Press Release

PNFP Reports Diluted EPS of $1.31, ROAA of 1.55% and ROTCE of 17.74% For 2Q 2019

Company Release - 7/16/2019 5:30 PM ET

Excluding non-GAAP adjustments, 2Q19 diluted EPS was $1.42, ROAA was 1.69% and ROTCE was 19.28%

NASHVILLE, Tenn.--(BUSINESS WIRE)-- Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $1.31 for the quarter ended June 30, 2019, compared to net income per diluted common share of $1.12 for the quarter ended June 30, 2018, an increase of 17.0 percent. Net income per diluted common share was $2.53 for the six months ended June 30, 2019, compared to net income per diluted common share of $2.20 for the six months ended June 30, 2018, an increase of 15.0 percent.

The following items impacted Pinnacle Financial’s second quarter of 2019 results:

  • $4.5 million in net losses on the sale of $382.0 million of investment securities as the firm seeks to better position its balance sheet for potential reductions in short-term rates,
  • $1.5 million loss from the sale of its remaining non-prime automobile portfolio, to finalize our exit from that business, which has been underway for some time,
  • $2.4 million write-down of facilities and land acquired in the BNC acquisition that previously had been held for potential expansion, and
  • $3.2 million non-cash impairment charge related to the proposed consolidation of five offices across the firm's footprint.

Excluding these items, as well as merger-related charges in 2018 and ORE expense in each period, net income per diluted common share was $1.42 for the three months ended June 30, 2019, compared to net income per diluted common share of $1.16 for the three months ended June 30, 2018, a growth rate of 22.4 percent. Excluding the same adjustments noted above for the six months ended June 30, 2019 and 2018, net income per diluted common share was $2.66 for the six months ended June 30, 2019, compared to net income per diluted common share of $2.28 for the six months ended June 30, 2018, a growth rate of 16.7 percent.

"Obviously, we are excited about our very strong earnings growth in the second quarter and first six months of 2019," said M. Terry Turner, Pinnacle's president and chief executive officer. "Highlights for the quarter included double-digit loan growth, strong hiring throughout our footprint and better than anticipated fee income associated with our investment in BHG. During the quarter, we also implemented plans for rationalization of certain assets. Our decision to sell the remainder of our non-prime automobile loans and to consolidate a number of branch offices, along with the other items noted above, negatively impacted the second quarter by approximately $12.0 million in additional expenses. However, by incurring these expenses, we believe we are much better positioned to absorb potential decreases in short-term interest rates. These actions also eliminate any future losses that could have been incurred from the non-prime automobile portfolio."

GROWING THE CORE EARNINGS CAPACITY OF THE FIRM:

  • Loans at June 30, 2019 were a record $18.8 billion, an increase of $1.8 billion from June 30, 2018, reflecting year-over-year growth of 10.4 percent. Loans at June 30, 2019 increased $639.4 million from March 31, 2019, reflecting a linked-quarter annualized growth rate of 14.1 percent.
    • Average loans were $18.6 billion for the three months ended June 30, 2019, up $672.7 million from $17.9 billion for the three months ended March 31, 2019, an annualized growth rate of 15.0 percent.
    • At June 30, 2019, the remaining discount associated with fair value accounting adjustments on acquired loans was $75.4 million, compared to $85.8 million at March 31, 2019.
  • Deposits at June 30, 2019 were $19.4 billion, an increase of $1.6 billion from June 30, 2018, reflecting year-over-year growth of 8.9 percent. Deposits at June 30, 2019 increased $968.9 million from March 31, 2019, reflecting a linked-quarter annualized growth rate of 21.0 percent.
    • Average deposits were $18.9 billion for the three months ended June 30, 2019, compared to $18.4 billion for the three months ended March 31, 2019, an annualized growth rate of 11.0 percent.
    • Core deposits were $16.5 billion at June 30, 2019, compared to $16.3 billion at March 31, 2019 and $15.4 billion at June 30, 2018, a year-over-year growth rate of 7.2 percent.
  • Revenues for the quarter ended June 30, 2019 were $259.6 million, an increase of $21.3 million from the $238.3 million recognized in the first quarter of 2019, and up $29.4 million from the second quarter of 2018. This represents a year-over-year growth rate of 12.8 percent. Second quarter 2019 revenues reflect the impact of a $7.2 million reduction in loan discount accretion when compared to the second quarter of 2018.
    • Revenue per fully diluted share was $3.39 for the three months ended June 30, 2019, compared to $3.09 for the first quarter of 2019 and $2.97 for the second quarter of 2018.

"We hired 45 high-profile revenue producers during the first six months of 2019, a strong predictor of our continued future growth," Turner said. "We believe our recruiting success is creating even more opportunities for our firm to move meaningful market share from larger banks. Taking market share by virtue of being able to hire the best bankers in our market is the only way I know to reliably produce outsized growth on a sound basis over the long term.

"We continue to experience much progress in the Carolinas and Virginia and could not be more proud of our successes there. We believe the BNC merger has been a great success and we anticipate many years of sustainable growth for our firm. BHG was another sound investment for our firm. Its franchise value, we believe, has increased significantly since our first investment in 2015. We believe the leadership and employees at BHG have worked tirelessly to grow their firm on a sound basis, and we anticipate more growth in future periods as our partnership continues to thrive."

FOCUSING ON PROFITABILITY:

  • Return on average assets was 1.55 percent for the second quarter of 2019, compared to 1.52 percent for the first quarter of 2019 and 1.50 percent for the second quarter last year. Second quarter 2019 return on average tangible assets amounted to 1.67 percent, compared to 1.64 percent for the first quarter of 2019 and 1.63 percent for the second quarter of 2018.
    • Excluding the adjustments described above for both 2019 and 2018, return on average assets was 1.69 percent for the second quarter of 2019, compared to 1.55 percent for both the first quarter of 2019 and the second quarter of 2018. Likewise, excluding those same adjustments, the firm’s return on average tangible assets was 1.82 percent for the second quarter of 2019, compared to 1.67 percent for the first quarter of 2019 and 1.68 for the second quarter of 2018.
  • Return on average common equity for the second quarter of 2019 amounted to 9.77 percent, compared to 9.49 percent for the first quarter of 2019 and 9.18 percent for the second quarter of 2018. Second quarter 2019 return on average tangible common equity amounted to 17.74 percent, compared to 17.60 percent for the first quarter of 2019 and 18.01 for the second quarter of 2018.
    • Excluding the adjustments described above for both 2019 and 2018, return on average tangible common equity amounted to 19.28 percent for the second quarter of 2019, compared to 17.91 percent for the first quarter of 2019 and 18.58 percent for the second quarter of 2018.

"Our profitability metrics remain strong and provide us the ongoing leverage to hire more revenue producers and continue investing in our future growth," said Harold R. Carpenter, Pinnacle's chief financial officer. "BHG reported a remarkable quarter that was the culmination of many initiatives they have been working on for several months. They have not only developed more sophisticated tools to better target potential borrowers, but they also have expanded their reach into other professional firms such as lawyers, accountants and others. This elevated production occurred during a time when FICO scores and their internally generated credit scores for their borrowers have actually improved. During the quarter, we also took the opportunity to critically evaluate certain assets. Specifically, we executed several initiatives during the quarter to better insulate our earnings in a down rate environment such as purchasing loan interest rate floors, unwinding fixed to floating loan interest rate swaps and repositioning a portion of the bond portfolio.

