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SECURITIES AND EXCHANGE COMMISSION
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
![](https://capedge.com/proxy/10-K/0000950144-08-001732/g12075g1207502.gif)
Tennessee | 62-1812853 | |
(State or other jurisdiction of incorporation) | (I.R.S. Employer Identification No.) |
211 Commerce Street, Suite 300, Nashville, Tennessee | 37201 | |
(Address of principal executive offices) | (Zip Code) |
Title of Each Class | Name of Exchange on which Registered | |
Common Stock, par value $1.00 | Nasdaq Global Select Market |
Large Accelerated filer o | Accelerated filer þ | Non-accelerated filer o | Smaller reporting company o | |||
(Do not check if a smaller reporting company) |
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1. | Achievement of all major integration milestones on time, | ||
2. | Achievement of the financial synergies that were proposed at the time the Mid-America transaction was announced, | ||
3. | No degradation in service quality as measured by internal client surveys, and | ||
4. | Continued loan growth for the combined firm at rates exceeding those of the previous period. |
• | Clients generally perceive that service levels at banks are declining. We believe this is largely attributable to merger-related integration issues resulting from consolidation in the bank and brokerage industries. Additionally, small business owners want a reliable point of contact that is knowledgeable about their business and the financial products and services that are important to the success of their business. Nashville is dominated by three large regional bank holding companies that are headquartered elsewhere, each of whom is experiencing declining market share trends over the last seven years; and | ||
• | There is significant growth in the demand for convenient access to financial services, particularly through ATMs, telephone banking, remote deposit capture and Internet banking. We have developed best-in-class products and services in these areas, including free ATM usage and a comprehensive Internet banking suite of products. |
• | Hire and retain highly experienced and qualified banking and financial professionals with successful track records and, for client contact personnel, established books of business with small businesses, real estate professionals and affluent households within the Nashville and Knoxville MSAs. On average, our senior client contact associates have in excess of 20 years experience in their local market. We have also achieved an annual associate retention rate of approximately 90 percent. We believe we will continue to experience success in attracting more market-best associates to our firm as well as retaining our highly experienced and successful group of associates. | ||
• | Provide individualized attention with consistent, local decision-making authority. | ||
• | Offer a full line of financial services to include traditional depository and credit products, as well as sophisticated investment, trust and insurance products and services. As of December 31, 2007, Pinnacle National’s brokerage division, Pinnacle Asset Management, had accumulated approximately $878 million in brokerage assets. In 2007, Pinnacle Asset Management was |
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the top producer among Raymond James Financial Services branches nationwide. Additionally, our trust department had accumulated approximately $464 million in trust assets under management at December 31, 2007. We will use our trust area, Pinnacle Asset Management and Miller and Loughry Insurance Services to provide a broad array of sophisticated and convenient investment and insurance products and services. |
• | Capitalize on customer dissatisfaction that we believe exists and has been caused by what we believe to be our competitors’ less than satisfactory response to the financial needs of today’s sophisticated consumers and small- to medium-sized businesses. Since we began our company, we have historically surveyed our customers on numerous matters related to their relationship with us. Consistently, 100 percent of these surveys indicate that Pinnacle is recognizably better than our competitors. | ||
• | Offer extraordinary convenience by building a distribution system with online banking, telephone banking, remote deposit services and access to ATMs across the globe to provide options for clients to access financial services 24/7. In addition to the office expansion through acquisition, we opened two new offices in 2007, one in the Nashville MSA and the other in Knoxville. |
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• | Mutual Funds; | • | Fixed Annuities; | |||||
• | Variable Annuities; | • | Stocks; | |||||
• | Money Market Instruments; | • | Financial Planning; | |||||
• | Treasury Securities; | • | Asset Management Accounts; and | |||||
• | Bonds; | • | Listed Options. |
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• | Acquiring direct or indirect ownership or control of any voting shares of any bank if, after the acquisition, the bank holding company will directly or indirectly own or control more than 5% of the bank’s voting shares; | ||
• | Acquiring all or substantially all of the assets of any bank; or | ||
• | Merging or consolidating with any other bank holding company. |
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• | The bank holding company has registered securities under Section 12 of the Securities Exchange Act of 1934; or | ||
• | No other person owns a greater percentage of that class of voting securities immediately after the transaction. |
• | Financial in nature; | ||
• | Incidental to a financial activity; or | ||
• | Complementary to a financial activity and do not pose a substantial risk to the safety or soundness of depository institutions or the financial system generally. |
• | Lending, trust and other banking activities; | ||
• | Insuring, guaranteeing, or indemnifying against loss or harm, or providing and issuing annuities, and acting as principal, agent, or broker for these purposes, in any state; | ||
• | Providing financial, investment, or advisory services; | ||
• | Issuing or selling instruments representing interests in pools of assets permissible for a bank to hold directly; | ||
• | Underwriting, dealing in or making a market in securities; | ||
• | Activities that the Federal Reserve has determined to be so closely related to banking or managing or controlling banks as to be a proper incident to banking or managing or controlling banks; |
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• | Activities permitted outside of the United States that the Federal Reserve has determined to be usual in connection with banking or other financial operations abroad; | ||
• | Merchant banking through securities or insurance affiliates; and | ||
• | Insurance company portfolio investments. |
• | Factoring accounts receivable; | ||
• | Acquiring or servicing loans; | ||
• | Leasing personal property; | ||
• | Conducting discount securities brokerage activities; | ||
• | Performing selected data processing services; | ||
• | Acting as agent or broker in selling credit life insurance and other types of insurance in connection with credit transactions; and | ||
• | Performing selected insurance underwriting activities. |
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• | A bank’s loans or extensions of credit to affiliates; | ||
• | A bank’s investment in affiliates; | ||
• | Assets a bank may purchase from affiliates, except for real and personal property exempted by the Federal Reserve; | ||
• | The amount of loans or extensions of credit to third parties collateralized by the securities or obligations of affiliates; and | ||
• | A bank’s guarantee, acceptance or letter of credit issued on behalf of an affiliate. |
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• | Federal Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers; | ||
• | Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves; | ||
• | Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit; | ||
• | Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies; | ||
• | Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies; | ||
• | Bank Secrecy Act, governing how banks and other firms report certain currency transactions and maintain appropriate safeguards against “money laundering” activities; | ||
• | Soldiers’ and Sailors’ Civil Relief Act of 1940, governing the repayment terms of, and property rights underlying, secured obligations of persons in military service; and | ||
• | Rules and regulations of the various federal agencies charged with the responsibility of implementing the federal laws. |
• | Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; and | ||
• | Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve to implement that act, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services. |
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• | the loss of key employees and customers; | ||
• | the disruption of operations and business; | ||
• | inability to maintain and increase competitive presence; | ||
• | loan and deposit attrition, customer loss and revenue loss; | ||
• | possible inconsistencies in standards, control procedures and policies | ||
• | unexpected problems with costs, operations, personnel, technology and credit; and/or | ||
• | problems with the assimilation of new operations, sites or personnel, which could divert resources from regular banking operations. |
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(a) | A special meeting of Pinnacle Financial’s shareholders was held on November 27, 2007 to vote on the merger agreement with Mid-America Bancshares, Inc. and to amend the 2004 Equity Incentive Plan. There were 15,553,036 shares outstanding as of October 9, 2007 (the record date for the meeting) of which 10,977,776 shares were represented at the meeting on November 27, 2007. | ||
(c) | Matters voted upon and the results of the voting were as follows: |
• | A proposal to approve the Agreement and Plan of Merger, dated as of August 15, 2007 by and between the Pinnacle Financial and Mid-America (“Proposal #1”); and | ||
• | A proposal to approve the adjournment of the Special Meeting, if necessary, to permit the Pinnacle Financial to solicit additional proxies if there were not sufficient votes at the Special Meeting to constitute a quorum or to approve Proposal #1 (“Proposal #2”); and | ||
• | A proposal to approve an amendment to Pinnacle’s 2004 Equity Incentive Plan to increase the number of shares of Pinnacle common stock reserved for issuance under the plan by 500,000 shares (“Proposal #3”). |
Proposal #1: | Number of votes cast “For” | 10,937,736 | ||||
Number of votes cast “Against” | 22,891 | |||||
Number of abstentions | 17,149 | |||||
Proposal #2: | Number of votes cast “For” | 10,738,068 | ||||
Number of votes cast “Against” | 202,398 | |||||
Number of abstentions | 36,310 | |||||
Proposal #3: | Number of votes cast “For” | 8,805,508 | ||||
Number of votes cast “Against” | 2,117,912 | |||||
Number of abstentions | 54,356 |
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Price Per Share | ||||||||
High | Low | |||||||
2007: | ||||||||
First quarter | $ | 33.85 | $ | 29.40 | ||||
Second quarter | 31.48 | 28.27 | ||||||
Third quarter | 31.31 | 21.62 | ||||||
Fourth quarter | 30.93 | 24.85 | ||||||
2006: | ||||||||
First quarter | $ | 28.84 | $ | 24.75 | ||||
Second quarter | 30.92 | 27.09 | ||||||
Third quarter | 37.41 | 28.93 | ||||||
Fourth quarter | 36.17 | 31.23 |
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2007(1) | 2006(2) | 2005 | 2004 | 2003 | ||||||||||||||||||||
(in thousands, except per share data, ratios and percentages) | ||||||||||||||||||||||||
Statement of Financial Condition Data: | ||||||||||||||||||||||||
Total assets | $ | 3,794,170 | $ | 2,142,187 | $ | 1,016,772 | $ | 727,139 | $ | 498,421 | ||||||||||||||
Loans, net of unearned income | 2,749,641 | 1,497,735 | 648,024 | 472,362 | 297,004 | |||||||||||||||||||
Allowance for loan losses | (28,470 | ) | (16,118 | ) | (7,858 | ) | (5,650 | ) | (3,719 | ) | ||||||||||||||
Total securities | 522,685 | 346,494 | 279,080 | 208,170 | 139,944 | |||||||||||||||||||
Goodwill and core deposit intangibles | 260,900 | 125,673 | — | — | — | |||||||||||||||||||
Deposits and securities sold under agreements to repurchase | 3,081,390 | 1,763,427 | 875,985 | 602,655 | 405,619 | |||||||||||||||||||
Advances from FHLB and other borrowings | 141,666 | 53,726 | 41,500 | 53,500 | 44,500 | |||||||||||||||||||
Subordinated debt | 82,476 | 51,548 | 30,929 | 10,310 | 10,310 | |||||||||||||||||||
Stockholders’ equity | 466,610 | 256,017 | 63,436 | 57,880 | 34,336 | |||||||||||||||||||
Income Statement Data: | ||||||||||||||||||||||||
Interest income | $ | 150,931 | $ | 109,696 | $ | 46,308 | $ | 27,679 | $ | 18,262 | ||||||||||||||
Interest expense | 75,219 | 48,743 | 17,270 | 7,415 | 5,363 | |||||||||||||||||||
Net interest income | 75,712 | 60,953 | 29,038 | 20,264 | 12,899 | |||||||||||||||||||
Provision for loan losses | 4,720 | 3,732 | 2,152 | 2,948 | 1,157 | |||||||||||||||||||
Net interest income after provision for loan losses | 70,992 | 57,221 | 26,886 | 17,316 | 11,742 | |||||||||||||||||||
Noninterest income | 22,521 | 15,786 | 5,394 | 4,978 | 3,035 | |||||||||||||||||||
Noninterest expense | 60,480 | 46,624 | 21,032 | 14,803 | 10,796 | |||||||||||||||||||
Income before income taxes | 33,033 | 26,383 | 11,248 | 7,491 | 3,981 | |||||||||||||||||||
Income tax expense | 9,992 | 8,456 | 3,193 | 2,172 | 1,426 | |||||||||||||||||||
Net income | $ | 23,041 | $ | 17,927 | $ | 8,055 | $ | 5,319 | $ | 2,555 | ||||||||||||||
Per Share Data: | ||||||||||||||||||||||||
Earnings per share — basic | $ | 1.43 | $ | 1.28 | $ | 0.96 | $ | 0.69 | $ | 0.35 | ||||||||||||||
Weighted average shares outstanding — basic | 16,100,076 | 13,954,077 | 8,408,663 | 7,750,943 | 7,384,106 | |||||||||||||||||||
Earnings per share — diluted | $ | 1.34 | $ | 1.18 | $ | 0.85 | $ | 0.61 | $ | 0.32 | ||||||||||||||
Weighted average shares outstanding — diluted | 17,255,543 | 15,156,837 | 9,464,500 | 8,698,139 | 7,876,006 | |||||||||||||||||||
Book value per share | $ | 20.96 | $ | 16.57 | $ | 7.53 | $ | 6.90 | $ | 4.65 | ||||||||||||||
Common shares outstanding at end of period | 22,264,817 | 15,446,074 | 8,426,551 | 8,389,232 | 7,384,106 | |||||||||||||||||||
Performance Ratios and Other Data: | ||||||||||||||||||||||||
Return on average assets | 0.96 | % | 1.01 | % | 0.93 | % | 0.89 | % | 0.66 | % | ||||||||||||||
Return on average stockholders’ equity | 8.34 | % | 8.66 | % | 13.23 | % | 12.31 | % | 7.70 | % | ||||||||||||||
