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MarketScreener Homepage  >  Equities  >  Nasdaq  >  Pinnacle Financial Partners    PNFP

PINNACLE FINANCIAL PARTNERS

(PNFP)
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Pinnacle Financial Partners : PNFP Reports Diluted EPS of $1.22, ROAA of 1.52% and ROTCE of 17.60% for 1Q 2019

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04/15/2019 | 05:51pm EDT

Excluding gains and losses on investment securities transactions, diluted EPS of $1.24, ROAA of 1.54% and ROTCE of 17.87% for 1Q 2019

Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $1.22 for the quarter ended March 31, 2019, compared to net income per diluted common share of $1.08 for the quarter ended March 31, 2018, an increase of 13.0 percent.

Excluding gains and losses on the sale of investment securities in both 2019 and 2018 and merger-related charges in 2018, net income per diluted common share was $1.24 for the three months ended March 31, 2019, compared to net income per diluted common share of $1.13 for the three months ended March 31, 2018, a growth rate of 9.7 percent.

"Our model is simple. First, we hire long-tenured bankers from our larger, bureaucratic competitors. Then, we support and enable them to move their clients and capture the balance sheet and fee opportunities those clients represent. And, ultimately, we capitalize on the operating leverage associated with hiring successful revenue producers to produce outsized earnings growth," said M. Terry Turner, Pinnacle's president and chief executive officer. "First quarter 2019 was another validation that our model works, as we continued to hire a meaningful number of revenue producers, continued to produce low double-digit loan growth and translated that into roughly 13 percent growth in fully diluted EPS on a GAAP basis, or 10 percent growth, after considering the impact of merger-related charges and gains and losses from investment securities transactions.

"My great friend, Ron Samuels, who is well known to many of our shareholders as the former Chairman and CEO of Avenue Bank here in Nashville, has recently decided that he is ready to retire from his day-to-day responsibilities as part of the leadership team at Pinnacle on June 30. We are grateful that he will remain on our board but will miss his everyday leadership and always optimistic perspective. On behalf of the entire Pinnacle family, I wish Ron and his wife Lynn all the best."

GROWING THE CORE EARNINGS CAPACITY OF THE FIRM:

  • Loans at March 31, 2019 were a record $18.2 billion, an increase of $1.8 billion from March 31, 2018, reflecting year-over-year growth of 11.3 percent. Loans at March 31, 2019 increased $467.4 million from Dec. 31, 2018, reflecting a linked-quarter annualized growth rate of 10.6 percent.
    • Average loans were $17.9 billion for the three months ended March 31, 2019, up $308.2 million from $17.6 billion for the three months ended Dec. 31, 2018, an annualized growth rate of 7.0 percent.
    • At March 31, 2019, the remaining discount associated with fair value accounting adjustments on acquired loans was $85.8 million, compared to $95.7 million at Dec. 31, 2018.
  • Deposits at March 31, 2019 were $18.5 billion, an increase of $2.0 billion from March 31, 2018, reflecting year-over-year growth of 12.0 percent. Deposits at March 31, 2019 decreased $368.6 million from Dec. 31, 2018, primarily from more favorable funding strategies.
    • Average deposits were $18.4 billion for the three months ended March 31, 2019, consistent with the $18.4 billion for the three months ended Dec. 31, 2018.
    • Core deposits were $16.3 billion at March 31, 2019, compared to $16.5 billion at Dec. 31, 2018 and $14.8 billion at March 31, 2018, a year-over-year growth rate of 10.8 percent.
  • Revenues for the quarter ended March 31, 2019 were $238.3 million, a decrease of $9.2 million from the $247.5 million recognized in the fourth quarter of 2018, and up $19.7 million from the first quarter of 2018. This represents a year-over-year growth rate of 9.0 percent, despite a $5.7 million reduction in the first quarter of 2019 in discount accretion associated with fair value adjustments compared to the first quarter of 2018.
    • Revenue per fully diluted share was $3.09 for the three months ended March 31, 2019, compared to $3.19 for the fourth quarter of 2018 and $2.83 for the first quarter of 2018.

"We hired 27 high-profile revenue producers in the first three months of 2019, a strong predictor of our continued future growth," Turner said. "We believe our recruiting success is creating even more opportunities for our firm to move meaningful market share from larger, more vulnerable banks and we expect to attract the best bankers who control the best clients in our markets. It is the only way I know to reliably produce outsized growth on a sound basis through a typical credit cycle.

"We expected low double-digit linked-quarter loan growth in the first quarter of 2019. We operate in 11 of the best banking markets in the United States and, given that Pinnacle is a relatively new entrant to seven of those markets, we are very optimistic about our future growth opportunities.

"Additionally, it now appears that we have successfully leveraged our distinctive culture and differentiated client experience to produce meaningful revenue synergies following our merger with BNC Bancorp," Turner said. "Many times, merger integrations have the impact of destroying associate and client engagement, which results in diminished growth and performance metrics. But at Pinnacle, largely based on how our associates responded to The Great Place to Work Institute's survey, we were recently recognized by FORTUNE magazine as the second-best place to work in Finance and Insurance, up from No. 7 on the prestigious list when the BNC merger was announced in early 2017. Similarly, Greenwich Associates recently recognized us as one of very few banks in its large research universe that has been able to establish a truly differentiated brand among businesses — specifically that we are easy to do business with. This relentless focus on associate engagement and the client experience has enabled us to produce extraordinary growth in the Carolinas and Virginia, our newest markets, even while changing the brand and converting systems. We are pleased to have experienced a compounded annual growth rate of 11 percent in both loans and deposits in that footprint since December 31, 2017."

