Pinnacle Financial Partners, Inc. · NYSE:PNFP
Pinnacle Financial Partners — Q1 2024 Earnings Presentation
62 slides from Pinnacle Financial Partners's earnings presentation, Apr 23, 2024
Slide 1: Investor Call First Quarter 2024
Slide 2: Safe Harbor Statements: Forward Looking Statements
Safe Harbor Statements einnacle 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 27 of the Securities Act of 1933 and
Slide 3: Safe Harbor Statements: Non-GAAP Financial Matters
Safe Harbor Statements einnacle 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, no
Slide 4: me} Cy ° rr 2) oc a) ) & G => he o aS
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Slide 5: Shareholder Value Dashboard
Shareholder Value Dashboard 1Q24 Summary Results of Key Non-GAAP Measures * * Adjusted Pre-Tax Pre-Provision Total Revenues’ FD EPs’ Net Income* FESSSSSSISESESESS SFFFSFSSSEPFSSSSE SEEESSISEESISIEES Total Loans Total Core Deposits Tangible Book Value per (millions) knmion} Common Share** SESS FISFSI
Slide 6: 1Q24 Financial Information
“innacle 1Q24 Financial Information Our advantaged markets, vulnerable competitors, ability to attract talent and our relentless focus on a differentiated client experience lead to resilience even in challenging periods like 2024.
Slide 7: PNFP Continues to Attract Deposits
PNFP Continues to Attract Deposits -innacle Average deposit growth was 5.0% linked-quarter annualized in Q1 Average Deposit Growth Quarterly Avg Deposit Rates and Cumulative Beta 3.50% sou 56% 90-0 > 2 53% 56% 2 zg 5 = 3.00% 50.09 = % 42% s A 2 = 250% e 2 8 & a 40.0 : § + 2 2.00% zg s 8 3 %, 30.0 9
Slide 8: Growth in Earning Assets Produces Increase in Net Interest Income
Growth in Earning Assets Produces Increase in Net Interest Income Linked-quarter annualized growth in average loans was 8.3% in Q1 “innacle aaa Average Loan Growth and Yields rae Fixed Rate Loan Maturities / Cash flow i“ 667% | $1,200 | Rates 5.00% $30,000 éieoo target seen 4.90% 7.5% to = $25,000 ‘
Slide 9: Operating Environment Remains Challenging for NII and NIM
Operating Environment Remains Challenging for NII and NIM Net interest income and net interest margin relatively stable in 1024 Net Interest Income & NIM Quarterly Avg. FFS, IB Cash & Repos $325 3.75% $5,000 5.50% = = $4,500 5.00% E $300 3.50% é $4,000 450% & & s = 4.00% = $275 3.25% = =, Seen sax =
Slide 10: Asset Quality Metrics - Problem Loan Formation Remains Low
Asset Quality Metrics - Problem Loan Formation Remains Low Problem loan metrics such as NPAs and classified assets remain near historically low long-term levels einnacle Net Charge Offs NPA/ Loans & ORE Highlights Credit metrics continue to move towards long- term historical averages in 1924 * PNFP
Slide 11: NOOCRE and Construction Highlights
, Highlights * Over 83% of NOOCRE Portfolio is in Pinnacle’s attractive Southeastern G demographic markets * Strategically poised to reduce Construction Loans as a percentage of Total Risk-Based Capital to a target of 70% which should occur before YE2024 New commitments limited to prior guidance lin
Slide 12: Asset Quality Metrics for NOOCRE and Construction Portfolio
rs Asset Quality Metrics for NOOCRE and Construction Portfolio Continue to Perform Well -innacle * Continued strong asset quality with minimal past PNFP NOOCRE & Construction Accruing PD, Classified, and Non-Accruals as a % of Total Loans due accruing loans and 99.1% of portfolio graded i pass lo.25
