Investor Call FIRST QUARTER 2019 APRIL 16, 2019 Time: 8:30 AM CDT - - PowerPoint PPT Presentation
Investor Call FIRST QUARTER 2019 APRIL 16, 2019 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 Safe Harbor Statements Forward
FIRST QUARTER 2019
HAROLD R. CARPENTER, EVP AND CFO
APRIL 16, 2019
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 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 differences in interest rates on loans or deposits from those that Pinnacle Financial is modeling or anticipating 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
regulatory capital 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 of applicable commercial real estate loans were to exceed percentage levels of total capital in guidelines recommended by its regulators; (xvi) approval of the declaration of any dividend by Pinnacle 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
significant investments, like BHG, and the development of additional banking 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 possible shutdown of the United States federal government, including the adverse effects on the national or local economies and adverse effects resulting from a 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 2019 versus certain periods in 2018 and to internally prepared projections.
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1Q19 Summary Results of Key GAAP Measures
4 Total Revenues ROTCE Total Deposits
(millions)
FD EPS Book Value per Share
Total Loans
(millions)
NPA/ Loans & OREO NCOs Classified Asset Ratio
13.45% 15.56% 15.64% 14.89% 18.98% 17.87%
ROTCE**
CAGR 5.6%
$4,182 $4,645 $6,828 $8,642 $16,326 $18,175
Total Loans
(millions)
CAGR 32.3%
$58,640 $69,755 $99,758 $119,148 $218,624 $238,309
Total Revenues
CAGR 30.6%
$4,087 $4,413 $6,432 $8,288 $14,750 $16,341
Total Core Deposits
(millions)
CAGR 30.2%
$0.47 $0.62 $0.71 $0.83 $1.13 $1.24
FD EPS*
CAGR 20.3%
$13.93 $16.12 $18.75 $23.25 $24.24 $28.61
Tangible Book Value per Share**
CAGR 14.7%
1Q19 Summary Results of Key Non-GAAP Measures
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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 44-47.
0.09% 0.12% 0.42% 0.20% 0.10% 0.08%
NCOs
21.2% 20.3% 24.2% 12.9% 12.6% 13.0%
Classified Asset Ratio
0.73% 0.58% 0.70% 0.36% 0.58% 0.61%
NPA/ Loans & OREO
Overarching Thesis on PNFP
2. PNFP’s distinctive hiring model produces rapid, sound growth and operating leverage 3. PNFP has long targeted top quartile profitability and consistently delivered 4. PNFP’s primary target is outsized EPS and TBV growth
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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 48 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 7 $10.19 $10.28 $10.58 $10.85 $11.14 $11.42 $11.73 $12.12 $12.42 12.9% 7.4% 6.0% 6.4% 9.3% 11.1% 10.9% 11.7% 11.4% 3.8% 3.8% 4.1% 3.9% 5.9% 5.2% 6.6% 5.9% 0.0% 5.0% 10.0% 15.0% 20.0% $9.00 $10.00 $11.00 $12.00 $13.00 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19
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
Loan & Deposit Growth are Keys to Top and Bottom Line Growth
Loan growth remained strong in 1Q19
$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
4.30% 5.28% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% 5.00% 5.50% $- $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
8 14.2% 14.6% 18.7% 13.3% 17.7% 10.6% 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
0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% $130.0 $140.0 $150.0 $160.0 $170.0 $180.0 $190.0 $200.0
Accretion/ Net Interest Income Net Interest Income (millions)
Net Interest Income Quarterly Trends Purchase Accounting Accretion
Purchase Accounting Accretion Net Interest Income Excluding Purchase Accounting Accretion Income to Net Interest income
Loan & Deposit Growth are Keys to Top and Bottom Line Growth
PNFP’s loan growth continues to outperform peers
