PNFP Pinnacle Financial Partners Inc

Excluding impacts of capital optimization and balance sheet repositioning initiatives, diluted EPS of $1.63

Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) reported net income per diluted common share of $0.64 for the quarter ended June 30, 2024, compared to net income per diluted common share of $2.54 for the quarter ended June 30, 2023, a decrease of approximately 74.8 percent. Net income per diluted common share was $2.21 for the six months ended June 30, 2024, compared to $4.30 for the six months ended June 30, 2023, a decrease of approximately 48.6 percent.

After considering the adjustments noted in the table below, net income per diluted common share was $1.63 for the three months ended June 30, 2024, compared to $1.80 for the three months ended June 30, 2023, and $1.53 for the three months ended March 31, 2024, an annualized linked-quarter growth rate of 26.1 percent. Net income per diluted common share adjusted for the items noted in the table below was $3.16 for the six months ended June 30, 2024, compared to $3.55 for the six months ended June 30, 2023.

 

Three months ended

 

Six months ended

 

June 30, 2024

March 31, 2024

June 30, 2023

 

June 30, 2024

June 30, 2023

Diluted earnings per common share

 

0.64

$

1.57

 

$

2.54

 

 

$

2.21

 

$

4.30

 

Net of tax adjustments (1):

 

 

 

 

 

 

Investment losses on sales of securities, net

 

0.71

 

—

 

 

0.10

 

 

 

0.71

 

 

0.10

 

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

 

—

 

—

 

 

(0.84

)

 

 

—

 

 

(0.84

)

Recognition of mortgage servicing asset

 

—

 

(0.12

)

 

—

 

 

 

(0.12

)

 

—

 

ORE expense (2)

 

—

 

—

 

 

—

 

 

 

—

 

 

—

 

FDIC special assessment

 

—

 

0.08

 

 

—

 

 

0.08

 

 

—

 

Fees related to terminating agreement to resell securities previously purchased and professional fees associated with capital optimization initiatives

 

0.28

 

—

 

 

—

 

 

 

0.28

 

 

—

 

Diluted earnings per common share after adjustments

 

1.63

$

1.53

 

$

1.80

 

 

$

3.16

 

$

3.55

 

(1): Adjustments include tax effect calculated using a marginal tax rate of 25.00 percent for all periods presented.

(2): Impact of ORE expense in all periods presented were minimal.

"It appears to us that, in the second quarter, we saw the inflection we had anticipated,” said M. Terry Turner, Pinnacle's President and Chief Executive Officer. "Not only did we continue to have outsized balance sheet growth which we expect to exceed that of peers, but we also had net interest margin expansion and ongoing double-digit growth in most of our fee businesses. Total revenues were $366.6 million during the second quarter of 2024 compared to $428.1 million last quarter. Excluding the adjustments noted above, total revenues increased $22.3 million, or 5.3 percent, to $438.7 million for the second quarter compared to $416.3 million in the first quarter.

"Also, during the second quarter, we executed several initiatives with the objective of capital optimization and balance sheet repositioning that were both a priority for our firm going into 2024. We accomplished these objectives while increasing both our tangible common equity and tier 1 common equity ratios at the end of the second quarter and achieving an earnback period on the balance sheet repositioning of less than three years.

"I believe the various initiatives that have been undertaken in order to achieve sound growth, even in this more difficult operating environment, continue to differentiate our firm in terms of earnings trajectory. Our effort to increase our deposit base by expanding into various deposit verticals is progressing well, now reporting approximately $1.0 billion in net deposit growth in these verticals through the first half of 2024. Additionally, our strategic expansion into new markets and our ability to attract "best in class" revenue producers continue to fuel outsized growth. Loan growth attributable to these new markets for the first half of 2024 amounted to approximately 73 percent of our aggregate loan growth this year. Our latest expansion into Jacksonville is also advancing rapidly in terms of hiring revenue producers and moving client relationships, with that market reporting $20.1 million in loans, $28.8 million in deposits and $614.6 million in wealth management assets, all amassed within just the last three months. System-wide, our robust hiring continues, as we have added 89 new revenue producers thus far this year, 18 of which are in Jacksonville. Our hiring pipelines remain very robust heading into the second half of 2024.

"With the initiatives we accomplished in the second quarter, as well as our continued outlook for outsized loan and deposit growth, we enter the second half of 2024 with great optimism."

BALANCE SHEET GROWTH AND LIQUIDITY:

Total assets at June 30, 2024, were $49.4 billion, an increase of approximately $472.8 million from March 31, 2024, and $2.5 billion from June 30, 2023, reflecting a linked-quarter annualized increase of 3.9 percent and a year-over-year increase of 5.3 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, 2024

March 31, 2024

June 30, 2023

Loans

$

33,769,150

 

33,162,873

7.3%

$

31,153,290

8.4%

Securities

 

7,882,891

 

7,371,847

27.7%

 

6,623,457

19.0%

Other interest-earning assets

 

2,433,910

 

3,195,211

(95.3)%

 

4,001,844

(39.2)%

Total interest-earning assets

$

44,085,951

$

43,729,931

3.3%

$

41,778,591

5.5%

 

 

 

 

 

 

Core deposits:

 

 

 

 

 

Noninterest-bearing deposits

$

7,932,882

$

7,958,739

(1.3)%

$

8,436,799

(6.0)%

Interest-bearing core deposits(1)

 

27,024,945

 

26,679,871

5.2%

 

24,343,968

11.0%

Noncore deposits and other funding(2)

 

7,569,703

 

7,506,409

3.4%

 

7,731,082

(2.1)%

Total funding

$

42,527,530

$

42,145,019

3.6%

$

40,511,849

5.0%

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

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

• During the second quarter of 2024, the commercial and industrial and owner-occupied commercial real estate loan portfolios grew linked-quarter annualized 14.6 percent and 17.0 percent, respectively, while the non-owner occupied commercial real estate portfolio, which consists primarily of commercial real estate investment, multifamily and construction and development loans decreased linked-quarter annualized by 2.6 percent. The firm continues to pursue reduced levels of commercial real estate loans by significantly limiting growth in these loan segments until certain benchmarks are achieved. At June 30, 2024, the firm’s non-owner occupied commercial real estate, multifamily and construction and development loans to total risk-based capital ratio fell to 254.0 percent while our construction and land development loans to total risk-based capital ratio decreased to 72.9 percent. Over time, the firm has targeted a non-owner occupied commercial real estate, multifamily and construction and land development loans to total risk-based capital ratio of less than 225 percent and construction and land development loans to total risk-based capital ratio of less than 70 percent.
• Late in the second quarter of 2024, the firm executed various capital optimization and balance sheet repositioning initiatives intended to improve ongoing revenue and earnings run rates, as follows:

1. Reposition the firm’s securities portfolio with the goal of meaningfully enhancing its future performance - In doing so, the firm incurred losses in the second quarter related to the sale of approximately $894.8 million of available-for-sale securities at a net loss of $72.1 million and the termination of an agreement to resell for $500.0 million of securities that the firm had previously purchased (the resell agreement). The termination of the resell agreement required termination fees to be paid to the counterparty of approximately $27.6 million, which has been recognized in noninterest expense during the second quarter. The proceeds from the sale of the $894.8 million in available-for-sale securities and the $500.0 million resulting from the termination of the resell agreement have been reinvested such that the yield increase on the new securities acquired approximates 3.1 percent over the prior weighted average yields of the sold securities and the terminated resell agreement.
2. Offset the negative capital impact of the second quarter losses from the execution of the balance sheet repositioning initiatives - The firm executed a credit default swap arrangement (CDS) with a notional amount of $86.5 million with a counterparty which equals 5 percent of a reference pool of $1.73 billion of 1-4 family first lien mortgage loans whereby the counterparty will assume the first-loss position for these loans up to approximately $86.5 million in aggregate losses. The firm will pay to the counterparty an annual loss protection fee equal to 7.95 percent of the corresponding notional amount of the CDS, for as long as the loans in the reference pool remain outstanding. The notional amount of the CDS will decline over time as the loans in the reference portfolio are paid down, mature or the investor absorbs the first loss portion of any loan losses on those loans. Additionally, and in accordance with regulatory guidelines, the firm has implemented enhanced control processes with respect to certain other commercial loans which permits recharacterization of these loans in order to reduce the risk weights assigned to these loans. As a result, the loans subject to the CDS and the loans where risk ratings were able to be recharacterized now qualify for reduced risk weights pursuant to risk-based capital guidelines. The benefits of these reductions in risk weighting offset the impact to capital of the loss on the sale of the securities and the termination of the resell agreement. In order to accomplish the CDS and the recharacterization, the firm incurred $850,000 of professional fees during the second quarter which are also included in noninterest expense.
3. Minimize the payback period on the losses incurred in connection with the balance sheet restructuring transactions - The firm anticipates that the increased revenues from the repositioning of the firm’s investment securities portfolio, less the annual loss protection fees associated with the CDS, will offset the loss incurred on the sale of available-for-sale securities and the termination of the resell agreement within a three-year time period, which the firm believes to be a reasonable payback period.

"Despite moving quickly toward our previously announced lower targets for our construction and land development, non-owner occupied commercial real estate and multifamily portfolios as a percentage of risk-based capital, through the first six months of 2024, our loan growth approximated $1.1 billion, a 6.7 percent annualized rate of growth," Turner said. "We are optimistic that we should see increases in the pace of loan growth in the second half of 2024 as we believe we will continue to take market share from the larger franchises that currently dominate our newer markets.

"As to deposit growth, during the second quarter, total deposits were up approximately $368.4 million while brokered deposits decreased by $339.7 million during the quarter. Excluding these brokered deposits, total deposits were up $708.1 million in the quarter which was similar to our experience in the first quarter of 2024. Importantly, we are very pleased that our noninterest bearing deposit balances were relatively stable during the entirety of the second quarter."

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

Pre-tax, pre-provision net revenues (PPNR) for the three and six months ended June 30, 2024, were $95.2 million and $280.9 million, respectively, a decrease of 65.7 and 39.9 percent, respectively, from the $277.6 million and $467.6 million recognized in the three and six months ended June 30, 2023, respectively.

