Pinnacle Financial Partners, Inc. · NYSE:PNFP
Pinnacle Financial Partners — Q3 2021 Earnings Presentation
63 slides from Pinnacle Financial Partners's earnings presentation, Oct 13, 2021
Slide 1: Investor Call Third Quarter 2021
Investor Call THIRD QUARTER 2021 OCT. 13, 2021 Time: 8:30 AM CDT Webcast: www.pnfp.com (investor relations) Audio only: 877-602-7944 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, earnings per diluted common share, PPNR, efficiency ratio and the ratio of noninterest expense to average assets, excluding in certain instances the impact
Slide 4: 3Q21 Financial Dashboard
3Q21 Financial Dashboard Key success measures including core loan growth, core deposit growth, net interest income growth, fee income growth, pre-provision net revenue growth, asset quality and tangible book value accretion were very strong again this quarter. 4
Slide 5: 3Q21 Summary Results of Key GAAP Measures
3Q21 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) (millions) NPA/ Loans & OREO Classified Asset Ratio NCOs 5
Slide 6: 3Q21 Summary Results of Key Non-GAAP Measures
3Q21 Summary Results of Key Non-GAAP Measures Total Revenues* FD EPS* Adjusted Pre-Tax Pre-Provision Net Income* CAGR 24.8% CAGR 17.0% CAGR 25.7% Total Loans Total Core Deposits Tangible Book Value per Share** CAGR 22.9% (millions) (millions) CAGR 28.4% CAGR 12.7% NPA/ Loans & OREO Classified Asset
Slide 7: Understanding the Growth
Understanding the Growth We believe our advantaged markets, our long-standing model for attracting talent and demonstrable ability to “wow” our clients should yield best-in-class growth and has positioned us for the continued share grab that should be available given the stressed client loyalty for
Slide 8: PNFP's Differentiated Model has Yielded Consistent, Sustainable Growth
PNFP’s Differentiated Model has Yielded Consistent, Sustainable Growth Excited Associates Engaged Clients Enriched Shareholders 2021 Workplace Awards Greenwich Net Promoter Scores NPS RANK • No. 26 – 2021 FORTUNE 100 Best Companies to Work For in the U.S. Nashville 92 1 (fifth year ranked) • America
Slide 9: PNFP is an Employer of Choice as Key Competitors Remain Vulnerable
PNFP is an Employer of Choice as Key Competitors Remain Vulnerable 2021 Revenue Producers By Competitor Revenue Producers BBVA Hired 2017 77 Other Truist 2018 109 2019 89 2020 87 Wells Fargo 2021 YTD 93 Regions First Citizens First Horizon Bank 9
Slide 10: 3Q21 Financial Information
3Q21 Financial Information Excluding the impact of PPP loans, loan growth was substantial in the third quarter. Along with continued growth in core deposits, net interest income, and fees, 3Q21 was a strong core growth quarter for the franchise. 10
Slide 11: Average Loan Balances and Loan Growth in 3Q21
PNFP Linked-Quarter Annualized Average Loan Balances Declined 3.3% in 3Q21 Linked-quarter annualized average loan growth ex-PPP was 14.2% and we are gaining optimism regarding 2022 loan growth $24,000 Average Loan Growth 5.40% Annual Organic EOP Loan Growth^ $22,000 5.20% Avg. Growth of 14.6% Annual
Slide 12: Balance Sheet Growth Driven by Outsized Core Deposit Inflows
Balance Sheet Growth was Driven by Outsized Core Deposit Inflows Core deposit growth continues to outperform expectations Average Deposit Growth Annual Core Deposit Growth^ 2.70% $28,000 Avg. Growth of 21.3% Annually $28,740 Core Deposit Growth Rates 40.0% $28,014 $26,000 $27,621 2.40% $27,193 $26,3
Slide 13: Excess Liquidity Continues to Impact NIM
Excess Liquidity Continues to Impact NIM Rebound in loan demand could potentially serve to reduce elevated liquidity levels Reported NIM vs. Adjusted NIM 3Q21 Liquidity Highlights 3.40% 3.35% 3.28% 3.29% • Strong deposit growth and PPP forgiveness/payoff 3.30% 3.27% 3.25% 3.19% 3.22% 3.21% activity
Slide 14: PNFP's Asset Quality Has Continued to Hold Up
PNFP’s Asset Quality Has Continued to Hold Up Asset quality metrics continue to remain strong as we enter 4Q21 Net Charge-offs NPA/ Loans & OREO 3Q21 Credit Highlights 0.23% 0.51% 0.55% 0.53% • Several credit measurements at 0.16% 0.40% all time records and top 0.14% 0.10% 0.10% quartile of peers 0.
