Pinnacle Financial Partners, Inc. · NYSE:PNFP
Pinnacle Financial Partners — Merger or Acquisition (February 2006)
45 slides from Pinnacle Financial Partners's merger presentation, Feb 6, 2006
Slide 1: Pinnacle Financial Partners, February 2006
-innacle FINANCIAL PARTNERS February 2006
Slide 2: Forward looking statements
Forward looking statements Certain of the statements in this presentation may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words "expect," "anticipate," "inte
Slide 3: Additional information and where to find it
Additional information and where to find It This communication is not a solicitation of a proxy from any security holder of Pinnacle Financial Partners, Inc. or Cavalry Bancorp, Inc. Pinnacle has filed a registration statement on Form S-4 with the Securities and Exchange Commission ("SEC") in connec
Slide 4: Company Profile
High growth, one-bank holding company Headquartered in Nashville, Tennessee Only 5 years old Total assets at December 31, 2005 - $1.02 billion Market cap at January 31, 2006 - $25.55 per share = $215 million Insider ownership - 13% Institutional and mutual fund ownership - 39% Reliable track record
Slide 5: Company Profile: Achievements
Largest, locally-owned financial institution in Nashville Fastest growing of 185 banks chartered in the US during 2000 Opened 8 branch offices in 5 years Hired 155 experienced associates Retained 94% of associates annually Received recognition as the Best Place to Work in Nashville by the Nashville
Slide 6: Reliable Track Record
Total Deposits (EOP) Total Loans (EOP) Total Assets (EOP) Net Income Company Profile Reliable Track Record $2.238M $810M $648M $1.02B
Slide 7: Reliable Track Record: asset quality
Net Charge Offs Allowance to Total Loans (EOP) Non Accrual Loans to Total Loans Weighted Average Commercial Loan Risk Rating 10 point scale: 1 through 6 = "pass" credits 7 through 10 = criticized / classified 0.07% 3.8 Company Profile Reliable Track Record 1.21% (0.01)%
Slide 8: Asset Growth versus Commitments
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 Plan 100 200 300 400 500 600 700 800 900 1000 Actual 175 305 498 727 1000 Asset Growth versus Commitments Targets established in 6/02 prospectus Company Profile Reliable Track Record
Slide 9: Valuation Summary
Stockholders' equity as of December 31, 2005 $ 63,436,000 Shares outstanding 8,427,000 Book value / share $ 7.53 12/31 1/31 Closing price $24.98 $25.55 Price to tangible book value / share 332% 339% Price to 2005 actual FDEPS ($0.85 per share*) 30 30 Price to 2006 projected FDEPS ($1.18 per share*)
Slide 10: Analysts Forecasts for 06, 07 Earnings Growth
Earnings growth projections by several of the most respected analysts in our space support premium valuations. Valuation Summary Analysts Forecasts for 06, 07 Earnings Growth
Slide 11: High Growth Peer Group Comparisons
Valuation Summary High Growth Peer Group Comparisons Excellent value based on asset and earnings growth profile
Slide 12: Growth Opportunity: The Nashville Market
The Nashville Market Large, fast growing, metropolitan market Vulnerable Competition Extremely attractive competitive landscape Strategy for Continued Rapid Growth Integrate Cavalry Leverage existing capacity and continue to add capacity Growth Opportunity
Slide 13: Current Size and Growth Dynamics
Current Size and Growth Dynamics Size 38th largest MSA 1.3 million population $25 billion deposits Growth 18th fastest growing population 4th fastest growing per capita income Source: U.S. Census, FDIC Nashville - Large, Fast Growing, Metropolitan Market Growth Opportunity
Slide 14: Future Growth Predictors
America's hottest market (for relocating or expanding) Hottest headquarters MSA for the 21st century Top 10 economic development agency Five star city for logistics Top 10 digital city Least costly city for businesses Top 10 city for African-Americans to live, work and play America's friendliest cit
