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PNFP Reports Diluted EPS of $2.54, ROAA of 1.71% and ROATCE of 21.06% for 2Q23

2Q23 annualized linked-quarter, end-of-period loans grew 11.3%, while deposits grew 17.1%

Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $2.54 for the quarter ended June 30, 2023, compared to net income per diluted common share of $1.86 for the quarter ended June 30, 2022, an increase of 36.6 percent. Net income per diluted common share was $4.30 for the six months ended June 30, 2023, compared to $3.51 for the six months ended June 30, 2022, an increase of approximately 22.5 percent.

Excluding losses on the sale of investment securities, other real estate (ORE) expense and gains on the sale of fixed assets associated with the firm's sale-leaseback transaction for the three months ended June 30, 2023 and 2022, net income per diluted common share was $1.79 for the three months ended June 30, 2023, compared to $1.86 for the three months ended June 30, 2022, a decrease of 3.8 percent. Excluding losses on the sale of investment securities, other real estate (ORE) expense and gains on the sale of fixed assets associated with our sale-leaseback transaction for the six months ended June 30, 2023 and 2022, net income per diluted common share was $3.55 for the six months ended June 30, 2023, compared to $3.51 for the six months ended June 30, 2022, an increase of 1.1 percent.

"This proved to be another sound operating quarter especially given the results of several critical performance metrics such as asset quality, net interest income growth and tangible book value accretion," said M. Terry Turner, Pinnacle's president and chief executive officer. "Second quarter results continue to reflect our longstanding and ongoing ability to leverage our award-winning work environment and market-leading net promoter scores to take market share from our large national and regional competitors. The second quarter of 2023 also saw us increase our thrust and focus on gathering client funding, which is the 'raw material' that we need to support our outsized loan and earnings growth over time. Consequently, our relationship managers attracted client funding from across our footprint, which resulted in deposit growth of over $1.5 billion this quarter. Loan growth during the second quarter of 2023 was $855 million, or 11.3% linked-quarter annualized. This amount is consistent with the outlook we provided in connection with our first quarter results and is reflective of our deliberate efforts to moderate loan growth by constraining certain asset classes and elevating loan pricing.

"We also added 20 revenue producers during the quarter. Despite all the uncertainty plaguing the industry, we continue to invest in our proven relationship banking model and believe, even during times such as these, that a consistent focus on attracting and retaining highly successful revenue producers and their clients will enable us to continue compounding earnings and accreting tangible book value more reliably than peers.

"Our second quarter diluted earnings per share includes the positive impact of $0.84 per diluted common share from a sale-leaseback transaction that was executed during the second quarter. The gain from the sale-leaseback transaction was partially offset by the realized net loss of approximately $0.10 per diluted common share from the sale of approximately $174.0 million in available-for-sale investment securities."

BALANCE SHEET GROWTH:

Total assets at June 30, 2023 were $46.9 billion, an increase of approximately $6.8 billion from June 30, 2022 and $1.8 billion from March 31, 2023, reflecting a year-over-year increase of 16.8 percent and a linked-quarter annualized increase of 15.6 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)

June 30, 2023

March 31, 2023

June 30, 2022

Loans

$

31,153,290

$

30,297,871

11.3

%

$

26,333,096

18.3

%

Less: PPP loans

 

4,650

 

6,382

NM

 

 

51,100

(90.9

)%

Loans excluding PPP loans

 

31,148,640

 

30,291,489

11.3

%

 

26,281,996

18.5

%

Securities and other interest-earning assets

 

10,625,301

 

10,080,769

21.6

%

 

9,342,543

13.7

%

Total interest-earning assets excluding PPP loans

$

41,773,941

$

40,372,258

13.9

%

$

35,624,539

17.3

%

 

 

 

 

 

 

Core deposits:

 

 

 

 

 

Noninterest-bearing deposits

$

8,436,799

$

9,018,439

(25.8

)%

$

11,058,198

(23.7

)%

Interest-bearing core deposits(1)

 

24,343,968

 

23,035,672

22.7

%

 

18,953,246

28.4

%

Noncore deposits and other funding(2)

 

7,731,082

 

6,865,003

50.5

%

 

4,496,117

72.0

%

Total funding

$

40,511,849

$

38,919,114

16.4

%

$

34,507,561

17.4

%

(1):

Interest-bearing core deposits are interest-bearing deposits, money market accounts, time deposits less than $250,000 including certain reciprocating time and money market deposits issued through the IntraFi Network.

(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.

"End-of-period loans grew by $855.4 million over last quarter, and end-of-period deposits grew by $1.5 billion over the same period, reflecting an annualized linked-quarter growth rate of 11.3 percent and 17.1 percent, respectfully," Turner said. "We continued to experience a mix shift in our deposits as more deposits moved from noninterest-bearing accounts to interest-bearing accounts, albeit at a lesser pace than the previous quarters. We anticipate that the reduction in noninterest bearing balances will slow from the pace of previous quarters this year.

"Our cumulative deposit beta at June 30, 2023 increased to 48.0 percent, which is consistent with our expectations. We believe with more rate hikes in the forecast for 2023, our funding costs will increase just not at the same rate as the second quarter increase. Furthermore, we anticipate that the impact of our hiring and usual seasonal growth will enable us to continue to grow our deposits for the remainder of the year at levels that should support our current outlook of high single-digit percentage deposit growth for 2023 over 2022."

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

Pre-tax, pre-provision net revenues (PPNR) for the three and six months ended June 30, 2023 were $277.6 million and $467.6 million, respectively, inclusive of $85.7 million of gain on the sale of fixed assets as a result of the sale-leaseback transaction completed in the three months ended June 30, 2023, an increase of 43.1 percent and 32.0 percent, respectively, from the $194.0 million and $354.3 million, respectively, recognized in the three and six months ended June 30, 2022.

 

Three months ended

Six months ended

 

June 30,

June 30,

(dollars in thousands)

 

2023

 

 

2022

% change

 

2023

 

 

2022

% change

Revenues:

 

 

 

 

 

 

Net interest income

$

315,393

 

$

264,574

19.2

%

$

627,624

 

$

504,049

24.5

%

Noninterest income

 

173,839

 

 

125,502

38.5

%

 

263,368

 

 

228,998

15.0

%

Total revenues

 

489,232

 

 

390,076

25.4

%

 

890,992

 

 

733,047

21.5

%

Noninterest expense

 

211,641

 

 

196,038

8.0

%

 

423,368

 

 

378,699

11.8

%

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

 

277,591

 

 

194,038

43.1

%

 

467,624

 

 

354,348

32.0

%

Adjustments:

 

 

 

 

 

 

Investment losses on sales of securities, net

 

9,961

 

 

NM

 

 

9,961

 

 

61

NM

 

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

 

(85,692

)

 

NM

 

 

(85,692

)

 

NM

 

ORE expense

 

58

 

 

86

(32.6

)%

 

157

 

 

191

(17.8

)%

Adjusted PPNR

$

201,918

 

$

194,124

4.0

%

$

392,050

 