Slide 13: 1Q24 Fee Income was up 23% Year-Over-Year
1Q24 Fee Income was up 23% Year-Over-Year PNFP continues emphasis on gathering more share of wallet from client base * Core fee categories of wealth management, service charges, site Year-over- interchange, etc. reflect strong revenue growth in 1024 over Annualized Year prior quarters. 4023 1023 Gro
Slide 14: 1Q24 Expense Results Consistent with Prior Quarter Outlook
1Q24 Expense Results Consistent with Prior Quarter Outlook First quarter expense includes $7.25 million FDIC Special Assessment * Salaries and commissions reflect the impact of increased headcount and merit raises in the first quarter of 2024. ° Cash incentives in 1024 reflect the resetting of incen
Slide 15: Bankers Healthcare Group
Bankers Healthcare Group BHG’s differentiated model has proven very resilient with continued high-quality originations, loan sales and yield/spread premium. The gain on sale model continues to provide meaningful earnings to BHG and to Pinnacle even as BHG has increased the mix toward balance sheet s
Slide 16: BHG Continues to Leverage & Grow its Distribution Network
BHG Continues to Leverage & Grow its Distribution Network -innacle BHG loans remain in high demand in 2024 * BHG’s origination strategy has continued to focus on Quarterly Origination & Placements ($mm)* prioritizing strong credit quality, as total volume was reduced relative to the prior quarter. *
Slide 17: BHG Spreads Consistent with Pre-COVID Results
BHG Spreads Consistent with Pre-COVID Results Resilient spreads despite elevated benchmark rates -innacle Bank Auction Platform Rates Borrower Coupon and Bank Buy Rates * Bank buy rates have increased since the 18.0% 45.5% 15.8% 17.0% 16.7% 16.7% 16.4% 17.0% Fed began increasing rates in 1Q22. 15.0%
Slide 18: BHG Reserves Compare Favorably to Actual Losses
BHG Reserves Compare Favorably to Actual Losses Reserves strengthened in Q1 as BHG continues to work through losses on older vintages Pinnacle * Trailing 12-month losses on off-balance sheet loans total 4.6%. The Q1 reserve for estimated loan substitutions and prepayments totaled Reserves vs. Actual
Slide 19: BHG Financial Overview
BHG Financial Overview -innacle BHG continues to deliver positive earnings, with Q1 earnings of $33M, above Q4 * BHG provides loans in as little as 3 days from application Origination Volume ($bn) to funding. $6.0 * Atruly diversified funding strategy creates ample liquidity to fund loan origination
Slide 20: A Unique Model Focused on Sustainable Shareholder Returns
A Unique Model Focused on Sustainable Shareholder Returns Inflation appears more difficult to tame than predicted. The economic landscape is both difficult and volatile making it challenging for bank investors to forecast short-term earnings. But PNFP’s obsession with workplace culture has led to a
Slide 21: PNFP Has Delivered Enviable Returns Over the Last Decade
PNFP Has Delivered Enviable Returns Over the Last Decade PNFP compounded EPS much faster than peers einnacle 250.0% Total Shareholder Return (Last 10 Years) 100.0% sian 50.0% | 39.0% 37.4% R so > & ¥ . & 2 8 o£ SY & PE ESPSSS REESE Ee ES EE EEE EEEEEEEEEE 21 ‘Source: S&P Global Market intelligence a
