Investor Call FOURTH QUARTER 2018 JANUARY 16, 2019 Time: 8:30 AM - - PowerPoint PPT Presentation
Investor Call FOURTH QUARTER 2018 JANUARY 16, 2019 Time: 8:30 AM CST Webcast: www.pnfp.com (investor relations) Audio only: 877-602-7944 M. TERRY TURNER, PRESIDENT AND CEO HAROLD R. CARPENTER, EVP AND CFO Safe Harbor Statements Forward
FOURTH QUARTER 2018
HAROLD R. CARPENTER, EVP AND CFO
JANUARY 16, 2019
Time: 8:30 AM CST 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 resulting in significant increases in loan losses and provisions for those losses; (ii) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits; (iii) 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; (iv) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (v) effectiveness of Pinnacle Financial's asset management activities in improving, resolving or liquidating lower-quality assets; (vi) the impact of competition with other financial institutions, including pricing pressures and the resulting impact
Financial's markets throughout Tennessee, North Carolina, South Carolina and Virginia, particularly in commercial and residential real estate markets; (viii) fluctuations or unanticipated changes in interest rates on loans or deposits or that affect the yield curve; (ix) the results of regulatory examinations; (x) a merger or acquisition; (xi) risks of expansion into new geographic or product markets; (xii) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including intangible assets; (xiii) 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
requirements, including those resulting from changes to capital calculation methodologies, required capital maintenance levels or regulatory requests or directives, particularly if Pinnacle Financial's level
Financial's board of directors; (xvii) the vulnerability of Pinnacle Bank's network and online banking portals, and the systems of parties with whom Pinnacle Financial contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (xviii) the possibility of increased compliance and operational costs as a result
products for Pinnacle Bank's corporate and consumer clients; (xix) 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; (xx) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, like BHG, including regulatory or legislative developments; (xxi) risk associated with the ongoing shutdown of the United States federal government, including the adverse effects on the national or local economies and adverse effects resulting from the shutdown of the U.S. Small Business Administration’s SBA loan program; (xxii) the availability of and access to capital; (xxiii) 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; and (xxiv) general competitive, economic, political and market conditions. Additional factors which could affect the forward looking statements can be found in Pinnacle Financial's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K 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, revenues per share, the ratio of noninterest income to average assets 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 investments, the revaluation of Pinnacle Financial’s deferred tax assets and other matters for the accounting periods presented. This presentation also includes non-GAAP financial measures which exclude expenses associated with Pinnacle Financial’s and Pinnacle Bank's recent mergers. This presentation may also contain certain other non-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 2018 versus certain periods in 2017 and to internally prepared projections.
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4Q18 Summary Results of Key GAAP Measures
Total Revenues FD EPS ROTCE NPA/ Loans & OREO Classified Asset Ratio NCOs Total Deposits
(millions)
Book Value per Share Total Loans
(millions)
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0.08% 0.23% 0.21% 0.13% 0.11%
NCOs
18.1% 18.7% 16.4% 12.9% 12.4%
Classified Asset Ratio
0.62% 0.55% 0.40% 0.55% 0.58%
NPA/ Loans & OREO
4Q18 Summary Results of Key Non-GAAP Measures
$0.53 $0.69 $0.83 $0.97 $1.25
FD EPS*
CAGR 21.6%
$4,590 $6,543 $8,450 $15,633 $17,708
Total Loans
(millions) CAGR 33.5%
$15.60 $17.46 $20.06 $23.71 $27.27
Tangible Book Value per Share**
CAGR 14.4%
$64,697 $98,083 $120,156 $219,484 $249,780
Total Revenues*
CAGR 33.4%
$4,381 $6,333 $7,835 $14,838 $16,489
Total Core Deposits
(millions) CAGR 32.2%
13.52% 15.81% 16.34% 16.11% 18.46%
ROTCE*
CAGR 6.5%
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*: excluding merger-related charges, gains and losses on sales of investment securities 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 45-48.
Today’s Agenda
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PNFP Primarily Focuses on Top and Bottom Line Growth
Strong growth continues in 4Q18 for both total revenues and revenues per share*
*: 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 45-48.
$1.68 $3.22 $1.00 $1.50 $2.00 $2.50 $3.00 $3.50 $- $50 $100 $150 $200 $250
Revenue per share* Total Revenues*(millions)
Total Revenues* Total revenue per share*
CAGR REVENUE PER SHARE 13.9%
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PNFP Primarily Focuses on Top and Bottom Line Growth
PNFP continues to grow revenue/share at a double-digit pace and faster than peers
Note: See slide 49 for peer group utilized in the above analysis. Source: S&P Global $10.19 $10.28 $10.58 $10.85 $11.14 $11.42 $11.73 $12.10 12.9% 7.4% 6.0% 6.4% 9.3% 11.2% 10.9% 11.6% 3.8% 3.8% 4.1% 3.9% 5.9% 5.2% 6.6% 0.0% 5.0% 10.0% 15.0% 20.0% $8.50 $9.50 $10.50 $11.50 $12.50 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
Y/Y Revenue per Share Growth Revenue per Share
LTM Revenue Per Share Growth vs. Peers
PNFP Revenue/Share PNFP Y/Y Growth Peer Y/Y Growth
BNCN Deal Closed BNCN Deal Announced System Conversion
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Loan & Deposit Growth are Keys to Top and Bottom Line Growth
Loan growth remains strong as yields increase
$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
4.30% 5.22% 3.00% 3.25% 3.50% 3.75% 4.00% 4.25% 4.50% 4.75% 5.00% 5.25% $- $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000
Loan Yields Average Loans
(millions) CPMK / Magna AVNU BNCN
9 14.2% 14.6% 18.7% 13.3% 12.5% 11.5% 0.0% 4.0% 8.0% 12.0% 16.0% 20.0%
Annual Organic Loan Growth
(excludes Day 1 merger impact)
Loan & Deposit Growth are Keys to Top and Bottom Line Growth
PNFP’s loan growth continues to significantly outperform peers
Note: See slide 49 for peer group utilized in the above analysis. Source: S&P Global 10
20.06% 11.70% 17.16% 16.29% 11.53% 9.99% 9.75% 24.34% 14.13% 9.80% 17.32% 17.70% 8.15% 5.53% 8.38% 10.71% 5.56% 11.34% 4.84% 7.68% 6.42% 10.74% 5.51% 5.55% 4.04% 6.20%
3.15%
0% 5% 10% 15% 20% 25% 30% 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4
Quarterly Loan Growth % - Annualized PNFP Annualized Loan Growth Median Annualized Loan Growth
N/A
13.4% 7.4% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 3Q 2017 4Q 2017 1Q 2018 2Q 2018 3Q 2018 4Q 2018 $130.0 $140.0 $150.0 $160.0 $170.0 $180.0 $190.0 $200.0
Accretion/ Net Interest Income Net Interest Income (millions)
Purchase Accounting Accretion Net Interest Income Excluding Purchase Accounting Accretion Income to Net Interest income
Net Interest Margin Influences Top and Bottom Line Growth
PNFP continues to transition to more variable rate assets
34.1% 20.0% 3.3% 4.3% 38.2%
All Loans
LIBOR Prime Treasury bill Fixed < 1 yr Fixed > 1 yr
Rate Index Weighted Average Coupon (*) New Loans Weighted Average Coupon (*)
Net change 1Q18 2Q18 3Q18 4Q18 LIBOR 3.82% 4.79% 0.97% 4.38% 4.58% 4.33% 4.99% Prime 4.75% 5.70% 0.95% 5.48% 5.49% 5.74% 5.95%
Fed funds 1.50% 2.50% 1.00% 1.75% 2.00% 2.25% 2.50%
Fixed rate 4.42% 4.61% 0.19% 4.75% 4.72% 4.91% 4.78%
5-Year Treasury 2.21% 2.51% 0.30% 2.53% 2.76% 2.81% 2.88%
(*) Weighted Average EOP Coupon Trends – excludes impact of PAA and impact from early payoffs which result in immediate recognition of deferred fees and prepayment penalties and increase actual yields. Pie charts reflect impact of balance sheet hedges in effect at YE 2018.