"We are aware that our industry faces many macro challenges. In spite of these challenges, we continue to target top-quartile profitability and, more importantly, continue our focus on earnings per share growth and tangible book value per share accretion, having produced 5-year compounded annual growth rates of 23.7 percent and 15.8 percent, respectively, in those key metrics through the second quarter of 2019."

MAINTAINING A FORTRESS BALANCE SHEET:

  • Net charge-offs were $4.1 million for the quarter ended June 30, 2019, compared to $3.6 million for the quarter ended March 31, 2019 and $4.0 million for the quarter ended June 30, 2018. Annualized net charge-offs as a percentage of average loans for the quarter ended June 30, 2019 were 0.09 percent, compared to 0.08 percent for the quarter ended March 31, 2019 and 0.10 percent for the second quarter of 2018.
  • Nonperforming assets decreased to 0.55 percent of total loans and ORE at June 30, 2019, from 0.61 percent at March 31, 2019, and up slightly from 0.53 percent at June 30, 2018. Nonperforming assets were $102.7 million at June 30, 2019, compared to $111.3 million at March 31, 2019 and $91.1 million at June 30, 2018.
  • The classified asset ratio at June 30, 2019 was 13.9 percent, compared to 13.0 percent at March 31, 2019 and 12.6 percent at June 30, 2018. Classified assets were $337.8 million at June 30, 2019, compared to $306.8 million at March 31, 2019 and $267.3 million at June 30, 2018.
  • The allowance for loan losses represented 0.48 percent of total loans at each of June 30, 2019 and March 31, 2019, compared to 0.44 percent at June 30, 2018.
    • The ratio of the allowance for loan losses to nonperforming loans increased to 118.6 percent at June 30, 2019, from 90.7 percent at March 31, 2019 and 106.7 percent at June 30, 2018. At June 30, 2019, purchase credit impaired loans of $7.2 million, which were recorded at fair value upon acquisition, represented 9.4 percent of the firm's nonperforming loans.
    • Provision for loan losses was $7.2 million in the second quarter of 2019, compared to $7.2 million in the first quarter of 2019 and $9.4 million in the second quarter of 2018.

"Asset quality continues to be a highlight for our firm," Carpenter said. "Net charge-offs, nonperforming assets and classified assets remain very low. Net charge-offs in our primary loan segments of C&I, CRE and construction have been very low for an extended period of time. Year-to-date in 2019, net charge-offs in these segments were 0.07 percent annualized, compared to 0.07 percent in 2018 and 0.02 percent in 2017."

GROWING REVENUES

  • Net interest income for the quarter ended June 30, 2019 was $188.9 million, compared to $187.2 million for the first quarter of 2019 and $182.2 million for the second quarter of 2018, a year-over-year growth rate of 3.7 percent. Net interest margin was 3.48 percent for the second quarter of 2019, compared to 3.62 percent for the first quarter of 2019 and 3.69 percent for the second quarter of 2018.
    • Included in net interest income for the second quarter of 2019 was $8.9 million of discount accretion associated with fair value adjustments, compared to $9.7 million of similar discount accretion recognized in the first quarter of 2019 and $16.1 million in the second quarter of 2018.
    • Average earning assets included $81.4 million of fair value adjustments related to our acquisitions at June 30, 2019, compared to $92.4 million at March 31, 2019 and $143.3 million at June 30, 2018.
  • Noninterest income for the quarter ended June 30, 2019 was $70.7 million, compared to $51.1 million for the first quarter of 2019 and $47.9 million for the second quarter of 2018, a year-over-year growth rate of 47.4 percent.
    • Wealth management revenues, which include investment, trust and insurance services, were $11.4 million for the quarter ended June 30, 2019, compared to $11.6 million for the first quarter of 2019 and $10.5 million for the second quarter of 2018.
    • Income from the firm's investment in BHG was $32.3 million for the quarter ended June 30, 2019, compared to $13.3 million for the quarter ended March 31, 2019 and $9.7 million for the quarter ended June 30, 2018. Income from the firm's investment in BHG grew more than 200 percent for the quarter ended June 30, 2019, compared to the quarter ended June 30, 2018.
    • Other noninterest income was $16.5 million for the quarter ended June 30, 2019 compared to $14.6 million for the quarter ended March 31, 2019 and $15.3 million for the quarter ended June 30, 2018. Contributing to the increase were increased credit card interchange fees and increased fees related to the firm's various lending programs. Other noninterest income for the quarter ended June 30, 2019 was also impacted by a $1.5 million charge associated with the sale of the firm's remaining non-prime automobile portfolio in the second quarter of 2019.

"For good reason, the rate environment has attracted much attention from the broader banking community, including not only bankers but also investors and analysts," Carpenter said. "Operating in this environment while funding high quality loan growth as inexpensively as possible is clearly a challenge. We will continue to support our relationship managers as they attract great clients to our firm, which typically begins with loans.

"We remain optimistic about our deposit-gathering strategies, which are largely dependent upon our continuing to recruit deposit gatherers to our firm. We are fortunate that we operate in markets with outstanding bankers that allow us to focus on growing revenues consistently and organically over the longer term. Our track record is strong, and we believe we have the runway in our current footprint to accomplish our goals of continuing to be a top-quartile performer."

CREATING OPERATING LEVERAGE

  • Noninterest expense for the quarter ended June 30, 2019 was $127.7 million, compared to $114.1 million in the first quarter of 2019 and $110.9 million in the second quarter of 2018, reflecting a year-over-year increase of 15.1 percent. Excluding the impairment charges associated with our branch consolidation initiatives, ORE expenses and merger-related charges for the relevant periods as described above, noninterest expense increased 13.8 percent over the second quarter of 2018.
    • Salaries and employee benefits were $75.6 million in the second quarter of 2019, compared to $70.4 million in the first quarter of 2019 and $64.1 million in the second quarter of 2018, reflecting a year-over-year increase of 17.9 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 $11.0 million in the second quarter of 2019, compared to $6.3 million in the first quarter of 2019 and $6.9 million in the second quarter of last year.
    • The efficiency ratio for the second quarter of 2019 increased to 49.19 percent, compared to 47.86 percent for the first quarter of 2019 and 48.18 percent in the second quarter of 2018. The ratio of noninterest expenses to average assets increased to 1.98 percent for the second quarter of 2019 from 1.85 percent in the first quarter of 2019 and 1.91 percent in the second quarter of 2018.
      • Excluding the adjustments noted elsewhere in this release for both 2019 and 2018, the efficiency ratio was 45.92 percent for the second quarter of 2019, compared to 47.37 percent for the first quarter of 2019 and 46.57 percent for the second quarter of 2018. Excluding the above described impairment charge, ORE expense and merger-related charges, the ratio of noninterest expense to average assets was 1.89 percent for the second quarter of 2019, compared to 1.84 percent for the first quarter of 2019 and 1.85 percent for the second quarter of 2018.
    • The effective tax rate for the second quarter of 2019 was 19.6 percent, compared to 19.7 percent for the first quarter of 2019 and 20.9 percent for the second quarter of 2018. The effective tax rate for the second quarter of 2019 includes tax expense related to equity compensation of $68,000, compared to a benefit of $769,000 in the first quarter of 2019 and $72,000 in the second quarter of 2018, respectively, associated with vesting of equity-based awards.
    • During the second quarter of 2019, the firm acquired 130,888 shares of its common stock in open market transactions pursuant to its previously announced share repurchase program, at an average price of $56.31.

