Pinnacle Financial Partners, Inc. · NYSE:PNFP
Pinnacle Financial Partners — Q1 2016 Earnings Presentation
50 slides from Pinnacle Financial Partners's earnings presentation, Apr 19, 2016
Slide 1: First Quarter 2016 Investor Call
First Quarter 2016 Investor Call M. Terry Turner, President and CEO Harold R. Carpenter, EVP and CFO April 19, 2016
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: Safe Harbor Statements
Safe Harbor Statements Additional Information and Where to Find It In connection with the Avenue merger, Pinnacle Financial has filed a registration statement on Form S-4 with the Securities and Exchange Commission (the SEC) to register the shares of Pinnacle’s common stock that will be issued to th
Slide 4: 1Q16 Summary Results
1Q16 Summary Results Execution of fundamentals fueled exceptional growth in key valuation drivers Total Revenues FD EPS* ROTCE* Earnings Growth $0.71 15.64% Up 43.0% yr/yr $99,758 Up 14.5% yr/yr 15.56% $0.62 13.45% $69,755 $0.47 $0.39 12.41% $54,661 $58,640 Balance Sheet Growth Total Loans $6,828 To
Slide 5: Previously outlined growth initiatives are moving forward
1Q16 Summary Results Previously outlined growth initiatives are moving forward 1. Aggressive hiring ahead of schedule – 14 revenue producers in 1Q16, compared to 36 all of last year 2. CapitalMark and Magna mergers –Successful integration completed. Final stages of CapitalMark synergy case to be ful
Slide 6: Steady growth in total revenues
Loan, Deposit and Fee Growth Yield Operating Leverage Steady growth in total revenues $3.00 $100 $2.44 Revenues per diluted WAVG share $2.50 $80 Total Revenues $2.00 $60 (000's) $1.31 $1.50 $40 $1.00 $20 $0.50 $- $- Fee income NII Total revenue per share 6
Slide 7: Linked quarter loan volumes and yields rose dramatically in 1Q16
Loan, Deposit and Fee Growth Yield Operating Leverage Linked quarter loan volumes and yields rose dramatically in 1Q16 7
Slide 8: Deposits grew consistently with costs well contained
Loan, Deposit and Fee Growth Yield Operating Leverage Deposits grew consistently with costs well contained 8
Slide 9: Fee businesses produce another solid quarter
Loan, Deposit and Fee Growth Yield Operating Leverage Fee businesses produce another solid quarter 1Q16 4Q15 3Q15 2Q15 1Q15 Service charges $3,443 $3,500 $3,258 $3,076 $2,913 Investment services 2,346 2,787 2,526 2,399 2,259 Insurance commissions 1,705 1,103 1,103 1,106 1,513 Gain on mortgage loans
Slide 10: Solid operating leverage; set for another year of improvement
Loan, Deposit and Fee Growth Yield Operating Leverage Solid operating leverage; set for another year of improvement 1Q16 4Q15 3Q15 2Q15 1Q15 Salaries and benefits $32,517 $30,878 $27,746 $23,775 $23,531 Equipment and occupancy 8,130 8,385 6,933 5,878 6,046 Other real estate owned 112 99 (686) (115)
Slide 11: Pinnacle has targeted four attractive urban markets
Strategic Outlook Pinnacle has targeted four attractive urban markets Memphis Nashville (1) Chattanooga Knoxville Loans – 1Q16 $589.7 mm $5,328.8 mm $711.6 mm $1,155.3 mm Deposits – 1Q16 $405.4 mm $6,038.9 mm $662.9 mm $939.5 mm Pro forma deposit 1.7% - 11th 11.0% - 4th 6.6% - 4th 4.9% - 6th market
Slide 12: PNFP has built a high growth, high profit model
Strategic Outlook PNFP has built a high growth, high profit model Net Interest Margin Noninterest Income / Average Assets (1) ROA (2) 3.95% 3.90% 1.60% 1.30% 1.23% 3.90% 1.17% 1.45% 3.85% 1.20% 3.76% 3.78% 3.78% 3.80% 1.10% 1.40% 1.32% 3.75% 1.00% 0.97% 3.70% 0.94% 1.20% 3.65% 0.90% 1.20% 3.60% 1.09