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At December 31, 2018 (*)
42.5% 23.1% 1.3% 0.0% 33.1%
C&I
34.2% 6.5% 2.8% 56.5%
CRE
43.6% 31.1% 0.9% 24.5%
Construction
At YE 2017, fixed rate = 62% of CRE Segment 35% Target by Mid-2019
2.50% 0.23% 1.08%
0.25% 0.75% 1.25% 1.75% 2.25% 2.75% $- $2,000 $4,000 $6,000 $8,000 $10,000 $12,000 $14,000 $16,000 $18,000 $20,000
EOP FFS Target Cost of Deposits
Loan & Deposit Growth are Keys to Top and Bottom Line Growth
Average deposit balances grew at a double-digit pace in 2018
Deposit Rate Tranches
% of Totals
Rate
Rate Noninterest bearing 22.9%
15.7% 0.21% 0.29% Negotiated with client 33.5% 1.57% 1.43% Indexed 9.4% 2.46% 2.17% CDs 18.5% 2.04% 1.83%
12 16.3% 11.8% 16.9% 14.6% 15.7% 16.3% 0.0% 4.0% 8.0% 12.0% 16.0% 20.0% 2015 2016 2017 2018 Total 2018 TN 2018 CA/VA
Annual Organic Deposit Growth
(excludes Day 1 merger impact)
Loan & Deposit Growth are Keys to Top and Bottom Line Growth
PNFP funded loan growth with core deposits in 4Q18; L/D ratio approximates peer median
Note: See slide 49 for peer group utilized in the above analysis. Source: S&P Global
15.5% 22.5% 6.2% 12.0% 22.5% 4.1% 23.8% 11.6% 0.8% 16.8% 1.2% 32.8% 12.3% 9.5% 7.02% 8.17% 6.70% 2.16% 13.51% 5.75% 5.12% 5.07% 5.12% 8.58% 2.59% 1.42% 3.28% 75.00% 80.00% 85.00% 90.00% 95.00% 100.00% 105.00% 110.00% 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4
Loan/Deposit Ratio Quarterly EOP Deposit Growth % - Annualized
PNFP Annualized Deposit Growth Peer Median Annualized Deposit Growth PNFP Loan/Deposit Ratio Peer Median Loan/Deposit Ratio
EOP core deposits increased 10.2% annualized in 4Q18 13
N/A
1,000,000 1,500,000 2,000,000 2,500,000 3,000,000 Residential Construction Other construction and land development Multifamily Non OOCRE Less than 10 million 10-15 million 15-20 million >20 million
Real Estate Portfolio Concentrations aggregated by real estate category and common borrower
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Granularity of Real Estate Portfolio Largest CRE Projects by Category
Top 10 Projects Aggregated Exposure Top 10 Projects/ Total Category Largest Projects in Category Average of Pro Forma LTV Average of Pro Forma LTC Average of Pro Forma DSC Construction Portfolio Hotel / Motel 180,581 $ 18% 26,460 $ 63.0% 67.1% 162.9% Medical 177,028 23% 36,342 $ 71.3% 76.7% 139.0% Multifamily 323,685 22% 43,304 $ 59.0% 69.6% 129.9% Professional Office 198,897 15% 55,000 $ 61.1% 69.4% 144.0% Retail 127,799 7% 21,225 $ 68.5% 77.1% 126.6% Storage / Warehouse 242,974 19% 49,696 $ 59.3% 66.5% 124.4% Existing NOO Properties Hotel / Motel 217,583 $ 29% 33,009 $ 61.4% 68.3% 179.5% Medical 124,109 43% 23,321 $ 64.9% 70.1% 135.8% Multifamily 229,829 32% 33,220 $ 63.9% 73.3% 126.9% Professional Office 225,612 30% 37,800 $ 59.3% 68.5% 148.3% Retail 175,682 14% 25,000 $ 59.3% 60.9% 140.2% Storage / Warehouse 155,636 24% 23,272 $ 58.2% 65.1% 140.6% Grand Total 2,379,414 $ 62.5% 69.6% 141.1%
PNFP CRE Portfolio Includes Healthy Diversification
Diversified borrower and projects exist within real estate portfolio
$2,000 $4,000 $6,000 $8,000
Other Income* (BOLI, Equity Investments, etc.)
Yr/Yr Growth 87%
Fee Income Growth Supports Ongoing Top and Bottom Line Growth
Fees/ Avg. Assets accelerated throughout 2018 and peaked in 4Q18
$5,000 $10,000 $15,000 $20,000
Income from Equity Method Investment
(BHG)
Yr/Yr Growth 44%
$8,000 $10,000 $12,000
Wealth Management Fees
(Investment, Trust, Insurance)
Yr/Yr Growth 22%
$10,000 $12,000 $14,000 $16,000 $18,000 $20,000
Deposit-Related Fees (Service Charges, Interchange)
$- $2,000 $4,000 $6,000 $8,000
Lending-Related Fees (Mortgage, Swaps, SBA)
Yr/Yr Growth 28% 0.60% 0.65% 0.70% 0.75% 0.80% 0.85% 0.90% 0.95% 1.00% 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 Fees / Avg Assets GAAP Fees / Avg Assets Adjusted*
*: Excluding gains and losses on sales of investment securities. For a reconciliation of these Non-GAAP financial measures to the comparable GAAP measures, see slide 45-48.