"We continue to be pleased with the management of our expense base and our team’s focus on growing revenues," Carpenter said. "We reviewed our branch network for opportunities and believe the proposed consolidation of approximately five facilities is sufficient at this time. We are not exiting any market or entering into any formal personnel reduction programs as a result of these actions.

"Additionally, we are reporting an adjusted efficiency ratio of 46 percent for our firm for the second quarter of 2019, providing further support that our firm can generate outsized returns efficiently and that we take our reputation of being sound operators seriously."

BOARD OF DIRECTORS DECLARES DIVIDEND

On July 16, 2019, Pinnacle's Board of Directors approved a quarterly cash dividend of $0.16 per common share to be paid on Aug. 30, 2019 to common shareholders of record as of the close of business on Aug. 2, 2019. The amount and timing of any future dividend payments to common shareholders will be subject to the discretion of Pinnacle's Board of Directors.

WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. (CDT) on July 17, 2019 to discuss second quarter 2019 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. Pinnacle Bank has the No. 1 deposit market share in the Nashville-Murfreesboro-Franklin MSA, according to June 30, 2018 deposit data from the FDIC. Pinnacle earned a place on FORTUNE’s 2017, 2018 and 2019 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 $26.5 billion in assets as of June 30, 2019. 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 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 differences in interest rates on loans or deposits from those that Pinnacle Financial is modeling or anticipating 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 for associates) or otherwise to attract customers from other financial institutions; (xiv) the ability of Pinnacle Financial to implement its branch consolidation strategy on the timelines, and at the costs, presently contemplated; (xv) 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, 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; (xvii) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xviii) 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; (xix) the possibility of increased compliance and operational costs as a result of increased regulatory oversight (including by the Consumer Financial Protection Bureau), 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; (xx) 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; (xxi) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, like BHG, including regulatory or legislative developments; (xxii) risks associated with the possible shutdown of the United States federal government, including adverse effects on the national or local economies and adverse effects resulting from a shutdown of the U.S. Small Business Administration's SBA loan program; (xxiii) the availability of and access to capital; (xxiv) 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 (xxv) 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, earnings per diluted share, efficiency ratio and the ratio of noninterest expense to average assets, excluding in certain instances the impact of expenses related to other real estate owned, gains or losses on sale of investment securities, the charges associated with Pinnacle Financial's branch consolidation project, the sale of the remaining portion of Pinnacle Bank's non-prime automobile portfolio, 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 2019 versus certain periods in 2018 and to internally prepared projections.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS – UNAUDITED

(dollars in thousands)

 

 

 

 

June 30, 2019

December 31, 2018

June 30, 2018

ASSETS

 

 

 

Cash and noninterest-bearing due from banks

$

153,071

$

137,433

$

193,962

Restricted cash

121,440

65,491

16,233

Interest-bearing due from banks

332,862

516,920

407,265

Federal funds sold and other

20,214

1,848

29,463

Cash and cash equivalents

627,587

721,692

646,923

 

 

 

 

Securities available-for-sale, at fair value

3,256,906

3,083,686

2,960,128

Securities held-to-maturity (fair value of $200.6 million, $193.1 million, and $15.3 million at June 30, 2019, Dec. 31, 2018, and June 30, 2018, respectively)

190,928

194,282

15,341

Consumer loans held-for-sale

70,004

34,196

108,592

Commercial loans held-for-sale

21,295

15,954

21,277

 

 

 

 

Loans

18,814,318

17,707,549

17,042,853

Less allowance for loan losses

(90,253)

(83,575)

(75,670)

Loans, net

18,724,065

17,623,974

16,967,183

 

 

 

 

Premises and equipment, net

274,729

265,560

269,876

Equity method investment

243,875

239,237

217,283

Accrued interest receivable

84,582

79,657

65,175

Goodwill

1,807,121

1,807,121

1,807,121

Core deposits and other intangible assets

41,578

46,161

51,353

Other real estate owned

26,657

15,165

19,785

Other assets

1,171,028

904,359

838,333

Total assets

$

26,540,355

$

25,031,044

$

23,988,370

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Deposits:

 

 

 

Noninterest-bearing

$

4,493,419

$

4,309,067

$

4,361,414

Interest-bearing

3,129,941

3,464,001

2,939,833

Savings and money market accounts

7,547,166

7,607,796

7,129,335

Time

4,278,857

3,468,243

3,426,836

Total deposits

19,449,383

18,849,107

17,857,418

Securities sold under agreements to repurchase

154,169

104,741

128,739

Federal Home Loan Bank advances

1,960,062

1,443,589

1,581,867

Subordinated debt and other borrowings

464,144

485,130

465,433

Accrued interest payable

30,376

23,586

15,604

Other liabilities

305,860

158,951

112,632

Total liabilities

22,363,994

21,065,104

20,161,693

 

 

 

 

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; 76.9 million, 77.5 million and 77.9 million shares issued and outstanding at June 30, 2019, Dec. 31, 2018 and June 30, 2018, respectively

76,929

77,484

77,855

Additional paid-in capital

3,076,486

3,107,431

3,119,461

Retained earnings

1,002,434

833,130

667,594

Accumulated other comprehensive income (loss), net of taxes

20,512

(52,105)

(38,233)

Total stockholders' equity

4,176,361

3,965,940

3,826,677

Total liabilities and stockholders' equity

$

26,540,355

$

25,031,044

$

23,988,370

 

 

 

 

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

Six Months Ended

 

June 30,
2019

March 31,
2019

June 30,
2018

June 30,
2019

June 30,
2018

Interest income:

 

 

 

 

 

Loans, including fees

$

237,653

$

229,379

$

208,758

$

467,032

$

399,972

Securities

 

 

 

 

 

Taxable

12,243

13,540

11,748

25,783

22,970

Tax-exempt

12,556

11,672

8,350

24,228

15,635

Federal funds sold and other

3,399

3,292

2,128

6,691

3,935

Total interest income

265,851

257,883

230,984

523,734

442,512

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

Deposits

58,988

54,217

32,767

113,205

56,748

Securities sold under agreements to repurchase

142

145

143

287

273

FHLB advances and other borrowings

17,803

16,275

15,838

34,078

28,784

Total interest expense

76,933

70,637

48,748

147,570

85,805

Net interest income

188,918

187,246

182,236

376,164

356,707

Provision for loan losses

7,195

7,184

9,402

14,379

16,333

Net interest income after provision for loan losses

181,723

180,062

172,834

361,785

340,374

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

Service charges on deposit accounts

8,940

8,542

8,456

17,482

16,361

Investment services

5,803

5,404

5,074

11,207

10,319

Insurance sales commissions

2,147

2,928

2,048

5,075

5,167

Gains on mortgage loans sold, net

6,011

4,878

3,777

10,889

7,521

Investment gains (losses) on sales, net

(4,466)

