Exhibit 99.1
FOR IMMEDIATE RELEASE
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MEDIA CONTACT: | | Vicki Kessler 615-320-7532 |
FINANCIAL CONTACT: | | Harold Carpenter 615-744-3742 |
WEBSITE: | | www.pnfp.com |
PINNACLE FINANCIAL REPORTS RECORD LOAN GROWTH AND EARNINGS
OF $0.33 PER FULLY DILUTED SHARE FOR FOURTH QUARTER OF 2007
Fully diluted earnings per share of $0.35, excluding merger related expenses
NASHVILLE,Tenn., Jan. 17, 2008 — Pinnacle Financial Partners Inc. (Nasdaq/NGS: PNFP) today reported strong earnings and continued rapid loan growth for the quarter ended Dec. 31, 2007. Fully diluted earnings per share were $0.33 for the quarter ended Dec. 31, 2007, compared to $0.34 per fully diluted share for the quarter ended Dec. 31, 2006. Excluding merger related expenses associated with its recent acquisition of Mid-America Bancshares, Inc. on Nov. 30, 2007, fully diluted earnings per share were $0.35 for the quarter ended Dec. 31, 2007.
Fully diluted earnings per share were $1.34 for the year ended Dec. 31, 2007, compared to $1.18 per fully diluted share for the year ended Dec. 31, 2006. Excluding merger related expenses associated with its recent acquisition of Mid-America Bancshares, fully diluted earnings per share were $1.36 for the year ended Dec. 31, 2007. For the year ended Dec. 31, 2006 fully diluted earnings per share were $1.25 excluding merger related expenses associated with the Cavalry Bancorp Inc. acquisition consummated on March 15, 2006.
Pinnacle also reported a record $155 million in organic loan growth in the fourth quarter of 2007 which contributed to a higher provision expense for the fourth quarter of 2007 when compared to prior quarters.
FOURTH QUARTER 2007 HIGHLIGHTS:
| | ° | | Net income for the fourth quarter of 2007 was $6.2 million, up 10.6 percent from the prior year’s fourth quarter net income of $5.6 million. |
| | ° | | Revenue (the sum of net interest income and noninterest income) for the quarter ended Dec. 31, 2007, amounted to $28.62 million, compared to $22.33 million for the same quarter of last year, an increase of 28.2 percent. |
| | • | | Superior credit quality: |
| | ° | | Net charge-offs as a percentage of average loan balances were 0.07 percent for the year ended Dec. 31, 2007. |
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| | ° | | Nonperforming assets were 0.78 percent of total loans and other real estate at Dec. 31, 2007, compared to 0.54 percent at Dec. 31, 2006. Approximately $11.3 million of nonperforming assets at Dec. 31, 2007, or 0.41 percent of total loans and other real estate, were acquired from the Mid-America acquisition. As a result, nonperforming assets associated with the legacy Pinnacle franchise were 0.37 percent of total loans and other real estate at Dec. 31, 2007. |
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| | ° | | Past due loans over 30 days, excluding nonperforming loans, were only 0.45 percent of total loans and other real estate at Dec. 31, 2007, compared to 0.74 percent of total loans and other real estate at Dec. 31, 2006. |
| | • | | Strong balance sheet growth: |
| | ° | | Loans at Dec. 31, 2007, were $2.75 billion, up $1.25 billion from $1.50 billion at Dec. 31, 2006. The annual increase in loans includes $389 million, or 26 percent, in organic growth and $863 million in loans acquired in conjunction with the Mid-America merger. Loans increased by $1.018 billion during the fourth quarter of 2007, with $155 million of the increase from organic growth, compared to $92 million in organic growth during the same quarter in 2006. |
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| | ° | | Total deposits at Dec. 31, 2007, were $2.93 billion, up $1.31 billion from $1.62 billion at Dec. 31, 2006. The increase includes $344 million in organic growth and $987 million in deposits acquired in conjunction with the Mid-America merger. |
| | • | | Investments in future growth: |
| | ° | | Pinnacle has hired 21 highly experienced associates for the denovo expansion to Knoxville that was announced on April 9, 2007. Pinnacle opened a full service office in May, a loan production office in the Fountain |
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City area of Knoxville in June and is involved in ongoing negotiations on another full service Knoxville location which is expected to open during the last half of 2008. Costs of the Knoxville expansion negatively impacted earnings in 2007 by approximately $0.08 per fully-diluted share for the full year and $0.03 per fully-diluted share in the fourth quarter of 2007.
| | ° | | Pinnacle’s total associate base at Dec. 31, 2007, including the Knoxville expansion and the Mid-America merger, was 702 full-time equivalents (FTEs). Approximately 220 FTEs were added to Pinnacle’s associate base in conjunction with the Mid-America merger. Excluding Mid-America, Pinnacle’s associate base increased by 78 associates, or by 19.3 percent, during 2007. |
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| | ° | | The in-market acquisition of Mid-America was completed on Nov. 30, 2007 adding 11 branches in the Nashville MSA, including three counties not previously served by Pinnacle. |
| | ° | | Based on FDIC market share data as of June 30, 2007, completion of the Mid-America acquisition provides Pinnacle with a No. 4 market share position in the Nashville MSA with only 8.7 percent of deposits leaving significant opportunity for continued dramatic growth. This places Pinnacle behind Regions, SunTrust and Bank of America — all out-of-state regional banks with negative market share trends in Nashville. |
“We believe our simple but aggressive plan to hire the best, most experienced bankers in the market will continue to distinguish Pinnacle’s financial performance from that of the banks with whom we compete,” said M. Terry Turner, Pinnacle’s president and CEO. “At a time when most banks are experiencing slowing loan demand and increasing credit costs, Pinnacle’s fourth quarter organic loan growth was the largest in the firm’s history. Our charge-offs were only 0.07 percent of average loans. We believe this performance compares very favorably to our peers.
“We also remain confident about our potential in the Knoxville market. We established aggressive balance sheet growth goals for our Knoxville expansion believing we could replicate our Nashville model there. Our Knoxville associates exceeded our target for loan
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growth with approximately $109 million in loans outstanding at Dec. 31, 2007, just eight months following our office opening. This is well ahead of the pace we set in Nashville in our first eight months of operations,” said Turner.
FINANCIAL PERFORMANCE AND BALANCE SHEET GROWTH
| | • | | Return on average assets for fourth quarter 2007 was 0.89 percent compared to 1.07 percent for the fourth quarter of 2006. Excluding the impact of the Knoxville expansion and Mid-America merger expenses, return on average assets for the fourth quarter of 2007 would have approximated 1.02 percent. |
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| | • | | Return on average stockholders’ equity for the quarter ended Dec. 31, 2007, was 8.00 percent compared to 8.83 percent for the fourth quarter of 2006. Excluding the impact of the Knoxville expansion and Mid-America merger expenses, return on average stockholders’ equity for the fourth quarter of 2007 would have approximated 9.20 percent. Return on average tangible stockholders’ equity (average stockholders’ equity less goodwill and core deposit intangibles) for the quarter ended Dec. 31, 2007, was 17.65 percent. |
Total assets grew to $3.80 billion as of Dec. 31, 2007, up $1.66 billion from the $2.14 billion reported at the same time last year. The increase in assets includes $536 million in organic growth and $1.12 billion in assets acquired in conjunction with the Mid-America merger. The securities to total assets ratio decreased from 16.17 percent at Dec. 31, 2006, to 13.75 percent at Dec. 31, 2007.
