Press Release

PNFP Reports Diluted EPS of $1.44, ROAA of 1.62% and ROTCE of 18.28% For 3Q 2019

Company Release - 10/15/2019 5:30 PM ET

Excluding non-GAAP adjustments, 3Q19 diluted EPS was $1.45, ROAA was 1.62% and ROTCE was 18.31%

NASHVILLE, Tenn.--(BUSINESS WIRE)-- Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $1.44 for the quarter ended Sept. 30, 2019, compared to net income per diluted common share of $1.21 for the quarter ended Sept. 30, 2018, an increase of 19.0 percent. Net income per diluted common share was $3.97 for the nine months ended Sept. 30, 2019, compared to net income per diluted common share of $3.41 for the nine months ended Sept. 30, 2018, an increase of 16.4 percent.

Impacting year-to-date results for 2019 were adjustments during the second quarter related to $4.5 million in net losses on the sale of investment securities, a $1.5 million loss from the sale of the non-prime automobile portfolio, $2.4 million of ORE expense related to facilities and land acquired in the BNC acquisition and $3.2 million of non-cash impairment charges related to the proposed consolidation of five offices across the firm's footprint. Excluding these adjustments, as well as merger-related charges in 2018, ORE expense in each period and gains and losses on the sale of investment securities in each period, net income per diluted common share was $4.11 for the nine months ended Sept. 30, 2019, compared to net income per diluted common share of $3.49 for the nine months ended Sept. 30, 2018, a growth rate of 17.8 percent.

"Highlights for the third quarter include double-digit loan and deposit growth, strong hiring throughout our footprint and substantial fee growth, including continued outperformance from BHG," said M. Terry Turner, Pinnacle president and chief executive officer. "We are particularly pleased with our dramatic year-over-year fee growth as we have headed into what appears to be a volatile interest rate environment.

"We continue to produce top-quartile profitability and, more importantly, we continue our focus on earnings per share growth and tangible book value per share accretion, having produced 5-year compounded annual growth rates of 22.6 percent and 16.1 percent, respectively, through the third quarter of 2019. Book value per share has also experienced a 20.6 percent compounded annual growth rate over the same period."

GROWING THE CORE EARNINGS CAPACITY OF THE FIRM:

  • Loans at Sept. 30, 2019 were a record $19.3 billion, an increase of $1.9 billion from Sept. 30, 2018, reflecting year-over-year growth of 10.8 percent. Loans at Sept. 30, 2019 increased $531.3 million from June 30, 2019, reflecting a linked-quarter annualized growth rate of 11.3 percent.
    • Average loans were $19.2 billion for the three months ended Sept. 30, 2019, up $605.7 million from $18.6 billion for the three months ended June 30, 2019, a linked-quarter annualized growth rate of 13.0 percent.
    • At Sept. 30, 2019, the remaining discount associated with fair value accounting adjustments on acquired loans was $65.2 million, compared to $75.4 million at June 30, 2019.
  • Deposits at Sept. 30, 2019 were $20.0 billion, an increase of $1.6 billion from Sept. 30, 2018, reflecting year-over-year growth of 8.7 percent. Deposits at Sept. 30, 2019 increased $551.3 million from June 30, 2019, reflecting a linked-quarter annualized growth rate of 11.3 percent.
    • Average deposits were $19.8 billion for the three months ended Sept. 30, 2019, compared to $18.9 billion for the three months ended June 30, 2019, a linked-quarter annualized growth rate of 19.4 percent.
    • Core deposits were $17.1 billion at Sept. 30, 2019, compared to $16.1 billion at Sept. 30, 2018 and $16.5 billion at June 30, 2019 a year-over-year growth rate of 6.4 percent and a linked-quarter annualized growth rate of 14.5 percent.
  • Revenues for the quarter ended Sept. 30, 2019 were $278.4 million, an increase of $18.8 million from the $259.6 million recognized in the second quarter of 2019, and up $37.5 million from the third quarter of 2018. This represents a year-over-year growth rate of 15.6 percent.
    • Revenue per fully diluted share was $3.64 for the three months ended Sept. 30, 2019, compared to $3.39 for the second quarter of 2019 and $3.11 for the third quarter of 2018.

"We have hired 67 high-profile revenue producers during the first nine months of 2019," Turner said. "It is great to be able to make such a substantial investment in hiring in order to grow the future earnings capacity of our firm while at the same time producing substantial growth in current earnings with enviable profitability metrics versus peers. Our ability to hire the best bankers in our markets contributed to the outstanding loan, deposit and fee growth we experienced in the third quarter.

"Additionally, we continue to invest in compatible businesses that have potential to enhance our growth and profitability. During the quarter, we acquired Advocate Capital, Inc. with approximately $155.4 million in loan balances. We intend to enhance Advocate's existing business model by offering a full suite of commercial banking products to their client base, while focusing on deposit gathering initially. We are excited about this acquisition and look forward to joining forces to grow our combined franchise."

