Bulletin
Investor Alert

New York Markets Close in:

press release

Jan. 21, 2020, 5:30 p.m. EST

PNFP Reports Diluted EPS of $1.26, ROAA of 1.38% and ROTCE of 15.41% For 4Q 2019

Excluding non-GAAP adjustments, 4Q19 diluted EPS was $1.27, ROAA was 1.39% and ROTCE was 15.49%

Pinnacle Financial Partners, Inc. (nasdaq/ngs:PNFP) reported net income per diluted common share of $1.26 for the quarter ended Dec. 31, 2019, compared to net income per diluted common share of $1.23 for the quarter ended Dec. 31, 2018, an increase of 2.4 percent. Net income per diluted common share was $5.22 for the year ended Dec. 31, 2019, compared to net income per diluted common share of $4.64 for the year ended Dec. 31, 2018, an increase of 12.5 percent.

Excluding gains and losses on the sale of investment securities and ORE expense for the three months ended Dec. 31, 2019 and 2018, net income per diluted common share was $1.27 in 2019, compared to $1.25 in 2018. Excluding these items for 2019 and 2018 as well as merger-related charges in 2018, a $1.5 million loss from the sale of the non-prime automobile portfolio earlier in 2019 and $3.2 million of non-cash impairment charges related to the consolidation of five offices earlier in 2019, net income per diluted common share was $5.37 for the year ended Dec. 31, 2019, compared to net income per diluted common share of $4.75 for the year ended Dec. 31, 2018, a growth rate of 13.1 percent.

"Given the volatile interest rate backdrop during 2019, we are very pleased to report 13 percent earnings per share growth in 2019," said M. Terry Turner, Pinnacle's president and chief executive officer. "We believe that growth rate should place us in the top quartile of our peers, which is specifically where we aim to be every year. Additionally, I'm pleased to report that our book value per share increased 11.2 percent to $56.89 per common share on Dec. 31, 2019 from $51.18 per share on Dec. 31, 2018 while tangible book value increased 19.0 percent to $32.45 per common share at Dec. 31, 2019, compared to $27.27 at Dec. 31, 2018, a growth rate that we believe will also result in top-quartile performance among our peers.

"We hired 85 revenue producers across our franchise in 2019, which followed hiring 107 in 2018, a strong indicator of our ability to produce outsized growth in the future. We also remain excited about our opportunities in the Carolinas and Virginia. We believe our integration in those markets has been tremendously successful, and we expect more opportunities in 2020 due to the health of those markets and the large number of revenue producers we have hired there. We've experienced more than 22 percent growth in both loans and client deposits since closing the acquisition. BHG had another phenomenal year, experiencing year-over-year earnings growth of 76 percent. Their business model is operating at a high level, and we believe BHG's current strategy to retain more loans on their balance sheet will serve all of us very well in 2020 and beyond. Lastly, we've announced our expansion into the Atlanta market and have hired four revenue producers there since our announcement in late December. Our hiring pipelines continue to grow in that market. Needless to say, as a result of the increased earnings capacity we have built over the last several years with these and other initiatives, we are excited about the opportunity to continue to produce outsized earnings and tangible book value growth going into 2020."

GROWING THE CORE EARNINGS CAPACITY OF THE FIRM:

  • Loans at Dec. 31, 2019 were a record $19.8 billion, an increase of $2.1 billion from Dec. 31, 2018, reflecting year-over-year growth of 11.7 percent. Loans at Dec. 31, 2019 increased $442.2 million from Sept. 30, 2019, reflecting a linked-quarter annualized growth rate of 9.1 percent.

  • Deposits at Dec. 31, 2019 were $20.2 billion, an increase of $1.3 billion from Dec. 31, 2018, reflecting year-over-year growth of 7.1 percent. Deposits at Dec. 31, 2019 increased $180.4 million from Sept. 30, 2019, reflecting a linked-quarter annualized growth rate of 3.6 percent.

  • Revenues for the quarter ended Dec. 31, 2019 were $253.6 million, a decrease of $24.8 million from the $278.4 million recognized in the third quarter of 2019 and up $6.1 million from the fourth quarter of 2018. This represents a year-over-year growth rate of 2.5 percent.

"We've always prided ourselves on strong organic balance sheet growth," Turner said. "Generally that strong growth has been predicated on our ongoing ability to hire the best bankers and their ability to bring their best clients to our firm. It's a simple strategy and is at the core of our success. Given how successful we have been executing on that strategy over the last two years and the status of our recruiting pipelines currently, we believe high-single to low-double digit loan growth is very much achievable for our firm in 2020.

