Pinnacle Financial Partners, Inc. · NYSE:PNFP
Pinnacle Financial Partners — Q4 2023 Earnings Presentation
53 slides from Pinnacle Financial Partners's earnings presentation, Jan 17, 2024
Slide 1: Investor Call Fourth Quarter 2023
Investor Call FOURTH QUARTER 2023 January 17, 2024 Time: 8:30 AM CT Webcast: www.pnfp.com (investor relations) M. TERRY TURNER, PRESIDENT AND CEO HAROLD R. CARPENTER, EVP AND CFO
Slide 2: Safe Harbor Statements: Forward Looking 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 of 1933 and Section
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, total revenues, net income to common shareholders, earnings per diluted common share, revenue per diluted common share, PPNR, efficiency ratio, noninterest
Slide 4: Shareholder Value Dashboard: Key GAAP Measures
Shareholder Value Dashboard 4Q23 Summary Results of Key GAAP Measures Total Revenues FD EPS Net Income Available to Common Shareholders Total Loans Total Deposits Book Value per Common Share (millions) (in millions) NPA/ Loans & ORE Classified Asset Ratio NCOs PNFP’s Median Quarterly Performance of
Slide 5: Shareholder Value Dashboard: Key Non-GAAP Measures
Shareholder Value Dashboard 4Q23 Summary Results of Key Non-GAAP Measures Adjusted Pre-Tax Pre-Provision Total Revenues* FD EPS* CAGR 6.3% Net Income* CAGR 10.9% CAGR 7.5% Total Loans Total Core Deposits (millions) Tangible Book Value per CAGR 12.4% (millions) CAGR 15.6% Common Share** CAGR 12.4% NP
Slide 6: 4Q23 Financial Information
4Q23 Financial Information Our advantaged markets, vulnerable competitors and relentless focus on true relationship banking lead to extraordinary resilience even in challenging periods like 2023. 6
Slide 7: 2023 Revealed PNFP's Ability to Attract and Retain Deposits
2023 Revealed PNFP’s Ability to Attract and Retain Deposits Average deposit growth was 4.6% linked-quarter annualized in Q4 Average Deposit Growth Quarterly Avg Deposit Rates and Cumulative Beta 3.50% 60.0% $40,000 3.07% 3.25% 56% 53% 3.00% Cost of Total Deposits - Average Rate Average Deposits (mil
Slide 8: Relentless Focus on Talent and Client Acquisition Yields Loan Growth
Relentless Focus on Talent and Client Acquisition Yields Consistent Loan Growth Linked-quarter annualized growth in average loans was 10.7% in Q4 Average Loan Growth and Yields $34,000 7.00% EOP Loan Growth 6.62% 30.0% $32,372 $30,000 6.50% $31,530 $30,882 25.0% $29,634 6.00% Average Loans (millions
Slide 9: Talent Attraction Is a Key Driver of Loan Growth
Talent Attraction in New and Existing Markets is a Key Driver of Loan Growth Hires in new and existing markets accounted for more than 75% of loan growth in 2023 Net Loan Growth – 2023 – Strategic Decisions: • Asset Generators – No growth; reduction of $60 million • BHG, JBB and Advocate Capital • S
Slide 10: Operating Environment Continues to Impact Firm Liquidity
Operating Environment Continues to Impact Firm Liquidity Net interest margin flattish between Q3 and Q4 Net Interest Income & NIM Quarterly Avg. FFS, IB Cash & Repos $325 3.75% $5,000 5.50% $4,500 5.00% Average Balances ($ in mil.) Net Interest Inncome ($ in mil.) $300 Average Quarterly Yield $4,000
Slide 11: PNFP's Asset Quality Has Continued to Perform Well
PNFP’s Asset Quality Has Continued to Perform Well Problem loan metrics such as NPAs and classified assets remain near historically low levels Net Charge Offs NPA/ Loans & ORE Highlights • Credit metrics continue to move towards 0.19% normalization in 4Q23 but still reflect a high- 0.17% 0.17% 0.46%
