Investor Call FIRST QUARTER 2020 April 21, 2020 Time: 8:30 AM CDT - - PowerPoint PPT Presentation
Investor Call FIRST QUARTER 2020 April 21, 2020 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 TIM HUESTIS, EVP AND CHIEF CREDIT
FIRST QUARTER 2020
HAROLD R. CARPENTER, EVP AND CFO TIM HUESTIS, EVP AND CHIEF CREDIT OFFICER
April 21, 2020
Time: 8:30 AM CDT Webcast: www.pnfp.com (investor relations) Audio only: 877-602-7944
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 21E of the Securities Exchange Act of 1934. The words "expect," "anticipate," "intend," "may," "should," "plan," "believe," "seek," "estimate" and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to: (i) deterioration in the financial condition of borrowers
health emergencies or pandemics, including the magnitude and duration of the COVID-19 pandemic and its impact on general economic and financial market conditions and on Pinnacle Financial's and its customers' business, results of operations, asset quality and financial condition; (iii) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits, including during times when Pinnacle Bank is seeking to lower rates it pays on deposits; (iv) the inability of Pinnacle Financial, or entities in which it has significant investments, like BHG, to maintain the historical growth rate of its, or such entities', loan portfolio; (v) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (vi) effectiveness of Pinnacle Financial's asset management activities in improving, resolving or liquidating lower-quality assets; (vii) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on Pinnacle Financial’s results, including as a result of compression to net interest margin; (viii) adverse conditions in the national or local economies including in Pinnacle Financial's markets throughout Tennessee, North Carolina, South Carolina and Virginia, particularly in commercial and residential real estate markets; (ix) fluctuations or differences in interest rates on loans or deposits from those that Pinnacle Financial is modeling or anticipating, including as a result of Pinnacle Bank's inability to better match deposit rates with the changes in the short-term rate environment, or that affect the yield curve; (x) the results of regulatory examinations; (xi) Pinnacle Financial's ability to identify potential candidates for, consummate, and achieve synergies from, potential future acquisitions; (xii) difficulties and delays in integrating acquired businesses or fully realizing costs savings and other benefits from acquisitions; (xiii) BHG's ability to profitably grow its business and successfully execute on its business plans; (xiv) risks of expansion into new geographic or product markets including the recent expansion into the Atlanta, Georgia metro market; (xv) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including goodwill or other intangible assets; (xvi) reduced ability to attract additional financial advisors (or failure of such advisors to cause their clients to switch to Pinnacle Bank), to retain financial advisors (including as a result of the competitive environment for associates) or otherwise to attract customers from other financial institutions; (xvii) deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xviii) inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies, required capital maintenance levels or regulatory requests or directives, particularly if Pinnacle Bank's level of applicable commercial real estate loans were to exceed percentage levels of total capital in guidelines recommended by its regulators; (xix) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xx) the vulnerability of Pinnacle Bank's network and online banking portals, and the systems of parties with whom Pinnacle Bank contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (xxi) the possibility of increased compliance and
investments, like BHG, and the development of additional banking products for Pinnacle Bank's corporate and consumer clients; (xxii) the risks associated with Pinnacle Financial and Pinnacle Bank being a minority investor in BHG, including the risk that the owners of a majority of the equity interests in BHG decide to sell the company if not prohibited from doing so by Pinnacle Financial or Pinnacle Bank; (xxiii) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, like BHG, including regulatory or legislative developments; (xxiv) the availability of and access to capital; (xxv) adverse results (including costs, fines, reputational harm, inability to obtain necessary approvals and/or other negative effects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of Pinnacle Bank's participation in and execution of government programs related to the COVID-19 pandemic; and (xxvi) general competitive, economic, political and market
filed with the SEC and available on the SEC's website at http://www.sec.gov. Pinnacle Financial disclaims any obligation to update or revise any forward-looking statements contained in this presentation, which speak only as of the date hereof, whether as a result of new information, future events or otherwise.
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Safe Harbor Statements
Non-GAAP Financial Matters
This presentation contains certain non-GAAP financial measures, including, without limitation, earnings per diluted share, efficiency ratio and the ratio of noninterest expense to average assets, excluding in certain instances the impact of expenses related to other real estate owned, gains or losses on sale of investment securities, the charges associated with Pinnacle Financial's branch rationalization project, the sale of the remaining portion of Pinnacle Bank's non-prime automobile portfolio, the revaluation of Pinnacle Financial’s deferred tax assets and other matters for the accounting periods
GAAP capital ratios and performance measures that exclude the impact of goodwill and core deposit intangibles associated with Pinnacle Financial's acquisitions of BNC, Avenue Bank, Magna Bank, CapitalMark Bank & Trust, Mid-America Bancshares, Inc., Cavalry Bancorp, Inc. and other acquisitions which collectively are less material to the non-GAAP measure. The presentation of the non-GAAP financial information is not intended to be considered in isolation or as a substitute for any measure prepared in accordance with GAAP. Because non-GAAP financial measures presented in this presentation are not measurements determined in accordance with GAAP and are susceptible to varying calculations, these non-GAAP financial measures, as presented, may not be comparable to other similarly titled measures presented by other companies. Pinnacle Financial believes that these non-GAAP financial measures facilitate making period-to-period comparisons and are meaningful indications of its operating performance. In addition, because intangible assets such as goodwill and the core deposit intangible, and the other items excluded each vary extensively from company to company, Pinnacle Financial believes that the presentation of this information allows investors to more easily compare Pinnacle Financial's results to the results of other companies. Pinnacle Financial's management utilizes this non-GAAP financial information to compare Pinnacle Financial's operating performance for 2020 versus certain periods in 2019 and to internally prepared projections.
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Our key success measures such as asset quality, loan and core deposit growth, deposit betas and fee growth all pointed to an outstanding quarter prior to the impact of COVID-19.
1Q20 Summary Results of Key GAAP Measures
5 Total Revenues Total Deposits
(millions)
FD EPS NCOs Classified Asset Ratio Total Loans
(millions)
NPA/ Loans & OREO Net Income Book Value per Share
0.70% 0.36% 0.58% 0.61% 0.48%
NPA/ Loans & OREO
0.42% 0.20% 0.10% 0.08% 0.20%
NCOs
$6,432 $8,288 $14,750 $16,341 $18,604
Total Core Deposits
(millions)
$6,828 $8,642 $16,326 $18,175 $20,397
Total Loans
(millions)
$99,758 $119,149 $218,624 $240,269 $263,466
Total Revenues
24.2% 12.9% 12.6% 13.0% 12.0%
Classified Asset Ratio
$18.75 $23.25 $24.24 $28.61 $33.20
Tangible Book Value per Share**
$0.71 $0.83 $1.13 $1.24 $0.39
FD EPS*
1Q20 Summary Results of Key Non-GAAP Measures
6
*: excluding merger-related charges, gains and losses on sales of investment securities, ORE expense (income), loss on sale of non-prime automobile portfolio, branch consolidation adjustment and revaluation of deferred tax assets **: excluding goodwill, core deposit and other intangible assets Note: For a reconciliation of these Non-GAAP financial measures to the comparable GAAP measures, see slides 66-67.