FOCUSING ON PROFITABILITY:

  • Return on average assets was 1.52 percent for the first quarter of 2019, compared to 1.54 percent for the fourth quarter of 2018 and 1.53 percent for the first quarter last year. First quarter 2019 return on average tangible assets amounted to 1.64 percent, compared to 1.66 percent for the fourth quarter of 2018 and 1.67 percent for the first quarter of 2018.
    • Excluding gains and losses from investment securities transactions and, for 2018, merger-related charges, return on average assets was 1.54 percent for the first quarter of 2019, compared to 1.56 percent for the fourth quarter of 2018 and 1.60 percent for the first quarter of 2018. Likewise, excluding gains and losses from investment securities transactions and, for 2018, merger-related charges, the firm’s return on average tangible assets was 1.67 percent for the first quarter of 2019, compared to 1.69 percent for the fourth quarter of 2018 and 1.74 percent for the first quarter of 2018.
  • Return on average common equity for the first quarter of 2019 amounted to 9.49 percent, compared to 9.60 percent for the fourth quarter of 2018 and 9.07 percent for the first quarter of 2018. First quarter 2019 return on average tangible common equity amounted to 17.60 percent, compared to 18.14 percent for the fourth quarter of 2018 and 18.12 percent for the first quarter of 2018.
    • Excluding gains and losses from investment securities transactions and, for 2018, merger-related charges, return on average tangible common equity amounted to 17.87 percent for the first quarter of 2019, compared to 18.46 percent for the fourth quarter of 2018 and 18.98 percent for the first quarter of 2018.

"Our profitability metrics are strong and provide us the ongoing leverage to hire more revenue producers and further invest in our future growth," said Harold R. Carpenter, Pinnacle's chief financial officer. "We originally published our model for targeted profitability back in 2012 and have elevated those targets several times since. We are cognizant that our industry faces many macro challenges. In spite of these challenges, we continue to target top-quartile profitability and, more importantly, continue our focus on earnings per share growth and tangible book value per share accretion, having produced 5-year compounded annual growth rates of 14.5 percent and 12.5 percent, respectively, through the first quarter of 2019."

MAINTAINING A FORTRESS BALANCE SHEET:

  • Net charge-offs were $3.6 million for the quarter ended March 31, 2019, compared to $5.7 million for the quarter ended Dec. 31, 2018 and $4.0 million for the quarter ended March 31, 2018. Annualized net charge-offs as a percentage of average loans for the quarter ended March 31, 2019 declined to 0.08 percent, compared to 0.11 percent for the quarter ended Dec. 31, 2018 and 0.10 percent for the first quarter of 2018.
  • Nonperforming assets increased to 0.61 percent of total loans and ORE at March 31, 2019, compared to 0.58 percent at both Dec. 31, 2018 and March 31, 2018. Nonperforming assets were $111.3 million at March 31, 2019, compared to $103.2 million at Dec. 31, 2018 and $94.7 million at March 31, 2018.
  • The classified asset ratio at March 31, 2019 was 13.0 percent, compared to 12.4 percent at Dec. 31, 2018 and 12.6 percent at March 31, 2018. Classified assets were $306.8 million at March 31, 2019, compared to $284.7 million at Dec. 31, 2018 and $258.1 million at March 31, 2018.
  • The allowance for loan losses represented 0.48 percent of total loans at March 31, 2019, compared to 0.47 percent at Dec. 31, 2018 and 0.43 percent at March 31, 2018.
    • The ratio of the allowance for loan losses to nonperforming loans was 90.7 percent at March 31, 2019, compared to 95.2 percent at Dec. 31, 2018 and 100.0 percent at March 31, 2018. At March 31, 2019, purchase credit impaired loans of $10.6 million, which were recorded at fair value upon acquisition, represented 11.0 percent of the firm's nonperforming loans.
    • Provision for loan losses was $7.2 million in the first quarter of 2019, compared to $9.3 million in the fourth quarter of 2018 and $6.9 million in the first quarter of 2018.

"We are extremely pleased with where we are on asset quality," Carpenter said. "Net charge-offs, nonperforming assets and classified assets remain very low. We remain optimistic about the credit prospects for our firm for the remainder of 2019. Additionally, in terms of credit concentrations, following the BNC merger many outside observers thought that our reliance on CRE was too important to our franchise's growth goals and could not be reduced without risk to those growth goals. We are pleased to report that our long-standing competence in C&I lending has enabled us to achieve our growth targets, while our commercial real estate to total risk-based capital ratio has gradually decreased to 282.5 percent, and the ratio of construction loans to total risk-based capital also decreased to 84.1 percent at March 31, 2019."

GROWING REVENUES

  • Net interest income for the quarter ended March 31, 2019 was $187.2 million, compared to $190.2 million for the fourth quarter of 2018 and $174.5 million for the first quarter of 2018, a year-over-year growth rate of 7.3 percent. Net interest margin was 3.62 percent for the first quarter of 2019, compared to 3.63 percent for the fourth quarter of 2018 and 3.77 percent for the first quarter of 2018.
    • Included in net interest income for the first quarter of 2019 was $9.7 million of discount accretion associated with fair value adjustments, compared to $13.2 million of discount accretion recognized in the fourth quarter of 2018 and $15.4 million in the first quarter of 2018.
    • Average earning assets included $92.4 million of fair value adjustments related to our acquisitions at March 31, 2019, compared to $105.8 million at Dec. 31, 2018 and $157.9 million at March 31, 2018.
  • Noninterest income for the quarter ended March 31, 2019 was $51.1 million, compared to a record $57.3 million for the fourth quarter of 2018 and $44.2 million for the first quarter of 2018, up 15.6 percent over the first quarter of last year.
    • Wealth management revenues, which include investment, trust and insurance services, were $11.6 million for the quarter ended March 31, 2019, compared to $11.5 million for both the fourth quarter of 2018 and for the first quarter of 2018.
    • Income from the firm's investment in Bankers Healthcare Group (BHG) was $13.3 million for the quarter ended March 31, 2019, compared to $17.9 million for the quarter ended Dec. 31, 2018 and $9.4 million for the quarter ended March 31, 2018. Income from the firm's investment in BHG grew 42.0 percent for the quarter ended March 31, 2019, compared to the quarter ended March 31, 2018.
    • Other noninterest income decreased by $2.5 million between the first quarter of 2019 and the fourth quarter of 2018. Contributing to this decrease were $608,000 of decreased fees related to the firm's participation in SBA lending programs and $1.3 million less of gains on loan swaps sold to the firm's clients.
    "Adjusting for the impact of purchase accounting, we are successfully translating our increasing client counts and balance sheet growth into meaningful net interest income and fee income growth," Carpenter said. "Impacting net interest income in the first quarter was a $3.5 million reduction in discount accretion from fair value adjustments between the fourth and first quarters. Additionally, our linked-quarter net interest income also decreased due to a fewer number of business days in the first quarter. Absent these matters, we would consider linked-quarter net interest income to be quite strong in a very difficult and volatile interest rate environment. Noninterest income was also strong in the first quarter, up 15.6 percent year-over-year, as mortgage revenues improved in the current rate environment, and BHG had another phenomenal quarter."