"Another item that we believe is at the core of our success is our unique, shareholder-aligned incentive system. For the first time in many years, we've decided to tweak our annual cash incentive system for 2020 to provide more focus on growing low-cost core deposits. We had a great fourth quarter in 2019 related to core deposit growth, with a 12 percent linked-quarter annualized growth rate. That said, we still desire more energy aimed at core deposit generation. In addition to core deposit growth, our firm-wide cash incentive plan for 2020 is still focused on the two metrics we believe are most directly aligned with increasing shareholder value: maintaining asset quality and growing EPS. Our goal for the slight modification to our annual cash incentive plan is to energize our entire associate base around core deposit growth, and I am optimistic that they will respond in a very strong way in 2020."

FOCUSING ON PROFITABILITY:

  • Return on average assets was 1.38 percent for the fourth quarter of 2019, compared to 1.62 percent for the third quarter of 2019 and 1.54 percent for the fourth quarter of 2018. Fourth quarter 2019 return on average tangible assets amounted to 1.48 percent, compared to 1.74 percent for the third quarter of 2019 and 1.66 percent for the fourth quarter of 2018.

  • Return on average common equity for the fourth quarter of 2019 amounted to 8.78 percent, compared to 10.28 percent for the third quarter of 2019 and 9.60 percent for the fourth quarter of 2018. Fourth quarter 2019 return on average tangible common equity amounted to 15.41 percent, compared to 18.28 percent for the third quarter of 2019 and 18.14 percent for the fourth quarter of 2018.

"Our profitability metrics remain very strong and provide us the ongoing operating leverage to hire more revenue producers and, thus, invest in our future growth," said Harold R. Carpenter, Pinnacle's chief financial officer. "The volatility in the interest rate environment impacted many banks, including us, making it more difficult to maintain margins during 2019. Since the yield curve stabilized in late 2019, we believe this will be helpful in stabilizing our net interest margin in 2020. We are fortunate that we operate in great markets with great bankers that yield meaningful growth and, therefore, a meaningful hedge to the negative earnings impact of recent yield curve volatility."

MAINTAINING A FORTRESS BALANCE SHEET:

  • Net charge-offs were $3.5 million for the quarter ended Dec. 31, 2019, compared to $4.9 million for the quarter ended Sept. 30, 2019 and $5.7 million for the quarter ended Dec. 31, 2018. Annualized net charge-offs as a percentage of average loans for the quarter ended Dec. 31, 2019 were 0.07 percent, compared to 0.10 percent for the quarter ended Sept. 30, 2019 and 0.11 percent for the fourth quarter of 2018.

  • Nonperforming assets decreased to 0.46 percent of total loans and ORE at Dec. 31, 2019, compared to 0.53 percent at Sept. 30, 2019 and 0.58 percent at Dec. 31, 2018. Nonperforming assets were $91.1 million at Dec. 31, 2019, compared to $103.3 million at Sept. 30, 2019 and $103.2 million at Dec. 31, 2018.

  • The classified asset ratio at Dec. 31, 2019 was 13.4 percent, compared to 13.5 percent at Sept. 30, 2019 and 12.4 percent at Dec. 31, 2018. Classified assets were $371.3 million at Dec. 31, 2019, compared to $363.2 million at Sept. 30, 2019 and $284.7 million at Dec. 31, 2018.

  • The allowance for loan losses represented 0.48 percent of total loans at Dec. 31, 2019, compared to 0.48 percent at Sept. 30, 2019 and 0.47 percent at Dec. 31, 2018.

"Asset quality continues to be a highlight for our firm, with the fourth quarter results yielding improvement to our already strong asset quality metrics," Carpenter said. "We experienced improvement from the previous quarter in nearly every asset quality metric, including nonperformers, past dues, net charge-offs and coverage ratios. After the BNC acquisition, we committed to reducing our regulatory ratios for commercial real estate and worked hard to get that done. Our regulatory ratios for construction and non-owner occupied commercial real estate and multi-family are now down to 83.6 percent and 268.3 percent, respectively. Going into 2020, we remain pleased with where we are with the soundness of our loan portfolio."

GROWING REVENUES

  • Net interest income for the quarter ended Dec. 31, 2019 was $194.2 million, compared to $195.8 million for the third quarter of 2019 and $190.2 million for the fourth quarter of 2018, a year-over-year growth rate of 2.1 percent. Net interest margin was 3.35 percent for the fourth quarter of 2019, compared to 3.43 percent for the third quarter of 2019 and 3.63 percent for the fourth quarter of 2018.

  • Noninterest income for the quarter ended Dec. 31, 2019 was $59.5 million, compared to $82.6 million for the third quarter of 2019 and $57.3 million for the fourth quarter of 2018, a year-over-year growth rate of 3.8 percent.

