Pinnacle Financial Partners, Inc. · NYSE:PNFP
Pinnacle Financial Partners — Q4 2017 Earnings Presentation
34 slides from Pinnacle Financial Partners's earnings presentation, Jan 17, 2018
Slide 1: Fourth Quarter 2017 Investor Call
Fourth Quarter 2017 Investor Call M. Terry Turner, President and CEO Harold R. Carpenter, EVP and CFO January 17, 2018
Slide 2: Safe Harbor Statements
Safe Harbor Statements Forward Looking Statements All statements, other than statements of historical fact, included in this presentation are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act and Section 21E of th
Slide 3: Safe Harbor Statements: Non-GAAP Financial Matters
Safe Harbor Statements Non-GAAP Financial Matters This presentation contains certain non-GAAP financial measures, including, without limitation, earnings per diluted share, efficiency ratio, core net interest margin, noninterest expense and the ratio of noninterest expense to average assets and noni
Slide 4: 4Q17 Summary Results – GAAP Measures
4Q17 Summary Results – GAAP Measures Total Revenues 211,219 FD EPS ROTCE Earnings Growth $0.78 14.97% 15.49% 12.81% 13.52% $0.65 $120,156 $0.53 $98,083 $0.44 5.76% $57,456 $64,697 $0.35 Balance Sheet Growth Total Loans Total Deposits Book Value per Share (millions) $15,633 (millions) $16,452 $47.70
Slide 5: 4Q17 Summary Results – Non-GAAP Measures
4Q17 Summary Results – Non-GAAP Measures Total Revenues* FD EPS* $0.97 ROTCE* $219,484 16.34% 16.11% Earnings Growth $0.83 15.81% $0.69 13.52% $120,156 12.79% $98,083 $0.53 $57,456 $64,697 $0.44 Total Loans Total Core Deposits Tangible Book Value per Share Balance Sheet Growth $15,633 $14,257 $23.71
Slide 6: 4Q17 Summary Results
4Q17 Summary Results Pinnacle sets and delivers against lofty strategic targets Pinnacle Targeted (1) GAAP Non-GAAP Operating Range For the fourth quarter of 2017 Return on Average Assets 1.30% to 1.50% 0.48% 1.36% Net Interest Margin 3.60% to 3.80% 3.76% 3.76% Noninterest Income to Avg. Assets 0.90
Slide 7: 4Q17 Summary Results
4Q17 Summary Results PNFP continued rapid growth and hiring while completing the BNC integration 1. Pinnacle / BNC merger update • Jan. 22 – Announcement of transaction • June 16 – Merger close • Nov. 30 – Technology conversion • First quarter 2018 – Synergy case fully deployed 2. Aggressive hiring
Slide 8: Loan and Deposit Growth are Keys to Earnings Growth
Loan and Deposit Growth are Keys to Earnings Growth Strong performance continues in both total revenues and revenues per share* $250 $3.50 Revenues per diluted share* $200 $3.00 $2.83 Total Revenues* $150 $2.50 (000's) $100 $2.00 $50 $1.50 $1.31 $- $1.00 Fee income NII Total revenue per share *: Exc
Slide 9: Average Loans
Average Loans (millions) $- $12,000 $16,000 $4,000 $8,000 $3,191 4.88% $3,212 $3,207 $3,262 $3,280 $3,403 $3,489 $3,580 $3,682 $3,845 $3,932 Avg. Loans $3,981 $4,130 $4,251 $4,358 $4,436 $4,625 $4,737 Loan Yields $5,690 $6,458 $6,742 Linked-quarter loan growth remains strong $6,998 $8,233 $8,357 $8,
Slide 10: Cost of Deposits and Average Deposits
Loan and Deposit Growth are Keys to Earnings Growth Average deposit balances continued strong organic growth $18,000 1.80% $16,000 1.60% $16,092 $15,828 $14,000 1.40% Avg. Deposits 1.25% Cost of Deposits $12,000 1.20% (millions) 1.01% $10,000 1.00% $10,394 $9,099 $8,000 0.80% $8,791 $8,454 0.53% $7,
Slide 11: Fee Businesses also Contribute to Earnings Growth
Fee Businesses also Contribute to Earnings Growth Fee businesses produce another strong quarter 4Q17 3Q17 2Q17 1Q17 4Q16 Service charges $6,078 $5,921 $4,179 $3,856 $3,850 Investment services 4,723 3,660 3,110 2,822 3,320 Insurance commissions 1,961 2,124 1,461 1,859 1,178 Gain on mortgage loans sol