$

354,600

10.6

%

  • Revenue per fully diluted common share was $6.43 for the second quarter of 2023, compared to $5.28 for the first quarter of 2023 and $5.14 for the second quarter of 2022, a 25.1 percent year-over-year growth rate. Excluding net losses on sales of investment securities, gain on the sale of fixed assets as a result of the sale-leaseback transaction and ORE expense, revenue per fully diluted share for the second quarter of 2023 was $5.43.
  • Net interest income for the quarter ended June 30, 2023 was $315.4 million, compared to $312.2 million for the first quarter of 2023 and $264.6 million for the second quarter of 2022, a year-over-year growth rate of 19.2 percent.
    • Revenues from PPP loans approximated $34,000 in the second quarter of 2023, compared to $20,000 in the first quarter of 2023 and $4.1 million in the second quarter of 2022. At June 30, 2023, remaining unamortized fees for PPP loans were approximately $192,000.
    • Included in net interest income for the second quarter of 2023 was $776,000 of discount accretion associated with fair value adjustments, compared to $852,000 of discount accretion recognized in the first quarter of 2023 and $1.6 million in the second quarter of 2022. There remains $1.9 million of purchase accounting discount accretion as of June 30, 2023.
  • Noninterest income for the quarter ended June 30, 2023 was $173.8 million, compared to $89.5 million for the first quarter of 2023 and $125.5 million for the second quarter of 2022, a year-over-year increase of 38.5 percent.
    • Gain on the sale of fixed assets was $85.7 million for the quarter ended June 30, 2023, compared to $135,000 and $65,000, respectively, for the quarters ended March 31, 2023 and June 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 $10.0 million for the quarter ended June 30, 2023, compared to no gains or losses for the quarters ended March 31, 2023 and June 30, 2022.
    • Wealth management revenues, which include investment, trust and insurance services, were $24.1 million for the second quarter of 2023, compared to $22.5 million for the first quarter of 2023 and $21.8 million for the second quarter of 2022, a year-over-year increase of 10.2 percent.
    • During the second quarter of 2023, mortgage loans sold resulted in a $1.6 million net gain, compared to a $2.1 million net gain in the first quarter of 2023 and a $2.2 million net gain in the second quarter of 2022.
    • Income from the firm's investment in BHG was $26.9 million for the second quarter 2023, compared to $19.1 million for the first quarter of 2023 and $49.5 million for the second quarter of 2022, a year-over-year decline of 45.6 percent.
      • Loan originations increased to $1.1 billion in the second quarter of 2023 compared to $1.0 billion in the first quarter of 2023 and $1.1 billion in the second quarter of 2022.
      • Loans sold to BHG's community bank partners were approximately $523 million in the second quarter of 2023 compared to approximately $704 million in the first quarter of 2023 and $658 million in the second quarter of 2022. BHG also sold $557 million in loans to private investors during the second quarter of 2022.
      • BHG increased its reserves for on-balance sheet loan losses to $196 million, or 5.99 percent of loans held for investment at June 30, 2023, compared to 5.19 percent at March 31, 2023. BHG also increased its accrual for losses attributable to loan substitutions and prepayments for loans previously sold through its community bank auction platform to $369 million, or 5.87 percent of the loans that have been previously sold and were unpaid, at June 30, 2023 compared to 5.81 percent at March 31, 2023.
  • Noninterest expense for the quarter ended June 30, 2023 was $211.6 million, compared to $211.7 million in the first quarter of 2023 and $196.0 million in the second quarter of 2022, reflecting a year-over-year increase of 8.0 percent.
    • Salaries and employee benefits were $132.4 million in the second quarter of 2023, compared to $135.7 million in the first quarter of 2023 and $126.6 million in the second quarter of 2022, reflecting a year-over-year increase of 4.6 percent.
      • Costs related to the firm's cash and equity incentive plans were $23.2 million in the second quarter of 2023, compared to $22.5 million in the first quarter of 2023 and $31.1 million in the second quarter of 2022.
      • The reduction in salaries and employee benefits expense 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 full-time equivalent associates increasing to 3,309.0 at June 30, 2023, from 3,074.0 at June 30, 2022, a year-over-year increase in headcount of 7.6 percent.
    • Noninterest expense categories, other than salaries and employee benefits, were $79.2 million in the second quarter of 2023, compared to $76.0 million in the first quarter of 2023 and $69.4 million in the second quarter of 2022, reflecting a year-over-year increase of 14.1 percent.

"Our sale-leaseback transaction resulted in an $85.7 million gain on the sale of fixed assets during the second quarter of 2023," said Harold R. Carpenter, Pinnacle's chief financial officer. "We have reviewed the potential for a sale-leaseback transaction on several occasions over the years. In the fourth quarter of last year, as rates were increasing, it became much more opportunistic. After much diligence, we elected to execute the transaction during the second quarter of 2023.

"As to revenues for the second quarter, our net interest income for the second quarter was up by $3.2 million from the first quarter. Our current outlook is that growth in net interest income for fiscal year 2023 over 2022 should approximate a low-teens percentage increase. Net growth in fee income in the second quarter of 2023 compared to the first quarter was largely attributable to the gain on sale of fixed assets recognized in connection with the sale-leaseback transaction, offset by $10.0 million in net losses from the sale of investment securities. The second quarter sale of investment securities provided us the opportunity to increase our net interest income as the proceeds of the sale are now achieving a higher yield and thus serve to minimize the financial impact of higher lease occupancy costs from the sale-leaseback transaction. BHG revenues also increased $7.8 million from the first to the second quarter of 2023.

"Expenses were essentially flat when comparing second quarter to first quarter of 2023. Salaries and employee benefits expense decreased on a linked-quarter basis, as employee benefits were seasonally lower in the second quarter of 2023 from the first quarter. Occupancy expense increased this quarter as a result of the sale-leaseback transaction. We anticipate a similar dollar increase in occupancy costs next quarter given the sale-leaseback transaction was consummated in multiple transactions that occurred throughout the second quarter and thus will be fully integrated into our results in the third quarter. We will continue to monitor our expense burden in light of our anticipated revenue growth and adjust incentives and/or reduce other expenses through either reduced hiring, deferral of anticipated projects or implementation of other cost-saving measures as required."

PROFITABILITY, LIQUIDITY AND SOUNDNESS:

 

Three months ended

 

Six months ended

 

June 30,

2023

March 31,

2023

June 30,

2022

 

June 30,

2023

June 30,

2022

Net interest margin

3.20

%

3.40

%

3.17

%

 

3.30

%

3.03

%

Efficiency ratio

43.26

%

52.70

%

50.26

%

 

47.52

%

51.66

%

Return on average assets

1.71

%

1.26

%

1.46

%

 

1.49

%

1.39

%

Return on average tangible common equity (TCE)

21.06

%

15.43

%

17.62

%

 

18.33

%

16.63

%

 

As of

 

 

June 30, 2023

March 31, 2023

June 30, 2022

 

Shareholders' equity to total assets

 

12.5

%

 

12.6

%

 

13.2

%

 

Average loan to deposit ratio

 

84.94

%

 

83.97

%

 

80.67

%

 

Uninsured/uncollateralized deposits to total deposits

 

28.31

%

 

33.23

%

 

41.38

%

 

Tangible common equity to tangible assets

 

8.3

%

 

8.3

%

 

8.4

%

 

Book value per common share

$

73.32

 

$

71.24

 

$

66.74

 

 

Tangible book value per common share

$

48.85

 

$

46.75

 

$

42.08

 

 

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

 

0.13

%

 

0.10

%

 

0.01

%

 

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

 

0.15

%

 

0.15

%

 

0.09

%

 

Classified asset ratio (Pinnacle Bank) (2)

 

3.30

%

 

2.70

%

 

2.90

%

 

Allowance for credit losses (ACL) to total loans

 

1.08

%

 

1.04

%

 

1.03

%

 

(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 3.20 percent for the second quarter of 2023, compared to 3.40 percent for the first quarter of 2023 and 3.17 percent for the second quarter of 2022.
  • Provision for credit losses was $31.7 million in the second quarter of 2023, compared to $18.8 million in the first quarter of 2023 and $12.9 million in the second quarter of 2022. Net charge-offs were $9.8 million for the quarter ended June 30, 2023, compared to $7.3 million for the quarter ended March 31, 2023 and $877,000 for the quarter ended June 30, 2022. Annualized net charge-offs for the second quarter of 2023 were 0.13 percent.
  • Nonperforming assets were $47.4 million at June 30, 2023, compared to $44.8 million at March 31, 2023 and $23.7 million at June 30, 2022, up 100.0 percent over the same quarter last year. The ratio of the allowance for credit losses to nonperforming loans at June 30, 2023 was 762.0 percent, compared to 848.5 percent at March 31, 2023 and 1,762.6 percent at June 30, 2022.
  • Classified assets were $153.9 million at June 30, 2023, compared to $120.3 million at March 31, 2023 and $112.5 at June 30, 2022, up 36.8 percent over the same quarter last year.

"Our net interest margin declined on a linked-quarter basis by approximately 20 basis points," Carpenter said. "Increased deposit pricing and the continued reduction in our noninterest-bearing deposit account balances as a result of a shift in deposit mix were the primary contributors to our decreased net interest margin. Also contributing to the reduced net interest margin was an elevated level of on-balance sheet liquidity, which, as we noted last quarter, we acquired during mid-March given the heightened levels of uncertainty in the broader banking industry. The impact of this elevated liquidity should decrease over the remainder of 2023 as we seek to deploy some of this excess into both loan growth and the reduction of wholesale funding.

"We continue to experience reductions in our uninsured deposit base, as approximately $1.9 billion in deposits were added to a reciprocal deposit insurance funding network during the second quarter, contributing to a reduction in our uninsured/uncollateralized deposit base from approximately 33.2 percent at the end of the first quarter of 2023 to approximately 28.3 percent at the end of the second quarter of 2023.