CREDIT QUALITY
| | • | | Provision for loan losses was $2,260,000 for the fourth quarter of 2007, compared to $1,051,000 in the fourth quarter of 2006. |
| | ° | | During the fourth quarter of 2007, the firm recorded net charge-offs of $462,000, compared to net charge-offs of $105,000 during the same period in 2006. Annualized net charge-offs to total average loans were 0.07 percent for the year ended Dec. 31, 2007, compared to 0.05 percent for the same period in 2006. |
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| | ° | | The increase in provision expense between the fourth quarter of 2007 and the fourth quarter of 2006 was primarily due to the increase in loan balances recorded during the fourth quarter of 2007 over the amount recorded in the fourth quarter of 2006. |
| | • | | Allowance for loan losses represented 1.04 percent of total loans at Dec. 31, 2007, compared to 1.08 percent a year ago. |
| | ° | | Nonperforming assets as a percentage of total loans and other real estate increased to 0.78 percent at Dec. 31, 2007, from 0.54 percent at Dec. 31, 2006. |
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| | ° | | Loan balances (excluding nonperforming loans) with payments past due more than 30 days as a percentage of total loans and other real estate decreased to 0.45 percent at Dec. 31, 2007, from 0.74 percent at Dec. 31, 2006. |
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| | ° | | The ratio of the allowance for loan losses to nonperforming loans was 144.7 percent at Dec. 31, 2007, compared to 228.0 percent at Dec. 31, 2006. |
“There is no doubt that the health of Nashville’s residential real estate market is not as good today as it was a year ago. Yet, compared to other large urban markets in the Southeast and around the country, Nashville is holding up very well. We are cautiously optimistic that our disciplined real estate lending practices and other actions we implemented in 2007 will continue to benefit our asset quality metrics in 2008,” said Turner.
Pinnacle reported that approximately 52 percent of its nonperforming assets were related to residential construction.
REVENUE
| | • | | Net interest income for fourth quarter 2007 was $22.01 million, compared to $17.39 million for the same quarter last year, an increase of 26.5 percent. |
| | ° | | Net interest margin for the fourth quarter of 2007 was 3.49 percent, compared to a net interest margin of 3.74 percent for the same period last year. |
| | • | | Noninterest income for fourth quarter 2007 was $6.61 million, a 34.0 percent increase over the $4.93 million recorded during the same quarter in 2006. |
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“After one month of combined operations, the Mid-America merger contributed approximately $3.1 million to our net interest income in the fourth quarter,” said Harold Carpenter, chief financial officer of Pinnacle Financial Partners. “Mid-America’s net interest margin improved in recent months such that its net interest margin approximated 3.43 percent in December. Additionally, recent Fed funds decreases have not materially impacted our net interest margins. We do, however, anticipate continued rate decreases in 2008, which will require our continued focus for the remainder of 2008. To mitigate the impact of these decreases, we will continue to reduce the cost of our short-term and maturing funding sources to the extent possible; however, in a competitive marketplace like Nashville, we will always prioritize maintaining valuable customer relationships above short-term margin considerations”
Carpenter also reported that the firm reduced interest income by approximately $202,000 during the fourth quarter of 2007 as a result of loans being transferred to nonperforming status.
The 34.0 percent increase in noninterest income between the fourth quarter of 2007 and the fourth quarter of 2006 was due primarily to increased revenues from existing customers, the continued addition of financial advisors, approximately $543,000 in fees from Mid-America recognized in the fourth quarter of 2007, record investment sales commissions from Pinnacle Asset Management and record gains on the sales of mortgage loans from the firm’s mortgage origination unit. During 2007, Pinnacle’s mortgage origination unit sold $166.4 million of mortgage loans compared to $132.9 million in 2006, an increase of 25.2 percent.
Noninterest income during the fourth quarter of 2007 represented approximately 23.10 percent of total revenues, compared to 22.10 percent for the same quarter in 2006.
NONINTEREST EXPENSE
| | • | | Noninterest expense for the quarter ended Dec. 31, 2007, was $17.76 million ($17.09 million, excluding merger expenses) compared to $13.14 million in the fourth quarter of 2006. Approximately $691,000 of noninterest expense was associated with the Knoxville expansion and approximately $1.72 million of noninterest expense was associated with the former Mid-America franchise during the quarter (exclusive of merger related expenses). |
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| | • | | Compensation expense increased to $9.98 million during the fourth quarter of 2007, compared to $8.15 million during the fourth quarter of 2006, an increase of 22.5 percent. |
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| | • | | During the fourth quarter of 2007 Pinnacle recognized compensation expense related to the expensing of stock options in accordance with Statement of Financial Accounting Standards No. 123R (“SFAS No. 123R”) of approximately $451,000, compared to $303,000 during the same quarter of 2006. For the year ended Dec. 31, 2007, Pinnacle recognized $1.70 million in equity compensation expense related to the expensing of stock options, compared to $1.01 million during 2006. |
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| | • | | The efficiency ratio (noninterest expense divided by net interest income and noninterest income) was 62.1 percent during the fourth quarter of 2007 compared to 62.2 percent for the third quarter of 2007 and 58.8 percent in the fourth quarter of 2006. Excluding merger related expenses, the efficiency ratio was 59.8 percent in the fourth quarter of 2007 compared to an efficiency ratio of 58.6 percent in the fourth quarter of 2006. |
Carpenter noted that linked quarter expense growth of $2.7 million between the third and fourth quarters of 2007 was primarily attributable to increased expenses from the Knoxville expansion, the Mid-America merger, the increased number of associates and increasing variable costs associated with the dramatic growth of the firm.
PROGRESS OF THE MID-AMERICA ACQUISITION
On Aug. 15, 2007, Pinnacle reported that the firm had entered into a definitive agreement to acquire the stock of Mid-America Bancshares Inc., a two-bank holding company headquartered in Nashville, Tenn., with assets of approximately $1.1 billion. Pinnacle completed the acquisition of Mid-America on Nov. 30, 2007.
“At this point, we have completed or planned actions that should enable us to achieve our $7 million first-year synergy target,” said Turner. “Additionally, we expect that total deal costs, including those costs incurred by Mid-America prior to Nov. 30, 2007, will approximate the $19 million that we initially forecasted at the time of the announcement. Included in that amount is approximately $6.2 million which will be incurred as merger related expense during
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2008. We remain on plan to complete systems conversions and all other major integration milestones during the first quarter of 2008.
“Many times it is difficult for high-growth companies to acquire other companies without sacrificing balance sheet and earnings growth for some period of time. It is particularly difficult to continue marketing momentum during the merger integration period. We are pleased to report that during the last half of 2007, Pinnacle experienced organic loan growth of $223 million while Mid-America grew its loan balances by $100 million, which represents more combined organic loan growth than the entities had experienced over previous comparable time periods. This is a great tribute to our associates at both Pinnacle and the former Mid-America who continue to take advantage of the competitive vulnerabilities in the market and execute our growth strategies with precision.”
INVESTMENT OUTLOOK
Management has developed several financial forecast scenarios for the next several quarters. Based on anticipated growth trends and future investments in the franchise, including the impact of the Knoxville expansion, Pinnacle estimates its first quarter 2008 diluted earnings per share will approximate $0.32 to $0.36 per fully diluted share, excluding merger related expenses and that its 2008 diluted earnings per share will approximate $1.56 to $1.68 per fully diluted share, excluding merger related expenses. Pinnacle noted that its first quarter 2008 results will be impacted by yet to be realized synergies from Mid-America, compensation increases, and anticipated seasonality in noninterest bearing deposit balances. Concerning the Knoxville expansion, Pinnacle anticipates that Knoxville will be modestly accretive in 2008.
As noted previously, management has developed several scenarios under which these estimates can be achieved and believes these estimates to be reasonable based on these scenarios. However, unanticipated events or developments, including the execution of any initiative which could include the development of any markets other than metropolitan Nashville or Knoxville, any merger or acquisition, the opportunity to hire more seasoned professionals than anticipated, deterioration in economic conditions that impact our borrowers’ ability to repay their loans or the ability to grow loans significantly in excess of the levels contemplated may cause the actual results of Pinnacle to differ materially from these estimates.
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Pinnacle Financial Partners provides a full range of banking, investment and insurance products and services designed for small- to mid-sized businesses and their owners, real estate professionals and individuals interested in a comprehensive relationship with their financial institution. Comprehensive wealth management services, such as financial planning and trust, help clients increase, protect and distribute their assets. The firm also has a well-established expertise in commercial real estate.
