Slide 1: Second Quarter 2016 Investor Call
Second Quarter 2016 Investor Call M. Terry Turner, President and CEO Harold R. Carpenter, EVP and CFO July 20, 2016
Slide 2: Safe Harbor Statements: Forward Looking Statements
Safe Harbor Statements Forward Looking Statements This presentation includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including those identified by the words “may,” “will,” “should,” “could,” “anticipate,” “believe,” “continue,” “estimate
Slide 3: Safe Harbor Statements: Non-GAAP Financial Matters
Safe Harbor Statements Non-GAAP Financial Matters This presentation also contains certain non-GAAP financial measures, including, without limitation, revenues, net income, earnings per diluted share, efficiency ratio, noninterest expense and the ratio of noninterest expense to average assets and non
Slide 4: 2Q16 Summary GAAP Results
2Q16 Summary GAAP Results Execution of fundamentals fueled exceptional growth in key valuation drivers Earnings Growth Balance Sheet Growth Total Deposits (millions) $7,293 $4,994 $4,652 $4,097 NCOs Asset Quality 0.37% 0.35% 0.16% 0.08%
Slide 5: 2Q16 Summary Non-GAAP Results
2Q16 Summary Non-GAAP Results Execution of fundamentals fueled exceptional growth in key valuation drivers Earnings Growth Up 51.2% yr/yr Up 14.1% yr/yr Balance Sheet Growth Up 46.8% yr/yr Up 43.0% yr/yr Up 18.2% yr/yr NCOs Asset Quality 0.37% 0.35% 0.16% 0.08% *: excluding tax effected merger relat
Slide 6: 2Q16 Summary Results
2Q16 Summary Results Previously outlined growth initiatives are moving forward 1. Aggressive hiring ahead of schedule – 29 revenue producers in 1H16, compared to 36 all of last year. 2. CapitalMark and Magna mergers – Highly successful integration completed. Synergy cases fully deployed. 3. Avenue m
Slide 7: Steady growth in total revenues and revenues per share
Loan, Deposit and Fee Growth Yield Operating Leverage Steady growth in both total revenues and revenues per share $120 $3.00 $2.57 $100 $2.50 Revenues per diluted WAVG share Total Revenues $80 $2.00 (000's) $60 $1.31 $1.50 $40 $1.00 $20 $0.50 $- $- Fee income NII Total revenue per share 7
Slide 8: Linked quarter loan volume growth remains strong
Loan, Deposit and Fee Growth Yield Operating Leverage Linked quarter loan volume growth remains strong 8
Slide 9: Annualized year-to-date growth in average deposits is 9.0%
Loan, Deposit and Fee Growth Yield Operating Leverage Annualized year-to-date growth in average deposits is 9.0% 9
Slide 10: Fee businesses produce another solid quarter
Loan, Deposit and Fee Growth Yield Operating Leverage Fee businesses produce another solid quarter 2Q16 1Q16 4Q15 3Q15 2Q15 Service charges $3,430 $3,443 $3,500 $3,258 $3,076 Investment services 2,500 2,346 2,787 2,526 2,399 Insurance commissions 1,193 1,705 1,103 1,103 1,106 Gain on mortgage loans
Slide 11: Operating leverage improves quarter over quarter
Loan, Deposit and Fee Growth Yield Operating Leverage Operating leverage improves quarter over quarter 2Q16 1Q16 4Q15 3Q15 2Q15 Salaries and benefits $34,254 $32,517 $30,878 $27,746 $23,775 Equipment and occupancy 8,312 8,130 8,385 6,933 5,878 Other real estate owned 223 112 99 (686) (115) Marketing
Slide 12: Pinnacle has traditionally targeted four attractive urban markets
Strategic Outlook Pinnacle has traditionally targeted four attractive urban markets Memphis Nashville (1) Chattanooga/ Knoxville Cleveland Loans – 2Q16 $650.8 mm $ 5,492 mm $730.7 mm $1,188.9 mm Deposits – 2Q16 $440.1 mm $ 6,434 mm $585.5 mm $871.7 mm Pro forma deposit 1.7% - 11th 11.0% - 4th 6.6% -
Slide 13: PNFP has built a high growth, high profit model
Strategic Outlook PNFP has built a high growth, high profit model Net Chargeoff Ratio 0.45% 0.40% 0.35% 0.37% 0.35% 0.30% 0.26% 0.25% 0.20% 0.16% 0.15% 0.08% 0.10% 0.05% 0.00% (1) - Calculation excludes net gains and losses on the sale of investment securities and in the second quarter of 2013 noncr
Slide 14: Consistent execution of growth tactics yields outsized growth
