Pinnacle Financial Partners, Inc. · NYSE:PNFP
Pinnacle Financial Partners — Investor Day (June 2018)
133 slides from Pinnacle Financial Partners's investor day presentation, Jun 7, 2018
Slide 1: Today's Agenda
Today’s Agenda 8:30 am Breakfast at Omni Hotel 9:00 M. Terry Turner – Opening remarks President and CEO 9:30 Harold R. Carpenter – Target setting and incentives EVP and Chief Financial Officer 10:00 Robert A. McCabe – Tennessee and Wealth Management Chairman of the Board and Chairman of the Tennesse
Slide 2: 2018 Investor Day Introduction
2018 Investor Day Introduction M. Terry Turner, President and CEO Harold R. Carpenter, EVP and CFO and other key leadership June 7, 2018
Slide 3: 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 4: Safe Harbor Statements
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 5: Objectives for the Day
Objectives for the Day 1. Showcase the quality and depth of management 2. Provide insight into why PNFP is a consistent and reliable grower 3. Demonstrate the ongoing power of the model in Tennessee 4. Provide an update on the status of the BNCN integration and ongoing thrust 5. Showcase the thrust
Slide 6: Quality and Depth of Management
Quality and Depth of Management Pinnacle has an unusually deep and cohesive management team M. Terry Turner Chief Executive Officer and President Rob McCabe - Chairman, Tennessee Hugh Queener - Chief Administrative Officer Harvey White - Chief Credit Officer Kim Jenny - Chief Risk Officer Ron Samuel
Slide 7: Objectives for the Day
Objectives for the Day 1. Showcase the quality and depth of management 2. Provide insight into why PNFP is a consistent and reliable grower 3. Demonstrate the ongoing power of the model in Tennessee 4. Provide an update on the status of the BNCN integration and ongoing thrust 5. Showcase the thrust
Slide 8: Why PNFP is a Consistent and Reliable Grower
Why PNFP is a Consistent and Reliable Grower 1. Proven competence in laddering in “market best” bankers 2. Rapid balance sheet growth leads to rapid EPS, TBV growth 3. Goal setting and incentives “require” top quartile performance 4. Engaged associates produce better outcomes than others 8
Slide 9: Objectives for the Day
Objectives for the Day 1. Showcase the quality and depth of management 2. Provide insight into why PNFP is a consistent and reliable grower 3. Demonstrate the ongoing power of the model in Tennessee 4. Provide an update on the status of the BNCN integration and ongoing thrust 5. Showcase the thrust
Slide 10: Objectives for the Day
Objectives for the Day 1. Showcase the quality and depth of management 2. Provide insight into why PNFP is a consistent and reliable grower 3. Demonstrate the ongoing power of the model in Tennessee 4. Provide an update on the status of the BNCN integration and ongoing thrust 5. Showcase the thrust
Slide 11: BNCN Integration and Ongoing Thrust
BNCN Integration and Ongoing Thrust Thesis: Accelerate double-digit growth by building a C&I platform 11
Slide 12: BNCN Integration and Ongoing Thrust
BNCN Integration and Ongoing Thrust 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: BNCN Integration and Ongoing Thrust
BNCN Integration and Ongoing Thrust BNC Integration - Key Measures of Success 1Q18 1. Continued high-growth CRE and construction lending practice 15.7%* 3. Accelerated C&I and owner-occupied CRE loan growth 26.6%* 13
Slide 14: Objectives for the Day
Objectives for the Day 1. Showcase the quality and depth of management 2. Provide insight into why PNFP is a consistent and reliable grower 3. Demonstrate the ongoing power of the model in Tennessee 4. Provide an update on the status of the BNCN integration and ongoing thrust 5. Showcase the thrust
Slide 15: Objectives for the Day
Objectives for the Day 1. Showcase the quality and depth of management 2. Provide insight into why PNFP is a consistent and reliable grower 3. Demonstrate the ongoing power of the model in Tennessee 4. Provide an update on the status of the BNCN integration and ongoing thrust 5. Showcase the thrust
Slide 16: Antidote for "law of large numbers"
Antidote for “law of large numbers” 1. Micro vs. macro; granular vs. aggregates 2. Geographic focus vs. Line of Business focus 16
Slide 17: Antidote for "law of large numbers"
Antidote for “law of large numbers” 17
Slide 18: Objectives for the Day
Objectives for the Day 1. Showcase the quality and depth of management 2. Provide insight into why PNFP is a consistent and reliable grower 3. Demonstrate the ongoing power of the model in Tennessee 4. Provide an update on the status of the BNCN integration and ongoing thrust 5. Showcase the thrust