The firm began operations in a single downtown Nashville location in October 2000 and has since grown to $3.8 billion in assets. In 2007, Pinnacle launched an expansion into Knoxville, another high growth MSA. The addition of Mid-America has made Pinnacle the second-largest bank holding company headquartered in Tennessee, with an anticipated 30 offices in the Nashville area once the integration is complete and two in Knoxville.
Additional information concerning Pinnacle can be accessed atwww.pnfp.com.
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Certain of the statements in this release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words “expect,” “anticipate,” “intend,” “plan,” “believe,” “seek,” “estimate” and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking. All forward-looking statements are subject to risks, uncertainties and other facts that may cause the actual results, performance or achievements of Pinnacle to differ materially from any results expressed or implied by such forward-looking statements. Such factors include, without limitation, (i) unanticipated deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses, (ii) the inability of Pinnacle to continue to grow its loan portfolio at historic rates in the Nashville-Davidson-Murfreesboro-Franklin MSA or projected rates in the Knoxville MSA, (iii) increased competition with other financial institutions, (iv) lack of sustained growth in the economy in the Nashville-Davidson-Murfreesboro-Franklin MSA and the Knoxville MSA, (v) rapid fluctuations or unanticipated changes in interest rates, (vi) the inability of Pinnacle to satisfy regulatory requirements for its expansion plans, (vii) the inability of Pinnacle to execute its expansion plans and (viii) changes in the legislative and regulatory environment. Additionally, risk factors exist in connection with Pinnacle’s merger with Mid-America including, among others, (1) the risk that the cost savings and any revenue synergies from the merger may not be realized or take longer than anticipated, (2) disruption from the merger with customers, suppliers or employee relationships, and (3) the risk of successful integration of the two companies’ businesses. Many of such factors are beyond Pinnacle’s ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. Pinnacle disclaims any obligation to update or revise any forward-looking statements contained in this release, whether as a result of new information, future events or otherwise.
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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS – UNAUDITED
| | | | | | | | | |
| | | December 31, 2007 | | | December 31, 2006 | |
| |
ASSETS | | | | | | | | |
| Cash and noninterest-bearing due from banks | | $ | 76,941,931 | | | $ | 43,611,533 | |
| Interest-bearing deposits due from banks | | | 24,706,966 | | | | 1,041,174 | |
| Federal funds sold and other | | | 20,854,966 | | | | 47,866,143 | |
| | | | | | | |
| Cash and cash equivalents | | | 122,503,863 | | | | 92,518,850 | |
| Securities available-for-sale, at fair value | | | 495,651,939 | | | | 319,237,428 | |
| Securities held-to-maturity (fair value of $26,883,473 and $26,594,235 at December 31, 2007 and 2006, respectively) | | | 27,033,356 | | | | 27,256,876 | |
| Mortgage loans held-for-sale | | | 11,251,652 | | | | 5,654,381 | |
| Loans | | | 2,749,640,689 | | | | 1,497,734,824 | |
| Less allowance for loan losses | | | (28,470,207 | ) | | | (16,117,978 | ) |
| | | | | | | |
| Loans, net | | | 2,721,170,482 | | | | 1,481,616,846 | |
| Premises and equipment, net | | | 68,385,946 | | | | 36,285,796 | |
| Investments in unconsolidated subsidiaries and other entities | | | 22,636,029 | | | | 16,200,684 | |
| Accrued interest receivable | | | 18,383,004 | | | | 11,019,173 | |
| Goodwill | | | 243,687,885 | | | | 114,287,640 | |
| Core deposit intangible | | | 17,325,988 | | | | 11,385,006 | |
| Other assets | | | 53,204,117 | | | | 26,724,183 | |
| | | | | | | |
| Total assets | | $ | 3,801,234,261 | | | $ | 2,142,186,863 | |
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| | | | | | | | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | |
| Deposits: | | | | | | | | |
| Noninterest-bearing demand | | $ | 400,120,147 | | | $ | 300,977,814 | |
| Interest-bearing demand | | | 410,661,187 | | | | 236,674,425 | |
| Savings and money market accounts | | | 742,354,465 | | | | 485,935,897 | |
| Time | | | 1,372,183,317 | | | | 598,823,167 | |
| | | | | | | |
| Total deposits | | | 2,925,319,116 | | | | 1,622,411,303 | |
| Securities sold under agreements to repurchase | | | 156,070,830 | | | | 141,015,761 | |
| Federal Home Loan Bank advances and other borrowings | | | 141,666,133 | | | | 53,725,833 | |
| Subordinated debt | | | 82,476,000 | | | | 51,548,000 | |
| Accrued interest payable | | | 10,374,538 | | | | 4,952,422 | |
| Other liabilities | | | 18,912,434 | | | | 12,516,523 | |
| | | | | | | |
| Total liabilities | | | 3,334,819,051 | | | | 1,886,169,842 | |
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Stockholders’ equity: | | | | | | | | |
| Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding | | | — | | | | — | |
| Common stock, par value $1.00; 90,000,000 shares authorized; 22,264,817 issued and outstanding at December 31, 2007 and 15,446,074 issued and outstanding at December 31, 2006 | | | 22,264,817 | | | | 15,446,074 | |
| Additional paid-in capital | | | 390,977,308 | | | | 211,502,516 | |
| Retained earnings | | | 54,150,679 | | | | 31,109,324 | |
| Accumulated other comprehensive loss, net | | | (977,594 | ) | | | (2,040,893 | ) |
| | | | | | | |
| Stockholders’ equity | | | 466,415,210 | | | | 256,017,021 | |
| | | | | | | |
| Total liabilities and stockholders’ equity | | $ | 3,801,234,261 | | | $ | 2,142,186,863 | |
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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME — UNAUDITED
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | | Year Ended | |
| | | December 31, | | | December 31, | |
| | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
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Interest income: | | | | | | | | | | | | | | | | |
| Loans, including fees | | $ | 37,605,268 | | | $ | 27,809,767 | | | $ | 129,888,784 | | | $ | 92,005,602 | |
| Securities: | | | | | | | | | | | | | | | | |
| Taxable | | | 3,833,771 | | | | 3,364,168 | | | | 13,961,714 | | | | 12,614,623 | |
| Tax-exempt | | | 959,662 | | | | 599,182 | | | | 3,066,519 | | | | 2,016,044 | |
| Federal funds sold and other | | | 939,052 | | | | 1,467,809 | | | | 4,014,424 | | | | 3,059,750 | |
| | | |
| Total interest income | | | 43,337,753 | | | | 33,240,926 | | | | 150,931,441 | | | | 109,696,019 | |
| | | |
| | | | | | | | | | | | | | | | | |
Interest expense: | | | | | | | | | | | | | | | | |