Note: See slide 48 for peer group utilized in the above analysis. Source: S&P Global 9
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% 5.36% 10.56% 7.69% 10.14% 6.49% 13.72% 6.17% 8.11% 6.90% 10.85% 5.49% 7.86% 4.00% 6.58%
3.22%
7.18% 0% 5% 10% 15% 20% 25% 30% 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 2017Q3 2017Q4 2018Q1 2018Q2 2018Q3 2018Q4 2019Q1
Quarterly Loan Growth % - Annualized PNFP Annualized Loan Growth Median Annualized Loan Growth
N/A
Average Acct Balances - Loans March 31, 2015 vs March 31, 2019
2015 Avg Commitment 2019 Avg Commitment Net Interest Margin Influences Top and Bottom Line Growth
PNFP continues to transition to more variable rate assets
35.7% 18.9% 3.3% 4.3% 37.9%
All Loans
LIBOR Prime T-Bill Fixed Rate <1Y Fixed Rate >1Y
Rate Index Weighted Average Coupon (*) New Loans Weighted Average Coupon (*) Origination Mix
Net change 2Q18 3Q18 4Q18 1Q19 1Q19 LIBOR 4.15% 4.89% 0.74% 4.58% 4.33% 4.99% 4.83% 43.4% Prime 5.01% 5.75% 0.74% 5.49% 5.74% 5.95% 6.07% 23.0%
Fed funds 1.75% 2.50% 0.75% 2.00% 2.25% 2.50% 2.50%
4.43% 4.57% 0.14% 4.72% 4.91% 4.78% 5.07% 30.6%
5-Year Treasury 2.56% 2.23% (0.33%) 2.76% 2.81% 2.88% 2.53%
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 March 31, 2019 (*)
45.1% 20.7% 1.2% 0.0% 32.9%
C&I
38.1% 7.5% 3.1% 51.4%
CRE
41.9% 32.7% 0.9% 24.5%
Construction
$- $500 $1,000 $1,500 $2,000 $2,500 $3,000 Non-owner occupied CRE Other Construction and Land Development Owner-occupied CRE Residential Construction less than $10 million greater than $10, but less than $15 greater than $15, but less than 20 Greater than $20 million
Real Estate Portfolio Concentrations aggregated by real estate category and common borrower
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Largest CRE Projects by Category
Granularity in the loan book should have positive effect in the event of a turn in the credit cycle
Granularity of Real Estate Portfolio
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
EOP FFS Target Cost of Deposits
Loan & Deposit Growth are Keys to Top and Bottom Line Growth
Balance sheet management contributes to deposit reduction in 1Q19
Deposit Rate Tranches
% of Totals
Rate
Rate Noninterest bearing 23.3%
14.9% 0.20% 0.21% Negotiated 35.6% 1.63% 1.57% Indexed 6.4% 2.46% 2.46% CDs 19.8% 2.21% 2.04%
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16.3% 11.8% 16.9% 14.6% 16.8%
0.0% 4.0% 8.0% 12.0% 16.0% 20.0%
Annual Organic Deposit Growth
(excludes Day 1 merger impact)
*: First quarter data annualized
$18,849 $18,480 ($67) Strategic Brokered Client Net Client Run-Off Net Chg One-Off Growth ($ in millions)
Net Change in Deposits during 1Q19
EOP 4Q18 EOP 1Q19 ($250) ($247) $195 Client Growth 4% Annualized
Loan & Deposit Growth are Keys to Top and Bottom Line Growth
Changes to funding profile strengthen both balance sheet and earnings profile
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1.16% 1.21%
0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% $0 $100 $200 $300 $400 $500 $600 $700 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19
Average quarterly yield Average balances ($ in millions)
Quarterly Avg. FFS and Cash
Avg FFS and Cash Yield on FFS and Cash
Source: Internal records. From internal reports analyzing deposit accounts which incurred > $15mm in deposit shrinkage in 1Q19
$3,000 $5,000
Other Income* (BOLI, Equity Investments, etc.)
Yr/Yr Growth 8%
Fee Income Growth Supports Ongoing Top and Bottom Line Growth
Fees/ Avg. Assets continues to be strong in 1Q19
$8,000 $12,000 $16,000
Income from Equity Method Investment
(BHG)
Yr/Yr Growth 42%
$10,500 $11,500 $12,500
Wealth Management Fees
(Investment, Trust, Insurance)
Yr/Yr Growth 1%
$12,000 $16,000
Deposit-Related Fees (Service Charges, Interchange)
$4,000 $6,000
Lending-Related Fees (Mortgage, Swaps, SBA)
Yr/Yr Growth 27% 0.60% 0.65% 0.70% 0.75% 0.80% 0.85% 0.90% 0.95% 1.00% 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 slides 44-47.