FOCUSING ON PROFITABILITY:

  • Return on average assets was 1.62 percent for the third quarter of 2019, compared to 1.55 percent for the second quarter of 2019 and 1.54 percent for the third quarter last year. Third quarter 2019 return on average tangible assets amounted to 1.74 percent, compared to 1.67 percent for the second quarter of 2019 and 1.67 percent for the third quarter of 2018.
    • Excluding the adjustments described above for both 2019 and 2018, return on average assets was 1.62 percent for the third quarter of 2019, compared to 1.69 percent for the second quarter of 2019 and 1.54 percent for the third quarter of 2018. Likewise, excluding those same adjustments, the firm’s return on average tangible assets was 1.74 percent for the third quarter of 2019, compared to 1.82 percent for the second quarter of 2019 and 1.67 percent for the third quarter of 2018.
  • Return on average common equity for the third quarter of 2019 amounted to 10.28 percent, compared to 9.77 percent for the second quarter of 2019 and 9.60 percent for the third quarter of 2018. Third quarter 2019 return on average tangible common equity amounted to 18.28 percent, compared to 17.74 percent for the second quarter of 2019 and 18.44 percent for the third quarter of 2018.
    • Excluding the adjustments described above for both 2019 and 2018, return on average tangible common equity amounted to 18.31 percent for the third quarter of 2019, compared to 19.28 percent for the second quarter of 2019 and 18.44 percent for the third quarter of 2018.

"Earlier in the year, we began discussing with our relationship managers various strategies to reduce our deposit rates should short-term interest rates decline and, thus far, we feel like we've been very successful in executing our strategies," said Harold R. Carpenter, Pinnacle's chief financial officer. "I am pleased to report that our end-of-period deposit rates decreased by 0.11 percent between June 30, 2019 and September 30, 2019 inclusive of our interest-bearing checking and money market categories, which decreased by 0.17 percent during the same time period. Given prospects for further rate decreases, we expect to have ongoing conversations with our depositors regarding the value of money. We believe, even though we are all in a difficult operating environment, that we are advantaged as we look to reduce our deposit rates further by the depth of our client relationships.

"BHG reported another remarkable quarter. Their business model has been continually refined and is operating at high levels of efficiency and producing extraordinary results. As BHG's management team mentioned in their recent analyst day in New York, we believe BHG will begin to reposition its balance sheet in the fourth quarter to rely less on gains on sale by opting to keep more loans on its balance sheet. We believe this will be an effective strategy for BHG over the longer term as its balance sheet should provide it with more consistent and predictable interest income than might otherwise be the case from a more volatile gain on sale revenue model."

MAINTAINING A FORTRESS BALANCE SHEET:

  • Net charge-offs were $4.9 million for the quarter ended Sept. 30, 2019, compared to $4.1 million for the quarter ended June 30, 2019 and $4.4 million for the quarter ended Sept. 30, 2018. Annualized net charge-offs as a percentage of average loans for the quarter ended Sept. 30, 2019 were 0.10 percent, compared to 0.09 percent for the quarter ended June 30, 2019 and 0.10 percent for the third quarter of 2018.
  • Nonperforming assets decreased to 0.53 percent of total loans and ORE at Sept. 30, 2019, compared to 0.55 percent at each of June 30, 2019 and Sept. 30, 2018. Nonperforming assets were $103.3 million at Sept. 30, 2019, compared to $102.7 million at June 30, 2019 and $95.6 million at Sept. 30, 2018.
  • The classified asset ratio at Sept. 30, 2019 was 13.5 percent, compared to 13.9 percent at June 30, 2019 and 13.7 percent at Sept. 30, 2018. Classified assets were $363.2 million at Sept. 30, 2019, compared to $337.8 million at June 30, 2019 and $304.1 million at Sept. 30, 2018.
  • The allowance for loan losses represented 0.48 percent of total loans at Sept. 30, 2019, compared to 0.48 percent at June 30, 2019 and 0.46 percent at Sept. 30, 2018.
    • The ratio of the allowance for loan losses to nonperforming loans increased to 127.8 percent at Sept. 30, 2019, from 118.6 percent at June 30, 2019 and 102.7 percent at Sept. 30, 2018. At Sept. 30, 2019, purchased credit impaired loans of $6.6 million, which were recorded at fair value upon acquisition, represented 8.9 percent of the firm's nonperforming loans.
    • Provision for loan losses was $8.3 million in the third quarter of 2019, compared to $7.2 million in the second quarter of 2019 and $8.7 million in the third quarter of 2018.

