Pinnacle Financial Partners, Inc. · NYSE:PNFP
Pinnacle Financial Partners — KBW 2014 Community Bank Investor Conference
27 slides from Pinnacle Financial Partners's conference presentation, Jul 29, 2014
Slide 1: KBW 2014 Community Bank Investor Conference
KBW 2014 Community Bank Investor Conference M. Terry Turner, President and CEO Harold Carpenter, EVP and CFO July 29, 2014
Slide 2: Safe Harbor Statements
Safe Harbor 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 "expec
Slide 3: The Pinnacle Model
The Pinnacle Model Engaged associates engage clients and yield strong investor returns • Engaged Associates • Engaged E d Clients Cli t • Engaged Shareholders 3
Slide 4: Engaged Associates
Engaged Associates Engaged associates engage clients and yield strong investor returns
Slide 5: Engaged Associates
Engaged Associates Pinnacle’s associate engagement is nationally recognized
Slide 6: Engaged Clients
Engaged Clients Pinnacle deploys five simple strategies • Focus on businesses, their owners and employees as well as affluent consumers that desire more than just lowest price ‐ Commercial and affluent consumer segments • Hire and retain experienced and qualified financial services professionals ‐ R
Slide 7: Engaged Clients
Engaged Clients PNFP has a track record for “best‐in‐market” share movement Nashville‐Davidson‐Rutherford MSA Knoxville MSA Top 10 Holding Market Market Change Top 10 Holding Market Market Change Market Company Share Share in Market Company Share Share in Share 6/30/13 6/30/00 Share Share 6/30/13 6/
Slide 8: Engaged Clients
Engaged Clients PNFP is dominating the commercial market in Nashville 30% Pinnacle Financial 25% Regional A Regional B 20% Customer penetration National A (%) 15% 10% Regional C 5% 0% 0 20 40 60 80 100 Excellent customer satisfaction *Question: How do you rate your overall satisfaction with the bank
Slide 9: Engaged Shareholders
Engaged Shareholders PNFP targets and has consistently delivered top quartile performance Total Shareholder Return ‐ 1 yr. Total Shareholder Return ‐ 3 yr. Total Shareholder Return ‐ 5 yr. 250.0% 250.0% 250.0% 200.0% 200.0% 200.0% 84th percentile il 150.0% 150.0% 150.0% 89th percentile 100.0% 100.0%
Slide 10: Keen Focus Produces Results
Keen Focus Produces Results Execution of fundamentals fuels exceptional growth in key valuation drivers Balance Sheet Growth Total Loans Avg Trans Accts Tangible Book Value per Share Up 9.9% yr/yr (millions) (millions) $2,115 $14.53 $4,182 $4,316 Up 17.3% yr/yr $2,050 Up 13.7% yr/yr $13.93 $4,144 $3
Slide 11: Keen Focus Produces Results
Keen Focus Produces Results PNFP has increased the long‐term return targets in the 2014‐2016 plan Net Interest Margin Noninterest Income/ Average Assets (1) 3.95% 1.05% 3.90% Return on Average Assets 3.90% 1.00% 0.97% 0.96% 0.93% 0.94% 0 94% 1.50% 0.95% 0.92% 3.85% 0.89% 0.89% 3.80% 0.90% 3.78% 0.86
Slide 12: Our Strategy for Growth and Profitability
Our Strategy for Growth and Profitability Net loan growth rate approximates the three year growth target 2012‐2014 Previously Reported Growth Anticipated Net Loan Growth Current Quarter Growth 11.5% CAGR (1/1/2012‐ 6/30/2014) Financial Advisor Capacity Thru 2Q2014 $1.02 billion net growth thru 2Q14
Slide 13: Our Strategy for Growth and Profitability
Our Strategy for Growth and Profitability Annual loan growth is reliable despite wide quarterly variation Annual Net Loan Growth Quarterly Net Loan Growth $500 $425 $ $434 $ $411 $ $200 Loan Volumes $400 Loan Volumes ($ millions) ($ millions) $221 $150 $300 $272 $200 $243 $100 $50 $100 $153 $213 $16
Slide 14: Our Strategy for Growth and Profitability
Our Strategy for Growth and Profitability Net interest income grew as loan and deposit volumes increased in 2Q14 $48 4.00% $47.2 3.90% $46 $45.9 3.80% 45.0 $44.6 $44 $4 3.70% Net Interesst Income Net Interest Margin $43.6 3.71% $42.8 $42 3.60% $42.2 ons) $40.9 9 3 50% 3.50% (millio $40 $40.2 $39.5 $
Slide 15: Our Strategy for Growth and Profitability