CREATING OPERATING LEVERAGE

  • Noninterest expense for the quarter ended March 31, 2019 was $114.1 million, compared to $119.4 million in the fourth quarter of 2018 and $108.6 million in the first quarter of 2018, reflecting a year-over-year decrease of 5.0 percent.
    • Salaries and employee benefits were $70.4 million in the first quarter of 2019, compared to $74.7 million in the fourth quarter of 2018 and $63.7 million in the first quarter of 2018, reflecting a year-over-year increase of 10.4 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 $6.3 million in the first quarter of 2019, compared to $13.7 million in the fourth quarter of 2018 and $5.7 million in the first quarter of last year.
    • The efficiency ratio for the first quarter of 2019 decreased to 47.86 percent, compared to 48.25 percent for the fourth quarter of 2018 and 49.7 percent in the first quarter of 2018. The ratio of noninterest expenses to average assets decreased to 1.85 percent for the first quarter of 2019 from 1.92 percent in the fourth quarter of 2018 and 1.98 percent in the first quarter of 2018.
      • Excluding merger-related charges, gains and losses from investment securities transactions and other real estate owned (ORE) expense in each period, the efficiency ratio was 47.37 percent for the first quarter of 2019, compared to 47.55 percent for the fourth quarter of 2018 and 47.58 percent for the first quarter of 2018. Excluding ORE expense, the ratio of noninterest expense to average assets was 1.84 percent for the first quarter of 2019, compared to 1.91 percent for the fourth quarter of 2018 and 1.90 percent for the first quarter of 2018.
    • The effective tax rate for the first quarter of 2019 was 19.7 percent, compared to 19.7 percent for the fourth quarter of 2018 and 19.0 percent for the first quarter of 2018. The effective tax rate for the first quarter of 2019 includes a tax benefit related to equity compensation of $769,000, compared to $14,000 in the fourth quarter of 2018 and $2.7 million in the first quarter of 2018, respectively, associated with vesting benefits.
    • During the first quarter of 2019, the firm acquired approximately 543,600 shares of its common stock in open market transactions pursuant to its previously approved share repurchase program, at an average price of $55.25.

"We continue to be pleased with the management of our expense base and our team’s focus on growing revenues without the need to focus entirely on structural expense reductions as the primary pathway for shareholder value creation," Carpenter said. "During the first quarter of 2019, we paid our associates a target incentive award for 2018, which serves to create a lot of positive energy around our firm. As to expense run rates for 2019, other than increasing our incentive accruals should we be able to achieve our corporate earnings goals, we don’t foresee any unusual items currently. Obviously, with recent merger announcements from competitors in our markets, we’d love to capitalize on the opportunity to ramp up our hiring activity."

WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. (CDT) on April 16, 2019 to discuss first quarter 2019 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. Pinnacle Banks has the No. 1 deposit market share in the Nashville-Murfreesboro-Franklin MSA, according to June 30, 2018 deposit data from the FDIC. Pinnacle earned a place on FORTUNE’s 2017, 2018 and 2019 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 $25.6 billion in assets as of March 31, 2019. 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.

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 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 differences in interest rates on loans or deposits from those that Pinnacle Financial is modeling or anticipating 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 for associates) or otherwise to attract customers from other financial institutions; (xiv) 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 by the Consumer Financial Protection Bureau), 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) risks associated with the possible shutdown of the United States federal government, including adverse effects on the national or local economies and adverse effects resulting from a shutdown of the U.S. Small Business Administration's SBA loan program; (xxii) the availability of and access to capital; (xxiii) 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 (xxiv) general competitive, economic, political and market conditions. Additional factors which could affect the forward looking statements 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, earnings per diluted share, efficiency ratio and the ratio of noninterest expense to average assets, excluding in certain instances 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 2019 versus certain periods in 2018 and to internally prepared projections.

 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS – UNAUDITED
(dollars in thousands)      
March 31, 2019   December 31, 2018   March 31, 2018
ASSETS
Cash and noninterest-bearing due from banks $ 167,181 $ 137,433 $ 128,854
Restricted cash 101,367 65,491 15,451
Interest-bearing due from banks 210,389 516,920 222,579
Federal funds sold and other   6,560       1,848       1,879  
Cash and cash equivalents 485,497 721,692 368,763
 
Securities available-for-sale, at fair value 3,250,006 3,083,686 2,960,624
Securities held-to-maturity (fair value of $199.0 million, $193.1 million, and $20.6 million at Mar. 31, 2019, Dec. 31, 2018, and Mar. 31, 2018, respectively) 194,043 194,282 20,677
Consumer loans held-for-sale 53,658 34,196 100,231
Commercial loans held-for-sale 14,456 15,954 18,625
 
Loans 18,174,906 17,707,549 16,326,017
Less allowance for loan losses   (87,194 )   (83,575 )   (70,204 )
Loans, net 18,087,712 17,623,974 16,255,813
 
Premises and equipment, net 262,595 265,560 269,439
Equity method investment 239,861 239,237 226,704
Accrued interest receivable 79,594 79,657 60,918
Goodwill 1,807,121 1,807,121 1,808,300
Core deposits and other intangible assets 43,850 46,161 54,012
Other real estate owned 15,077 15,165 23,982
Other assets   1,024,388       904,359       767,086  
Total assets $ 25,557,858     $ 25,031,044     $ 22,935,174  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing $ 4,317,787 $ 4,309,067 $ 4,274,213
Interest-bearing 3,170,570 3,464,001 3,040,154
Savings and money market accounts 7,349,496 7,607,796 6,615,562
Time   3,642,608       3,468,243       2,572,980  
Total deposits 18,480,461 18,849,107 16,502,909
Securities sold under agreements to repurchase 100,698 104,741 131,863
Federal Home Loan Bank advances 2,121,075 1,443,589 1,976,881
Subordinated debt and other borrowings 484,703 485,130 465,550
Accrued interest payable 26,052 23,586 13,592
Other liabilities   288,930       158,951       95,076  
Total liabilities 21,501,919 21,065,104 19,185,871