"Our investment securities portfolio, including both the held-to-maturity and available-for-sale portfolios, continues to perform well for us though the value of these securities decreased by approximately $255.4 million in the second quarter from the first quarter, largely as a result of our decision to sell approximately $174.0 million in securities in the second quarter of 2023. Our tangible book value per share also increased to $48.85 at June 30, 2023 from $46.75 at March 31, 2023.

"Lastly, credit metrics have been largely consistent for an extended period of time, and we expect those metrics to remain consistent for the remainder of this year. We did record an increased provision this quarter in comparison to last quarter and, thus, increased the ratio of our allowance for credit losses to total loans to 1.08 percent."

BOARD OF DIRECTORS DECLARES DIVIDENDS

On July 18, 2023, Pinnacle Financial's Board of Directors approved a quarterly cash dividend of $0.22 per common share to be paid on Aug. 25, 2023 to common shareholders of record as of the close of business on Aug. 4, 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 Sept. 1, 2023 to shareholders of record at the close of business on Aug. 17, 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 July 19, 2023, to discuss second 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 2022 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 $46.9 billion in assets as of June 30, 2023. As the second-largest bank holding company headquartered 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) 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; (xiii) BHG's ability to profitably grow its business and successfully execute on its business plans; (xiv) risks of expansion into new geographic or product markets; (xv) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including goodwill or other intangible assets; (xvi) the ineffectiveness of Pinnacle Bank's hedging strategies, or the unexpected counterparty failure or hedge failure of the underlying hedges; (xvii) 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; (xviii) deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xix) 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; (xx) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xxi) 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; (xxii) 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; (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 also includes non-GAAP financial measures which exclude the impact of loans originated and forgiven and repaid under the PPP. 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)

June 30,

2023

December 31,

2022

June 30,

2022

ASSETS

 

 

 

Cash and noninterest-bearing due from banks

$

447,216

 

$

268,649

 

$

265,507

 

Restricted cash

 

22,567

 

 

31,447

 

 

29,739

 

Interest-bearing due from banks

 

3,363,348

 

 

877,286

 

 

1,336,667

 

Cash and cash equivalents

 

3,833,131

 

 

1,177,382

 

 

1,631,913

 

Securities purchased with agreement to resell

 

507,235

 

 

513,276

 

 

1,328,876

 

Securities available-for-sale, at fair value

 

3,591,280

 

 

3,558,870

 

 

3,809,338

 

Securities held-to-maturity (fair value of $2.7 billion, $2.7 billion, and $2.5 billion, net of allowance for credit losses of $1.7 million, $1.6 million, and $1.2 million at June 30, 2023, Dec. 31, 2022, and June 30, 2022, respectively)

 

3,032,177

 

 

3,079,050

 

 

2,744,555

 

Consumer loans held-for-sale

 

85,981

 

 

42,237

 

 

67,467

 

Commercial loans held-for-sale

 

22,713

 

 

21,093

 

 

25,901

 

Loans

 

31,153,290

 

 

29,041,605

 

 

26,333,096

 

Less allowance for credit losses

 

(337,459

)

 

(300,665

)

 

(272,483

)

Loans, net

 

30,815,831

 

 

28,740,940

 

 

26,060,613

 

Premises and equipment, net

 

244,853

 

 

327,885

 

 

302,389

 

Equity method investment

 

461,596

 

 

443,185

 

 

403,191

 

Accrued interest receivable

 

164,854

 

 

161,182

 

 

116,038

 

Goodwill

 

1,846,973

 

 

1,846,973

 

 

1,846,466

 

Core deposits and other intangible assets

 

30,981

 

 

34,555

 

 

37,617

 

Other real estate owned

 

2,555

 

 

7,952

 

 

8,237

 

Other assets

 

2,235,822

 

 

2,015,441

 

 

1,738,691

 

Total assets

$

46,875,982

 

$

41,970,021

 

$

40,121,292

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

Deposits:

 

 

 

Noninterest-bearing

$

8,436,799

 

$

9,812,744

 

$

11,058,198

 

Interest-bearing

 

10,433,361

 

 

7,884,605

 

 

6,617,324

 

Savings and money market accounts

 

13,645,849

 

 

13,774,534

 

 

12,492,329

 

Time

 

5,206,652

 

 

3,489,355

 

 

2,427,452

 

Total deposits

 

37,722,661

 

 

34,961,238

 

 

32,595,303

 

Securities sold under agreements to repurchase

 

163,774

 

 

194,910

 

 

199,585

 

Federal Home Loan Bank advances

 

2,200,917

 

 

464,436

 

 

1,289,059

 

Subordinated debt and other borrowings

 

424,497

 

 

424,055

 

 

423,614

 

Accrued interest payable

 

53,854

 

 

19,478

 

 

13,551

 

Other liabilities

 

466,520

 

 

386,512

 

 

284,941

 

Total liabilities

 

41,032,223

 

 

36,450,629

 

 

34,806,053

 

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 June 30, 2023, Dec. 31, 2022, and June 30, 2022, respectively

 

217,126

 

 

217,126

 

 

217,126

 

Common stock, par value $1.00; 180.0 million shares authorized; 76.7 million, 76.5 million and 76.4 million shares issued and outstanding at June 30, 2023, Dec. 31, 2022, and June 30, 2022, respectively

 

76,740

 

 

76,454

 

 

76,385

 

Additional paid-in capital

 

3,087,967

 

 

3,074,867

 

 

3,056,228

 

Retained earnings

 

2,634,315

 

 

2,341,706

 

 

2,096,950

 

Accumulated other comprehensive loss, net of taxes

 

(172,389

)

 

(190,761

)

 

(131,450

)

Total shareholders' equity

 

5,843,759

 

 

5,519,392

 

 

5,315,239

 

Total liabilities and shareholders' equity

$

46,875,982

 

$

41,970,021

 

$

40,121,292

 

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

Six months ended

 

June 30,

2023

March 31,

2023

June 30,

2022

June 30,

2023

June 30,

2022

Interest income:

 

 

 

 

 

Loans, including fees

$

478,896

 

$

431,902

 

$

252,182

 

$

910,798

 

$

479,229

 

Securities

 

 

 

 

 

Taxable

 

31,967

 

 

29,358

 

 

12,725

 

 

61,325

 

 

23,773

 

Tax-exempt

 

24,603

 

 

23,802

 

 

19,898

 

 

48,405

 

 

37,344

 

Federal funds sold and other

 

39,773

 

 

20,977

 

 

7,571

 

 

60,750

 

 

10,647

 

Total interest income

 

575,239

 

 

506,039

 

 

292,376

 

 

1,081,278

 

 

550,993

 

Interest expense:

 

 

 

 

 

Deposits

 

228,668

 

 

176,589

 

 

18,181

 

 

405,257

 

 

28,431

 

Securities sold under agreements to repurchase

 

783

 

 

595

 

 

82

 

 

1,378

 

 

138

 

FHLB advances and other borrowings

 

30,395

 

 

16,624

 

 

9,539

 

 

47,019

 

 

18,375

 

Total interest expense

 

259,846

 

 

193,808

 

 

27,802

 

 

453,654

 

 

46,944

 

Net interest income

 

315,393

 

 

312,231

 

 

264,574

 

 

627,624

 

 

504,049

 

Provision for credit losses

 

31,689

 

 

18,767

 

 

12,907

 

 

50,456

 

 

15,627

 

Net interest income after provision for credit losses

 

283,704

 

 

293,464

 

 

251,667

 

 

577,168

 

 

488,422

 

Noninterest income:

 

 

 

 

 

Service charges on deposit accounts

 

12,180

 

 

11,718

 

 

11,616

 

 

23,898

 

 

22,646

 

Investment services

 

14,174

 

 

11,595

 

 

13,205

 

 

25,769

 

 

23,896

 

Insurance sales commissions

 

3,252

 

 

4,464

 

 

2,554

 

 

7,716

 

 

6,590

 

Gains on mortgage loans sold, net

 

1,567

 

 

2,053

 

 

2,150

 

 

3,620

 

 

6,216

 

Investment losses on sales, net

 

(9,961

)

 

 

 

 

 

(9,961

)

 

(61

)

Trust fees

 

6,627

 

 

6,429

 

 

6,065

 

 

13,056

 

 

12,038

 

Income from equity method investment

 

26,924

 

 

19,079

 

 

49,465

 

 

46,003

 

 

83,120

 

