Pinnacle Financial Partners, Inc. · NYSE:PNFP
Pinnacle Financial Partners — Q2 2009 Earnings Presentation
31 slides from Pinnacle Financial Partners's earnings presentation, Jul 22, 2009
Slide 1: Second Quarter 2009 Earnings
Pinnacle Financial Partners, Inc. Second Quarter 2009 Earnings Terry Turner, T T President P id t andd CEO Harold Carpenter, EVP and CFO July 22 22, 2009 1
Slide 2: Safe Harbor Statements
Safe Harbor Statements Forward--looking statements Forward Pinnacle Financial Partners, Inc. (“Pinnacle Financial”) may from time to time make written or oral statements, including statements contained in this presentation which may constitute forward-looking statements within the meaning of Section
Slide 3: Financial Highlights
Financial Highlights • Net income and EPS • 2Q09 net loss available to common stockholders of $33.2 million compared to net income of $8.0 million in 2Q08 • FDEPS of ($ ($1.33)) in 2Q09 Q compared p to $0.34 $ in 2Q08. Q Includes $1.47 million in TARP preferred stock charges. 3
Slide 4: Opening Comments
Opening Comments Two Important Themes • Aggressively dealing with credit issues • g the pre-provision Building p p capacity p y of the firm 4
Slide 5: Opening Comments: Dealing with Credit Issues
Opening Comments Two Important Themes • Aggressively dealing with credit issues • gg Aggressive problem p identification • NCO’s of 2.81% • Increased NPAs to total loans of 3.34% • Increased ALLL to total loans of 1.86% • $32 million in NPA resolutions • Past dues and NPLs g generally y outperform p
Slide 6: Opening Comments: Building Pre-Provision Capacity
Opening Comments Two Important Themes • Building the pre-provision capacity of the firm • Loan g growth of 17% • Core funding growth of 14% • Net interest income growth of 10% • Noninterest income growth of 5% (exclusive of extraordinary items) 6
Slide 7: Balance Sheet Strength
Balance Sheet Strength Strong capital base Pro Forma June 30, June 30, March 31, December 2009 2009 (*) 2009 31, 2008 Tangible common equity 7 4% 7.4% 7 4% 7.4% 6 0% 6.0% 6 1% 6.1% Tangible common to risk weighted assets 9.0% 9.0% 7.4% 7.5% Tier 1 leverage 11.1% 9.1% 9.7% 10.5% Tier 1 risk based cap
Slide 8: Balance Sheet Strength: Bond Portfolio
Balance Sheet Strength Corporates 1.1% Conservative bond portfolio Municipals 19.2% Average yield on bond portfolio = 4.60% Average life = 4.3 years Agency Notes 24.1% MBS pass thrus A Agency 54 1% 54.1% CMOs 1.5% As of June 30, 2009 FNMA, FHLMC and GNMA 8
Slide 9: Balance Sheet Strength: Diversified Loan Portfolio
Balance Sheet Strength Diversified loan p portfolio Other 3.2% Other RE 1.5% PNFP avoided: C&D and • Sub prime Land • Indirect auto 17 4% 17.4% • Credit card C&I 27.8% • Student lending • SBA loans only 0.13% of Consumer book RE 20.6% CRE - CRE - Own Occ. Invest 15.1% 14.4% 9
Slide 10: Balance Sheet Strength: Loan Categories
Balance Sheet Strength Loan Categories Amts. %’s Amts. %’s 2Q09 (*) () 2Q09 4Q08 4Q08 C&D and Land $ 616.9 17.4% $ 645.4 19.2% Consumer RE 730.0 20.6% 675.6 20.1% CRE – Owner Occ. 536.9 15.1% 371.6 11.1% CRE – Investment 508.6 14.4% 554.9 16.6% Other RE loans 54.0 1.5% 50.4 1.5% Total real estate 2
Slide 11: Construction and Land Categories
Balance Sheet Strength Construction and Land Categories Amts. %’s(*) Amts. %’s (*) 2Q09 2Q09 4Q08 4Q08 Resid – Spec $ 77.7 2.2% $ 96.9 2.9% Resid - Custom 25.5 0.7% 0 % 29.0 0.9% 0 9% Resid - Condo 47.0 1.3% 48.5 1.4% Comm Construct. 77.1 2.2% 77.1 2.3% Land Devel – Resi 218.8 6.2% 243.2 7.2% Land D
Slide 12: Asset Quality Metrics
Asset Quality Metrics Past Dues and NPLs Expressed as a % of Total Loans within Category PNFP PNFP Peer PNFP PNFP Peer 30-90 30-90 30-90 NPLs and NPLs and NPLs and days past days past days > 90 days > 90 days > 90 days due due past due 2Q09 1Q09 (*) 2Q09 1Q09 (*) Const. and land 1.61% 2.33% 2.92% 12
Slide 13: Asset Quality Metrics
Asset Quality Metrics $100.3 $ MM nonaccruing g loans Other • 2.83% of loan balances 0.8% Resid Const Nonaccrual loans $100.3 20.3% ORE 18.8 Total NPA’s $119.1 C&I 5.3% NPA’s as a % off NPA’ CRE Land Develop Total loans + ORE 3.34% 2.4% 55.0% 1-4 Family 16.2% As of June 30, 2009 13
Slide 14: Asset Quality Metrics: Nonaccruing Loans
Asset Quality Metrics N Nonaccruing i l loans • Largest NPL’s • #1 - $9.9 $9 9 mm Nashville condo and residential developer • #2 - $8.3 mm SE Davidson county residential development • #3 - $7.0 mm Rutherford county developer • #4 - $6.4 mm So. Williamson county developer • Three separate development
Slide 15: Asset Quality Metrics: ORE Classifications
A Asset tQQuality lit Metrics M ti ORE Classifications (dollars in thousands) Average Fair value as Appraisal Balances a % of book Age in June 30, 2009 value Months ORE classifications: New home construct construct. $ 10 10,068 068 114% 39 3.9 Developed lots 4,104 182% 11.3 Undeveloped land 2,100 19
Slide 16: Asset Quality Metrics: Net Charge-offs
Asset Quality Metrics Net Charge-off’s Expressed as a % of Category PNFP Peer Net Net Largest 2Q09 charge-offs: Charge Charge - $21.5mm to bank holding company Off’s Off’s (*) - $15.8mm to nine borrowers 2Q09 Const. and land dev. 5.49% 2.83% CRE 0.03% 0.75% Total real estate 1.69% 1.17% C&I 5.68% 1.
