Avenue Financial — Merger or Acquisition (January 2016)
26 slides from Avenue Financial's merger presentation, Jan 29, 2016
Slide 1: Pinnacle and Avenue to Combine Forces Creating Nashville's Bank
Pinnacle and Avenue to Combine Forces Creating Nashville’s Bank M. Terry Turner, President and CEO – Pinnacle Financial Harold R. Carpenter, EVP and CFO – Pinnacle Financial January 29, 2016 Exhibit 99.2
Slide 2: Safe Harbor Statement
Safe Harbor Statement Forward Looking Statements All statements, other than statements of historical fact, included in this presentation are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
Slide 3: Nashville is one of the most attractive markets in the US
Nashville is one of the most attractive markets in the US Area Development’s top states for doing business Milken Institute’s “Best Performing Cities Index” list Business Insiders’ hottest American cities for 2016 Business Facilities’ leading city for economic growth potential Creating Nashville’s B
Slide 4: PNFP and AVNU have identical responses to the opportunity
PNFP and AVNU have identical responses to the opportunity Common vision to be Nashville’s bank An engaging culture resulting in “Best Bank to Work For” Reliance on client experience to take share from regionals A fiercely competitive approach to business development Creating Nashville’s Bank
Slide 5: The combination accelerates what is best about both banks
The combination accelerates what is best about both banks AVNU has a commercial focus, like PNFP AVNU produces outsized organic growth, like PNFP AVNU is poised for rapid growth in operating leverage, like PNFP AVNU has pristine asset quality, like PNFP A Strategically Compelling Combination
Slide 6: The combination produces meaningful shareholder value
The combination produces meaningful shareholder value $10.8 billion in pro forma assets Accretive to first full year’s EPS Approximately 4% of long term EPS accretion (even after costs of exceeding $10 billion) Less than 1% dilutive to TBV at closing IRR > 20% A Strategically Compelling Combination
Slide 7: Avenue Produces Outsized Organic Growth
Avenue Produces Outsized Organic Growth Since its founding in 2007, Avenue has produced Pinnacle-like organic growth Assets Loans Deposits Tangible Common Equity Source: SNL Financial, Company Documents Note: Dollars in millions 2009 – 2015 CAGR : 20% 2009 – 2015 CAGR : 22% 2009 – 2015 CAGR : 23% 20
Slide 8: Avenue is Poised for Rapid Operating Leverage
Avenue has matured to the point of rapid operating leverage, much like Pinnacle Net Income to Common ROAA Net Interest Margin Efficiency Ratio Avenue is Poised for Rapid Operating Leverage (1) Profitability metrics adjusted for negative provision Source: SNL Financial, Company Documents Note: Dollar
Slide 9: Avenue has Pristine Asset Quality
Avenue’s disciplined credit culture has produced outstanding asset quality NPLs / Loans NPAs / Assets ALLL / Gross Loans NCOs / Avg. Loans Source: SNL Financial, Company Documents Note: Nonperforming loans and assets include TDRs Avenue has Pristine Asset Quality
Slide 10: Avenue's Commercial Strategy is Like Pinnacle's (loan mix)
Source: SNL Financial Note: Financial data as of December 31, 2015 per call reports; excludes purchase accounting adjustments Avenue’s loan mix highlights its commercial orientation Avenue’s Commercial Strategy is Like Pinnacle’s
Slide 11: Avenue's Commercial Strategy is Like Pinnacle's (deposit mix)
Source: SNL Financial; Company Documents Note: Financial data as of December 31, 2015; excludes purchase accounting adjustments Avenue’s deposit mix highlights its commercial orientation Avenue’s Commercial Strategy is Like Pinnacle’s
Slide 12: Comprehensive Due Diligence Overview
Comprehensive Due Diligence Overview Key Focus Area Action Observation Risk Management Key risk managers at Pinnacle participated in due diligence including CEO, CFO, CAO, CCO, CRM, etc. Avenue risk management practices similar to Pinnacle EWRM practices Credit Detailed loan reviews on approximately
Slide 13: Transaction Structure
