Pinnacle Financial Partners, Inc. · NYSE:PNFP
Pinnacle Financial Partners — Q4 2024 Earnings Presentation
53 slides from Pinnacle Financial Partners's earnings presentation, Jan 22, 2025
Slide 1: Investor Call Fourth Quarter 2024
Investor Call FOURTH QUARTER 2024 JANUARY 22, 2025 Time: 8:30 AM CT Webcast: www.pnfp.com (investor relations) M. TERRY TURNER, PRESIDENT AND CEO HAROLD R. CARPENTER, EVP AND CFO
Slide 2: Safe Harbor Statements: Forward Looking 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 of 1933 and Section
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, total revenues, net income to common shareholders, earnings per diluted common share, revenue per diluted common share, PPNR, efficiency ratio, noninterest
Slide 4: Shareholder Value Dashboard: 4Q24 GAAP Results
Shareholder Value Dashboard 4Q24 Summary Results of Key GAAP Measures Total Revenues FD EPS Net Income Available to Common Shareholders Total Loans Total Deposits Book Value per Common Share (millions) (in millions) Classified Asset Ratio NPA/ Loans & ORE NCOs PNFP’s Median Quarterly Performance of
Slide 5: Shareholder Value Dashboard: 4Q24 Non-GAAP Results
Shareholder Value Dashboard 4Q24 Summary Results of Key Non-GAAP Measures Adjusted Pre-Tax Pre-Provision Total Revenues* FD EPS* Net Income* CAGR 12.5% CAGR 37.3% CAGR 10.7% Total Loans Total Core Deposits Tangible Book Value per Share** (millions) (millions) CAGR 11.7% CAGR 15.4% CAGR 11.1% Classif
Slide 6: Rapid Revenue Growth Begins with Hiring Revenue Producers
At PNFP, Rapid Revenue Growth Begins with Hiring Revenue Producers 161 147 119 107 87 2020 2021 2022 2023 2024 6
Slide 7: Revenue Producers Hired in Last 3 Years Produced >100% of Loan Growth
In 2024, Revenue Producers Hired in the Last 3 Years Produced >100% of Loan Growth Net Loan Growth – YTD 4Q24 – Strategic Decisions: • Strategic Expansion - $2.6 billion • Jacksonville, Atlanta, DC, Alabama, Kentucky, Franchise Finance, Equipment Finance • Legacy Recruiting Impact - $349 million • N
Slide 8: Peer Leading 10-year CAGR for Net Interest Income Growth
PNFP’s Model has Yielded Peer Leading 10-year CAGR for Net Interest Income Growth 8
Slide 9: 4Q24 Financial Information
4Q24 Financial Information Revenue growth. EPS growth. Tangible book value per share accretion. Strong asset quality. Balance sheet growth. More of the same. A strong foundation from which to grow, particularly if macroeconomic growth should materialize. 9
Slide 10: Loan Growth Ended the Year on a High Note
Loan Growth Ended the Year on a High Note Linked-quarter annualized growth in average loans was 10.6% in Q4 Average Loan Growth and Yields Fixed Rate Loan Maturities / Cash flow $37,500 6.42% 7.00% $1,200 5.10% 6.50% 5.06% $34,981 4.97% $32,500 $34,082 5.00% $33,517 $1,000 4.92% 6.00% $33,042 $32,37
Slide 11: Deposit Growth Accelerated as Costs Declined
Deposit Growth Accelerated as Costs Declined Linked-quarter annualized growth in average deposits was 15.8% in Q4 Average Deposit Growth Cumulative Betas Dec. 31, 2021 through Sept. 18, 2024 through $42,500 2.74% 3.25% (EOP rate comparisons) Sept. 18, 2024 Jan.16, 2025 3.00% Average Deposits (millio
Slide 12: Our Ability to Grow Through the Challenging Operating Environment
