Pinnacle Reports Diluted Earnings Per Share Of $0.68 For 1st Quarter

  • Monday, April 18, 2016
Pinnacle Financial Partners, Inc. reported net income per diluted common share of $0.68 for the quarter ended March 31, 2016, compared to net income per diluted common share of $0.62 for the quarter ended March 31, 2015, an increase of 9.7 percent.

 

Excluding pre-tax merger-related charges of $1.8 million for the three months ended March 31, 2016, net income per diluted common share was $0.71 for the three months ended March 31, 2016, or a 14.5 percent increase over the same period last year.

 

“Several very significant events occurred during the first quarter of 2016,” said M. Terry Turner, Pinnacle’s president and chief executive officer. “First, in January, we announced our intent to merge with Avenue Financial Holdings (Avenue) later this year. The combination of our two franchises will further expand our penetration in Nashville, which we believe is one of the strongest banking markets in the United States. Second, in early March, we closed on our previously announced acquisition of an additional 19 percent interest in Bankers Healthcare Group (BHG), bringing our total ownership to 49 percent. We believe our partnership with BHG has produced outstanding results for our shareholders, and we will continue to look for opportunities to grow revenues between the two firms. Third, in mid-March, we successfully completed the technology and brand integration of CapitalMark Bank & Trust in Chattanooga so that now we operate just one platform and brand in all of our markets.” 

·    Revenues (excluding securities gains and losses) for the quarter ended March 31, 2016 were a record $99.8 million, an increase of $1.7 million from the fourth quarter of 2015. Revenues (excluding securities gains and losses) increased 43.0 percent over the same quarter last year.

·    Loans at March 31, 2016 were a record $6.828 billion, an increase of $284.7 million from Dec. 31, 2015 and $2.183 billion from March 31, 2015, reflecting year-over-year growth of 47.0 percent. Included in first quarter loan growth was $169.2 million of purchased loans that were acquired in conjunction with a recent liftout of three commercial lenders in the Memphis market.   

·    Average balances of non interest-bearing deposit accounts were $1.960 billion in the first quarter of 2016 and represented approximately 27.9 percent of total average deposit balances for the quarter. First quarter 2016 average non interest-bearing deposits increased 46.0 percent over the same quarter last year.

“Setting the $169.2 million loan purchase aside, organic net loan growth during the first quarter was $115.5 million, which represented more than twice the net loan growth in the same quarter last year,” Mr. Turner said. “We also continue to experience success in our recruiting efforts in our markets. During the first quarter, we recruited 14 revenue-producing associates from other firms, making the first quarter one of our most successful recruiting quarters in recent memory. Both our business development and recruiting pipelines remain strong and give me increased optimism that our firm remains the preferred bank for clients and bankers in our markets. Despite the incremental expenses associated with these investments in our future growth, we continue to outperform peer averages in terms of key profitability and productivity measures such as ROAA, ROTCE and the efficiency ratio.”

·       The firm’s net interest margin was 3.78 percent for the quarter ended March 31, 2016, compared to 3.73 percent last quarter and 3.78 percent for the quarter ended March 31, 2015.

·       Return on average assets was 1.27 percent for the first quarter of 2016, compared to 1.24 percent for the fourth quarter of 2015 and 1.45 percent for the same quarter last year. Excluding merger-related charges, return on average assets was 1.32 percent for the first quarter of 2016 compared to 1.31 percent for the fourth quarter of 2015.

·       First quarter 2016 return on average tangible equity amounted to 15.04 percent, compared to 14.97 percent for the fourth quarter of 2015 and 15.56 percent for the same quarter last year. Excluding merger-related charges, return on average tangible equity amounted to 15.64 percent for the first quarter of 2016 compared to 15.81 percent for the fourth quarter of 2015.

 

“We are pleased with the ongoing financial performance of our firm,” said Harold R. Carpenter, Pinnacle’s chief financial officer. “As expected, our first quarter net interest margin was supported by the positive impact of purchase accounting, so our net interest margin will likely see some dilution through the end of 2016 as purchase accounting becomes less impactful during the remainder of the year. Nevertheless, we continue to believe net interest income will grow consistently this year. As has been the case for a number of years, our ability to take market share should produce reliable and consistent growth in our bottom line results.”

OTHER FIRST QUARTER 2016 HIGHLIGHTS:

·      Revenue growth

o   Net interest income for the quarter ended March 31, 2016 increased to a record $73.9 million, compared to $71.5 million for the fourth quarter of 2015 and $51.3 million for the first quarter of 2015. 

Noninterest income for the quarter ended March 31, 2016 decreased to $25.9 million, compared to $26.6 million for the fourth quarter of 2015 and $18.5 million for the same quarter last year.

§  Wealth management revenues, which include investment, trust and insurance services, were $5.6 million for the quarter ended March 31, 2016, compared to $5.1 million for the first quarter of 2015 and $5.4 million for the quarter ended Dec. 31, 2015, resulting in a year-over-year growth rate of 10.8 percent.

§  Income from the firm’s investment in BHG was $5.2 million for the quarter ended March 31, 2016, compared to $7.8 million for the quarter ended Dec. 31, 2015 and $3.2 million for the same quarter last year. The firm’s investment in BHG contributed slightly less than $0.06 in diluted earnings per share in the first quarter of 2016, compared to $0.11 in the fourth quarter of 2015 and $0.05 for the same quarter last year. “BHG’s contribution was less in the first quarter of 2016 compared to the fourth quarter of 2015 primarily due to seasonal fluctuations, but their pipelines have rebuilt and appear to be on track for another record year of growth,” Carpenter said. “We also believe our loan growth will continue at a low-double digit rate this year which, in turn, will be the principal driver of our revenue growth in 2016.” 


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