Slide 22: And Built a Robust Capital and Credit Position
..And Built a Robust Capital and Credit Position cinnacle CET1 Ratio Allowance for Credit Losses Marked CET1 (1) Stated CET1 ACL/NPLS ACL/Loans Peer 10 Age ’ a a a a (a Peer10 =e Peer === Stee Peers Pod Peer? a | | — Peer17 = Peer14 “ee Peer4 = 7 Peer7 Peer21 7 Peer19 St Peer4 Peer16 all Peer3 BRS)S
Slide 23: Sustainability is Built on a Differentiated Model
Sustainability is Built on a Differentiated Model ... Zinnacle ‘canes Customer Provider roma Pasttation YOY Change 20% NFP 76% 5% an% Regional D 72% % a1% i 15% 4 National A Regional A 60% 1% A1% e Pa National E: Regional B 59% 4% v1% National B 56% 8% 02% 10% 3 National C 54% 4% v1% ® National B e
Slide 24: Raving Fans as Evidenced by the Net Promoter Score
... That has Produced “Raving Fans” as Evidenced by the Net Promoter Score -innacle Distribution of Evaluations ($1-500MM in sales — FY2023) se Regional A 73% 26% | Regional B 67% 26% | 7% | Regional 67% 26% Ea 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% m@ Detractors extremely likely. Prot Question
Slide 25: PNFP Hasn't Simply Hired A Lot — It has Hired the Best
PNFP Hasn’t Simply Hired A Lot — It has Hired the Best PNFP relationship managers are the highly valued by clients Bank Score {¥-0-¥ Change) Peer Comparison ‘Overall Satisfaction with 90% | | | EE | Relationship Manager (Pen a ~ s a5 Ag ee 90% Lh__E EL Prompt Follow-Up on Requests (oP) 0 20 40 60 80
Slide 26: PNFP Combines Technology with High Touch
PNFP Combines Technology with High Touch Irrespective of large k expenditures, PNFP offers market leading Treasury Management and digital experience Peer Comparison Bank Score (¥-0-¥ Change) One bracket Conabne 85% Lt G | himhai, 0 20 40 60 80 100 Gatien Gane prokeniced| 90% | EE EEE | keoren 0 20 4
Slide 27: Relentless Focus on Clients Has Yielded the Best Brand
PNFP’s Relentless Focus on Clients has Yielded the “Best Brand” in Its Market einnacle Greenwich has identified the key drivers of brand perceptions peek store Peer Comparison (¥-0-¥ Change) sit Pecad ook bake 86% EE (3 PPT) oO 20 40 60 80 100 ee Bank You Can Trust 91% {+3 PPT) 0 20 40 60 80 100 87%
Slide 28: Strong Momentum for Continued Outsized Growth
... And Strong Momentum for Continued Outsized Growth At Risk of Losing Business Expect to Earn More Business PNFP , = °° Regional A Regional B Regional C Regional D National A National B National C National D ‘Note: The following banks are included in the charts above: Truist, BofA, Wells Fargo, 2°
Slide 29: PNFP Modifies Outlook for Various Line Items for 2024
PNFP Modifies Outlook for Various Line Items for 2024 rs Allin, 2024 total results consistent with prior quarter -innacle 2023 Actual Current 2024 Outlook (as of April 23, 2024) SoBe Y/Y EOP Loan Growth Our current estimate is that EOP loan growth for 2024 will be 9% to 11% over 2023 year-end balanc
Slide 30: Pinnacle Financial Partners
le & FINANCIAL PARTNERS Gx N (@) N [ac Lu cl [ae q 5s =) g nN ce LL einnac Q
Slide 31: Supplemental Information
Supplemental Information -innacle Slide # * Balance Sheet 32 * Income Statement 33 * BHG bo * Non-GAAP Reconciliation 58 * Peer Group 61 31
Slide 32: Balance Sheet — Loan Portfolio