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 Mar. 31, 2019 and Dec. 31, 2018 and 90.0 million shares authorized at Mar. 31, 2018; 77.1 million, 77.5 million shares and 77.9 million shares issued and outstanding at Mar. 31, 2019, Dec. 31, 2018 and Mar. 31, 2018, respectively

77,064 77,484 77,853
Additional paid-in capital 3,079,358 3,107,431 3,115,990
Retained earnings 914,545 833,130 591,680
Accumulated other comprehensive loss, net of taxes   (15,028 )     (52,105 )     (36,220 )
Total stockholders' equity   4,055,939       3,965,940       3,749,303  
Total liabilities and stockholders' equity $ 25,557,858     $ 25,031,044     $ 22,935,174  
 
This information is preliminary and based on company data available at the time of the presentation.
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED
(dollars in thousands, except for per share data)   Three Months Ended
March 31, 2019   December 31, 2018   March 31, 2018
Interest income:    
Loans, including fees $ 229,379 $ 228,599 $ 191,214
Securities
Taxable 13,540 13,013 11,222
Tax-exempt 11,672 10,286 7,285
Federal funds sold and other   3,292       4,197       1,807  
Total interest income   257,883       256,095       211,528  
 
Interest expense:
Deposits 54,217 50,123 23,981
Securities sold under agreements to repurchase 145 150 130
FHLB advances and other borrowings   16,275       15,607       12,946  
Total interest expense   70,637       65,880       37,057  
Net interest income 187,246 190,215 174,471
Provision for loan losses   7,184       9,319       6,931  
Net interest income after provision for loan losses 180,062 180,896 167,540
 
Noninterest income:
Service charges on deposit accounts 8,542 9,753 7,905
Investment services 5,404 6,136 5,245
Insurance sales commissions 2,928 2,038 3,119
Gains on mortgage loans sold, net 4,878 3,141 3,744
Investment gains and losses on sales, net (1,960 ) (2,295 ) 30
Trust fees 3,295 3,375 3,117
Income from equity method investment 13,290 17,936 9,360
Other noninterest income   14,686       17,186       11,663  
Total noninterest income   51,063       57,270       44,183  
 
Noninterest expense:
Salaries and employee benefits 70,376 74,725 63,719
Equipment and occupancy 19,331 19,073 17,743
Other real estate, net 246 631 (794 )
Marketing and other business development 2,948 3,628 2,247
Postage and supplies 1,892 1,831 2,039
Amortization of intangibles 2,311 2,576 2,698
Merger-related expenses 5,353
Other noninterest expense   16,947       16,945       15,575  
Total noninterest expense   114,051       119,409       108,580  
Income before income taxes 117,074 118,757 103,143
Income tax expense   23,114       23,439       19,633  
Net income $ 93,960     $ 95,318     $ 83,510  
 
Per share information:
Basic net income per common share $ 1.22     $ 1.24     $ 1.08  
Diluted net income per common share $ 1.22     $ 1.23     $ 1.08  
 
Weighted average shares outstanding:
Basic 76,803,171 77,096,522 77,077,957
Diluted 77,127,692 77,469,803 77,365,664
 
This information is preliminary and based on company data available at the time of the presentation.
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
         
(dollars in thousands) March December September June March December
  2019     2018     2018     2018     2018     2017  
Balance sheet data, at quarter end:
Commercial and industrial loans $ 5,419,520 5,271,420 5,006,247 4,821,299 4,490,886 4,141,341
Commercial real estate - owner occupied 2,617,541 2,653,433 2,688,247 2,504,891 2,427,946 2,460,015
Commercial real estate - investment 4,107,953 3,855,643 3,818,055 3,822,182 3,714,854 3,564,048
Commercial real estate - multifamily and other 693,652 655,879 708,817 697,566 651,488 645,547
Consumer real estate - mortgage loans 2,887,628 2,844,447 2,815,160 2,699,399 2,580,766 2,561,214
Construction and land development loans 2,097,570 2,072,455 2,059,009 2,133,646 2,095,875 1,908,288
Consumer and other 351,042 354,272 368,474 363,870 364,202 352,663
Total loans 18,174,906 17,707,549 17,464,009 17,042,853 16,326,017 15,633,116
Allowance for loan losses (87,194 ) (83,575 ) (79,985 ) (75,670 ) (70,204 ) (67,240 )
Securities 3,444,049 3,277,968 3,199,579 2,975,469 2,981,301 2,536,045
Total assets 25,557,858 25,031,044 24,557,545 23,988,370 22,935,174 22,205,700
Noninterest-bearing deposits 4,317,787 4,309,067 4,476,925 4,361,414 4,274,213 4,381,386
Total deposits 18,480,461 18,849,107 18,407,515 17,857,418 16,502,909 16,451,702
Securities sold under agreements to repurchase 100,698 104,741 130,217 128,739 131,863 135,262
FHLB advances 2,121,075 1,443,589 1,520,603 1,581,867 1,976,881 1,319,909
Subordinated debt and other borrowings 484,703 485,130 465,487 465,433 465,550 465,505
Total stockholders' equity 4,055,939 3,965,940 3,897,041 3,826,677 3,749,303 3,707,952
Balance sheet data, quarterly averages:
Total loans $ 17,938,480 17,630,281 17,259,139 16,729,734 15,957,466 15,520,255
Securities 3,302,676 3,148,638 3,075,633 2,970,267 2,829,604 2,850,322
Federal funds sold and other 469,909 645,644 647,728 442,401 335,093 439,167
Total earning assets 21,711,065 21,424,563 20,982,500 20,142,402 19,122,163 18,809,744
Total assets 25,049,954 24,616,733 24,125,051 23,236,945 22,204,599 21,933,500
Noninterest-bearing deposits 4,195,443 4,317,782 4,330,917 4,270,459 4,304,186 4,165,876
Total deposits 18,358,094 18,368,012 18,112,766 16,949,374 16,280,581 16,091,700
Securities sold under agreements to repurchase 109,306 119,247 146,864 123,447 129,969 134,983
FHLB advances 1,926,358 1,689,920 1,497,511 1,884,828 1,584,281 1,465,145
Subordinated debt and other borrowings 470,775 469,074 468,990 474,328 471,029 477,103
Total stockholders' equity 4,017,375 3,939,927 3,874,430 3,795,963 3,732,633 3,706,741
Statement of operations data, for the three months ended:
Interest income $ 257,883 256,095 248,110 230,984 211,528 208,371
Interest expense   70,637     65,880     58,690     48,748     37,057     33,354  
Net interest income 187,246 190,215 189,420 182,236 174,471 175,017
Provision for loan losses   7,184     9,319     8,725     9,402     6,931     6,281  
Net interest income after provision for loan losses 180,062 180,896 180,695 172,834 167,540 168,736
Noninterest income 51,063 57,270 51,478 47,939 44,183 36,202
Noninterest expense   114,051     119,409     113,990     110,908     108,580     122,973  
Income before taxes 117,074 118,757 118,183 109,865 103,143 81,965
Income tax expense   23,114     23,439     24,436     23,000     19,633     55,167  
Net income $ 93,960     95,318     93,747     86,865     83,510     26,798  
 