 

Three months ended

Six months ended

 

June 30,

June 30,

(dollars in thousands)

2024

2023

% change

2024

2023

% change

Revenues:

 

 

 

 

 

 

Net interest income

$

332,262

$

315,393

 

5.3

%

$

650,296

 

$

627,624

 

3.6

%

Noninterest income

 

34,288

 

173,839

 

(80.3

)%

 

144,391

 

 

263,368

 

(45.2

)%

Total revenues

 

366,550

 

489,232

 

(25.1

)%

 

794,687

 

 

890,992

 

(10.8

)%

Noninterest expense

 

271,389

 

211,641

 

28.2

%

 

513,754

 

 

423,368

 

21.3

%

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

 

95,161

 

277,591

 

(65.7

)%

 

280,933

 

 

467,624

 

(39.9

)%

Adjustments:

 

 

 

 

 

 

Investment losses on sales of securities, net

 

72,103

 

9,961

 

>100%

 

72,103

 

 

9,961

 

>100%

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

 

—

 

(85,692

)

(100.0

)%

 

—

 

 

(85,692

)

(100.0

)%

Recognition of mortgage servicing asset

 

—

 

—

 

NA

 

(11,812

)

 

—

 

100.0

%

ORE expense

 

22

 

58

 

(62.1

)%

 

106

 

 

157

 

(32.5

)%

FDIC special assessment

 

—

 

—

 

NA

 

7,250

 

 

—

 

NA

Fees related to terminating agreement to resell securities previously purchased and professional fees associated with capital optimization initiatives

 

28,400

 

—

 

100.0

%

 

28,400

 

 

—

 

100.0

%

Adjusted PPNR

$

195,686

$

201,918

 

(3.1

)%

$

376,980

 

$

392,050

 

(3.8

)%

 

Three months ended

 

Six months ended

 

June 30, 2024

March 31, 2024

June 30, 2023

 

June 30, 2024

June 30, 2023

Net interest margin

3.14 %

3.04 %

3.20 %

 

3.09 %

3.30 %

Efficiency ratio

74.04 %

56.61 %

43.26 %

 

64.65 %

47.52 %

Return on average assets

0.41 %

1.00 %

1.71 %

 

0.70 %

1.49 %

Return on average tangible common equity (TCE)

4.90 %

12.11 %

21.06 %

 

8.48 %

18.33 %

Average loan to deposit ratio

84.95 %

84.73 %

84.94 %

 

84.84 %

84.47 %

• Net interest income for the second quarter of 2024 was $332.3 million, compared to $318.0 million for the first quarter of 2024 and $315.4 million for the second quarter of 2023, a year-over-year growth rate of 5.3 percent. Net interest margin was 3.14 percent for the second quarter of 2024, compared to 3.04 percent for the first quarter of 2024 and 3.20 percent for the second quarter of 2023.

Noninterest income for the second quarter of 2024 was $34.3 million compared to $110.1 million for the first quarter of 2024 and $173.8 million for the second quarter of 2023.

 

Three months ended

Linked-quarter Annualized % Change

Three months ended

Yr-over-Yr

% Change

(dollars in thousands)

June 30, 2024

March 31, 2024

June 30, 2023

Noninterest income

$

34,288

$

110,103

 

>(100.0%)

$

173,839

 

(80.3

)%

Less:

 

 

 

 

 

Investment losses on sales of securities, net

 

72,103

 

—

 

100.0

%

 

9,961

 

>100%

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

 

—

 

—

 

—

%

 

(85,692

)

(100.0

)%

Recognition of mortgage servicing asset

 

—

 

(11,812

)

(100.0

)%

 

—

 

—

%

Adjusted noninterest income

$

106,391

$

98,291

 

33.0

%

$

98,108

 

8.4

%

• Wealth management revenues, which include investment, trust and insurance services, were $27.8 million for the second quarter of 2024, compared to $26.0 million for the first quarter of 2024 and $24.1 million for the second quarter of 2023, a year-over-year increase of 15.4 percent. The increase in wealth management revenues was attributable to several factors, but primarily is the result of an increase in capacity with more revenue producers and the placement of those producers in the areas of the firm's most recent strategic market expansions.
• During the second quarter of 2024, net gains from mortgage loans sold were $3.3 million, compared to $2.9 million in the first quarter of 2024 and $1.6 million in the second quarter of 2023. Similar to wealth management, the increase in mortgage fee income was primarily attributable to increases in capacity with more originators in Pinnacle's newer strategic market expansions.
• Income from the firm's investment in Banker's Healthcare Group (BHG) was $18.7 million for the second quarter of 2024, compared to $16.0 million for the first quarter of 2024 and $26.9 million for the second quarter of 2023, a year-over-year decline of 30.6 percent.
  • BHG's loan originations increased to $871 million in the second quarter of 2024, compared to $692 million in the first quarter of 2024 and $1.1 billion in the second quarter of 2023.
  • Loans sold to BHG's community bank partners were approximately $467 million in the second quarter of 2024, compared to approximately $533 million in the first quarter of 2024 and $523 million in the second quarter of 2023.
  • BHG reserves for on-balance sheet loan losses were $271 million, or 9.9 percent of loans held for investment at June 30, 2024, compared to 10.3 percent at March 31, 2024 and 6.0 percent at June 30, 2023. The year-over-year increase in reserves as a percentage of loans held for investment was impacted by BHG's adoption of lifetime credit losses associated with its implementation of the current expected credit loss (CECL) methodology on Oct. 1, 2023.
  • BHG increased its accrual for estimated losses attributable to loan substitutions and prepayments to $415 million, or 5.9 percent of the unpaid loan balances that were previously purchased by BHG's community bank network, at June 30, 2024, compared to $391 million, or 5.7 percent, at March 31, 2024 and $369 million, or 5.9 percent, at June 30, 2023.
• Other noninterest income was $41.8 million for the quarter ended June 30, 2024, a decline of $9.9 million between the second quarter of 2024 and the first quarter of 2024 and an increase of $8.4 million from the second quarter of 2023. Positively impacting other noninterest income in the first quarter of 2024 was approximately $11.8 million associated with the recognition of the Freddie Mac Small Business Lending mortgage servicing asset.

Noninterest expense for the second quarter of 2024 was $271.4 million compared to $242.4 million for the first quarter of 2024 and $211.6 million for the second quarter of 2023.

 

Three months ended

Linked-quarter Annualized % Change

Three months ended

Yr-over-Yr

% Change

(dollars in thousands)

June 30, 2024

March 31, 2024

June 30, 2023

Noninterest expense

$

271,389

$

242,365

47.9

%

$

211,641

28.2

%

Less:

 

 

 

 

 

ORE expense

 

22

 

84

NM

 

 

58

(62.1

)%

FDIC special assessment

 

—

 

7,250

(100.0

)%

 

—

—

%

Fees related to terminating agreement to resell securities previously purchased and professional fees associated with capital optimization initiatives

 

28,400

 

—

100.0

%

 

—

100.0

%

Adjusted noninterest expense

$

242,967

$

235,031

13.5

%

$

211,583

14.8

%

• Salaries and employee benefits were $150.1 million in the second quarter of 2024, compared to $146.0 million in the first quarter of 2024 and $132.4 million in the second quarter of 2023, reflecting a year-over-year increase of 13.3 percent.
  • Full-time equivalent associates increased to 3,469.0 at June 30, 2024 from 3,386.5 at March 31, 2024 and 3,309.0 at June 30, 2023, a year-over-year increase of 4.8 percent.
  • Cash and equity incentive costs in the second quarter of 2024 were approximately $4.3 million higher than the first quarter of 2024 and $4.8 million higher than the amounts recorded in the second quarter of 2023.
• Equipment and occupancy costs were $41.0 million in the second quarter of 2024, compared to $39.6 million in the first quarter of 2024, reflecting an increase of 3.5 percent, and $33.7 million in the second quarter of 2023, reflecting a year-over-year increase of 21.7 percent. Comparing the second quarter of 2024 to the second quarter of 2023, several factors contributed to the increase of equipment and occupancy costs, including new equipment and facilities, rent escalators on various properties and the previously disclosed sale-leaseback transaction executed in the second quarter of 2023.
• Noninterest expense categories, other than those specifically noted above, were $80.2 million in the second quarter of 2024, compared to $56.7 million in the first quarter of 2024, reflecting an increase of 41.5 percent, and $45.5 million in the second quarter of 2023, reflecting a year-over-year increase of 76.4 percent. Primarily impacting the quarterly changes in other noninterest expense between the first and second quarters of 2024 was the impact of the $28.4 million in fees paid to terminate the resell agreement and professional fees incurred in connection with the capital optimization initiatives described elsewhere in this release.

"During the second quarter, while our net interest margin expanded to 3.14 percent, we anticipate continued margin expansion for the remainder of 2024," said Harold R. Carpenter, Pinnacle's Chief Financial Officer. "Second quarter net interest margin expansion was the direct result of an intense focus on obtaining appropriate pricing on new and renewing loans, stability of our noninterest bearing deposit balances, and our relationship managers working extremely hard to keep our deposit pricing well contained during the quarter.

"We are very excited about our core fee performance during the second quarter. Second quarter fee growth in nearly every core fee category, including, but not limited to service charges, wealth management and mortgage, exceeded double-digit growth in comparison to the second quarter of 2023. BHG also had another strong quarter as their contribution was up approximately $2.7 million from the first quarter. At this time, we are anticipating the quarterly run rate for BHG's contribution to be fairly consistent with their second quarter contribution for the remainder of 2024.

"Our expense results for the second quarter are generally consistent with where we thought we would be excluding the costs of the balance sheet restructuring and capital optimization initiatives. That said, we are seeing strong hiring across our franchise, particularly in our newer markets and, in most cases, more favorable results than we anticipated. Given our outlook for the remainder of the year, we are increasing our accrual for annual cash incentive plan payouts to approximately 85 percent of target level payouts as of the end of the second quarter."