(1,960)

(6,426)

30

Trust fees

3,461

3,295

3,564

6,756

6,681

Income from equity method investment

32,261

13,290

9,690

45,551

19,050

Other noninterest income

16,525

14,686

15,330

31,211

26,993

Total noninterest income

70,682

51,063

47,939

121,745

92,122

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

Salaries and employee benefits

75,620

70,376

64,112

145,996

127,831

Equipment and occupancy

23,844

19,331

18,208

43,175

35,951

Other real estate, net

2,523

246

819

2,769

25

Marketing and other business development

3,282

2,948

2,544

6,230

4,791

Postage and supplies

2,079

1,892

2,291

3,971

4,330

Amortization of intangibles

2,271

2,311

2,659

4,582

5,357

Merger-related expenses

2,906

8,259

Other noninterest expense

18,067

16,947

17,369

35,014

32,944

Total noninterest expense

127,686

114,051

110,908

241,737

219,488

Income before income taxes

124,719

117,074

109,865

241,793

213,008

Income tax expense

24,398

23,114

23,000

47,512

42,633

Net income

$

100,321

$

93,960

$

86,865

$

194,281

$

170,375

 

 

 

 

 

 

Per share information:

 

 

 

 

 

Basic net income per common share

$

1.31

$

1.22

$

1.13

$

2.54

$

2.21

Diluted net income per common share

$

1.31

$

1.22

$

1.12

$

2.53

$

2.20

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

Basic

76,343,608

76,803,171

77,123,854

76,572,120

77,101,816

Diluted

76,611,657

77,127,692

77,468,082

76,866,163

77,417,930

 

 

 

 

 

 

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)

June
2019

March
2019

December
2018

September
2018

June
2018

March
2018

Balance sheet data, at quarter end:

 

 

 

 

 

 

Commercial and industrial loans

$

5,795,107

5,419,520

5,271,420

5,006,247

4,821,299

4,490,886

Commercial real estate - owner occupied

 

2,624,160

2,617,541

2,653,433

2,688,247

2,504,891

2,427,946

Commercial real estate - investment

 

4,252,098

4,107,953

3,855,643

3,818,055

3,822,182

3,714,854

Commercial real estate - multifamily and other

 

709,135

693,652

655,879

708,817

697,566

651,488

Consumer real estate - mortgage loans

 

2,949,755

2,887,628

2,844,447

2,815,160

2,699,399

2,580,766

Construction and land development loans

 

2,117,969

2,097,570

2,072,455

2,059,009

2,133,646

2,095,875

Consumer and other

 

366,094

351,042

354,272

368,474

363,870

364,202

Total loans

 

18,814,318

18,174,906

17,707,549

17,464,009

17,042,853

16,326,017

Allowance for loan losses

 

(90,253)

(87,194)

(83,575)

(79,985)

(75,670)

(70,204)

Securities

 

3,447,834

3,444,049

3,277,968

3,199,579

2,975,469

2,981,301

Total assets

 

26,540,355

25,557,858

25,031,044

24,557,545

23,988,370

22,935,174

Noninterest-bearing deposits

 

4,493,419

4,317,787

4,309,067

4,476,925

4,361,414

4,274,213

Total deposits

 

19,449,383

18,480,461

18,849,107

18,407,515

17,857,418

16,502,909

Securities sold under agreements to repurchase

 

154,169

100,698

104,741

130,217

128,739

131,863

FHLB advances

 

1,960,062

2,121,075

1,443,589

1,520,603

1,581,867

1,976,881

Subordinated debt and other borrowings

 

464,144

484,703

485,130

465,487

465,433

465,550

Total stockholders' equity

 

4,176,361

4,055,939

3,965,940

3,897,041

3,826,677

3,749,303

Balance sheet data, quarterly averages:

 

 

 

 

 

 

Total loans

$

18,611,164

17,938,480

17,630,281

17,259,139

16,729,734

15,957,466

Securities

 

3,412,475

3,302,676

3,148,638

3,075,633

2,970,267

2,829,604

Federal funds sold and other

 

530,556

469,909

645,644

647,728

442,401

335,093

Total earning assets

 

22,554,195

21,711,065

21,424,563

20,982,500

20,142,402

19,122,163

Total assets

 

25,915,971

25,049,954

24,616,733

24,125,051

23,236,945

22,204,599

Noninterest-bearing deposits

 

4,399,766

4,195,443

4,317,782

4,330,917

4,270,459

4,304,186

Total deposits

 

18,864,859

18,358,094

18,368,012

18,112,766

16,949,374

16,280,581

Securities sold under agreements to repurchase

 

117,261

109,306

119,247

146,864

123,447

129,969

FHLB advances

 

2,164,341

1,926,358

1,689,920

1,497,511

1,884,828

1,584,281

Subordinated debt and other borrowings

 

469,498

470,775

469,074

468,990

474,328

471,029

Total stockholders' equity

 

4,117,754

4,017,375

3,939,927

3,874,430

3,795,963

3,732,633

Statement of operations data, for the three months ended:

Interest income

$

265,851

257,883

256,095

248,110

230,984

211,528

Interest expense

 

76,933

70,637

65,880

58,690

48,748

37,057

Net interest income

 

188,918

187,246

190,215

189,420

182,236

174,471

Provision for loan losses

 

7,195

7,184

9,319

8,725

9,402

6,931

Net interest income after provision for loan losses

 

181,723

180,062

180,896

180,695

172,834

167,540

Noninterest income

 

70,682

51,063

57,270

51,478

47,939

44,183

Noninterest expense

 

127,686

114,051

119,409

113,990

110,908

108,580

Income before taxes

 

124,719

117,074

118,757

118,183

109,865

103,143

Income tax expense

 

24,398

23,114

23,439

24,436

23,000

19,633

Net income

$

100,321

93,960

95,318

93,747

86,865

83,510

 

 

 

 

 

 

 

Profitability and other ratios:

 

 

 

 

 

 

Return on avg. assets (1)

 

1.55%

1.52%

1.54%

1.54%

1.50%

1.53%

Return on avg. common equity (1)

 

9.77%

9.49%

9.60%

9.60%

9.18%

9.07%

Return on avg. tangible common equity (1)

 

17.74%

17.60%

18.14%

18.44%

18.01%

18.12%

Dividend payout ratio (16)

 

12.88%

13.39%

13.79%

14.89%

16.57%

18.36%

Net interest margin (2)

 

3.48%

3.62%

3.63%

3.65%

3.69%

3.77%

Noninterest income to total revenue (3)

 

27.23%

21.43%

23.14%

21.37%

20.83%

20.21%

Noninterest income to avg. assets (1)

 

1.09%

0.83%

0.92%

0.85%

0.83%

0.81%

Noninterest exp. to avg. assets (1)

 

1.98%

1.85%

1.92%

1.87%

1.91%

1.98%

Efficiency ratio (4)