"Asset quality continues to be a highlight for our firm," Carpenter said. "Net charge-offs, nonperforming assets and classified assets remain low. We also saw improvement in the nonperforming asset and classified asset ratios this quarter when compared to last quarter."

GROWING REVENUES

  • Net interest income for the quarter ended Sept. 30, 2019 was $195.8 million, compared to $188.9 million for the second quarter of 2019 and $189.4 million for the third quarter of 2018, a year-over-year growth rate of 3.4 percent. Net interest margin was 3.43 percent for the third quarter of 2019, compared to 3.48 percent for the second quarter of 2019 and 3.65 percent for the third quarter of 2018.
    • Included in net interest income for the third quarter of 2019 was $11.1 million of discount accretion associated with fair value adjustments, compared to $8.9 million of similar discount accretion recognized in the second quarter of 2019 and $17.1 million in the third quarter of 2018.
  • Noninterest income for the quarter ended Sept. 30, 2019 was $82.6 million, compared to $70.7 million for the second quarter of 2019 and $51.5 million for the third quarter of 2018, a year-over-year growth rate of 60.5 percent.
    • Wealth management revenues, which include investment, trust and insurance services, were $12.1 million for the quarter ended Sept. 30, 2019, compared to $11.5 million for the second quarter of 2019 and $10.7 million for the third quarter of 2018, a year-over-year increase of 13.6 percent.
    • Income from the firm's investment in BHG was $32.2 million for the quarter ended Sept. 30, 2019, compared to $32.3 million for the quarter ended June 30, 2019 and $14.2 million for the quarter ended Sept. 30, 2018.
    • Other noninterest income was $20.2 million for the quarter ended Sept. 30, 2019, compared to $16.5 million for the quarter ended June 30, 2019 and $12.7 million for the quarter ended Sept. 30, 2018, a year-over-year increase of 59.5 percent. Contributing to the increase were increased credit card interchange fees, SBA loan fees and the firm's client interest rate swap programs.

"Our net interest margin decreased by 0.05 percent in the third quarter from the second quarter, primarily due to reduced yields on our securities portfolio as well as increased balance sheet liquidity," Carpenter said. "Our loan yields remained consistent during the third quarter aided by additional purchase accounting accretion income and higher yielding loans resulting from the addition of the Advocate Capital portfolio. Our funding costs for the third quarter amounted to 1.40 percent on an annualized basis, which was down 0.03 percent from the second quarter's annualized amount. Specifically, we are most encouraged with the trends in our deposit rates as we experienced a peak in those rates in July followed by two months of deposit rate decreases primarily due to the hard work of our relationship managers."

OTHER HIGHLIGHTS

  • The efficiency ratio for the third quarter of 2019 decreased on a linked-quarter basis to 47.75 percent, compared to 49.19 percent for the second quarter of 2019 and 47.32 percent in the third quarter of 2018. The ratio of noninterest expenses to average assets was 1.94 percent for the third quarter of 2019 compared to 1.98 percent in the second quarter of 2019 and 1.87 percent in the third quarter of 2018.
    • Excluding the adjustments noted elsewhere in this release for both 2019 and 2018, the efficiency ratio was 47.58 percent for the third quarter of 2019, compared to 45.92 percent for the second quarter of 2019 and 47.29 percent for the third quarter of 2018. Excluding the above described impairment charge, ORE expense and merger-related charges, the ratio of noninterest expense to average assets was 1.93 percent for the third quarter of 2019, compared to 1.89 percent for the second quarter of 2019 and 1.87 percent for the second quarter of 2018.
  • Noninterest expense for the quarter ended Sept. 30, 2019 was $132.9 million, compared to $127.7 million in the second quarter of 2019 and $114.0 million in the third quarter of 2018, reflecting a year-over-year increase of 16.6 percent. Excluding ORE expenses and merger-related charges for the relevant periods as described above, noninterest expense increased 16.1 percent over the third quarter of 2018.
    • Salaries and employee benefits were $85.9 million in the third quarter of 2019, compared to $75.6 million in the second quarter of 2019 and $69.1 million in the third quarter of 2018, reflecting a year-over-year increase of 24.3 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 $18.5 million in the third quarter of 2019, compared to $11.0 million in the second quarter of 2019 and $10.0 million in the third quarter of last year.
  • The effective tax rate for the third quarter of 2019 was 19.5 percent, compared to 19.6 percent for the second quarter of 2019 and 20.7 percent for the third quarter of 2018.
  • During the third quarter of 2019, the firm acquired 199,032 shares of its common stock in open market transactions pursuant to its previously announced share repurchase program, at an average price of $55.57.
  • On Sept. 11, 2019, Pinnacle completed its public offering of $300.0 million aggregate principal amount of 4.125 percent fixed-to-floating rate subordinated notes due 2029.