Slide 19: Key Funding Strategies and Tactics
Key Funding Strategies and Tactics 1. PNFP’s model requires core funding of 75-85% 2. PNFP gathers funding primarily through a relationship strategy – not traditional mass market strategies 3. PNFP’s Client Advisory Group in Nashville is the model for building other C&I programs 19
Slide 20: Key Funding Strategies and Tactics
Key Funding Strategies and Tactics Additional Deposit Gathering Tactics 1. Hire RMs and CSAs that are net providers of funds 2. Focus existing RMs on sectors/clients that are net providers of funds 3. Ladder in additional branch distribution in high gain markets 4. Augment branch distribution with c
Slide 21: Objectives for the Day
Objectives for the Day 1. Showcase the quality and depth of management 2. Provide insight into why PNFP is a consistent and reliable grower 3. Demonstrate the ongoing power of the model in Tennessee 4. Provide an update on the status of the BNCN integration and ongoing thrust 5. Showcase the thrust
Slide 22: Objectives for the Day
Objectives for the Day 1. Showcase the quality and depth of management 2. Provide insight into why PNFP is a consistent and reliable grower 3. Demonstrate the ongoing power of the model in Tennessee 4. Provide an update on the status of the BNCN integration and ongoing thrust 5. Showcase the thrust
Slide 23: 2018 PNFP Investor Day
2018 PNFP Investor Day M. Terry Turner, President and CEO Harold R. Carpenter, EVP and CFO and other key leadership June 7, 2018
Slide 24: Agenda
Agenda • Managing Change • Deposits, Deposits, Deposits • Accretion • Incentives / Target Setting / Why? 24
Slide 25: Much change over last 3+ years
Much change over last 3+ years • Mergers/acquisitions • CapitalMark, Magna, Avenue, BNCN - $11.2B in assets • BHG - 49% acquisition - $189mm cash/stock • People March 31, 2018 March 31, 2015 177% FTE’s 2,148 775 13% Revenue/FTE $412,800 $365,300 6% Expense/FTE $205,000 $192,900 30% Assets/FTE $10.7
Slide 26: Much change over last 3+ years
Much change over last 3+ years Pinnacle has been a rapid and reliable grower of EPS and BV FD EPS Book Value per Share Revenue per share $1.08 $2.83 $0.82 $48.16 $2.46 $2.44 $0.68 $0.62 $34.61 $29.26 $1.97 $0.47 $20.88 $22.98 $1.68 FD EPS* Tangible Book Value per Share* Revenue per share * $1.13 $24
Slide 27: Return on Average Tangible Equity vs Price to Tangible Book
Price to Tangible Book Value Pinnacle consistently delivers top quartile ROTCE supporting P/TBV upside 22.00 PACW WAL 20.00 Return on Average Tangible Equity CHFC 18.00 PNFP FNB STL MBFI CFR OZRK 16.00 ONB PB HBHC SNV UBSI FHN 14.00 BXS UMPQ WTFC TRMK TCF 12.00 ASB FULT UMBF IBKC 10.00 170.00 190.00
Slide 28: PE Ratios Comparisons Inconclusive
PE Ratios Comparisons Inconclusive Pinnacle to focus on earnings growth to support PE upside 25.00 2018 PE Return on Average Tangible Equity PACW WAL 20.00 CHFC FNB STL PNFP MBFI OZRK CFR ONB PB 15.00 FHN HBHC SNV UBSI UMPQ BXS WTFC TRMK ASB TCF UMBF FULT IBKC 10.00 5.00 - 11.00 12.00 13.00 14.00 15
Slide 29: There's also been a lot of change in NC
There’s also been a lot of change in NC Pinnacle (PNFP) Quarter Quarter Most Pre-Deal F.N.B. Corp (FNB) Quarter Quarter Most Pre-Deal acquires Ann'c Closed Recent to acquires Ann'c Closed Recent to Bank of N.C. (1Q17) (2Q17) (1Q18) Current Yadkin Valley (3Q16) (1Q17) (1Q18) Current PPNR/Share $1.19
Slide 30: Deposits, Deposits, Deposits
Deposits, Deposits, Deposits Large Cap Thesis PNFP Thesis 15
Slide 31: Loan Growth and Funding Costs are Related
Loan Growth and Funding Costs are Related Our loan growth requires significant attention to funding 30% Average Ticket Size - Loans 0.90% $1,400,000 $1,200,000 $1,000,000 $800,000 $600,000 25% 0.75% $400,000 $200,000 Quarterly Loan Growth % - Annualized $0 C&I CRE Constr. Cons Cons RE All Loans 2015
Slide 32: Asset Quality Critical to our Business Model
Asset Quality Critical to our Business Model Organic Loan Growers Require Effective Credit Systems NPLs/ Loans NPAs/Total Loans + ORE 3.50 4.00 3.00 3.50 2.50 3.00 2.00 2.50 1.50 2.00 1.50 1.00 1.00 0.50 0.50 0.00 0.00 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2006 2007 2008 2
Slide 33: Deposit Growth Exceeds Peers Over Time
Deposit Growth Exceeds Peers Over Time Quarterly Deposit Growth Beats Median 7 of last 11 quarters 25.00% 100.00% Quarterly Deposit Growth % - Annualized 20.00% 96.00% Loan/Deposit Ratio 15.00% 92.00% 10.00% 88.00% 5.00% 84.00% 0.00% 80.00% 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 201