Slide 12: PNFP's CRE Portfolio Continues to Perform Well
PNFP’s CRE Portfolio Continues to Perform Well PNFP’s granular CRE portfolio is concentrated in high-growth Southeastern markets CRE Investment and Construction Commitments Fixed Rate CRE and Construction Maturities $200 10.00% $1,000 4Q22 through 4Q23 ($ millions) 4Q23 to 4Q25 ($ in millions) 8.00%
Slide 13: 4Q23 Adjusted Fee Income up 4.8% Year-Over-Year
4Q23 Adjusted Fee Income was up 4.8% Year-Over-Year PNFP continues emphasis on gathering more share of wallet from client base 4Q23 to 3Q23 Linked- • 4Q23 income from equity method investment Quarter Year-over- Year-over- (BHG) approximates $14.4 million, down from Annualized Year Year $25.0 million
Slide 14: 4Q23 Expense Results Consistent with Prior Quarter Outlook
4Q23 Expense Results Consistent with Prior Quarter Outlook FDIC Special Assessment of $29 million recorded in 4Q23 4Q23 to 3Q23 Linked-Quarter • Personnel cost reflect the impact of increased headcount and increased Yr-over-Yr Yr-over-Yr Annualized incentive costs in 4Q23 over 3Q23. (dollars in thou
Slide 15: Preservation and Growth in Tangible Book Value Remains a Critical Focus
Preservation and Growth in Tangible Book Value Remains a Critical Focus 4Q23 tangible book value per share was up 14.8% year-over-year Tangible Book Value per Focused on preserving and growing Common Share** TBV per common share – YOY growth $51.38 $44.74 2023 14.8% $42.55 $37.25 $32.45 2022 5.1% 20
Slide 16: Bankers Healthcare Group
Bankers Healthcare Group BHG’s differentiated model has proven very resilient with continued high-quality originations, loan sales and yield/spread premium. The gain on sale model continues to provide meaningful earnings to BHG and to Pinnacle even as BHG has increased the mix toward balance sheet s
Slide 17: BHG Continues to Leverage and Grow its Bank Network
BHG Credit Quality BHG Continues Continues to Leverage & Growto its Impress Bank Network Sophisticated BHG loans remainedcredit scoring in high demand models2023 throughout produce impressive results 4Q 2023 Highlights • BHG successfully closed its second ABS Quarterly Origination & Placements ($mm)
Slide 18: BHG Has Diverse, Growing Funding Channels
BHGHas BHG Credit Quality Diverse, Continues Growing FundingtoChannels Impress Sophisticated Proactive credit management scoringchannels of placement models produce provides impressive flexibility results to BHG’s platform Loan Sale Auction Over 1,600 Banks in Network. 714 unique banks have acquired
Slide 19: BHG Spreads Are Consistent with Pre-COVID Results
BHG Spreads BHG Credit Quality Continues are Consistent with to ImpressResults Pre-COVID Spreads prove resilient Sophisticated despite credit elevated models scoring benchmarkproduce rates impressive results Bank Auction Platform Rates Borrower Coupon and Bank Buy Rates • Bank buy rates have increas
Slide 20: Increased Focus on Higher FICO Originations
Increased Focus on Higher FICO Originations 85% of 2023 Originations were originated to FICO scores of 700+, BHG’s highest ever Originations • BHG continues to refine and FICO Chart Mix ($ mm) Cumulative Net Loss Curves (24 months) tighten its credit underwriting: 2013 $260 • Losses in certain risk
Slide 21: BHG Reserves Have Adequate Cushion Relative to Actual Losses