Yr/Yr Growth 23%
16 $390.8 $181.5 $408.4 $192.8 $412.8 $192.1 $419.9 $193.4 $424.8 $200.9 $431.4 $205.2 $0.0 $100.0 $200.0 $300.0 $400.0 $500.0 Annualized REV* / Associate Annualized EXP** / Associate (in millions)
3Q17 to 4Q18
(increase of $40,600/ associate)
3Q17 to 4Q18
(increase of $23,700/ associate) 80% 85% 90% 95% 100% 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
Employee Retention^
Retention % 1.00% 1.25% 1.50% 1.75% 2.00% 2.25% 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18
Expenses / Avg Assets GAAP Expenses / Avg Assets Adjusted**
*: Excluding gains and losses on sales of investment securities. For a reconciliation of these Non-GAAP financial measures to the comparable GAAP measures, see slide 45-48. **: Excluding the impact of ORE expense and income and merger-related charges. For a reconciliation of these Non-GAAP financial measures to the comparable GAAP measures, see slide 45-48. ^: 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
Expense are Leveraged to Produce Top and Bottom Line Growth
Leveraging our associate base is the key to efficiency
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PNFP is Tightly Focused on EPS Growth
PNFP recognizes the value proposition of our current share price
approved plan thru Dec. 31, 2019
2018 In Review
“My centre is giving way, my right is retreating, situation excellent, I am attacking.”
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Ferdinand Jean Marie Foch Supreme Allied Commander (WWI)
32.8% 6.7%
31.1% 5.7%
0.0% 10.0% 20.0% 30.0% 40.0%
2018 FDEPS growth 2019 Consensus FDEPS growth 2018 Market Price Change 2018 Net change in P:TBV ratio
PNFP Peer Median 19
10.0x 12.0x 14.0x 16.0x 18.0x 20.0x 22.0x 24.0x Price/Earnings (LTM Core EPS)
PNFP P/E Peer Median P/E
5Y Avg PNFP P/E (18.5x)
2018 share price depreciation has been dramatic even though 2018 earnings were strong while 2019 consensus estimates show modest growth and appear to promote unique opportunity for investors
2018 was Disastrous for SMID Cap Bank Stocks
PNFP contracted more than peers
Current PNFP P/E (11.2x)
Absolute: 61% of 5Y avg Relative: 11% below 5Y avg of 111%
Carolinas and Virginia – Key Measures of Success YTD 2018
construction practice 10.6%
O/O CRE loan growth 26.9%
13.8%
Planned Planned-to-date Actual-to-date Planned Planned-to-date Actual-to-date
Plan: Continue High Growth CRE and Bolt-on C&I Franchise Execution: Lever PNFP’s Ongoing Recruitment Competence as the Cornerstone for Success Result: Continued High Growth in CRE, accelerated C&I with Strong Core Deposit Growth 20
Investors Generally Punished Acquirers in 2018
PNFP engaged BNC associates, exceeded its hiring plan and transformed the growth model
0.00% 0.05% 0.10% 0.15% 0.20% 0.25%
2013Y 2014Y 2015Y 2016Y 2017Y 2018Y
Net Charge-offs to Average Real Estate Loans
Pinnacle Peer Median
Source: S&P Global See slide 49 for peer group
297% 278%
250% 270% 290% 310% 330% 4Q17 1Q18 2Q18 3Q18 4Q18
CRE 300
89% 85%
75% 80% 85% 90% 95% 100% 4Q17 1Q18 2Q18 3Q18 4Q18
AD&D 100
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CRE Concentrations were a Concern for Investors throughout 2018
As planned, PNFP reduced it’s CRE concentration while delivering asset quality and double-digit loan growth
Many questioned PNFP’s ability to gather core funding at a reasonable price to fund loan growth. PNFP’s “client-centric” model delivered above average growth in net interest income per share, indicating that an above average deposit cost beta does not negate a disciplined growth strategy.
Peer Median PNFP
0.05% 0.15% 0.25% 0.35% 0.45% 0.55% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0%
Cost of Total Deposits - Y/Y Change NII Per Share - Y/Y Change
NII Per Share Growth vs. Deposit Cost Increase (2018)
Source: S&P Global Peer data represents annualized 9/30 YTD financials Peer Median PNFP
15.0% 25.0% 35.0% 45.0% 55.0% 65.0% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0%
Deposit Beta: Chg in COD / Change in EFFR NII Per Share - Y/Y Change
NII Per Share Growth vs. Deposit Cost Beta (2018)
PNFP Peer vs. Key Growth and Funding Stats 2018 Median Peers Total Loans 13% 6% 220% Core Deposits 11% 4% 248% Core Dep. Growth/Loan Growth 80% 74% 108% Increase in Cost of Deposits 0.40% 0.27% 151% Deposit Cost Beta 49% 34% 143% NII Per Share 12.6% 8.2% 153%
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Deposit Betas & Funding Loan Growth were Much Discussed Investor Concerns in 2018
PNFP relied on gathering new associates and clients to deliver outsized growth in NII
PINNACLE TARGETED OPERATING RANGE 4Q18 ACTUALS 2018 ACTUALS Return on Average Assets 1.50% to 1.70% 1.54% 1.53% Net Interest Margin 3.55% to 3.75% 3.63% 3.68% Noninterest Income to
0.80% to 1.00% 0.92% 0.85% Noninterest Expense to
1.80% to 2.00% 1.92% 1.92% Net Charge-off Ratio 0.15% to 0.25% 0.11% 0.10%
$4.64 $4.74 $4.70
$4.60 $4.65 $4.70 $4.75 $4.80
2018 Results
23 PNFP GAAP EPS PNFP Adjusted EPS
Expectations for SMID Cap Bank Stocks Got Worse throughout 2018
PNFP continued to hit long established profitability targets and “original” consensus estimates
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Bank #3 Bank #4 Pinnacle Bank #1 Bank #2 0% 5% 10% 15% 20% 25% 30% 30% 40% 50% 60% 70% 80% 90% Customer Penetration (%) Overall Satisfaction - Excellent (%)
excellent client satisfaction (X-axis).
your overall satisfaction with the bank? Which other banks, non-banks, credit unions, or financial institutions does your company currently use for any product?
Nashville - $1-500MM - Q3 2018 Rolling Four Quarters).
