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PNFP Reports 3Q23 Diluted EPS of $1.69, Diluted EPS of $1.79 Excluding Investment Losses

3Q23 annualized linked-quarter, end-of-period loans and core deposits grew 10.1%

Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $1.69 for the quarter ended Sept. 30, 2023, compared to net income per diluted common share of $1.91 for the quarter ended Sept. 30, 2022, a decrease of 11.5 percent. Net income per diluted common share was $5.99 for the nine months ended Sept. 30, 2023, compared to $5.42 for the nine months ended Sept. 30, 2022, an increase of approximately 10.5 percent.

 

Three Months Ended

 

Nine Months Ended

 

September 30,

2023

June 30,

2023

September 30,

2022

 

September 30,

2023

September 30,

2022

Diluted earnings per common share

$

1.69

 

$

2.54

 

$

1.91

 

$

5.99

 

$

5.42

Adjustments:

 

 

 

 

 

 

Investment losses on sales of securities, net

 

0.13

 

 

0.13

 

 

 

 

0.26

 

 

Gain on sale of fixed assets as a result of sale-leaseback transaction

 

 

 

(1.13

)

 

 

 

(1.13

)

 

Tax effect of above noted adjustments

 

(0.03

)

 

0.25

 

 

 

 

0.22

 

 

Diluted earnings per common share after adjustments

$

1.79

 

$

1.79

 

$

1.91

 

$

5.34

 

$

5.42

After considering the adjustments noted in the table above for the three months ended Sept. 30, 2023 and 2022, net income per diluted common share was $1.79, compared to $1.91 for the three months ended Sept. 30, 2022. Net income per diluted common share adjusted for the items noted in the table above was $5.34 for the nine months ended Sept. 30, 2023, compared to $5.42 for the nine months ended Sept. 30, 2022.

"Despite a volatile economic backdrop, our firm continues to benefit from our unmatched ability to attract talent and create raving clients that refuse to leave us," said M. Terry Turner, Pinnacle's president and chief executive officer. "We continued to deliver outsized growth to our already strong client deposit base, with our core deposits increasing by 10.1 percent annualized this quarter. The 2023 FDIC summary of deposits reflects significant market share growth over 2022 in all our major markets, validating both the exportability of our model and the sustainability of our outsized growth by taking market share from our larger, more vulnerable competitors.

"Additionally, during the quarter we continued to avoid certain asset classes and reduced our exposure in loan segments with elevated risks and expect that to continue for the next few quarters. Against that backdrop, we are also pleased that overall loan growth during the third quarter of 2023 was $790 million, or 10.1 percent linked-quarter annualized.

"We also added 29 revenue producers during the third quarter. Going forward, I have asked our line leadership to accelerate their efforts to recruit the best relationship bankers in our markets in order to seize on the vulnerabilities that exist at many of our larger competitors. It is this ability to attract market-leading revenue producers that enables us to continue compounding earnings and growing tangible book value more reliably than peers, even in a very challenging operating environment. Historically, our operating leverage has compared favorably to our peers; however, given the outsized number of non-revenue support hires we have invested in over the last few years, I would now expect our focus on recruiting more revenue producers to yield an even stronger operating leverage advantage for us as we move into 2024."

BALANCE SHEET GROWTH AND LIQUIDITY:

Total assets at Sept. 30, 2023 were $47.5 billion, an increase of approximately $6.5 billion from Sept. 30, 2022 and $647.8 million from June 30, 2023, reflecting a year-over-year increase of 15.9 percent and a linked-quarter annualized increase of 5.5 percent, respectively. A further analysis of select balance sheet trends follows:

 

Balances at

Linked-

Quarter

Annualized

% Change

Balances at

Year-over-Year

% Change

(dollars in thousands)

Sept. 30, 2023

June 30, 2023

Sept. 30, 2022

Loans

$

31,943,284

$

31,153,290

10.1

%

$

27,711,694

15.3

%

Securities

 

6,882,276

 

6,623,457

15.6

%

 

6,481,018

6.2

%

Other interest-earning assets

 

3,512,452

 

4,001,844

(48.9

)%

 

2,225,435

57.8

%

Total interest-earning assets

$

42,338,012

$

41,778,591

5.4

%

$

36,418,147

16.3

%

 

 

 

 

 

 

Core deposits:

 

 

 

 

 

Noninterest-bearing deposits

$

8,324,325

$

8,436,799

(5.3

)%

$

10,567,873

(21.2

)%

Interest-bearing core deposits(1)

 

25,282,458

 

24,343,968

15.4

%

 

20,180,944

25.3

%

Noncore deposits and other funding(2)

 

7,420,341

 

7,731,082

(16.1

)%

 

4,444,868

66.9

%

Total funding

$

41,027,124

$

40,511,849

5.1

%

$

35,193,685

16.6

%

(1):

Interest-bearing core deposits are interest-bearing deposits, money market accounts, time deposits less than $250,000 including reciprocating time and money market deposits.

(2):

Noncore deposits and other funding consists of time deposits greater than $250,000, securities sold under agreements to repurchase, public funds, brokered deposits, FHLB advances and subordinated debt. 

  • Approximately 54 percent of third quarter 2023 loan growth was related to commercial and industrial and owner-occupied commercial real estate categories, two segments the firm intends to continue to emphasize for the remainder of 2023 and 2024.
  • During the quarter ended Sept. 30, 2023, the firm acquired $583.6 million in floating rate US treasuries offset by the sale of $129.7 million in other investment securities, premium amortization and market value adjustments.
  • On-balance sheet liquidity, defined as cash and cash equivalents plus unpledged securities, remained strong, totaling $7.4 billion as of Sept. 30, 2023, representing a $381 million decrease from the on-balance sheet liquidity level of $7.8 billion as of June 30, 2023.

"As we entered the third quarter, we expected three important deposit related trends to materialize for our firm," Turner said. "First, we believed that we would continue to grow our core deposit base more rapidly than peers. Our core deposits increased by 10.1 percent linked-quarter annualized in the third quarter, which we believe is exceptional in this environment. Second, we also believed the rate of decrease in noninterest bearing deposits should begin to subside, which it has. Demand deposit contraction in the third quarter was only $112.5 million, compared to $581.6 million and $794.3 million in the second and first quarters of 2023, respectively. And third, we expected the rate of increase in our overall deposit costs would lessen, which it did, having increased by 40 basis points in the third quarter, compared to 49 basis points and 63 basis points in the second and first quarters, respectively. We are pleased to see these three critical trends improve during the third quarter and are optimistic about continued improvement as we enter the fourth quarter of 2023."

PRE-TAX, PRE-PROVISION NET REVENUE (PPNR) GROWTH:

Pre-tax, pre-provision net revenues (PPNR) for the three and nine months ended Sept. 30, 2023 were $194.8 million and $662.4 million, respectively, a decrease of 7.8 percent and an increase of 17.1 percent, respectively, from the $211.3 million and $565.7 million, respectively, recognized in the three and nine months ended Sept. 30, 2022.

 

Three months ended

Nine months ended

 

Sept. 30,

Sept. 30,

(dollars in thousands)

2023

2022

% change

2023

2022

% change

Revenues:

 

 

 

 

 

 

Net interest income

$

317,242

$

305,784

 

3.7

%

$

944,866

 

$

809,833

 

16.7

%

Noninterest income

 

90,797

 

104,805

 

(13.4

)%

 

354,165

 

 

333,803

 

6.1

%

Total revenues

 

408,039

 

410,589

 

(0.6

)%

 

1,299,031

 

 

1,143,636

 

13.6

%

Noninterest expense

 

213,233

 

199,253

 

7.0

%

 

636,601

 

 

577,952

 

10.1

%

Pre-tax, pre-provision net revenue (PPNR)

 

194,806

 

211,336

 

(7.8

)%

 

662,430

 

 

565,684

 

17.1

%

Adjustments:

 

 

 

 

 

 

Investment losses (gains) on sales of securities, net

 

9,727

 

(217

)

NM

 

 

19,688

 

 

(156

)

NM

 

Gain on the sale of fixed assets as a result of sale leaseback

 

 

 

NM

 

 

(85,692

)

 

 

NM

 

ORE expense (benefit)

 

33

 

(90

)

NM

 

 

190

 

 

101

 

88.1

%

Adjusted PPNR

$

204,566

$

211,029

 

(3.1

)%

$

596,616

 

$

565,629

 