Slide 17: Net Interest Income
Net Interest Income Sep Dec March June 2008 2008 2008 2009 June 2009 Loan income $42,228 $44,075 $43,433 $38,526 $39,627 Loan yields 5.77% 5.60% 5.27% 4.57% 4.52% Investment income $6,132 $7,345 $9,366 $10,563 $9,967 Investment yields 5.10% 5.24% 5.40% 5.18% 4.60% T t l IB deposit Total d it expense
Slide 18: Net Interest Income
Net Interest Income • Margin compression in 2Q09 • Loan floors making impact • Core funding has increased driving lower funding costs • p Impact of new NPA’s - $ $1,300,000 , , • NPA’s will continue to weigh on margin in 2009 • 2Q09 NIM impact of approx. 10 basis points • Improving margin trends for
Slide 19: Net Interest Income
Net Interest Income • Improving margin trends during 2Q09 • Loan rate floors increasing 19
Slide 20: Net Interest Income
Net Interest Income • Improving margin trends for 2009 • Loan repricing opportunities - $406 million of loans maturing and repricing in next six months < 5% rate 20
Slide 21: Net Interest Income
Net Interest Income • Improving margin trends during 2Q09 • CD repricing opportunities - $862mm in CD’s maturing in six months 21
Slide 22: Provision expense
Provision expense Sep Dec March June 2008 2008 2008 2009 June 2009 Components of provision: Net loan growth $1,740 $1,860 $1,642 $ 1,548 $ 1,321 Net charge offs 870 73 2,068 4,760 44,579 Other (*) 177 1,192 - 7,302 19,420 T t l provision Total i i expense $2 787 $2,787 $3 125 $3,125 $3 710 $3,710 $1
Slide 23: Provision for 2009
Provision for 2009 • Net charge offs in 2Q included the $21.5 million loan to a bank holding company which was disclosed in May. • Remaining charge-offs of approximately $23.0 million during 2Q. Excluding the $21.5 million above, we believe that annualized charge off rate will approximate 100 bps th
Slide 24: Fee income
Fee income Sep Dec March June 2008 2008 2008 2009 June 2009 Service charges $2,684 $2,778 $2,699 $2,477 $2,568 Investment services 1,220 1,271 1,164 854 1,078 Insurance commissions 589 959 908 1,305 919 Gains on loan sales 880 1,460 1,048 1,288 1,633 Trust fees 531 585 557 658 642 Other: Gain on sal
Slide 25: Fees for 2009
Fees for 2009 • Fee income expected to experience modest increases during 2H09 • Service charges to be slightly rising • Investment and trust revenues expected to fluctuate with markets. k t CContinue ti tto hi hire brokerage b k and d trust t t associates. i t • Mortgage origination fees continued
Slide 26: Expenses
Expenses Sep Dec March June 2008 2008 2008 2009 June 2009 Salaries and benefits $11,161 $12,103 $12,058 $13,679 $13,747 Incentive Expense 1,335 958 (2,043) 1,072 (1,072) Equipment and occupancy 3,693 4,235 3,935 4,235 4,310 Other real estate owned 129 95 1,118 701 3,914 Marketing and BD 479 381 680
Slide 27: Expenses for 2009
Expenses for 2009 • FTE’s at 746.0 at June 30, compared to 719.0 at year end. Anticipate hiring approximately 35 FTE’s during remainder of 2009. 2009 • Occupancy and equipment will experience modest increases. New branch facilities expected to be on line during 2H09. • $2.3mm FDIC assessment in 2Q09
Slide 28: Significant Growth Opportunity Persists
28 2/09 1/09 4/08 3/08 2/08 1/08 4/07 3/07 Significant Growth Opportunity Persists 2/07 1/07 4-06 3-06 2-06 Deposits 1-06 4-05 3-05 2-05 1-05 4-04 3-04 2-04 1-04 4-03 3-03 2-03 1-03 4-02 3-02 2-02 1-02 4-01 3-01 2-01 1-01 $0 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 $1,000 $500 2/09 1/09 4/08 3/08 2
Slide 29: Significant Growth Opportunity Persists
Significant Growth Opportunity Persists Knoxville Original multi multi--year performance targets 2007 2008 2009 2010 2011 Associate hiring plan Target 26 39 51 59 63 Actual 22 32 43 Facilities Target 2 2 4 5 5 Actual 2 2 2 Loan growth targets Target $ 100 $ 225 $ 375 $ 490 $ 600 (millions) Actual $1
Slide 30: Final Thoughts
Final Thoughts • Aggressively gg y addressing g problem p credits • Extensive review for problem identification • Heavy reserve building • Significant NPA resolution • Responsibly growing pre-provision earnings capacity • Loan growth • Core funding growth • Net interest income growth • Noninterest i
Slide 31: Q&A
Q&A Terry Turner Turner, President and CEO Harold Carpenter, EVP and CFO 31
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