Third Quarter 2013 Investor Call

Transcription

1 Third Quarter 2013 Investor Call Terry Turner, President and CEO Harold Carpenter, EVP and CFO October 16, 2013

2 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, 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

3 3Q13 Profitability, Earnings and Quarterly Progress 3Q13 was another quarter of solid execution (thousands) Net Interest Income $50,000 $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 NPL % Growing NPL Coverage 2.50% 400% 2.00% 1.50% 1.00% 320% 240% 160% 0.50% 80% 0.00% 0% ALL Coverage % (thousands) $14,000 $13,000 $12,000 $11,000 $10,000 $9,000 $8,000 $7,000 $6,000 Core Non-interest income (1) 2.70% 2.60% 2.50% 2.40% 2.30% 2.20% 2.10% Core Non-interest Expense/ Average Assets (2,3) (1) - Calculation excludes net gains and losses on the sale of investment securities and noncredit related loan losses (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 3

4 3Q13 Profitability, Earnings and Quarterly Progress Net interest income grew despite margin contraction $ % $ % 3.78% 3.80% 3.90% $43.6 $ % 3.80% Net Interest Income (millions) $42 $40 $38 $ % $ % $38.4 $ % 3.60% $39.5 $ % $40.2 $40.9 $42.2 $ % 3.72% 3.70% 3.60% 3.50% 3.40% 3.30% 3.20% Net Interest Margin $ % 4

5 3Q13 Profitability, Earnings and Quarterly Progress Yields contracted yet NII expanded as loans grew 12.9% year-over-year $4, % Average Loans (millions) $3,900 $3,800 $3,700 $3,600 $3,500 $3,400 $3,300 $3,200 $3, % $3,191 $3,212 $3,207 $3,262 $3,280 $3,403 $3,489 $3,580 $3,682 $3,845 $3, % 5.60% 5.20% 4.80% 4.40% 4.00% Loan Yields $3, % Avg Loans Loan Yields 5

6 3Q13 Profitability, Earnings and Quarterly Progress Lower deposit costs lessened the impact of decreasing loan yields $4,250 $4,150 $4, % $4, % 1.08% Avg. Deposits (millions) $3,950 $3,850 $3,750 $3,650 $3,550 $3,450 $3,772 $3,723 $3,700 $3,642 $3,597 $3,636 $3,706 $3,883 $3,950 $3, % 0.83% 0.70% 0.58% 0.45% Deposit Costs (%) $3,350 $3, % 0.26% 0.20% Avg Deposits Cost of Deposits 6

7 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

8 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, Gain on mortgage loans sold, net 1,326 1,949 1,814 1,768 1,979 Trust fees 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 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% * Excludes the impact of securities sales and noncredit related loan losses 8

9 3Q13 Profitability, Earnings and Quarterly Progress PNFP continues the trajectory toward its long-term profitability targets Ratio PNFP 1Q12 PNFP 2Q12 PNFP 3Q12 PNFP 4Q12 PNFP 1Q13 PNFP 2Q13 (3) PNFP 3Q13 PNFP 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 / Total Average Assets 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% Noninterest Expense / Total Average Assets 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% 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

10 Loan, Deposit and Fee Growth Yield Operating Leverage Lenders are leveraging capacity to take share and grow loans 11.3% CAGR (1/1/2012-9/30/2013) Anticipated Net Loan Growth Thru 3Q % AGR (Last 4 Quarters) $678.0 million net growth thru 3Q % CAGR Previously reported growth Current quarter growth Financial Advisor capacity FA Capacity $1.27 Billion Capacity $1.27 Billion Target (billions of dollars) 10

11 Loan, Deposit and Fee Growth Yield Operating Leverage Loan growth is a function of improving demand and market share movement New Loans YTD 2013 Existing clients, 50.2% New clients, 49.8% Source: Internal loan records, new loans to new clients based on review of new tax ID s recorded during the first nine months of All accounts > $250,000 reviewed by relationship managers to determine new client vs existing clients. Excludes net change in lines of credit. 11

