CAVB Cavalry Bancorp (MM)

Cavalry Bancorp, Inc. (the "Company") (Nasdaq NMS: CAVB) announced today third quarter and year-to-date consolidated earnings for its wholly-owned subsidiary Cavalry Banking ("Bank") and the Company. THIRD QUARTER 2005 HIGHLIGHTS: -- Net income of $2.15 million, up 45.3 percent from the prior year's $1.48 million and up 15.6 percent from second quarter 2005 net income of $1.86 million. -- Return on average assets of 1.39 percent for the third quarter compared to 1.10 percent for the same quarter last year -- Net interest margin of 4.32 percent for the third quarter compared to 4.18 percent for the same quarter last year -- Strong balance sheet growth: -- Total assets at September 30, 2005 of $632.0 million representing growth of $27.4 million during the third quarter of 2005. -- Loans at September 30, 2005 of $476.4 million representing growth of $26.5 million during the third quarter of 2005. -- Deposits at September 30, 2005 of $564.1 million representing growth of $24.9 million during the third quarter of 2005. -- Superior credit quality: -- Net charge-offs to average loans of 0.01 percent for the third quarter of 2005. -- Nonperforming loans of 0.22 percent of total loans and other real estate. Ed Loughry, Cavalry's Chairman and Chief Executive Officer said, "In 2004, we made several strategic decisions to enhance the long-term profitability of this Company. One was an intense focus by our sales teams on attracting and maintaining transaction-based deposit accounts and another was the acceleration of the repayment of our leveraged Employee Stock Ownership Plan ("ESOP"). As a result of those and other decisions, we have transformed the profitability performance of this firm for 2005 and beyond." Net income increased from $1.48 million or $0.22 per share diluted for the quarter ended September 30, 2004 to $2.15 million or $0.29 per share diluted for the quarter ended September 30, 2005. Annualized return on average assets increased from 1.10 percent for the quarter ended September 30, 2004 to 1.39 percent for the quarter ended September 30, 2005. Annualized return on average shareholders' equity increased from 10.51 percent for the quarter ended September 30, 2004 to 14.65 percent for the quarter ended September 30, 2005. "One of the strengths of this Company has been our ability to expand our net interest margin at the same time we are experiencing significant growth in our assets," said Bill Jones, Executive Vice President and Chief Administrative Officer. Net income increased from $3.7 million or $0.55 per share diluted for the nine months ended September 30, 2004 to $6.2 million or $0.85 per share diluted for the nine months ended September 30, 2005. Annualized return on average assets increased from 0.95 percent for the nine months ended September 30, 2004 to 1.42 percent for the nine months ended September 30, 2005. Annualized return on average shareholders' equity increased from 8.82 percent for the nine months ended September 30, 2004 to 14.77 percent for the nine months ended September 30, 2005. Earnings for the nine months ended September 30, 2005 include a tax benefit of $427,000. This tax benefit resulted from the distribution of cash dividends to the participants of the ESOP. Total assets of the Company increased from $578.7 million at December 31, 2004 to $632.0 million at September 30, 2005. Net loans receivable increased from $430.5 million at December 31, 2004 to $476.4 million at September 30, 2005. Deposits increased from $506.5 million at December 31, 2004 to $564.1 million at September 30, 2005. Total assets of the Company increased 14.51 percent from $551.9 million at September 30, 2004 to $632.0 million at September 30, 2005. Net loans receivable increased 15.13 percent from $413.8 million at September 30, 2004 to $476.4 million at September 30, 2005. Deposits increased 16.00 percent from $486.3 million at September 30, 2004 to $564.1 million at September 30, 2005. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Certain of these statements contained in this release which are not historical facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including the uncertainties inherent in the process of auditing and making end-of-year adjustments to a corporation's financial statements. By making these forward-looking statements, the Company undertakes no obligation to update these statements for revisions or changes after the date of this release. Additional Information and Where to Find It This communication is not a solicitation of a proxy from any security holder of Pinnacle Financial Partners, Inc. ("Pinnacle") or Cavalry Bancorp, Inc. ("Cavalry"). Pinnacle has filed a registration statement on Form S-4 with the Securities and Exchange Commission ("SEC") in connection with the proposed merger of Pinnacle and Cavalry. The Form S-4 contains a joint proxy statement/prospectus and other documents for the shareholders' meeting of Pinnacle and Cavalry at which time