Yr/Yr Growth 12%
15 $390.8 $181.5 $393.1 $228.8 $412.8 $205.0 $419.9 $202.3 $424.9 $201.0 $427.5 $206.2 $415.9 $199.0 $0.0 $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 $400.0 $450.0 Annualized REV/ Associate Annualized EXP/ Associate
3Q17 to 1Q19
(increase of $25,100/ associate)
3Q17 to 1Q19
(increase of $17,500/ associate) 80% 85% 90% 95% 100% 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19
Employee Retention^
Retention % 1.00% 1.25% 1.50% 1.75% 2.00% 2.25% 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19
Expenses / Avg Assets GAAP Expenses / Avg Assets Adjusted**
**: 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 44-47. ^: 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
Expenses are Leveraged to Produce Top and Bottom Line Growth
Leveraging our associate base is the key to efficiency
Overarching Thesis on PNFP
2. PNFP’s distinctive hiring model produces rapid, sound growth and operating leverage 3. PNFP has long targeted top quartile profitability and consistently delivered 4. PNFP’s primary target is outsized EPS and TBV growth
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“Culture eats strategy for lunch” and differentiates PNFP
Aligned culture and incentives have produced a differentiated franchise with reliable growth
Engaged Associates Produce Better Outcomes
“Culture eats strategy for lunch” and differentiates PNFP
Based on internal surveys, we have successfully managed the change and integrated the BNC merger from a cultural standpoint.
Agree that our firm’s culture is special.
August 2017
Agree that our firm’s culture is special.
August 2018
Agree that this is a great company where people want to work.
August 2017
Agree that this is a great company where people want to work.
August 2018
Source : Based on our own work environment survey in the Carolinas and Virginia, we have successfully managed the change and integrated the BNC merger from a cultural standpoint.
Largely based on associate feedback, while integrating the BNC merger, FORTUNE and The Great Place to Work Institute named Pinnacle Financial Partners:
2019 NO. 2
Best Place to Work in Finance and Insurance
2018 NO. 3
Best Place to Work in Finance and Insurance
2017 NO. 7
Best Place to Work in Finance and Insurance
Announced BNCN Merger Completed systems conversion
“Culture eats strategy for lunch” and differentiates PNFP
Source: Great Place to Work Institute and Fortune magazine
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1Q19 Year-over-year Growth 1Q19 Asset Quality 1Q19 Operating Leverage Loans 11.3% NCOs 0.08% YoY Change in Adjusted Efficiency Ratio* (0.21%) Core Deposits 10.8% NPAs 0.61% Fee Income 15.6% Classified Assets 13.0%
Note: Based on 1Q19 and comparisons to 1Q18. Efficiency ratio above has been adjusted for merger-related charges, gains and losses on sales of investment securities, ORE expense and income. For a reconciliation of this Non-GAAP financial measure to the comparable GAAP measure, see slides 44-47.
PNFP’s distinctive hiring model produces rapid, sound growth and operating leverage
Carolinas and Virginia – Key Measures of Success YoY % Growth
construction practice 9.2%
O/O CRE loan growth 21.5%
12.5%
65 23 49
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 21
PNFP’s distinctive hiring model produces rapid, sound growth and operating leverage
PNFP engaged BNC associates, exceeded its hiring plan and transformed the growth model
PNFP’s has long-targeted top quartile profitability and consistently delivered
PNFP is within or better than targeted range for ROAA and each component
PINNACLE TARGETED OPERATING RANGE 1Q 2019 GAAP ACTUALS 1Q 2019 Non-GAAP ACTUALS Return on Average Assets 1.50% to 1.70% 1.52% 1.54%* Net Interest Margin 3.55% to 3.75% 3.62% 3.62% Noninterest Income to
0.80% to 1.00% 0.83% 0.86%* Noninterest Expense to
1.80% to 2.00% 1.85% 1.84%** Net Charge-off Ratio 0.15% to 0.25% 0.08% 0.08%
*: excluding gains and losses on sales of investment securities **: excluding ORE expense (income) Note: For a reconciliation of these Non-GAAP financial measures to the comparable GAAP measures, see slides 44-47.
1.54% 1.56% 1.35% 1.10% 1.35% 0.89% 0.97% 0.80% 1.00% 1.20% 1.40% 1.60%
ROAA*
PNFP Peer Median Top Quartile 1.04% 1.18% 1.41%
1Q19 2018 2017 2016
17.87% 18.60% 12.83% 15.18% 15.31% 11.02% 11.93% 0.80% 5.80% 10.80% 15.80% 20.80%
ROTCE*
PNFP Peer Median Top Quartile 12.98% 14.83% 18.42%
1Q19 2018 2017 2016
$0.47 $0.62 $0.71 $0.83 $1.13 $1.24
FD EPS*
CAGR 20.3%
$13.93 $16.12 $18.75 $23.25 $24.24 $28.61
Tangible Book Value per Share**
CAGR 14.7%
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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 44-47.
PNFP prioritizes EPS and TBV
Many measures demonstrate how the model works, but we hold fast to the correlation between EPS, TBV growth and share price.