5.5

%

  • Revenue per fully diluted common share was $5.35 for the third quarter of 2023, compared to $6.43 for the second quarter of 2023 and $5.40 for the third quarter of 2022, a decline of 0.9 percent year-over-year. Excluding net losses on sales of investment securities and ORE expense, revenue per fully diluted share for the third quarter of 2023 was $5.49.
  • Net interest income for the quarter ended Sept. 30, 2023 was $317.2 million, compared to $315.4 million for the second quarter of 2023 and $305.8 million for the third quarter of 2022, a year-over-year growth rate of 3.7 percent.
  • Noninterest income for the quarter ended Sept. 30, 2023 was $90.8 million, compared to $173.8 million for the second quarter of 2023 and $104.8 million for the third quarter of 2022, a year-over-year decrease of 13.4 percent.
    • Gain on the sale of fixed assets was $87,000 for the quarter ended Sept. 30, 2023, compared to $85.7 million and $227,000, respectively, for the quarters ended June 30, 2023 and Sept. 30, 2022. The quarter ended June 30, 2023 included a gain on the sale of fixed assets as a result of the sale-leaseback transaction completed in the second quarter of 2023 of $85.7 million.
    • Net losses on the sale of investment securities were $9.7 million for the quarter ended Sept. 30, 2023, compared to $10.0 million in net losses for the quarter ended June 30, 2023 and $217,000 in net gains for the quarter ended Sept. 30, 2022.
    • Wealth management revenues, which include investment, trust and insurance services, were $22.8 million for the third quarter of 2023, compared to $24.1 million for the second quarter of 2023 and $19.4 million for the third quarter of 2022, a year-over-year increase of 17.3 percent.
    • During the third quarter of 2023, mortgage loans sold resulted in a $2.0 million net gain, compared to $1.6 million in the second quarter of 2023 and $1.1 million in the third quarter of 2022.
    • Income from the firm's investment in BHG was $25.0 million for the third quarter 2023, compared to $26.9 million for the second quarter of 2023 and $41.3 million for the third quarter of 2022, a year-over-year decline of 39.6 percent. The firm estimated that BHG's overall impact to Pinnacle's earnings for the first nine months of 2023 amounted to $0.52, down from $1.09 for the comparable period in 2022, in each case, after considering reasonable funding costs to support the investment. BHG's impact on Pinnacle's earnings declined from 20.2 percent of Pinnacle's 2022 total diluted earnings per common share to 8.6 percent of Pinnacle's 2023 total diluted earnings per share.
      • BHG's loan originations decreased to $1.0 billion in the third quarter 2023 compared to $1.1 billion in the second quarter of 2023 and $1.2 billion in the third quarter of 2022.
      • Loans sold to BHG's community bank partners were approximately $435 million in the third quarter 2023 compared to approximately $523 million in the second quarter of 2023 and $555 million in the third quarter of 2022. BHG also sold $564 million in loans to private investors during the third quarter of 2022 compared to $557 million in the second quarter of 2023 and $452 million in the third quarter of 2022.
      • BHG increased its reserves for on-balance sheet loan losses to $213.5 million, or 6.44 percent of loans held for investment at Sept. 30, 2023, compared to 5.99 percent at June 30, 2023. BHG decreased its accrual for losses attributable to loan substitutions and prepayments for loans previously sold through its community bank auction platform to $350.3 million, or 5.46 percent of the loans that have been previously sold and were unpaid, at Sept. 30, 2023 compared to 5.87 percent at June 30, 2023.
  • Noninterest expense for the quarter ended Sept. 30, 2023 was $213.2 million, compared to $211.6 million in the second quarter of 2023 and $199.3 million in the third quarter of 2022, reflecting a year-over-year increase of 7.0 percent.
    • Salaries and employee benefits were $130.3 million in the third quarter of 2023, compared to $132.4 million in the second quarter of 2023 and $129.9 million in the third quarter of 2022, reflecting a slight year-over-year increase. The reduction in salaries and employee benefits expense on a linked-quarter basis was primarily due to the year-over-year decrease in the costs related to the firm's annual cash and equity incentive plans. Offsetting this decrease in part was the impact of an increase in full-time equivalent associates, to 3,329.5 at Sept. 30, 2023 from 3,184.5 at Sept. 30, 2022, a year-over-year increase of 4.6 percent.
    • Equipment and occupancy costs were $36.9 million in the third quarter of 2023, compared to $33.7 million in the second quarter of 2023 and $27.9 million in the third quarter of 2022, reflecting a year-over-year increase of 32.3 percent. Contributing to the year-over-year increase is the impact of the sale leaseback transaction completed in the second quarter of 2023.
    • Noninterest expense categories, other than those specifically noted above, were $46.0 million in the third quarter of 2023, compared to $45.5 million in the second quarter of 2023 and $41.5 million in the third quarter of 2022, reflecting a year-over-year increase of 10.9 percent.

"To grow net interest income in this environment on a linked-quarter basis is a great achievement," said Harold R. Carpenter, Pinnacle's chief financial officer. "The net reduction in fee income in the third quarter of 2023 compared to the second quarter was largely attributable to the $85.7 million gain on sale of fixed assets recognized in connection with a sale-leaseback transaction during the prior quarter.

"BHG had a stronger quarter than we originally anticipated. Even though their pipelines remain strong and credit costs improved during the quarter, our 2023 outlook for BHG remains essentially unchanged at this time. Thus, we believe BHG's fourth quarter results will not be as strong as the last two quarters. Excluding the impact of BHG, the sale-leaseback transaction in the second quarter and the bond losses experienced in the second and third quarters, third quarter fee income increased slightly over the second quarter."

SOUNDNESS AND PROFITABILITY:

 

Three months ended

 

Nine months ended

 

September 30,

2023

June 30,

2023

September 30,

2022

 

September 30,

2023

September 30,

2022

Net interest margin

3.06

%

3.20

%

3.47

%

 

3.22

%

3.18

%

Efficiency ratio

52.26

%

43.26

%

48.53

%

 

49.01

%

50.54

%

Return on average assets

1.08

%

1.71

%

1.42

%

 

1.35

%

1.40

%

Return on average tangible common equity (TCE)

13.43

%

21.06

%

17.40

%

 

16.62

%

16.89

%

 

As of

 

September 30,

2023

June 30,

2023

September 30,

2022

Shareholders' equity to total assets

 

12.3

%

 

12.5

%

 

13.0

%

Average loan to deposit ratio

 

82.80

%

 

84.94

%

 

81.61

%

Uninsured/uncollateralized deposits to total deposits

 

28.89

%

 

28.31

%

 

39.71

%

Tangible common equity to tangible assets

 

8.2

%

 

8.3

%

 

8.3

%

Book value per common share

$

73.23

 

$

73.32

 

$

67.07

 

Tangible book value per common share

$

48.78

 

$

48.85

 

$

42.44

 

Annualized net loan charge-offs to avg. loans (1)

 

0.23

%

 

0.13

%

 

0.16

%

Nonperforming assets to total loans, ORE and other nonperforming assets (NPAs)

 

0.14

%

 

0.15

%

 

0.15

%

Classified asset ratio (Pinnacle Bank) (2)

 

4.60

%

 

3.30

%

 

2.60

%

Allowance for credit losses (ACL) to total loans

 

1.08

%

 

1.08

%

 

1.04

%

(1):

Annualized net loan charge-offs to average loans ratios are computed by annualizing quarterly net loan charge-offs and dividing the result by average loans for the quarter.

(2):

Classified assets as a percentage of Tier 1 capital plus allowance for credit losses. 

  • Net interest margin was 3.06 percent for the third quarter of 2023, compared to 3.20 percent for the second quarter of 2023 and 3.47 percent for the third quarter of 2022. Net interest margin increased to 3.22 percent for the nine months ended Sept. 30, 2023, compared to 3.18 percent for the nine months ended Sept. 30, 2022.
  • Provision for credit losses was $26.8 million in the third quarter of 2023, compared to $31.7 million in the second quarter of 2023 and $27.5 million in the third quarter of 2022. Net charge-offs were $18.1 million for the quarter ended Sept. 30, 2023, compared to $9.8 million for the quarter ended June 30, 2023 and $11.0 million for the quarter ended Sept. 30, 2022. Annualized net charge-offs for the third quarter of 2023 were 0.23 percent.
  • Nonperforming assets were $46.0 million at Sept. 30, 2023, compared to $47.4 million at June 30, 2023 and $41.9 million at Sept. 30, 2022, up 9.7 percent over the same quarter last year. The ratio of the allowance for credit losses to nonperforming loans at Sept. 30, 2023 was 806.0 percent, compared to 762.0 percent at June 30, 2023 and 844.5 percent at Sept. 30, 2022.
  • Classified assets were $218.9 million at Sept. 30, 2023, compared to $153.9 million at June 30, 2023 and $107.9 at Sept. 30, 2022, up more than 100 percent over the same quarter last year.

"Although our net interest margin declined on a linked-quarter basis by approximately 14 basis points, we are pleased that the size of the decline was lower than what we experienced over the last several quarters," Carpenter said. "Increased deposit pricing and the continued reduction in our noninterest-bearing deposit account balances were again the primary contributors to our decreased net interest margin.

"Our investment securities portfolio, including both the held-to-maturity and available-for-sale portfolios, continues to perform well for us. Approximately 35 percent of our available-for-sale securities portfolio is effectively indexed to floating rates, which we consider to be a meaningful advantage. Despite this advantage, the impact of increased market interest rates on investment securities caused our accumulated other comprehensive loss to increase by $127 million this quarter, contributing to a slight decline in our tangible book value per share from $48.85 at June 30, 2023 to $48.78 at Sept. 30, 2023.

"Lastly, net charge-offs increased this quarter primarily due to a single loan acquired through our syndication platform. At June 30, 2023, we had placed this loan on nonperforming status and allocated approximately 50 percent of the loan to our allowance for credit losses. We were notified during the third quarter by the lead syndication bank that the borrower filed for bankruptcy protection, which prompted us to charge off substantially all of this loan, or $9.5 million, during the third quarter.

"Nevertheless, our asset quality metrics such as past due loans, classified assets and nonperforming loans continue to perform at historically low levels. Our strong credit culture, as well as operating in some of the best markets in the U.S., enable our portfolio to continue performing at peer-leading levels of classified and nonperforming loans."

BOARD OF DIRECTORS DECLARES DIVIDENDS

On Oct. 17, 2023, Pinnacle Financial's Board of Directors approved a quarterly cash dividend of $0.22 per common share to be paid on Nov. 24, 2023 to common shareholders of record as of the close of business on Nov. 3, 2023. Additionally, the Board of Directors approved a quarterly cash dividend of approximately $3.8 million, or $16.88 per share (or $0.422 per depositary share), on Pinnacle Financial's 6.75 percent Series B Non-Cumulative Perpetual Preferred Stock payable on Dec. 1, 2023 to shareholders of record at the close of business on Nov. 16, 2023. The amount and timing of any future dividend payments to both preferred and common shareholders will be subject to the approval of Pinnacle's Board of Directors.

WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. CDT on Oct. 18, 2023, to discuss third quarter 2023 results and other matters. To access the call for audio only, please call 1-877-209-7255. 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 2023 deposit data from the FDIC, is listed by Forbes among the top 25 banks in the nation and earned a spot on the 2022 list of 100 Best Companies to Work For® in the U.S., its sixth consecutive appearance. Pinnacle was also listed in Fortune magazine as the second best company to work for in the U.S. for women. American Banker recognized Pinnacle as one of America’s Best Banks to Work For nine years in a row and No. 1 among banks with more than $11 billion in assets in 2021.

Pinnacle owns a 49 percent interest in Bankers Healthcare Group (BHG), which provides innovative, hassle-free financial solutions to healthcare practitioners and other professionals. Great Place to Work and FORTUNE ranked BHG No. 4 on its 2021 list of Best Workplaces in New York State in the small/medium business category.

The firm began operations in a single location in downtown Nashville, TN in October 2000 and has since grown to approximately $47.5 billion in assets as of Sept. 30, 2023. As the second-largest bank holding company in Tennessee, Pinnacle operates in 17 primarily urban markets and their surrounding communities.

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 of Pinnacle Bank and its subsidiaries or BHG, including as a result of the negative impact of inflationary pressures on our and BHG's customers and their businesses, resulting in significant increases in loan losses and provisions for those losses and, in the case of BHG, substitutions; (ii) fluctuations or differences in interest rates on loans or deposits from those that Pinnacle Financial is modeling or anticipating, including as a result of Pinnacle Bank's inability to better match deposit rates with the changes in the short-term rate environment, or that affect the yield curve; (iii) the sale of investment securities in a loss position before their value recovers, including as a result of asset liability management strategies or in response to liquidity needs; (iv) adverse conditions in the national or local economies including in Pinnacle Financial's markets throughout Tennessee, North Carolina, South Carolina, Georgia, Alabama, Virginia and Kentucky, particularly in commercial and residential real estate markets; (v) the inability of Pinnacle Financial, or entities in which it has significant investments, like BHG, to maintain the long-term historical growth rate of its, or such entities', loan portfolio; (vi) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits, including during times when Pinnacle Bank is seeking to limit the rates it pays on deposits or uncertainty exists in the financial services sector; (vii) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (viii) effectiveness of Pinnacle Financial's asset management activities in improving, resolving or liquidating lower-quality assets; (ix) 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 the negative impact to net interest margin from rising deposit and other funding costs; (x) the results of regulatory examinations; (xi) BHG's ability to profitably grow its business and successfully execute on its business plans; (xii) risks of expansion into new geographic or product markets; (xiii) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including goodwill or other intangible assets; (xiv) the ineffectiveness of Pinnacle Bank's hedging strategies, or the unexpected counterparty failure or hedge failure of the underlying hedges; (xv) 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; (xvi) deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xvii) 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 Bank's level of applicable commercial real estate loans were to exceed percentage levels of total capital in guidelines recommended by its regulators; (xviii) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xix) the vulnerability of Pinnacle Bank's network and online banking portals, and the systems of parties with whom Pinnacle Bank contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (xx) 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; (xi) Pinnacle Financial's ability to identify potential candidates for, consummate, and achieve synergies from, potential future acquisitions; (xii) difficulties and delays in integrating acquired businesses or fully realizing costs savings and other benefits from acquisitions; (xxiii) the risks associated with 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 or all or a portion of their ownership interests in BHG (triggering a similar sale by Pinnacle Bank); (xxiv) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, like BHG, including regulatory or legislative developments; (xxv) fluctuations in the valuations of Pinnacle Financial's equity investments and the ultimate success of such investments; (xxvi) the availability of and access to capital; (xxvii) 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 (xxviii) 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 for the year ended December 31, 2022, and subsequently filed 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, total revenues, net income to common shareholders, earnings per diluted common share, revenue per diluted common share, PPNR, efficiency ratio, noninterest expense, noninterest income 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 investment securities, gains associated with the sale-leaseback transaction completed in the second quarter of 2023 and other matters for the accounting periods presented. 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 as well as the impact of Pinnacle Financial's Series B Preferred Stock. 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 2023 versus certain periods in 2022 and to internally prepared projections.

 
 
PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS – UNAUDITED

 

 

 

 

(dollars in thousands, except for share and per share data)

September 30,

2023

December 31,

2022

September 30,

2022

ASSETS

 

 

 

Cash and noninterest-bearing due from banks

$

279,652

 

$

268,649

 

$

168,010

 

Restricted cash

 

17,356

 

 

31,447

 

 

18,636

 

Interest-bearing due from banks

 

2,855,094

 

 

877,286

 

 

1,616,878

 

Cash and cash equivalents

 

3,152,102

 

 

1,177,382

 

 

1,803,524

 

Securities purchased with agreement to resell

 

500,000

 

 

513,276

 

 

528,999

 

Securities available-for-sale, at fair value

 

3,863,697

 

 

3,558,870

 

 

3,542,601

 

Securities held-to-maturity (fair value of $2.6 billion, $2.7 billion, and $2.5 billion, net of allowance for credit losses of $1.7 million, $1.6 million, and $1.6 million at Sept. 30, 2023, Dec. 31, 2022, and Sept. 30, 2022, respectively)

 

3,018,579

 

 

3,079,050

 

 

2,938,417

 

Consumer loans held-for-sale

 

119,489

 

 

42,237

 

 

45,509

 

Commercial loans held-for-sale

 

20,513

 

 

21,093

 

 

15,413

 

Loans

 

31,943,284

 

 

29,041,605

 

 

27,711,694

 

Less allowance for credit losses

 

(346,192

)

 

(300,665

)

 

(288,088

)

Loans, net

 

31,597,092

 

 

28,740,940

 

 

27,423,606

 

Premises and equipment, net

 

252,669

 

 

327,885

 

 

320,273

 

Equity method investment

 

480,996

 

 

443,185

 

 

425,892

 

Accrued interest receivable

 

177,390

 

 

161,182

 

 

110,170

 

Goodwill

 

1,846,973

 

 

1,846,973

 

 

1,846,466

 

Core deposits and other intangible assets

 

29,216

 

 

34,555

 

 

35,666

 

Other real estate owned

 

2,555

 

 

7,952

 

 

7,787

 

Other assets

 

2,462,519

 

 

2,015,441

 

 

1,955,795

 

Total assets

$

47,523,790

 

$

41,970,021

 

$

41,000,118

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

Deposits:

 

 

 

Noninterest-bearing

$

8,324,325

 

$

9,812,744

 

$

10,567,873

 

Interest-bearing

 

10,852,086

 

 

7,884,605

 

 

7,549,510

 

Savings and money market accounts

 

14,306,359

 

 

13,774,534

 

 

12,712,809

 

Time

 

4,813,039

 

 

3,489,355

 

 

2,859,857

 

Total deposits

 

38,295,809

 

 

34,961,238

 

 

33,690,049

 

Securities sold under agreements to repurchase

 

195,999

 

 

194,910

 

 

190,554

 

Federal Home Loan Bank advances

 

2,110,598

 

 

464,436

 

 

889,248

 

Subordinated debt and other borrowings

 

424,718

 

 

424,055

 

 

423,834

 

Accrued interest payable

 

67,442

 

 

19,478

 

 

10,202

 

Other liabilities

 

591,583

 

 

386,512

 

 

454,119

 

Total liabilities

 

41,686,149

 

 

36,450,629

 

 

35,658,006

 

Preferred stock, no par value, 10.0 million shares authorized; 225,000 shares non-cumulative perpetual preferred stock, Series B, liquidation preference $225.0 million, issued and outstanding at Sept. 30, 2023, Dec. 31, 2022, and Sept. 30, 2022, respectively

 

217,126

 

 

217,126

 

 

217,126

 

Common stock, par value $1.00; 180.0 million shares authorized; 76.8 million, 76.5 million and 76.4 million shares issued and outstanding at Sept. 30, 2023, Dec. 31, 2022, and Sept. 30, 2022, respectively

 

76,753

 

 

76,454

 

 

76,413

 

Additional paid-in capital

 

3,097,702

 

 

3,074,867

 

 

3,066,527

 

Retained earnings

 

2,745,934

 

 

2,341,706

 

 

2,224,736

 

Accumulated other comprehensive loss, net of taxes

 

(299,874

)

 

(190,761

)

 

(242,690

)

Total shareholders' equity

 

5,837,641

 

 

5,519,392

 

 

5,342,112

 

Total liabilities and shareholders' equity

$

47,523,790

 

$

41,970,021

 

$

41,000,118

 

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 share and per share data)

Three months ended

Nine months ended

 

September 30,

2023

June 30,

2023

September 30,

2022

September 30,

2023

September 30,

2022

Interest income:

 

 

 

 

 

Loans, including fees

$

508,963

 

$

478,896

 

$

315,935

 

$

1,419,761

 

$

795,164

 

Securities

 

 

 

 

 

Taxable

 

36,525

 

 

31,967

 

 

18,204

 

 

97,850

 

 

41,977

 

Tax-exempt

 

24,185

 

 

24,603

 

 

21,408

 

 

72,590

 

 

58,752

 

Federal funds sold and other

 

57,621

 

 

39,773

 

 

16,217

 

 

118,371

 

 

26,864

 

Total interest income

 

627,294

 

 

575,239

 

 

371,764

 

 

1,708,572

 

 

922,757

 

Interest expense:

 

 

 

 

 

Deposits

 

280,305

 

 

228,668

 

 

55,189

 

 

685,562

 

 

83,620

 

Securities sold under agreements to repurchase

 

1,071

 

 

783

 

 

182

 

 

2,449

 

 

320

 

FHLB advances and other borrowings

 

28,676

 

 

30,395

 

 

10,609

 

 

75,695

 

 