Slide 15: PNFP Grew Fees at a Double-Digit Rate YOY
PNFP Grew Fees at a Double-Digit Rate YOY Record quarter – Other equity investments provide substantial growth for 3Q21 Linked-Quarter Year-over-Year Annualized • Service charges are up from prior quarter due to 3Q21 2Q21 3Q20 Growth % Growth % $1.5 million in vendor incentives received during Servi
Slide 16: Expenses In-line with Expectations for 3Q21
Expenses In-line with Expectations for 3Q21 Incentives expense up for FY21, given below target payout in FY20 Linked-Quarter Year-over-Year 3Q21 2Q21 3Q20 Annualized Growth % Growth % • Salary costs reflect increased personnel as total FTEs in Salaries and employee benefits: Salaries $61,382 $58,622
Slide 17: Capital Update for Third Quarter 2021
Capital Update for Third Quarter 2021 Sub Debt redemption anticipated in 4Q21 Tangible Book Value per Share** • Dividends – Tangible book dividends • Increased value perpershare commongrowth share to remains $0.18 from our $0.16focus, in 1Q21but other capital initiatives will be considered $40.98 $3
Slide 18: PNFP Remains Optimistic about 2021
PNFP Remains Optimistic about 2021 We remain confident in our model 2021 Outlook – as of October 11, 2021 (Note) • Anticipate low-double digit percentage end-of-year loan growth for FY21 over FY20, excluding the impact of PPP. Inclusive of PPP, Y/Y End of Period Loan Growth anticipate 2 to 5 percent
Slide 19: Bankers' Healthcare Group
Bankers’ Healthcare Group BHG’s differentiated model has proven very resilient with continued strong originations, loan sales and yield/spread premium. The gain on sale model continues to provide meaningful earnings to BHG and to Pinnacle even as BHG increases the mix toward balance sheet spread inc
Slide 20: The Pandemic Served to Validate the BHG Model
The Pandemic Served to Validate the BHG Model BHG continues to originate loans at record levels while maintaining strong yields $800 BHG Business Model Drives Outperformance Loan Originations and Placements $700 • 3Q21 was the 5th consecutive record highest origination $727 $714 $600 quarter in the
Slide 21: BHG Credit Quality
BHG Credit Quality The Pandemic ServedContinues to Validate to theImpress BHG Model Sophisticated Additional credit COVID-related scoring reserves models released in 2Q21 &produce 3Q21 impressive results Recourse Obligation Reserves (Note) • Recourse obligation reserves decreased to 5.67% of total (
Slide 22: BHG Credit Quality: Vintage Analysis
BHG Credit Quality The Pandemic ServedContinues to Validate to theImpress BHG Model Vintage analysiscredit Sophisticated demonstrates scoring continuous improvement models produce in asset impressive quality results • Historical credit results indicate that 70% of losses occur Historical FICO Scores
Slide 23: The Pandemic Served to Validate the BHG Model
The Pandemic Served to Validate the BHG Model BHG believes its unique model is outperforming other online lenders by a wide margin Big plans at BHG and Future Growth opportunities • Deeper penetration for Core Product < 1% of market BHG Pre-Tax Profitability share currently • Expansion of credit car