 

49.19%

47.86%

48.25%

47.32%

48.18%

49.66%

Avg. loans to avg. deposits

 

98.66%

97.71%

95.98%

95.29%

98.70%

98.02%

Securities to total assets

 

12.99%

13.48%

13.10%

13.03%

12.40%

13.00%

 

 

 

 

 

 

 

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

June 30, 2019

 

June 30, 2018

 

Average Balances

Interest

Rates/
Yields

 

Average Balances

Interest

Rates/
Yields

Interest-earning assets

 

 

 

 

 

 

 

Loans (1) (2)

$

18,611,164

$

237,653

5.22%

 

$

16,729,734

$

208,758

5.04%

Securities

 

 

 

 

 

 

 

Taxable

1,781,814

12,243

2.76%

 

1,792,845

11,748

2.63%

Tax-exempt (2)

1,630,661

12,556

3.68%

 

1,177,422

8,350

3.34%

Federal funds sold and other

530,556

3,399

2.57%

 

442,401

2,128

1.93%

Total interest-earning assets

22,554,195

$

265,851

4.85%

 

20,142,402

$

230,984

4.66%

Nonearning assets

 

 

 

 

 

 

 

Intangible assets

1,850,146

 

 

 

1,860,868

 

 

Other nonearning assets

1,511,630

 

 

 

1,233,675

 

 

Total assets

$

25,915,971

 

 

 

$

23,236,945

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

Interest checking

3,150,865

9,305

1.18%

 

3,038,705

6,395

0.84%

Savings and money market

7,355,783

26,947

1.47%

 

6,739,430

16,165

0.96%

Time

3,958,445

22,736

2.30%

 

2,900,779

10,207

1.41%

Total interest-bearing deposits

14,465,093

58,988

1.64%

 

12,678,914

32,767

1.04%

Securities sold under agreements to repurchase

117,261

142

0.49%

 

123,447

143

0.47%

Federal Home Loan Bank advances

2,164,341

11,552

2.14%

 

1,884,828

9,690

2.06%

Subordinated debt and other borrowings

469,498

6,251

5.34%

 

474,328

6,148

5.20%

Total interest-bearing liabilities

17,216,193

76,933

1.79%

 

15,161,517

48,748

1.29%

Noninterest-bearing deposits

4,399,766

 

4,270,459

Total deposits and interest-bearing liabilities

21,615,959

$

76,933

1.43%

 

19,431,976

$

48,748

1.01%

Other liabilities

182,258

 

 

 

9,005

 

 

Stockholders' equity

4,117,754

 

 

 

3,795,963

 

 

Total liabilities and stockholders' equity

$

25,915,971

 

 

 

$

23,236,944

 

 

Net interest income

 

$

188,918

 

 

 

$

182,236

 

Net interest spread (3)

 

 

3.06%

 

 

 

3.37%

Net interest margin (4)

 

 

3.48%

 

 

 

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 and include $6.9 million of taxable equivalent income for the three months ended June 30, 2019 compared to $3.1 million for the three months ended June 30, 2018. The tax-exempt benefit has been reduced by the projected impact of tax-exempt income that will be disallowed pursuant to IRS Regulations as of and for the then current period presented.

(3) Yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. The net interest spread calculation excludes the impact of demand deposits. Had the impact of demand deposits been included, the net interest spread for the quarter ended June 30, 2019 would have been 3.42% compared to a net interest spread of 3.66% for the quarter ended June 30, 2018.

(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)

Six months ended

 

Six months ended

June 30, 2019

 

June 30, 2018

 

Average Balances

Interest

Rates/
Yields

 

Average Balances

Interest

Rates/
Yields

Interest-earning assets

 

 

 

 

 

 

 

Loans (1) (2)

$

18,276,680

$

467,032

5.25%

 

$

16,345,734

$

399,972

4.98%

Securities

 

 

 

 

 

 

 

Taxable

1,813,693

25,783

2.87%

 

1,793,619

22,970

2.58%

Tax-exempt (2)

1,544,186

24,228

3.77%

 

1,106,705

15,635

3.33%

Federal funds sold and other

500,400

6,691

2.70%

 

389,043

3,935

2.04%

Total interest-earning assets

22,134,959

$

523,734

4.89%

 

19,635,101

$

442,512

4.61%

Nonearning assets

 

 

 

 

 

 

 

Intangible assets

1,851,292

 

 

 

1,862,294

 

 

Other nonearning assets

1,499,104

 

 

 

1,226,229

 

 

Total assets

$

25,485,355

 

 

 

$

22,723,624

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

Interest checking

3,140,734

18,628

1.20%

 

3,006,328

11,509

0.77%

Savings and money market

7,446,911

53,284

1.44%

 

6,597,734

28,153

0.86%

Time

3,727,061

41,293

2.23%

 

2,725,534

17,086

1.26%

Total interest-bearing deposits

14,314,706

113,205

1.59%

 

12,329,596

56,748

0.93%

Securities sold under agreements to repurchase

113,305

287

0.51%

 

126,690

273

0.43%

Federal Home Loan Bank advances

2,046,007

21,515

2.12%

 

1,735,385

16,697

1.94%

Subordinated debt and other borrowings

470,133

12,563

5.39%

 

475,066

12,087

5.13%

Total interest-bearing liabilities

16,944,151

147,570

1.76%

 

14,666,737

85,805

1.18%

Noninterest-bearing deposits

4,298,169

 

4,287,229

Total deposits and interest-bearing liabilities

21,242,320

$

147,570

1.40%

 

18,953,966

$

85,805

0.91%

Other liabilities

175,193

 

 

 

5,185

 

 

Stockholders' equity

4,067,842

 

 

 

3,764,473

 

 

Total liabilities and stockholders' equity

$

25,485,355

 

 

 

$

22,723,624

 

 

Net interest income

 

$

376,164

 

 

 

$

356,707

 

Net interest spread (3)

 

 

3.14%

 

 

 

3.43%

Net interest margin (4)

 

 

3.55%

 

 

 

3.73%

 

 

 

 

 

 

 

 

(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 $13.4 million of taxable equivalent income for the six months ended June 30, 2019 compared to $6.3 million for the six months ended June 30, 2018. The tax-exempt benefit has been reduced by the projected impact of tax-exempt income that will be disallowed pursuant to IRS Regulations as of and for the then current period presented.

(3) Yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. The net interest spread calculation excludes the impact of demand deposits. Had the impact of demand deposits been included, the net interest spread for the six months ended June 30, 2019 would have been 3.49% compared to a net interest spread of 3.70% for the six months ended June 30, 2018.