Strategic Outlook Consistent execution of growth tactics yields outsized growth • Hiring revenue producers at record pace in 1H16 Traditional • Recruiting pipelines remain robust for remainder of 2016 Tactics • Double digit organic balance sheet and core fee growth rates • Double digit EPS growth ra
Slide 15: Pinnacle's focus remains sustainable growth in value
Strategic Outlook Pinnacle’s focus remains sustainable growth in value 1. Competitive distinction among bankers and clients 2. Double digit organic asset growth 3. 1.20 – 1.40% ROA Target, 15% - 16% ROTCE Target, excluding merger-related charges 4. Double digit EPS growth rate 5. Top quartile ROTCE
Slide 16: Q&A – Second Quarter 2016 Investor Call
Q&A – Second Quarter 2016 Investor Call
Slide 17: Supplemental Information
Supplemental Information Second Quarter 2016 Investor Call
Slide 18: Supplemental Information
Supplemental Information Chart • Balance Sheet 19 • Asset Quality 28 • Income Statement 32 • Avenue Financial Holdings, Inc. 38 Financial Trends (2012 – 2Q16) • Pinnacle Financial Partners profile 42 • Economic and Market Conditions 48 18
Slide 19: Supplemental Information: Balance Sheet
Supplemental Information Balance Sheet 19
Slide 20: Loan portfolio is well diversified
Balance Sheet Loan portfolio is well diversified Amts. %’s(*) Amts. %’s(*) Amts. %’s(*) Amts. %’s(*) 2Q16 2Q16 1Q16 1Q16 2Q15 2Q15 2Q14 2Q14 C&D and Land $816.7 11.5% $764.1 11.2% $372.0 7.7% $292.9 6.8% Consumer RE 1,068.6 15.1% 1,042.3 15.3% 740.6 15.3% 698.5 16.2% CRE – Owner Occ. 1,120.1 15.8% 1
Slide 21: Construction portfolio reflects quality growth
Balance Sheet Construction portfolio reflects quality growth Amts. %’s(*) Amts. %’s(*) Amts. %’s(*) Amts. %’s(*) 2Q16 2Q16 1Q16 1Q16 2Q15 2Q15 2Q14 2Q14 Residential – Spec $128.9 1.8% $120.9 1.9% $48.4 1.0% $35.6 0.8% Residential – Custom 92.6 1.3% 97.1 1.4% 44.9 0.9% 36.2 0.8% Residential – Condo 1
Slide 22: The C&I loan portfolio is highly diversified
Balance Sheet The C&I loan portfolio is highly diversified NAICS Sector Description 2Q16 1Q16 2Q15 Accommodation and Food Services 3.91% 3.93% 5.08% Admin. and Support and Waste Mgmt & Remediation 2.83% 2.57% 3.34% Agriculture, Forestry, Fishing and Hunting 0.11% 0.16% 0.02% Arts, Entertainment, and
Slide 23: PNFP remains focused on relationship funding
Balance Sheet PNFP remains focused on relationship funding 6/30/2016 Percent 6/30/2015 Percent Core Funding: Non-interest bearing deposits 2,013,847 24.03% 1,473,086 26.14% Interest-bearing deposits 1,284,593 15.33% 1,051,908 18.67% Money Market accounts 2,843,895 33.94% 1,784,004 31.66% Time deposi
Slide 24: Unfunded line commitments hold potential for significant loan growth
Balance Sheet Unfunded line commitments hold potential for significant loan growth Note: Excludes HELOCS and credit cards 24
Slide 25: The securities book is maintained at a minimal level
Balance Sheet The securities book is maintained at a minimal level 25
Slide 26: PNFP maintains a conservative bond portfolio
Balance Sheet PNFP maintains a conservative bond portfolio Portfolio: June 30, 2016 Total Investments $1.138 billion Unrealized Gain (Loss) $ 21.1 million QTD Purchases $ 164.0 million QTD Sales $ 0.00 million Duration Avg Yield – TE 2Q16 2.4% 2.5% 1Q16 2.7% 2.6% 4Q15 3.0% 2.5% As of 3Q15 2.8% 2.6%
Slide 27: The municipal portfolio contains minimal risk
Balance Sheet The municipal portfolio contains minimal risk Municipal Bond Portfolio Statistics Muni Allocation % 2Q16 2Q15 Weighted Average Life 3.4 years 3.6 years Tax equivalent yield 4.57% 4.63% 20% FMV as % of Cost 104.8% 104.7% 80% Location # of Issuances Market Value % Tennessee 70 $38,266 19
Slide 28: Supplemental Information: Asset Quality
Supplemental Information Asset Quality 28
Slide 29: Past due loans remain very low
