EXHIBIT 99.1
[PINNACLE LOGO]
FOR IMMEDIATE RELEASE
MEDIA CONTACT: Vicki Kessler 615-320-7532
FINANCIAL CONTACT: Harold Carpenter 615-744-3742
WEBSITE: www.pnfp.com
PINNACLE FINANCIAL REPORTS CONTINUED RAPID GROWTH AND
RECORD EARNINGS
ASSETS GROW TO $979 MILLION AND DILUTED EARNINGS PER SHARE IS $0.22
NASHVILLE, Tenn., Oct. 18, 2005 - Pinnacle Financial Partners Inc.
(Nasdaq: PNFP) today reported record earnings for the quarter ended Sept. 30,
2005.
THIRD QUARTER 2005 HIGHLIGHTS:
- Record net income of $2.08 million, up 49.5 percent from the
prior year's $1.39 million
- Record diluted earnings per share of $0.22, up 37.5 percent
from the prior year's $0.16
- Strong balance sheet growth:
- Average loans up 50 percent from the same period last
year
- Average total deposits up 51 percent from the same
period last year, with average noninterest bearing
demand deposit accounts up 54 percent from the same
period last year
- Superior credit quality:
- Past due loans over 30 days of only 0.10 percent of
total loans
- Nonperforming assets of only 0.01 percent of total loans
and other real estate
"We are again reporting continued rapid growth in assets and earnings,"
said M. Terry Turner, president and CEO of Pinnacle Financial Partners. "As we
approach our fifth anniversary later this month, it is gratifying to continue to
set new quarterly records in many categories, including deposit growth. Based on
our performance in the third quarter we fully expect to exceed our previous
guidance of $1 billion in assets by the end of 2005."
Pinnacle Reports Continued Growth - 2 of 7
FINANCIAL PERFORMANCE
- Return on average assets for the quarter ended Sept. 30, 2005,
was 0.90 percent compared to 0.89 percent for the same quarter
last year.
- Return on average stockholders' equity for the quarter ended
Sept. 30, 2005, was 13.23 percent compared to 12.58 percent
for the same quarter last year.
Total assets grew to $979 million as of Sept. 30, 2005, up $293 million or
43 percent from the $685 million reported at Sept. 30, 2004. Loans as of Sept.
30, 2005, were $604 million, up $169 million or 39 percent from the $435 million
reported at Sept. 30, 2004. Total deposits increased to $789 million at Sept.
30, 2005, or 46 percent higher than the $542 million reported a year ago.
REVENUE
- Revenue (the sum of net interest income and noninterest
income) for the quarter ended Sept. 30, 2005 amounted to $8.8
million compared to $6.9 million for the same quarter of last
year, an increase of 27.0 percent.
- Net interest income for the quarter ended Sept. 30, 2005, was
$7.46 million compared to $5.30 million for the quarter ended
Sept. 30, 2004, an increase of 40.7 percent.
- Net interest margin for the third quarter of 2005 was
3.48 percent, compared to a net interest margin of
3.62 percent reported during the third quarter in
2004 and 3.57 percent for the second quarter of 2005.
- Percentage of daily floating rate loans to total
loans was 56.4 percent at Sept. 30, 2005.
- Noninterest income for the quarter ended Sept. 30, 2005, was
$1,299,000 compared to $1,593,000 during the same quarter in
2004, a decrease of 18.4 percent.
"The decline in our net interest margin during the third quarter of 2005
was due to several factors, with the primary contributors being continued
increases in deposit rates and our decision to maintain increased liquidity
throughout the quarter," said Harold Carpenter, chief financial officer of
Pinnacle Financial Partners. "Our marketing and customer retention activities
yielded significant deposit growth during the third quarter. Based on current
sales pipelines, we anticipate another strong quarter of loan growth in the
fourth quarter of 2005. This puts Pinnacle in a great position to deploy this
excess liquidity rapidly. Our internal
Pinnacle Reports Continued Growth - 3 of 7
models continue to indicate that our balance sheet remains structurally asset
sensitive. Although Nashville continues to be a very competitive deposit pricing
market, we believe we should maintain our net interest margin for the remainder
of the year. Even though our margin was less than we anticipated, our growth
continues to provide the top line revenues we require to meet our objectives.
Our net interest income was approximately $7.5 million for the third quarter,
compared to $6.8 million in the second quarter of 2005 and compared to $5.3
million in the same period last year. This represents a year over year growth of
41 percent in net interest income which we directly attribute to our associates
continuing to increase the number of profitable loan and deposit relationships
at our firm."
