PNFP Reports Diluted EPS of $1.86, ROAA of 1.46% and ROATCE of 17.62% For 2Q2022

Company Release - 7/19/2022 4:45 PM ET

Annualized linked-quarter loan growth of 29.9% for 2Q2022, 31.9% exclusive of PPP paydowns

NASHVILLE, Tenn.--(BUSINESS WIRE)-- Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $1.86 for the quarter ended June 30, 2022, compared to net income per diluted common share of $1.69 for the quarter ended June 30, 2021, an increase of approximately 10.1 percent. Net income per diluted common share was $3.51 for the six months ended June 30, 2022, compared to $3.30 for the six months ended June 30, 2021, an increase of approximately 6.4 percent.

Paycheck Protection Program (PPP) net interest income for the three months ended June 30, 2022 and 2021 was $4.1 million and $24.6 million, respectively. PPP net interest income for the six months ended June 30, 2022 and 2021 was $14.7 million and $45.5 million, respectively. PPP net interest income contributed $0.04 and $0.14 to diluted earnings per common share for the three and six months ended June 30, 2022, respectively, compared to contributions of $0.24 and $0.44 for the three and six months ended June 30, 2021, respectively.

“As we noted last quarter, inflation is anything but transitory, now prompting urgent action by the Fed and increasing the likelihood of recession,” said M. Terry Turner, Pinnacle’s president and chief executive officer. “But even with the changing economic outlook and all the uncertainty, our ability to attract and retain clients continues to fuel our outsized growth.

“During the second quarter, we experienced outsized loan growth as a result of our recent market extensions and our continued focus on recruiting experienced relationship managers. Our new markets contributed almost 25 percent of our loan growth this quarter and our relationship managers that have been in our legacy markets less than 2.5 years contributed an incremental 21 percent of this quarter’s growth. Our prolific hiring continued during the second quarter with 37 additional revenue producers, so we are well on pace to surpass our hiring successes of the past two years,” Turner said. “As to revenues, we were able to convert the recent short-term rate increases into significant growth in net interest income. And in addition to the growth in net interest income, we saw double-digit growth in many core fee categories, which coupled with BHG’s outstanding performance in the second quarter, resulted in second quarter fee revenues being the best we’ve ever experienced. Even though we enter the second half of the year fully expecting a more difficult economic landscape, we believe our second quarter results showcase why we believe we can outperform even through a more challenging operating environment.”

BALANCE SHEET GROWTH:

Total assets at June 30, 2022 were $40.1 billion, an increase of approximately $4.7 billion from June 30, 2021, reflecting a year-over-year increase of 13.3 percent. A further analysis of select balance sheet trends follows:

 

Balances at

 

Balances at

 

(dollars in thousands)

June 30,

2 022

March 31,

2022

Linked-Quarter

A nnualized

% Change

June 30,

2 021

Year-over-Year

% Change

Loans

$

26,333,096

$

24,499,022

29.9

%

$

22,897,935

15.0

%

Less: PPP loans

 

51,100

 

157,180

(270.0

)%

 

1,372,916

(96.3

)%

Loans excluding PPP loans

 

26,281,996

 

24,341,842

31.9

%

 

21,525,019

22.1

%

Securities and other interest-earning assets

 

9,342,543

 

10,704,157

(50.9

)%

 

8,641,231

8.1

%

Total interest-earning assets excluding PPP loans

$

35,624,539

$

35,045,999

6.6

%

$

30,166,250

18.1

%

 

 

 

 

 

 

Core deposits:

 

 

 

 

 

Noninterest-bearing deposits

 

11,058,198

 

10,986,194

2.6

%

 

8,926,200

23.9

%

Interest-bearing core deposits(1)

 

18,953,246

 

19,412,489

(9.5

)%

 

16,931,439

11.9

%

Noncore deposits and other funding(2)

 

4,496,117

 

3,428,850

124.5

%

 

4,097,923

9.7

%

Total funding

$

34,507,561

$

33,827,533

8.0

%

$

29,955,562

15.2

%

(1):

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

 

“During the second quarter, loan growth approximated a linked-quarter annualized rate of 29.9 percent when compared to balances at March 31, 2022. Excluding the impact of PPP loans in each period, loans increased at a linked-quarter annualized rate of 31.9 percent,” Turner said. “Deposits for the second quarter increased by 3.7 percent linked-quarter annualized, while average deposits decreased by 0.7 percent linked-quarter annualized, which we believe is consistent with national trends. Much of the deposit outflows during the second quarter occurred in the early stages of the quarter, likely due to tax payments, which again, we believe is consistent with national trends. We are encouraged that end-of-period and average balances of our noninterest-bearing deposit accounts actually increased during the quarter.”

PRE-TAX, PRE-PROVISION NET REVENUES (PPNR):

Pre-tax, pre-provision net revenues (PPNR) for the quarter ended June 30, 2022 were $194.0 million an increase of 17.4 percent from the $165.3 million recognized in the quarter ended June 30, 2021.

 

Three months ended

Six months ended

 

June 30,

June 30,

(dollars in thousands)

2022

2021

 

% change

2022

2021

% change

Revenues:

 

 

 

 

 

 

Net interest income

$

264,574

$

233,225

 

13.4

%

$

504,049

$

456,095

 

10.5

%

Noninterest income

 

125,502

 

98,207

 

27.8

%

 

228,998

 

190,916

 

19.9

%

Total revenues

 

390,076

 

331,432

 

17.7

%

 

733,047

 

647,011

 

13.3

%

Noninterest expense

 

196,038

 

166,140

 

18.0

%

 

378,699

 

320,836

 

18.0

%

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

$

194,038

$

165,292

 

17.4

%

$

354,348

$

326,175

 

8.6

%

Adjustments:

 

 

 

 

 

 

Investment (gains) losses on sales of securities, net

 

 

(366

)

NM

 

 

61

 

(366

)

NM

 

ORE expense (benefit)

 

86

 

(657

)

NM

 

 

191

 

(670

)

NM

 

Adjusted PPNR

$

194,124

$

164,269

 

18.2

%

$

354,600

$

325,139

 