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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Outlook for 2019
We remain committed to long-term shareholder value through top and bottom line growth
2019 Focus Items 1Q19
11.3% (YoY)
10.8% (YoY)
9.7% (YoY) Long-term Shareholder Value Creation Thesis
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9.0% / 5.0% (YoY)
18.0% (YoY)
25
FIRST QUARTER 2019
Supplemental Information
Chart
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Balance Sheet – Loan Portfolio
Amts. 1Q19 % 1Q19 Amts. 4Q18 % 4Q18 Amts. 1Q18 % 1Q18 Amts. 1Q17 % 1Q17 C&I $5,419.5 29.8% $5,271.4 29.8% $4,490.9 27.5% $2,980.8 34.5% CRE – Owner Occ. 2,617.5 14.4% 2,653.4 15.0% 2,427.9 14.9% 1,399.5 16.2% Total C&I & O/O CRE $8,037.0 44.2% $7,924.8 44.8% $6,918.8 42.4% $4,380.3 50.7% CRE – Investment 4,108.0 22.6% 3,855.6 21.8% 3,714.9 22.8% 1,386.4 16.0% CRE – Multifamily and other 693.7 3.8% 655.9 3.7% 651.4 4.0% 395.7 4.6% C&D and Land 2,097.6 11.6% 2,072.5 11.7% 2,095.9 12.8% 1,015.1 11.8% Total CRE & Construction $6,899.3 38.0% $6,584.0 37.2% $6,462.2 39.6% $2,797.2 32.4% Consumer RE 2,887.6 15.9% 2,844.4 16.0% 2,580.8 15.8% 1,196.4 13.8% Consumer and other 351.0 1.9% 354.3 2.0% 364.2 2.2% 268.1 3.1% Total Other $3,238.6 17.8% $3,198.7 18.0% $2,945.0 18.0% $1,464.5 16.9% Total loans $18,174.9 100.0% $17,707.5 100.0% $16,326.0 100.0% $8,642.0 100.0%
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Balance Sheet – Loan Portfolio
TOTAL PINNACLE TENNESSEE LOANS CAROLINAS/ VA LOANS OTHER UNIT LOANS* Amts. 1Q19 Amts. 1Q18 Amts. 1Q19 Amts. 1Q18 Amts. 1Q19 Amts. 1Q18 Amts. 1Q19 Amts. 1Q18 C&I $5,419.5 $4,490.9 $4,196.3 $3,502.4 $781.6 $553.9 $441.6 $434.6 CRE – Owner Occ. 2,617.5 2,427.9 1,541.6 1,450.1 994.2 907.1 81.7 70.7 Total C&I & O/O CRE $8,037.0 $6,918.8 $5,737.9 $4,952.5 $1,775.8 $1,461.0 $523.3 $505.3 CRE – Investment 4,108.0 3,714.9 1,742.1 1,618.0 2,307.3 2,055.9 58.6 41.0 CRE – Multifamily and other 693.7 651.4 473.0 453.4 216.9 193.1 3.8 4.9 C&D and Land 2,097.6 2,095.9 1,257.1 1,256.4 818.0 811.2 22.5 28.3 Total CRE & Construction $6,899.3 $6,462.2 $3,472.2 $3,327.8 $3,342.2 $3,060.2 $84.9 $74.2 Consumer RE 2,887.6 2,580.8 1,342.9 1,224.7 1,182.9 1,215.8 361.8 140.3 Consumer and other 351.0 364.2 159.7 160.0 87.7 78.3 103.6 125.9 Total Other $3,238.6 $2,945.0 $1,502.6 $1,384.7 $1,270.6 $1,294.1 $465.4 $266.2 Total Loans $18,174.9 $16,326.0 $10,712.7 $9,665.0 $6,388.6 $5,815.3 $1,073.6 $845.7 Average Ticket Size (in ‘000s) $259.5 $234.4 $385.3 $373.9 $194.1 $176.3 $115.3 $78.3
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Note: Percentages noted in red text represent year-over-year growth rates. *: Represents mortgage, associate banking, automobile finance and various other business lines.