Best in Class/ Closest Competitor Client Score Change*** Score Q3 ’17 R4Q Q3 ’18 R4Q Q3 ’18 R4Q Q3 ’18 R4Q Overall Satisfaction81% 88%
(+)82%
Ease of Doing Business83% 93%
(+)81%
Values Long-Term Relationships85% 97%
(+)81%
Likely to Recommend86% 92%
(+)80%
Relationship Manager Overall Satisfaction with Relationship Manager95% 96%
(+)87%
Responsiveness and Prompt Follow-up on Requests94% 97%
(+)87%
Knowledge of Cash Management Services86% 98%
(+)87%
Provides Advice to Help Business Grow74% 85%
(+)65%
Effectively Coordinates Product Specialists73% 87%
(+)83%
Frequency of Visits59% 77%
(+)80%
Understanding of Your Industry64% 76%
(+)81%
Overall Satisfaction - Branch Service83% 99%
(+)81%
Cash Management Overall Product Capability71% 79%
(+)85%
Accuracy of Operations80% 90%
(+)85%
Customer Service Professional91% 90%
(-)79%
Balance Sheet Growth Slowed for the Industry in 2018
PNFP leveraged a differentiated franchise to take market share
Promoter Score equals Promoters minus Detractors. Evaluations are based on a 0-10 scale, "0" not at all likely to "10" extremely likely. Promoter = 9,10; Passive = 7,8; Detractor = 0-6. ***+/- indicates increase or decrease of 2 or more from the previous period.
500MM - Q3 2018 Rolling Four Quarters).
Journal
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Market 2018 Rank* 2017 Rank* 2018 % market Share* 2017 % market share*
Nashville 1 3 14.67% 12.44% Knoxville 5 6 7.94% 5.55% Memphis 6 7 7.32% 6.77% Chattanooga 4 4 7.05% 6.68% Greensboro-High Point 3 4 11.36% 10.36% Raleigh 14 17 1.07% 0.62% Charlotte 9 9 0.34% 0.32% Greenville 14 15 1.30% 1.30% Myrtle Beach 13 13 2.84% 2.65% Roanoke 5 5 7.32% 6.77%
PNFP Continued its Track Record for Rapid Reliable Growth
Aligned culture and incentives have produced a differentiated franchise with reliable growth
Engaged Associates Produce Better Outcomes PNFP is consistently growing share in its major markets
*: Federal Deposit Insurance Corporation Summary of Deposits data
Outlook for 2019
We remain committed to long-term shareholder value through top and bottom line growth
2019 Focus Items
Long-term Shareholder Value Creation Thesis
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FOURTH QUARTER 2018
Supplemental Information
Chart
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40
41
49
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Balance Sheet – Loan Portfolio
Amts. 4Q18 %s 4Q18 Amts. 3Q18 %s 3Q18 Amts. 4Q17 %s 4Q17 Amts. 4Q16 %s 4Q16 C&I $5,271.4 29.8% $5,006.2 28.7% $4,141.3 26.5% $2,891.7 34.2% CRE – Owner Occ. 2,653.4 15.0% 2,688.2 15.4% 2,460.0 15.7% 1,354.9 16.0% Total C&I & O/O CRE 7,924.8 44.8% 7,694.4 44.1% 6,601.3 42.2% 4,246.6 50.2% CRE – Investment 3,855.6 21.8% 3,818.1 21.8% 3,564.0 22.8% 1,444.2 17.1% CRE – Multifamily and other 655.9 3.7% 708.8 4.1% 645.6 4.1% 394.4 4.7% C&D and Land 2,072.5 11.7% 2,059.0 11.8% 1,908.3 12.2% 912.7 10.8% Total CRE & Construction 6,584.0 37.2% 6,585.9 37.7% 6,117.9 39.1% 2,751.3 32.6% Consumer RE 2,844.4 16.0% 2,815.2 16.1% 2,561.2 16.4% 1,185.9 14.1% Consumer and other 354.3 2.0% 368.5 2.1% 352.7 2.3% 266.1 3.1% Total Other 3,198.7 18.0% 3,183.7 18.2% 2,913.9 18.7% 1,452.0 17.2% Total loans $17,707.5 100.0% $17,464.0 100.0% $15,633.1 100.0% $8,449.9 100.0%
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Balance Sheet – Loan Portfolio
TOTAL PINNACLE TENNESSEE LOANS CAROLINAS/ VA LOANS OTHER UNIT LOANS Amts. 4Q18 Amts. 4Q17 Amts. 4Q18 Amts. 4Q17 Amts. 4Q18 Amts. 4Q17 Amts. 4Q18 Amts. 4Q17 C&I $5,271.4 $4,141.3 $4,147.8 $3,312.4 $731.9 $475.9 $391.7 $353.0 CRE – Owner Occ. 2,653.4 2,460.0 1,533.4 1,467.8 1,037.0 917.5 83.0 74.7 Total C&I & O/O CRE 7,924.8 6,601.3 5,681.2 4,780.2 1,768.9 1,393.4 474.7 427.7 CRE – Investment 3,855.6 3,564.0 1,603.1 1,516.0 2,187.1 2,010.1 65.4 37.9 CRE – Multifamily and other 655.9 645.6 439.6 447.5 211.9 193.4 4.4 4.7 C&D and Land 2,072.5 1,908.3 1,238.6 1,168.4 808.9 697.1 25.0 42.8 Total CRE & Construction 6,584.0 6,117.9 3,281.3 3,131.9 3,207.9 2,900.6 94.8 85.4 Consumer RE 2,844.4 2,561.2 1,300.3 1,203.6 1,193.4 1,246.7 350.7 110.9 Consumer and other 354.3 352.7 155.5 143.7 89.6 74.0 109.2 135.0 Total Other 3,198.7 2,913.9 1,455.8 1,347.3 1,283.0 1,320.7 459.9 245.9 Total Loans $17,707.5 $15,633.1 $10,418.3 $9,259.4 $6,259.8 $5,614.7 $1,029.4 $759.0 Average Ticket Size (in ‘000s) $253.5 $222.9 $384.4 $363.4 $190.1 $168.6 $105.0 $187.7
30
Balance Sheet – Loan Portfolio
