Third Quarter 2015 Investor Call

Transcription

1 Third Quarter 2015 Investor Call M. Terry Turner, President and CEO Harold R. Carpenter, EVP and CFO October 21, 2015

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," "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, 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.

3 3Q15 Summary Results Execution of fundamentals fueled exceptional growth in key valuation drivers Balance Sheet Growth Earnings Growth Up 33.7% yr/yr Total Revenues $57,401 $62,396 $83,469 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Total Loans (millions) Legacy PNFP up 13.2% yr/yr $3,969 $4,421 $6,336 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Legacy PNFP Acquired Franchises Up 40.2% yr/yr $14,647 Net Income* $18,197 $25,515 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Total Deposits (millions) Legacy PNFP Up 30.6 % yr/yr $4,334 $4,662 $6,601 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Legacy PNFP Acquired Franchises FD EPS* Up 26.9% yr/yr $0.66 $0.52 $0.42 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 Tangible Book Value per Share $17.09 Up 13.9% yr/yr $15.01 $ Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 NPA % Classified Asset Ratio ALL % Asset Quality 0.89% 0.58% 0.41% 20.6% 20.0% 17.1% 1.70% 1.50% 1.01% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 *: excluding merger related charges 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15

4 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 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

5 Loan, Deposit and Fee Growth Yield Operating Leverage Organic growth and acquisitions fuel significant growth in net interest income $ % Net Interest Income (millions) $60 $55 $50 $45 $40 $35 $ % $37.8 $38.4 $39.3 $39.5 $40.2 $40.9 $42.2 $42.8 $43.6 $44.6 $45.0 $45.9 $47.2 $49.5 $50.3 $51.3 $51.8 $ % 3.66% 3.50% 3.25% 3.00% 2.75% 2.50% Net Interest Margin $ % $ % 5

6 Loan, Deposit and Fee Growth Yield Operating Leverage Legacy PNFP loans grew 13.9% compared to 3Q14; yields up linked quarter $6, % Average Loans (millions) $5,500 $5,000 $4,500 $4,000 $3,500 $3, % $3,191 $3,212 $3,207 $3,262 $3,280 $3,403 $3,489 $3,580 $3,682 $3,845 $3,932 $3,981 $4,130 $4,251 $4,358 $4,436 $4,625 $4,737 $4,963 $ % 5.50% 5.00% 4.50% 4.00% 3.50% 3.00% Loan Yields $2, % $2, % Legacy PNFP Avg. Loans Acquired Franchise Avg. Loans Loan Yields 6

7 Loan, Deposit and Fee Growth Yield Operating Leverage Post merger balance sheet in line with stated objectives $1, % $1,300 $1, % 0.93% 0.84% 0.73% 0.64% 4.50% 4.00% $1, % $1, % $ % $ % $ % $600 Dec 2011 Dec 2012 Dec 2013 Dec 2014 September 2015 Loan Volumes Acquired Entity Loan Volumes Weighted Average Rate Contract Rate 1.00% 7

8 Loan, Deposit and Fee Growth Yield Operating Leverage Deposits continued to grow while cost of deposits remained low $6, % Avg. Deposits (millions) $5,500 $5,000 $4,500 $4,000 $3, % $3,772 $3,723 $3,700 $3,642 $3,597 $3,636 $3,706 $3,883 $3,950 $3,963 $4,199 $4,408 $4,509 $4,519 $4,655 $4,758 $4,792 $4,885 $5,141 $ % 1.00% 0.80% 0.60% 0.40% 0.20% $3, % Legacy PNFP Avg. Deposits Acquired Franchise Avg. Deposits Cost of Deposits 8

