Third Quarter 2013 Investor Call Terry Turner, President and CEO Harold Carpenter, EVP and CFO October 16, 2013
Safe Harbor Statements Forward-looking statements Certain of the statements in this presentation may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words "expect," "anticipate," “goal,” “objective,” "intend," "plan," "believe," ”should,” "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. All forward-looking statements are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of Pinnacle Financial to differ materially from any results expressed or implied by such forward-looking statements. Such risks include, without limitation, (i) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (ii) continuation of the historically low short-term interest rate environment; (iii) the inability of Pinnacle Financial to grow its 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) increased competition with other financial institutions; (vii) greater than anticipated adverse conditions in the national or local economies including the Nashville-Davidson-Murfreesboro- Franklin MSA and the Knoxville MSA, particularly in commercial and residential real estate markets; (viii) rapid fluctuations or unanticipated changes in interest rates on loans or deposits; (ix) the results of regulatory examinations; (x) the ability to retain large, uninsured deposits; (xi) the development of any new market other than Nashville or Knoxville; (xii) a merger or acquisition; (xiii) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including intangible assets; (xiv) the ability to attract additional financial advisors or to attract customers from other financial institutions; (xv) further deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xvi) inability to comply with regulatory capital requirements, including those resulting from recently adopted changes to capital calculation methodologies and required capital maintenance levels; (xvii) risks associated with litigation, including the applicability of insurance coverage; (xviii) approval of the declaration of any dividend by Pinnacle Financial’s board of directors and, (xviii) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, including regulatory or legislative developments arising out of current unsettled conditions in the economy, including implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act. A more detailed description of these and other risks is contained in Pinnacle Financial's most recent annual report on Form 10-K filed with the Securities and Exchange Commission on February 22, 2013 and Pinnacle Financial’s most recent quarterly report on Form 10-Q filed with the Securities and Exchange Commission on July 31, 2013. Many of such factors are beyond Pinnacle Financial's ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. Pinnacle Financial disclaims any obligation to update or revise any forward-looking statements contained in this release, whether as a result of new information, future events or otherwise. 2
3Q13 Profitability, Earnings and Quarterly Progress 3Q13 was another quarter of solid execution Net Interest Income Growing NPL Coverage $50,000 2.50% 400% $45,000 2.00% 320% ALL Coverage % (thousands) $40,000 NPL % 1.50% 240% $35,000 1.00% 160% $30,000 $25,000 0.50% 80% $20,000 0.00% 0% Core Non-interest income (1) Core Non-interest Expense/ Average Assets (2,3) $14,000 2.70% $13,000 2.60% $12,000 (thousands) $11,000 2.50% $10,000 2.40% $9,000 2.30% $8,000 2.20% $7,000 2.10% $6,000 (1) - Calculation excludes net gains and losses on the sale of investment securities and noncredit related loan losses 3 (2) - Calculation excludes OREO expense and FHLB prepayment charges (3) - Non-interest expense for 2Q13 includes the impact of the reversal of a $2.0 million allowance for off-balance sheet commitments
