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PNFP reports DILUTED earnings per share of $0.65 for 4Q 2015

Excluding merger-related charges, diluted EPS was a record $0.69 for 4Q 2015


NASHVILLE, TN, Jan. 19, 2016 – Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $0.65 for the quarter ended Dec. 31, 2015, compared to net income per diluted common share of $0.53 for the quarter ended Dec. 31, 2014, an increase of 22.6 percent. Net income per diluted common share was $2.52 for the year ended Dec. 31, 2015, compared to net income per diluted common share of $2.01 for the year ended Dec. 31, 2014, an increase of 25.4 percent.

Excluding pre-tax merger-related charges of $2.5 million and $4.8 million for the three months and year ended Dec. 31, 2015, respectively, net income per diluted common share was $0.69 for the three months ended Dec. 31, 2015, or a 30.2 percent increase over the same period last year, and $2.61 for the year ended Dec. 31, 2015, or a 29.9 percent increase over the year ended Dec. 31, 2014.

Pinnacle completed the acquisitions of CapitalMark Bank & Trust (CapitalMark) on July 31, 2015 and Magna Bank (Magna) on Sept. 1, 2015. The financial statements accompanying this press release and the financial condition and results of operations described herein reflect the impact of the acquisitions beginning on the respective acquisition dates and are subject to future refinements in the firm’s purchase accounting adjustments.

“I could not be more proud of our associates as I look back on a very successful 2015,” said M. Terry Turner, Pinnacle’s president and chief executive officer. “At the beginning of the year, we outlined several longer-term initiatives, including expansion into Memphis and Chattanooga, investing in fee businesses that we believe will drive shareholder value and continuing our focus on improved bottom-line results. With the acquisitions of CapitalMark and Magna, we now are in a great position to grow our brand in both Chattanooga and Memphis. Earlier in 2015, we also acquired a 30 percent interest in Bankers Healthcare Group (BHG). We believe our partnership with BHG has produced outstanding results for our firm and today we are separately announcing that we have entered into an agreement to increase our investment in BHG. Lastly, excluding merger charges, we are reporting earnings growth of 29.9 percent in 2015. At the beginning of the year, street expectations for earnings growth for our firm approximated 15 percent for 2015, so for our associates to produce these outsized results is a tremendous accomplishment.”

 

Growing the Core Earnings Capacity of the Firm:

  • Revenues (excluding securities gains and losses) for the quarter ended Dec. 31, 2015 were a record $98.1 million, an increase of $14.6 million from the third quarter of 2015. Revenues (excluding securities gains and losses) increased 51.6 percent over the same quarter last year.
  • Loans at Dec. 31, 2015 were a record $6.543 billion, an increase of $207.2 million from Sept. 30, 2015 and $1.953 billion from Dec. 31, 2014, reflecting year-over-year growth of 42.6 percent. Annualized linked-quarter fourth quarter loan growth approximated 13.1 percent when comparing balances as of Dec. 31, 2015 to balances as of Sept. 30, 2015.  
  • Average balances of noninterest-bearing deposit accounts were $1.949 billion in the fourth quarter of 2015 and represented approximately 28.7 percent of total average deposit balances for the quarter. Fourth quarter 2015 average noninterest-bearing deposits increased 41.9 percent over the same quarter last year.

 

“We continue to believe that banking firms like ours that are capable of significant core deposit growth will be those most highly valued by investors,” Turner said. “The rapid rate of organic growth in loans and core deposits across our franchise indicates not only that we operate in great banking markets, but also that our core strategies of hiring the best bankers in our markets, focusing on the commercial and affluent consumer segments and competing aggressively with the large regional banking firms continue to produce value for our shareholders. In 2015, exclusive of our acquisitions, our ongoing recruitment efforts added 36 revenue-producing associates as we continue to invest in future growth. This level of recruitment is significantly higher than that of the past few years. As we enter 2016, our recruiting pipelines give me increased optimism that our firm remains the preferred employer for the best bankers in our markets. In general, despite the incremental personnel and related expenses, the quality and success of our new hires has enabled us to drive our efficiency and noninterest expense to average asset ratios, excluding merger-related expenses, to their best levels ever.”

 

FOCUSING ON PROFITABILITY:

  • The firm’s net interest margin was 3.73 percent for the quarter ended Dec. 31, 2015, compared to 3.66 percent last quarter and 3.76 percent for the quarter ended Dec. 31, 2014.
  • Return on average assets was 1.24 percent for the fourth quarter of 2015, compared to 1.27 percent for the third quarter of 2015 and for the same quarter last year. Excluding merger-related charges, return on average assets was 1.31 percent for the fourth quarter of 2015.
  • Fourth quarter 2015 return on average tangible equity amounted to 14.97 percent, compared to 14.49 percent for the third quarter of 2015 and 13.52 percent for the same quarter last year. Excluding merger-related charges, return on average tangible equity amounted to 15.81 percent for the fourth quarter of 2015.