9.1

%

  • Revenue per fully diluted common share was $5.14 for the three months ended June 30, 2022, compared to $4.52 for the first quarter of 2022 and $4.37 for the second quarter of 2021, a 17.6 percent year-over-year growth rate.
  • Net interest income for the quarter ended June 30, 2022 was $264.6 million, compared to $239.5 million for the first quarter of 2022 and $233.2 million for the second quarter of 2021, a year-over-year growth rate of 13.4 percent.
    • Revenues from PPP loans approximated $4.1 million in the second quarter of 2022, compared to $10.7 million in the first quarter of 2022 and $24.6 million in the second quarter of 2021. At June 30, 2022, remaining unamortized fees for PPP loans were approximately $1.1 million.
    • Included in net interest income for the second quarter of 2022 was $1.6 million of discount accretion associated with fair value adjustments, compared to $1.7 million of discount accretion recognized in the first quarter of 2022 and $3.3 million in the second quarter of 2021. There remains $5.6 million of purchase accounting discount accretion as of June 30, 2022.
  • Noninterest income for the quarter ended June 30, 2022 was $125.5 million, compared to $103.5 million for the quarter ended March 31, 2022, a linked-quarter annualized increase of 85.1 percent. Compared to $98.2 million for the second quarter of 2021, noninterest income grew 27.8 percent year-over-year.
    • Wealth management revenues, which include investment, trust and insurance services, were $21.8 million for the second quarter of 2022, compared to $20.7 million for the first quarter of 2022, a linked-quarter annualized increase of 21.7 percent. Wealth management revenues were up 32.5 percent year-over-year compared to $16.5 million reported in the second quarter of 2021.
    • Service charges on deposit accounts were $11.6 million for the quarter ended June 30, 2022, compared to $11.0 million for the quarter ended March 31, 2022 and $8.9 million for the quarter ended June 30, 2021. Future service charge revenues will be impacted by changes in the firm's insufficient funds and overdraft programs announced earlier this month. The firm believes that the impact of these changes could amount to approximately $2.9 million in reduced service charge revenue annually, or approximately $700,000 on a quarterly basis.
    • Income from the firm's investment in BHG was a record $49.5 million for the quarter ended June 30, 2022, up from $33.7 million for the quarter ended March 31, 2022 and $32.1 million for the quarter ended June 30, 2021. During the second quarter of 2022, BHG placed approximately $505 million in loans with community banks through its auction platform compared to approximately $323 million in the first quarter of 2022. Additionally, BHG completed its fifth securitization during the second quarter of 2022 for approximately $300 million in funding secured by previously funded loans. This was the second securitization completed in 2022 and BHG anticipates that it may complete more securitizations in the second half of the year.
    • Other noninterest income was $40.4 million for the quarter ended June 30, 2022, compared to $34.1 million for the quarter ended March 31, 2022 and $33.7 million for the quarter ended June 30, 2021, a linked-quarter annualized increase of 74.4 percent and year-over-year growth of 20.0 percent, respectively.
      • Second quarter 2022 gains from market valuation adjustments in investments in joint ventures and other funds were $6.7 million, compared to $1.7 million in the first quarter of 2022 and $7.0 million in the second quarter of 2021.
      • As previously announced, on March 1, 2022, Pinnacle Bank acquired the remaining equity of JB&B Capital, LLC (“JB&B”), a commercial equipment financing business headquartered in Knoxville, TN, in a cash transaction. Pinnacle had previously acquired 20 percent of JB&B's equity in 2017. For the six months ended June 30, 2022, net income per diluted common share was favorably impacted by $0.04 per share as a result of the acquisition of JB&B, which includes approximately $5.5 million of gains resulting from remeasurement of Pinnacle's previous 20 percent investment in JB&B offset in part by approximately $1.0 million of provision for credit losses recorded in accordance with CECL for the loans and leases at JB&B outstanding at the closing. Loan and lease balances attributable to the JB&B acquisition approximated $109.7 million at June 30, 2022 compared to $60.7 million at March 31, 2022.
  • Noninterest expense for the quarter ended June 30, 2022 was $196.0 million, compared to $182.7 million in the first quarter of 2022 and $166.1 million in the second quarter of 2021, reflecting a linked-quarter annualized growth rate of 29.3 percent and a year-over-year increase of 18.0 percent.
    • Salaries and employee benefits were $126.6 million in the second quarter of 2022, compared to $121.9 million in the first quarter of 2022 and $110.8 million in the second quarter of 2021, reflecting a linked-quarter annualized growth rate of 15.6 percent and a year-over-year increase of 14.2 percent.
      • Total full-time equivalent associates amounted to 3,074.0 associates at June 30, 2022, compared to 2,706.0 full-time equivalent associates at June 30, 2021, an increase of 13.6 percent.
      • Costs related to the firm's incentive plans increased to $31.8 million in the second quarter of 2022 compared to $25.9 million in the first quarter of 2022 due to increased personnel as well as increased earnings and PPNR which are primary factors in determining the costs of the firm's incentive compensation awards.
    • Noninterest expense categories, other than salaries and employee benefits, were $69.4 million in the second quarter of 2022, compared to $60.8 million in the first quarter of 2022 and $55.3 million in the second quarter of 2021, reflecting a linked-quarter annualized growth rate of 56.7 percent and a year-over-year increase of 25.5 percent. The second quarter 2022 increase was the result of additional equipment and occupancy expenses, marketing and business development expenses as well as increased expenses related to our credit card programs.

 

“We continue to highlight PPNR and our efforts to grow PPNR regardless of the economic cycle,” said Harold R. Carpenter, Pinnacle’s chief financial officer. “Our PPNR results were outstanding in the second quarter. We continue to be successful in battling the revenue headwinds from reduced PPP, declines in residential mortgage lending and, of course, inflation. Loan growth, as well as the impact of the rising short-term rate environment, contributed to an increase of $25.1 million in net interest income in the second quarter of 2022 as compared to the first quarter of 2022, or $31.7 million when excluding the impact of a net reduction in PPP net interest income of $6.6 million. Also, BHG had another phenomenal quarter. We anticipated a strong second quarter from BHG but are not expecting similar performance in the second half of 2022 as BHG's decision to place more loans into their auction platform in the second quarter than they would have otherwise anticipated is likely to negatively impact BHG's results in the second half of 2022.

“As to expenses, compensation costs increased approximately 14 percent over the same quarter last year, due primarily to increased headcount, annual merit raises and higher incentive accruals. We are optimistic that our hiring model will continue to provide us even more opportunities to add revenue producers this year. As a result, including the impact of inflation and the acquisition of JB&B in the first quarter of this year, we continue to believe our total 2022 noninterest expense should approximate a mid-teens percentage increase over that of 2021.”

PROFITABILITY:

 

Three months ended

 

Six months ended

 

June 30, 2022

March 31, 2022

June 30, 2021

 

June 30, 2022

June 30, 2021

Net interest margin

 

3.17

%

 

2.89

%

 

3.08

%

 

 

3.03

%

 

3.05

%

Efficiency ratio

 

50.26

%

 

53.26

%

 

50.13

%

 

 

51.66

%

 

49.59

%

Return on average assets

 

1.46

%

 

1.32

%

 

1.46

%

 

 

1.39

%

 

1.44

%

Return on average tangible common equity (TCE)

 

17.62

%

 

15.63

%

 

17.32

%

 

 

16.63

%

 

17.24

%

Book value per common share

$

66.74

 

$

66.30

 

$

64.19

 

 

$

66.74

 

$

64.19

 

Tangible book value per common share

$

42.08

 

$

41.65

 

$

39.77

 

 

$

42.08

 

$

39.77

 

  • Net interest margin was 3.17 percent for the second quarter of 2022, compared to 2.89 percent for the first quarter of 2022 and 3.08 percent for the second quarter of 2021. Net interest margin for the six months ended June 30, 2022 was 3.03 percent compared to 3.05 percent for the six months ended June 30, 2021.
    • Impacting the firm’s net interest margin in the first and second quarters of 2022 and second quarter of 2021 was the impact of PPP loans, while the firm’s decision early in the pandemic to maintain additional on-balance sheet liquidity also impacted net interest margin in 2021. The firm estimates its first and second quarter 2022 net interest margin was negatively impacted by approximately 29 and 12 basis points, respectively, compared to approximately 17 basis points for the second quarter 2021 as a result of these factors.