"We are pleased with net interest margin results in the fourth quarter, as the compression in our net interest margin slowed meaningfully," Carpenter said. "We are also pleased with the results of our actions to lower deposit pricing in conjunction with the last three Fed moves. All of this, combined with anticipated continued stabilization in the yield curve, should be helpful to us as we seek to find a floor for our net interest margin in 2020.

"We also had a great 2019 with respect to fee performance. BHG reported 76 percent earnings growth in 2019, with the fourth quarter amount approximating what we anticipated as BHG began executing on its current strategy of holding more loans on its balance sheet. Additionally, excluding BHG and the impact of losses on the sale of investment securities, we are also pleased to report that other fee categories grew 18.3 percent in 2019 over the amounts reported in 2018."

OTHER HIGHLIGHTS

  • The firm's efficiency ratio for the fourth quarter of 2019 increased to 51.44 percent, compared to 47.75 percent for the third quarter of 2019 and 48.25 percent in the fourth quarter of 2018. The ratio of noninterest expenses to average assets was 1.88 percent for the fourth quarter of 2019, compared to 1.94 percent in the third quarter of 2019 and 1.92 percent in the fourth quarter of 2018.

  • Noninterest expense for the quarter ended Dec. 31, 2019 was $130.5 million, compared to $132.9 million in the third quarter of 2019 and $119.4 million in the fourth quarter of 2018, reflecting a year-over-year increase of 9.3 percent. Excluding ORE expense, noninterest expense increased 9.2 percent over the fourth quarter of 2018.

  • The effective tax rate for the fourth quarter of 2019 was 18.9 percent, compared to 19.5 percent for the third quarter of 2019 and 19.7 percent for the fourth quarter of 2018.

  • During the fourth quarter of 2019, the firm acquired 228,533 shares of its common stock in open market transactions pursuant to its previously announced share repurchase program, at an average price of $56.54. For 2019, the number of shares acquired was 1.1 million at an average price of $55.70.

"We experienced reduced expenses in the fourth quarter of 2019 compared to the third quarter of 2019 due in large part to the anticipated reduction in incentive costs," Carpenter said. "Early in the third quarter of 2019, we added Advocate Capital, which contributed to increased expense run rates in the second half of 2019. As we consider expense run rates going into 2020, we fully expect continued hiring, especially with the build out in Atlanta. We believe we can keep our expense growth to the mid- to high-single digit percentage increases for 2020. Going into 2020, we are also targeting cash incentives of approximately $50 million in 2020. These amounts provide us flexibility should revenues not materialize at the growth rates we currently are planning for in 2020."

BOARD OF DIRECTORS DECLARES DIVIDEND

On Jan. 21, 2020, Pinnacle's Board of Directors approved a quarterly cash dividend of $0.16 per common share to be paid on Feb. 28, 2020 to common shareholders of record as of the close of business on Feb. 7, 2020. 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. CT on Jan. 22, 2020 to discuss fourth 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 list 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 $27.8 billion in assets as of Dec. 31, 2019. As the second-largest bank holding company headquartered in Tennessee, Pinnacle operates in 12 primarily urban markets in Tennessee, the Carolinas, Virginia and Georgia.

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 and its subsidiaries 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 better match deposit rates with the changes in the short-term rate environment, 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 including the recent expansion into the Atlanta, Georgia metro market; (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) deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xvii) 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; (xviii) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xix) 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; (xx) 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; (xxi) 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; (xxii) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, like BHG, including regulatory or legislative developments; (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 rationalization 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)      
  December 31, 2019 September 30, 2019 December 31, 2018
ASSETS      
Cash and noninterest-bearing due from banks $ 157,901     $ 197,660     $ 137,433    
Restricted cash 137,045     157,544     65,491    
Interest-bearing due from banks 210,784     553,124     516,920    
Federal funds sold and other 20,977     11,975     1,848    
Cash and cash equivalents 526,707     920,303     721,692    
       
Securities available-for-sale, at fair value 3,539,995     3,393,435     3,083,686    
Securities held-to-maturity (fair value of $201.2 million, $202.8 million and $193.1 million at Dec. 31, 2019, Sept. 30, 2019, and Dec. 31, 2018, respectively) 188,996     189,684     194,282    
Consumer loans held-for-sale 81,820     73,042     34,196    
Commercial loans held-for-sale 17,585     21,312     15,954    
       
Loans 19,787,876     19,345,642     17,707,549    
Less allowance for loan losses (94,777 )   (93,647 )   (83,575 )  
Loans, net 19,693,099     19,251,995     17,623,974    
       
Premises and equipment, net 273,932     274,983     265,560    
Equity method investment 278,037     267,097     239,237    
Accrued interest receivable 84,462     81,124     79,657    
Goodwill 1,819,811     1,830,652     1,807,121    
Core deposits and other intangible assets 51,130     39,349     46,161    
Other real estate owned 29,487     30,049     15,165    
Other assets 1,220,435     1,174,809     904,359    
Total assets $ 27,805,496     $ 27,547,834     $ 25,031,044    
       