Net interest margin (3) | 3.55 | % | 3.90 | % | 3.60 | % | 3.62 | % | 3.53 | % | ||||||||||||||
Net interest spread (4) | 2.88 | % | 3.20 | % | 3.16 | % | 3.34 | % | 3.23 | % | ||||||||||||||
Noninterest income to average assets | 0.94 | % | 0.89 | % | 0.62 | % | 0.83 | % | 0.78 | % | ||||||||||||||
Noninterest expense to average assets | 2.53 | % | 2.61 | % | 2.42 | % | 2.48 | % | 2.78 | % | ||||||||||||||
Efficiency ratio (5) | 61.57 | % | 60.76 | % | 61.08 | % | 58.64 | % | 67.78 | % | ||||||||||||||
Average loan to average deposit ratio | 94.88 | % | 88.73 | % | 81.3 | % | 79.0 | % | 85.5 | % | ||||||||||||||
Average interest-earning assets to average interest-bearing liabilities | 119.46 | % | 122.10 | % | 120.0 | % | 120.0 | % | 118.9 | % | ||||||||||||||
Average equity to average total assets ratio | 11.56 | % | 11.64 | % | 7.00 | % | 7.23 | % | 8.54 | % | ||||||||||||||
Asset Quality Ratios: | ||||||||||||||||||||||||
Allowance for loan losses to nonperforming assets | 133.3 | % | 199.9 | % | 1,708.3 | % | 1,006.9 | % | 981.3 | % | ||||||||||||||
Allowance for loan losses to total loans | 1.04 | % | 1.08 | % | 1.21 | % | 1.20 | % | 1.25 | % | ||||||||||||||
Nonperforming assets to total assets | 0.56 | % | 0.37 | % | 0.05 | % | 0.08 | % | 0.08 | % | ||||||||||||||
Nonaccrual loans to total loans | 0.72 | % | 0.47 | % | 0.07 | % | 0.12 | % | 0.13 | % | ||||||||||||||
Net loan charge-offs (recoveries) to average loans | 0.06 | % | 0.05 | % | (0.01 | )% | 0.27 | % | 0.05 | % | ||||||||||||||
Capital Ratios: | ||||||||||||||||||||||||
Leverage (6) | 11.6 | % | 9.5 | % | 9.9 | % | 9.7 | % | 9.7 | % | ||||||||||||||
Tier 1 risk-based capital | 9.5 | % | 10.9 | % | 11.7 | % | 11.7 | % | 11.8 | % | ||||||||||||||
Total risk-based capital | 10.4 | % | 11.8 | % | 12.6 | % | 12.7 | % | 12.8 | % |
(1) | Information for 2007 fiscal year includes the operations of Mid-America, which Pinnacle Financial merged with on November 30, 2007 and reflects approximately 6.7 million shares of Pinnacle Financial common stock issued in connection with the merger. | |
(2) | Information for 2006 fiscal year includes the operations of Cavalry, which Pinnacle Financial merged with on March 15, 2006 and reflects approximately 6.9 million shares of Pinnacle Financial common stock issued in connection with the merger. | |
(3) | Net interest margin is the result of net interest income for the period divided by average interest earning assets. | |
(4) | Net interest spread is the result of the difference between the interest yield earned on interest earning assets less the interest paid on interest bearing liabilities. |
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(5) | Efficiency ratio is the result of noninterest expense divided by the sum of net interest income and noninterest income. | |
(6) | Leverage ratio is computed by dividing Tier 1 capital by average total assets for the fourth quarter of each year. |
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Cash and cash equivalents | $ | 60,795 | ||
Investment securities — available-for-sale | 147,766 | |||
Loans, net of an allowance for loan losses of $8,695 | 855,887 | |||
Goodwill | 129,334 | |||
Core deposit intangible | 8,085 | |||
Other assets | 49,854 | |||
Total assets acquired | 1,251,721 | |||
Deposits | 957,076 | |||
Federal Home Loan Bank advances | 61,383 | |||
Other liabilities | 27,107 | |||
Total liabilities assumed | 1,045,566 | |||
Total consideration paid for Mid-America | $ | 206,155 | ||
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Cash and cash equivalents | $ | 37,420 | ||
Investment securities — available-for-sale | 39,476 | |||
Loans, net of an allowance for loan losses of $5,102 | 545,598 | |||
Goodwill | 114,288 | |||
Core deposit intangible | 13,168 | |||
Other assets | 42,937 | |||
Total assets acquired | 792,887 | |||
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Deposits | 583,992 | |||
Federal Home Loan Bank advances | 17,767 | |||
Other liabilities | 18,851 | |||
Total liabilities assumed | 620,610 | |||
Total consideration paid for Cavalry | $ | 172,277 | ||
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Years ended | 2007-2006 | Year ended | 2006-2005 | |||||||||||||||||
December 31, | Percent | December 31, | Percent | |||||||||||||||||
2007 | 2006 | Increase (Decrease) | 2005 | Increase (Decrease) | ||||||||||||||||
Interest income | $ | 150,931 | $ | 109,696 | 37.6 | % | $ | 46,308 | 136.9 | % | ||||||||||
Interest expense | 75,219 | 48,743 | 54.3 | % | 17,270 | 182.2 | % | |||||||||||||
Net interest income | 75,712 | 60,953 | 24.2 | % | 29,038 | 109.9 | % | |||||||||||||
Provision for loan losses | 4,720 | 3,732 | 26.5 | % | 2,152 | 73.4 | % | |||||||||||||
Net interest income after provision for loan losses | 70,992 | 57,221 | 24.1 | % | 26,886 | 112.8 | % | |||||||||||||
Noninterest income | 22,521 | 15,786 | 42.7 | % | 5,394 | 192.7 | % | |||||||||||||
Noninterest expense | 60,480 | 46,624 | 29.7 | % | 21,032 | 121.7 | % | |||||||||||||
Net income before income taxes | 33,033 | 26,383 | 25.2 | % | 11,248 | 134.6 | % | |||||||||||||
Income tax expense | 9,992 | 8,456 | 18.2 | % | 3,193 | 164.8 | % | |||||||||||||
Net income | $ | 23,041 | $ | 17,927 | 28.5 | % | $ | 8,055 | 122.6 | % | ||||||||||
Year ended | Year ended | Year ended | ||||||||||
December 31, | December 31, | December 31, | ||||||||||
2007 | 2006 | 2005 | ||||||||||
Net income, as reported | $ | 23,041 | $ | 17,927 | $ | 8,055 | ||||||
Merger related expense net of tax | 378 | 994 | — | |||||||||
Net income excluding merger related expense | $ | 23,419 | $ | 18,921 | $ | 8,055 | ||||||
Fully-diluted net income per common share, as reported | $ | 1.34 | $ | 1.18 | $ | 0.85 | ||||||
Fully-diluted net income per common share, excluding merger related expense | $ | 1.36 | $ | 1.25 | $ | 0.85 | ||||||
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2007 | 2006 | 2005 | ||||||||||||||||||||||||||||||||||
Average Balances | Interest | Rates/ Yields | Average Balances | Interest | Rates/ Yields | Average Balances | Interest | Rates/ Yields | ||||||||||||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||||||||||||||
Loans (1) | $ | 1,723,361 | $ | 129,889 | 7.54 | % | $ | 1,226,803 | $ | 92,006 | 7.50 | % | $ | 562,061 | $ | 35,167 | 6.26 | % | ||||||||||||||||||
Securities: | ||||||||||||||||||||||||||||||||||||
Taxable | 280,668 | 13,962 | 4.97 | % | 254,906 | 12,615 | 4.95 | % | 204,532 | 9,086 | 4.44 | % | ||||||||||||||||||||||||
Tax-exempt (2) | 82,001 | 3,066 | 4.93 | % | 54,270 | 2,016 | 4.90 | % | 31,578 | 1,116 | 4.66 | % | ||||||||||||||||||||||||
Federal funds sold and other | 72,344 | 4,014 | 5.57 | % | 53,562 | 3,059 | 6.87 | % | 24,541 | 939 | 3.90 | % | ||||||||||||||||||||||||
Total interest-earning assets | 2,158,374 | 150,931 | 7.04 | % | 1,589,541 | 109,696 | 6.95 | % | 822,712 | 46,308 | 5.68 | % | ||||||||||||||||||||||||
Nonearning assets | ||||||||||||||||||||||||||||||||||||
Intangible assets | 135,893 | 100,107 | — | |||||||||||||||||||||||||||||||||
Other nonearning assets | 93,782 | 89,568 | 47,322 | |||||||||||||||||||||||||||||||||
Total assets | $ | 2,388,049 | $ | 1,779,216 | $ | 870,034 | ||||||||||||||||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||||||||||||||||
Interest checking | $ | 261,163 | $ | 8,309 | 3.18 | % | $ | 171,637 | $ | 4,074 | 2.37 | % | $ | 65,119 | $ | 659 | 1.01 | % | ||||||||||||||||||
Savings and money market | 535,468 | 17,618 | 3.29 | % | 435,082 | 13,532 | 3.11 | % | 250,136 | 4,860 | 1.94 | % | ||||||||||||||||||||||||
Certificates of deposit | 727,724 | 35,745 | 4.91 | % | 516,394 | 22,426 | 4.34 | % | 256,056 | 8,171 | 3.19 | % | ||||||||||||||||||||||||
Total deposits | 1,524,355 | 61,672 | 4.05 | % | 1,123,113 | 40,032 | 3.56 | % | 571,311 | 13,690 | 2.40 | % | ||||||||||||||||||||||||
Securities sold under agreements to repurchase | 181,621 | 7,371 | 4.06 | % | 101,144 | 4,329 | 4.28 | % | 54,811 | 1,315 | 2.40 | % | ||||||||||||||||||||||||
Federal Home Loan Bank advances and other borrowings | 44,072 | 2,211 | 5.02 | % | 39,728 | 1,878 | 4.68 | % | 43,933 | 1,279 | 2.91 | % | ||||||||||||||||||||||||
Subordinated debt | 56,759 | 3,965 | 6.98 | % | 37,372 | 2,504 | 6.70 | % | 16,361 | 986 | 6.02 | % | ||||||||||||||||||||||||
Total interest-bearing liabilities | 1,806,807 | 75,219 | 4.16 | % | 1,301,357 | 48,743 | 3.75 | % | 686,416 | 17,270 | 2.52 | % | ||||||||||||||||||||||||
Noninterest-bearing deposits | 291,983 | — | — | 259,585 | — | — | 120,007 | — | — | |||||||||||||||||||||||||||
Total deposits and interest- bearing liabilities | 2,098,790 | 75,219 | 3.58 | % | 1,560,942 | 48,743 | 3.12 | % | 806,423 | 17,270 | 2.14 | % | ||||||||||||||||||||||||
Other liabilities | 13,108 | 11,105 | 2,730 | |||||||||||||||||||||||||||||||||
Stockholders’ equity | 276,151 | 207,169 | 60,881 | |||||||||||||||||||||||||||||||||
$ | 2,388,049 | $ | 1,779,216 | $ | 870,034 | |||||||||||||||||||||||||||||||
Net interest income | $ | 75,712 | $ | 60,953 | $ | 29,038 | ||||||||||||||||||||||||||||||
Net interest spread (3) | 2.88 | % | 3.20 | % | 3.16 | % | ||||||||||||||||||||||||||||||
Net interest margin | 3.55 | % | 3.90 | % | 3.60 | % |
(1) | Average balances of nonperforming loans are included in the above amounts. | |
(2) | Yields based on the carrying value of those tax exempt instruments are shown on a fully tax equivalent basis. |
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(3) | 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 December 31, 2007 would have been 3.46% compared to a net interest spread for the years ended December 31, 2006 and 2005 of 3.83% and 3.54%, respectively. |
• | Our loan yields increased by only 4 basis points between 2007 and 2006 while they increased by 124 basis points between 2006 and 2005. A significant amount of our loan portfolio has variable rate pricing with a large portion of these loans tied to our prime lending rate. Our weighted average prime rate for 2005 was 6.25% compared to 7.94% in 2006 and 7.52% in 2007. Our prime lending rate moves in concert with the Federal Reserve’s changes to its Federal funds rate. As a result, the large increase in our prime rate between 2005 and 2006 contributed to the increase in overall loan rates while the decrease in our weighted average prime rate between 2006 and 2007 also impacted our loan rates. Other factors that impact our loan yields in any period are our evaluation of the credit worthiness, collateral and other factors related to the borrower when we agree to make a loan, the term of the loan and the ongoing relationship we have with a particular borrower. | ||
• | We have been able to grow our funding base significantly. For asset/liability management purposes, we elected to allocate a greater proportion of such funds to our loan portfolio versus our securities and shorter-term investment portfolio during the three year period noted above. For 2007, average loan balances were 80% of total interest-earning assets compared to 77% in 2006 and 68% in 2005. Loans generally have higher yields than do securities and other shorter-term investments. This change in allocation contributed to the increase in the overall total interest earning asset yields between the three years. | ||
• | During 2007, overall deposit rates were higher than those rates for the comparable period in 2006 and 2005. Normally, changes in interest rates paid on such products as interest checking, savings and money market accounts, securities sold under agreements to repurchase and Federal funds purchased will generally increase or decrease in a manner that is consistent with changes in the short-term rate environment. However, during 2007, our short term funding rates were generally higher than in 2006 even though we experienced decreases in our short-term asset and prime rate loan yields. We continue to monitor the pricing of deposit products by our primary competitors. The pricing of our primary competitors required us to increase these rates during the three-year period noted. | ||
• | During 2007, the average balances of noninterest bearing deposit balances, interest bearing transaction accounts, savings and money market accounts and securities sold under agreements to repurchase amounted to 61% of our total funding compared to 62% in 2005 and 61% in 2004. These funding sources generally have lower rates than do other funding sources, such as certificates of deposit and other borrowings. Additionally, noninterest bearing deposits comprised only 14% of total funding in 2007, compared to 17% in 2006 and 15% in 2005. Maintaining our noninterest bearing deposit balances in relation to total funding is critical to maintaining and growing our net interest margin. Management places a great deal of emphasis on this particular product. | ||
• | Also impacting the net interest margin during 2007 compared to 2006 and 2005 was pricing of our floating rate subordinated indebtedness which comprises approximately $60 million of our average aggregate subordinated indebtedness as of December 31, 2007, compared to $30 million at December 31, 2006. The interest rate charged on this indebtedness is generally higher than other funding sources. In October 2007, we issued an additional $30 million in floating rate subordinated indebtedness to fund the cash component of the Mid-America purchase price. The rate we are required to pay on this indebtedness is 285 points over three-month LIBOR. This spread is higher than similar forms of subordinated indebtedness which were acquired in previous periods reflecting an increase in market pricing for this form of indebtedness which occurred in the last half of 2007. |
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2007 Compared to 2006 | 2006 Compared to 2005 | |||||||||||||||||||||||
Increase (decrease) due to | Increase (decrease) due to | |||||||||||||||||||||||
Rate | Volume | Net | Rate | Volume | Net | |||||||||||||||||||
Interest-earning assets: | ||||||||||||||||||||||||
Loans | $ | 491 | $ | 37,392 | $ | 37,883 | $ | 6,970 | $ | 49,869 | $ | 56,839 | ||||||||||||
Securities: | ||||||||||||||||||||||||
Taxable | 51 | 1,296 | 1,347 | 1,043 | 2,486 | 3,529 | ||||||||||||||||||
Tax-exempt | 16 | 1,034 | 1,050 | 76 | 824 | 900 | ||||||||||||||||||
Federal funds sold | (696 | ) | 1,651 | 955 | 729 | 1,391 | 2,120 | |||||||||||||||||
Total interest-earning assets | (138 | ) | 41,373 | 41,235 | 8,818 | 54,570 | 63,388 | |||||||||||||||||
Interest-bearing liabilities: | ||||||||||||||||||||||||
Interest-bearing deposits: | ||||||||||||||||||||||||
Interest checking | 1,390 | 2,845 | 4,235 | 886 | 2,529 | 3,415 | ||||||||||||||||||
Savings and money market | 783 | 3,303 | 4,086 | 2,927 | 5,745 | 8,672 | ||||||||||||||||||