28,984

 

Total interest expense

 

310,052

 

 

259,846

 

 

65,980

 

 

763,706

 

 

112,924

 

Net interest income

 

317,242

 

 

315,393

 

 

305,784

 

 

944,866

 

 

809,833

 

Provision for credit losses

 

26,826

 

 

31,689

 

 

27,493

 

 

77,282

 

 

43,120

 

Net interest income after provision for credit losses

 

290,416

 

 

283,704

 

 

278,291

 

 

867,584

 

 

766,713

 

Noninterest income:

 

 

 

 

 

Service charges on deposit accounts

 

12,665

 

 

12,180

 

 

10,906

 

 

36,563

 

 

33,552

 

Investment services

 

13,253

 

 

14,174

 

 

10,780

 

 

39,022

 

 

34,676

 

Insurance sales commissions

 

2,882

 

 

3,252

 

 

2,928

 

 

10,598

 

 

9,518

 

Gains on mortgage loans sold, net

 

2,012

 

 

1,567

 

 

1,117

 

 

5,632

 

 

7,333

 

Investment losses (gains) on sales, net

 

(9,727

)

 

(9,961

)

 

217

 

 

(19,688

)

 

156

 

Trust fees

 

6,640

 

 

6,627

 

 

5,706

 

 

19,696

 

 

17,744

 

Income from equity method investment

 

24,967

 

 

26,924

 

 

41,341

 

 

70,970

 

 

124,461

 

Gain on sale of fixed assets

 

87

 

 

85,724

 

 

227

 

 

85,946

 

 

425

 

Other noninterest income

 

38,018

 

 

33,352

 

 

31,583

 

 

105,426

 

 

105,938

 

Total noninterest income

 

90,797

 

 

173,839

 

 

104,805

 

 

354,165

 

 

333,803

 

Noninterest expense:

 

 

 

 

 

Salaries and employee benefits

 

130,344

 

 

132,443

 

 

129,910

 

 

398,495

 

 

378,373

 

Equipment and occupancy

 

36,900

 

 

33,706

 

 

27,886

 

 

100,959

 

 

80,343

 

Other real estate, net

 

33

 

 

58

 

 

(90

)

 

190

 

 

101

 

Marketing and other business development

 

5,479

 

 

5,664

 

 

4,958

 

 

17,085

 

 

13,494

 

Postage and supplies

 

2,621

 

 

2,863

 

 

2,795

 

 

8,303

 

 

7,486

 

Amortization of intangibles

 

1,765

 

 

1,780

 

 

1,951

 

 

5,339

 

 

5,873

 

Other noninterest expense

 

36,091

 

 

35,127

 

 

31,843

 

 

106,230

 

 

92,282

 

Total noninterest expense

 

213,233

 

 

211,641

 

 

199,253

 

 

636,601

 

 

577,952

 

Income before income taxes

 

167,980

 

 

245,902

 

 

183,843

 

 

585,148

 

 

522,564

 

Income tax expense

 

35,377

 

 

48,603

 

 

35,185

 

 

117,975

 

 

99,669

 

Net income

 

132,603

 

 

197,299

 

 

148,658

 

 

467,173

 

 

422,895

 

Preferred stock dividends

 

(3,798

)

 

(3,798

)

 

(3,798

)

 

(11,394

)

 

(11,394

)

Net income available to common shareholders

$

128,805

 

$

193,501

 

$

144,860

 

$

455,779

 

$

411,501

 

Per share information:

 

 

 

 

 

Basic net income per common share

$

1.69

 

$

2.55

 

$

1.91

 

$

6.00

 

$

5.43

 

Diluted net income per common share

$

1.69

 

$

2.54

 

$

1.91

 

$

5.99

 

$

5.42

 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

 

76,044,182

 

 

76,030,081

 

 

75,761,930

 

 

75,998,965

 

 

75,723,129

 

Diluted

 

76,201,916

 

 

76,090,321

 

 

75,979,056

 

 

76,102,622

 

 

75,945,469

 

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 SHAREHOLDERS' EQUITY

(Unaudited)

(dollars and shares in thousands)

Preferred

Stock

Amount

Common Stock

Additional

Paid-in Capital

Retained

Earnings

Accumulated Other

Comp. Income

(Loss), net

Total

Shareholders'

Equity

 

Shares

Amounts

Balance at December 31, 2021

$

217,126

76,143

 

$

76,143

 

$

3,045,802

 

$

1,864,350

 

$

107,186

 

$

5,310,607

 

Exercise of employee common stock options & related tax benefits

 

14

 

 

14

 

 

264

 

 

 

 

 

 

278

 

Preferred dividends paid ($50.64 per share)

 

 

 

 

 

 

 

(11,394

)

 

 

 

(11,394

)

Common dividends paid ($0.66 per share)

 

 

 

 

 

 

 

(51,115

)

 

 

(51,115

)

Issuance of restricted common shares, net of forfeitures

 

207

 

 

207

 

 

(169

)

 

 

 

 

 

38

 

Restricted shares withheld for taxes & related tax benefits

 

(46

)

 

(46

)

 

(4,657

)

 

 

 

 

 

(4,703

)

Issuance of common stock pursuant to restricted stock unit (RSU) and performance stock unit (PSU) agreements, net of shares withheld for taxes & related tax benefits

 

95

 

 

95

 

 

(5,595

)

 

 

 

 

 

(5,500

)

Compensation expense for restricted shares & performance stock units

 

 

 

 

 

30,882

 

 

 

 

 

 

30,882

 

Net income

 

 

 

 

 

 

 

422,895

 

 

 

 

422,895

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

(349,876

)

 

(349,876

)

Balance at Sept. 30, 2022

$

217,126

76,413

 

$

76,413

 

$

3,066,527

 

$

2,224,736

 

$

(242,690

)

$

5,342,112

 

 

 

 

 

 

 

 

 

Balance at December 31, 2022

$

217,126

76,454

 

$

76,454

 

$

3,074,867

 

$

2,341,706

 

$

(190,761

)

$

5,519,392

 

Exercise of employee common stock options & related tax benefits

 

40

 

 

40

 

 

931

 

 

 

 

 

 

971

 

Preferred dividends paid ($50.64 per share)

 

 

 

 

 

 

 

(11,394

)

 

 

 

(11,394

)

Common dividends paid ($0.66 per share)

 

 

 

 

 

 

 

(51,551

)

 

 

 

(51,551

)

Issuance of restricted common shares, net of forfeitures

 

219

 

 

219

 

 

(219

)

 

 

 

 

 

 

Restricted shares withheld for taxes & related tax benefits

 

(53

)

 

(53

)

 

(3,712

)

 

 

 

 

 

(3,765

)

Issuance of common stock pursuant to RSU and PSU agreements, net of shares withheld for taxes & related tax benefits

 

93

 

 

93

 

 

(3,738

)

 

 

 

 

 

(3,645

)

Compensation expense for restricted shares & performance stock units

 

 

 

 

 

29,573

 

 

 

 

 

 

29,573

 

Net income

 

 

 

 

 

 

 

467,173

 

 

 

 

467,173

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

(109,113

)

 

(109,113

)

Balance at Sept. 30, 2023

$

217,126

76,753

 

$

76,753

 

$

3,097,702

 

$

2,745,934

 

$

(299,874

)

$

5,837,641

 

 
 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED

 

 

 

 

 

 

 

(dollars in thousands)

September

June

March

December

September

June

2023

2023

2023

2022

2022

2022

Balance sheet data, at quarter end:

 

 

 

 

 

 

Commercial and industrial loans

$

11,307,611

 

10,983,911

 

10,723,327

 

10,241,362

 

9,748,994

 

9,295,808

 

Commercial real estate - owner occupied loans

 

3,944,616

 

3,845,359

 

3,686,796

 

3,587,257

 

3,426,271

 

3,243,018

 

Commercial real estate - investment loans

 

5,957,426

 

5,682,652

 

5,556,484

 

5,277,454

 

5,122,127

 

4,909,598

 

Commercial real estate - multifamily and other loans

 

1,490,184

 

1,488,236

 

1,331,249

 

1,265,165

 

1,042,854

 

951,998

 

Consumer real estate - mortgage loans

 

4,768,780

 

4,692,673

 

4,531,285

 

4,435,046

 

4,271,913

 

4,047,051

 

Construction and land development loans

 

3,942,143

 

3,904,774

 

3,909,024

 

3,679,498

 

3,548,970

 

3,386,866

 

Consumer and other loans

 

532,524

 

555,685

 

559,706

 

555,823

 

550,565

 

498,757

 

Total loans

 

31,943,284

 

31,153,290

 

30,297,871

 

29,041,605

 

27,711,694

 

26,333,096

 

Allowance for credit losses

 

(346,192

)

(337,459

)

(313,841

)

(300,665

)

(288,088

)

(272,483

)

Securities

 

6,882,276

 

6,623,457

 

6,878,831

 

6,637,920

 

6,481,018

 

6,553,893

 

Total assets

 

47,523,790

 

46,875,982

 

45,119,587

 

41,970,021

 

41,000,118

 

40,121,292

 

Noninterest-bearing deposits

 

8,324,325

 

8,436,799

 

9,018,439

 

9,812,744

 

10,567,873

 

11,058,198

 

Total deposits

 

38,295,809

 

37,722,661

 

36,178,553

 

34,961,238

 

33,690,049

 

32,595,303

 

Securities sold under agreements to repurchase

 

195,999

 

163,774

 

149,777

 

194,910

 

190,554

 

199,585

 

FHLB advances

 

2,110,598

 

2,200,917

 

2,166,508

 

464,436

 

889,248

 

1,289,059

 

Subordinated debt and other borrowings

 

424,718

 

424,497

 

424,276

 

424,055

 

423,834

 

423,614

 

