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FOR IMMEDIATE RELEASE
MEDIA CONTACT: Vicki Kessler 615-320-7532
FINANCIAL CONTACT: Harold Carpenter 615-744-3742
WEBSITE: www.pnfp.com
PINNACLE FINANCIAL REPORTS RECORD EARNINGS
Diluted earnings per share of $0.24 and
diluted earnings per share excluding merger related expenses of $0.27
NASHVILLE, Tenn., April 24, 2006 - Pinnacle Financial Partners, Inc. (Nasdaq: PNFP) today reported record earnings, superior credit quality and continued strong loan and deposit growth for the quarter ended March 31, 2006. Fully diluted earnings per share of $0.24 for the quarter included the impact of merger related expenses of $0.03 which were associated with its merger with Cavalry Bancorp that was effective on March 15, 2006. Fully diluted earnings per share exclusive of merger related items were $0.27 for the quarter ended March 31, 2006, compared to $0.19 fully diluted earnings per share for the quarter ended March 31, 2005, an increase of 42 percent.
FIRST QUARTER 2006 HIGHLIGHTS:
· | Record earnings growth: |
o | Record net income for the first quarter of 2006 of $2.61 million, up 47 percent from the prior year’s first quarter net income of $1.78 million. |
o | Diluted earnings per share for the first quarter of 2006 of $0.24, up 26 percent from the prior year’s first quarter of $0.19. Diluted earnings per share exclusive of merger related expenses were $0.27, up 42 percent from the prior year’s first quarter diluted earnings per share. |
o | Revenue (the sum of net interest income and noninterest income) for the quarter ended March 31, 2006, amounted to $11.56 million, compared to $7.68 million for the same quarter of last year, an increase of 51 percent. |
· | Superior credit quality: |
o | Nonperforming assets were only 0.10 percent of total loans at March 31, 2006. |
o | Annualized net recoveries to total loans were 0.04 percent for the period ended March 31, 2006. |
· | Strong balance sheet growth: |
o | Loans at March 31, 2006, were $1.24 billion, up 139 percent from the same period last year reflecting strong organic growth and the impact of the Cavalry merger. |
o | Total deposits at March 31, 2006, were $1.42 billion, up 129 percent from the same period last year, with noninterest bearing demand deposit accounts up 121 percent from the same period last year reflecting strong organic growth and the impact of the Cavalry merger. |
In March, Pinnacle successfully completed its acquisition of Cavalry Bancorp, which held the No. 1 market share position in rapidly growing Rutherford County. “Given the strength of our geographic footprint and our first quarter performance, we are well positioned for a very strong year. This was a great start,” said M. Terry Turner, Pinnacle president and CEO.
With its acquisition and dramatic loan and deposit growth during the first quarter, Pinnacle had total assets of more than $1.8 billion at March 31, 2006, making the company the largest financial services firm headquartered in Nashville and the second largest in Tennessee.
Pinnacle’s merger with Cavalry Bancorp was completed on March 15, 2006. Consequently, Pinnacle’s average balance sheet volumes and statement of income for the quarter ended March 31, 2006, were impacted by the Cavalry amounts for the last 16 days of the first quarter of 2006.
FINANCIAL PERFORMANCE AND BALANCE SHEET GROWTH
· | Return on average assets for the quarter ended March 31, 2006, was 0.92 percent. Return on average tangible assets (total assets less goodwill and core deposit intangibles) for the quarter ended March 31, 2006, was 0.94 percent. The return on average tangible assets exclusive of merger related items for the quarter ended March 31, 2006, was 1.04 percent, compared to 0.96 percent for the same quarter last year. |
· | Return on average stockholders’ equity for the quarter ended March 31, 2006, was 11.09 percent. Return on average tangible stockholders’ equity (total stockholders’ equity less goodwill and core deposit intangibles) for the quarter ended March 31, 2006, was 14.30 percent. Return on average tangible stockholders’ equity exclusive of merger related expenses for the quarter ended March 31, 2006, was 15.77 percent, compared to 12.48 percent for the same quarter last year. |
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Total assets grew to $1.83 billion as of March 31, 2006, up $1.04 billion or 132 percent from the $787.4 million reported at March 31, 2005. The $1.04 billion year over year increase in total assets was comprised of $247 million in net asset growth at Pinnacle, $668 million in assets associated with the acquisition of Cavalry Bancorp and $129 million in goodwill and core deposit intangibles associated with that acquisition.
“We are extremely pleased with the accelerating growth momentum that we saw during the first quarter of this year compared to the same quarter last year both for the newly combined footprint as a whole and for the Cavalry footprint on a stand-alone basis. Many institutions actually experience attrition during this stage of a merger. We actually saw faster loan, deposit and new deposit account growth for the combined firm this year than last,” said Turner. “This would indicate that we are in fact being successful in our goal to combine these two great companies into one firm that is both bigger and better than either of us could have been on an independent basis,” he added.
REVENUE
· | Net interest income for the quarter ended March 31, 2006, was $9.51 million, compared to $6.50 million for the quarter ended March 31, 2005, an increase of 46.3 percent. |
o | Net interest margin for the first quarter of 2006, was 3.65 percent, compared to a net interest margin of 3.58 percent reported for the fourth quarter of 2005 and 3.78 percent for the same period last year. |
o | Percentage of daily floating rate loans to total loans was 48.5 percent at March 31, 2006. |
· | Noninterest income for the quarter ended March 31, 2006, was $2.05 million, a 73.9 percent increase over the $1.18 million recorded during the same quarter in 2005. |
“The yield curve continues to present challenges for us as we seek ways to expand our margins,” said Harold Carpenter, chief financial officer of Pinnacle Financial Partners. “As anticipated, the Cavalry merger did contribute to the increase in our net interest margin. Based on our current models, we believe our net interest margin for the combined firm for the second quarter should be within a range of 3.85 percent to 3.95 percent.”