TOTAL PINNACLE C&I & O/O CRE CRE & CONSTRUCTION OTHER LOANS Amts. 4Q18 Amts. 4Q17 Amts. 4Q18 Amts. 4Q17 Amts. 4Q18 Amts. 4Q17 Amts. 4Q18 Amts. 4Q17 Nashville $6,267.1 $5,633.5 $3,191.2 $2,682.8 $2,123.6 $1,719.1 $952.3 $1,231.6 Knoxville 1,549.8 1,448.0 944.4 889.1 450.2 350.2 155.2 208.7 Chattanooga 1,262.2 1,077.8 769.6 627.8 279.9 222.8 212.7 227.2 Memphis 1,339.2 1,100.1 776.0 580.6 427.6 392.3 135.6 127.2 Total Tennessee $10,418.3 $9,259.4 $5,681.2 $4,780.3 $3,281.3 $2,684.4 $1,455.8 $1,794.7 Greensboro/Highpoint 1,597.1 1,494.5 575.7 478.3 728.4 643.3 293.0 372.9 Charlotte 1,811.2 1,612.2 458.3 349.3 980.9 847.5 372.0 415.4 Raleigh 1,043.6 867.0 258.8 193.3 641.7 514.2 143.1 159.5 Charleston 830.0 788.6 152.9 146.4 383.5 300.3 293.6 341.9 Greenville 418.7 344.8 115.9 69.3 258.7 218.7 44.1 56.8 Roanoke 462.3 421.4 122.9 90.3 202.7 163.9 136.7 167.2 SBA 96.9 86.2 84.4 66.5 12.0 19.3 0.5 0.4 Total Carolina/VA $6,259.8 $5,614.7 $1,768.9 $1,393.4 $3,207.9 $2,707.2 $1,283.0 $1,514.1 Other 1,029.4 759.0 474.7 427.8 94.8 80.7 459.9 250.5 Total $17,707.5 $15,633.1 $7,924.8 $6,601.5 $6,584.0 $5,472.3 $3,198.7 $3,559.3
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Balance Sheet – Loan Portfolio
Amts. 4Q18 %s 4Q18 Amts. 3Q18 %s 3Q18 Amts. 4Q17 %s 4Q17 Amts. 4Q16 %s 4Q16 Residential – Spec $352.3 2.0% $321.6 1.8% $278.7 1.8% $195.7 2.3% Residential – Custom 134.2 0.8% 146.0 0.8% 95.9 0.6% 81.9 1.0% Residential – Condo
0.6 0.0% 5.2 0.1% Commercial Construct. 1,132.5 6.4% 1,112.5 6.4% 1,057.3 6.8% 347.1 4.1% Land Dev– Residential 165.9 0.9% 166.0 1.0% 157.5 1.0% 116.3 1.4% Land Dev – Commercial 167.8 0.9% 191.2 1.1% 208.9 1.3% 162.7 1.9% Land Dev – Mixed Use 39.2 0.2% 38.0 0.2% 25.7 0.2%
80.6 0.5% 83.7 0.5% 83.7 0.5% 3.8 0.1% Total Construction and Land Dev. $2,072.5 11.7% $2,059.0 11.8% $1,908.3 12.2% $912.7 10.8%
32
Balance Sheet – Loan Portfolio
TOTAL PINNACLE TENNESSEE LOANS CAROLINAS/VA LOANS OTHER UNIT LOANS Amts. 4Q18 Amts. 4Q17 Amts. 4Q18 Amts. 4Q17 Amts. 4Q18 Amts. 4Q17 Amts. 4Q18 Amts. 4Q17 Residential – Spec $352.3 $278.7 $255.8 $206.7 $96.5 $71.1 $ - $0.9 Residential – Custom 134.2 95.9 88.6 59.6 45.6 36.3
1,132.5 1,057.4 644.0 645.0 487.1 407.7 1.4 4.7 Land Dev– Residential 165.9 157.5 105.6 91.8 44.1 42.7 16.2 23.0 Land Dev – Commercial 167.8 208.8 80.8 89.7 83.3 112.0 3.7 7.1 Land Dev – Mixed Use 39.2 25.7 4.8 12.8 34.4 10.0
Land – Unimproved 80.6 83.7 58.9 62.9 18.0 16.8 3.7 4.0 Total Construction and Land Dev. $2,072.5 $1,908.3 $1,238.5 $1,168.5 $809.0 $697.2 $25.0 $42.6 Average Ticket Size (in ‘000s) $506.2 $461.8 $582.3 $573.9 $430.5 $353.1 $284.3 $370.1
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Balance Sheet – Loan Portfolio
Total NOO and Multifamily Total Construction Total NOO and Construction Amts. 4Q18 Amts. 3Q18 Amts. 2Q18 Amts. 1Q18 Amts. 4Q18 Amts. 3Q18 Amts. 2Q18 Amts. 1Q18 Amts. 4Q18 Amts. 3Q18 Amts. 2Q18 Amts. 1Q18 Multifamily $655.9 $708.8 $738.6 $644.8 $390.3 $412.2 $405.0 $375.4 $1,046.2 $1,121.0 $1,143.6 $1,020.2 Hospitality 708.8 651.1 643.9 568.7 118.6 106.8 106.3 119.1 827.4 757.9 750.2 687.8 Retail 1,205.8 1,243.2 1,295.0 1,141.8 153.5 145.6 174.0 186.2 1,359.3 1,388.8 1,469.0 1,328.0 Office 682.2 669.3 704.1 632.1 102.2 87.2 91.5 147.4 784.4 756.5 795.6 779.5 Warehouse 611.5 605.0 553.7 504.2 139.6 180.3 212.7 166.4 751.1 785.3 766.4 670.6 Medical 281.9 278.1 257.8 234.1 104.1 105.8 112.9 94.5 386.0 383.9 370.7 328.6 Other 365.40 371.4 326.7 640.6 1,064.2 1,021.1 1,031.2 1,007.0 1,429.6 1,392.5 1,357.9 1,647.6 Total $4,511.5 $4,526.9 $4,519.8 $4,366.3 $2,072.5 $2,059.0 $2,133.6 $2,096.0 $6,58 ,584.0 $6,58 ,585.9 $6,65 ,653.4 $6,46 ,462.3 Average Ticket Size (in ‘000s) $1,599.8 $1,580.8 $1,594.3 $1,525.3 $506.2 $504.4 $518.1 $494.7 $952.3 .3 $948.8 .8 $958.0 .0 $911.2 .2
34
Balance Sheet – Loan Portfolio
35
0.00% 0.10% 0.20% 0.30% CRE Construction C&I Net commercial charge off's
Net Commercial loan charge off's by loan type
2014 2015 2016 2017 2018
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
Total net charge off rates
Net Consumer loan charge off's by loan type & Total net charge-offs
2014 2015 2016 2017 2018
Balance Sheet – Loan Portfolio
Balance Sheet – Loan Portfolio
Description 12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017 9/30/2017
Loans secured by real estate: Construction, land development, and other loans: 1-4 family residential construction loans $541,253 $523,300 $488,893 $475,979 $445,077 $423,988 Other construction loans and all land development and other land loans 1,531,202 1,535,709 1,644,753 1,619,895 1,463,211 1,515,821 Loans included in the 100% test $2,072,455 $2,059,009 $2,133,646 $2,095,874 $1,908,288 $1,939,809 Secured by multifamily (5 or more) residential properties $671,156 $718,953 $716,781 $668,904 $669,054 $638,285 Loans secured by other nonfarm nonresidential properties 3,855,643 3,818,055 3,822,182 3,714,854 3,564,048 3,398,381 Financed real estate not secured by real estate 154,527 145,880 189,690 196,807 198,769 198,769 Loans included in the 300% test $6,753,781 $6,741,897 $6,862,299 $6,676,439 $6,340,159 $6,175,244 Total Risk-Based Capital $2,432,419 $2,344,597 $2,254,929 $2,180,680 $2,134,344 $2,129,643 % of Total Risk-Based Capital 100% Test - NOOCRE + Secured by multi-family 85% 88% 95% 96% 89% 91% 300% Test - NOOCRE + Multifamily + Construction 278% 288% 304% 306% 297% 290%