Slide 15: PNFP/CAVB Footprint
Source: SNL Growth Opportunity Nashville - Large, Fast Growing, Metropolitan Market PNFP/CAVB Footprint
Slide 16: County population and income growth
Growth Opportunity County Total Population 2005 (Actual) Projected Population Change 2005-2010 (%) Median HH Income 2005 ($) Projected HH Income Change 2005-2010 (%) Rutherford 222,607 21.04 51,974 12.34 Davidson 596,717 6.16 45,854 14.78 Williamson 150,546 17.35 80,324 16.55 Sumner 143,813 9.49 52,
Slide 17: Extremely Attractive Competitive Landscape
Extremely Attractive Competitive Landscape Market Share - Nashville MSA - June 2005 Growth Opportunity Total Deposits Total Deposits Total Share Total Share 2005 Share 2005 Share Rank Institution ($000) ($000) (%) (%) Growth Growth 1 SunTrust Bank $ 4,479,997 $ 4,479,997 17.77% 17.77% (.06) (.06) 2
Slide 18: Market Share of Deposits in the Nashville MSA
6/30/1995 6/3/1996 6/30/1997 6/30/1998 6/30/1999 6/30/2000 6/30/2001 6/30/2002 6/1/2003 6/1/2004 6/1/2005 AmSouth 24.09 23.96 24.52 26.23 27.63 23.3 19.8 18.6 18.9 18.8 17.7 SunTrust 21.28 20.65 20.95 19.17 18.13 19.67 19.46 20.07 18.56 17.8 17.8 B of A 20.02 18.63 17.08 16.67 16.36 15.3 16.6 16.1 1
Slide 19: CAVB Transaction Rationale
Acceleration in targeted market Increased size and scale Enhanced franchise value Enhanced geographic market Accretion to earnings Increased float Lower cost source of funding Improved revenue diversification Potential for dramatic earnings growth CAVB Transaction Rationale Growth Opportunity Contin
Slide 20: CAVB Growth Profile
CAVB GROWTH PROFILE 4 Year CAGR Loans 15.8 % Deposits 10.7 % Net income before nonrecurring (*) 21.9 % 2005 Growth Rate Loans 17.4 % Deposits 13.1 % Net income before nonrecurring (*) 65.8 % How can PNFP extend its dramatic growth? CAVB and Rutherford County, TN provide significant growth opportunit
Slide 21: Current earnings capacity of CAVB
1997 1998 1999 2000 2001 2002 2003 2004 (1) 2005 Q2 2005 (1) 2005 Q2 Loans 187 266.1 379.9 511.6 605.8 630 8.41 7.69 Net Interest Income 10757 11702 14706 15459 16064 16320 19513 21244 10840 42700 Net Income 2975 2388 2952 8276 4117 4494 4839 2480 8024 6039 What is the current earnings capacity of C
Slide 22: Current earnings capacity of CAVB: ratios
What is the current earnings capacity of CAVB? Growth Opportunity Continued Growth - Integrate Cavalry PNFP CAVB Net Charge Offs Return on Assets (*) Net Interest Margin (*) Return on assets calculation reflects net income before nonrecurring charges which excludes certain pretax charges as describe
Slide 23: Potential Revenue Synergies
Strong commercial focus to CAVB Treasury management services to CAVB Insurance services to PNFP Merchant services to PNFP Various retail product initiatives to PNFP Brokerage services to CAVB Residential construction lending to PNFP Continued Growth - Integrate Cavalry Potential Revenue Synergies No
Slide 24: Leverage Existing Capacity and Continue to Add Capacity
Significant room to grow market share in Nashville Increase in the number of branch offices Increase in the number of Financial Advisors Urban community bank with significant potential for market extension Growth Opportunity ? 2. Knoxville Leverage Existing Capacity and Continue to Add Capacity
Slide 25: Our Plan for the Future
Maintain soundness Harvest robust pipelines Execute disciplined merger integration plan Continue to capitalize on consolidation related turmoil Continue to invest for future growth People Markets / Offices Infrastructure Remain "well capitalized" Significant trust preferred capacity available Our Pl
Slide 26: Why Pinnacle?
Large, rapidly-growing, metropolitan market Extremely attractive competitive landscape Seasoned management and team of professionals Existing capacity should yield above average growth Continued addition of new markets and people Strong asset quality Why Pinnacle?