(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)

June
2019

March
2019

December
2018

September
2018

June
2018

March
2018

Asset quality information and ratios:

 

 

 

 

 

 

Nonperforming assets:

 

 

 

 

 

 

Nonaccrual loans

 

76,077

96,144

87,834

77,868

70,887

70,202

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

 

26,658

15,138

15,393

17,731

20,229

24,533

Total nonperforming assets

$

102,735

111,282

103,227

95,599

91,116

94,735

Past due loans over 90 days and still accruing interest

$

2,733

1,982

1,558

1,773

1,572

1,131

Accruing troubled debt restructurings (5)

$

7,412

5,481

5,899

6,125

5,647

6,115

Accruing purchase credit impaired loans

$

12,632

13,122

14,743

21,473

22,993

24,398

Net loan charge-offs

$

4,136

3,565

5,729

4,410

3,936

3,967

Allowance for loan losses to nonaccrual loans

 

118.6%

90.7%

95.2%

102.7%

106.7%

100.0%

As a percentage of total loans:

 

 

 

 

 

 

Past due accruing loans over 30 days

 

0.21%

0.22%

0.34%

0.25%

0.23%

0.24%

Potential problem loans (6)

 

1.21%

1.05%

1.00%

1.16%

1.00%

0.97%

Allowance for loan losses

 

0.48%

0.48%

0.47%

0.46%

0.44%

0.43%

Nonperforming assets to total loans, ORE and other NPAs

 

0.55%

0.61%

0.58%

0.55%

0.53%

0.58%

Nonperforming assets to total assets

 

0.39%

0.44%

0.41%

0.39%

0.38%

0.41%

Classified asset ratio (Pinnacle Bank) (8)

 

13.9%

13.0%

12.4%

13.7%

12.6%

12.6%

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

 

0.09%

0.08%

0.11%

0.10%

0.10%

0.10%

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

 

44.9

44.9

44.4

4.5

4.4

4.4

 

 

44.4

4.5

4.4

4.4

4.5

Interest rates and yields:

 

 

 

 

 

 

Loans

 

5.22%

5.28%

5.22%

5.15%

5.04%

4.91%

Securities

 

3.20%

3.37%

3.22%

3.11%

2.91%

2.87%

Total earning assets

 

4.85%

4.94%

4.85%

4.76%

4.66%

4.56%

Total deposits, including non-interest bearing

 

1.25%

1.20%

1.08%

0.97%

0.78%

0.60%

Securities sold under agreements to repurchase

 

0.49%

0.54%

0.50%

0.44%

0.47%

0.40%

FHLB advances

 

2.14%

2.10%

2.18%

2.16%

2.06%

1.79%

Subordinated debt and other borrowings

 

5.34%

5.44%

5.33%

5.29%

5.20%

5.11%

Total deposits and interest-bearing liabilities

 

1.43%

1.37%

1.27%

1.15%

1.01%

0.81%

 

 

 

 

 

 

 

Capital and other ratios (8):

 

 

 

 

 

 

Pinnacle Financial ratios:

 

 

 

 

 

 

Stockholders' equity to total assets

 

15.7%

15.9%

15.8%

15.9%

16.0%

16.3%

Common equity Tier one

 

9.5%

9.4%

9.6%

9.4%

9.3%

9.2%

Tier one risk-based

 

9.5%

9.4%

9.6%

9.4%

9.3%

9.2%

Total risk-based

 

12.0%

12.0%

12.2%

12.1%

12.0%

12.0%

Leverage

 

9.1%

9.0%

8.9%

8.8%

8.8%

8.8%

Tangible common equity to tangible assets

 

9.4%

9.3%

9.1%

9.0%

8.9%

9.0%

Pinnacle Bank ratios:

 

 

 

 

 

 

Common equity Tier one

 

10.3%

10.4%

10.5%

10.3%

10.2%

10.3%

Tier one risk-based

 

10.3%

10.4%

10.5%

10.3%

10.2%

10.3%

Total risk-based

 

11.3%

11.4%

11.5%

11.4%

11.2%

11.3%

Leverage

 

9.8%

9.9%

9.8%

9.6%

9.7%

9.8%

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

 

82.6%

84.1%

85.2%

87.8%

94.6%

96.1%

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

 

288.9%

282.5%

277.7%

287.6%

304.3%

306.2%

 

 

 

 

 

 

 

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)

 

June
2019

March
2019

December
2018

September
2018

June
2018

March
2018

 

 

 

 

 

 

 

 

Per share data:

 

 

 

 

 

 

 

Earnings – basic

$

1.31

1.22

1.24

1.22

1.13

1.08

Earnings - basic, excluding the adjustments noted below

$

1.43

1.24

1.26

1.22

1.15

1.13

Earnings – diluted

$

1.31

1.22

1.23

1.21

1.12

1.08

Earnings - diluted, excluding the adjustments noted below

$

1.42

1.24

1.25

1.21

1.15

1.13

Common dividends per share

$

0.16

0.16

0.16

0.14

0.14

0.14

Book value per common share at quarter end (9)

$

54.29

52.63

51.18

50.05

49.15

48.16

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

$

30.26

28.61

27.27

26.21

25.28

24.24

Revenue per diluted share

$

3.39

3.09

3.19

3.11

2.97

2.83

Revenue per diluted share, excluding the adjustments noted below

$

3.47

3.12

3.22

3.11

2.97

2.83

Noninterest expense per diluted share

$

1.67

1.48

1.54

1.47

1.43

1.40

Noninterest expense per diluted share, excluding the adjustments noted below

$

1.59

1.48

1.53

1.47

1.38

1.34

 

 

 

 

 

 

 

 

Investor information:

 

 

 

 

 

 

 

Closing sales price on last trading day of quarter

$

57.48

54.70

46.10

60.15

61.35

64.20

High closing sales price during quarter

$

59.23

59.55

61.04

66.20

68.10

69.45

Low closing sales price during quarter

$

52.95

46.35

44.03

60.05

61.35

60.20

 

 

 

 

 

 

 

 

Other information:

 

 

 

 

 

 

 

Gains on residential mortgage loans sold:

 

 

 

 

 

 

 

Residential mortgage loan sales:

 

 

 

 

 

 

 

Gross loans sold

$

291,813

193,830

236,861

278,073

264,934

237,667

Gross fees (10)

$

8,485

5,695

6,184

7,756

7,134

6,036

Gross fees as a percentage of loans originated

 

2.91%

2.94%

2.61%

2.79%

2.69%

2.54%

Net gain on residential mortgage loans sold

$

6,011

4,878

3,141

3,902

3,777

3,744

Investment gains (losses) on sales of securities, net (15)

$

(4,466)

(1,960)

(2,295)

11

30

Brokerage account assets, at quarter end (11)

$

4,287,985

4,122,980

3,763,911

3,998,774

3,745,635

3,508,669

Trust account managed assets, at quarter end

$

2,425,791

2,263,095

2,055,861

2,074,027

1,920,226

1,844,871

Core deposits (12)

$

16,503,686

16,340,763

16,489,173

16,076,859

15,400,142

14,750,211

Core deposits to total funding (12)

 

74.9%

77.1%

79.0%

78.3%

76.9%

77.3%

Risk-weighted assets

$

22,706,512

22,001,959

21,137,263

20,705,547

20,151,827

19,286,101

Number of offices

 

114

114

114

115

115

114

Total core deposits per office

$

144,769

143,340

144,642

139,799

133,914

129,388

Total assets per full-time equivalent employee

$

11,241

10,997

10,897

10,917

10,911

10,677

Annualized revenues per full-time equivalent employee

$

441.0

415.9

427.5

424.9

419.9

412.8

Annualized expenses per full-time equivalent employee

$

216.9

199.0

206.2

201.0

202.3

205.0

Number of employees (full-time equivalent)