Slide 12: PNFP Focuses on Strategic Expense Management
PNFP Focuses on Strategic Expense Management 4Q17 core expense results reflect enviable operating leverage 4Q17 3Q17 2Q17 1Q17 4Q16 Salaries and benefits $ 63,347 $64,288 $43,676 $38,352 $37,994 Equipment and occupancy 17,114 16,590 10,713 9,675 9,228 Other real estate owned 252 512 63 252 44 Market
Slide 13: Extraordinary Growth Potential on the Path Forward
Extraordinary Growth Potential on the Path Forward Net income Effective before taxes Tax Rate Tax Expense Net income FDEPS 2017 results, as reported $ 297,986 41.62% $ 124,007 $ 173,979 $ 2.70 Items impacting 2017 results Merger expense $ 31,843 $ 12,492 $ 19,351 Investment securities losses $ 8,265
Slide 14: Extraordinary Growth Potential on the Path Forward
Extraordinary Growth Potential on the Path Forward The BNC integration overall is on-track and highly accretive • The system integration has been completed • Cultural integration is well underway • Hiring thrust is strong and building • Potential revenue synergies are meaningful • Synergy case is la
Slide 15: Extraordinary Growth Potential on the Path Forward
Extraordinary Growth Potential on the Path Forward Recent market extensions provide roadmap for Carolinas & Virginia Market At 12/31/17 At 12/31/16 YOY Growth At 12/31/15 YOY Growth Loans (000’s) Memphis $1,101 $736 49.5% $458 60.7% Chattanooga $1,079 $800 34.9% $708 13.0% Core Deposits (000’s) Memp
Slide 16: Long-Term Shareholder Value
Long-Term Shareholder Value PNFP is focused on rapid growth across the Southeast 1. Continuation of current high growth, high profit plan 2. Explore expansion to other high growth southeastern markets 16
Slide 17: Q&A – Fourth Quarter 2017 Investor Call
Q&A – Fourth Quarter 2017 Investor Call
Slide 18: Supplemental Information
Supplemental Information Chart • Balance Sheet 19 • Asset Quality 26 • Income Statement 27 18
Slide 19: Balance Sheet: Loan portfolio is well diversified
Balance Sheet Loan portfolio is well diversified Amts. %’s(*) Amts. %’s(*) Amts. %’s(*) Amts. %’s(*) 4Q17 4Q17 3Q17 3Q17 4Q16 4Q16 4Q15 4Q15 C&D and Land $1,908.3 12.2% $1,939.8 12.7% $912.7 10.8% $747.7 11.4% Consumer RE 2,561.2 16.4% 2,541.1 16.7% 1,185.9 14.0% 1,046.5 16.0% CRE – Owner Occ. 2,460
Slide 20: Balance Sheet: Construction portfolio reflects discipline
Balance Sheet Construction portfolio reflects discipline Amounts %’s(*) Amounts %’s(*) Amts. %’s(*) Amts. %’s(*) 4Q17 4Q17 3Q17 3Q17 4Q16 4Q16 4Q15 4Q15 Residential – Spec $278.7 1.8% $253.3 1.7% $195.7 2.3% $126.1 1.9% Residential – Custom 95.9 0.6% 157.4 1.0% 81.9 1.0% 54.1 0.8% Residential – Cond
Slide 21: Balance Sheet: CRE loan portfolio within 100/300 guidelines
Balance Sheet The CRE loan portfolio remains within the 100/300 guidelines Description 12/31/2017 9/30/2017 6/30/2017 3/31/17 12/31/16 Loans secured by real estate: Construction, land development, and other loans: 1-4 family residential construction loans $445,077 $423,988 $408,035 $303,219 $282,738
Slide 22: Balance Sheet: Relationship funding
Balance Sheet PNFP remains focused on relationship funding 12/31/2017 Percent 9/30/2017 Percent 12/31/2016 Percent Core Funding: Non-interest bearing deposits $4,381,386 23.85% $4,099,086 22.76% $2,399,191 24.99% Interest-bearing deposits 2,756,506 15.00% 2,473,902 13.74% 1,737,996 18.10% Money Mark
Slide 23: Balance Sheet: Securities book yields increase in 4Q17
