CAVB Cavalry Bancorp (MM)

Cavalry Bancorp, Inc. (the "Company") (Nasdaq NMS: CAVB) announced today fourth quarter and year-to-date financial results for its wholly-owned subsidiary Cavalry Banking (the "Bank") and the Company. FOURTH QUARTER 2005 HIGHLIGHTS: -- Strong Earnings Growth -- Net income after merger related charges of $1.1 million, or $0.15 per share diluted, compared to the prior year's net loss of $3.2 million or $(0.48) per share diluted. -- Annualized return on average assets after merger related charges of 0.68 percent for the fourth quarter compared to negative 2.28 percent for the same quarter last year. -- Annualized return on average shareholders' equity after merger related charges of 7.26 percent for the fourth quarter compared to negative 23.19 percent for the same quarter last year. -- Net interest margin of 4.55 percent for the fourth quarter compared to 4.14 percent for the same quarter last year. -- Strong balance sheet growth: -- Loans at December 31, 2005 of $505.8 million, up 17.49 percent from December 31, 2004 and 24.55 percent on an annualized basis from September 30, 2005. -- Deposits at December 31, 2005 of $572.8 million, up 13.09 percent from December 31, 2004 and 6.17 percent on an annualized basis from September 30, 2005. -- Superior credit quality: -- Net charge-offs to average loans of 0.05 percent for the fourth quarter of 2005. -- Nonperforming loans of 0.18 percent of total loans. In connection with the pending merger with Pinnacle Financial Partners, the Company incurred merger related expenses of $1.1 million (net of taxes) during the fourth quarter of 2005, reducing diluted earnings per share by $0.15 for the quarter ended December 31, 2005. Without these merger related charges, annualized return on average assets and return on average equity for the fourth quarter of 2005 would have been 1.37 percent and 14.73 percent, respectively. "We have spent much of the last two years repositioning the balance sheet and income statement of this company with the objective of becoming a truly high performing commercial bank. We are extremely pleased with the profitability and return ratios we are now achieving and how they compare to high performing peers," said Ed C. Loughry, Jr., Chairman and CEO. Total assets of the Company increased 10.31 percent from $578.7 million at December 31, 2004 to $638.3 million at December 31, 2005. Net loans receivable increased 17.49 percent from $430.5 million at December 31, 2004 to $505.8 million at December 31, 2005. Deposits increased 13.09 percent from $506.5 million at December 31, 2004 to $572.8 million at December 31, 2005. Net income increased from $429,000 or $0.06 per share diluted for the year ended December 31, 2004 to $7.3 million or $1.00 per share diluted for the year ended December 31, 2005. Return on average assets increased from 0.08 percent for the year ended December 31, 2004 to 1.22 percent for the year ended December 31, 2005. Return on average shareholders' equity increased from 0.77 percent for the year ended December 31, 2004 to 12.81 percent for the year ended December 31, 2005. Earnings for the year ended December 31, 2005 include a tax benefit of $427,000. This tax benefit resulted from the distribution of cash dividends to the participants of the Employee Stock Ownership Plan. Exclusive of the merger related expense of $1.1 million (net of taxes) and the tax benefit of $427,000 associated with the distribution of cash dividends to the participants of the Employee Stock Ownership Plan, return on average assets and return on average shareholders' equity for the year ending December 31, 2005 would have been 1.33 percent and 14.02 percent, respectively. Earnings for the year ended December 31, 2004 include a one-time charge associated with fully funding the Company's Employee Stock Ownership Plan of $4.4 million (net of taxes). Exclusive of this charge, return on average assets and return on average shareholders' equity for the year ending December 31, 2004 would have been 0.92 percent and 8.72 percent, respectively. "Loan demand during