Our Ability to Grow Through the Challenging Operating Environment is Compelling 4Q marked by stable NIM and accelerated NII growth Net Interest Income & NIM Quarterly Avg. Securities $375 3.75% $8,500 4.27% 4.75% $8,000 4.50% Average Balances ($ in mil.) Net Interest Income ($ in mil.) $350 Average
Slide 13: Problem Loan Formation Remains Low
Problem Loan Formation Remains Low Problem loan metrics such as NPAs and classified assets remain below long-term levels Net Charge Offs NPA/ Loans & ORE Highlights 0.33% 0.61% • Most credit metrics continued to perform well 0.58% 0.53% 0.55% in comparison to long-term historical averages 0.46% 0.21
Slide 14: Core Fee Income Continues Strong Year-over-Year Growth in 4Q24
Core Fee Income Continues Strong Year-over-Year Growth in 4Q24 PNFP continues emphasis on gathering more share of wallet from client base Linked- 4Q24 to 3Q24 Quarter Year-over- Year-over- Annualized Year Year • Other noninterest income was positively (dollars in thousands) 4Q24 3Q24 4Q23 Growth % G
Slide 15: 4Q24 Non-incentive Related Expenses were Flat
4Q24 Non-incentive Related Expenses were Flat Incentive expenses increased during 4Q as a result of increased earnings 4Q24 to 3Q24 Linked-Quarter Yr-over-Yr Yr-over-Yr • Personnel cost reflects the impact of increased headcount and incentive Annualized (dollars in thousands) 4Q24 3Q24 4Q23 Growth %
Slide 16: Bankers Healthcare Group
Bankers Healthcare Group BHG’s differentiated model has proven resilient with continued high-quality originations, loan sales and yield/spread premium. The gain on sale model continues to provide meaningful earnings to Pinnacle and is complemented by balance sheet spread income. Capital and reserve
Slide 17: BHG Continues to Leverage & Grow its Distribution Network
BHG Credit Quality BHG Continues Continues to Leverage & Grow to its Impress Distribution Network Sophisticated credit scoring Origination volume continues to increasemodels produce while maintaining impressive credit discipline results • BHG’s origination volumes increased again in Q4 as lead Quart
Slide 18: BHG Bank Auction Spreads Widened to 9.7% in Q4
BHG Bank BHG Credit Quality Auction Continues Spreads to Impress Widened to 9.7% in Q4 Highest Quarterly Spread Sophisticated creditsince Q2’22 models produce impressive results scoring Bank Auction Platform Rates Off Balance Sheet - Borrower Coupon and Bank Buy Rates • With interest rate decreases,
Slide 19: BHG Reserves Compare Favorably to Trailing Credit Loss
BHG Reserves Compare Favorably to Trailing Credit Loss Increased Off-Balance Sheet Reserves Considerably while On Balance Sheet Remained around 9% • Trailing 12-month losses for off-balance sheet loans total 6.6% including the Reserves and Losses for Off B/S Loans (TTM) impact of loans where borrowe
Slide 20: BHG Financial Overview
BHG Financial Overview BHG continues to build a stronger franchise with its highly desirable loan product Origination Volume ($bn) • BHG provides loans in as little as 3 days from application $6.0 to funding. • A truly diversified funding strategy creates ample liquidity $4.0 to fund loan originatio
Slide 21: All in, 2024 Results Keep Us Optimistic About 2025
All in, 2024 Results Keep Us Optimistic About 2025 PNFP establishing 2025 outlook for several line items Current 2025 Outlook (as of January 21, 2025) 2024 Results Y/Y EOP Loan Growth Our current estimate is that EOP loan growth for 2025 will be 8-11% over 2024 end of period balances. Y/Y EOP growth