Balance Sheet – Loan Portfolio
TOTAL PINNACLE C&I & O/O CRE CRE & CONSTRUCTION OTHER LOANS* Amts. 1Q19 Amts. 1Q18 Amts. 1Q19 Amts. 1Q18 Amts. 1Q19 Amts. 1Q18 Amts. 1Q19 Amts. 1Q18 Nashville $6,071.4 $5,703.1 $3,010.0 $2,688.5 $2,179.9 $2,151.9 $881.5 $862.8 Knoxville 1,558.2 1,389.1 938.6 825.2 465.0 423.6 154.6 140.3 Music and Entertainment 351.5 219.5 241.0 127.7 19.1 23.6 91.4 68.1 Chattanooga 1,282.1 1,142.2 755.9 656.0 303.2 296.3 223.0 189.9 Memphis 1,449.5 1,211.1 792.4 655.1 505.2 432.4 151.9 123.6 Total Tennessee $10,712.7 $9,665.0 $5,737.9 $4,952.5 $3,472.4 $3,327.8 $1,502.4 $1,384.7 Greensboro/Highpoint 1,631.0 1,517.8 596.4 509.2 750.5 707.8 284.1 300.8 Charlotte 1,843.7 1,707.9 474.0 381.9 994.7 962.2 375.0 363.8 Raleigh 1,053.6 926.9 218.3 196.5 696.2 601.1 139.1 129.3 Charleston 853.3 785.5 158.5 145.4 406.3 321.4 288.5 318.7 Greenville 432.5 360.1 116.0 61.7 270.1 252.2 46.4 46.2 Roanoke 471.5 422.3 121.6 92.3 212.6 195.1 137.3 134.9 SBA 103.0 94.9 91.0 74.0 11.8 20.4 0.2 0.5 Total Carolina/VA $6,388.6 $5,815.3 $1,775.8 $1,461.0 $3,342.2 $3,060.2 $1,270.6 $1,294.1 Other 1,073.6 845.7 523.3 505.3 84.7 74.2 465.6 266.2 Total $18,174.9 $16,326.0 $8,037.0 $6,918.8 $6,899.3 $6,462.2 $3,238.6 $2,945.0
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Note: Percentages noted in red text represent year-over-year growth rates. *: Represents mortgage, associate banking, automobile finance and various other business lines.
Balance Sheet – Loan Portfolio
Amts. 1Q19 % 1Q19 Amts. 4Q18 % 4Q18 Amts. 1Q18 % 1Q18 Amts. 1Q17 % 1Q17 Residential – Spec $355.2 2.0% $352.3 2.0% $288.0 1.8% $200.7 2.3% Residential – Custom 131.0 0.7% 134.2 0.8% 123.0 0.7% 96.9 1.1% Residential – Condo 0.2 0.0%
0.6 0.0% 5.6 0.1% Commercial Construct. 1,207.5 6.7% 1,132.5 6.4% 1,207.2 7.4% 429.8 5.0% Land Dev– Residential 161.5 0.9% 165.9 0.9% 161.2 1.0% 111.2 1.3% Land Dev – Commercial 159.0 0.9% 167.8 0.9% 200.8 1.2% 167.4 2.0% Land Dev – Mixed Use 5.2 0.0% 39.2 0.2% 25.1 0.1%
78.0 0.4% 80.6 0.5% 90.0 0.6% 3.5 0.0% Total Construction and Land Dev. $2,097.6 11.6% $2,072.5 11.7% $2,095.9 12.8% $1,015.1 11.8%
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Balance Sheet – Loan Portfolio
TOTAL PINNACLE TENNESSEE LOANS CAROLINAS/VA LOANS OTHER UNIT LOANS Amts. 1Q19 Amts. 1Q18 Amts. 1Q19 Amts. 1Q18 Amts. 1Q19 Amts. 1Q18 Amts. 1Q19 Amts. 1Q18 Residential – Spec $355.2 $288.0 $253.8 $206.3 $99.7 $81.4 $1.7 $0.3 Residential – Custom 131.0 123.0 82.4 77.0 48.1 46.0 0.5
0.2 0.6 0.2
1,207.5 1,207.2 670.8 704.8 535.3 502.2 1.4 0.2 Land Dev– Residential 161.5 161.2 109.4 99.5 39.9 42.2 12.2 19.5 Land Dev – Commercial 159.0 200.8 79.2 88.9 76.2 107.3 3.6 4.6 Land Dev – Mixed Use 5.2 25.1 4.5 9.4 0.7 15.7
78.0 90.0 56.8 70.5 18.1 15.8 3.1 3.7 Total Construction and Land Dev. $2,097.6 $2,095.9 $1,257.1 $1,256.4 $818.0 $811.2 $22.5 $28.3 Average Ticket Size (in ‘000s) $513.7 $494.7 $580.7 $598.8 $445.5 $398.4 $273.5 $274.9
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Balance Sheet – Loan Portfolio