the fourth quarter was extremely strong reflecting the growth of the Rutherford county market and our associates' continued focus on serving our customers. We are also excited that our marketing pipelines indicate that strong loan growth should continue in the first quarter of 2006 as well. As we move toward the finalization of our merger with Pinnacle, we are very pleased by the growing momentum we experienced during the fourth quarter in terms of loan growth, margin expansion and operating efficiencies," said Bill Jones, Executive Vice President and Chief Administrative Officer. "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 and those risks identified in our Quarterly Report on Form 10-Q for the quarter ended September 30, 2005. 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 Investors and security holders may obtain free copies of our and Pinnacle's joint proxy statement/prospectus related to the proposed merger 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. To supplement the Company's consolidated financial statements presented in accordance with GAAP, the Company is disclosing non-GAAP net income and non-GAAP EPS, both of which are defined as non-GAAP financial measures by the SEC. The presentation of this non-GAAP financial information is not intended to be considered independently or as a substitute for the financial information prepared and presented in accordance with GAAP. Because non-GAAP net income and non-GAAP EPS are not measurements determined in accordance with GAAP and are susceptible to varying calculations, non-GAAP net income and non-GAAP EPS, as presented, may not be comparable to other similarly titled measures presented by other companies. The Company's management believes that these non-GAAP financial measures provide meaningful supplemental information regarding the performance of the Company's core business, excluding certain one-time expenditures that are not expected to occur again in future periods. These non-GAAP financial measures facilitate management's internal comparisons to the Company's historical performance as well as to our competitors' operating results. The Company included these non-GAAP financial measures to provide investors with the information management believes is necessary to more clearly assess the Company's performance for the periods presented. -0- *T Cavalry Bancorp, Inc. Consolidated Balance Sheets (Unaudited) (In thousands, except per share data) December 31, December 31, Assets 2005 2004 --------------------------------------------- ----------- ----------- Cash and cash equivalents $ 49,623 $ 63,135 Investment securities available-for-sale, at fair value 41,008 42,183 Loans held for sale, at estimated fair value 1,170 2,501 Loans receivable, net of allowances for loan losses of $5,247 at December 31, 2005 and $4,863 at December 31, 2004 505,834 430,526 Accrued interest receivable 2,725 1,985 Office properties and equipment, net 16,316 17,607 Required investments in stock of the Federal Home Loan Bank and Federal Reserve Bank, at cost 3,354 3,125 Foreclosed assets 54 16 Bank owned life insurance 12,139 11,604 Goodwill 1,772 1,772 Other assets 4,329 4,216 ----------- ----------- Total assets 638,324 578,670 =========== =========== Liabilities --------------------------------------------- Deposits: Non-interest-bearing $ 111,548 $ 81,719 Interest-bearing 461,272 424,815 ----------- ----------- 572,820 506,534 Advances from Federal Home Loan Bank of Cincinnati 2,780 2,835 Dividends payable - 11,332 Accrued expenses and other liabilities 4,181 4,136 ----------- ----------- Total liabilities 579,781 524,837 ----------- ----------- Shareholders' Equity --------------------------------------------- Preferred Stock, no par value Authorized - 250,000 shares; none issued or outstanding at December 31, 2005 and December 31, 2004 - - Common Stock, no par value Authorized- 49,750,000 shares; issued and outstanding 7,217,565 at December 31, 2005, and December 31, 2004 19,354 19,354 Retained earnings 39,766 34,598 Accumulated other comprehensive loss, net of tax (577) (119) ----------- ----------- Total shareholders' equity 58,543 53,833 ----------- ----------- Total Liabilities and Shareholders' Equity 638,324 578,670 --------------------------------------------- =========== =========== Cavalry Bancorp, Inc. Consolidated Statements of Operations (Unaudited) (In thousands, except per share data) Three Months Ended Year Ended December 31, December 31, ----------------------- ----------------------- 2005 2004 2005 2004 Interest income: Loans $ 8,551 $ 6,344 $ 29,632 $ 23,183 Investment securities: Taxable 381 337 1,296 1,315 Non-taxable 76 27 160 101 Other 482 207 1,817 469 ---------- ---------- ---------- ---------- Total interest income 9,490 6,915 32,905 25,068 ---------- ---------- ---------- ---------- Interest expense: Deposits 2,804 1,577 9,190 5,458 Borrowings 24 25 96 97 ---------- ---------- ---------- ---------- Total interest expense 2,828 1,602 9,286 5,555 ---------- ---------- ---------- ---------- Net interest income 6,662 5,313 23,619 19,513 Provision for loan losses 516 523 728 875 ---------- ---------- ---------- ---------- Net interest income after provision for loan losses 6,146 4,790 22,891 18,638 ---------- ---------- ---------- ---------- Non-interest income: Servicing income 55 47 219 186 Gain on sale of loans, net 259 492 1,243 2,773 Deposit servicing fees and charges 1,483 1,371 5,768 5,362 Trust service fees 373 265 1,193 1,097 Commissions and other non-banking fees 634 579 2,739 2,477 Other operating income 371 267 1,170 1,003 ---------- ---------- ---------- ---------- Total non-interest income 3,175 3,021 12,332 12,898 ---------- ---------- ---------- ---------- Non-interest expenses: Salaries and employee benefits 4,747 8,370 14,413 19,205 Occupancy expense 355 417 1,274 1,395 Supplies, communications, and other office expenses 254 239 948 946 Advertising expense 90 175 379 578 Professional fees 590 378 1,121 1,033 Equipment and service bureau expense 1,261 956 4,028 3,507 Loss on sale of investment securities, net - 19 - 22 Other operating expense 501 431 2,004 1,887 ---------- ---------- ---------- ---------- Total non-interest expense 7,798 10,985 24,167 28,573 ---------- ---------- ---------- ---------- Income (loss) before income tax expense 1,523 (3,174) 11,056 2,963 Income tax expense 438 59 3,723 2,534 ---------- ---------- ---------- ---------- Net income (loss) $ 1,085 $ (3,233) $ 7,333 $ 429 ========== ========== ========== ========== Basic Earnings (Loss) Per Share $ 0.15 $ (0.48) $ 1.02 $ 0.07 Diluted Earnings (Loss) Per Share $ 0.15 $ (0.48) $ 1.00 $ 0.06 Weighted average shares outstanding - Basic 7,217,565 6,754,189 7,217,565 6,536,801 Weighted average shares outstanding - Diluted 7,331,259 6,754,189 7,328,744 6,779,184 Cavalry Bancorp, Inc. Consolidated Financial Highlights (Unaudited) (Dollars in thousands) December December 31, 31, % 2005 2004 Change -------- ------- ------- FINANCIAL CONDITION DATA: Total assets $638,324 $578,670 10.31% Loans receivable, net 505,834 430,526 17.49% Loans held-for-sale 1,170 2,501 -53.22% Investment securities available-for-sale 41,008 42,183 -2.79% Cash and cash equivalents 49,623 63,135 -21.40% Deposits 572,820 506,534 13.09% Advances from Federal Home Loan Bank 2,780 2,835 -1.94% Shareholders' Equity 58,543 53,833 8.75% Asset Quality Ratios: Nonaccrual and 90 days or more past due loans as a percent of total loans, net 0.18% 0.17% Nonperforming assets as a percent of total assets 0.15% 0.13% Allowance for loan losses as a percent of total loans receivable 1.03% 1.12% For the quarters For the year ending ending December 31, % December 31, % ------------------ ---------------- 2005 2004 Change 2005 2004 Change -------- ------- ------- ------- ------- -------- OPERATING DATA: Interest income $ 9,490 $ 6,915 37.24% $32,905 $25,068 31.26% Interest expense 2,828 1,602 76.53% 9,286 5,555 67.16% -------- --------------- ------- ---------------- Net interest income 6,662 5,313 25.39% 23,619 19,513 21.04% Provision for loan losses 516 523 -1.34% 728 875 -16.80% -------- --------------- ------- ---------------- Net interest