47,748 58,271 114,603 126,464 128,532
Adjusted Pre-Tax Pre-Provision Net Income* (‘000)
Balance Sheet Growth was Strong
Core loan growth in 1Q20 was above expectations before impact of line draws
$4,130 $4,251 $4,358 $4,436 $4,625 $4,737 $5,690 $6,458 $6,742 $6,998 $8,233 $8,357 $8,558 $9,817 $15,017 $15,520 $15,957 $16,730 $17,259 $17,630 $17,938 $18,611 $19,217 $19,600 $20,009
4.30% 4.84% 3.40% 3.60% 3.80% 4.00% 4.20% 4.40% 4.60% 4.80% 5.00% 5.20% 5.40% $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 $20,000 $22,000
Loan Yields Average Loans
(millions) BNCN
7 14.2% 14.6% 18.7% 13.3% 11.7% 12.3% 0.0% 4.0% 8.0% 12.0% 16.0% 20.0%
Annual Organic Loan Growth
(excludes Day 1 merger impact)
*: First quarter data annualized
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16.3% 11.8% 16.9% 14.6% 7.1% 22.8%
0.0% 4.0% 8.0% 12.0% 16.0% 20.0% 24.0%
Annual Organic Deposit Growth
(excludes Day 1 merger impact)
Balance Sheet Growth was Strong
Deposit growth was unseasonably strong even prior to increases associated with COVID-19
$4,510 $4,519 $4,655 $4,758 $4,792 $4,885 $5,898 $6,787 $7,037 $7,093 $8,454 $8,791 $9,099 $10,394 $15,828 $16,092 $16,281 $16,949 $18,113 $18,368 $18,358 $18,865 $19,778 $20,079 $20,680
1.25% 1.25% 1.10% 0.99%
0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% 1.75% 2.00% 2.25% 2.50% 2.75% 3.00% $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 $20,000 $22,000
EOP FFS Target Cost of Deposits
Deposit Rates
*: First quarter data annualized
Margin, excluding PAA, held during the quarter
Loan yields contracted along with major indices
Note: Weighted Average EOP Coupon Trends – excluding leases and credit cards and the impact of purchase accounting adjustments and impact from early payoffs which result in immediate recognition
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At March 31, 2020 (*)
38.0% 16.3% 3.7% 4.2% 37.8%
All Loans
LIBOR Prime T-Bill Fixed Rate <1Y Fixed Rate >1Y
47.2% 27.1% 1.5% 24.1%
C&I
36.4% 3.8% 4.5% 55.1%
CRE
47.2% 27.1% 1.5% 24.1%
Construction
Rate Index End-of-Period Weighted Average Coupon New Loans Weighted Average Coupon for the Quarter Origination Mix
YOY Change 2Q19 3Q19 4Q19 1Q20 1Q20 LIBOR 4.89% 4.22% 3.80% (1.09)% 4.73% 4.49% 4.13% 3.51% 40.7%
1-MO LIBOR 2.38% 1.76% 0.99% (1.39)% 2.44% 2.18% 1.79% 1.43%
Prime 5.75% 5.00% 3.99% (1.76)% 6.03% 5.36% 4.98% 4.00% 22.1%
FFS target 2.50% 1.75% 0.25% (2.25)% 2.50% 2.00% 1.75% 1.40%
Fixed rate 4.52% 4.51% 4.45% (0.07)% 4.89% 4.65% 4.28% 4.16% 34.4%
5-YR UST 2.23% 1.69% 0.37% (1.86)% 2.12% 1.63% 1.61% 1.14%
Margin, excluding PAA, held during the quarter
PNFP recognized a 37% deposit beta since 6/30/2019
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transaction accounts = 0.42% at 3.31.20
Deposit Rate Tranches June 30, 2019 EOP Rates
2019 EOP Rates
2019 EOP Rates
2020 EOP Rates June 19 - Mar 20 Change in EOP rates
2020 % of Totals Noninterest bearing
Rate sheet 0.20% 0.13% 0.11% 0.10% (0.10)% 13.4% Negotiated 1.66% 1.49% 1.32% 0.48% (1.17)% 37.4% Indexed 2.43% 2.01% 1.66% 0.70% (1.73)% 6.3% CDs 2.32% 2.29% 2.19% 2.00% (0.32)% 19.7% Total 1.28% 1.17% 1.04% 0.63% (0.65)% 100.0%
1.38% 1.38% 1.39% 1.40% 1.36% 1.28% 1.22% 1.13% 1.10% 1.10% 1.11% 0.73% 0.60% 0.70% 0.80% 0.90% 1.00% 1.10% 1.20% 1.30% 1.40% 1.50% Apr19 May19 Jun19 Jul19 Aug19 Sep19 Oct19 Nov19 Dec19 Jan20 Feb20 Mar20
3.55% 3.17% 2.93% 3.25% 3.55% 3.77% 3.77% 3.75% 3.72% 3.70% 3.76% 3.35% 3.46% 3.28% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50%
Fed Funds Target (Upper Range) GAAP NIM
$4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000
Actual/Anticipated Discount Accretion Through Dec 2020 (in thousands)
$62 mm $40 mm $23 mm
Margin, excluding PAA, held during the quarter
COF reductions offsets declining loan yields, increasing liquidity and purchase accounting impacts
0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% $0 $200 $400 $600 $800 $1,000 Average quarterly yield Average balances ($ in millions)
Quarterly Avg. FFS and Cash
Avg FFS and Cash Yield on FFS and Cash
Annualized Net Interest Income Impact of Loan Floors ($mm) At 3.31.20 (Libor ~ 0.90%) Assuming LIBOR ~ 0.25%
$1.3B Balance Sheet Hedge unwind (~$2.5mm/qtr – 4Q21) $10.2 $10.2 $1.5B Balance Sheet Hedge still in effect $4.6 ~$15 Client loan floors in note documents $10.5 ~13.5
(1): Funding available through PPPLF program not considered
Liquidity Sources ($mm) At 3.31.20 At 12.31.19 Cash and FFS $ 843.3 $ 368.8 Unpledged investments 2,819.9 2,678.5 Total on-balance sheet 3,663.2 3,047.3 Other available sources: FHLB capacity 1,777.7 2,058.8 Fed programs (1) 3,415.6 3,425.0 Totals $ 8,856.5 $ 8,531.1
**: Excluding gains and losses on sales of investment securities. For a reconciliation of these Non-GAAP financial measures to the comparable GAAP measures, see slides 66-67.
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PNFP has Rapidly Grown Fee Income
As the margin has contracted, PNFP has grown revenue via fee growth
1Q20 4Q19 1Q19
Year-over- Year Growth %
Service charges $9,032 $9,094 $8,542
5.7%
Investment services 9,239 6,581 5,468
69.0%
Insurance commissions 3,240 2,017 2,928
10.7%
Gain on mortgage loans sold, net 8,583 6,044 4,878
76.0%
Investment gains and losses, net 463 68 (1,960)
123.6%
Trust fees 4,170 3,835 3,295
26.6%
Income from equity method investment 15,592 12,312 13,290
17.3%
Other: Interchange and other consumer fees 9,969 9,959 7,508
32.8%
Bank-owned life insurance 4,652 4,508 4,095
13.6%
Loan swap fees 2,187 947 761
187.4%
SBA loans sales 1,341 2,020 572
134.4%
Gain on other equity investments (174) 591 782
(122.3%)
Other 2,083 1,487 905
130.2%
Total noninterest income $70,377 $59,462 $51,063
37.8%
Noninterest income/Average Assets 1.00% 0.85% 0.83%
20.5%
Noninterest income** $69,914 $59,394 $53,023
31.9%
Noninterest Income**/Total Average Assets 1.00% 0.85% 0.86%
16.3%
17.3% year-over-year. Both originations and FICO scores have elevated as a result of improved analytics.
due to increases in revenue producers and market volatility.
to favorable interest rate environment for most of the quarter, significant growth in revenue producers and strong housing markets in which we operate.
improved sales penetration.
*: Excluding the impact of ORE expense and income. **: Excluding the impact of ORE expense and income and securities gains and losses, net. For a reconciliation of these Non- GAAP financial measures to the comparable GAAP measures, see slide 66-67.
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1Q20 4Q19 1Q19
Year-over-Year Growth %
Salaries and employee benefits: Salaries $52,176 $48,795 $45,056
15.8%
Commissions 3,983 3,796 3,140
26.8%
Cash and equity incentives 10,281 17,069 11,163
(7.9%)
Employee benefits and other 14,041 11,784 11,017
27.4%
Total salaries and benefits $80,481 $81,444 $70,376
14.4%
Equipment and occupancy 20,978 21,059 19,331
8.5%
Other real estate owned, net 2,415 804 246
881.7%
Marketing and other business development 3,251 4,298 2,948
10.3%
Postage and supplies 1,990 2,407 1,892
5.2%
Amortization of intangibles 2,520 2,896 2,311
9.0%
Other noninterest expense: Deposit related expense 5,238 2,828 4,543
15.3%
Lending related expense 12,068 6,803 5,298
127.8%
Wealth management related expense 558 420 530
5.3%
Other noninterest expense 7,851 7,511 6,576
19.4%
Total other noninterest expense $25,715 $17,562 $16,947
51.7%
Total noninterest expense $137,349 $130,470 $114,051
20.4%
Efficiency ratio 52.0% 51.4% 47.9%
8.6%
Expense/Total Average Assets 1.95% 1.88% 1.85%
5.4%
Noninterest expense * $131,779 $129,666 $113,805
15.8%
Efficiency ratio ** 51.21% 51.1% 47.4%
8.0%
Noninterest Expense*/Total Average Assets 1.92% 1.86% 1.84%
4.3%
Expenses Generally Grew In Line with Revenue
We now believe growth in expenses will be less than a mid-single digit range for the year
Up 238 FTE’s in 1Q20 compared to 1Q19. Headcount up 75 FTE’s at Mar. 31, 2020 from Dec. 31, 2019. 2020 headcount plan includes support for Atlanta buildout but otherwise headcount additions limited to critical revenue and support unit hires.
properties during the quarter.
to increased technology costs
CECL on off-balance sheet
increase over 4Q19 annualized run rates.
