Pinnacle Financial Partners, Inc. · NYSE:PNFP
Pinnacle Financial Partners — Q1 2018 Earnings Presentation
37 slides from Pinnacle Financial Partners's earnings presentation, Apr 17, 2018
Slide 1: First Quarter 2018 Investor Call
First Quarter 2018 Investor Call M. Terry Turner, President and CEO Harold R. Carpenter, EVP and CFO April 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 t
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, revenues, earnings per diluted share, efficiency ratio, core net interest margin, loan yields, noninterest expense and the ratio of noninterest expense to
Slide 4: 1Q18 Summary Results – GAAP Measures
1Q18 Summary Results – GAAP Measures Total Revenues FD EPS $1.08 ROTCE Earnings Growth $218,654 18.12% $0.82 15.56% 15.04% 14.74% $0.68 13.47% $119,148 $0.62 $99,758 $69,755 $0.47 $58,640 Total Loans Total Deposits Book Value per Share Balance Sheet Growth $16,326 (millions) (millions) $16,503 $48.1
Slide 5: 1Q18 Summary Results – Non-GAAP Measures
1Q18 Summary Results – Non‐GAAP Measures Total Revenues FD EPS* $1.13 ROTCE* 18.98% Earnings Growth $218,624 $0.83 $119,148 $0.71 $99,758 15.64% 15.56% $69,755 $0.62 14.89% $58,640 $0.47 13.45% Total Loans Total Core Deposits Balance Sheet Growth $16,326 $14,224 Tangible Book Value per Share $24.24
Slide 6: 1Q18 Summary Results
1Q18 Summary Results Pinnacle sets and delivers against lofty strategic targets (1) Non‐GAAP amounts exclude net gains and losses on the sale of investment securities, ORE expense and income, merger‐related charges and the impact of revaluation of deferred tax assets. Non‐GAAP net interest margin ex
Slide 7: BNC Integration Has Been Highly Successful
BNC Integration Has Been Highly Successful • Core systems conversions are complete • Cost synergies have been harvested • Associate engagement is high • Year‐over‐year increase based on Great Place to Work survey • Hiring success is ahead of schedule • Balance sheet growth is strong 7
Slide 8: BNC Integration Has Been Highly Successful
BNC Integration Has Been Highly Successful “BNC has a high‐growth CRE lending practice that we expect to continue at its previous pace. However, the key to realizing our potential in the Carolinas and Virginia is to build out a large C&I platform – the thing we do best.” PNFP 2017 Annual Report BNC
Slide 9: BNC Integration Has Been Highly Successful
BNC Integration Has Been Highly Successful 2017 2018 – 1Q No. 34 – 100 Best Companies to No. 22 – 100 Best Companies to Work For, FORTUNE Work For, FORTUNE No. 7 – Best Workplaces in No. 3 – Best Workplaces in Financial Services and Insurance, Financial Services and Insurance, FORTUNE FORTUNE No. 6
Slide 10: BNC Integration Has Been Highly Successful
BNC Integration Has Been Highly Successful Each year, FTSE Russell conducts independent research that analyzes the cumulative stock market returns of publically‐traded Fortune 100 Best Companies to Work For. If you invested in these companies (divesting stock in the companies that were no longer on
Slide 11: BNC Integration Has Been Highly Successful
BNC Integration Has Been Highly Successful High trust environments elevate productivity, profitability and job applicants A 2013 study led by Luigi Guiso, of the Einaudi Institute for Economics and Finance & CEPR, found that in companies where employees reported that their leaders act with integrity
Slide 12: BNC Integration Has Been Highly Successful