9 Loan, Deposit and Fee Growth Yield Operating Leverage Expansion of fee businesses produced record fee revenues in 3Q15 3Q15 2Q15 1Q15 4Q14 3Q14 Service charges $3,258 $3,076 $2,913 $3,038 $2,913 Investment services 2,526 2,399 2,259 2,737 2,353 Insurance commissions 1,103 1,106 1,513 1,046 1,037 Gain on mortgage loans sold, net 1,895 1,652 1,941 1,374 1,353 Trust fees 1,437 1,230 1,312 1,274 1,109 Income from equity method investment 5,285 4,266 3, Other: Securities gains (losses) Interchange and other consumer fees 4,964 3,893 3,799 3,591 3,024 Bank-owned life insurance Loan swap fees Other (117) Total noninterest income $21,410 $20,019 $18,494 $14,384 $12,888 Total Assets (Quarterly Average) $7,514,633 $6,319,712 $6,102,523 $5,855,421 $5,752,776 Noninterest income/average Assets 1.13% 1.27% 1.23% 0.97% 0.89% Core Noninterest Income**/ Average Assets 1.13% 1.24% 1.23% 0.97% 0.89% ** Excludes the impact of securities gains (losses) 9

10 Loan, Deposit and Fee Growth Yield Operating Leverage Operating leverage led to an all time best core expense to average assets 3Q15 2Q15 1Q15 4Q14 3Q14 Salaries and benefits $27,746 $23,775 $23,531 $23,075 $21,722 Equipment and occupancy 6,933 5,878 6,046 5,984 6,477 Other real estate owned (686) (115) 395 (630) 417 Marketing and business development 1,252 1, , Supplies and postage Intangible amortization Merger related expense 2, Other expenses 6,216 5,006 5,023 3,801 3,992 Total noninterest expense $45,107 $36,747 $36,831 $34,391 $34,360 Efficiency ratio 54.0% 51.1% 52.8% 53.2% 55.0% Expense/Total Average Assets 2.38% 2.33% 2.45% 2.33% 2.37% Core noninterest expense ** $43,544 $36,324 $36,436 $35,021 $33,943 Core efficiency ratio 52.2% 51.1% 52.2% 54.1% 54.4% Core Noninterest Expense**/Total Average Assets 2.30% 2.31% 2.42% 2.37% 2.34% ** Excludes the impact of OREO expense, FHLB prepayment charges and merger related expenses 10

11 Industry Concerns Source: Wall Street Journal 10/2/2015

12 Pinnacle Building for the Future Banks may serve up more scares than treats for investors when they announce earnings later this month. WSJ 10/2/15 3Q15 Bank Industry Trends 3Q15 Pinnacle Trends Lower, longer rate forecast Credit leverage slows Margin compression continues Cost cutting jeopardizes future earnings and core deposits Mortgage revenues slow Energy lending concerns Robust banking markets Organic growth creates operating leverage despite aggressively hiring Continued investment for future growth: - M&A: CapitalMark, Magna, BHG - Organic: Accelerating hiring, CRE, Capital markets Intense focus on building a valuable Tennessee franchise

13 Pinnacle Building for the Future Changes to long-term targets reflect PNFP operating environment 3.95% 3.90% 3.85% 3.80% 3.75% 3.70% 3.65% 3.60% 3.55% 3.50% Net Interest Margin 3.80% 3.70% 3.76% 3.66% 1.30% 1.20% 1.10% 1.00% 0.90% 0.80% 0.70% Noninterest Income / Average Assets (1) 1.13% 0.97% 0.89% 0.92% 1.60% 1.40% 1.20% 1.00% 0.94% ROA (2) 1.13% 1.27% 1.35% 0.80% 2.70% 2.60% 2.50% 2.40% 2.30% 2.20% 2.10% 2.00% Noninterest Expense / Average Assets (2) 2.52% 2.38% 2.37% 2.30% 0.50% 0.45% 0.40% 0.35% 0.30% 0.25% 0.20% 0.15% 0.10% 0.05% 0.00% Net Chargeoff Ratio 0.29% 0.15% 0.09% 0.20% 0.60% 0.40% 0.20% 0.00% (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, FHLB prepayment charges and merger related expenses. Noninterest expense for 2Q13 includes the impact of the reversal of a $2.0 million allowance for off-balance sheet commitments --- : Reflects targets resulting from the annual corporate strategic planning process for the then current period. 13