12 Third Quarter 2013 Highlights Loan pay offs remain a significant headwind Loan Volumes ($ thousands) $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 New loans Pay offs/ Pay downs Source: Pinnacle internal records. New loans include new fundings to new and existing clients as well as net changes in existing lines of credit. Pay offs and pay downs include monthly amortization of existing loans. 12

13 Loan, Deposit and Fee Growth Yield Operating Leverage Line commitments are up 16.5% over 3Q12 70% $2,500 65% Total Commitments (millions) $2,000 $1,500 $1,000 $ % $747 $957 $715 $959 $685 $1,000 $779 $975 $808 $1,009 $787 $1,054 $815 $1,055 $865 $1,138 $941 $1,105 $926 $1,166 $ % $1,190 60% 55% 50% 45% 40% 35% Funded % $0 30% Note: Excludes HELOCS and credit cards Net active balance Unfunded Commitments Funded % 13

14 Loan, Deposit and Fee Growth Yield Operating Leverage Loan growth is primarily funded by growth in low cost deposits % of Deposits by Type to Total Deposits Avg. Loan & Trans, Savings and MMA Account Growth 70% 60% 50% 40% 30% 20% 10% 0% $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $0 -$100,000 -$200, % 95% 90% 85% 80% 75% 70% 65% 60% 55% 50% Trans Accounts CDs Savings & MMA Net loan growth Trans, Savings and MMDA growth Average Loans to Average deposits 14

15 Operating Leverage Enhances Profitability The core efficiency ratio at 3Q13 stands at 56.8% 3Q13 2Q13 1Q13 4Q12 3Q12 Salaries and benefits $21,010 $20,570 $19,572 $19,556 $19,470 Equipment and occupancy 5,413 5,204 5,113 5,202 5,156 Other real estate owned 699 1, ,365 2,399 Marketing and Bus. Dev , Supplies and postage Intangible amortization Other expenses: FHLB restructuring charges ,092 - Other expenses 4,652 1,944 (1) 4,253 4,114 4,397 Total noninterest expense $33,323 $30,862 $32,440 $34,851 $33,578 Efficiency ratio 59.5% 56.2% 59.3% 63.0% 65.4% Core noninterest expense ** $32,624 $29,471 $30,842 $31,395 $31,179 Core efficiency ratio * 56.8% 52.9% 56.4% 58.8% 60.6% Total Assets (Quarterly Average) $5,313,003 $5,210,600 $4,992,018 $4,964,521 $4,860,394 Expense/Total Average Assets 2.49% 2.38% 2.64% 2.79% 2.75% Core Noninterest Expense**/Total Average Assets 2.44% 2.27% 2.51% 2.52% 2.55% * Excludes gain on sale of securities, noncredit related loan losses, ORE and FHLB restructuring charges ** Excludes the impact of OREO expense and FHLB restructuring charges (1) Includes a $2.0 million reversal of a previously recorded allowance for off-balance liabilities 15

16 Potential Ongoing Impact on Growth, Earnings and Valuation Floors have enhanced margin and represent reduced risk going forward $1, % $1, % $1, % 4.41% 4.5% (millions of dollars) $1,300 $1,280 $1, % 3.54% 0.87% 3.0% $1, % $1,220 $1,200 Dec 2010 Dec 2011 Dec 2012 Mar 2013 Jun 2013 Sep 2013 Floor Volumes Weighted Avg Floor Rate Contract Rate 0.0% 16

17 Potential Ongoing Impact on Growth, Earnings and Valuation Margin outlook for 2013 is consistent with the targeted range Opportunities: 1. Loan growth 2. Continued reduction in cost of funds 3. Growth in low cost core deposits Threats: 4. Loan yields will continue to re-price below current yields Anticipated 2013 Margin Range 3.70% to 3.80% 17