BNC Integration Has Been Highly Successful Our C&I and Private Banking hiring is actually ahead of plan C&I, Private Banking FAs Projected Timeline C&I and Private Banking actual hires since 7/1/17 12
Slide 13: 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 $3.00 $2.83 Revenues per diluted share* $2.80 $200 $2.60 $2.40 Total Revenues* $150 $2.20 (000's) $2.00 $100 $1.80 $1.60 $50 $1.40 $1.31 $1.20 $‐ $1.00 Fee income NII
Slide 14: Loan and Deposit Growth are Keys to Earnings Growth
Loan and Deposit Growth are Keys to Earnings Growth Linked‐quarter loan growth remains strong as yields increase 4.88% 4.91% $20,000 5.00% 4.50% $16,000 4.50% $15,957 $15,520 $15,017 Average Loans $12,000 4.00% Loan Yields (millions) $9,817 $8,000 3.50% $8,558 $8,357 $8,233 BNCN $6,998 $6,742 $6,458
Slide 15: Loan and Deposit Growth are Keys to Earnings Growth
Loan and Deposit Growth are Keys to Earnings Growth Portfolio transitions to more variable rate March 31, 2018 Loan Pricing Allocation • Floating rate loans have expanded 2% since merger date • $525 mm Fixed to Floating 3-month LIBOR Forward Swap LIBOR • Executed post quarter-end Prime • Moves addit
Slide 16: Loan and Deposit Growth are Keys to Earnings Growth
Loan and Deposit Growth are Keys to Earnings Growth Average deposit balances continued to grow 1.75% $18,000 1.80% $16,000 Deposit Rate Tranches Mar. 31, 2018 1.60% $16,281 $16,092 % of Totals $15,828 $14,000 Noninterest bearing 25.9% 1.40% Avg. Deposits Cost of Deposits Rate sheet 23.0% $12,000 1.2
Slide 17: Fee Businesses also Contribute to Earnings Growth
Fee Businesses also Contribute to Earnings Growth Fee businesses produce another strong quarter 1Q18 4Q17 3Q17 2Q17 1Q17 Service charges $5,820 $6,078 $5,921 $4,179 $3,856 Investment services 5,107 4,723 3,660 3,110 2,822 Insurance commissions 3,119 1,961 2,124 1,461 1,859 Gain on mortgage loans sol
Slide 18: PNFP Focuses on Strategic Expense Management
PNFP Focuses on Strategic Expense Management 1Q18 core expense results reflect enviable operating leverage 1Q18 4Q17 3Q17 2Q17 1Q17 Salaries and benefits $63,719 $ 63,347 $64,288 $43,676 $38,352 Equipment and occupancy 17,743 17,114 16,590 10,713 9,675 Other real estate owned (794) 252 512 63 252 Ma
Slide 19: 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 19
Slide 20: 1Q18 Summary
1Q18 Summary • Year over year quarterly FDEPS, excluding merger‐related charges and investment gains and losses on sales of securities, growth rate is ahead of the consensus year over year quarterly growth rate (36% vs. 32%). • Hiring of revenue producers is ahead of schedule and has accelerated ove
Slide 21: Q&A – First Quarter 2018 Investor Call
Q&A – First Quarter 2018 Investor Call
Slide 22: Supplemental Information
Supplemental Information Chart • Balance Sheet 23 • Asset Quality 29 • Income Statement 30 22
Slide 23: Balance Sheet: Loan portfolio is well diversified
Balance Sheet Loan portfolio is well diversified Amts. %’s(*) Amts. %’s(*) Amts. %’s(*) Amts. %’s(*) 1Q18 1Q18 4Q17 4Q17 1Q17 1Q17 1Q16 1Q16 C&I $4,490.9 27.5% $4,141.3 26.5% $2,980.8 34.5% $2,434.6 35.6% CRE – Owner Occ. 2,427.9 14.9% 2,460.0 15.7% 1,399.5 16.2% 1,099.7 16.1% CRE – Investment 3,714
Slide 24: Balance Sheet: Construction portfolio reflects discipline
Balance Sheet Construction portfolio reflects discipline Amts. %’s(*) Amts. %’s(*) Amts. %’s(*) Amts. %’s(*) 1Q18 1Q18 4Q17 4Q17 1Q17 1Q17 1Q16 1Q16 Residential – Spec $288.0 1.8% $278.7 1.8% $200.7 2.3% $120.9 1.9% Residential – Custom 123.0 0.7% 95.9 0.6% 96.9 1.1% 97.1 1.4% Residential – Condo 0.