Total NOO and Multifamily Total Construction Total NOO and Construction Amts. 1Q19 Amts. 4Q18 Amts. 1Q18 Amts. 1Q19 Amts. 4Q18 Amts. 1Q18 Amts. 1Q19 Amts. 4Q18 Amts. 1Q18 Multifamily $693.1 $655.9 $644.8 $357.8 $390.3 $375.4 $1,063.8 $1,046.2 $1,020.2 Hospitality 769.5 708.8 568.7 105.5 118.6 119.1 875.0 827.4 687.8 Retail 1,211.9 1,205.8 1,141.8 148.0 153.5 186.2 1,360.0 1,359.3 1,328.0 Office 730.0 682.2 632.1 95.2 102.2 147.4 825.2 784.4 779.5 Warehouse 628.1 611.5 504.2 163.3 139.6 166.4 791.4 751.1 670.6 Medical 388.7 281.9 234.1 111.7 104.1 94.5 500.5 386.0 328.6 Other 379.7 365.40 640.6 1,116.0 1,064.2 1,007.0 1,495.8 1,429.6 1,647.6 Total $4,801.6 $4,511.5 $4,366.3 $2,097.6 $2,072.5 $2,096.0 $6, $6,911. 911.6 $6, $6,584. 584.0 $6, $6,462. 462.3 Average Ticket Size (in ‘000s) $1,731.1 $1,599.8 $1,525.3 $569.2 $506.2 $494.7 $1, $1,132. 132.4 $952. $952.3 $911. $911.2
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Balance Sheet – Loan Portfolio
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Balance Sheet – Loan Portfolio
0.00% 0.10% 0.20% 0.30% CRE Construction C&I Net commercial charge
Net Commercial loan charge offs by loan type
2014 2015 2016 2017 2018 1Q 2019
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
2014 2015 2016 2017 2018 1Q 2019
Balance Sheet – Loan Portfolio
Description 3/31/2019 12/31/2018 9/30/2018 6/30/2018 3/31/2018 12/31/2017
Loans secured by real estate: Construction, land development, and other loans: 1-4 family residential construction loans $575,753 $541,253 $523,300 $488,893 $475,979 $445,077 Other construction loans and all land development and other land loans 1,521,817 1,531,202 1,535,709 1,644,753 1,619,895 1,463,211 Loans included in the 100% test $2,097,570 $2,072,455 $2,059,009 $2,133,646 $2,095,874 $1,908,288 Secured by multifamily (5 or more) residential properties $706,097 $671,156 $718,953 $716,781 $668,904 $669,054 Loans secured by other nonfarm nonresidential properties 4,107,953 3,855,643 3,818,055 3,822,182 3,714,854 3,564,048 Financed real estate not secured by real estate 136,306 154,527 145,880 189,690 196,807 198,769 Loans included in the 300% test $7,047,926 $6,753,781 $6,741,897 $6,862,299 $6,676,439 $6,340,159
2,Total Risk-Based Capital $2,495,127 $2,432,419 $2,344,597 $2,254,929 $2,180,680 $2,134,344 % of Total Risk-Based Capital 100% Test - NOOCRE + Secured by multi-family 84% 85% 88% 95% 96% 89% 300% Test - NOOCRE + Multifamily + Construction 283% 278% 288% 304% 306% 297%
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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 1Q19 1Q18 1Q19 1Q18 1Q19 1Q18 1Q19 1Q18 Nashville $7,137.5 $5,854.3 $6,377.0 $5,678.0 $511.1 $406.9 $249.4 $219.4 Knoxville 1,639.2 1,266.3 1,528.5 1,213.9 68.4 27.8 42.3 24.6 Music and Entertainment 299.8 202.0 296.2 197.8 1.6 2.1 2.0 2.1 Memphis 832.3 968.2 676.2 841.4 119.2 89.6 36.9 37.2 Chattanooga 948.7 842.3 850.4 794.2 54.4 28.7 43.9 19.4 Total Tennessee $10,857.4 $9,583.0 $9,728.3 $8,725.3 $754.7 $555.1 $374.5 $302.7 Greensboro/Highpoint 1,931.3 1,846.3 1,565.8 1,547.8 257.9 247.0 107.6 51.5 Charlotte 1,120.1 943.5 819.1 755.4 193.0 141.3 108.0 46.8 Charleston 899.0 858.6 688.6 685.0 176.0 145.3 34.4 28.3 Raleigh 620.0 435.6 530.7 406.0 51.7 22.4 37.6 7.2 Roanoke 580.5 495.4 442.8 396.5 120.4 83.6 17.3 15.3 Greenville 308.0 274.9 198.2 192.1 76.6 63.6 33.2 19.2 Total Carolinas / VA $5,458.9 $4,854.3 $4,245.2 $3,982.8 $875.6 $703.2 $338.1 $168.3 Other 2,164.1 2,065.6 653.7 651.1 83.6 132.8 1,426.8 $1,281.7 Total $18,480.5 $16,502.9 $14,627.2 $13,359.2 $1,713.9 $1,391.0 $2,139.4 $1,752.7
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Note: Percentages noted in red text represent year-over-year growth rates.