Slide 34: Client Bank Drives Results
Client Bank Drives Results Wholesale Funds Provide Immediate Liquidity COF Trends Wholesale Bank vs Client Bank 2.00% 1.80% 1.60% 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.20% 0.00% 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 Client COF Wholesale COF AVG Effective FF Rate Core Fundi
Slide 35: Criticality of Core Funding
Criticality of Core Funding Focus is on Core Funding to Reduce Dependence on Noncore Sources Net Noncore Funding Dependency Ratio 25.00% 20.00% BNCN 15.00% 10.00% 5.00% 0.00% PNFP Peer Median Source: SNL Financial Peer group detailed in Supplemental Information. 35
Slide 36: Accretion impact – 2018 and 2019
Accretion impact – 2018 and 2019 Impact of Purchase Accounting in 2018 and 2019 $55 mm $40 mm Anticipated Remaining Accretable Discount Through Dec 2019 $160,000,000 $140,000,000 $120,000,000 $100,000,000 $80,000,000 $60,000,000 $40,000,000 $20,000,000 Source: Company records $0 Q1 2018 Q2 2018 Q3 2
Slide 37: Linkage between Results and Compensation
Linkage between Results and Compensation • March kickoff, June board retreat, July board approval 3.5 Year • Market assessments from regional presidents & Greenwich Strategic Plan • Peer information, sell side research, economic reports • LOB leaders will construct plan • LT goals and objectives – e
Slide 38: Linkage between Results and Compensation
Linkage between Results and Compensation • A few years ago, Mercer Consulting performed a study to identify measurements that most closely correlated to increases in TSR • Studied many individual metrics and combinations of metrics using regression analysis over 3- and 5-year periods • Findings to g
Slide 39: Linkage between Results and Compensation
Linkage between Results and Compensation • We set targets that: • Focus on earnings growth, revenue growth and soundness, such that these targets consistently rank PNFP in the top quartile of a peer group over the longer term, and • We incent everyone in our firm to achieve these targets High Perfor
Slide 40: 2017 Results for Incentive Purposes
2017 Results for Incentive Purposes Merger costs, EPS, Revenue DFIT and ROAA Consolidated revaluation, results for Results BNC Impact, Incentive bond Purposes transactions EPS $2.70 $0.83 $3.53 Revenues $688.2 mm $172.50 mm $515.70 mm ROATA 1.11% 0.30% 1.41% 40
Slide 41: 2017 Incentive Tiering – Cash Plan
2017 Incentive Tiering – Cash Plan Soundness threshold – - Classified Asset Ratio < 35% Payout Summary - Actual of 13% in 2017 125% 100% Percentage of total Percentage of total 75% award calculation award calculation 35% at Target at Maximum 80% 100% Corporate FDEPS target 20% 25% Corporate Revenue
Slide 42: History of Incentive Payouts
History of Incentive Payouts Cash Incentive Target Payouts During recession, no payouts and in 140% some years NEO payments were 120% eliminated. 100% 80% Max payout is 125% of target. 60% 40% 20% 0% NEO's All other Participants Cash Incentive Trends $0.50 125% 140% 120% Equity Incentives: $0.45 115
Slide 43: 2017 Equity Incentives
2017 Equity Incentives Leadership PUA – Vesting Criteria Performance Criteria % of total performance units available for vesting if December 31, 2017 performance criteria below and subsequent one-year service vesting requirement are achieved. Results interpolated within the ranges. Couple of things
Slide 44: Incentive plan grid
Incentive plan grid Corporate Commercial Focus Retail Focus (PNFP) Shareholder Easier to align as targets are based Should be fairly consistent with Activity based, sales process – can be Alignment on corporate goals. One step below shareholder alignment. However, cross-purposed at the individual ba
Slide 45: Sustainable business targets
Sustainable business targets Pinnacle sets and delivers against lofty strategic targets Pinnacle Targeted Thoughts through Dec. 2019 Operating Range Return on Average Assets 1.50% to 1.70% No change Net Interest Margin 3.60% to 3.80% Funding pressure offset by loan growth momentum. Not enough pressu
Slide 46: FDEPS estimates
FDEPS estimates FYE 2014 FYE 2015 FYE 2016 FYE 2017 FYE 2018 FYE 2019 MEAN Analyst estimates – Per SNL 1/1/2014 $ 1.86 $ 2.12 1/2/2015 $ 2.02 $ 2.29 $ 2.61 1/4/2016 $ 2.59 $ 3.01 $ 3.35 1/1/2017 $ 3.05 $ 3.43 $ 3.98 1/1/2018 $ 3.55 $ 4.78 $ 5.37 Current $ 4.71 $ 5.18 Actual (GAAP) $ 2.01 $ 2.52 $ 2.