“The net loan growth for the combined firm was approximately $82 million during the first quarter of 2006. Based on current sales pipelines, we anticipate another strong quarter of loan growth in the second quarter of 2006,” Carpenter said. “We continue to anticipate dramatic loan growth which we believe will result in increased revenues despite the anticipated challenging rate environment.”
At March 31, 2006, the ratio of investment securities to total assets declined to 17.3 percent from the 25.7 percent reported a year ago. Pinnacle anticipates that this ratio will approximate 17.0 to 20.0 percent during 2006.
Noninterest income during the first quarter of 2006 represented approximately 17.7 percent of total revenues, compared to 15.3 percent for the same quarter in 2005.
NONINTEREST EXPENSE
· | Noninterest expense for the quarter ended March 31, 2006, was $7.33 million. |
· | Merger related charges incurred during the quarter ended March 31, 2006, were $443,000 which were consistent with expectations and amounted to approximately $0.03 per fully diluted share. These charges consisted of integration costs incurred in connection with the merger and accelerated depreciation associated with software and other technology assets which will have limited, if any, value once the conversion of data systems is complete in the second quarter of 2006. |
· | During the quarter ended March 31, 2006, Pinnacle recognized compensation related to the expensing of stock options in accordance with Statement of Financial Accounting Standards No. 123R of approximately $144,000 on an after-tax basis or approximately $0.01 per fully diluted share. |
· | The efficiency ratio (noninterest expense divided by net interest income and noninterest income) was 63.4 percent during the first quarter of 2006. The efficiency ratio excluding merger related expenses was 59.6 percent during the first quarter of 2006, compared to 59.6 percent during the first quarter of 2005 and compared to 61.0 percent for the quarter ended Dec. 31, 2005. |
CREDIT QUALITY
· | Provision for loan losses was $387,000 for the first quarter of 2006, compared to $601,000 in the first quarter in 2005. During the first quarter of 2006, the firm recorded net recoveries of $73,000 compared to net charge-offs of $53,000 during the same period in 2005. |
· | Allowance for loan losses represented 1.08 percent of total loans at March 31, 2006, compared to 1.21 percent at Dec. 31, 2005. |
o | Nonperforming assets as a percentage of total loans and other real estate decreased to 0.10 percent at March 31, 2006, from 0.12 percent at March 31, 2005. |
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The reduction in the percentage of consolidated allowance for loan losses to total loans was attributable to the Cavalry acquisition. At March 31, 2006, we assessed the allowance requirement for Pinnacle (excluding Cavalry) using our existing methodology, and we determined the allowance component for the Cavalry loan portfolio using its existing allowance for loan loss methodology. During the second and third quarters of 2006, we will continue to review these methodologies to determine if any changes are appropriate in light of the consolidation of the respective loan portfolios.
“We remain extremely pleased with the credit quality of our firm,” said Turner. “Both Pinnacle and Cavalry have had excellent asset quality indicators for quite some time. We continue to believe that our asset quality is a key predictor of our ability to create long-term shareholder value.”
PROGRESS OF THE CAVALRY INTEGRATION
On Oct. 3, 2005, Pinnacle reported that the firm had entered into a definitive agreement to acquire the common stock of Cavalry Bancorp, a one-bank holding company in Murfreesboro, Tenn., with assets of $632 million as of Sept. 30, 2005. During December 2005, the shareholders of both Pinnacle and Cavalry voted to approve the merger. During the first quarter of 2006, all regulatory approvals were obtained and the merger was consummated on March 15, 2006.
Key Integration Milestones | Status |
Consolidation of credit policies resulting in larger credit limits | Complete |
Conversion of Cavalry from service bureau platform to in-house processing | Complete |
Merger celebration - cultural integration kickoff | Complete |
Launch of innovative communication materials discussing impact of merger on clients, associates and community using web-based technology available at www.pnfp.com and through other media | Complete |
Conversion of Pinnacle data systems to target environment | On Schedule |
Conversion set for late April | |
Conversion of Cavalry brand and signage to Pinnacle | On Schedule |
Conversion set for early May |
INVESTMENT OUTLOOK
Management has developed several financial forecast scenarios for the next several quarters. Based on anticipated growth trends and future investments in the franchise, Pinnacle estimates its second quarter 2006 diluted earnings per share will approximate $0.25 to $0.27 and approximately $0.27 to $0.29 per share, exclusive of merger-related expenses. Additionally, based on anticipated growth trends and future investments in the franchise, Pinnacle estimates its 2006 earnings will approximate $1.14 to $1.19 per fully diluted share and approximately $1.18 to $1.25 per fully diluted share, exclusive merger-related expenses.
These estimates include an estimate for compensation expense of $0.05 to $0.07 per fully diluted share for the year ending December 31, 2006, related to the expensing of stock-based incentives that have been and may be granted to employees under the firm’s broad-based stock incentive plans.
As noted previously, management has developed several scenarios under which these estimates can be achieved and believes these estimates to be reasonable based on these scenarios. However, unanticipated events or developments including the execution of any initiative involving the development of any market other than the current Nashville-Davidson-Murfreesboro MSA, the opportunity to hire more seasoned professionals than anticipated or the ability to grow loans significantly in excess of the levels contemplated may cause the actual results of Pinnacle to differ materially from these estimates.
