EXHIBIT 99.1
[PINNACLE FINANCIAL PARTNERS LOGO]
FOR IMMEDIATE RELEASE
MEDIA CONTACT: Vicki Kessler 615-320-7532
FINANCIAL CONTACT: Harold Carpenter 615-744-3742
WEBSITE: www.pnfp.com
PINNACLE FINANCIAL EXCEEDS $1 BILLION IN
TOTAL ASSETS AND REPORTS RECORD EARNINGS
ASSETS GROW TO $1.02 BILLION
NASHVILLE, Tenn., Jan. 17, 2006 - Pinnacle Financial Partners, Inc. (Nasdaq:
PNFP) today reported record earnings, superior credit quality and achievement of
its asset target of $1 billion as of and for the year ended Dec. 31, 2005.
FOURTH QUARTER 2005 HIGHLIGHTS:
o Record earnings growth:
o Record net income for the fourth quarter of 2005 of
$2.24 million, up 32.5 percent from the prior year's
fourth quarter of $1.69 million. Net income for the year
ended Dec. 31, 2005 was $8.06 million, up 51.4 percent
from the prior year's $5.32 million.
o Record diluted earnings per share for the fourth quarter
of 2005 of $0.24, up 33.3 percent from the prior year's
fourth quarter of $0.18. Diluted earnings per share for
the year ended Dec. 31, 2005 was $0.85, up 39.3 percent
from the prior year's $0.61.
o Revenue (the sum of net interest income and noninterest
income) for the quarter ended Dec. 31, 2005 amounted to
$9.79 million, compared to $7.52 million for the same
quarter of last year, an increase of 30.1 percent and
compared to $8.76 million for the third quarter of 2005,
an annualized increase of 47 percent over the previous
quarter.
o Superior credit quality:
o Past due loans over 30 days of only 0.58 percent of
total loans with no loan over 90 days past due at Dec.
31, 2005
o Nonperforming assets of only 0.07 percent of total loans
Pinnacle Reports Continued Growth - 2 of 7
o Strong balance sheet growth:
o Average loans up 41.5 percent from the same period last
year
o Average total deposits up 41.5 percent from the same
period last year, with average noninterest bearing
demand deposit accounts up 43.1 percent from the same
period last year
"Achieving $1 billion in assets through organic growth in five years is
remarkable," said M. Terry Turner, president and CEO of Pinnacle Financial
Partners. "In my view, this can largely be attributed to our philosophy of
hiring a large group of the most respected and experienced bankers and brokers
in our market."
FINANCIAL PERFORMANCE AND BALANCE SHEET GROWTH
o Return on average assets for the quarter ended Dec. 31, 2005, was
0.90 percent, compared to 0.95 percent for the same quarter last
year.
o Return on average stockholders' equity for the quarter ended Dec.
31, 2005, was 14.05 percent, compared to 11.61 percent for the same
quarter last year.
Total assets grew to $1.017 billion as of Dec. 31, 2005, up $290 million or
39.9 percent from the $727 million reported at Dec. 31, 2004. Loans as of Dec.
31, 2005, were $648 million, up $176 million or 37.2 percent from the $472
million reported at Dec. 31, 2004. Total deposits increased to $810 million at
Dec. 31, 2005, or 42.0 percent higher than the $571 million reported a year ago.
REVENUE
o Net interest income for the quarter ended Dec. 31, 2005, was $8.29
million compared to $6.28 million for the quarter ended Dec. 31,
2004, an increase of 32.0 percent.
o Net interest margin for the fourth quarter of 2005 was
3.58 percent, compared to a net interest margin of 3.78
percent reported during the fourth quarter in 2004 and
3.48 percent for the third quarter of 2005.
o Percentage of daily floating rate loans to total loans
was 53.5 percent at Dec. 31, 2005.
o Noninterest income for the quarter ended Dec. 31, 2005, was
$1,501,000, a 20.5 percent increase over the $1,246,000 recorded
during the same quarter in 2004.
Pinnacle Reports Continued Growth - 3 of 7
"As we move into a period where some are concerned about our industry's
ability to grow top-line revenues, we are encouraged by the acceleration in our
revenue growth rate during the fourth quarter of 2005 as well as our sales
pipelines for the first quarter of 2006," said Mr. Turner.
"Our net interest margin improved from the previous quarter," said Harold
Carpenter, chief financial officer of Pinnacle Financial Partners. "Our internal
models continue to indicate that our balance sheet remains structurally asset
sensitive."
"Net loan growth for the quarter ended December 31, 2005 was approximately
$44 million, which was consistent with previous quarters. Based on current sales
pipelines, we anticipate another strong quarter of loan growth in the first
quarter of 2006. Our net interest income was approximately $8.29 million for the
fourth quarter, compared to $7.46 million in the third quarter of 2005 and
compared to $6.28 million in the same period last year. This represents a year
over year growth of 32.0 percent in net interest income which we directly
attribute to our associates' focus on growth in high quality customer
relationships," said Harold Carpenter.
At Dec. 31, 2005, the ratio of investment securities to total assets declined
to 27.4 percent from the 29.1 percent reported a year ago. Pinnacle anticipates
that this ratio will approximate 25.0 to 28.0 percent during 2006.
Noninterest income of $1,501,000 during the fourth quarter of 2005
represented approximately 15.3 percent of total revenues, compared to 16.6
percent for the same quarter in 2004.
NONINTEREST EXPENSE
o Noninterest expense for the quarter ended Dec. 31, 2005, was $5.97
million, compared to $4.13 million for the same quarter in 2004 and
compared to $5.52 million for the quarter ended Sept. 30, 2005.
o Efficiency ratio (noninterest expense divided by net interest income
and noninterest income) was 61.0 percent during the fourth quarter
of 2005, compared to 54.9 percent during the fourth quarter of 2004
and compared to 63.1 percent for the quarter ended Sept. 30, 2005.
Compensation and employee benefits expense increased approximately 61.6
percent over the same quarter last year due primarily to an increase in
personnel and incentive expense. At Dec. 31, 2005, Pinnacle employed 156.5
full-time equivalent personnel compared to 122.0 at Dec. 31, 2004, an increase
of approximately 28.3 percent. Equipment
Pinnacle Reports Continued Growth - 4 of 7
and occupancy expenses increased 35.6 percent over the same period last year due
in large part to increased square footage for operating units at the firm's
downtown Nashville location and additional branch offices, including the
Franklin location in Williamson County and the Hendersonville location in Sumner
County.
CREDIT QUALITY
o Provision for loan losses was $702,000 for the fourth quarter of
2005, compared to $1,134,000 in the fourth quarter in 2004. The
following impacted the amount of the provision for loan losses in
the fourth quarter of 2005 when compared to the same period in 2004:
o Loan growth in the fourth quarter of 2005 of $44
million, compared to loan growth of $37 million in the
fourth quarter of 2004.
o During the fourth quarter of 2005, the firm recorded net
charge-offs of $76,000 compared to net charge-offs of
$918,000 during the same period in 2004.
o Allowance for loan losses represented 1.21 percent of total loans at
Dec. 31, 2005, compared to 1.20 percent at Dec. 31, 2004.
o Due to a significant recovery received during the third
quarter of 2005, the firm's recoveries have exceeded
gross charge-offs such that on an annualized basis, the
net recovered position approximates 0.01 percent of
average loans for 2005 compared to a net charge-off
position of 0.27 percent for 2004.
o Nonperforming assets as a percentage of total loans and
other real estate decreased to 0.07 percent at Dec. 31,
2005, from 0.12 percent at Dec. 31, 2004.
"We remain extremely pleased with the credit quality of our firm," said
Turner. "Throughout this year, our 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."
Pinnacle Reports Continued Growth - 5 of 7
OTHER 2005 DEVELOPMENTS
o Pinnacle continued to focus on treasury management services and
growth in demand deposit and customer securities sold under
agreements to repurchase accounts. For the quarter ended Dec. 31,
2005, average noninterest-bearing deposit balances averaged $136
million compared to $95 million for the same quarter last year, an
increase of 43 percent. Securities sold under repurchase agreements,
a low-cost funding source associated with treasury management
activities, also averaged $68 million during the fourth quarter of
2005 compared to $24 million for the same quarter in 2004, an
increase of 189 percent.
o Pinnacle concluded the offering of $20 million in trust preferred
securities to provide regulatory capital to support Pinnacle's
continued rapid growth.
o Pinnacle grew to 159 associates (156.5 full-time equivalents) at
Dec. 31, 2005, with 111 working in client contact areas and 48 in
operational and corporate areas. This represents an increase of 37
employees from the 122 employees as of Dec. 31, 2004. Pinnacle's
annual retention rate was 94.3 percent at Dec. 31, 2005,
representing a very high level of engagement by Pinnacle's
associates.
o Pinnacle was named as the "Best Place to Work" among Middle
Tennessee's large companies. This marks the third consecutive year
Pinnacle received top honors in the annual Nashville Business
Journal award program.
o Pinnacle received the 2005 Community Partnership Award for
affordable housing and community investment achievement from the
Federal Home Loan Bank of Cincinnati. The housing award is presented
annually to one of 740 FHLB-Cincinnati members in Tennessee,
Kentucky, and Ohio. The award recipient exemplifies outstanding
achievement through the FHLB-Cincinnati's affordable housing
programs and investment in its service community.
o Pinnacle is planning to open 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, Mary Smith, a 16-year veteran from a large
regional bank holding company to lead Pinnacle's efforts at that
location.
Pinnacle Reports Continued Growth - 6 of 7
PROGRESS OF CAVALRY ACQUISITION
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, the shareholders of both Pinnacle and Cavalry voted
to approve the merger which remains subject to receipt of the required
regulatory approvals. Management of both firms believe that regulatory approval
will be received before the end of the first quarter of 2006. Pinnacle believes
it will incur approximately $1 million in pre-tax merger-related charges in the
first and second quarters of 2006.
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 first quarter 2006 diluted earnings per
share will approximate $0.22 to $0.25, exclusive of merger-related charges.
Additionally, based on anticipated growth trends and future investments in the
franchise, Pinnacle estimates its 2006 earnings will approximate $1.14 to $1.22
per fully diluted share, exclusive of merger-related charges. These estimates
anticipate the Cavalry merger closing before the end of the first quarter of
2006.
This estimate also includes an estimate for compensation expense 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 failure of the merger with Cavalry to be consummated in the first
quarter of 2006 or at all, 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
Pinnacle Reports Continued Growth - 7 of 7
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 of Davidson County; 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 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 timely consummation of its merger with Cavalry Bancorp and the
successful integration of Cavalry's operations with Pinnacle's 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 merger of Pinnacle and Cavalry. The Form S-4
contains a joint proxy statement/prospectus and other documents which disclose
important information about Pinnacle, Cavalry, the merger and related matters.
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.
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
DECEMBER 31, DECEMBER 31,
2005 2004
---------------------------------
ASSETS
Cash and noninterest-bearing due from banks..................... $ 25,935,948 $ 15,243,796
Interest-bearing due from banks................................. 839,960 379,047
Federal funds sold.............................................. 31,878,362 11,122,944
-------------- ---------------
Cash and cash equivalents.................................. 58,654,270 26,745,787
Securities available-for-sale, at fair value ................... 251,749,094 180,573,820
Securities held-to-maturity (fair value of $26,546,297
and $27,134,913 at December 31,2005 and December
31, 2004, respectively).................................... 27,331,251 27,596,159
Mortgage loans held-for-sale.................................... 4,874,323 1,634,900
Loans........................................................... 648,024,032 472,362,219
Less allowance for loan losses.................................. (7,857,774) (5,650,014)
-------------- ---------------
Loans, net................................................. 640,166,258 466,712,205
Premises and equipment, net..................................... 12,915,595 11,130,671
Investments in unconsolidated subsidiaries and other entities... 5,532,326 3,907,807
Accrued interest receivable..................................... 4,870,197 2,639,548
Other assets ................................................... 10,678,416 6,198,553
-------------- ---------------
Total assets........................................... $1,016,771,730 $ 727,139,450
============== ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing demand................................. $ 155,811,214 $ 114,318,024
Interest-bearing demand.................................... 72,520,757 51,751,320
Savings and money market accounts.......................... 304,161,625 199,058,240
Time....................................................... 277,657,129 205,599,425
-------------- ---------------
Total deposits......................................... 810,150,725 570,727,009
Securities sold under agreements to repurchase.................. 65,834,232 31,927,860
Federal Home Loan Bank advances................................. 41,500,000 53,500,000
Subordinated debt............................................... 30,929,000 10,310,000
Accrued interest payable........................................ 1,884,596 769,300
Other liabilities............................................... 3,036,752 2,025,106
-------------- ---------------
Total liabilities...................................... 953,335,305 669,259,275
Stockholders' equity .......................................... 63,436,425 57,880,175
-------------- ---------------
Total liabilities and stockholders' equity............. $1,016,771,730 $ 727,139,450
============== ===============
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
THREE MONTHS ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
2005 2004 2005 2004
--------------------------------------------------------
INTEREST INCOME:
Loans, including fees.................................... $10,738,850 $ 6,285,348 $ 35,166,671 $ 19,909,900
Securities, available-for-sale
Taxable............................................. 2,684,597 1,989,532 9,086,134 6,935,902
Tax-exempt.......................................... 356,914 180,992 1,115,486 490,757
Federal funds sold and other............................. 337,901 117,826 939,369 342,470
----------- ---------- ------------- -------------
Total interest income................................ 14,118,262 8,573,698 46,307,660 27,679,029
----------- ---------- ------------- -------------
INTEREST EXPENSE:
Deposits................................................. 4,690,811 1,836,505 13,690,649 5,829,395
Securities sold under agreements to repurchase........... 512,008 49,995 1,315,122 104,085
Federal funds purchased and other borrowings............. 628,345 409,199 2,263,851 1,481,072
----------- ---------- ------------- -------------
Total interest expense............................... 5,831,164 2,295,699 17,269,622 7,414,552
----------- ---------- ------------- -------------
Net interest income.................................. 8,287,098 6,277,999 29,038,038 20,264,477
PROVISION FOR LOAN LOSSES..................................... 701,722 1,134,101 2,151,966 2,948,423
----------- ---------- ------------- -------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES........... 7,585,376 5,143,898 26,886,072 17,316,054
NONINTEREST INCOME:
Service charges on deposit accounts...................... 245,256 249,426 977,386 955,851
Investment services...................................... 432,526 398,180 1,835,757 1,656,743
Gain on loans and loan participations sold (1) (2)....... 348,504 294,710 1,247,898 1,628,584
Gain on sale of investment securities, net............... - - 114,410 357,196
Other noninterest income................................. 474,435 304,229 1,218,123 734,449
----------- ---------- ------------- -------------
Total noninterest income............................. 1,500,721 1,246,545 5,393,574 5,332,823
----------- ---------- ------------- -------------
NONINTEREST EXPENSE:
Compensation and employee benefits (2)................... 3,639,067 2,252,067 13,130,779 9,400,743
Equipment and occupancy.................................. 1,053,969 777,221 3,766,593 2,405,613
Marketing and other business development................. 218,919 143,998 698,232 606,841
Postage and supplies..................................... 164,344 114,948 618,060 492,254
Other noninterest expense................................ 890,788 838,824 2,818,352 2,252,233
----------- ---------- ------------- -------------
Total noninterest expense............................ 5,967,087 4,127,058 21,032,016 15,157,684
----------- ---------- ------------- -------------
INCOME BEFORE INCOME TAXES.................................... 3,119,010 2,263,385 11,247,630 7,491,193
Income tax expense....................................... 880,907 574,505 3,192,362 2,172,283
----------- ---------- ------------- -------------
NET INCOME.................................................... $ 2,238,103 $ 1,688,880 $ 8,055,268 $ 5,318,910
=========== ========== ============= =============
PER SHARE INFORMATION:
Basic net income per common share........................ $ 0.27 $ 0.20 $ 0.96 $ 0.69
=========== ========== ============= =============
Diluted net income per common share...................... $ 0.24 $ 0.18 $ 0.85 $ 0.61
=========== ========== ============= =============
Weighted average shares outstanding:
Basic............................................... 8,425,717 8,389,232 8,408,663 7,750,943
Diluted............................................. 9,490,447 9,448,696 9,464,500 8,698,139
- ---------
(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
DECEMBER 31, 2005 DECEMBER 31, 2004
AVERAGE YIELD/ AVERAGE YIELD/
(DOLLARS IN THOUSANDS) BALANCES INTEREST RATE(1) BALANCES INTEREST RATE(1)
- ----------------------------------------------------------------------------------------------------------
Interest-earning assets:
Loans.................................. $ 634,715 $ 10,739 6.72 % $ 448,611 $ 6,285 5.58 %
Securities:
Taxable.............................. 233,148 2,685 4.57 182,850 1,990 4.33
Tax-exempt........................... 40,339 357 4.63 20,879 181 4.43
Federal funds sold..................... 24,926 246 3.92 15,283 72 1.87
Other.................................. 4,229 91 9.67 3,216 45 6.34
--------- -------- ---- ----------- --------- ----
Total interest-earning assets........ 937,357 14,118 6.03 670,839 8,574 5.12
-------- ---- --------- ----
Noninterest-earning assets................ 48,749 36,292
--------- -----------
Total assets........................... $ 986,106 $ 707,131
========= ===========
Interest-bearing liabilities:
Interest-bearing deposits:
Interest checking.................... $ 80,717 256 1.26 $ 43,518 57 0.52
Savings and money market............. 299,025 1,848 2.45 217,748 564 1.03
Certificates of deposit.............. 280,906 2,587 3.65 206,547 1,215 2.34
--------- -------- ---- ----------- --------- ----
Total interest-bearing deposits... 660,648 4,691 2.82 467,813 1,836 1.56
Securities sold under agreements to
repurchase........................... 67,874 512 2.99 23,520 50 0.85
Federal funds purchased and other...... 1,038 12 4.54 483 3 2.73
Federal Home Loan Bank advances........ 22,663 137 2.41 48,022 282 2.34
Subordinated debt...................... 30,929 479 6.14 10,310 124 4.77
--------- -------- ---- ----------- --------- ----
Total interest-bearing liabilities... 783,152 5,831 2.95 550,148 2,296 1.66
Non-interest bearing demand deposits...... 136,143 - - 95,123 - -
--------- -------- ---- ----------- --------- ----
Total deposits and interest-bearing
liabilities..................... 919,295 5,831 2.52 645,271 2,296 1.42
-------- ---- --------- ----
Other liabilities......................... 3,612 4,139
Stockholders' equity...................... 63,199 57,721
--------- -----------
Total liabilities and stockholders'
equity................................. $ 986,106 $ 707,131
========= ===========
Net interest income....................... $ 8,287 $ 6,278
======== =========
Net interest spread (2)................ 3.08% 3.46%
Net interest margin (3)................ 3.58% 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.
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS - UNAUDITED
YEAR ENDED YEAR ENDED
DECEMBER 31, 2005 DECEMBER 31, 2004
AVERAGE YIELD/ AVERAGE YIELD/
(DOLLARS IN THOUSANDS) BALANCES INTEREST RATE(1) BALANCES INTEREST RATE(1)
- ------------------------------------------------------------------------------------------------------------
Interest-earning assets:
Loans................................... $ 562,061 $ 35,167 6.26% 373,287 $ 19,910 5.34%
Securities:
Taxable............................... 204,532 9,086 4.44 162,712 6,936 4.26
Tax-exempt............................ 31,578 1,116 4.66 13,899 491 4.55
Federal funds sold...................... 20,714 682 3.29 14,716 182 1.23
Other................................... 3,827 257 7.69 2,894 160 6.26
--------- -------- ---- ----------- --------- ----
Total interest-earning assets......... 822,712 46,308 5.68 567,508 27,679 4.91
-------- ---- --------- ----
Noninterest-earning assets................. 47,322 29,872
--------- -----------
Total assets............................ $ 870,034 $ 597,380
========= ===========
Interest-bearing liabilities:
Interest-bearing deposits:
Interest checking..................... $ 65,119 659 1.01 $ 38,544 191 0.50
Savings and money market.............. 250,136 4,860 1.94 173,318 1,520 0.88
Certificates of deposit............... 256,056 8,171 3.19 182,221 4,118 2.26
--------- -------- ---- ----------- --------- ----
Total interest-bearing deposits.. 571,311 13,690 2.40 394,083 5,829 1.48
Securities sold under agreements to
repurchase............................ 54,811 1,315 2.40 20,466 104 0.51
Federal funds purchased and other....... 1,607 57 3.51 1,705 24 1.43
Federal Home Loan Bank advances......... 42,326 1,222 2.89 46,284 1,027 2.22
Subordinated debt....................... 16,361 986 6.02 10,310 431 4.18
--------- -------- ---- ----------- --------- ----
Total interest-bearing liabilities.... 686,416 17,270 2.52 472,848 7,415 1.57
Non-interest bearing demand deposits....... 120,007 - - 78,616 - -
--------- -------- ---- ----------- --------- ----
Total deposits and interest-bearing
liabilities...................... 806,423 17,270 2.14 551,464 7,415 1.34
-------- ---- --------- ----
Other liabilities.......................... 2,730 2,707
Stockholders' equity....................... 60,881 43,209
--------- -----------
Total liabilities and stockholders'
equity.................................. $ 870,034 $ 597,380
========= ===========
Net interest income........................ $ 29,038 $ 20,264
======== =========
Net interest spread (2)................. 3.16% 3.34%
Net interest margin (3)................. 3.60% 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 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, DEC SEPT JUNE MAR DEC SEPT
EXCEPT PER SHARE DATA) 2005 2005 2005 2005 2004 2004
- ----------------------------------------------------------------------------------------------------------
BALANCE SHEET DATA, AT QUARTER END:
Total assets......................... $1,016,772 978,539 872,076 787,436 727,139 685,408
Total loans.......................... 648,024 604,225 556,786 516,733 472,362 434,909
Allowance for loan losses............ (7,858) (7,231) (6,659) (6,198) (5,650) (5,434)
Securities........................... 279,080 246,914 227,938 202,223 208,170 191,323
Noninterest-bearing deposits......... 155,811 154,440 142,794 119,212 114,318 107,469
Total deposits....................... 810,151 788,628 689,919 619,021 570,727 541,859
Securities sold under agreements
to repurchase.................... 65,834 67,652 57,677 46,388 31,928 22,958
Advances from FHLB................... 41,500 24,500 49,500 51,500 53,500 51,500
Subordinated debt.................... 30,929 30,929 10,310 10,310 10,310 10,310
Total stockholders' equity........... 63,436 62,883 61,501 57,657 57,880 56,668
BALANCE SHEET DATA, QUARTERLY AVERAGES:
Total assets......................... $ 986,106 914,801 822,344 756,884 707,131 618,694
Total loans.......................... 634,175 587,902 537,313 488,313 448,611 392,220
Securities........................... 273,487 240,525 222,172 208,253 203,728 183,721
Total earning assets................. 937,357 866,706 778,094 708,690 670,839 589,554
Noninterest-bearing deposits......... 136,143 125,447 111,937 100,929 95,123 85,082
Total deposits....................... 796,792 730,446 640,676 597,358 562,936 485,300
Securities sold under agreements
to repurchase.................... 67,874 63,337 49,883 38,149 23,520 25,953
Advances from FHLB................... 22,663 41,456 54,951 50,233 48,022 49,000
Subordinated debt.................... 30,929 13,896 10,310 10,310 10,310 10,310
Total stockholders' equity........... 63,199 62,338 59,569 58,420 57,721 43,868
STATEMENT OF OPERATIONS DATA, FOR THE
THREE MONTHS ENDED:
Interest income...................... $ 14,118 12,379 10,544 9,270 8,574 7,214
Interest expense..................... 5,831 4,923 3,749 2,767 2,296 1,915
---------- --------- --------- --------- --------- ---------
Net interest income.............. 8,287 7,456 6,795 6,503 6,278 5,299
Provision for loan losses............ 702 366 483 601 1,134 1,012
---------- --------- --------- --------- --------- ---------
Net interest income after provision
for loan losses.................. 7,585 7,089 6,312 5,902 5,144 4,287
Noninterest income................... 1,501 1,299 1,413 1,178 1,246 1,593
Noninterest expense.................. 5,967 5,521 4,963 4,581 4,127 3,919
---------- --------- --------- --------- --------- ---------
Income before taxes............... 3,119 2,867 2,762 2,499 2,263 1,961
Income tax expense................ 881 789 803 719 574 570
---------- --------- --------- --------- --------- ---------
Net income...................... $ 2,238 2,078 1,959 1,780 1,689 1,391
========== ========= ========= ========= ========= =========
PER SHARE DATA:
Earnings - basic..................... $ 0.27 0.25 0.23 0.21 0.20 0.18
Earnings - diluted................... $ 0.24 0.22 0.21 0.19 0.18 0.16
Book value at quarter end (1)........ $ 7.53 7.47 7.32 6.87 6.90 6.75
Weighted avg. shares - basic......... 8,425,717 8,417,980 8,401,198 8,389,256 8,389,232 7,832,512
Weighted avg. shares - diluted....... 9,490,447 9,495,187 9,434,260 9,437,183 9,448,696 8,857,015
Common shares outstanding............ 8,426,551 8,424,217 8,405,891 8,391,371 8,389,232 8,389,232
CAPITAL RATIOS (2):
Equity to total assets............... 6.2% 6.4% 7.1% 7.3% 8.0% 8.3%
Leverage............................. 9.3% 9.3% 8.8% 9.2% 9.7% 10.9%
Tier one risk-based.................. 11.0% 10.9% 10.0% 10.6% 11.7% 12.4%
Total risk-based..................... 11.9% 13.0% 10.9% 11.5% 12.7% 13.4%
INVESTOR INFORMATION:
Closing sales price.................. $ 24.98 25.18 24.00 20.72 22.62 21.50
High sales price during quarter...... $ 25.96 26.65 25.14 24.05 25.10 23.70
Low sales price during quarter....... $ 21.70 22.67 20.50 20.72 22.05 17.70
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED
(DOLLARS IN THOUSANDS, DEC SEPT JUNE MAR DEC SEPT
EXCEPT PER SHARE DATA) 2005 2005 2005 2005 2004 2004
- -----------------------------------------------------------------------------------------------------
PERFORMANCE RATIOS AND OTHER DATA:
Return on avg. assets (3)................ 0.90% 0.90% 0.96% 0.96% 0.95% 0.89%
Return on avg. equity (3)................ 14.05% 13.23% 13.21% 12.48% 11.61% 12.58%
Net interest margin (4).................. 3.58% 3.48% 3.57% 3.78% 3.78% 3.62%
Noninterest income to total revenue (5).. 15.3% 14.8% 17.2% 15.3% 16.6% 23.1%
Noninterest income to avg. assets (3).... 0.60% 0.56% 0.69% 0.62% 0.70% 1.03%
Noninterest exp. to avg. assets (3)...... 2.40% 2.39% 2.42% 2.42% 2.33% 2.53%
Efficiency ratio (6)..................... 61.0% 63.1% 60.4% 59.6% 54.9% 56.9%
Avg. loans to average deposits........... 79.7% 80.5% 83.9% 81.7% 79.7% 80.8%
Securities to total assets............... 27.4% 25.2% 26.1% 25.7% 29.1% 27.9%
Average interest-earning assets to
average interest-bearing
liabilities...................... 117.7% 119.8% 120.0% 119.0% 121.9% 121.0%
Brokered time deposits to total
deposits.......................... 6.6% 7.2% 8.6% 8.3% 7.6% 8.2%
SELECTED GROWTH RATES, LAST TWELVE
MONTHS (7):
Total average assets..................... 39.5% 47.9% 48.6% 48.9% 55.6% 52.3%
Average loans............................ 41.5% 49.9% 56.2% 59.3% 58.3% 45.4%
Total average deposits................... 41.5% 50.5% 46.3% 48.4% 58.2% 54.4%
Total revenue (5)........................ 30.1% 27.0% 46.6% 45.4% 58.6% 58.1%
Total noninterest expense................ 44.6% 40.9% 41.9% 38.0% 29.1% 38.4%
Diluted earnings per share............... 33.3% 37.5% 50.0% 46.2% 68.3% 58.5%
ASSET QUALITY INFORMATION AND RATIOS:
Nonaccrual loans and other real estate... $ 460 61 596 596 561 1,332
Past due loans over 90 days and still
accruing interest................. $ - 8 66 47 146 95
Net loan charge-offs (recoveries) (8).... $ 76 (206) 22 53 918 43
Allowance for loan losses to total
loans............................. 1.21% 1.20% 1.20% 1.20% 1.20% 1.25%
As a percentage of total loans and ORE:
Past due loans over 30 days....... 0.58% 0.10% 0.21% 0.27% 0.37% 0.69%
Nonperforming assets.............. 0.07% 0.01% 0.11% 0.12% 0.12% 0.31%
Potential problem loans (9)....... 0.20% 0.37% 0.18% 0.08% 0.02% 0.08%
Annualized net loan charge-offs
(recoveries) to avg. loans (10)... (0.01)% (0.03)% 0.02% 0.04% 0.27% 0.04%
Avg. commercial loan internal risk
ratings (9)....................... 3.8 3.9 3.8 3.8 3.9 3.8
Avg. loan account balances (11).......... $ 180 172 171 162 161 157
INTEREST RATES AND YIELDS:
Loans.................................... 6.72% 6.40% 5.98% 5.78% 5.58% 5.25%
Securities............................... 4.58% 4.40% 4.42% 4.44% 4.34% 4.33%
Federal funds sold and other............. 4.83% 3.72% 3.90% 3.41% 2.72% 2.50%
Total earning assets..................... 6.03% 5.73% 5.48% 5.34% 5.12% 4.90%
Total deposits, including non-interest
bearing........................... 2.34% 2.16% 1.80% 1.46% 1.30% 1.22%
Securities sold under agreements to
repurchase........................ 2.99% 2.50% 2.04% 1.60% 0.85% 0.51%
Federal funds purchased and FHLB
advances.......................... 2.50% 3.22% 3.12% 2.61% 2.34% 2.14%
Subordinated debt........................ 6.14% 6.22% 5.98% 5.32% 4.77% 4.58%
Total deposits and other interest-
bearing liabilities............... 2.52% 2.30% 1.98% 1.61% 1.42% 1.33%
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED
(DOLLARS IN THOUSANDS, DEC SEPT JUNE MAR DEC SEPT
EXCEPT PER SHARE DATA) 2005 2005 2005 2005 2004 2004
- ---------------------------------------------------------------------------------------------------------
OTHER INFORMATION:
Gains (losses) on sale of loans and
loan participations sold:
Mortgage loan originations:
Gross loans originated.............. $ 31,792 31,066 27,239 21,360 17,584 22,382
Gross fees (12)..................... $ 485 533 419 364 378 419
Gross fees as a percentage of
mortgage loans originated.......... 1.53% 1.72% 1.54% 1.70% 2.14% 1.87%
Loan participations sold................. $ 41 (26) 152 (15) 56 219
Gains on sales of investment securities,
net................................. $ - - - 114 - 109
Brokerage account assets, at quarter-
end (13)............................ $441,000 428,000 419,000 400,000 398,000 368,000
Floating rate loans as a
percentage of loans (14)............ 53.5% 56.2% 55.9% 55.5% 56.0% 55.8%
Balance of loan participations sold
to other banks and serviced by
Pinnacle, at quarter end............ $ 62,722 55,887 64,474 58,844 57,678 53,343
Total core deposits to total funding (15).. 59.5% 60.7% 57.3% 58.7% 60.8% 61.8%
Total assets per full-time equivalent
employee............................ $ 6,498 6,396 5,952 5,988 5,960 5,909
Annualized revenues per full-time
equivalent employee................. $ 250.2 228.9 227.0 233.6 246.7 235.6
Number of employees (full-time
equivalent)......................... 156.5 153.0 146.5 131.5 122.0 116.0
Associate retention rate (16).............. 94.3% 95.5% 96.6% 99.2% 98.4% 97.4%
- --------
(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 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.