the proposed merger will be considered. The Form S-4 and joint proxy statement/prospectus contain important information about Pinnacle, Cavalry, the merger and related matters. INVESTORS AND SECURITY HOLDERS ARE ENCOURAGED TO READ THE REGISTRATION STATEMENT AND THE PRELIMINARY COPY OF THE JOINT PROXY STATEMENT/PROSPECTUS INCLUDED THEREIN WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED TRANSACTION BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT PINNACLE, CAVALRY AND THE PROPOSED TRANSACTION. Investors and security holders may obtain free copies of these documents once they are available through the website maintained by the SEC at http://www.sec.gov. Free copies of the joint proxy statement/prospectus also may be obtained by directing a request by telephone or mail to Pinnacle Financial Partners Inc., 211 Commerce Street, Suite 300, Nashville, TN 37201, Attention: Investor Relations (615) 744-3710 or Cavalry Bancorp, Inc., 114 West College Street, P.O. Box 188, Murfreesboro, TN 37133, Attention: Investor Relations (615) 849-3313. This communication shall not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. Participants in the Solicitation The directors and executive officers of Pinnacle and Cavalry may be deemed to be participants in the solicitation of proxies with respect to the proposed merger. Information about Pinnacle's directors and executive officers is contained in the proxy statement filed by Pinnacle with the SEC on March 14, 2005, which is available on Pinnacle's web site (www.pnfp.com) and at the address provided above. Information about Cavalry's directors and executive officers is contained in the proxy statement filed by Cavalry with the SEC on March 18, 2005, which is available at Cavalry's website (www.cavb.com) and at the address provided above. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests by security holding or otherwise, will be contained in the joint proxy statement/prospectus and other relevant material to be filed with the SEC when they become available. Investors and security holders may obtain free copies of these documents once they are available through the website maintained by the SEC at http://www.sec.gov. Free copies of the joint proxy statement/prospectus also may be obtained by directing a request by telephone or mail to Pinnacle Financial Partners Inc., 211 Commerce Street, Suite 300, Nashville, TN 37201, Attention: Investor Relations (615) 744-3710 or Cavalry Bancorp, 114 West College Street, P.O. Box 188, Murfreesboro, TN 37133, Attention: Investor Relations (615) 849-3313. This communication shall not constitute an offer to sell or the solicitation of an offer to buy securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of such jurisdiction. (Selected financial data follows) -0- *T Cavalry Bancorp, Inc. Consolidated Balance Sheets (Unaudited) (In thousands, except per share data) Assets September 30, December 31, ------ 2005 2004 ---- ---- Cash and cash equivalents $ 67,458 $ 63,135 Time deposits with Federal Home Loan Bank 4,000 - Investment securities available-for-sale, at fair value 42,934 42,183 Loans held for sale, at estimated fair value 1,067 2,501 Loans receivable, net of allowances for loan losses of $4,955 at September 30, 2005 and $4,863 at December 31, 2004 476,354 430,526 Accrued interest receivable 2,448 1,985 Office properties and equipment, net 17,202 17,607 Required investments in stock of the Federal Home Loan Bank and Federal Reserve Bank, at cost 3,317 3,125 Foreclosed assets 119 16 Bank owned life insurance 11,933 11,604 Goodwill 1,772 1,772 Other assets 3,402 4,216 ------------ ----------- Total assets 632,006 578,670 ============ =========== Liabilities ----------- Deposits: Non-interest-bearing $ 112,360 $ 81,719 Interest-bearing 451,695 424,815 ------------ ----------- 564,055 506,534 Advances from Federal Home Loan Bank of Cincinnati 2,794 2,835 Dividends payable 577 11,332 Accrued expenses and other liabilities 6,416 4,136 ------------ ----------- Total liabilities 573,842 524,837 ------------ ----------- Shareholders' Equity -------------------- Preferred Stock, no par value Authorized - 250,000 shares; none issued or outstanding at September 30, 2005 and December 31, 2004 - - Common Stock, no par value Authorized- 49,750,000 shares; issued and outstanding 7,217,565 at September 30, 2005, and December 31, 2004 19,354 19,354 Retained earnings 39,259 34,598 Accumulated other comprehensive loss, net of tax (449) (119) ------------ ----------- Total shareholders' equity 58,164 53,833 ------------ ----------- Total Liabilities and Shareholders' Equity 632,006 578,670 ------------------------------------------ ============ =========== Cavalry Bancorp, Inc. Consolidated Statements of Operations (Unaudited) (In thousands, except per share data) Three Months Ended Nine Months Ended September 30, September 30, ------------------ ----------------- 2005 2004 2005 2004 Interest income: Loans $ 7,711 $ 5,994 $ 21,081 $ 16,839 