FOR IMMEDIATE RELEASE
| | MEDIA CONTACT: | Nikki Klemmer, 615-743-6132 |
| | FINANCIAL CONTACT: | Harold Carpenter, 615-744-3742 |
| | WEBSITE: | www.pnfp.com |
PNFP REPORTS RECORD EARNINGS PER SHARE OF $0.62 FOR 1Q 2015
ROAA of 1.45% and ROATE of 15.56% for first quarter 2015
NASHVILLE, Tenn., April 20, 2015 – Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $0.62 for the quarter ended March 31, 2015, compared to net income per diluted common share of $0.47 for the quarter ended March 31, 2014, an increase of 31.9 percent.
"Strategically, it has been a very eventful 2015 thus far," said M. Terry Turner, Pinnacle's president and chief executive officer. "Our investment in Bankers Healthcare Group LLC (BHG), which occurred on Feb. 1, 2015, as well as our anticipated merger with CapitalMark Bank & Trust (CapitalMark) in Chattanooga, TN, which we announced two weeks ago, represent two significant milestones for our firm. Additionally, we launched a capital markets initiative that will provide a new revenue stream that's been routinely conceded to others in the past, and we also hired several commercial real estate professionals that position us to develop a higher profile in the commercial real estate segment to match that we've developed in the commercial and industrial segment. Those building blocks, plus our record core earnings for the 16th consecutive quarter, serve as a great platform to achieve our long-term growth objectives."
GROWING THE CORE EARNINGS CAPACITY OF THE FIRM:
| · | Revenues (excluding securities gains and losses) for the quarter ended March 31, 2015 were a record $69.8 million, an increase of $5.1 million from $64.7 million in the fourth quarter of 2014. Revenues (excluding securities gains and losses) increased 19.0 percent over the same quarter last year. |
| · | Loans at March 31, 2015 were a record $4.65 billion, an increase of $55.2 million from Dec. 31, 2014 and $463.6 million from March 31, 2014, reflecting year-over-year growth of 11.1 percent. |
| · | Average balances of noninterest-bearing deposit accounts were $1.34 billion in the first quarter of 2015 and represented approximately 28.0 percent of total average deposit balances for the quarter, another record for the firm. First quarter 2015 average noninterest-bearing deposits increased 19.0 percent over the same quarter last year. |
| · | Return on average assets increased to 1.45 percent for the first quarter of 2015, compared to 1.27 percent for the fourth quarter of 2014 and 1.20 percent for the same quarter last year. |
| · | First quarter 2015 return on average tangible equity amounted to 15.56 percent, compared to 13.52 percent for the fourth quarter of 2014 and 13.45 percent for the same quarter last year. |
| · | The firm's investment in BHG resulted in additional noninterest income of approximately $3.1 million for the first quarter of 2015, ultimately amounting to approximately $0.05 in fully diluted earnings per share for the period. |
"We are very pleased with BHG's contribution in the first quarter and remain excited about the future opportunities that we believe exist between our two firms," Turner said. "Further, by focusing on our core banking businesses and growing our client base in our now three MSAs in Tennessee, we believe we will continue to increase revenues, increase operating leverage and, most importantly, produce long-term sustainable shareholder value for our investors."
OTHER FIRST QUARTER 2015 HIGHLIGHTS:
| o | Net interest income for the quarter ended March 31, 2015 increased to $51.3 million, compared to $50.3 million for the fourth quarter of 2014 and $45.9 million for the first quarter of 2014. Net interest income for the period ended March 31, 2015 increased 11.7 percent as compared to the same period prior year. |
| § | The firm's net interest margin was 3.78 percent for the quarter ended March 31, 2015, compared to 3.76 percent last quarter and for the quarter ended March 31, 2014. |
| o | Noninterest income for the quarter ended March 31, 2015 increased to $18.5 million, compared to $14.4 million for the fourth quarter of 2014 and $12.7 million for the same quarter last year. Noninterest income for the period ended March 31, 2015 increased 45.2 percent as compared to the same period prior year. |
| § | Wealth management revenues, which include investment, trust and insurance services, were $5.1 million for the quarter ended March 31, 2015, compared to $5.1 million for the quarter ended Dec. 31, 2014 and $4.7 million for the same quarter last year. |
| § | Other noninterest income increased by approximately $604,000 between fourth quarter of 2014 and first quarter of 2015 to $5.3 million, primarily due to $208,000 in increased interchange revenues and $547,000 in loan swap fees. |
"Over the last few years, we outlined and ultimately increased several of the performance targets for our firm," said Harold R. Carpenter, Pinnacle's chief financial officer. "The achievement of those targets was based on increasing our client base. As a firm, we remain focused on revenue growth and achieving it by recruiting the best financial professionals in our markets. We made several key hires in the first quarter of 2015 and look forward to additional hires over the remainder of this year.