Even with significant investments in new markets and new associates in 2015, we experienced improvement in substantially all of our profitability metrics after excluding merger-related charges,” said Harold R. Carpenter, Pinnacle’s chief financial officer. “We will continue to monitor our planned and actual performance against all of our long-term profitability targets, as we believe those targets have helped guide us to be one of the most profitable banking firms in the country. That said, even though profitability metrics are important, the consistent growth of the core earnings capacity of our franchise will remain our primary focus.”

 

OTHER FOURTH QUARTER 2015 HIGHLIGHTS:

  • Revenue growth
    • Net interest income for the quarter ended Dec. 31, 2015 increased to a record $71.5 million, compared to $62.1 million for the third quarter of 2015 and $50.3 million for the fourth quarter of 2014. Net interest income for the year ended Dec. 31, 2015 increased 22.6 percent as compared to the same period in 2014
    • Noninterest income for the quarter ended Dec. 31, 2015 increased to a record $26.6 million, compared to $21.4 million for the third quarter of 2015 and $14.4 million for the same quarter last year. Noninterest income for the year ended Dec. 31, 2015 increased 64.5 percent as compared to the same period in 2014.
      • Wealth management revenues, which include investment, trust and insurance services, were $5.4 million for the quarter ended Dec. 31, 2015, compared to $5.1 million for the quarter ended Sept. 30, 2015, resulting in a year-over-year growth rate of 6.2 percent.
      • Income from the firm’s investment in BHG was $7.8 million for the quarter ended Dec. 31, 2015, compared to $5.3 million for the quarter ended Sept. 30, 2015. The firm’s investment in BHG contributed slightly less than $0.12 in diluted earnings per share in the fourth quarter of 2015, compared to $0.07 in each of the second and third quarters of 2015.

Given our relatively recent transition to asset sensitivity, we were pleased to see the mid-December Fed funds rate increase,” Carpenter said. “Since that date and through mid-January, approximately $2.16 billion in loans have repriced, while our funding costs have increased only modestly. We also remain pleased with our BHG investment and the results it has provided to our firm. We are announcing separately today that we have committed to increase our investment in BHG. We continue to believe future opportunities are available to both firms as a result of our partnership.”

  • Noninterest expense
    • Noninterest expense for the quarter ended Dec. 31, 2015 was $52.2 million, compared to $45.1 million in the third quarter of 2015 and $34.4 million in the same quarter last year.
      • Salaries and employee benefits were $30.9 million in the fourth quarter of 2015, compared to $27.7 million in the third quarter of 2015 and $23.0 million in the same quarter last year. Incentive costs associated with the firm’s annual cash incentive plan amounted to $3.9 million in the fourth quarter of 2015, compared to $3.6 million in the third quarter of 2015.
      • Merger-related expenses were approximately $4.8 million during the year ended Dec. 31, 2015. The firm will continue to incur additional merger-related expenses for CapitalMark and Magna in future periods primarily due to increased training costs and the conversions of technology systems.
      • The efficiency ratio for the fourth quarter of 2015 decreased to 53.2 percent from 54.0 percent in the third quarter of 2015, and the ratio of noninterest expenses, including merger-related charges, to average assets increased to 2.42 percent from 2.38 in the third quarter of 2015. Excluding merger-related charges, ORE expense and FHLB prepayment charges, the efficiency ratio for the fourth quarter of 2015 decreased to 50.6 percent, and the ratio of noninterest expenses to average assets decreased to 2.30 percent.
      • The firm’s headcount increased to 1,058.5 FTE’s at Dec. 31, 2015, including 213 FTE’s from the entities acquired in 2015.

As we look at our quarterly expense run rates going into 2016, we do expect expense increases but don’t expect our efficiency or noninterest expense to average asset ratios to increase,” Carpenter said. “We are very pleased with the operating leverage that has been created over the last few years and will continue to work to improve our operating metrics. Our belief continues to be that investors will reward those franchises that can demonstrate the ability to operate a growing franchise profitably and efficiently.”