18 Potential Ongoing Impact on Growth, Earnings and Valuation Fee income has relatively limited exposure to shrinking mortgage refi s Noninterest income by Line of Business Refinance/Purchase Mix $6,000 $5,000 ($ thousands) $4,000 $3,000 $2,000 $1,000 $0 Deposit & Interchange Wealth Management Mortgage, net of commission Refinance Purchases 18

19 Potential Ongoing Impact on Growth, Earnings and Valuation Pinnacle is leveraging existing infrastructure and adding growth capacity $8, $7, Assets per Associate (000's) $6,000 $5,000 $4,000 $3,000 $2,000 Revenue per Associate (000's) $1, $- - Pinnacle Financial Partners, Inc. Median* Pinnacle Financial Partners, Inc. Median * *: Represents median of McLagan peer group; see page 56 of supplementary materials 19

20 Potential Ongoing Impact on Growth, Earnings and Valuation PNFP operates in advantaged markets Nashville Home Sales 3Q2013 3Q2012 % Change Avg. Qtrly. Median Home Price $197,887 $177, % Quarterly Closings 7,331 6, % Quarter end Inventory 10,183 11,055 (7.5%) Months of Inventory (19.1%) 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Unemployment Rates seasonally adjusted (Thru July 2013) Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Nashville MSA Knoxville rate US Oct-12 Jan-13 Apr-13 Jul-13 Source: BERC Middle Tennessee State University & Bureau of Labor Statistics, Greater Nashville Area Realtors 20

21 Potential Ongoing Impact on Growth, Earnings and Valuation PNFP is dominating the commercial market in Nashville 20% Pinnacle Financial ** 18% 16% Lead Relationships as a % of Total Market (%) 14% 12% 10% 8% National A Regional B Regional C 6% Regional A Net Promoter Score *Question: How likely are you to specifically recommend (Lead Bank) in the future to a friend or colleague using a scale of 0-10 where "0" means Not At All Likely and "10" means Extremely Likely? Which bank or non-bank do you consider to be your company's single most important or lead provider of banking services? ** Source 2013 Greenwich Associates Market Tracking Program (Pinnacle Financial - Nashville - $1-500 Million - Rolling 4Q to Q2 2013) 21

22 Potential Ongoing Impact on Growth, Earnings and Valuation Dividends may enhance valuations Factors that argue for a sustainable dividend strategy Should not impact our growth prospects Should attract yield-oriented investors to PNFP Appears market is assigning a premium to dividend payers Factors that argue against a sustainable dividend strategy Investors could draw wrong conclusion regarding future growth Once started - difficult to unwind, difficult to reduce 22

23 Potential Ongoing Impact on Growth, Earnings and Valuation Profitability provides cushion for current rate of growth and a dividend PNFP At Dec. 31, 2012 At Sept. 30, 2013 Net Change Percent Change Loans $3,712.2 $3,969.3 $ % RW % 94.5% 93.2% RW Loans $3,507.4 $3,700.0 $ % Tier 1 CTE $418.8 $466.3 $ % Tier 1 RBC $498.8 $546.3 $ % Total RBC $552.0 $603.5 $ % 23

24 Potential Ongoing Impact on Growth, Earnings and Valuation 20.4% payout ratio is a conservative starting point Dividend amount Dividend amount annualized PNFP $0.08 per share $0.32 per share Last 12 months of FDEPS $1.57 Dividend payout ratio - Peer group median - Peer group average 20.4% Peer Group* 32.5% 31.0% *: Per SNL data. For peer group members, see slide 56 included as part of supplemental information. 24

25 Management s Focus for 4Q 2013 Continued loan and core deposit growth Continued revenue growth Continued NPA reductions 25

26 Q&A Third Quarter 2013 Investor Call Terry Turner, President and CEO Harold Carpenter, EVP and CFO October 16,

27 Supplemental Information Third Quarter 2013 Investor Call Terry Turner, President and CEO Harold Carpenter, EVP and CFO October 16,

