Pinnacle Financial Partners, Inc. · NYSE:PNFP
Pinnacle Financial Partners — Q3 2017 Earnings Presentation
37 slides from Pinnacle Financial Partners's earnings presentation, Oct 18, 2017
Slide 1: Third Quarter 2017 Investor Call
Third Quarter 2017 Investor Call M. Terry Turner, President and CEO Harold R. Carpenter, EVP and CFO October 18, 2017
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, earnings per diluted share, efficiency ratio, core net interest margin, noninterest expense and the ratio of noninterest expense to average assets and noni
Slide 4: 3Q17 Summary Results – GAAP Measures
3Q17 Summary Results – GAAP Measures Execution of fundamentals fueled exceptional growth in key valuation drivers Total Revenues FD EPS ROTCE Earnings Growth $216,159 $0.83 $0.71 14.49% 14.47% 14.25% $0.62 13.69% $118,327 $0.52 $83,469 $0.42 12.73% $57,401 $62,396 Balance Sheet Growth Total Loans To
Slide 5: 3Q17 Summary Results – Non-GAAP Measures
3Q17 Summary Results – Non‐GAAP Measures Execution of fundamentals fueled exceptional growth in key valuation drivers Total Revenues FD EPS* $0.90 ROTCE* Earnings Growth $216,159 16.01% $0.78 15.31% 15.43% $0.66 $118,327 13.69% $83,469 $0.52 $57,401 $62,396 $0.42 12.71% Balance Sheet Growth Total Lo
Slide 6: 3Q17 Summary Results – GAAP Measures
3Q17 Summary Results – GAAP Measures Pinnacle sets and delivers against lofty strategic targets ROAA Net Interest Margin Noninterest Income / Average Assets 1.60% 4.00% 1.40% 3.90% 1.30% 1.40% 3.80% 1.20% 1.10% 3.70% 1.00% 1.20% 3.60% 0.90% 3.50% 0.80% 1.00% 3.40% 0.70% 0.80% Noninterest Expense / A
Slide 7: 3Q17 Summary Results – Non-GAAP Measures
3Q17 Summary Results – Non‐GAAP Measures Pinnacle sets and delivers against lofty strategic targets ROAA Net Interest Margin Noninterest Income / Average Assets (1) 1.60% 4.00% 1.40% 3.90% 3.87% 1.30% 3.78% 3.79% 1.16% 1.40% 1.35% 3.80% 1.20% 1.13% 1.31% 1.31% 3.72% 3.66% 1.10% 1.25% 3.70% 3.60% 1.0
Slide 8: 3Q17 Summary Results
3Q17 Summary Results PNFP continued the infrastructure build in 3Q17 to support future rapid growth 1. Pinnacle / BNC merger update • Jan. 22 – Announcement of transaction • Apr. 6 – Regulatory approvals obtained • June 12 – Shareholder meetings anticipated • June 16 – Merger close • August 21 – PNF
Slide 9: 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 $3.50 Revenues per diluted share $200 $3.00 $2.80 Total Revenues $150 $2.50 (000's) $100 $2.00 $50 $1.50 $1.31 $‐ $1.00 Fee income NII Total revenue per share 9
Slide 10: 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% $16,000 5.00% $15,017 $12,000 4.00% Average Loans Loan Yields $9,817 (millions) $8,000 3.00% $8,558 $8,357 $8,233 $6,998 $6,742 $6,458 $5,690 $4,737 $4,000 2.00% $4,625 $4,436
Slide 11: Loan and Deposit Growth are Keys to Earnings Growth
Loan and Deposit Growth are Keys to Earnings Growth Average deposit balances grew $5.4 billion in 3Q17 $16,000 1.60% $15,828 $14,000 1.40% 1.25% $12,000 1.20% Avg. Deposits 1.01% (millions) $10,000 1.00% $10,394 $9,099 $8,791 $8,000 0.80% $8,454 $7,093 $7,037 $6,787 $6,000 0.60% $5,898 0.48% $4,885
Slide 12: Fee Businesses also Contribute to Earnings Growth
Fee Businesses also Contribute to Earnings Growth Fee businesses produce another strong quarter – Up 57% year‐over‐year 3Q17 2Q17 1Q17 4Q16 3Q16 Service charges $5,921 $4,179 $3,856 $3,850 $3,778 Investment services 3,660 3,110 2,822 3,320 2,592 Insurance commissions 2,124 1,461 1,859 1,178 1,233 Ga