CAPITAL, SOUNDNESS AND TAXES:

 

As of

 

June 30, 2024

December 31, 2023

June 30, 2023

Shareholders' equity to total assets

 

12.5

%

 

12.6

%

 

12.5

%

Tangible common equity to tangible assets

 

8.6

%

 

8.6

%

 

8.3

%

Book value per common share

$

77.15

 

$

75.80

 

$

73.32

 

Tangible book value per common share

$

52.92

 

$

51.38

 

$

48.85

 

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

 

0.27

%

 

0.17

%

 

0.13

%

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

 

0.30

%

 

0.27

%

 

0.15

%

Classified asset ratio (Pinnacle Bank) (2)

 

3.99

%

 

5.22

%

 

3.32

%

Construction and land development loans as a percentage of total capital (3)

 

72.90

%

 

84.20

%

 

84.50

%

Construction and land development, non-owner occupied commercial real estate and multi-family loans as a percentage of total capital (3)

 

254.00

%

 

259.00

%

 

256.70

%

Allowance for credit losses (ACL) to total loans

 

1.13

%

 

1.08

%

 

1.08

%

(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.

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

"Net charge-offs to average loans for the second quarter of 2024 were 0.27 percent, compared to 0.20 percent in the prior quarter," Carpenter said. "Net charge-offs increased in the second quarter primarily due to the continued deterioration of the value of the underlying collateral of an owner-occupied commercial real estate loan. In light of these matters, our special assets officers determined it was time to exit the borrower. This resulted in a charge-off of $10.3 million which was recognized in the second quarter. Most of our other key asset quality metrics continue to be better than longer-term historical levels as we experienced a decrease in nonperforming loans in relation to total loans at June 30, 2024 and experienced overall improvement in past dues, classified assets and potential problem loans ratios.

"Our effective tax rate for the first six months of 2024 was 18.1 percent. Excluding adjustments noted above and other tax benefits, the effective tax rate would have approximated 19.6 percent for the first six months of 2024, which is consistent with our historical run rates.

"Also, we are reporting an increase in book value per common share during the quarter from $76.23 to $77.15, an annualized linked-quarter increase of 4.8 percent and an increase in tangible book value per common share from $51.98 at March 31, 2024 to $52.92 at June 30, 2024, an annualized linked-quarter increase of 7.2 percent. Additionally, even after considering the securities losses, termination fees associated with terminating the resell agreement and transaction expenses associated with the capital optimization initiatives, the firm's common equity Tier one risk-based capital ratio increased from 10.4 percent at March 31, 2024 to 10.7 percent at June 30, 2024 which we also consider a great accomplishment."

BOARD OF DIRECTORS DECLARES DIVIDENDS

On July 16, 2024, Pinnacle Financial's Board of Directors approved a quarterly cash dividend of $0.22 per common share to be paid on Aug. 30, 2024 to common shareholders of record as of the close of business on Aug. 2, 2024. 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, 2024 to shareholders of record at the close of business on Aug. 17, 2024. 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 17, 2024, to discuss second quarter 2024 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 and fastest growing bank in the Nashville-Murfreesboro-Franklin MSA, according to June 30, 2023 deposit data from the FDIC. Pinnacle is No. 11 on the 2024 list of 100 Best Companies to Work For® in the U.S., its eighth consecutive appearance and was recognized by American Banker as one of America's Best Banks to Work For 11 years in a row and No. 1 among banks with more than $10 billion in assets in 2023.

Pinnacle Bank 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 $49.4 billion in assets as of June 30, 2024. As the second-largest bank holding company in Tennessee, Pinnacle operates in several 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 persistent elevated interest rates, the negative impact of inflationary pressures and challenging economic conditions 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 the Southeast region of the United States, 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 of Pinnacle Financial, Pinnacle Bank or BHG, or companies with whom they do business; (xi) BHG's ability to profitably grow its business and successfully execute on its business plans; (xii) risks of expansion into new geographic or product markets; (xiii) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including goodwill or other intangible assets; (xiv) the ineffectiveness of Pinnacle Bank's hedging strategies, or the unexpected counterparty failure or hedge failure of the underlying hedges; (xv) reduced ability to attract additional financial advisors (or failure of such advisors to cause their clients to switch to Pinnacle Bank), to retain financial advisors (including as a result of the competitive environment for associates) or otherwise to attract customers from other financial institutions; (xvi) deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xvii) inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies, required capital maintenance levels or regulatory requests or directives, particularly if Pinnacle Bank's level of applicable commercial real estate loans were to exceed percentage levels of total capital in guidelines recommended by its regulators; (xviii) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xix) the vulnerability of Pinnacle Bank's network and online banking portals, and the systems of parties with whom Pinnacle Bank contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (xx) the possibility of increased compliance and operational costs as a result of increased regulatory oversight (including by the Consumer Financial Protection Bureau), including oversight of companies in which Pinnacle Financial or Pinnacle Bank have significant investments, like BHG, and the development of additional banking products for Pinnacle Bank's corporate and consumer clients; (xxi) Pinnacle Financial's ability to identify potential candidates for, consummate, and achieve synergies from, potential future acquisitions; (xxii) difficulties and delays in integrating acquired businesses or fully realizing costs savings and other benefits from acquisitions; (xxiii) the risks associated with Pinnacle Bank being a minority investor in BHG, including the risk that the owners of a majority of the equity interests in BHG decide to sell the company or all or a portion of their ownership interests in BHG (triggering a similar sale by Pinnacle Bank); (xxiv) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, like BHG, including regulatory or legislative developments; (xxv) fluctuations in the valuations of Pinnacle Financial's equity investments and the ultimate success of such investments; (xxvi) the availability of and access to capital; (xxvii) adverse results (including costs, fines, reputational harm, inability to obtain necessary approvals and/or other negative effects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions involving Pinnacle Financial, Pinnacle Bank or BHG; 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, 2023, 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, losses on the restructuring of certain bank owned life insurance (BOLI) contracts, charges related to the FDIC special assessment, income associated with the recognition of a mortgage servicing asset in the first quarter of 2024, fees related to terminating agreement to resell securities previously purchased and professional fees associated with capital optimization initiatives in the second quarter of 2024 and other matters for the accounting periods presented. This release may also contain certain other non-GAAP capital ratios and performance measures that exclude the impact of goodwill and core deposit intangibles associated with Pinnacle Financial's acquisitions of BNC, Avenue Bank, Magna Bank, CapitalMark Bank & Trust, Mid-America Bancshares, Inc., Cavalry Bancorp, Inc. and other acquisitions which collectively are less material to the non-GAAP measure as well as the impact of Pinnacle Financial's Series B Preferred Stock. The presentation of the non-GAAP financial information is not intended to be considered in isolation or as a substitute for any measure prepared in accordance with GAAP. Because non-GAAP financial measures presented in this release are not measurements determined in accordance with GAAP and are susceptible to varying calculations, these non-GAAP financial measures, as presented, may not be comparable to other similarly titled measures presented by other companies.

Pinnacle Financial believes that these non-GAAP financial measures facilitate making period-to-period comparisons and are meaningful indications of its operating performance. In addition, because intangible assets such as goodwill and the core deposit intangible, and the other items excluded each vary extensively from company to company, Pinnacle Financial believes that the presentation of this information allows investors to more easily compare Pinnacle Financial's results to the results of other companies. Pinnacle Financial's management utilizes this non-GAAP financial information to compare Pinnacle Financial's operating performance for 2024 versus certain periods in 2023 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, 2024

December 31, 2023

June 30, 2023

ASSETS

 

 

 

Cash and noninterest-bearing due from banks

$

219,110

 

$

228,620

 

$

447,216

 

Restricted cash

 

50,924

 

 

86,873

 

 

22,567

 

Interest-bearing due from banks

 

2,107,883

 

 

1,914,856

 

 

3,363,348

 

Cash and cash equivalents

 

2,377,917

 

 

2,230,349

 

 

3,833,131

 

Securities purchased with agreement to resell

 

71,903

 

 

558,009

 

 

507,235

 

Securities available-for-sale, at fair value

 

4,908,967

 

 

4,317,530

 

 

3,591,280

 

Securities held-to-maturity (fair value of $2.7 billion, $2.8 billion, and $2.7 billion, net of allowance for credit losses of $1.7 million, $1.7 million, and $1.7 million at June 30, 2024, Dec. 31, 2023, and June 30, 2023, respectively)

 

2,973,924

 

 

3,006,357

 

 

3,032,177

 

Consumer loans held-for-sale

 

187,154

 

 

104,217

 

 

85,981

 

Commercial loans held-for-sale

 

16,046

 

 

9,280

 

 

22,713

 

Loans

 

33,769,150

 

 

32,676,091

 

 

31,153,290

 

Less allowance for credit losses

 

(381,601

)

 

(353,055

)

 

(337,459

)

Loans, net

 

33,387,549

 

 

32,323,036

 

 

30,815,831

 

Premises and equipment, net

 

282,775

 

 

256,877

 

 

244,853

 

Equity method investment

 

433,073

 

 

445,223

 

 

461,596

 

Accrued interest receivable

 

220,232

 

 

217,491

 

 

164,854

 

Goodwill

 

1,846,973

 

 

1,846,973

 

 

1,846,973

 

Core deposits and other intangible assets

 

24,313

 

 

27,465

 

 

30,981

 

Other real estate owned

 

2,636

 

 

3,937

 

 

2,555

 

Other assets

 

2,633,507

 

 

2,613,139

 

 

2,235,822

 

Total assets

$

49,366,969

 

$

47,959,883

 

$

46,875,982

 

LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

Deposits:

 

 

 

Noninterest-bearing

$

7,932,882

 

$

7,906,502

 

$

8,436,799

 

Interest-bearing

 

12,600,723

 

 

11,365,349

 

 

10,433,361

 

Savings and money market accounts

 

14,437,407

 

 

14,427,206

 

 

13,645,849

 

Time

 

4,799,368

 

 

4,840,753

 

 

5,206,652

 

Total deposits

 

39,770,380

 

 

38,539,810

 

 

37,722,661

 

Securities sold under agreements to repurchase

 

220,885

 

 

209,489

 

 

163,774

 

Federal Home Loan Bank advances

 

2,110,885

 

 

2,138,169

 

 

2,200,917

 

Subordinated debt and other borrowings

 

425,380

 

 

424,938

 

 

424,497

 

Accrued interest payable

 

58,881

 

 

66,967

 

 

53,854

 

Other liabilities

 

605,890

 

 

544,722

 

 

466,520

 

Total liabilities

 

43,192,301

 

 

41,924,095

 

 

41,032,223

 