28 Supplemental Information Chart Balance Sheet 29 Asset Quality 39 Income Statement 47 Economic Conditions & Other 51 Pinnacle Financial Partners profile 54 28

29 Supplemental Information Balance Sheet 29

30 Balance Sheet Keen focus on core earnings capacity produces record results $4,500 Total Loans $14.00 Tangible Common Equity Per Share Millions $4,000 $3,500 $3,000 $2,500 $2,000 $12.00 $10.00 $8.00 $6.00 $1,500 $1,000 $500 $4.00 $2.00 $0 Dec-00 Mar-01 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 $0.00 Dec-00 Mar-01 Jun-01 Sep-01 Dec-01 Mar-02 Jun-02 Sep-02 Dec-02 Mar-03 Jun-03 Sep-03 Dec-03 Mar-04 Jun-04 Sep-04 Dec-04 Mar-05 Jun-05 Sep-05 Dec-05 Mar-06 Jun-06 Sep-06 Dec-06 Mar-07 Jun-07 Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Source: SNL Financial except for Q *Total revenues and noninterest income exclude investment gains and losses 30

31 Balance Sheet Loan portfolio components are within targeted ranges Amts. 3Q13 % s 3Q13 Amts. 2Q13 % s 2Q13 Amts. 4Q12 % s 4Q12 Amts. 3Q12 % s 3Q12 C&D and Land $ % $ % $ % $ % Consumer RE % % % % CRE Owner Occ % % % % CRE Investment % % % % Other RE loans % % % % Total real estate 2, % 2, % 2, % 2, % C&I 1, % 1, % 1, % 1, % Other loans % % % % Total loans $3, % $3, % $3, % $3, % 31

32 Balance Sheet Exposure to residential land development is limited Amts. 3Q13 % s(*) 3Q13 Amts. 2Q13 % s(*) 2Q13 Amts. 4Q12 % s(*) 4Q12 Amts. 3Q12 % s(*) 3Q12 Residential Spec $ % $ % $ % $ % Residential Custom % % % % Residential Condo % % % % Commercial Construct % % % % Land Dev Residential % % % % Land Dev Commercial % % % % Land Unimproved % % % % Total C&D $ % $ % $ % $ % (*) as a percentage of total loans 32

33 Balance Sheet The C&I loan portfolio is highly diversified Utilities, 0.1% Transportation & Warehousing, 2.6% Wholesale Trade, 3.5% Accomodation and Food Services, 1.3% Administrative & Support & Waste Management & Remediation Services, 2.0% Arts, Entertainment & Recreation, 0.6% Construction, 2.3% Retail Trade, 1.5% Consumer, 3.3% Educational Services, 0.3% Real Estate & Rental & Leasing, 3.0% Finance & Insurance, 5.3% Public Administration, 0.8% Other Services (except Public Administration), 1.5% Professional, Scientific & Technical Services, 2.1% Mining, Quarrying, & Oil & Gas Extraction, 0.1% Manufacturing, 2.7% Information, 1.3% Healthcare & Social Assistance, 4.6% Basis: Classification based on NAIC sector as of September 30,

34 Balance Sheet Bond volumes have stabilized $1, % $1,000 $950 $1,010 $ % 3.30% Average Securities (000 s) $900 $850 $800 $750 $700 $940 $924 $876 $819 $767 $720 $714 $746 $ % 2.90% 2.70% 2.50% 2.30% Bond Yields (%) $ % Avg Investments Bond Yields 34