Slide 24: Q&A Third Quarter 2021
Q&A THIRD QUARTER 2021 einnacle FINANCIAL PARTNERS
Slide 25: Supplemental Information
Supplemental Information Slide # • Balance Sheet 26 • Income Statement 55 • Peer Group 62 25
Slide 26: Balance Sheet – Loan Portfolio
Balance Sheet – Loan Portfolio ($ in millions) Amts. % Amts. % Amts. % Amts. %s 3Q21 3Q21 2Q21 2Q21 3Q20 3Q20 3Q19 3Q19 C&I $7,079.4 30.7% $6,771.3 29.6% $6,144.9 27.4% $5,891.0 30.5% C&I – Paycheck Protection Program 708.7 3.1% 1,372.9 6.0% 2,251.0 10.0% - - CRE – Owner Occ. 2,954.6 12.8% 2,817.7 1
Slide 27: Balance Sheet – Loan Portfolio
Balance Sheet – Loan Portfolio ($ in millions) TOTAL PINNACLE TN/AL LOANS CAROLINAS/ VA LOANS GEORGIA OTHER UNIT LOANS* Amts. Amts. Amts. Amts. Amts. Amts. Amts. Amts. Amts. Amts. 3Q21 3Q20 3Q21 3Q20 3Q21 3Q20 3Q21 3Q20 3Q21 3Q20 C&I $7,079.4 $6,144.9 $4,888.4 $4,371.2 $951.3 $858.0 $78.2 $27.4 $1,1
Slide 28: Balance Sheet – Loan Portfolio
Balance Sheet – Loan Portfolio ($ in millions) TOTAL PINNACLE C&I & O/O CRE CRE & CONSTRUCTION OTHER LOANS* Amts. Amts. Amts. Amts. Amts. Amts. Amts. Amts. 3Q21 3Q20 3Q21 3Q20 3Q21 3Q20 3Q21 3Q20 Nashville $6,846.4 $6,500.4 $3,022.4 $2,851.9 $2,510.2 $2,574.4 $1,313.8 $1,074.1 Knoxville 1,864.6 1,76
Slide 29: Balance Sheet – Loan Portfolio
Balance Sheet – Loan Portfolio ($ in millions) Amts. % Amts. % Amts. % Amts. % 3Q21 3Q21 2Q21 2Q21 3Q20 3Q20 3Q19 3Q19 Residential – Spec $291.1 1.3% $232.7 1.0% $251.9 1.1% $360.0 1.9% Residential – Custom 223.7 1.0% 219.0 1.0% 164.3 0.7% 129.1 0.7% Residential – Condo 0.2 0.0% - 0.0% 0.4 0.0% 1.0
Slide 30: Balance Sheet – Loan Portfolio
Balance Sheet – Loan Portfolio ($ in millions) TOTAL PINNACLE TENNESSEE/AL CAROLINAS/VA GEORGIA LOANS OTHER UNIT LOANS LOANS LOANS Amts. Amts. Amts. Amts. Amts. Amts. Amts. Amts. Amts. Amts. 3Q21 3Q20 3Q21 3Q20 3Q21 3Q20 3Q21 3Q20 3Q21 3Q20 Residential – Spec $291.1 $251.9 $191.7 $178.2 $98.0 $73.5
Slide 31: Balance Sheet – Loan Portfolio
Balance Sheet – Loan Portfolio ($ in millions) Total NOO and Multifamily Total Construction Total NOO and Construction Amts. Amts. Amts. Amts. Amts. Amts. Amts. Amts. Amts. 3Q21 2Q21 3Q20 3Q21 2Q21 3Q20 3Q21 2Q21 3Q20 Multifamily $609.2 $713.5 $571.6 $761.2 $696.8 $651.0 $1,370.4 $1,410.3 $1,222.6 H
Slide 32: PPP Program is a Differentiator for Pinnacle
PPP Program is a Differentiator for Pinnacle Pinnacle provided needed stimulus to smaller businesses in 2021 • $708.7 million in PPP balances remain on balance sheet at ($000’s) 2020 PPP 2021 PPP Totals Total PPP fundings through Sept. 30, 2021 $ 2,483,177 $ 933,872 $ 3,417,049 Sept. 30, 2021 • Unam
Slide 33: Asset Quality Has Continued to Hold Up
Asset Quality Has Continued to Hold Up COVID-impacted categories continue to outperform initial expectations Outstanding Balances % Nonperforming Loans % Classified Loans % Past Due > 30 days 3Q21 2Q21 3Q21 2Q21 3Q21 2Q21 3Q21 2Q21 Hotels NOO CRE & Construction $943,047 $985,616 0.00% 0.00% 0.50% 0.