At June 30, 2005, the ratio of investment securities to total assets
declined to 25.2 percent from the 28.2 percent reported a year ago. Pinnacle
anticipates that this ratio will approximate 25.0 to 27.0 percent for the
remainder of 2005, representing a slight shift in asset mix.
Noninterest income was $1,299,000 during the third quarter of 2005,
compared to $1,593,000 for the same period last year, a decrease of $294,000.
Gains on sales of loan participations and investment securities were lower
between the two quarters by $246,000 and $109,000, respectively. For the quarter
ended Sept. 30, 2005, noninterest income represented approximately 14.8 percent
of total revenues, compared to 23.1 percent for the same quarter in 2004.
NONINTEREST EXPENSE
- Noninterest expense for the quarter ended June 30, 2005, was
$5.52 million, compared to $3.92 million for the same quarter
in 2004.
- Efficiency ratio (noninterest expense divided by net interest
income and noninterest income) was 63.1 percent during the
third quarter of 2005, compared to 56.9 percent during the
third quarter of 2004.
Compensation and employee benefits expense increased approximately 38.9
percent over the same quarter last year due primarily to an increase in
personnel. At Sept. 30, 2005, Pinnacle employed 153 full-time equivalent
personnel compared to 116 at Sept. 30, 2004, an increase of approximately 32
percent. Equipment and occupancy expenses increased 76.1 percent over the same
period last year due in large part to increased square footage for
Pinnacle Reports Continued Growth - 4 of 7
operating units at the firm's downtown Nashville location and additional branch
offices, including the West End location in Davidson County, the Franklin
location in Williamson County and the Hendersonville location in Sumner County.
CREDIT QUALITY
- Provision for loan losses was $366,000 for the third quarter
of 2005, compared to $1,012,000 in the third quarter in 2004.
The following impacted the amount of the provision for loan
losses in the third quarter of 2005 when compared to the same
period in 2004:
- Loan growth in the third quarter of 2005 of $47
million, compared to loan growth of $80 million in
the third quarter of 2004.
- During the third quarter of 2005, a $230,000 recovery
was recorded from a previously charged-off commercial
loan. This recovery exceeded gross charge-offs of
$26,000 during the quarter, resulting in the firm
reporting net recoveries of $206,000 in the third
quarter of 2005 compared to net charge-offs of
$43,000 during the same period in 2004.
- Allowance for loan losses represented 1.20 percent of total
loans at Sept. 30, 2005, compared to 1.26 percent at June 30,
2004.
- With the significant recovery noted above, the firm's
recoveries have exceeded gross charge-off's such that
on an annualized basis, the net recovered position
approximates (0.03) percent of average loans for 2005
compared to a net charge-off position of 0.04 percent
for 2004.
- Nonperforming assets as a percentage of total loans
and other real estate decreased to 0.01 percent at
Sept. 30, 2005, from 0.31 percent at Sept. 30, 2004.
"We remain extremely pleased with the credit quality of our firm," said
Turner. "In the first nine months of this year, asset quality indicators have
been excellent. We continue to believe that our asset quality is a key
predictor of our ability to create long-term shareholder value."
OTHER THIRD QUARTER 2005 DEVELOPMENTS
- Pinnacle continued to focus on treasury management
services and growth in demand deposit accounts. For the
quarter ended September 30, 2005, average
noninterest-bearing deposit balances averaged $125
million compared to $85
Pinnacle Reports Continued Growth - 5 of 7
million for the same quarter last year, an increase of
47 percent. "Average noninterest bearing demand accounts
increased by $14 million during the third quarter of
2005," said Robert A. McCabe Jr., chairman of Pinnacle's
board of directors. "We are very pleased with our
progress in making Pinnacle the premier treasury
management firm in Nashville."
- Pinnacle concluded the offering of $20 million in trust
preferred securities to provide regulatory capital to
support Pinnacle's continued rapid growth.
- Pinnacle grew to 155 associates (153 full-time
equivalent) at Sept. 30, 2005, with 107 working in
client contact areas and 48 in operational and corporate
areas. This represents an increase of 32 employees from
the 123 employees as of Dec. 31, 2004. Pinnacle's annual
retention rate was 96 percent at Sept. 30, 2005,
representing a very high level of engagement for
Pinnacle's associates. Approximately eight associate
additions are currently planned for the remainder of
2005, including five in client contact areas.
- Pinnacle is considering a ninth location to be opened in
2006 in the Donelson/Hermitage area of Davidson County
within the Nashville-Davidson-Murfreesboro MSA.
Additionally, Pinnacle has been successful in recruiting
a 16-year veteran from a large regional bank holding
company to lead Pinnacle's efforts at that location.