| Deposits | | | 17,634,417 | | | | 12,818,282 | | | | 61,671,734 | | | | 40,032,020 | |
| Securities sold under agreements to repurchase | | | 1,707,323 | | | | 1,759,944 | | | | 7,371,490 | | | | 4,329,327 | |
| Federal Home Loan Bank advances and other borrowings | | | 1,987,150 | | | | 1,271,218 | | | | 6,176,205 | | | | 4,381,878 | |
| | | |
| Total interest expense | | | 21,328,890 | | | | 15,849,444 | | | | 75,219,429 | | | | 48,743,225 | |
| | | |
| Net interest income | | | 22,008,863 | | | | 17,391,482 | | | | 75,712,012 | | | | 60,952,794 | |
Provision for loan losses | | | 2,259,813 | | | | 1,051,394 | | | | 4,719,841 | | | | 3,732,032 | |
| | | |
Net interest income after provision for loan losses | | | 19,749,050 | | | | 16,340,088 | | | | 70,992,171 | | | | 57,220,762 | |
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Noninterest income: | | | | | | | | | | | | | | | | |
| Service charges on deposit accounts | | | 2,257,830 | | | | 1,494,021 | | | | 7,941,029 | | | | 4,645,685 | |
| Investment sales commissions | | | 1,002,303 | | | | 651,777 | | | | 3,455,808 | | | | 2,463,205 | |
| Insurance sales commissions | | | 657,602 | | | | 559,756 | | | | 2,486,884 | | | | 2,122,702 | |
| Gain on loans and loan participations sold, net | | | 477,194 | | | | 582,575 | | | | 1,858,077 | | | | 1,868,184 | |
| Trust fees | | | 596,364 | | | | 504,845 | | | | 1,908,440 | | | | 1,180,839 | |
| Gain on sale of investment securities | | | 16,472 | | | | — | | | | 16,472 | | | | — | |
| Other noninterest income | | | 1,604,299 | | | | 1,141,311 | | | | 4,854,217 | | | | 3,505,903 | |
| | | |
| Total noninterest income | | | 6,612,064 | | | | 4,934,285 | | | | 22,520,927 | | | | 15,786,518 | |
| | | |
| | | | | | | | | | | | | | | | | |
Noninterest expense: | | | | | | | | | | | | | | | | |
| Compensation and employee benefits | | | 9,977,978 | | | | 8,154,910 | | | | 36,145,588 | | | | 27,469,275 | |
| Equipment and occupancy | | | 3,050,938 | | | | 2,196,328 | | | | 10,260,915 | | | | 7,521,602 | |
| Other real estate | | | 88,184 | | | | 2,085 | | | | 160,367 | | | | 2,169 | |
| Marketing and other business development | | | 619,363 | | | | 334,690 | | | | 1,676,455 | | | | 1,234,497 | |
| Postage and supplies | | | 542,070 | | | | 391,740 | | | | 1,995,267 | | | | 1,510,048 | |
| Amortization of core deposit intangible | | | 596,756 | | | | 534,895 | | | | 2,144,018 | | | | 1,783,230 | |
| Other noninterest expense | | | 2,264,739 | | | | 1,467,860 | | | | 7,475,072 | | | | 5,467,608 | |
| Merger related expense | | | 621,883 | | | | 53,097 | | | | 621,883 | | | | 1,635,831 | |
| | | |
| Total noninterest expense | | | 17,761,911 | | | | 13,135,605 | | | | 60,479,565 | | | | 46,624,260 | |
| | | |
Income before income taxes | | | 8,599,203 | | | | 8,138,768 | | | | 33,033,533 | | | | 26,383,020 | |
| Income tax expense | | | 2,357,363 | | | | 2,492,875 | | | | 9,992,178 | | | | 8,455,987 | |
| | | |
Net income | | $ | 6,241,840 | | | $ | 5,645,893 | | | $ | 23,041,355 | | | $ | 17,927,033 | |
| | | |
| | | | | | | | | | | | | | | | | |
Per share information: | | | | | | | | | | | | | | | | |
| Basic net income per common share | | $ | 0.35 | | | $ | 0.37 | | | $ | 1.43 | | | $ | 1.28 | |
| | | |
| Diluted net income per common share | | $ | 0.33 | | | $ | 0.34 | | | $ | 1.34 | | | $ | 1.18 | |
| | | |
| | | | | | | | | | | | | | | | | |
| Weighted average shares outstanding: | | | | | | | | | | | | | | | | |
| Basic | | | 17,753,661 | | | | 15,393,735 | | | | 16,100,076 | | | | 13,954,077 | |
| Diluted | | | 19,110,851 | | | | 16,655,349 | | | | 17,255,543 | | | | 15,156,837 | |
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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three months ended | | | Three months ended | |
| (dollars in thousands) | | December 31, 2007 | | | December 31, 2006 | |
| | | Average | | | | | | | | | | | Average | | | | | | | |
| | | Balances | | | Interest | | | Rates/ Yields | | | Balances | | | Interest | | | Rates/ Yields | |
| | | |
Interest-earning assets: | | | | | | | | | | | | | | | | | | | | | | | | |
| Loans | | $ | 2,063,442 | | | $ | 37,606 | | | | 7.23 | % | | $ | 1,442,730 | | | $ | 27,810 | | | | 7.65 | % |
| Securities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Taxable | | | 309,353 | | | | 3,834 | | | | 4.92 | % | | | 268,786 | | | | 3,364 | | | | 4.97 | % |
| Tax-exempt (1) | | | 100,789 | | | | 959 | | | | 4.98 | % | | | 65,640 | | | | 599 | | | | 4.78 | % |
| Federal funds sold and other | | | 68,215 | | | | 939 | | | | 5.71 | % | | | 102,603 | | | | 1,468 | | | | 5.78 | % |
| | | |
| Total interest-earning assets | | | 2,541,799 | | | $ | 43,338 | | | | 6.82 | % | | | 1,879,759 | | | $ | 33,241 | | | | 7.06 | % |
| | | | | | | | | | | | | |
Nonearning assets: | | | | | | | | | | | | | | | | | | | | | | | | |
| Intangible assets | | | 169,140 | | | | | | | | | | | | 126,408 | | | | | | | | | |
| Other nonearning assets | | | 80,730 | | | | | | | | | | | | 90,726 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 2,791,669 | | | | | | | | | | | $ | 2,096,893 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing deposits | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest checking | | $ | 284,121 | | | $ | 2,083 | | | | 2.91 | % | | $ | 210,620 | | | $ | 1,542 | | | | 2.91 | % |
| Savings and money market | | | 599,127 | | | | 4,497 | | | | 2.98 | % | | | 487,500 | | | | 4,149 | | | | 3.38 | % |
| Certificates of deposit | | | 924,859 | | | | 11,055 | | | | 4.74 | % | | | 605,649 | | | | 7,127 | | | | 4.67 | % |
| | | |
| Total interest-bearing deposits | | | 1,808,107 | | | | 17,635 | | | | 3.87 | % | | | 1,303,769 | | | | 12,818 | | | | 3.90 | % |
| Securities sold under agreements to repurchase | | | 201,605 | | | | 1,707 | | | | 3.36 | % | | | 154,483 | | | | 1,760 | | | | 4.52 | % |
| Federal Home Loan Bank advances and other borrowings | | | 57,970 | | | | 673 | | | | 4.61 | % | | | 30,783 | | | | 383 | | | | 4.94 | % |
| Subordinated debt | | | 72,391 | | | | 1,314 | | | | 7.20 | % | | | 51,548 | | | | 889 | | | | 6.84 | % |
| | | |
| Total interest-bearing liabilities | | | 2,140,073 | | | | 21,329 | | | | 3.95 | % | | | 1,540,583 | | | | 15,850 | | | | 4.08 | % |
Noninterest-bearing deposits | | | 327,866 | | | | — | | | | — | | | | 292,996 | | | | — | | | | — | |
| | | |
| Total deposits and interest-bearing liabilities | | | 2,467,939 | | | $ | 21,329 | | | | 3.43 | % | | | 1,833,579 | | | $ | 15,850 | | | | 3.43 | % |
| | | | | | | | | | | | | |
| Other liabilities | | | 14,299 | | | | | | | | | | | | 9,553 | | | | | | | | | |