Certificates of deposit | 2,943 | 10,376 | 13,319 | 2,945 | 11,310 | 14,255 | ||||||||||||||||||
Total deposits | 5,116 | 16,524 | 21,640 | 6,758 | 19,584 | 26,342 | ||||||||||||||||||
Securities sold under agreements to repurchase | (223 | ) | 3,265 | 3,042 | 1,031 | 1,983 | 3,014 | |||||||||||||||||
Federal Home Loan Bank advances and other borrowings | 135 | 198 | 333 | 798 | (199 | ) | 599 | |||||||||||||||||
Subordinated debt | 105 | 1,356 | 1,461 | 111 | 1,407 | 1,518 | ||||||||||||||||||
Total interest-bearing liabilities | 5,134 | 21,342 | 26,476 | 8,698 | 22,775 | 31,473 | ||||||||||||||||||
Net interest income | $ | (5,272 | ) | $ | 20,031 | $ | 14,759 | $ | 120 | $ | 31,795 | $ | 31,915 | |||||||||||
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2007-2006 | 2006-2005 | |||||||||||||||||||
Years ended | Percent | Year ended | Percent | |||||||||||||||||
December 31, | Increase | December 31, | Increase | |||||||||||||||||
2007 | 2006 | (Decrease) | 2005 | (Decrease) | ||||||||||||||||
Noninterest income: | ||||||||||||||||||||
Service charges on deposit accounts | $ | 7,941 | $ | 4,645 | 71.0 | % | $ | 978 | 374.9 | % | ||||||||||
Investment services | 3,456 | 2,463 | 40.3 | % | 1,836 | 34.2 | % | |||||||||||||
Insurance sales commissions | 2,487 | 2,123 | 17.1 | % | — | — | ||||||||||||||
Gains on sales of loans and loan participations, net: | ||||||||||||||||||||
Fees from the origination and sale of mortgage loans, net of sales commissions | 1,619 | 1,448 | 11.8 | % | 1,096 | 32.1 | % | |||||||||||||
Gains on loan participations sold, net | 239 | 420 | (43.1 | %) | 152 | 176.3 | % | |||||||||||||
Gain on sale of investment securities, net | 16 | — | — | 114 | (100.0 | %) | ||||||||||||||
Trust fees | 1,908 | 1,181 | 61.6 | % | — | — | ||||||||||||||
Other noninterest income: | ||||||||||||||||||||
ATM and other consumer fees | 2,822 | 1,796 | 57.1 | % | 90 | 1895.6 | % | |||||||||||||
Letters of credit fees | 293 | 506 | (42.1 | %) | 527 | (4.0 | %) | |||||||||||||
Bank-owned life insurance | 631 | 470 | 34.3 | % | 74 | 535.1 | % | |||||||||||||
Equity in earnings of Collateral Plus, LLC | 274 | 120 | 128.3 | % | 216 | (44.4 | %) | |||||||||||||
Other noninterest income | 835 | 614 | 36.0 | % | 311 | 97.4 | % | |||||||||||||
Total noninterest income | $ | 22,521 | $ | 15,786 | 42.7 | % | $ | 5,394 | 192.7 | % | ||||||||||
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2007-2006 | 2006-2005 | |||||||||||||||||||
Years ended | Percent | Year ended | Percent | |||||||||||||||||
December 31, | Increase | December 31, | Increase | |||||||||||||||||
2007 | 2006 | (Decrease) | 2005 | (Decrease) | ||||||||||||||||
Noninterest expense: | ||||||||||||||||||||
Salaries and employee benefits: | ||||||||||||||||||||
Salaries | $ | 26,304 | $ | 18,017 | 46.0 | % | $ | 8,592 | 109.7 | % | ||||||||||
Commissions | 1,778 | 1,298 | 37.0 | % | 714 | 81.8 | % | |||||||||||||
Other compensation, primarily incentives | 2,602 | 4,209 | (38.2 | %) | 2,101 | 100.3 | % | |||||||||||||
Equity compensation expenses | 2,100 | 1,475 | 42.4 | % | 245 | 502.0 | % | |||||||||||||
Employee benefits and other | 3,362 | 2,470 | 36.1 | % | 1,479 | 67.0 | % | |||||||||||||
Total salaries and employee benefits | 36,146 | 27,469 | 31.6 | % | 13,131 | 109.2 | % | |||||||||||||
Equipment and occupancy | 10,261 | 7,522 | 36.4 | % | 3,767 | 99.7 | % | |||||||||||||
Other real estate | 160 | — | — | — | ||||||||||||||||
Marketing and business development | 1,677 | 1,234 | 35.9 | % | 698 | 76.8 | % | |||||||||||||
Postage and supplies | 1,995 | 1,510 | 32.1 | % | 618 | 144.3 | % | |||||||||||||
Amortization of core deposit intangible | 2,144 | 1,783 | 20.2 | % | — | — | ||||||||||||||
Other noninterest expense: | ||||||||||||||||||||
Accounting and auditing | 1,263 | 742 | 70.2 | % | 646 | 14.9 | % | |||||||||||||
Consultants | 269 | 320 | (15.9 | %) | 123 | 160.2 | % | |||||||||||||
Legal, including borrower-related charges | 437 | 310 | 41.0 | % | 245 | 26.5 | % | |||||||||||||
OCC exam fees | 365 | 257 | 42.0 | % | 182 | 41.2 | % | |||||||||||||
Directors’ fees | 233 | 257 | (9.3 | %) | 229 | 12.2 | % | |||||||||||||
Insurance, including FDIC assessments | 1,278 | 687 | 86.0 | % | 322 | 113.4 | % | |||||||||||||
Charitable contributions | 334 | 186 | 79.6 | % | 113 | 64.6 | % | |||||||||||||
Other professional fees | 158 | 73 | 116.4 | % | 4 | 1,725.0 | % | |||||||||||||
Other noninterest expense | 3,138 | 2,632 | 19.2 | % | 954 | 175.9 | % | |||||||||||||
Total other noninterest expense | 7,475 | 5,470 | 36.7 | % | 2,818 | 94.1 | % | |||||||||||||
Merger related expense | 622 | 1,636 | (62.0 | %) | — | — | ||||||||||||||
Total noninterest expense | $ | 60,480 | $ | 46,624 | 29.7 | % | $ | 21,032 | 121.7 | % | ||||||||||
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2007 | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||||||||||||||||||||||
Amount | Percent | Amount | Percent | Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||||||||||||||
Commercial real estate — Mortgage | $ | 728,201 | 26.5 | % | $ | 284,302 | 19.0 | % | $ | 148,102 | 22.9 | % | $ | 117,123 | 24.8 | % | $ | 68,507 | 23.1 | % | ||||||||||||||||||||
Consumer real estate — Mortgage | 562,721 | 20.5 | % | 299,627 | 20.0 | % | 169,953 | 26.2 | % | 126,907 | 26.9 | % | 76,042 | 25.6 | % | |||||||||||||||||||||||||
Construction and land development | 517,399 | 18.8 | % | 253,097 | 16.9 | % | 67,667 | 10.5 | % | 23,419 | 5.0 | % | 11,288 | 3.8 | % | |||||||||||||||||||||||||
Commercial and industrial | 838,161 | 30.5 | % | 608,530 | 40.6 | % | 239,129 | 36.9 | % | 189,456 | 40.1 | % | 129,882 | 43.7 | % | |||||||||||||||||||||||||
Consumer and other loans | 103,159 | 3.7 | % | 52,179 | 3.5 | % | 23,173 | 3.6 | % | 15,457 | 3.3 | % | 11,285 | 3.8 | % | |||||||||||||||||||||||||
Total loans | $ | 2,749,641 | 100.0 | % | $ | 1,497,735 | 100.0 | % | $ | 648,024 | 100.0 | % | $ | 472,362 | 100.0 | % | $ | 297,004 | 100.0 | % | ||||||||||||||||||||
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Amounts at December 31, 2007 | ||||||||||||||||||||
Fixed | Variable | At December 31, | At December 31, | |||||||||||||||||
Rates | Rates | Totals | 2007 | 2006 | ||||||||||||||||
Based on contractual maturity: | ||||||||||||||||||||
Due within one year | $ | 267,227 | $ | 956,620 | $ | 1,223,847 | 44.5 | % | 40.9 | % | ||||||||||
Due in one year to five years | 836,154 | 266,926 | 1,097,079 | 39.9 | % | 39.9 | % | |||||||||||||
Due after five years | 142,701 | 286,014 | 428,715 | 15.6 | % | 19.2 | % | |||||||||||||
Totals | $ | 1,246,082 | $ | 1,503,559 | $ | 2,749,641 | 100.0 | % | 100.0 | % | ||||||||||
Based on contractual repricing dates: | ||||||||||||||||||||
Daily floating rate | $ | — | $ | 1,099,215 | $ | 1,099,215 | 40.0 | % | 46.1 | % | ||||||||||
Due within one year | 267,227 | 316,208 | 583,435 | 21.2 | % | 13.6 | % | |||||||||||||
Due in one year to five years | 836,154 | 55,810 | 891,963 | 32.4 | % | 34.2 | % | |||||||||||||
Due after five years | 142,701 | 32,327 | 175,028 | 6.4 | % | 6.1 | % | |||||||||||||
Totals | $ | 1,246,802 | $ | 1,503,559 | $ | 2,749,641 | 100.0 | % | 100.0 | % | ||||||||||
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At December 31, | ||||||||||||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||
Nonaccrual loans (1) | $ | 19,677 | $ | 7,070 | $ | 460 | $ | 561 | $ | 379 | ||||||||||
Restructured loans | — | — | — | — | — | |||||||||||||||
Other real estate owned | 1,673 | 995 | — | — | — | |||||||||||||||
Total nonperforming assets | 21,350 | 8,065 | 460 | 561 | 379 | |||||||||||||||
Accruing loans past due 90 days or more | 1,613 | 737 | — | 146 | 182 | |||||||||||||||
Total nonperforming assets and accruing loans past due 90 days or more | $ | 22,963 | $ | 8,802 | $ | 460 | $ | 707 | $ | 561 | ||||||||||
Total loans outstanding | $ | 2,749,641 | $ | 1,497,735 | $ | 648,024 | $ | 472,362 | $ | 297,004 | ||||||||||
Ratio of nonperforming assets and accruing loans past due 90 days or more to total loans outstanding at end of period | 0.84 | % | 0.59 | % | 0.07 | % | 0.15 | % | 0.19 | % | ||||||||||
Ratio of nonperforming assets and accruing loans past due 90 days or more to total allowance for loan losses at end of period | 80.66 | % | 54.61 | % | 5.85 | % | 12.51 | % | 15.08 | % | ||||||||||
(1) | Interest income that would have been recorded in 2007 related to nonaccrual loans was $485,000 compared to $283,000 for the year ended December 31, 2006 and $21,000 for the year ended December 31, 2005, none of which is included in interest income or net income for the applicable periods. |
2007 | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||||||||||||||||||||||
Amount | Percent | Amount | Percent | Amount | Percent | Amount | Percent | Amount | Percent | |||||||||||||||||||||||||||||||
Commercial real estate — Mortgage | $ | 8,068 | 26.4 | % | $ | 4,550 | 19.0 | % | $ | 1,488 | 22.9 | % | $ | 1,205 | 24.8 | % | $ | 723 | 23.1 | % | ||||||||||||||||||||
Consumer real estate — Mortgage | 1,890 | 20.8 | % | 913 | 20.0 | % | 1,286 | 26.2 | % | 869 | 26.9 | % | 607 | 25.6 | % | |||||||||||||||||||||||||
Construction and land development | 4,897 | 18.7 | % | 2,869 | 16.9 | % | 690 | 10.5 | % | 227 | 5.0 | % | 113 | 3.8 | % | |||||||||||||||||||||||||
Commercial and industrial | 11,660 | 30.4 | % | 6,517 | 40.6 | % | 2,305 | 36.9 | % | 1,711 | 40.1 | % | 1,236 | 43.7 | % | |||||||||||||||||||||||||
Consumer and other loans | 1,400 | 3.7 | % | 870 | 3.5 | % | 552 | 3.6 | % | 396 | 3.3 | % | 320 | 3.8 | % | |||||||||||||||||||||||||
Unallocated | 555 | NA | 399 | NA | 1,537 | NA | 1,242 | NA | 720 | NA | ||||||||||||||||||||||||||||||
Total allowance for loan losses | $ | 28,470 | 100.0 | % | $ | 16,118 | 100.0 | % | $ | 7,858 | 100.0 | % | $ | 5,650 | 100.0 | % | $ | 3,719 | 100.0 | % | ||||||||||||||||||||
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For the year ended December 31, | ||||||||||||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | ||||||||||||||||
Balance at beginning of period | $ | 16,118 | $ | 7,858 | $ | 5,650 | $ | 3,719 | $ | 2,677 | ||||||||||
Provision for loan losses | 4,720 | 3,732 | 2,152 | 2,948 | 1,157 | |||||||||||||||
Allowance from Mid-America (2007) and Cavalry (2006) acquisitions | 8,695 | 5,102 | — | — | — | |||||||||||||||
Charged-off loans: | ||||||||||||||||||||
Commercial real estate — Mortgage | (22 | ) | — | — | — | — | ||||||||||||||
Consumer real estate — Mortgage | (364 | ) | (46 | ) | (38 | ) | (834 | ) | (123 | ) | ||||||||||
Construction and land development | (271 | ) | — | — | — | — | ||||||||||||||
Commercial and industrial | (326 | ) | (436 | ) | (61 | ) | (50 | ) | — | |||||||||||
Consumer and other loans | (359 | ) | (336 | ) | (109 | ) | (148 | ) | (44 | ) | ||||||||||
Total charged-off loans | (1,342 | ) | (818 | ) | (208 | ) | (1,032 | ) | (167 | ) | ||||||||||
Recoveries of previously charged-off loans: | ||||||||||||||||||||
Commercial real estate — Mortgage | — | — | — | — | — | |||||||||||||||
Consumer real estate — Mortgage | 125 | — | 231 | — | — | |||||||||||||||
Commercial real estate — Construction | 1 | — | — | 2 | 49 | |||||||||||||||
Commercial and industrial | 51 | 166 | 3 | — | — | |||||||||||||||
Consumer — Other | 102 | 78 | 30 | 13 | 3 | |||||||||||||||
Total recoveries of previously charged-off loans | 279 | 244 | 264 | 15 | 52 | |||||||||||||||
Net (charge-offs) recoveries | (1,063 | ) | (574 | ) | 56 | (1,017 | ) | (115 | ) | |||||||||||
Balance at end of period | $ | 28,470 | $ | 16,118 | $ | 7,858 | $ | 5,650 | $ | 3,719 | ||||||||||
Ratio of allowance for loan losses to total loans outstanding at end of period | 1.04 | % | 1.08 | % | 1.21 | % | 1.20 | % | 1.25 | % | ||||||||||
Ratio of net charge-offs (recoveries) to average loans outstanding for the period | 0.06 | % | 0.05 | % | (0.01 | )% | 0.27 | % | 0.05 | % | ||||||||||
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At December 31, | ||||||||||||||||||||||||||||||||||||||||
U.S. Treasury | U.S. government | State and Municipal | ||||||||||||||||||||||||||||||||||||||
securities | agency securities | securities | Corporate securities | Totals | ||||||||||||||||||||||||||||||||||||
Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | |||||||||||||||||||||||||||||||
At December 31, 2007: | ||||||||||||||||||||||||||||||||||||||||
Securities available-for-sale: | ||||||||||||||||||||||||||||||||||||||||
Due in one year or less | $ | — | — | % | $ | 16,612 | 4.3 | % | $ | 12,463 | 5.2 | % | $ | 490 | 3.4 | % | $ | 29,565 | 4.7 | % | ||||||||||||||||||||
Due in one year to five years | — | — | % | 43,097 | 4.5 | % | 27,089 | 5.3 | % | 1,488 | 3.9 | % | 71,674 | 4.8 | % | |||||||||||||||||||||||||
Due in five years to ten years | — | — | % | 6,774 | 5.1 | % | 45,545 | 5.6 | % | — | 5.2 | % | 52,319 | 5.5 | % | |||||||||||||||||||||||||
Due after ten years | — | — | % | 3,180 | 4.9 | % | 40,809 | 5.6 | % | 400 | 5.4 | % | 44,389 | 5.5 | % | |||||||||||||||||||||||||
$ | — | — | % | $ | 69,663 | 4.5 | % | $ | 125,906 | 5.5 | % | $ | 2,378 | 5.2 | % | $ | 197,947 | 5.2 | % | |||||||||||||||||||||
Securities held-to-maturity: | ||||||||||||||||||||||||||||||||||||||||
Due in one year or less | $ | — | — | % | $ | — | — | % | $ | 1,578 | 5.0 | % | $ | — | — | % | $ | 1,578 | 5.0 | % | ||||||||||||||||||||
Due in one year to five years | — | — | % | 15,750 | 4.2 | % | 6,786 | 4.4 | % | — | — | % | 22,536 | 4.3 | % | |||||||||||||||||||||||||
Due in five years to ten years | — | — | % | 1,997 | 4.8 | % | 922 | 5.0 | % | — | — | % | 2,919 | 4.8 | % | |||||||||||||||||||||||||
Due after ten years | — | — | % | — | — | % | — | — | % | — | — | % | — | — | % | |||||||||||||||||||||||||
$ | — | — | % | $ | 17,747 | 4.3 | % | $ | 9,286 | 4.6 | % | $ | — | — | % | $ | 27,033 | 4.4 | % | |||||||||||||||||||||
At December 31, 2006: | ||||||||||||||||||||||||||||||||||||||||
Securities available-for-sale: | ||||||||||||||||||||||||||||||||||||||||
Due in one year or less | $ | — | — | % | $ | — | — | % | $ | 2,240 | 4.5 | % | $ | 398 | 3.2 | % | $ | 2,638 | 4.3 | % | ||||||||||||||||||||
Due in one year to five years | — | — | % | 30,105 | 4.7 | % | 22,121 | 5.2 | % | 1,427 | 3.4 | % | 53,653 | 4.9 | % | |||||||||||||||||||||||||
Due in five years to ten years | — | — | % | 7,524 | 5.2 | % | 28,848 | 5.4 | % | — | — | % | 36,372 | 5.4 | % | |||||||||||||||||||||||||
Due after ten years | — | — | % | — | — | % | 8,750 | 5.7 | % | — | — | % | 8,750 | 5.7 | % | |||||||||||||||||||||||||
$ | — | — | % | $ | 37,629 | 4.8 | % | $ | 61,959 | 5.3 | % | $ | 1,825 | 3.4 | % | $ | 101,413 | 5.1 | % | |||||||||||||||||||||
Securities held-to-maturity: | ||||||||||||||||||||||||||||||||||||||||
Due in one year or less | $ | — | — | % | $ | — | — | % | $ | 154 | 5.6 | % | $ | — | — | % | $ | 154 | 5.6 | % | ||||||||||||||||||||