Profitability and other ratios:
Return on avg. assets (1) 1.52 % 1.54 % 1.54 % 1.50 % 1.53 % 0.48 %
Return on avg. common equity (1) 9.49 % 9.60 % 9.60 % 9.18 % 9.07 % 2.87 %
Return on avg. tangible common equity (1) 17.60 % 18.14 % 18.44 % 18.01 % 18.12 % 5.76 %
Dividend payout ratio (16) 13.39 % 13.79 % 14.89 % 16.57 % 18.36 % 20.00 %
Net interest margin (2) 3.62 % 3.63 % 3.65 % 3.69 % 3.77 % 3.76 %
Noninterest income to total revenue (3) 21.43 % 23.14 % 21.37 % 20.83 % 20.21 % 17.27 %
Noninterest income to avg. assets (1) 0.83 % 0.92 % 0.85 % 0.83 % 0.81 % 0.66 %
Noninterest exp. to avg. assets (1) 1.85 % 1.92 % 1.87 % 1.91 % 1.98 % 2.22 %
Efficiency ratio (4) 47.86 % 48.25 % 47.32 % 48.18 % 49.66 % 58.22 %
Avg. loans to avg. deposits 97.71 % 95.98 % 95.29 % 98.70 % 98.02 % 96.45 %
Securities to total assets 13.48 % 13.10 % 13.03 % 12.40 % 13.00 % 11.42 %
 
This information is preliminary and based on company data available at the time of the presentation.
 
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
March 31, 2019 March 31, 2018

Average

Balances

  Interest  

Rates/

Yields

Average

Balances

  Interest  

Rates/

Yields

Interest-earning assets        
Loans (1) (2) $ 17,938,480 $ 229,379 5.28 % $ 15,957,466 $ 191,214 4.91 %
Securities
Taxable 1,845,927 13,540 2.97 % 1,794,402 11,222 2.54 %
Tax-exempt (2) 1,456,749 11,672 3.87 % 1,035,202 7,285 3.44 %
Federal funds sold and other   469,909     3,292   2.84 %   335,093     1,807   2.19 %
Total interest-earning assets 21,711,065 $ 257,883   4.94 % 19,122,163 $ 211,528   4.56 %
Nonearning assets
Intangible assets 1,852,451 1,863,736
Other nonearning assets   1,486,438   1,218,700
Total assets $ 25,049,954 $ 22,204,599
 
Interest-bearing liabilities
Interest-bearing deposits:
Interest bearing demand deposits $ 749,975 $ 3,285 1.78 % $ 774,883 $ 1,782 0.93 %
Interest checking 2,380,517 6,038 1.03 % 2,198,707 3,332 0.61 %
Savings and money market 7,539,052 26,336 1.42 % 6,454,463 11,988 0.75 %
Time   3,493,107     18,558   2.15 %   2,548,342     6,879   1.09 %
Total interest-bearing deposits 14,162,651 54,217 1.55 % 11,976,395 23,981 0.81 %
Securities sold under agreements to repurchase 109,306 145 0.54 % 129,969 130 0.40 %
Federal Home Loan Bank advances 1,926,358 9,963 2.10 % 1,584,281 7,007 1.79 %
Subordinated debt and other borrowings   470,775     6,312   5.44 %   471,029     5,939   5.11 %
Total interest-bearing liabilities 16,669,090 70,637 1.72 % 14,161,674 37,057 1.06 %
Noninterest-bearing deposits   4,195,443           4,304,186        
Total deposits and interest-bearing liabilities 20,864,533 $ 70,637   1.37 % 18,465,860 $ 37,057   0.81 %
Other liabilities 168,046 6,106
Stockholders' equity   4,017,375   3,732,633
Total liabilities and stockholders' equity $ 25,049,954 $ 22,204,599
Net interest income $ 187,246 $ 174,471
Net interest spread (3) 3.22 % 3.50 %
Net interest margin (4) 3.62 % 3.77 %

 

(1) Average balances of nonperforming loans are included in the above amounts.

(2) Yields computed on tax-exempt instruments on a tax equivalent basis. The tax-exempt benefit has been reduced by the projected impact of tax-exempt income that will be disallowed pursuant to IRS Regulations as of and for the then current period presented.
(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 March 31, 2019 would have been 3.57% compared to a net interest spread of 3.75% for the quarter ended March 31, 2018.
(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.
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
           
(dollars in thousands) March December September June March December
  2019     2018     2018     2018     2018     2017  
Asset quality information and ratios:
Nonperforming assets:
Nonaccrual loans 96,144 87,834 77,868 70,887 70,202 57,455

Other real estate (ORE) and other nonperforming assets (NPAs)