35 Balance Sheet PNFP maintains a conservative bond portfolio 1.4% 24.3% 19.2% 4.6% 2.4% 48.1% Portfolio: Sept. 30, 2013 Total Investments $743 million Unrealized Loss $0.1 million QTD Purchases $72.2 million QTD sales, maturities, calls $5.5 million Agency Corporates MBS Asset Backed CMOs Municipals As of 9/30/2013 Tax Equivalent Book Yield Avg Life (yrs) Agency 2.16% 9.6 Asset Backed 1.42% 2.5 Corporates 4.16% 5.2 CMOs 2.40% 4.3 MBS 2.97% 4.7 Municipals 4.65% 4.6 Duration Avg Yield - TE Sep % 3.1 % Jun % 3.0 % Dec % 3.3 % Sep % 3.1 % Investment portfolio at $743 million, up $17 million vs Q2 MBS sector at 48% of portfolio Avg TE yield down linked quarter Recent purchases targeting shorter durations Investments to Total Assets of 13.8% as of 9/30 OTTI reported in Q earnings represents a loss on 5 bonds sold on October 4,

36 Balance Sheet The municipal portfolio contains minimal risk Municipal Bond Portfolio Statistics 3Q13 3Q12 Weighted Average Life 4.6 years 4.3 years Muni Allocation % % State Agency Holdings 4.95% 5.18% Tax equivalent yield 4.70% 5.60% FMV as % of Cost 102.4% 108.8% All municipals are A rated or better. 21% 79% As of September 30, 2013 Location # of Issuances Market Value % Tennessee 66 $ 38, % Florida % California % Nevada % Michigan 10 5, % Illinois 19 15, % Other 30 states , % Totals 276 $ 187, % General Obligation Bonds Revenue Bonds 36

37 Balance Sheet PNFP has limited dependence on non-relationship funding 9/30/2013 Percent 12/31/2012 Percent Core Funding: Transaction accounts 1,908, % 1,746, % Money Market accounts 1,560, % 1,461, % Time deposits less than $250, , % 467, % Total Core Funding 3,903, % 3,674, % Non-core funding: Relationship based non-core funding: Reciprocal DDA deposits 14, % % Reciprocal MMDA deposits 300, % 100, % Time deposits Reciprocating time deposits 33, % 52, % Other time deposits 82, % 87, % Securities sold under agreements to repurchase 84, % 114, % Total relationship based non-core funding 514, % 354, % Wholesale funding: Time deposits greater than $250,000 Public funds % % Brokered deposits % % FHLB advances 115, % 75, % Federal funds purchased % % Holding Company Loan 16, % 23, % Subordinated debt 82, % 82, % Total wholesale funding 214, % 182, % Total non-core funding 729, % 536, % Totals 4,632, % 4,211, % 37

38 Balance Sheet Elevated tangible common is available for deployment Tangible Common Ratio Return on Tangible Common Equity 8.77% 8.73% 9.15% 8.97% 9.18% 8.75% 9.03% 10.76% 10.83% 12.41% 12.72% 12.71% 6.13% 7.58% 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 38

39 Supplemental Information Asset Quality 39

40 Asset Quality Past due loans remain very low (000 s) Past Due Loans (*) Managed by special assets: Sept. 30, 2013 As a % of total loans Sept. 30, 2012 As a % of total loans Nonaccrual loans $11, % $23, % Accruing loans 7, % 8, % Managed by relationship managers: Accruing loans 5, % 3, % Total past due $24, % $35, % (*) > 30 days past due 40

41 Asset Quality Percentage of potential problem loans continued to decline Potential Problem loans/total loans 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 7.24% 7.18% 8.63% 9.30% 8.64% 7.65% 5.78% 5.04% 4.09% 4.12% 3.78% 3.49% 3.13% 2.84% 2.57% 2.11% 1.80% Note: Classified loans (or loans with an identified credit weakness) that continue to accrue interest are considered potential problem loans. 41

42 Asset Quality Classified assets continued to decline (in thousands) Balances Sept. 30, 2013 Balances Dec. 31, 2012 Balances Sept. 30, 2012 Classified loans and ORE: - Substandard commercial loans $102,169 $ 144,684 $157,483 - Doubtful commercial loans Other impaired loans 4,730 2,083 3, days past due and accruing (*) Other real estate 15,522 18,580 21,816 - Other repossessed assets Total $122,592 $ 165,443 $183,474 Pinnacle Bank classified asset ratio 20.6% 29.4% 33.4% (*) Includes loans 90 days past due and accruing not included elsewhere 42