Slide 13: PNFP Focuses on Strategic Expense Management
PNFP Focuses on Strategic Expense Management 3Q17 expense results reflect enviable operating leverage 3Q17 2Q17 1Q17 4Q16 3Q16 Salaries and benefits $64,288 $43,676 $38,352 $37,994 $36,053 Equipment and occupancy 16,590 10,713 9,675 9,228 9,401 Other real estate owned 512 63 252 44 17 Marketing and
Slide 14: Extraordinary Growth Potential on the Path Forward
Extraordinary Growth Potential on the Path Forward Recent market extensions provide roadmap for Carolina & Virginia Market At 9/30/17 At 12/31/16 At 12/31/15 YTD Annualized Growth Loans (000’s) Memphis 987 736 458 45.5% Chattanooga 1,033 800 708 38.7% Core Deposits (000’s) Memphis 823 696 385 24.0%
Slide 15: Extraordinary Growth Potential on the Path Forward
Extraordinary Growth Potential on the Path Forward The BNC integration overall is on‐track and highly accretive • Cultural integration is well underway • The system integration schedule has been expedited • ~ $40 million in cost take‐outs in 2018 are still on track • Potential revenue synergies are
Slide 16: Extraordinary Growth Potential on the Path Forward
Extraordinary Growth Potential on the Path Forward High growth urban markets across the Southeast provide further opportunity 16
Slide 17: Extraordinary Growth Potential on the Path Forward
Extraordinary Growth Potential on the Path Forward Opportunities likely exist for de novo or merger related expansion M&A Criteria De novo Sizing • At least $1 billion in assets • Nashville, Knoxville experience • Commercial thrust – Approximately $2.0 million in cumulative losses prior to break‐eve
Slide 18: 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 18
Slide 19: Q&A – Third Quarter 2017 Investor Call
Q&A – Third Quarter 2017 Investor Call
Slide 20: Supplemental Information
Supplemental Information Chart • Balance Sheet 21 • Asset Quality 29 • Income Statement 31 20
Slide 21: Supplemental Information – Balance Sheet
Supplemental Information Balance Sheet 21
Slide 22: Balance Sheet – Loan portfolio is well diversified
Balance Sheet Loan portfolio is well diversified Amts. %’s(*) Amts. %’s(*) Amts. %’s(*) Amts. %’s(*) 3Q17 3Q17 2Q17 2Q17 3Q16 3Q16 3Q15 3Q15 C&D and Land $1,939.8 12.7% $1,772.8 12.0% $930.2 11.3% $674.9 10.7% Consumer RE 2,541.1 16.7% 2,552.9 17.3% 1,186.0 14.4% 1,044.3 16.5% CRE – Owner Occ. 2,433
Slide 23: Balance Sheet – Construction portfolio reflects discipline
Balance Sheet Construction portfolio reflects discipline Amounts %’s(*) Amounts %’s(*) Amts. %’s(*) Amts. %’s(*) 3Q17 3Q17 2Q17 2Q17 3Q16 3Q16 3Q15 3Q15 Residential – Spec $253.3 1.7% $243.0 1.6% $182.2 2.2% $102.1 1.6% Residential – Custom 157.4 1.0% 153.3 1.0% 99.4 1.2% 44.5 0.7% Residential – Con
Slide 24: Balance Sheet – C&I loan portfolio is highly diversified
Balance Sheet The C&I loan portfolio is highly diversified 3Q17 2Q17 1Q17 4Q16 CRE Owner‐occupied $2,433,762 $2,368,641 $1,399,512 $1,354,893 C&I 3,971,227 3,688,357 2,980,840 2,891,710 Total C&I and CRE Owner‐occupied Portfolio $6,404,989 $6,056,998 $4,380,352 $4,246,603 NAICS Description 3Q17 2Q17
Slide 25: Balance Sheet – The CRE loan portfolio
Balance Sheet The CRE loan portfolio 9/30/2017 6/30/2017 3/31/2017 12/31/2016 Description % of RBC % of RBC % of RBC % of RBC Total Land 18.3% 18.3% 17.0% 17.9% Total 1‐4 Family Construction 19.1% 19.0% 25.3% 24.4% Total Apartment Construction 11.2% 8.3% 13.4% 11.6% Total Commercial Construction 39.