We Opted to Adopt CECL Effective January 1, 2020
1Q20 Implementation Results in Meaningful Reserve Boost due to COVID-19
(1) Calculation based on end of period loan balances as of Dec. 31, 2019 and Mar. 31, 2020, as applicable (2) Net charge-off percentage calculation is annualized and in relation to avg. loans for 1Q20
$’s in 000’s ALL % of Loans Off-Balance Sheet Total ACL December 31, 2019 $94,777 0.48% (1) $2,364 $97,141 Day One CECL impact $38,103 0.19% (1) $8,774 $46,877 Beginning – January 1, 2020 $132,880 0.67% (1) $11,138 $144,018 Net Charge off’s ($10,155) 0.20% (2) ($10,155) 1Q Provision $14,218 $14,218 1Q Provision (COVID 19 impact) $85,522 $5,156 $90,678 At March 31, 2020 $222,465 1.09% (1) $16,294 $238,759
through Dec. 31, 2020
length and severity of pandemic better understood
We Intend to Preserve Capital
We have suspended the share buyback program and are not redeeming subordinated debt at this time
1Q20 4Q19 3Q19 2Q19 1Q19
# of shares repurchased 1,015,039 228,533 199,032 130,888 543,585 Value of shares $50.8m $12.9m $11.1m $7.4m $30.0m
$50.01 $56.54 $55.57 $56.31 $55.25
July 2020
$18.75 $23.25 $24.24 $28.61 $33.20
Tangible Book Value per Share Growth
The length and depth of the pandemic are unknown, but we remain confident in our model
2Q20 Outlook (in relation to 1Q20) Notes Full Year 2020 Average Loan Growth Low to mid-single digit growth (annualized) Outlook excludes impact of PPP program which will increase balances in the near term. Anticipate significant PPP payoff’s before y/e with significant PPP fee recognition Full Year Guidance Withheld at this time Average Deposit Growth Mid to high-single digit growth (annualized) Will continue to build liquidity in 2Q20 with several scheduled wholesale fund
3Q Net interest income Up GAAP margin compression likely with reduced PAA and liquidity build but NII should be higher due to larger balance sheet Fee income Flat to down Believe BHG performance will be consistent. Mortgage revenues likely to be flat to down based on volumes and rate volatility. Wealth management should be stable based on overall market dynamics Expenses Flat Expenses should be relatively stable with 1Q20. No anticipated meaningful change in expense base contemplated at this time. Have throttled back hiring plans meaningfully for 2020. Net Charge off’s Withheld Pending more information regarding pandemic’s depth and subsequent recovery prior to offering any prospective outlook Return on Average Assets Return on Tangible Common Equity Tangible Common Equity Longer term
8.75% to 9.75% Anticipate TCE to be within our longer-term operating range.
COVID-19 has had a dramatic impact on our associates, our communities, our clients and our firm. Our response has been aggressive and aimed at protecting all
Feb 26 - First cases of community spread in US Jan 11 - China reports first death Jan 30 - WHO declares global health emergency March 11 - WHO declares Pandemic US restricts travel March 22 – Various cities and states in
“safer at home” restrictions March 15- CDC suggests no groups larger than 50 people Jan 30 - Pinnacle activates its pandemic response Feb 20 - Response team meeting weekly. Initial supply orders for hand sanitizer, etc. March 6 - Pinnacle restricts business travel, inventories personal travel, asks associates to report illness Jan 20 – First US case March 11 - First client communication and dedicated website All associate communication re: full pandemic pay March 12 - PNFP cancels company events and limits meetings to <15 associates March 18 - Pinnacle
thru only More than 50% of
working remotely March 20 – Loan deferral and relief programs in place
Pinnacle Response Pandemic Timeline
Pinnacle executed an aggressive pandemic response
January February March
confirmed cases.
facilitated by appointment.
to arrange child care
to work from home if possible and, if not, stay home with full pay
Pinnacle responded quickly and decisively to protect associates and clients
Pinnacle responded quickly and decisively to protect borrowers
Loan deferral table as of 4/15/20 PPP Loan Stratification Table as of 4/15/20
$ Volume at
$ Volume at
% age of Loans by NAIC (4/17) Hotels $ 131,261 $ 634,910 77% Restaurants $ 75,574 $ 138,253 43% Entertainment $ 31,687 $ 121,559 34% Retail $ 46,988 $ 96,361 17% All others $ 494,409 $ 2,291,023 13% Totals $ 779,919 $ 3,282,106 16%
1,000,000,000 1,500,000,000 2,000,000,000 2,500,000,000 3,000,000,000
Amount of PPP Loan Requests
Approved In process SBA Fee App Count Approved Dollars Average Ticket
1% 157 586,547,682 3,735,972 3% 978 776,065,623 793,523 5% 4,951 443,868,131 89,652 6,086 1,806,481,436 296,826
calculator and program requirements on Thursday, April 2, prior to launch
requirement on the morning of Friday, April 3rd.
Pinnacle enhanced its reputation for valuing long-term relationships in PPP roll-out
ALL the communications from Pinnacle regarding PPP have been thorough, actionable and timely. I have compared notes with other small business owners, and Pinnacle has handled the entire process so much better than some of The Big Banks.
My friends who deal with other banks are pretty envious because they didn’t get near the information, competent direction and speedy treatment you provided me. No one else has even heard anything yet about getting loan papers let alone having the money in their accounts. I think this will be a game changer for you and your bank.
Just wanted to say thanks again for all of the resources you provided this week. Compared to
and hop into webinars that provided the BEST information available given all of the fluid
process.
You are the only bank who is having webinars and helping out
you will be looking to change once things calm down.
There are likely no borrowers that are unimpacted by COVID-19. But clearly segments like hotels, restaurants, retail and entertainment will be most impacted by the loss of revenue from the national and local attempts to contain its spread.
C&I 33% CRE O/O 13% CRE Invest 22% Multifamily 3% Construction 12% Consumer 17%
Loan Portfolio Products
Hotels 5% Restaurants 3% Entertainment 3% Retail 10%
Segments Disrupted by COVID-19
Loan Portfolio Highlights:
smaller ticket sizes - Approximately 95% of portfolio subject to customized credit underwriting involving senior credit officers
to diesel and gasoline distributors
to segments most directly disrupted by COVID-19
processes underway involving other industries
0% 25% 50% 75% 100%
Classified Asset Ratio
Amounts as of 3.31.20 – Comments as of 4.15.20
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Hotel Portfolio Highlights:
91% in market 85% in market
$0 $50 $100 $150 $200 $250 $300
Hotel Term Locations
Millions of $'s
$0 $10 $20 $30 $40 $50 $60 $70 Georgia North CarolinaSouth Carolina Tennessee Florida/Other
Hotel Construction Locations
Funded Available to Fund
Millions of $'s
Hotel Portfolio by Product ('000s) Construction - w/ draws Construction - no draws Term Other Total
Total Commitments $ 183,778 $ 101,821 $ 806,941 $ 15,425 $ 1,107,965 Balances as of 3.31.20 $ 116,681 $ - $ 780,743 $ 8,389 $ 905,813 Average balances $ 6,141 $ - $ 4,941 $ 186 $ 3,937 Average LTV 60% 65% 45% 40% 50% Payment deferred 4.15.20 52% 0% 79% 13% 74% Loans > $15mm $ 28,442 $ - $ 159,780 $ - $ 188,222 Loans between $10-15mm $ 34,476 $ - $ 263,709 $ - $ 298,185 Loans between $5mm-$10mm $ 33,053 $ - $ 204,804 $ - $ 237,857 Loans < $5mm $ 20,710 $ - $ 152,450 $ 8,389 $ 181,549
Amounts as of 3.31.20 – Comments as of 4.15.20