  15,138     15,393     17,731     20,229     24,533     28,028  
Total nonperforming assets $ 111,282     103,227     95,599     91,116     94,735     85,483  
Past due loans over 90 days and still accruing interest $ 1,982 1,558 1,773 1,572 1,131 4,139
Accruing troubled debt restructurings (5) $ 5,481 5,899 6,125 5,647 6,115 6,612
Accruing purchase credit impaired loans $ 13,122 14,743 21,473 22,993 24,398 26,719
Net loan charge-offs $ 3,565 5,729 4,410 3,936 3,967 4,200
Allowance for loan losses to nonaccrual loans 90.7 % 95.2 % 102.7 % 106.7 % 100.0 % 117.0 %
As a percentage of total loans:
Past due accruing loans over 30 days 0.22 % 0.34 % 0.25 % 0.23 % 0.24 % 0.38 %
Potential problem loans (6) 1.05 % 1.00 % 1.16 % 1.00 % 0.97 % 1.05 %
Allowance for loan losses 0.48 % 0.47 % 0.46 % 0.44 % 0.43 % 0.43 %
Nonperforming assets to total loans, ORE and other NPAs 0.61 % 0.58 % 0.55 % 0.53 % 0.58 % 0.55 %
Nonperforming assets to total assets 0.44 % 0.41 % 0.39 % 0.38 % 0.41 % 0.38 %
Classified asset ratio (Pinnacle Bank) (8) 13.0 % 12.4 % 13.7 % 12.6 % 12.6 % 12.9 %
Annualized net loan charge-offs to avg. loans (7) 0.08 % 0.11 % 0.10 % 0.10 % 0.10 % 0.13 %
Wtd. avg. commercial loan internal risk ratings (6) 44.9 44.4 4.5 4.4 4.4 4.5
Interest rates and yields:
Loans 5.28 % 5.22 % 5.15 % 5.04 % 4.91 % 4.87 %
Securities 3.37 % 3.22 % 3.11 % 2.91 % 2.87 % 2.68 %
Total earning assets 4.94 % 4.85 % 4.76 % 4.66 % 4.56 % 4.46 %
Total deposits, including non-interest bearing 1.20 % 1.08 % 0.97 % 0.78 % 0.60 % 0.53 %
Securities sold under agreements to repurchase 0.54 % 0.50 % 0.44 % 0.47 % 0.40 % 0.38 %
FHLB advances 2.10 % 2.18 % 2.16 % 2.06 % 1.79 % 1.64 %
Subordinated debt and other borrowings 5.44 % 5.33 % 5.29 % 5.20 % 5.11 % 4.83 %
Total deposits and interest-bearing liabilities 1.37 % 1.27 % 1.15 % 1.01 % 0.81 % 0.73 %
 
Capital and other ratios (8):
Pinnacle Financial ratios:
Stockholders' equity to total assets 15.9 % 15.8 % 15.9 % 16.0 % 16.3 % 16.7 %
Common equity Tier one 9.4 % 9.6 % 9.4 % 9.3 % 9.2 % 9.2 %
Tier one risk-based 9.4 % 9.6 % 9.4 % 9.3 % 9.2 % 9.2 %
Total risk-based 12.0 % 12.2 % 12.1 % 12.0 % 12.0 % 12.0 %
Leverage 9.0 % 8.9 % 8.8 % 8.8 % 8.8 % 8.7 %
Tangible common equity to tangible assets 9.3 % 9.1 % 9.0 % 8.9 % 9.0 % 9.1 %
Pinnacle Bank ratios:
Common equity Tier one 10.4 % 10.5 % 10.3 % 10.2 % 10.3 % 10.3 %
Tier one risk-based 10.4 % 10.5 % 10.3 % 10.2 % 10.3 % 10.3 %
Total risk-based 11.4 % 11.5 % 11.4 % 11.2 % 11.3 % 11.4 %
Leverage 9.9 % 9.8 % 9.6 % 9.7 % 9.8 % 9.7 %

Construction and land development loans as a percentage of total capital (19)

84.1 % 85.2 % 87.8 % 94.6 % 96.1 % 89.4 %

Non-owner occupied commercial real estate and multi-family as a percentage of total capital (19)

282.5 % 277.7 % 287.6 % 304.3 % 306.2 % 297.1 %
 
This information is preliminary and based on company data available at the time of the presentation.
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
           
(dollars in thousands, except per share data) March December September June March December
  2019     2018     2018     2018     2018     2017  
 
Per share data:
Earnings – basic $ 1.22 1.24 1.22 1.13 1.08 0.35

Earnings - basic, excluding merger-related charges, gains and losses on sales of investment securities and revaluation of deferred tax assets

$ 1.24 1.26 1.22 1.15 1.13 0.98
Earnings – diluted $ 1.22 1.23 1.21 1.12 1.08 0.35
Earnings - diluted, excluding merger-related charges, gains and losses on sales of investment securities and revaluation of deferred tax assets $ 1.24 1.25 1.21 1.15 1.13 0.97
Common dividends per share $ 0.16 0.16 0.14 0.14 0.14 0.14
Book value per common share at quarter end (9) $ 52.63 51.18 50.05 49.15 48.16 47.70
Tangible book value per common share at quarter end (9) $ 28.61 27.27 26.21 25.28 24.24 23.71
Revenue per diluted share $ 3.09 3.19 3.11 2.97 2.83 2.73
Revenue per diluted share, excluding investment (gains) losses on sale of securities, net $ 3.12 3.22 3.11 2.97 2.83 2.83
Noninterest expense per diluted share $ 1.48 1.54 1.47 1.43 1.40 1.59
Noninterest expense per diluted share, excluding the impact of other real estate expense and merger-related charges $ 1.48 1.53 1.47 1.38 1.34 1.34
 
Investor information:
Closing sales price on last trading day of quarter $ 54.70 46.10 60.15 61.35 64.20 66.30
High closing sales price during quarter $ 59.55 61.04 66.20 68.10 69.45 69.30
Low closing sales price during quarter $ 46.35 44.03 60.05 61.35 60.20 63.85
 
Other information:
Gains on residential mortgage loans sold:
Residential mortgage loan sales:
Gross loans sold $ 193,830 236,861 278,073 264,934 237,667 289,149
Gross fees (10) $ 5,695 6,184 7,756 7,134 6,036 7,364
Gross fees as a percentage of loans originated 2.94 % 2.61 % 2.79 % 2.69 % 2.54 % 2.55 %
Net gain on residential mortgage loans sold $ 4,878 3,141 3,902 3,777 3,744 3,839
Investment gains (losses) on sales of securities, net (15) $ (1,960 ) (2,295 ) 11 30 (8,265 )
Brokerage account assets, at quarter end (11) $ 4,122,980 3,763,911 3,998,774 3,745,635 3,508,669 3,266,936
Trust account managed assets, at quarter end $ 2,263,095 2,055,861 2,074,027 1,920,226 1,844,871 1,837,233
Core deposits (12) $ 16,340,763 16,489,173 16,076,859 15,400,142 14,750,211 14,838,208
Core deposits to total funding (12) 88.4 % 79.0 % 78.3 % 76.9 % 77.3 % 80.8 %
Risk-weighted assets $ 22,001,959 21,137,263 20,705,547 20,151,827 19,286,101 18,812,653
Number of offices 114 114 115 115 114 114
Total core deposits per office $ 143,340 144,642 139,799 133,914 129,388 130,160
Total assets per full-time equivalent employee $ 10,997 10,897 10,917 10,911 10,677 10,415
Annualized revenues per full-time equivalent employee $ 415.9 427.5 424.9 419.9 412.8 393.1
Annualized expenses per full-time equivalent employee $ 199.0 206.2 201.0 202.3 205.0 228.8
Number of employees (full-time equivalent) 2,324.0 2,297.0 2,249.5 2,198.5 2,148.0 2,132.0
Associate retention rate (13) 92.8 % 92.3 % 91.1 % 89.6 % 89.9 % 93.5 %
 