Asset Quality Past due loans remain very low June 30, As a % of Mar. 31, As a % of June 30, As a % 2016 total 2016 total 2015 of total (000’s) loans loans loans Past Due Loans (*) Nonaccrual loans** $9,689 0.14% $9,592 0.14% $ 5,991 0.12% Accruing loans 23,731 0.33% 22,064 0.32% 18,117 0.38% Total p
Slide 30: NPLs and loans >90 days past due remain very low
Asset Quality NPLs and loans >90 days past due & accruing remain very low NPLs Expressed as a % of Total Loans within each Category PNFP NPLs and >90 days June 30, As a % of Mar. 31, As a % of June 30, As a % of (000’s) 2016 total loans 2016 total loans 2015 total loans Const. and land development $
Slide 31: Classified assets remain low
Asset Quality Classified assets remain low (in thousands) Balances Balances Balances June 30, 2016 Mar. 31, 2016 Dec. 31, 2015 Classified loans and ORE: - Substandard commercial loans $132,579 $155,125 $116,088 - Doubtful commercial loans 87 - 18 - Other impaired loans 11,398 17,639 19,402 - 90 days
Slide 32: Supplemental Information: Income Statement
Supplemental Information Income Statement 32
Slide 33: Mortgage volumes experience growth in purchase money transactions
Income Statement Mortgage volumes experience growth in “purchase money” transactions 33
Slide 34: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non-GAAP measures 2Q16 1Q16 4Q15 3Q15 2Q15 Net interest income $75,044 $73,902 $71,475 $62,059 $51,831 Total non-interest income $32,713 $25,856 $26,608 $21,410 $20,019 Less: Securities (gains) losses - - 10 - (556) Non-interest income, excluding the impact of net
Slide 35: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non-GAAP measures 2Q16 1Q16 4Q15 3Q15 2Q15 Total non-interest income $32,713 $25,856 $26,608 $21,410 $20,019 Less: Securities (gains) losses - - 10 - (556) Non-interest income, excluding the impact of net gains and losses on sale of investment securities $32,713 $2
Slide 36: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non-GAAP measures 2Q16 1Q16 4Q15 3Q15 2Q15 Net income $30,787 $27,965 $26,854 $24,149 $22,664 Merger-related charges 980 1,829 2,489 2,249 59 Tax effect on merger-related charges (385) (718) (977) (882) (23) Net income less merger-related charges $31,382 $29,076 $2
Slide 37: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non-GAAP measures 2Q16 1Q16 4Q15 3Q15 2Q15 Net income $30,787 $27,965 $26,854 $24,149 Merger-related charges 980 1,829 2,489 2,249 Tax effect on merger-related charges (385) (718) (977) (882) Net income less merger-related charges $31,382 $29,076 $28,366 $25,516 Av
Slide 38: Avenue Financial Holdings, Inc. Financial Trends
Supplemental Information Avenue Financial Holdings, Inc. Financial Trends (2012 through 2Q16) 38
Slide 39: Avenue Financial Holdings, Inc. Balance Sheet
Avenue Financial Holdings, Inc. 2012 FY 2013 FY 2014 FY 2015 FY 1Q 2016 2Q 2016 Balance Sheet ($000) Gross Loans Held for Investment $ 455,979 $ 573,430 $ 693,908 $ 845,821 $ 957,517 $ 970,659 Loan Loss Reserve (6,695) (7,204) (8,518) (10,061) (10,889) (11,126) Loans Held for Sale 11,632 4,986 27,23
Slide 40: Avenue Financial Holdings, Inc. Income Statement
Avenue Financial Holdings, Inc. 2012 FY 2013 FY 2014 FY 2015 FY 1Q 2016 2Q 2016 Income Statement ($000) Net Interest Income $ 17,692 $ 23,196 $ 28,957 $ 32,679 $ 9,011 $ 9,041 Provision for Loan Losses 1,623 1,593 1,643 2,029 774 234 Total Noninterest Income 4,714 4,533 4,653 6,321 1,681 1,122 Reali
Slide 41: Avenue Financial Holdings, Inc. Ratios
Avenue Financial Holdings, Inc. 2012 FY 2013 FY 2014 FY 2015 FY 1Q 2016 2Q 2016 Balance Sheet Ratios (%) Loans/ Deposits 77.17% 81.25% 86.40% 87.23% 99.07% 100.55% Securities/ Assets 27.41% 29.47% 22.57% 19.29% 14.81% 13.10% Total Equity/ Total Assets 11.67% 9.19% 9.11% 8.10% 8.17% 8.38% Tang Common
Slide 42: Supplemental Information: Pinnacle Financial Partners Profile
Supplemental Information Pinnacle Financial Partners Profile 42
Slide 43: PNFP Profile