Balance Sheet – Bond Portfolio
71% 60% 65% 29% 40% 35%
Bond Portfolio Pricing
Fixed Rate Variable Rate
37
10.00 15.00 20.00 25.00 30.00 35.00 40.00
1.00 1.50 2.00 2.50 3.00 3.50 4.00
% of Total Assets Bond Yields Axis Title
PNFP - Bond Yields Peer Median - Bond Yields PNFP - % of Total Assets Peer Median - % of Total Assets
Balance Sheet – Bond Portfolio
Portfolio: March 31, 2019
Total Investments $3.444 billion Net Unrealized Gain (Loss) $(10.8) million
Quarter Duration
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% 1Q17 3.4% 2.4% 4Q16 3.2% 2.3% 3Q16 2.8% 2.3% 2Q16 2.4% 2.5%
Conservative bond portfolio
2% 2% 29% 8% 13% 46% Agency/Treasury Corporates MBS Asset Backed CMOs Municipals
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Asset Quality
(*) > 30 days past due
39
(000S)
AS A % OF TOTAL LOANS
AS A % OF TOTAL LOANS
AS A % OF TOTAL LOANS
Past Due Loans (*)
Nonaccrual loans $48,739 0.27% $35,306 0.20% $13,875 0.08% Accruing loans 40,556 0.22% 60,537 0.34% $39,666 0.24%
Total past due $89,295 0.49% $95,843 0.54% $53,541 0.32% NPLs and > 90 days
$2,775 0.02% $3,388 0.02% $3,621 0.02% Consumer RE 32,170 0.18% 28,069 0.16% 18,549 0.11% CRE – Owner Occupied 23,553 0.13% 17,190 0.10% 21,112 0.13% CRE – Investment 12,013 0.07% 12,143 0.07% 918 0.01% Total real estate $73,864 0.41% 64,083 0.36% 47,407 0.29% C&I 23,311 0.13% 23,850 0.13% 22,761 0.14% Other 950 0.01% 1,459 0.01% 1,165 0.01%
Total loans $98,126 0.54% $89,392 0.50% $71,333 0.44% Classified loans and ORE
Substandard commercial loans $266,099 1.46% $242,799 1.37% $216,046 1.32% Doubtful commercial loans
Other impaired loans 23,552 0.13% 24,914 0.14% 16,409 0.10% 90 days past due and accruing (*) 1,982 0.01% 1,558 0.01% 1,131 0.01% Other real estate 15,077 0.08% 15,165 0.09% 23,982 0.15% Other repossessed assets 61 0.00% 228 0.00% 551 0.00%
Total $306,771 1.69% $284,665 1.61% $258,119 1.58%
Pinnacle Bank classified asset ratio 13.0% 12.4% 12.6%
**: 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 44-47.
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Operating Leverage
1Q19 4Q18 3Q18 2Q18 1Q18 4Q17 3Q17 2Q17 1Q17
Service charges $8,542 $9,754 $9,972 $8,456 $7,905 $8,799 $8,695 $7,612 $6,394 Investment services 5,404 6,135 5,423 5,074 5,245 4,828 3,758 3,196 2,888 Insurance commissions 2,928 2,038 2,126 2,048 3,119 1,961 2,124 1,461 1,859 Gain on mortgage loans sold, net 4,878 3,141 3,902 3,778 3,744 3,839 5,963 4,668 4,155 Investment gains on sales, net (1,960) (2,295) 11
(8,264)
3,295 3,375 3,087 3,563 3,118 2,645 2,636 1,677 1,705 Income from equity method investment 13,290 17,936 14,236 9,689 9,361 12,443 8,937 8,755 7,822 Other: Interchange and other consumer fees 7,507 8,133 7,112 7,030 6,471 5,778 4,891 4,140 3,612 Bank-owned life insurance 4,095 3,492 3,397 2,894 2,752 1,467 1,276 1,184 1,099 Loan swap fees 761 2,055 251 752 504 187 529 336 261 SBA loans sales 572 1,194 565 1,728 1,118 724 1,134 715 307 Gain (loss) on other equity investments 782 562 (85) 2,112 189 (499) 333 331 200 Other 969 1,750 1,481 815 627 2,318 2,975 997 76 Total noninterest income $51,063 $57,270 $51,478 $47,939 $44,183 $36,226 $43,251 $35,072 $30,378 Noninterest income/Average Assets 0.83% 0.92% 0.85% 0.83% 0.81% 0.66% 0.80% 1.05% 1.08% Noninterest income** $53,023 $59,565 $51,467 $47,939 $44,153 $44,490 $43,251 $35,072 $30,378 Noninterest Income**/Total Average Assets 0.86% 0.96% 0.85% 0.83% 0.81% 0.81% 0.80% 1.05% 2.17%
Operating Leverage
*: Excluding the impact of ORE expense and income and merger-related expenses. **: Excluding the impact of ORE expense and income, securities gains and losses and merger-related charges. For a reconciliation of these Non-GAAP financial measures to the comparable GAAP measures, see slide 44-47.