  • Asset quality
    • Nonperforming assets increased to $36.3 million at Dec. 31, 2015, compared to $35.8 million at Sept. 30, 2015 and $28.6 million at Dec. 31, 2014. Nonperforming assets decreased to 0.55 percent of total loans and ORE at Dec. 31, 2015, compared to 0.57 percent at Sept. 30, 2015 and 0.62 percent at Dec. 31, 2014.
    • The allowance for loan losses represented 1.00 percent of total loans at Dec. 31, 2015, compared to 1.01 percent at Sept. 30, 2015 and 1.47 percent at Dec. 31, 2014. The ratio decrease is partially attributable to increasing total loans as a result of our two bank acquisitions. Those loans were recorded at their fair value upon acquisition date. The ratio decrease is also attributable to improvements in overall loan quality for the legacy Pinnacle portfolio. The ratio of the allowance for loan losses to nonperforming loans was 222.9 percent at Dec. 31, 2015, compared to 212.2 percent at Sept. 30, 2015 and 403.2 percent at Dec. 31, 2014.
      • Net charge-offs were $3.8 million for the quarter ended Dec. 31, 2015, compared to $4.0 million for the third quarter of 2015 and $842,000 for the quarter ended Dec. 31, 2014. Annualized net charge-offs as a percentage of average loans for the quarter ended Dec. 31, 2015 were 0.21 percent, compared to 0.10 percent for the quarter ended Dec. 31, 2014.
      • Provision for loan losses increased to $5.5 million in the fourth quarter of 2015 from $2.2 million in the third quarter of 2015 and $2.0 million in the fourth quarter of 2014.

 

BOARD OF DIRECTORS DECLARES DIVIDEND

On Jan. 19, 2016, Pinnacle’s Board of Directors increased the quarterly cash dividend to $0.14 per common share to be paid on Feb. 26, 2016 to common shareholders of record as of the close of business on Feb. 5, 2016. The amount and timing of any future dividend payments to common shareholders will be subject to the discretion of Pinnacle’s Board of Directors.

 

WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. (CST) on Jan. 20, 2016 to discuss fourth quarter 2015 results and other matters. To access the call for audio only, please call 1-877-602-7944. For the presentation and streaming audio, please access the webcast on the investor relations page of Pinnacle's website at www.pnfp.com.

For those unable to participate in the webcast, it will be archived on the investor relations page of Pinnacle's website at www.pnfp.com for 90 days following the presentation.

Pinnacle Financial Partners provides a full range of banking, investment, trust, mortgage and insurance products and services designed for businesses and their owners and individuals interested in a comprehensive relationship with their financial institution. Pinnacle’s focus begins in recruiting top financial professionals. The American Banker recognized Pinnacle as the third best bank to work for in the country in 2015.

The firm began operations in a single downtown Nashville location in October 2000 and has since grown to more than $8.7 billion in assets at Dec. 31, 2015. As the second-largest bank holding company headquartered in Tennessee, Pinnacle operates in the state’s four largest markets, Nashville, Memphis, Knoxville and Chattanooga, as well as several surrounding counties.

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

 

 

PINNACLE NAMED ONE OF THE 50 BEST WORKPLACES FOR CAMARADERIE

NASHVILLE, Tenn., Dec. 22, 2015 – After surveying more than 255,000 employees across the country, Great Place to Work® and Fortune have recognized Pinnacle Financial Partners as one of the 50 Best Workplaces for Camaraderie.

The recognition is based on employees’ assessments of the sense of team, fun and collegiality in their workplace.

“Pinnacle associates are serious about meeting our clients’ financial needs, but they’re encouraged to have fun at the same time,” said Terry Turner, Pinnacle’s president and CEO. “We know that creating an environment where associates become friends and enjoy coming to the office every day is the only way to attract the best financial services professionals in our markets.”

Pinnacle and the 49 other winning companies were selected based on evaluations by over 255,000 employees from nearly 600 participating companies. Employees anonymously answered questions about how frequently they experience the behaviors that create a great workplace. 

Companies achieving the highest overall results in their size categories were then ranked based on employees’ feedback regarding the quality of the personal connections they experience with colleagues, taking into account: how comfortable people feel being themselves; how friendly, cooperative and fun the workplace is; and the strength of its teams. Survey results achieved a 95 percent confidence level and a margin of error of 5 percent or less. The total score for each company was based entirely upon employee feedback.

“Companies that develop strong personal ties among employees and make time for fun at work aren’t just doing it to be nice – it’s a critical strategic investment,” says Michael Bush, CEO of Great Place to Work® United States. “Workplaces with strong camaraderie are associated with higher levels of cooperation, effort and effective communication – all essential ingredients of a high-performing organization.”

The 50 Best Workplaces for Camaraderie ranking is one of a series of rankings by Great Place to Work® and Fortune based upon employee survey feedback from published Great Place to Work® Reviews.

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’s focus begins in recruiting top financial professionals. The American Banker recognized Pinnacle as the third best bank to work for in the country in 2015.

The firm began operations in a single downtown Nashville location in October 2000 and has since grown to more than $8.5 billion in assets at Sept. 30, 2015. As the second-largest bank holding company headquartered in Tennessee, Pinnacle operates in the state’s four largest markets, Nashville, Memphis, Knoxville and Chattanooga, as well as several surrounding counties.