Slide 26: Balance Sheet – Relationship funding
Balance Sheet PNFP remains focused on relationship funding 9/30/2017 Percent 6/30/2017 Percent 12/31/2016 Percent Core Funding: Non‐interest bearing deposits $4,099,086 22.76% $3,893,603 22.70% $2,399,191 24.99% Interest‐bearing deposits 2,473,902 13.74% 2,480,791 14.46% 1,737,996 18.10% Money Marke
Slide 27: Balance Sheet – Securities book yields increase
Balance Sheet The securities book yields increase in 3Q17 4.00% 40.00% 3.58% 3.50% 35.00% 3.00% 30.00% 2.50% 25.00% 20.75% 2.64% 2.00% 20.00% 1.50% 15.00% 1.00% 12.92% 10.00% 0.50% 5.00% 0.00% 0.00% Bond Yields % of Avg. Assets 27
Slide 28: Balance Sheet – Conservative bond portfolio
Balance Sheet Conservative bond portfolio Portfolio: September 30, 2017 1.1% 4.0% 26.6% Total Investments $2.901 billion Unrealized Gain (Loss) $ (11.3) million QTD Purchases $ 546.0 million 48.7% QTD Sales $ 0 12.9% Duration Avg Yield – TE 3Q17 3.5% 2.6% 6.8% 2Q17 3.3% 2.5% Agency Corporates MBS 1Q
Slide 29: Supplemental Information – Asset Quality
Supplemental Information Asset Quality 29
Slide 30: Asset Quality – Asset quality remains very sound
Asset Quality Asset quality remains very sound (000’s) Sept. 30, 2017 As a % of total loans June 30, 2017 As a % of total loans Sept. 30, 2016 As a % of total loans Past Due Loans (*) Nonaccrual loans** $20,210 0.13% $17,602 0.12% $8,822 0.11% Accruing loans 39,081 0.26% 28,893 0.20% 19,929 0.24% To
Slide 31: Supplemental Information – Income Statement
Supplemental Information Income Statement 31
Slide 32: Income Statement – Mortgage volumes were strong in 3Q17
Income Statement Mortgage volumes were strong in 3Q17 300,000 6.00% 250,000 5.00% 200,000 4.00% 150,000 3.00% 100,000 2.00% 50,000 1.00% 0 0.00% Purchase Money Refinance Gross fees as a % of loans originated 32
Slide 33: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non‐GAAP measures 3Q17 2Q17 1Q17 4Q16 3Q16 Net interest income $173,182 $106,627 $88,767 $89,413 $86,635 Total noninterest income $42,977 $35,057 $30,382 $30,743 $31,692 Less: Securities gains ‐ ‐ ‐ (395) ‐ Noninterest income, excluding investment gains on sales of
Slide 34: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non‐GAAP measures 3Q17 2Q17 1Q17 4Q16 3Q16 Net income $64,442 $43,086 $39,653 $36,097 $32,376 Merger‐related charges 8,847 3,221 672 3,264 5,672 Tax effect on merger‐related charges (3,471) (1,264) (264) (1,281) (2,225) Net income less merger‐related charges $69,81
Slide 35: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non‐GAAP measures 3Q17 2Q17 1Q17 4Q16 3Q16 Net income $64,442 $43,086 $39,653 $36,097 $32,376 Merger‐related charges 8,847 3,221 672 3,264 5,672 Tax effect on merger‐related charges (3,471) (1,264) (264) (1,281) (2,225) Net income less merger‐related charges $69,81
Slide 36: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non‐GAAP measures 3Q17 2Q17 1Q17 4Q16 3Q16 Net income $64,442 $43,086 $39,653 $36,097 $32,376 Merger‐related charges 8,847 3,221 672 3,264 5,672 Tax effect on merger‐related charges (3,471) (1,264) (264) (1,281) (2,225) Net income less merger‐related charges $69,81
Slide 37: Third Quarter 2017 Investor Call
Third Quarter 2017 Investor Call M. Terry Turner, President and CEO Harold R. Carpenter, EVP and CFO October 18, 2017
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