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Balance Sheet – Deposit Portfolio
TOTAL DEPOSITS CORE DEPOSITS NONCORE DEPOSITS TOTAL PINNACLE TRANSACTION AND MMDA CDs PUBLIC FUNDS and OTHER DEPOSITS 4Q18 4Q17 4Q18 4Q17 4Q18 4Q17 4Q18 4Q17 Nashville $7,465.2 $6,488.4 $6,668.7 $5,906.9 $503.7 $375.6 $292.8 $205.9 Knoxville 1,485.4 1,260.3 1,396.1 1,217.5 58.6 24.6 30.8 18.2 Memphis 1,073.2 880.5 927.0 753.1 118.7 84.9 27.5 42.6 Chattanooga 871.5 786.9 789.9 740.1 48.1 28.1 33.5 18.7 Total Tennessee 10,895.3 9,416.1 9,781.7 8,617.5 729.1 513.2 384.6 285.4 Greensboro/Highpoint 2,012.3 1,799.7 1,666.8 1,543.9 252.4 202.3 93.0 53.5 Charlotte 1,105.4 943.4 831.0 765.0 190.8 136.9 83.6 41.5 Charleston 892.4 835.2 680.5 666.4 174.8 143.2 37.1 25.6 Raleigh 581.1 409.8 491.2 382.6 52.2 21.9 37.7 5.3 Roanoke 583.7 500.4 452.3 406.9 115.0 80.8 16.4 12.8 Greenville 378.5 282.7 267.3 196.7 78.0 66.4 33.3 19.5 SBA
5,553.4 4,775.0 4,389.1 3,965.3 863.2 651.5 301.1 158.2 Other 2,400.4 2,260.6 621.3 889.0 104.8 201.7 1,674.2 1,169.9 Total $18,849.1 $16,451.7 $14,792.0 $13,471.8 $1,697.1 $1,366.4 $2,359.9 $1,613.5
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Balance Sheet – Bond Portfolio
3.58% 3.22% 20.75% 13.10%
0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00%
Bond Yields % of Total Assets
78% 71% 60% 22% 29% 40%
Bond Portfolio Pricing
Fixed Rate Variable Rate
38
Balance Sheet – Bond Portfolio
Portfolio: December 31, 2018
Total Investments $3.277 billion Net Unrealized Gain (Loss) $(48.7) million
Quarter Duration
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% 1Q17 3.4% 2.4% 4Q16 3.2% 2.3% 3Q16 2.8% 2.3% 2Q16 2.4% 2.5%
Conservative bond portfolio
1% 1% 30% 12% 13% 43% Agency/Treasury Corporates MBS Asset Backed CMOs Municipals
39
Asset Quality
(*) > 30 days past due
40
(000S)
AS A % OF TOTAL LOANS
AS A % OF TOTAL LOANS
AS A % OF TOTAL LOANS
Past Due Loans (*)
Nonaccrual loans $35,306 0.20% $11,691 0.07% $10,873 0.13% Accruing loans 60,537 0.34% 60,159 0.38% 22,331 0.26%
Total past due $95,843 0.54% $71,850 0.46% $33,204 0.39% NPLs and > 90 days
$3,388 0.02% $6,114 0.04% $6,613 0.08% Consumer RE 28,069 0.16% 19,381 0.12% 8,127 0.10% CRE – Owner Occupied 17,190 0.10% 12,605 0.08% 4,254 0.05% CRE – Investment 12,143 0.07% 302 0.00% 666 0.01% Total real estate 64,083 0.36% 41,664 0.27% 19,661 0.23% C&I 23,850 0.13% 18,657 0.12% 7,495 0.09% Other 1,459 0.01% 1,273 0.01% 1,556 0.02%
Total loans $89,392 0.50% $61,594 0.39% $28,711 0.34% Classified loans and ORE
Substandard commercial loans $242,799 1.37% $ 211,308 1.35% $148,460 1.76% Doubtful commercial loans
1 0.00% Other impaired loans 24,914 0.14% 15,320 0.10% 9,820 0.12% 90 days past due and accruing (*) 1,558 0.01% 4,139 0.03% 1,134 0.01% Other real estate 15,165 0.09% 27,831 0.18% 6,090 0.07% Other repossessed assets 228 0.00% 197 0.00%
Total $284,665 1.61% $ 258,795 1.66% 165,505 1.96%
Pinnacle Bank classified asset ratio 12.4% 12.9% 16.4%
Fee Businesses also Contribute to Earnings Growth
Fee businesses produce another strong quarter
**: Excluding gains and losses on sales of investment securities. For a reconciliation of these Non-GAAP financial measures to the comparable GAAP measures, see slide 45-48.
4Q18 3Q18 2Q18 1Q18 4Q17
Service charges $6,617 $6,404 $6,065 $5,820 $6,078 Investment services 5,925 5,237 4,906 5,107 4,723 Insurance commissions 2,038 2,126 2,048 3,119 1,961 Gain on mortgage loans sold, net 3,141 3,902 3,777 3,744 3,839 Investment gains on sales, net (2,295) 11
(8,265) Income from equity method investment 17,936 14,236 9,690 9,360 12,444 Trust fees 3,375 3,087 3,564 3,117 2,645 Other: Interchange and other consumer fees 11,269 10,682 9,421 8,556 8,499 Bank-owned life insurance 3,492 3,397 2,894 2,752 2,829 Loan swap fees 2,055 733 752 22 188 SBA loans sales 1,194 565 1,728 1,117 723 Gain (loss) on other equity investments 562 (85) 2,111 189 (499) Other 1,961 1,183 983 1,250 1,036 Total noninterest income $57,270 $51,478 $47,939 $44,183 $36,201 Noninterest income/Average Assets 0.92% 0.85% 0.83% 0.81% 0.66% Noninterest income** $59,565 $51,467 $47,939 $44,153 $44,466 Noninterest Income**/Total Average Assets 0.96% 0.85% 0.83% 0.81% 0.81%
41
Fee Businesses also Contribute to Earnings Growth
4Q18 core expense results continue to reflect enviable operating leverage
*: Excluding the impact of ORE expense and income and merger-related charges. For a reconciliation of these Non-GAAP financial measures to the comparable GAAP measures, see slide 45-48.