Stockholders’ equity | | | 309,431 | | | | | | | | | | | | 253,761 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 2,791,669 | | | | | | | | | | | $ | 2,096,893 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Net interest income | | | | | | $ | 22,009 | | | | | | | | | | | $ | 17,391 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Net interest spread (2) | | | | | | | | | | | 2.87 | % | | | | | | | | | | | 2.98 | % |
| Net interest margin (3) | | | | | | | | | | | 3.49 | % | | | | | | | | | | | 3.74 | % |
| | |
| (1) | | Yields computed on tax-exempt instruments on a tax equivalent basis. |
| |
| (2) | | Yields realized on interest-earning assets less the rates paid on interest-bearing liabilities. |
| |
| (3) | | 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. |
Page 12
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Year ended | | | Year ended | |
| (dollars in thousands) | | December 31, 2007 | | | December 31, 2006 | |
| |
| | | Average | | | | | | | | | | | Average | | | | | | | |
| | | Balances | | | Interest | | | Rates/ Yields | | | Balances | | | Interest | | | Rates/ Yields | |
| | | |
Interest-earning assets: | | | | | | | | | | | | | | | | | | | | | | | | |
| Loans | | $ | 1,723,361 | | | $ | 129,889 | | | | 7.54 | % | | $ | 1,226,803 | | | $ | 92,006 | | | | 7.50 | % |
| Securities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Taxable | | | 280,668 | | | | 13,962 | | | | 4.97 | % | | | 254,906 | | | | 12,615 | | | | 4.95 | % |
| Tax-exempt (1) | | | 82,001 | | | | 3,066 | | | | 4.93 | % | | | 54,270 | | | | 2,016 | | | | 4.90 | % |
| Federal funds sold and other | | | 72,344 | | | | 4,014 | | | | 5.57 | % | | | 53,562 | | | | 3,059 | | | | 6.87 | % |
| | | |
| Total interest-earning assets | | | 2,158,374 | | | $ | 150,931 | | | | 7.04 | % | | | 1,589,541 | | | $ | 109,696 | | | | 6.95 | % |
| | | | | | | | | | | | | |
Nonearning assets: | | | | | | | | | | | | | | | | | | | | | | | | |
| Intangible assets | | | 135,893 | | | | | | | | | | | | 100,107 | | | | | | | | | |
| Other nonearning assets | | | 93,782 | | | | | | | | | | | | 89,568 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 2,388,049 | | | | | | | | | | | $ | 1,779,216 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Interest-bearing liabilities: | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest-bearing deposits Interest checking | | $ | 261,163 | | | $ | 8,309 | | | | 3.18 | % | | $ | 171,637 | | | $ | 4,074 | | | | 2.37 | % |
| Savings and money market | | | 535,468 | | | | 17,618 | | | | 3.29 | % | | | 435,082 | | | | 13,532 | | | | 3.11 | % |
| Certificates of deposit | | | 727,724 | | | | 35,745 | | | | 4.91 | % | | | 516,394 | | | | 22,426 | | | | 4.34 | % |
| | | |
| Total interest-bearing deposits | | | 1,524,355 | | | | 61,672 | | | | 4.05 | % | | | 1,123,113 | | | | 40,032 | | | | 3.56 | % |
| Securities sold under agreements to repurchase | | | 181,621 | | | | 7,371 | | | | 4.06 | % | | | 101,144 | | | | 4,329 | | | | 4.28 | % |
| Federal Home Loan Bank advances and other borrowings | | | 44,072 | | | | 2,211 | | | | 5.02 | % | | | 39,728 | | | | 1,878 | | | | 4.68 | % |
| Subordinated debt | | | 56,759 | | | | 3,965 | | | | 6.98 | % | | | 37,372 | | | | 2,504 | | | | 6.70 | % |
| | | |
| Total interest-bearing liabilities | | | 1,806,807 | | | | 75,219 | | | | 4.16 | % | | | 1,301,357 | | | | 48,743 | | | | 3.75 | % |
Noninterest-bearing deposits | | | 291,983 | | | | — | | | | — | | | | 259,585 | | | | — | | | | — | |
| | | |
| Total deposits and interest-bearing liabilities | | | 2,098,790 | | | $ | 75,219 | | | | 3.58 | % | | | 1,560,942 | | | $ | 48,743 | | | | 3.12 | % |
| | | | | | | | | | | | | |
| Other liabilities | | | 13,108 | | | | | | | | | | | | 11,105 | | | | | | | | | |
Stockholders’ equity | | | 276,151 | | | | | | | | | | | | 207,169 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| | | $ | 2,388,049 | | | | | | | | | | | $ | 1,779,216 | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
Net interest income | | | | | | $ | 75,712 | | | | | | | | | | | $ | 60,953 | | | | | |
| | | | | | | | | | | | | | | | | | | | | | | |
| Net interest spread (2) | | | | | | | | | | | 2.88 | % | | | | | | | | | | | 3.20 | % |
| Net interest margin (3) | | | | | | | | | | | 3.55 | % | | | | | | | | | | | 3.90 | % |
| | |
| (1) | | Yields computed on tax-exempt instruments on a tax equivalent basis. |
| |
| (2) | | Yields realized on interest-earning assets less the rates paid on interest-bearing liabilities. |
| |
| (3) | | 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. |
Page 13
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA — UNAUDITED
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Dec | | | Sept | | | June | | | Mar | | | Dec | | | Sept | |
| (dollars in thousands, except per share data) | | 2007 | | | 2007 | | | 2007 | | | 2007 | | | 2006 | | | 2006 | |
| |
Balance sheet data, at quarter end: | | | | | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 3,801,234 | | | | 2,368,079 | �� | | | 2,315,327 | | | | 2,193,132 | | | | 2,142,187 | | | | 2,052,252 | |
| Total loans | | | 2,749,641 | | | | 1,731,245 | | | | 1,663,030 | | | | 1,553,980 | | | | 1,497,735 | | | | 1,405,401 | |
| Allowance for loan losses | | | (28,470 | ) | | | (17,978 | ) | | | (17,375 | ) | | | (16,792 | ) | | | (16,118 | ) | | | (15,172 | ) |
| Securities | | | 522,685 | | | | 352,222 | | | | 339,781 | | | | 340,255 | | | | 346,494 | | | | 330,759 | |
| Noninterest-bearing deposits | | | 400,120 | | | | 316,542 | | | | 294,631 | | | | 306,885 | | | | 300,978 | | | | 306,296 | |
| Total deposits | | | 2,925,319 | | | | 1,826,884 | | | | 1,797,536 | | | | 1,700,132 | | | | 1,622,411 | | | | 1,585,238 | |
| Securities sold under agreements to repurchase | | | 156,071 | | | | 145,332 | | | | 140,443 | | | | 116,952 | | | | 141,016 | | | | 122,354 | |
| Advances from FHLB and other borrowings | | | 141,666 | | | | 55,671 | | | | 46,699 | | | | 46,619 | | | | 53,726 | | | | 28,739 | |
| Subordinated debt | | | 82,476 | | | | 51,548 | | | | 51,548 | | | | 51,548 | | | | 51,548 | | | | 51,548 | |
| Total stockholders’ equity | | | 466,415 | | | | 274,636 | | | | 265,194 | | | | 262,917 | | | | 256,017 | | | | 249,059 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Balance sheet data, quarterly averages: | | | | | | | | | | | | | | | | | | | | | | | | |
| Total assets | | $ | 2,791,669 | | | | 2,378,501 | | | | 2,229,227 | | | | 2,149,928 | | | | 2,096,893 | | | | 1,987,236 | |
| Total loans | | | 2,063,442 | | | | 1,697,862 | | | | 1,598,967 | | | | 1,530,771 | | | | 1,442,730 | | | | 1,375,036 | |
| Securities | | | 410,142 | | | | 347,423 | | | | 347,081 | | | | 345,630 | | | | 334,426 | | | | 317,332 | |
| Total earning assets | | | 2,541,799 | | | | 2,151,583 | | | | 2,004,884 | | | | 1,932,298 | | | | 1,879,759 | | | | 1,751,559 | |
| Noninterest-bearing deposits | | | 327,866 | | | | 293,701 | | | | 276,241 | | | | 269,864 | | | | 292,996 | | | | 281,812 | |