PNFP Profile Recently completed acquisitions will position firm in four great banking markets Headquarters: Nashville, TN Offices: 31 in 8 Middle-TN counties 7 in 5 East-TN counties Founded: 2000 5 in West-TN Total assets: $ 9.736 Billion Avg. daily trading volume **: 250,131 shares (6/30/16) % Inst
Slide 44: PNFP has an extraordinarily experienced team of entrepreneurs
PNFP Profile PNFP has an extraordinarily experienced team of entrepreneurs Name Title Age Years in Years at Banking Pinnacle Industry M. Terry Turner President and Chief Executive Officer 61 38 16 Robert A. McCabe, Jr. Chairman of the Board 65 39 16 Hugh M. Queener Chief Administrative Officer 60 41
Slide 45: PNFP compares favorably to high performing peers
PNFP Profile PNFP compares favorably to high performing peers • Pinnacle Financial Partners (PNFP) • MB Financial Inc. (MBFI) • Bancorp South (BXS) • Private Bank (PVTB) • Bank of the Ozarks (OZRK) • Renasant Corporation (RNST) • Columbia Banking System, Inc. • South State Corporation (SSB) (COLB) •
Slide 46: PNFP has a track record for best-in-market share movement
PNFP Profile PNFP has a track record for “best-in-market” share movement Nashville-Davidson-Rutherford MSA Knoxville MSA Top 10 Holding Market Market % Top 10 Holding Market Market Change Market Company Share Share Change Market Company Share Share in Share 6/30/15 6/30/00 in Share 6/30/15 6/30/07 S
Slide 47: PNFP has a track record for best-in-market share movement
PNFP Profile PNFP has a track record for “best-in-market” share movement Chattanooga TN-GA MSA Memphis, TN-MS-AR MSA Top 10 Holding Market Market % Top 11 Holding Market Market % Market Company Share Share Change Market Company Share Share Change Share 6/30/15 6/30/14 in Share Share 6/30/15 6/30/14
Slide 48: Supplemental Information: Economic & Market Conditions
Supplemental Information Economic & Market Conditions 48
Slide 49: PNFP operates in advantaged markets
PNFP operates in advantaged markets Tennessee Market Demographics 2016 -2021E 2016 -2021E Current Population Population Growth Current Median Median HHI Growth Top 20 MSAs Total Deposits ($Ms) (000s) (%) HHI ($) (%) Nashville-Davidson-Murfreesboro-Franklin TN 48,022 1,840 6.87% 55,922 9.41% Memphis
Slide 50: PNFP operates in advantaged markets: Tennessee
PNFP operates in advantaged markets TENNESSEE • Tennessee received Area Development’s Gold Shovel Award for second consecutive Area Development year. Award recognizes achievements in economic impact and job creation. • Tennessee ranked No. 3 in the first annual Prosperity Cup, which is based on the
Slide 51: PNFP operates in advantaged markets: Memphis, Chattanooga
PNFP operates in advantaged markets MEMPHIS Memphis offers a diverse, metropolitan workforce. Over the past three decades, the presence of companies like FedEx and the region’s superior distribution infrastructure have earned Memphis the title, “America’s Distribution Center.” • Memphis sees stronge
Slide 52: Job growth occurring in all four markets
PNFP operates in advantaged markets Job growth occurring in all four markets Source: BERC – Middle Tennessee State University & Bureau of Labor Statistics, Greater Nashville Area Realtors 52
Slide 53: Rapid job growth leads to rapid real estate absorption
PNFP operates in advantaged markets Rapid job growth leads to rapid real estate absorption Home Sales Nashville Knoxville Memphis Chattanooga % Change % Change % Change % Change 2Q16 2Q16 2Q16 2Q16 from PY from PY from PY from PY Avg. Qtrly. Median $256,349 9.9% $168,233 5.5% $150,000 2.4% $162,217
Slide 54: Nashville's commercial vacancy rates indicate a healthy market
PNFP Operates in Advantaged Markets Nashville’s commercial vacancy rates indicate a healthy market CRE Vacancy Rates Nashville Knoxville Chattanooga Memphis National 2Q16 % Change 2Q16 % Change 2Q16 % Change 2Q16 % Change 2Q16 % Change from PY from PY from PY from PY from PY Industrial / 4.2% (32.4%
Slide 55: Second Quarter 2016 Investor Call
Second Quarter 2016 Investor Call M. Terry Turner, President and CEO Harold R. Carpenter, EVP and CFO July 20, 2016