Slide 27: Appendices
einnacle cavalryBanking Appendices
Slide 28: Transaction Summary
Fully diluted calculations Based on PNFP closing price on September 30, 2005 of $25.18 per share Fixed exchange ratio 0.95 shares of PNFP for each share of CAVB Anticipated closing First Quarter 2006 - Termination date of March 31, 2006 Consideration 100% Stock; Tax-free exchange for CAVB shareholde
Slide 29: Transaction Summary: multiples vs similar transactions
Price / 2005 annualized earnings (+) 21.2x 26.6x (*) Price / book value (++) 302% 311% Price / tangible book value (++) 311% 327% PNFP / CAVB Average of Similar "All Stock" Transactions (#) # Average results based on RJA SNL database consisting of 12 "all stock" merger transactions since January 1,
Slide 30: Loan Portfolios and Funding Mix
December 2005 Loan Portfolios "CAVB is not your father's thrift" PNFP December 2005 Funding Mix PNFP Pro Forma CAVB CAVB Pro Forma
Slide 31: Pro Forma Company
(As of December 31, 2005 - dollars in thousands) (1) Includes estimated anticipated impact of pro forma purchase accounting adjustments. Pro Forma Company
Slide 32: Merger Execution: cost savings
Synergy case considers cost savings from both CAVB and PNFP. PNFP's plans for 2006 and 2007 contemplated additional space requirements and hiring of additional support staff. With the CAVB acquisition, PNFP can leverage CAVB's experienced staff and less expensive space to support both PNFP and CAVB'
Slide 33: Merger Execution: other items
OTHER ITEMS Pretax amounts 2006 Total identified synergies $ 4.6 mm Anticipated intangible amortization $ (2.2) mm Other (*) $ (1.1) mm Totals $ 1.3 mm (*) Primarily merger financing costs Merger Execution
Slide 34: Merger Execution: one-time costs
Compensation and benefits (1) $10.8 mm Transaction fees and costs $2.5 mm Operations (2) $1.7 mm Administrative and other $1.0 mm Totals $16.0 mm (1) Compensation and benefits are primarily associated with change of control provisions in employment and severance agreements and retirement plans. (2)
Slide 35: Merger Execution: low risk factors
CAVB executive management engaged Other key social issues decided Conservative cost saving assumptions No revenue enhancements assumed No branch overlap Low risk balance sheet; strong credit quality and reliance on core funding Franchise with similar vision and culture to Pinnacle Merger Execution
Slide 36: Increased Size and Scale
Increased Size and Scale Proforma assets of $1.8 billion (at Dec. 31, 2005) Proforma market cap of approximately $400 million Largest independent institution headquartered in Nashville Second largest independent institution in the state of Tennessee 17 offices in the most ideal trade areas in Middle
Slide 37: Enhanced Franchise Value
Enhanced Franchise Value $1.6 billion in assets and 17 offices in advantaged trade areas would attract the largest acquirers and potentially enhance "take-over" premium Elimination of CAVB reduces potential acquisition targets in the Nashville MSA which should increase scarcity value The Transaction
Slide 38: Enhanced Geographic Market
Enhanced Geographic Market Rutherford is the 5th largest county in Tennessee Rutherford is the fastest growing county in Tennessee in terms of population Rutherford has been the fastest growing county in the entire U.S. for the last three quarters in terms of job growth PNFP had plans to enter Murfr
Slide 39: Accretion to Earnings
Accretion to Earnings Modest synergy case Anticipated $0.05 impact to 2006 GAAP earnings Experienced management team The Transaction Rationale
Slide 40: Increased Float
Increased Float Proforma shares outstanding would increase from 8.4 million shares to 15.6 million shares Proforma market cap would approximate $400+ million The Transaction Rationale
Slide 41: Lower Cost Source of Funding
Lower Cost Source of Funding PNFP CAVB Core deposits / total deposits 70% 81% 4Q05 average cost of deposits 2.82% 1.96% 4Q05 net interest margin 3.58% 4.55% The Transaction Rationale
Slide 42: Improved Revenue Diversification
Improved Revenue Diversification Percent 2005 Total Revenue PNFP CAVB Spread income 84% 66% Deposit charges 3% 16% Investment sales commissions 5% 1% Mortgage (origination and servicing) 3% 4% Insurance sales commissions - 6% Fiduciary fees - 3% Other 5% 4% The Transaction Rationale
Slide 43: CAVB Historical Balance Sheet
CAVB Historical Balance Sheet
Slide 44: CAVB Historical Income Statement
CAVB Historical Income Statement Amounts and ratios exclude certain non-recurring expenses as noted above. In 2001, Cavalry incurred $2.5 million in charges to terminate a management compensation plan; in 2004, Cavalry incurred $5.3 million in charges to fully fund its Employee Stock Ownership Plan;
Slide 45: Pinnacle Financial Partners
-“innacle FINANCIAL PARTNERS
Pinnacle Financial Partners — Merger or Acquisition (February 2006) on 6ix