Transaction Structure Consideration $2.00 per share in cash 0.36 shares of PNFP common stock 90% stock / 10% cash based on fully-diluted shares outstanding Avenue’s unexercised outstanding options cashed out at $20.00 per share Transaction Value(1) $201.4 million $19.29 per share Price / Q4 ’15 Tang
Slide 14: Key Transaction Assumptions
Key Transaction Assumptions Purchase Accounting Adjustments Mark to loan portfolio of approximately $11.1 million, equal to the projected ALLL at closing Mark to OREO of 10% Core deposit intangible of 1.5% amortized straight-line over 8 years Cost Savings 40% cost savings Approximately 75% phase-in
Slide 15: Financial Impact
Financial Impact EPS Impact ~1.0% accretive in 2016 ~4.0% accretive in 2017 Tangible Book Value Impact Less than 1.0% dilutive to tangible book value at close, earn-back period estimated to be approx. 2.0 yrs (1) Pro Forma Consolidated Capital ~8.4% TCE / TA ~9.2% Leverage Ratio ~11.5% Total Risk Ba
Slide 16: Pinnacle Building for the Future: 5-Year Horizon
5-Year Horizon Develop market leadership in four Tennessee markets Pursue attractive merger candidates within current markets Expand CRE asset class Increase assets beyond $10B Increase capital allocation to fee businesses that can drive shareholder value Continued focus on bottom line results Pinna
Slide 17: Appendix
Appendix Overview of Avenue Financial Holdings Avenue 5-year Financial Summary Purchase Price Reconciliation Projected Impact of Crossing $10.0 Billion Threshold Nashville and Tennessee Market Demographics Deposit Market Share – Tennessee Deposit Market Share – MSAs Summary of BHG January 19, 2016 A
Slide 18: Overview of Avenue Financial Holdings
Overview of Avenue Financial Holdings Founded in 2007 5 offices located in the Nashville MSA Experienced management team with extensive local relationships Commercial business model with impressive non-interest income generation Strong financial performance momentum Source: SNL Financial; Company Do
Slide 19: Avenue 5-Year Financial Summary
Avenue 5-Year Financial Summary Note: December 31, 2015 regulatory capital ratios have yet to be finalized Source: SNL Financial, Company Documents Dollar Values in Millions, Except Per Share Amounts For the Fiscal Year Ended, For the Quarter Ended, 2011Y 2012Y 2013Y 2014Y 2015Y Balance Sheet Total
Slide 20: Purchase Price Reconciliation
Purchase Price Reconciliation Reflects PNFP’s trailing 10-day average closing price as of January 28, 2016 Assumes no options are exercised prior to closing Does not include $20 million of subordinated debt issued by Avenue that Pinnacle will assume For each share of Avenue common stock, the AVNU sh
Slide 21: Projected Impact of Crossing $10.0 Billion Threshold
Projected Impact of Crossing $10.0 Billion Threshold PNFP’s approach to being a $10+ billion franchise No change to merger strategy – in market, strategic fit Continued reliance on organic growth strategy in TN to build balance sheet to absorb additional costs Durbin and FDIC are significant to oper
Slide 22: Tennessee Market Demographics
Tennessee Market Demographics Source: SNL Financial Note: Deposit data as of June 30, 2015
Slide 23: Deposit Market Share – Tennessee
Deposit Market Share – Tennessee PNFP strengthens its Tennessee footprint Greater than $7.0B in pro forma deposits Supplements #5 ranking Source: SNL Financial Note: Deposit data as of June 30, 2015; Pending ownership, including banks and thrifts
Slide 24: Deposit Market Share – MSAs
Deposit Market Share – MSAs Source: SNL Financial Note: Deposit data as of June 30, 2015; Pending ownership, including banks and thrifts
Slide 25: Deposit Market Share – MSAs
Deposit Market Share – MSAs Source: SNL Financial Note: Deposit data as of June 30, 2015; Pending ownership, including banks and thrifts
Slide 26: Summary of BHG January 19, 2016 Announcement
Bankers Healthcare Group, Inc. (“BHG”) transaction announced January 19, 2016 – A privately-owned commercial finance company operating in the healthcare sector PNFP ownership position increasing from 30% - 49% Approximately 5% accretion to 2017 earnings Minimal dilution to TBV with earn-back less th
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