Slide 47: Supplemental Information
2018 PNFP Investor Day Supplemental Information June 7, 2018
Slide 48: Yields and Rates
Yields and Rates 6.00 5.00 4.00 3.00 2.00 1.00 0.00 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 Cost of Funds Loan Yield Securities Yield Source: Company records 48
Slide 49: 2018 Peer Group
2018 Peer Group NPA & Loans 90+/ Price/ Last- Market Number of Tangible Common Price/ Tangible twelve-months Capitalization Dividend Institution Name Ticker City, State Total Assets Offices ROAA (%) ROATE Equity + LLR (%) Book (%) EPS (x) ($millions) Yield # of Analysts Analyst Rec. Pinnacle Financi
Slide 50: Peer Performance Heat Map
Peer Performance Heat Map PNFP Rank 2014 2015 2016 2017 2018 PNFP YTD 2018 Gap to 75% Price/ Tangible Book 6 2 1 2 4 264.87 (28.69) Price/ Earnings 8 5 3 6 8 20.98 0.13 ROATE 6 5 6 7 4 18.25 (1.74) ROA 5 4 4 10 4 1.50 (0.17) ROATA 5 5 5 7 4 1.68 (0.21) NIM 12 10 7 8 8 3.65 0.02 Net C/O’s 10 22 23 13
Slide 51: Non-GAAP reconciliation
Non-GAAP reconciliation Non GAAP reconciliation 2014 2015 2016 2017 Net income $ 70,471 $ 95,509 $ 127,224 $ 173,979 Dilutive Weighted Average Shares 35,126 37,973 43,731 64,328 GAAP EPS $ 2.01 $ 2.52 $ 2.91 $ 2.70 Investment (gains) losses $ (29) $ (552) $ (395) $ 8,264 FHLB prepayment charges $ 47
Slide 52: Tennessee Market & Wealth Management
Tennessee Market & Wealth Management Rob McCabe – Chairman of the Board June 7, 2018
Slide 53: Current Franchise
Current Franchise 46 office locations statewide Four Major Urban Centers Memphis – 5 Middle TN – 30 Chattanooga – 4 Knoxville - 7
Slide 54: Middle Tennessee
Middle Tennessee ● Economic drivers ● Highly diversified industry structure ● Healthcare - number one economic driver ● Music, entertainment, tourism ● Publishing, light manufacturing, automotive assembly and supplies ● State capital employs +/- 20,000 people ● Professional sports – Predators/Titans
Slide 55: Knoxville
Knoxville ● Economic drivers ● Innovation Valley (Knox and surrounding counties) ● US Department of Energy (Oak Ridge) ● Healthcare center (Covenant, UHS & Tennova) ● Diversified employment: Transportation, Manufacturing, Government, Education, Hospitality ● CNN Money # 5 Best Cities for Small Busin
Slide 56: Memphis
Memphis Eight Fortune 1000 world headquarters in Memphis provides stable employment St. Jude is the premier center for research and treatment of catastrophic childhood diseases. Transportation & Logistics: World class transportation infrastructure ● Home to the FedEx World Hub and major hubs for UPS
Slide 57: Chattanooga
Chattanooga ● Economic drivers ● Manufacturing ● Volkswagen expansion and supply chain participants ● Tourism: $1 Billion + growth sector ● Entrepreneurial ecosystem supporting start-ups; small business expansion ● Extensive Foundation engagement investing in initiatives, people, programs ● Growth o
Slide 58: Pinnacle's Success Equation
Pinnacle’s Success Equation ● Well-known experienced leaders with stature in the business ● Professional staff > 10 years experience in market ● Product/Service lines compete well with super regionals ● Little or no turnover ● Attractive work environment/Flat organization/Geographic focus/Local Deci
Slide 59: Experienced Market Leadership
Experienced Market Leadership Years in Years at Name Original Firm Title Age Banking Pinnacle Industry Ed White First American Manager, Client Advisory Group - Nashville 65 43 18 John Cannon National City Manager, Commercial Real Estate Division 45 23 3 Larry Whisenant Suntrust Manager, Client Servi
Slide 60: Lead Relationships as % of Market
Commercial Banking Lead Market Share / NPS PNFP’s differentiating practices are working in every Tennessee market Nashville Knoxville 25% 20% Lead Relationships as % of Market Pinnacle 20% 15% Bank #4 15% Bank #1 Bank #1 10% Bank #3 10% Pinnacle Bank #3 Bank #4 Bank #5 Bank #2 5% 5% Bank #2 0% 0% 0
Slide 61: Market Share Overview
Market Share Overview Pinnacle Total Market Pinnacle Total Market PNFP Deposit PNFP Branch Lead Bank Region Deposits Deposits Deposit Rank Lead Share Branches Branches Mkt Share % Mkt Share % Mkt Share % ($000) ($000) Bank of Middle TN 30 591 $7,142,000 $57,393,000 3 12.4% 5.1% 15.6% America First K
Slide 62: Competitive Landscape
Competitive Landscape Market FTN Regions STI BB&T First Bank Middle TN * * * * Knoxville * * * * Chattanooga * * * Memphis * * * Client Acquisition opportunity remains high from First Tennessee, Regions, Suntrust 62
Slide 63: Revenue Hires Year over Year