"We are pleased with our operating metrics for the third quarter," Carpenter said. "In the second quarter, we incurred certain costs related to our branch consolidation efforts, including the write down of certain other assets to better position these assets for disposition. We anticipate the office closures to be finalized in the fourth quarter, while several of the other assets are under contract. Additionally, our performance in the third quarter allowed us to increase our 2019 expected incentive payout resulting in an increase of $7.5 million in third quarter incentive costs over the amount recorded in the second quarter. We anticipate that incentive costs for the fourth quarter of 2019 will be less than those recorded in the third quarter and more consistent with the amounts reported in the second quarter of 2019.”

BOARD OF DIRECTORS DECLARES DIVIDEND AND NEW SHARE REPURCHASE AUTHORIZATION

On Oct. 15, 2019, Pinnacle's Board of Directors approved a quarterly cash dividend of $0.16 per common share to be paid on Nov. 29, 2019 to common shareholders of record as of the close of business on Nov. 1, 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. The Board of Directors also approved a new share repurchase authorization for an additional $100 million to be available for the repurchase of the firm's common stock in open market transactions upon the completion of Pinnacle's currently authorized and previously disclosed repurchase program and through Dec. 31, 2020.

WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. (CDT) on October 16, 2019 to discuss third 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. The firm is the No. 1 bank in the Nashville-Murfreesboro-Franklin MSA, according to 2019 deposit data from the FDIC. Pinnacle earned a spot on FORTUNE’s 2019 lists of the 100 Best Companies to Work For® in the U.S., its third consecutive appearance. American Banker recognized Pinnacle as one of America’s Best Banks to Work For seven 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 $27.5 billion in assets as of Sept. 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 of Pinnacle Bank or BHG resulting in significant increases in loan losses and provisions for those losses or, in the case of BHG, substitutions; (ii) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits, including during times when Pinnacle Bank is seeking to lower rates it pays on 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) 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, including as a result of Pinnacle Bank's inability to lower deposit rates with the speed and at the levels desired in connection with the declining short-term rate environment currently contemplated, or that affect the yield curve; (ix) the results of regulatory examinations; (x) Pinnacle Financial's ability to identify potential candidates for, consummate, and achieve synergies from, potential future acquisitions; (xi) difficulties and delays in integrating acquired businesses or fully realizing costs savings and other benefits from acquisitions; (xii) BHG's ability to profitably grow its business and successfully execute on its business plans; (xiii) risks of expansion into new geographic or product markets; (xiv) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including goodwill or the intangible assets; (xv) 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; (xvi) the ability of Pinnacle Financial to implement its branch consolidation strategy on the timelines, and at the costs, presently contemplated; (xvii) deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xviii) 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; (xix) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xx) the vulnerability of Pinnacle Bank's network and online banking portals, 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; (xxi) 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; (xxii) the risks associated with Pinnacle Financial and Pinnacle Bank being a minority investor in BHG, including the risk that the owners of a majority of the equity interests in BHG decide to sell the company if not prohibited from doing so by Pinnacle Financial or Pinnacle Bank; (xxiii) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, like BHG, including regulatory or legislative developments; (xxiv) 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; (xxv) the availability of and access to capital; (xxvi) 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 (xxvii) 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 projection.

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS – UNAUDITED

(dollars in thousands)

 

 

 

 

September 30,

2019

December 31,

2018

September 30,

2018

ASSETS

 

 

 

Cash and noninterest-bearing due from banks

$

197,660

$

137,433

$

131,134

Restricted cash

157,544

65,491

14,504

Interest-bearing due from banks

553,124

516,920

394,129

Federal funds sold and other

11,975

1,848

11,313

Cash and cash equivalents

920,303

721,692

551,080

 

 

 

 

Securities available-for-sale, at fair value

3,393,435

3,083,686

3,004,582

Securities held-to-maturity (fair value of $202.8 million, $193.1 million, and $192.5 million at Sept. 30, 2019, Dec. 31, 2018, and Sept. 30, 2018, respectively)

189,684

194,282

194,997

Consumer loans held-for-sale

73,042

34,196

47,417

Commercial loans held-for-sale

21,312

15,954

11,402

 

 

 

 

Loans

19,345,642

17,707,549

17,464,009

Less allowance for loan losses

(93,647)

(83,575)

(79,985)

Loans, net

19,251,995

17,623,974

17,384,024

 

 

 

 

Premises and equipment, net

274,983

265,560

268,387

Equity method investment

267,097

239,237

221,302

Accrued interest receivable

81,124

79,657

73,366

Goodwill

1,830,652

1,807,121

1,807,121

Core deposits and other intangible assets

39,349

46,161

48,737

Other real estate owned

30,049

15,165

17,467

Other assets

1,174,809

904,359

927,663

Total assets

$

27,547,834

$

25,031,044

$

24,557,545

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Deposits:

 

 

 

Noninterest-bearing

$

4,702,155

$

4,309,067

$

4,476,925

Interest-bearing

3,372,028

3,464,001

3,195,657

Savings and money market accounts

7,625,872

7,607,796

7,262,968

Time

4,300,622

3,468,243

3,471,965

Total deposits

20,000,677

18,849,107

18,407,515

Securities sold under agreements to repurchase

95,402

104,741

130,217

Federal Home Loan Bank advances

2,052,548

1,443,589

1,520,603

Subordinated debt and other borrowings

750,488

485,130

465,487

Accrued interest payable

36,836

23,586

20,944

Other liabilities

317,253

158,951

115,738

Total liabilities

23,253,204

21,065,104

20,660,504

 

 

 

 

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

76,736

77,484

77,867

Additional paid-in capital

3,070,235

3,107,431

3,123,323

Retained earnings

1,100,517

833,130

750,363

Accumulated other comprehensive income (loss), net of taxes

47,142

(52,105)

(54,512)

Total stockholders' equity

4,294,630

3,965,940

3,897,041

Total liabilities and stockholders' equity

$

27,547,834

$

25,031,044

$

24,557,545

 

 

 

 

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,

2019

June 30,

2019

September 30,

2018

September 30,

2019

September 30,

2018

Interest income:

 

 

 

 

 

Loans, including fees

$

247,147

$

237,653

$

221,901

$

714,179

$

621,873

Securities

 

 

 

 

 

Taxable

10,655

12,243

12,209

36,438

35,179

Tax-exempt

13,313

12,556

10,074

37,541

25,709

Federal funds sold and other

4,634

3,399

3,926

11,325

7,861

Total interest income

275,749

265,851

248,110

799,483

690,622

 

 

 

 

 

 

Interest expense:

 

 

 

 

 

Deposits

62,531

58,988

44,172

175,736

100,920

Securities sold under agreements to repurchase

152

142

165

439

438

FHLB advances and other borrowings

17,260

17,803

14,353

51,338

43,137

Total interest expense

79,943

76,933

58,690

227,513

144,495

Net interest income

195,806

188,918

189,420

571,970

546,127

Provision for loan losses

8,260

7,195

8,725

22,639

25,058

Net interest income after provision for loan losses

187,546

181,723

180,695

549,331

521,069

 

 

 

 

 

 

Noninterest income:

 

 

 

 

 

Service charges on deposit accounts

10,193

8,940

9,972

27,675

26,333

Investment services

6,270

5,868

5,450

17,607

15,817

Insurance sales commissions

2,252

2,147

2,126

7,327

7,293

Gains on mortgage loans sold, net

7,402

6,011

3,902

18,291

11,423

Investment gains (losses) on sales, net

417

(4,466)

11

(6,009)

41

Trust fees

3,593

3,461

3,087

10,349

9,768

Income from equity method investment

32,248

32,261

14,236

77,799

33,286

Other noninterest income

20,244

16,460

12,694

51,325

39,639

Total noninterest income

82,619

70,682

51,478

204,364

143,600

 

 

 

 

 

 

Noninterest expense:

 

 

 

 

 

Salaries and employee benefits

85,919

75,620

69,117

231,915

196,948

Equipment and occupancy

20,348

23,844

19,252

63,523

55,203

Other real estate, net

655

2,523

67

3,424

92

Marketing and other business development

2,723

3,282

3,293

8,953

8,084

Postage and supplies

1,766

2,079

1,654

5,737

5,984

Amortization of intangibles

2,430

2,271

2,616

7,012

7,973

Merger-related expenses

8,259

Other noninterest expense

19,100

18,067

17,991

54,114

50,935

Total noninterest expense

132,941

127,686

113,990

374,678

333,478

Income before income taxes

137,224

124,719

118,183

379,017

331,191

Income tax expense

26,703

24,398

24,436

74,215

67,069

Net income

$

110,521

$

100,321

$

93,747

$

304,802

$

264,122

 

 

 

 

 

 

Per share information:

 

 

 

 

 

Basic net income per common share

$

1.45

$

1.31

$

1.22

$

3.99

$

3.42

Diluted net income per common share

$

1.44

$

1.31

$

1.21

$

3.97

$

3.41

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

Basic

76,301,010

76,343,608

77,145,023

76,480,757

77,116,377

Diluted

76,556,309

76,611,657

77,490,977

76,761,167

77,442,554

 

 

 

 

 

 

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

2019

2019

2019

2018

2018

2018

Balance sheet data, at quarter end:

 

 

 

 

 

 