Slide 22: Q&A Fourth Quarter 2024
einnacle FINANCIAL PARTNERS Q&A FOURTH QUARTER 2024
Slide 23: Supplemental Information
Supplemental Information Slide # • Balance Sheet • Income Statement • BHG • Non-GAAP Reconciliation • Peer Group 23
Slide 24: Balance Sheet – Loan Portfolio Segments
Balance Sheet – Loan Portfolio Segments ($ in millions) Amts. % Amts. % Amts. % Amts. % 4Q24 4Q24 3Q24 3Q24 4Q23 4Q23 4Q22 4Q22 C&I $13,815.8 38.9% $12,986.9 37.9% $11,666.7 35.7% $10,241.3 35.2% CRE – Owner Occ. 4,388.5 12.4% 4,264.7 12.4% 4,044.9 12.4% 3,587.3 12.4% Total C&I & O/O CRE $18,204.3 5
Slide 25: Balance Sheet – Loan Portfolio – Market Segmentation
Balance Sheet – Loan Portfolio – Market Segmentation ($ in millions) TOTAL PINNACLE C&I & O/O CRE CRE & CONSTRUCTION OTHER LOANS* Amts. Amts. Amts. Amts. Amts. Amts. Amts. Amts. 4Q24 4Q23 4Q24 4Q23 4Q24 4Q23 4Q24 4Q23 Nashville $8,643.0 $8,526.2 $4,045.8 $3,684.5 $2,721.3 $2,992.1 $1,875.9 $1,849.7
Slide 26: Balance Sheet – Loan Portfolio – CRE Segmentation
Balance Sheet – Loan Portfolio – CRE Segmentation ($ in millions) Total NOO and Multifamily Total Construction Total NOO and Construction Amts. Amts. Amts. Amts. Amts. Amts. Amts. Amts. Amts. 4Q24 3Q24 4Q23 4Q24 3Q24 4Q23 4Q24 3Q24 4Q23 Multifamily $2,187.1 $2,213.9 $1,607.9 $1,712.1 $1,560.4 $1,546
Slide 27: Balance Sheet – Loan Portfolio Lines of Credit
Balance Sheet – Loan Portfolio Lines of Credit ($s in millions) Linked Qtr. 6/30/2023 9/30/2023 12/31/2023 03/31/2024 06/30/2024 09/30/2024 12/31/2024 Change CRE – Investment & Construction Net Active Balance $6,060.39 $6,293.84 $6,517.26 $6,835.87 $6,539.76 $6,465.36 $6,577.64 $112.28 Net Available
Slide 28: CRE Appetite by Segment
Construction Concentration approximates 70% Target NOOCRE Target of 225% appears achievable in 2025 Highlights 4Q 24 NOOCRE & Construction Balances / Total Loans • Over 88% of NOOCRE Portfolio is in 12.0% 11.0% Pinnacle’s attractive Southeastern demographic markets 10.0% • Met strategic goal to redu
Slide 29: Asset Quality Metrics for NOOCRE and Construction Portfolio
Asset Quality Metrics for NOOCRE and Construction Portfolio Continue to Perform Well • Continued strong asset quality with minimal past due PNFP CRE & Construction accruing loans and 99% of portfolio graded pass Accruing PD, Classified, and Non-Accruals • Reduced appetite for NOOCRE loan origination
Slide 30: Multifamily Loan Portfolio Highlights
Balance Sheet Highlights Multifamily – Loan Portfolio (DRAFT) Multifamily Highlights • 94.5% is located within the PNFP footprint 4Q 24 Multifamily Balances by Property Location • 53.6% are MF Construction loans (by commitment): 14.0% 12.2% o Average number of units 280 ($20MM+ Construction) 12.0% 1
Slide 31: Warehouse Loan Portfolio Highlights
Balance Sheet Highlights Multifamily – Loan Portfolio (DRAFT) Warehouse Highlights • Industrial production primarily focuses on construction opportunities with top-tier 4Q 24 Warehouse Balances by Property Location development platforms • Conservative loan basis exhibiting an average LTV of 51.7% an
Slide 32: Professional Office Highlights