BHG Reserves Have Adequate Cushion Relative to Actual Losses Reserves strengthened in the quarter as BHG implemented CECL for on balance sheet allowance Reserves vs. Actual Losses for Off B/S Loans (TTM) 10.0% • Reserves for off-balance sheet exposure created to support loans sold to bank network pa
Slide 22: BHG Financial Overview
BHG Financial Overview BHG generated positive 2023 earnings against a challenging environment 2023 • BHG provides loans in as little as 3 days from application Origination Volume ($bn) Originations to funding. $6.0 of $3.9bn • A truly diversified funding strategy creates ample liquidity $4.3 to fund
Slide 23: PNFP Enhances Its Already Attractive Southeastern Franchise
PNFP Enhances Its Already Attractive Southeastern Franchise PNFP’s EWRM has provided appropriate guardrails and enabled it to stay the course • Credit • Hiring model promotes the building of a high-quality commercial loan portfolio • 10 years experience in market is intended to result in strong clie
Slide 24: PNFP Enhances Its Attractive Southeastern Markets
PNFP Enhances Its Already Attractive Southeastern Markets Florida’s urban markets have been targeted for quite some time U.S. Net Domestic Migration April 1, 2020 to July 1, 2022 Pinnacle’s Footprint (Including Jacksonville, FL) Source: U.S. Census Bureau 24
Slide 25: Recent De Novo Starts Outpace PNFP's Nashville Start
PNFP Enhances Its Already Attractive Southeastern Franchise Recent de novo starts outpace PNFP’s start up in Nashville, where it now dominates Jacksonville offers a similar opportunity to our other de novo starts $1,400 $1,200 $1,000 Deposits (in millions) $800 $600 $400 $200 $- Nashville Atlanta Wa
Slide 26: Jacksonville Is One of the Southeast's Most Attractive Markets
PNFP Enhances Its Already Attractive Southeastern Franchise Jacksonville is one of the Southeast’s most attractive markets Nashville, TN Charlotte, NC Atlanta, GA Washington, D.C. Jacksonville, FL GDP 10-year growth rate 88.4% 72.6% 72.3% 44.9% 83.6% Population 10-year growth rate 17.9% 16.8% 12.9%
Slide 27: Jacksonville's Competitive Landscape Is Ideal for PNFP
PNFP Enhances Its Already Attractive Southeastern Franchise Jacksonville’s competitive landscape is ideal for PNFP FDIC Market Share Nashville, TN Charlotte, NC Atlanta, GA Washington, D.C. Jacksonville, FL Rank 1 PNFP BAC TFC COF BAC 2 BAC TFC BAC BAC Everbank 3 RF WFC WFC TFC WFC 4 TFC FTB SNV ETC
Slide 28: Talent Acquisition Is Both the Catalyst and Key to Success
PNFP Enhances Its Already Attractive Southeastern Franchise Talent acquisition is both the catalyst and key to success Scott Keith, Regional President • 34 years of local experience • Former regional president for North Florida at Truist • Built the North Florida leadership team following BB&T-SunTr
Slide 29: PNFP Is Optimistic about Financial Outlook for 2024
PNFP is Optimistic about Financial Outlook for 2024 Focus remains to increase market share via a robust hiring model 2024 Outlook – as of January 17, 2024 (Note) 2023 Actual Results Y/Y EOP • We estimate low double-digit percentage EOP loan growth for 2024 over 2023 year-end balances. Y/Y growth of
Slide 30: Q&A Fourth Quarter 2023
Q&A FOURTH QUARTER 2023 einnacle FINANCIAL PARTNERS
Slide 31: Supplemental Information
Supplemental Information Slide # • Balance Sheet 32 • Income Statement 47 • Peer Group 52 31
Slide 32: Balance Sheet – Loan Portfolio Segments