“We are very excited about our profitability metrics in the second quarter,” Carpenter said. "With the rate environment being very much in a state of transition after several years of rates holding fairly steady, there was much discussion about how our balance sheet would respond. We still believe our balance sheet is positioned more conservatively than most from an interest rate risk perspective but now that we are essentially through our loan floors, we believe we have significant opportunities to continue margin expansion going into the third quarter. Thus far, our on-the-spot interest rates from our data systems indicate that our loan yields have increased by approximately 68 basis points from the mid-March 2022 rate increase through last night while deposit spot rates have increased by approximately 34 basis points for the same period. We are pleased with how our relationship managers are working with their clients and setting expectations for the next several quarters. We believe further margin expansion in the third quarter is likely. The key to all of this is our rapid loan growth and the impact it has on our revenue base.

“Additionally, the impact of increased rates on tangible book value has also garnered attention. We are pleased to report that our tangible book value per share increased this quarter, in spite of the impact of rising rates on accumulated other comprehensive income.”

MAINTAINING A STRONG BALANCE SHEET:

 

As of

 

June 30, 2022

March 31, 2022

June 30, 2021

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

0.01

%

0.05

%

0.17

%

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

0.09

%

0.14

%

0.27

%

Classified asset ratio (Pinnacle Bank) (2)

2.90

%

3.60

%

6.80

%

Allowance for credit losses (ACL) to total loans

1.03

%

1.07

%

1.20

%

ACL to total loans, excluding PPP

1.04

%

1.07

%

1.27

%

(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. 

  • Provision for credit losses was $12.9 million in the second quarter of 2022 compared to $2.7 million in the first quarter of 2022 and $2.8 million in the second quarter of 2021. Net charge-offs were $877,000 for the quarter ended June 30, 2022, compared to $3.0 million for the quarter ended March 31, 2022 and $10.0 million for the quarter ended June 30, 2021.
  • Nonperforming assets were $23.7 million at June 30, 2022, compared to $35.1 million at March 31, 2022 and $62.7 million at June 30, 2021. The ratio of the allowance for credit losses to nonperforming loans at June 30, 2022 was 1,762.6 percent, compared to 982.9 percent at March 31, 2022 and 515.5 percent at June 30, 2021.
  • Classified assets were $112.5 million at June 30, 2022, compared to $137.0 million at March 31, 2022 and $233.8 million at June 30, 2021.

“Our credit performance has been strong for many years, and thus far 2022 is no exception,” Carpenter said. “Several of our loan credit metrics remain at the lowest point they have been at in many years. Our allowance for credit losses to total loans (ACL) decreased from 1.07 percent at March 31, 2022 to 1.03 percent at June 30, 2022. These ratios are higher than our ACL as reflected on Jan. 1, 2020 of 0.67 percent immediately following our adoption of CECL.

“Over the last few months, our credit officers have been very active in portfolio reviews and making sure we understand how inflation is impacting those borrowers that have outsized exposure to rapidly rising energy and labor costs. To that end, our emphasis has been on stress testing for all commercial borrowers and updated segment guidance for CRE. The good news thus far is that demand for our borrowers' products and services remains strong across our footprint and thus far our borrowers have continued to successfully combat the impact of inflation.”

BOARD OF DIRECTORS DECLARES DIVIDENDS

On July 19, 2022, Pinnacle Financial's Board of Directors approved a quarterly cash dividend of $0.22 per common share to be paid on Aug. 26, 2022 to common shareholders of record as of the close of business on Aug. 5, 2022. Additionally, the Board of Directors approved a quarterly 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, 2022 to shareholders of record at the close of business on Aug. 17, 2022. 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. CT on July 20, 2022, to discuss second quarter 2022 results and other matters. For those who plan to watch and listen only without asking questions, please access the presentation and streaming audio on the investor relations page of Pinnacle’s website at www.pnfp.com.

For those who plan to watch, listen and ask questions, please register using this link. Once registered, you will receive an email with instructions for accessing the audio portion of the call only. To watch the presentation, as well, click the link on the investor relations page of 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 2021 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. 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 licensed 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 $40.1 billion in assets as of June 30, 2022. As the second-largest bank holding company headquartered in Tennessee, Pinnacle operates in 15 primarily urban markets across the Southeast.

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) adverse conditions in the national or local economies including in Pinnacle Financial's markets throughout Tennessee, North Carolina, South Carolina, Georgia, Alabama and Virginia, particularly in commercial and residential real estate markets; (iv) 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; (v) 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; (vi) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (vii) effectiveness of Pinnacle Financial's asset management activities in improving, resolving or liquidating lower-quality assets; (viii) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on Pinnacle Financial’s results, including as a result of compression to net interest margin; (ix) the effects of new outbreaks of COVID-19, including actions taken by governmental officials to curb the spread of the virus, and the resulting impact on general economic and financial market conditions and on Pinnacle Financial's and its customers' business, results of operations, asset quality and financial condition; (x) further public acceptance of the booster shots of the vaccines that were developed against the virus as well as the decisions of governmental agencies with respect to vaccines including recommendations related to booster shots and requirements that seek to mandate that individuals receive or employers require that their employees receive the vaccine; (xi) those vaccines' efficacy against the virus, including new variants; (xii) the results of regulatory examinations; (xiii) Pinnacle Financial's ability to identify potential candidates for, consummate, and achieve synergies from, potential future acquisitions; (xiv) difficulties and delays in integrating acquired businesses or fully realizing costs savings and other benefits from acquisitions; (xv) BHG's ability to profitably grow its business and successfully execute on its business plans; (xvi) risks of expansion into new geographic or product markets; (xvii) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including goodwill or other intangible assets; (xviii) the ineffectiveness of Pinnacle Bank's hedging strategies, or the unexpected counterparty failure or hedge failure of the underlying hedges; (xix) 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; (xx) deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xxi) 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; (xxii) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xxiii) 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; (xxiv) 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; (xxv) the risks associated with Pinnacle Financial and Pinnacle Bank being a minority investor in BHG, including the risk that the owners of a majority of the equity interests in BHG decide to sell the company or all or a portion of their ownership interests in BHG (triggering a similar sale by Pinnacle Financial and Pinnacle Bank) if not prohibited from doing so by Pinnacle Financial or Pinnacle Bank; (xxvi) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, like BHG, including regulatory or legislative developments; (xxvii) fluctuations in the valuations of Pinnacle Financial's equity investments and the ultimate success of such investments; (xxviii) the availability of and access to capital; (xxix) 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, including as a result of Pinnacle Bank's participation in and execution of government programs related to the COVID-19 pandemic; and (xxx) 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, 2021, 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, earnings per diluted common share, PPNR, efficiency ratio and the ratio of noninterest expense to average assets, excluding in certain instances the impact of expenses related to other real estate owned, gains or losses on sale of investment securities, FHLB restructuring charges, hedge termination charges 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 2022 versus certain periods in 2021 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, 2022