3Q13 Profitability, Earnings and Quarterly Progress Net interest income grew despite margin contraction $46 4.00% 3.90% 3.90% 3.80% $44.6 $44 3.78% 3.76% 3.80% $43.6 Net Interest Income $42.8 3.77% $42 3.70% Net Interest Margin 3.74% $42.2 3.72% 3.65% 3.60% $40.9 3.60% $40 (millions) $40.2 3.50% 3.55% $39.5 $39.3 3.40% $38 3.40% $38.4 $37.8 3.30% $36 $36.0 3.20% $34 3.10% 4
3Q13 Profitability, Earnings and Quarterly Progress Yields contracted yet NII expanded as loans grew 12.9% year-over-year $4,000 6.00% $3,900 $3,932 5.60% $3,845 $3,800 $3,700 Average Loans 5.20% $3,682 Loan Yields $3,600 4.88% (millions) $3,580 $3,500 4.80% $3,489 $3,400 $3,403 4.40% $3,300 $3,280 4.33% $3,262 $3,200 $3,212 $3,207 4.00% $3,191 $3,100 $3,000 3.60% Avg Loans Loan Yields 5
3Q13 Profitability, Earnings and Quarterly Progress Lower deposit costs lessened the impact of decreasing loan yields $4,250 1.20% $4,199 $4,150 1.01% 1.08% $4,050 0.95% $3,950 $3,963 Deposit Costs $3,950 Avg. Deposits $3,883 $3,850 0.83% (millions) (%) $3,750 $3,772 0.70% $3,723 $3,706 $3,700 $3,650 $3,642 $3,636 0.58% $3,597 $3,550 0.45% $3,450 0.33% $3,350 0.26% $3,250 0.20% Avg Deposits Cost of Deposits 6
3Q13 Profitability, Earnings and Quarterly Progress Pinnacle’s net interest margin has been built on success with clients 4.50% 4.00% 3.50% 3.00% 2.50% 2.00% 1.50% Treasury Margin Client Margin Net Interest Margin Client Margin – Measures the ratio of interest earnings of the loan portfolio as supported by non-collateralized customer deposits plus wholesale funds needed, if any, plus equity. Treasury Margin – Measures the ratio of interest earnings of other earning assets as supported by collateralized customer deposits plus wholesale funds. 7
3Q13 Profitability, Earnings and Quarterly Progress Core fees progressed to the highest level in firm history 3Q13 2Q13 1Q13 4Q12 3Q12 Service charges $2,797 $2,541 $2,480 $2,623 $ 2,532 Investment services 1,956 1,895 1,793 2,051 1,677 Insurance commissions 1,021 1,108 1,393 1,045 987 Gain on mortgage loans sold, net 1,326 1,949 1,814 1,768 1,979 Trust fees 932 880 944 863 767 Other: Securities gains (losses) (1,441) (25) - 1,988 (50) Other 4,796 2,978 3,478 2,770 2,538 Total noninterest income $11,387 $11,326 $11,902 $13,108 $ 10,430 Less: Securities gains (losses) (1,441) 25 - (1,988) 50 Noncredit related loan losses - 771 - - - Core noninterest income $12,828 $12,122 $11,902 $11,120 $ 10,480 Total Assets (Quarterly Average) $5,313,003 $5,210,600 $4,992,018 $4,964,521 $4,860,394 Noninterest income/Average Assets 0.85% 0.87% 0.97% 1.05% 0.85% Noninterest income/Average Assets* 0.96% 0.93% 0.97% 0.89% 0.86% 8 * Excludes the impact of securities sales and noncredit related loan losses
3Q13 Profitability, Earnings and Quarterly Progress PNFP continues the trajectory toward its long-term profitability targets Ratio PNFP PNFP PNFP PNFP PNFP PNFP PNFP PNFP 2Q13 (3) 1Q12 2Q12 3Q12 4Q12 1Q13 3Q13 Long-term Targets NIM 3.74% 3.76% 3.78% 3.80% 3.90% 3.77% 3.72% 3.70%-3.90% Net Charge-offs 0.44% 0.28% 0.22% 0.24% 0.24% 0.36% 0.21% 0.20%-0.35% Noninterest Income / 0.83% (1) 0.81% (1) 0.86% (1) 0.89% (1) 0.97% (1) 0.93% (1) 0.96% (1) 0.70%-0.90% Total Average Assets Noninterest Expense / 2.60% (2) 2.56% (2) 2.55% (2) 2.52% (2) 2.51% (2) 2.27% (2) 2.44% (2) 2.10%-2.30% Total Average Assets ROAA 0.60% 0.65% 0.93% 0.94% 1.09% 1.10% 1.09% 1.10%-1.30% (1) - Calculation excludes net gains and losses on the sale of investment securities and in the second quarter of 2013 noncredit related loan losses (2) - Calculation excludes OREO expense and FHLB prepayment charges (3) – Noninterest expense for 2Q13 includes the impact of the reversal of a $2.0 million allowance for off-balance sheet commitments 9
Loan, Deposit and Fee Growth Yield Operating Leverage Lenders are leveraging capacity to take share and grow loans 2012 - 2014 Anticipated Net Loan Growth 11.3% CAGR (1/1/2012-9/30/2013) 12.6% AGR (Last 4 Quarters) Previously reported growth $678.0 million net growth thru Current quarter growth Thru 3Q2013 3Q2013 Financial Advisor capacity 11.5% CAGR FA Capacity $1.27 Billion Capacity $1.27 Billion Target (billions of dollars) 10
Recommend
More recommend
