Pinnacle Financial Partners Inc. (PNFP) filed Quarterly Report for the period ended 2009-09-30.
Pinnacle Financial Partners Inc. is a bank holding company which owns 100% of the capital stock of Pinnacle National Bank a national bank operating in the Nashville Tennessee metropolitan area. Pinnacle Financial Partners Inc. has a market cap of $427.2 million; its shares were traded at around $12.97 with and P/S ratio of 1.7. Pinnacle Financial Partners Inc. had an annual average earning growth of 47.3% over the past 5 years.
Highlight of Business Operations:
General. Our continued organic growth, together with continuing deterioration in the economy in our principal markets, particularly the residential real estate market, materially impacted our financial condition and results of operations in 2009 as compared to 2008. Our fully diluted net loss per share for the three months ended September 30, 2009 was $0.15, compared to fully diluted net income per share of $0.36 for the same period in 2008. Our fully diluted net loss per share for the nine months ended September 30, 2009 was $1.39, compared to fully diluted net income per share of $0.96 for the same period in 2008. At September 30, 2009, loans totaled $3.608 billion, as compared to $3.355 billion at December 31, 2008, while total deposits increased to $3.820 billion at September 30, 2009 from $3.533 billion at December 31, 2008.
Our provision for loan losses was $22.1 million for the third quarter of 2009 compared to $3.1 million for the same period in 2008. The provision for loan losses was $101.1 million for the nine months ended September 30, 2009 compared to $7.5 million for the same period in 2008. Impacting the provision for loan losses in any accounting period are several matters including the amount of loan growth during the period, the level of charge-offs or recoveries incurred during the period, the changes in the amount of impaired loans, changes in the risk ratings assigned to our loans and the results of our quarterly assessment of the inherent risks of our loan portfolio. During the third quarter of 2009, we incurred net charge-offs of $5.2 million compared to $73,000 in the third quarter of 2008. Additionally, during the first nine months of 2009, we increased our allowance for loan losses as a percentage of total loans from 1.09% at December 31, 2008 to 2.30% at September 30, 2009 due to these increased levels of charge-offs and nonperforming loans and the continued weakening in the economy.
Net loss available to common stockholders for the third quarter of 2009 was $4.9 million compared to net income available to common stockholders of $8.8 million for the same period in 2008, a decrease of 155.2%. Net loss for the first nine months of 2009 was $37.5 million compared to net income available to common stockholders of $22.8 million for the same period in 2008, a decrease of 264.1%. Included in net loss available to common stockholders for the three and nine months ended September 30, 2009 was approximately $1.5 million and $4.4 million of charges related to preferred stock dividends and accretion of the preferred stock discount related to our participation in the U.S. Department of Treasury’s Capital Purchase Program (the “CPP”).
Financial Condition. Loans increased $253.0 million during the first nine months of 2009. We have grown our total deposits to $3.820 billion at September 30, 2009 compared to $3.533 billion at December 31, 2008, an increase of $286.7 million. In comparing the composition of the average balances of our deposits between the second quarter of 2009 with the second quarter of 2008, we have experienced increased growth in our higher cost certificate of deposit balances than in any other category. This increase in reliance on higher cost deposits has contributed to a reduced net interest margin between the two periods.
During the third quarter of 2008, we sold 1.0 million shares of our common stock for $21.5 million. During the fourth quarter of 2008, we further increased our capital through our participation in the CPP, issuing 95,000 shares of preferred stock for $95 million. Additionally, we issued 534,910 common stock warrants to the U.S. Treasury. The warrants have an exercise price of $26.64 each, are immediately exercisable and expire 10 years from the date of issuance. The common stock warrants have been assigned a fair value of $6.7 million, as of December 12, 2008 and that amount has been recorded as the discount on the preferred stock which will be accreted as a reduction in net income available to common stockholders over the next five years at approximately $1.1 million to $1.3 million per year. The resulting $88.3 million has been assigned to the Series A preferred stock issued in the CPP and will be accreted up to the redemption amount of $95 million over the next five years, a further increase of capital.
Net Interest Income. Net interest income represents the amount by which interest earned on various earning assets exceeds interest paid on deposits and other interest bearing liabilities and is one of the most significant components of our results of operations. For the three months ended September 30, 2009 and 2008, we recorded net interest income of $34.5 million and $29.3 million respectively, which resulted in a net interest margin of 3.05% and 3.14%. For the nine months ended September 30, 2009 and 2008, we recorded net interest income of $93.8 million and $84.3 million respectively, which resulted in a net interest margin of 2.84% and 3.24%.
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