| Total deposits | | | 2,135,973 | | | | 1,814,135 | | | | 1,678,036 | | | | 1,634,513 | | | | 1,596,765 | | | | 1,535,667 | |
| Securities sold under agreements to repurchase | | | 201,605 | | | | 194,774 | | | | 172,872 | | | | 157,180 | | | | 154,483 | | | | 122,292 | |
| Advances from FHLB and other borrowings | | | 57,970 | | | | 29,946 | | | | 38,516 | | | | 37,828 | | | | 29,817 | | | | 33,299 | |
| Subordinated debt | | | 72,391 | | | | 51,548 | | | | 51,548 | | | | 51,548 | | | | 51,548 | | | | 36,084 | |
| Total stockholders’ equity | | | 309,431 | | | | 271,653 | | | | 264,055 | | | | 259,466 | | | | 253,761 | | | | 244,980 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Statement of operations data, for the three months ended: | | | | | | | | | | | | | | | | | | | | | | | | |
| Interest income | | $ | 43,338 | | | | 38,347 | | | | 35,508 | | | | 33,739 | | | | 33,241 | | | | 31,340 | |
| Interest expense | | | 21,329 | | | | 19,387 | | | | 17,847 | | | | 16,657 | | | | 15,850 | | | | 14,181 | |
| | | |
| Net interest income | | | 22,009 | | | | 18,960 | | | | 17,661 | | | | 17,082 | | | | 17,391 | | | | 17,159 | |
| Provision for loan losses | | | 2,260 | | | | 772 | | | | 900 | | | | 788 | | | | 1,051 | | | | 587 | |
| | | |
| Net interest income after provision for loan losses | | | 19,749 | | | | 18,188 | | | | 16,761 | | | | 16,294 | | | | 16,340 | | | | 16,572 | |
| Noninterest income | | | 6,612 | | | | 5,332 | | | | 5,552 | | | | 5,026 | | | | 4,934 | | | | 4,424 | |
| Noninterest expense | | | 17,762 | | | | 15,110 | | | | 14,484 | | | | 13,124 | | | | 13,135 | | | | 13,054 | |
| | | |
| Income before taxes | | | 8,599 | | | | 8,410 | | | | 7,828 | | | | 8,196 | | | | 8,139 | | | | 7,942 | |
| Income tax expense | | | 2,357 | | | | 2,638 | | | | 2,402 | | | | 2,594 | | | | 2,493 | | | | 2,595 | |
| | | |
| Net income | | $ | 6,242 | | | | 5,772 | | | | 5,426 | | | | 5,602 | | | | 5,646 | | | | 5,347 | |
| | | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Profitability and other ratios: | | | | | | | | | | | | | | | | | | | | | | | | |
| Return on avg. assets (1) | | | 0.89 | % | | | 0.96 | % | | | 0.98 | % | | | 1.06 | % | | | 1.07 | % | | | 1.07 | % |
| Return on avg. equity (1) | | | 8.00 | % | | | 8.43 | % | | | 8.24 | % | | | 8.76 | % | | | 8.83 | % | | | 8.66 | % |
| Net interest margin (2) | | | 3.49 | % | | | 3.54 | % | | | 3.58 | % | | | 3.64 | % | | | 3.74 | % | | | 3.95 | % |
| Noninterest income to total revenue (3) | | | 23.10 | % | | | 21.95 | % | | | 23.92 | % | | | 22.73 | % | | | 22.10 | % | | | 20.50 | % |
| Noninterest income to avg. assets (1) | | | 0.94 | % | | | 0.89 | % | | | 1.00 | % | | | 0.95 | % | | | 0.93 | % | | | 0.89 | % |
| Noninterest exp. to avg. assets (1) | | | 2.52 | % | | | 2.52 | % | | | 2.61 | % | | | 2.48 | % | | | 2.49 | % | | | 2.63 | % |
| Efficiency ratio (4) | | | 62.06 | % | | | 62.20 | % | | | 62.40 | % | | | 59.36 | % | | | 58.84 | % | | | 60.48 | % |
| Avg. loans to average deposits | | | 96.60 | % | | | 93.59 | % | | | 95.29 | % | | | 93.65 | % | | | 90.40 | % | | | 89.50 | % |
| Securities to total assets | | | 13.75 | % | | | 14.87 | % | | | 14.68 | % | | | 15.51 | % | | | 16.17 | % | | | 16.12 | % |
| Average interest-earning assets to average interest-bearing liabilities | | | 118.77 | % | | | 119.75 | % | | | 119.75 | % | | | 119.75 | % | | | 122.00 | % | | | 121.20 | % |
| Brokered time deposits to total deposits | | | 9.48 | % | | | 8.04 | % | | | 8.17 | % | | | 5.83 | % | | | 3.71 | % | | | 4.50 | % |
Page 14
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA — UNAUDITED
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Dec | | | Sept | | | June | | | Mar | | | Dec | | | Sept | |
| (dollars in thousands, except per share data) | | 2007 | | | 2007 | | | 2007 | | | 2007 | | | 2006 | | | 2006 | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Asset quality information and ratios: | | | | | | | | | | | | | | | | | | | | | | | | |
| Nonperforming assets: | | | | | | | | | | | | | | | | | | | | | | | | |
| Nonaccrual loans | | $ | 19,677 | | | | 2,364 | | | | 2,392 | | | | 4,705 | | | | 7,070 | | | | 3,477 | |
| Other real estate | | | 1,673 | | | | 878 | | | | 687 | | | | 927 | | | | 995 | | | | — | |
| Past due loans over 90 days and still accruing interest | | | 1,613 | | | | 633 | | | | 606 | | | | 98 | | | | 737 | | | | 1,123 | |
| Net loan charge-offs (6) | | | 462 | | | | 169 | | | | 317 | | | | 114 | | | | 105 | | | | 101 | |
| Allowance for loan losses to total loans | | | 1.04 | % | | | 1.04 | % | | | 1.04 | % | | | 1.08 | % | | | 1.08 | % | | | 1.08 | % |
| Allowance for loan losses to nonaccrual loans | | | 144.7 | % | | | 760.5 | % | | | 726.4 | % | | | 356.9 | % | | | 228.0 | % | | | 436.4 | % |
| As a percentage of total loans and ORE: | | | | | | | | | | | | | | | | | | | | | | | | |
| Past due loans over 30 days | | | 0.45 | % | | | 0.38 | % | | | 0.31 | % | | | 0.33 | % | | | 0.74 | % | | | 0.69 | % |
| Nonperforming assets | | | 0.78 | % | | | 0.19 | % | | | 0.19 | % | | | 0.36 | % | | | 0.54 | % | | | 0.25 | % |
| Potential problem loans (5) | | | 0.56 | % | | | 0.40 | % | | | 0.16 | % | | | 0.21 | % | | | 0.24 | % | | | 0.77 | % |
| Annualized net loan charge-offs year-to-date to avg. loans (6) | | | 0.07 | % | | | 0.05 | % | | | 0.06 | % | | | 0.03 | % | | | 0.05 | % | | | 0.05 | % |
| Avg. commercial loan internal risk ratings (5) | | | 4.1 | | | | 4.1 | | | | 4.1 | | | | 4.1 | | | | 4.1 | | | | 4.1 | |
| Avg. loan account balances (7) | | $ | 160 | | | | 169 | | | | 164 | | | | 156 | | | | 140 | | | | 132 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Interest rates and yields: | | | | | | | | | | | | | | | | | | | | | | | | |
| Loans | | | 7.23 | % | | | 7.65 | % | | | 7.66 | % | | | 7.68 | % | | | 7.65 | % | | | 7.72 | % |
| Securities | | | 4.92 | % | | | 4.99 | % | | | 4.98 | % | | | 4.96 | % | | | 4.97 | % | | | 4.91 | % |
| Total earning assets | | | 6.82 | % | | | 7.12 | % | | | 7.15 | % | | | 7.13 | % | | | 7.06 | % | | | 7.14 | % |
| Total deposits, including non-interest bearing | | | 3.28 | % | | | 3.51 | % | | | 3.46 | % | | | 3.36 | % | | | 3.18 | % | | | 3.05 | % |
| Securities sold under agreements to repurchase | | | 3.36 | % | | | 4.20 | % | | | 4.39 | % | | | 4.42 | % | | | 4.52 | % | | | 4.49 | % |
| FHLB advances and other borrowings | | | 4.61 | % | | | 5.10 | % | | | 5.19 | % | | | 5.36 | % | | | 4.94 | % | | | 4.57 | % |
| Subordinated debt | | | 7.20 | % | | | 6.90 | % | | | 6.84 | % | | | 6.89 | % | | | 6.84 | % | | | 6.75 | % |
| Total deposits and interest-bearing liabilities | | | 3.43 | % | | | 3.68 | % | | | 3.67 | % | | | 3.59 | % | | | 3.43 | % | | | 3.26 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Capital ratios (8): | | | | | | | | | | | | | | | | | | | | | | | | |