PROGRESS OF CAVALRY ACQUISITION
On October 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
September 30, 2005. Since that date:
- The two companies have announced the formation of a joint
merger integration team to be led by Hugh M. Queener of
Pinnacle and Bill Jones of Cavalry.
- Pinnacle filed a Form S-4 with the Securities and Exchange
Commission on Oct. 17, 2005, detailing various aspects of the
merger and the information to be included in the companies'
joint proxy statement/prospectus.
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 fourth quarter 2005 diluted earnings per
share will approximate $0.23, exclusive of merger-related charges, if any. As a
result, Pinnacle's estimate for diluted
Pinnacle Reports Continued Growth - 6 of 7
earnings per share for the year ending Dec. 31, 2005, is projected to be
approximately $0.85 per fully diluted share. Pinnacle currently estimates total
asset balances will exceed $1 billion by the end of 2005 as a result of
continued organic growth. Pinnacle continues to anticipate significant loan
demand for the remainder of 2005 and early 2006 and, as a result, has considered
the increased provision for loan losses associated with increased loan balances
in these estimates.
In its Oct. 3, 2005, news release, Pinnacle also included earnings
guidance estimates for 2006 of $1.14 to $1.22 per fully diluted share which
includes an estimate for compensation expense related to the expensing of stock
options that have been and may be granted to employees under the firm's
broad-based stock option 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
County-Murfreesboro franchise, 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 (R)), 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 in Commerce Center in
downtown Nashville. Since then the firm has added Nashville offices in the
Rivergate, Green Hills and West End areas; in Hendersonville in Sumner County;
and in the Brentwood, Cool Springs and Franklin areas in Williamson County.
Additional information concerning Pinnacle can be accessed at
www.pnfp.com.
###
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
Pinnacle Reports Continued Growth - 7 of 7
sustained growth in the economy in the Nashville, Tennessee area, (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 including the consummation
of its merger with Cavalry Bancorp and (viii) 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.
This communication is not a solicitation of a proxy from any security holder of
Pinnacle Financial Partners, Inc. or Cavalry Bancorp, Inc. Pinnacle has filed a
registration statement on Form S-4 with the Securities and Exchange Commission
("SEC") in connection with the proposed merger of Pinnacle and Cavalry. The Form
S-4 contains a joint proxy statement/prospectus and other documents for the
shareholders' meeting of Pinnacle and Cavalry at which time the proposed merger
will be considered. The Form S-4 and joint proxy statement/prospectus contain
important information about Pinnacle, Cavalry, the merger and related matters.
INVESTORS AND SECURITY HOLDERS ARE ENCOURAGED TO READ THE JOINT 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, CAVALRY 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 joint proxy statement/prospectus also may
be obtained by directing a request by telephone or mail to Pinnacle Financial
Partners Inc., 211 Commerce Street, Suite 300, Nashville, TN 37201, Attention:
Investor Relations (615) 744-3710 or Cavalry Bancorp, 114 West College Street,
P.O. Box 188, Murfreesboro, TN 37133, Attention: Investor Relations (615)
849-2272.
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.
PARTICIPANTS IN THE SOLICITATION
The directors and executive officers of Pinnacle and Cavalry may be deemed to be
participants in the solicitation of proxies with respect to the proposed
transaction. Information about Pinnacle's directors and executive officers is
contained in the proxy statement filed by Pinnacle with the Securities and
Exchange Commission on March 14, 2005, which is available on Pinnacle's web site
(www.pnfp.com) and at the address provided above. Information about Cavalry's
directors and executive officers is contained in the proxy statement filed by
Cavalry with the Securities and Exchange Commission on March 18, 2005, which is
available on Cavalry's website (www.cavb.com). Other information regarding the
participants in the proxy solicitation and a description of their direct and
indirect interests by security holding or otherwise, will be contained in the
joint proxy statement/prospectus and other relevant material to be filed with
the Securities and Exchange Commission when they become available.