Commercial and industrial loans

$

5,891,038

5,795,107

5,419,520

5,271,420

5,006,247

4,821,299

Commercial real estate - owner occupied

2,595,837

2,624,160

2,617,541

2,653,433

2,688,247

2,504,891

Commercial real estate - investment

4,443,687

4,252,098

4,107,953

3,855,643

3,818,055

3,822,182

Commercial real estate - multifamily and other

669,721

709,135

693,652

655,879

708,817

697,566

Consumer real estate - mortgage loans

3,025,502

2,949,755

2,887,628

2,844,447

2,815,160

2,699,399

Construction and land development loans

2,253,303

2,117,969

2,097,570

2,072,455

2,059,009

2,133,646

Consumer and other

466,554

366,094

351,042

354,272

368,474

363,870

Total loans

19,345,642

18,814,318

18,174,906

17,707,549

17,464,009

17,042,853

Allowance for loan losses

(93,647)

(90,253)

(87,194)

(83,575)

(79,985)

(75,670)

Securities

3,583,119

3,447,834

3,444,049

3,277,968

3,199,579

2,975,469

Total assets

27,547,834

26,540,355

25,557,858

25,031,044

24,557,545

23,988,370

Noninterest-bearing deposits

4,702,155

4,493,419

4,317,787

4,309,067

4,476,925

4,361,414

Total deposits

20,000,677

19,449,383

18,480,461

18,849,107

18,407,515

17,857,418

Securities sold under agreements to repurchase

95,402

154,169

100,698

104,741

130,217

128,739

FHLB advances

2,052,548

1,960,062

2,121,075

1,443,589

1,520,603

1,581,867

Subordinated debt and other borrowings

750,488

464,144

484,703

485,130

465,487

465,433

Total stockholders' equity

4,294,630

4,176,361

4,055,939

3,965,940

3,897,041

3,826,677

Balance sheet data, quarterly averages:

 

 

 

 

 

 

Total loans

$

19,216,835

18,611,164

17,938,480

17,630,281

17,259,139

16,729,734

Securities

3,507,363

3,412,475

3,302,676

3,148,638

3,075,633

2,970,267

Federal funds sold and other

802,326

530,556

469,909

645,644

647,728

442,401

Total earning assets

23,526,524

22,554,195

21,711,065

21,424,563

20,982,500

20,142,402

Total assets

27,134,163

25,915,971

25,049,954

24,616,733

24,125,051

23,236,945

Noninterest-bearing deposits

4,574,821

4,399,766

4,195,443

4,317,782

4,330,917

4,270,459

Total deposits

19,778,007

18,864,859

18,358,094

18,368,012

18,112,766

16,949,374

Securities sold under agreements to repurchase

134,197

117,261

109,306

119,247

146,864

123,447

FHLB advances

2,136,928

2,164,341

1,926,358

1,689,920

1,497,511

1,884,828

Subordinated debt and other borrowings

533,194

469,498

470,775

469,074

468,990

474,328

Total stockholders' equity

4,265,006

4,117,754

4,017,375

3,939,927

3,874,430

3,795,963

Statement of operations data, for the three months ended:

Interest income

$

275,749

265,851

257,883

256,095

248,110

230,984

Interest expense

79,943

76,933

70,637

65,880

58,690

48,748

Net interest income

195,806

188,918

187,246

190,215

189,420

182,236

Provision for loan losses

8,260

7,195

7,184

9,319

8,725

9,402

Net interest income after provision for loan losses

187,546

181,723

180,062

180,896

180,695

172,834

Noninterest income

82,619

70,682

51,063

57,270

51,478

47,939

Noninterest expense

132,941

127,686

114,051

119,409

113,990

110,908

Income before taxes

137,224

124,719

117,074

118,757

118,183

109,865

Income tax expense

26,703

24,398

23,114

23,439

24,436

23,000

Net income

$

110,521

100,321

93,960

95,318

93,747

86,865

 

 

 

 

 

 

 

Profitability and other ratios:

 

 

 

 

 

 

Return on avg. assets (1)

1.62

%

1.55

%

1.52

%

1.54

%

1.54

%

1.50

%

Return on avg. common equity (1)

10.28

%

9.77

%

9.49

%

9.60

%

9.60

%

9.18

%

Return on avg. tangible common equity (1)

18.28

%

17.74

%

17.60

%

18.14

%

18.44

%

18.01

%

Dividend payout ratio (16)

12.31

%

12.88

%

13.39

%

13.79

%

14.89

%

16.57

%

Net interest margin (2)

3.43

%

3.48

%

3.62

%

3.63

%

3.65

%

3.69

%

Noninterest income to total revenue (3)

29.67

%

27.23

%

21.43

%

23.14

%

21.37

%

20.83

%

Noninterest income to avg. assets (1)

1.21

%

1.09

%

0.83

%

0.92

%

0.85

%

0.83

%

Noninterest exp. to avg. assets (1)