Due in one year to five years | — | — | % | 15,750 | 4.2 | % | 5,777 | 4.9 | % | — | — | % | 21,527 | 4.4 | % | |||||||||||||||||||||||||
Due in five years to ten years | — | — | % | 1,997 | 4.8 | % | 3,579 | 5.0 | % | — | — | % | 5,576 | 4.9 | % | |||||||||||||||||||||||||
Due after ten years | — | — | % | — | — | % | — | — | % | — | — | % | — | — | % | |||||||||||||||||||||||||
$ | — | — | % | $ | 17,747 | 4.3 | % | $ | 9,510 | 5.0 | % | $ | — | — | % | $ | 27,257 | 4.5 | % | |||||||||||||||||||||
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December 31, | December 31, | |||||||||||||||
2007 | Percent | 2006 | Percent | |||||||||||||
Core funding: | ||||||||||||||||
Noninterest-bearing deposit accounts | $ | 400,120 | 12.1 | % | $ | 300,978 | 16.1 | % | ||||||||
Interest-bearing demand accounts | 410,661 | 12.4 | % | 236,674 | 12.7 | % | ||||||||||
Savings and money market accounts | 742,354 | 22.5 | % | 485,936 | 26.0 | % | ||||||||||
Time deposit accounts less than $100,000 | 371,881 | 11.3 | % | 158,687 | 8.5 | % | ||||||||||
Total core funding | 1,925,016 | 58.2 | % | 1,182,275 | 63.3 | % | ||||||||||
Non-core funding: | ||||||||||||||||
Time deposit accounts greater than $100,000 | ||||||||||||||||
Public funds | 104,902 | 3.2 | % | 98,286 | 5.3 | % | ||||||||||
Brokered deposits | 163,188 | 4.9 | % | 61,718 | 3.3 | % | ||||||||||
Other time deposits | 732,213 | 22.2 | % | 280,132 | 15.0 | % | ||||||||||
Securities sold under agreements to repurchase | 156,071 | 4.7 | % | 141,016 | 7.5 | % | ||||||||||
Federal Home Loan Bank advances and other borrowings | 141,666 | 4.3 | % | 53,726 | 2.9 | % | ||||||||||
Subordinated debt | 82,476 | 2.5 | % | 51,548 | 2.8 | % | ||||||||||
Total non-core funding | 1,380,516 | 41.8 | % | 686,426 | 36.7 | % | ||||||||||
Totals | $ | 3,305,532 | 100.0 | % | $ | 1,868,701 | 100.0 | % | ||||||||
Balances | Weighted Avg. Rate | |||||||
Denominations less than $100,000 | ||||||||
Three months or less | $ | 124,339 | 4.91 | % | ||||
Over three but less than six months | 88,374 | 4.85 | % | |||||
Over six but less than twelve months | 110,856 | 4.84 | % | |||||
Over twelve months | 48,312 | 4.69 | % | |||||
371,881 | 4.84 | % | ||||||
Denomination $100,000 and greater | ||||||||
Three months or less | 446,096 | 4.71 | % | |||||
Over three but less than six months | 204,522 | 5.04 | % | |||||
Over six but less than twelve months | 193,500 | 5.06 | % | |||||
Over twelve months | 156,124 | 5.04 | % | |||||
1,000,302 | 4.90 | % | ||||||
Totals | $ | 1,372,183 | 4.88 | % | ||||
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Interest | ||||||||
Amount | Rates | |||||||
2008 | $ | 15,554 | 5.02 | % | ||||
2009 | 15,000 | 5.01 | % | |||||
2010 | 13,250 | 4.56 | % | |||||
2011 | — | NA | ||||||
2012 | 30,294 | 3.51 | % | |||||
Thereafter | 18,706 | 4.02 | % | |||||
Total | $ | 92,804 | ||||||
Weighted average interest rate | 4.26 | % |
2007 | 2006 | 2005 | ||||||||||
Amounts outstanding at year-end: | ||||||||||||
Securities sold under agreements to repurchase | $ | 156,071 | $ | 141,016 | $ | 65,834 | ||||||
Federal funds purchased | 48,862 | — | — | |||||||||
Federal Home Loan Bank advances | 92,804 | 25,000 | 29,500 | |||||||||
Weighted average interest rates at year-end: | ||||||||||||
Securities sold under agreements to repurchase | 2.81 | % | 4.33 | % | 3.16 | % |
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2007 | 2006 | 2005 | ||||||||||
Federal funds purchased | 3.75 | % | — | — | ||||||||
Federal Home Loan Bank advances | 4.26 | % | 5.36 | % | 3.21 | % | ||||||
Maximum amount of borrowings at any month-end: | ||||||||||||
Securities sold under agreements to repurchase | $ | 216,321 | $ | 166,520 | $ | 69,767 | ||||||
Federal funds purchased | 48,862 | 9,985 | 18,702 | |||||||||
Federal Home Loan Bank advances | 92,804 | 25,000 | 35,500 | |||||||||
Average balances for the year: | ||||||||||||
Securities sold under agreements to repurchase | $ | 181,621 | $ | 101,144 | $ | 54,811 | ||||||
Federal funds purchased | 5,544 | 1,260 | 1,607 | |||||||||
Federal Home Loan Bank advances | 38,528 | 6,284 | 24,208 | |||||||||
Weighted average interest rates for the year: | ||||||||||||
Securities sold under agreements to repurchase | 4.06 | % | 4.28 | % | 2.40 | % | ||||||
Federal funds purchased | 5.15 | % | 5.26 | % | 3.51 | % | ||||||
Federal Home Loan Bank advances | 4.97 | % | 4.70 | % | 2.65 | % |
Next 12 | 13-36 | 37-60 | More than | |||||||||||||||||
months | months | months | 60 months | Totals | ||||||||||||||||
Contractual obligations: | ||||||||||||||||||||
Certificates of deposit | $ | 1,167,747 | $ | 185,837 | $ | 18,599 | $ | — | $ | 1,372,183 | ||||||||||
Securities sold under agreements to repurchase | 156,071 | — | — | — | 156,071 | |||||||||||||||
Federal Home Loan Bank advances and other borrowings | 64,416 | 28,250 | 30,294 | 18,706 | 141,666 | |||||||||||||||
Subordinated debt | 10,310 | 20,619 | 51,547 | — | 82,476 | |||||||||||||||
Minimum operating lease commitments | 1,846 | 3,551 | 2,703 | 10,227 | 18,327 | |||||||||||||||
Totals | $ | 1,400,390 | $ | 238,257 | $ | 103,143 | $ | 28,933 | $ | 1,770,723 | ||||||||||
Next 12 | 13-36 | 37-60 | More than | |||||||||||||||||
months | months | months | 60 months | Totals | ||||||||||||||||
Unfunded commitments: | ||||||||||||||||||||
Lines of credit | $ | 559,721 | $ | 90,174 | $ | 44,496 | $ | 139,502 | $ | 833,893 | ||||||||||
Letters of credit | 84,504 | 12,301 | 1,500 | — | 98,305 | |||||||||||||||
Totals | $ | 644,225 | $ | 102,475 | $ | 45,996 | $ | 139,502 | $ | 932,198 | ||||||||||
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52 | ||||
53 | ||||
54 | ||||
Consolidated Financial Statements: | ||||
55 | ||||
56 | ||||
57 | ||||
58 | ||||
59 |
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Pinnacle Financial Partners, Inc.:
March 5, 2008
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Pinnacle Financial Partners, Inc.:
March 5, 2008
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CONSOLIDATED BALANCE SHEETS
December 31, | ||||||||
2007 | 2006 | |||||||
ASSETS | ||||||||
Cash and noninterest-bearing due from banks | $ | 76,941,931 | $ | 43,611,533 | ||||
Interest-bearing due from banks | 24,706,966 | 1,041,174 | ||||||
Federal funds sold | 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 December 31, 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 | 243,573,636 | 114,287,640 | ||||||
Core deposit intangible | 17,325,988 | 11,385,006 | ||||||
Other assets | 46,254,566 | 26,724,183 | ||||||
Total assets | $ | 3,794,170,461 | $ | 2,142,186,863 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Deposits: | ||||||||
Non-interest-bearing | $ | 400,120,147 | 300,977,814 | |||||
Interest-bearing | 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 | 92,804,133 | 53,725,833 | ||||||
Federal Funds purchased | 48,862,000 | — | ||||||
Subordinated debt | 82,476,000 | 51,548,000 | ||||||
Accrued interest payable | 10,374,538 | 4,952,422 | ||||||
Other liabilities | 11,653,550 | 12,516,523 | ||||||
Total liabilities | 3,327,560,167 | 1,886,169,842 | ||||||
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 of taxes | (782,510 | ) | (2,040,893 | ) | ||||
Total stockholders’ equity | 466,610,294 | 256,017,021 | ||||||
Total liabilities and stockholders’ equity | $ | 3,794,170,461 | $ | 2,142,186,863 | ||||
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CONSOLIDATED STATEMENTS OF INCOME
For the years ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Interest income: | ||||||||||||
Loans, including fees | $ | 129,888,784 | $ | 92,005,602 | $ | 35,166,671 | ||||||
Securities: | ||||||||||||
Taxable | 13,961,714 | 12,614,623 | 9,086,134 | |||||||||
Tax-exempt | 3,066,519 | 2,016,044 | 1,115,486 | |||||||||
Federal funds sold and other | 4,014,424 | 3,059,750 | 939,369 | |||||||||
Total interest income | 150,931,441 | 109,696,019 | 46,307,660 | |||||||||
Interest expense: | ||||||||||||
Deposits | 61,671,734 | 40,032,020 | 13,690,649 | |||||||||
Securities sold under agreements to repurchase | 7,371,490 | 4,329,327 | 1,315,122 | |||||||||
Federal funds purchased and other borrowings | 6,176,205 | 4,381,878 | 2,263,851 | |||||||||
Total interest expense | 75,219,429 | 48,743,225 | 17,269,622 | |||||||||
Net interest income | 75,712,012 | 60,952,794 | 29,038,038 | |||||||||
Provision for loan losses | 4,719,841 | 3,732,032 | 2,151,966 | |||||||||
Net interest income after provision for loan losses | 70,992,171 | 57,220,762 | 26,886,072 | |||||||||
Noninterest income: | ||||||||||||
Service charges on deposit accounts | 7,941,029 | 4,645,685 | 977,386 | |||||||||
Investment services | 3,455,808 | 2,463,205 | 1,835,757 | |||||||||
Insurance sales commissions | 2,486,884 | 2,122,702 | — | |||||||||
Gains on loans and loan participations sold | 1,858,077 | 1,868,184 | 1,247,898 | |||||||||
Trust fees | 1,908,440 | 1,180,839 | — | |||||||||
Gains on sales of investment securities, net | 16,472 | — | 114,410 | |||||||||
Other noninterest income | 4,854,217 | 3,505,903 | 1,218,123 | |||||||||
Total noninterest income | 22,520,927 | 15,786,518 | 5,393,574 | |||||||||
Noninterest expense: | ||||||||||||
Salaries and employee benefits | 36,145,588 | 27,469,275 | 13,130,779 | |||||||||
Equipment and occupancy | 10,260,915 | 7,521,602 | 3,766,593 | |||||||||
Other real estate owned | 160,367 | — | — | |||||||||
Marketing and other business development | 1,676,455 | 1,234,497 | 698,232 | |||||||||
Postage and supplies | 1,995,267 | 1,510,048 | 618,060 | |||||||||
Amortization of core deposit intangibles | 2,144,018 | 1,783,230 | — | |||||||||
Merger related expense | 621,883 | 1,635,831 | — | |||||||||
Other noninterest expense | 7,475,072 | 5,469,777 | 2,818,352 | |||||||||
Total noninterest expense | 60,479,565 | 46,624,260 | 21,032,016 | |||||||||
Net income before income taxes | 33,033,533 | 26,383,020 | 11,247,630 | |||||||||
Income tax expense | 9,992,178 | 8,455,987 | 3,192,362 | |||||||||
Net income | $ | 23,041,355 | $ | 17,927,033 | $ | 8,055,268 | ||||||
Per share information: | ||||||||||||
Basic net income per common share | $ | 1.43 | $ | 1.28 | $ | 0.96 | ||||||
Diluted net income per common share | $ | 1.34 | $ | 1.18 | $ | 0.85 | ||||||
Weighted average common shares outstanding: | ||||||||||||
Basic | 16,100,076 | 13,954,077 | 8,408,663 | |||||||||
Diluted | 17,255,543 | 15,156,837 | 9,464,500 | |||||||||
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CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
AND COMPREHENSIVE INCOME
Additional | Accumulated | Total | ||||||||||||||||||||||||||
Common Stock | Paid-in | Unearned | Retained | Other Comprehensive | Stockholders’ | |||||||||||||||||||||||
Shares | Amount | Capital | Compensation | Earnings | Income (Loss) | Equity | ||||||||||||||||||||||
Balances, December 31, 2004 | 8,389,232 | $ | 8,389,232 | $ | 44,376,307 | $ | (37,250 | ) | $ | 5,127,023 | $ | 24,863 | $ | 57,880,175 | ||||||||||||||
Exercise of employee incentive common stock options and related tax benefits | 20,953 | 20,953 | 153,808 | — | — | — | 174,761 | |||||||||||||||||||||
Issuance of restricted common shares pursuant to 2004 Equity Incentive Plan | 16,366 | 16,366 | 360,797 | (377,163 | ) | — | — | — | ||||||||||||||||||||
Compensation expense for restricted shares | — | — | — | 244,724 | — | — | 244,724 | |||||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Net income | — | — | — | — | 8,055,268 | — | 8,055,268 | |||||||||||||||||||||
Net unrealized holding losses on available-for-sale securities, net of deferred tax benefit of $1,788,761 | — | — | — | — | — | (2,918,503 | ) | (2,918,503 | ) | |||||||||||||||||||
Total comprehensive income | 5,136,765 | |||||||||||||||||||||||||||
Balances, December 31, 2005 | 8,426,551 | $ | 8,426,551 | $ | 44,890,912 | $ | (169,689 | ) | $ | 13,182,291 | $ | (2,893,640 | ) | $ | 63,436,425 | |||||||||||||
Transfer of unearned compensation to additional paid-in capital upon adoption of SFAS 123(R) | — | — | (169,689 | ) | 169,689 | — | — | — | ||||||||||||||||||||
Exercise of employee incentive common stock options and related tax benefits | 130,168 | 130,168 | 1,240,724 | — | — | — | 1,370,892 | |||||||||||||||||||||
Issuance of restricted common shares pursuant to 2004 Equity Incentive Plan | 22,057 | 22,057 | (22,057 | ) | — | — | — | — | ||||||||||||||||||||
Exercise of director common stock warrants | 11,000 | 11,000 | 44,000 | — | — | — | 55,000 | |||||||||||||||||||||
Compensation expense for restricted shares | — | — | 465,003 | — | — | — | 465,003 | |||||||||||||||||||||
Compensation expense for stock options | — | — | 1,009,958 | — | — | — | 1,009,958 | |||||||||||||||||||||
Merger with Cavalry Bancorp, Inc. | 6,856,298 | 6,856,298 | 164,231,274 | — | — | — | 171,087,572 | |||||||||||||||||||||
Costs to register common stock issued in connection with the merger with Cavalry Bancorp, Inc. | — | — | (187,609 | ) | — | — | — | (187,609 | ) | |||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Net income | — | — | — | — | 17,927,033 | — | 17,927,033 | |||||||||||||||||||||
Net unrealized holding gains on available-for-sale securities, net of deferred tax expense of $521,886 | — | — | — | — | — | 852,747 | 852,747 | |||||||||||||||||||||
Total comprehensive income | 18,779,780 | |||||||||||||||||||||||||||
Balances, December 31, 2006 | 15,446,074 | $ | 15,446,074 | $ | 211,502,516 | $ | — | $ | 31,109,324 | $ | (2,040,893 | ) | $ | 256,017,021 | ||||||||||||||
Exercise of employee incentive common stock options, stock appreciation rights and related tax benefits | 99,862 | 99,862 | 883,429 | — | — | — | 983,291 | |||||||||||||||||||||
Issuance of restricted common shares pursuant to 2004 Equity Incentive Plan | 42,301 | 42,301 | (42,301 | ) | — | — | — | — | ||||||||||||||||||||
Compensation expense for restricted shares | — | — | 396,378 | — | — | — | 396,378 | |||||||||||||||||||||
Compensation expense for stock options | — | — | 1,703,441 | — | — | — | 1,703,441 | |||||||||||||||||||||
Merger with Mid-America Bancshares, Inc. | 6,676,580 | 6,676,580 | 176,833,242 | — | — | — | 183,509,822 | |||||||||||||||||||||
Costs to register common stock issued in connection with the merger with Mid-America Bancshares, Inc. | — | — | (299,397 | ) | — | — | — | (299,397 | ) | |||||||||||||||||||
Comprehensive income: | ||||||||||||||||||||||||||||
Net income | — | — | — | — | 23,041,355 | — | 23,041,355 | |||||||||||||||||||||
Net unrealized holding gains on available-for-sale securities, net of deferred tax expense of $762,956 | — | — | — | — | — | 1,258,383 | 1,258,383 | |||||||||||||||||||||
Total comprehensive income | 24,299,738 | |||||||||||||||||||||||||||
