Pinnacle Financial Partners, Inc. · NYSE:PNFP
Pinnacle Financial Partners — Raymond James 36th Annual Institutional Investors Conference (March 2015)
28 slides from Pinnacle Financial Partners's conference presentation, Mar 4, 2015
Slide 1: Raymond James 36th Annual Institutional Investors Conference
RAYMOND JAMES 36th Annual Institutional Investors Conference Harold R. Carpenter, EVP and CFO Rob McCabe, EVP, Chairman/CCO March 4, 2015
Slide 2: Safe Harbor Statements
Safe Harbor Statements Forward-looking statements Certain of the statements in this quarterly report on Form 10-Q 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.
Slide 3: The Pinnacle Model
The Pinnacle Model Engaged associates engage clients and yield strong investor returns • Engaged Associates • Engaged Clients • 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 6/30/14 6/30/00 Share Share 6/30/14 6/
Slide 8: Engaged Clients
Engaged Clients PNFP leads Nashville commercial market, growing in Knoxville Nashville Knoxville 25% 30% Regional B Pinnacle 25% 20% Regional A 20% Client Penetration Client Penetration Regional A Regional D 15% Regional B 15% Regional C 10% National A Regional C 10% 5% Pinnacle 5% 0% 0% 0% 20% 40%
Slide 9: Competitive Advantage
Competitive Advantage PNFP is uniquely positioned to capitalize on “willingness to switch” Primary Reasons for Primary Reasons for Small Business Mid-Size Business Switching Switching Pinnacle’s Ability to Harvest Dissatisfaction Competitor Unsatisfied with representitive 25% Ranking Pricing of loan
Slide 10: Competitive Advantage
Competitive Advantage 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 10 Pinnacle Financial – Nashville - $1-500 MM as of 3/31/1
Slide 11: 4Q14 Summary Results
4Q14 Summary Results Strong loan growth. PNFP exceeded its aggressive 3-year loan growth target Previously Reported Growth 2012-2014 Current Quarter Growth Anticipated Net Loan Growth 3-year Target 11.7% CAGR 3-year Actual (1/1/2012- 12/31/2014) $1.30 Billion 3-year Target 11.5% CAGR $1.27 Billion (
Slide 12: 4Q14 Summary Results
4Q14 Summary Results PNFP’s 4Q14 profitability is already approaching elevated 2015-2016 targets Net Interest Margin Noninterest Income/ Average Assets (1) ROAA 3.95% 1.05% 1.50% 3.90% 1.00% 0.97% 0.97% 3.90% 0.94% 0.95% 0.92% 3.85% 0.89% 0.89% 0.89% 1.40% 0.90% 0.87% 3.80% 3.79% 0.86% 3.78% 0.85% 3
Slide 13: 4Q14 Summary Results
4Q14 Summary Results Execution of fundamentals fuels exceptional growth in key valuation drivers Total Revenues (1) FD EPS ROTCE Earnings Growth $0.53 13.52% (millions) 12.79% $64,697 Up 12.6% yr/yr Up 20.5% yr/yr $0.44 10.83% $57,456 $0.34 $53,363 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 4Q12 1
Slide 14: Net Interest Income
Loan, Deposit and Fee Growth Yield Operating Leverage Net interest income rises primarily due to volume growth in 4Q14 $50 $50.3 $49.5 $48 $47.2 $46 Net Interest Income $45.9 $45.0 $44 $44.6 $43.6 (millions) $42 $42.8 $42.2 $40.9 $40 $40.2 $39.5 $39.3 $38 $38.4 $37.8 $36 $36.0 $34 14
Slide 15: Average Loans
Loan, Deposit and Fee Growth Yield Operating Leverage Average loans grew 11.4% compared to 4Q13; yields were stable 6.00% $4,400 $4,436 $4,358 $4,200 5.50% $4,251 $4,130 $4,000 Average Loans Loan Yields 5.00% $3,981 4.88% $3,932 $3,800 (millions) $3,845 $3,600 4.50% $3,682 $3,580 4.34% $3,489 $3,400
Slide 16: Avg. Deposits
Loan, Deposit and Fee Growth Yield Operating Leverage Deposits continued to grow while cost of deposits continued to decrease $4,800 1.20% $4,700 1.10% $4,758 1.01% $4,600 $4,655 1.00% $4,500 0.90% $4,519 $4,509 $4,400 0.80% $4,408 $4,300 Deposit Costs Avg. Deposits $4,200 0.70% (millions) $4,199 (%
Slide 17: Expansion of fee businesses produces record fee revenues