Total shareholders' equity

 

5,837,641

 

5,843,759

 

5,684,128

 

5,519,392

 

5,342,112

 

5,315,239

 

Balance sheet data, quarterly averages:

 

 

 

 

 

 

Total loans

$

31,529,854

 

30,882,205

 

29,633,640

 

28,402,197

 

27,021,031

 

25,397,389

 

Securities

 

6,801,285

 

6,722,247

 

6,765,126

 

6,537,262

 

6,542,026

 

6,446,774

 

Federal funds sold and other

 

4,292,956

 

3,350,705

 

2,100,757

 

1,828,588

 

2,600,978

 

2,837,679

 

Total earning assets

 

42,624,095

 

40,955,157

 

38,499,523

 

36,768,047

 

36,164,035

 

34,681,842

 

Total assets

 

47,266,199

 

45,411,961

 

42,983,854

 

41,324,251

 

40,464,649

 

38,780,786

 

Noninterest-bearing deposits

 

8,515,733

 

8,599,781

 

9,332,317

 

10,486,233

 

10,926,069

 

10,803,439

 

Total deposits

 

38,078,665

 

36,355,859

 

35,291,775

 

34,177,281

 

33,108,415

 

31,484,100

 

Securities sold under agreements to repurchase

 

184,681

 

162,429

 

219,082

 

199,610

 

215,646

 

216,846

 

FHLB advances

 

2,132,638

 

2,352,045

 

1,130,356

 

701,813

 

1,010,865

 

1,095,531

 

Subordinated debt and other borrowings

 

426,855

 

426,712

 

426,564

 

427,503

 

426,267

 

427,191

 

Total shareholders' equity

 

5,898,196

 

5,782,239

 

5,605,604

 

5,433,274

 

5,403,244

 

5,316,219

 

Statement of operations data, for the three months ended:

Interest income

$

627,294

 

575,239

 

506,039

 

451,178

 

371,764

 

292,376

 

Interest expense

 

310,052

 

259,846

 

193,808

 

131,718

 

65,980

 

27,802

 

Net interest income

 

317,242

 

315,393

 

312,231

 

319,460

 

305,784

 

264,574

 

Provision for credit losses

 

26,826

 

31,689

 

18,767

 

24,805

 

27,493

 

12,907

 

Net interest income after provision for credit losses

 

290,416

 

283,704

 

293,464

 

294,655

 

278,291

 

251,667

 

Noninterest income

 

90,797

 

173,839

 

89,529

 

82,321

 

104,805

 

125,502

 

Noninterest expense

 

213,233

 

211,641

 

211,727

 

202,047

 

199,253

 

196,038

 

Income before income taxes

 

167,980

 

245,902

 

171,266

 

174,929

 

183,843

 

181,131

 

Income tax expense

 

35,377

 

48,603

 

33,995

 

37,082

 

35,185

 

36,004

 

Net income

 

132,603

 

197,299

 

137,271

 

137,847

 

148,658

 

145,127

 

Preferred stock dividends

 

(3,798

)

(3,798

)

(3,798

)

(3,798

)

(3,798

)

(3,798

)

Net income available to common shareholders

$

128,805

 

193,501

 

133,473

 

134,049

 

144,860

 

141,329

 

Profitability and other ratios:

 

 

 

 

 

 

Return on avg. assets (1)

 

1.08

%

1.71

%

1.26

%

1.29

%

1.42

%

1.46

%

Return on avg. equity (1)

 

8.66

%

13.42

%

9.66

%

9.79

%

10.64

%

10.66

%

Return on avg. common equity (1)

 

9.00

%

13.95

%

10.05

%

10.20

%

11.08

%

11.12

%

Return on avg. tangible common equity (1)

 

13.43

%

21.06

%

15.43

%

15.95

%

17.40

%

17.62

%

Common stock dividend payout ratio (14)

 

11.35

%

11.04

%

12.07

%

12.26

%

12.34

%

12.63

%

Net interest margin (2)

 

3.06

%

3.20

%

3.40

%

3.60

%

3.47

%

3.17

%

Noninterest income to total revenue (3)

 

22.25

%

35.53

%

22.28

%

20.49

%

25.53

%

32.17

%

Noninterest income to avg. assets (1)

 

0.76

%

1.54

%

0.84

%

0.79

%

1.03

%

1.30

%

Noninterest exp. to avg. assets (1)

 

1.79

%

1.87

%

2.00

%

1.94

%

1.95

%

2.03

%

Efficiency ratio (4)

 

52.26

%

43.26

%

52.70

%

50.29

%

48.53

%

50.26

%

Avg. loans to avg. deposits

 

82.80

%

84.94

%

83.97

%

83.10

%

81.61

%

80.67

%

Securities to total assets

 

14.48

%

14.13

%

15.25

%

15.82

%

15.81

%

16.34

%

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

September 30, 2023

 

September 30, 2022

 

Average

Balances

Interest

Rates/

Yields

 

Average

Balances

Interest

Rates/

Yields

Interest-earning assets

 

 

 

 

 

 

 

Loans (1) (2)

$

31,529,854

$

508,963

6.50

%

 

$

27,021,031

$

315,935

4.73

%

Securities

 

 

 

 

 

 

 

Taxable

 

3,542,383

 

36,525

4.09

%

 

 

3,436,460

 

18,204

2.10

%

Tax-exempt (2)

 

3,258,902

 

24,185

3.51

%

 

 

3,105,566

 

21,408

3.28

%

Interest-bearing due from banks

 

3,553,640

 

51,109

5.71

%

 

 

1,491,338

 

8,666

2.31

%

Resell agreements

 

503,153

 

3,258

2.57

%

 

 

920,786

 

5,616

2.42

%

Federal funds sold

 

 

%

 

 

 

%

Other

 

236,163

 

3,254

5.47

%

 

 

188,854

 

1,935

4.06

%

Total interest-earning assets

 

42,624,095

$

627,294

5.95

%

 

 

36,164,035

$

371,764

4.20

%

Nonearning assets

 

 

 

 

 

 

 

Intangible assets

 

1,877,340

 

 

 

 

1,883,350

 

 

Other nonearning assets

 

2,764,764

 

 

 

 

2,417,264

 

 

Total assets

$

47,266,199

 

 

 

$

40,464,649

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

Interest checking

 

10,414,869

 

98,974

3.77

%

 

 

6,763,990

 

18,008

1.06

%

Savings and money market

 

14,131,277

 

128,453

3.61

%

 

 

12,765,435

 

29,347

0.91

%

Time

 

5,016,786

 

52,878

4.18

%

 

 

2,652,921

 

7,834

1.17

%

Total interest-bearing deposits

 

29,562,932

 

280,305

3.76

%

 

 

22,182,346

 

55,189

0.99

%

Securities sold under agreements to repurchase

 

184,681

 

1,071

2.30

%

 

 

215,646

 

182

0.34

%

Federal Home Loan Bank advances

 

2,132,638

 

22,710

4.22

%

 

 

1,010,865

 

5,762

2.26

%

Subordinated debt and other borrowings

 

426,855

 

5,966

5.54

%

 

 

426,267

 

4,847

4.51

%

Total interest-bearing liabilities

 

32,307,106

 

310,052

3.81

%

 

 

23,835,124

 

65,980

1.10

%

Noninterest-bearing deposits

 

8,515,733

 

 

 

 

10,926,069

 

 

Total deposits and interest-bearing liabilities

 

40,822,839

$

310,052

3.01

%

 

 

34,761,193

$

65,980

0.75

%

Other liabilities

 

545,164

 

 

 

 

300,212

 

 

Shareholders' equity

 

5,898,196

 

 

 

 

5,403,244

 

 

Total liabilities and shareholders' equity

$

47,266,199

 

 

 

$

40,464,649

 

 

Net interest income

 

$

317,242

 

 

 

$

305,784

 

Net interest spread (3)

 

 

2.14

%

 

 

 

3.10

%

Net interest margin (4)

 

 

3.06

%

 

 

 

3.47

%

 

 

 

 

 

 

 

 

(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 included $12.0 million of taxable equivalent income for the three months ended September 30, 2023 compared to $10.8 million for the three months ended September 30, 2022. 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 three months ended September 30, 2023 would have been 2.94% compared to a net interest spread of 3.44% for the three months ended September 30, 2022.

(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

ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED

 

 

 

 

(dollars in thousands)

Nine months ended

 

Nine months ended

September 30, 2023

 

September 30, 2022

 

Average

Balances

Interest

Rates/

Yields

 

Average

Balances

Interest

Rates/

Yields

Interest-earning assets

 

 

 

 

 

 

 

Loans (1) (2)

$

30,688,846

$

1,419,761

6.27

%

 

$

25,433,939

$

795,164

4.27

%

Securities

 

 

 

 

 

 

 

Taxable

 

3,482,068

 

97,850

3.76

%

 

 

3,400,046

 

41,977

1.65

%

Tax-exempt (2)

 

3,280,951

 

72,590

3.53

%

 

 

2,978,901

 

58,752

3.18

%

Interest-bearing due from banks

 

2,522,300

 

100,275

5.32

%

 

 

2,050,401

 

12,580

0.82

%

Resell agreements

 

508,467

 

9,960

2.62

%

 

 

1,175,119

 

10,674

1.21

%

Federal funds sold

 

 

%

 

 

 

%

Other

 

225,402

 

8,136

4.83

%

 

 

179,293

 

3,610

2.69

%

Total interest-earning assets

 

40,708,034

$

1,708,572

5.72

%

 

 

35,217,699

$

922,757

3.61

%

Nonearning assets

 

 

 

 

 

 

 

Intangible assets

 

1,879,100

 

 

 

 

1,876,614

 

 

Other nonearning assets

 

2,649,291

 

 

 

 

2,206,600

 