Balances, December 31, 2007 | 22,264,817 | $ | 22,264,817 | $ | 390,977,308 | $ | — | $ | 54,150,679 | $ | (782,510 | ) | $ | 466,610,294 | ||||||||||||||
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CONSOLIDATED STATEMENTS OF CASH FLOWS
For the years ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Operating activities: | ||||||||||||
Net income | $ | 23,041,355 | $ | 17,927,033 | $ | 8,055,268 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Net amortization of premiums on securities | 492,280 | 629,634 | 1,130,766 | |||||||||
Depreciation and net amortization | 3,810,374 | 1,382,401 | 1,699,380 | |||||||||
Provision for loan losses | 4,719,841 | 3,732,032 | 2,151,966 | |||||||||
Gains on sales of investment securities, net | (16,472 | ) | — | (114,410 | ) | |||||||
Gain on loans and loan participations sold, net | (1,858,077 | ) | (1,868,184 | ) | (1,247,898 | ) | ||||||
Stock-based compensation expense | 2,099,819 | 1,474,961 | 244,724 | |||||||||
Deferred tax (benefit) expense | 3,977,708 | (1,164,336 | ) | (575,755 | ) | |||||||
Tax benefit on exercise of stock awards | — | — | (50,535 | ) | ||||||||
Excess tax benefit from stock compensation | (105,809 | ) | (131,121 | ) | — | |||||||
Mortgage loans held for sale: | ||||||||||||
Loans originated | (169,808,372 | ) | (131,971,094 | ) | (102,874,134 | ) | ||||||
Loans sold | 169,599,685 | 134,301,622 | 100,730,532 | |||||||||
Increase in other assets | (17,546,455 | ) | (6,103,122 | ) | (3,155,825 | ) | ||||||
Increase (decrease) in other liabilities | (2,011,851 | ) | (6,303,665 | ) | 2,177,477 | |||||||
Net cash provided by operating activities | 16,394,026 | 11,906,161 | 8,171,556 | |||||||||
Investing activities: | ||||||||||||
Activities in available for sale securities: | ||||||||||||
Purchases | (78,978,057 | ) | (62,760,686 | ) | (116,361,069 | ) | ||||||
Sales | 770,400 | — | 6,791,867 | |||||||||
Maturities, prepayments and calls | 51,518,109 | 35,568,504 | 32,935,215 | |||||||||
Increase in loans, net | (386,164,624 | ) | (297,565,733 | ) | (175,606,019 | ) | ||||||
Purchases of premises and equipment and software | (6,071,813 | ) | (4,649,676 | ) | (3,438,916 | ) | ||||||
Cash and cash equivalents acquired in merger with Cavalry Bancorp, Inc., net of acquisition costs | — | 36,230,539 | — | |||||||||
Cash and cash equivalents acquired in merger with Mid-America Bancshares, Inc., net of acquisition costs | 38,149,471 | — | — | |||||||||
Purchases of other assets | (4,905,032 | ) | (6,107,658 | ) | (2,708,000 | ) | ||||||
Net cash used in investing activities | (385,681,546 | ) | (299,284,710 | ) | (258,386,922 | ) | ||||||
Financing activities: | ||||||||||||
Net increase in deposits | 346,584,243 | 229,745,145 | 239,423,716 | |||||||||
Net increase (decrease) in repurchase agreements | (5,481,091 | ) | 75,181,529 | 33,906,372 | ||||||||
Net increase in Federal funds purchased | 48,862,000 | — | — | |||||||||
Federal Home Loan Bank: | ||||||||||||
Issuances | 80,000,000 | 56,000,000 | 62,000,000 | |||||||||
Payments | (102,304,513 | ) | (61,540,828 | ) | (74,000,000 | ) | ||||||
Proceeds from issuance of subordinated debt | 30,928,000 | 20,619,000 | 20,619,000 | |||||||||
Exercise of common stock warrants | — | 55,000 | — | |||||||||
Exercise of common stock options and stock appreciation rights | 877,482 | 1,239,771 | 174,761 | |||||||||
Excess tax benefit from stock compensation | 105,809 | 131,121 | — | |||||||||
Costs incurred in connection with registration of common stock issued in merger | (299,397 | ) | (187,609 | ) | — | |||||||
Net cash provided by financing activities | 399,272,533 | 321,243,129 | 282,123,849 | |||||||||
Net increase in cash and cash equivalents | 29,985,013 | 33,864,580 | 31,908,483 | |||||||||
Cash and cash equivalents, beginning of year | 92,518,850 | 58,654,270 | 26,745,787 | |||||||||
Cash and cash equivalents, end of year | $ | 122,503,863 | $ | 92,518,850 | $ | 58,654,270 | ||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the years ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Cash Payments: | ||||||||||||
Interest | $ | 76,735,790 | $ | 50,752,304 | $ | 16,154,326 | ||||||
Income taxes | 7,900,000 | 8,280,000 | 3,802,633 | |||||||||
Noncash Transactions: | ||||||||||||
Common stock, stock appreciation rights, and options issued to acquire Mid-America Bancshares, Inc. (see note 2) | 183,509,822 | — | — | |||||||||
Common stock and options issued to acquire Cavalry Bancorp, Inc. (see note 3) | — | 171,087,572 | — | |||||||||
Loans charged-off to the allowance for loan losses | 1,341,890 | 818,467 | 207,647 | |||||||||
Loans foreclosed upon with repossessions transferred to other assets | 481,915 | 994,781 | — |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2007 | 2006 | 2005 | ||||||||||
Basic earnings per share calculation: | ||||||||||||
Numerator— Net income | $ | 23,041,355 | $ | 17,927,033 | $ | 8,055,268 | ||||||
Denominator— Average common shares outstanding | 16,100,076 | 13,954,077 | 8,408,663 | |||||||||
Basic net income per share | $ | 1.43 | $ | 1.28 | $ | 0.96 | ||||||
Diluted earnings per share calculation: | ||||||||||||
Numerator— Net income | $ | 23,041,355 | $ | 17,927,033 | $ | 8,055,268 | ||||||
Denominator— Average common shares outstanding | 16,100,076 | 13,954,077 | 8,408,663 | |||||||||
Dilutive shares contingently issuable | 1,155,467 | 1,202,760 | 1,055,837 | |||||||||
Average diluted common shares outstanding | 17,255,543 | 15,156,837 | 9,464,500 | |||||||||
Diluted net income per share | $ | 1.34 | $ | 1.18 | $ | 0.85 |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Cash and cash equivalents | $ | 60,795 | ||
Investment securities — available-for-sale | 147,766 | |||
Loans, net of an allowance for loan losses of $8,695 | 855,887 | |||
Goodwill | 129,334 | |||
Core deposit intangible | 8,085 | |||
Other assets | 49,854 | |||
Total assets acquired | 1,251,721 | |||
Deposits | 957,076 | |||
Federal Home Loan Bank advances | 61,383 | |||
Other liabilities | 27,107 | |||
Total liabilities assumed | 1,045,566 | |||
Total consideration paid for Mid-America | $ | 206,155 | ||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Year ended December 31, | ||||||||
2007 | 2006(1) | |||||||
(unaudited) | ||||||||
Pro Forma Income Statements: | ||||||||
Net interest income | $ | 104,610 | $ | 78,454 | ||||
Provision for loan losses | 14,544 | 5,005 | ||||||
Noninterest income | 29,495 | 21,141 | ||||||
Noninterest expense | 98,437 | 68,897 | ||||||
Net income before taxes | 21,124 | 25,693 | ||||||
Income tax expense | 6,908 | 7,750 | ||||||
Net income | $ | 14,216 | $ | 17,943 | ||||
Pro Forma Per Share Information: | ||||||||
Basic net income per common share | $ | 0.64 | $ | 0.98 | ||||
Diluted net income per common share | $ | 0.61 | $ | 0.92 | ||||
Weighted average shares outstanding: | ||||||||
Basic | 22,209,642 | 18,222,247 | ||||||
Diluted | 23,365,109 | 19,483,299 |
(1) | In preparation and as a result of the merger during 2007, Mid-America and Pinnacle Financial incurred significant merger related charges of approximately $3.9 million in the aggregate, primarily for severance benefits, accelerated vesting of defined compensation agreements, investment banker fees, etc. Including these charges would have decreased pro forma net income for the year ended December 31, 2007 by $2.35 million resulting in net income of $11,872,000 and a basic and fully diluted pro forma net income per share of $0.53 and $0.51, respectively. |
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Cash and cash equivalents | $ | 37,420 | ||
Investment securities — available-for-sale | 39,476 | |||
Loans, net of an allowance for loan losses of $5,102 | 545,598 | |||
Goodwill | 114,288 | |||
Core deposit intangible | 13,168 | |||
Other assets | 42,937 | |||
Total assets acquired | 792,887 | |||
Deposits | 583,992 | |||
Federal Home Loan Bank advances | 17,767 | |||
Other liabilities | 18,851 | |||
Total liabilities assumed | 620,610 | |||
Total consideration paid for Cavalry | $ | 172,277 | ||
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December 31, 2007 | ||||||||||||||||
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
Securities available-for-sale: | ||||||||||||||||
U.S. Treasury securities | $ | — | $ | — | $ | — | $ | — | ||||||||
U.S. Government agency securities | 69,481,328 | 199,761 | 18,526 | 69,662,563 | ||||||||||||
Mortgage-backed securities | 297,909,174 | 1,237,808 | 1,441,636 | 297,705,346 | ||||||||||||
State and municipal securities | 127,220,978 | 208,241 | 1,523,412 | 125,905,807 | ||||||||||||
Corporate notes | 2,415,782 | — | 37,559 | 2,378,223 | ||||||||||||
$ | 497,027,262 | $ | 1,645,810 | $ | 3,021,133 | $ | 495,651,939 | |||||||||
Securities held-to-maturity: | ||||||||||||||||
U.S. government agency securities | $ | 17,747,589 | $ | 4,436 | $ | — | 17,752,025 | |||||||||
State and municipal securities | 9,285,767 | 23,175 | 177,494 | 9,131,448 | ||||||||||||
$ | 27,033,356 | $ | 27,611 | $ | 177,494 | $ | 26,883,473 | |||||||||
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December 31, 2006 | ||||||||||||||||
Gross | Gross | |||||||||||||||
Amortized | Unrealized | Unrealized | Fair | |||||||||||||
Cost | Gains | Losses | Value | |||||||||||||
Securities available-for-sale: | ||||||||||||||||
U.S. Treasury securities | $ | — | $ | — | $ | — | $ | — | ||||||||
U.S. Government agency securities | 38,076,428 | 9,739 | 457,321 | 37,628,846 | ||||||||||||
Mortgage-backed securities | 220,397,093 | 455,203 | 3,028,241 | 217,824,055 | ||||||||||||
State and municipal securities | 62,215,952 | 131,412 | 388,124 | 61,959,240 | ||||||||||||
Corporate notes | 1,887,475 | — | 62,188 | 1,825,287 | ||||||||||||
$ | 322,576,948 | $ | 596,354 | $ | 3,935,874 | $ | 319,237,428 | |||||||||
Securities held-to-maturity: | ||||||||||||||||
U.S. government agency securities | $ | 17,747,278 | $ | — | $ | 378,528 | $ | 17,368,700 | ||||||||
State and municipal securities | 9,509,648 | — | 284,113 | 9,225,535 | ||||||||||||
$ | 27,256,876 | $ | — | $ | 662,641 | $ | 26,594,235 | |||||||||
Available-for-sale | Held-to-maturity | |||||||||||||||
Fair | Amortized | Fair | ||||||||||||||
Amortized Cost | Value | Cost | Value | |||||||||||||
Due in one year or less | $ | 29,574,165 | $ | 29,565,012 | $ | 1,578,186 | $ | 1,571,404 | ||||||||
Due in one year to five years | 71,667,981 | 71,674,128 | 22,535,568 | 22,403,338 | ||||||||||||
Due in five years to ten years | 52,785,286 | 52,318,514 | 2,919,602 | 2,908,731 | ||||||||||||
Due after ten years | 45,090,656 | 44,388,939 | — | — | ||||||||||||
$ | 199,118,088 | $ | 197,946,593 | $ | 27,033,356 | $ | 26,883,473 | |||||||||
Investments with an | ||||||||||||||||||||||||
Unrealized Loss of less than | Investments with an Unrealized | Total Investments with an | ||||||||||||||||||||||
12 months | Loss of 12 months or longer | Unrealized Loss | ||||||||||||||||||||||
Unrealized | Unrealized | Unrealized | ||||||||||||||||||||||
Fair Value | Losses | Fair Value | Losses | Fair Value | Losses | |||||||||||||||||||
At December 31, 2007: | ||||||||||||||||||||||||
U.S. government agency securities | $ | 13,942,078 | $ | 25,198 | $ | 2,985,600 | $ | 14,400 | $ | 16,927,678 | $ | 39,598 | ||||||||||||
Mortgage-backed securities | 51,240,090 | 181,098 | 97,593,453 | 1,260,537 | 148.833.543 | 1.441.635 | ||||||||||||||||||
State and municipal securities | 54,467,544 | 1,193,763 | 35,481,739 | 486,071 | 89,949,283 | 1,679,834 | ||||||||||||||||||
Corporate notes | 527,115 | 300 | 1,451,108 | 37,260 | 1,978,223 | 37,560 | ||||||||||||||||||
Total temporarily-impaired securities | $ | 120,176,827 | $ | 1,400,359 | $ | 137,511,900 | $ | 1,798,268 | $ | 257,688,727 | $ | 3,198,627 | ||||||||||||
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At December 31, 2006: | ||||||||||||||||||||||||
U.S. government agency securities | $ | — | $ | — | $ | 47,988,246 | $ | 835,849 | $ | 47,988,246 | $ | 835,849 | ||||||||||||
Mortgage-backed securities | 13,959,080 | 68,965 | 149,496,521 | 2,959,276 | 163,455,601 | 3,028,241 | ||||||||||||||||||
State and municipal securities | 13,975,595 | 47,071 | 35,660,379 | 625,166 | 49,635,974 | 672,237 | ||||||||||||||||||
Corporate notes | — | — | 1,825,286 | 62,188 | 1,825,286 | 62,188 | ||||||||||||||||||
Total temporarily-impaired securities | $ | 27,934,675 | $ | 116,036 | $ | 234,970,432 | $ | 4,482,479 | $ | 262,905,107 | $ | 4,598,515 | ||||||||||||
2007 | 2006 | |||||||
Commercial real estate — Mortgage | $ | 728,200,839 | $ | 284,301,650 | ||||
Consumer real estate — Mortgage | 562,720,828 | 299,626,769 | ||||||
Construction and land development | 517,399,037 | 253,097,234 | ||||||
Commercial and industrial | 838,160,611 | 608,529,830 | ||||||
Consumer and other | 103,159,374 | 52,179,341 | ||||||
Total Loans | 2,749,640,689 | 1,497,734,824 | ||||||
Allowance for loan losses | (28,470,207 | ) | (16,117,978 | ) | ||||
Loans, net | $ | 2,721,170,482 | $ | 1,481,616,846 | ||||
2007 | 2006 | |||||||
Trucking industry | $ | 109,118,000 | $ | 89,862,000 | ||||
Lessors of nonresidential buildings | 249,959,000 | 133,504,000 | ||||||
Lessors of residential buildings | 135,413,000 | 65,791,000 | ||||||
Land subdividers | 283,327,000 | 164,535,000 | ||||||
New housing operative builders | 269,744,000 | 192,373,000 | ||||||
New single family housing construction | 104,980,000 | 18,900 |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2007 | 2006 | 2005 | ||||||||||
Balance at beginning of period | $ | 16,117,978 | $ | 7,857,774 | $ | 5,650,014 | ||||||
Charged-off loans | (1,341,890 | ) | (818,467 | ) | (207,647 | ) | ||||||
Recovery of previously charged-off loans | 279,491 | 244,343 | 263,441 | |||||||||
Allowance from Mid-America acquisition (see note 2) | 8,694,787 | — | — | |||||||||
Allowance from Cavalry acquisition (see note 3) | — | 5,102,296 | — | |||||||||
Provision for loan losses | 4,719,841 | 3,732,032 | 2,151,966 | |||||||||
Balance at end of period | $ | 28,470,207 | $ | 16,117,978 | $ | 7,857,774 | ||||||
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Range of Useful Lives | 2007 | 2006 | ||||||||||
Land | — | $ | 15,365,882 | $ | 9,545,667 | |||||||
Buildings | 15 to 30 years | 41,255,704 | 19,849,960 | |||||||||
Leasehold improvements | 15 to 20 years | 5,087,210 | 1,954,028 | |||||||||
Furniture and equipment | 3 to 15 years | 26,910,636 | 21,350,694 | |||||||||
88,619,432 | 52,700,349 | |||||||||||
Accumulated depreciation | (20,233,486 | ) | (16,414,553 | ) | ||||||||
$ | 68,385,946 | $ | 36,285,796 | |||||||||
2008 | $ | 1,846,000 | ||
2009 | 1,878,000 | |||
2010 | 1,673,000 | |||
2011 | 1,343,000 | |||
2012 | 1,360,000 | |||
Thereafter | 10,225,651 | |||
$ | 18,326,837 | |||
2008 | $ | 1,168,105,188 | ||