Pinnacle Financial Partners, the largest financial services firm headquartered in Nashville, provides a full range of banking, investment and insurance products and services designed for small- to mid-sized businesses and their owners/operators. Pinnacle provides financial planning services by a certified financial planner (CFP ®), and a number of Pinnacle’s senior financial advisors provide comprehensive wealth management services to help clients increase, protect and distribute their assets.
Pinnacle opened its first office in October 2000. Since then the firm has added seven other offices on a denovo basis and acquired Cavalry Bancorp with its nine offices bringing the total number of offices to 17 in the most attractive trade areas in the Nashville-Davidson-Murfreesboro MSA.
Additional information concerning Pinnacle can be accessed at www.pnfp.com.
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Certain of the statements in this release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate" and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking. All forward-looking statements are subject to risks, uncertainties and other facts that may cause the actual results, performance or achievements of Pinnacle to differ materially from any results expressed or implied by such forward-looking statements. Such factors include, without limitation, (i) unanticipated deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses, (ii) the inability of Pinnacle to continue to grow its loan portfolio at historic rates, (iii) increased competition with other financial institutions, (iv) lack of sustained growth in the economy in the Nashville-Davidson-Murfreesboro MSA, (v) rapid fluctuations or unanticipated changes in interest rates, (vi) the inability of Pinnacle to satisfy regulatory requirements for its expansion plans, (vii) the inability of Pinnacle to execute its expansion plans, (viii) the inability of Pinnacle to successfully integrate the former Cavalry Bancorp's operations with Pinnacle's and (ix) changes in the legislative and regulatory environment. A more detailed description of these and other risks is contained in Pinnacle's most recent annual report on Form 10-K. Many of such factors are beyond Pinnacle's ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. Pinnacle disclaims any obligation to update or revise any forward-looking statements contained in this release, whether as a result of new information, future events or otherwise.
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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
March 31, 2006 | December 31, 2005 | ||||||
ASSETS | |||||||
Cash and noninterest-bearing due from banks | $ | 41,533,756 | $ | 25,935,948 | |||
Interest-bearing due from banks | 2,954,669 | 839,960 | |||||
Federal funds sold | 35,103,280 | 31,878,362 | |||||
Cash and cash equivalents | 79,591,705 | 58,654,270 | |||||
Securities available-for-sale, at fair value | 288,160,347 | 251,749,094 | |||||
Securities held-to-maturity (fair value of $26,352,705 and $26,546,297 at March 31, 2006 and December 31, 2005, respectively) | 27,312,913 | 27,331,251 | |||||
Mortgage loans held-for-sale | 7,262,679 | 4,874,323 | |||||
Loans | 1,235,169,993 | 648,024,032 | |||||
Less allowance for loan losses | (13,354,496 | ) | (7,857,774 | ) | |||
Loans, net | 1,221,815,497 | 640,166,258 | |||||
Premises and equipment, net | 33,989,309 | 12,915,595 | |||||
Investments in unconsolidated subsidiaries and other entities | 10,099,180 | 6,622,645 | |||||
Accrued interest receivable | 7,883,211 | 4,870,197 | |||||
Goodwill | 115,618,320 | - | |||||
Core deposit intangible | 13,102,395 | - | |||||
Other assets | 23,376,815 | 9,588,097 | |||||
Total assets | $ | 1,828,212,371 | $ | 1,016,771,730 | |||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||
Deposits: | |||||||
Noninterest-bearing demand | $ | 263,700,581 | $ | 155,811,214 | |||
Interest-bearing demand | 181,067,846 | 72,520,757 | |||||
Savings and money market accounts | 470,532,348 | 304,161,625 | |||||
Time | 500,477,255 | 277,657,129 | |||||
Total deposits | 1,415,778,031 | 810,150,725 | |||||
Securities sold under agreements to repurchase | 63,911,911 | 65,834,232 | |||||
Federal Home Loan Bank advances | 67,266,661 | 41,500,000 | |||||
Subordinated debt | 30,929,000 | 30,929,000 | |||||
Accrued interest payable | 3,093,184 | 1,884,596 | |||||
Other liabilities | 10,906,823 | 3,036,752 | |||||
Total liabilities | 1,591,885,610 | 953,335,305 | |||||
Stockholders’ equity: | |||||||
Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding | - | - | |||||