Revenue Hires Year over Year Financial Advisors and Office Leaders - Tennessee Market May 18 May 17 YoY Change Nashville 168 159 9 Knoxville 41 38 3 Memphis 46 36 10 Chattanooga 29 29 0 Total 284 262 22 Wealth Management – Lines of Business Market May 18 May 17 YoY Change Nashville 49 42 7 Knoxville
Slide 64: Selective Revenue Hires
Selective Revenue Hires Financial Advisors/Office Leaders Wealth Management Market Producer Former Firm Market Producer Former Firm Nashville Tom Fox Wells Nashville Oakley Group STI Bob Edwards STI David Bower STI Rick Seadler Commerce Ken Farley STI Clay Hart Renasant Knoxville Scott Schroeffel ST
Slide 65: Loan Volumes Continue to Rise
Loan Volumes Continue to Rise (000s) Mar 18 Dec 16 $$ Chg % Chg Construction $1,410,013 $820,262 $589,751 71.9% CRE $3,373,512 $3,208,043 $165,469 5.2% C&I $3,516,321 $2,639,876 $876,445 33.2% Other $1,373,408 $1,278,600 $94,808 7.4% Total Loans $9,673,254 $7,946,781 $1,726,473 21.7% (000s) Mar 18 D
Slide 66: Client Funding Supporting Asset Growth
Client Funding Supporting Asset Growth (000s) Mar 18 Dec 16 $$ Chg % Chg Middle TN $6,506,253 $5,724,247 $782,006 13.7% Knoxville $1,266,297 $853,422 $412,875 48.4% Memphis $966,773 $696,899 $269,874 38.7% Chattanooga $842,309 $626,651 $215,658 34.4% Total Deposits $9,581,632 $7,901,219 $1,680,413 2
Slide 67: Wealth Management Summary – Revenues & AUM
Wealth Management Summary– Revenues & AUM Total Revenues 1Q18 1Q17 $$ Change % Change Pinnacle Asset Mgmt $5,057 $3,359 $1,698 50.6% Trust Division $3,914 $3,466 $448 12.9% Pinnacle Wealth Adv $132 $89 $43 48.0% Insurance (MLB & HPB) $3,106 $2,998 $108 3.6% Total $12,209 $9,912 $2,297 23.2% 1Q18 AUM
Slide 68: Tennessee Market/Wealth Management Q&A
Tennessee Market/Wealth Management Q&A 68
Slide 69: Carolinas and Virginia
Carolinas and Virginia Rick Callicutt – Chairman of Carolinas and Virginia June 7, 2018
Slide 70: Current Franchise
Current Franchise Roanoke Greensboro Asheville Raleigh Charlotte Greenville Myrtle Beach Charleston
Slide 71: Current Franchise - Regions
Current Franchise - Regions VA Western NC Eastern NC Central NC Southern SC Coastal SC Upstate einnacle
Slide 72: Carolinas & Virginia – On offense
Carolinas & Virginia – On offense 7 2
Slide 73: Carolinas & Virginia – On offense
Carolinas & Virginia – On offense 7 3
Slide 74: Carolinas & Virginia – On offense: Loan Growth
Carolinas & Virginia – On offense Loan Growth • Loan growth since Q4 primarily in C&I and Construction • C&I has increased from 9.4% of Total loans to 12.6% in less than a year. • Loan growth YTD - $303mm • Loan yields have been steadily increasing • Volumes and yields do not include Purchase accoun
Slide 75: Carolinas & Virginia – Loan Growth by Market
Carolinas & Virginia – On offense Loan Growth - Market • Charlotte, Raleigh Durham and the Triad are leading the growth in 2018 • All markets continue to add seasoned C&I Bankers • All markets are contributing to growth goals in 2018 7 5
Slide 76: Carolinas & Virginia – On offense
Carolinas & Virginia – On offense 7 6
Slide 77: Carolinas & Virginia – Deposit Growth
Carolinas & Virginia – On offense Deposit Growth 7 7
Slide 78: Carolinas & Virginia Q&A
Carolinas & Virginia Q&A yi . 73 innacle FINANCIAL PARTNERS
Slide 79: Music, Sports, & Entertainment
Music, Sports, & Entertainment Andy Moats– Director, Music and Entertainment June 7, 2018
Slide 80: Overview
Overview Music has an enormous influence on our country’s landscape, and yet few banking competitors have effectively competed in this space. The barrier to entry is knowledge, not risk. Non traditional cash cycles, Intellectual property lending, Specialty products like royalty advances, tour lendin
Slide 81: Broader Market Assessment
Broader Market Assessment - Artist: Revenues primarily driven by writing and touring. Digital royalties creating new and growing income streams for artists. Leveraging ‘influence’ not just music, means new opportunities are being created for artists outside of music. - Songwriter: In an singles driv
Slide 82: Pinnacle Team / Competition
Pinnacle Team / Competition Pinnacle Music, Sports, and Entertainment Team: Leadership: Ron Samuels, Andy Moats Financial Advisors (5): Jennifer Alexander, Cooper Samuels, Randy Hulse, Tom Fox, Brent Young Financial Advisor Assistants / Credit: Woody Hartman, Josh Thamm, Amy Dodgen, Sharon Mejia, Ja
Slide 83: Financial Highlights
Financial Highlights Book of Business (Loans and Deposit Balances) will exceed $500,000,000 in 2018 Note: Music Sports and Entertainment team only. Does not include industry related business outside of Department. Department is self-funded: Approximately 1:1 loans to deposits Balance of Commer
Slide 84: New Loan Activity