 

2,361.0

2,324.0

2,297.0

2,249.5

2,198.5

2,148.0

Associate retention rate (13)

 

93.0%

92.8%

92.3%

91.1%

89.6%

89.9%

 

 

 

 

 

 

 

 

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

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

RECONCILIATION OF NON-GAAP SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED

 

 

Three Months Ended

 

Six Months Ended

(dollars in thousands, except per share data)

 

June 30,
2019

March 31,
2019

June 30,
2018

 

June 30,
2019

June 30,
2018

 

 

 

 

 

 

 

 

Net interest income

$

188,918

187,246

182,236

 

376,164

356,707

 

 

 

 

 

 

 

 

Noninterest income

 

70,682

51,063

47,939

 

121,745

92,122

Total revenues

 

259,600

238,309

230,175

 

497,909

448,829

Less: Investment (gains) losses on sales of securities, net

 

4,466

1,960

 

6,426

(30)

Loss on sale of non-prime automobile portfolio

 

1,536

 

1,536

Total revenues excluding the impact of adjustments noted above

 

265,602

240,269

230,175

 

505,871

448,799

 

 

 

 

 

 

 

 

Noninterest expense

 

127,686

114,051

110,908

 

241,737

219,488

Less: Other real estate (ORE) expense

 

2,523

246

819

 

2,769

25

Merger-related charges

 

2,906

 

8,259

Branch consolidation

 

3,189

 

3,189

Noninterest expense excluding the impact of adjustments noted above

 

121,974

113,805

107,183

 

235,779

211,204

 

 

 

 

 

 

 

 

Adjusted pre-tax pre-provision income(14)

$

143,628

126,464

122,992

 

270,092

237,595

 

 

 

 

 

 

 

 

Efficiency ratio (4)

 

49.19%

47.86%

48.18%

 

48.55%

48.90%

Adjustments as noted above

 

(3.27)%

(0.49)%

(1.61)%

 

(1.94)%

(1.84)%

Efficiency ratio (excluding adjustments noted above)

 

45.92%

47.37%

46.57%

 

46.61%

47.06%

 

 

 

 

 

 

 

 

Total average assets

$

25,915,971

25,049,954

23,236,945

 

25,485,355

22,723,624

 

 

 

 

 

 

 

 

Noninterest income to average assets

 

1.09%

0.83%

0.83%

 

0.96%

0.82%

Adjustments as noted above

 

0.10%

0.03%

—%

 

0.07%

—%

Noninterest income (excluding adjustments noted above) to average assets

 

1.19%

0.86%

0.83%

 

1.03%

0.82%

 

 

 

 

 

 

 

 

Noninterest expense to average assets

 

1.98%

1.85%

1.91%

 

1.91%

1.95%

Adjustments as noted above

 

(0.09)%

(0.01)%

(0.06)%

 

(0.04)%

(0.08)%

Noninterest expense (excluding adjustments noted above) to average assets

 

1.89%

1.84%

1.85%

 

1.87%

1.87%

 

 

 

 

 

 

 

 

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

 

Six Months Ended

(dollars in thousands, except per share data)

 

June 30,
2019

March 31,
2019

June 30,
2018

 

June 30,
2019

June 30,
2018

Net income

$

100,321

93,960

86,865

 

194,281

170,375

Merger-related charges

 

2,906

 

8,259

Investment (gains) losses on sales of securities, net

 

4,466

1,960

 

6,426

(30)

Sale of non-prime automobile portfolio

 

1,536

 

1,536

ORE expense

 

2,523

246

819

 

2,769

25

Branch rationalization

 

3,189

 

3,189

Tax effect on adjustments noted above (18)

 

(3,062)

(577)

(974)

 

(3,639)

(2,158)

Net income excluding adjustments noted above

$

108,973

95,589

89,616

 

204,562

176,471

 

 

 

 

 

 

 

 

Basic earnings per share

$

1.31

1.22

1.13

 

2.54

2.21

Adjustment due to merger-related charges

 

0.04

 

0.11

Adjustment due to investment (gains) losses on sales of securities, net

 

0.06

0.03

 

0.08

Adjustment due to sale of non-prime automobile portfolio

 

0.02

 

0.02

Adjustment due to ORE expense

 

0.04

0.01

 

0.04

Adjustment due to branch consolidation

 

0.04

 

0.04

Adjustment due to tax effect on adjustments noted above (18)

 

(0.04)

(0.01)

(0.01)

 

(0.05)

(0.03)

Basic earnings per share excluding adjustments noted above

 

1.43

1.24

1.17

 

2.67

2.29

 

 

 

 

 

 

 

 

Diluted earnings per share

$

1.31

1.22

1.12

 

2.53

2.20

Adjustment due to merger-related charges

 

0.04

 

0.11

Adjustment due to investment (gains) losses on sales of securities, net

 

0.06

0.03

 

0.08

Adjustment due to sale of non-prime automobile portfolio

 

0.02

 

0.02

Adjustment due to ORE expense

 

0.03

0.01

 

0.04

Adjustment due to branch consolidation

 

0.04

 

0.04

Adjustment due to tax effect on adjustments noted above (18)

 

(0.04)

(0.01)

(0.01)

 

(0.05)

(0.03)

Diluted earnings per share excluding the adjustments noted above

$

1.42

1.24

1.16

 

2.66

2.28

 

 

 

 

 

 

 

 

Noninterest expense per diluted share

$

1.67

1.48

1.43

 

3.14

2.84

Adjustments as noted above

 

(0.08)

(0.05)

 

(0.07)

(0.11)

Noninterest expense (excluding adjustments noted above) per diluted share

$

1.59

1.48

1.38

 

3.07

2.73

 

 

 

 

 

 

 

 

Revenue per diluted share

$

3.39

3.09

2.97

 

6.48

5.80

Adjustments as noted above

 

0.08

0.03

 

0.10

Revenue per diluted share (excluding adjustments noted above) per diluted share

$

3.47

3.12

2.97

 

6.58

5.80

 

 

 

 

 

 

 

 

Equity method investment (17)

 

 

 

 

 

 

 

Fee income from BHG, net of amortization

$

32,261

13,290

9,690

 

45,551

19,050

Funding cost to support investment

 

2,399

2,379

2,114

 

4,779

4,118

Pre-tax impact of BHG

 

29,862

10,911

7,576

 

40,772

14,932

Income tax expense at statutory rates

 

7,806

2,852

1,980

 

10,658

3,903

Earnings attributable to BHG

$

22,056

8,059

5,596

 

30,114

11,029

 

 

 

 

 

 

 

 

Basic earnings per share attributable to BHG

$

0.29

0.10

0.07

 

0.39

0.14

Diluted earnings per share attributable to BHG

$

0.29

0.10

0.07

 

0.39

0.14

 

 

 

 

 

 

 

 

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

 

Six Months Ended

(dollars in thousands, except per share data)

 

June 30,
2019

March 31,
2019

June 30,
2018

 

June 30,
2019

June 30,
2018

 