Balance Sheet – Loan Portfolio Segments ($ in millions) Amts. % Amts. % Amts. % Amts. % 4Q23 4Q23 3Q23 3Q23 4Q22 4Q22 4Q21 4Q21 C&I $11,663.1 35.7% $11,303.6 35.4% $10,233.3 35.2% $7,703.5 32.9% C&I – Paycheck Protection Program 3.6 0.0% 4.0 0.0% 8.0 0.0% 371.1 1.6% CRE – Owner Occ. 4,044.9 12.4% 3,
Slide 33: Loan Portfolio – Market Segmentation
Balance Sheet – Loan Portfolio – Market Segmentation ($ in millions) TOTAL PINNACLE C&I & O/O CRE CRE & CONSTRUCTION OTHER LOANS* Amts. Amts. Amts. Amts. Amts. Amts. Amts. Amts. 4Q23 4Q22 4Q23 4Q22 4Q23 4Q22 4Q23 4Q22 Nashville $8,526.3 $8,154.6 $3,684.5 $3,562.2 $2,992.1 $2,918.2 $1,849.7 $1,674.2
Slide 34: Loan Portfolio – CRE Segmentation
Balance Sheet – Loan Portfolio – CRE Segmentation ($ in millions) Total NOO and Multifamily Total Construction Total NOO and Construction Amts. Amts. Amts. Amts. Amts. Amts. Amts. Amts. Amts. 4Q23 3Q23 4Q22 4Q23 3Q23 4Q22 4Q23 3Q23 4Q22 Multifamily $1,607.9 $1,490.6 $1,291.8 $1,546.0 $1,319.5 $910.9
Slide 35: Loan Portfolio Lines of Credit
Balance Sheet – Loan Portfolio Lines of Credit ($'s in millions) Linked Qtr. 6/30/2022 9/30/2022 12/31/2022 3/31/2023 6/30/2023 9/30/2023 12/31/2023 Change CRE – Investment & Construction Net Active Balance $4,389.62 $4,743.41 $5,225.32 $5,726.97 $6,060.77 $6,294.22 $6,517.57 $223.35 Net Available C
Slide 36: Current Expected Credit Losses
Current Expected Credit Losses Total Allowance for Credit Losses for loans = $353.1 or 1.08% of loans at December 31, 2023 Allowance for Off-Balance % of Loans Total Credit Losses Sheet At December 31, 2022 $300,665 1.04% (1) $24,969 $325,634 Net Charge Offs ($7,291) 0.10% (2) ($7,291) 1Q Provision
Slide 37: Current Expected Credit Losses by Loan Type
Current Expected Credit Losses December 31, March 31, June 30, September 30, December 31, 2022 2023 2023 2023 2023 % of % of % of % of % of Allowance for Credit Losses Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans Commercial and Industrial $144,353 1.41% $153,629 1.43% $148,418 1.
Slide 38: Asset Quality
Asset Quality AS A % OF AS A % OF AS A % OF ($ in thousands) December 31, 2023 September 30, 2023 December 31, 2022 TOTAL LOANS TOTAL LOANS TOTAL LOANS NPLs and > 90 days Const. and land development $607 0.00% - 0.00% $232 0.00% Consumer RE 18,660 0.06% 19,655 0.06% 17,329 0.06% CRE – Owner Occupied
Slide 39: Loan Portfolio – Net Charge Offs by Loan Type
Balance Sheet – Loan Portfolio 1.00% Net Loan Charge Offs by Loan Type 0.90% 0.80% 0.70% 0.60% 0.50% 0.40% 0.30% 0.20% 0.10% 0.00% -0.10% CRE Construction C&I Consumer RE Consumer and Total other Net Charge Off 2020 2021 2022 2023 Rates 39
Slide 40: Loan Portfolio – 100/300 Test
Balance Sheet – Loan Portfolio – 100/300 Test ($ in thousands) Description 4Q23 3Q23 2Q23 1Q23 4Q22 3Q22 Loans secured by real estate: Construction, land development, and other loans: 1-4 family residential construction loans $693,128 $684,366 $676,742 $737,692 $772,653 $792,046 Other construction l
Slide 41: Key CRE Asset Classes
Key CRE Asset Classes Zinnacle FINANCIAL PARTNERS Mul Balance: $3.15Bn Industrial Balance: $2.038n Muttiramily 9.7% of Total Loans 4 oo 6.2% of Total Loans Weighted Average Located within high Top Markets averaged > Well diversified with no QA% _ occupancy on Q7%_ rrulation & rent growth QO%GF 20% r
Slide 42: Deposit Portfolio – Market Segmentation