New Loan Activity NEW LOAN COMMITMENTS BY QUARTER: RECENT DEAL HIGHLIGHTS Q4 2016: $55,062,000 Q1 2017: $32,892,000 Digital Streaming Company: Boston Q2 2017: $15,644,200 $30,000,000 Secured by digital music royalties (“streaming”) Q3 2017: $14,446,130 LIBOR + 325-375 Q4 2017: $79,728,500 $175,000 c
Slide 85: Sample Publishing/Label Collateral List
Sample Publishing/Label Collateral List Twist and Shout – The Beatles Baba O’Reilly – The Who Tom Sawyer – Rush Jeopardy Theme Song Everybody Wang Chung Tonight – Wang Chung Shape of You – Ed Sheeran Viva Las Vegas – Elvis I Want Candy – The Strangeloves Cry Me A River – Justin Timberlake She Loves
Slide 86: Sports
Sports With the recent addition of longtime sports banker, Tom Fox, the music & entertainment team has expanded its scope to include professional athletes and coaches. The initiative is further supported by our marketing partnerships with the Tennessee Titans, Memphis Grizzlies & JR Motorsports. All
Slide 87: Artist Growth
A ARTIST GROWTH Financial & Business Management * Track revenues & expenses (actual vs. projected) « Auto Generate Road Reports * Create and Track Budgets * Track every transaction: Who, Where, & by What method 360 Tour Insights * Merch counts & settlements * Ticket counts * Guarantees & overages *
Slide 88: Artist Growth
Artist Growth INTEGRATION & SERVICES PARTNERSHIP Description of Opportunity ADDRESSABLE MARKET Touring Artists & Related Teams PRODUCTS OFFERED Sa Tour Loan Program Tour Card Program Tour Account Program einnacle FINANCIAL PARTNERS
Slide 89: innacle
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Slide 90: Pinnacle Investor Day – Bankers Healthcare Group
Pinnacle Investor Day Nashville, TN | June 7, 2018 Albert Crawford Principal Owner, Chairman and CEO Bankers Healthcare Group | 2018
Slide 91: How BHG Started
91 How BHG Started • Founded in 2001 • Al Crawford (institutional sales) – investment banking background in Upstate NY • Bob Castro & Eric Castro (originations) – one of the largest lease franchises in So. FL. • Strategy • Doctors are a good credit risk with high cash flow • Small loan amounts • 84
Slide 92: BHG Strategy
92 BHG Strategy • Provide healthcare practitioner loans (primarily permanent operating capital) to a target group of borrowers emphasizing fast, efficient and responsive customer service • Marketing platform key to producing lead flow • Trade association involvement • Web-based advertising • 32% of
Slide 93: BHG Today
93 BHG Today • Over $3.25 billion in commercial medical loans originated since inception • ~$1.71 billion outstanding loan portfolio as of 12/31/2017 • ~$711 million originated in 2017 • Annualized default / charge off ratio of 2.54% of total portfolio • 2017 charge / charge off ratio of 2.28%, anti
Slide 94: Loan Fundings
Loan Fundings 94 $800 $700 $600 $500 Millions $400 $300 $200 $100 $0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Bankers Healthcare Group | 2018
Slide 95: BHG Loan Distribution – National Franchise
BHG Loan Distribution – National Franchise 95 Bankers Healthcare Group | 2018
Slide 96: Marketing, Marketing, Marketing!!!
96 Marketing, Marketing, Marketing!!! Maintaining the balance between customer acquisition and profitability Generating Quality Lead Flow is Critical!! Low Fico High Bankers Healthcare Group | 2018
Slide 97: BHG Marketing Investment
97 BHG Marketing Investment E Bankers Healthcare Group | 2018
Slide 98: Data Driven Decision-Making
98 Data Driven Decision-Making What’s next in Marketing & Analytics • Data Modeling and Response/Revenue Forecasting • “Persona” Development • Full Marketing Automation • Utilizing Artificial Intelligence • BHG Ambassador Program and Influencer Strategy Bankers Healthcare Group | 2018
Slide 99: Lead Flow Performance
99 Lead Flow Performance Revenue per Avg Lead Flow Lead to Fund % Avg Revenue Lead Q4 2017 4,241 13.19% $5,640,508 $1,330 Q1 2018 4,002 15.92% $7,572,200 $1,892 6,000 5,000 4,000 3,000 2,000 1,000 0 January February March April May June July August September October November December 2016 2017 2018
Slide 100: BHG Credit Statistics
100 BHG Credit Statistics Monthly average 2018 Characteristics 2017 Applicants initially scored 2,943 Total amount $1,281,140,045 approved Withdrawn by customer 337 Declined prior to underwriting 739 Average CMS 752 Applicants forwarded to underwriting: 1,867 Average FICO 728 - Approvals 1,387 - Dec
Slide 101: Bank Funding
101 Bank Funding 875+ banks have purchased a BHG loan Bankers Healthcare Group | 2018
Slide 102: www.bhgbanks.com
www.bhgbanks.com Approximately 57% of placement volumes in 2017 were
Slide 103: How Banks Purchase Loans?