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, 2024, Dec. 31, 2023, and June 30, 2023, respectively

 

217,126

 

 

217,126

 

 

217,126

 

Common stock, par value $1.00; 180.0 million shares authorized; 77.2 million, 76.8 million and 76.7 million shares issued and outstanding at June 30, 2024, Dec. 31, 2023, and June 30, 2023, respectively

 

77,217

 

 

76,767

 

 

76,740

 

Additional paid-in capital

 

3,110,993

 

 

3,109,493

 

 

3,087,967

 

Retained earnings

 

2,919,923

 

 

2,784,927

 

 

2,634,315

 

Accumulated other comprehensive loss, net of taxes

 

(150,591

)

 

(152,525

)

 

(172,389

)

Total shareholders' equity

 

6,174,668

 

 

6,035,788

 

 

5,843,759

 

Total liabilities and shareholders' equity

$

49,366,969

 

$

47,959,883

 

$

46,875,982

 

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, 2024

March 31, 2024

June 30, 2023

June 30, 2024

June 30, 2023

Interest income:

 

 

 

 

 

Loans, including fees

$

551,659

 

$

541,199

 

$

478,896

 

$

1,092,858

 

$

910,798

 

Securities

 

 

 

 

 

Taxable

 

51,578

 

 

44,470

 

 

31,967

 

 

96,048

 

 

61,325

 

Tax-exempt

 

24,372

 

 

24,600

 

 

24,603

 

 

48,972

 

 

48,405

 

Federal funds sold and other

 

40,781

 

 

40,214

 

 

39,773

 

 

80,995

 

 

60,750

 

Total interest income

 

668,390

 

 

650,483

 

 

575,239

 

 

1,318,873

 

 

1,081,278

 

Interest expense:

 

 

 

 

 

Deposits

 

304,449

 

 

300,968

 

 

228,668

 

 

605,417

 

 

405,257

 

Securities sold under agreements to repurchase

 

1,316

 

 

1,399

 

 

783

 

 

2,715

 

 

1,378

 

FHLB advances and other borrowings

 

30,363

 

 

30,082

 

 

30,395

 

 

60,445

 

 

47,019

 

Total interest expense

 

336,128

 

 

332,449

 

 

259,846

 

 

668,577

 

 

453,654

 

Net interest income

 

332,262

 

 

318,034

 

 

315,393

 

 

650,296

 

 

627,624

 

Provision for credit losses

 

30,159

 

 

34,497

 

 

31,689

 

 

64,656

 

 

50,456

 

Net interest income after provision for credit losses

 

302,103

 

 

283,537

 

 

283,704

 

 

585,640

 

 

577,168

 

Noninterest income:

 

 

 

 

 

Service charges on deposit accounts

 

14,563

 

 

13,439

 

 

12,180

 

 

28,002

 

 

23,898

 

Investment services

 

15,720

 

 

14,751

 

 

14,174

 

 

30,471

 

 

25,769

 

Insurance sales commissions

 

3,715

 

 

3,852

 

 

3,252

 

 

7,567

 

 

7,716

 

Gains on mortgage loans sold, net

 

3,270

 

 

2,879

 

 

1,567

 

 

6,149

 

 

3,620

 

Investment losses on sales, net

 

(72,103

)

 

—

 

 

(9,961

)

 

(72,103

)

 

(9,961

)

Trust fees

 

8,323

 

 

7,415

 

 

6,627

 

 

15,738

 

 

13,056

 

Income from equity method investment

 

18,688

 

 

16,035

 

 

26,924

 

 

34,723

 

 

46,003

 

Gain on sale of fixed assets

 

325

 

 

58

 

 

85,724

 

 

383

 

 

85,859

 

Other noninterest income

 

41,787

 

 

51,674

 

 

33,352

 

 

93,461

 

 

67,408

 

Total noninterest income

 

34,288

 

 

110,103

 

 

173,839

 

 

144,391

 

 

263,368

 

Noninterest expense:

 

 

 

 

 

Salaries and employee benefits

 

150,117

 

 

146,010

 

 

132,443

 

 

296,127

 

 

268,151

 

Equipment and occupancy

 

41,036

 

 

39,646

 

 

33,706

 

 

80,682

 

 

64,059

 

Other real estate, net

 

22

 

 

84

 

 

58

 

 

106

 

 

157

 

Marketing and other business development

 

6,776

 

 

6,125

 

 

5,664

 

 

12,901

 

 

11,606

 

Postage and supplies

 

3,135

 

 

2,771

 

 

2,863

 

 

5,906

 

 

5,682

 

Amortization of intangibles

 

1,568

 

 

1,584

 

 

1,780

 

 

3,152

 

 

3,574

 

Other noninterest expense

 

68,735

 

 

46,145

 

 

35,127

 

 

114,880

 

 

70,139

 

Total noninterest expense

 

271,389

 

 

242,365

 

 

211,641

 

 

513,754

 

 

423,368

 

Income before income taxes

 

65,002

 

 

151,275

 

 

245,902

 

 

216,277

 

 

417,168

 

Income tax expense

 

11,840

 

 

27,331

 

 

48,603

 

 

39,171

 

 

82,598

 

Net income

 

53,162

 

 

123,944

 

 

197,299

 

 

177,106

 

 

334,570

 

Preferred stock dividends

 

(3,798

)

 

(3,798

)

 

(3,798

)

 

(7,596

)

 

(7,596

)

Net income available to common shareholders

$

49,364

 

$

120,146

 

$

193,501

 

$

169,510

 

$

326,974

 

Per share information:

 

 

 

 

 

Basic net income per common share

$

0.65

 

$

1.58

 

$

2.55

 

$

2.22

 

$

4.30

 

Diluted net income per common share

$

0.64

 

$

1.57

 

$

2.54

 

$

2.21

 

$

4.30

 

Weighted average common shares outstanding:

 

 

 

 

 

Basic

 

76,506,121

 

 

76,278,453

 

 

76,030,081

 

 

76,392,287

 

 

75,975,982

 

Diluted

 

76,644,227

 

 

76,428,885

 

 

76,090,321

 

 

76,531,419

 

 

76,061,883

 

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, 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 restricted stock unit (RSU) and performance stock unit (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

 

 

 

 

 

 

 

 

 

Balance at December 31, 2023

$

217,126

76,767

 

$

76,767

 

$

3,109,493

 

$

2,784,927

 

$

(152,525

)

$

6,035,788

 

Preferred dividends paid ($33.76 per share)

 

—

—

 

 

—

 

 

—

 

 

(7,596

)

 

—

 

 

(7,596

)

Common dividends paid ($0.44 per share)

 

—

—

 

 

—

 

 

—

 

 

(34,514

)

 

—

 

 

(34,514

)

Issuance of restricted common shares, net of forfeitures

 

—

194

 

 

194

 

 

(194

)

 

—

 

 

—

 

 

—

 

Restricted shares withheld for taxes & related tax benefits

 

—

(55

)

 

(55

)

 

(4,529

)

 

—

 

 

—

 

 

(4,584

)

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

 

—

311

 

 

311

 

 

(14,739

)

 

—

 

 

—

 

 

(14,428

)

Compensation expense for restricted shares & performance stock units

 

—

—

 

 

—

 

 

20,962

 

 

—

 

 

—

 

 

20,962

 

Net income

 

—

—

 

 

—

 

 

—

 

 

177,106

 

 

—

 

 

177,106

 

Other comprehensive gain

 

—

—

 

 

—

 

 

—

 

 

—

 

 

1,934

 

 

1,934

 

Balance at June 30, 2024

$

217,126

77,217

 

$

77,217

 

$

3,110,993

 

$

2,919,923

 

$

(150,591

)

$

6,174,668

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED

 

 

 

 

 

 

 

(dollars in thousands)

June

March

December

September

June

March

2024

2024

2023

2023

2023

2023

Balance sheet data, at quarter end:

 

 

 

 

 

 

Commercial and industrial loans

$

12,328,622

 

11,893,198

 

11,666,691

 

11,307,611

 

10,983,911

 

10,723,327

 

Commercial real estate - owner occupied loans

 

4,217,351

 

4,044,973

 

4,044,896

 

3,944,616

 

3,845,359

 

3,686,796

 

Commercial real estate - investment loans

 

5,998,326

 

6,138,711

 

5,929,595

 

5,957,426

 

5,682,652

 

5,556,484

 

Commercial real estate - multifamily and other loans

 

2,185,858

 

1,924,931

 

1,605,899

 

1,490,184

 

1,488,236

 

1,331,249

 

Consumer real estate - mortgage loans

 

4,874,846

 

4,828,416

 

4,851,531

 

4,768,780

 

4,692,673

 

4,531,285

 

Construction and land development loans

 

3,621,563

 

3,818,334

 

4,041,081

 

3,942,143

 

3,904,774

 

3,909,024

 

Consumer and other loans

 

542,584

 

514,310

 

536,398

 

532,524

 

555,685

 

559,706

 

Total loans

 

33,769,150

 

33,162,873

 

32,676,091

 

31,943,284

 

31,153,290

 

30,297,871

 

Allowance for credit losses

 

(381,601

)

(371,337

)

(353,055

)

(346,192

)

(337,459

)

(313,841

)

Securities

 

7,882,891

 

7,371,847

 

7,323,887

 

6,882,276

 

6,623,457

 

6,878,831

 

Total assets

 

49,366,969

 

48,894,196

 

47,959,883

 

47,523,790

 

46,875,982

 

45,119,587

 

Noninterest-bearing deposits

 

7,932,882

 

7,958,739

 

7,906,502

 

8,324,325

 

8,436,799

 

9,018,439

 

Total deposits

 

39,770,380

 

39,402,025

 

38,539,810

 

38,295,809

 

37,722,661

 

36,178,553

 

Securities sold under agreements to repurchase

 

220,885

 

201,418

 

209,489

 

195,999

 

163,774

 

149,777

 

FHLB advances

 

2,110,885

 

2,116,417

 

2,138,169

 

2,110,598

 

2,200,917

 

2,166,508

 

Subordinated debt and other borrowings

 

425,380

 

425,159

 

424,938

 

424,718

 

424,497

 

424,276

 

Total shareholders' equity

 

6,174,668

 

6,103,851

 

6,035,788

 