Additional information concerning Pinnacle, which is included in the NASDAQ Financial-100 Index, can be accessed at www.pnfp.com.

 

KEVIN CONLEY JOINS CAPITALMARK

Kevin Conley HeadshotCHATTANOOGA, TN,Nov. 25, 2015– CapitalMark Bank & Trust, a division of Pinnacle Bank, announces the addition of Kevin Conley as senior vice president and financial advisor. Conley will be one of 16 financial advisors that operate out of the Chattanooga region.

Read more: Kevin Conley Joins CapitalMark

DANNY GORK JOINS CAPITALMARK

 

Danny Gork

CHATTANOOGA, TN,Nov. 12, 2015– CapitalMark Bank & Trust, a division of Pinnacle Bank, announces the addition of Danny Gork as senior vice president and trust services advisor.

 

Read more: Danny Gork Joins CapitalMark

CAPITALMARK GROWS MARKET SHARE IN CHATTANOOGA, RISES IN RANKS IN NEARBY MARKETS

Recently acquired by Pinnacle, combined firm plans to continue rapid growth

CHATTANOOGA, TN, Sept. 29, 2015 – CapitalMark Bank & Trust, a division of Pinnacle Bank, saw double-digit deposit growth in all of its markets over the past year, according to the Federal Deposit Insurance Corporation (FDIC).

Read more: CapitalMark Grows Market Share in Chattanooga, Rises in Ranks in Nearby Markets

PINNACLE, TITANS PARTNER FOR CHATTANOOGA HEROES FUND CONTRIBUTION

CHATTANOOGA, TN, Sept. 21, 2015 – Pinnacle Financial Partners and CapitalMark Bank & Trust have partnered with the Tennessee Titans Foundation in making a significant contribution to the Chattanooga Heroes Fund. The fund provides financial support to help the families of those who were killed or wounded in the tragic shootings on July 16 in Chattanooga.

Read more: Pinnacle, Titans Partner for Chattanooga Heroes Fund Contribution

Banking Veteran Larry Richey Joins CapitalMark

Chattanooga, Tennessee – September 11, 2015 – CapitalMark Bank & Trust announces the addition of Lawrence M. “Larry” Richey as senior vice president and director of client services operating in CapitalMark’s downtown Chattanooga office. In this role, Richey will deliver customized solutions to clients seeking a comprehensive banking relationship.

Read more: Banking Veteran Larry Richey Joins CapitalMark

PINNACLE ANNOUNCES THE COMPLETION OF ITS MERGER WITH CAPITALMARK BANK & TRUST

Nashville, TN, August 3, 2015 – Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) (“Pinnacle”) today announced that on July 31, 2015, it completed its previously announced merger with CapitalMark Bank & Trust (“CapitalMark”).

Read more: Pinnacle Announces the Completion of its Merger with CapitalMark

CAPITALMARK BANK & TRUST SHAREHOLDERS APPROVE COMBINATION WITH PINNACLE BANK

Nashville and CHATTANOOGA, TN, July 23, 2015 – Shareholders of CapitalMark Bank & Trust (“CapitalMark”) today voted overwhelmingly in favor of the proposed merger of CapitalMark with Pinnacle Bank, a wholly owned subsidiary of Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) (“Pinnacle”).

Read more: Shareholders Approve Combination with Pinnacle Bank

Pinnacle Financial Partners AND CAPITALMARK BANK & TRUST Extend TIME FOR Shareholders TO ELECT FORM OF CONSIDERATION

Nashville and CHATTANOOGA, TN, July 16, 2015 – Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) (“Pinnacle”) and CapitalMark Bank & Trust (“CapitalMark”) announced today that they have agreed to extend the date by which CapitalMark’s shareholders must make their election to receive shares of Pinnacle’s common stock, cash or a mix of cash and stock in the proposed merger of CapitalMark and Pinnacle Bank to 5 p.m. Eastern Daylight Time on Thursday, July 23, 2015. The extension is for the convenience of CapitalMark’s shareholders.

Read more: PNFP and CMBT Extend Election Time

CapitalMark posts $2.7 million record quarterly profit; surpasses $1 billion total assets

Chattanooga, Tennessee – July 16, 2015 – CapitalMark Bank & Trust today reported earnings of $2.7 million for the quarter ended June 30, 2015. Net income for the six months ended June 30, 2015, was $5.0 million, an increase of 51% from the same six months in 2014. Net income per fully diluted common share increased 54% from the same six month period in 2014 to $0.63.

Read more: CapitalMark Posts $2.7 Million Record Profit; Surpasses $1 Billion Total Assets

News

January 25, 2016

PNFP Reports Diluted Earnings Per Share of $0.65 for 4Q 2015

December 22, 2015

Pinnacle Named One of 50 Best Workplaces for Camaradarie

November 25, 2015

Kevin Conley Joins CapitalMark