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$0 $100 $200 $300 $400 $500 $600 Limited Service Full Service Economy Boutique Extended Stay Resort / Luxury
Hotel Property Types Top 10 Hotel Borrowers Hotel Loans by Year Hotel Flags
10 Largest Hotel Loans Location ('000s) Balance at 3.31.20 Loan Type LTV Flag Deferral Arkansas $ 32,748 Term 64.0% Marriott No Tennessee $ 28,442 Construction 65.0% Marriott Yes Georgia $ 26,549 Term 65.0% Marriott Yes Tennessee $ 24,647 Term 74.0% Hilton Yes Tennessee $ 24,045 Term 58.0% Holiday Inn Yes Virginia $ 18,428 Term 60.0% Marriott No Tennessee $ 18,296 Term 67.0% Hilton Yes Tennessee $ 17,802 Term 67.0% Marriott Yes Tennessee $ 15,562 Term 69.0% Hilton Yes North Carolina $ 14,409 Term 70.0% Hyatt Yes $ 220,928 24.4% of hotel loans
Hilton/Marriott 63% Holiday Inn/Hyatt… Independent/Boutique 6% Best Western, Starwood, Radison, Wyndham, etc., 13% Construction vintages by year Term and Other Year Balance ($ in millions) Maturities Balance ($ in millions) Maturities 2001-2016 $ 28.4 $ 493.6 2017 8.1 131.8 2018 54.6 81.5 2019 25.2 77.2 2020
5.0 $ 74.3 2021 28.6 52.6 2022 11.6 184.5 2023 46.8 137.5 2024 20.8 177.4 2025 3.8 62.0 After 2025 4.7 100.8 $ 116.3 $ 116.3 $ 789.1 $ 789.1
Amounts as of 3.31.20 – Comments as of 4.15.20
26 Restaurant Portfolio Highlights:
portfolio at 3.31.20
that lease to restaurants
markets
exposure
Restaurant Portfolio by Product ('000) Construction - w/ draws CRE Operating Restaurants Total Total Commitments $ 21,177 325,699 $ 225,847 $ 572,723 Balances as of 3.31.20 $ 14,894 317,507 $ 206,007 $ 538,408 Average balances $ 823 838 $ 298 $ 526 Payment deferred at 4.15.20 28% 48% 40% 44% Average LTV 75% 75% Loans > $15mm $ -
$ 41,830 Loans between $10mm-$15mm $ - 21,829 $ 25,789 $ 47,618 Loans between $5mm-$10mm $ - 20,317 $ 9,099 $ 29,416 Loans < $5mm $ 14,894 275,361 $ 129,288 $ 419,543
Full Service, 36% Quick Service, 23% CRE loans to developers leasing to restaurants, 31% Drinking Places, 3% Other, 6%
Outstanding Balance by Restaurant Type
10 Largest Restaurant Relationships Balance at 3.31.20 Loan Type LTV Flag Deferral Tennessee $34,592 C&I Unsecured Casual Dining No Tennessee $25,698 C&I 79% Fine Dining Yes Tennessee $23,339 C&I FF&E Fast Food No Texas $15,186 CRE 70% Fast Food Yes Tennessee $12,253 C&I 78% Fine Dining No Alabama $10,631 CRE 86% Fast Food No Tennessee $7,584 CRE 78% Fast Food No Tennessee $7,059 CRE 65% Casual Dining Yes Tennessee $6,901 CRE 77% Bar Yes North Carolina $6,267 CRE 55% Fast Food No $149,510 28% of Restaurant portfolio
Largest Aggregated Exposures Non Owner Occupied CRE Leasing to Restaurants Franchise Name # of Locations Total Exposure ('000) Bojangles 30 $ 42,127 Local/Independent 16 15,843 Chick-Fil-A 2 4,660 Starbucks 3 4,411 Burger King 4 4,252 Wendy's 2 2,219 IHOP 3 2,163 Arby's 3 1,481 Total 63 $ 77,156 C&I Franchise Customers with Exposure Greater than $10MM $35.0 mm
$25.5 mm
$24.0 mm
countries around the world
$16.0 mm
different ownership interests
$15.5 mm
$13.5 mm
6,700 locations in the United States
countries $11.0 mm
Brands restaurant chains
22,000 locations in 136 countries
16.2% 15.5% 18.4% 14.7% 8.7% 4.2% 7.2% 4.2% 11.2% CRE - Neighborhood Strip Centers CRE - Anchored Strip Centers CRE - Single Tenant CRE - Other Grocery, Fuel, Convenience Clothing Home, Farm and Garden Auto Dealers Other
Am Amounts as as of 3. 3.31 31.20 – Co Comments s as as of 4. 4.15 15.20 20
27 Retail Highlights
renting space to retailers, approximates 10.5% of total loans
$1.5mm
prevalent single tenants
Retail Types
Retail Portfolio by Product ('000) Construction - w/ draws Construction - no draws CRE Other Total Total Commitments $ 245,088 $ 19,587 $ 1,589,460 $ 540,024 $ 2,394,159 Balances as of 3.31.20 $ 164,640 $
$ 382,850 $ 2,096,728 Average balances $ 1,509 $
$ 462 Payment deferred at 4.15.20 30% 0% 41% 9% 33% Loans > $15mm $ - $ - $ 194,642 $ 106,818 $ 301,460 Loans between $10mm-$15mm $ 21,158 $ - $ 172,520 $ 80,664 $ 274,342 Loans between $5mm-$10mm $ 12,977 $ - $ 166,300 $ 34,402 $ 213,679 Loans < $5mm $ 130,355 $
$ 160,966 $ 1,307,097 10 Largest Retail Relationships ('000) Balance at 3.31.20 Loan Type OCC Industry Deferral Tennessee $43,367 C&I Clothing Stores No North Carolina $34,167 CRE Developer Yes Tennessee $31,019 C&I Equipment & Supply No Tennesssee $29,186 CRE Nonstore Retailer No North Carolina $27,932 CRE Developer No North Carolina $27,401 Construction/CRE Developer No North Carolina $24,540 CRE Developer No Tennessee $24,142 C&I Specialty Retail No Tennessee $22,434 C&I Specialty Retail No North Carolina $21,930 CRE Services - Real Estate Yes $286,118 13% of Retail portfolio
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Real Estate Working Capital and Other Unsecured
Outstanding Balances Secured by Collateral
Amounts as of 3.31.20 – Comments as of 4.15.20
28
Entertainment Highlights:
towards music publishing and royalty catalogs
model
Entertainment Portfolio by Product ('000) Construction – w/ draws Construction - no draws CRE C&I and Other Total Total Commitments $ 8,558 $ - $ 199,698 $ 714,918 $ 923,174 Balances as of 3.31.20 $ 3,861 $ - $ 194,765 $ 506,963 $ 705,589 Average balances $ 644 $ - $ 1,787 $ 804 $ 942 Percent deferred at 4.15.20 0% N/A 49% 4% 17% Loans > $15mm $ - $ - $ 33,936 $ 290,063 $ 323,999 Loans between $10mm-$15mm $ - $ - $ 24,508 $ 45,186 $ 69,694 Loans between $5mm-$10mm $ - $ - $ 35,029 $ 51,496 $ 86,525 Loans < $5mm $ 3,861 $ - $ 101,292 $ 120,218 $ 225,371 10 Largest Entertainment Relationships ('000) Balance at 3.31.20 Loan Type Flag Deferral Tennessee $41,875 C&I Recording Industry No Tennessee 33,936 CRE Other Amusement Yes New York 31,990 C&I Recording Industry No New York 31,343 C&I Recording Industry No New York 30,681 C&I Recording Industry No New York 30,000 C&I Recording Industry No Massachusetts 25,861 C&I Recording Industry No Tennessee 24,782 C&I Recording Industry No California 19,715 C&I Recording Industry No New York 19,450 C&I Recording Industry Yes $289,633 41% of Entertainment portfolio
Recording Industries - 50.1% Amusement, Athletics, and Other Recreation- 28.8% Performers, Agents, Spectator Sports - 11.2% Other - 9.9%
Like all lenders to medical professionals, BHG will be impacted by COVID-19, but capital and reserve levels are very strong and temporarily reverting to the gain on sale model provides meaningful pre-provision net revenue to BHG and to Pinnacle.
30
March 31, 2020.
0.00% 10.00% 20.00% 30.00% 40.00% 50.00% 60.00% 70.00% 80.00% 90.00% 100.00% 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 <650 650-699 700-749 750-799 >800
within first 36 months of origination
includes 14 months of history. Steady improvement in credit over past 7-8 years.
BHG Credit Quality Continues to Impress
Sophisticated credit scoring models produce impressive results
Historical FICO Scores
Source: BHG Internal Data
Sophisticated credit scoring models produce impressive results
31
6.43% of total loans outstanding (loans off- balance sheet) of almost $2.8B
time while maintaining strong profitability
increasing FICO score of new borrowers
classifications at this time
BHG Credit Quality Continues to Impress
Sophisticated credit scoring models produce impressive results
Historical Charge Off’s and Reserves
($’s in millions) Source: BHG Internal Data
Sophisticated credit scoring models produce impressive results
32
BHG’s response to COVID-19 has been quick and proactive
Dentists 11%, Nonmedical 14%
portfolio thru April 5 – dentists and optometrists requesting assistance.