42
4Q18 3Q18 2Q18 1Q18 4Q17 Salaries and employee benefits: Salaries $41,965 $41,024 $39,136 $39,104 $39,950 Commissions 3,456 3,011 3,148 3,029 2,062 Cash and equity incentives 18,082 14,505 11,224 10,180 12,665 Employee benefits and other 11,222 10,577 10,604 11,406 8,670 Total salaries and benefits 74,725 69,117 64,112 63,719 63,347 Equipment and occupancy 19,073 19,252 18,208 17,743 17,114 Other real estate owned 631 67 819 (794) 252 Marketing and business development 3,628 3,293 2,544 2,247 2,093 Postage and supplies 1,831 1,654 2,291 2,039 1,662 Intangible amortization 2,576 2,616 2,659 2,698 3,071 Merger-related charges
5,353 19,103 Other noninterest expense: Deposit related expense 5,033 5,982 6,078 5,675 6,156 Lending related expense 5,181 5,664 4,695 3,908 3,964 Wealth management related expense 417 433 465 523 160 Other noninterest expense 6,314 5,912 6,131 5,469 6,051 Total other noninterest expense 16,945 17,991 17,369 15,575 16,331 Total noninterest expense $119,409 113,990 $110,908 $108,580 $122,973 Efficiency ratio 48.3% 47.3% 48.2% 49.7% 58.2% Expense/Total Average Assets 1.92% 1.87% 1.91% 1.98% 2.22% Noninterest expense * $118,778 $113,923 $107,183 $104,021 $103,618 Efficiency ratio * 48.0% 47.3% 46.6% 47.6% 47.2% Noninterest Expense*/Total Average Assets 1.91% 1.87% 1.85% 1.90% 1.87%
$0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000
Actual/Anticipated Discount Accretion Through Dec 2019
$62 mm $38 mm
Income Statement – Discount Accretion and Income Tax Rate Trends
15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00%
Income Tax Effective Tax Rate Trends
Income tax as % of pre-tax income, excluding discrete items Blended statutory tax rate
Life to date accretion approximates original projections. Anticipate continued reduction in accretion income in future periods. Continue to pursue tax initiatives to reduce firm’s ETR.
43
Income Statement – Mortgage Volumes
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
44
Income Statement – Reconciliation of Non-GAAP Financial Measures
45
4Q18 3Q18 2Q18 1Q18 4Q17 3Q17 2Q17 1Q17 4Q16 3Q16 2Q16 1Q16 4Q15 3Q15 2Q15 1Q15 4Q14 3Q14 2Q14 1Q14 Net income $ 95,318 93,747 86,865 83,510 26,798 64,442 43,086 39,653 36,097 32,377 30,787 27,965 26,855 24,149 22,665 21,843 18,737 18,197 17,170 16,367 Merger-related charges
Investment (gains) losses on sales of securities 2,295 (11)
Tax effect on merger-related charges and investment (gains) losses on sales of securities (600) 3 (760) (1,391) (10,736) (3,471) (1,264) (264) (1,126) (2,225) (384) (718) (980) (882) 195 2
Revaluation of deferred tax assets
Net income excluding merger-related charges, investment (gains) losses on sales of securities and revaluation of deferred tax assets 97,013 93,739 89,011 87,442 74,916 69,818 45,043 40,061 37,840 35,824 31,383 29,077 28,374 25,515 22,363 21,839 18,737 18,179 17,170 16,367 Diluted earnings per share $ 1.24 1.21 1.12 1.08 0.35 0.83 0.80 0.82 0.78 0.71 0.73 0.68 0.65 0.62 0.64 0.62 0.53 0.52 0.49 0.47 Adjustment to diluted earnings per share due to merger- related charges, investment (gains) losses on sales of securities and revaluation of deferred tax assets 0.02
Diluted earnings per share excluding merger-related charges, investment (gains) losses on sales of securities and revaluation of deferred tax assets $ 1.26 1.21 1.15 1.13 0.97 0.90 0.84 0.83 0.82 0.78 0.75 0.71 0.69 0.66 0.63 0.62 0.53 0.52 0.49 0.47 Net interest income $ 190,215 189,420 182,236 174,471 175,017 172,910 106,627 88,767 89,413 86,635 75,044 73,902 71,475 62,059 51,831 51,269 50,313 49,537 47,226 45,908 Total noninterest income 57,270 51,478 47,939 44,183 36,202 43,248 35,057 30,382 30,743 31,692 32,713 25,856 26,608 21,410 20,019 18,493 14,384 12,888 12,598 12,732 Total revenues 247,485 240,898 230,175 218,654 211,219 216,158 141,684 119,149 120,156 118,327 107,757 99,758 98,083 83,469 71,850 69,762 64,697 62,425 59,824 58,640 Less: Investment (gains) losses on sales of securities, net 2,295 (11)
Total revenues, excluding investment (gains) losses on sales of securities, net $ 249,780 240,887 230,175 218,624 219,484 216,158 141,684 119,149 119,761 118,327 107,757 99,758 98,093 83,469 71,294 69,756 64,697 62,396 59,824 58,640 Revenue per share $ 3.19 3.11 2.97 2.83 2.73 2.80 2.64 2.46 2.61 2.58 2.57 2.44 2.39 2.15 2.02 1.97 1.83 1.78 1.71 1.68 Adjustment due to investment (gains) losses on sales
0.03
Revenue per share excluding investment (gains) losses
$ 3.22 3.11 2.97 2.83 2.83 2.80 2.64 2.46 2.60 2.58 2.57 2.44 2.39 2.15 2.01 1.97 1.83 1.77 1.71 1.68 Book value per share $ 51.18 50.05 49.15 48.16 47.70 47.31 46.56 34.61 32.28 31.97 29.92 29.26 28.25 27.80 23.39 22.98 22.46 21.93 21.47 20.88 Adjustment due to goodwill, core deposit and other intangible assets (23.91) (23.84) (23.87) (23.92) (23.99) (23.99) (23.98) (11.36) (12.22) (12.28) (10.34) (10.51) (10.82) (10.81) (6.84) (6.86) (6.89) (6.92) (6.94) (6.95) Tangible book value per share $ 27.27 26.21 25.28 24.24 23.71 23.32 22.58 23.25 20.06 19.69 19.58 18.75 17.43 16.99 16.55 16.12 15.57 15.01 14.53 13.93
Income Statement – Reconciliation of Non-GAAP Financial Measures
46
4Q18 3Q18 2Q18 1Q18 4Q17 3Q17 2Q17 1Q17 4Q16 3Q16 2Q16 1Q16 4Q15 3Q15 2Q15 1Q15 4Q14 3Q14 2Q14 1Q14 Net income $ 95,318 93,747 86,865 83,510 26,798 64,442 43,086 39,653 36,097 32,377 30,787 27,965 26,855 24,149 22,665 21,843 18,737 18,197 17,170 16,367 Merger-related charges
Investment (gains) losses on sales of securities 2,295 (11)
Tax effect on merger-related charges and investment (gains) losses
(600) 3 (760) (1,391) (10,736) (3,471) (1,264) (264) (1,126) (2,225) (384) (718) (980) (882) 195 2