 

Total assets

$

45,236,425

 

 

 

$

39,300,913

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

Interest checking

 

9,199,603

 

227,263

3.30

%

 

 

6,560,068

 

26,741

0.54

%

Savings and money market

 

14,063,699

 

335,997

3.19

%

 

 

12,479,841

 

43,542

0.47

%

Time

 

4,509,386

 

122,302

3.63

%

 

 

2,272,063

 

13,337

0.78

%

Total interest-bearing deposits

 

27,772,688

 

685,562

3.30

%

 

 

21,311,972

 

83,620

0.52

%

Securities sold under agreements to repurchase

 

188,605

 

2,449

1.74

%

 

 

204,251

 

320

0.21

%

Federal Home Loan Bank advances

 

1,875,351

 

58,284

4.16

%

 

 

998,828

 

15,467

2.07

%

Subordinated debt and other borrowings

 

426,711

 

17,411

5.46

%

 

 

431,681

 

13,517

4.19

%

Total interest-bearing liabilities

 

30,263,355

 

763,706

3.37

%

 

 

22,946,732

 

112,924

0.66

%

Noninterest-bearing deposits

 

8,812,953

 

 

 

 

10,737,610

 

 

Total deposits and interest-bearing liabilities

 

39,076,308

$

763,706

2.61

%

 

 

33,684,342

$

112,924

0.45

%

Other liabilities

 

396,965

 

 

 

 

266,018

 

 

Shareholders' equity

 

5,763,152

 

 

 

 

5,350,553

 

 

Total liabilities and shareholders' equity

$

45,236,425

 

 

 

$

39,300,913

 

 

Net interest income

 

$

944,866

 

 

 

$

809,833

 

Net interest spread (3)

 

 

2.35

%

 

 

 

2.95

%

Net interest margin (4)

 

 

3.22

%

 

 

 

3.18

%

 

 

 

 

 

 

 

 

(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 included $34.1 million of taxable equivalent income for the nine months ended September 30, 2023 compared to $28.8 million for the nine months ended September 30, 2022. 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 nine months ended September 30, 2023 would have been 3.11% compared to a net interest spread of 3.16% for the nine months ended September 30, 2022.

(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)

September

June

March

December

September

June

2023

2023

2023

2022

2022

2022

Asset quality information and ratios:

 

 

 

 

 

 

Nonperforming assets:

 

 

 

 

 

 

Nonaccrual loans

$

42,950

 

44,289

 

36,988

 

38,116

 

34,115

 

15,459

 

ORE and other nonperforming assets (NPAs)

 

3,019

 

3,105

 

7,802

 

7,952

 

7,787

 

8,237

 

Total nonperforming assets

$

45,969

 

47,394

 

44,790

 

46,068

 

41,902

 

23,696

 

Past due loans over 90 days and still accruing interest

$

4,969

 

5,257

 

5,284

 

4,406

 

6,757

 

3,840

 

Accruing purchase credit deteriorated loans

$

7,010

 

7,415

 

7,684

 

8,060

 

8,759

 

9,194

 

Net loan charge-offs

$

18,093

 

9,771

 

7,291

 

11,729

 

10,983

 

877

 

Allowance for credit losses to nonaccrual loans

 

806.0

%

762.0

%

848.5

%

788.8

%

844.5

%

1,762.6

%

As a percentage of total loans:

 

 

 

 

 

 

Past due accruing loans over 30 days

 

0.16

%

0.14

%

0.14

%

0.15

%

0.13

%

0.11

%

Potential problem loans

 

0.42

%

0.32

%

0.22

%

0.19

%

0.21

%

0.32

%

Allowance for credit losses

 

1.08

%

1.08

%

1.04

%

1.04

%

1.04

%

1.03

%

Nonperforming assets to total loans, ORE and other NPAs

 

0.14

%

0.15

%

0.15

%

0.16

%

0.15

%

0.09

%

Classified asset ratio (Pinnacle Bank) (6)

 

4.6

%

3.3

%

2.7

%

2.4

%

2.6

%

2.9

%

Annualized net loan charge-offs to avg. loans (5)

 

0.23

%

0.13

%

0.10

%

0.17

%

0.16

%

0.01

%

 

 

 

 

 

 

 

Interest rates and yields:

 

 

 

 

 

 

Loans

 

6.50

%

6.30

%

6.00

%

5.54

%

4.73

%

4.07

%

Securities

 

3.81

%

3.66

%

3.47

%

3.19

%

2.66

%

2.29

%

Total earning assets

 

5.95

%

5.74

%

5.45

%

5.02

%

4.20

%

3.49

%

Total deposits, including non-interest bearing

 

2.92

%

2.52

%

2.03

%

1.40

%

0.66

%

0.23

%

Securities sold under agreements to repurchase

 

2.30

%

1.93

%

1.10

%

0.94

%

0.34

%

0.15

%

FHLB advances

 

4.22

%

4.20

%

3.94

%

3.04

%

2.26

%

1.92

%

Subordinated debt and other borrowings

 

5.54

%

5.44

%

5.38

%

4.98

%

4.51

%

4.04

%

Total deposits and interest-bearing liabilities

 

3.01

%

2.65

%

2.12

%

1.47

%

0.75

%

0.34

%

 

 

 

 

 

 

 

Capital and other ratios (6):

 

 

 

 

 

 

Pinnacle Financial ratios:

 

 

 

 

 

 

Shareholders' equity to total assets

 

12.3

%

12.5

%

12.6

%

13.2

%

13.0

%

13.2

%

Common equity Tier one

 

10.3

%

10.2

%

9.9

%

10.0

%

10.0

%

10.2

%

Tier one risk-based

 

10.9

%

10.8

%

10.5

%

10.5

%

10.7

%

10.9

%

Total risk-based

 

12.8

%

12.7

%

12.4

%

12.4

%

12.6

%

12.9

%

Leverage

 

9.4

%

9.5

%

9.6

%

9.7

%

9.7

%

9.8

%

Tangible common equity to tangible assets

 

8.2

%

8.3

%

8.3

%

8.5

%

8.3

%

8.4

%

Pinnacle Bank ratios:

 

 

 

 

 

 

Common equity Tier one

 

11.2

%

11.1

%

10.8

%

10.9

%

11.1

%

11.0

%

Tier one risk-based

 

11.2

%

11.1

%

10.8

%

10.9

%

11.1

%

11.0

%

Total risk-based

 

12.0

%

11.9

%

11.6

%

11.6

%

11.8

%

11.7

%

Leverage

 

9.7

%

9.8

%

9.9

%

10.1

%

10.1

%

9.9

%

Construction and land development loans as a percentage of total capital (17)

 

83.1

%

84.5

%

88.5

%

85.9

%

85.4

%

87.4

%

Non-owner occupied commercial real estate and multi-family as a percentage of total capital (17)

 

256.4

%

256.7

%

261.1

%

249.6

%

244.0

%

250.2

%

 

 

 

 

 

 

 

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)

September

June

March

December

September

June

2023

2023

2023

2022

2022

2022

 

 

 

 

 

 

 

 

Per share data:

 

 

 

 

 

 

 

Earnings per common share – basic

$

1.69

 

2.55

 

1.76

 

1.77

 

1.91

 

1.87

 

Earnings per common share - basic, excluding non-GAAP adjustments

$

1.79

 

1.80

 

1.76

 

1.77

 

1.91

 

1.87

 

Earnings per common share – diluted

$

1.69

 

2.54

 

1.76

 

1.76

 

1.91

 

1.86

 

Earnings per common share - diluted, excluding non-GAAP adjustments

$

1.79

 

1.79

 

1.76

 

1.76

 

1.91

 

1.86

 

Common dividends per share

$

0.22

 

0.22

 

0.22

 

0.22

 

0.22

 

0.22

 

Book value per common share at quarter end (7)

$

73.23

 

73.32

 

71.24

 

69.35

 

67.07

 

66.74

 

Tangible book value per common share at quarter end (7)

$

48.78

 

48.85

 

46.75

 

44.74

 

42.44

 

42.08

 

Revenue per diluted common share

$

5.35

 

6.43

 

5.28

 

5.27

 

5.40

 

5.14

 

Revenue per diluted common share, excluding non-GAAP adjustments

$

5.48

 

5.43

 

5.28

 

5.27

 

5.40

 

5.14

 

 

 

 

 

 

 

 

 

Investor information:

 

 

 

 

 

 

 

Closing sales price of common stock on last trading day of quarter

$

67.04

 

56.65

 

55.16

 

73.40

 

81.10

 

72.31

 

High closing sales price of common stock during quarter

$

75.95

 

57.93

 

82.79

 

87.81

 

87.66

 

91.42

 

Low closing sales price of common stock during quarter

$

56.41

 

46.17

 

52.51

 

70.74

 

68.68

 

68.56

 

 

 

 

 

 

 

 

 

Closing sales price of depositary shares on last trading day of quarter

$

22.70

 

23.75

 

24.15

 

25.35

 

25.33

 

25.19

 

High closing sales price of depositary shares during quarter

$

23.85

 

24.90

 

25.71

 

25.60

 

26.23

 

26.44

 

Low closing sales price of depositary shares during quarter

$

21.54

 

19.95

 

20.77

 

23.11

 

24.76

 

24.75

 

 

 

 

 

 

 

 

 

Other information:

 

 

 

 

 

 

 

Residential mortgage loan sales:

 

 

 

 

 

 

 

Gross loans sold

$

198,247

 

192,948

 

120,146

 

134,514

 

181,139

 

239,736

 

Gross fees (8)

$

4,350

 

4,133

 

2,795

 

3,149

 

3,189

 

6,523

 

Gross fees as a percentage of loans originated

 

2.19

%

2.14

%

2.33

%

2.34

%

1.76

%

2.72

%

Net gain (loss) on residential mortgage loans sold

$

2,012

 