Gain on sale of fixed assets

 

85,724

 

 

135

 

 

65

 

 

85,859

 

 

198

 

Other noninterest income

 

33,352

 

 

34,056

 

 

40,382

 

 

67,408

 

 

74,355

 

Total noninterest income

 

173,839

 

 

89,529

 

 

125,502

 

 

263,368

 

 

228,998

 

Noninterest expense:

 

 

 

 

 

Salaries and employee benefits

 

132,443

 

 

135,708

 

 

126,611

 

 

268,151

 

 

248,463

 

Equipment and occupancy

 

33,706

 

 

30,353

 

 

26,921

 

 

64,059

 

 

52,457

 

Other real estate, net

 

58

 

 

99

 

 

86

 

 

157

 

 

191

 

Marketing and other business development

 

5,664

 

 

5,942

 

 

4,759

 

 

11,606

 

 

8,536

 

Postage and supplies

 

2,863

 

 

2,819

 

 

2,320

 

 

5,682

 

 

4,691

 

Amortization of intangibles

 

1,780

 

 

1,794

 

 

2,051

 

 

3,574

 

 

3,922

 

Other noninterest expense

 

35,127

 

 

35,012

 

 

33,290

 

 

70,139

 

 

60,439

 

Total noninterest expense

 

211,641

 

 

211,727

 

 

196,038

 

 

423,368

 

 

378,699

 

Income before income taxes

 

245,902

 

 

171,266

 

 

181,131

 

 

417,168

 

 

338,721

 

Income tax expense

 

48,603

 

 

33,995

 

 

36,004

 

 

82,598

 

 

64,484

 

Net income

 

197,299

 

 

137,271

 

 

145,127

 

 

334,570

 

 

274,237

 

Preferred stock dividends

 

(3,798

)

 

(3,798

)

 

(3,798

)

 

(7,596

)

 

(7,596

)

Net income available to common shareholders

$

193,501

 

$

133,473

 

$

141,329

 

$

326,974

 

$

266,641

 

Per share information:

 

 

 

 

 

Basic net income per common share

$

2.55

 

$

1.76

 

$

1.87

 

$

4.30

 

$

3.52

 

Diluted net income per common share

$

2.54

 

$

1.76

 

$

1.86

 

$

4.30

 

$

3.51

 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

 

76,030,081

 

 

75,921,282

 

 

75,751,296

 

 

75,975,982

 

 

75,703,407

 

Diluted

 

76,090,321

 

 

76,042,328

 

 

75,940,500

 

 

76,061,883

 

 

75,934,025

 

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

 

 

309

 

 

 

 

 

 

323

 

Preferred dividends paid ($33.76 per share)

 

 

 

 

 

 

 

(7,596

)

 

 

 

(7,596

)

Common dividends paid ($0.44 per share)

 

 

 

 

 

 

 

(34,041

)

 

 

(34,041

)

Issuance of restricted common shares, net of forfeitures

 

166

 

 

166

 

 

(166

)

 

 

 

 

 

 

Restricted shares withheld for taxes & related tax benefits

 

(43

)

 

(43

)

 

(4,359

)

 

 

 

 

 

(4,402

)

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

 

105

 

 

105

 

 

(5,566

)

 

 

 

 

 

(5,461

)

Compensation expense for restricted shares & performance stock units

 

 

 

 

 

20,208

 

 

 

 

 

 

20,208

 

Net income

 

 

 

 

 

 

 

274,237

 

 

 

 

274,237

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

(238,636

)

 

(238,636

)

Balance at June 30, 2022

$

217,126

76,385

 

$

76,385

 

$

3,056,228

 

$

2,096,950

 

$

(131,450

)

$

5,315,239

 

 

 

 

 

 

 

 

 

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 ($33.76 per share)

 

 

 

 

 

 

 

(7,596

)

 

 

 

(7,596

)

Common dividends paid ($0.44 per share)

 

 

 

 

 

 

 

(34,365

)

 

 

 

(34,365

)

Issuance of restricted common shares, net of forfeitures

 

200

 

 

200

 

 

(200

)

 

 

 

 

 

 

Restricted shares withheld for taxes & related tax benefits

 

(47

)

 

(47

)

 

(3,345

)

 

 

 

 

 

(3,392

)

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

 

 

 

 

 

19,452

 

 

 

 

 

 

19,452

 

Net income

 

 

 

 

 

 

 

334,570

 

 

 

 

334,570

 

Other comprehensive gain

 

 

 

 

 

 

 

 

 

18,372

 

 

18,372

 

Balance at June 30, 2023

$

217,126

76,740

 

$

76,740

 

$

3,087,967

 

$

2,634,315

 

$

(172,389

)

$

5,843,759

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED

 

 

 

 

 

 

 

(dollars in thousands)

June

March

December

September

June

March

 

2023

 

2023

 

2022

 

2022

 

2022

 

2022

 

Balance sheet data, at quarter end:

 

 

 

 

 

 

Commercial and industrial loans

$

10,979,261

 

10,716,945

 

10,233,395

 

9,738,271

 

9,244,708

 

8,213,204

 

Commercial real estate - owner occupied loans

 

3,845,359

 

3,686,796

 

3,587,257

 

3,426,271

 

3,243,018

 

3,124,275

 

Commercial real estate - investment loans

 

5,682,652

 

5,556,484

 

5,277,454

 

5,122,127

 

4,909,598

 

4,707,761

 

Commercial real estate - multifamily and other loans

 

1,488,236

 

1,331,249

 

1,265,165

 

1,042,854

 

951,998

 

718,822

 

Consumer real estate - mortgage loans

 

4,692,673

 

4,531,285

 

4,435,046

 

4,271,913

 

4,047,051

 

3,813,252

 

Construction and land development loans

 

3,904,774

 

3,909,024

 

3,679,498

 

3,548,970

 

3,386,866

 

3,277,029

 

Consumer and other loans

 

555,685

 

559,706

 

555,823

 

550,565

 

498,757

 

487,499

 

Paycheck protection program loans

 

4,650

 

6,382

 

7,967

 

10,723

 

51,100

 

157,180

 

Total loans

 

31,153,290

 

30,297,871

 

29,041,605

 

27,711,694

 

26,333,096

 

24,499,022

 

Allowance for credit losses

 

(337,459

)

(313,841

)

(300,665

)

(288,088

)

(272,483

)

(261,618

)

Securities

 

6,623,457

 

6,878,831

 

6,637,920

 

6,481,018

 

6,553,893

 

6,136,109

 

Total assets

 

46,875,982

 

45,119,587

 

41,970,021

 

41,000,118

 

40,121,292

 

39,400,378

 

Noninterest-bearing deposits

 

8,436,799

 

9,018,439

 

9,812,744

 

10,567,873

 

11,058,198

 

10,986,194

 

Total deposits

 

37,722,661

 

36,178,553

 

34,961,238

 

33,690,049

 

32,595,303

 

32,295,814

 

Securities sold under agreements to repurchase

 

163,774

 

149,777

 

194,910

 

190,554

 

199,585

 

219,530

 

FHLB advances

 

2,200,917

 

2,166,508

 

464,436

 

889,248

 

1,289,059

 

888,870

 

Subordinated debt and other borrowings

 

424,497

 

424,276

 

424,055

 

423,834

 

423,614

 

423,319

 

Total shareholders' equity

 

5,843,759

 

5,684,128

 

5,519,392

 

5,342,112

 

5,315,239

 

5,280,950

 

Balance sheet data, quarterly averages:

 

 

 

 

 

 

Total loans

$

30,882,205

 

29,633,640

 

28,402,197

 

27,021,031

 

25,397,389

 

23,848,533

 

Securities

 

6,722,247

 

6,765,126

 

6,537,262

 

6,542,026

 

6,446,774

 

6,143,664

 

Federal funds sold and other

 

3,350,705

 

2,100,757

 

1,828,588

 

2,600,978

 

2,837,679

 

4,799,946

 

Total earning assets

 

40,955,157

 

38,499,523

 

36,768,047

 

36,164,035

 

34,681,842

 

34,792,143

 

Total assets

 

45,411,961

 

42,983,854

 

41,324,251

 

40,464,649

 

38,780,786

 

38,637,221

 

Noninterest-bearing deposits

 

8,599,781

 

9,332,317

 

10,486,233

 

10,926,069

 

10,803,439

 

10,478,403

 

Total deposits

 

36,355,859

 

35,291,775

 

34,177,281

 

33,108,415

 

