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
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