1,567

 

2,053

 

(65

)

1,117

 

2,150

 

Investment gains (losses) on sales of securities, net (13)

$

(9,727

)

(9,961

)

 

 

217

 

 

Brokerage account assets, at quarter end (9)

$

9,041,716

 

9,007,230

 

8,634,339

 

8,049,125

 

7,220,405

 

6,761,480

 

Trust account managed assets, at quarter end

$

5,047,128

 

5,084,592

 

4,855,951

 

4,560,752

 

4,162,639

 

4,207,406

 

Core deposits (10)

$

33,606,783

 

32,780,767

 

32,054,111

 

31,301,077

 

30,748,817

 

30,011,444

 

Core deposits to total funding (10)

 

81.9

%

80.9

%

82.4

%

86.8

%

87.4

%

87.0

%

Risk-weighted assets

$

39,527,086

 

38,853,588

 

38,117,659

 

36,216,901

 

35,281,315

 

33,366,074

 

Number of offices

 

128

 

127

 

126

 

123

 

120

 

119

 

Total core deposits per office

$

262,553

 

258,116

 

254,398

 

254,480

 

256,240

 

252,197

 

Total assets per full-time equivalent employee

$

14,274

 

14,166

 

13,750

 

12,948

 

12,875

 

13,052

 

Annualized revenues per full-time equivalent employee

$

486.2

 

593.0

 

496.5

 

491.8

 

511.5

 

509.0

 

Annualized expenses per full-time equivalent employee

$

254.1

 

256.5

 

261.7

 

247.3

 

248.2

 

255.8

 

Number of employees (full-time equivalent)

 

3,329.5

 

3,309.0

 

3,281.5

 

3,241.5

 

3,184.5

 

3,074.0

 

Associate retention rate (11)

 

93.6

%

94.1

%

93.8

%

93.8

%

93.6

%

93.3

%

 

 

 

 

 

 

 

 

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

 

Nine months ended

(dollars in thousands, except per share data)

September

June

September

 

September

September

2023

2023

2022

 

2023

2022

 

 

 

 

 

 

 

Net interest income

$

317,242

 

315,393

 

305,784

 

 

944,866

 

809,833

 

 

 

 

 

 

 

 

Noninterest income

 

90,797

 

173,839

 

104,805

 

 

354,165

 

333,803

 

Total revenues

 

408,039

 

489,232

 

410,589

 

 

1,299,031

 

1,143,636

 

Less: Investment losses (gains) on sales of securities, net

 

9,727

 

9,961

 

(217

)

 

19,688

 

(156

)

Gain on sale of fixed assets as a result of sale-leaseback transaction

 

 

(85,692

)

 

 

(85,692

)

 

Total revenues excluding the impact of adjustments noted above

$

417,766

 

413,501

 

410,372

 

 

1,233,027

 

1,143,480

 

 

 

 

 

 

 

 

Noninterest expense

$

213,233

 

211,641

 

199,253

 

 

636,601

 

577,952

 

Less: ORE expense (benefit)

 

33

 

58

 

(90

)

 

190

 

101

 

Noninterest expense excluding the impact of adjustments noted above

$

213,200

 

211,583

 

199,343

 

 

636,411

 

577,851

 

 

 

 

 

 

 

 

Pre-tax income

$

167,980

 

245,902

 

183,843

 

 

585,148

 

522,564

 

Provision for credit losses

 

26,826

 

31,689

 

27,493

 

 

77,282

 

43,120

 

Pre-tax pre-provision net revenue

 

194,806

 

277,591

 

211,336

 

 

662,430

 

565,684

 

Less: Adjustments noted above

 

9,760

 

(75,673

)

(307

)

 

(65,814

)

(55

)

Adjusted pre-tax pre-provision net revenue (12)

$

204,566

 

201,918

 

211,029

 

 

596,616

 

565,629

 

 

 

 

 

 

 

 

Noninterest income

$

90,797

 

173,839

 

104,805

 

 

354,165

 

333,803

 

Less: Adjustments noted above

 

9,727

 

(75,731

)

(217

)

 

(66,004

)

(156

)

Noninterest income excluding the impact of adjustments noted above

$

100,524

 

98,108

 

104,588

 

 

288,161

 

333,647

 

 

 

 

 

 

 

 

Efficiency ratio (4)

 

52.26

%

43.26

%

48.53

%

 

49.01

%

50.54

%

Adjustments noted above

 

(1.23

)%

7.91

%

0.05

%

 

2.60

%

(0.01

)%

Efficiency ratio excluding adjustments noted above (4)

 

51.03

%

51.17

%

48.58

%

 

51.61

%

50.53

%

 

 

 

 

 

 

 

Total average assets

$

47,266,199

 

45,411,961

 

40,464,649

 

 

45,236,425

 

39,300,913

 

 

 

 

 

 

 

 

Noninterest income to average assets (1)

 

0.76

%

1.54

%

1.03

%

 

1.05

%

1.14

%

Less: Adjustments noted above

 

0.08

%

(0.67

)%

%

 

(0.20

)%

%

Noninterest income (excluding adjustments noted above) to average assets (1)

 

0.84

%

0.87

%

1.03

%

 

0.85

%

1.14

%

 

 

 

 

 

 

 

Noninterest expense to average assets (1)

 

1.79

%

1.87

%

1.95

%

 

1.88

%

1.97

%

Adjustments as noted above

 

%

%

%

 

%

%

Noninterest expense (excluding adjustments noted above) to average assets (1)

 

1.79

%

1.87

%

1.95

%

 

1.88

%

1.97

%

 

 

 

 

 

 

 

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)

September

June

March

December

September

June

2023

2023

2023

2022

2022

2022

Net income available to common shareholders

$

128,805

 

193,501

 

133,473

 

134,049

 

144,860

 

141,329

 

Investment (gains) losses on sales of securities, net

 

9,727

 

9,961

 

 

 

(217

)

 

Gain on sale of fixed assets as a result of sale-leaseback transaction

 

 

(85,692

)

 

 

 

 

ORE expense (benefit)

 

33

 

58

 

99

 

179

 

(90

)

86

 

Tax effect on adjustments noted above (16)

 

(2,440

)

18,918

 

(25

)

(47

)

80

 

(22

)

Net income available to common shareholders excluding adjustments noted above

$

136,125

 

136,746

 

133,547

 

134,181

 

144,633

 

141,393

 

 

 

 

 

 

 

 

Basic earnings per common share

$

1.69

 

2.55

 

1.76

 

1.77

 

1.91

 

1.87

 

Adjustment due to investment (gains) losses on sales of securities, net

 

0.13

 

0.13

 

 

 

 

 

Adjustment due to gain on sale of fixed assets as a result of sale-leaseback transaction

 

 

(1.13

)

 

 

 

 

Adjustment due to ORE expense (benefit)

 

 

 

 

 

 

 

Adjustment due to tax effect on adjustments noted above (16)

 

(0.03

)

0.25

 

 

 

 

 

Basic earnings per common share excluding adjustments noted above

$

1.79

 

1.80

 

1.76

 

1.77

 

1.91

 

1.87

 

 

 

 

 

 

 

 

Diluted earnings per common share

$

1.69

 

2.54

 

1.76

 

1.76

 

1.91

 

1.86

 

Adjustment due to investment (gains) losses on sales of securities, net

 

0.13

 

0.13

 

 

 

 

 

Adjustment due to gain on sale of fixed assets as a result of sale-leaseback transaction

 

 

(1.13

)

 

 

 

 

Adjustment due to ORE expense (benefit)

 

 

 

 

 

 

 

Adjustment due to tax effect on adjustments noted above (16)

 

(0.03

)

0.25

 

 

 

 

 

Diluted earnings per common share excluding the adjustments noted above

$

1.79

 

1.79

 

1.76

 

1.76

 

1.91

 

1.86

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue per diluted common share

$

5.35

 

6.43

 

5.28

 

5.27

 

5.40

 

5.14

 

Adjustments due to revenue-impacting items as noted above

 

0.13

 

(1.00

)

 

 

 

 

Revenue per diluted common share excluding adjustments due to revenue-impacting items as noted above

$

5.48

 

5.43

 

5.28

 

5.27

 

5.40

 

5.14

 

 

 

 

 

 

 

 

Book value per common share at quarter end (7)

$

73.23

 

73.32

 

71.24

 

69.35

 

67.07

 

66.74

 

Adjustment due to goodwill, core deposit and other intangible assets

 

(24.45

)

(24.47

)

(24.49

)

(24.61

)

(24.63

)

(24.66

)

Tangible book value per common share at quarter end (7)

$

48.78

 

48.85

 

46.75

 

44.74

 

42.44

 

42.08

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity method investment (15)

 

 

 

 

 

 

Fee income from BHG, net of amortization

$

24,967

 

26,924

 

19,079

 

21,005

 

41,341

 

49,465

 

Funding cost to support investment

 

6,546

 

6,005

 

5,768

 

5,438

 

4,680

 

3,887

 

Pre-tax impact of BHG

 

18,421

 

20,919

 

13,311

 

15,567

 

36,661

 

45,578

 

Income tax expense at statutory rates (16)

 

4,605

 

5,230

 

3,328

 

4,069

 

9,583

 

11,914

 

Earnings attributable to BHG

$

13,816

 

15,689

 

9,983

 

11,498

 

27,078

 

33,664

 

 

 

 

 

 

 

 

Basic earnings per common share attributable to BHG

$

0.18

 

0.21

 

0.13

 

0.15

 

0.36

 

0.44

 

Diluted earnings per common share attributable to BHG

$

0.18

 

0.21

 

0.13

 

0.15

 

0.36

 

0.44

 

 

 

 

 

 

 

 