Our Strategy for Growth and Profitability Average loans grew meaningfully; loan yields contracted slightly 6.00% $4,200 $4,251 $4,130 5.50% $4,000 981 $3,9 $3,932 2 Averrage Loans $3,800 Loaan Yields $3,845 4.88% 5.00% (millions) $3,682 $3,600 0 $3,580 4 50% 4.50% $ $3,489 $3,400 $3,403 4.27% 4.00%
Slide 16: Our Strategy for Growth and Profitability
Our Strategy for Growth and Profitability Floors have provided meaningful earnings and are manageable going forward $1,360 6.00% $1,340 5.00% $1,320 1.33% 0.96% 0.93% 0.84% 0.81% 0.72% 4.00% $1,300 Loan Volumes ($ millions) $1,280 3.00% $1,260 , 2.00% $1,240 1.00% $1,220 $1,200 0.00% Dec 2010 Dec 20
Slide 17: Our Strategy for Growth and Profitability
Our Strategy for Growth and Profitability Deposits continued to grow while cost of funds declined in 2Q14 $4,600 1.20% $4,500 1.01% 1.10% $4,519 $4,509 $4,400 1.00% $4,408 $4,300 0.90% $4 200 $4,200 0.80% osit Costs $4,199 Avg. Deposits $4,100 0.70% $4,000 millions) (%) 0.60% 963 $3,900 950 Depo (m
Slide 18: Our Strategy for Growth and Profitability
Our Strategy for Growth and Profitability The “noninterest income to asset” ratio remains in the high end of the target range 2Q14 1Q14 4Q13 3Q13 2Q13 Service charges $2,966 $2,791 $2,739 $2,797 $2,541 Investment services 2,164 2,128 2,394 1,956 1,895 Insurance commissions 1,145 1,385 1,015 1,021 1,
Slide 19: Our Strategy for Growth and Profitability
Our Strategy for Growth and Profitability The core ‘noninterest expense to average assets’ ratio is declining toward target 2Q14 1Q14 4Q13 3Q13 2Q13 Salaries and benefits $21,772 $21,750 $21,494 $21,010 $20,570 Equipment and occupancy 5,823 5,709 5,543 5,413 5,204 Other real estate owned 226 651 302
Slide 20: Our Strategy for Growth and Profitability
Our Strategy for Growth and Profitability Adjusted PTPP expanded at a 7.9% annualized rate in 2Q14 (000’s) 2Q14 1Q14 4Q13 3Q13 2Q13 Net interest income $47,226 $45,908 $44,969 $44,573 $43,599 Total noninterest income 12,597 12,732 12,488 11,387 11,326 Total revenue 59,823 58,644 57,457 55,960 54,925
Slide 21: PNFP Operates in Advantaged Markets
PNFP Operates in Advantaged Markets Nashville and Knoxville are healthy business markets TENNESSEE • Tennessee ranks No. 2 in the annual list of the most competitive states for economic development success Site Selection magazine • Tennessee ranks No. No 6 in the “Top Top 10” 10 nationwide for small
Slide 22: PNFP Operates in Advantaged Markets
PNFP Operates in Advantaged Markets Rapid job growth leads to rapid real estate absorption Nashville Home Sales 2Q2014 Q 2Q2013 Q % Change g Avg. Qtrly. Median Home $212,268 $201,650 5.3% Price Quarterly Closings 7,541 7,402 1.9% Quarter end 10,553 10,555 0.0% Inventory Months of 3.8 4.1 (7.5%) Inve
Slide 23: Future Outlook
Future Outlook 1. Aspirations remain high – top quartile performance 2. Nashville and Knoxville are advantaged markets 3. PNFP is uniquely positioned to capitalize on businesses’ “willingness to switch” 4. Client retention supports outsized share growth 23
Slide 24: Future Outlook
Future Outlook PNFP is uniquely positioned to capitalize on “willingness to switch” Primary Reasons for Primary Reasons for Small Business Mid-Size Business S i hi Switching S i hi Switching Pinnacle’s Ability to Harvest Dissatisfaction Competitor Unsatisfied with representitive 25% Ranking Pricing
Slide 25: Future Outlook
Future Outlook Client retention supports outsized share growth Competitor Ranking Overall Client Satisfaction 1 Ease of Doing Business 1 Values Long-Term Relationships 1 Loyalty – Likelihood to Recommend 1 Source: Greenwich Associates 25 Pinnacle Financial – Nashville - $1-500 MM as of 3/31/14
Slide 26: PNFP Valuation Drivers
PNFP Valuation Drivers 2Q14 Execution Future Earnings Stream • Revenue growth is primarily organic • 9.9% year‐over‐year average loan growth • Organic growth is due to vibrant markets and competitive Revenue • 17.3% 17 3% year‐over‐year transaction t ti accountt distinction growth • Track record for
Slide 27: KBW 2014 Community Bank Investor Conference
KBW 2014 Community Bank Investor Conference M. Terry Turner, President and CEO Harold Carpenter, EVP and CFO July 29, 2014
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