5,837,641

 

5,843,759

 

5,684,128

 

Balance sheet data, quarterly averages:

 

 

 

 

 

 

Total loans

$

33,516,804

 

33,041,954

 

32,371,506

 

31,529,854

 

30,882,205

 

29,633,640

 

Securities

 

7,322,588

 

7,307,201

 

6,967,488

 

6,801,285

 

6,722,247

 

6,765,126

 

Federal funds sold and other

 

3,268,307

 

3,274,062

 

3,615,908

 

4,292,956

 

3,350,705

 

2,100,757

 

Total earning assets

 

44,107,699

 

43,623,217

 

42,954,902

 

42,624,095

 

40,955,157

 

38,499,523

 

Total assets

 

48,754,091

 

48,311,260

 

47,668,519

 

47,266,199

 

45,411,961

 

42,983,854

 

Noninterest-bearing deposits

 

8,000,159

 

7,962,217

 

8,342,572

 

8,515,733

 

8,599,781

 

9,332,317

 

Total deposits

 

39,453,828

 

38,995,709

 

38,515,560

 

38,078,665

 

36,355,859

 

35,291,775

 

Securities sold under agreements to repurchase

 

213,252

 

210,888

 

202,601

 

184,681

 

162,429

 

219,082

 

FHLB advances

 

2,106,786

 

2,214,489

 

2,112,809

 

2,132,638

 

2,352,045

 

1,130,356

 

Subordinated debt and other borrowings

 

427,256

 

428,281

 

426,999

 

426,855

 

426,712

 

426,564

 

Total shareholders' equity

 

6,138,722

 

6,082,616

 

5,889,075

 

5,898,196

 

5,782,239

 

5,605,604

 

Statement of operations data, for the three months ended:

Interest income

$

668,390

 

650,483

 

644,796

 

627,294

 

575,239

 

506,039

 

Interest expense

 

336,128

 

332,449

 

327,544

 

310,052

 

259,846

 

193,808

 

Net interest income

 

332,262

 

318,034

 

317,252

 

317,242

 

315,393

 

312,231

 

Provision for credit losses

 

30,159

 

34,497

 

16,314

 

26,826

 

31,689

 

18,767

 

Net interest income after provision for credit losses

 

302,103

 

283,537

 

300,938

 

290,416

 

283,704

 

293,464

 

Noninterest income

 

34,288

 

110,103

 

79,088

 

90,797

 

173,839

 

89,529

 

Noninterest expense

 

271,389

 

242,365

 

251,168

 

213,233

 

211,641

 

211,727

 

Income before income taxes

 

65,002

 

151,275

 

128,858

 

167,980

 

245,902

 

171,266

 

Income tax expense

 

11,840

 

27,331

 

33,879

 

35,377

 

48,603

 

33,995

 

Net income

 

53,162

 

123,944

 

94,979

 

132,603

 

197,299

 

137,271

 

Preferred stock dividends

 

(3,798

)

(3,798

)

(3,798

)

(3,798

)

(3,798

)

(3,798

)

Net income available to common shareholders

$

49,364

 

120,146

 

91,181

 

128,805

 

193,501

 

133,473

 

Profitability and other ratios:

 

 

 

 

 

 

Return on avg. assets (1)

 

0.41

%

1.00

%

0.76

%

1.08

%

1.71

%

1.26

%

Return on avg. equity (1)

 

3.23

%

7.94

%

6.14

%

8.66

%

13.42

%

9.66

%

Return on avg. common equity (1)

 

3.35

%

8.24

%

6.38

%

9.00

%

13.95

%

10.05

%

Return on avg. tangible common equity (1)

 

4.90

%

12.11

%

9.53

%

13.43

%

21.06

%

15.43

%

Common stock dividend payout ratio (14)

 

17.29

%

12.59

%

12.26

%

11.35

%

11.04

%

12.07

%

Net interest margin (2)

 

3.14

%

3.04

%

3.06

%

3.06

%

3.20

%

3.40

%

Noninterest income to total revenue (3)

 

9.35

%

25.72

%

19.95

%

22.25

%

35.53

%

22.28

%

Noninterest income to avg. assets (1)

 

0.28

%

0.92

%

0.66

%

0.76

%

1.54

%

0.84

%

Noninterest exp. to avg. assets (1)

 

2.24

%

2.02

%

2.09

%

1.79

%

1.87

%

2.00

%

Efficiency ratio (4)

 

74.04

%

56.61

%

63.37

%

52.26

%

43.26

%

52.70

%

Avg. loans to avg. deposits

 

84.95

%

84.73

%

84.05

%

82.80

%

84.94

%

83.97

%

Securities to total assets

 

15.97

%

15.08

%

15.27

%

14.48

%

14.13

%

15.25

%

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, 2024

 

June 30, 2023

 

Average Balances

Interest

Rates/ Yields

 

Average Balances

Interest

Rates/ Yields

Interest-earning assets

 

 

 

 

 

 

 

Loans (1) (2)

$

33,516,804

$

551,659

6.71

%

 

$

30,882,205

$

478,896

6.30

%

Securities

 

 

 

 

 

 

 

Taxable

 

4,085,859

 

51,578

5.08

%

 

 

3,394,507

 

31,967

3.78

%

Tax-exempt (2)

 

3,236,729

 

24,372

3.61

%

 

 

3,327,740

 

24,603

3.54

%

Interest-bearing due from banks

 

2,541,394

 

33,607

5.32

%

 

 

2,597,020

 

33,234

5.13

%

Resell agreements

 

476,435

 

3,641

3.07

%

 

 

509,694

 

3,374

2.65

%

Federal funds sold

 

—

 

—

—

%

 

 

—

 

—

—

%

Other

 

250,478

 

3,533

5.67

%

 

 

243,991

 

3,165

5.20

%

Total interest-earning assets

 

44,107,699

$

668,390

6.20

%

 

 

40,955,157

$

575,239

5.74

%

Nonearning assets

 

 

 

 

 

 

 

Intangible assets

 

1,872,282

 

 

 

 

1,879,108

 

 

Other nonearning assets

 

2,774,110

 

 

 

 

2,577,696

 

 

Total assets

$

48,754,091

 

 

 

$

45,411,961

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

Interest checking

 

12,118,160

 

118,785

3.94

%

 

 

9,361,316

 

75,815

3.25

%

Savings and money market

 

14,659,713

 

134,399

3.69

%

 

 

13,684,536

 

110,024

3.22

%

Time

 

4,675,796

 

51,265

4.41

%

 

 

4,710,226

 

42,829

3.65

%

Total interest-bearing deposits

 

31,453,669

 

304,449

3.89

%

 

 

27,756,078

 

228,668

3.30

%

Securities sold under agreements to repurchase

 

213,252

 

1,316

2.48

%

 

 

162,429

 

783

1.93

%

Federal Home Loan Bank advances

 

2,106,786

 

24,395

4.66

%

 

 

2,352,045

 

24,603

4.20

%

Subordinated debt and other borrowings

 

427,256

 

5,968

5.62

%

 

 

426,712

 

5,792

5.44

%

Total interest-bearing liabilities

 

34,200,963

 

336,128

3.95

%

 

 

30,697,264

 

259,846

3.40

%

Noninterest-bearing deposits

 

8,000,159

 

—

—

 

 

 

8,599,781

 

—

—

 

Total deposits and interest-bearing liabilities

 

42,201,122

$

336,128

3.20

%

 

 

39,297,045

$

259,846

2.65

%

Other liabilities

 

414,247

 

 

 

 

332,677

 

 

Shareholders' equity

 

6,138,722

 

 

 

 

5,782,239

 

 

Total liabilities and shareholders' equity

$

48,754,091

 

 

 

$

45,411,961

 

 

Net interest income

 

$

332,262

 

 

 

$

315,393

 

Net interest spread (3)

 

 

2.25

%

 

 

 

2.35

%

Net interest margin (4)

 

 

3.14

%

 

 

 

3.20

%

 

 

 

 

 

 

 

 

(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 $11.9 million of taxable equivalent income for the three months ended June 30, 2024 compared to $11.2 million for the three months ended June 30, 2023. 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, 2024 would have been 3.00% compared to a net interest spread of 3.09% for the three months ended June 30, 2023.

(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, 2024

 

June 30, 2023

 

Average Balances

Interest

Rates/ Yields

 

Average Balances

Interest

Rates/ Yields

Interest-earning assets

 

 

 

 

 

 

 

Loans (1) (2)

$

33,279,379

$

1,092,858

6.69

%

 

$

30,261,372

$

910,798

6.15

%

Securities

 

 

 

 

 

 

 

Taxable

 

4,002,696

 

96,048

4.83

%

 

 

3,451,410

 

61,325

3.58

%

Tax-exempt (2)

 

3,312,198

 

48,972

3.54

%

 

 

3,292,158

 

48,405

3.54

%

Interest-bearing due from banks

 

2,509,097

 

66,359

5.32

%

 

 

1,998,083

 

49,166

4.96

%

Resell agreements

 

510,111

 

7,499

2.96

%

 

 

511,169

 

6,703

2.64

%

Federal funds sold

 

—

 

—

—

%

 

 

—

 

—

—

%

Other

 

251,976

 

7,137

5.70

%

 

 

219,932

 

4,881

4.48

%

Total interest-earning assets

 

43,865,457

$

1,318,873

6.15

%

 

 

39,734,124

$

1,081,278

5.60

%

Nonearning assets

 

 

 

 

 

 

 

Intangible assets

 

1,873,076

 

 

 

 

1,879,994

 

 

Other nonearning assets

 

2,794,141

 

 

 

 

2,590,548

 

 

Total assets

$

48,532,674

 

 

 

$

44,204,666

 

 

 

 

 

 

 

 

 

 

Interest-bearing liabilities

 

 

 

 

 

 

 

Interest-bearing deposits:

 

 

 

 

 

 

 

Interest checking

 

11,842,966

 

231,513

3.93

%

 

 

8,581,899

 

128,289

3.01

%

Savings and money market

 

14,634,200

 

269,151

3.70

%

 

 

14,029,351

 

207,543

2.98

%

Time

 

4,766,414

 

104,753

4.42

%

 

 

4,251,481

 

69,425

3.29

%

Total interest-bearing deposits

 