Common stock, par value $1.00; 20,000,000 shares authorized; 15,300,629 issued and outstanding at March 31, 2006 and 8,426,551 issued and outstanding at December 31, 2005 | 15,300,629 | 8,426,551 | |||||
Additional paid-in capital | 208,914,892 | 44,890,912 | |||||
Unearned compensation | - | (169,689 | ) | ||||
Retained earnings | 15,794,187 | 13,182,291 | |||||
Accumulated other comprehensive income (loss), net | (3,682,947 | ) | (2,893,640 | ) | |||
Stockholders’ equity | 236,326,761 | 63,436,425 | |||||
Total liabilities and stockholders’ equity | $ | 1,828,212,371 | $ | 1,016,771,730 |
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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
Three months ended March 31, | |||||||
2006 | 2005 | ||||||
Interest income: | |||||||
Loans, including fees | $ | 13,178,830 | 6,954,365 | ||||
Securities: | |||||||
Taxable | 2,861,118 | 2,021,783 | |||||
Tax-exempt | 400,773 | 201,424 | |||||
Federal funds sold and other | 369,675 | 92,162 | |||||
Total interest income | 16,810,396 | 9,269,734 | |||||
Interest expense: | |||||||
Deposits | 5,850,307 | 2,153,961 | |||||
Securities sold under agreements to repurchase | 508,788 | 150,262 | |||||
Federal funds purchased and other borrowings | 944,498 | 462,537 | |||||
Total interest expense | 7,303,593 | 2,766,761 | |||||
Net interest income | 9,506,803 | 6,502,973 | |||||
Provision for loan losses | 387,184 | 601,250 | |||||
Net interest income after provision for loan losses | 9,119,619 | 5,901,723 | |||||
Noninterest income: | |||||||
Service charges on deposit accounts | 438,269 | 261,700 | |||||
Investment sales commissions | 513,597 | 437,424 | |||||
Insurance sales commissions | 264,828 | - | |||||
Gain on loans and loan participations sold, net | 324,546 | 160,555 | |||||
Gain on sales of investment securities, net | - | 114,410 | |||||
Other noninterest income | 507,011 | 203,710 | |||||
Total noninterest income | 2,048,251 | 1,177,799 | |||||
Noninterest expense: | |||||||
Compensation and employee benefits | 4,448,357 | 2,970,558 | |||||
Equipment and occupancy | 1,173,353 | 784,026 | |||||
Marketing and other business development | 190,471 | 113,168 | |||||
Postage and supplies | 185,409 | 135,538 | |||||
Other noninterest expense | 888,294 | 577,584 | |||||
Merger related expense | 443,330 | - | |||||
Total noninterest expense | 7,329,214 | 4,580,874 | |||||
Income before income taxes | 3,838,656 | 2,498,648 | |||||
Income tax expense | 1,226,760 | 718,895 | |||||
Net income | $ | 2,611,896 | 1,779,753 | ||||
Per share information: | |||||||
Basic net income per common share | $ | 0.27 | 0.21 | ||||
Diluted net income per common share | $ | 0.24 | 0.19 | ||||
Weighted average shares outstanding: | |||||||
Basic | 9,578,813 | 8,389,256 | |||||
Diluted | 10,745,626 | 9,437,183 |
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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED
(dollars in thousands) | Three months ended March 31, 2006 | Three months ended March 31, 2005 | |||||||||||||||||
Average Balances | Interest | Rates/ Yields | Average Balances | Interest | Rates/ Yields | ||||||||||||||
Interest-earning assets: | |||||||||||||||||||
Loans | $ | 761,326 | $ | 13,179 | 7.02 | % | $ | 488,313 | $ | 6,954 | 5.78 | % | |||||||
Securities: | |||||||||||||||||||
Taxable | 241,750 | 2,861 | 4.80 | % | 184,926 | 2,022 | 4.43 | % | |||||||||||
Tax-exempt (1) | 44,571 | 401 | 4.81 | % | 23,327 | 202 | 4.50 | % | |||||||||||
Federal funds sold | 22,621 | 281 | 5.04 | % | 8,848 | 46 | 2.10 | % | |||||||||||
Other | 4,617 | 89 | 7.96 | % | 3,276 | 46 | 6.50 | % | |||||||||||
Total interest-earning assets | 1,074,885 | 16,811 | 6.39 | % | 708,690 | 9,270 | 5.34 | % | |||||||||||
Nonearning assets | 78,938 | 48,194 | |||||||||||||||||
Total assets | 1,153,823 | $ | 756,884 | ||||||||||||||||
Interest-bearing liabilities: | |||||||||||||||||||
Interest bearing deposits | |||||||||||||||||||
Interest checking | $ | 104,123 | $ | 481 | 1.88 | % | $ | 57,738 | $ | 72 | 0.51 | % | |||||||
Savings and money market | 344,852 | 2,350 | 2.76 | % | 222,079 | 698 | 1.27 | % | |||||||||||
Certificates of deposit | 314,992 | 3,019 | 3.89 | % | 216,612 | 1,384 | 2.59 | % | |||||||||||
Total deposits | 763,967 | 5,850 | 3.11 | % | 496,429 | 2,154 | 1.76 | % | |||||||||||
Securities sold under agreements to repurchase | 59,723 | 508 | 3.46 | % | 38,149 | 150 | 1.60 | % | |||||||||||
Federal funds purchased | 375 | 5 | 4.82 | % | 614 | 4 | 2.76 | % | |||||||||||
Federal Home Loan Bank advances | 46,336 | 455 | 3.98 | % | 50,233 | 323 | 2.61 | % | |||||||||||
Subordinated debt | 30,929 | 486 | 6.36 | % | 10,310 | 136 | 5.33 | % | |||||||||||