Loan, Deposit and Fee Growth Yield Operating Leverage Expansion of fee businesses produces record fee revenues in 4Q14 4Q14 3Q14 2Q14 1Q14 4Q13 Service charges $3,038 $2,913 $2,966 $2,791 $2,739 Investment services 2,737 2,353 2,164 2,128 2,394 Insurance commissions 1,046 1,037 1,145 1,385 1,015 Gai
Slide 18: Efficiency is at an all time best
Loan, Deposit and Fee Growth Yield Operating Leverage Efficiency is at an all time best for PNFP 4Q14 3Q14 2Q14 1Q14 4Q13 Salaries and benefits $23,075 $21,722 $21,772 $21,750 $21,494 Equipment and occupancy 5,984 6,477 5,917 5,709 5,543 Other real estate owned (630) 417 226 651 302 Marketing and bu
Slide 19: Balance Sheet Interest Rate Sensitivity
Balance Sheet Interest Rate Sensitivity PNFP has transitioned away from liability sensitivity Structural Positives – Promoting Asset Sensitivity 1. Avg. non-interest bearing DDAs to total avg. deposits ratio stands at 28.9%. 2. Securities portfolio has a 2.8% effective duration and represents only 1
Slide 20: Balance Sheet Interest Rate Sensitivity
Balance Sheet Interest Rate Sensitivity Floors on loans provided meaningful earnings during low rate environment but resulted in a liability sensitive balance sheet that has now been repositioned $1,400 6.00% Est. Floor Volumes $1,200 4.50% 1.33% of 0.96% 0.93% 0.84% 0.73% $850mm to Loan Volumes ($
Slide 21: Balance Sheet Interest Rate Sensitivity
Balance Sheet Interest Rate Sensitivity Rate shock analysis shows position modest impact to earnings for various rate scenarios Traditional IRR Shock Analysis 5.00% • Modeling would indicate becoming 4.00% more asset sensitive in 2014 with a 3.00% 100 or 200 bp rate scenario increase. 2.00% Up 200 b
Slide 22: Balance Sheet Interest Rate Sensitivity
Balance Sheet Interest Rate Sensitivity Further evidence that balance sheet is becoming asset sensitive Day 1 Rate Change Analysis $2,000 Over the course of 2014, we’ve Millions of dollars $1,750 experienced a decrease in the gap $1,500 between day 1 rate changes from $1,250 approx. $500 mm to $200
Slide 23: Bankers Healthcare Group, LLC
Future Outlook Bankers Healthcare Group, LLC History Founded in 2001, three founders remain with firm – 70% interest retained $1.4B in loans originated since founding - $657 mm outstanding on bank balance sheets 83rd Default/charge off rate of approximately 2% percentile 200+ employees, primarily in
Slide 24: Bankers Healthcare Group, LLC: PNFP Transaction Summary
Future Outlook Bankers Healthcare Group, LLC PNFP Transaction Summary • 30% interest for $75 million cash 83rd percentile • $40 million loan from national banking franchise • 5 year term; 10 year amortization • 2.95% initial rate • 7%-9% accretive to PNFP FDEPS in 2015 • Founders under contract to r
Slide 25: PNFP has targeted and delivered top quartile performance
Future Outlook PNFP has targeted and delivered top quartile performance PNFP's Percent Rank vs. Peer Group 0% 25% 50% 75% 100% 83rd ROATA percentile Profitability ROATE Efficiency Ratio NPAs/ Assets Asset Quality Reserves/ Loans Note: Calculated as of September 30, 2014. Peer group listed on slide 4
Slide 26: Top quartile shareholder returns
Future Outlook Top quartile execution has resulted in top quartile shareholder returns Total Shareholder Return - 1 yr. Total Shareholder Return - 3 yr. Total Shareholder Return - 5 yr. 200.0% 200.0% 200.0% 83rd percentile 150.0% 150.0% 150.0% 95 th percentile 100.0% 100.0% 100.0% 50.0% 50.0% 50.0%
Slide 27: Summary and Future Outlook
Summary and Future Outlook 2014 Goals & Objectives 2015 Goals and Objectives 5-Year Horizon Double digit EPS growth – $2 FDEPS Dogged execution that produces • Expand CRE asset class Budget in 2014 and sustains increased results • Expand to Tennessee’s other urban markets Achieve 3-year loan growth
Slide 28: Raymond James 36th Annual Institutional Investors Conference
RAYMOND JAMES 36th Annual Institutional Investors Conference Harold R. Carpenter, EVP and CFO Rob McCabe, EVP, Chairman/CCO March 4, 2015