31,243,580

 

605,417

3.90

%

 

 

26,862,731

 

405,257

3.04

%

Securities sold under agreements to repurchase

 

212,070

 

2,715

2.57

%

 

 

190,599

 

1,378

1.46

%

Federal Home Loan Bank advances

 

2,160,637

 

48,515

4.52

%

 

 

1,744,575

 

35,574

4.11

%

Subordinated debt and other borrowings

 

427,768

 

11,930

5.61

%

 

 

426,638

 

11,445

5.41

%

Total interest-bearing liabilities

 

34,044,055

 

668,577

3.95

%

 

 

29,224,543

 

453,654

3.13

%

Noninterest-bearing deposits

 

7,981,188

 

—

—

 

 

 

8,964,026

 

—

—

 

Total deposits and interest-bearing liabilities

 

42,025,243

$

668,577

3.20

%

 

 

38,188,569

$

453,654

2.40

%

Other liabilities

 

396,762

 

 

 

 

321,637

 

 

Shareholders' equity

 

6,110,669

 

 

 

 

5,694,460

 

 

Total liabilities and shareholders' equity

$

48,532,674

 

 

 

$

44,204,666

 

 

Net interest income

 

$

650,296

 

 

 

$

627,624

 

Net interest spread (3)

 

 

2.21

%

 

 

 

2.47

%

Net interest margin (4)

 

 

3.09

%

 

 

 

3.30

%

 

 

 

 

 

 

 

 

(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 $23.7 million of taxable equivalent income for the six months ended June 30, 2024 compared to $22.1 million for the six months ended June 30, 2023. 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, 2024 would have been 2.96% compared to a net interest spread of 3.20% for the six months ended June 30, 2023.

(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

2024

2024

2023

2023

2023

2023

Asset quality information and ratios:

 

 

 

 

 

 

Nonperforming assets:

 

 

 

 

 

 

Nonaccrual loans

$

97,649

 

108,325

 

82,288

 

42,950

 

44,289

 

36,988

 

ORE and other nonperforming assets (NPAs)

 

2,760

 

2,766

 

4,347

 

3,019

 

3,105

 

7,802

 

Total nonperforming assets

$

100,409

 

111,091

 

86,635

 

45,969

 

47,394

 

44,790

 

Past due loans over 90 days and still accruing interest

$

4,057

 

5,273

 

6,004

 

4,969

 

5,257

 

5,284

 

Accruing purchase credit deteriorated loans

$

6,021

 

6,222

 

6,501

 

7,010

 

7,415

 

7,684

 

Net loan charge-offs

$

22,895

 

16,215

 

13,451

 

18,093

 

9,771

 

7,291

 

Allowance for credit losses to nonaccrual loans

 

390.8

%

342.8

%

429.0

%

806.0

%

762.0

%

848.5

%

As a percentage of total loans:

 

 

 

 

 

 

Past due accruing loans over 30 days

 

0.16

%

0.17

%

0.23

%

0.16

%

0.14

%

0.14

%

Potential problem loans

 

0.18

%

0.28

%

0.39

%

0.42

%

0.32

%

0.22

%

Allowance for credit losses

 

1.13

%

1.12

%

1.08

%

1.08

%

1.08

%

1.04

%

Nonperforming assets to total loans, ORE and other NPAs

 

0.30

%

0.33

%

0.27

%

0.14

%

0.15

%

0.15

%

Classified asset ratio (Pinnacle Bank) (6)

 

4.0

%

4.9

%

5.2

%

4.6

%

3.3

%

2.7

%

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

 

0.27

%

0.20

%

0.17

%

0.23

%

0.13

%

0.10

%

 

 

 

 

 

 

 

Interest rates and yields:

 

 

 

 

 

 

Loans

 

6.71

%

6.67

%

6.62

%

6.50

%

6.30

%

6.00

%

Securities

 

4.43

%

4.06

%

4.12

%

3.81

%

3.66

%

3.47

%

Total earning assets

 

6.20

%

6.11

%

6.09

%

5.95

%

5.74

%

5.45

%

Total deposits, including non-interest bearing

 

3.10

%

3.10

%

3.07

%

2.92

%

2.52

%

2.03

%

Securities sold under agreements to repurchase

 

2.48

%

2.67

%

2.54

%

2.30

%

1.93

%

1.10

%

FHLB advances

 

4.66

%

4.38

%

4.26

%

4.22

%

4.20

%

3.94

%

Subordinated debt and other borrowings

 

5.62

%

5.60

%

5.59

%

5.54

%

5.44

%

5.38

%

Total deposits and interest-bearing liabilities

 

3.20

%

3.20

%

3.15

%

3.01

%

2.65

%

2.12

%

 

 

 

 

 

 

 

Capital and other ratios (6):

 

 

 

 

 

 

Pinnacle Financial ratios:

 

 

 

 

 

 

Shareholders' equity to total assets

 

12.5

%

12.5

%

12.6

%

12.3

%

12.5

%

12.6

%

Common equity Tier one

 

10.7

%

10.4

%

10.3

%

10.3

%

10.2

%

9.9

%

Tier one risk-based

 

11.2

%

10.9

%

10.8

%

10.9

%

10.8

%

10.5

%

Total risk-based

 

13.2

%

12.9

%

12.7

%

12.8

%

12.7

%

12.4

%

Leverage

 

9.5

%

9.5

%

9.4

%

9.4

%

9.5

%

9.6

%

Tangible common equity to tangible assets

 

8.6

%

8.5

%

8.6

%

8.2

%

8.3

%

8.3

%

Pinnacle Bank ratios:

 

 

 

 

 

 

Common equity Tier one

 

11.5

%

11.3

%

11.1

%

11.2

%

11.1

%

10.8

%

Tier one risk-based

 

11.5

%

11.3

%

11.1

%

11.2

%

11.1

%

10.8

%

Total risk-based

 

12.5

%

12.2

%

12.0

%

12.0

%

11.9

%

11.6

%

Leverage

 

9.7

%

9.7

%

9.7

%

9.7

%

9.8

%

9.9

%

Construction and land development loans

as a percentage of total capital (17)

 

72.9

%

77.5

%

84.2

%

83.1

%

84.5

%

88.5

%

Non-owner occupied commercial real estate and

multi-family as a percentage of total capital (17)

 

254.0

%

258.0

%

259.0

%

256.4

%

256.7

%

261.1

%

 

 

 

 

 

 

 

This information is preliminary and based on company data available at the time of the presentation.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED

 

 

 

 

 

 

 

(dollars in thousands, except per share data)

June

March

December

September

June

March

2024

2024

2023

2023

2023

2023

 

 

 

 

 

 

 

Per share data:

 

 

 

 

 

 

Earnings per common share – basic

$

0.65

 

1.58

 

1.20

 

1.69

 

2.55

 

1.76

 

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

$

1.63

 

1.54

 

1.70

 

1.79

 

1.80

 

1.76

 

Earnings per common share – diluted

$

0.64

 

1.57

 

1.19

 

1.69

 

2.54

 

1.76

 

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

$

1.63

 

1.53

 

1.68

 

1.79

 

1.79

 

1.76

 

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)

$

77.15

 

76.23

 

75.80

 

73.23

 

73.32

 

71.24

 

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

$

52.92

 

51.98

 

51.38

 

48.78

 

48.85

 

46.75

 

Revenue per diluted common share

$

4.78

 

5.60

 

5.16

 

5.35

 

6.43

 

5.28

 

Revenue per diluted common share, excluding non-GAAP adjustments

$

5.72

 

5.45

 

5.25

 

5.48

 

5.43

 

5.28

 

 

 

 

 

 

 

 

Investor information:

 

 

 

 

 

 

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

$

80.04

 

85.88

 

87.22

 

67.04

 

56.65

 

55.16

 

High closing sales price of common stock during quarter

$

84.70

 

91.82

 

89.34

 

75.95

 

57.93

 

82.79

 

Low closing sales price of common stock during quarter

$

74.62

 

79.26

 

60.77

 

56.41

 

46.17

 

52.51

 

 

 

 

 

 

 

 

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

$

23.25

 

23.62

 

22.60

 

22.70

 

23.75

 

24.15

 

High closing sales price of depositary shares during quarter

$

23.85

 

24.44

 

23.65

 

23.85

 

24.90

 

25.71

 

Low closing sales price of depositary shares during quarter

$

22.93

 

22.71

 

21.00

 

21.54

 

19.95

 

20.77

 

 

 

 

 

 

 

 

Other information:

 

 

 

 

 

 

Residential mortgage loan sales:

 

 

 

 

 

 

Gross loans sold

$

217,080

 

148,576

 

142,556

 

198,247

 

192,948

 

120,146

 

Gross fees (8)

$

5,368

 

3,540

 

3,191

 

4,350

 

4,133

 

2,795

 

Gross fees as a percentage of loans originated

 

2.47

%

2.38

%

2.24

%

2.19

%

2.14

%

2.33

%

Net gain (loss) on residential mortgage loans sold

$

3,270

 

2,879

 

879

 

2,012

 

1,567

 

2,053

 

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

$

(72,103

)

—

 

14

 

(9,727

)

(9,961

)

—

 

Brokerage account assets, at quarter end (9)

$

11,917,578

 

10,756,108

 

9,810,457

 

9,041,716

 

9,007,230

 

8,634,339

 

Trust account managed assets, at quarter end

$

6,443,916

 

6,297,887

 

5,530,495

 

5,047,128

 

5,084,592

 

4,855,951

 

Core deposits (10)

$

34,957,827

 

34,638,610

 

33,738,917

 

33,606,783

 

32,780,767

 

32,054,111

 

Core deposits to total funding (10)

 

82.2

%

82.2

%

81.7

%

81.9

%

80.9

%

82.4

%

Risk-weighted assets

$

39,983,191

 

40,531,311

 

40,205,295

 

39,527,086

 

38,853,588

 

38,117,659

 

Number of offices

 

135

 

128

 

128

 

128

 

127

 

126

 

Total core deposits per office

$

258,947

 

270,614

 

263,585

 

262,553

 

258,116

 

254,398

 

Total assets per full-time equivalent employee

$

14,231

 

14,438

 

14,287

 

14,274

 

14,166

 

13,750

 