Balance Sheet – Deposit Portfolio – Market Segmentation ($ in millions) TOTAL DEPOSITS CORE DEPOSITS NONCORE DEPOSITS TOTAL PINNACLE TRANSACTION AND MMDA CDs PUBLIC FUNDS and OTHER DEPOSITS 4Q23 4Q22 4Q23 4Q22 4Q23 4Q22 4Q23 4Q22 Nashville $13,937.8 13,403.3 12,553.3 12,514.9 742.6 497.7 641.9 390.7
Slide 43: Balance Sheet - Deposit Portfolio
Balance Sheet - Deposit Portfolio Ratio of EOP Uninsured and/or Uncollateralized Deposits Estimated Liquidity Available for Uninsured Deposits Balances at ($’s in millions) Dec. 31, 2023 to Total Deposits 50.00% 42.9% Total Deposits $38,540 38.9% 40.00% 35.6% Less: Insured and/or Collateralized Depo
Slide 44: Balance Sheet – Bond Portfolio
Balance Sheet – Bond Portfolio Investment Securities Segmentation 12/31/23 % of 9/30/23 % of 12/31/22 Portfolio: Dec. 31, 2023 Security Type % of Portfolio Balance Portfolio Balance Portfolio Balance Total Investments $7.3 billion Treasuries 985,766 13.0% 902,335 12.1% 317,812 4.5% Net Unrealized Ga
Slide 45: Balance Sheet – Bond Portfolio
Balance Sheet – Bond Portfolio 4.50 25.0 Effective Bond Portfolio Composition 4.12 End of Period 4.00 22.5 71% 72% 66% 65% 65% 3.50 20.0 % of Total Assets Bond Yields 18.7 3.00 17.5 2.61 2.50 15.0 34% 35% 35% 15.3 29% 28% 2.00 12.5 1.50 10.0 2020Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1 2019Q2 2019Q3 20
Slide 46: Interest Rate Sensitivity
Interest Rate Sensitivity Rate Ramp Scenarios Rate Shock Scenarios 5.0% 5.0% 3.0% 3.0% 3.0% 2.5% 2.4% 2.1% Net Interest Income % D Net Interest Income % D 1.5% 1.6% 1.4% 1.0% 1.2% 1.0% 0.6% 1.0% -1.0% -0.6% -0.6% -1.0% -1.2% -1.2% -1.0% -1.6% -1.4% -2.0% -3.0% -3.0% -2.4% -2.9% -5.0% -5.0% 4Q22 1Q23
Slide 47: Income Statement – Revenue Per Share
Income Statement – Revenue Per Share LTM Revenue Per Share Growth* vs. Peers $22.00 20.0% 19.0% $21.39 $21.48 $21.45 $21.09 $21.00 17.5% 18.0% 16.2% $20.33 $20.00 $19.51 18.2% 16.0% 16.0% 13.8% 13.1% 14.5% 16.2% $19.00 13.0% $18.62 14.0% Y/Y Revenue per Share Growth 11.3% 11.9% $17.85 14.3% 14.9% $1
Slide 48: Income Statement – PPNR
Income Statement – PPNR ($'s in thousands) 2019 2020 2021 2022 2023 PPNR Trends Net interest income $ 766,142 $821,788 $932,401 $1,129,293 $1,262,118 Adjusted PPNR Noninterest income 263,826 317,840 395,734 416,124 433,253 Noninterest expense (505,148) (564,455) (660,104) (779,999) (887,769) $800 PP
Slide 49: BHG Financials
BHG Financials At Dec 31, At Sept 30, At Dec 31, ($'s in thousands) ($'s in thousands) 4Q 2023 3Q 2023 4Q 2022 2023 2023 2022 Cash and Cash Equivalents 602,850 642,519 683,143 Interest Income $ 147,105 $ 142,237 $ 134,193 Loans Held for Investment 3,242,215 3,315,173 3,204,290 Allowance for Loan Los
Slide 50: Income Statement: Reconciliation of Non-GAAP Financial Measures
Income Statement Reconciliation of Non-GAAP Financial Measures 50
Slide 51: Income Statement: Reconciliation of Non-GAAP Financial Measures
Income Statement Reconciliation of Non-GAAP Financial Measures 51
Slide 52: 2023 Peer Group
2023 Peer Group Institution Name Ticker City, State Pinnacle Financial Partners, Inc. PNFP Nashville, TN Associated Banc-corp ASB Green Bay, WI Bank OZK OZK Little Rock, AR Bank United Inc. BKU Houston, TX Cadence Bank CADE Tupelo, MS Comerica Inc. CMA Dallas, TX Commerce Bancshares, Inc. CBSH Kansa
Slide 53: Investor Call Fourth Quarter 2023
Investor Call FOURTH QUARTER 2023 M. TERRY TURNER, PRESIDENT AND CEO HAROLD R. CARPENTER, EVP AND CFO
Pinnacle Financial Partners — Q4 2023 Earnings Presentation on 6ix