Total interest-bearing liabilities | 901,330 | 7,304 | 3.29 | % | 595,735 | 2,767 | 1.88 | % | |||||||||||
Noninterest-bearing deposits | 152,247 | - | - | 100,929 | - | - | |||||||||||||
Total deposits and interest-bearing liabilities | 1,053,577 | 7,304 | 2.81 | % | 696,664 | 2,767 | 1.61 | % | |||||||||||
Other liabilities | 4,711 | 1,800 | |||||||||||||||||
Stockholders' equity | 95,535 | 58,420 | |||||||||||||||||
$ | 1,153,823 | $ | 756,884 | ||||||||||||||||
Net interest income | $ | 9,507 | $ | 6,503 | |||||||||||||||
Net interest spread (2) | 3.10 | % | 3.46 | % | |||||||||||||||
Net interest margin (3) | 3.65 | % | 3.78 | % |
(1) | Yields computed on tax-exempt instruments on a tax equivalent basis. |
(2) | Yields realized on interest-earning assets less the rates paid on interest-bearing liabilities. |
(3) | Net interest margin is the result of annualized net interest income divided by average interest-earning assets for the period. |
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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED
(dollars in thousands, except per share data) | Mar 2006 | Dec 2005 | Sept 2005 | June 2005 | Mar 2005 | Dec 2004 | |||||||||||||
Balance sheet data, at quarter end: | |||||||||||||||||||
Total assets | $ | 1,828,212 | 1,016,772 | 978,539 | 872,076 | 787,436 | 727,139 | ||||||||||||
Total loans | 1,235,170 | 648,024 | 604,225 | 556,786 | 516,733 | 472,362 | |||||||||||||
Allowance for loan losses | (13,354 | ) | (7,858 | ) | (7,231 | ) | (6,659 | ) | (6,198 | ) | (5,650 | ) | |||||||
Securities | 315,473 | 279,080 | 246,914 | 227,938 | 202,223 | 208,170 | |||||||||||||
Noninterest-bearing deposits | 263,701 | 155,811 | 154,440 | 142,794 | 119,212 | 114,318 | |||||||||||||
Total deposits | 1,415,778 | 810,151 | 788,628 | 689,919 | 619,021 | 570,727 | |||||||||||||
Securities sold under agreements to repurchase | 63,912 | 65,834 | 67,652 | 57,677 | 46,388 | 31,928 | |||||||||||||
Advances from FHLB | 67,267 | 41,500 | 24,500 | 49,500 | 51,500 | 53,500 | |||||||||||||
Subordinated debt | 30,929 | 30,929 | 30,929 | 10,310 | 10,310 | 10,310 | |||||||||||||
Total stockholders’ equity | 236,327 | 63,436 | 62,883 | 61,501 | 57,657 | 57,880 | |||||||||||||
Balance sheet data, quarterly averages: | |||||||||||||||||||
Total assets | $ | 1,153,823 | 986,106 | 914,801 | 822,344 | 756,884 | 707,131 | ||||||||||||
Total loans | 761,326 | 634,175 | 587,902 | 537,313 | 488,313 | 448,611 | |||||||||||||
Securities | 286,321 | 273,487 | 240,525 | 222,172 | 208,253 | 203,728 | |||||||||||||
Total earning assets | 1,074,885 | 937,357 | 866,706 | 778,094 | 708,690 | 670,839 | |||||||||||||
Noninterest-bearing deposits | 152,247 | 136,143 | 125,447 | 111,937 | 100,929 | 95,123 | |||||||||||||
Total deposits | 763,967 | 796,792 | 730,446 | 640,676 | 597,358 | 562,936 | |||||||||||||
Securities sold under agreements to repurchase | 59,723 | 67,874 | 63,337 | 49,883 | 38,149 | 23,520 | |||||||||||||
Advances from FHLB | 46,336 | 22,663 | 41,456 | 54,951 | 50,233 | 48,022 | |||||||||||||
Subordinated debt | 30,929 | 30,929 | 13,896 | 10,310 | 10,310 | 10,310 | |||||||||||||
Total stockholders’ equity | 95,535 | 63,199 | 62,338 | 59,569 | 58,420 | 57,721 | |||||||||||||
Statement of operations data, for the three months ended: | |||||||||||||||||||
Interest income | $ | 16,811 | 14,118 | 12,379 | 10,544 | 9,270 | 8,574 | ||||||||||||
Interest expense | 7,304 | 5,831 | 4,923 | 3,749 | 2,767 | 2,296 | |||||||||||||
Net interest income | 9,507 | 8,287 | 7,456 | 6,795 | 6,503 | 6,278 | |||||||||||||
Provision for loan losses | 387 | 702 | 366 | 483 | 601 | 1,134 | |||||||||||||
Net interest income after provision for loan losses | 9,120 | 7,585 | 7,089 | 6,312 | 5,902 | 5,144 | |||||||||||||
Noninterest income | 2,048 | 1,501 | 1,299 | 1,413 | 1,178 | 1,246 | |||||||||||||
Noninterest expense | 7,329 | 5,967 | 5,521 | 4,963 | 4,581 | 4,127 | |||||||||||||
Income before taxes | 3,839 | 3,119 | 2,867 | 2,762 | 2,499 | 2,263 | |||||||||||||
Income tax expense | 1,227 | 881 | 789 | 803 | 719 | 574 | |||||||||||||
Net income | $ | 2,612 | 2,238 | 2,078 | 1,959 | 1,780 | 1,689 | ||||||||||||
Per share data: | |||||||||||||||||||
Earnings - basic | $ | 0.27 | 0.27 | 0.25 | 0.23 | 0.21 | 0.20 | ||||||||||||
Earnings - diluted | $ | 0.24 | 0.24 | 0.22 | 0.21 | 0.19 | 0.18 | ||||||||||||
Book value at quarter end (1) | $ | 15.45 | 7.53 | 7.47 | 7.32 | 6.87 | 6.90 | ||||||||||||
Weighted avg. shares - basic | 9,578,813 | 8,425,717 | 8,417,980 | 8,401,198 | 8,389,256 | 8,389,232 | |||||||||||||
Weighted avg. shares - diluted | 10,745,626 | 9,490,447 | 9,495,187 | 9,434,260 | 9,437,183 | 9,448,696 | |||||||||||||