Revaluation of deferred tax assets
Net income excluding merger-related charges, investment (gains) losses on sales of securities and revaluation of deferred tax assets $ 97,013 93,739 89,011 87,442 74,916 69,818 45,043 40,061 37,840 35,824 31,383 29,077 28,374 25,515 22,363 21,839 18,737 18,179 17,170 16,367 Average stockholders’ equity $ 3,939,927 3,874,430 3,795,963 3,732,633 3,706,741 3,655,029 2,057,505 1,657,072 1,493,684 1,442,440 1,247,762 1,188,153 1,153,681 986,325 836,791 815,706 796,338 774,032 757,089 740,743 Less: Average goodwill (1,807,121) (1,807,121) (1,807,850) (1,808,055) (1,803,546) (1,800,761) (760,646) (551,548) (551,042) (541,153) (431,155) (430,228) (430,574) (317,461) (243,383) (243,505) (243,531) (243,544) (243,559) (243,559) Average core deposit and other intangible assets (47,711) (50,292) (53,018) (55,681) (58,192) (59,521) (23,957) (14,674) (15,724) (11,296) (9,367) (10,237) (11,261) (7,634) (2,581) (2,809) (3,040) (3,278) (3,484) (3,484) Net average tangible common equity $ 2,085,095 2,017,017 1,935,095 1,868,897 1,845,003 1,794,747 1,272,902 1,090,850 926,918 889,991 807,240 747,688 711,846 661,230 590,827 569,392 549,767 527,210 510,046 493,700 Return on average common equity 9.60% 9.60% 9.18% 9.07% 2.87% 6.99% 8.40% 9.70% 9.61% 8.93% 9.92% 9.47% 9.24% 9.71% 10.86% 10.86% 9.33% 9.33% 9.10% 8.96% Adjustment due to goodwill, core deposit and other intangible assets 8.54% 8.84% 8.83% 9.05% 2.89% 7.26% 5.18% 5.04% 5.88% 5.54% 5.42% 5.57% 5.73% 4.78% 4.53% 4.70% 4.19% 4.36% 4.40% 4.51% Return on average tangible common equity 18.14% 18.44% 18.01% 18.12% 5.76% 14.25% 13.58% 14.74% 15.49% 14.47% 15.34% 15.04% 14.97% 14.49% 15.39% 15.56% 13.52% 13.69% 13.50% 13.47% Adjustment due to merger-related charges, investment (gains) losses
0.32% 0.00% 0.44% 0.86% 10.35% 1.18% 0.61% 0.15% 0.75% 1.54% 0.30% 0.60% 0.84% 0.82%
0.00% 0.00% 0.00% 0.00% 0.00% Return on average tangible common equity (excluding merger- related charges, investment (gains) losses on sales of securities and revaluation of deferred tax assets) 18.46% 18.44% 18.45% 18.98% 16.11% 15.43% 14.19% 14.89% 16.24% 16.01% 15.64% 15.64% 15.81% 15.31% 15.18% 15.56% 13.52% 13.69% 13.50% 13.47% Total average assets $24,616,733 24,125,051 23,236,945 22,204,599 21,933,500 21,211,459 13,335,359 11,421,654 11,037,555 10,883,547 9,305,941 8,851,978 8,565,341 7,514,633 6,319,712 6,102,523 5,855,421 5,752,776 5,673,615 5,514,031
Income Statement – Reconciliation of Non-GAAP Financial Measures
47
4Q18 3Q18 2Q18 1Q18 4Q17 3Q17 Net interest income $ 190,215 189,420 182,236 174,471 175,017 172,910 Total noninterest income 57,270 51,478 47,939 44,183 36,202 43,248 Total revenues 247,485 240,898 230,175 218,654 211,219 216,158 Less: Investment (gains) losses on sales of securities, net 2,295 (11)
249,780 240,887 230,175 218,624 219,484 216,158 Total noninterest expense $ 119,409 113,990 110,908 108,580 122,973 109,736 Less: ORE expenses (income) 631 67 819 (794) 252 513 Merger-related charges
Core noninterest expense, excluding the impact of ORE expense (income) and merger-related charges $ 118,778 113,923 107,183 104,021 103,618 100,376 Adjusted pre-tax pre-provision income $ 131,002 126,964 122,992 114,603 115,866 115,782 Average Assets $24,616,733 24,125,051 23,236,945 22,204,599 21,933,500 21,211,459 Noninterest income/ Average assets 0.92% 0.85% 0.83% 0.81% 0.66% 0.81% Adjustment due to investment (gains) losses on sales of securities, net 0.04% 0.00% 0.00% 0.00% 0.14% 0.00% Noninterest income, excluding the impact of net gains on sale of investment securities/Average Assets 0.96% 0.85% 0.83% 0.81% 0.80% 0.81% Noninterest expense/ Average assets 1.92% 1.87% 1.91% 1.98% 2.22% 2.05% Adjustment due to ORE expense (income) and merger-related charges
0.00%
Core noninterest expense, excluding ORE expense (income) and merger-related charges/ Average Assets 1.91% 1.87% 1.85% 1.90% 1.87% 1.88% Efficiency ratio 48.3% 47.3% 48.2% 49.7% 58.2% 50.8% Adjustment due to securities gains and losses, ORE expense (income) and merger- related charges
0.0%
Core Efficiency ratio 47.6% 47.3% 46.6% 47.6% 47.2% 46.4%
Income Statement – Reconciliation of Non-GAAP Financial Measures
48
4Q18 3Q18 2Q18 1Q18 4Q17 3Q17 Net interest income $ 190,215 189,420 182,236 174,471 175,017 172,910 Total noninterest income 57,270 51,478 47,939 44,183 36,202 43,248 Total revenues 247,485 240,898 230,175 218,654 211,219 216,158 Less: Investment (gains) losses on sales of securities, net 2,295 (11)
249,780 240,887 230,175 218,624 219,484 216,158 Number of employees (full-time equivalent) 2,297.0 2,249.5 2,198.5 2,148.0 2,132.0 2,194.5 Revenue per associate $ 427.5 424.9 419.9 412.8 393.1 390.8 Adjustment due to investment (gains) losses on sales of securities 3.9 (0.02)
$ 431.4 424.8 419.9 412.8 408.4 390.8 Total noninterest expense $ 119,409 113,990 110,908 108,580 122,973 109,736 Less: ORE expenses (income) 631 67 819 (794) 252 513 Merger-related charges
Core noninterest expense, excluding the impact of ORE expense (income) and merger- related charges $ 118,778 113,923 107,183 104,021 103,618 100,376 Expenses per associate $ 206.2 201.0 200.1 200.5 228.8 198.4 Adjustment due to investment (gains) losses on sales of securities (1.0) (0.12) (6.72) (8.42) (36.02) (16.92) Expenses per associate excluding investment (gains) losses on sales of securities $ 205.2 200.9 193.4 192.1 192.8 181.5
2018 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
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FOURTH QUARTER 2018
HAROLD R. CARPENTER, EVP AND CFO