2009 | 153,890,291 | |||
2010 | 31,986,218 | |||
2011 | 12,512,723 | |||
2012 | 5,688,898 | |||
$ | 1,372,183,317 | |||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Scheduled | ||||||||
Maturities | Interest Rate Ranges | |||||||
2008 | $ | 15,554,292 | 4.4% to 5.2% | |||||
2009 | 15,000,000 | 5.0% | ||||||
2010 | 13,250,485 | 4.1% to 5.0% | ||||||
2011-2020 | 48,999,356 | 2.3% to 4.4% | ||||||
$ | 92,804,133 | |||||||
Weighted average interest rate | 4.3% |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Scheduled | ||||
Maturities | ||||
2008 | $ | 10,310,000 | ||
2009 | 20,619,000 | |||
2010 | 51,547,000 | |||
2011-2020 | — | |||
$ | 82,476,000 | |||
December 31, 2007 | December 31, 2006 | |||||||
Asset— Investment in subordinated debentures issued by Pinnacle Financial | $ | 82,476 | $ | 51,548 | ||||
Liabilities | $ | — | $ | — | ||||
Stockholder’s equity— Trust preferred securities | 80,000 | 50,000 | ||||||
Common securities (100% owned by Pinnacle Financial) | 2,476 | 1,548 | ||||||
Total stockholder’s equity | 82,476 | 51,548 | ||||||
Total liabilities and stockholder’s equity | $ | 82,476 | $ | 51,548 | ||||
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Combined Summary Income Statement | ||||||||||||
Year ended December 31, | ||||||||||||
2007 | 2006 | 2005 | ||||||||||
Income —Interest income from subordinated debentures issued by Pinnacle Financial | $ | 3,965 | $ | 2,504 | $ | 986 | ||||||
Net Income | $ | 3,965 | $ | 2,504 | $ | 986 | ||||||
Combined Summary Statement of Stockholder’s Equity | ||||||||||||||||
Trust | Total | |||||||||||||||
Preferred | Common | Retained | Stockholder’s | |||||||||||||
Securities | Stock | Earnings | Equity | |||||||||||||
Balances, December 31, 2004 | $ | 10,000 | $ | 310 | $ | — | $ | 10,310 | ||||||||
Net income | — | — | 986 | 986 | ||||||||||||
Issuance of trust preferred securities | 20,000 | 619 | — | 20,619 | ||||||||||||
Dividends: | ||||||||||||||||
Trust preferred securities | — | — | (956 | ) | (956 | ) | ||||||||||
Common paid to Pinnacle Financial | — | — | (30 | ) | (30 | ) | ||||||||||
Balances, December 31, 2005 | $ | 30,000 | $ | 929 | $ | — | $ | 30,929 | ||||||||
Net income | — | — | 2,504 | 2,504 | ||||||||||||
Issuance of trust preferred securities | 20,000 | 619 | — | 20,619 | ||||||||||||
Dividends: | ||||||||||||||||
Trust preferred securities | — | — | (2,428 | ) | (2,428 | ) | ||||||||||
Common paid to Pinnacle Financial | — | — | (76 | ) | (76 | ) | ||||||||||
Balances, December 31, 2006 | $ | 50,000 | $ | 1,548 | $ | — | $ | 51,548 | ||||||||
Net income | — | — | 3,965 | 3,965 | ||||||||||||
Issuance of trust preferred securities | 30,000 | 928 | — | 30,928 | ||||||||||||
Dividends: | ||||||||||||||||
Trust preferred securities | — | — | (3,847 | ) | (3,847 | ) | ||||||||||
Common paid to Pinnacle Financial | — | — | (118 | ) | (118 | ) | ||||||||||
Balances, December 31, 2007 | $ | 80,000 | $ | 2,476 | $ | — | $ | 82,476 | ||||||||
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2007 | ||||
Balance at beginning of year | $ | 700,000 | ||
Increases (decreases) in unrecognized tax benefits relating to current period | — | |||
Increases (decreases) in unrecognized tax benefits relating to prior period | (700,000 | ) | ||
Decreases in unrecognized tax benefits relating to settlements with taxing authorities | — | |||
Reductions to unrecognized tax benefits as a result of a lapse of the applicable statue of limitations | — | |||
Balance at end of year | $ | — | ||
2007 | 2006 | 2005 | ||||||||||
Current tax expense (benefit): | ||||||||||||
Federal | $ | 6,422,436 | $ | 9,073,193 | $ | 3,589,487 | ||||||
State | (407,966 | ) | 547,130 | 178,630 | ||||||||
Total current tax expense (benefit) | 6,014,470 | 9,620,323 | 3,768,117 | |||||||||
Deferred tax expense (benefit): | ||||||||||||
Federal | 3,318,644 | (971,418 | ) | (479,072 | ) | |||||||
State | 659,064 | (192,918 | ) | (96,683 | ) | |||||||
Total deferred tax expense (benefit) | 3,977,708 | (1,164,336 | ) | (575,755 | ) | |||||||
$ | 9,992,178 | $ | 8,455,987 | $ | 3,192,362 | |||||||
2007 | 2006 | 2005 | ||||||||||
Income taxes at statutory rate | $ | 11,561,737 | $ | 9,234,057 | $ | 3,824,194 | ||||||
State tax expense, net of federal tax effect | 163,214 | 230,238 | 54,085 | |||||||||
Federal tax credits | (360,000 | ) | (300,000 | ) | (300,000 | ) | ||||||
Tax-exempt securities | (889,716 | ) | (602,100 | ) | (339,900 | ) | ||||||
Insurance premiums | (304,807 | ) | (91,049 | ) | — | |||||||
Other items | (178,250 | ) | (15,159 | ) | (46,017 | ) | ||||||
Income tax expense | $ | 9,992,178 | $ | 8,455,987 | $ | 3,192,362 | ||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2007 | 2006 | |||||||
Deferred tax assets: | ||||||||
Loan loss allowance | $ | 11,104,038 | $ | 6,654,334 | ||||
Loans | 1,398,865 | 1,337,983 | ||||||
Securities | 485,398 | 1,251,636 | ||||||
Accrued liability for supplemental retirement agreements | 433,049 | 1,535,688 | ||||||
Deposits | 1,156,680 | 585,568 | ||||||
Restricted stock and stock options | 559,888 | 316,407 | ||||||
FHLB discount | 346,402 | — | ||||||
Mid-America organization costs | 298,169 | — | ||||||
Net operating loss carryforward | 1,662,445 | — | ||||||
Other deferred tax assets | 546,491 | 23,889 | ||||||
Total deferred tax assets | 17,991,425 | 11,705,505 | ||||||
Deferred tax liabilities: | ||||||||
Depreciation and amortization | 5,620,575 | 1,563,078 | ||||||
Core deposit intangible asset | 6,803,830 | 4,473,076 | ||||||
REIT dividends | 266,981 | — | ||||||
FHLB dividends | 853,829 | 770,156 | ||||||
Other deferred tax liabilities | 838,845 | 440,642 | ||||||
Total deferred tax liabilities | 14,384,060 | 7,246,952 | ||||||
Net deferred tax assets | $ | 3,607,365 | $ | 4,458,553 | ||||
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Commitments to extend credit | $ | 833,893,000 | ||
Standby letters of credit | 98,305,000 |
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Weighted- | |||||||||||||||||
Weighted- | Average | Aggregate | |||||||||||||||
Average | Contractual | Intrinsic | |||||||||||||||
Exercise | Remaining Term | Value (1) | |||||||||||||||
Number | Price | (in years) | (000’s) | ||||||||||||||
Outstanding at December 31, 2004 | 1,068,350 | $ | 7.03 | ||||||||||||||
Granted | 209,482 | 23.74 | |||||||||||||||
Exercised | (20,953 | ) | 5.93 | ||||||||||||||
Forfeited | (14,486 | ) | 14.93 | ||||||||||||||
Outstanding at December 31, 2005 | 1,242,393 | $ | 9.78 | ||||||||||||||
Additional stock option grants resulting from assumption of the Cavalry Plan | 195,551 | 10.80 | |||||||||||||||
Granted | 365,519 | 24.00 | |||||||||||||||
Exercised | (130,168 | ) | 9.69 | ||||||||||||||
Forfeited | (14,836 | ) | 15.45 | ||||||||||||||
Outstanding at December 31, 2006 | 1,658,459 | $ | 12.93 | ||||||||||||||
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Weighted- | |||||||||||||||||
Weighted- | Average | Aggregate | |||||||||||||||
Average | Contractual | Intrinsic | |||||||||||||||
Exercise | Remaining Term | Value (1) | |||||||||||||||
Number | Price | (in years) | (000’s) | ||||||||||||||
Additional stock option grants and stock appreciation rights resulting from assumption of the Mid-America Plan | 487,835 | 14.54 | |||||||||||||||
Granted | 376,543 | 30.66 | |||||||||||||||
Stock options exercised | (99,741 | ) | 8.68 | ||||||||||||||
Stock appreciation rights exercised(2) | (465 | ) | 21.37 | ||||||||||||||
Forfeited | (23,808 | ) | 28.00 | �� | |||||||||||||
Outstanding at December 31, 2007 | 2,398,823 | $ | 16.84 | 6.9 | $ | 23,784 | |||||||||||
Outstanding and expected to vest at December 31, 2007 | 2,357,000 | $ | 16.67 | 6.9 | $ | 23,692 | |||||||||||
Options exercisable at December 31, 2007 | 1,533,986 | $ | 11.06 | 6.2 | $ | 20,876 | |||||||||||
(1) | The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted price of Pinnacle Financial common stock of $25.42 per common share for the 2.1 million options and stock appreciation rights that were in-the-money at December 31, 2007. | |
(2) | The 465 stock appreciation rights exercised during 2007 settled for 121 shares of Pinnacle Financial common stock. |
Awards granted with | ||||||||||||
the intention to be | ||||||||||||
classified | ||||||||||||
as incentive stock | Non-qualified stock | |||||||||||
options | option awards | Totals | ||||||||||
For the year ended December 31,2007: | ||||||||||||
Stock-based compensation expense | $ | 481,009 | $ | 1,222,432 | $ | 1,703,441 | ||||||
Deferred income tax benefit | — | 479,560 | 479,560 | |||||||||
Impact of stock-based compensation expense after deferred income tax benefit | $ | 481,009 | $ | 742,872 | $ | 1,223,881 | ||||||
Impact on earnings per share: | ||||||||||||
Basic —weighted average shares outstanding | $ | 0.03 | $ | 0.05 | $ | 0.08 | ||||||
Fully diluted — weighted average shares outstanding | $ | 0.03 | $ | 0.04 | $ | 0.07 | ||||||
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Awards granted | ||||||||||||
with | ||||||||||||
the intention to be | ||||||||||||
classified | ||||||||||||
as incentive stock | Non-qualified stock | |||||||||||
options | option awards | Totals | ||||||||||
For the year ended December 31,2006: | ||||||||||||
Stock-based compensation expense | $ | 586,924 | $ | 423,034 | $ | 1,009,958 | ||||||
Deferred income tax benefit | — | 165,956 | 165,956 | |||||||||
Impact of stock-based compensation expense after deferred income tax benefit | $ | 586,924 | $ | 257,078 | $ | 844,002 | ||||||
Impact on earnings per share: | ||||||||||||
Basic —weighted average shares outstanding | $ | 0.04 | $ | 0.02 | $ | 0.06 | ||||||
Fully diluted — weighted average shares outstanding | $ | 0.04 | $ | 0.02 | $ | 0.06 | ||||||
2007 | 2006 | 2005 | ||||||||||
Risk free interest rate | 4.70 | % | 4.65 | % | 2.57 | % | ||||||
Expected life of options | 6.50 years | 6.50 years | 6.50 years | |||||||||
Expected dividend yield | 0.00 | % | 0.00 | % | 0.00 | % | ||||||
Expected volatility | 21.1 | % | 23.1 | % | 24.1 | % | ||||||
Weighted average fair value | $ | 10.57 | $ | 10.44 | $ | 7.30 |
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Executive Management Awards | Board of Director Awards | |||||||||||||||||||||||
(number of share awards) | Vested | Unvested | Totals | Vested | Unvested | Totals | ||||||||||||||||||
Balances at December 31, 2005 | 8,016 | 12,196 | 20,212 | — | — | — | ||||||||||||||||||
Granted | — | 18,057 | 18,057 | — | 4,400 | 4,400 | ||||||||||||||||||
Forfeited | — | — | — | — | (400 | ) | (400 | ) | ||||||||||||||||
Vested | 12,753 | (12,753 | ) | — | — | — | — | |||||||||||||||||
Balances at December 31, 2006 | 20,769 | 17,500 | 38,269 | — | 4,000 | 4,000 | ||||||||||||||||||
Granted | — | 39,071 | 39,071 | — | 3,230 | 3,230 | ||||||||||||||||||
Vested | 5,452 | (5,452 | ) | — | 4,000 | (4,000 | ) | — | ||||||||||||||||
Balances at December 31, 2007 | 26,221 | 51,119 | 77,340 | 4,000 | 3,230 | 7,230 | ||||||||||||||||||
2007 | 2006 | 2005 | ||||||||||
Stock-based compensation expense | $ | 396,378 | $ | 465,003 | $ | 244,724 | ||||||
Income tax benefit | 155,499 | 182,421 | 93,705 | |||||||||
Impact of stock-based compensation expense, net of income tax benefit | $ | 240,879 | $ | 282,582 | $ | 151,019 | ||||||
Impact on earnings per share: | ||||||||||||
Basic —weighted average shares outstanding | $ | 0.01 | $ | 0.02 | $ | 0.02 | ||||||
Fully diluted — weighted average shares outstanding | $ | 0.01 | $ | 0.02 | $ | 0.02 | ||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
2005 | ||||||||
Net income, as reported | $ | 8,055,268 | ||||||
Add: Compensation expense recognized in the accompanying consolidated statement of income, net of related tax effects | 167,981 | |||||||
Deduct: Total stock-based compensation expense determined under the fair value based method for all awards, net of related tax effects | (859,350 | ) | ||||||
Pro forma net income | $ | 7,363,899 | ||||||
Per share information: | ||||||||
Basic net income | As reported | $ | 0.96 | |||||
Pro forma | 0.88 | |||||||
Diluted net income | As reported | $ | 0.85 | |||||
Pro forma | 0.78 |
December 31, 2007 | ||||||||
Notional Amount | Estimated Fair Value | |||||||
Interest rate swap agreements: | ||||||||
Pay fixed / receive variable swaps | $ | 25,415 | $ | 504 | ||||
Pay variable / receive fixed swaps | 25,415 | (504 | ) | |||||
Total | $ | 50,830 | $ | — | ||||
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December 31, 2007 | December 31, 2006 | |||||||||||||||
Estimated | Estimated Fair | |||||||||||||||
Carrying Amount | Fair Value | Carrying Amount | Value | |||||||||||||
Financial assets: | ||||||||||||||||
Cash, due from banks, and Federal funds sold | $ | 122,504 | $ | 122,504 | $ | 92,519 | $ | 92,519 | ||||||||
Securities available-for-sale | 495,652 | 495,652 | 319,237 | 319,237 | ||||||||||||
Securities held-to-maturity | 27,033 | 26,883 | 27,257 | 26,594 | ||||||||||||
Mortgage loans held-for-sale | 11,252 | 11,252 | 5,654 | 5,654 | ||||||||||||
Loans, net | 2,721,170 | 2,705,663 | 1,481,617 | 1,469,642 | ||||||||||||
Derivative assets | 504 | 504 | — | — | ||||||||||||
Financial liabilities: | ||||||||||||||||
Deposits and securities sold under agreements to repurchase | $ | 3,081,390 | $ | 3,077,828 | $ | 1,763,427 | $ | 1,761,178 | ||||||||
Federal Home Loan Bank advances | 92,804 | 92,576 | 53,726 | 53,481 | ||||||||||||
Federal Funds Purchased | 48,862 | 48,862 | — | — | ||||||||||||
Subordinated debt | 82,476 | 83,293 | 51,548 | 52,110 | ||||||||||||
Derivative liabilities | 504 | 504 | — | — | ||||||||||||
Notional | Notional | |||||||||||||||
Amount | Amount | |||||||||||||||
Off-balance sheet instruments: | ||||||||||||||||
Commitments to extend credit | $ | 833,893 | $ | — | $ | 532,383 | $ | — | ||||||||
Standby letters of credit | 98,305 | 234 | 52,961 | 159 |
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Minimum | ||||||||||||||||||||||||
To Be Well-Capitalized | ||||||||||||||||||||||||
Minimum | Under Prompt | |||||||||||||||||||||||
Capital | Corrective | |||||||||||||||||||||||
Actual | Requirement | Action Provisions | ||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||
At December 31, 2007 | ||||||||||||||||||||||||
Total capital to risk weighted assets: | ||||||||||||||||||||||||
Pinnacle Financial | $ | 322,146 | 10.4 | % | $ | 248,263 | 8.0 | % | not applicable | |||||||||||||||
Pinnacle National | $ | 214,201 | 10.1 | % | $ | 169,825 | 8.0 | % | $ | 212,282 | 10.0 | % | ||||||||||||
PrimeTrust Bank | $ | 56,822 | 10.1 | % | $ | 45,026 | 8.0 | % | $ | 56,283 | 10.0 | % | ||||||||||||
Bank of the South | $ | 41,946 | 10.4 | % | $ | 32,155 | 8.0 | % | $ | 40,193 | 10.0 | % | ||||||||||||
Tier I capital to risk weighted assets: | ||||||||||||||||||||||||
