Third Quarter 2015 Investor Call M. Terry Turner, President and CEO Harold R. Carpenter, EVP and CFO October 21, 2015
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," "hope," “pursue,” "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 maintain the historical growth of 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, the Knoxville MSA, the Chattanooga, TN-GA MSA and the Memphis, TN-MS-AR 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 the Nashville, Knoxville, Chattanooga or Memphis MSAs; (xii) a merger or acquisition; (xiii) risks of expansion into new geographic or product markets, like the recent expansion into the Chattanooga and Memphis MSAs; (xiv) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including intangible assets; (xv) reduced ability to attract additional financial advisors (or failure of such advisors to cause their clients to switch to Pinnacle Financial), to retain financial advisors (including those at CapitalMark Bank & Trust and Magna Bank) or otherwise to attract customers from other financial institutions; (xvi) further deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xvii) inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies and required capital maintenance levels; (xviii) risks associated with litigation, including the applicability of insurance coverage; (xix) the risk that the cost savings and any revenue synergies from the recent mergers with CapitalMark and Magna may not be realized or take longer than anticipated to be realized; (xx) disruption from the CapitalMark and Magna mergers with customers, suppliers or employee relationships; (xxi) the risk of successful integration of CapitalMark's and Magna's business with ours; (xxii) the amount of the costs, fees, expenses and charges related to the CapitalMark and Magna mergers; (xxiii) reputational risk and the reaction of Pinnacle Financial's, CapitalMark's and Magna's customers to the recent CapitalMark and Magna mergers; (xxiv) the risk that the integration of CapitalMark's and Magna's operations with Pinnacle Financial's will be materially delayed or will be more costly or difficult than expected; (xxv) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xxvi) the vulnerability of our network and online banking portals to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (xxvii) the possibility of increased compliance costs as a result of increased regulatory oversight, including oversight of companies in which Pinnacle Financial has significant investments, and the development of additional banking products for our corporate and consumer clients; (xxviii) the risks associated with our being a minority investor in Bankers Healthcare Group, LLC, including the risk that the owners of a majority of the equity interests in Bankers Healthcare Group decide to sell the company; and (xxix) 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 herein and in Pinnacle Financial's most recent annual report on Form 10-K filed with the Securities and Exchange Commission on February 25, 2015 and Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission on May 8, 2015 and August 7, 2015. 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 report, whether as a result of new information, future events or otherwise.
3Q15 Summary Results Execution of fundamentals fueled exceptional growth in key valuation drivers Total Revenues Net Income* FD EPS* Earnings Growth Up 40.2% yr/yr $25,515 $83,469 Up 33.7% yr/yr Up 26.9% yr/yr $0.66 $0.52 $18,197 $62,396 $57,401 $0.42 $14,647 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Balance Sheet Growth Total Loans Total Deposits Tangible Book Value per Share $6,336 $6,601 (millions) (millions) $17.09 Legacy PNFP up 13.2% yr/yr Legacy PNFP Up 30.6 % yr/yr Up 13.9% yr/yr $4,662 $15.01 $4,334 $4,421 $3,969 $13.22 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Legacy PNFP Acquired Franchises Legacy PNFP Acquired Franchises NPA % Classified Asset Ratio ALL % Asset Quality 0.89% 1.70% 20.6% 20.0% 1.50% 0.58% 17.1% 0.41% 1.01% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 *: excluding merger related charges
3Q15 Summary Results Future Growth Initiatives are Moving Forward 1. CapitalMark and Magna mergers • Legal mergers – Closings for both banks completed in 3Q15 • Financial case – Results for 3Q15 ahead of schedule • Technology conversions – Magna conversion on target for November 2015; CapitalMark conversion on target for March 2016. • Cultural integration – All key associates have been retained and 3-day orientation completed for all newly acquired personnel 2. CRE initiative is producing ahead of schedule 3. PNFP Capital Markets has obtained FINRA broker/dealer approval 4. Aggressive hiring ahead of schedule
Loan, Deposit and Fee Growth Yield Operating Leverage Organic growth and acquisitions fuel significant growth in net interest income $65 4.00% $62.1 $60 3.75% 3.66% Net Interest Margin $55 3.50% Net Interest Income 3.40% $51.8 $50 3.25% $50.3 $51.3 $49.5 (millions) $47.2 $45 3.00% $45.9 $45.0 $44.6 $43.6 $42.8 $42.2 $40 2.75% $40.9 $40.2 $39.5 $39.3 $38.4 $37.8 $35 2.50% $36.0 $30 2.25% $25 2.00% 5
Loan, Deposit and Fee Growth Yield Operating Leverage Legacy PNFP loans grew 13.9% compared to 3Q14; yields up linked quarter $6,000 6.00% $727 $5,500 5.50% 4.88% $5,000 5.00% $4,963 Average Loans $4,737 Loan Yields $4,500 4.50% $4,625 $4,436 $4,358 (millions) $4,251 $4,000 4.00% $4,130 4.33% $3,981 $3,932 $3,845 $3,682 $3,500 3.50% $3,580 $3,489 $3,403 $3,280 $3,262 $3,212 $3,207 $3,191 $3,000 3.00% $2,500 2.50% $2,000 2.00% Legacy PNFP Avg. Loans Acquired Franchise Avg. Loans Loan Yields 6
Loan, Deposit and Fee Growth Yield Operating Leverage Post merger balance sheet in line with stated objectives $1,400 5.00% $1,300 4.50% 1.17% 0.93% 0.84% $1,200 4.00% 0.73% 0.64% $1,100 3.50% $1,000 3.00% $900 2.50% $800 2.00% $700 1.50% $600 1.00% Dec 2011 Dec 2012 Dec 2013 Dec 2014 September 2015 Loan Volumes Acquired Entity Loan Volumes Weighted Average Rate Contract Rate 7
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