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
SEPTEMBER 30, DECEMBER 31,
2005 2004
------------- ------------
ASSETS
Cash and noninterest-bearing due from banks.................................. $ 19,192,529 $ 15,243,796
Interest-bearing due from banks ............................................. 2,473,308 379,047
Federal funds sold .......................................................... 75,405,514 11,122,944
--------------- ---------------
Cash and cash equivalents ............................................... 97,071,351 26,745,787
Securities available-for-sale, at fair value ................................ 219,564,463 180,573,820
Securities held-to-maturity (fair value of $26,798,072 and $27,134,913
at September 30, 2005 and December 31, 2004, respectively) ................ 27,349,837 27,596,159
Mortgage loans held-for-sale ................................................ 6,363,441 1,634,900
Loans ....................................................................... 604,225,108 472,362,219
Less allowance for loan losses .............................................. (7,231,378) (5,650,014)
--------------- ---------------
Loans, net .............................................................. 596,993,730 466,712,205
Premises and equipment, net ................................................. 13,082,736 11,130,671
Investments in unconsolidated subsidiaries and other entities ............... 6,170,626 3,907,807
Accrued interest receivable ................................................. 3,764,836 2,639,548
Other assets ................................................................ 8,177,820 6,198,553
--------------- ---------------
Total assets......................................................... $ 978,538,840 $ 727,139,450
=============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand............................................... $ 154,440,038 $ 114,318,024
Interest-bearing demand ................................................. 68,956,596 51,751,320
Savings and money market accounts ....................................... 292,021,828 199,058,240
Time .................................................................... 273,209,264 205,599,425
--------------- ---------------
Total deposits ...................................................... 788,627,726 570,727,009
Securities sold under agreements to repurchase .............................. 67,651,789 31,927,860
Federal Home Loan Bank advances ............................................. 24,500,000 53,500,000
Subordinated debt ........................................................... 30,929,000 10,310,000
Accrued interest payable .................................................... 1,515,140 769,300
Other liabilities ........................................................... 2,432,117 2,025,106
--------------- ---------------
Total liabilities ................................................... 915,655,772 669,259,275
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; 8,424,217
issued and outstanding at September 30, 2005 and 8,389,232 issued
and outstanding at December 31, 2004 ................................. 8,424,217 8,389,232
Additional paid-in capital .............................................. 44,885,859 44,376,307
Unearned compensation ................................................... (309,297) (37,250)
Retained earnings ....................................................... 10,936,377 5,127,023
Accumulated other comprehensive (loss) income, net ...................... (1,054,088) 24,863
--------------- ---------------
Total stockholders' equity .......................................... 62,883,068 57,880,175
--------------- ---------------
Total liabilities and stockholders' equity .......................... $ 978,538,840 $ 727,139,450
=============== ===============
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
2005 2004 2005 2004
----------- ----------- ----------- -----------
INTEREST INCOME:
Loans, including fees ................................... $ 9,470,954 $ 5,172,042 $24,427,821 $13,624,552
Securities, available-for-sale
Taxable ............................................. 2,245,019 1,840,366 6,401,537 4,946,370
Tax-exempt .......................................... 318,235 124,780 758,572 309,765
Federal funds sold and other ............................ 344,498 76,563 601,468 224,644
----------- ----------- ----------- -----------
Total interest income ............................... 12,378,706 7,213,751 32,189,398 19,105,331
----------- ----------- ----------- -----------
INTEREST EXPENSE:
Deposits ................................................ 3,968,648 1,493,652 8,999,838 3,992,890
Securities sold under agreements to repurchase .......... 399,731 33,417 803,114 54,090
Federal funds purchased and other borrowings ............ 554,694 388,311 1,635,506 1,071,873
----------- ----------- ----------- -----------
Total interest expense .............................. 4,923,073 1,915,380 11,438,458 5,118,853
----------- ----------- ----------- -----------
Net interest income ................................. 7,455,633 5,298,371 20,750,940 13,986,478
PROVISION FOR LOAN LOSSES ................................... 366,304 1,012,000 1,450,244 1,814,322
----------- ----------- ----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES ......... 7,089,329 4,286,371 19,300,696 12,172,156
NONINTEREST INCOME:
Service charges on deposit accounts ..................... 228,994 311,372 732,130 706,425
Investment services ..................................... 474,354 464,468 1,403,231 1,258,563
Gain (loss) on loans and loan participations
sold (1) (2) ......................................... 348,577 552,604 899,393 979,621
Gain on sale of investment securities, net .............. - 108,843 114,410 357,196
Other noninterest income ................................ 247,208 155,382 743,689 430,220
----------- ----------- ----------- -----------
Total noninterest income ............................ 1,299,133 1,592,669 3,892,853 3,732,025
----------- ----------- ----------- -----------
NONINTEREST EXPENSE:
Compensation and employee benefits (2) .................. 3,410,436 2,455,692 9,491,712 6,773,914
Equipment and occupancy ................................. 1,034,661 587,649 2,712,624 1,628,392
Marketing and other business development ................ 186,430 157,894 479,313 462,843
Postage and supplies .................................... 159,782 154,042 453,716 377,306
Other noninterest expense ............................... 729,528 563,333 1,927,564 1,433,917
----------- ----------- ----------- -----------
Total noninterest expense ........................... 5,520,837 3,918,610 15,064,929 10,676,372
----------- ----------- ----------- -----------
INCOME BEFORE INCOME TAXES .................................. 2,867,625 1,960,430 8,128,620 5,227,809
Income tax expense ...................................... 789,382 569,897 2,311,455 1,597,779
----------- ----------- ----------- -----------
NET INCOME .................................................. $ 2,078,243 $ 1,390,533 $ 5,817,165 $ 3,630,030
=========== =========== =========== ===========
PER SHARE INFORMATION:
Basic net income per common share ....................... $ 0.25 $ 0.18 $ 0.69 $ 0.48
=========== =========== =========== ===========
Diluted net income per common share............ ......... $ 0.22 $ 0.16 $ 0.62 $ 0.43
=========== =========== =========== ===========
Weighted average shares outstanding:
Basic ............................................... 8,417,980 7,832,512 8,402,916 7,537,856
Diluted ............................................. 9,495,187 8,857,015 9,455,756 8,451,439
- -------------------
(1) AMOUNTS REFLECT THE RECLASSIFICATION OF NONINTEREST INCOME PREVIOUSLY
REPORTED AS "FEES FROM THE ORIGINATION OF MORTGAGE LOANS" TO "GAIN ON
LOANS AND LOAN PARTICIPATIONS SOLD" TO CONFORM WITH THE PRESENTATION IN
2005.
(2) SALES COMMISSION EXPENSES ASSOCIATED WITH MORTGAGE LOAN ORIGINATIONS
PREVIOUSLY INCLUDED IN "COMPENSATION AND EMPLOYEE BENEFITS" HAVE BEEN
RECLASSIFIED IN 2004 TO OFFSET NONINTEREST INCOME INCLUDED IN "GAIN ON
LOANS AND LOAN PARTICIPATIONS SOLD".
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS - UNAUDITED
THREE MONTHS ENDED THREE MONTHS ENDED
(DOLLARS IN THOUSANDS) SEPTEMBER 30, 2005 SEPTEMBER 30, 2004
--------------------------------------- --------------------------------------
AVERAGE YIELD/ AVERAGE YIELD/
BALANCES INTEREST RATE(1) BALANCES INTEREST RATE(1)
--------- -------- ------- -------- -------- -------
Interest-earning assets:
Loans................................ $ 587,902 $ 9,471 6.40% $392,220 $ 5,172 5.25%
Securities:
Taxable ........................... 205,213 2,245 4.34 170,446 1,840 4.30
Tax-exempt ........................ 35,312 318 4.72 13,275 125 4.80
Federal funds sold .................. 34,204 282 3.27 10,503 35 1.32
Other ............................... 4,075 63 7.02 3,110 42 6.08
--------- -------- ---- -------- -------- ----
Total interest-earning assets ..... 866,706 12,379 5.73 589,554 7,214 4.90
-------- ---- -------- ----
Noninterest-earning assets............. 48,095 29,140
--------- --------
Total assets......................... $ 914,801 $618,694
========= ========
Interest-bearing liabilities:
Interest-bearing deposits:
Interest checking.................. $ 64,369 242 1.49 $ 40,045 48 0.48
Savings and money market........... 266,327 1,408 2.10 173,577 374 0.86
Certificates of deposit............ 274,303 2,319 3.35 186,596 1,072 2.29
--------- -------- ---- -------- -------- ----
Total interest-bearing
deposits .................... 604,999 3,969 2.60 400,218 1,494 1.48
Securities sold under agreements to
repurchase......................... 63,337 400 2.50 25,953 33 0.51
Federal funds purchased and other.... - - - 1,871 7 4.45
Federal Home Loan Bank advances...... 41,456 336 3.22 49,000 267 2.16
Subordinated debt.................... 13,896 218 6.22 10,310 115 4.43
--------- -------- ---- -------- -------- ----
Total interest-bearing
liabilities .................... 723,688 954 3.19 487,352 422 1.93
Non-interest bearing demand deposits... 125,447 - - 85,082 - -
--------- -------- ---- -------- -------- ----
Total deposits and interest-bearing
liabilities..................... 849,135 4,923 2.30 572,434 1,916 1.33
-------- ---- -------- ----
Other liabilities...................... 3,328 2,392
Stockholders' equity................... 62,338 43,868
--------- --------
Total liabilities and stockholders'
equity ........................... $ 914,801 $618,694
========= ========
Net interest income.................... $ 7,456 $ 5,298
======== ========
Net interest spread (2).............. 3.02% 3.33%
Net interest margin (3).............. 3.48% 3.62%
- ------------------
(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.
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS - UNAUDITED
NINE MONTHS ENDED NINE MONTHS ENDED
(DOLLARS IN THOUSANDS) SEPTEMBER 30, 2005 SEPTEMBER 30, 2004
------------------------------------ ------------------------------------
AVERAGE YIELD/ AVERAGE YIELD/
BALANCES INTEREST RATE(1) BALANCES INTEREST RATE(1)
-------- -------- ------- -------- -------- -------
Interest-earning assets:
Loans ................................ $537,842 $ 24,428 6.08% $348,180 $ 13,625 5.23%
Securities:
Taxable ............................ 194,993 6,401 4.39 156,000 4,946 4.24
Tax-exempt ......................... 28,657 758 4.67 11,572 310 4.61
Federal funds sold ................... 19,311 436 3.02 14,527 110 1.01
Other ................................ 3,694 166 6.92 2,786 115 6.22
-------- -------- ---- -------- -------- ----
Total interest-earning assets ...... 784,497 32,189 5.53 533,065 19,105 4.82
-------- ---- -------- ----
Noninterest-earning assets ............. 46,846 27,732
-------- --------
Total assets ......................... $831,343 $560,797
======== ========
Interest-bearing liabilities:
Interest-bearing deposits:
Interest checking .................. $ 59,919 403 0.90 $ 36,886 134 0.48
Savings and money market ........... 235,697 3,012 1.71 158,507 956 0.81
Certificates of deposit ............ 247,773 5,585 3.01 167,870 2,903 2.23
-------- -------- ---- -------- -------- ----
Total interest-bearing deposits.. 543,389 9,000 2.21 369,505 3,993 1.44
Securities sold under agreements to
repurchase ......................... 50,456 803 2.13 19,448 54 0.37
Federal funds purchased and other .... 1,796 45 3.31 2,113 21 1.33
Federal Home Loan Bank advances ...... 48,880 1,084 2.97 45,705 743 2.17
Subordinated debt .................... 11,505 506 5.89 10,310 308 3.99
-------- -------- ---- -------- -------- ----
Total interest-bearing liabilities.. 656,027 2,438 2.89 447,081 1,126 1.53
Non-interest bearing demand deposits ... 112,771 - - 73,116 - -
-------- -------- ---- -------- -------- ----
Total deposits and interest-bearing
liabilities ................... 768,798 11,438 1.99 520,197 5,119 1.31
-------- ---- -------- ----
Other liabilities ...................... 2,436 2,228
Stockholders' equity ................... 60,109 38,372
-------- --------
Total liabilities and stockholders'
equity ............................ $831,343 $560,797
======== ========
Net interest income..................... $ 20,751 $ 13,986
======== ========
Net interest spread (2)............... 3.20% 3.29%
Net interest margin (3)............... 3.60% 3.55%
- ------------
(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.
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED
(DOLLARS IN THOUSANDS, SEPT JUNE MAR DEC SEPT JUNE
EXCEPT PER SHARE DATA) 2005 2005 2005 2004 2004 2004
---- ---- ---- ---- ---- ----
BALANCE SHEET DATA, AT QUARTER END:
Total assets ........................ $ 978,539 872,076 787,436 727,139 685,408 586,313
Total loans ......................... 604,225 556,786 516,733 472,362 434,909 355,267
Allowance for loan losses ........... (7,231) (6,659) (6,198) (5,650) (5,434) (4,466)
Securities .......................... 246,914 227,938 202,223 208,170 191,323 165,528
Noninterest-bearing deposits ........ 154,440 142,794 119,212 114,318 107,469 82,491
Total deposits ...................... 788,628 689,919 619,021 570,727 541,859 467,321
Securities sold under agreements to
repurchase ........................ 67,652 57,677 46,388 31,928 22,958 23,772
Advances from FHLB .................. 24,500 49,500 51,500 53,500 51,500 47,500
Subordinated debt ................... 30,929 10,310 10,310 10,310 10,310 10,310
Total stockholders' equity .......... 62,883 61,501 57,657 57,880 56,668 35,125
BALANCE SHEET DATA, QUARTERLY AVERAGES:
Total assets ........................ $ 914,801 822,344 756,884 707,131 618,694 555,437
Total loans ......................... 587,902 537,313 488,313 448,611 392,220 343,974
Securities .......................... 240,525 222,172 208,253 203,728 183,721 169,192
Total earning assets ................ 866,706 778,094 708,690 670,839 589,554 527,070
Noninterest-bearing deposits ........ 125,447 111,937 100,929 95,123 85,082 72,812
Total deposits ...................... 730,446 640,676 597,358 562,936 485,300 439,964
Securities sold under
agreements to repurchase ......... 63,337 49,883 38,149 23,520 25,953 17,523
Advances from FHLB .................. 41,456 54,951 50,233 48,022 49,000 45,736
Subordinated debt ................... 13,896 10,310 10,310 10,310 10,310 10,310
Total stockholders' equity .......... 62,338 59,569 58,420 57,721 43,868 35,542
STATEMENT OF OPERATIONS DATA,
FOR THE THREE MONTHS ENDED:
Interest income ..................... $ 12,379 10,544 9,270 8,574 7,214 6,225
Interest expense .................... 4,923 3,749 2,767 2,296 1,915 1,689
---------- --------- --------- --------- --------- ---------
Net interest income ............... 7,456 6,795 6,503 6,278 5,299 4,536
Provision for loan losses ........... 366 483 601 1,134 1,012 449
---------- --------- --------- --------- --------- ---------
Net interest income after
provision for loan losses ......... 7,089 6,312 5,902 5,144 4,287 4,087
Noninterest income .................. 1,299 1,413 1,178 1,246 1,593 1,067
Noninterest expense ................. 5,521 4,963 4,581 4,127 3,919 3,499
---------- --------- --------- --------- --------- ---------
Income before taxes ................ 2,867 2,762 2,499 2,263 1,961 1,655
Income tax expense ................. 789 803 719 574 570 487
---------- --------- --------- --------- --------- ---------
Net income........................ $ 2,078 1,959 1,780 1,689 1,391 1,168
========== ========= ========= ========= ========= =========
PER SHARE DATA:
Earnings - basic..................... $ 0.25 0.23 0.21 0.20 0.18 0.16
Earnings - diluted................... $ 0.22 0.21 0.19 0.18 0.16 0.14
Book value at quarter end (1)........ $ 7.45 7.32 6.87 6.90 6.75 4.74
Weighted avg. shares - basic ........ 8,417,980 8,401,198 8,389,256 8,389,232 7,832,512 7,397,920
Weighted avg. shares - diluted ...... 9,495,187 9,434,260 9,437,183 9,448,696 8,857,015 8,279,114
Common shares outstanding ........... 8,424,217 8,405,891 8,391,371 8,389,232 8,389,232 7,404,586
CAPITAL RATIOS (2):
Equity to total assets .............. 6.4% 7.1% 7.3% 8.0% 8.3% 6.0%
Leverage ............................ 10.4% 8.8% 9.2% 9.7% 10.9% 8.4%
Tier one risk-based ................. 12.1% 10.0% 10.6% 11.7% 12.4% 10.2%
Total risk-based .................... 13.0% 10.9% 11.5% 12.7% 13.4% 11.2%
INVESTOR INFORMATION:
Closing sales price.................. $ 25.18 24.00 20.72 22.62 21.50 18.30
High sales price during quarter...... $ 26.65 25.14 24.05 25.10 23.70 18.67
Low sales price during quarter....... $ 22.67 20.50 20.72 22.05 17.70 13.50
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED
(DOLLARS IN THOUSANDS, SEPT JUNE MAR DEC SEPT JUNE
EXCEPT PER SHARE DATA) 2005 2005 2005 2004 2004 2004
---- ---- ---- ---- ---- ----
PERFORMANCE RATIOS AND OTHER DATA:
Return on avg. assets (3) ............. 0.90% 0.96% 0.96% 0.95% 0.89% 0.82%
Return on avg. equity (3) ............. 13.23% 13.21% 12.48% 11.61% 12.58% 12.83%
Net interest margin (4) ............... 3.48% 3.57% 3.78% 3.78% 3.62% 3.51%
Noninterest income to total
revenue (5) ........................ 14.8% 17.2% 15.3% 16.6% 23.1% 19.0%
Noninterest income to avg. assets (3).. 0.56% 0.69% 0.62% 0.70% 1.03% 0.77%
Noninterest exp. to avg. assets (3) ... 2.39% 2.42% 2.42% 2.33% 2.53% 2.52%
Efficiency ratio (6) .................. 63.1% 60.4% 59.6% 54.9% 56.9% 62.4%
Avg. loans to average deposits ........ 80.5% 83.9% 81.7% 79.7% 80.8% 78.2%
Securities to total assets ............ 25.2% 26.1% 25.7% 29.1% 27.9% 28.2%
Average interest-earning assets to
average interest-bearing
liabilities ........................ 119.8% 120.0% 119.0% 121.9% 121.0% 118.3%
Brokered time deposits to
total deposits ..................... 7.2% 8.6% 8.3% 7.6% 8.2% 8.8%
SELECTED GROWTH RATES, LAST
TWELVE MONTHS (7):
Total average assets .................. 47.9% 48.6% 48.9% 55.6% 52.3% 52.0%
Average loans ......................... 49.9% 56.2% 59.3% 58.3% 45.4% 40.2%
Total average deposits ................ 50.5% 46.3% 48.4% 58.2% 54.4% 58.5%
Total revenue (5) ..................... 27.0% 46.6% 45.4% 58.6% 58.1% 48.2%
Total noninterest expense ............. 40.9% 41.9% 38.0% 29.1% 38.4% 34.9%
Diluted earnings per share ............ 37.5% 50.0% 46.2% 68.3% 58.5% 104.0%
ASSET QUALITY INFORMATION AND RATIOS:
Nonaccrual loans and other
real estate .......... ............. $ 61 596 596 561 1,332 1,339
Past due loans over 90 days and
still accruing interest ............ $ 8 66 47 146 95 35
Net loan charge-offs (recoveries) (8).. $ (206) 22 53 918 43 25
Allowance for loan
losses to total loans .............. 1.20% 1.20% 1.20% 1.20% 1.25% 1.26%
As a percentage of total loans and ORE:
Past due loans over 30 days ..... 0.10% 0.21% 0.27% 0.37% 0.69% 0.21%
Nonperforming assets ............ 0.01% 0.11% 0.12% 0.12% 0.31% 0.38%
Potential problem loans (9) ..... 0.37% 0.18% 0.08% 0.02% 0.08% 0.11%
Annualized net loan charge-offs
(recoveries) to avg. loans (10)..... (0.03)% 0.02% 0.04% 0.27% 0.04% 0.03%
Avg. commercial loan internal risk
ratings (9) ........................ 3.9 3.8 3.8 3.9 3.8 3.9
Avg. loan account balances (11) ....... $ 172 171 162 161 157 149
INTEREST RATES AND YIELDS:
Loans ................................. 6.40% 5.98% 5.78% 5.58% 5.25% 5.27%
Securities ............................ 4.40% 4.42% 4.44% 4.34% 4.33% 4.00%
Federal funds sold and other .......... 3.72% 3.90% 3.41% 2.72% 2.50% 2.20%
Total earning assets .................. 5.72% 5.48% 5.34% 5.12% 4.90% 4.78%
Total deposits, including
non-interest bearing................ 2.16% 1.80% 1.46% 1.30% 1.22% 1.21%
Securities sold under
agreements to repurchase............ 2.50% 2.04% 1.60% 0.85% 0.51% 0.26%
Federal funds purchased and
FHLB advances....................... 3.22% 3.12% 2.61% 2.34% 2.14% 2.08%
Subordinated debt...................... 6.22% 5.98% 5.32% 4.77% 4.58% 3.54%
Total deposits and other
interest-bearing liabilities........ 2.30% 1.98% 1.61% 1.42% 1.33% 1.31%
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED
(DOLLARS IN THOUSANDS, SEPT JUNE MAR DEC SEPT JUNE
EXCEPT PER SHARE DATA) 2005 2005 2005 2004 2004 2004
---- ---- ---- ---- ---- ----
OTHER INFORMATION:
Gains (losses) on sale of loans and
loan participations sold:
Mortgage loan originations:
Gross loans originated ............... $ 31,066 27,239 21,360 17,584 22,382 16,061
Gross fees (11) ...................... $ 533 419 364 378 419 266
Gross fees as a percentage of
mortgage loans originated .......... 1.72% 1.54% 1.70% 2.14% 1.87% 1.66%
Loan participations sold ............... $ (26) 152 (15) 56 219 116
Gains on sales of investment securities, net $ - - 114 - 109 -
Brokerage account assets, at
quarter-end(13) ...................... $ 428,000 419,000 400,000 398,000 368,000 344,000
Floating rate loans as a
percentage of loans (14) ............. 56.4% 55.9% 55.5% 56.0% 55.8% 52.5%
Balance of loan participations sold to other
banks and serviced by Pinnacle, at
quarter end .......................... $ 55,887 64,474 58,844 57,678 53,343 58,530
Total core deposits
to total funding (15) ................ 60.7% 57.3% 58.7% 60.8% 61.8% 59.8%
Total assets per full-time equivalent
employee ............................. $ 6,396 5,952 5,988 5,960 5,909 5,776
Annualized revenues per full-time equivalent
employee ............................. $ 228.9 227.0 233.6 246.7 235.6 220.8
Number of employees (full-time
equivalent) .......................... 153.0 146.5 131.5 122.0 116.0 101.5
Associate retention rate (16) .............. 95.5% 96.6% 99.2% 98.4% 97.4% 97.5%
- -----------
(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 the company'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 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.