14 Pinnacle Building for the Future Mergers on Track to Hit Targets CapitalMark As of announcement date April 7, 2015 Updated as of Sept. 30, 2015 Magna As of announcement date April 28, 2015 Updated as of Sept. 30, 2015 Aggregate Amounts Closing Late 3Q/Early 4Q Jul-15 Late 3Q Sep-15 Consideration 90% Stock, 10% Cash 75% Stock, 25% Cash PNFP share price $ $ $ $ PNFP shares 3,305,000 3,306,184 1,325,000 1,371,717 4,677,901 Stock option value Cash consideration Total transaction value $ $ $ 23,179,000 16,380, ,000,000 $ $ $ 30,429,000 19,675, ,629,000 $ $ $ 1,957,000 18,774,000 82,556,000 $ $ $ 847,000 19,453,000 83,838,000 $ 309,467,000 SBLF redemption $ 18,212,000 $ 18,212,000 $ 18,350,000 $ 18,350,000 $ 36,562,000 Purchase Accounting Loan mark 2.50% $ (20,500,000) 2.47% $ (21,621,000) 2.00% $ (9,700,000) 2.18% $ (10,009,000) $ (31,630,000) ORE mark 30% $ (1,100,000) 0% $ - 25% $ (800,000) 0% $ - $ - Core deposit intangible 1.50% $ 8,622, % $ 6,195, % $ 5,400, % $ 3,170,000 $ 9,365,000 Cost Savings Aggregate cost saves 30% No change anticipated 25% No change anticipated EPS Accretion 3Q15 0.0% 0.0% Approx. $0.02/share 4Q15 0.0% 0.0% % 3.4% % 4.4% Tangible Book Value Dilution 2.5% Neutral Less than 1% Note: Purchase accounting adjustments should be considered preliminary and subject to change. Loan mark excludes impact of ALLL reversal. 14

15 Pinnacle Building for the Future Revenue growth provides capacity to accelerate hiring FTE's Dec. 31, 2014 New hires Trans / Retire / Terms Acquired franchises Synergy case impact FTE's Sept. 30, 2015 Client advisory units Nashville (3.5) Knoxville (1.0) Chattanooga Memphis Wealth management Residential mortgage (1.0) Support units Client advisory support (6.5) 39.0 (2.0) Branch support (12.0) 41.0 (4.0) Operations and admin (10.0) (2.0) (34.0) (8.0) 1,

16 Pinnacle Building for the Future Future Growth Initiatives are Moving Forward Expanding our CRE Capacity Target Markets A. Top-tier owners and developers in Tennessee B. FHLMC Small Balance Loan program Product Offering A. Traditional bank balance sheet products B. Brokerage of long-term mortgages off balance sheet to insurance companies and conduits $2,500,000,000 $2,000,000,000 $1,500,000,000 $1,000,000,000 CRE Investment Portfolio $500,000,000 $- Outstanding Commitments 16

17 Pinnacle Building for the Future Future Growth Initiatives are Moving Forward Entering Capital Markets Segment Pinnacle Subsidiary PNFP Capital Markets - SEC registration completed on October 6, FINRA registration completed on October 6, State of TN authorization on October 13, 2015 Target Markets - Focused on commercial middle market companies with revenue between $20-$300 mm approximately 6,500* targets - Owner-managed businesses considering ownership transition in next 5 years (we estimate to be 30-50% of target market) Product Offerings - M&A Advisory: Sell-side/Buy-side - Private Placements of Debt and Equity - Advisory services: - Capital Structure - Exit-strategy - Valuation - Client derivative consulting $800 $600 $400 $200 $- Loan Swap Income, net Q1 Q2 Q3 Q *Per FactSet 17

18 Pinnacle Building for the Future PNFP is positioned for meaningful growth in Tennessee s Urban Markets Memphis Nashville Chattanooga Knoxville Loans 3Q15 $450.8 mm $4.116 billion $671.5 mm $1.098 billion Deposits and customer repurchase accounts 3Q15 Pro forma deposit market share 2Q15 $466.2 mm $4.826 billion $640.7 mm $736.2 mm 1.7% - 11 th 9.2% - 4 th 6.6% - 4 th 4.9% - 6th Significant Regional Bank Competitors Long-term deposit target $2.5 billion $7.5 billion $2.5 billion $2.5 billion Primary competitors First Horizon Regions SunTrust Bank of America Regions SunTrust First Horizon SunTrust Regions First Horizon SunTrust Regions Source: Internal records, FDIC market share information. 18