Slide 34: Hotel Portfolio
Hotel Portfolio Amounts as of 9.30.21 Hotel Property Types Hotel Flags ADR, RevPAR & Occupancy Trendlines 34
Slide 35: Top 10 Hotel Borrowers
Hotel Portfolio Amounts as of 9.30.21 Hotel Construction Type, Delivery Dates, Volumes Hotel Type (Construction) Hotel Flag (Construction) Exposure at CARES Act PNFP Hotel Property Type Descriptions are as follows: 10 Largest 9.30.21 Hotel Property Section 4013 Economy – The economy sector often is
Slide 36: Restaurant Portfolio
Restaurant Portfolio Amounts as of 9.30.21 C&I and Owner-Occupied CRE Restaurant Borrowers with Exposure Greater than $10mm Restaurants by Type Exposure at 9.30.21 CARES Act Section Location ('000s) LTV at 9.30.21 Food Service Type 4013 Modification Thomasville, NC 49,797 Quick Service No Morristown
Slide 37: Retail Portfolio
Retail Portfolio Amounts as of 9.30.21 CRE- NOO by Tenant Type 10 Largest Exposure at CARES Act Tenant Type Descriptions are as follows: Loan Retail 9.30.21 Tenant Type Section 4013 • Grocery Anchored Shopping Center is otherwise known as the “Neighborhood Center”, Regional Type Top 10 Retail NOO CR
Slide 38: Entertainment Portfolio
Entertainment Portfolio Amounts as of 9.30.21 Entertainment by Type Motion Picture SBA PPP; 3.2% 10 Largest Industry; 0.5% Entertainment Exposure at CARES Act Relationships 9.30.21 Entertainment Section 4013 ('000) ('000s) Loan Type Type Modification Houston, TX $50,000 C&I Performers, Agents & Spec
Slide 39: Balance Sheet – Loan Portfolio Lines of Credit
Balance Sheet – Loan Portfolio Lines of Credit ($'s in millions) Linked Qtr. 3/31/2020 6/30/2020 9/30/2020 12/31/2020 3/31/2021 6/30/2021 9/30/2021 Change CRE – Investment & Construction Net Active Balance $3,929.10 $4,090.80 $4,067.10 $4,106.82 $4,051.74 $3,921.54 $4,040.73 $119.18 Net Available Cr
Slide 40: Current Expected Credit Losses
Current Expected Credit Losses Total Allowance for Credit Losses for loans = $268.6 mm or 1.17% of loans at September 30, 2021, or 1.20% excluding PPP loans Allowance for % of Loans Off-Balance Total Forecasted economic metrics(1) Credit Losses Sheet Base Case Outlook at: 4Q21 1Q22 2Q22 3Q22 At Dece
Slide 41: Current Expected Credit Losses
Current Expected Credit Losses September 30, 2020 December 31, 2020 March 31, 2021 June 30, 2021 September 30, 2021 CECL CECL CECL CECL CECL Allowance for Credit Losses Amount % of Loans Amount % of Loans Amount % of Loans Amount % of Loans Amount % of Loans Commercial and Industrial $ 102,208 1.66%
Slide 42: Asset Quality
Asset Quality AS A % OF AS A % OF AS A % OF ($ in millions) September 30, 2021 June 30, 2021 September 30, 2020 TOTAL LOANS TOTAL LOANS TOTAL LOANS NPLs and > 90 days Const. and land development $1,645 0.01% $1,082 0.00% $3,152 0.01% Consumer RE 19,357 0.08% 17,472 0.08% 22,176 0.10% CRE – Owner Occ
Slide 43: Balance Sheet – Loan Portfolio
Balance Sheet – Loan Portfolio Net Commercial Loan Charge Offs by Loan Type Net Consumer Loan Charge Offs by Loan Type 0.60% 3.00% 0.50% 2.50% 0.40% 2.00% 0.30% 1.50% 0.20% 1.00% 0.10% 0.50% 0.00% -0.10% 0.00% -0.20% -0.50% CRE Construction C&I Net commercial charge Consumer RE Consumer and other Ne
Slide 44: Balance Sheet – Loan Portfolio
Balance Sheet – Loan Portfolio ($ in thousands) Description 3Q21 2Q21 1Q21 4Q20 3Q20 2Q20 Loans secured by real estate: Construction, land development, and other loans: 1-4 family residential construction loans $635,470 $556,052 $548,614 $514,819 $527,743 $580,193 Other construction loans and all la
Slide 45: Balance Sheet – Deposit Portfolio
Balance Sheet – Deposit Portfolio ($ in millions) TOTAL DEPOSITS CORE DEPOSITS NONCORE DEPOSITS TOTAL PINNACLE TRANSACTION AND MMDA CDs PUBLIC FUNDS and OTHER DEPOSITS 3Q21 3Q20 3Q21 3Q20 3Q21 3Q20 3Q21 3Q20 Nashville $12,213.6 $9,597.4 $11,655.9 $8,864.6 $376.2 $487.7 $181.5 $245.1 Knoxville 2,373.