43 Asset Quality NPLs remain very low NPLs Expressed as a % of Total Loans within each Category PNFP NPLs and > 90 days PNFP NPLs and > 90 days PNFP NPLs and > 90 days PNFP NPLs and > 90 days PNFP NPLs and > 90 days 3Q13 2Q13 1Q13 4Q12 3Q12 Const. and land development 0.41% 0.61% 0.57% 1.44% 1.92% CRE Owner Occupied 1.45% 0.45% 1.18% 1.36% 1.80% CRE Investment 0.19% 0.00% 0.68% 0.21% 0.75% Total real estate 0.73% 0.48% 0.93% 0.82% 1.46% C&I 0.18% 0.18% 0.10% 0.21% 0.38% Total loans 0.50% 0.37% 0.60% 0.61% 1.04% 43

44 Asset Quality ORE is 43.7% of NPAs with resolution in bank s control Balances Sept. 30, 2013 (dollars in thousands) Fair value as a % of book value* Average Appraisal Age in Months ORE categories: Developed lots $1, % 9.94 Undeveloped land 12, % 4.47 Other 2, % 3.54 Total ORE $15, % 5.27 Largest ORE balance - $4.1 M * Excludes costs to sell 44

45 Asset Quality Current OREO valuations are below historical disposition results ORE Dispositions (*) thru Sept. 30, 2013 ORE Balance at Sept. 30, 2013 Loan balances prior to charge offs % % Charge off s prior to foreclosure 21.08% 26.57% foreclosure 78.92% 73.43% Valuation losses while in ORE 23.78% 32.00% Balance in ORE 55.14% 41.43% Loss (gain) on disposition -0.19% Net realized 55.33% (*) ORE dispositions > $250,000 from 10/1/12 thru 9/30/13 excluding partial sales 45

46 Asset Quality OREO disposition plans suggest limited unresolved issues (dollars in thousands) Balances Sept. 30, 2013 Near-term liquidation (1) Active Projects (2) Other Properties (3) ORE categories: Developed lots $1,361 $147 $1,214 $ - Undeveloped land 12, ,560 2,036 Other 2, Total ORE $15,522 $1,655 $11,297 $2,570 (1) Market indications are that property will liquidate within 6 months (2) Various properties with reasonable activity or anticipated absorption such that liquidation should be realized within 24 months (3) Other properties likely requiring a speculative investor with longer-term workout potential 46

47 Supplemental Information Income Statement 47

48 Income Statement Mortgage refinance has slowed $2,500 $150,000 Gain on mortgages sold, net (000 s) $2,000 $1,500 $1,000 $500 $120,000 $90,000 $60,000 $30,000 Gross Loans Sold (000s ) $- 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 $- Gross Loans Sold, net Gain on Mortgage Loans Sold, net 48 48

49 Income Statement PNFP continues to improve operating leverage 3Q13 2Q13 1Q13 4Q12 3Q12 Net interest income $44,573 $43,599 $42,758 $42,243 $40,932 Total non-interest income $11,387 $11,326 $11,902 $13,108 $10,430 Less: Securities (gains) losses 1, (1,988) 50 Less: Net noncredit related loan losses Non-interest income, excluding the impact of net gains (losses) on sale of investment securities and noncredit related loan losses $12,828 $12,122 $11,902 $11,120 $10,480 Total non-interest expense $33,323 $30,862 $32,440 $34,851 $33,578 Less: ORE expenses (699) (1,391) (721) (1,365) (2,399) Less: FHLB restructuring charges - - (877) (2,092) - Non-Interest expense, excluding ORE expense and FHLB restructuring charges $32,624 $29,471 $30,842 $31,394 $31,179 Adjusted pre-tax pre-provision income $24,778 $26,250 $23,818 $21,969 $20,233 Efficiency ratio, excl. ORE, FHLB prepayment charges, noncredit related loan losses and securities gains and losses 56.8% 52.9% 56.4% % 60.6%