Slide 13: Strong execution of growth tactics yields sustainable growth
Strategic Outlook Strong execution of growth tactics yields sustainable growth • Hiring revenue producers at record pace in 1Q16 Traditional • Recruiting pipelines remain robust for remainder of 2016 Tactics • Double digit organic balance sheet and core fee growth rates • Double digit EPS growth rat
Slide 14: Pinnacle's focus remains sustainable growth in value
Strategic Outlook Pinnacle’s focus remains sustainable growth in value 1. Competitive distinction among bankers and clients 2. Double digit organic asset growth - $13-15 billion 3. 1.20 – 1.40% ROA Target 4. Double digit EPS growth 5. Top quartile ROTCE 6. Advantage stock rationally deployed 14
Slide 15: Q&A – First Quarter 2016 Investor Call
Q&A – First Quarter 2016 Investor Call
Slide 16: Supplemental Information
Supplemental Information First Quarter 2016 Investor Call
Slide 17: Supplemental Information
Supplemental Information Chart • Balance Sheet 18 • Asset Quality 27 • Income Statement 31 • Pinnacle Financial Partners profile 37 • Economic and Market Conditions 43 17
Slide 18: Supplemental Information: Balance Sheet
Supplemental Information Balance Sheet 18
Slide 19: Loan portfolio well diversified
Balance Sheet Loan portfolio well diversified Amts. %’s(*) Amts. %’s(*) Amts. %’s Amts. %’s 1Q16 1Q16 4Q15 4Q15 1Q15 1Q15 1Q14 1Q14 C&D and Land $764.1 11.2% $747.7 11.4% $324.5 7.0% $294.1 7.0% Consumer RE 1,042.3 15.3% 1,046.5 16.0% 723.9 15.6% 703.6 16.8% CRE – Owner Occ. 1,099.7 16.1% 1,083.5 16
Slide 20: Construction portfolio reflects quality growth
Balance Sheet Construction portfolio reflects quality growth Amts. %’s(*) Amts. %’s(*) Amts. %’s(*) Amts. %’s(*) 1Q16 1Q16 4Q15 4Q15 1Q15 1Q15 1Q14 1Q14 Residential – Spec $120.9 1.9% $126.1 1.9% $39.0 0.8% $34.0 0.8% Residential – Custom 97.1 1.4% 54.1 0.8% 36.0 0.8% 31.7 0.8% Residential – Condo 1
Slide 21: The C&I loan portfolio is highly diversified
Balance Sheet The C&I loan portfolio is highly diversified NAICS Sector Description 1Q16 1Q15 Accommodation and Food Services 3.93% 4.40% Admin. and Support and Waste Mgmt & Remediation 2.57% 2.99% Agriculture, Forestry, Fishing and Hunting 0.16% 0.01% Arts, Entertainment, and Recreation 1.19% 1.10%
Slide 22: PNFP maintains limited dependence on non-relationship funding
Balance Sheet PNFP maintains limited dependence on non-relationship funding 3/31/2016 Percent 3/31/2015 Percent Core Funding: Non-interest bearing deposits 2,026,550 25.43% 1,424,971 26.16% Interest-bearing deposits 1,394,708 17.50% 1,054,373 19.35% Money Market accounts 2,573,981 32.30% 1,627,539 2
Slide 23: Unfunded line commitments hold potential for significant loan growth
Balance Sheet Unfunded line commitments hold potential for significant loan growth Note: Excludes HELOCS and credit cards 23
Slide 24: The securities book is maintained at a minimal level
Balance Sheet The securities book is maintained at a minimal level 24
Slide 25: Conservative bond portfolio
Balance Sheet Conservative bond portfolio Portfolio: March 31, 2016 Total Investments $ 1.048 billion Unrealized Gain (Loss) $ 15.5 million QTD Purchases $ 101.9 million QTD Sales $ 0.0 million Duration Avg Yield – TE 1Q16 2.7% 2.6% 4Q15 3.0% 2.5% 3Q15 2.8% 2.6% 2Q15 2.9% 2.6% As of 1Q15 2.9% 2.8% 3
Slide 26: The municipal portfolio contains minimal risk