Annualized revenues per full-time equivalent employee

$

425.0

 

508.5

 

468.4

 

486.2

 

593.0

 

496.5

 

Annualized expenses per full-time equivalent employee

$

314.6

 

287.8

 

296.8

 

254.1

 

256.5

 

261.7

 

Number of employees (full-time equivalent)

 

3,469.0

 

3,386.5

 

3,357.0

 

3,329.5

 

3,309.0

 

3,281.5

 

Associate retention rate (11)

 

94.4

%

94.2

%

94.2

%

93.6

%

94.1

%

93.8

%

 

 

 

 

 

 

 

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

2024

2024

2023

 

2024

2023

 

 

 

 

 

 

 

Net interest income

$

332,262

 

318,034

 

315,393

 

 

650,296

 

627,624

 

 

 

 

 

 

 

 

Noninterest income

 

34,288

 

110,103

 

173,839

 

 

144,391

 

263,368

 

Total revenues

 

366,550

 

428,137

 

489,232

 

 

794,687

 

890,992

 

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

 

72,103

 

—

 

9,961

 

 

72,103

 

9,961

 

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

 

—

 

—

 

(85,692

)

 

—

 

(85,692

)

Recognition of mortgage servicing asset

 

—

 

(11,812

)

—

 

 

(11,812

)

—

 

Total revenues excluding the impact of adjustments noted above

$

438,653

 

416,325

 

413,501

 

 

854,978

 

815,261

 

 

 

 

 

 

 

 

Noninterest expense

$

271,389

 

242,365

 

211,641

 

 

513,754

 

423,368

 

Less: ORE expense

 

22

 

84

 

58

 

 

106

 

157

 

FDIC special assessment

 

—

 

7,250

 

—

 

 

7,250

 

—

 

Fees related to terminating agreement to resell securities previously purchased and professional fees associated with capital optimization initiatives

 

28,400

 

—

 

—

 

 

28,400

 

—

 

Noninterest expense excluding the impact of adjustments noted above

$

242,967

 

235,031

 

211,583

 

 

477,998

 

423,211

 

 

 

 

 

 

 

 

Pre-tax income

$

65,002

 

151,275

 

245,902

 

 

216,277

 

417,168

 

Provision for credit losses

 

30,159

 

34,497

 

31,689

 

 

64,656

 

50,456

 

Pre-tax pre-provision net revenue

 

95,161

 

185,772

 

277,591

 

 

280,933

 

467,624

 

Less: Adjustments noted above

 

100,525

 

(4,478

)

(75,673

)

 

96,047

 

(75,574

)

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

$

195,686

 

181,294

 

201,918

 

 

376,980

 

392,050

 

 

 

 

 

 

 

 

Noninterest income

$

34,288

 

110,103

 

173,839

 

 

144,391

 

263,368

 

Less: Adjustments noted above

 

72,103

 

(11,812

)

(75,731

)

 

60,291

 

(75,731

)

Noninterest income excluding the impact of adjustments noted above

$

106,391

 

98,291

 

98,108

 

 

204,682

 

187,637

 

 

 

 

 

 

 

 

Efficiency ratio (4)

 

74.04

%

56.61

%

43.26

%

 

64.65

%

47.52

%

Adjustments noted above

 

(18.65

)%

(0.16

)%

7.91

%

 

(8.74

)%

4.39

%

Efficiency ratio excluding adjustments noted above (4)

 

55.39

%

56.45

%

51.17

%

 

55.91

%

51.91

%

 

 

 

 

 

 

 

Total average assets

$

48,754,091

 

48,311,260

 

45,411,961

 

 

48,532,674

 

44,204,666

 

 

 

 

 

 

 

 

Noninterest income to average assets (1)

 

0.28

%

0.92

%

1.54

%

 

0.60

%

1.20

%

Less: Adjustments noted above

 

0.60

%

(0.10

)%

(0.67

)%

 

0.25

%

(0.34

)%

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

 

0.88

%

0.82

%

0.87

%

 

0.85

%

0.86

%

 

 

 

 

 

 

 

Noninterest expense to average assets (1)

 

2.24

%

2.02

%

1.87

%

 

2.13

%

1.93

%

Adjustments as noted above

 

(0.24

)%

(0.06

)%

—

%

 

(0.15

)%

—

%

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

 

2.00

%

1.96

%

1.87

%

 

1.98

%

1.93

%

 

 

 

 

 

 

 

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

2024

2024

2023

2023

2023

2023

Net income available to common shareholders

$

49,364

 

120,146

 

91,181

 

128,805

 

193,501

 

133,473

 

Investment (gains) losses on sales of securities, net

 

72,103

 

—

 

(14

)

9,727

 

9,961

 

—

 

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

 

—

 

—

 

—

 

—

 

(85,692

)

—

 

Loss on BOLI restructuring

 

—

 

—

 

16,252

 

—

 

—

 

—

 

FDIC special assessment

 

—

 

7,250

 

29,000

 

—

 

—

 

—

 

ORE expense

 

22

 

84

 

125

 

33

 

58

 

99

 

Recognition of mortgage servicing asset

 

—

 

(11,812

)

—

 

—

 

—

 

—

 

Fees related to terminating agreement to resell securities previously purchased and professional fees associated with capital optimization initiatives

 

28,400

 

—

 

—

 

—

 

—

 

—

 

Tax effect on above noted adjustments (16)

 

(25,131

)

1,120

 

(7,278

)

(2,440

)

18,918

 

(25

)

Net income available to common shareholders excluding adjustments noted above

$

124,758

 

116,788

 

129,266

 

136,125

 

136,746

 

133,547

 

 

 

 

 

 

 

 

Basic earnings per common share

$

0.65

 

1.58

 

1.20

 

1.69

 

2.55

 

1.76

 

Less:

 

 

 

 

 

 

Investment (gains) losses on sales of securities, net

 

0.94

 

—

 

—

 

0.13

 

0.13

 

—

 

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

 

—

 

—

 

—

 

—

 

(1.13

)

—

 

Loss on BOLI restructuring

 

—

 

—

 

0.21

 

—

 

—

 

—

 

FDIC special assessment

 

—

 

0.10

 

0.38

 

—

 

—

 

—

 

ORE expense

 

—

 

—

 

—

 

—

 

—

 

—

 

Recognition of mortgage servicing asset

 

—

 

(0.15

)

—

 

—

 

—

 

—

 

Fees related to terminating agreement to resell securities previously purchased and professional fees associated with capital optimization initiatives

 

0.37

 

—

 

—

 

—

 

—

 

—

 

Tax effect on above noted adjustments (16)

 

(0.33

)

0.01

 

(0.10

)

(0.03

)

0.25

 

—

 

Basic earnings per common share excluding adjustments noted above

$

1.63

 

1.54

 

1.70

 

1.79

 

1.80

 

1.76

 

 

 

 

 

 

 

 

Diluted earnings per common share

$

0.64

 

1.57

 

1.19

 

1.69

 

2.54

 

1.76

 

Less:

 

 

 

 

 

 

Investment (gains) losses on sales of securities, net

 

0.94

 

—

 

—

 

0.13

 

0.13

 

—

 

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

 

—

 

—

 

—

 

—

 

(1.13

)

—

 

Loss on BOLI restructuring

 

—

 

—

 

0.21

 

—

 

—

 

—

 

FDIC special assessment

 

—

 

0.10

 

0.38

 

—

 

—

 

—

 

ORE expense

 

—

 

—

 

—

 

—

 

—

 

—

 

Recognition of mortgage servicing asset

 

—

 

(0.15

)

—

 

—

 

—

 

—

 

Fees related to terminating agreement to resell securities previously purchased and professional fees associated with capital optimization initiatives

 

0.37

 

—

 

—

 

—

 

—

 

—

 

Tax effect on above noted adjustments (16)

 

(0.32

)

0.01

 

(0.09

)

(0.03

)

0.25

 

—

 

Diluted earnings per common share excluding the adjustments noted above

$

1.63

 

1.53

 

1.68

 

1.79

 

1.80

 

1.76

 

 

 

 

 

 

 

 

Revenue per diluted common share

$

4.78

 

5.60

 

5.16

 

5.35

 

6.43

 

5.28

 

Adjustments due to revenue-impacting items as noted above

 

0.94

 

(0.15

)

0.09

 

0.13

 

(1.00

)

—

 

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

$

5.72

 

5.45

 

5.25

 

5.48

 

5.43

 

5.28

 

 

 

 

 

 

 

 

Book value per common share at quarter end (7)

$

77.15

 

76.23

 

75.80

 

73.23

 

73.32

 

71.24

 

Adjustment due to goodwill, core deposit and other intangible assets

 

(24.23

)

(24.25

)

(24.42

)

(24.45

)

(24.47

)

(24.49

)

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

$

52.92

 

51.98

 

51.38

 

48.78

 

48.85

 

46.75

 

 

 

 

 

 

 

 

Equity method investment (15)

 

 

 

 

 

 

Fee income from BHG, net of amortization

$

18,688

 

16,035

 

14,432

 

24,967

 

26,924

 

19,079

 

Funding cost to support investment

 

5,704

 

5,974

 

5,803

 

6,546

 

6,005

 

5,768

 

Pre-tax impact of BHG

 

12,984

 

10,061

 

8,629

 

18,421

 

20,919

 

13,311

 

Income tax expense at statutory rates (16)

 

3,246

 

2,515

 

2,157

 

4,605

 

5,230

 

3,328

 

Earnings attributable to BHG

$

9,738

 

7,546

 

6,472

 

13,816

 

15,689

 

9,983

 

Basic earnings per common share attributable to BHG

$

0.13

 

0.10

 

0.09

 

0.18

 

0.21

 

0.13

 

Diluted earnings per common share attributable to BHG

$

0.13

 

0.10

 

0.08

 

0.18

 

0.21

 

0.13

 

This information is preliminary and based on company data available at the time of the presentation.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

 

 

 

RECONCILIATION OF NON-GAAP SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED

 

 

 

 

 

Six months ended

(dollars in thousands, except per share data)

 

June 30,

 

2024

2023

Net income available to common shareholders

 

$

169,510

 

326,974

 

Investment losses on sales of securities, net

 

 

72,103

 

9,961

 

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

 

 

—

 

(85,692

)