Balance Sheet Highlights Multifamily – Loan Portfolio (DRAFT) Professional Office Highlights • 94.9% of Professional Office CRE properties are in PNFP market. • The concentration in Nashville is primarily due to the participation in the Nashville Yards project (approximately 4Q 24 Professional Offic
Slide 33: Professional Office Portfolio by Type and LTV
Balance Sheet Highlights Multifamily – Loan Portfolio (DRAFT) Professional Office Highlights 4Q 2024 Multi-Tenant Office LTVs 4Q 24 Professional Office 90.0% Portfolio by Type 81.0% 80.0% 70.0% 6% 60.0% 9% 50.0% Avg Bal: 40.0% $6.1 MM Avg Bal: 30.0% Avg Bal: $3.0 MM Avg Bal: 20.0% $3.6 MM 8.3% 10.1%
Slide 34: Allowance for Credit Losses
Allowance for Credit Losses Total Allowance for Credit Losses for loans = $414.5mm or, 1.17% of loans, at December 31, 2024 $ in thousands Allowance for Off-Balance % of Loans Total Credit Losses Sheet At December 31, 2023 $353,055 1.08% (1) $17,469 $370,524 Net Charge Offs ($16,215) 0.20% (2) ($16,
Slide 35: Allowance for Credit Losses by Loan Type
Allowance for Credit Losses ($ in thousands) December 31, September 30, June 30, March 31, December 31, 2024 2024 2024 2024 2023 % of % of % of % of % of Allowance for Credit Losses Amount Loans Amount Loans Amount Loans Amount Loans Amount Loans Commercial and Industrial $174,799 1.27% $162,371 1.2
Slide 36: Asset Quality
Asset Quality AS A % OF AS A % OF AS A % OF ($ in thousands) December 31, 2024 September 30, 2024 December 31, 2023 TOTAL LOANS TOTAL LOANS TOTAL LOANS NPLs and > 90 days Const. and land development $2,387 0.01% $3,186 0.01% $607 0.00% Consumer RE 38,245 0.11% 32,635 0.10% 18,660 0.06% CRE – Owner O
Slide 37: Balance Sheet – Loan Portfolio Net Charge Offs
Balance Sheet – Loan Portfolio 1.60% Annualized Net Loan Charge Offs by Loan Type 1.40% 1.20% 1.00% 0.80% 0.60% 0.40% 0.23% 0.17% 0.20% 0.10% 0.16% 0.00% -0.20% CRE Construction C&I Consumer RE Consumer and Total other Net Charge Off Rates 2021 2022 2023 2024 37
Slide 38: Balance Sheet – Loan Portfolio – 100/300 Test
Balance Sheet – Loan Portfolio – 100/300 Test ($ in thousands) Description 4Q24 3Q24 2Q24 1Q24 4Q23 3Q23 Loans secured by real estate: Construction, land development, and other loans: 1-4 family residential construction loans $670,350 $667,600 $678,836 $672,284 $693,128 $684,366 Other construction l
Slide 39: Balance Sheet – Deposit Portfolio
Balance Sheet – Deposit Portfolio Net Deposit Growth – YTD 4Q24 – Strategic Decisions: • Strategic Expansion - $1.3 billion • Jacksonville, Atlanta, DC, Alabama, Kentucky, Franchise Finance, Equipment Finance • Legacy Recruiting Impact –$470 million • New RMs hired in past 3.0 years other than in ou
Slide 40: Deposit Portfolio – Market Segmentation
Balance Sheet – Deposit Portfolio – Market Segmentation ($ in millions) TOTAL DEPOSITS CORE DEPOSITS NONCORE DEPOSITS TOTAL PINNACLE TRANSACTION AND MMDA CDs PUBLIC FUNDS and OTHER DEPOSITS 4Q24 4Q23 4Q24 4Q23 4Q24 4Q23 4Q24 4Q23 Nashville $15,452.5 $13,937.8 $14,204.0 $12,553.3 $731.7 $742.6 $516.8
Slide 41: Balance Sheet - Deposit Portfolio
Balance Sheet - Deposit Portfolio Ratio of EOP Uninsured and/or Uncollateralized Deposits Estimated Liquidity Available for Uninsured Deposits Balances at to Total Deposits ($s in millions) Dec. 31, 2024 50.00% 42.9% Total Deposits $42,843 38.9% 40.00% Less: Insured and/or Collateralized Deposits $2
Slide 42: Balance Sheet – Bond Portfolio