December 31, 2021

June 30, 2021

ASSETS

 

 

 

Cash and noninterest-bearing due from banks

$

265,507

 

$

188,287

 

$

159,863

 

Restricted cash

 

29,739

 

 

82,505

 

 

155,275

 

Interest-bearing due from banks

 

1,336,667

 

 

3,830,747

 

 

2,576,237

 

Cash and cash equivalents

 

1,631,913

 

 

4,101,539

 

 

2,891,375

 

Securities purchased with agreement to resell

 

1,328,876

 

 

1,000,000

 

 

500,000

 

Securities available-for-sale, at fair value

 

3,809,338

 

 

4,914,194

 

 

4,331,070

 

Securities held-to-maturity (fair value of $2.5 billion, $1.2 billion and $1.0 billion, net of allowance for credit losses of $1.2 million, $161 and $198 at June 30, 2022, Dec. 31, 2021 and June 30, 2021, respectively)

 

2,744,555

 

 

1,155,958

 

 

995,838

 

Consumer loans held-for-sale

 

67,467

 

 

45,806

 

 

56,968

 

Commercial loans held-for-sale

 

25,901

 

 

17,685

 

 

25,843

 

Loans

 

26,333,096

 

 

23,414,262

 

 

22,897,935

 

Less allowance for credit losses

 

(272,483

)

 

(263,233

)

 

(273,747

)

Loans, net

 

26,060,613

 

 

23,151,029

 

 

22,624,188

 

Premises and equipment, net

 

302,389

 

 

288,182

 

 

287,992

 

Equity method investment

 

403,191

 

 

360,833

 

 

320,167

 

Accrued interest receivable

 

116,038

 

 

98,813

 

 

99,664

 

Goodwill

 

1,846,466

 

 

1,819,811

 

 

1,819,811

 

Core deposits and other intangible assets

 

37,617

 

 

33,819

 

 

37,963

 

Other real estate owned

 

8,237

 

 

8,537

 

 

9,602

 

Other assets

 

1,738,691

 

 

1,473,193

 

 

1,411,828

 

Total assets

$

40,121,292

$

38,469,399

 

$

35,412,309

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

Deposits:

 

 

 

Noninterest-bearing

$

11,058,198

 

$

10,461,071

 

$

8,926,200

 

Interest-bearing

 

6,617,324

 

 

6,530,015

 

 

5,581,651

 

Savings and money market accounts

 

12,492,329

 

 

12,179,663

 

 

11,079,165

 

Time

 

2,427,452

 

 

2,133,784

 

 

2,630,587

 

Total deposits

 

32,595,303

 

 

31,304,533

 

 

28,217,603

 

Securities sold under agreements to repurchase

 

199,585

 

 

152,559

 

 

177,661

 

Federal Home Loan Bank advances

 

1,289,059

 

 

888,681

 

 

888,304

 

Subordinated debt and other borrowings

 

423,614

 

 

423,172

 

 

671,994

 

Accrued interest payable

 

13,551

 

 

12,504

 

 

15,776

 

Other liabilities

 

284,941

 

 

377,343

 

 

339,740

 

Total liabilities

 

34,806,053

 

 

33,158,792

 

 

30,311,078

 

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, 2022, Dec. 31, 2021 and June 30, 2021, respectively

 

217,126

 

 

217,126

 

 

217,126

 

Common stock, par value $1.00; 180.0 million shares authorized; 76.4 million, 76.1 million and 76.1 million shares issued and outstanding at June 30, 2022, Dec. 31, 2021, and June 30, 2021, respectively

 

76,385

 

 

76,143

 

 

76,088

 

Additional paid-in capital

 

3,056,228

 

 

3,045,802

 

 

3,032,338

 

Retained earnings

 

2,096,950

 

 

1,864,350

 

 

1,629,580

 

Accumulated other comprehensive income (loss), net of taxes

 

(131,450

)

 

107,186

 

 

146,099

 

Total stockholders' equity

 

5,315,239

 

 

5,310,607

 

 

5,101,231

 

Total liabilities and stockholders' equity

$

40,121,292

 

$

38,469,399

 

$

35,412,309

 

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, 2022

March 31, 2022

June 30, 2021

June 30, 2022

June 30, 2021

Interest income:

 

 

 

 

 

Loans, including fees

$

252,182

 

$

227,047

 

$

232,788

 

$

479,229

 

$

460,160

 

Securities

 

 

 

 

 

Taxable

 

12,725

 

 

11,048

 

 

8,359

 

 

23,773

 

 

16,087

 

Tax-exempt

 

19,898

 

 

17,446

 

 

16,546

 

 

37,344

 

 

32,044

 

Federal funds sold and other

 

7,571

 

 

3,076

 

 

1,543

 

 

10,647

 

 

2,862

 

Total interest income

 

292,376

 

 

258,617

 

 

259,236

 

 

550,993

 

 

511,153

 

Interest expense:

 

 

 

 

 

Deposits

 

18,181

 

 

10,250

 

 

13,861

 

 

28,431

 

 

31,329

 

Securities sold under agreements to repurchase

 

82

 

 

56

 

 

56

 

 

138

 

 

128

 

FHLB advances and other borrowings

 

9,539

 

 

8,836

 

 

12,094

 

 

18,375

 

 

23,601

 

Total interest expense

 

27,802

 

 

19,142

 

 

26,011

 

 

46,944

 

 

55,058

 

Net interest income

 

264,574

 

 

239,475

 

 

233,225

 

 

504,049

 

 

456,095

 

Provision for credit losses

 

12,907

 

 

2,720

 

 

2,834

 

 

15,627

 

 

10,069

 

Net interest income after provision for credit losses

 

251,667

 

 

236,755

 

 

230,391

 

 

488,422

 

 

446,026

 

Noninterest income:

 

 

 

 

 

Service charges on deposit accounts

 

11,616

 

 

11,030

 

 

8,906

 

 

22,646

 

 

17,213

 

Investment services

 

13,205

 

 

10,691

 

 

8,997

 

 

23,896

 

 

17,188

 

Insurance sales commissions

 

2,554

 

 

4,036

 

 

2,406

 

 

6,590

 

 

5,631

 

Gains on mortgage loans sold, net

 

2,150

 

 

4,066

 

 

6,700

 

 

6,216

 

 

20,366

 

Investment gains (losses) on sales, net

 

 

 

(61

)

 

366

 

 

(61

)

 

366

 

Trust fees

 

6,065

 

 

5,973

 

 

5,062

 

 

12,038

 

 

9,749

 

Income from equity method investment

 

49,465

 

 

33,655

 

 

32,071

 

 

83,120

 

 

61,021

 

Other noninterest income

 

40,447

 

 

34,106

 

 

33,699

 

 

74,553

 

 

59,382

 

Total noninterest income

 

125,502

 

 

103,496

 

 