Loss on BOLI restructuring

 

 

—

 

—

 

ORE expense

 

 

106

 

157

 

FDIC special assessment

 

 

7,250

 

—

 

Recognition of mortgage servicing asset

 

 

(11,812

)

—

 

Fees related to terminating agreement to resell securities previously purchased and professional fees associated with capital optimization initiatives

 

 

28,400

 

—

 

Tax effect on adjustments noted above (16)

 

 

(24,012

)

18,894

 

Net income available to common shareholders excluding adjustments noted above

 

$

241,545

 

270,294

 

 

 

 

 

Basic earnings per common share

 

$

2.22

 

4.30

 

Less:

 

 

 

Investment (gains) losses on sales of securities, net

 

 

0.94

 

0.13

 

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

 

 

—

 

(1.13

)

ORE expense

 

 

—

 

—

 

Recognition of mortgage servicing asset

 

 

(0.15

)

—

 

FDIC special assessment

 

 

0.09

 

—

 

Fees related to terminating agreement to resell securities previously purchased and professional fees associated with capital optimization initiatives

 

 

0.37

 

—

 

Tax effect on above noted adjustments (16)

 

 

(0.31

)

0.25

 

Basic earnings per common share excluding adjustments noted above

 

$

3.16

 

3.55

 

 

 

 

 

Diluted earnings per common share

 

 

2.21

 

4.30

 

Less:

 

 

 

Investment (gains) losses on sales of securities, net

 

 

0.94

 

0.13

 

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

 

 

—

 

(1.13

)

Loss on BOLI restructuring

 

 

—

 

—

 

ORE expense

 

 

—

 

—

 

FDIC special assessment

 

 

0.09

 

—

 

Recognition of mortgage servicing asset

 

 

(0.15

)

—

 

Fees related to terminating agreement to resell securities previously purchased and professional fees associated with capital optimization initiatives

 

 

0.37

 

—

 

Tax effect on above noted adjustments (16)

 

 

(0.31

)

0.25

 

Diluted earnings per common share excluding the adjustments noted above

 

$

3.16

 

3.55

 

 

 

 

 

Revenue per diluted common share

 

$

10.38

 

11.71

 

Adjustments due to revenue-impacting items as noted above

 

 

0.79

 

(0.99

)

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

 

$

11.17

 

10.72

 

 

 

 

 

 

 

 

 

Equity method investment (15)

 

 

 

Fee income from BHG, net of amortization

 

$

34,723

 

46,003

 

Funding cost to support investment

 

 

11,584

 

11,088

 

Pre-tax impact of BHG

 

 

23,139

 

34,915

 

Income tax expense at statutory rates (16)

 

 

5,785

 

8,729

 

Earnings attributable to BHG

 

$

17,354

 

26,186

 

 

 

 

 

Basic earnings per common share attributable to BHG

 

$

0.23

 

0.34

 

Diluted earnings per common share attributable to BHG

 

$

0.23

 

0.34

 

 

 

 

 

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

2024

2024

2023

 

2024

2023

 

 

 

 

 

 

 

Return on average assets (1)

 

0.41

%

1.00

%

1.71

%

 

 

0.70

%

1.49

%

Adjustments as noted above

 

0.62

%

(0.03

)%

(0.50

)%

 

 

0.30

%

(0.26

)%

Return on average assets excluding adjustments noted above (1)

 

1.03

%

0.97

%

1.21

%

 

 

1.00

%

1.23

%

 

 

 

 

 

 

 

Tangible assets:

 

 

 

 

 

 

Total assets

$

49,366,969

 

48,894,196

 

46,875,982

 

 

$

49,366,969

 

46,875,982

 

Less: Goodwill

 

(1,846,973

)

(1,846,973

)

(1,846,973

)

 

 

(1,846,973

)

(1,846,973

)

Core deposit and other intangible assets

 

(24,313

)

(25,881

)

(30,981

)

 

 

(24,313

)

(30,981

)

Net tangible assets

$

47,495,683

 

47,021,342

 

44,998,028

 

 

$

47,495,683

 

44,998,028

 

 

 

 

 

 

 

 

Tangible common equity:

 

 

 

 

 

 

Total shareholders' equity

$

6,174,668

 

6,103,851

 

5,843,759

 

 

$

6,174,668

 

5,843,759

 

Less: Preferred shareholders' equity

 

(217,126

)

(217,126

)

(217,126

)

 

 

(217,126

)

(217,126

)

Total common shareholders' equity

 

5,957,542

 

5,886,725

 

5,626,633

 

 

 

5,957,542

 

5,626,633

 

Less: Goodwill

 

(1,846,973

)

(1,846,973

)

(1,846,973

)

 

 

(1,846,973

)

(1,846,973

)

Core deposit and other intangible assets

 

(24,313

)

(25,881

)

(30,981

)

 

 

(24,313

)

(30,981

)

Net tangible common equity

$

4,086,256

 

4,013,871

 

3,748,679

 

 

$

4,086,256

 

3,748,679

 

 

 

 

 

 

 

 

Ratio of tangible common equity to tangible assets

 

8.60

%

8.54

%

8.33

%

 

 

8.60

%

8.33

%

 

 

 

 

 

 

 

Average tangible assets:

 

 

 

 

 

 

Average assets

$

48,754,091

 

48,311,260

 

45,411,961

 

 

$

48,532,674

 

44,204,666

 

Less: Average goodwill

 

(1,846,973

)

(1,846,973

)

(1,846,973

)

 

 

(1,846,973

)

(1,846,973

)

Average core deposit and other intangible assets

 

(25,309

)

(26,898

)

(32,135

)

 

 

(26,103

)

(33,021

)

Net average tangible assets

$

46,881,809

 

46,437,389

 

43,532,853

 

 

$

46,659,598

 

42,324,672

 

 

 

 

 

 

 

 

Return on average assets (1)

 

0.41

%

1.00

%

1.71

%

 

 

0.70

%

1.49

%

Adjustment due to goodwill, core deposit and other intangible assets

 

0.01

%

0.04

%

0.07

%

 

 

0.03

%

0.07

%

Return on average tangible assets (1)

 

0.42

%

1.04

%

1.78

%

 

 

0.73

%

1.56

%

Adjustments as noted above

 

0.65

%

(0.03

)%

(0.52

)%

 

 

0.31

%

(0.27

)%

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

 

1.07

%

1.01

%

1.26

%

 

 

1.04

%

1.29

%

 

 

 

 

 

 

 

Average tangible common equity:

 

 

 

 

 

 

Average shareholders' equity

$

6,138,722

 

6,082,616

 

5,782,239

 

 

$

6,110,669

 

5,694,460

 

Less: Average preferred equity

 

(217,126

)

(217,126

)

(217,126

)

 

 

(217,126

)

(217,126

)

Average common equity

 

5,921,596

 

5,865,490

 

5,565,113

 

 

 

5,893,543

 

5,477,334

 

Less: Average goodwill

 

(1,846,973

)

(1,846,973

)

(1,846,973

)

 

 

(1,846,973

)

(1,846,973

)

Average core deposit and other intangible assets

 

(25,309

)

(26,898

)

(32,135

)

 

 

(26,103

)

(33,021

)

Net average tangible common equity

$

4,049,314

 

3,991,619

 

3,686,005

 

 

$

4,020,467

 

3,597,340

 

 

 

 

 

 

 

 

Return on average equity (1)

 

3.23

%

7.94

%

13.42

%

 

 

5.58

%

11.58

%

Adjustment due to average preferred shareholders' equity

 

0.12

%

0.30

%

0.53

%

 

 

0.20

%

0.46

%

Return on average common equity (1)

 

3.35

%

8.24

%

13.95

%

 

 

5.78

%

12.04

%

Adjustment due to goodwill, core deposit and other intangible assets

 

1.55

%

3.87

%

7.11

%

 

 

2.70

%

6.29

%

Return on average tangible common equity (1)

 

4.90

%

12.11

%

21.06

%

 

 

8.48

%

18.33

%

Adjustments as noted above

 

7.49

%

(0.34

)%

(6.18

)%

 

 

3.60

%

(3.18

)%

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

 

12.39

%

11.77

%

14.88

%

 

 

12.08

%

15.15

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

This information is preliminary and based on company data available at the time of the presentation.

 

 

 

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED

 

1. Ratios are presented on an annualized basis.

2. Net interest margin is the result of net interest income on a tax equivalent basis divided by average interest earning assets.

3. Total revenue is equal to the sum of net interest income and noninterest income.

4. Efficiency ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.

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

6. Capital ratios are calculated using regulatory reporting regulations enacted for such period and are defined as follows:

Equity to total assets – End of period total shareholders' equity as a percentage of end of period assets.

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

Leverage – Tier I capital (pursuant to risk-based capital guidelines) as a percentage of adjusted average assets.

Tier I risk-based – Tier I capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets.

Total risk-based – Total capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets.

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

Tier I common equity to risk weighted assets - Tier 1 capital (pursuant to risk-based capital guidelines) less the amount of any preferred stock or subordinated indebtedness that is considered as a component of Tier 1 capital as a percentage of total risk-weighted assets.

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

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

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

10. Core deposits include all transaction deposit accounts, money market and savings accounts and all certificates of deposit issued in a denomination of less than $250,000. The ratio noted above represents total core deposits divided by total funding, which includes total deposits, FHLB advances, securities sold under agreements to repurchase, subordinated indebtedness and all other interest-bearing liabilities.

11. Associate retention rate is computed by dividing the number of associates employed at quarter end less the number of associates that have resigned in the last 12 months by the number of associates employed at quarter end.

12. Adjusted pre-tax, pre-provision net revenue excludes the impact of ORE expenses and income, investment gains and losses on sales of securities, the impact of BOLI restructuring, the impact of the FDIC special assessment, the recognition of the mortgage servicing asset and fees related to terminating agreement to resell securities previously purchased and professional fees associated with capital optimization initiatives.

13. Represents investment gains (losses) on sales and impairments, net occurring as a result of gains or losses incurred as the result of a change in management's intention to sell a bond prior to the recovery of its amortized cost basis.

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

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

16. Tax effect calculated using the blended statutory rate of 25.00 percent for all periods in 2024 and 2023.

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

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240716482425/en/

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