Common shares outstanding | 15,300,629 | 8,426,551 | 8,424,217 | 8,405,891 | 8,391,371 | 8,389,232 | |||||||||||||
Capital ratios (2): | |||||||||||||||||||
Stockholders’ equity to total assets | 12.9 | % | 6.2 | % | 6.4 | % | 7.1 | % | 7.3 | % | 8.0 | % | |||||||
Leverage | 14.7 | % | 9.3 | % | 9.3 | % | 8.8 | % | 9.2 | % | 9.7 | % | |||||||
Tier one risk-based | 10.4 | % | 11.0 | % | 10.9 | % | 10.0 | % | 10.6 | % | 11.7 | % | |||||||
Total risk-based | 11.9 | % | 11.9 | % | 13.0 | % | 10.9 | % | 11.5 | % | 12.7 | % | |||||||
Investor information: | |||||||||||||||||||
Closing sales price | $ | 27.44 | 24.98 | 25.18 | 24.00 | 20.72 | 22.62 | ||||||||||||
High sales price during quarter | $ | 28.84 | 25.96 | 26.65 | 25.14 | 24.05 | 25.10 | ||||||||||||
Low sales price during quarter | $ | 24.87 | 21.70 | 22.67 | 20.50 | 20.72 | 22.05 |
9
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED
(dollars in thousands, except per share data) | Mar 2006 | Dec 2005 | Sept 2005 | June 2005 | Mar 2005 | Dec 2004 | |||||||||||||
Performance ratios and other data: | |||||||||||||||||||
Return on avg. assets (3) | 0.92 | % | 0.90 | % | 0.90 | % | 0.96 | % | 0.96 | % | 0.95 | % | |||||||
Return on avg. equity (3) | 11.09 | % | 14.05 | % | 13.23 | % | 13.21 | % | 12.48 | % | 11.61 | % | |||||||
Net interest margin (4) | 3.65 | % | 3.58 | % | 3.48 | % | 3.57 | % | 3.78 | % | 3.78 | % | |||||||
Noninterest income to total revenue (5) | 17.7 | % | 15.3 | % | 14.8 | % | 17.2 | % | 15.3 | % | 16.6 | % | |||||||
Noninterest income to avg. assets (3) | 0.72 | % | 0.60 | % | 0.56 | % | 0.69 | % | 0.62 | % | 0.70 | % | |||||||
Noninterest exp. to avg. assets (3) | 2.58 | % | 2.40 | % | 2.39 | % | 2.42 | % | 2.42 | % | 2.33 | % | |||||||
Efficiency ratio (6) | 63.4 | % | 61.0 | % | 63.1 | % | 60.4 | % | 59.6 | % | 54.9 | % | |||||||
Avg. loans to average deposits | 83.1 | % | 79.7 | % | 80.5 | % | 83.9 | % | 81.7 | % | 79.7 | % | |||||||
Securities to total assets | 17.3 | % | 27.4 | % | 25.2 | % | 26.1 | % | 25.7 | % | 29.1 | % | |||||||
Average interest-earning assets to average interest-bearing liabilities | 119.3 | % | 117.7 | % | 119.8 | % | 120.0 | % | 119.0 | % | 121.9 | % | |||||||
Brokered time deposits to total deposits | 3.3 | % | 6.6 | % | 7.2 | % | 8.6 | % | 8.3 | % | 7.6 | % | |||||||
Selected growth rates, last twelve months (7): | |||||||||||||||||||
Total average assets | 52.4 | % | 39.5 | % | 47.9 | % | 48.6 | % | 48.9 | % | 55.6 | % | |||||||
Average loans | 55.9 | % | 41.5 | % | 49.9 | % | 56.2 | % | 59.3 | % | 58.3 | % | |||||||
Total average deposits | 53.9 | % | 41.5 | % | 50.5 | % | 46.3 | % | 48.4 | % | 58.2 | % | |||||||
Total revenue (5) | 50.4 | % | 30.1 | % | 27.0 | % | 46.6 | % | 45.4 | % | 58.6 | % | |||||||
Total noninterest expense | 60.0 | % | 44.6 | % | 40.9 | % | 41.9 | % | 38.0 | % | 29.1 | % | |||||||
Diluted earnings per share | 26.3 | % | 33.3 | % | 37.5 | % | 50.0 | % | 46.2 | % | 68.3 | % | |||||||
Asset quality information and ratios: | |||||||||||||||||||
Nonaccrual loans and other real estate | $ | 1,201 | 460 | 61 | 596 | 596 | 561 | ||||||||||||
Past due loans over 90 days and still accruing interest | $ | - | - | 8 | 66 | 47 | 146 | ||||||||||||
Net loan charge-offs (recoveries) (8) | $ | (73 | ) | 76 | (206 | ) | 22 | 53 | 918 | ||||||||||
Allowance for loan losses to total loans | 1.08 | % | 1.21 | % | 1.20 | % | 1.20 | % | 1.20 | % | 1.20 | % | |||||||
As a percentage of total loans and ORE: | |||||||||||||||||||
Past due loans over 30 days | 0.52 | % | 0.58 | % | 0.10 | % | 0.21 | % | 0.27 | % | 0.37 | % | |||||||
Nonperforming assets | 0.10 | % | 0.07 | % | 0.01 | % | 0.11 | % | 0.12 | % | 0.12 | % | |||||||
Potential problem loans (9) | 0.63 | % | 0.20 | % | 0.37 | % | 0.18 | % | 0.08 | % | 0.02 | % | |||||||
Annualized net loan charge-offs (recoveries) to avg. loans (10) | (0.04 | )% | (0.01 | )% | (0.03 | )% | 0.02 | % | 0.04 | % | 0.27 | % | |||||||
Avg. commercial loan internal risk ratings (9) | 4.1 | 3.8 | 3.9 | 3.8 | 3.8 | 3.9 | |||||||||||||
Avg. loan account balances (11) | $ | 105 | 180 | 172 | 171 | 162 | 161 | ||||||||||||
Interest rates and yields: | |||||||||||||||||||
Loans | 7.02 | % | 6.72 | % | 6.40 | % | 5.98 | % | 5.78 | % | 5.58 | % | |||||||
Securities | 4.80 | % | 4.58 | % | 4.40 | % | 4.42 | % | 4.44 | % | 4.34 | % | |||||||
Federal funds sold and other | 5.54 | % | 4.83 | % | 3.72 | % | 3.90 | % | 3.41 | % | 2.72 | % | |||||||
Total earning assets | 6.39 | % | 6.03 | % | 5.73 | % | 5.48 | % | 5.34 | % | 5.12 | % | |||||||
Total deposits, including non-interest bearing | 2.59 | % | 2.34 | % | 2.16 | % | 1.80 | % | 1.46 | % | 1.30 | % | |||||||