This information is preliminary and based on company data available at the time of the presentation.
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
  Three Months Ended
(dollars in thousands, except per share data) March 31,   December 31,   March 31,
  2019     2018     2018  
 
Net interest income $ 187,246 190,215 174,471
 
Noninterest income   51,063     57,270     44,183  
Total revenues 238,309 247,485 218,654
Less: Investment (gains) losses on sales of securities, net   1,960     2,295     (30 )

Total revenues excluding the impact of investment (gains) losses on sales of securities, net

  240,269     249,780     218,684  
 
Noninterest expense 114,051 119,409 108,580
Less: Other real estate (ORE) expense 246 631 (794 )
Merger-related charges           5,353  

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

  113,805     118,778     104,021  
 
Adjusted pre-tax pre-provision income(14) $ 126,464     131,002     114,663  
 
Efficiency ratio (4) 47.86 % 48.25 % 49.66 %

Adjustment due to investment gains and losses, ORE expense and merger-related charges

  (0.49 )%   (0.70 )%   (2.08 )%

Efficiency ratio (excluding investment gains and losses, ORE expense and merger-related charges)

  47.37 %   47.55 %   47.58 %
 
Total average assets $ 25,049,954     24,616,733     22,204,599  
 
Noninterest expense to average assets 1.85 % 1.92 % 1.98 %
Adjustment due to ORE expense and merger-related charges   (0.01 )%   (0.01 )%   (0.08 )%

Noninterest expense (excluding ORE expense and merger-related charges) to average assets (1)

  1.84 %   1.91 %   1.90 %
 
Net income $ 93,960 95,318 83,510
Merger-related charges 5,353
Investment (gains) losses on sales of securities, net 1,960 2,295 (30 )

Tax effect on merger-related charges and investment gains and losses (18)

  (512 )   (600 )   (1,391 )

Net income excluding merger-related charges and gains and losses on sales of investment securities

$ 95,408     97,013     87,442  
 
Basic earnings per share $ 1.22 1.24 1.08

Adjustment due to merger-related charges and gains and losses on sales of investment securities

  0.02     0.02     0.05  

Basic earnings per share excluding merger-related charges and gains and losses on sales of investment securities

$ 1.24     1.26     1.13  
 
Diluted earnings per share $ 1.22 1.23 1.08

Adjustment due to merger-related charges and gains and losses on sales of investment securities

  0.02     0.02     0.05  

Diluted earnings per share excluding merger-related charges and gains and losses on sales of investment securities

$ 1.24     1.25     1.13  
 
This information is preliminary and based on company data available at the time of the presentation.
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
  Three Months Ended
(dollars in thousands, except per share data) March 31,   December 31,   March 31,
  2019     2018     2018  
 
Return on average assets 1.52 % 1.54 % 1.53 %

Adjustment due to merger-related charges and gains and losses on sales of investment securities

  0.02 %   0.02 %   0.07 %

Return on average assets excluding merger-related charges and gains and losses on sales of investment securities

  1.54 %   1.56 %   1.60 %
 
Tangible assets:
Total assets $ 25,557,858 25,031,044 22,935,174
Less: Goodwill (1,807,121 ) (1,807,121 ) (1,808,300 )
Core deposit and other intangible assets   (43,850 )   (46,161 )   (54,012 )
Net tangible assets $ 23,706,887     23,177,762     21,072,862  
 
Tangible equity:
Total stockholders' equity $ 4,055,939 3,965,940 3,749,303
Less: Goodwill (1,807,121 ) (1,807,121 ) (1,808,300 )
Core deposit and other intangible assets   (43,850 )   (46,161 )   (54,012 )
Net tangible common equity $ 2,204,968     2,112,658     1,886,991  
 
Ratio of tangible common equity to tangible assets   9.30 %   9.12 %   8.95 %
 
Average tangible assets:
Average assets $ 25,049,954 24,616,733 22,204,599
Less: Average goodwill (1,807,121 ) (1,807,121 ) (1,808,055 )
Average core deposit and other intangible assets   (45,330 )   (47,711 )   (55,681 )
Net average tangible assets $ 23,197,503     22,761,901     20,340,863  
 
Return on average assets 1.52 % 1.54 % 1.53 %

Adjustment due to goodwill, core deposit and other intangible assets

  0.12 %   0.12 %   0.14 %
Return on average tangible assets 1.64 % 1.66 % 1.67 %

Adjustment due to merger-related charges and gains and losses on sales of investment securities

  0.03 %   0.03 %   0.07 %

Return on average tangible assets excluding merger-related charges and gains and losses on sales of investment securities

  1.67 %   1.69 %   1.74 %
 
This information is preliminary and based on company data available at the time of the presentation.
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
  Three Months Ended
(dollars in thousands, except per share data) March 31,   December 31,   March 31,
  2019     2018     2018  
 
Average tangible stockholders' equity:
Average stockholders' equity $ 4,017,375 3,939,927 3,732,633
Less: Average goodwill (1,807,121 ) (1,807,121 ) (1,808,055 )
Average core deposit and other intangible assets   (45,330 )   (47,711 )   (55,681 )
Net average tangible common equity $ 2,164,924     2,085,095     1,868,897  
 
Return on average common equity 9.49 % 9.60 % 9.07 %
Adjustment due to goodwill, core deposit and other intangible assets   8.11 %   8.54 %   9.05 %
Return on average tangible common equity (1) 17.60 % 18.14 % 18.12 %

Adjustment due to merger-related charges and gains and losses on sales of investment securities