Balance Sheet The securities book yields increase in 4Q17 4.00% 40.00% 3.58% 3.50% 35.00% 3.00% 30.00% 2.50% 2.68% 25.00% 20.75% 2.00% 20.00% 1.50% 15.00% 1.00% 13.00% 10.00% 0.50% 5.00% 0.00% 0.00% Bond Yields % of Avg. Assets 23
Slide 24: Balance Sheet: Conservative bond portfolio
Balance Sheet Conservative bond portfolio Portfolio: December 31, 2017 1.2% 2.8% Total Investments $2.536 billion 30.9% Unrealized Gain (Loss) $ (1.8) million QTD Purchases $ 31.9 million 44.0% QTD Sales $ 308.9million 7.1% 14.0% Quarter Duration Avg. Yield- TE 4Q17 3.5% 2.7% Agency Corporates MBS 3
Slide 25: Asset Quality
Asset Quality Asset quality remains very sound (000’s) Dec. 31, 2017 As a % of total loans Sept. 30, 2017 As a % of total loans Dec. 31, 2016 As a % of total loans Past Due Loans (*) Nonaccrual loans $11,691 0.07% $20,210 0.13% $10,873 0.13% Accruing loans 60,159 0.38% 39,081 0.26% 22,331 0.26% Tota
Slide 26: Income Statement: Core net interest margin growth
Income Statement Core net interest margin growth key to achieving profitability targets 4.00% $200,000 3.87% 3.76% 3.72% 3.70% 3.68% 3.64% 3.60% 3.45% 3.46% 3.44% 3.41% 3.33% 3.00% $150,000 Net Interest Margin Remaining Loan Mark 2.00% $100,000 1.00% $50,000 0.00% $0 Reported NIM NIM excl. PAA loan
Slide 27: Income Statement: Mortgage volumes
Income Statement Mortgage volumes continue to be strong 4Q17 325,000 6.00% 275,000 5.00% 225,000 4.00% 175,000 3.00% 125,000 2.00% 75,000 1.00% 25,000 0.00% Purchase Money Refinance Gross fees as a % of loans originated 27
Slide 28: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non-GAAP measures 4Q17 3Q17 2Q17 1Q17 4Q16 Net interest income $174,731 $173,182 $106,627 $88,767 $89,413 Total noninterest income 36,488 42,977 35,057 30,382 30,743 Total revenues $211,219 $216,159 $141,684 $119,149 $120,156 Less: Investment (gains) losses on sale
Slide 29: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non-GAAP measures 4Q17 3Q17 2Q17 1Q17 4Q16 Net income $26,798 $64,442 $43,086 $39,653 $36,097 Merger-related charges 19,103 8,847 3,221 672 3,264 Investment (gains) losses on sales of securities 8,265 - - - (395) Tax effect on merger-related charges and investment
Slide 30: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non-GAAP measures 4Q17 3Q17 2Q17 1Q17 4Q16 Net income $26,798 $64,442 $43,086 $39,653 $36,097 Merger-related charges 19,103 8,847 3,221 672 3,264 Investment (gains) losses on sales of securities 8,265 - - - (395) Tax effect on merger-related charges and investment
Slide 31: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non-GAAP measures 4Q17 3Q17 2Q17 1Q17 4Q16 Net income $26,798 $64,442 $43,086 $39,653 $36,097 Merger-related charges 19,103 8,847 3,221 672 3,264 Investment (gains) losses on sales of securities 8,265 - - - (395) Tax effect on merger-related charges and investment
Slide 32: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non-GAAP measures 4Q17 3Q17 2Q17 1Q17 4Q16 Revenue per diluted share $2.73 $2.80 $2.64 $2.46 $2.61 Adjustment due to investment (gains) losses on sales of securities, net 0.10 - - - (0.01) Revenue per diluted share (excluding investment (gains) losses on sales of s
Slide 33: Selected Economic Data
Selected Economic Data Selected economic information (in thousands): Dec. 2017 Sept. 2017 June 2017 Mar. 2017 Dec. 2016 Sept. 2016 Charleston MSA nonfarm employment - October 1,183.7 1,183.0 1,179.4 1,170.6 1,167.7 1,160.9 Nashville MSA nonfarm employment - October 986.6 986.2 975.1 977.1 968.5 957.
Slide 34: Fourth Quarter 2017 Investor Call
Fourth Quarter 2017 Investor Call M. Terry Turner, President and CEO Harold R. Carpenter, EVP and CFO January 17, 2018
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