Pinnacle Financial | $ | 293,676 | 9.5 | % | $ | 124,132 | 4.0 | % | not applicable | |||||||||||||||
Pinnacle National | $ | 194,804 | 9.2 | % | $ | 84,913 | 4.0 | % | $ | 127,369 | 6.0 | % | ||||||||||||
PrimeTrust Bank | $ | 51,550 | 9.2 | % | $ | 22,513 | 4.0 | % | $ | 33,770 | 6.0 | % | ||||||||||||
Bank of the South | $ | 38,089 | 9.5 | % | $ | 16,077 | 4.0 | % | $ | 24,116 | 6.0 | % | ||||||||||||
Tier I capital to average assets (*): | ||||||||||||||||||||||||
Pinnacle Financial | $ | 293,676 | 11.6 | % | $ | 101,515 | 4.0 | % | not applicable | |||||||||||||||
Pinnacle National | $ | 194,804 | 8.5 | % | $ | 91,273 | 4.0 | % | $ | 114,091 | 5.0 | % | ||||||||||||
PrimeTrust Bank | $ | 51,550 | 8.3 | % | $ | 24,976 | 4.0 | % | $ | 31,220 | 5.0 | % | ||||||||||||
Bank of the South | $ | 38,089 | 7.6 | % | $ | 19,908 | 4.0 | % | $ | 24,886 | 5.0 | % |
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Minimum | ||||||||||||||||||||||||
To Be Well-Capitalized | ||||||||||||||||||||||||
Minimum | Under Prompt | |||||||||||||||||||||||
Capital | Corrective | |||||||||||||||||||||||
Actual | Requirement | Action Provisions | ||||||||||||||||||||||
Amount | Ratio | Amount | Ratio | Amount | Ratio | |||||||||||||||||||
At December 31, 2006 | ||||||||||||||||||||||||
Total capital to risk weighted assets: | ||||||||||||||||||||||||
Pinnacle Financial | $ | 202,881 | 11.8 | % | $ | 137,638 | 8.0 | % | not applicable | |||||||||||||||
Pinnacle National | $ | 175,159 | 10.2 | % | $ | 137,340 | 8.0 | % | $ | 171,676 | 10.0 | % | ||||||||||||
Tier I capital to risk weighted assets: | ||||||||||||||||||||||||
Pinnacle Financial | $ | 186,763 | 10.9 | % | $ | 68,819 | 4.0 | % | not applicable | |||||||||||||||
Pinnacle National | $ | 159,031 | 9.3 | % | $ | 68,670 | 4.0 | % | $ | 103,005 | 6.0 | % | ||||||||||||
Tier I capital to average assets (*): | ||||||||||||||||||||||||
Pinnacle Financial | $ | 186,763 | 9.5 | % | $ | 79,021 | 4.0 | % | not applicable | |||||||||||||||
Pinnacle National | $ | 159,031 | 8.1 | % | $ | 79,056 | 4.0 | % | $ | 98,820 | 5.0 | % |
(*) | Average assets for the above calculations were based on the most recent quarter. |
Trust and | ||||||||||||||||||||
Commercial | Investment | Mortgage | Insurance | Total | ||||||||||||||||
Banking | Services | Origination | Services | Company | ||||||||||||||||
For the year ended December 31, 2007: | ||||||||||||||||||||
Net interest income | $ | 75,541 | $ | — | $ | 171 | $ | — | $ | 75,712 | ||||||||||
Provision for loan losses | 4,720 | — | — | — | 4,720 | |||||||||||||||
Noninterest income | 12,492 | 4,743 | 2,792 | 2,494 | 22,521 | |||||||||||||||
Noninterest expense | 52,929 | 3,484 | 2,249 | 1,818 | 60,480 | |||||||||||||||
Income tax expense | 8,949 | 494 | 280 | 269 | 9,992 | |||||||||||||||
Net income | $ | 21,435 | $ | 765 | $ | 434 | $ | 407 | $ | 23,041 | ||||||||||
For the year ended December 31, 2006: | ||||||||||||||||||||
Net interest income | $ | 60,953 | $ | — | $ | — | $ | — | $ | 60,953 | ||||||||||
Provision for loan losses | 3,732 | — | — | — | 3,732 | |||||||||||||||
Noninterest income | 8,705 | 3,316 | 1,647 | 2,119 | 15,787 | |||||||||||||||
Noninterest expense | 41,930 | 2,375 | 976 | 1,343 | 46,624 | |||||||||||||||
Income tax expense | 7,508 | 369 | 263 | 317 | 8,457 | |||||||||||||||
Net income | $ | 16,488 | $ | 572 | $ | 408 | $ | 459 | $ | 17,927 | ||||||||||
For the year ended December 31, 2005: | ||||||||||||||||||||
Net interest income | $ | 29,038 | $ | — | $ | — | $ | — | $ | 29,038 | ||||||||||
Provision for loan losses | 2,152 | — | — | — | 2,152 | |||||||||||||||
Noninterest income | 2,675 | 1,573 | 1,146 | — | 5,394 | |||||||||||||||
Noninterest expense | 19,315 | 1,171 | 546 | — | 21,032 | |||||||||||||||
Income tax expense | 2,809 | 154 | 230 | — | 3,193 | |||||||||||||||
Net income | $ | 7,437 | $ | 248 | $ | 370 | $ | — | $ | 8,055 |
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Trust and | ||||||||||||||||||||
Commercial | Investment | Mortgage | Insurance | Total | ||||||||||||||||
Banking | Services | Origination | Services | Company | ||||||||||||||||
As of December 31, 2007: | ||||||||||||||||||||
End of period assets | $ | 3,773,874 | $ | 400 | $ | 15,074 | $ | 4,822 | $ | 3,794,170 | ||||||||||
As of December 31, 2006: | ||||||||||||||||||||
End of period assets | $ | 2,128,105 | $ | 402 | $ | 9,762 | $ | 3,918 | $ | 2,142,187 | ||||||||||
2007 | 2006 | |||||||
Assets: | ||||||||
Cash | $ | 9,829,126 | $ | 24,803,538 | ||||
Investments in consolidated subsidiaries | 538,364,192 | — | ||||||
Investment in unconsolidated subsidiaries: | ||||||||
PNFP Statutory Trust I | 310,000 | 310,000 | ||||||
PNFP Statutory Trust II | 619,000 | 619,000 | ||||||
PNFP Statutory Trust III | 619,000 | 619,000 | ||||||
PNFP Statutory Trust IV | 928,000 | — | ||||||
Other investments | 1,255,135 | — | ||||||
Income taxes receivable from subsidiaries | — | 1,298,299 | ||||||
Current income tax receivable | 8,365,160 | 1,049,604 | ||||||
Other assets | 8,125,827 | 786,846 | ||||||
$ | 568,415,440 | $ | 307,755,021 | |||||
Liabilities and stockholders’ equity: | ||||||||
Income taxes payable to subsidiaries | $ | 8,916,956 | $ | — | ||||
Subordinated debt and other borrowings | 91,476,000 | 51,548,000 | ||||||
Other liabilities | 1,412,189 | 190,000 | ||||||
Stockholders’ equity | 466,610,295 | 256,017,021 | ||||||
$ | 568,415,440 | $ | 307,755,021 | |||||
2007 | 2006 | 2005 | ||||||||||
Revenues — Interest income | $ | 347,787 | $ | 267,154 | $ | 133,748 | ||||||
Expenses: | ||||||||||||
Interest expense — subordinated debentures | 4,012,243 | 2,504,033 | 985,645 | |||||||||
Stock-based compensation expense | 2,099,819 | 1,474,960 | 244,724 | |||||||||
Other expense | 303,827 | 245,528 | 58,772 | |||||||||
Loss before income taxes and equity in undistributed income of subsidiaries | (6,068,102 | ) | (3,957,367 | ) | (1,155,393 | ) | ||||||
Income tax benefit | (2,195,146 | ) | (1,632,738 | ) | (438,270 | ) | ||||||
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2007 | 2006 | 2005 | ||||||||||
Loss before equity in undistributed income of subsidiaries | (3,872,956 | ) | (2,324,629 | ) | (717,123 | ) | ||||||
Equity in undistributed income of subsidiaries | 26,914,311 | 20,251,662 | 8,772,391 | |||||||||
Net income | $ | 23,041,355 | $ | 17,927,033 | $ | 8,055,268 | ||||||
2007 | 2006 | 2005 | ||||||||||
Operating activities: | ||||||||||||
Net income | $ | 23,041,355 | $ | 17,927,033 | $ | 8,055,268 | ||||||
Adjustments to reconcile net income to net cash provided (used) by operating activities: | ||||||||||||
Stock-based compensation expense | 2,099,819 | 1,474,960 | 244,724 | |||||||||
Increase (decrease) in income tax payable, net | (1,528,956 | ) | (1,921,194 | ) | 1,000,352 | |||||||
Decrease (increase) in other assets | 77,960 | 1,118,127 | (479,474 | ) | ||||||||
Decrease in other liabilities | 495,586 | 190,000 | 99,726 | |||||||||
Tax benefit from exercise of stock awards | — | — | (50,535 | ) | ||||||||
Excess tax benefit from stock compensation | (105,809 | ) | (131,121 | ) | ||||||||
Deferred tax expense (benefit) | 67,501 | (232,866 | ) | — | ||||||||
Equity in undistributed income of subsidiaries | (26,914,311 | ) | (20,251,662 | ) | (8,772,391 | ) | ||||||
Net cash provided (used) by operating activities | (2,766,855 | ) | (1,826,723 | ) | 97,670 | |||||||
Investing activities— | ||||||||||||
Investment in unconsolidated subsidiaries | (928,000 | ) | (619,000 | ) | (619,000 | ) | ||||||
Investment in consolidated subsidiaries: | ||||||||||||
Banking subsidiaries | (20,250,000 | ) | (10,000,000 | ) | (15,500,000 | ) | ||||||
Other subsidiaries | — | (350,250 | ) | (183,721 | ) | |||||||
Investments in other entities | (1,189,488 | ) | (65,647 | ) | — | |||||||
Cash and cash equivalents used in merger with Mid-America | (21,557,773 | ) | — | — | ||||||||
Cash and cash equivalents acquired in merger with Cavalry | — | 3,128,116 | — | |||||||||
Net cash used by investing activities | (43,925,261 | ) | (7,906,781 | ) | (16,302,721 | ) | ||||||
Financing activities— | ||||||||||||
Proceeds from issuance of subordinated debt | 30,928,000 | 20,619,000 | 20,619,000 | |||||||||
Exercise of common stock warrants | — | 55,000 | — | |||||||||
Exercise of common stock options | 983,292 | 1,239,771 | 174,761 | |||||||||
Excess tax benefit from stock compensation arrangements | 105,809 | 131,121 | — | |||||||||
Costs incurred in connection with registration of common stock issued in mergers | (299,397 | ) | (187,609 | ) | — | |||||||
Net cash provided by financing activities | 31,717,704 | 21,857,283 | 20,793,761 | |||||||||
Net increase (decrease) in cash | (14,974,412 | ) | 12,123,779 | 4,588,710 | ||||||||
Cash, beginning of year | 24,803,538 | 12,679,759 | 8,091,049 | |||||||||
Cash, end of year | $ | 9,829,126 | $ | 24,803,538 | $ | 12,679,759 | ||||||
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
First | Second | Third | Fourth | |||||||||||||
(in thousands, except per share data) | Quarter | Quarter | Quarter | Quarter | ||||||||||||
2007 | ||||||||||||||||
Interest income | $ | 33,739 | $ | 35,508 | $ | 38,347 | $ | 43,338 | ||||||||
Net interest income | 17,082 | 17,661 | 18,960 | 22,009 | ||||||||||||
Provision for loan losses | 788 | 900 | 772 | 2,260 | ||||||||||||
Net income before taxes | 8,196 | 7,828 | 8,410 | 8,599 | ||||||||||||
Net income | 5,602 | 5,426 | 5,772 | 6,242 | ||||||||||||
Basic net income per share | $ | 0.36 | $ | 0.35 | $ | 0.37 | $ | 0.35 | ||||||||
Diluted net income per share | $ | 0.34 | $ | 0.33 | $ | 0.35 | $ | 0.33 | ||||||||
2006 | ||||||||||||||||
Interest income | $ | 16,811 | $ | 28,305 | $ | 31,340 | $ | 33,241 | ||||||||
Net interest income | 9,507 | 16,895 | 17,159 | 17,391 | ||||||||||||
Provision for loan losses | 387 | 1,707 | 587 | 1,051 | ||||||||||||
Net income before taxes | 3,839 | 6,463 | 7,942 | 8,139 | ||||||||||||
Net income | 2,612 | 4,322 | 5,347 | 5,646 | ||||||||||||
Basic net income per share | $ | 0.27 | $ | 0.28 | $ | 0.35 | $ | 0.37 | ||||||||
Diluted net income per share | $ | 0.24 | $ | 0.26 | $ | 0.32 | $ | 0.34 | ||||||||
2005 | ||||||||||||||||
Interest income | $ | 9,270 | $ | 10,544 | $ | 12,379 | $ | 14,118 | ||||||||
Net interest income | 6,503 | 6,795 | 7,456 | 8,287 | ||||||||||||
Provision for loan losses | 601 | 483 | 366 | 702 | ||||||||||||
Net income before taxes | 2,499 | 2,762 | 2,867 | 3,119 | ||||||||||||
Net income | 1,780 | 1,959 | 2,078 | 2,238 | ||||||||||||
Basic net income per share | $ | 0.21 | $ | 0.23 | $ | 0.25 | $ | 0.27 | ||||||||
Diluted net income per share | $ | 0.19 | $ | 0.21 | $ | 0.22 | $ | 0.24 |
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Number of | ||||||||||||
Securities | ||||||||||||
Remaining Available | ||||||||||||
Number of | for Future Issuance | |||||||||||
Securities to be | Under Equity | |||||||||||
Issued upon | Weighted Average | Compensation Plans | ||||||||||
Exercise of | Exercise Price of | (Excluding | ||||||||||
Outstanding | Outstanding | Securities | ||||||||||
Options, Warrants | Options, Warrants | Reflected in First | ||||||||||
Plan Category | and Rights | and Rights | Column) | |||||||||
Equity compensation plans approved by shareholders: | ||||||||||||
2000 Stock Incentive Plan | 844,127 | $ | 6.19 | — | ||||||||
2004 Equity Incentive Plan | 982,484 | $ | 27.73 | 728,661 | ||||||||
1999 Cavalry Bancorp, Inc. Stock Option Plan | 98,456 | $ | 10.86 | — | ||||||||
Bank of the South 2001 Stock Option Plan | 68,223 | $ | 17.06 | — | ||||||||
PrimeTrust Bank 2001 Statutory-Non-Statutory Stock Option Plan | 40,557 | $ | 7.52 | — | ||||||||
PrimeTrust Bank 2005 Statutory-Non-Statutory Stock Option Plan | 113,024 | $ | 12.89 | — | ||||||||
Mid-America Bancshares, Inc. 2006 Omnibus Equity Incentive Plan | 251,952 | $ | 15.65 | 88,435 | ||||||||
Equity compensation plans not approved by shareholders | N/A | N/A | N/A | |||||||||
Total | 2,398,823 | $ | 16.84 | 817,096 |
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Exhibit | ||
No. | Description | |
2.1 | Merger Agreement, dated September 30, 2005, by and between Pinnacle Financial Partners, Inc. and Cavalry Bancorp, Inc. (schedules and exhibits to which been omitted pursuant to Items 601(b)(2) of Regulations S-K)(1) | |
2.2 | Agreement and Plan of Merger by and between Pinnacle Financial Partners, Inc. and Mid-America Bancshares, Inc. (schedules and exhibits to which been omitted pursuant to Items 601(b)(2) of Regulations S-K)(2) | |
3.1 | Amended and Restated Charter(3) | |
3.2 | Bylaws(4) | |
4.1.1 | Specimen Common Stock Certificate(5) | |
4.1.2 | See Exhibits 3.1 and 3.2 for provisions of the Charter and Bylaws defining rights of holders of the Common Stock | |
10.1 | Lease Agreement by and between TMP, Inc. (former name of Pinnacle Financial Partners, Inc.) and Commercial Street Associates dated March 16, 2000 (main office)(5) | |
10.4 | Form of Pinnacle Financial Partners, Inc.’s Organizers’ Warrant Agreement(5) | |
10.7 | Employment Agreement dated as of August 1, 2000 by and between Pinnacle National Bank, Pinnacle Financial Partners, Inc. and Robert A. McCabe, Jr.(5) * | |
10.8 | Employment Agreement dated as of April 1, 2000 by and between Pinnacle National Bank, Pinnacle Financial Partners, Inc. and Hugh M. Queener(5) * | |
10.9 | Letter Agreement dated March 14, 2000 and accepted March 16, 2000 by and between Pinnacle Financial Corporation (now known as Pinnacle Financial Partners, Inc.) and Atkinson Public Relations(5) | |
10.14 | Employment Agreement dated March 1, 2000 by and between Pinnacle National Bank, Pinnacle Financial Partners, Inc. and M. Terry Turner(5) * | |
10.15 | Pinnacle Financial Partners, Inc. 2000 Stock Incentive Plan(5)* | |
10.16 | Form of Pinnacle Financial Partners, Inc.’s Stock Option Award(5) * | |
10.18 | Agreement for Assignment of Lease by and between Franklin National Bank and TMP, Inc., now known as Pinnacle Financial Partners, Inc., effective July 17, 2000(5) | |
10.19 | Form of Assignment of Lease and Consent of Landlord by Franklin National Bank, Pinnacle Financial Partners, Inc., formerly TMP, Inc., and Stearns Investments, Jack J. Stearns and Edna Stearns, General Partners(5) | |
10.21 | Green Hills Office Lease(6) | |
10.23 | Form of Restricted Stock Award Agreement(7) | |
10.24 | Form of Incentive Stock Option Agreement(7) | |
10.25 | Lease Agreement for West End Lease(8) | |
10.26 | Lease Amendments for Commerce Street location(8) | |
10.27 | Pinnacle Financial Partners, Inc. 2004 Equity Incentive Plan(9) * | |
10.28 | 2007 Annual Cash Incentive Plan(10) * | |
10.29 | Fourth Amendment to Commerce Street Lease(3) | |
10.30 | Employment Agreement by and between Pinnacle National Bank and Ed C. Loughry, Jr.(11) * | |