  0.27 %   0.32 %   0.86 %

Return on average tangible common equity excluding merger-related charges, and gains and losses on sales of investment securities

  17.87 %   18.46 %   18.98 %
 
Total average assets $ 25,049,954     24,616,733     22,204,599  
 
Book value per common share at quarter end $ 52.63 51.18 48.16
Adjustment due to goodwill, core deposit and other intangible assets   (24.02 )   (23.91 )   (23.92 )
Tangible book value per common share at quarter end (9) $ 28.61     27.27     24.24  
 
Noninterest expense per diluted share $ 1.48 1.54 1.40
Adjustment due to ORE expense and merger-related charges       (0.01 )   (0.06 )

Noninterest expense (excluding ORE expense and merger-related charges) per diluted share

$ 1.48     1.53     1.34  
 
Equity method investment (17)
Fee income from BHG, net of amortization $ 13,290 17,936 9,360
Funding cost to support investment   2,379     2,354     2,004  
Pre-tax impact of BHG 10,911 15,582 7,356
Income tax expense at statutory rates   2,852     4,073     1,923  
Earnings attributable to BHG $ 8,059     11,509     5,433  
 
Basic earnings per share attributable to BHG $ 0.10 0.15 0.07
Diluted earnings per share attributable to BHG $ 0.10 0.15 0.07
 
This information is preliminary and based on company data available at the time of the presentation.
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
 
1. Ratios are presented on an annualized basis.
2. Net interest margin is the result of net interest income on a tax equivalent basis divided by average interest earning assets.
3. Total revenue is equal to the sum of net interest income and noninterest income.
4. Efficiency ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.
5. Troubled debt restructurings include loans where the company, as a result of the borrower's financial difficulties, has granted a credit concession to the borrower (i.e., interest only payments for a significant period of time, extending the maturity of the loan, etc.). All of these loans continue to accrue interest at the contractual rate.
6. Average risk ratings are based on an internal loan review system which assigns a numeric value of 1 to 10 for quarters ended prior to Dec. 31, 2018 and 10 to 100 for all subsequent periods to all loans to commercial entities based on their underlying risk characteristics as of the end of each quarter. The risk rating scale was changed to allow for granularity, if needed, in criticized and classified risk ratings to distinguish accrual status or structural loan issues. A "10" risk rating is assigned to credits that exhibit Excellent risk characteristics, "20" exhibit Very Good risk characteristics, "30" Good, "40" Satisfactory, "50" Acceptable or Average, "60" Watch List, "70" Criticized, "80" Classified or Substandard, "90" Doubtful and "100" Loss (which are charged-off immediately). Additionally, loans rated "80" or worse that are not nonperforming or restructured loans are considered potential problem loans. Generally, consumer loans are not subjected to internal risk ratings.
7. Annualized net loan charge-offs to average loans ratios are computed by annualizing quarter-to-date net loan charge-offs and dividing the result by average loans for the quarter-to-date period.
8. Capital ratios are calculated using regulatory reporting regulations enacted for such period and are defined as follows:
Equity to total assets – End of period total stockholders' equity as a percentage of end of period assets.
Tangible common equity to tangible assets - End of period total stockholders' equity less end of period goodwill, core deposit and other intangibles as a percentage of end of period assets.
Leverage – Tier I capital (pursuant to risk-based capital guidelines) as a percentage of adjusted average assets.
Tier I risk-based – Tier I 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.
Classified asset - Classified assets as a percentage of Tier 1 capital plus allowance for loan losses.
Tier I common equity to risk weighted assets - Tier 1 capital (pursuant to risk-based capital guidelines) less the amount of any preferred stock or subordinated indebtedness that is considered as a component of Tier 1 capital as a percentage of total risk-weighted assets.
9. Book value per share computed by dividing total stockholders' equity by common shares outstanding. Tangible book value per share computed by dividing total stockholder's equity, less goodwill, core deposit and other intangibles by common shares outstanding.
10. Amounts are included in the statement of operations in "Gains on mortgage loans sold, net", net of commissions paid on such amounts.
11. At fair value, based on information obtained from Pinnacle's third party broker/dealer for non-FDIC insured financial products and services.
12. Core deposits include all transaction deposit accounts, money market and savings accounts and all certificates of deposit issued in a denomination of less than $250,000. Periods prior to the second quarter of 2018 have been restated to reflect regulatory changes that were adopted in the second quarter of 2018 that permit reciprocal deposits to be treated as core deposits if they otherwise qualify as such. 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.
13. 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. Associate retention rate does not include associates at acquired institutions displaced by merger.
14. Adjusted pre-tax, pre-provision income excludes the impact of other real estate expenses and income, investment gains and losses on sales of securities and merger-related charges.
15. Represents investment gains (losses) on sales and impairments, net occurring as a result of gains or losses incurred as the result of a change in management's intention to sell a bond prior to the recovery of its amortized cost basis.
16. The dividend payout ratio is calculated as the sum of the annualized dividend rate divided by the trailing 12-months fully diluted earnings per share as of the dividend declaration date.
17. Earnings from equity method investment includes the impact of the issuance of subordinated debt as well as the funding costs of the overall franchise. Income tax expense is calculated using statutory tax rates.
18. Tax effect calculated using the blended statutory rate of 39.23 percent for all periods prior to 2018. For 2018 and 2019, tax effect calculated using the blended statutory rate of 26.14 percent.
19. Calculated using the same guidelines as are used in the Federal Financial Institutions Examination Council's Uniform Bank Performance Report.


© Business Wire 2019
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Financials (USD)
Sales 2019 1 044 M
EBIT 2019 549 M
Net income 2019 395 M
Debt 2019 -
Yield 2019 1,11%
P/E ratio 2019 11,4x
P/E ratio 2020 10,9x
Capi. / Sales2019 4,31x
Capi. / Sales2020 4,03x
Capitalization 4 499 M
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Mean consensus BUY
Number of Analysts 10
Average target price 65,11  $
Last Close Price 58,82  $
Spread / Highest target 24,1%
Spread / Average Target 10,7%
Spread / Lowest Target -1,39%
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Managers
NameTitle
M. Terry Turner President, Chief Executive Officer & Director
Robert A. McCabe Chairman
Harold R. Carpenter CFO, EVP & Director-Investor Relations
Randy Withrow Chief Information Officer & Senior Vice President
Gregory L. Burns Independent Director
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