LIABILITIES AND STOCKHOLDERS' EQUITY      
Deposits:      
Noninterest-bearing $ 4,795,476     $ 4,702,155     $ 4,309,067    
Interest-bearing 3,630,168     3,372,028     3,464,001    
Savings and money market accounts 7,813,939     7,625,872     7,607,796    
Time 3,941,445     4,300,622     3,468,243    
Total deposits 20,181,028     20,000,677     18,849,107    
Securities sold under agreements to repurchase 126,354     95,402     104,741    
Federal Home Loan Bank advances 2,062,534     2,052,548     1,443,589    
Subordinated debt and other borrowings 749,080     750,488     485,130    
Accrued interest payable 42,183     36,836     23,586    
Other liabilities 288,569     317,253     158,951    
Total liabilities 23,449,748     23,253,204     21,065,104    
       
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; 76.5 million, 76.7 million and 77.5 million shares issued and outstanding at Dec. 31, 2019, Sept. 30, 2019 and Dec. 31, 2018, respectively 76,564     76,736     77,484    
Additional paid-in capital 3,064,467     3,070,235     3,107,431    
Retained earnings 1,184,183     1,100,517     833,130    
Accumulated other comprehensive income (loss), net of taxes 30,534     47,142     (52,105 )  
Total stockholders' equity 4,355,748     4,294,630     3,965,940    
Total liabilities and stockholders' equity $ 27,805,496     $ 27,547,834     $ 25,031,044    
       
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 Year Ended
  December 31, 2019 September 30, 2019 December 31, 2018 December 31, 2019 December 31, 2018
Interest income:          
Loans, including fees $ 241,209   $ 247,147   $ 228,599     $ 955,388     $ 850,472    
Securities          
Taxable 10,211   10,655   13,013     46,649     48,192    
Tax-exempt 13,597   13,313   10,286     51,138     35,995    
Federal funds sold and other 3,436   4,634   4,197     14,761     12,058    
Total interest income 268,453   275,749   256,095     1,067,936     946,717    
           
Interest expense:          
Deposits 55,905   62,531   50,123     231,641     151,043    
Securities sold under agreements to repurchase 131   152   150     570     588    
FHLB advances and other borrowings 18,245   17,260   15,607     69,583     58,744    
Total interest expense 74,281   79,943   65,880     301,794     210,375    
Net interest income 194,172   195,806   190,215     766,142     736,342    
Provision for loan losses 4,644   8,260   9,319     27,283     34,377    
Net interest income after provision for loan losses 189,528   187,546   180,896     738,859     701,965    
           
Noninterest income:          
Service charges on deposit accounts 9,094   10,193   9,753     36,769     36,088    
Investment services 6,581   6,270   6,168     24,187     21,985    
Insurance sales commissions 2,017   2,252   2,038     9,344     9,331    
Gains on mortgage loans sold, net 6,044   7,402   3,141     24,335     14,564    
Investment gains (losses) on sales, net 68   417   (2,295 )   (5,941 )   (2,254 )  
Trust fees 3,835   3,593   3,375     14,184     13,143    
Income from equity method investment 12,312   32,248   17,936     90,111     51,222    
Other noninterest income 19,511   20,244   17,154     70,837     56,771    
Total noninterest income 59,462   82,619   57,270     263,826     200,850    
           
Noninterest expense:          
Salaries and employee benefits 81,444   85,919   74,725     313,359     271,673    
Equipment and occupancy 21,059   20,348   19,073     84,582     74,276    
Other real estate, net 804   655   631     4,228     723    
Marketing and other business development 4,298   2,723   3,628     13,251     11,712    
Postage and supplies 2,407   1,766   1,831     8,144     7,815    
Amortization of intangibles 2,896   2,430   2,576     9,908     10,549    
Merger-related expenses         8,259    
Other noninterest expense 17,562   19,100   16,945     71,676     67,860    
Total noninterest expense 130,470   132,941   119,409     505,148     452,867    
Income before income taxes 118,520   137,224   118,757     497,537     449,948    
Income tax expense 22,441   26,703   23,439     96,656     90,508    
Net income $ 96,079   $ 110,521   $ 95,318     $ 400,881     $ 359,440    
           
Per share information:          
Basic net income per common share $ 1.26   $ 1.45   $ 1.24     $ 5.25     $ 4.66    
Diluted net income per common share $ 1.26   $ 1.44   $ 1.23     $ 5.22     $ 4.64    
           
Weighted average shares outstanding:          
Basic 76,018,739   76,301,010   77,096,522     76,364,303     77,111,372    
Diluted 76,398,982   76,556,309   77,469,803     76,763,903     77,449,917    
           