31,484,100

 

31,538,985

 

Securities sold under agreements to repurchase

 

162,429

 

219,082

 

199,610

 

215,646

 

216,846

 

179,869

 

FHLB advances

 

2,352,045

 

1,130,356

 

701,813

 

1,010,865

 

1,095,531

 

888,746

 

Subordinated debt and other borrowings

 

426,712

 

426,564

 

427,503

 

426,267

 

427,191

 

441,755

 

Total shareholders' equity

 

5,782,239

 

5,605,604

 

5,433,274

 

5,403,244

 

5,316,219

 

5,331,405

 

Statement of operations data, for the three months ended:

Interest income

$

575,239

 

506,039

 

451,178

 

371,764

 

292,376

 

258,617

 

Interest expense

 

259,846

 

193,808

 

131,718

 

65,980

 

27,802

 

19,142

 

Net interest income

 

315,393

 

312,231

 

319,460

 

305,784

 

264,574

 

239,475

 

Provision for credit losses

 

31,689

 

18,767

 

24,805

 

27,493

 

12,907

 

2,720

 

Net interest income after provision for credit losses

 

283,704

 

293,464

 

294,655

 

278,291

 

251,667

 

236,755

 

Noninterest income

 

173,839

 

89,529

 

82,321

 

104,805

 

125,502

 

103,496

 

Noninterest expense

 

211,641

 

211,727

 

202,047

 

199,253

 

196,038

 

182,661

 

Income before income taxes

 

245,902

 

171,266

 

174,929

 

183,843

 

181,131

 

157,590

 

Income tax expense

 

48,603

 

33,995

 

37,082

 

35,185

 

36,004

 

28,480

 

Net income

 

197,299

 

137,271

 

137,847

 

148,658

 

145,127

 

129,110

 

Preferred stock dividends

 

(3,798

)

(3,798

)

(3,798

)

(3,798

)

(3,798

)

(3,798

)

Net income available to common shareholders

$

193,501

 

133,473

 

134,049

 

144,860

 

141,329

 

125,312

 

Profitability and other ratios:

 

 

 

 

 

 

Return on avg. assets (1)

 

1.71

%

1.26

%

1.29

%

1.42

%

1.46

%

1.32

%

Return on avg. equity (1)

 

13.42

%

9.66

%

9.79

%

10.64

%

10.66

%

9.53

%

Return on avg. common equity (1)

 

13.95

%

10.05

%

10.20

%

11.08

%

11.12

%

9.94

%

Return on avg. tangible common equity (1)

 

21.06

%

15.43

%

15.95

%

17.40

%

17.62

%

15.63

%

Common stock dividend payout ratio (14)

 

11.04

%

12.07

%

12.26

%

12.34

%

12.63

%

12.94

%

Net interest margin (2)

 

3.20

%

3.40

%

3.60

%

3.47

%

3.17

%

2.89

%

Noninterest income to total revenue (3)

 

35.53

%

22.28

%

20.49

%

25.53

%

32.17

%

30.18

%

Noninterest income to avg. assets (1)

 

1.54

%

0.84

%

0.79

%

1.03

%

1.30

%

1.09

%

Noninterest exp. to avg. assets (1)

 

1.87

%

2.00

%

1.94

%

1.95

%

2.03

%

1.92

%

Efficiency ratio (4)

 

43.26

%

52.70

%

50.29

%

48.53

%

50.26

%

53.26

%

Avg. loans to avg. deposits

 

84.94

%

83.97

%

83.10

%

81.61

%

80.67

%

75.62

%

Securities to total assets

 

14.13

%

15.25

%

15.82

%

15.81

%

16.34

%

15.57

%

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

June 30, 2023

 

June 30, 2022

 

Average

Balances

Interest

Rates/

Yields

 

Average

Balances

Interest

Rates/

Yields

Interest-earning assets

 

 

 

 

 

 

 

Loans (1) (2)

$

30,882,205

$

478,896

6.30

%

 

$

25,397,389

$

252,182

4.07

%

Securities

 

 

 

 

 

 

 

Taxable

 

3,394,507

 

31,967

3.78

%

 

 

3,420,950

 

12,725

1.49

%

Tax-exempt (2)

 

3,327,740

 

24,603

3.54

%

 

 

3,025,824

 

19,898

3.19

%

Interest-bearing due from banks

 

2,597,020

 

33,234

5.13

%

 

 

1,332,463

 

2,611

0.79

%

Resell agreements

 

509,694

 

3,374

2.65

%

 

 

1,326,790

 

3,844

1.16

%

Federal funds sold

 

 

%

 

 

 

%

Other

 

243,991

 

3,165

5.20

%

 

 

178,426

 

1,116

2.51

%

Total interest-earning assets

 

40,955,157

$

575,239

5.74

%

 

 

34,681,842

$

292,376

3.49

%

Nonearning assets

 

 

 

 

 

 

 

Intangible assets

 

1,879,108

 

 

 

 

1,882,546

 

 

Other nonearning assets

 

2,577,696

 

 

 

 

2,216,398

 

 

Total assets

$

45,411,961

 

 

 

$

38,780,786

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

Interest checking

 

9,361,316

 

75,815

3.25

%

 

 

6,520,804

 

6,134

0.38

%

Savings and money market

 

13,684,536

 

110,024

3.22

%

 

 

12,084,911

 

9,071

0.30

%

Time

 

4,710,226

 

42,829

3.65

%

 

 

2,074,946

 

2,976

0.58

%

Total interest-bearing deposits

 

27,756,078

 

228,668

3.30

%

 

 

20,680,661

 

18,181

0.35

%

Securities sold under agreements to repurchase

 

162,429

 

783

1.93

%

 

 

216,846

 

82

0.15

%

Federal Home Loan Bank advances

 

2,352,045

 

24,603

4.20

%

 

 

1,095,531

 

5,231

1.92

%

Subordinated debt and other borrowings

 

426,712

 

5,792

5.44

%

 

 

427,191

 

4,308

4.04

%

Total interest-bearing liabilities

 

30,697,264

 

259,846

3.40

%

 

 

22,420,229

 

27,802

0.50

%

Noninterest-bearing deposits

 

8,599,781

 

 

 

 

10,803,439

 

 

Total deposits and interest-bearing liabilities

 

39,297,045

$

259,846

2.65

%

 

 

33,223,668

$

27,802

0.34

%

Other liabilities

 

332,677

 

 

 

 

240,899

 

 

Shareholders' equity

 

5,782,239

 

 

 

 

5,316,219

 

 

Total liabilities and shareholders' equity

$

45,411,961

 

 

 

$

38,780,786

 

 

Net interest income

 

$

315,393

 

 

 

$

264,574

 

Net interest spread (3)

 

 

2.35

%

 

 

 

2.99

%

Net interest margin (4)

 

 

3.20

%

 

 

 

3.17

%

 

 

 

 

 

 

 

 

(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 $11.2 million of taxable equivalent income for the three months ended June 30, 2023 compared to $9.6 million for the three months ended June 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 June 30, 2023 would have been 3.09% compared to a net interest spread of 3.16% for the three months ended June 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)

Six months ended

 

Six months ended

June 30, 2023

 

June 30, 2022

 

Average

Balances

Interest

Rates/

Yields

 

Average Balances

Interest

Rates/

Yields

Interest-earning assets

 

 

 

 

 

 

 

Loans (1) (2)

$

30,261,372

$

910,798

6.15

%

 

$

24,627,240

$

479,229

4.01

%

Securities

 

 

 

 

 

 

 

Taxable

 

3,451,410

 

61,325

3.58

%

 

 

3,381,538

 

23,773

1.42

%

Tax-exempt (2)

 

3,292,158

 

48,405

3.54

%

 

 

2,914,519

 

37,344

3.12

%

Interest-bearing due from banks

 

1,998,083

 

49,166

4.96

%

 

 

2,334,566

 

3,914

0.34

%

Resell agreements

 

511,169

 

6,703

2.64

%

 

 

1,304,392

 

5,058

0.78

%

Federal funds sold

 

 

%

 

 

 

%

Other

 

219,932

 

4,881

4.48

%

 

 

174,434

 

1,675

1.94

%

Total interest-earning assets

 

39,734,124

$

1,081,278

5.60

%

 

 

34,736,689

$

550,993

3.30

%

Nonearning assets

 

 

 

 

 

 

 

Intangible assets

 

1,879,994

 

 

 

 

1,873,190

 

 

Other nonearning assets

 