| Stockholders’ equity to total assets | | | 12.3 | % | | | 11.6 | % | | | 11.5 | % | | | 12.0 | % | | | 11.9 | % | | | 12.1 | % |
| Leverage | | | 11.6 | % | | | 9.2 | % | | | 9.5 | % | | | 9.5 | % | | | 9.5 | % | | | 9.2 | % |
| Tier one risk-based | | | 9.5 | % | | | 10.4 | % | | | 10.4 | % | | | 10.9 | % | | | 10.9 | % | | | 10.6 | % |
| Total risk-based | | | 10.4 | % | | | 11.3 | % | | | 11.3 | % | | | 11.8 | % | | | 11.8 | % | | | 12.0 | % |
Page 15
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA — UNAUDITED
| | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Dec | | | Sept | | | June | | | Mar | | | Dec | | | Sept | |
| (dollars in thousands, except per share data) | | 2007 | | | 2007 | | | 2007 | | | 2007 | | | 2006 | | | 2006 | |
| |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Per share data: | | | | | | | | | | | | | | | | | | | | | | | | |
| Earnings — basic | | $ | 0.35 | | | | 0.37 | | | | 0.35 | | | | 0.36 | | | | 0.37 | | | | 0.35 | |
| Earnings — diluted | | $ | 0.33 | | | | 0.35 | | | | 0.33 | | | | 0.34 | | | | 0.34 | | | | 0.32 | |
| Book value at quarter end (9) | | $ | 20.95 | | | | 17.66 | | | | 17.06 | | | | 16.93 | | | | 16.57 | | | | 16.16 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
| Weighted avg. shares — basic | | | 17,753,661 | | | | 15,503,284 | | | | 15,494,522 | | | | 15,433,442 | | | | 15,393,735 | | | | 15,393,735 | |
| Weighted avg. shares — diluted | | | 19,110,851 | | | | 16,609,328 | | | | 16,664,213 | | | | 16,617,484 | | | | 16,655,349 | | | | 16,655,349 | |
| Common shares outstanding | | | 22,264,817 | | | | 15,553,037 | | | | 15,545,581 | | | | 15,530,975 | | | | 15,446,074 | | | | 15,409,341 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Investor information: | | | | | | | | | | | | | | | | | | | | | | | | |
| Closing sales price | | $ | 25.42 | | | | 28.82 | | | | 29.36 | | | | 30.51 | | | | 33.18 | | | | 35.80 | |
| High sales price during quarter | | $ | 30.93 | | | | 31.31 | | | | 31.48 | | | | 33.85 | | | | 36.17 | | | | 37.41 | |
| Low sales price during quarter | | $ | 24.85 | | | | 21.62 | | | | 28.27 | | | | 29.40 | | | | 31.23 | | | | 28.93 | |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Other information: | | | | | | | | | | | | | | | | | | | | | | | | |
| Gains on sale of loans and loan participations sold: | | | | | | | | | | | | | | | | | | | | | | | | |
| Mortgage loan sales: | | | | | | | | | | | | | | | | | | | | | | | | |
| Gross loans sold | | $ | 40,273 | | | | 42,895 | | | | 52,197 | | | | 31,044 | | | | 36,551 | | | | 37,371 | |
| Gross fees (10) | | $ | 750 | | | | 659 | | | | 846 | | | | 544 | | | | 653 | | | | 679 | |
| Gross fees as a percentage of mortgage loans originated | | | 1.86 | % | | | 1.54 | % | | | 1.62 | % | | | 1.75 | % | | | 1.79 | % | | | 1.82 | % |
| Commercial loan participations sold | | $ | 8 | | | | 19 | | | | 167 | | | | 45 | | | | 224 | | | | 31 | |
| Gains on sales of investment securities, net | | $ | 16 | | | | — | | | | — | | | | — | | | | — | | | | — | |
| Brokerage account assets, at quarter-end (11) | | $ | 878,000 | | | | 590,000 | | | | 643,000 | | | | 617,000 | | | | 597,000 | | | | 553,000 | |
| Trust account assets, at quarter-end | | $ | 464,000 | | | | 512,000 | | | | 475,000 | | | | 400,000 | | | | 380,000 | | | | 361,000 | |
| Floating rate loans as a percentage of loans (12) | | | 41.8 | % | | | 44.6 | % | | | 45.5 | % | | | 46.3 | % | | | 46.3 | % | | | 47.3 | % |
| Balance of commercial loan participations sold to other banks and serviced by Pinnacle, at quarter end | | $ | 233,400 | | | | 125,370 | | | | 115,913 | | | | 114,143 | | | | 95,398 | | | | 85,291 | |
| Core deposits to total funding (13) | | | 58.2 | % | | | 61.4 | % | | | 62.3 | % | | | 63.7 | % | | | 63.3 | % | | | 63.7 | % |
| Risk-weighted assets | | $ | 3,103,293 | | | | 1,998,401 | | | | 1,921,648 | | | | 1,780,107 | | | | 1,721,633 | | | | 1,628,596 | |
| Total assets per full-time equivalent employee | | $ | 5,415 | | | | 5,257 | | | | 5,250 | | | | 5,228 | | | | 5,302 | | | | 5,189 | |
| Annualized revenues per full-time equivalent employee | | $ | 161.8 | | | | 213.9 | | | | 211.1 | | | | 210.8 | | | | 219.2 | | | | 218.3 | |
| Number of employees (full-time equivalent) | | | 702.0 | | | | 450.5 | | | | 441.0 | | | | 419.5 | | | | 404.0 | | | | 395.5 | |
| Associate retention rate (14) | | | 89.7 | % | | | 89.4 | % | | | 88.1 | % | | | 85.3 | % | | | 85.1 | % | | | 91.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | |
Selected economic information (15): | | | | | | | | | | | | | | | | | | | | | | | | |
| Nashville MSA nonfarm employment | | | 795.2 | | | | 763.6 | | | | 759.5 | | | | 757.5 | | | | 768.8 | | | | 758.4 | |
| Knoxville MSA nonfarm employment | | | 358.7 | | | | 337.2 | | | | 335.9 | | | | 335.2 | | | | 337.3 | | | | 335.1 | |
| Nashville MSA unemployment | | | 4.2 | % | | | 3.5 | % | | | 3.7 | % | | | 4.0 | % | | | 3.5 | % | | | 3.5 | % |
| Knoxville MSA unemployment | | | 3.9 | % | | | 3.2 | % | | | 3.4 | % | | | 3.8 | % | | | 3.3 | % | | | 3.2 | % |
| Nashville residential median home price | | $ | 187.9 | | | | 182.3 | | | | 196.0 | | | | 173.4 | | | | 184.6 | | | | 178.9 | |
| Nashville inventory of residential homes for sale | | | 13.4 | | | | 15.4 | | | | 14.6 | | | | 12.9 | | | | 10.8 | | | | 11.7 | |
Page 16
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY AND YEAR-TO-DATE FINANCIAL DATA — UNAUDITED
| | | | | | | | | |
| | | As of December 31, | | | As of December 31, | |
| (dollars in thousands,except per share data) | | 2007 | | | 2006 | |
| |
Reconciliation of certain financial measures: | | | | | | | | |
| Tangible assets: | | | | | | | | |
| Total assets | | $ | 3,801,234 | | | $ | 2,142,187 | |
| Less: Goodwill | | | (243,688 | ) | | | (114,288 | ) |
| Core deposit intangible | | | (17,326 | ) | | | (11,385 | ) |
| | | |
| Net tangible assets | | $ | 3,540,220 | | | $ | 2,016,514 | |
| | | |
| | | | | | | | | |
| Tangible equity: | | | | | | | | |
| Total stockholders’ equity | | $ | 466,415 | | | $ | 256,017 | |
| Less: Goodwill | | | (243,688 | ) | | | (114,288 | ) |
| Core deposit intangible | | | (17,326 | ) | | | (11,385 | ) |
| | | |
| Net tangible equity | | $ | 205,401 | | | $ | 130,344 | |
| | | |
| | | | | | | | | |
Tangible equity divided by tangible assets | | | 5.80 | % | | | 6.46 | % |
| | | |
| | | | | | | | | |
Tangible equity per common share | | $ | 9.23 | | | $ | 8.44 | |
| | | |
| | | | | | | | | | | | | | | | | |
| | | For the three months ended | | | For the year ended | |
| | | December 31, | | | December 31, | |
| (dollars in thousands) | | 2007 | | | 2006 | | | 2007 | | | 2006 | |
| |
| | | | | | | | | | | | | | | | | |
| Average tangible assets: | | | | | | | | | | | | | | | | |
| Total average assets | | $ | 2,791,669 | | | $ | 2,096,893 | | | $ | 2,388,049 | | | $ | 1,779,216 | |