adequate resources to support debt
balances classified as consumer loans
Source: BHG Internal Data as of March 31, 2020 – Deferral requests as of April 5, 2020
Composition by Profession # of Loans Current Outstanding Balance % of Total Outstanding
Loan Size
Current / Orig.Loan Size Origination FICO Rate Term Remaining
Deferral request % PHYSICIAN/SURGEON (MD) 11,365 $1,026,191,827 34.9% $90,294
77%$117,293 736 13.2% 76 $461,649 7% DENTIST (DDS/DMD) 3,451 $321,176,846 10.9% $93,068
76%$121,857 737 12.8% 74 $430,168 35% REGISTERED NURSE (RN) 7,489 $313,458,992 10.7% $41,856
91%$46,201 718 15.3% 76 $140,782 3% PHARMACIST (PHARMD & RPH) 3,559 $177,810,845 6.0% $49,961
81%$62,028 725 13.9% 77 $191,194 3% NURSE PRACTITIONER (NP) 3,463 $153,652,133 5.2% $44,370
85%$52,489 714 14.9% 78 $166,997 5% OSTEOPATH (DO) 1,223 $109,436,225 3.7% $89,482
79%$113,082 734 13.4% 76 $442,528 4% PHYSICIAN ASSISTANT (PA) 1,500 $72,020,197 2.4% $48,013
81%$59,306 724 13.9% 76 $189,130 6% PHYSICAL THERAPIST (PT) 1,403 $59,933,854 2.0% $42,718
74%$57,901 728 13.8% 70 $176,307 13%
561 $33,502,341 1.1% $59,719
86%$69,752 724 14.2% 81 $228,816 12% VETERINARIAN (DVM & VMD) 445 $33,480,535 1.1% $75,237
78%$97,040 736 14.0% 73 $317,432 6% OCCUPATIONAL THERAPIST (OT) 894 $29,501,372 1.0% $32,999
77%$42,904 720 14.4% 72 $134,043 6% OPTOMETRIST (OD) 399 $26,846,504 0.9% $67,284
79%$85,667 735 13.2% 75 $251,089 27% ADVANCED PRACTICING RN (APRN) 548 $23,474,341 0.8% $42,836
82%$52,356 716 15.1% 78 $162,114 5% SPEECH-LANGUAGE PATHOLOGIST (SLP) 530 $19,877,490 0.7% $37,505
89%$42,090 716 14.9% 81 $136,861 6% PODIATRIST (DPM) 238 $19,003,691 0.6% $79,847
77%$104,092 739 13.2% 78 $327,500 16% PSYCHOLOGIST (PHD & PSYD) 300 $16,393,752 0.6% $54,646
86%$63,528 731 13.6% 84 $234,385 5% ADVANCED REGISTERED NP (ARNP) 308 $12,855,290 0.4% $41,738
80%$52,023 721 14.0% 74 $178,701 7% LICENSED PRACTICAL NURSE (LPN) 333 $12,062,520 0.4% $36,224
92%$39,266 715 15.5% 79 $110,000 6% REGISTERED DENTAL HYGIENIST (RDH) 176 $6,860,773 0.2% $38,982
95%$41,159 730 14.7% 84 $143,470 21% DOCTOR OF PHYSICAL THERAPY (DPT) 59 $2,580,719 0.1% $43,741
81%$54,021 722 14.2% 77 $156,583 12% CHIROPRACTOR (DC) 34 $2,388,428 0.1% $70,248
84%$84,118 734 14.6% 69 $297,745 14% OTHER HEALTHCARE (OH) 1,074 $48,531,486 1.7% $45,188
95%$47,636 725 14.4% 90 $138,235 4% 39,352 $2,521,040,161 85.7% $64,064 $80,144 730 13.7% 76 $335,701 10% FINANCIAL ADVISOR (FA) 1,019 $105,909,403 3.6% $103,935
95%$109,015 736 13.3% 95 $425,790 6% SKILLED PROFESSIONAL 1,062 $93,143,593 3.2% $87,706
93%$94,159 742 13.2% 78 $322,227 6% CERTIFIED PUBLIC ACCOUNTANT (CPA) 1,058 $78,042,028 2.7% $73,764
91%$80,749 735 13.3% 88 $282,535 6% ATTORNEY (ATY) 595 $58,322,016 2.0% $98,020
96%$101,782 733 14.1% 99 $381,856 3% ENGINEER (ENGR) 590 $40,393,433 1.4% $68,463
94%$72,794 734 13.3% 90 $216,872 2% PILOT (PLT) 341 $28,021,220 1.0% $82,174
98%$84,092 730 13.8% 99 $246,052 3% INSURANCE AGENT (IA) 68 $6,280,288 0.2% $92,357
95%$96,846 740 13.8% 97 $290,200 5% ARCHITECT (ARCH) 49 $3,684,968 0.1% $75,203
95%$79,278 740 13.5% 91 $227,025 1% Others (Balance <1m) 69 $5,867,438 0.2% $85,035
96%$88,571 730 14.5% 107 $385,623 6% 4,851 $419,664,387 14.3% $86,511 $91,792 736 13.4% 90 $333,613 5% Grand Total 44,203 $2,940,704,548 100% $66,527
82%$81,422 731 13.7% 78 $335,403 9%
33
in the history of BHG, business flows remain strong into second quarter
build cash and provide for additional reserves as a result of COVID 19
Gain on sale lever fully engaged to augment reserve build
Source: BHG Internal Data
34
Strong demand for BHG originations among bank buyers
Source: BHG Internal Data ($’s in millions)
strongest in BHG history
liquidity for BHG’s loan originations
Network Strength 1Q20 2019 2018
1,094 980 460 Gross Yield to Borrower 15.72% 14.39% 14.66% BHG Realized Spread 10.27% 9.12% 9.34%
Customer Segments 1Q20 2019 2018
Medical Commercial 216 $ 792 $ 723 $ Medical Consumer 76 $ 150 $ 52 $ Non-Medical Commercial 87 $ 165 $ 18 $ Non-Medical Consumer 29 $ 7 $ 2 $ Total 408 $ 1,113 $ 796 $
Placement Channel 1Q20 2019 2018
Auction 213 $ 678 $ 421 $ Direct 121 $ 233 $ 232 $ JV - Secured Borrowings 74 $ 202 $ 142 $ Grand Total 408 $ 1,113 $ 796 $
35
Continuous improvements have provided significant opportunity for growth
$605,000 $711,000 $872,000 $1,442,000 $- $300,000 $600,000 $900,000 $1,200,000 $1,500,000 $1,800,000 2016 2017 2018 2019 Forecast 2020
Thousands
Total BHG Loan Originations
$193,014 $314,982 $662,764 $88,423 $150,370 $395,138 $0 $200,000 $400,000 $600,000 $800,000 $1,000,000 $1,200,000
Forecast 12/31/20
Thousands
BHG Total Loans and Borrowings
At Year End
Total Loans on Balance Sheet Total Borrowings $77,953 $121,194 $182,461 $0 $50,000 $100,000 $150,000 $200,000 2017 2018 2019 Forecast 2020
Thousands
BHG Net Earnings Growth
Atlanta represents a “once-in-a-generation” opportunity to build a relevant franchise in the Southeast’s most attractive market. In response to the potential damage created by COVID-19, we will substantially slow our anticipated hiring pace with its associated expense build for the foreseeable future throughout our footprint with the exception of the Atlanta
National Bank A Regional Bank D
Pinnacle
Regional Bank C Regional Bank B
0% 5% 10% 15% 20% 25% 30% 35% 50 60 70 80 90 100
Commercial Market Share Excellent Client Satisfaction
National Bank A National Bank F National Bank E Regional Bank C Regional Bank B
0% 5% 10% 15% 20% 25% 30% 35% 35 45 55 65 75 85
Commercial Market Share Excellent Client Satisfaction
Nashville Atlanta
Source: 2019 Greenwich Associates Market Tracking Program - $1-500MM - December 2019 Cross Hairs are set at the mean for each measurement across the market
PNFP’s Entry into Atlanta – The Southeast’s Economic Center
The opportunity in Atlanta is extraordinary and warrants investment
38
PNFP’s Entry into Atlanta – The Southeast’s Economic Center
Pinnacle intends to invest in order to seize this “once-in-a-generation” opportunity
5 Year Build-out Targets
39
PNFP’s Entry into Atlanta – The Southeast’s Economic Center
Pinnacle intends to invest in order to seize this “once-in-a-generation” opportunity
1Q20 Progress
All the impacts of the COVID-19 pandemic are unknown as yet. Severity is likely a function of duration. But there can be little doubt that its impacts will be far reaching on our nation in general, and banks in particular. At this juncture, it is critical that we continue our aggressive focus on protecting our associates, clients, communities and shareholders.
when need for liquidity subsides.
We have and will continue to build liquidity, reserves and capital during this crisis
42
FIRST QUARTER 2020
Chart
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58
60
68
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($ in thousands) Amts. 1Q20 % 1Q20 Amts. 4Q19 % 4Q19 Amts. 1Q19 %s 1Q19 Amts. 1Q18 %s 1Q18 C&I $6,752.3 33.1% $6,290.3 31.8% $5,419.5 29.8% $4,490.9 27.5% CRE – Owner Occ. 2,650.2 13.0% 2,669.8 13.5% 2,617.5 14.4% 2,427.9 14.9% Total C&I & O/O CRE $9,402.5 46.1% $8,960.1 45.3% $8,037.0 44.2% $6,918.8 42.4% CRE – Investment 4,520.2 22.2% 4,418.7 22.3% 4,108.0 22.6% 3,714.9 22.8% CRE – Multifamily and other 550.3 2.7% 620.8 3.1% 693.7 3.8% 651.4 4.0% C&D and Land 2,521.0 12.3% 2,430.5 12.3% 2,097.6 11.6% 2,095.9 12.8% Total CRE & Construction $7,591.5 37.2% $7,470.0 37.7% $6,899.3 38.0% $6,462.2 39.6% Consumer RE 3,106.5 15.2% 3,068.6 15.5% 2,887.6 15.9% 2,580.8 15.8% Consumer and other 296.4 1.5% 289.3 1.5% 351.0 1.9% 364.2 2.2% Total Other $3,402.9 16.7% $3,357.9 17.0% $3,238.6 17.8% $2,945.0 18.0% Total loans $20,396.9 100.0% $19,788.0 100.0% $18,174.9 100.0% $16,326.0 100.0%
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($ in thousands) TOTAL PINNACLE TENNESSEE LOANS CAROLINAS/ VA LOANS ATLANTA OTHER UNIT LOANS* Amts. 1Q20 Amts. 1Q19 Amts. 1Q20 Amts. 1Q19 Amts. 1Q20 Amts. 1Q19 Amts. 1Q20 Amts. 1Q19 Amts. 1Q20 Amts. 1Q19 C&I $6,752.3 $5,419.5 $4,970.4 $4,196.3 $970.0 $781.6 $0.2
$441.6 CRE – Owner Occ. 2,650.2 2,617.5 1,553.8 1,541.6 961.6 994.2 0.2
81.7 Total C&I & O/O CRE $9,402.5 $8,037.0 $6,524.2 $5,737.9 $1,931.6 $1,775.8 $0.4
$523.3 CRE – Investment 4,520.2 4,108.0 1,874.4 1,742.1 2,582.0 2,307.3 1.6
58.6 CRE – Multifamily and other 550.3 693.7 453.6 473.0 95.0 216.9
3.8 C&D and Land 2,521.0 2,097.6 1,439.0 1,257.1 1,049.1 818.0 0.6
22.5 Total CRE & Construction $7,591.5 $6,899.3 $3,767.0 $3,472.2 $3,726.1 $3,342.2 $2.2
$84.9 Consumer RE 3,106.5 2,887.6 1,740.6 1,342.9 1,247.7 1,182.9 0.3
361.8 Consumer and other 296.4 351.0 168.5 159.7 44.3 87.7
103.6 Total Other $3,402.9 $3,238.6 $1,909.1 $1,502.6 $1,292.0 $1,270.6 $0.3
$465.4 Total Loans $20,396.9 $18,174.9 $12,200.3 $10,712.7 $6,949.7 $6,388.6 $2.9
$1,073.6 Average Ticket Size (in ‘000s) $293.5 $259.5 $407.0 $385.3 $210.0 $194.1 $253.5
$115.3 45
Note: Percentages noted in red text represent year-over-year growth rates. *: Represents mortgage, associate banking, automobile finance and various other business lines.