2,590,548

 

 

 

 

2,099,522

 

 

Total assets

$

44,204,666

 

 

 

$

38,709,401

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

Interest checking

 

8,581,899

 

128,289

3.01

%

 

 

6,456,418

 

8,733

0.27

%

Savings and money market

 

14,029,351

 

207,543

2.98

%

 

 

12,334,678

 

14,195

0.23

%

Time

 

4,251,481

 

69,425

3.29

%

 

 

2,078,477

 

5,503

0.53

%

Total interest-bearing deposits

 

26,862,731

 

405,257

3.04

%

 

 

20,869,573

 

28,431

0.27

%

Securities sold under agreements to repurchase

 

190,599

 

1,378

1.46

%

 

 

198,459

 

138

0.14

%

Federal Home Loan Bank advances

 

1,744,575

 

35,574

4.11

%

 

 

992,710

 

9,705

1.97

%

Subordinated debt and other borrowings

 

426,638

 

11,445

5.41

%

 

 

434,433

 

8,670

4.02

%

Total interest-bearing liabilities

 

29,224,543

 

453,654

3.13

%

 

 

22,495,175

 

46,944

0.42

%

Noninterest-bearing deposits

 

8,964,026

 

 

 

 

10,641,819

 

 

Total deposits and interest-bearing liabilities

 

38,188,569

$

453,654

2.40

%

 

 

33,136,994

$

46,944

0.29

%

Other liabilities

 

321,637

 

 

 

 

248,637

 

 

Shareholders' equity

 

5,694,460

 

 

 

 

5,323,770

 

 

Total liabilities and shareholders' equity

$

44,204,666

 

 

 

$

38,709,401

 

 

Net interest income

 

$

627,624

 

 

 

$

504,049

 

Net interest spread (3)

 

 

2.47

%

 

 

 

2.88

%

Net interest margin (4)

 

 

3.30

%

 

 

 

3.03

%

 

 

 

 

 

 

 

 

(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 $22.1 million of taxable equivalent income for the six months ended June 30, 2023 compared to $18.1 million for the six months ended June 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 six months ended June 30, 2023 would have been 3.20% compared to a net interest spread of 3.02% for the six months ended June 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)

June

March

December

September

June

March

 

2023

 

2023

 

2022

 

2022

 

2022

 

2022

 

Asset quality information and ratios:

 

 

 

 

 

 

Nonperforming assets:

 

 

 

 

 

 

Nonaccrual loans

$

44,289

 

36,988

 

38,116

 

34,115

 

15,459

 

26,616

 

ORE and other nonperforming assets (NPAs)

 

3,105

 

7,802

 

7,952

 

7,787

 

8,237

 

8,437

 

Total nonperforming assets

$

47,394

 

44,790

 

46,068

 

41,902

 

23,696

 

35,053

 

Past due loans over 90 days and still accruing interest

$

5,257

 

5,284

 

4,406

 

6,757

 

3,840

 

1,605

 

Accruing purchase credit deteriorated loans

$

7,415

 

7,684

 

8,060

 

8,759

 

9,194

 

12,661

 

Net loan charge-offs

$

9,771

 

7,291

 

11,729

 

10,983

 

877

 

2,958

 

Allowance for credit losses to nonaccrual loans

 

762.0

%

848.5

%

788.8

%

844.5

%

1,762.6

%

982.9

%

As a percentage of total loans:

 

 

 

 

 

 

Past due accruing loans over 30 days

 

0.14

%

0.14

%

0.15

%

0.13

%

0.11

%

0.11

%

Potential problem loans

 

0.32

%

0.22

%

0.19

%

0.21

%

0.32

%

0.41

%

Allowance for credit losses

 

1.08

%

1.04

%

1.04

%

1.04

%

1.03

%

1.07

%

Nonperforming assets to total loans, ORE and other NPAs

 

0.15

%

0.15

%

0.16

%

0.15

%

0.09

%

0.14

%

Classified asset ratio (Pinnacle Bank) (6)

 

3.3

%

2.7

%

2.4

%

2.6

%

2.9

%

3.6

%

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

 

0.13

%

0.10

%

0.17

%

0.16

%

0.01

%

0.05

%

 

 

 

 

 

 

 

Interest rates and yields:

 

 

 

 

 

 

Loans

 

6.30

%

6.00

%

5.54

%

4.73

%

4.07

%

3.94

%

Securities

 

3.66

%

3.47

%

3.19

%

2.66

%

2.29

%

2.12

%

Total earning assets

 

5.74

%

5.45

%

5.02

%

4.20

%

3.49

%

3.11

%

Total deposits, including non-interest bearing

 

2.52

%

2.03

%

1.40

%

0.66

%

0.23

%

0.13

%

Securities sold under agreements to repurchase

 

1.93

%

1.10

%

0.94

%

0.34

%

0.15

%

0.13

%

FHLB advances

 

4.20

%

3.94

%

3.04

%

2.26

%

1.92

%

2.04

%

Subordinated debt and other borrowings

 

5.44

%

5.38

%

4.98

%

4.51

%

4.04

%

4.00

%

Total deposits and interest-bearing liabilities

 

2.65

%

2.12

%

1.47

%

0.75

%

0.34

%

0.23

%

 

 

 

 

 

 

 

Capital and other ratios (6):

 

 

 

 

 

 

Pinnacle Financial ratios:

 

 

 

 

 

 

Shareholders' equity to total assets

 

12.5

%

12.6

%

13.2

%

13.0

%

13.2

%

13.4

%

Common equity Tier one

 

10.2

%

9.9

%

10.0

%

10.0

%

10.2

%

10.5

%

Tier one risk-based

 

10.8

%

10.5

%

10.5

%

10.7

%

10.9

%

11.2

%

Total risk-based

 

12.7

%

12.4

%

12.4

%

12.6

%

12.9

%

13.3

%

Leverage

 

9.5

%

9.6

%

9.7

%

9.7

%

9.8

%

9.5

%

Tangible common equity to tangible assets

 

8.3

%

8.3

%

8.5

%

8.3

%

8.4

%

8.5

%

Pinnacle Bank ratios:

 

 

 

 

 

 

Common equity Tier one

 

11.1

%

10.8

%

10.9

%

11.1

%

11.0

%

11.4

%

Tier one risk-based

 

11.1

%

10.8

%

10.9

%

11.1

%

11.0

%

11.4

%

Total risk-based

 

11.9

%

11.6

%

11.6

%

11.8

%

11.7

%

12.1

%

Leverage

 

9.8

%

9.9

%

10.1

%

10.1

%

9.9

%

9.6

%

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

 

84.5

%

88.5

%

85.9

%

85.4

%

87.4

%

87.4

%

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

 

256.7

%

261.1

%

249.6

%

244.0

%

250.2

%

243.7

%

 

 

 

 

 

 

 

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)

 

June

March

December

September

June

March

 

2023

 

2023

 

2022

 

2022

 

2022

 

2022

 

 

 

 

 

 

 

 

 

Per share data:

 

 

 

 

 

 

 

Earnings per common share – basic

$

2.55

 

1.76

 

1.77

 

1.91

 

1.87

 

1.66

 

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

$

1.80

 

1.76

 

1.77

 

1.91

 

1.87

 

1.66

 

Earnings per common share – diluted

$

2.54

 

1.76

 

1.76

 

1.91

 

1.86

 

1.65

 

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

$

1.79

 

1.76

 

1.76

 

1.91

 

1.86

 

1.65

 

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)

$

73.32

 

71.24

 

69.35

 

67.07

 

66.74

 

66.30

 

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

$

48.85

 

46.75

 

44.74

 

42.44

 

42.08

 

41.65

 

Revenue per diluted common share

$

6.43

 

5.28

 

5.27

 

5.40

 

5.14

 

4.52

 

Revenue per diluted common share, excluding non-GAAP adjustments

$

5.43

 

5.28

 

5.27

 

5.40

 

5.14

 

4.52

 

 

 

 

 

 

 

 

 

Investor information:

 

 

 

 

 

 

 

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

$

56.65

 

55.16

 

73.40

 

81.10

 

72.31

 

92.08

 

High closing sales price of common stock during quarter

$

57.93

 

82.79

 

87.81

 

87.66

 

91.42

 

110.41

 

Low closing sales price of common stock during quarter

$

46.17

 

52.51

 

70.74

 

68.68

 

68.56

 

90.46

 

 

 

 

 

 

 

 

 

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

$

23.75

 

24.15

 