"Ongoing organic growth has been and will continue to be the foundation of our business model in the Nashville and Knoxville markets. We will work diligently to ensure a smooth integration of CapitalMark into our franchise and expect, ultimately, the same organic growth model will be the foundation for building a $2 billion+ banking franchise in Chattanooga over the next few years. We believe that the core business strategies shared by both CapitalMark and Pinnacle will be what grows the value of the combined franchise."
| o | Noninterest expense for the quarter ended March 31, 2015 was $36.8 million, compared to $34.4 million in the fourth quarter of 2014 and $33.6 million in the same quarter last year. |
| § | Salaries and employee benefits were $23.5 million in the first quarter of 2015, compared to $23.1 million in the fourth quarter of 2014 and $21.7 million in the same quarter last year. |
"We continue to experience improved operating leverage in the first quarter with another record efficiency ratio of 52.8 percent," Carpenter said. "Going into 2015, we anticipated increases in compensation for new hires and merit raises, as well as increases in other expenses due to increases in variable costs related to revenue growth. That said, absent the usual increases for additional hires that will occur, we feel our expense run rate should remain fairly consistent throughout this year."
| o | Nonperforming assets decreased to $25.4 million at March 31, 2015, compared to $27.9 million at Dec. 31, 2014 and $30.6 million at March 31, 2014. Nonperforming assets decreased to 0.54 percent of total loans and ORE at March 31, 2015, compared to 0.61 percent at Dec. 31, 2014 and 0.73 percent at March 31, 2014. |
| o | The allowance for loan losses represented 1.43 percent of total loans at March 31, 2015, compared to 1.47 percent at Dec. 31, 2014 and 1.61 percent at March 31, 2014. The ratio of the allowance for loan losses to nonperforming loans was 391.6 percent at March 31, 2015, compared to 403.2 percent at Dec. 31, 2014 and 432.7 percent at March 31, 2014. |
| · | Net charge-offs were $1.4 million for the quarter ended March 31, 2015, compared to $842,000 for the fourth quarter of 2014 and $934,000 for the quarter ended March 31, 2014. Annualized net charge-offs as a percentage of average loans for the quarter ended March 31, 2015 were 0.13 percent, compared to 0.09 percent for the quarter ended March 31, 2014. |
| · | Provision for loan losses decreased from $488,000 in the first quarter of 2014 to $315,000 in the first quarter of 2015, which reflects an overall decrease in the allowance for loan losses from 1.61 percent at March 31, 2014 to 1.43 percent at March 31, 2015, based on improvements in overall loan quality. |
BOARD OF DIRECTORS DECLARES DIVIDEND
On April 7, 2015, Pinnacle's Board of Directors also declared a $0.12 per share cash dividend to be paid on May 29, 2015 to common shareholders of record as of the close of business on May 1, 2015. The amount and timing of any future dividend payments to common shareholders will be subject to the discretion of Pinnacle's Board of Directors.
WEBCAST AND CONFERENCE CALL INFORMATION
Pinnacle will host a webcast and conference call at 8:30 a.m. (CDT) on April 21, 2015 to discuss first quarter 2015 results and other matters. To access the call for audio only, please call 1-877-602-7944. For the presentation and streaming audio, please access the webcast on the investor relations page of Pinnacle's website at www.pnfp.com.
For those unable to participate in the webcast, it will be archived on the investor relations page of Pinnacle's website at www.pnfp.com for 90 days following the presentation.
Pinnacle Financial Partners provides a full range of banking, investment, trust, mortgage and insurance products and services designed for businesses and their owners and individuals interested in a comprehensive relationship with their financial institution.
The firm began operations in a single downtown Nashville location in October 2000 and has since grown to approximately $6.3 billion in assets at March 31, 2015. At March 31, 2015, Pinnacle is the second-largest bank holding company headquartered in Tennessee, with 29 offices in eight Middle Tennessee counties and five offices in Knoxville. Additionally, Great Place to Work® named Pinnacle one of the best workplaces in the United States on its 2014 Best Small & Medium Workplaces list published in FORTUNE magazine. The American Banker also recognized Pinnacle as the second best bank to work for in the country.
Additional information concerning Pinnacle, which is included in the NASDAQ Financial-100 Index, can be accessed at www.pnfp.com.