50 Income Statement Adjusted PTPP expanded 22.5% in 3Q13 over the same period prior year 50

51 Supplemental Information Economic Conditions & Other 51

52 Economic Conditions Nashville and Knoxville are healthy business markets TENNESSEE Tennessee business tax climate ranks 15th best among states Commercial Appeal NASHVILLE Nashville achieved it city status in 2012, landing on several major national publications lists of hot spots. Nashville s diverse economy, thriving cultural base and strong business community are major attractions for corporations. The accolades continued in the third quarter of 2013: Nashville s GDP grows by 5.4% in 12, more than double average growth rate Nashville ranks No. 15 among nation s Top 25 Strongest Economies Nashville ranks No. 12 among Top 25 U.S. housing markets in the country Nashville No. 6 in Top 15 Aspirational Cities U.S. Dept. of Commerce, Bureau of Economic Analysis The Business Journals - On Numbers Economic Index OwnAmerica The Daily Beast KNOXVILLE Knoxville also enjoys a very healthy and diverse economy with an excellent transportation and technology infrastructure. The Knoxville metropolitan area currently enjoys the lowest unemployment rate of Tennessee s metro areas. Good news on that front in the third quarter of 2013 includes: Knoxville ranks No. 9 among Top 25 U.S. housing markets in the country Knoxville sees 2.4% increase in employment over 2012 OwnAmerica Business and Economic Research Center at Middle Tennessee State University 52

53 Economic Conditions Nashville s commercial vacancy rates indicate a healthy market Industrial / Warehouse 3Q 2013(*) Nashville CRE Vacancy Rates YE 2012(*) YE 2011 (*) YE 2010 (*) YE 2009 (**) YE 2008 (**) National CRE Vacancy Rates 3Q 2013 (*) 9.1% 9.1% 10.1% 10.2% 10.6% 9.6% 8.3% Multifamily** 7.9% 7.0% 6.6% 6.7% 9.6% 7.6% 6.1% Retail 7.4% 7.0% 7.3% 6.7% 8.1% 6.3% 6.7% Office 7.8% 8.5% 9.7% 10.6% 12.7% 10.5% 11.6% *Costar **REIS Other 22.0% PNFP CRE Portfolio* Retail 15.1% Office 6.6% Warehouse 8.2% *: As of 9/30/2013 Own/Occ 48.1% 53

54 Supplemental Information Pinnacle Financial Partners Profile 54

55 PNFP Profile PNFP operates in two great banking markets Headquarters: Nashville, TN Founded: 2000 Total assets: $ Billion (9/30/13) Shareholders equity: $ Million (9/30/13) **: 50 day average per nasdaq.com Offices: 29 in 8 Middle-TN counties 4 in Knox County Avg. daily trading volume **: 110,261 shares % Institutional ownership: 69.1% (9/30/13) 55

56 PNFP Profile PNFP has an extraordinarily experienced management team Name Title Age Years in Banking Industry Years at Pinnacle M. Terry Turner President and Chief Executive Officer Robert A. McCabe, Jr. Chairman of the Board Hugh M. Queener Chief Administrative Officer Harold R. Carpenter, Jr. Chief Financial Officer J. Harvey White Chief Credit Officer Joanne B. Jackson Manager, Client Services Group D. Kim Jenny Risk Management Officer William S. Jones Rutherford County Area Executive * J. Edward White Manager, Client Advisory Group Jason K. West Manager, Special Assets Group * * - Messrs. Jones and West were executives with entities acquired by Pinnacle in 2006 and 2007, respectively. 56