Investment securities: Taxable 308 332 916 979 Non-taxable 33 36 83 74 Other 552 120 1,335 261 ---------- ---------- ---------- ---------- Total interest income 8,604 6,482 23,415 18,153 ---------- ---------- ---------- ---------- Interest expense - deposits 2,463 1,367 6,386 3,880 Interest expense - borrowings 24 24 71 73 ---------- ---------- ---------- ---------- Total interest expense 2,487 1,391 6,457 3,953 ---------- ---------- ---------- ---------- Net interest income 6,117 5,091 16,958 14,200 Provision for loan losses 101 176 211 352 ---------- ---------- ---------- ---------- Net interest income after provision for loan losses 6,016 4,915 16,747 13,848 ---------- ---------- ---------- ---------- Non-interest income: Servicing income 61 47 165 140 Gain on sale of loans, net 320 879 984 2,281 Deposit servicing fees and charges 1,499 1,457 4,285 3,992 Trust service fees 258 266 819 832 Commissions and other non-banking fees 739 649 2,105 1,899 Other operating income 242 221 800 754 ---------- ---------- ---------- ---------- Total non-interest income 3,119 3,519 9,158 9,898 ---------- ---------- ---------- ---------- Non-interest expenses: Salaries and employee benefits 3,267 3,603 9,666 10,834 Occupancy expense 322 329 919 984 Supplies, communications, and other office expenses 221 223 695 706 Advertising expense 70 87 289 404 Professional fees 197 257 531 656 Equipment and service bureau expense 930 890 2,767 2,557 Loss on sale of investment securities, net - 81 - 3 Other operating expense 522 491 1,503 1,464 ---------- ---------- ---------- ---------- Total non-interest expense 5,529 5,961 16,370 17,608 ---------- ---------- ---------- ---------- Income before income tax expense 3,606 2,473 9,535 6,138 Income tax expense 1,461 994 3,286 2,475 ---------- ---------- ---------- ---------- Net income $ 2,145 $ 1,479 $ 6,249 $ 3,663 ========== ========== ========== ========== Basic Earnings Per Share $ 0.30 $ 0.23 $ 0.87 $ 0.57 Diluted Earnings Per Share $ 0.29 $ 0.22 $ 0.85 $ 0.55 Weighted average shares outstanding - Basic 7,217,565 6,441,148 7,217,565 6,463,810 Weighted average shares outstanding - Diluted 7,328,799 6,675,920 7,327,831 6,700,546 Cavalry Bancorp, Inc. Consolidated Financial Highlights (unaudited) (dollars in thousands) September December 30, 31, % 2005 2004 Change ---- ---- ------ FINANCIAL CONDITION DATA: Total assets $ 632,006 578,670 9.22% Loans receivable, net 476,354 430,526 10.64% Loans held- for-sale 1,067 2,501 -57.34% Investment securities available- for-sale 42,934 42,183 1.78% Cash and cash equivalents 67,458 63,135 6.85% Deposits 564,055 506,534 11.36% Advances from Federal Home Loan Bank 2,794 2,835 -1.45% Shareholders' Equity 58,164 53,833 8.05% For the quarters For the nine months ending ending September 30, % September 30, % ------------------- ------------------- 2005 2004 Change 2005 2004 Change ---- ---- ------ ---- ---- ------ OPERATING DATA: Interest income $ 8,604 6,482 32.74% $ 23,415 18,153 28.99% Interest expense 2,487 1,391 78.79% 6,457 3,953 63.34% Net interest income 6,117 5,091 20.15% 16,958 14,200 19.42% Provision for loan losses 101 176 -42.61% 211 352 -40.06% Net interest income after provision for loan losses 6,016 4,915 22.40% 16,747 13,848 20.93% Gains from sale of loans 320 879 -63.59% 984 2,281 -56.86% Other income 2,799 2,640 6.02% 8,174 7,617 7.31% Other expenses 5,529 5,961 -7.25% 16,370 17,608 -7.03% Income before income taxes 3,606 2,473 45.81% 9,535 6,138 55.34% Income tax expense 1,461 994 46.98% 3,286 2,475 32.77% Net income $ 2,145 1,479 45.03% $ 6,249 3,663 70.60% For the quarters ending For the nine months ending September 30, September 30, ----------------------- -------------------------- 2005 2004 2005 2004 ---- ---- ---- ---- KEY FINANCIAL RATIOS Performance Ratios: Return on average assets 1.39% 1.10% 1.42% 0.95% Return on average shareholders' equity 14.65% 10.51% 14.77% 8.82% Interest rate spread (tax equivalent basis) 3.87% 3.89% 3.83% 3.84% Net interest margin (tax equivalent basis) 4.32% 4.18% 4.22% 4.09% Average interest- earning assets to average interest- bearing liabilities 126.07% 125.35% 124.07% 121.43% Non-interest expense as a percent of average total assets 3.58% 4.39% 3.71% 4.55% Efficiency ratio 59.86% 68.94% 62.68% 73.06% Asset Quality Ratios: Nonaccrual and 90 days or more past due loans as a percent of total loans, net 0.22% 0.29% Nonperforming assets as a percent of total assets 0.19% 0.22% Allowance for loan losses as a percent of total loans receivable 1.04% 1.14% Net charge-offs to average outstanding loans 0.01% 0.01% 0.03% 0.04% For the nine months ending September Diluted EPS 30, 2005 Impact ------------- ------------ Reconcilation of Net Income to Net Income as Adjusted: Net income $6,249 $0.85 Adjustment: Tax benefit of ESOP dividend paid to participants (427) (0.06) ------------- ------------ Total adjustment (427) (0.06) ------------- ------------ Net income as adjusted $5,822 $0.79 ============= ============ *T