103 How Banks Purchase Loans? • Executed Master Agreement = Order At March 31, 2018 • $3.0mm avg. daily sales pace via Auction & Number of banks in network 864 Direct offers • Auction ‘win’ provides same day closing docs Number of banks that acquired loans 296 • Direct offer typically allows for 48-
Slide 104: BHG Origination to Funding
104 BHG Origination to Funding Placements & Institutions Funding Originations & Credit Bankers Healthcare Group | 2018
Slide 105: BHG Substitutions and Collections
105 BHG Substitutions and Collections The key to keeping liquidity in the Bank network At BHG’s option and upon appropriate notification and BHG Board approval – BHG will substitute a delinquent loan to purchasing bank after the loan reaches 90 days past due BHG Collections • We have one of the fast
Slide 106: BHG Other Products and the Future
106 BHG Other Products and the Future Future Excitement in the Mix!! • Non-Core Loan products – Fund-EX • BHG Patient Lending • Consumer Lending • Credit Cards – Partnership with Pinnacle Bank • BHG has 22,837 approved credit cards as of March 31, 2018 • Outstanding balance on cards originated is >
Slide 107: Patient Lending
107 Patient Lending 1. Healthcare provider staff introduces patient responsibility and offers patient lending program 2. Patient selects term and monthly payment, then reviews and signs documents on their phone or tablet, at home or in the provider’s office 3. Loan is immediately assigned to the ban
Slide 108: BHG Value Proposition
108 BHG Value Proposition Why Healthcare Professionals Pick BHG • Convenient and efficient • No trips to the bank • Web-based application • Speed – 3 days from application • ACH for funding and payments • Customer Service • Doesn’t impact personal credit • No spousal guarantees • Brand • Well known
Slide 109: Supplemental Financial Information
Supplemental Financial Information
Slide 110: 2012-2017 Results
110 2012-2017 Results * In Millions Fiscal Year Assets Liabilities Equity Revenue Net Income 2012 $94.8 $38.5 $56.3 $51.8 $21.3 2013 $150.7 $85.4 $65.3 $65.6 $23.5 2014 $206.3 $141.3 $65 $91.7 $45.4 2015 $207.1 $132 $75.1 $104 $56.4 2016 $198.8 $129.2 $69.6 $140.7 $69.4 2017 $295.3 $201.4 $93.9 $149
Slide 111: Fiscal 2017 P&L
111 Fiscal 2017 P&L Revenues $millions % Notes Loan sales 88.6 59% Auction & Direct Loan Sales Loan origination fees 30.5 20% Fees from borrowers Commission income on referrals 7.5 5% Fees from brokered loans Interest and dividend income 17.9 12% Loan Inventory, Held to Maturity, Interest-Only Recei
Slide 112: Fiscal 2017 P&L
112 Fiscal 2017 P&L Expenses % Notes Salaries and employee benefits 35.8 47% Advertising expense 13.8 18% Amortization expense 6.1 8% Related to Interest-Only Receivables Secured borrowing interest expense 2.3 3% "JV" loan transfers Portfolio expense 4.1 5% Site Inpections, UCC Search, IRS Transcrip
Slide 113: Fiscal 2017 Balance Sheet
113 Fiscal 2017 Balance Sheet Assets Millions % Notes Cash and cash equivalents $ 94.90 32.1% $47.6 million is Reserve Accounts Interest-only strip at fair value $ 5.80 2.0% Interest-Only receivable related to loan sales Alternative financing referral receivable at fair value $ 7.00 2.4% Interest-On
Slide 114: 2018 Investor Day Conclusion
2018 Investor Day Conclusion M. Terry Turner, President and CEO Harold R. Carpenter, EVP and CFO and other key leadership June 7, 2018
Slide 115: Objectives for the Day
Objectives for the Day 1. Showcase the quality and depth of management 2. Provide insight into why PNFP is a consistent and reliable grower 3. Demonstrate the ongoing power of the model in Tennessee 4. Provide an update on the status of the BNCN integration and ongoing thrust 5. Showcase the thrust
Slide 116: Objectives for the Day
Objectives for the Day 1. Showcase the quality and depth of management 2. Provide insight into why PNFP is a consistent and reliable grower 3. Demonstrate the ongoing power of the model in Tennessee 4. Provide an update on the status of the BNCN integration and ongoing thrust 5. Showcase the thrust
Slide 117: Objectives for the Day
Objectives for the Day 1. Showcase the quality and depth of management 2. Provide insight into why PNFP is a consistent and reliable grower 3. Demonstrate the ongoing power of the model in Tennessee 4. Provide an update on the status of the BNCN integration and ongoing thrust 5. Showcase the thrust
Slide 118: Objectives for the Day
Objectives for the Day 1. Showcase the quality and depth of management 2. Provide insight into why PNFP is a consistent and reliable grower 3. Demonstrate the ongoing power of the model in Tennessee 4. Provide an update on the status of the BNCN integration and ongoing thrust 5. Showcase the thrust
Slide 119: Objectives for the Day