25.35

 

25.33

 

25.19

 

26.72

 

High closing sales price of depositary shares during quarter

$

24.90

 

25.71

 

25.60

 

26.23

 

26.44

 

28.53

 

Low closing sales price of depositary shares during quarter

$

19.95

 

20.77

 

23.11

 

24.76

 

24.75

 

25.63

 

 

 

 

 

 

 

 

 

Other information:

 

 

 

 

 

 

 

Residential mortgage loan sales:

 

 

 

 

 

 

 

Gross loans sold

$

192,948

 

120,146

 

134,514

 

181,139

 

239,736

 

270,793

 

Gross fees (8)

$

4,133

 

2,795

 

3,149

 

3,189

 

6,523

 

5,700

 

Gross fees as a percentage of loans originated

 

2.14

%

2.33

%

2.34

%

1.76

%

2.72

%

2.11

%

Net gain (loss) on residential mortgage loans sold

$

1,567

 

2,053

 

(65

)

1,117

 

2,150

 

4,066

 

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

$

(9,961

)

 

 

217

 

 

(61

)

Brokerage account assets, at quarter end (9)

$

9,007,230

 

8,634,339

 

8,049,125

 

7,220,405

 

6,761,480

 

7,158,939

 

Trust account managed assets, at quarter end

$

5,084,592

 

4,855,951

 

4,560,752

 

4,162,639

 

4,207,406

 

4,499,911

 

Core deposits (10)

$

32,780,767

 

32,054,111

 

31,301,077

 

30,748,817

 

30,011,444

 

30,398,683

 

Core deposits to total funding (10)

 

80.9

%

82.4

%

86.8

%

87.4

%

87.0

%

89.9

%

Risk-weighted assets

$

38,853,588

 

38,117,659

 

36,216,901

 

35,281,315

 

33,366,074

 

31,170,258

 

Number of offices

 

127

 

126

 

123

 

120

 

119

 

119

 

Total core deposits per office

$

258,116

 

254,398

 

254,480

 

256,240

 

252,197

 

255,451

 

Total assets per full-time equivalent employee

$

14,166

 

13,750

 

12,948

 

12,875

 

13,052

 

13,186

 

Annualized revenues per full-time equivalent employee

$

593.0

 

496.5

 

491.8

 

511.5

 

509.0

 

465.5

 

Annualized expenses per full-time equivalent employee

$

256.5

 

261.7

 

247.3

 

248.2

 

255.8

 

247.9

 

Number of employees (full-time equivalent)

 

3,309.0

 

3,281.5

 

3,241.5

 

3,184.5

 

3,074.0

 

2,988.0

 

Associate retention rate (11)

 

94.1

%

93.8

%

93.8

%

93.6

%

93.3

%

93.1

%

 

 

 

 

 

 

 

 

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

 

Six months ended

(dollars in thousands, except per share data)

June

March

June

 

June

June

 

2023

 

2023

 

2022

 

 

2023

 

2022

 

 

 

 

 

 

 

 

Net interest income

$

315,393

 

312,231

 

264,574

 

 

627,624

 

504,049

 

 

 

 

 

 

 

 

Noninterest income

 

173,839

 

89,529

 

125,502

 

 

263,368

 

228,998

 

Total revenues

 

489,232

 

401,760

 

390,076

 

 

890,992

 

733,047

 

Less: Investment losses on sales of securities, net

 

9,961

 

 

 

 

9,961

 

61

 

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

$

413,501

 

401,760

 

390,076

 

 

815,261

 

733,108

 

 

 

 

 

 

 

 

Noninterest expense

$

211,641

 

211,727

 

196,038

 

 

423,368

 

378,699

 

Less: ORE expense

 

58

 

99

 

86

 

 

157

 

191

 

Noninterest expense excluding the impact of adjustments noted above

$

211,583

 

211,628

 

195,952

 

 

423,211

 

378,508

 

 

 

 

 

 

 

 

Pre-tax income

$

245,902

 

171,266

 

181,131

 

 

417,168

 

338,721

 

Provision for credit losses

 

31,689

 

18,767

 

12,907

 

 

50,456

 

15,627

 

Pre-tax pre-provision net revenue

 

277,591

 

190,033

 

194,038

 

 

467,624

 

354,348

 

Less: Adjustments noted above

 

(75,673

)

99

 

86

 

 

(75,574

)

252

 

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

$

201,918

 

190,132

 

194,124

 

 

392,050

 

354,600

 

 

 

 

 

 

 

 

Noninterest income

$

173,839

 

89,529

 

125,502

 

 

263,368

 

228,998

 

Less: Adjustments noted above

 

(75,731

)

 

 

 

(75,731

)

61

 

Noninterest income excluding the impact of adjustments noted above

$

98,108

 

89,529

 

125,502

 

 

187,637

 

229,059

 

 

 

 

 

 

 

 

Efficiency ratio (4)

 

43.26

%

52.70

%

50.26

%

 

47.52

%

51.66

%

Adjustments noted above

 

7.91

%

(0.02

)%

(0.03

)%

 

4.39

%

(0.03

)%

Efficiency ratio excluding adjustments noted above (4)

 

51.17

%

52.68

%

50.23

%

 

51.91

%

51.63

%

 

 

 

 

 

 

 

Total average assets

$

45,411,961

 

42,983,854

 

38,780,786

 

 

44,204,666

 

38,709,401

 

 

 

 

 

 

 

 

Noninterest income to average assets (1)

 

1.54

%

0.84

%

1.30

%

 

1.20

%

1.19

%

Less: Adjustments noted above

 

(0.67

)%

%

%

 

(0.34

)%

%

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

 

0.87

%

0.84

%

1.30

%

 

0.86

%

1.19

%

 

 

 

 

 

 

 

Noninterest expense to average assets (1)

 

1.87

%

2.00

%

2.03

%

 

1.93

%

1.97

%

Adjustments as noted above

 

%

%

%

 

%

%

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

 

1.87

%

2.00

%

2.03

%

 

1.93

%

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)

June

March

December

September

June

March

 

2023

 

2023

 

2022

 

2022

 

2022

 

2022

 

Net income available to common shareholders

$

193,501

 

133,473

 

134,049

 

144,860

 

141,329

 

125,312

 

Investment (gains) losses on sales of securities, net

 

9,961

 

 

 

(217

)

 

61

 

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

 

(85,692

)

 

 

 

 

 

ORE expense (benefit)

 

58

 

99

 

179

 

(90

)

86

 

105

 

Tax effect on adjustments noted above (16)

 

18,918

 

(25

)

(47

)

80

 

(22

)

(43

)

Net income available to common shareholders excluding adjustments noted above

$

136,746

 

133,547

 

134,181

 

144,633

 

141,393

 

125,435

 

 

 

 

 

 

 

 

Basic earnings per common share

$

2.55

 

1.76

 

1.77

 

1.91

 

1.87

 

1.66

 

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

 

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)

 

0.25

 

 

 

 

 

 

Basic earnings per common share excluding adjustments noted above

$

1.80

 

1.76

 

1.77

 

1.91

 

1.87

 

1.66

 

 

 

 

 

 

 

 

Diluted earnings per common share

$

2.54

 

1.76

 

1.76

 

1.91

 

1.86

 

1.65

 

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

 

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)

 

0.25

 

 

 

 

 

 

Diluted earnings per common share excluding the adjustments noted above

$

1.79

 

1.76

 

1.76

 

1.91

 

1.86

 

1.65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue per diluted common share

$

6.43

 

5.28

 

5.27

 

5.40

 

5.14

 

4.52

 

Adjustments due to revenue-impacting items as noted above

 

(1.00

)

 

 

 

 

 

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

$

5.43

 

5.28

 

5.27

 

5.40

 

5.14

 

4.52

 

 

 

 

 

 

 

 

Book value per common share at quarter end (7)

$

73.32

 

71.24

 

69.35

 

67.07

 

66.74

 

66.30

 

Adjustment due to goodwill, core deposit and other intangible assets

 

(24.47

)

(24.49

)

(24.61

)

(24.63

)

(24.66

)

(24.65

)

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

$

48.85

 

46.75

 

44.74

 

42.44

 

42.08

 

41.65

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity method investment (15)

 

 

 

 

 

 

Fee income from BHG, net of amortization

$

26,924

 

19,079

 

21,005

 

41,341

 

49,465

 

33,655

 

Funding cost to support investment

 

5,995

 

5,093

 

4,586

 

3,891

 