Balance Sheet — Loan Portfolio -innacle Net Loan Growth — 1924 — Strategic Decisions: + Asset Generators — Minimal growth of $4 million * BHG, JBB and Advocate Capital * Strategic Expansion - $358 million a Atlanta, DC, Alabama, Kentucky, Franchise Finance, Equipment Finance * Recruiting Impact - $1
Slide 33: Loan Portfolio by Category ($ in millions)
($ in millions) C&l CRE — Owner Occ. Total C&I & O/O CRE CRE — Investment CRE — Multifamily and other C&D and Land Total CRE & Construction Consumer RE Consumer and other Total Other Total Loans $11,893.2 4,045.0 $15,938.2 6,138.8 1,924.9 3,818.3 $11,882.0 4,828.4 514.3 $5,342.7 $33,162.9| 100.0% 35
Slide 34: Loan Portfolio — Market Segmentation
Balance Sheet — Loan Portfolio — Market Segmentation /innacle ($ in millions) TOTAL PINNACLE CRE & CONSTRUCTION Amts. Amts. ‘Amts. Amts. Amts. Amts. 1024 1023 1024 1023, 1Q24 1023 $1,710.3 Nashville $8,609.5 $8,295.3 $3,779.1 $3,495.5 $2,993.1 $3,089.5 $1,837.3 Knoxville 2,033.0 2,034.1 1,049.6 1,14
Slide 35: Loan Portfolio — CRE Segmentation
Balance Sheet — Loan Portfolio — CRE Segmentation rinnacle ($ in millions) Total NOO and Multifamily Total Construction Total NOO and Construction Amts. Amts. Amts. Amts. Amts. Amts. Amts. 1Q24 4023 1923 4023 1024 4Q23 1923 Multifamily $1,890.1 $1,607.9 $1,333.5 $1,573.9 $1,546.0 $1,106.5 $3,464.0 $
Slide 36: Loan Portfolio Lines of Credit
Balance Sheet — Loan Portfolio Lines of Credit [Ss in millions) 9/30/2022 | 12/31/2022 | 3/31/2023 | 6/30/2023 | 9/30/2023 | 12/31/2023 | 03/31/2024 ets CRE - Investment & Construction Net Active Balance | $4,743.41 | $5,225.32 | $5,726.97 | $6,060.77 | $6,294.22 | $6,517.57 | $6,836.18 $318.61 Net
Slide 37: CRE Commitment Trends
Balance Sheet — CRE Commitment Trends Zinnacle New Construction Commitments $600 1Q23 to 1Q24 (S$ in million) $400 $0 1Q23 2Q23 3Q23 4Q23 1Q24 ™ Warehouse/Industrial m Multifamily 1-4 Family Retail m All Other 37
Slide 38: Multifamily Highlights
Balance Sheet — Loan Portfolio Multifamily Highlights cinnacle * 94.7% is located within the PNFP footprint * 62.5% are MF Construction loans (by commitment): Average number of units 278 ($20MM+ Construction) Typically, 4 & 5-star, garden style apartments Located in core urban and suburban Southeast
Slide 39: Warehouse Highlights
Balance Sheet — Loan Portfolio Warehouse Highlight cinnacle « — Industrial production primarily focuses on construction opportunities with top-tier development platforms * Conservative loan basis exhibiting an average LTV of 51.4% and an average LTC of 64.7% for construction * Our top industrial mar
Slide 40: Professional Office Highlights
Balance Sheet — Loan Portfolio Professional Office Highlights -innacle * 93.1% of Professional Office CRE properties are in PNFP markets * The concentration in Nashville is primarily due to the participation in the Nashville 10 24 Professional Office Balances by Property Location Yards project (appr
Slide 41: Professional Office Highlights: Portfolio by Type and LTVs
Balance Sheet — Loan Portfolio Professional Office Highlights “innacle Single-Tenant Office LTVs Q1 24 Professional Office 60.0% 55.9% Portfolio by Type ie 40.0% 33.6% 30.0% Avg Bal: 20.0% $1.3MM $6.2MM 9.5% Avg Bal: 10.0% $0.8MM. 0.0% ——— LIV< 60% LTV 60% to70% LTV 70% to 80% LTV 2 80% Multi-Tenant