Objectives for the Day 1. Showcase the quality and depth of management 2. Provide insight into why PNFP is a consistent and reliable grower 3. Demonstrate the ongoing power of the model in Tennessee 4. Provide an update on the status of the BNCN integration and ongoing thrust 5. Showcase the thrust
Slide 120: Objectives for the Day
Objectives for the Day 1. Showcase the quality and depth of management 2. Provide insight into why PNFP is a consistent and reliable grower 3. Demonstrate the ongoing power of the model in Tennessee 4. Provide an update on the status of the BNCN integration and ongoing thrust 5. Showcase the thrust
Slide 121: Objectives for the Day
Objectives for the Day 1. Showcase the quality and depth of management 2. Provide insight into why PNFP is a consistent and reliable grower 3. Demonstrate the ongoing power of the model in Tennessee 4. Provide an update on the status of the BNCN integration and ongoing thrust 5. Showcase the thrust
Slide 122: Objectives for the Day
Objectives for the Day 1. Showcase the quality and depth of management 2. Provide insight into why PNFP is a consistent and reliable grower 3. Demonstrate the ongoing power of the model in Tennessee 4. Provide an update on the status of the BNCN integration and ongoing thrust 5. Showcase the thrust
Slide 123: PNFPs Current Stance on Bank M&A
PNFPs Current Stance on Bank M&A 1. PNFP is satisfactorily through the BNCN integration such that M&A transactions with targets could be considered. 2. We expect double digit growth in our existing footprint for several years, so we need no M&A to hit growth or profitability targets 3. Strategically
Slide 124: Objectives for the Day
Objectives for the Day 1. Showcase the quality and depth of management 2. Provide insight into why PNFP is a consistent and reliable grower 3. Demonstrate the ongoing power of the model in Tennessee 4. Provide an update on the status of the BNCN integration and ongoing thrust 5. Showcase the thrust
Slide 125: Speaker Biographies
2018 PNFP Investor Day Speaker Biographies June 7, 2018
Slide 126: Speaker Biographies
Speaker Biographies Robert A. McCabe, Jr.- Chairman Rob McCabe began his banking career with the former Park National Bank of Knoxville as an officer trainee in 1976. From 1976-1984, he held various positions with the bank, including senior vice president, until First American National Bank acquired
Slide 127: Speaker Biographies
Speaker Biographies Kirk Bailey- Chairman, Memphis Kirk Bailey is Pinnacle’s Memphis chairman. Bailey began his banking career in 1820 with Leader Federal Bank for Savings. He ran subsidiary operations for Leader Federal including insurance, land development, home building and commercial development
Slide 128: Speaker Biographies
Speaker Biographies Mark Carlton- Regional President, North Carolina Eastern region Mark Carlton is a regional president for Pinnacle Financial Partners’ North Carolina Eastern region. Before Pinnacle’s acquisition of BNC Bancorp in 2017 Carlton served in a similar role with Bank of North Carolina,
Slide 129: Speaker Biographies
Speaker Biographies Albert Crawford- Chairman/CEO & Original Founder of BHG Albert Crawford is a co-founder of BHG and currently serves as Chairman and Chief Executive Officer. He personally manages the company’s financial headquarters, overseeing all accounting, credit, clearing, human resources, l
Slide 130: Speaker Biographies
Speaker Biographies Mike Hendren- Senior Vice President an Senior Credit Officer Mike Hendren is senior credit officer for Pinnacle Financial Partners and oversees residential and commercial real estate lending for the firm. Hendren brings 26 years of real estate banking experience to his credit rol
Slide 131: Speaker Biographies
Speaker Biographies Time Huestis- Senior Credit Officer, Carolinas and Virginia Tim Huestis is senior credit officer for Pinnacle Financial Partners’ Carolinas and Virginia region. Huestis joined Pinnacle in 2009 as senior credit officer for the firm’s Middle Tennessee market. Before coming to Pinna
Slide 132: Speaker Biographies
Speaker Biographies Andy Moats- Executive Vice President and Director, Music & Entertainment- Nashville Andy Moats lead’s the firm’s music and entertainment group. Before Pinnacle’s merger with Avenue Bank in 2016, Moats was Avenue’s chief credit officer and bank group director for Avenue. He co-fou
Slide 133: Speaker Biographies
Speaker Biographies Other Pinnacle Associates Ron Samuels Vice Chairman Kent Cleaver Executive Vice President – Nashville Commercial Lending Kim Jenny Chief Risk Manager David Spencer EVP – Finance – Investment Securities Mike Hammontree Manager of Corporate Services Dana Sanders Finance – SEC repor
Pinnacle Financial Partners — Investor Day (June 2018) on 6ix