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) December   September   June   March   December   September
2019   2019   2019   2019   2018   2018
Balance sheet data, at quarter end:            
Commercial and industrial loans $ 6,290,296     6,002,285     5,795,107     5,419,520     5,271,420     5,006,247    
Commercial real estate - owner occupied 2,669,766     2,595,837     2,624,160     2,617,541     2,653,433     2,688,247    
Commercial real estate - investment 4,418,658     4,443,687     4,252,098     4,107,953     3,855,643     3,818,055    
Commercial real estate - multifamily and other 620,794     669,721     709,135     693,652     655,879     708,817    
Consumer real estate - mortgage loans 3,068,625     3,025,502     2,949,755     2,887,628     2,844,447     2,815,160    
Construction and land development loans 2,430,483     2,253,303     2,117,969     2,097,570     2,072,455     2,059,009    
Consumer and other 289,254     355,307     366,094     351,042     354,272     368,474    
Total loans 19,787,876     19,345,642     18,814,318     18,174,906     17,707,549     17,464,009    
Allowance for loan losses (94,777 )   (93,647 )   (90,253 )   (87,194 )   (83,575 )   (79,985 )  
Securities 3,728,991     3,583,119     3,447,834     3,444,049     3,277,968     3,199,579    
Total assets 27,805,496     27,547,834     26,540,355     25,557,858     25,031,044     24,557,545    
Noninterest-bearing deposits 4,795,476     4,702,155     4,493,419     4,317,787     4,309,067     4,476,925    
Total deposits 20,181,028     20,000,677     19,449,383     18,480,461     18,849,107     18,407,515    
Securities sold under agreements to repurchase 126,354     95,402     154,169     100,698     104,741     130,217    
FHLB advances 2,062,534     2,052,548     1,960,062     2,121,075     1,443,589     1,520,603    
Subordinated debt and other borrowings 749,080     750,488     464,144     484,703     485,130     465,487    
Total stockholders' equity 4,355,748     4,294,630     4,176,361     4,055,939     3,965,940     3,897,041    
Balance sheet data, quarterly averages:            
Total loans $ 19,599,620     19,216,835     18,611,164     17,938,480     17,630,281     17,259,139    
Securities 3,662,829     3,507,363     3,412,475     3,302,676     3,148,638     3,075,633    
Federal funds sold and other 717,927     802,326     530,556     469,909     645,644     647,728    
Total earning assets 23,980,376     23,526,524     22,554,195     21,711,065     21,424,563     20,982,500    
Total assets 27,604,774     27,134,163     25,915,971     25,049,954     24,616,733     24,125,051    
Noninterest-bearing deposits 4,834,694     4,574,821     4,399,766     4,195,443     4,317,782     4,330,917    
Total deposits 20,078,594     19,778,007     18,864,859     18,358,094     18,368,012     18,112,766    
Securities sold under agreements to repurchase 109,127     134,197     117,261     109,306     119,247     146,864    
FHLB advances 1,992,213     2,136,928     2,164,341     1,926,358     1,689,920     1,497,511    
Subordinated debt and other borrowings 753,244     533,194     469,498     470,775     469,074     468,990    
Total stockholders' equity 4,343,246     4,265,006     4,117,754     4,017,375     3,939,927     3,874,430    
Statement of operations data, for the three months ended:
Interest income $ 268,453     275,749     265,851     257,883     256,095     248,110    
Interest expense 74,281     79,943     76,933     70,637     65,880     58,690    
Net interest income 194,172     195,806     188,918     187,246     190,215     189,420    
Provision for loan losses 4,644     8,260     7,195     7,184     9,319     8,725    
Net interest income after provision for loan losses 189,528     187,546     181,723     180,062     180,896     180,695    
Noninterest income 59,462     82,619     70,682     51,063     57,270     51,478    
Noninterest expense 130,470     132,941     127,686     114,051     119,409     113,990    
Income before taxes 118,520     137,224     124,719     117,074     118,757     118,183    
Income tax expense 22,441     26,703     24,398     23,114     23,439     24,436    
Net income $ 96,079     110,521     100,321     93,960     95,318     93,747    
             