($ in thousands)
TOTAL PINNACLE C&I & O/O CRE CRE & CONSTRUCTION OTHER LOANS* Amts. 1Q20 Amts. 1Q19 Amts. 1Q20 Amts. 1Q19 Amts. 1Q20 Amts. 1Q19 Amts. 1Q20 Amts. 1Q19 Nashville
$6,778.8 $6,071.4 $3,231.3 $3,010.0 $2,448.7 $2,179.9 $1,098.8 $881.5
Knoxville
1,808.6 1,558.2 1,112.5 938.6 481.6 465.0 214.5 154.6
Music and Entertainment
542.5 351.5 414.6 241.0 20.4 19.1 107.5 91.4
Chattanooga
1,433.5 1,282.1 848.7 755.9 316.3 303.2 268.5 223
Memphis
1,636.9 1,449.5 917.1 792.4 500.0 505.0 219.8 152.1
Total Tennessee
$12,200.3 $10,712.7 $6,524.2 $5,737.9 $3,767.0 $3,472.2 $1,909.1 $1,502.6
Greensboro/Highpoint
1,718.9 1,631.0 590.2 596.4 858.7 750.5 270.0 284.1
Charlotte
2,079.2 1,843.7 533.2 474 1,149.7 994.7 396.3 375
Raleigh
1,217.2 1,053.6 217.3 218.3 845.0 696.2 154.9 139.1
Charleston
845.6 853.3 181.6 158.5 378.5 406.3 285.5 288.5
Greenville
424.5 432.5 118.2 116.0 254.6 270.1 51.7 46.4
Roanoke
540.4 471.5 181.1 121.6 226.5 212.6 132.8 137.3
SBA
123.9 103.0 110.0 91.0 13.1 11.8 0.8 0.2
Total Carolina/VA
$6,949.70 $6,388.6 $1,931.6 $1,775.8 $3,726.1 $3,342.2 $1,292.0 $1,270.6
Atlanta
2.9
Other
1,244.0 1,073.6 946.3 523.3 96.2 84.9 201.5 465.4
Total
$20,396.9 $18,174.9 $9,402.5 $8,037.0 $7,591.5 $6,899.3 $3,402.9 $3,238.6 46
Note: Percentages noted in red text represent year-over-year growth rates. *: Represents mortgage, associate banking, automobile finance and various other business lines.
($ in thousands) Amts. 1Q20 % 1Q20 Amts. 4Q19 % 4Q19 Amts. 1Q19 % 1Q19 Amts. 1Q18 % 1Q18 Residential – Spec $347.7 1.7% $367.9 1.9% $355.2 2.0% $288.0 1.8% Residential – Custom 145.2 0.7% 124.1 0.6% 131.0 0.7% 123.0 0.7% Residential – Condo 1.5 0.0% 1.2 0.0% 0.2 0.0% 0.6 0.0% Commercial Construct. 1,581.9 7.8% 1,515.6 7.7% 1,207.5 6.7% 1,207.2 7.4% Land Dev– Residential 269.8 1.3% 259.2 1.3% 161.5 0.9% 161.2 1.0% Land Dev – Commercial 108.2 0.6% 105.3 0.5% 159.0 0.9% 200.8 1.2% Land Dev – Mixed Use 6.6 0.0% 3.8 0.0% 5.2 0.0% 25.1 0.1% Land – Unimproved 60.1 0.3% 53.3 0.3% 78.0 0.4% 90.0 0.6% Total Construction and Land Dev. $2,521.0 12.4% $2,430.5 12.3% $2,097.6 11.6% $2,095.9 12.8%
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($ in thousands) TOTAL PINNACLE TENNESSEE LOANS CAROLINAS/VA LOANS ATLANTA LOANS OTHER UNIT LOANS Amts. 1Q20 Amts. 1Q19 Amts. 1Q20 Amts. 1Q19 Amts. 1Q20 Amts. 1Q19 Amts. 1Q20 Amts. 1Q19 Amts. 1Q20 Amts. 1Q19 Residential – Spec $347.7 $355.2 $249.8 $253.8 $97.5 $99.7 $0.0 $0.0 $0.4 $1.7 Residential – Custom 145.2 131.0 78.7 82.4 64.7 48.1 0.0 $0.0 1.8 0.5 Residential – Condo 1.5 0.2 1.5 0.2 0.0
$0.0 0.0
1,581.9 1,207.5 827.0 670.8 739.8 535.3 0.0 $0.0 15.1 1.4 Land Dev– Residential 269.8 161.5 166.8 109.4 89.4 39.9 0.6 $0.0 13.0 12.2 Land Dev – Commercial 108.2 159.0 68.0 79.2 39.6 76.2 0.0 $0.0 0.6 3.6 Land Dev – Mixed Use 6.6 5.2 3.0 4.5 3.6 0.7 0.0 $0.0 0.0
60.1 78.0 44.2 56.8 14.5 18.1 0.0 $0.0 1.4 3.1 Total Construction and Land Dev. $2,521.0 $2,097.6 $1,439.0 $1,257.1 $1,049.1 $818.0 $0.6 $0.0 $32.3 $22.5 Average Ticket Size (in ‘000s) $614.0 $513.7 $658.0 $580.7 $566.5 $445.5 $551.1 $0.0 $490.1 $273.5
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($ in thousands)
Total NOO and Multifamily Total Construction Total NOO and Construction Amts. 1Q20 Amts. 4Q19 Amts. 1Q19 Amts. 1Q20 Amts. 4Q19 Amts. 1Q19 Amts. 1Q20 Amts. 4Q19 Amts. 1Q19 Multifamily $550.3 $620.8 $693.1 $491.8 $471.3 $357.8 $1,042.1 $1,092.1 $1,063.8 Hospitality 742.6 771.6 769.5 87.4 62.8 105.5 830.0 834.4 875.0 Retail 1,328.6 1,376.7 1,211.9 173.9 168.7 148.0 1,502.5 1,545.4 1,360.0 Office 758.5 703.3 730.0 150.1 154.3 95.2 908.6 857.6 825.2 Warehouse 816.4 758.7 628.1 333.0 354.7 163.3 1,149.4 1,113.4 791.4 Medical 456.0 398.8 388.7 170.8 153.0 111.7 626.8 551.8 500.5 Other 418.1 409.6 379.7 1,114.0 1,065.7 1,116.0 1,532.1 1,475.3 1,495.8 Total $5,070.5 $5,039.5 $4,801.0 $2,521.0 $2,430.5 $2,097.5 $7,591.5 $7,470.0 $6,911.7 Average Ticket Size (in ‘000s) $1,792.3 $1,759.1 $1,731.1 $614.0 $609.8 $569.2 $1,094.7 $1,091.0 $1,132.4
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($ in thousands) TOTAL DEPOSITS CORE DEPOSITS NONCORE DEPOSITS TOTAL PINNACLE TRANSACTION AND MMDA CDs PUBLIC FUNDS and OTHER DEPOSITS 1Q20 1Q19 1Q20 1Q19 1Q20 1Q19 1Q20 1Q19 Nashville $8,122.5 $7,141.5 $7,266.4 $6,381.0 $556.5 $511.1 $299.6 $249.4 Knoxville 1,748.9 1,639.2 1,572.6 1,528.5 121.5 68.4 54.8 42.3 Music and Entertainment 279.0 299.8 270.2 296.2 1.8 1.6 7.0 2.0 Memphis 1,152.5 828.1 946.0 672.0 154.2 119.2 52.3 36.9 Chattanooga 1,268.4 948.8 1,145.2 850.4 60.8 54.4 62.4 44.0 Total Tennessee $12,571.3 $10,857.4 $11,200.4 $9,728.1 $894.8 $754.7 $476.1 $374.6 Greensboro/Highpoint 2,039.0 1,931.3 1,569.0 1,565.8 303.1 257.9 166.9 107.6 Charlotte 1,307.1 1,120.1 1,000.8 819.1 193.4 193.0 112.9 108.0 Charleston 935.8 899.0 732.7 688.6 161.4 176.0 41.7 34.4 Raleigh 641.0 620.0 566.6 530.7 54.0 51.7 20.4 37.6 Roanoke 661.4 580.5 506.2 442.8 133.7 120.4 21.5 17.3 Greenville 336.6 308.0 212.4 198.2 83.0 76.6 41.2 33.2 Total Carolinas / VA $5,920.9 $5,458.9 $4,587.7 $4,245.2 $928.6 $875.6 $404.6 $338.1 Atlanta 6.6
2,834.4 2,164.2 948.4 653.8 37.9 83.6 1,848.1 1,426.8 Total $21,333.2 $18,480.5 $16,743.1 $14,627.1 $1,861.3 $1,713.9 $2,728.8 $2,139.5 50
Note: Percentages noted in red text represent year-over-year growth rates.