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1Q19 4Q18 3Q18 2Q18 1Q18 4Q17 3Q17 2Q17 1Q17 Salaries and employee benefits: Salaries $45,056 $41,965 $41,024 $39,136 $39,104 $39,950 $41,252 $26,312 $23,414 Commissions 3,140 3,456 3,011 3,148 3,029 2,045 2,026 1,831 1,631 Cash and equity incentives 11,163 18,082 14,505 11,224 10,180 12,253 11,568 9,038 5,921 Employee benefits and other 11,017 11,222 10,577 10,604 11,406 9,098 9,442 6,495 7,386 Total salaries and benefits 70,376 74,725 69,117 64,112 63,719 63,346 64,288 43,676 38,352 Equipment and occupancy 19,331 19,073 19,252 18,208 17,743 17,114 16,590 10,713 9,675 Other real estate owned, net 246 631 67 819 (794) 252 512 63 252 Marketing and other business development 2,948 3,628 3,293 2,544 2,247 2,093 2,222 2,127 1,879 Postage and supplies 1,892 1,831 1,654 2,291 2,039 1,662 1,755 1,122 1,196 Amortization of intangibles 2,311 2,576 2,616 2,659 2,698 3,071 3,077 1,472 1,196 Merger-related expenses
5,353 19,103 8,847 3,221 672 Other noninterest expense: Deposit related expense 4,543 5,033 5,982 6,078 5,675 6,156 2,790 1,804 2,348 Lending related expense 5,299 5,181 5,664 4,695 3,908 3,964 3,850 2,801 2,808 Wealth management related expense 530 417 433 465 523 160 393 323 394 Other noninterest expense 6,575 6,314 5,912 6,131 5,469 6,052 5,410 4,477 3,281 Total other noninterest expense 16,947 16,945 17,991 17,369 15,575 16,332 12,443 9,405 8,831 Total noninterest expense $114,051 $119,409 113,990 $110,908 $108,580 $122,973 $109,734 $71,799 $62,053 Efficiency ratio 47.9% 48.3% 47.3% 48.2% 49.7% 58.2% 50.8% 50.7% 52.1% Expense/Total Average Assets 1.85% 1.92% 1.87% 1.91% 1.98% 2.22% 2.05% 2.16% 2.20% Noninterest expense * $113,805 $118,778 $113,923 $107,183 $104,021 $103,618 $100,375 $68,515 $61,129 Efficiency ratio ** 47.4% 48.0% 47.3% 46.6% 47.6% 47.2% 46.4% 48.4% 51.3% Noninterest Expense*/Total Average Assets 1.84% 1.91% 1.87% 1.85% 1.90% 1.87% 1.88% 2.06% 2.17%
$10,000 $15,000 $20,000 $25,000
Actual/Anticipated Discount Accretion Through Dec 2019 (in thousands)
$62 mm $31 mm
Income Statement – Discount Accretion and Income Tax Rate Trends
15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 45.00%
Core 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
in accretion income in future periods. Continue to pursue tax initiatives to reduce firm’s ETR.
42 1Q19 4Q18 # of shares repurchased 543,585 405,200 Value of shares $30.0 mm $20.7 mm
$55.25 $51.07 Share Repurchase Program
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
43
Income Statement – Reconciliation of Non-GAAP Financial Measures
44
Income Statement – Reconciliation of Non-GAAP Financial Measures
45
Income Statement – Reconciliation of Non-GAAP Financial Measures
46
Income Statement – Reconciliation of Non-GAAP Financial Measures
47
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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FIRST QUARTER 2019
HAROLD R. CARPENTER, EVP AND CFO