Profitability and other ratios:            
Return on avg. assets [(1)] 1.38   % 1.62   % 1.55   % 1.52   % 1.54   % 1.54   %
Return on avg. common equity [(1)] 8.78   % 10.28   % 9.77   % 9.49   % 9.60   % 9.60   %
Return on avg. tangible common equity [(1)] 15.41   % 18.28   % 17.74   % 17.60   % 18.14   % 18.44   %
Dividend payout ratio [(16)] 12.24   % 12.31   % 12.88   % 13.39   % 13.79   % 14.89   %
Net interest margin [ (2)] 3.35   % 3.43   % 3.48   % 3.62   % 3.63   % 3.65   %
Noninterest income to total revenue [(3)] 23.44   % 29.67   % 27.23   % 21.43   % 23.14   % 21.37   %
Noninterest income to avg. assets [(1)] 0.85   % 1.21   % 1.09   % 0.83   % 0.92   % 0.85   %
Noninterest exp. to avg. assets [(1)] 1.88   % 1.94   % 1.98   % 1.85   % 1.92   % 1.87   %
Efficiency ratio [(4)] 51.44   % 47.75   % 49.19   % 47.86   % 48.25   % 47.32   %
Avg. loans to avg. deposits 97.61   % 97.16   % 98.66   % 97.71   % 95.98   % 95.29   %
Securities to total assets 13.41   % 13.01   % 12.99   % 13.48   % 13.10   % 13.03   %
             
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
December 31, 2019   December 31, 2018
  Average Balances Interest Rates/ Yields   Average Balances Interest Rates/ Yields
Interest-earning assets              
Loans [ (1) (2)] $ 19,599,620   $ 241,209   5.00 %   $ 17,630,281   $ 228,599   5.22 %
Securities              
Taxable 1,827,719   10,211   2.22 %   1,829,051   13,013   2.82 %
Tax-exempt [(2)] 1,835,110   13,597   3.48 %   1,319,587   10,286   3.77 %
Federal funds sold and other 717,927   3,436   1.90 %   645,644   4,197   2.58 %
Total interest-earning assets 23,980,376   $ 268,453   4.58 %   21,424,563   $ 256,095   4.85 %
Nonearning assets              
Intangible assets 1,869,116         1,854,831      
Other nonearning assets 1,755,282         1,337,339      
Total assets $ 27,604,774         $ 24,616,733      
               
Interest-bearing liabilities              
Interest-bearing deposits:              
Interest checking 3,425,866   8,755   1.01 %   3,229,411   9,430   1.16 %
Savings and money market 7,717,082   23,551   1.21 %   7,424,287   24,138   1.29 %
Time 4,100,952   23,599   2.28 %   3,396,532   16,555   1.93 %
Total interest-bearing deposits 15,243,900   55,905   1.45 %   14,050,230   50,123   1.42 %
Securities sold under agreements to repurchase 109,127   131   0.48 %   119,247   150   0.50 %
Federal Home Loan Bank advances 1,992,213   10,568   2.10 %   1,689,920   9,307   2.18 %
Subordinated debt and other borrowings 753,244   7,677   4.04 %   469,074   6,300   5.33 %
Total interest-bearing liabilities 18,098,484   74,281   1.63 %   16,328,471   65,880   1.60 %
Noninterest-bearing deposits 4,834,694         4,317,782      
Total deposits and interest-bearing liabilities 22,933,178   $ 74,281   1.29 %   20,646,253   $ 65,880   1.27 %
Other liabilities 328,350         30,553      
Stockholders' equity 4,343,246         3,939,927      
Total liabilities and stockholders' equity $ 27,604,774         $ 24,616,733      
Net interest income   $ 194,172         $ 190,215    
Net interest spread [(3)]     2.95 %       3.25 %
Net interest margin [(4)]     3.35 %       3.63 %
               
(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 included $8.1 million of taxable equivalent income for the three months ended Dec. 31, 2019 compared to $5.8 million for the three months ended Dec. 31, 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 three months ended Dec. 31, 2019 would have been 3.29% compared to a net interest spread of 3.58% for the three months ended Dec. 31, 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) Year ended   Year ended
December 31, 2019   December 31, 2018
  Average Balances Interest Rates/ Yields   Average Balances Interest Rates/ Yields
Interest-earning assets              
Loans [ (1) (2)] $ 18,847,104   $ 955,388   5.17 %   $ 16,899,738   $ 850,472   5.09 %
Securities              
Taxable 1,791,663   46,649   2.60 %   1,804,958   48,192   2.67 %
Tax-exempt [(2)] 1,680,758   51,138   3.62 %   1,202,143   35,995   3.58 %
Federal funds sold and other 631,331   14,761   2.34 %   518,923   12,058   2.32 %
Total interest-earning assets 22,950,856   $ 1,067,936   4.78 %   20,425,762   $ 946,717   4.71 %
Nonearning assets              
Intangible assets 1,859,548         1,859,183      
Other nonearning assets 1,624,750         1,269,083      
Total assets $ 26,435,154         $ 23,554,028      
               