Slide 42: Current Expected Credit Losses
Current Expected Credit Losses cinnacle Total Allowance for Credit Losses for loans = $371.3mm or, 1.12% of loans, at March 31, 2024 Sin thousands Allowance for pe Off-Balance redit Losses eines Sheet At March 31, 2023 Net Charge Offs ($9,771) 0.13% 2 (9,771) 2Q Provision $33,389 481.500) $31,889 At
Slide 43: Current Expected Credit Losses by Category
Current Expected Credit Losses Zinnacle (Sin thousands) September 30, | December 31, 2023 2023 % of Allowance for Credit Losses Amount Loans Conteatarcialiernd inckestrtal $153,629 1.43% $148,418 1.35% $144,302 1.28% $148,212 1.27% $151,172 1.27% Commercial Real Estate 65,512 0.62% 81,605 0.74% 85,1
Slide 44: Asset Quality
Asset Quality Zinnacle AS A% OF AS A% OF AS A% OF i dubssamair | _mochasame | oratoans | Somber 200 | TAL LOANS: | mecha 20 OPAL ED ANS NPLs and > 90 days Const. and land development $701 0.00% $607 0.00% $130 0.00% Consumer RE 23,630 0.07% 18,660 0.06% 16,907 0.06% (CRE — Owner Occupied 10,707 0.03
Slide 45: Net Loan Charge Offs by Loan Type
Balance Sheet — Loan Portfolio Zinnacle Net Loan Charge Offs by Loan Type oo il —_" | ‘al ‘Construction al ‘Consumer RE Consumer and other Total CRE PEREEEE ER ES 2021 m2022 2023 92024 — Rates 45
Slide 46: Loan Portfolio — 100/300 Test
Balance Sheet — Loan Portfolio — 100/300 Test Finnacle ($ in thousands) 1Q24 4Q23 3Q23 2Q23 1023 4Q22 Loans secured by real estate: Construction, land development, and other loans: 1-4 family residential construction loans $672,284 $693,128 $684,366 $676,742 $737,692 $772,653 Other construction loan
Slide 47: Deposit Portfolio — Market Segmentation
Balance Sheet — Deposit Portfolio — Market Segmentation Zinnacl ($ in millions) TOTAL DEPOSITS DRE DEPOSITS NONCORE DEPOSITS TOTAL PINNACLE Rs IN AND MA s PUBLIC FUNDS and OTHER DEPOSITS 1024 1023 1024 Q: 1 I 1Q 1024 1023 Nashville $14,144 $13,386 $12,941 $12,336 $729 $620 $474 $430 Knoxville 2,949
Slide 48: Balance Sheet - Deposit Portfolio
Balance Sheet - Deposit Portfolio Ratio of EOP Uninsured and/or Uncollateralized Deposits Estimated Liquidity Available for Uninsured Deposits Balances at to Total Deposits ($s in miltions) Mar. 31, 2024 50.00% PTT Total Deposits $39,402 38.9% 40.00% 33.7% 33.2% Less: Insured and/or Collateralized D
Slide 49: Balance Sheet — Bond Portfolio
Balance Sheet — Bond Portfolio Portfolio: Mar. 31, 2024 Total Investments $7.4 billion Net Unrealized Gain (Loss) ($159.6) million Investment Securities Segmentation D Net of ies caalacats aT 3/31/24 % of 12/31/23 % of 9/30/23 % of yovee Balance Portfolio Balance Portfolio Balance Portfol 3. “y 4.1%
Slide 50: Balance Sheet — Bond Portfolio
Balance Sheet — Bond Portfolio “innacle 3 3.00 SSSI IO IOP LEEEELEE ——— Peer Median - Bond Yields = = » Peer Median - % of Total Assets ‘% of Total Assets Effective Bond Portfolio Composition End of Period NR% 66% 65% 65% a 35% 35% Mar. 2023 Jun. 2023 Sep. 2023 Dec. 2023 "Fixed Rate ™ Variable Rate
Slide 51: Tangible Book Value
Tangible Book Value “innacle Tangible Book Value per Common Share** $51.98 $46.75 $41.65 l | | | 2 © 2 > > nd “y ta “y 2 > ‘ed > > > vv + ¥ V sy + a + v + a y ¥ sul F & er Fr rer err ers FF SF +*: excluding good Focused on preserving and growing TBV per common share — YTD growth 2024* 4.7% 2023 14.8