98,207

 

 

228,998

 

 

190,916

 

Noninterest expense:

 

 

 

 

 

Salaries and employee benefits

 

126,611

 

 

121,852

 

 

110,824

 

 

248,463

 

 

213,552

 

Equipment and occupancy

 

26,921

 

 

25,536

 

 

23,321

 

 

52,457

 

 

46,541

 

Other real estate, net

 

86

 

 

105

 

 

(657

)

 

191

 

 

(670

)

Marketing and other business development

 

4,759

 

 

3,777

 

 

2,652

 

 

8,536

 

 

5,001

 

Postage and supplies

 

2,320

 

 

2,371

 

 

2,115

 

 

4,691

 

 

3,921

 

Amortization of intangibles

 

2,051

 

 

1,871

 

 

2,167

 

 

3,922

 

 

4,373

 

Other noninterest expense

 

33,290

 

 

27,149

 

 

25,718

 

 

60,439

 

 

48,118

 

Total noninterest expense

 

196,038

 

 

182,661

 

 

166,140

 

 

378,699

 

 

320,836

 

Income before income taxes

 

181,131

 

 

157,590

 

 

162,458

 

 

338,721

 

 

316,106

 

Income tax expense

 

36,004

 

 

28,480

 

 

30,668

 

 

64,484

 

 

58,888

 

Net income

 

145,127

 

 

129,110

 

 

131,790

 

 

274,237

 

 

257,218

 

Preferred stock dividends

 

(3,798

)

 

(3,798

)

 

(3,798

)

 

(7,596

)

 

(7,596

)

Net income available to common shareholders

$

141,329

 

$

125,312

 

$

127,992

 

$

266,641

 

$

249,622

 

Per share information:

 

 

 

 

 

Basic net income per common share

$

1.87

 

$

1.66

 

$

1.70

 

$

3.52

 

$

3.31

 

Diluted net income per common share

$

1.86

 

$

1.65

 

$

1.69

 

$

3.51

 

$

3.30

 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

 

75,751,296

 

 

75,654,986

 

 

75,481,198

 

 

75,703,407

 

 

75,427,340

 

Diluted

 

75,940,500

 

 

75,930,372

 

 

75,809,974

 

 

75,934,025

 

 

75,735,763

 

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, 2020

$

217,126

75,850

 

$

75,850

 

$

3,028,063

 

$

1,407,723

 

$

175,849

 

$

4,904,611

 

Exercise of employee common stock options & related tax benefits

 

18

 

 

18

 

 

386

 

 

 

 

 

 

404

 

Preferred dividends paid ($33.76 per share)

 

 

 

 

 

 

 

(7,596

)

 

 

 

(7,596

)

Common dividends paid ($0.36 per share)

 

 

 

 

 

 

 

(27,765

)

 

 

 

(27,765

)

Issuance of restricted common shares, net of forfeitures

 

175

 

 

175

 

 

(175

)

 

 

 

 

 

 

Restricted shares withheld for taxes & related tax benefits

 

(42

)

 

(42

)

 

(3,153

)

 

 

 

 

 

(3,195

)

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

 

87

 

 

87

 

 

(3,851

)

 

 

 

 

 

(3,764

)

Compensation expense for restricted shares & performance stock units

 

 

 

 

 

11,068

 

 

 

 

 

 

11,068

 

Net income

 

 

 

 

 

 

 

257,218

 

 

 

 

257,218

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

(29,750

)

 

(29,750

)

Balance at June 30, 2021

$

217,126

76,088

 

$

76,088

 

$

3,032,338

 

$

1,629,580

 

$

146,099

 

$

5,101,231

 

 

 

 

 

 

 

 

 

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 RSU and 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

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED

 

 

 

 

 

 

 

(dollars in thousands)

June

 

March

 

December

 

September

 

June

 

March

2022

 

2022

 

2021

 

2021

 

2021

 

2021

Balance sheet data, at quarter end:

 

 

 

 

 

 

Commercial and industrial loans

$

9,244,708

 

8,213,204

 

7,703,428

 

7,079,431

 

6,771,254

 

6,355,119

 

Commercial real estate - owner occupied loans

 

3,243,018

 

3,124,275

 

3,048,822

 

2,954,519

 

2,817,689

 

2,869,785

 

Commercial real estate - investment loans

 

4,909,598

 

4,707,761

 

4,607,048

 

4,597,736

 

4,644,551

 

4,782,712

 

Commercial real estate - multifamily and other loans

 

951,998

 

718,822

 

614,656

 

621,471

 

724,253

 

790,469

 

Consumer real estate - mortgage loans

 

4,047,051

 

3,813,252

 

3,680,684

 

3,540,439

 

3,335,537

 

3,086,916

 

Construction and land development loans

 

3,386,866

 

3,277,029

 

2,903,017

 

3,096,961

 

2,791,611

 

2,568,969

 

Consumer and other loans

 

498,757

 

487,499

 

485,489

 

459,182

 

440,124

 

411,322

 

Paycheck protection program loans

 

51,100

 

157,180

 

371,118

 

708,722

 

1,372,916

 

2,221,409

 

Total loans

 

26,333,096

 

24,499,022

 

23,414,262

 

23,058,461

 

22,897,935

 

23,086,701

 

Allowance for credit losses

 

(272,483

)

(261,618

)

(263,233

)

(268,635

)

(273,747

)

(280,881

)

Securities

 

6,553,893

 

6,136,109

 

6,070,152

 

5,623,890

 

5,326,908

 

4,691,364

 

Total assets

 

40,121,292

 

39,400,378

 

38,469,399

 

36,523,936

 

35,412,309

 

35,299,705

 

Noninterest-bearing deposits

 

11,058,198

 

10,986,194

 

10,461,071

 

9,809,691

 

8,926,200

 

8,103,943

 

Total deposits

 

32,595,303

 

32,295,814

 

31,304,533

 

29,369,807

 

28,217,603

 

28,292,940

 

Securities sold under agreements to repurchase

 

199,585

 

219,530

 

152,559

 

148,240

 

177,661

 

172,117

 

FHLB advances

 

1,289,059

 

888,870

 

888,681

 

888,493

 

888,304

 

888,115

 

Subordinated debt and other borrowings

 

423,614

 

423,319

 

423,172

 

542,712

 

671,994

 

671,002

 

Total stockholders' equity

 

5,315,239

 

5,280,950

 

5,310,607

 

5,191,798

 

5,101,231

 

4,959,524

 

Balance sheet data, quarterly averages:

 

 

 

 

 

 

Total loans

$

25,397,389

 

23,848,533

 

23,225,735

 

22,986,835

 

23,179,803

 

22,848,086

 

Securities

 

6,446,774

 

6,143,664

 

5,813,636

 

5,451,232

 

5,036,786

 

4,666,269

 

Federal funds sold and other

 

2,837,679

 

4,799,946

 

4,356,113

 

3,743,074

 

3,143,078

 

3,356,199

 

Total earning assets

 

34,681,842

 

34,792,143

 

33,395,484

 

32,181,141

 

31,359,667

 