Interest-bearing liabilities              
Interest-bearing deposits:              
Interest checking 3,236,907   36,901   1.14 %   3,064,328   28,767   0.94 %
Savings and money market 7,557,265   104,138   1.38 %   6,994,938   73,431   1.05 %
Time 3,978,688   90,602   2.28 %   3,070,071   48,845   1.59 %
Total interest-bearing deposits 14,772,860   231,641   1.57 %   13,129,337   151,043   1.15 %
Securities sold under agreements to repurchase 117,518   570   0.49 %   129,899   588   0.45 %
Federal Home Loan Bank advances 2,055,365   43,675   2.12 %   1,663,968   34,174   2.05 %
Subordinated debt and other borrowings 557,387   25,908   4.65 %   470,189   24,570   5.23 %
Total interest-bearing liabilities 17,503,130   301,794   1.72 %   15,393,393   210,375   1.37 %
Noninterest-bearing deposits 4,503,134         4,305,942      
Total deposits and interest-bearing liabilities 22,006,264   $ 301,794   1.37 %   19,699,335   $ 210,375   1.07 %
Other liabilities 241,935         18,281      
Stockholders' equity 4,186,955         3,836,412      
Total liabilities and stockholders' equity $ 26,435,154         $ 23,554,028      
Net interest income   $ 766,142         $ 736,342    
Net interest spread [(3)]     3.06 %       3.35 %
Net interest margin [(4)]     3.46 %       3.68 %
               
(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 included $29.0 million of taxable equivalent income for the year ended Dec. 31, 2019 compared to $16.2 million for the year ended Dec. 31, 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 year ended Dec. 31, 2019 would have been 3.41% compared to a net interest spread of 3.65% for the year ended Dec. 31, 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) December   September   June   March   December   September
2019   2019   2019   2019   2018   2018
Asset quality information and ratios:            
Nonperforming assets:            
Nonaccrual loans 61,605   73,263   76,077   96,144   87,834   77,868  
Other real estate (ORE) and other nonperforming assets (NPAs) 29,487   30,049   26,658   15,138   15,393   17,731  
Total nonperforming assets $ 91,092   103,312   102,735   111,282   103,227   95,599  
Past due loans over 90 days and still accruing interest $ 1,615   2,450   2,733   1,982   1,558   1,773  
Accruing troubled debt restructurings [(5)] $ 4,850   5,803   7,412   5,481   5,899   6,125  
Accruing purchase credit impaired loans $ 13,249   12,887   12,632   13,122   14,743   21,473  
Net loan charge-offs $ 3,515   4,866   4,136   3,565   5,729   4,410  
Allowance for loan losses to nonaccrual loans 153.8 % 127.8 % 118.6 % 90.7 % 95.2 % 102.7 %
As a percentage of total loans:            
Past due accruing loans over 30 days 0.18 % 0.24 % 0.21 % 0.22 % 0.34 % 0.25 %
Allowance for loan losses 0.48 % 0.48 % 0.48 % 0.48 % 0.47 % 0.46 %
Nonperforming assets to total loans, ORE and other NPAs 0.46 % 0.53 % 0.55 % 0.61 % 0.58 % 0.55 %
Classified asset ratio (Pinnacle Bank) [(8)] 13.4 % 13.5 % 13.9 % 13.0 % 12.4 % 13.7 %
Annualized net loan charge-offs to avg. loans [(7)] 0.07 % 0.10 % 0.09 % 0.08 % 0.11 % 0.10 %
Wtd. avg. commercial loan internal risk ratings [(6)]   44.9   45.3   44.9   44.9   44.4   4.5  
               
Interest rates and yields:            
Loans 5.00 % 5.21 % 5.22 % 5.28 % 5.22 % 5.15 %
Securities 2.85 % 3.00 % 3.20 % 3.37 % 3.22 % 3.11 %
Total earning assets 4.58 % 4.78 % 4.85 % 4.94 % 4.85 % 4.76 %
Total deposits, including non-interest bearing 1.10 % 1.25 % 1.25 % 1.20 % 1.08 % 0.97 %
Securities sold under agreements to repurchase 0.48 % 0.45 % 0.49 % 0.54 % 0.50 % 0.44 %
FHLB advances 2.10 % 2.15 % 2.14 % 2.10 % 2.18 % 2.16 %
Subordinated debt and other borrowings 4.04 % 4.22 % 5.34 % 5.44 % 5.33 % 5.29 %
Total deposits and interest-bearing liabilities 1.29 % 1.40 % 1.43 % 1.37 % 1.27 % 1.15 %
             