10.31 | Employment Agreement by and between Pinnacle National Bank and William S. Jones(11) * | |
10.32 | Consulting Agreement by and between Pinnacle National Bank and Ronnie F. Knight(11) * | |
10.33 | Form of Restricted Stock Agreement for non-employee directors(12) * | |
10.34 | Form of Non-Qualified Stock Option Agreement(13)* | |
10.35 | 2006 Annual Cash Incentive Plan(14)* | |
10.36 | Employment Agreement dated as of March 14, 2006 by and among Pinnacle Financial Partners, Inc., Pinnacle National Bank and Harold R. Carpenter(14)* | |
10.37 | Calvary Bancorp, Inc. 1999 Stock Option Plan(15)* | |
10.38 | Amendment No. 1 to Calvary Bancorp, Inc. 1999 Stock Option Plan(15)* | |
10.39 | Form of Non-Qualified Stock Option Agreement(15)* | |
10.40 | Amendment No. 1 to Pinnacle Financial Partners, Inc. 2000 Stock Incentive Plan(15)* | |
10.41 | Amendment No. 3 to Pinnacle Financial Partners, Inc. 2004 Equity Incentive Plan(15)* | |
10.42 | Form of Restricted Stock Award Agreement*(16) | |
10.43 | Amendment No. 4 to Pinnacle Financial Partners, Inc. 2004 Equity Incentive Plan(17) | |
10.44 | 2008 Annual Cash Incentive Plan(18)* | |
10.45 | Form of Restricted Stock Award Agreement(18)* | |
10.46 | 2008 Special Cash Incentive Plan(19)* | |
10.47 | 2008 Director and Named Executive Officer Compensation Summary* | |
10.48 | Amendment to Employment Agreement by and among Pinnacle National Bank, Pinnacle Financial Partners, Inc. and M. Terry Turner * | |
10.49 | Amendment to Employment Agreement by and among Pinnacle National Bank, Pinnacle Financial Partners, Inc. and Robert A. McCabe, Jr. * | |
10.50 | Amendment to Employment Agreement by and among Pinnacle National Bank, Pinnacle Financial Partners, Inc. |
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Exhibit | ||
No. | Description | |
and Hugh M. Queener * | ||
10.51 | Employment Agreement by and among Pinnacle National Bank, Pinnacle Financial Partners, Inc. and Harold R. Carpenter * | |
10.52 | Bank of the South 2001 Stock Option Plan * | |
10.53 | PrimeTrust Bank 2001 Statutory — Nonstatutory Stock Option Plan * | |
10.54 | PrimeTrust Bank 2005 Statutory — Nonstatutory Stock Option Plan * | |
10.55 | Mid-America Bancshares, Inc. 2006 Equity Incentive Plan * | |
21.1 | Subsidiaries of Pinnacle Financial Partners, Inc. | |
23.1 | Consent of KPMG LLP | |
31.1 | Certification pursuant to Rule 13a-14(a)/15d-14(a) | |
31.2 | Certification pursuant to Rule 13a-14(a)/15d-14(a) | |
32.1 | Certification pursuant to 18 USC Section 1350 — Sarbanes-Oxley Act of 2002 | |
32.2 | Certification pursuant to 18 USC Section 1350 — Sarbanes-Oxley Act of 2002 |
(*) | Management compensatory plan or arrangement | |
(1) | Registrant hereby incorporates by reference to Registrant’s Current Report on Form 8-K filed on October 3, 2005. | |
(2) | Registrant hereby incorporates by reference to Registrant’s Current Report on Form 8-K filed on August 15, 2007. | |
(3) | Registrant hereby incorporates by reference to Registrant’s Form 10-Q for the quarter ended March 31, 2005. | |
(4) | Registrant hereby incorporates by reference to Registrant’s Current Report on Form 8-K filed on September 21, 2007. | |
(5) | Registrant hereby incorporates by reference to the Registrant’s Registration Statement on Form SB-2, as amended (File No. 333-38018). | |
(6) | Registrant hereby incorporates by reference to the Registrant’s Form 10-KSB for the fiscal year ended December 31, 2000 as filed with the SEC on March 29, 2001. | |
(7) | Registrant hereby incorporates by reference to Registrant’s Form 10-Q for the quarter ended September 30, 2004. | |
(8) | Registrant hereby incorporates by reference to Registrant’s Form 10-K for the fiscal year ended December 31, 2004 as filed with the SEC on February 28, 2005. | |
(9) | Registrant hereby incorporates by reference to Registrant’s Current Report on Form 8-K filed on April 19, 2005. | |
(10) | Registrant hereby incorporates by reference to Registrant’s Current Report on Form 8-K filed on January 25, 2007. | |
(11) | Registrant hereby incorporates by reference to Registrant’s Registration Statement on Form S-4, as amended (File No. 333-129076). | |
(12) | Registrant hereby incorporates by reference to Registrant’s Current Report on Form 8-K filed on January 23, 2006. | |
(13) | Registrant hereby incorporates by reference to Registrant’s Form 10-K for the fiscal year ended December 31, 2005 as filed with the SEC on February 24, 2006. | |
(14) | Registrant hereby incorporates by reference to Registrant’s Current Report on Form 8-K filed on March 20, 2006. | |
(15) | Registrant hereby incorporates by reference to Registrant’s Form 10-Q for the quarter ended on September 30, 2006. | |
(16) | Registrant hereby incorporates by reference to Registrant’s Form 10-K for the fiscal year ended December 31, 2006 as filed with the SEC on February 28, 2007. | |
(17) | Registrant hereby incorporates by reference to Registrant’s Current Report on Form 8-K filed on December 4, 2007. | |
(18) | Registrant hereby incorporates by reference to Registrant’s Current Report on Form 8-K filed on January 25, 2008. | |
(19) | Registrant hereby incorporates by reference to Registrant’s Current Report on Form 8-K filed on January 25, 2008. |
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PINNACLE FINANCIAL PARTNERS, INC | ||||
By: | /s/ M. Terry Turner | |||
M. Terry Turner | ||||
Date: March 7, 2008 | President and Chief Executive Officer | |||
SIGNATURES | TITLE | DATE | ||
/s/ Robert A. McCabe, Jr. | Chairman of the Board | March 7, 2008 | ||
/s/ M. Terry Turner | Director, President and Chief Executive Officer (Principal Executive Officer) | March 7, 2008 | ||
/s/ Harold R. Carpenter | Chief Financial Officer (Principal Financial and Accounting Officer) | March 7, 2008 | ||
/s/ Sue R. Atkinson | Director | March 7, 2008 | ||
/s/ H. Gordon Bone | Director | March 7, 2008 | ||
/s/ Gregory L. Burns | Director | March 7, 2008 | ||
/s/ James C. Cope | Director | March 7, 2008 | ||
/s/ Colleen Conway-Welch | Director | March 7, 2008 | ||
/s/ Clay T. Jackson | Director | March 7, 2008 | ||
/s/ William H. Huddleston | Director | March 7, 2008 | ||
/s/ Ed C. Loughry, Jr. | Director | March 7, 2008 | ||
/s/ David Major | Director | March 7, 2008 | ||
/s/ Hal N. Pennington | Director | March 7, 2008 | ||
/s/ Dale W. Polley | Director | March 7, 2008 |
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SIGNATURES | TITLE | DATE | ||
/s/ Wayne J. Riley | Director | March 7, 2008 | ||
/s/ Gary Scott | Director | March 7, 2008 | ||
/s/ James L. Shaub, II | Director | March 7, 2008 | ||
/s/ Reese L. Smith, III | Director | March 7, 2008 |
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Exhibit | ||
No. | Description | |
2.1 | Merger Agreement, dated September 30, 2005, by and between Pinnacle Financial Partners, Inc. and Cavalry Bancorp, Inc. (schedules and exhibits to which been omitted pursuant to Items 601(b)(2) of Regulations S-K)(1) | |
2.2 | Agreement and Plan of Merger by and between Pinnacle Financial Partners, Inc. and Mid-America Bancshares, Inc. (schedules and exhibits to which been omitted pursuant to Items 601(b)(2) of Regulations S-K)(2) | |
3.1 | Amended and Restated Charter(3) | |
3.2 | Bylaws(4) | |
4.1.1 | Specimen Common Stock Certificate(5) | |
4.1.2 | See Exhibits 3.1 and 3.2 for provisions of the Charter and Bylaws defining rights of holders of the Common Stock | |
10.1 | Lease Agreement by and between TMP, Inc. (former name of Pinnacle Financial Partners, Inc.) and Commercial Street Associates dated March 16, 2000 (main office)(5) | |
10.4 | Form of Pinnacle Financial Partners, Inc.’s Organizers’ Warrant Agreement(5) | |
10.7 | Employment Agreement dated as of August 1, 2000 by and between Pinnacle National Bank, Pinnacle Financial Partners, Inc. and Robert A. McCabe, Jr.(5) * | |
10.8 | Employment Agreement dated as of April 1, 2000 by and between Pinnacle National Bank, Pinnacle Financial Partners, Inc. and Hugh M. Queener(5) * | |
10.9 | Letter Agreement dated March 14, 2000 and accepted March 16, 2000 by and between Pinnacle Financial Corporation (now known as Pinnacle Financial Partners, Inc.) and Atkinson Public Relations(5) | |
10.14 | Employment Agreement dated March 1, 2000 by and between Pinnacle National Bank, Pinnacle Financial Partners, Inc. and M. Terry Turner(5) * | |
10.15 | Pinnacle Financial Partners, Inc. 2000 Stock Incentive Plan(5)* | |
10.16 | Form of Pinnacle Financial Partners, Inc.’s Stock Option Award(5) * | |
10.18 | Agreement for Assignment of Lease by and between Franklin National Bank and TMP, Inc., now known as Pinnacle Financial Partners, Inc., effective July 17, 2000(5) | |
10.19 | Form of Assignment of Lease and Consent of Landlord by Franklin National Bank, Pinnacle Financial Partners, Inc., formerly TMP, Inc., and Stearns Investments, Jack J. Stearns and Edna Stearns, General Partners(5) | |
10.21 | Green Hills Office Lease(6) | |
10.23 | Form of Restricted Stock Award Agreement(7) | |
10.24 | Form of Incentive Stock Option Agreement(7) | |
10.25 | Lease Agreement for West End Lease(8) | |
10.26 | Lease Amendments for Commerce Street location(8) | |
10.27 | Pinnacle Financial Partners, Inc. 2004 Equity Incentive Plan(9) * | |
10.28 | 2007 Annual Cash Incentive Plan(10) * | |
10.29 | Fourth Amendment to Commerce Street Lease(3) | |
10.30 | Employment Agreement by and between Pinnacle National Bank and Ed C. Loughry, Jr.(11) * | |
10.31 | Employment Agreement by and between Pinnacle National Bank and William S. Jones(11) * | |
10.32 | Consulting Agreement by and between Pinnacle National Bank and Ronnie F. Knight(11) * | |
10.33 | Form of Restricted Stock Agreement for non-employee directors(12) * | |
10.34 | Form of Non-Qualified Stock Option Agreement(13)* | |
10.35 | 2006 Annual Cash Incentive Plan(14)* | |
10.36 | Employment Agreement dated as of March 14, 2006 by and among Pinnacle Financial Partners, Inc., Pinnacle National Bank and Harold R. Carpenter(14)* | |
10.37 | Calvary Bancorp, Inc. 1999 Stock Option Plan(15)* | |
10.38 | Amendment No. 1 to Calvary Bancorp, Inc. 1999 Stock Option Plan(15)* | |
10.39 | Form of Non-Qualified Stock Option Agreement(15)* | |
10.40 | Amendment No. 1 to Pinnacle Financial Partners, Inc. 2000 Stock Incentive Plan(15)* | |
10.41 | Amendment No. 3 to Pinnacle Financial Partners, Inc. 2004 Equity Incentive Plan(15)* | |
10.42 | Form of Restricted Stock Award Agreement*(16) | |
10.43 | Amendment No. 4 to Pinnacle Financial Partners, Inc. 2004 Equity Incentive Plan(17) | |
10.44 | 2008 Annual Cash Incentive Plan(18)* | |
10.45 | Form of Restricted Stock Award Agreement(18)* | |
10.46 | 2008 Special Cash Incentive Plan(19)* | |
10.47 | 2008 Director and Named Executive Officer Compensation Summary* | |
10.48 | Amendment to Employment Agreement by and among Pinnacle National Bank, Pinnacle Financial Partners, Inc. and M. Terry Turner * | |
10.49 | Amendment to Employment Agreement by and among Pinnacle National Bank, Pinnacle Financial Partners, Inc. and Robert A. McCabe, Jr. * | |
10.50 | Amendment to Employment Agreement by and among Pinnacle National Bank, Pinnacle Financial Partners, Inc. |
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Exhibit | ||
No. | Description | |
and Hugh M. Queener * | ||
10.51 | Employment Agreement by and among Pinnacle National Bank, Pinnacle Financial Partners, Inc. and Harold R. Carpenter * | |
10.52 | Bank of the South 2001 Stock Option Plan * | |
10.53 | PrimeTrust Bank 2001 Statutory — Nonstatutory Stock Option Plan * | |
10.54 | PrimeTrust Bank 2005 Statutory — Nonstatutory Stock Option Plan * | |
10.55 | Mid-America Bancshares, Inc. 2006 Equity Incentive Plan * | |
21.1 | Subsidiaries of Pinnacle Financial Partners, Inc. | |
23.1 | Consent of KPMG LLP | |
31.1 | Certification pursuant to Rule 13a-14(a)/15d-14(a) | |
31.2 | Certification pursuant to Rule 13a-14(a)/15d-14(a) | |
32.1 | Certification pursuant to 18 USC Section 1350 — Sarbanes-Oxley Act of 2002 | |
32.2 | Certification pursuant to 18 USC Section 1350 — Sarbanes-Oxley Act of 2002 |
(*) | Management compensatory plan or arrangement | |
(1) | Registrant hereby incorporates by reference to Registrant’s Current Report on Form 8-K filed on October 3, 2005. | |
(2) | Registrant hereby incorporates by reference to Registrant’s Current Report on Form 8-K filed on August 15, 2007. | |
(3) | Registrant hereby incorporates by reference to Registrant’s Form 10-Q for the quarter ended March 31, 2005. | |
(4) | Registrant hereby incorporates by reference to Registrant’s Current Report on Form 8-K filed on September 21, 2007. | |
(5) | Registrant hereby incorporates by reference to the Registrant’s Registration Statement on Form SB-2, as amended (File No. 333-38018). | |
(6) | Registrant hereby incorporates by reference to the Registrant’s Form 10-KSB for the fiscal year ended December 31, 2000 as filed with the SEC on March 29, 2001. | |
(7) | Registrant hereby incorporates by reference to Registrant’s Form 10-Q for the quarter ended September 30, 2004. | |
(8) | Registrant hereby incorporates by reference to Registrant’s Form 10-K for the fiscal year ended December 31, 2004 as filed with the SEC on February 28, 2005. | |
(9) | Registrant hereby incorporates by reference to Registrant’s Current Report on Form 8-K filed on April 19, 2005. | |
(10) | Registrant hereby incorporates by reference to Registrant’s Current Report on Form 8-K filed on January 25, 2007. | |
(11) | Registrant hereby incorporates by reference to Registrant’s Registration Statement on Form S-4, as amended (File No. 333-129076). | |
(12) | Registrant hereby incorporates by reference to Registrant’s Current Report on Form 8-K filed on January 23, 2006. | |
(13) | Registrant hereby incorporates by reference to Registrant’s Form 10-K for the fiscal year ended December 31, 2005 as filed with the SEC on February 24, 2006. | |
(14) | Registrant hereby incorporates by reference to Registrant’s Current Report on Form 8-K filed on March 20, 2006. | |
(15) | Registrant hereby incorporates by reference to Registrant’s Form 10-Q for the quarter ended on September 30, 2006. | |
(16) | Registrant hereby incorporates by reference to Registrant’s Form 10-K for the fiscal year ended December 31, 2006 as filed with the SEC on February 28, 2007. | |
(17) | Registrant hereby incorporates by reference to Registrant’s Current Report on Form 8-K filed on December 4, 2007. | |
(18) | Registrant hereby incorporates by reference to Registrant’s Current Report on Form 8-K filed on January 25, 2008. | |
(19) | Registrant hereby incorporates by reference to Registrant’s Current Report on Form 8-K filed on January 25, 2008. |
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