19 Q&A Third Quarter 2015 Investor Call 19

20 Supplemental Information Third Quarter 2015 Investor Call 20

21 Supplemental Information Chart Balance Sheet 22 Asset Quality 32 Income Statement 36 Pinnacle Financial Partners profile 41 Economic and Market Conditions 47 21

22 Supplemental Information Balance Sheet 22

23 Balance Sheet Loan portfolio well diversified Amts. 3Q15 % s(*) 3Q15 Amts. 2Q15 % s(*) 2Q15 Amts. 3Q14 % s 3Q14 Amts. 3Q13 % s 3Q13 C&D and Land $ % $ % $ % $ % Consumer RE 1, % % % % CRE Owner Occ. 1, % % % % CRE Investment % % % % Other RE loans % % % % Total real estate 3, % 2, % 2, % 2, % C&I 2, % 1, % 1, % 1, % Other loans % % % % Total loans $6, % $4, % $4, % $3, % (*) as a percentage of total loans 23

24 Balance Sheet Construction portfolio reflects quality growth Amts. 3Q15 % s(*) 3Q15 Amts. 2Q15 % s(*) 2Q15 Amts. 3Q14 % s(*) 3Q14 Amts. 3Q13 % s(*) 3Q13 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 24

25 Balance Sheet The C&I loan portfolio is highly diversified NAICS Sector Description 3Q15 3Q14 Health Care and Social Assistance 13.74% 14.26% Finance and Insurance 10.28% 11.11% Real Estate and Rental and Leasing 9.87% 8.74% Manufacturing 8.67% 7.20% Consumer 7.68% 7.21% Transportation and Warehousing 7.43% 7.27% Wholesale Trade 7.07% 7.71% Retail Trade 6.49% 6.15% Construction 4.82% 5.54% Accommodation and Food Services 4.61% 3.37% Professional, Scientific, and Technical Services 4.31% 4.77% Public Administration 3.67% 3.99% Admin. & Support and Waste Mgt. and Remediation 2.91% 3.52% Information 2.39% 2.90% Other Services (except Public Administration) 2.31% 2.80% Educational Services 1.68% 1.56% Arts, Entertainment, and Recreation 1.40% 0.91% Management of Companies and Enterprises 0.46% 0.68% Agriculture, Forestry, Fishing and Hunting 0.14% 0.02% Utilities 0.07% 0.10% Mining, Quarrying, and Oil and Gas Extraction 0.02% 0.19% Total C&I Portfolio % % 25

26 Balance Sheet Consistent annual loan growth despite significant payoffs in legacy PNFP Loan Volumes ($ millions) $500 $400 $300 $200 $100 Annual Net Loan Growth $421 $434 $446 $414 Loan Volumes ($ millions) $200 $150 $100 $50 Quarterly Net Loan Growth $- $0 Loan Volumes ($ millions) $700 $600 $500 $400 $300 $200 $100 Quarterly New Loan Originations Loan Volumes ($ millions) $500 $400 $300 $200 $100 Quarterly Pay Offs/ Pay Downs $0 $0 Source: Pinnacle internal records. New loans include new fundings to new and existing clients as well as net changes in lines of credit. Pay offs and pay downs include amortization and pay offs of existing loans. 26