Capital and other ratios (8):            
Pinnacle Financial ratios:            
Stockholders' equity to total assets 15.7 % 15.6 % 15.7 % 15.9 % 15.8 % 15.9 %
Common equity Tier one 9.7 % 9.6 % 9.5 % 9.4 % 9.6 % 9.4 %
Tier one risk-based 9.7 % 9.6 % 9.5 % 9.4 % 9.6 % 9.4 %
Total risk-based 13.2 % 13.2 % 12.0 % 12.0 % 12.2 % 12.1 %
Leverage 9.1 % 8.9 % 9.1 % 9.0 % 8.9 % 8.8 %
Tangible common equity to tangible assets 9.6 % 9.4 % 9.4 % 9.3 % 9.1 % 9.0 %
Pinnacle Bank ratios:            
Common equity Tier one 11.2 % 11.1 % 10.3 % 10.4 % 10.5 % 10.3 %
Tier one risk-based 11.2 % 11.1 % 10.3 % 10.4 % 10.5 % 10.3 %
Total risk-based 12.2 % 12.1 % 11.3 % 11.4 % 11.5 % 11.4 %
Leverage 10.5 % 10.4 % 9.8 % 9.9 % 9.8 % 9.6 %
Construction and land development loans as a percentage of total capital [(19)] 83.6 % 79.9 % 82.6 % 84.1 % 85.2 % 87.8 %
Non-owner occupied commercial real estate and multi-family as a percentage of total capital [(19)] 268.3 % 272.8 % 288.9 % 282.5 % 277.7 % 287.6 %
             
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)   December   September   June   March   December   September
  2019   2019   2019   2019   2018   2018
               
Per share data:              
Earnings – basic $ 1.26   1.45   1.31     1.22     1.24     1.22  
Earnings - basic, excluding the adjustments noted below $ 1.27   1.45   1.43     1.24     1.26     1.22  
Earnings – diluted $ 1.26   1.44   1.31     1.22     1.23     1.21  
Earnings - diluted, excluding the adjustments noted below $ 1.27   1.45   1.42     1.24     1.25     1.21  
Common dividends per share $ 0.16   0.16   0.16     0.16     0.16     0.14  
Book value per common share at quarter end [(9)] $ 56.89   55.97   54.29     52.63     51.18     50.05  
Tangible book value per common share at quarter end [(9)] $ 32.45   31.60   30.26     28.61     27.27     26.21  
Revenue per diluted share $ 3.32   3.64   3.39     3.09     3.19     3.11  
Revenue per diluted share, excluding the adjustments noted below $ 3.32   3.63   3.47     3.12     3.22     3.11  
Noninterest expense per diluted share $ 1.71   1.74   1.67     1.48     1.54     1.47  
Noninterest expense per diluted share, excluding the adjustments noted below $ 1.70   1.73   1.59     1.48     1.53     1.47  
               
Investor information:              
Closing sales price on last trading day of quarter $ 64.00   56.75   57.48     54.70     46.10     60.15  
High closing sales price during quarter $ 64.80   61.14   59.23     59.55     61.04     66.20  
Low closing sales price during quarter $ 54.58   50.78   52.95     46.35     44.03     60.05  
               
Other information:              
Gains on residential mortgage loans sold:              
Residential mortgage loan sales:              
Gross loans sold $ 322,228   302,473   291,813     193,830     236,861     278,073  
Gross fees [(10)] $ 9,953   9,392   8,485     5,695     6,184     7,756  
Gross fees as a percentage of loans originated   3.09 % 3.11 % 2.91   % 2.94   % 2.61   % 2.79 %
Net gain on residential mortgage loans sold $ 6,044   7,402   6,011     4,878     3,141     3,902  
Investment gains (losses) on sales of securities, net [(15)] $ 68   417   (4,466 )   (1,960 )   (2,295 )   11  
Brokerage account assets, at quarter end [(11)] $ 4,636,441   4,355,429   4,287,985     4,122,980     3,763,911     3,998,774  
Trust account managed assets, at quarter end $ 2,942,811   2,530,356   2,425,791     2,263,095     2,055,861     2,074,027  
Core deposits [(12)] $ 17,617,479   17,103,470   16,503,686     16,340,763     16,489,173     16,076,859  
Core deposits to total funding [(12)]   76.2 % 74.7 % 74.9   % 77.1   % 79.0   % 78.3 %
Risk-weighted assets $ 23,911,064   23,370,342   22,706,512     22,001,959     21,137,263     20,705,547  
Number of offices   111   114   114     114     114     115  
Total core deposits per office $ 158,716   150,030   144,769     143,340     144,642     139,799  
Total assets per full-time equivalent employee $ 11,180   11,217   11,241     10,997     10,897     10,917  
Annualized revenues per full-time equivalent employee $ 404.6   449.8   441.0     415.9     427.5     424.9  
Annualized expenses per full-time equivalent employee $ 208.1   214.8   216.9     199.0     206.2     201.0  
Number of employees (full-time equivalent)   2,487.0   2,456.0   2,361.0     2,324.0     2,297.0     2,249.5  
Associate retention rate [(13)]   92.8 % 93.2 % 93.0   % 92.8   % 92.3   % 91.1 %
               
This information is preliminary and based on company data available at the time of the presentation.
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES