pnfplogoa15.jpg
FOR IMMEDIATE RELEASE

 
MEDIA CONTACT:
Joe Bass, 615-743-8219
 
FINANCIAL CONTACT:
Harold Carpenter, 615-744-3742
 
WEBSITE:
www.pnfp.com

PNFP REPORTS DILUTED EPS OF $1.21, ROAA OF 1.54 PERCENT AND ROTCE OF 18.44 PERCENT FOR 3Q 2018
Year-over-year diluted EPS growth rate of 38.6 percent (34.7 percent, excluding merger-related charges)

NASHVILLE, TN, Oct. 16, 2018 - Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $1.21 for the quarter ended Sept. 30, 2018, compared to net income per diluted common share of $0.83 for the quarter ended Sept. 30, 2017, an increase of 45.8 percent. Net income per diluted common share was $3.41 for the nine months ended Sept. 30, 2018, compared to net income per diluted common share of $2.46 for the nine months ended Sept. 30, 2017, an increase of 38.6 percent.
No merger-related charges were recorded during the quarter ended Sept. 30, 2018. Net income per diluted common share was $1.21 for the three months ended Sept. 30, 2018, compared to net income per diluted common share of $0.90 for the three months ended Sept. 30, 2017, excluding pre-tax merger-related charges of $8.8 million in the third quarter of 2017, an increase of 34.4 percent. Net income per diluted common share was $3.49 for the nine months ended Sept. 30, 2018, excluding pre-tax merger-related charges of $8.3 million, compared to net income per diluted common share of $2.59 for the nine months ended Sept. 30, 2017, excluding pre-tax merger-related charges of $12.7 million, an increase of 34.7 percent.
"We continue to experience extremely strong earnings momentum," said M. Terry Turner, Pinnacle's president and chief executive officer. "We are reporting nearly 35 percent earnings growth so far this year after adjusting for merger-related charges, which showcases our associates' ability to integrate a sizable merger while maintaining our intense focus on growing the core earnings of our firm. There is great energy and optimism within our associate base, and I anticipate this will contribute to continued growth given the markets we serve, our ability to attract the best bankers to our franchise and our cultural focus on delivering differentiated customer service and enhancing long-term shareholder value."

GROWING THE CORE EARNINGS CAPACITY OF THE FIRM:
Loans at Sept. 30, 2018 were a record $17.46 billion, an increase of $421.2 million from June 30, 2018 and $2.20 billion from Sept. 30, 2017, reflecting year-over-year growth of 14.4 percent. Annualized organic loan growth during the third quarter of 2018 was 9.8 percent, compared to 13.5 percent for the third quarter of 2017.
Average loans were $17.26 billion for the three months ended Sept. 30, 2018, up $529.4 million from the $16.73 billion for the three months ended June 30, 2018, an annualized growth rate of 12.6 percent.
At Sept. 30, 2018, the remaining discount associated with fair value accounting adjustments on acquired loans was $110.0 million, compared to $132.1 million at June 30, 2018.
Deposits at Sept. 30, 2018 were a record $18.41 billion, an increase of $550.1 million from June 30, 2018 and $2.62 billion from Sept. 30, 2017, reflecting year-over-year growth of 16.6 percent.

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Average deposits were $18.11 billion for the three months ended Sept. 30, 2018, up $1.16 billion from the $16.95 billion for the three months ended June 30, 2018.
Core deposits were $16.08 billion at Sept. 30, 2018, compared to $15.40 billion at June 30, 2018 and $14.24 billion at Sept. 30, 2017. The annualized growth rate of core deposits in the third quarter of 2018 was 17.4 percent.
Revenues for the quarter ended Sept. 30, 2018 were $240.9 million, an increase of $10.7 million and $24.7 million, respectively, from the $230.2 million recognized in the second quarter of 2018 and $216.2 million in the quarter ended Sept. 30, 2017. That is a year-over-year growth rate of 11.4 percent and an annualized growth rate of 18.5 percent in the third quarter of this year.
Revenue per fully diluted share was $3.11 for the three months ended Sept. 30, 2018, compared to $2.97 for the second quarter of 2018 and $2.80 for the third quarter of 2017.

"Our model of hiring experienced bankers to produce outsized loan and deposit growth continues to work extremely well," Turner said. "Last week, we announced that we had hired 23 high-profile revenue producers across all of our markets during the third quarter, a strong predictor of our continued future growth. This compares to 39 hires in the second quarter and 22 in the first quarter. We believe our recruiting strategies are hitting on all cylinders and have resulted in accelerated hiring in our markets, which is our principal investment in future growth.
"Loan growth was approximately 10 percent on an annualized linked-quarter basis and continues to be exceptional for our firm this year, up nearly 15.6 percent on an annualized basis since the end of last year. Importantly, we are also pleased that we have experienced 16.6 percent loan growth in our primary loan growth segments, C&I and owner-occupied commercial real estate, since Dec. 31, 2017. Much of this is occurring in the Carolinas and Virginia, where many believed our ability to grow a C&I franchise would take an extended period of time. Lastly, core deposits also showed strong growth during the third quarter, up nearly 18 percent on an annualized basis, reflecting our relationship managers’ ability to gather deposits from across the franchise."

FOCUSING ON PROFITABILITY:
Return on average assets was 1.54 percent for the third quarter of 2018, compared to 1.50 percent for the second quarter of 2018 and 1.21 percent for the third quarter last year. Third quarter 2018 return on average tangible assets amounted to 1.67 percent, compared to 1.63 percent for the second quarter of 2018 and 1.32 percent for the third quarter last year.
Excluding merger-related charges, of which there were none in the third quarter of 2018, return on average assets was 1.54 percent for the third quarter of 2018, compared to 1.54 percent for the second quarter of 2018 and 1.31 percent for the third quarter of 2017. Likewise, excluding these merger-related charges, the firm’s return on average tangible assets was 1.67 percent for the third quarter of 2018, compared to 1.67 percent for the second quarter of 2018 and 1.43 for the third quarter of 2017.
Return on average common equity for the third quarter of 2018 amounted to 9.60 percent, compared to 9.18 percent for the second quarter of 2018 and 6.99 percent for the third quarter last year. Third quarter 2018 return on average tangible common equity amounted to 18.44 percent, compared to 18.01 percent for the second quarter of 2018 and 14.25 percent for the third quarter last year.

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Excluding merger-related charges, of which there were none in the third quarter of 2018, return on average tangible common equity amounted to 18.44 percent for the third quarter of 2018, compared to 18.45 percent for the second quarter of 2018 and 15.44 percent for the third quarter of 2017.

"Our profitability metrics remain very strong and provide us leverage to invest in our future growth," said Harold R. Carpenter, Pinnacle's chief financial officer. "We are very proud of our 1.54 percent return on average assets and our 18.44 percent return on tangible common equity for the third quarter. Importantly, we continue to experience increased tangible book value accretion. Since the merger with BNC Bancorp was completed in June 2017, our tangible book value per common share has increased by more than 16 percent. We think this is a significant achievement, because since the merger date we’ve also absorbed over $39.4 million in merger-related charges, which obviously dilutes tangible book value.
"Additionally, and as a testament to our commitment to grow this firm, we now have more associates working for our firm than we had immediately following the merger, despite the fact that since the merger date we’ve completed systems conversions, branch closures and other reductions normally associated with the execution of a merger synergy case. A reduction in staff personnel is usually critical to the financial success of a merger. Rarely can a firm continue to aggressively hire for critical roles and revenue producers during the integration process and, at the same time, achieve rock-solid profitability metrics."

MAINTAINING A FORTRESS BALANCE SHEET:
Nonperforming assets increased to 0.55 percent of total loans and ORE at Sept. 30, 2018, compared to 0.53 percent at June 30, 2018 and 0.51 percent at Sept. 30, 2017. Nonperforming assets were $95.6 million at Sept. 30, 2018, compared to $91.1 million at June 30, 2018 and $78.1 million at Sept. 30, 2017.
The allowance for loan losses represented 0.46 percent of total loans at Sept. 30, 2018 compared to 0.44 percent at June 30, 2018 and 0.43 percent at Sept. 30, 2017
The ratio of the allowance for loan losses to nonperforming loans was 102.7 percent at Sept. 30, 2018, compared to 106.7 percent at June 30, 2018 and 122.0 percent at Sept. 30, 2017. At Sept. 30, 2018, purchase credit impaired loans of $12.1 million, which were recorded at fair value upon acquisition, represented 15.8 percent of our nonperforming loans.
Net charge-offs were $4.4 million for the quarter ended Sept. 30, 2018, compared to $3.9 million for the quarter ended June 30, 2018 and $3.7 million for the quarter ended Sept. 30, 2017. Annualized net charge-offs as a percentage of average loans for both the quarters ended Sept. 30, 2018 and June 30, 2018 were 0.10 percent, compared to 0.14 percent for the third quarter of 2017.
Provision for loan losses was $8.7 million in the third quarter of 2018, compared to $9.4 million in the second quarter of 2018 and $6.9 million in the third quarter of 2017.

"Overall, asset quality for our firm remains exceptional," Carpenter said. "We have allocated reserves to consider potential incurred losses from Hurricane Florence of approximately $2.5 million as of Sept. 30, 2018. Additionally, as we had projected last quarter, our commercial real estate to total risk-based capital ratio decreased to below 300 percent during the third quarter of 2018 and was 287.6 percent at Sept. 30, 2018. The ratio of construction loans to total risk-based capital also decreased to 87.8 percent at Sept. 30, 2018."




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GROWING REVENUES
Net interest income for the quarter ended Sept. 30, 2018 was $189.4 million, compared to $182.2 million for the second quarter of 2018 and $172.9 million for the third quarter of 2017. That represents an annualized organic growth rate of 15.6 percent between the second and third quarter of 2018.
Net interest margin was 3.65 percent for the third quarter of 2018, compared to 3.69 percent for the second quarter of 2018 and 3.87 percent for the third quarter of 2017.
Included in net interest income for the third quarter of 2018 was $17.1 million of discount accretion associated with fair value adjustments, compared to $16.1 million of discount accretion recognized in the second quarter of 2018.
Noninterest income for the quarter ended Sept. 30, 2018 was $51.5 million, compared to $47.9 million for the second quarter of 2018 and $43.2 million for the third quarter of 2017, up 29.3 percent on an annualized basis.
Wealth management revenues, which include investment, trust and insurance services, were $10.5 million for the quarter ended Sept. 30, 2018, compared to $10.5 million for the second quarter of 2018 and $8.4 million for the third quarter of 2017.
Income from the firm's investment in Bankers Healthcare Group (BHG) was $14.2 million for the quarter ended Sept. 30, 2018, compared to $9.7 million for the quarter ended June 30, 2018 and $8.9 million for the quarter ended Sept. 30, 2017. Income from the firm's investment in BHG grew 59.3 percent for the quarter ended Sept. 30, 2018, compared to the quarter ended Sept. 30, 2017.

"We are reporting an annualized growth rate in net interest income of almost 16 percent, as well as a significant increase in noninterest income for the third quarter of 2018 when compared to the second quarter," Carpenter said. "Our net interest margin decreased to 3.65 percent from 3.69 percent during the previous quarter. Earning asset yields improved this quarter by 10 basis points, which was the same level of improvement reported in the previous quarter. Total funding rates increased by 14 basis points during the third quarter, compared to a 20 basis point increase in the second quarter. BHG had a strong third quarter, and we anticipate they will have a great fourth quarter as they finish out 2018.
"While many are focused internally on cost-cutting exercises, we are aggressively growing our client base across our franchise. Despite potential modest deterioration in our margins, we will continue our focus on growing net interest income since that is the key to growing our earnings and meeting our tangible book value growth goals. We believe our track record for delivering results quarter after quarter and year after year provides confidence to our shareholders that, over the long term, this firm is a sound investment for the future."

CREATING OPERATING LEVERAGE
Noninterest expense for the quarter ended Sept. 30, 2018 was $114.0 million, compared to $110.9 million in the second quarter of 2018 and $109.7 million in the third quarter of 2017, reflecting a year-over-year increase of 3.9 percent.
Salaries and employee benefits were $69.1 million in the third quarter of 2018, compared to $64.1 million in the second quarter of 2018 and $64.3 million in the third quarter of last year, reflecting a year-over-year increase of 7.5 percent.
Included in salaries and employee benefits are costs related to the firm’s annual cash incentive plan. Incentive costs for this plan amounted to $10.0 million in the third quarter of 2018, compared to $6.9 million in both the second quarter of 2018 and in the third quarter of last year.

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The efficiency ratio for the third quarter of 2018 decreased to 47.3 percent, compared to 48.2 percent for the second quarter of 2018. The ratio of noninterest expenses to average assets decreased to 1.87 percent for the third quarter of 2018 from 1.91 percent in the second quarter of 2018.
Excluding merger-related charges, of which there were none in the third quarter of 2018, and other real estate owned (ORE) expense, the efficiency ratio was 47.3 percent for the third quarter of 2018, compared to 46.6 percent for the second quarter of 2018, and the ratio of noninterest expense to average assets was 1.87 percent for the third quarter of 2018, compared to 1.85 percent for the second quarter of 2018.
The effective tax rate for the third quarter of 2018 was 20.7 percent, compared to 20.9 percent for the second quarter of 2018 and 35.2 percent for the third quarter of 2017. The Tax Cuts and Jobs Act reduced the aggregate blended federal and state statutory income tax rate for the firm from 39.23 percent to 26.14 percent.
Included in income tax expense for the three and nine months ended Sept. 30, 2018 were excess tax benefits of $199,000 and $3.0 million, respectively, related to the application of FASB Accounting Standards Update (ASU) 2016-09, Stock Compensation Improvements to Employee Share-Based Payment Activity compared to $59,000 and $4.6 million, respectively, for the three and nine months ended Sept. 30, 2017.
Inclusive of all of these matters, the firm anticipates an effective tax rate of between 20.0 and 21.0 percent for calendar year 2018.

"Our efficiency ratio for the third quarter was 47 percent, slightly higher than the ratio for the second quarter, excluding merger-related charges and ORE expense," Carpenter said. "We are very pleased with both the efficiency ratio and the expense to asset ratio given our hiring activity and that we were able to increase our incentive accruals in the third quarter by $3.1 million over the amounts we expensed in the second quarter. We have increased our target payout percentage to approximately 90 percent as of Sept. 30, 2018. Our ability to maintain our incentive accrual at 90 percent or increase it will depend on our ability to achieve the revenue and earnings necessary to fund such increases."

BOARD OF DIRECTORS DECLARES DIVIDEND

On Oct.16, 2018, Pinnacle’s Board of Directors approved an increase to the quarterly cash dividend to $0.16 per common share to be paid on Nov. 30, 2018 to common shareholders of record as of the close of business on Nov. 2, 2018. The amount and timing of any future dividend payments to common shareholders will be subject to the discretion of Pinnacle’s Board of Directors.

5




WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. (CDT) on Oct. 17, 2018 to discuss third quarter 2018 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 is the No. 1 bank in the Nashville-Murfreesboro-Franklin MSA, according to 2018 deposit data from the FDIC. Pinnacle earned a place on FORTUNE’s 2017 and 2018 lists of the 100 Best Companies to Work For in the U.S., and American Banker recognized Pinnacle as one of America’s Best Banks to Work For six years in a row.
The firm began operations in a single location in downtown Nashville, TN in October 2000 and has since grown to approximately $24.6 billion in assets as of Sept. 30, 2018. As the second-largest bank holding company headquartered in Tennessee, Pinnacle operates in 11 primarily urban markets in Tennessee, the Carolinas and Virginia.
Additional information concerning Pinnacle, which is included in the Nasdaq Financial-100 Index, can be accessed at www.pnfp.com.
###

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Forward-Looking Statements

All statements, other than statements of historical fact, included in this press release, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "expect," "anticipate," "intend," "may," "should," "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 statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to:  (i) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (ii) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits; (iii) the inability of Pinnacle Financial, or entities in which it has significant investments, like BHG, to maintain the historical growth rate of its, or such entities', 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) the impact of competition with other financial institutions, including pricing pressures (including those resulting from the Tax Cuts and Jobs Act) and the resulting impact on Pinnacle Financial’s results, including as a result of compression to net interest margin; (vii) greater than anticipated adverse conditions in the national or local economies including in Pinnacle Financial's markets throughout Tennessee, North Carolina, South Carolina and Virginia,  particularly in commercial and residential real estate markets; (viii) fluctuations or unanticipated changes in interest rates on loans or deposits or that affect the yield curve; (ix) the results of regulatory examinations; (x) a merger or acquisition; (xi) risks of expansion into new geographic or product markets; (xii) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including intangible assets; (xiii) reduced ability to attract additional financial advisors (or failure of such advisors to cause their clients to switch to Pinnacle Bank), to retain financial advisors (including as a result of the competitive environment resulting from the Tax Cuts and Jobs Act) or otherwise to attract customers from other financial institutions; (xiv) further deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xv) inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies, required capital maintenance levels or regulatory requests or directives, particularly if Pinnacle Financial's level of applicable commercial real estate loans were to exceed percentage levels of total capital in guidelines recommended by its regulators; (xvi) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xvii) the vulnerability of Pinnacle Bank's network and online banking portals, and the systems of parties with whom Pinnacle Financial contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (xviii) the possibility of increased compliance and operational costs as a result of increased regulatory oversight, including oversight of companies in which Pinnacle Financial or Pinnacle Bank have significant investments, like BHG, and the development of additional banking products for Pinnacle Bank's corporate and consumer clients;  (xix) the risks associated with Pinnacle Financial and Pinnacle Bank being a minority investor in BHG, including the risk that the owners of a majority of the equity interests in BHG decide to sell the company if not prohibited from doing so by Pinnacle Financial or Pinnacle Bank; (xx) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, like BHG, including regulatory or legislative developments; (xxi) the availability and access to capital; (xxii) adverse results (including costs, fines, reputational harm, inability to obtain necessary approvals and/or other negative effects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions; and (xxiii) general competitive, economic, political and market conditions. Additional factors which could affect the forward looking statements

7



can be found in Pinnacle Financial's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K filed with the SEC and available on the SEC's website at http://www.sec.gov. Pinnacle Financial disclaims any obligation to update or revise any forward-looking statements contained in this press release, which speak only as of the date hereof, whether as a result of new information, future events or otherwise.

Non-GAAP Financial Matters

This release contains certain non-GAAP financial measures, including, without limitation, revenues per diluted share, earnings per diluted share, efficiency ratio and the ratio of noninterest expense to average assets, in each case excluding the impact of expenses related to other real estate owned, gains or losses on sale of investments, the revaluation of Pinnacle Financial’s deferred tax assets and other matters for the accounting periods presented. This release also includes non-GAAP financial measures which exclude expenses associated with Pinnacle Bank's merger with BNC. This release may also contain certain other non-GAAP capital ratios and performance measures that exclude the impact of goodwill and core deposit intangibles associated with Pinnacle Financial's acquisitions of BNC, Avenue Bank, Magna Bank, CapitalMark Bank & Trust, Mid-America Bancshares, Inc., Cavalry Bancorp, Inc. and other acquisitions which collectively are less material to the non-GAAP measure. The presentation of the non-GAAP financial information is not intended to be considered in isolation or as a substitute for any measure prepared in accordance with GAAP. Because non-GAAP financial measures presented in this release are not measurements determined in accordance with GAAP and are susceptible to varying calculations, these non-GAAP financial measures, as presented, may not be comparable to other similarly titled measures presented by other companies.

Pinnacle Financial believes that these non-GAAP financial measures facilitate making period-to-period comparisons and are meaningful indications of its operating performance. In addition, because intangible assets such as goodwill and the core deposit intangible, and the other items excluded each vary extensively from company to company, Pinnacle Financial believes that the presentation of this information allows investors to more easily compare Pinnacle Financial's results to the results of other companies. Pinnacle Financial's management utilizes this non-GAAP financial information to compare Pinnacle Financial's operating performance for 2018 versus certain periods in 2017 and to internally prepared projections.




8



PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS – UNAUDITED
(dollars in thousands)
 
 
 
 
September 30, 2018
December 31, 2017
September 30, 2017
ASSETS
 


Cash and noninterest-bearing due from banks
$
145,638

$
176,553

$
132,324

Interest-bearing due from banks
394,129

496,911

270,563

Federal funds sold and other
11,313

106,132

5,395

Cash and cash equivalents
551,080

779,596

408,282

 
 
 
 
Securities available-for-sale, at fair value
3,004,582

2,515,283

2,880,181

Securities held-to-maturity (fair value of $192.5 million, $20.8 million, and $21.0 million at Sept. 30, 2018, Dec. 31, 2017, and Sept. 30, 2017, respectively)
194,997

20,762

20,848

Consumer loans held-for-sale
47,417

103,729

105,032

Commercial loans held-for-sale
11,402

25,456

20,385

 
 
 
 
Loans
17,464,009

15,633,116

15,259,786

Less allowance for loan losses
(79,985
)
(67,240
)
(65,159
)
Loans, net
17,384,024

15,565,876

15,194,627

 
 
 
 
Premises and equipment, net
268,387

266,014

270,136

Equity method investment
221,302

221,667

211,502

Accrued interest receivable
73,366

57,440

54,287

Goodwill
1,807,121

1,808,002

1,802,534

Core deposits and other intangible assets
48,737

56,710

59,781

Other real estate owned
17,467

27,831

24,339

Other assets
927,663

757,334

738,437

Total assets
$
24,557,545

$
22,205,700

$
21,790,371

 
 
 
 
LIABILITIES AND STOCKHOLDERS' EQUITY
 
 
 

Deposits:
 
 
 

Noninterest-bearing
$
4,476,925

$
4,381,386

$
4,099,086

Interest-bearing
3,195,657

2,987,291

2,571,765

Savings and money market accounts
7,262,968

6,548,964

6,595,640

Time
3,471,965

2,534,061

2,523,094

Total deposits
18,407,515

16,451,702

15,789,585

Securities sold under agreements to repurchase
130,217

135,262

129,557

Federal Home Loan Bank advances
1,520,603

1,319,909

1,623,947

Subordinated debt and other borrowings
465,487

465,505

465,461

Accrued interest payable
20,944

10,480

10,715

Other liabilities
115,738

114,890

97,757

Total liabilities
20,660,504

18,497,748

18,117,022

 
 
 
 
Preferred stock, no par value; 10.0 million shares authorized;
no shares issued and outstanding



Common stock, par value $1.00; 180.0 million shares authorized at Sept. 30, 2018 and 90.0 million shares authorized at Dec. 31, 2017 and Sept. 30, 2017, respectively; 77.9 million, 77.7 million shares and 77.7 million shares issued and outstanding at Sept. 30, 2018, Dec. 31, 2017 and Sept. 30, 2017, respectively
77,867

77,740

77,652

Additional paid-in capital
3,123,323

3,115,304

3,105,578

Retained earnings
750,363

519,144

503,270

Accumulated other comprehensive loss, net of taxes
(54,512
)
(4,236
)
(13,151
)
Total stockholders' equity
3,897,041

3,707,952

3,673,349

Total liabilities and stockholders' equity
$
24,557,545

$
22,205,700

$
21,790,371

 
 
 
 
This information is preliminary and based on company data available at the time of the presentation.


9



PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED
(dollars in thousands, except for per share data)
Three Months Ended
Nine Months Ended
 
September 30, 2018
June 30,
2018
September 30, 2017
September 30, 2018
September 30, 2017
Interest income:
 
 
 
 
 
Loans, including fees
$
221,901

$
208,758

$
183,570

$
621,873

$
389,093

Securities
 
 
 
 
 
Taxable
12,209

11,748

12,067

35,179

26,765

Tax-exempt
10,074

8,350

4,620

25,709

8,533

Federal funds sold and other
3,926

2,128

1,639

7,861

3,376

Total interest income
248,110

230,984

201,896

690,622

427,767

 
 
 
 
 
 
Interest expense:
 
 
 
 
 
Deposits
44,172

32,767

19,104

100,920

38,216

Securities sold under agreements to repurchase
165

143

148

438

277

Federal Home Loan Bank advances and other borrowings
14,353

15,838

9,734

43,137

20,984

Total interest expense
58,690

48,748

28,986

144,495

59,477

Net interest income
189,420

182,236

172,910

546,127

368,290

Provision for loan losses
8,725

9,402

6,920

25,058

17,384

Net interest income after provision for loan losses
180,695

172,834

165,990

521,069

350,906

 
 
 
 
 
 
Noninterest income:
 
 
 
 
 
Service charges on deposit accounts
6,404

6,065

5,921

18,289

13,955

Investment services
5,237

4,906

3,660

15,250

9,592

Insurance sales commissions
2,126

2,048

2,123

7,293

5,444

Gains on mortgage loans sold, net
3,902

3,777

5,963

11,423

14,785

Investment gains on sales, net
11



41


Trust fees
3,087

3,564

2,636

9,768

6,019

Income from equity method investment
14,236

9,690

8,937

33,286

25,514

Other noninterest income
16,475

17,889

14,008

48,250

33,392

Total noninterest income
51,478

47,939

43,248

143,600

108,701

 
 
 
 
 
 
Noninterest expense:
 
 
 
 
 
Salaries and employee benefits
69,117

64,112

64,288

196,948

146,316

Equipment and occupancy
19,252

18,208

16,590

55,203

36,978

Other real estate, net
67

819

513

92

827

Marketing and other business development
3,293

2,544

2,222

8,084

6,228

Postage and supplies
1,654

2,291

1,755

5,984

4,074

Amortization of intangibles
2,616

2,659

3,077

7,973

5,745

Merger-related expenses

2,906

8,847

8,259

12,740

Other noninterest expense
17,991

17,369

12,444

50,935

30,679

Total noninterest expense
113,990

110,908

109,736

333,478

243,587

Income before income taxes
118,183

109,865

99,502

331,191

216,020

Income tax expense
24,436

23,000

35,060

67,069

68,839

Net income
$
93,747

$
86,865

$
64,442

$
264,122

$
147,181

 
 
 
 
 
 
Per share information:
 
 
 
 
 
Basic net income per common share
$
1.22

$
1.13

$
0.84

$
3.42

$
2.48

Diluted net income per common share
$
1.21

$
1.12

$
0.83

$
3.41

$
2.46

 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
Basic
77,145,023

77,123,854

76,678,584

77,116,377

59,371,202

Diluted
77,490,977

77,468,082

77,232,098

77,442,554

59,910,344

 
 
 
 
 
 
This information is preliminary and based on company data available at the time of the presentation.


10



PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
 
 
 
 
 
 
 
(dollars in thousands)
September
June
March
December
September
June
2018
2018
2018
2017
2017
2017
Balance sheet data, at quarter end:
 
 
 
 
 
 
Commercial and industrial loans
$
5,006,247

4,821,299

4,490,886

4,141,341

3,971,227

3,688,357

Commercial real estate - owner occupied
2,688,247

2,504,891

2,427,946

2,460,015

2,433,762

2,368,641

Commercial real estate - investment
3,818,055

3,822,182

3,714,854

3,564,048

3,398,381

3,357,120

Commercial real estate - multifamily and other
708,817

697,566

651,488

645,547

617,899

661,611

Consumer real estate  - mortgage loans
2,815,160

2,699,399

2,580,766

2,561,214

2,541,180

2,552,927

Construction and land development loans
2,059,009

2,133,646

2,095,875

1,908,288

1,939,809

1,772,799

Consumer and other
368,474

363,870

364,202

352,663

357,528

357,310

Total loans
17,464,009

17,042,853

16,326,017

15,633,116

15,259,786

14,758,765

Allowance for loan losses
(79,985
)
(75,670
)
(70,204
)
(67,240
)
(65,159
)
(61,944
)
Securities
3,199,579

2,975,469

2,981,301

2,536,046

2,901,029

2,448,198

Total assets
24,557,545

23,988,370

22,935,174

22,205,700

21,790,371

20,886,154

Noninterest-bearing deposits
4,476,925

4,361,414

4,274,213

4,381,386

4,099,086

3,893,603

Total deposits
18,407,515

17,857,418

16,502,909

16,451,702

15,789,585

15,757,475

Securities sold under agreements to repurchase
130,217

128,739

131,863

135,262

129,557

205,008

FHLB advances
1,520,603

1,581,867

1,976,881

1,319,909

1,623,947

725,230

Subordinated debt and other borrowings
465,487

465,433

465,550

465,505

465,461

465,419

Total stockholders' equity
3,897,041

3,826,677

3,749,303

3,707,952

3,673,349

3,615,327

 
 
 
 
 
 
 
Balance sheet data, quarterly averages:
 
 
 
 
 
 
Total loans
$
17,259,139

16,729,734

15,957,466

15,520,255

15,016,642

9,817,139

Securities
3,075,633

2,970,267

2,829,604

2,850,322

2,741,493

1,798,334

Federal funds sold and other
647,728

442,401

335,093

439,167

379,769

269,645

Total earning assets
20,982,500

20,142,402

19,122,163

18,809,744

18,137,904

11,885,118

Total assets
24,125,051

23,236,945

22,204,599

21,933,500

21,211,459

13,335,359

Noninterest-bearing deposits
4,330,917

4,270,459

4,304,186

4,165,876

3,953,855

2,746,499

Total deposits
18,112,766

16,949,374

16,280,581

16,091,700

15,828,480

10,394,267

Securities sold under agreements to repurchase
146,864

123,447

129,969

134,983

160,726

99,763

FHLB advances
1,497,511

1,884,828

1,584,281

1,465,145

1,059,032

399,083

Subordinated debt and other borrowings
468,990

474,328

471,029

477,103

473,805

375,249

Total stockholders' equity
3,874,430

3,795,963

3,732,633

3,706,741

3,655,029

2,057,505

 
 
 
 
 
 
 
Statement of operations data, for the three months ended:
Interest income
$
248,110

230,984

211,528

208,371

201,896

123,743

Interest expense
58,690

48,748

37,057

33,354

28,986

17,116

Net interest income
189,420

182,236

174,471

175,017

172,910

106,627

Provision for loan losses
8,725

9,402

6,931

6,281

6,920

6,812

Net interest income after provision for loan losses
180,695

172,834

167,540

168,736

165,990

99,815

Noninterest income
51,478

47,939

44,183

36,202

43,248

35,057

Noninterest expense
113,990

110,908

108,580

122,973

109,736

71,798

Income before taxes
118,183

109,865

103,143

81,965

99,502

63,074

Income tax expense
24,436

23,000

19,633

55,167

35,060

19,988

Net income
$
93,747

86,865

83,510

26,798

64,442

43,086

 
 
 
 
 
 
 
Profitability and other ratios:
 
 
 
 
 
 
Return on avg. assets (1)
1.54
%
1.50
%
1.53
%
0.48
%
1.21
%
1.30
%
Return on avg. common equity (1)
9.60
%
9.18
%
9.07
%
2.87
%
6.99
%
8.40
%
Return on avg. tangible common equity (1)
18.44
%
18.01
%
18.12
%
5.76
%
14.25
%
13.58
%
Dividend payout ratio (16)
14.89
%
16.57
%
18.36
%
20.00
%
17.34
%
18.01
%
Net interest margin (2)
3.65
%
3.69
%
3.77
%
3.76
%
3.87
%
3.68
%
Noninterest income to total revenue (3)
21.37
%
20.83
%
20.21
%
17.27
%
19.88
%
24.74
%
Noninterest income to avg. assets (1)
0.85
%
0.83
%
0.81
%
0.66
%
0.80
%
1.05
%
Noninterest exp. to avg. assets (1)
1.87
%
1.91
%
1.98
%
2.22
%
2.05
%
2.16
%
Efficiency ratio (4)
47.32
%
48.18
%
49.66
%
58.22
%
50.77
%
50.67
%
Avg. loans to avg. deposits
95.29
%
98.70
%
98.02
%
96.45
%
94.87
%
94.45
%
Securities to total assets
13.03
%
12.40
%
13.00
%
11.42
%
13.31
%
11.72
%
 
 
 
 
 
 
 
This information is preliminary and based on company data available at the time of the presentation.

11



PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED
 
 
 
 
(dollars in thousands)
Three months ended
 
Three months ended
September 30, 2018
 
September 30, 2017
 
Average Balances
Interest
Rates/ Yields
 
Average Balances
Interest
Rates/ Yields
Interest-earning assets
 
 
 
 
 
 
 
Loans (1)
$
17,259,139

$
221,901

5.15
%
 
$
15,016,642

$
183,570

4.91
%
Securities
 
 
 
 
 
 
 
Taxable
1,803,104

12,209

2.69
%
 
2,080,512

12,067

2.30
%
Tax-exempt (2)
1,272,529

10,074

3.72
%
 
660,981

4,620

3.72
%
Federal funds sold and other
647,728

3,926

2.40
%
 
379,769

1,639

1.71
%
Total interest-earning assets
20,982,500

$
248,110

4.76
%
 
18,137,904

$
201,896

4.50
%
Nonearning assets
 
 
 
 
 
 
 
Intangible assets
1,857,413

 
 
 
1,860,282

 
 
Other nonearning assets
1,285,138

 
 
 
1,213,273

 
 
Total assets
$
24,125,051

 
 
 
$
21,211,459

 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
Interest bearing demand deposits
$
828,420

$
2,566

1.23
%
 
$
616,404

$
1,213

0.78
%
Interest checking
2,247,605

5,277

0.93
%
 
2,042,329

2,155

0.42
%
Savings and money market
7,284,373

21,125

1.15
%
 
6,727,136

10,725

0.63
%
Time
3,421,451

15,204

1.76
%
 
2,488,756

5,011

0.80
%
Total interest-bearing deposits
13,781,849

44,172

1.27
%
 
11,874,625

19,104

0.64
%
Securities sold under agreements to repurchase
146,864

165

0.44
%
 
160,726

148

0.37
%
Federal Home Loan Bank advances
1,497,511

8,171

2.16
%
 
1,059,032

3,959

1.48
%
Subordinated debt and other borrowings
468,990

6,182

5.29
%
 
473,805

5,775

4.84
%
Total interest-bearing liabilities
15,895,214

58,690

1.46
%
 
13,568,188

28,986

0.85
%
Noninterest-bearing deposits
4,330,917



 
3,953,855



Total deposits and interest-bearing liabilities
20,226,131

$
58,690

1.15
%
 
17,522,043

$
28,986

0.66
%
Other liabilities
20,490

 
 
 
34,387

 
 
Stockholders' equity 
3,874,430

 
 
 
3,655,029

 
 
Total liabilities and stockholders' equity
$
24,121,051

 
 
 
$
21,211,459

 
 
Net  interest  income 
 
$
189,420

 
 
 
$
172,910

 
Net interest spread (3)
 
 
3.30
%
 
 
 
3.65
%
Net interest margin (4)
 
 
3.65
%
 
 
 
3.87
%
 
 
 
 
 
 
 
 
(1) Average balances of nonperforming loans are included in the above amounts.
 

 
 

 

 

(2) Yields computed on tax-exempt instruments on a tax equivalent basis and include $3.8 million of taxable equivalent income for the quarter ended September 30, 2018 compared to $3.6 million for the quarter ended September 30, 2017.
(3) Yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. The net interest spread calculation excludes the impact of demand deposits. Had the impact of demand deposits been included, the net interest spread for the quarter ended September 30, 2018 would have been 3.61% compared to a net interest spread of 3.84% for the quarter ended September 30, 2017.
(4) Net interest margin is the result of annualized net interest income calculated on a tax equivalent basis divided by average interest-earning assets for the period.
 
 
 
This information is preliminary and based on company data available at the time of the presentation.
 

 



12



PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED
 
 
 
 
(dollars in thousands)
Nine months ended
 
Nine months ended
September 30, 2018
 
September 30, 2017
 
Average Balances
Interest
Rates/ Yields
 
Average Balances
Interest
Rates/ Yields
Interest-earning assets
 
 
 
 
 
 
 
Loans (1)
$
16,653,548

$
621,873

5.04
%
 
$
11,154,340

$
389,093

4.73
%
Securities
 
 
 
 
 
 
 
Taxable
1,796,816

35,179

2.62
%
 
1,593,590

26,765

2.25
%
Tax-exempt (2)
1,162,587

25,709

3.51
%
 
404,756

8,533

3.78
%
Federal funds sold and other
476,219

7,861

2.21
%
 
300,552

3,376

1.50
%
Total interest-earning assets
20,089,170

$
690,622

4.66
%
 
13,453,238

$
427,767

4.34
%
Nonearning assets
 
 
 
 
 
 
 
Intangible assets
1,860,649

 
 
 
1,075,109

 
 
Other nonearning assets
1,246,081

 
 
 
830,337

 
 
Total assets
$
23,195,900

 
 
 
$
15,358,684

 
 
 
 
 
 
 
 
 
 
Interest-bearing liabilities
 
 
 
 
 
 
 
Interest-bearing deposits:
 
 
 
 
 
 
 
Interest bearing demand deposits
$
803,230

$
6,483

1.08
%
 
$
554,196

$
2,712

0.65
%
Interest checking
2,205,466

12,853

0.78
%
 
1,652,738

5,062

0.41
%
Savings and money market
6,850,249

49,294

0.96
%
 
5,043,033

21,175

0.56
%
Time
2,960,055

32,290

1.46
%
 
1,498,114

9,267

0.83
%
Total interest-bearing deposits
12,819,000

100,920

1.05
%
 
8,748,081

38,216

0.58
%
Securities sold under agreements to repurchase
133,489

438

0.44
%
 
113,687

277

0.33
%
Federal Home Loan Bank advances
1,655,222

24,867

2.01
%
 
560,121

6,347

1.52
%
Subordinated debt and other borrowings
470,564

18,270

5.19
%
 
401,814

14,637

4.87
%
Total interest-bearing liabilities
15,078,275

144,495

1.28
%
 
9,823,703

59,477

0.81
%
Noninterest-bearing deposits
4,301,952



 
3,050,640



Total deposits and interest-bearing liabilities
19,380,227

$
144,495

1.00
%
 
12,874,343

$
59,477

0.62
%
Other liabilities
14,145

 
 
 
20,486

 
 
Stockholders' equity 
3,801,528

 
 
 
2,463,855

 
 
Total liabilities and stockholders' equity
$
23,195,900

 
 
 
$
15,358,684

 
 
Net  interest  income 
 
$
546,127

 
 
 
$
368,290

 
Net interest spread (3)
 
 
3.38
%
 
 
 
3.53
%
Net interest margin (4)
 
 
3.70
%
 
 
 
3.75
%
 
 
 
 
 
 
 
 
(1) Average balances of nonperforming loans are included in the above amounts.
(2) Yields computed on tax-exempt instruments on a tax equivalent basis and include $10.4 million of taxable equivalent income for the nine months ended September 30, 2018 compared to $8.3 million for the nine months ended September 30, 2017.
(3) Yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. The net interest spread calculation excludes the impact of demand deposits. Had the impact of demand deposits been included, the net interest spread for the nine months ended September 30, 2018 would have been 3.67% compared to a net interest spread of 3.72% for the nine months ended September 30, 2017.
(4) Net interest margin is the result of annualized net interest income calculated on a tax equivalent basis divided by average interest-earning assets for the period.
 
This information is preliminary and based on company data available at the time of the presentation.


13




PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
 
 
 
 
 
 
 
(dollars in thousands)
September
June
March
December
September
June
2018
2018
2018
2017
2017
2017
Asset quality information and ratios:
 
 
 
 
 
 
Nonperforming assets:
 
 
 
 
 
 
Nonaccrual loans
$
77,868

70,887

70,202

57,455

53,414

40,217

Other real estate (ORE) and
other nonperforming assets (NPAs)
17,731

20,229

24,533

28,028

24,682

25,153

Total nonperforming assets
$
95,599

91,116

94,735

85,483

78,096

65,370

Past due loans over 90 days and still accruing interest
$
1,773

1,572

1,131

4,139

3,010

1,691

Accruing troubled debt restructurings (5)
$
6,125

5,647

6,115

6,612

15,157

14,248

Accruing purchase credit impaired loans
$
21,473

22,993

24,398

26,719

29,254

34,874

Net loan charge-offs
$
4,410

3,936

3,967

4,200

3,705

3,218

Allowance for loan losses to nonaccrual loans
102.7
%
106.7
%
100.0
%
117.0
%
122.0
%
154.0
%
As a percentage of total loans:
 
 
 
 
 
 
Past due accruing loans over 30 days
0.25
%
0.23
%
0.24
%
0.38
%
0.24
%
0.20
%
Potential problem loans (6)
1.16
%
1.00
%
0.97
%
1.05
%
0.97
%
1.26
%
Allowance for loan losses
0.46
%
0.44
%
0.43
%
0.43
%
0.43
%
0.42
%
Nonperforming assets to total loans, ORE and other NPAs
0.55
%
0.53
%
0.58
%
0.55
%
0.51
%
0.44
%
Nonperforming assets to total assets
0.39
%
0.38
%
0.41
%
0.38
%
0.36
%
0.31
%
    Classified asset ratio (Pinnacle Bank) (8)
13.7
%
12.6
%
12.6
%
12.9
%
12.7
%
14.2
%
Annualized net loan charge-offs to avg. loans (7)
0.10
%
0.10
%
0.10
%
0.13
%
0.14
%
0.17
%
Wtd. avg. commercial loan internal risk ratings (6)
4.5

4.4

4.4

4.5

4.5

4.5

 
 
 
 
 
 
 
Interest rates and yields:
 
 
 
 
 
 
Loans
5.15
%
5.04
%
4.91
%
4.87
%
4.91
%
4.66
%
Securities
3.11
%
2.91
%
2.87
%
2.68
%
2.64
%
2.51
%
Total earning assets
4.76
%
4.66
%
4.56
%
4.46
%
4.50
%
4.21
%
Total deposits, including non-interest bearing
0.97
%
0.78
%
0.60
%
0.53
%
0.48
%
0.42
%
Securities sold under agreements to repurchase
0.44
%
0.47
%
0.40
%
0.38
%
0.37
%
0.32
%
FHLB advances
2.16
%
2.06
%
1.79
%
1.64
%
1.48
%
1.49
%
Subordinated debt and other borrowings
5.29
%
5.20
%
5.11
%
4.83
%
4.84
%
4.87
%
Total deposits and interest-bearing liabilities
1.15
%
1.01
%
0.81
%
0.73
%
0.66
%
0.61
%
 
 
 
 
 
 
 
Capital and other ratios (8):
 
 
 
 
 
 
Pinnacle Financial ratios:
 
 
 
 
 
 
Stockholders' equity to total assets
15.9
%
16.0
%
16.3
%
16.7
%
16.9
%
17.3
%
Common equity Tier one
9.4
%
9.3
%
9.2
%
9.2
%
9.4
%
9.5
%
Tier one risk-based
9.4
%
9.3
%
9.2
%
9.2
%
9.4
%
9.5
%
Total risk-based
12.1
%
12.0
%
12.0
%
12.0
%
12.3
%
12.6
%
Leverage
8.8
%
8.8
%
8.8
%
8.7
%
8.9
%
14.5
%
Tangible common equity to tangible assets
9.0
%
8.9
%
9.0
%
9.1
%
9.1
%
9.2
%
Pinnacle Bank ratios:
 
 
 
 
 
 
Common equity Tier one
10.3
%
10.2
%
10.3
%
10.3
%
10.7
%
11.0
%
Tier one risk-based
10.3
%
10.2
%
10.3
%
10.3
%
10.7
%
11.0
%
Total risk-based
11.4
%
11.2
%
11.3
%
11.4
%
11.8
%
12.1
%
Leverage
9.6
%
9.7
%
9.8
%
9.7
%
10.1
%
16.7
%
Construction and land development loans
as a percentage of total capital (19)
87.8
%
94.6
%
96.1
%
89.4
%
88.1
%
85.1
%
Non-owner occupied commercial real estate and
multi-family as a percentage of total capital (19)
287.6
%
304.3
%
306.2
%
297.1
%
289.1
%
286.4
%
 
 
 
 
 
 
 
This information is preliminary and based on company data available at the time of the presentation.

14



PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
 
 
 
 
 
 
 
 
(dollars in thousands, except per share data)
 
September
June
March
December
September
June
 
2018
2018
2018
2017
2017
2017
 
 
 
 
 
 
 
 
Per share data:
 
 
 
 
 
 
 
Earnings  – basic
$
1.22

1.13

1.08

0.35

0.84

0.81

Earnings  – diluted
$
1.21

1.12

1.08

0.35

0.83

0.80

Common dividends per share
$
0.14

0.14

0.14

0.14

0.14

0.14

Book value per common share at quarter end (9)
$
50.05

49.15

48.16

47.70

47.31

46.56

Tangible book value per common share at quarter end (9)
$
26.21

25.28

24.24

23.71

23.32

22.58

Revenue per diluted share
$
3.11

2.97

2.83

2.73

2.80

2.64

Revenue per diluted share, excluding investment (gains) losses on sale of securities, net
$
3.11

2.97

2.83

2.83

2.80

2.64

Noninterest expense per diluted share
$
1.47

1.43

1.40

1.59

1.42

1.34

Noninterest expense per diluted share, excluding the impact of other real estate expense and merger-related charges
$
1.47

1.38

1.34

1.34

1.30

1.28

 
 
 
 
 
 
 
 
Investor information:
 
 
 
 
 
 
 
Closing sales price on last trading day of quarter
$
60.15

61.35

64.20

66.30

66.95

62.80

High closing sales price during quarter
$
66.20

68.10

69.45

69.30

66.95

69.10

Low closing sales price during quarter
$
60.05

61.35

60.20

63.85

58.50

60.00

 
 
 
 
 
 
 
 
Other information:
 
 
 
 
 
 
 
Gains on residential mortgage loans sold:
 
 
 
 
 
 
 
Residential mortgage loan sales:
 
 
 
 
 
 
 
Gross loans sold
$
278,073

264,934

237,667

289,149

299,763

245,474

Gross fees (10)
$
7,756

7,134

6,036

7,364

9,050

7,361

Gross fees as a percentage of loans originated
 
2.79
%
2.69
%
2.54
%
2.55
%
3.02
%
3.00
%
Net gain on residential mortgage loans sold
$
3,902

3,777

3,744

3,839

5,963

4,668

Investment gains (losses) on sales of securities, net (15)
$
11


30

(8,265
)


Brokerage account assets, at quarter end (11)
$
3,998,774

3,745,635

3,508,669

3,266,936

2,979,936

2,815,501

Trust account managed assets, at quarter end
$
2,074,027

1,920,226

1,844,871

1,837,233

1,880,488

1,804,811

Core deposits (12)
$
16,076,859

15,400,142

14,750,211

14,838,208

14,236,205

14,461,407

Core deposits to total funding (12)
 
78.3
%
76.9
%
77.3
%
80.8
%
79.1
%
84.3
%
Risk-weighted assets
$
20,705,547

20,151,827

19,286,101

18,812,653

18,164,765

17,285,264

Number of offices
 
115

115

114

114

123

121

Total core deposits per office
$
139,799

133,914

129,388

130,160

115,742

119,516

Total assets per full-time equivalent employee
$
10,917

10,911

10,677

10,415

9,930

9,398

Annualized revenues per full-time equivalent employee
$
424.9

419.9

412.8

393.1

390.8

255.7

Annualized expenses per full-time equivalent employee
$
201.0

202.3

205.0

228.8

198.4

129.6

Number of employees (full-time equivalent)
 
2,249.5

2,198.5

2,148.0

2,132.0

2,194.5

2,222.5

Associate retention rate (13)
 
91.1
%
89.6
%
89.9
%
93.5
%
98.3
%
87.1
%
 
 
 
 
 
 
 
 
This information is preliminary and based on company data available at the time of the presentation.


15



PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
 
 
 
RECONCILIATION OF NON-GAAP SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
 
 
 
 
 
Three Months Ended
 
Nine Months Ended
(dollars in thousands, except per share data)
 
September 30,
June 30,
September 30,
 
September 30,
September 30,
 
2018
2018
2017
 
2018
2017
 
 
 
 
 
 
 
 
Net interest income
$
189,420

182,236

172,910

 
546,127

368,290

 
 
 
 
 
 
 
 
Noninterest income
 
51,478

47,939

43,248

 
143,600

108,701

 Total revenues
 
240,898

230,175

216,158

 
689,727

476,991

 
 
 
 
 
 
 
 
Noninterest expense
 
113,990

110,908

109,736

 
333,478

243,587

Less:   Other real estate (ORE) expense
 
67

819

513

 
92

827

Merger-related charges
 

2,906

8,847

 
8,259

12,740

Noninterest expense excluding the impact of ORE expense and merger-related charges
 
113,923

107,183

100,376

 
325,127

230,020

 
 
 
 
 
 
 
 
Adjusted pre-tax pre-provision income (14)
$
126,975

122,992

115,782

 
364,600

246,971

 
 
 
 
 
 
 
 
Efficiency ratio (4)
 
47.32
 %
48.18
 %
50.77
 %
 
48.35
 %
51.07
 %
Adjustment due to ORE expense and merger-related charges
 
(0.03
%)
(1.61
%)
(4.33
%)
 
(1.21
%)
(2.85
%)
Efficiency ratio (excluding ORE expense and merger-related charges)
 
47.29
 %
46.57
 %
46.44
 %
 
47.14
 %
48.22
 %
 
 
 
 
 
 
 
 
Total average assets
$
24,125,051

23,236,945

21,211,459

 
23,195,900

15,358,684

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noninterest expense to average assets
 
1.87
 %
1.91
 %
2.05
 %
 
1.92
 %
2.12
 %
Adjustment due to ORE expense and merger-related charges
 
%
(0.06
%)
(0.17
%)
 
(0.05
%)
(0.12
%)
Noninterest expense (excluding ORE expense and
merger-related charges) to average assets (1)
 
1.87
 %
1.85
 %
1.88
 %
 
1.87
 %
2.00
 %
 
 
 
 
 
 
 
 
Net income
$
93,747

86,865

64,442

 
264,122

147,181

Merger-related charges
 

2,906

8,847

 
8,259

12,740

Tax effect on merger-related charges (18)
 

(760
)
(3,471
)
 
(2,159
)
(4,998
)
Net income excluding merger-related charges
$
93,747

89,011

69,818

 
270,222

154,923

 
 
 
 
 
 
 
 
Basic earnings per share
$
1.22

1.13

0.84

 
3.42

2.48

Adjustment due to merger-related charges
 

0.02

0.07

 
0.08

0.13

Basic earnings per share excluding merger-related charges
$
1.22

1.15

0.91

 
3.50

2.61

 
 
 
 
 
 
 
 
Diluted earnings per share
$
1.21

1.12

0.83

 
3.41

2.46

Adjustment due to merger-related charges
 

0.03

0.07

 
0.08

0.13

Diluted earnings per share excluding merger-related charges
$
1.21

1.15

0.90

 
3.49

2.59

 
 
 
 
 
 
 
 
This information is preliminary and based on company data available at the time of the presentation.

16



PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
 
 
 
RECONCILIATION OF NON-GAAP SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
 
 
Three Months Ended
 
Nine Months Ended
(dollars in thousands, except per share data)
 
September 30,
June 30,
September 30,
 
September 30,
September 30,
 
2018
2018
2017
 
2018
2017
 
 
 
 
 
 
 
 
Return on average assets
 
1.54
%
1.50
%
1.21
%
 
1.52
%
1.28
%
Adjustment due to merger-related charges
 
%
0.04
%
0.10
%
 
0.04
%
0.07
%
Return on average assets excluding merger-related charges
 
1.54
%
1.54
%
1.31
%
 
1.56
%
1.35
%
 
 
 
 
 
 
 
 
Tangible assets:
 
 
 
 
 
 
 
Total assets
$
24,557,545

23,988,370

21,790,371

 
24,557,545

21,790,371

Less:   Goodwill
 
(1,807,121
)
(1,807,121
)
(1,802,534
)
 
(1,807,121
)
(1,802,534
)
Core deposit and other intangible assets
 
(48,737
)
(51,353
)
(59,781
)
 
(48,737
)
(59,781
)
Net tangible assets
$
22,701,687

22,129,896

19,928,056

 
22,701,687

19,928,056

 
 
 
 
 
 
 
 
Tangible equity:
 
 
 
 
 
 
 
Total stockholders' equity
$
3,897,041

3,826,677

3,673,349

 
3,897,041

3,673,349

Less: Goodwill
 
(1,807,121
)
(1,807,121
)
(1,802,534
)
 
(1,807,121
)
(1,802,534
)
Core deposit and other intangible assets
 
(48,737
)
(51,353
)
(59,781
)
 
(48,737
)
(59,781
)
Net tangible common equity
$
2,041,183

1,968,203

1,811,034

 
2,041,183

1,811,034

 
 
 
 
 
 
 
 
Ratio of tangible common equity to tangible assets
 
8.99
%
8.89
%
9.09
%
 
8.99
%
9.09
%
 
 
 
 
 
 
 
 
Average tangible assets:
 
 
 
 
 
 
 
Average assets
$
24,125,051

23,236,945

21,211,459

 
23,195,900

15,358,684