27 Balance Sheet PNFP maintains limited dependence on non-relationship funding 9/30/2015 Percent 9/30/2014 Percent Core Funding: Non-interest bearing deposits 1,876, % 1,357, % Interest-bearing deposits 1,275, % 847, % Money Market accounts 2,320, % 1,712, % Time deposits less than $250, , % 342, % Total Core Funding 5,890, % 4,260, % Relationship based non-core funding: Reciprocal NOW deposits 17, % 13, % Reciprocal MMDA deposits 371, % 270, % Time deposits Reciprocal time deposits 82, % 45, % Other time deposits 216, % 72, % Securities sold under agreements to repurchase 68, % 64, % Total relationship based non-core funding 756, % 466, % Wholesale funding: Time deposits greater than $250,000 Public funds 14, % % Brokered deposits 7, % % FHLB advances 545, % 215, % Federal funds purchased % % Other borrowings % 14, % Subordinated debt 142, % 82, % Total wholesale funding 709, % 312, % Total non-core funding 1,466, % 778, % Totals 7,356, % 5,039, % 27

28 Balance Sheet Line utilization drops with acquisitions $5,000 70% $4, % $2,407 60% Total Commitments (millions) $3,000 $2,000 $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 $989 $1,190 $1,024 $1,216 $1,028 $1,247 $1,046 $1,349 $1,131 $1,375 $1,177 $1,376 $1,221 $1,440 $1,372 $1,538 $2,087 50% 46.40% 40% 30% Funded % $0 20% Net active balance Unfunded Commitments Funded % Note: Excludes HELOCS and credit cards 28

29 Balance Sheet The securities book is maintained at a minimal level 4.00% 3.58% 3.50% 3.00% 40.00% 35.00% 30.00% 2.50% 2.00% 20.75% 2.51% 25.00% 20.00% 1.50% 15.00% 1.00% 12.32% 10.00% 0.50% 5.00% 0.00% 0.00% Bond Yields % of Avg. Assets 29

30 Balance Sheet Conservative bond portfolio 7.4% 18.8% 7.6% 13.8% 1.2% 51.2% Agency Corporates MBS Asset Backed CMOs Municipals As of 9/30/2015 Book Yield Avg Life (yrs) Agency 2.27% 8.0 Asset Backed 1.34% 4.8 Corporates 4.11% 3.5 CMOs 1.57% 3.9 MBS 2.23% 4.5 Municipals 4.68% 3.7 Total 2.60% 4.7 Portfolio: September 30, 2015 Total Investments Unrealized Gain (Loss) QTD Purchases QTD Sales $1.004 billion $ 12.0 million $ 82.8 million $ 91.7 million Duration Avg Yield TE 3Q15 2.8% 2.6% 2Q15 2.9% 2.6% 1Q15 2.9% 2.8% 4Q14 2.8% 2.8% 3Q14 3.0% 2.9% 2Q14 3.1% 2.9% Repositioned $90.0 million of acquired bond portfolios to accelerate asset sensitivity Investment portfolio at $1.004 billion, up $175 million vs Dec 2014 Increase due to Magna/CMBT purchase MBS sector at 51% of portfolio Duration stable at low levels Purchases focused on reducing extension risk Investments to Total Assets of 11.8% as of 9/30 30

31 Balance Sheet The municipal portfolio contains minimal risk Municipal Bond Portfolio Statistics 3Q15 3Q14 Weighted Average Life 3.7 years 3.6 years Muni Allocation % Tax equivalent yield 4.68% 4.57% FMV as % of Cost 103.7% 104.7% 23% 77% As of September 30, 2015 Location # of Issuances Market Value % Tennessee 73 $40, % Michigan 7 3, % Illinois 20 15, % Other 30 states , % Totals 293 $193, % General Obligation Bonds Revenue Bonds All municipals are A rated or better. 31

32 Supplemental Information Asset Quality 32

33 Asset Quality Past due loans remain very low (000 s) Sept. 30, 2015 As a % of total loans June 30, 2015 As a % of total loans Sept. 30, 2014 As a % of total loans Past Due Loans (*) Nonaccrual loans $8, % $ 5, % $6, % Accruing loans 21, % 18, % 14, % Total past due $30, % $24, % $20, % (*) > 30 days past due 33

34 Asset Quality NPLs and loans >90 days past due & accruing remain very low (000 s) NPLs Expressed as a % of Total Loans within each Category Sept. 30, 2015 As a % of total loans PNFP NPLs and >90 days June 30, 2015 As a % of total loans Sept. 30, 2014 As a % of total loans Const. and land development $8, % $3, % $5, % CRE Owner Occupied 4, % 3, % 7, % CRE Investment 2, % 2, % % Total real estate 28, % 13, % 19, % C&I 1, % 1, % 2, % Total loans $35, % $18, % $21, % 34