income after provision for loan losses 6,146 4,790 28.31% 22,891 18,638 22.82% Gain on sale of loans, net 259 492 -47.36% 1,243 2,773 -55.17% Other income 2,916 2,529 15.30% 11,089 10,125 9.52% Other expenses 7,798 10,985 -29.01% 24,167 28,573 -15.42% -------- --------------- ------- ---------------- Income (loss) before income taxes 1,523 (3,174) nm 11,056 2,963 273.14% Income tax expense 438 59 642.37% 3,723 2,534 46.92% -------- --------------- ------- ---------------- Net income (loss) $ 1,085 $ (3,233) nm $ 7,333 $ 429 1,609.32% ======== =============== ======= ================ Diluted net income (loss) per share $ 0.15 $ (0.48) nm $ 1.00 $ 0.06 1,566.67% ======== =============== ======= ================ For the quarters For the year ending ending December 31, % December 31, % ------------------ ---------------- 2005 2004 Change 2005 2004 Change -------- --------------- ------- ---------------- Reconcilation of GAAP Net Income (Loss) to Net Income as Adjusted: Net income (loss) $ 1,085 $ (3,233) $ 7,333 $ 429 Adjustments (net of income tax effect): Merger related charges 355 - 355 - Accelerated vesting and payout of SERP 763 763 ESOP related charges and credits - 4,410 (427) 4,410 -------- -------- ------- ------- Total adjustments 1,118 4,410 691 4,410 -------- -------- ------- ------- Net income as adjusted $ 2,203 $ 1,177 87.17% $ 8,024 $ 4,839 65.82% ======== =============== ======= ================ Reconcilation of GAAP Diluted Net Income (Loss) Per Share to Diluted Net Income Per Share as Adjusted (1): Diluted net income (loss) per share $ 0.15 $ (0.48) $ 1.00 $ 0.06 Adjustments (net of income tax effect): Merger related charges 0.05 - 0.05 - Accelerated vesting and payout of SERP 0.10 0.10 ESOP related charges and credits - 0.65 (0.06) 0.65 -------- -------- ------- ------- Total adjustments 0.15 0.65 0.09 0.65 -------- -------- ------- ------- Diluted net income (loss) per share as adjusted $ 0.30 $ 0.17 76.47% $ 1.09 $ 0.71 53.52% ======== =============== ======= ================ Note (1): Net income as adjusted for 2005 excludes the impact of charges incurred due to the pending merger with Pinnacle Financial Partners and excludes the tax benefit received as a result of the distribution of cash dividends to participants of the Company's ESOP. Charges and credits associated with the Company's ESOP in 2004 were incurred as a result of the Company's decision to deleverage the ESOP in 2004. Management believes adjusting these matters from operating earnings is a more meaningful presentation of the Company's results. KEY FINANCIAL RATIOS Performance Ratios: Return on average assets 0.68% -2.28% 1.22% 0.08% Return on average shareholders' equity 7.26% -23.19% 12.81% 0.77% Interest rate spread (tax equivalent basis) 4.04% 3.82% 3.89% 3.84% Net interest margin (tax equivalent basis) 4.55% 4.14% 4.31% 4.10% Non-interest expense as a percent of average total assets 4.86% 7.76% 4.02% 5.40% Efficiency ratio 79.27% 131.81% 67.22% 88.16% Net charge-offs to average outstanding loans 0.05% 0.09% 0.08% 0.14% Performance Ratios, as adjusted (2): Return on average assets 1.37% 0.83% 1.33% 0.92% Return on average shareholders' equity 14.73% 8.44% 14.02% 8.72% Interest rate spread (tax equivalent basis) 4.04% 3.82% 3.89% 3.84% Net interest margin (tax equivalent basis) 4.55% 4.14% 4.31% 4.10% Non-interest expense as a percent of average total assets 3.73% 4.13% 3.72% 4.43% Efficiency ratio 60.85% 70.09% 62.18% 72.29% Net charge-offs to average outstanding loans 0.05% 0.09% 0.08% 0.14% Note (2): The above Performance Ratios as adjusted for 2005 excludes the impact of charges incurred due to the pending merger with Pinnacle Financial Partners and excludes the tax benefit received as a result of the distribution of cash dividends to participants of the Company's ESOP. Charges and credits associated with the Company's ESOP in 2004 were incurred as a result of the Company's decision to deleverage the ESOP in 2004. Management believes adjusting these matters from operating earnings is a more meaningful presentation of the Company's results. *T