57 PNFP Profile McLagan Peer Group Pinnacle Financial Partners (PNFP) 1st Source Corporation (SRCE) Columbia Banking System, Inc. (COLB) CVB Financial Corp. (CVBF) First Busey Corporation (BUSE) First Financial Bancorp. (FFBC) Flushing Financial Corp (FFIC) First Midwest Bancorp, Inc. (FMBI) Independent Bank Corp. (INDB) MB Financial (MBFI) Old National Bancorp (ONB) PacWest Bancorp (PACW) Sandy Springs Bancorp, Inc. (SASR) SCBT Financial Corp (SCBT) Taylor Capital Group, Inc. (TAYC) Texas Capital Bancshares, Inc. (TCBI) TowneBank (TOWN) Union First Market Bkshs Co (UBSH) United Bankshares, Inc. (UBSI) Westamerica Bancorporation (WABC) Western Alliance Bancorporation (WAL) 57

58 PNFP Profile Engaged associates drive market-best client satisfaction Customer Satisfaction Scores % 90% 80% 70% 60% Associate Engagement Scores Customer Satisfaction Scores Associate engagement survey positive responses Source: Annual Associate Survey 58

59 PNFP Profile PNFP has proven experience in market share take-away Nashville-Davidson-Rutherford MSA Knoxville MSA Top 10 Market Share Rank Holding Company Market Share 6/30/13 Market Share 6/30/00 Chang e in Share Top 10 Market Share Rank Holding Company Market Share 6/30/13 Market Share 6/30/07 Change in Share 4 Pinnacle Financial Partners 9.1% 1.7% 7.4% 6 Pinnacle Financial Partners 3.4% 0.0% 3.4% 6 US Bank 3.6% 0.3% 3.2% 5 Branch Banking and Trust 9.9% 6.7% 3.2% 10 CapStar Bank 2.3% 0.0% 2.3% 8 Clayton Bank and Trust 2.1% 1.2% 0.9% 5 First Horizon 6.9% 4.8% 2.1% 1 First Horizon 21.0% 20.8% 0.2% 1 Bank of America 16.6% 15.1% 1.5% 9 Citizens of Blount County 2.1% 2.2% -0.1% 7 Wilson County B & T 3.5% 2.5% 1.0% 10 Bank of American 1.9% 2.2% -0.3% 8 Fifth Third 3.2% 2.4% 0.8% 4 Home Federal Bank of TN 11.7% 12.4% -0.7% 9 Wells Fargo 2.6% 2.2% 0.4% 7 First National 2.3% 3.2% -0.9% 3 SunTrust 12.3% 19.7% -7.4% 2 SunTrust 16.9% 18.1% -1.2% 2 Regions 15.9% 30.5% -14.6% 3 Regions 13.7% 17.8% -4.1% Other 24.0% 20.8% 3.2% Other 15.1% 15.4% -0.3% Total 100% 100% Total 100% 100% Source: SNL; FDIC Summary of Deposits 2013; Amounts reflect aggregation of previously merged banks. 59

60 PNFP Profile Market Rank Number of Branches Company Deposits in Market ($000) Deposit Market Share (%) Percent of Franchise (%) Total Population 2012 (Actual) Population Change (%) Projected Population Change (%) Median HH Income 2012 ($) Projected HH Income Change (%) MSA Nashville-Davidson- Murfreesboro-Franklin, TN ,611, ,635, , Knoxville, TN , , , Shelbyville, TN , , , MSA Totals ,390,794 Source: SNL Deposit data from the June 30, 2013 FDIC Summary of Deposits Weighted Average is calculated as the sum of (Percent of State/National Franchise * demographic item) within each market. Banks, Thrifts, and Savings Banks included (Retail Branches Only) Demographic data is provided by ESRI based primarily on US Census data. For non-census year data, ESRI uses samples and projections to estimate the demographic data. SNL performs calculations on the underlying data provided by ESRI for some of the data presented on this page. 60

61 Third Quarter 2013 Investor Call Terry Turner, President and CEO Harold Carpenter, EVP and CFO October 16, 2013