30,870,554

 

Total assets

 

38,780,786

 

38,637,221

 

37,132,078

 

35,896,130

 

35,053,772

 

34,659,132

 

Noninterest-bearing deposits

 

10,803,439

 

10,478,403

 

10,240,393

 

9,247,382

 

8,500,465

 

7,620,665

 

Total deposits

 

31,484,100

 

31,538,985

 

30,034,026

 

28,739,871

 

28,013,659

 

27,620,784

 

Securities sold under agreements to repurchase

 

216,846

 

179,869

 

141,781

 

164,837

 

173,268

 

143,586

 

FHLB advances

 

1,095,531

 

888,746

 

888,559

 

888,369

 

888,184

 

934,662

 

Subordinated debt and other borrowings

 

427,191

 

441,755

 

484,389

 

586,387

 

674,162

 

673,662

 

Total stockholders' equity

 

5,316,219

 

5,331,405

 

5,262,586

 

5,176,625

 

5,039,608

 

4,953,656

 

Statement of operations data, for the three months ended:

Interest income

$

292,376

 

258,617

 

259,193

 

260,868

 

259,236

 

251,917

 

Interest expense

 

27,802

 

19,142

 

20,430

 

23,325

 

26,011

 

29,047

 

Net interest income

 

264,574

 

239,475

 

238,763

 

237,543

 

233,225

 

222,870

 

Provision for credit losses

 

12,907

 

2,720

 

2,675

 

3,382

 

2,834

 

7,235

 

Net interest income after provision for credit losses

 

251,667

 

236,755

 

236,088

 

234,161

 

230,391

 

215,635

 

Noninterest income

 

125,502

 

103,496

 

100,723

 

104,095

 

98,207

 

92,709

 

Noninterest expense

 

196,038

 

182,661

 

170,417

 

168,851

 

166,140

 

154,696

 

Income before taxes

 

181,131

 

157,590

 

166,394

 

169,405

 

162,458

 

153,648

 

Income tax expense

 

36,004

 

28,480

 

32,866

 

32,828

 

30,668

 

28,220

 

Net income

 

145,127

 

129,110

 

133,528

 

136,577

 

131,790

 

125,428

 

Preferred stock dividends

 

(3,798

)

(3,798

)

(3,798

)

(3,798

)

(3,798

)

(3,798

)

Net income available to common shareholders

$

141,329

 

125,312

 

129,730

 

132,779

 

127,992

 

121,630

 

Profitability and other ratios:

 

 

 

 

 

 

Return on avg. assets (1)

 

1.46

%

1.32

%

1.39

%

1.47

%

1.46

%

1.42

%

Return on avg. equity (1)

 

10.66

%

9.53

%

9.78

%

10.18

%

10.19

%

9.96

%

Return on avg. common equity (1)

 

11.12

%

9.94

%

10.20

%

10.62

%

10.65

%

10.41

%

Return on avg. tangible common equity (1)

 

17.62

%

15.63

%

16.13

%

16.98

%

17.32

%

17.16

%

Common stock dividend payout ratio (16)

 

12.63

%

12.94

%

10.65

%

11.13

%

11.73

%

13.69

%

Net interest margin (2)

 

3.17

%

2.89

%

2.96

%

3.03

%

3.08

%

3.02

%

Noninterest income to total revenue (3)

 

32.17

%

30.18

%

29.67

%

30.47

%

29.63

%

29.38

%

Noninterest income to avg. assets (1)

 

1.30

%

1.09

%

1.08

%

1.15

%

1.12

%

1.08

%

Noninterest exp. to avg. assets (1)

 

2.03

%

1.92

%

1.82

%

1.87

%

1.90

%

1.81

%

Efficiency ratio (4)

 

50.26

%

53.26

%

50.20

%

49.42

%

50.13

%

49.02

%

Avg. loans to avg. deposits

 

80.67

%

75.62

%

77.33

%

79.98

%

82.74

%

82.72

%

Securities to total assets

 

16.34

%

15.57

%

15.78

%

15.40

%

15.04

%

13.29

%

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, 2022

June 30, 2021

 

Average Balances

Interest

Rates/ Yields

Average Balances

Interest

Rates/ Yields

Interest-earning assets

 

 

 

 

 

 

Loans (1) (2)

$

25,397,389

$

252,182

4.07

%

$

23,179,803

$

232,788

4.11

%

Securities

 

 

 

 

 

 

Taxable

 

3,420,950

 

12,725

1.49

%

 

2,581,063

 

8,359

1.30

%

Tax-exempt (2)

 

3,025,824

 

19,898

3.19

%

 

2,455,723

 

16,546

3.25

%

Interest-bearing due from banks

 

1,332,463

 

2,611

0.79

%

 

2,484,192

 

556

0.09

%

Resell agreements

 

1,326,790

 

3,844

1.16

%

 

484,066

 

410

0.34

%

Federal funds sold

 

 

%

 

17,405

 

%

Other

 

178,426

 

1,116

2.51

%

 

157,415

 

577

1.47

%

Total interest-earning assets

 

34,681,842

$

292,376

3.49

%

 

31,359,667

$

259,236

3.42

%

Nonearning assets

 

 

 

 

 

 

Intangible assets

 

1,882,546

 

 

 

1,859,170

 

 

Other nonearning assets

 

2,216,398

 

 

 

1,834,935

 

 

Total assets

$

38,780,786

 

 

$

35,053,772

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

Interest checking

 

6,520,804

 

6,134

0.38

%

 

5,453,520

 

2,407

0.18

%

Savings and money market

 

12,084,911

 

9,071

0.30

%

 

11,288,119

 

5,658

0.20

%

Time

 

2,074,946

 

2,976

0.58

%

 

2,771,555

 

5,796

0.84

%

Total interest-bearing deposits

 

20,680,661

 

18,181

0.35

%

 

19,513,194

 

13,861

0.28

%

Securities sold under agreements to repurchase

 

216,846

 

82

0.15

%

 

173,268

 

56

0.13

%

Federal Home Loan Bank advances

 

1,095,531

 

5,231

1.92

%

 

888,184

 

4,501

2.03

%

Subordinated debt and other borrowings

 

427,191

 

4,308

4.04

%

 

674,162

 

7,593

4.52

%

Total interest-bearing liabilities

 

22,420,229

 

27,802

0.50

%

 

21,248,808

 

26,011

0.49

%

Noninterest-bearing deposits

 

10,803,439

 

 

 

8,500,465

 

 

Total deposits and interest-bearing liabilities

 

33,223,668

$

27,802

0.34

%

 

29,749,273

$

26,011

0.35

%

Other liabilities

 

240,899

 

 

 

264,891

 

 

Stockholders' equity

 

5,316,219

 

 

 

5,039,608

 

 

Total liabilities and stockholders' equity

$

38,780,786

 

 

$

35,053,772

 

 

Net interest income

 

$

264,574

 

 

$

233,225

 

Net interest spread (3)

 

 

2.99

%

 

 

2.93

%

Net interest margin (4)

 

 

3.17

%

 

 

3.08

%

 

 

 

 

 

 

 

(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 $9.6 million of taxable equivalent income for the three months ended June 30, 2022 compared to $7.9 million for the three months ended June 30, 2021. 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, 2022 would have been 3.16% compared to a net interest spread of 3.07% for the three months ended June 30, 2021.