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

 

 

Nine months ended

(dollars in thousands, except per share data)

 

Sept. 30,

 

2023

2022

Net income available to common shareholders

 

$

455,779

 

411,501

 

Investment losses on sales of securities, net

 

 

19,688

 

(156

)

Gain on sale of fixed assets as a result of sale-leaseback transaction

 

 

(85,692

)

 

ORE expense

 

 

190

 

101

 

Tax effect on adjustments noted above (16)

 

 

16,454

 

14

 

Net income available to common shareholders excluding adjustments noted above

 

$

406,419

 

411,460

 

 

 

 

 

Basic earnings per common share

 

$

6.00

 

5.43

 

Adjustment due to investment losses on sales of securities, net

 

 

0.26

 

 

Adjustment due to gain on sale of fixed assets as a result of sale-leaseback transaction

 

 

(1.13

)

 

Adjustment due to ORE expense

 

 

 

 

Adjustment due to tax effect on adjustments noted above (16)

 

 

0.22

 

 

Basic earnings per common share excluding adjustments noted above

 

$

5.35

 

5.43

 

 

 

 

 

Diluted earnings per common share

 

 

5.99

 

5.42

 

Adjustment due to investment losses on sales of securities, net

 

 

0.26

 

 

Adjustment due to gain on sale of fixed assets as a result of sale-leaseback transaction

 

 

(1.13

)

 

Adjustment due to ORE expense

 

 

 

 

Adjustment due to tax effect on adjustments noted above (16)

 

 

0.22

 

 

Diluted earnings per common share excluding the adjustments noted above

 

$

5.34

 

5.42

 

 

 

 

 

 

 

 

 

Revenue per diluted common share

 

$

17.07

 

15.06

 

Adjustments due to revenue-impacting items as noted above

 

 

(0.87

)

 

Revenue per diluted common share excluding adjustments due to revenue-impacting items noted above

 

$

16.20

 

15.06

 

 

 

 

 

Equity method investment (15)

 

 

 

Fee income from BHG, net of amortization

 

$

70,970

 

124,461

 

Funding cost to support investment

 

 

18,332

 

12,102

 

Pre-tax impact of BHG

 

 

52,638

 

112,359

 

Income tax expense at statutory rates (16)

 

 

13,160

 

29,371

 

Earnings attributable to BHG

 

$

39,478

 

82,988

 

 

 

 

 

Basic earnings per common share attributable to BHG

 

$

0.52

 

1.10

 

Diluted earnings per common share attributable to BHG

 

$

0.52

 

1.09

 

 

 

 

 

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

 

Nine months ended

(dollars in thousands, except per share data)

September

June

September

 

September

September

2023

2023

2022

 

2023

2022

 

 

 

 

 

 

 

Return on average assets (1)

 

1.08

%

1.71

%

1.42

%

 

 

1.35

%

1.40

%

Adjustments as noted above

 

0.06

%

(0.50

)%

%

 

 

(0.15

)%

%

Return on average assets excluding adjustments noted above (1)

 

1.14

%

1.21

%

1.42

%

 

 

1.20

%

1.40

%

 

 

 

 

 

 

 

Tangible assets:

 

 

 

 

 

 

Total assets

$

47,523,790

 

46,875,982

 

41,000,118

 

 

$

47,523,790

 

41,000,118

 

Less: Goodwill

 

(1,846,973

)

(1,846,973

)

(1,846,466

)

 

 

(1,846,973

)

(1,846,466

)

Core deposit and other intangible assets

 

(29,216

)

(30,981

)

(35,666

)

 

 

(29,216

)

(35,666

)

Net tangible assets

$

45,647,601

 

44,998,028

 

39,117,986

 

 

$

45,647,601

 

39,117,986

 

 

 

 

 

 

 

 

Tangible common equity:

 

 

 

 

 

 

Total shareholders' equity

$

5,837,641

 

5,843,759

 

5,342,112

 

 

$

5,837,641

 

5,342,112

 

Less: Preferred shareholders' equity

 

(217,126

)

(217,126

)

(217,126

)

 

 

(217,126

)

(217,126

)

Total common shareholders' equity

 

5,620,515

 

5,626,633

 

5,124,986

 

 

 

5,620,515

 

5,124,986

 

Less: Goodwill

 

(1,846,973

)

(1,846,973

)

(1,846,466

)

 

 

(1,846,973

)

(1,846,466

)

Core deposit and other intangible assets

 

(29,216

)

(30,981

)

(35,666

)

 

 

(29,216

)

(35,666

)

Net tangible common equity

$

3,744,326

 

3,748,679

 

3,242,854

 

 

$

3,744,326

 

3,242,854

 

 

 

 

 

 

 

 

Ratio of tangible common equity to tangible assets

 

8.20

%

8.33

%

8.29

%

 

 

8.20

%

8.29

%

 

 

 

 

 

 

 

Average tangible assets:

 

 

 

 

 

 

Average assets

$

47,266,199

 

45,411,961

 

40,464,649

 

 

$

45,236,425

 

39,300,913

 

Less: Average goodwill

 

(1,846,973

)

(1,846,973

)

(1,846,466

)

 

 

(1,846,973

)

(1,842,777

)

Average core deposit and other intangible assets

 

(30,367

)

(32,135

)

(36,884

)

 

 

(32,127

)

(33,837

)

Net average tangible assets

$

45,388,859

 

43,532,853

 

38,581,299

 

 

$

43,357,325

 

37,424,299

 

 

 

 

 

 

 

 

Return on average assets (1)

 

1.08

%

1.71

%

1.42

%

 

 

1.35

%

1.40

%

Adjustment due to goodwill, core deposit and other intangible assets

 

0.05

%

0.07

%

0.07

%

 

 

0.06

%

0.07

%

Return on average tangible assets (1)

 

1.13

%

1.78

%

1.49

%

 

 

1.41

%

1.47

%

Adjustments as noted above

 

0.06

%

(0.52

)%

%

 

 

(0.16

)%

%

Return on average tangible assets excluding adjustments noted above (1)

 

1.19

%

1.26

%

1.49

%

 

 

1.25

%

1.47

%

 

 

 

 

 

 

 

Average tangible common equity:

 

 

 

 

 

 

Average shareholders' equity

$

5,898,196

 

5,782,239

 

5,403,244

 

 

$

5,763,152

 

5,350,553

 

Less: Average preferred equity

 

(217,126

)

(217,126

)

(217,126

)

 

 

(217,126

)

(217,126

)

Average common equity

 

5,681,070

 

5,565,113

 

5,186,118

 

 

 

5,546,026

 

5,133,427

 

Less: Average goodwill

 

(1,846,973

)

(1,846,973

)

(1,846,466

)

 

 

(1,846,973

)

(1,842,777

)

Average core deposit and other intangible assets

 

(30,367

)

(32,135

)

(36,884

)

 

 

(32,127

)

(33,837

)

Net average tangible common equity

$

3,803,730

 

3,686,005

 

3,302,768

 

 

$

3,666,926

 

3,256,813

 

 

 

 

 

 

 

 

Return on average equity (1)

 

8.66

%

13.42

%

10.64

%

 

 

10.57

%

10.28

%

Adjustment due to average preferred shareholders' equity

 

0.34

%

0.53

%

0.44

%

 

 

0.42

%

0.44

%

Return on average common equity (1)

 

9.00

%

13.95

%

11.08

%

 

 

10.99

%

10.72

%

Adjustment due to goodwill, core deposit and other intangible assets

 

4.43

%

7.11

%

6.32

%

 

 

5.63

%

6.17

%

Return on average tangible common equity (1)

 

13.43

%

21.06

%

17.40

%

 

 

16.62

%

16.89

%

Adjustments as noted above

 

0.77

%

(6.18

)%

(0.03

)%

 

 

(1.80

)%

%

Return on average tangible common equity excluding adjustments noted above (1)

 

14.20

%

14.88

%

17.37

%

 

 

14.82

%

16.89

%

 

 

 

 

 

 

 

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. 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.

6. 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 shareholders' equity as a percentage of end of period assets.

Tangible common equity to tangible assets - End of period total shareholders' equity less end of period preferred stock, goodwill, core deposit and other intangibles as a percentage of end of period assets less end of period goodwill, core deposit and other intangibles.

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 credit 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.

7. Book value per common share computed by dividing total common shareholders' equity by common shares outstanding. Tangible book value per common share computed by dividing total common shareholders' equity, less goodwill, core deposit and other intangibles by common shares outstanding.

8. Amounts are included in the statement of income in "Gains on mortgage loans sold, net", net of commissions paid on such amounts.

9. At fair value, based on information obtained from Pinnacle's third party broker/dealer for non-FDIC insured financial products and services.

10. 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. 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.

11. 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.

12. Adjusted pre-tax, pre-provision net revenue excludes the impact of ORE expenses and income, investment gains and losses on sales of securities and gain on sale of fixed assets as a result of the sale-leaseback transaction.

13. 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.

14. The dividend payout ratio is calculated as the sum of the annualized dividend rate for dividends paid on common shares divided by the trailing 12-months fully diluted earnings per common share as of the dividend declaration date.

15. Earnings from equity method investment includes the impact of the funding costs of the overall franchise calculated using the firm's subordinated and other borrowing rates. Income tax expense is calculated using statutory tax rates.

16. Tax effect calculated using the blended statutory rate of 25.00 percent for 2023. For periods prior to 2023, tax effect calculated using the blended statutory rate of 26.14 percent.

17. Calculated using the same guidelines as are used in the Federal Financial Institutions Examination Council's Uniform Bank Performance Report.

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Contacts

MEDIA CONTACT: Joe Bass, 615-743-8219

FINANCIAL CONTACT: Harold Carpenter, 615-744-3742

WEBSITE: www.pnfp.com

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