Slide 46: Balance Sheet – Bond Portfolio
Balance Sheet – Bond Portfolio Conservative bond portfolio Portfolio: September 30, 2021 Total Investments $5.6 billion Net Unrealized Gain $79.5 million 2.2% Quarter Duration Avg. Yield- TE 10.1% 3Q21 4.5% 2.0% 2Q21 4.3% 2.3% 1Q21 4.8% 2.3% 48.5% 4Q20 4.4% 2.3% 32.2% 3Q20 4.7% 2.4% 2Q20 4.6% 2.6% 1
Slide 47: Balance Sheet – Bond Portfolio
Balance Sheet – Bond Portfolio 4.00 40.0 Effective Bond Portfolio Composition End of Period 3.50 35.0 3.00 30.0 78% 76% 76% 75% 76% % of Total Assets 2.50 25.0 Bond Yields 2.04 2.00 20.0 1.50 15.0 15.4 1.00 10.0 24% 24% 25% 24% 22% 0.50 5.0 - - Sep. 2020 Dec. 2020 Mar. 2021 Jun. 2021 Sep. 2021 PNFP
Slide 48: Interest Rate Sensitivity
Interest Rate Sensitivity ▪ Change since 1Q21 largely due to unwinding of $1.5 billion loan floor; locked in $46.5 million gain and freed up floating rate assets ▪ Numerous options available (or already undertaken) to Bank to increase asset sensitivity: ▪ PPP forgiveness proceeds will organically be
Slide 49: NIM Adjusted for PPP and Liquidity Impact
NIM Adjusted for PPP and Liquidity Impact Estimate PPP and Liquidity Build negatively impacted 3Q21 NIM by 0.17% Adjusted Avg Adjusted ProForma Adj. Yield/ Actual Avg Balances ProForma Balances after PF ProForma Interest after Yield/ Rate Rates after 3Q21 Adjustments Entries Interest Adjustments PF
Slide 50: NIM Adjusted for PPP and Liquidity Impact
NIM Adjusted for PPP and Liquidity Impact Estimate PPP and Liquidity Build negatively impacted 2Q21 NIM by 0.17% Adjusted Avg Adjusted ProForma Adj. Yield/ Actual Avg Balances ProForma Balances after PF ProForma Interest after Yield/ Rate Rates after 2Q21 Adjustments Entries Interest Adjustments PF
Slide 51: NIM Adjusted for PPP and Liquidity Impact
NIM Adjusted for PPP and Liquidity Impact Estimate PPP and Liquidity Build negatively impacted 1Q21 NIM by 0.27% Adjusted Avg Adjusted ProForma Adj. Yield/ Actual Avg Balances ProForma Balances after PF ProForma Interest after Yield/ Rate Rates after 1Q21 Adjustments Entries Interest Adjustments PF
Slide 52: NIM Adjusted for PPP and Liquidity Impact
NIM Adjusted for PPP and Liquidity Impact Estimate PPP and Liquidity Build negatively impacted 4Q20 NIM by 0.29% Adjusted Avg Adjusted ProForma Adj. Yield/ Actual Avg Balances ProForma Balances after PF ProForma Interest after Yield/ Rate Rates after 4Q20 Adjustments Entries Interest Adjustments PF
Slide 53: NIM Adjusted for PPP and Liquidity Impact
NIM Adjusted for PPP and Liquidity Impact Estimate PPP and Liquidity Build negatively impacted 3Q20 NIM by 0.40% Adjusted Avg Adjusted ProForma Adj. Yield/ Actual Avg Balances ProForma Balances after PF ProForma Interest after Yield/ Rate Rates after 3Q20 Adjustments Entries Interest Adjustments PF