(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, 2022

June 30, 2021

 

Average Balances

Interest

Rates/ Yields

Average Balances

Interest

Rates/ Yields

Interest-earning assets

 

 

 

 

 

 

Loans (1) (2)

$

24,627,240

$

479,229

4.01

%

$

23,014,861

$

460,160

4.11

%

Securities

 

 

 

 

 

 

Taxable

 

3,381,538

 

23,773

1.42

%

 

2,427,050

 

16,087

1.34

%

Tax-exempt (2)

 

2,914,519

 

37,344

3.12

%

 

2,425,501

 

32,044

3.20

%

Interest-bearing due from banks

 

2,334,566

 

3,914

0.34

%

 

2,824,360

 

1,268

0.09

%

Resell agreements

 

1,304,392

 

5,058

0.78

%

 

245,857

 

410

0.34

%

Federal funds sold

 

 

%

 

20,092

 

%

Other

 

174,434

 

1,675

1.94

%

 

158,741

 

1,184

1.50

%

Total interest-earning assets

 

34,736,689

$

550,993

3.30

%

 

31,116,462

$

511,153

3.41

%

Nonearning assets

 

 

 

 

 

 

Intangible assets

 

1,873,190

 

 

 

1,860,272

 

 

Other nonearning assets

 

2,099,522

 

 

 

1,880,809

 

 

Total assets

$

38,709,401

 

 

$

34,857,543

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

Interest checking

 

6,456,418

 

8,733

0.27

%

 

5,459,919

 

5,007

0.18

%

Savings and money market

 

12,334,678

 

14,195

0.23

%

 

11,304,640

 

12,371

0.22

%

Time

 

2,078,477

 

5,503

0.53

%

 

2,990,753

 

13,951

0.94

%

Total interest-bearing deposits

 

20,869,573

 

28,431

0.27

%

 

19,755,312

 

31,329

0.32

%

Securities sold under agreements to repurchase

 

198,459

 

138

0.14

%

 

158,509

 

128

0.16

%

Federal Home Loan Bank advances

 

992,710

 

9,705

1.97

%

 

911,295

 

8,995

1.99

%

Subordinated debt and other borrowings

 

434,433

 

8,670

4.02

%

 

673,913

 

14,606

4.37

%

Total interest-bearing liabilities

 

22,495,175

 

46,944

0.42

%

 

21,499,029

 

55,058

0.52

%

Noninterest-bearing deposits

 

10,641,819

 

 

 

8,062,995

 

 

Total deposits and interest-bearing liabilities

 

33,136,994

$

46,944

0.29

%

 

29,562,024

$

55,058

0.38

%

Other liabilities

 

248,637

 

 

 

298,649

 

 

Stockholders' equity

 

5,323,770

 

 

 

4,996,870

 

 

Total liabilities and stockholders' equity

$

38,709,401

 

 

$

34,857,543

 

 

Net interest income

 

$

504,049

 

 

$

456,095

 

Net interest spread (3)

 

 

2.88

%

 

 

2.89

%

Net interest margin (4)

 

 

3.03

%

 

 

3.05

%

 

 

 

 

 

 

 

(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 $18.1 million of taxable equivalent income for the six months ended June 30, 2022 compared to $15.2 million for the six months ended June 30, 2021. 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, 2022 would have been 3.02% compared to a net interest spread of 3.04% for the six months ended June 30, 2021.

(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

2022

 

2022

 

2021

 

2021

 

2021

 

2021

Asset quality information and ratios:

 

 

 

 

 

 

Nonperforming assets:

 

 

 

 

 

 

Nonaccrual loans

$

15,459

 

26,616

 

31,569

 

46,692

 

53,105

 

72,135

 

ORE and other nonperforming assets (NPAs)

 

8,237

 

8,437

 

8,537

 

8,415

 

9,602

 

10,651

 

Total nonperforming assets

$

23,696

 

35,053

 

40,106

 

55,107

 

62,707

 

82,786

 

Past due loans over 90 days and still accruing interest

$

3,840

 

1,605

 

1,607

 

1,914

 

1,810

 

2,833

 

Accruing troubled debt restructurings (5)

$

2,279

 

2,317

 

2,354

 

2,397

 

2,428

 

2,460

 

Accruing purchase credit deteriorated loans

$

9,194

 

12,661

 

13,086

 

12,158

 

12,400

 

13,904

 

Net loan charge-offs

$

877

 

2,958

 

8,077

 

9,281

 

9,968

 

11,397

 

Allowance for credit losses to nonaccrual loans

 

1,762.6

%

982.9

%

833.8

%

575.3

%

515.5

%

389.4

%

As a percentage of total loans:

 

 

 

 

 

 

Past due accruing loans over 30 days

 

0.11

%

0.11

%

0.09

%

0.09

%

0.07

%

0.09

%

Potential problem loans (6)

 

0.32

%

0.41

%

0.47

%

0.60

%

0.74

%

0.70

%

Allowance for credit losses (20)

 

1.03

%

1.07

%

1.12

%

1.17

%

1.20

%

1.22

%

Nonperforming assets to total loans, ORE and other NPAs

 

0.09

%

0.14

%

0.17

%

0.24

%

0.27

%

0.36

%

Classified asset ratio (Pinnacle Bank) (8)

 

2.9

%

3.6

%

4.1

%

5.6

%

6.8

%

7.3

%

Annualized net loan charge-offs to avg. loans (7)

 

0.01

%

0.05

%

0.14

%

0.16

%

0.17

%

0.20

%

Wtd. avg. commercial loan internal risk ratings (6)

 

44.5

 

44.9

 

45.3

 

46.0

 

46.1

 

45.2

 

 

 

 

 

 

 

 

Interest rates and yields:

 

 

 

 

 

 

Loans

 

4.07

%

3.94

%

4.04

%

4.13

%

4.11

%

4.11

%

Securities

 

2.29

%

2.12

%

2.08

%

2.04

%

2.25

%

2.29

%

Total earning assets

 

3.49

%

3.11

%

3.20

%

3.32

%

3.42

%

3.41

%

Total deposits, including non-interest bearing

 

0.23

%

0.13

%

0.14

%

0.17

%

0.20

%

0.26

%

Securities sold under agreements to repurchase

 

0.15

%

0.13

%

0.15

%

0.14

%

0.13

%

0.20

%

FHLB advances

 

1.92

%

2.04

%

2.04

%

2.04

%

2.03

%

1.95

%

Subordinated debt and other borrowings

 

4.04

%

4.00

%

4.23

%

4.45

%

4.52

%

4.22

%

Total deposits and interest-bearing liabilities

 

0.34

%

0.23

%

0.26

%

0.30

%

0.35

%

0.40

%

 

 

 

 

 

 

 

Capital and other ratios (8):

 

 

 

 

 