51
0.00% 0.10% 0.20% 0.30% CRE Construction C&I Net commercial charge
Net Commercial Loan Charge Offs by Loan Type
2015 2016 2017 2018 2019 1Q20
0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% 7.00% 8.00% Consumer RE Consumer and other Net consumer charge offs
Net Consumer Loan Charge Offs by Loan Type
2015 2016 2017 2018 2019 1Q20
($ in thousands) Description 1Q20 4Q19 3Q19 2Q19 1Q19 4Q18
Loans secured by real estate: Construction, land development, and other loans: 1-4 family residential construction loans $582,106 $578,443 $575,975 $564,339 $575,753 $541,253 Other construction loans and all land development and other land loans 1,938,831 1,852,040 1,677,328 1,553,630 1,521,817 1,531,202 Loans included in the 100% test $2,520,937 $2,430,483 $2,253,303 $2,117,969 $2,097,570 $2,072,455 Secured by multifamily (5 or more) residential properties $551,963 $631,616 $686,385 $726,744 $706,097 $671,156 Loans secured by other nonfarm nonresidential properties 4,520,234 4,418,658 4,443,687 4,252,098 4,107,953 3,855,643 Financed real estate not secured by real estate 309,990 317,949 306,738 310,371 136,306 154,527 Loans included in the 300% test $7,903,124 $7,798,706 $7,690,113 $7,407,182 $7,047,926 $6,753,781
2,Total Risk-Based Capital $2,993,005 $2,906,853 $2,818,988 $2,563,617 $2,495,127 $2,432,419 % of Total Risk-Based Capital 100% Test – Construction and Land Development 84% 84% 80% 83% 84% 85% 300% Test – Construction and Land Development + NOOCRE + Multifamily 264% 268% 273% 289% 283% 278%
52
Conservative bond portfolio
53 2.3% 2.1% 35.6% 4.7% 3.7% 51.6% Agency/Treasury Corporates MBS Asset Backed CMOs Municipals
Portfolio: March 31, 2020
Total Investments $4.090 billion Net Unrealized Gain (Loss) $(64.3) million
Quarter Duration
1Q20 4.3% 2.8% 4Q19 4.8% 2.9% 3Q19 4.4% 3.0% 2Q19 4.1% 3.2% 1Q19 3.7% 3.4% 4Q18 3.6% 3.2% 3Q18 4.4% 3.1% 2Q18 3.9% 2.9% 1Q18 3.5% 2.9% 4Q17 3.5% 2.7% 3Q17 3.5% 2.6% 2Q17 3.3% 2.5%
54 Note: See slide 68 for peer group utilized in the above analysis. Source: S&P Global
65% 70% 74% 77% 79% 35% 30% 26% 23% 21%
Effective Bond Portfolio Composition End of Period
Fixed Rate Variable Rate
2.82 13.9
10.0 15.0 20.0 25.0 30.0 35.0 40.0
1.00 1.50 2.00 2.50 3.00 3.50 4.00
% of Total Assets Bond Yields
PNFP - Bond Yields Peer Median - Bond Yields PNFP - % of Total Assets Peer Median - % of Total Assets
0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 Average quarterly yield Average balances ($ in millions)
Quarterly Avg. FFS and Cash
Avg FFS and Cash Yield on FFS and Cash
55
Source: Internal records.
$20,181 $21,333 $134 $58 $960
4Q19 Wholesale Net Chg Line Fundings Client Growth 1Q20
Total Period- End Deposit Growth
$19,788 $20,396 $257 $351
4Q19 Line Fundings Client Growth 1Q20
Total Period- End Loan Growth
56
2.1% 1.0% 0.3%
0.6%
0.0% 1.0% 2.0% 3.0% 1Q19 2Q19 3Q19 4Q19 1Q20 Net Interest Income % D
Rate Shock Sensitivity
Ramp +100 Ramp -100 4.1% 2.2% 1.0%
0.6%
0.0% 2.0% 4.0% 6.0% 1Q19 2Q19 3Q19 4Q19 1Q20 Net Interest Income % D
Rate Ramp Scenarios
Shock +100 Shock -100
Interest-rate risk mitigation efforts taken over the past 12 months:
swaps
($1.3b and $1.5b)
realized through income over next two years.
provide an additional $10mm to interest income if LIBOR drops to 25bp.
exposure from 36% of investment securities at 3/31/19 to 21% at 3/31/20
wholesale funding refinances within one year compared to 76% at December 31
environment; moved aggressively to lower deposit rates
Allowance for Credit Losses 12/31/2019 Probable Incurred Losses January 1, 2020 CECL Adoption March 31, 2020 CECL Amount % of Loans Outandstanding Amount % of Loans Outandstanding Amount % of Loans Outandstanding Commercial Real Estate - Mortgage $ 33,369 0.43% $ 28,894 0.37% $ 55,748 0.72% Consumer Real Estate - Mortgage 8,054 0.26% 29,109 0.95% 32,997 1.06% Construction and Land Development 12,662 0.52% 9,537 0.39% 38,911 1.54% Commercial and Industrial 36,112 0.57% 59,114 0.94% 88,032 1.30% Consumer and Other 3,595 1.24% 6,226 2.15% 6,776 2.29% Unallocated 985
$ 94,777 0.48% $ 132,880 0.67% $ 222,464 1.09% Reserve for unfunded lending commitments 2,364 11,138 16,294 Allowance for Credit Losses - Total $ 97,141 $ 154,018 $ 238,758
(*) > 30 days past due (**) Excludes past due loans rated substandard
58
(000S)
AS A % OF TOTAL LOANS
AS A % OF TOTAL LOANS
AS A % OF TOTAL LOANS
Past Due Loans (*)
Nonaccrual loans $31,285 0.15% $25,841 0.13% $48,739 0.27% Accruing loans 33,780 0.17% 35,963 0.18% 40,556 0.22%
Total past due $65,065 0.32% $61,804 0.31% $89,295 0.49% NPLs and > 90 days
$2,391 0.01% $2,278 0.01% $2,775 0.02% Consumer RE 26,623 0.13% 24,835 0.13% 32,170 0.18% CRE – Owner Occupied 11,324 0.06% 11,654 0.06% 23,553 0.13% CRE – Investment 9,375 0.05% 7,001 0.04% 12,013 0.07% Total real estate $49,713 0.25% $45,940 0.23% $73,864 0.41% C&I 22,805 0.11% 16,631 0.08% 23,311 0.13% Other 442 0.00% 649 0.00% 950 0.01%
Total loans $72,960 0.36% $63,220 0.32% $98,126 0.54% Classified loans and ORE
Substandard commercial loans $293,665 1.44% $314,732 1.59% $266,099 1.46% Doubtful commercial loans 294 0.00% 1 0.00%
Other impaired loans 26,926 0.13% 25,482 0.13% 23,552 0.13% 90 days past due and accruing (**) 1,990 0.01% 1,615 0.01% 1,982 0.01% Other real estate 27,182 0.13% 29,487 0.15% 15,077 0.08% Other repossessed assets
61 0.00%
Total $350,057 $371,318 1.88% $306,771 1.69%
Pinnacle Bank classified asset ratio 12.0% 13.4% 13.0%
1,000,000,000 1,500,000,000 2,000,000,000 2,500,000,000 3,000,000,000 Non-owner
Other Construction and Land Development Owner-occupied CRE Residential Construction Multi-family Less than $10 million Greater than $10 million, but less than $15 million Greater than $15 million, but less than $20 million Greater than $20 million
Real Estate Portfolio Concentrations aggregated by real estate category and common borrower
59
Largest CRE Projects by Category at March 31, 2020 Granularity of Real Estate Portfolio
Top 10 Projects Aggregated Exposure Largest Project in Category Weighted Average of Pro Forma LTV Weighted Average of Original LTC Weighted Average of Pro Forma DSC Construction Portfolio Hotel / Motel $ 160,316 $ 31,161 65.3% 65.9% 1.68 Medical 222,944 34,468 65.7% 73.2% 1.47 Multifamily 381,269 52,500 55.6% 63.5% 1.30 Professional Office 242,191 50,000 54.2% 63.7% 1.37 Retail 108,469 25,000 67.9% 75.0% 1.57 Storage / Warehouse 303,251 39,523 61.7% 68.5% 1.17 Existing NOO Properties Hotel / Motel 201,076 32,894 64.7% 44.7% 1.84 Medical 192,128 43,033 65.4% 51.6% 1.70 Multifamily 197,871 36,000 57.2% 50.3% 1.49 Professional Office 223,727 37,800 56.0% 56.3% 1.54 Retail 214,590 30,987 67.9% 75.0% 1.57 Storage / Warehouse 259,778 49,696 64.6% 64.0% 1.22 Grand Total $ 2,707,611 $ 463,062 62.2% 62.6% 1.49
60
and provides significant P&L benefit as rates fall.