| Less: Average intangible assets | | | (169,140 | ) | | | (126,408 | ) | | | (135,893 | ) | | | (100,107 | ) |
| | | |
| Net average tangible assets | | $ | 2,622,529 | | | $ | 1,970,485 | | | $ | 2,252,156 | | | $ | 1,679,109 | |
| | | |
| | | | | | | | | | | | | | | | | |
| Average tangible equity: | | | | | | | | | | | | | | | | |
| Total average stockholders’ equity | | $ | 309,431 | | | $ | 253,761 | | | $ | 276,151 | | | $ | 207,169 | |
| Less: Average intangible assets | | | (169,140 | ) | | | (126,408 | ) | | | (135,893 | ) | | | (100,107 | ) |
| | | |
| Net average tangible stockholders’ equity | | $ | 140,291 | | | $ | 127,353 | | | $ | 140,258 | | | $ | 107,062 | |
| | | |
| | | | | | | | | | | | | | | | | |
| Net income | | $ | 6,242 | | | $ | 5,646 | | | $ | 23,041 | | | $ | 17,927 | |
| | | |
| | | | | | | | | | | | | | | | | |
| Return on average tangible assets (annualized) | | | 0.94 | % | | | 1.14 | % | | | 1.02 | % | | | 1.07 | % |
| | | |
| | | | | | | | | | | | | | | | | |
| Return on average tangible stockholders’ equity (annualized) | | | 17.65 | % | | | 17.78 | % | | | 16.43 | % | | | 16.74 | % |
| | | |
| | | | | | | | | | | | | | | | | |
| Net income | | $ | 6,242 | | | $ | 5,646 | | | $ | 23,041 | | | $ | 17,927 | |
| Impact of merger related expense, net of tax | | | 378 | | | | 32 | | | | 378 | | | | 994 | |
| | | |
Net income before impact of merger related expense | | $ | 6,620 | | | $ | 5,678 | | | $ | 23,419 | | | $ | 18,921 | |
| | | |
Fully-diluted earnings per share before impact of merger related expense | | $ | 0.35 | | | $ | 0.34 | | | $ | 1.36 | | | $ | 1.25 | |
| | | |
| | | | | | | | | | | | | | | | | |
| Net income | | $ | 6,242 | | | $ | 5,646 | | | $ | 23,041 | | | $ | 17,927 | |
| Impact of Knoxville expansion, net of tax | | | 557 | | | | — | | | | 1,546 | | | | — | |
| | | |
Net income before impact of Knoxville expansion | | $ | 6,799 | | | $ | 5,646 | | | $ | 24,587 | | | $ | 17,927 | |
| | | |
Fully-diluted earnings per share before impact of Knoxville expansion | | $ | 0.36 | | | $ | 0.34 | | | $ | 1.42 | | | $ | 1.18 | |
| | | |
Return on average assets before impact of Knoxville expansion | | | 0.97 | % | | | 1.07 | % | | | 1.03 | % | | | 1.01 | % |
| | | |
Return on average equity before impact of Knoxville expansion | | | 8.72 | % | | | 8.83 | % | | | 8.90 | % | | | 8.65 | % |
| | | |
Return on average assets before impact of Knoxville expansion and merger expenses | | | 1.02 | % | | | 1.07 | % | | | 1.05 | % | | | 1.06 | % |
| | | |
Return on average equity before impact of Knoxville expansion and merger expenses | | | 9.20 | % | | | 8.88 | % | | | 9.04 | % | | | 9.13 | % |
| | | |
| | | | | | | | | | | | | | | | | |
| Total expenses | | $ | 17,762 | | | $ | 13,136 | | | $ | 60,480 | | | $ | 46,624 | |
| Less: merger expense | | | (622 | ) | | | (53 | ) | | | (622 | ) | | | (1,636 | ) |
| | | |
Total expenses before impact of merger related expense | | $ | 17,140 | | | $ | 13,083 | | | $ | 59,858 | | | $ | 44,988 | |
| | | |
| | | | | | | | | | | | | | | | | |
Efficiency ratio before impact of merger related expense | | | 59.89 | % | | | 58.60 | % | | | 60.93 | % | | | 58.63 | % |
| | | |
Page 17
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA — UNAUDITED
| 1. | | Ratios are presented on an annualized basis. |
| |
| 2. | | Net interest margin is the result of net interest income on a tax equivalent basis divided by average interest earning assets. |
| |
| 3. | | Total revenue is equal to the sum of net interest income and noninterest income. |
| |
| 4. | | Efficiency ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income. |
| |
| 5. | | Average risk ratings are based on an internal loan review system which assigns a numeric value of 1 to 10 to all loans to commercial entities based on their underlying risk characteristics as of the end of each quarter. A “1” risk rating is assigned to credits that exhibit Excellent risk characteristics, “2” exhibit Very Good risk characteristics, “3” Good, “4” Satisfactory, “5” Acceptable or Average, “6” Watch List, “7” Criticized, “8” Classified or Substandard, “9” Doubtful and “10” Loss (which are charged-off immediately). Additionally, loans rated “8” or worse are considered potential problem loans. Potential problem loans do not include nonperforming loans. Generally, consumer loans are not subjected to internal risk ratings. |
| |
| 6. | | Annualized net loan charge-offs to average loans ratios are computed by annualizing year-to-date net loan charge-offs and dividing the result by average loans for the year-to-date period. |
| |
| 7. | | Computed by dividing the balance of all loans by the number of loan accounts as of the end of each quarter. |
| |
| 8. | | Capital ratios are for Pinnacle Financial Partners, Inc. and are defined as follows: Equity to total assets — End of period total stockholders’ equity as a percentage of end of period assets. Leverage — Tier one capital (pursuant to risk-based capital guidelines) as a percentage of adjusted average assets. Tier one risk-based — Tier one capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets. Total risk-based — Total capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets. |
| |
| 9. | | Book value per share computed by dividing total stockholders’ equity by common shares outstanding |
| |
| 10. | | Amounts are included in the statement of income in “Gains on the sale of loans and loan participations sold”, net of commissions paid on such amounts. |
| |
| 11. | | At fair value, based on information obtained from Pinnacle’s third party broker/dealer for non-FDIC insured financial products and services. |
| |
| 12. | | Floating rate loans are those loans that are eligible for repricing on a daily basis subject to changes in Pinnacle’s prime lending rate or other factors. |
| |
| 13. | | Core deposits include all transaction deposit accounts, money market and savings accounts and all certificates of deposit issued in a denomination of less than $100,000. The ratio noted above represents total core deposits divided by total funding, which includes total deposits, FHLB advances, securities sold under agreements to repurchase, subordinated indebtedness and all other interest-bearing liabilities. |
| |
| 14. | | Associate retention rate is computed by dividing the number of associates employed at quarter-end less the number of associates that have resigned in the last 12 months by the number of associates employed at quarter-end. |
| |
| 15. | | Employment and unemployment data is from the US Dept. of Labor Bureau of Labor Statistics. Labor force data is not seasonally adjusted. The most recent quarter data presented is as of the most recent month that data is available as of the release date. The Nashville home data is from the Greater Nashville Association of Realtors. |
Page 18