Balance Sheet The municipal portfolio contains minimal risk Municipal Bond Portfolio Statistics Muni Allocation % 1Q16 1Q15 Weighted Average Life 3.4 years 3.4 years Tax equivalent yield 4.65% 4.51% 21% FMV as % of Cost 104.2% 105.1% 79% As of September 30, 2015 Location # of Issuances Market Value
Slide 27: Supplemental Information: Asset Quality
Supplemental Information Asset Quality 27
Slide 28: Past due loans remain very low
Asset Quality Past due loans remain very low Mar. 31, As a % of Dec. 31, As a % of Mar. 31, As a % 2016 total 2015 total 2015 of total (000’s) loans loans loans Past Due Loans (*) Nonaccrual loans** $9,592 0.14% $10,362 0.16% $ 3,394 0.07% Accruing loans 22,064 0.32% 19,977 0.31% 15,745 0.34% Total
Slide 29: NPLs and loans >90 days past due & accruing remain very low
Asset Quality NPLs and loans >90 days past due & accruing remain very low NPLs Expressed as a % of Total Loans within each Category PNFP NPLs and >90 days Mar. 31, As a % of Dec. 31, As a % of Mar. 31, As a % of (000’s) 2016 total loans 2015 total loans 2015 total loans Const. and land development 7
Slide 30: Classified assets remain low
Asset Quality Classified assets remain low (in thousands) Balances Balances Balances Mar. 31, 2016 Dec. 31, 2015 Sept. 30, 2015 Classified loans and ORE: - Substandard commercial loans $155,125 $116,088 $94,801 - Doubtful commercial loans - 18 - - Other impaired loans 17,639 19,402 22,490 - 90 days
Slide 31: Supplemental Information: Income Statement
Supplemental Information Income Statement 31
Slide 32: Diversified fee structure
Income Statement Diversified fee structure 2015 Growth - 56.3% 32 Source: Company information
Slide 33: Mortgage volumes remain strong
Income Statement Mortgage volumes remain strong 33
Slide 34: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non-GAAP measures 1Q16 4Q15 3Q15 2Q15 1Q15 Net interest income $73,902 $71,475 $62,059 $51,831 $51,269 Total non-interest income $25,856 $26,608 $21,410 $20,019 $18,493 Less: Securities (gains) losses - 10 - (556) (6) Non-interest income, excluding the impact of ne
Slide 35: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non-GAAP measures 1Q16 4Q15 3Q15 2Q15 1Q15 Total non-interest income $25,856 $26,608 $21,410 $20,019 $18,493 Less: Securities (gains) losses - 10 - (556) (6) Non-interest income, excluding the impact of net gains $25,856 $26,618 $21,410 $19,463 $18,487 (losses) on
Slide 36: Reconciliation of Non-GAAP measures
Income Statement Reconciliation of Non-GAAP measures 1Q16 4Q15 3Q15 2Q15 1Q15 Net income $27,965 $26,854 $24,149 $22,664 $21,843 Merger related expenses 1,829 2,489 2,249 59 - Tax effect on merger related expenses (718) (977) (882) (23) - Net income less merger related expenses $29,076 $28,366 $25,5
Slide 37: Supplemental Information: Pinnacle Financial Partners Profile
Supplemental Information Pinnacle Financial Partners Profile 37
Slide 38: PNFP Profile
PNFP Profile Recently completed acquisitions positioned firm in four great banking markets PNFP CapitalMark Magna Headquarters: Nashville, TN Offices: 29 in 8 Middle-TN counties 10 in 5 East-TN counties Founded: 2000 5 in West-TN Total assets: $ 9.262 Billion Avg. daily trading volume **: 238,007 sh
Slide 39: PNFP has an extraordinarily experienced management team
PNFP Profile PNFP has an extraordinarily experienced management team Name Title Age Years in Years at Banking Pinnacle Industry M. Terry Turner President and Chief Executive Officer 61 38 16 Robert A. McCabe, Jr. Chairman of the Board 65 40 15 Hugh M. Queener Chief Administrative Officer 60 41 16 Ha
Slide 40: PNFP compares favorably to high performing peers