1.94

%

1.98

%

1.85

%

1.92

%

1.87

%

1.91

%

Efficiency ratio (4)

47.75

%

49.19

%

47.86

%

48.25

%

47.32

%

48.18

%

Avg. loans to avg. deposits

97.16

%

98.66

%

97.71

%

95.98

%

95.29

%

98.70

%

Securities to total assets

13.01

%

12.99

%

13.48

%

13.10

%

13.03

%

12.40

%

 

 

 

 

 

 

 

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, 2019

 

September 30, 2018

 

Average

Balances

Interest

Rates/

Yields

 

Average

Balances

Interest

Rates/

Yields

Interest-earning assets

 

 

 

 

 

 

 

Loans (1) (2)

$

19,216,835

$

247,147

5.21

%

 

$

17,259,139

$

221,901

5.15

%

Securities

 

 

 

 

 

 

 

Taxable

1,712,265

10,655

2.47

%

 

1,803,104

12,209

2.69

%

Tax-exempt (2)

1,795,098

13,313

3.51

%

 

1,272,529

10,074

3.72

%

Federal funds sold and other

802,326

4,634

2.29

%

 

647,728

3,926

2.40

%

Total interest-earning assets

23,526,524

$

275,749

4.78

%

 

20,982,500

$

248,110

4.76

%

Nonearning assets

 

 

 

 

 

 

 

Intangible assets

1,866,223

 

 

 

1,857,413

 

 

Other nonearning assets

1,741,416

 

 

 

1,285,138

 

 

Total assets

$

27,134,163

 

 

 

$

24,125,051

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

Interest checking

3,237,155

9,517

1.17

%

 

3,076,025

7,843

1.01

%

Savings and money market

7,614,558

27,303

1.42

%

 

7,284,373

21,125

1.15

%

Time

4,351,473

25,711

2.34

%

 

3,421,451

15,204

1.76

%

Total interest-bearing deposits

15,203,186

62,531

1.63

%

 

13,781,849

44,172

1.27

%

Securities sold under agreements to repurchase

134,197

152

0.45

%

 

146,864

165

0.44

%

Federal Home Loan Bank advances

2,136,928

11,591

2.15

%

 

1,497,511

8,171

2.16

%

Subordinated debt and other borrowings

533,194

5,669

4.22

%

 

468,990

6,182

5.29

%

Total interest-bearing liabilities

18,007,505

79,943

1.76

%

 

15,895,214

58,690

1.46

%

Noninterest-bearing deposits

4,574,821

 

4,330,917

Total deposits and interest-bearing liabilities

22,582,326

$

79,943

1.40

%

 

20,226,131

$

58,690

1.15

%

Other liabilities

286,831

 

 

 

20,490

 

 

Stockholders' equity

4,265,006

 

 

 

3,874,430

 

 

Total liabilities and stockholders' equity

$

27,134,163

 

 

 

$

24,121,051

 

 

Net interest income

 

$

195,806

 

 

 

$

189,420

 

Net interest spread (3)

 

 

3.02

%

 

 

 

3.30

%

Net interest margin (4)

 

 

3.43

%

 

 

 

3.65

%

 

 

 

 

 

 

 

 

(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 $7.5 million of taxable equivalent income for the three months ended Sept. 30, 2019 compared to $3.8 million for the three months ended Sept. 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 Sept. 30, 2019 would have been 3.37% compared to a net interest spread of 3.61% for the quarter ended Sept. 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)

Nine months ended

 

Nine months ended

September 30, 2019

 

September 30, 2018

 

Average

Balances

Interest

Rates/

Yields

 

Average

Balances

Interest

Rates/

Yields

Interest-earning assets

 

 

 

 

 

 

 

Loans (1) (2)

$

18,593,509

$

714,179

5.23%

 

$

16,653,548

$

621,873

5.04%

Securities

 

 

 

 

 

 

 

Taxable

1,779,512

36,438

2.74%

 

1,796,816

35,179

2.62%

Tax-exempt (2)

1,628,742

37,541

3.67%

 

1,162,587

25,709

3.51%

Federal funds sold and other

602,148

11,325

2.51%

 

476,219

7,861

2.21%

Total interest-earning assets

22,603,911

$

799,483

4.85%

 

20,089,170

$

690,622

4.66%

Nonearning assets

 

 

 

 

 

 

 

Intangible assets

1,856,324

 

 

 

1,860,649

 

 

Other nonearning assets

1,580,762

 

 

 

1,246,081

 

 

Total assets

$

26,040,997

 

 

 

$

23,195,900

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

Interest checking

3,173,228

28,145

1.19%

 

3,008,696

19,336

0.86%

Savings and money market

7,503,407

80,587

1.44%

 