Slide 25: Balance Sheet: Total CRE loan portfolio
Balance Sheet As projected, total CRE loan portfolio exceeds 300 guidelines Description 3/31/2018 12/31/2017 9/30/2017 6/30/2017 3/31/2017 Loans secured by real estate: Construction, land development, and other loans: 1‐4 family residential construction loans $475,979 $445,077 $423,988 $408,035 $303
Slide 26: Balance Sheet: Relationship funding
Balance Sheet PNFP remains focused on relationship funding 3/31/2018 Percent 12/31/2017 Percent 3/31/2017 Percent Core Funding: Non‐interest bearing deposits $4,274,213 22.40% $4,381,386 23.85% $2,508,680 25.25% Interest‐bearing deposits 2,803,718 14.70% 2,756,506 15.00% 1,869,570 18.82% Money Marke
Slide 27: Balance Sheet: Securities book yields
Balance Sheet Securities book yields increase with more variable rate bonds 4.00% 40.00% 3.50% 35.00% 2.87% 3.00% 3.58% 30.00% 2.50% 25.00% 2.00% 20.00% 1.50% 13.0% 15.00% 20.75% 1.00% 10.00% 0.50% 5.00% 0.00% 0.00% Bond Yields % of Total Assets Bond Portfolio Pricing 78% 71% 29% 22% Sept. 2017 Mar.
Slide 28: Balance Sheet: Conservative bond portfolio
Balance Sheet Conservative bond portfolio Portfolio: March 31, 2018 2.3% 1.0% Total Investments $2.981 billion Unrealized Gain (Loss) $(44.0) million 34.9% 40.8% Quarter Duration Avg. Yield‐ TE 7.1% 1Q18 3.5% 2.9% 13.8% 4Q17 3.5% 2.7% 3Q17 3.5% 2.6% 2Q17 3.3% 2.5% Agency Corporates MBS 1Q17 3.4% 2.4
Slide 29: Asset Quality
Asset Quality Asset quality remains very sound (000’s) Mar. 31, 2018 As a % of total loans Dec. 31, 2017 As a % of total loans Mar. 31, 2017 As a % of total loans Past Due Loans (*) Nonaccrual loans $13,875 0.08% $11,691 0.07% $10,011 0.12% Accruing loans $39,666 0.24% 60,159 0.38% 14,684 0.17% Tota
Slide 30: Income Statement: Core net interest margin
Income Statement Core net interest margin growth key to achieving profitability targets 4.00% $200,000 3.87% 3.77% 3.76% 3.72% 3.70% 3.68% 3.64% 3.60% 3.45% 3.46% 3.44% 3.42% 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 exc
Slide 31: Income Statement: Mortgage volumes decline in 1Q18
Income Statement Mortgage volumes decline in 1Q18 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 31
Slide 32: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non‐GAAP measures 1Q18 4Q1 3Q17 2Q17 1Q17 Net interest income $174,471 $174,731 $173,182 $106,627 $88,767 Total noninterest income 44,183 36,488 42,977 35,057 30,382 Total revenues $218,654 $211,219 $216,159 $141,684 $119,149 Less: Investment (gains) losses on sale
Slide 33: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non‐GAAP measures 1Q18 4Q17 3Q17 2Q17 1Q17 Net income $83,510 $26,798 $64,442 $43,086 $39,653 Merger‐related charges 5,353 19,103 8,847 3,221 672 Investment (gains) losses on sales of securities (30) 8,265 ‐ ‐ ‐ Tax effect on merger‐related charges and investment (
Slide 34: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non‐GAAP measures 1Q18 4Q17 3Q17 2Q17 1Q17 Net income $83,510 $26,798 $64,442 $43,086 $39,653 Merger‐related charges 5,353 19,103 8,847 3,221 672 Investment (gains) losses on sales of securities (30) 8,265 ‐ ‐ ‐ Tax effect on merger‐related charges and investment (
Slide 35: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non‐GAAP measures 1Q18 4Q17 3Q17 2Q17 1Q17 Net income $83,510 $26,798 $64,442 $43,086 $39,653 Merger‐related charges 5,353 19,103 8,847 3,221 672 Investment (gains) losses on sales of securities (30) 8,265 ‐ ‐ ‐ Tax effect on merger‐related charges and investment (
Slide 36: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non‐GAAP measures 1Q18 4Q17 3Q17 2Q17 1Q17 Net interest margin 3.77% 3.76% 3.87% 3.68% 3.60% Adjustment due to accretion from fair value accounting 0.35% 0.43% 0.45% 0.23% 0.21% Core net interest margin 3.42% 3.33% 3.42% 3.45% 3.39% Loan yield 4.91% 4.87% 4.91% 4.5
Slide 37: First Quarter 2018 Investor Call
First Quarter 2018 Investor Call M. Terry Turner, President and CEO Harold R. Carpenter, EVP and CFO April 17, 2018
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