into income over following seven quarters (~$2.5MM quarterly)
Current Environment Assuming LIBOR = 0.25% Client Loan Floors - In-The-Money (Prime Index) 9,435 9,435 Client Loan Floors - In-The-Money (LIBOR Index) 1,132 3,214 Client Loan Floors - Out-The-Money (LIBOR Index)
$1.3B Floor - Balance Sheet Hedge (Unwound) 10,200 10,200 $1.5B Floor - Balance Sheet Hedge (Active) 4,599 15,034 25,365 38,797 Rate Floors - Annual Interest Income Contribution (in 000s)
*: excluding gains and losses on sales of investment securities and loss on sale of non-prime automobile portfolio. For a reconciliation of these Non-GAAP financial measures to the comparable GAAP measures, see slides 66-67. Note: See slide 69 for peer group utilized in the above analysis. Peer group calculated by aggregating total peer revenues by total peer weighted avg. shares for each quarter. Source: S&P Global
61
$10.20 $10.27 $10.49 $10.73 $11.10 $11.43 $11.74 $12.13 $12.42 $12.92 $13.44 $13.54 $13.87 13.0% 7.3% 5.0% 5.3% 8.8% 11.3% 11.9% 13.0% 11.9% 13.0% 14.5% 11.6% 11.6% 4.0% 4.5% 3.9% 4.6% 6.4% 6.5% 7.3% 6.2% 4.7% 5.0% 4.3% 5.0% 0.0% 3.0% 6.0% 9.0% 12.0% 15.0% $10.00 $11.00 $12.00 $13.00 $14.00 $15.00 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 Y/Y Revenue per Share Growth Revenue per Share
LTM Revenue Per Share Growth vs. Peers
PNFP LTM Revenue/Share PNFP Y/Y Growth Peer Median Y/Y Growth
$3,500 $4,500 $5,500 $6,500 $7,500
Other Income* (BOLI, Equity Investments, etc.)
Yr/Yr Growth 12.2%
$- $10,000 $20,000 $30,000
Income from Equity Method Investment
(BHG)
Yr/Yr Growth 17.3%
$9,000 $10,000 $11,000 $12,000 $13,000
Wealth Management Fees
(Investment, Trust, Insurance)
Yr/Yr Growth 42.4%
$14,000 $16,000 $18,000 $20,000
Deposit-Related Fees (Service Charges, Interchange)
$4,000 $5,000 $6,000 $7,000 $8,000 $9,000 $10,000
Lending-Related Fees (Mortgage, Swaps, SBA)
Yr/Yr Growth 95.0% 0.70% 0.80% 0.90% 1.00% 1.10% 1.20% 1.30% Fees / Avg Assets GAAP Fees / Avg Assets Adjusted* Yr/Yr Growth 18.4%
*: Excludes gains and losses on sales of investment securities and loss on sale of non-prime automobile portfolio. For a reconciliation of these Non-GAAP financial measures to the comparable GAAP measures, see slides 66-67.
62
63
Strong equity to support business model
Source: BHG Internal Data, unaudited
At March 31, 2020 At December 31, 2019 At March 31, 2019
For the Three Months Ended March 31, 2020 For the Three Months Ended December 31, 2019 For the Three Months Ended March 31, 2019
Cash and Cash Equivalents 346,462,337 $ 135,608,161 $ 71,374,831 $ Gains on Loan Sales and Origination Fees 106,317,402 $ 56,413,443 $ 45,087,093 $ Loans Held for Investment 390,431,315 461,381,463 239,324,206 Interest and Dividend Income 24,166,270 20,435,998 10,629,068 Allowance for Loan Losses (9,237,825) (6,718,905) (2,544,293) Other Income 4,122,071 4,021,732 3,475,494 Loans Held for Sale 344,779,932 208,101,296 173,406,383 Total Revenues 134,605,743 80,871,173 59,191,654 Premises and Equipment 40,013,345 10,343,685 7,572,854 Other assets 43,681,053 31,683,454 31,121,544 Expenses related to Loan Portfolio Management Total Assets 1,156,130,157 $ 840,398,153 $ 520,254,525 $ Provision expense 36,662,583 (6,059,813) (3,625,122) Interest expense 4,369,600 3,615,730 1,825,474 Recourse Obligation 178,989,055 117,957,667 91,248,689 Other 10,029,855 8,224,663 3,512,463 Secured Borrowings 361,749,659 316,728,601 174,452,877 Total 51,062,038 5,780,580 1,712,815 Notes Payable 270,113,861 78,409,733 32,000,000 Borrower Reimbursable Fee 58,655,148 53,781,395 42,416,609 Salary and benefits 26,504,164 28,489,562 15,050,363 Other Liabilities 72,864,777 74,159,330 70,285,912 Marketing expenses 11,420,585 9,407,061 8,137,680 942,372,500 $ 641,036,726 $ 410,404,087 $ Other expenses 13,147,677 10,795,473 7,155,850 Total operating expenses 51,072,426 48,692,096 30,343,893 Equity (all Tangible) 213,757,657 199,361,427 109,850,438 Total Liabilities & Stockholders Equity 1,156,130,157 $ 840,398,153 $ 520,254,525 $ Net Earnings 32,471,279 $ 26,398,497 $ 27,134,946 $ Soundness Statistics: Profitability Statistics Cash to Assets 30.0% 16.1% 13.7% Earnings to Revenues 24.1% 32.6% 45.8% Equity to Assets 18.5% 23.7% 21.1% Portfolio Mgmt Expense to Revenues 37.9% 7.1% 2.9% Recourse Obligation to Loans at Other Banks 6.4% 4.6% 4.6% Operating Expenses to Revenues 37.9% 60.2% 51.3% Total Liabilities
64 $412.8 $205.0 $419.9 $202.3 $424.9 $201.0 $427.5 $206.2 $415.9 $199.0 $441.0 $216.9 $449.8 $214.8 $404.6 $208.1 $414.3 $215.6 $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 Annualized REV/ Associate Annualized EXP/ Associate
1Q18 to 1Q20
(increase of $1,500/ associate)
1Q18 to 1Q20
(increase of $10,600) 86% 88% 90% 92% 94%
Employee Retention^
Retention % 1.00% 1.25% 1.50% 1.75% 2.00% 2.25% 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20
Noninterest Expense / Avg Assets GAAP Noninterest Expense / Avg Assets Adjusted**
**: Excludes the impact of ORE expense and income, branch consolidation adjustment and merger-related charges. For a reconciliation of these Non-GAAP financial measures to the comparable GAAP measures, see slide 66-67. ^: Associate retention rate is computed by dividing the number of associates employed at quarter end less the number of associates that have resigned in the last 12 months by the number of associates employed at quarter
0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 6.00% $25,000 $75,000 $125,000 $175,000 $225,000 $275,000 $325,000
Purchase Money Refinance Gross fees as a % of loans originated
65
Reconciliation of Non-GAAP Financial Measures
66
Reconciliation of Non-GAAP Financial Measures
67
Peer Group
Institution Name Ticker City, State
Pinnacle Financial Partners PNFP Nashville, TN Associated Banc-Corp ASB Green Bay, WI BancorpSouth, Inc. BXS Tupelo, MS Bank of the Ozarks, Inc. OZRK Little Rock, AR Chemical Financial Corporation CHFC Midland, MI Cullen/Frost Bankers, Inc. CFR San Antonio, TX F.N.B. Corporation FNB Pittsburgh, PA First Horizon National Corporation FHN Memphis, TN Fulton Financial Corporation FULT Lancaster, PA Hancock Holding Company HWC Gulfport, MS IBERIABANK Corporation IBKC Lafayette, LA MB Financial, Inc. MBFI Chicago, IL Old National Bancorp ONB Evansville, IN PacWest Bancorp PACW Beverly Hills, CA Prosperity Bancshares, Inc. PB Houston, TX Sterling Bancorp STL Montebello, NY Synovus Financial Corp. SNV Columbus, GA TCF Financial Corporation TCF Wayzata, MN Trustmark Corporation TRMK Jackson, MS UMB Financial Corporation UMBF Kansas City, MO Umpqua Holdings Corporation UMPQ Portland, OR United Bankshares, Inc. UBSI Charleston, WV Valley National Bancorp VLY Wayne, NJ Western Alliance Bancorporation WAL Phoenix, AZ Wintrust Financial Corporation WTFC Rosemont, IL
68
FIRST QUARTER 2020
HAROLD R. CARPENTER, EVP AND CFO TIM HUESTIS, EVP AND CHIEF CREDIT OFFICER