6,850,249

49,294

0.96%

Time

3,937,486

67,004

2.28%

 

2,960,055

32,290

1.46%

Total interest-bearing deposits

14,614,121

175,736

1.61%

 

12,819,000

100,920

1.05%

Securities sold under agreements to repurchase

120,346

439

0.49%

 

133,489

438

0.44%

Federal Home Loan Bank advances

2,076,647

33,107

2.13%

 

1,655,222

24,867

2.01%

Subordinated debt and other borrowings

491,384

18,231

4.96%

 

470,564

18,270

5.19%

Total interest-bearing liabilities

17,302,498

227,513

1.76%

 

15,078,275

144,495

1.28%

Noninterest-bearing deposits

4,391,400

 

4,301,952

Total deposits and interest-bearing liabilities

21,693,898

$

227,513

1.40%

 

19,380,227

$

144,495

1.00%

Other liabilities

212,813

 

 

 

14,145

 

 

Stockholders' equity

4,134,286

 

 

 

3,801,528

 

 

Total liabilities and stockholders' equity

$

26,040,997

 

 

 

$

23,195,900

 

 

Net interest income

 

$

571,970

 

 

 

$

546,127

 

Net interest spread (3)

 

 

3.09%

 

 

 

3.38%

Net interest margin (4)

 

 

3.51%

 

 

 

3.70%

 

 

 

 

 

 

 

 

(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 $20.9 million of taxable equivalent income for the nine months ended Sept. 30, 2019 compared to $10.4 million for the nine months ended Sept. 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 nine months ended Sept. 30, 2019 would have been 3.45% compared to a net interest spread of 3.67% for the nine months ended Sept. 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)

 

September

 

June

 

March

 

December

 

September

 

June

 

 

2019

 

 

2019

 

 

2019

 

 

2018

 

 

2018

 

 

2018

 

Asset quality information and ratios:

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming assets:

 

 

 

 

 

 

 

 

 

 

 

 

Nonaccrual loans

 

 

73,263

 

 

76,077

 

 

96,144

 

 

87,834

 

 

77,868

 

 

70,887

 

Other real estate (ORE) and

other nonperforming assets (NPAs)

 

 

30,049

 

 

26,658

 

 

15,138

 

 

15,393

 

 

17,731

 

 

20,229

 

Total nonperforming assets

 

$

103,312

 

 

102,735

 

 

111,282

 

 

103,227

 

 

95,599

 

 

91,116

 

Past due loans over 90 days and still accruing interest

 

$

2,450

 

 

2,733

 

 

1,982

 

 

1,558

 

 

1,773

 

 

1,572

 

Accruing troubled debt restructurings (5)

 

$

5,803

 

 

7,412

 

 

5,481

 

 

5,899

 

 

6,125

 

 

5,647

 

Accruing purchase credit impaired loans

 

$

12,887

 

 

12,632

 

 

13,122

 

 

14,743

 

 

21,473

 

 

22,993

 

Net loan charge-offs

 

$

4,866

 

 

4,136

 

 

3,565

 

 

5,729

 

 

4,410

 

 

3,936

 

Allowance for loan losses to nonaccrual loans

 

 

127.8

%

 

118.6

%

 

90.7

%

 

95.2

%

 

102.7

%

 

106.7

%

As a percentage of total loans:

 

 

 

 

 

 

 

 

 

 

 

 

Past due accruing loans over 30 days

 

 

0.24

%

 

0.21

%

 

0.22

%

 

0.34

%

 

0.25

%

 

0.23

%

Allowance for loan losses

 

 

0.48

%

 

0.48

%

 

0.48

%

 

0.47

%

 

0.46

%

 

0.44

%

Nonperforming assets to total loans, ORE and other NPAs

 

 

0.53

%

 

0.55

%

 

0.61

%

 

0.58

%

 

0.55

%

 

0.53

%

Classified asset ratio (Pinnacle Bank) (8)

 

 

13.5

%

 

13.9

%

 

13.0

%

 

12.4

%

 

13.7

%

 

12.6

%

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

 

 

0.10

%

 

0.09

%

 

0.08

%

 

0.11

%

 

0.10

%

 

0.10

%

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

 

 

45.3

 

 

44.9

 

 

44.9

 

 

44.4

 

 

4.5

 

 

4.4

 

 

 

 

 

44.4

 

 

4.5

 

 

4.4

 

 

4.4

 

 

4.5

 

Interest rates and yields:

 

 

 

 

 

 

 

 

 

 

 

 

Loans

 

 

5.21

%

 

5.22

%

 

5.28

%

 

5.22

%

 

5.15

%

 

5.04

%

Securities

 

 

3.00

%

 

3.20

%

 

3.37

%

 

3.22

%

 

3.11

%

 

2.91

%

Total earning assets