Slide 54: NIM Adjusted for PPP and Liquidity Impact
NIM Adjusted for PPP and Liquidity Impact Estimate PPP and Liquidity Build negatively impacted 2Q20 NIM by 0.32% Adjusted Avg Adjusted ProForma Adj. Yield/ Actual Avg Balances ProForma Balances after PF ProForma Interest after Yield/ Rate Rates after 2Q20 Adjustments Entries Interest Adjustments PF
Slide 55: Income Statement – Revenue per Common Share
Income Statement – Revenue per Common Share LTM Revenue Per Share Growth* vs. Peers $17.50 20.0% $17.07 $17.00 $16.51 $16.50 18.9% 18.0% $16.00 $15.78 17.5% 16.0% $15.50 14.5% Y/Y Revenue per Share Growth $15.07 13.8% $15.00 13.0% 13.0% 13.0% 14.0% $14.50 11.9% 11.9% $14.35 Revenue per Share 11.6% $
Slide 56: Income Statement – Mortgage Volumes
Income Statement – Mortgage Volumes $625,000 5.00% $550,000 4.50% $475,000 4.00% $400,000 3.50% $325,000 3.00% $250,000 2.50% $175,000 2.00% $100,000 1.50% $25,000 1.00% Purchase Money Refinance Gross fees as a % of loans originated 56
Slide 57: Income Statement – PPNR
Income Statement – PPNR ($'s in thousands) 2017 2018 2019 2020 YTD 2021 PPNR Trends Adjusted PPNR $700 Net interest income $543,306 $ 736,342 $ 766,142 $821,788 $693,638 Noninterest income 144,904 200,850 263,826 317,840 295,011 $600 Noninterest expense (366,560) (452,867) (505,148) (576,536) 489,68
Slide 58: BHG Financials
BHG Financials Strong equity to support business model • Strong performance in 3Q21 • Strong cash position to provide increased liquidity and, thus, better withstand any Pandemic losses At Sep 30, At Jun 30, At Sep 30, ($'s in thousands) ($'s in thousands) 3Q 2021 2Q 2021 3Q 2020 2021 2021 2020 Cash
Slide 59: Income Statement: Reconciliation of Non-GAAP Financial Measures
Income Statement Reconciliation of Non-GAAP Financial Measures 59
Slide 60: Income Statement: Reconciliation of Non-GAAP Financial Measures
Income Statement Reconciliation of Non-GAAP Financial Measures 60
Slide 61: Income Statement: Reconciliation of Non-GAAP Financial Measures
Income Statement Reconciliation of Non-GAAP Financial Measures *: Annualized for YTD 2021. 61
Slide 62: Peer Group
Peer Group Institution Name Ticker City, State Pinnacle Financial Partners PNFP Nashville, TN Valley National Bancorp VLY Wayne, NJ BancorpSouth, Inc. BXS Tupelo, MS Bank of the Ozarks, Inc. OZK Little Rock, AR Simmons First National Corp. SFNC Pine Bluff, AR F.N.B. Corporation FNB Pittsburgh, PA Cu
Slide 63: Investor Call
Investor Call THIRD QUARTER 2021 M. TERRY TURNER, PRESIDENT AND CEO HAROLD R. CARPENTER, EVP AND CFO
Pinnacle Financial Partners — Q3 2021 Earnings Presentation on 6ix