1,998

 

666

 

Pre-tax impact of BHG

 

20,929

 

13,986

 

16,419

 

37,450

 

47,467

 

32,989

 

Income tax expense at statutory rates (16)

 

5,232

 

3,497

 

4,292

 

9,789

 

12,408

 

8,623

 

Earnings attributable to BHG

$

15,697

 

10,489

 

12,127

 

27,661

 

35,059

 

24,366

 

 

 

 

 

 

 

 

Basic earnings per common share attributable to BHG

$

0.21

 

0.14

 

0.16

 

0.37

 

0.46

 

0.32

 

Diluted earnings per common share attributable to BHG

$

0.21

 

0.14

 

0.16

 

0.36

 

0.46

 

0.32

 

 

 

 

 

 

 

 

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

 

 

 

 

 

Six months ended

(dollars in thousands, except per share data)

 

June 30,

 

 

2023

 

2022

 

Net income available to common shareholders

 

$

326,974

 

266,641

 

Investment losses on sales of securities, net

 

 

9,961

 

61

 

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

 

 

(85,692

)

 

ORE expense

 

 

157

 

191

 

Tax effect on adjustments noted above (16)

 

 

18,894

 

(66

)

Net income available to common shareholders excluding adjustments noted above

 

$

270,294

 

266,827

 

 

 

 

 

Basic earnings per common share

 

$

4.30

 

3.52

 

Adjustment due to investment losses on sales of securities, net

 

 

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

 

 

 

 

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

 

 

0.25

 

 

Basic earnings per common share excluding adjustments noted above

 

$

3.55

 

3.52

 

 

 

 

 

Diluted earnings per common share

 

 

4.30

 

3.51

 

Adjustment due to investment losses on sales of securities, net

 

 

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

 

 

 

 

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

 

 

0.25

 

 

Diluted earnings per common share excluding the adjustments noted above

 

$

3.55

 

3.51

 

 

 

 

 

 

 

 

 

Revenue per diluted common share

 

$

11.71

 

9.65

 

Adjustments due to revenue-impacting items as noted above

 

 

(0.99

)

 

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

 

$

10.72

 

9.65

 

 

 

 

 

Equity method investment (15)

 

 

 

Fee income from BHG, net of amortization

 

$

46,003

 

83,120

 

Funding cost to support investment

 

 

11,088

 

2,664

 

Pre-tax impact of BHG

 

 

34,915

 

80,456

 

Income tax expense at statutory rates (16)

 

 

8,729

 

21,031

 

Earnings attributable to BHG

 

$

26,186

 

59,425

 

 

 

 

 

Basic earnings per common share attributable to BHG

 

$

0.34

 

0.78

 

Diluted earnings per common share attributable to BHG

 

$

0.34

 

0.78

 

 

 

 

 

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

 

Six months ended

(dollars in thousands, except per share data)

June

March

June

 

June

June

 

2023

 

2023

 

2022

 

 

 

2023

 

2022

 

 

 

 

 

 

 

 

Return on average assets (1)

 

1.71

%

1.26

%

1.46

%

 

 

1.49

%

1.39

%

Adjustments as noted above

 

(0.50

)%

%

%

 

 

(0.26

)%

%

Return on average assets excluding adjustments noted above (1)

 

1.21

%

1.26

%

1.46

%

 

 

1.23

%

1.39

%

 

 

 

 

 

 

 

Tangible assets:

 

 

 

 

 

 

Total assets

$

46,875,982

 

45,119,587

 

40,121,292

 

 

$

46,875,982

 

40,121,292

 

Less: Goodwill

 

(1,846,973

)

(1,846,973

)

(1,846,466

)

 

 

(1,846,973

)

(1,846,466

)

Core deposit and other intangible assets

 

(30,981

)

(32,761

)

(37,617

)

 

 

(30,981

)

(37,617

)

Net tangible assets

$

44,998,028

 

43,239,853

 

38,237,209

 

 

$

44,998,028

 

38,237,209

 

 

 

 

 

 

 

 

Tangible common equity:

 

 

 

 

 

 

Total shareholders' equity

$

5,843,759

 

5,684,128

 

5,315,239

 

 

$

5,843,759

 

5,315,239

 

Less: Preferred shareholders' equity

 

(217,126

)

(217,126

)

(217,126

)

 

 

(217,126

)

(217,126

)

Total common shareholders' equity

 

5,626,633

 

5,467,002

 

5,098,113

 

 

 

5,626,633

 

5,098,113

 

Less: Goodwill

 

(1,846,973

)

(1,846,973

)

(1,846,466

)

 

 

(1,846,973

)

(1,846,466

)

Core deposit and other intangible assets

 

(30,981

)

(32,761

)

(37,617

)

 

 

(30,981

)

(37,617

)

Net tangible common equity

$

3,748,679

 

3,587,268

 

3,214,030

 

 

$

3,748,679

 

3,214,030

 

 

 

 

 

 

 

 

Ratio of tangible common equity to tangible assets

 

8.33

%

8.30

%

8.41

%

 

 

8.33

%

8.41

%

 

 

 

 

 

 

 

Average tangible assets:

 

 

 

 

 

 

Average assets

$

45,411,961

 

42,983,854

 

38,780,786

 

 

$

44,204,666

 

38,709,401

 

Less: Average goodwill

 

(1,846,973

)

(1,846,973

)

(1,851,137

)

 

 

(1,846,973

)

(1,840,902

)

Average core deposit and other intangible assets

 

(32,135

)

(33,917

)

(31,409

)

 

 

(33,021

)

(32,288

)

Net average tangible assets

$

43,532,853

 

41,102,964

 

36,898,240

 

 

$

42,324,672

 

36,836,211

 

 

 

 

 

 

 

 

Return on average assets (1)

 

1.71

%

1.26

%

1.46

%

 

 

1.49

%

1.39

%

Adjustment due to goodwill, core deposit and other intangible assets

 

0.07

%

0.06

%

0.08

%

 

 

0.07

%

0.07

%

Return on average tangible assets (1)

 

1.78

%

1.32

%

1.54

%

 

 

1.56

%

1.46

%

Adjustments as noted above

 

(0.52

)%

%

%

 

 

(0.27

)%

%

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

 

1.26

%

1.32

%

1.54

%

 

 

1.29

%

1.46

%

 

 

 

 

 

 

 

Average tangible common equity:

 

 

 

 

 

 

Average shareholders' equity

$

5,782,239

 

5,605,604

 

5,316,219

 

 

$

5,694,460

 

5,323,770

 

Less: Average preferred equity

 

(217,126

)

(217,126

)

(217,126

)

 

 

(217,126

)

(217,126

)

Average common equity

 

5,565,113

 

5,388,478

 

5,099,093

 

 

 

5,477,334

 

5,106,644

 

Less: Average goodwill

 

(1,846,973

)

(1,846,973

)

(1,851,137

)

 

 

(1,846,973

)

(1,840,902

)

Average core deposit and other intangible assets

 

(32,135

)

(33,917

)

(31,409

)

 

 

(33,021

)

(32,288

)

Net average tangible common equity

$

3,686,005

 

3,507,588

 

3,216,547

 

 

$

3,597,340

 

3,233,454

 

 

 

 

 

 

 

 

Return on average equity (1)

 

13.42

%

9.66

%

10.66

%

 

 

11.58

%

10.10

%

Adjustment due to average preferred shareholders' equity

 

0.53

%

0.39

%

0.46

%

 

 

0.46

%

0.43

%

Return on average common equity (1)

 

13.95

%

10.05

%

11.12

%

 

 

12.04

%

10.53

%

Adjustment due to goodwill, core deposit and other intangible assets

 

7.11

%

5.38

%

6.50

%

 

 

6.29

%

6.10

%

Return on average tangible common equity (1)

 

21.06

%

15.43

%

17.62

%

 

 

18.33

%

16.63

%

Adjustments as noted above

 

(6.18

)%

0.01

%

0.01

%

 

 

(3.18

)%

0.01

%

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

 

14.88

%

15.44

%

17.63

%

 

 

15.15

%

16.64

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 operations 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. Associate retention rate does not include associates at acquired institutions displaced by merger.

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 issuance of subordinated debt as well as the funding costs of the overall franchise. 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.

pnfp-earnings

Contacts

MEDIA CONTACT:

Joe Bass, 615-743-8219

FINANCIAL CONTACT:

Harold Carpenter, 615-744-3742

WEBSITE:

www.pnfp.com

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