35 Asset Quality Classified assets remain low Balances Sept. 30, 2015 (in thousands) Balances June 30, 2015 Balances Sept. 30, 2014 Classified loans and ORE: - Substandard commercial loans $94,801 $107,359 $110,389 - Doubtful commercial loans Other impaired loans 22,490 7,428 5, days past due and accruing (*) 5, Other real estate 4,773 6,793 12,329 - Other repossessed assets 1,022 1, Total $128,450 $123,508 $128,874 Pinnacle Bank classified asset ratio 17.1% 19.0% 20.0% (*) Includes loans 90 days past due and accruing not included elsewhere 35

36 Supplemental Information Income Statement 36

37 Income Statement Mortgage volumes experience growth in purchase money transactions 160, % 140, , ,000 80,000 60,000 40, % 20, % 2.19% 2.50% 2.25% 2.00% 1.75% 1.50% % Purchase Money Refinance Gross fees as a % of loans originated 37

38 Income Statement PNFP efficiency ratio reflects excellent operating leverage 3Q15 2Q15 1Q15 4Q14 3Q14 Net interest income $62,059 $51,831 $51,269 $50,313 $49,537 Total non-interest income $21,410 $20,128 $18,493 $14,384 $12,888 Less: Securities (gains) losses - (556) (6) - (29) Non-interest income, excluding the impact of net gains (losses) on sale of investment securities $21,410 $19,572 $18,487 $14,384 $12,859 Total non-interest expense $45,107 $36,747 $36,831 $34,391 $34,360 Less: ORE expenses (686) 115 (395) 630 (417) FHLB prepayment charges Merger related expenses 2, Non-Interest expense, excluding ORE expense $43,544 $36,324 $36,436 $35,021 $33,943 Adjusted pre-tax pre-provision income $39,925 $34,970 $33,320 $29,676 $28,453 Efficiency ratio** 52.2% 51.1% 52.2% 54.1% 54.4% **: Excluding ORE expense, FHLB prepayment charges, merger related expenses and securities gains and losses 38

39 Income Statement Reconciliation of Non-GAAP measures 3Q15 2Q15 1Q15 4Q14 3Q14 Total non-interest income $21,410 $20,128 $18,493 $14,384 $12,888 Less: Securities (gains) losses - (556) (6) - (29) Non-interest income, excluding the impact of net gains (losses) on sale of investment securities $21,410 $19,572 $18,487 $14,384 $12,859 Total non-interest expense $45,107 $36,747 $36,831 $34,391 $34,360 Less: ORE expenses (686) 115 (395) 630 (417) FHLB prepayment charges Merger related expenses 2, Non-Interest expense, excluding ORE expense $43,544 $36,324 $36,436 $35,021 $33,943 Adjusted pre-tax pre-provision income $39,925 $34,970 $33,320 $29,676 $28,453 Total Assets (Quarterly Average) $7,514,633 $6,319,712 $6,102,523 $5,855,421 $5,752,776 Noninterest income, excluding the impact of net gains (losses) on sale of investment securities/average Assets 1.13% 1.27% 1.23% 0.97% 0.89% Non-interest expense, excluding ORE expense, FHLB prepayment charges and merger related expenses 2.30% 2.31% 2.42% 2.37% 2.34% 39

40 Income Statement Reconciliation of Non-GAAP measures 3Q15 2Q15 1Q15 4Q14 3Q14 Net income $24,149 $22,664 $21,843 $18,737 $18,197 Merger related expenses 2, Tax effect on merger related expenses (882) (23) Net income less merger related expenses $25,515 $22,746 $21,843 $18,737 $18,197 Basic earnings per share $0.64 $0.65 $0.62 $0.54 $0.52 Adjustment to basic earnings per share due to merger related expenses Basic earnings per share excluding merger related expenses $0.67 $0.65 $0.62 $0.54 $0.52 Diluted earnings per share excluding merger related expenses $0.62 $0.64 $0.62 $0.53 $0.52 Adjustment to diluted earnings per share due to merger related expenses Diluted earnings per share excluding merger related expenses $0.66 $0.64 $0.62 $0.53 $