 

 

 

 

 

 

 

Return on average assets

 

1.55%

1.52%

1.50%

 

1.54%

1.51%

Adjustments as noted above

 

0.14%

0.03%

0.05%

 

0.08%

0.06%

Return on average assets excluding adjustments noted above

 

1.69%

1.55%

1.55%

 

1.62%

1.57%

 

 

 

 

 

 

 

 

Tangible assets:

 

 

 

 

 

 

 

Total assets

$

26,540,355

25,557,858

23,988,370

 

26,540,355

23,988,370

Less: Goodwill

 

(1,807,121)

(1,807,121)

(1,807,121)

 

(1,807,121)

(1,807,121)

Core deposit and other intangible assets

 

(41,578)

(43,850)

(51,353)

 

(41,578)

(51,353)

Net tangible assets

$

24,691,656

23,706,887

22,129,896

 

24,691,656

22,129,896

 

 

 

 

 

 

 

 

Tangible equity:

 

 

 

 

 

 

 

Total stockholders' equity

$

4,176,361

4,055,939

3,826,677

 

4,176,361

3,826,677

Less: Goodwill

 

(1,807,121)

(1,807,121)

(1,807,121)

 

(1,807,121)

(1,807,121)

Core deposit and other intangible assets

 

(41,578)

(43,850)

(51,353)

 

(41,578)

(51,353)

Net tangible common equity

$

2,327,662

2,204,968

1,968,203

 

2,327,662

1,968,203

 

 

 

 

 

 

 

 

Ratio of tangible common equity to tangible assets

 

9.43%

9.30%

8.89%

 

9.43%

8.89%

 

 

 

 

 

 

 

 

Average tangible assets:

 

 

 

 

 

 

 

Average assets

$

25,915,971

25,049,954

23,236,945

 

25,485,355

22,723,624

Less: Average goodwill

 

(1,807,121)

(1,807,121)

(1,807,850)

 

(1,807,121)

(1,807,952)

Average core deposit and other intangible assets

 

(43,025)

(45,330)

(53,018)

 

(44,171)

(54,342)

Net average tangible assets

$

24,065,825

23,197,503

21,376,077

 

23,634,063

20,861,330

 

 

 

 

 

 

 

 

Return on average assets

 

1.55%

1.52%

1.50%

 

1.54%

1.51%

Adjustment due to goodwill, core deposit and other intangible assets

 

0.12%

0.12%

0.13%

 

0.12%

0.14%

Return on average tangible assets

 

1.67%

1.64%

1.63%

 

1.66%

1.65%

Adjustments as noted above

 

0.15%

0.03%

0.05%

 

0.09%

0.06%

Return on average tangible assets excluding adjustments noted above

 

1.82%

1.67%

1.68%

 

1.75%

1.71%

 

 

 

 

 

 

 

 

Average tangible stockholders' equity:

 

 

 

 

 

 

 

Average stockholders' equity

$

4,117,754

4,017,375

3,795,963

 

4,067,842

3,764,473

Less: Average goodwill

 

(1,807,121)

(1,807,121)

(1,807,850)

 

(1,807,121)

(1,807,952)

Average core deposit and other intangible assets

 

(43,025)

(45,330)

(53,018)

 

(44,171)

(54,342)

Net average tangible common equity

$

2,267,608

2,164,924

1,935,095

 

2,216,550

1,902,179

 

 

 

 

 

 

 

 

Return on average common equity

 

9.77%

9.49%

9.18%

 

9.63%

9.13%

Adjustment due to goodwill, core deposit and other intangible assets

 

7.97%

8.11%

8.83%

 

8.05%

8.93%

Return on average tangible common equity (1)

 

17.74%

17.60%

18.01%

 

17.68%

18.06%

Adjustments as noted above

 

1.54%

0.31%

0.57%

 

0.93%

0.65%

Return on average tangible common equity excluding adjustments noted above

 

19.28%

17.91%

18.58%

 

18.61%

18.71%

 

 

 

 

 

 

 

 

Total average assets

$

25,915,971

25,049,954

23,236,945

 

25,485,355

22,723,624

 

 

 

 

 

 

 

 

Book value per common share at quarter end

$

54.29

52.63

49.15

 

54.29

49.15

Adjustment due to goodwill, core deposit and other intangible assets

 

(24.03)

(24.02)

(23.87)

 

(24.03)

(23.87)

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

$

30.26

28.61

25.28

 

30.26

25.28

 

 

 

 

 

 

 

 

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

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED

 

1. Ratios are presented on an annualized basis.

2. Net interest margin is the result of net interest income on a tax equivalent basis divided by average interest earning assets.

3. Total revenue is equal to the sum of net interest income and noninterest income.

4. Efficiency ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.

5. Troubled debt restructurings include loans where the company, as a result of the borrower's financial difficulties, has granted a credit concession to the borrower (i.e., interest only payments for a significant period of time, extending the maturity of the loan, etc.). All of these loans continue to accrue interest at the contractual rate.

6. Average risk ratings are based on an internal loan review system which assigns a numeric value of 1 to 10 for quarters ended prior to Dec. 31, 2018 and 10 to 100 for all subsequent periods to all loans to commercial entities based on their underlying risk characteristics as of the end of each quarter. The risk rating scale was changed to allow for granularity, if needed, in criticized and classified risk ratings to distinguish accrual status or structural loan issues. A "10" risk rating is assigned to credits that exhibit Excellent risk characteristics, "20" exhibit Very Good risk characteristics, "30" Good, "40" Satisfactory, "50" Acceptable or Average, "60" Watch List, "70" Criticized, "80" Classified or Substandard, "90" Doubtful and "100" Loss (which are charged-off immediately). Additionally, loans rated "80" or worse that are not nonperforming or restructured loans are considered potential problem loans. Generally, consumer loans are not subjected to internal risk ratings.

7. Annualized net loan charge-offs to average loans ratios are computed by annualizing 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 tangible 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 I capital (pursuant to risk-based capital guidelines) as a percentage of adjusted average assets.

Tier I risk-based – Tier I 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 I 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. Tangible book value per share computed by dividing total stockholder's equity, less goodwill, core deposit and other intangibles 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. Periods prior to the second quarter of 2018 have been restated to reflect regulatory changes that were adopted in the second quarter of 2018 that permit reciprocal deposits to be treated as core deposits if they otherwise qualify as such. 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. Adjusted pre-tax, pre-provision income excludes the impact of other real estate expenses and income, investment gains and losses on sales of securities, merger-related charges, loss on the sale of our non-prime automobile portfolio and branch rationalization, as described above.

15. Represents investment gains (losses) on sales and impairments, net occurring as a result of gains or 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.

16. 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.

17. 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.

18. Tax effect calculated using the blended statutory rate of 26.14 percent.

19. Calculated using the same guidelines as are used in the Federal Financial Institutions Examination Council's Uniform Bank Performance Report.

 

MEDIA CONTACT:
Joe Bass, 615-743-8219

FINANCIAL CONTACT:
Harold Carpenter, 615-744-3742

WEBSITE: www.pnfp.com

Source: Pinnacle Financial Partners, Inc.