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ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed merger of Pinnacle Bank and CapitalMark Bank & Trust ("CapitalMark"), Pinnacle Financial intends to file a registration statement on Form S-4 with the Securities and Exchange Commission (the "SEC") to register the shares of Pinnacle Financial common stock that will be issued to CapitalMark's shareholders in connection with the transaction. The registration statement will include a proxy statement/prospectus (that will be delivered to CapitalMark's shareholders in connection with their required approval of the proposed merger) and other relevant materials in connection with the proposed merger transaction involving Pinnacle Bank and CapitalMark.
INVESTORS AND SECURITY HOLDERS ARE ENCOURAGED TO READ THE PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT PINNACLE FINANCIAL, PINNACLE BANK, CAPITALMARK AND THE PROPOSED TRANSACTION.
Investors and security holders may obtain free copies of these documents once they are available through the website maintained by the SEC at http://www.sec.gov. Free copies of the proxy statement/prospectus also may be obtained by directing a request by telephone or mail to Pinnacle Financial Partners Inc., 150 3rd Avenue South, Suite 980, Nashville, TN 37201, Attention: Investor Relations (615) 744-3742 or CapitalMark, 801 Broad St., Chattanooga, TN 37402, Attention: Investor Relations (423) 386-2828.
This communication shall not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction.
FORWARD-LOOKING STATEMENTS
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," "goal," "objective," "intend," "plan," "believe," "should," "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 factors that may cause the actual results, performance or achievements of Pinnacle Financial to differ materially from any results expressed or implied by such forward-looking statements. Such risks include, without limitation, (i) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (ii) continuation of the historically low short-term interest rate environment; (iii) the inability of Pinnacle Financial to maintain the historical growth of its loan portfolio; (iv) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (v) effectiveness of Pinnacle Financial's asset management activities in improving, resolving or liquidating lower-quality assets; (vi) increased competition with other financial institutions; (vii) greater than anticipated adverse conditions in the national or local economies including the Nashville-Davidson-Murfreesboro-Franklin MSA and the Knoxville MSA, particularly in commercial and residential real estate markets; (viii) rapid fluctuations or unanticipated changes in interest rates on loans or deposits; (ix) the results of regulatory examinations; (x) the ability to retain large, uninsured deposits; (xi) the development of any new market other than Nashville or Knoxville; (xii) a merger or acquisition, like the proposed merger with CapitalMark; (xiii) risks of expansion into new geographic or product markets, like the proposed expansion into the Chattanooga, TN-GA MSA associated with the proposed merger with CapitalMark; (xiv) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including intangible assets; (xv) reduced ability to attract additional financial advisors (or failure of such advisors to cause their clients to switch to Pinnacle Financial) or otherwise to attract customers from other financial institutions; (xvi) further deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xvii) inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies and required capital maintenance levels; (xviii) risks associated with litigation, including the applicability of insurance coverage; (xix) the risk that the cost savings and any revenue synergies from the proposed merger with CapitalMark may not be realized or take longer than anticipated to be realized; (xx) disruption from the merger with customers, suppliers or employee relationships; (xxi) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement that Pinnacle Financial and Pinnacle Bank have entered into with CapitalMark; (xxii) the risk of successful integration of CapitalMark's business with ours; (xxiii) the failure of CapitalMark's shareholders to approve the merger; (xxiv) the amount of the costs, fees, expenses and charges related to the merger; (xxv) the ability to obtain required governmental approvals of the proposed terms of the merger; (xxvi) reputational risk and the reaction of Pinnacle Financial's and CapitalMark's customers to the proposed merger; (xxvii) the failure of the closing conditions to be satisfied; (xxviii) the risk that the integration of CapitalMark's operations with Pinnacle Financial's will be materially delayed or will be more costly or difficult than expected; (xxix) the possibility that the merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events; (xxx) the dilution caused by Pinnacle's issuance of additional shares of its common stock in the merger; (xxxi) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xxxii) the vulnerability of our network and online banking portals to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (xxxiii) the possibility of increased compliance costs as a result of increased regulatory oversight and the development of additional banking products for our corporate and consumer clients; and (xxxiv) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, including regulatory or legislative developments arising out of current unsettled conditions in the economy, including implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act. A more detailed description of these and other risks is contained in Pinnacle Financial's most recent annual report on Form 10-K filed with the Securities and Exchange Commission on February 25, 2015. Many of such factors are beyond Pinnacle Financial's ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. Pinnacle Financial disclaims any obligation to update or revise any forward-looking statements contained in this report, whether as a result of new information, future events or otherwise.