Balance Sheet – Bond Portfolio 12/31/24 % of 9/30/24 % of 6/30/24 % of 3/31/24 % of Duration Net of Security Type Quarter Unhedged Duration Avg. Yield - TE Balance Portfolio Balance Portfolio Balance Portfolio Balance Portfolio Hedging Treasuries 1,526,372 17.5% 1,480,557 17.6% 1,548,161 18.9% 996,7
Slide 43: Interest Rate Sensitivity
Interest Rate Sensitivity Rate Ramp Scenarios Rate Shock Scenarios 5.0% 5.0% 3.0% 3.0% 3.0% 2.5% 2.4% Net Interest Income % D Net Interest Income % D 1.5% 1.6% 1.4% 1.4% 1.2% 1.0% 0.6% 0.7% 1.0% 0.6% 0.7% 0.3% 0.4% 0.3% 0.3% 0.1% 0.1% -0.3% -0.1% -0.1% -1.0% -0.6% -0.7% -1.0% -0.7% -1.2% -1.2% -1.6%
Slide 44: Income Statement – Revenue Per Share
Income Statement – Revenue Per Share LTM Revenue Per Share Growth* vs. Peers $24.00 20.0% 19.0% 18.2% $23.39 17.5% 18.0% $23.00 16.2% 16.2% $22.49 13.8% 13.1% 15.2% 16.0% 16.0% 14.3% $21.89 $22.00 $21.39 $21.48 $21.45 $21.60 12.8% $21.09 14.0% 11.3% $21.00 14.9% 11.6% $20.33 10.1% Y/Y Revenue per Sh
Slide 45: Income Statement – PPNR
Income Statement – PPNR ($s in thousands) 2020 2021 2022 2023 2024 PPNR Trends Net interest income $821,788 $932,401 $1,129,293 $1,262,118 $1,365,590 Adjusted PPNR Noninterest income 317,840 395,734 416,124 433,253 371,178 $800 Noninterest expense (564,455) (660,104) (779,999) (887,769) (1,034,970)
Slide 46: Tangible Book Value Growth Continued
Tangible Book Value Growth Continued One of PNFP’s fundamental operating principles is that TBV compounding creates long-term shareholder value Tangible Book Value per Focused on preserving and growing Common Share** TBV per common share – YTD growth $56.24 $51.38 $44.74 2024 9.5% $42.55 $37.25 2023
Slide 47: BHG has Increased Focus on Higher FICO Originations
BHG has Increased Focus on Higher FICO Originations Over 85% of 2024 Originations were originated to FICO scores of 700+ Originations • BHG continues to refine and FICO Mix ($ mm) Cumulative Net Loss Curves tighten its credit underwriting: 2014 $311 • Losses in certain risk classes, particularly the
Slide 48: BHG Diverse, Growing Funding Channels
BHGHas BHG Credit Quality Diverse, Continues Growing FundingtoChannels Impress Sophisticated Proactive credit management scoringchannels of placement models produce continues impressive to provide flexibility results to BHG’s platform Loan Sale Auction Over 1,660 banks in network. 689 unique banks h
Slide 49: BHG Financials
BHG Financials At Dec 31, At Sep 30, At Jun 30, ($'s in thousands) ($'s in thousands) 4Q 2024 3Q 2024 2Q 2024 2024 2024 2024 Cash and Cash Equivalents 578,067 608,749 598,585 Interest Income $ 129,220 $ 126,503 $ 124,903 Loans Held for Investment 2,589,084 2,612,574 2,745,676 Allowance for Loan Loss
Slide 50: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 50
Slide 51: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures 51
Slide 52: 2024 Peer Group
2024 Peer Group Institution Name Ticker City, State Pinnacle Financial Partners, Inc. PNFP Nashville, TN Associated Banc-corp ASB Green Bay, WI Bank OZK OZK Little Rock, AR Bank United Inc. BKU Houston, TX Cadence Bank CADE Tupelo, MS Comerica Inc. CMA Dallas, TX Commerce Bancshares, Inc. CBSH Kansa
Slide 53: Investor Call Fourth Quarter 2024
Investor Call FOURTH QUARTER 2024 M. TERRY TURNER, PRESIDENT AND CEO HAROLD R. CARPENTER, EVP AND CFO
Pinnacle Financial Partners — Q4 2024 Earnings Presentation on 6ix