 

Pinnacle Financial ratios:

 

 

 

 

 

 

Stockholders' equity to total assets

 

13.2

%

13.4

%

13.8

%

14.2

%

14.4

%

14.0

%

Common equity Tier one

 

10.2

%

10.5

%

10.9

%

10.5

%

10.5

%

10.3

%

Tier one risk-based

 

10.9

%

11.2

%

11.7

%

11.3

%

11.3

%

11.2

%

Total risk-based

 

12.9

%

13.3

%

13.8

%

14.0

%

14.5

%

14.5

%

Leverage

 

9.8

%

9.5

%

9.7

%

9.3

%

9.2

%

8.9

%

Tangible common equity to tangible assets

 

8.4

%

8.5

%

8.8

%

9.0

%

9.0

%

8.6

%

Pinnacle Bank ratios:

 

 

 

 

 

 

Common equity Tier one

 

11.0

%

11.4

%

11.9

%

11.7

%

11.9

%

11.8

%

Tier one risk-based

 

11.0

%

11.4

%

11.9

%

11.7

%

11.9

%

11.8

%

Total risk-based

 

11.7

%

12.1

%

12.6

%

12.5

%

13.1

%

13.0

%

Leverage

 

9.9

%

9.6

%

9.9

%

9.7

%

9.6

%

9.4

%

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

 

87.4

%

87.4

%

79.1

%

89.3

%

80.1

%

76.0

%

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

 

250.2

%

243.7

%

234.1

%

252.4

%

248.8

%

256.0

%

 

 

 

 

 

 

 

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

 

2022

 

2022

 

2021

 

2021

 

2021

 

2021

 

 

 

 

 

 

 

 

Per share data:

 

 

 

 

 

 

 

Earnings per common share – basic

$

1.87

 

1.66

 

1.72

 

1.76

 

1.70

 

1.61

 

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

$

1.87

 

1.66

 

1.71

 

1.76

 

1.69

 

1.61

 

Earnings per common share – diluted

$

1.86

 

1.65

 

1.71

 

1.75

 

1.69

 

1.61

 

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

$

1.86

 

1.65

 

1.70

 

1.75

 

1.68

 

1.61

 

Common dividends per share

$

0.22

 

0.22

 

0.18

 

0.18

 

0.18

 

0.18

 

Book value per common share at quarter end (9)

$

66.74

 

66.30

 

66.89

 

65.36

 

64.19

 

62.33

 

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

$

42.08

 

41.65

 

42.55

 

40.98

 

39.77

 

37.88

 

Revenue per diluted common share

$

5.14

 

4.52

 

4.47

 

4.50

 

4.37

 

4.17

 

Revenue per diluted common share, excluding non-GAAP adjustments

$

5.14

 

4.52

 

4.46

 

4.50

 

4.37

 

4.17

 

 

 

 

 

 

 

 

 

Investor information:

 

 

 

 

 

 

 

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

$

72.31

 

92.08

 

95.50

 

94.08

 

88.29

 

88.66

 

High closing sales price of common stock during quarter

$

91.42

 

110.41

 

104.72

 

98.00

 

92.94

 

93.58

 

Low closing sales price of common stock during quarter

$

68.56

 

90.46

 

90.20

 

83.84

 

84.25

 

63.48

 

 

 

 

 

 

 

 

 

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

$

25.19

 

26.72

 

28.21

 

28.14

 

29.13

 

27.62

 

High closing sales price of depositary shares during quarter

$

26.44

 

28.53

 

28.99

 

29.23

 

29.13

 

27.83

 

Low closing sales price of depositary shares during quarter

$

24.75

 

25.63

 

27.42

 

28.00

 

27.38

 

26.83

 

 

 

 

 

 

 

 

 

Other information:

 

 

 

 

 

 

 

Residential mortgage loan sales:

 

 

 

 

 

 

 

Gross loans sold

$

239,736

 

270,793

 

352,342

 

347,664

 

394,299

 

546,963

 

Gross fees (10)

$

6,523

 

5,700

 

10,098

 

11,215

 

15,552

 

18,793

 

Gross fees as a percentage of loans originated

 

2.72

%

2.11

%

2.87

%

3.23

%

3.94

%

3.44

%

Net gain on residential mortgage loans sold

$

2,150

 

4,066

 

4,244

 

7,814

 

6,700

 

13,666

 

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

$

 

(61

)

393

 

 

366

 

 

Brokerage account assets, at quarter end (11)

$

6,761,480

 

7,158,939

 

7,187,085

 

6,597,152

 

6,344,416

 

5,974,884

 

Trust account managed assets, at quarter end

$

4,207,406

 

4,499,911

 

4,720,290

 

4,155,510

 

3,640,932

 

3,443,373

 

Core deposits (12)

$

30,011,444

 

30,398,683

 

29,316,911

 

27,170,367

 

25,857,639

 

24,961,390

 

Core deposits to total funding (12)

 

87.0

%

89.9

%

89.5

%

87.8

%

86.3

%

83.1

%

Risk-weighted assets

$

33,366,074

 

31,170,258

 

29,349,534

 

27,945,624

 

26,819,277

 

26,105,158

 

Number of offices

 

119

 

119

 

118

 

117

 

116

 

115

 

Total core deposits per office

$

252,197

 

255,451

 

248,448

 

232,225

 

222,911

 

217,141

 

Total assets per full-time equivalent employee

$

13,052

 

13,186

 

13,541

 

13,188

 

13,087

 

13,468

 

Annualized revenues per full-time equivalent employee

$

509.0

 

465.5

 

474.1

 

489.4

 

491.3

 

488.3

 

Annualized expenses per full-time equivalent employee

$

255.8

 

247.9

 

238.0

 

241.9

 

246.3

 

239.4

 

Number of employees (full-time equivalent)

 

3,074.0

 

2,988.0

 

2,841.0

 

2,769.5

 

2,706.0

 

2,621.0

 

Associate retention rate (13)

 

93.3

%

93.1

%

93.4

%

93.4

%

93.3

%

94.4

%

 

 

 

 

 

 

 

 

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

2022

 

2022

 

2021

 

2022

 

2021

 

 

 

 

 

 

Net interest income

$

264,574

 

239,475

 

233,225

 

504,049

 

456,095

 

 

 

 

 

 

 

Noninterest income

 

125,502

 

103,496

 

98,207

 

228,998

 

190,916

 

Total revenues

 

390,076

 

342,971

 

331,432

 

733,047

 

647,011

 

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

 

 

61

 

(366

)

61

 

(366

)

Total revenues excluding the impact of adjustments noted above

$

390,076

 

343,032

 

331,066

 

733,108

 

646,645

 

 

 

 

 

 

 

Noninterest expense

$

196,038

 

182,661

 

166,140

 

378,699

 

320,836

 

Less: ORE expense (benefit)

 

86

 

105

 

(657

)

191

 

(670

)

Noninterest expense excluding the impact of adjustments noted above

$

195,952

 

182,556

 

166,797

 

378,508

 

321,506

 

 

 

 

 

 

 

Pre-tax income

$