PNFP Profile PNFP compares favorably to high performing peers • Pinnacle Financial Partners (PNFP) • MB Financial (MBFI) • Bank of the Ozarks (OZRK) • National Penn Bancshares, Inc. • Brookline Bancorp, Inc. (BRKL) (NPBC) • Columbia Banking System, Inc. • Renasant Corporation (RNST) (COLB) • South S
Slide 41: PNFP has a track record for best-in-market share movement
PNFP Profile PNFP has a track record for “best-in-market” share movement Nashville-Davidson-Rutherford MSA Knoxville MSA Top 10 Holding Market Market % Top 10 Holding Market Market Change Market Company Share Share Change Market Company Share Share in Share 6/30/15 6/30/00 in Share 6/30/15 6/30/07 S
Slide 42: PNFP has a track record for best-in-market share movement
PNFP Profile PNFP has a track record for “best-in-market” share movement Chattanooga TN-GA MSA Memphis, TN-MS-AR MSA Top 10 Holding Market Market % Top 11 Holding Market Market % Market Company Share Share Change Market Company Share Share Change Share 6/30/15 6/30/14 in Share Share 6/30/15 6/30/14
Slide 43: Supplemental Information: Economic & Market Conditions
Supplemental Information Economic & Market Conditions 43
Slide 44: PNFP operates in advantaged markets
PNFP operates in advantaged markets Tennessee Market Demographics 2016 -2021E 2016 -2021E Current Population Population Growth Current Median Median HHI Growth Top 20 MSAs Total Deposits ($Ms) (000s) (%) HHI ($) (%) Nashville-Davidson-Murfreesboro-Franklin TN 48,022 1,840 6.87% 55,922 9.41% Memphis
Slide 45: PNFP operates in advantaged markets
PNFP operates in advantaged markets TENNESSEE • Tennessee was ranked the No. 1 state to be a taxpayer in the “2015 Best States to be WalletHub a Taxpayer” study. In the same study, Tennessee ranked No. 4 state to be a taxpayer in the nation, when adjusted for cost of living index. • Tennessee’s Davi
Slide 46: PNFP operates in advantaged markets
PNFP operates in advantaged markets MEMPHIS Memphis offers a diverse, metropolitan workforce. Over the past three decades, the presence of companies like FedEx and the region’s superior distribution infrastructure have earned Memphis the title, “America’s Distribution Center.” • Memphis ranks No. 4
Slide 47: Job growth occurring in all four markets
PNFP operates in advantaged markets Job growth occurring in all four markets Nashville MSA Knoxville MSA Nonfarm Payrolls- SA (thru January 2016) Nonfarm Payrolls- SA (thru January 2016) 950,000 400,000 900,000 390,000 380,000 850,000 370,000 800,000 360,000 750,000 350,000 700,000 340,000 650,000 3
Slide 48: Rapid job growth leads to rapid real estate absorption
PNFP operates in advantaged markets Rapid job growth leads to rapid real estate absorption Unemployment Rates Seasonally Adjusted (thru Feb 2016) 12.00 10.00 8.00 6.00 4.00 2.00 0.00 Nashville Knoxville Chattanooga Memphis US Home Sales Nashville Knoxville** Memphis** Chattanooga % Change % Change %
Slide 49: Nashville's commercial vacancy rates indicate a healthy market
PNFP Operates in Advantaged Markets Nashville’s commercial vacancy rates indicate a healthy market CRE Vacancy Rates Nashville Knoxville Chattanooga Memphis National 4Q15 % Change 4Q15 % Change 4Q15 % Change 4Q15 % Change 4Q15 % Change from PY from PY from PY from PY from PY Industrial / 5.90% (15.7
Slide 50: First Quarter 2016 Investor Call
First Quarter 2016 Investor Call M. Terry Turner, President and CEO Harold R. Carpenter, EVP and CFO April 19, 2016
Pinnacle Financial Partners — Q1 2016 Earnings Presentation on 6ix