Securities sold under agreements to repurchase | 3.46 | % | 2.99 | % | 2.50 | % | 2.04 | % | 1.60 | % | 0.85 | % | |||||||
Federal funds purchased and FHLB advances | 3.99 | % | 2.50 | % | 3.22 | % | 3.12 | % | 2.61 | % | 2.34 | % | |||||||
Subordinated debt | 6.36 | % | 6.14 | % | 6.22 | % | 5.98 | % | 5.32 | % | 4.77 | % | |||||||
Total deposits and other interest-bearing liabilities | 2.81 | % | 2.52 | % | 2.30 | % | 1.98 | % | 1.61 | % | 1.42 | % |
10
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED
(dollars in thousands, except per share data) | Mar 2006 | Dec 2005 | Sept 2005 | June 2005 | Mar 2005 | Dec 2004 | |||||||||||||
Other information: | |||||||||||||||||||
Gains (losses) on sale of loans and loan participations sold: | |||||||||||||||||||
Mortgage loan originations: | |||||||||||||||||||
Gross loans originated | $ | 24,034 | 31,792 | 31,066 | 27,239 | 21,360 | 17,584 | ||||||||||||
Gross fees (12) | $ | 389 | 485 | 533 | 419 | 364 | 378 | ||||||||||||
Gross fees as a percentage of mortgage loans originated | 1.62 | % | 1.53 | % | 1.72 | % | 1.54 | % | 1.70 | % | 2.14 | % | |||||||
Loan participations sold | $ | 74 | 41 | (26 | ) | 152 | (15 | ) | 56 | ||||||||||
Gains on sales of investment securities, net | $ | - | - | - | - | 114 | - | ||||||||||||
Brokerage account assets, at quarter-end (13) | $ | 540,000 | 441,000 | 428,000 | 419,000 | 400,000 | 398,000 | ||||||||||||
Floating rate loans as a percentage of loans (14) | 48.5 | % | 53.5 | % | 56.2 | % | 55.9 | % | 55.5 | % | 56.0 | % | |||||||
Balance of loan participations sold to other banks and serviced by Pinnacle, at quarter end | $ | 104,756 | 62,722 | 55,887 | 64,474 | 58,844 | 57,678 | ||||||||||||
Core deposits to total funding (15) | 68.1 | % | 59.5 | % | 60.7 | % | 57.3 | % | 58.7 | % | 60.8 | % | |||||||
Total assets per full-time equivalent employee | $ | 4,968 | 6,498 | 6,396 | 5,952 | 5,988 | 5,960 | ||||||||||||
Annualized revenues per full-time equivalent employee | $ | 205.0 | 250.2 | 228.9 | 227.0 | 233.6 | 246.7 | ||||||||||||
Number of employees (full-time equivalent) | 368.0 | 156.5 | 153.0 | 146.5 | 131.5 | 122.0 | |||||||||||||
Associate retention rate (16) | 93.2 | % | 94.3 | % | 95.5 | % | 96.6 | % | 99.2 | % | 98.4 | % |
11
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED
As of and for the three months ended | |||||||
(dollars in thousands, except per share data) | March 31, 2006 | March 31, 2005 | |||||
Reconciliation of Non-GAAP measures: | |||||||
Tangible assets: | |||||||
Total assets | $ | 1,828,212 | $ | 787,436 | |||
Less: Goodwill | (115,618 | ) | - | ||||
Core deposit intangible | (13,102 | ) | - | ||||
Net tangible assets | $ | 1,699,492 | $ | 787,436 | |||
Tangible equity: | |||||||
Total stockholders’ equity | $ | 236,327 | $ | 57,657 | |||
Less: Goodwill | (115,618 | ) | - | ||||
Core deposit intangible | (13,102 | ) | - | ||||
Net tangible equity | $ | 107,607 | $ | 57,657 | |||
Tangible average assets: | |||||||
Total average assets | $ | 1,153,823 | $ | 756,884 | |||
Less: Average goodwill | (19,269 | ) | - | ||||
Average core deposit intangible | (2,184 | ) | - | ||||
Net tangible average assets | $ | 1,132,370 | $ | 756,884 | |||
Tangible average equity: | |||||||
Total average stockholders’ equity | $ | 95,535 | $ | 58,420 | |||
Less: Average goodwill | (19,269 | ) | - | ||||
Average core deposit intangible | (2,184 | ) | - | ||||
Net tangible average stockholders’ equity | $ | 74,082 | $ | 58,420 | |||
Net income | $ | 2,612 | $ | 1,780 | |||
Impact of merger related expense, net of tax (17) | 269 | - | |||||
Net income before impact of merger related expense | $ | 2,881 | $ | 1,780 | |||
Fully-diluted earnings per share before impact of merger related expense | $ | 0.27 | $ | 0.19 | |||
Tangible equity divided by tangible assets | 6.33 | % | 7.32 | % | |||
Tangible equity per common share | $ | 7.03 | $ | 6.87 | |||
Return on tangible average assets (annualized) | 0.94 | % | 0.96 | % | |||
Impact of merger related expense, net of tax (annualized) | 0.10 | % | - | ||||
Return on tangible average assets before impact of merger related expense (annualized) | 1.04 | % | 0.96 | % | |||
Return on tangible average stockholders’ equity (annualized) | 14.30 | % | 12.48 | % | |||
Impact of merger related expense, net of tax | 1.47 | % | - | ||||
Return on tangible average stockholders’ equity before impact of merger related expense (annualized) | 15.77 | % | 12.48 | % | |||
Efficiency ratio | 63.4 | % | 59.6 | % | |||
Impact of merger related expense | (3.8 | )% | - | ||||
Efficiency ratio before impact of merger related expense | 59.6 | % | 59.6 | % |
12
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED
Anticipated Earnings Estimate Ranges | |||||||||||||
Second Quarter 2006 | Year ended December 31, 2006 | ||||||||||||
Low | High | Low | High | ||||||||||
Projected 2006 EPS Reconciliation Excluding Impact of Merger Related Expense: | |||||||||||||
Estimated diluted earnings per share | $ | 0.25 | $ | 0.27 | $ | 1.14 | $ | 1.19 | |||||
Add: Projected merger related expense | $ | 0.02 | $ | 0.02 | $ | 0.04 | $ | 0.06 | |||||
Adjusted estimated diluted earnings per share to exclude merger related expense | $ | 0.27 | $ | 0.29 | $ | 1.18 | $ | 1.25 | |||||
Projected 2006 EPS Reconciliation Excluding Impact of Stock Compensation Expense: | |||||||||||||
Estimated diluted earnings per share | $ | 0.25 | $ | 0.27 | $ | 1.14 | $ | 1.19 | |||||
Add: Projected stock compensation expense | $ | 0.01 | $ | 0.02 | $ | 0.05 | $ | 0.07 | |||||
Adjusted estimated diluted earnings per share to exclude stock compensation expense | $ | 0.26 | $ | 0.29 | $ | 1.19 | $ | 1.26 |
(1) | Book value per share computed by dividing total stockholders’ equity by common shares outstanding |
(2) | Capital ratios are for Pinnacle Financial Partners, Inc. and are defined as follows: |
Equity to total assets - End of period total stockholders’ equity as a percentage of end of period assets. | |
Leverage - Tier one capital (pursuant to risk-based capital guidelines) as a percentage of adjusted average assets. | |
Tier one risk-based - Tier one capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets. | |
Total risk-based - Total capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets. | |
(3) | Ratios are presented on an annualized basis. |
(4) | Net interest margin is the result of net interest income on a tax equivalent basis divided by average interest earning assets. |
(5) | Total revenue is equal to the sum of net interest income and noninterest income. |
(6) | Efficiency ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income. |
(7) | Growth rates are calculated by dividing amounts for the current quarter by the same quarter of the previous year. |
(8) | During the fourth quarter of 2004, the Company incurred two large commercial charge-offs of approximately $850,000 which had been previously on nonaccruing status. During the third quarter of 2005, the Company recorded a recovery of $230,000 related to one of these commercial loans. |
(9) | Average risk ratings are based on an internal loan review system which assigns a numeric value of 1 to 10 to all loans to commercial entities based on their underlying risk characteristics as of the end of each quarter. A “1” risk rating is assigned to credits that exhibit Excellent risk characteristics, “2” exhibit Very Good risk characteristics, “3” Good, “4” Satisfactory, “5” Acceptable or Average, “6” Watch List, “7” Criticized, “8” Classified or Substandard, “9” Doubtful and “10” Loss (which are charged-off immediately). Additionally, loans rated “8” or worse are considered potential problem loans. Potential problem loans do not include nonperforming loans. Generally, consumer loans are not subjected to internal risk ratings. |
(10) | Annualized net loan charge-offs to average loans ratios are computed by annualizing year-to-date net loan charge-offs and dividing the result by average loans for the year-to-date period. |
(11) | Computed by dividing the balance of all loans by the number of loan accounts as of the end of each quarter. |
(12) | Amounts are included in the statement of income in “Gains on the sale of loans and loan participations sold.” |
(13) | At fair value, based on information obtained from Pinnacle’s third party broker/dealer for non-FDIC insured financial products and services. |
(14) | Floating rate loans are those loans that are eligible for repricing on a daily basis subject to changes in Pinnacle’s prime lending rate or other factors. |
(15) | Core deposits include all transaction deposit accounts, money market and savings accounts and all certificates of deposit issued in a denomination of less than $100,000. The ratio noted above represents total core deposits divided by total funding, which includes total deposits, FHLB advances, securities sold under agreements to repurchase, subordinated indebtedness and all other interest-bearing liabilities. |
(16) | Associate retention rate does not include the Murfreesboro operations and is computed by dividing the number of associates employed at quarter-end less the number of associates that have resigned in the last 12 months by the number of associates employed at quarter-end. |
(17) | Represents merger related expenses of $443,000, net of income tax benefit of $174,000 for first quarter of 2006. |
13