Slide 52: Interest Rate Sensitivity
Interest Rate Sensitivity cinnacle Rate Ramp Scenarios Rate Shock Scenarios 3.0% 5 a on a at! i = = —_— — ee em oe 5.0% 5.0% 4022 1023 2023 3023 4023 1024 4022 1023 2023 3023 4023 1024 =+100bp Ramp = -100bp Ramp w+100bp Shock ss -100bp Shock ‘Most recent IRR analysis conducted as of 2/29/24 ‘Most re
Slide 53: Income Statement — Revenue Per Share
Income Statement — Revenue Per Share *: excluding ge Revenue per Share $23.00 $22.00 $21.00 $20.00 $19.00 $18.00 $17.00, 6.8% %y + $16.51 $15.78 ~ ‘ys! 915,07 seeking oethrs1005” saaagspst $12.92 $12.42 $12.13 $11.74 $11.43 Py gl $16.00 $15.00 $14.00 $13.00 $12.00 $11.00 $10.00 LTM Revenue Per Share
Slide 54: Income Statement — PPNR
Income Statement — PPNR -innacle ($s in thousands) 2024 ID PPNR Trends , Adjusted PPNR Net interest income $821,788 $932,401 $1,129,293 $1,262,118 $318,034 Noninterest income 317,840 395,734 416,124 433,253 110,103 $800 Noninterest expense (564,455) (660,104) (779,999) (887,769) 242,365 F 700 PPNR b
Slide 55: BHG Funding Sources
Pinnacle Over 1,600 banks in network. 741 unique banks acquired BHG loans in 2023,| approximating $1.9B in loan volume. $533m sold in Q1 2024. $1B in loan volume sold to multiple institutional investors in 2023. $98mm sold in Q1 2024 via a monthly forward flow arrangement. Over $2.2B in cumulative s
Slide 56: BHG Originations
-innacle Originations * BHG continues to refine and FICO Mix (mm) Cumulative Net Loss Curves (27 months) SE ole Tete | * Losses in certain risk classes, ams S&S en ere particularly the lower credit | 20:5 Im” Ep“ e tranches of loans made post- COVID (2021 and H1 2022), oS ene GoD exceeded acceptable
Slide 57: BHG Financials
BHG Financials [isin thousands) Saipan calor {8'sh thousands) saz 42003102023 [Cash and Cash Equivalents 671,722 602,850 591,246 Interest Income $ 140,564 $ 147,105 $ 142,514 Loans Held for Investment 2,988,136 3,242,215 3,429,382 a 48,786 51,106 46,837 ntownees for tcmlomes Cee) en BO) Provision fo
Slide 58: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures -innacle Netincome Investment (gains) losses on sales of securities - 0) 97273361 Gain on sale of ned assets as aresut of sale easeback - - ORE expense lincome} FDIC special assessment Loss on BOLIrestiuctuing Recognition of mortgage serviong asset FHLBr
Slide 59: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures “innacle paseo (fees ae aoe eat Be : igen eoe Sw are 8se1 : em : i) ea : , i Pr en no eee : : 1 see : : : : é : : : : : : : Loss on BOLI restuctuing: = 16 = = = = = = = = = . - = = = = Tecogelin of more spe serilag soeot E : = 2 E = = = = : J : = e = _ G
Slide 60: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures -innacle Note: See slide 62 for peer group utilized in the above analysis. Source: S&P Global Market Intelligence
Slide 61: 2024 Peer Group
2024 Peer Group einnacle Institution Name Pinnacle Partner: Associated Banc-corp Green Bay, WI Bank OZK Little Rock, AR Bank United Inc. BKU Houston, TX Cadence Bank CADE Tupelo, MS Comerica Inc. CMA Dallas, TX Commerce Bancshares, Inc. CBSH Kansas City, MO Cullen/Frost Bankers, Inc. CFR San Antonio
Slide 62: Slide 62
Pinnacle Financial Partners — Q1 2024 Earnings Presentation on 6ix