41 Supplemental Information Pinnacle Financial Partners Profile 41

42 PNFP Profile Recently completed acquisitions will position firm in four great banking markets PNFP CapitalMark Magna Headquarters: Nashville, TN Founded: 2000 Total assets: $ Billion (9/30/15) Shareholders equity: $ Billion (9/30/15) **: 50 day average daily volume per NASDAQ.com Offices: 29 in 8 Middle-TN counties 10 in 5 East-TN counties 5 in West-TN Avg. daily trading volume **: 162,931 shares % Institutional ownership: 72.16% (6/30/15) 42

43 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/ Knoxville Regional Executive Joanne B. Jackson Manager, Client Services Group Nashville D. Kim Jenny Risk Management Officer William S. Jones Rutherford County Area Executive * J. Edward White Manager, Client Advisory Group Nashville Craig Holley Chattanooga Chairman ** Kirk Bailey Memphis Chairman ** * - Mr. Jones was an executive with Cavalry Bancorp which was acquired by Pinnacle in ** - Mr. Holley and Mr. Bailey both joined Pinnacle in mid-2015 following the acquisitions of CapitalMark Bank & Trust and Magna Bank, respectively. 43

44 PNFP Profile PNFP compares favorably to high performing peers Pinnacle Financial Partners (PNFP) Bank of the Ozarks (OZRK) Brookline Bancorp, Inc. (BRKL) Columbia Banking System, Inc. (COLB) CVB Financial Corp. (CVBF) Eagle Bancorp, Inc. (EGBN) FCB Financial Holdings, Inc. (FCB) First Financial Bancorp. (FFBC) First Midwest Bancorp (FMBI) Hilltop Holdings Inc. (HTH) Independent Bank Corp. (INDB) Legacy Texas Financial Group, Inc. (LXTB) MB Financial (MBFI) National Penn Bancshares, Inc. (NPBC) Renasant Corporation (RNST) South State Bank (SSB) Sterling Bancorp (STL) Trustmark Corporation (TRMK) Union First Market Bkshs Co (UBSH) United Bankshares, Inc. (UBSI) United Community Banks, Inc. (UCBI) Western Alliance Bancorporation (WAL) 44

45 PNFP Profile PNFP has a track record for best-in-market share movement Nashville-Davidson-Rutherford MSA Knoxville MSA Top 10 Market Share Rank Holding Company Market Share 6/30/15 Market Share 6/30/00 (1) % Change in Share Top 10 Market Share Rank Holding Company Market Share 6/30/15 Market Share 6/30/07 (1) Change in Share 4 Pinnacle Financial Partners 9.19% 1.74% 7.45% 6 Pinnacle Financial Partners 4.86% 0.03% 4.83% 1 Bank of America Corp 17.29% 14.59% 2.70% 8 Bank of America Corp. 3.26% 2.00% 1.26% 5 First Horizon National Corp. 6.23% 5.13% 1.10% 9 Clayton HC Inc. 2.06% 1.10% 0.96% 7 Wilson Bank Holding Co. 3.27% 2.34% 0.93% 5 BB&T Corp. 6.37% 6.19% 0.18% 10 Wells Fargo & Co. 2.70% 2.05% 0.65% 2 SunTrust Banks Inc % 16.19% 0.09% 9 Fifth Third Bancorp 2.93% 2.29% 0.64% 10 Twin Cities Financial Services Inc. 1.76% 1.96% (0.20)% 8 Franklin Financial Network Inc. 3.11% Home Federal Bank of TN 10.31% 10.87% (0.56)% 6 U.S. Bancorp 3.41% 7.35% (3.94)% 1 First Horizon 17.44% 19.11% (1.67)% 3 SunTrust Banks Inc % 18.60% (6.29)% 7 United Community Banks Inc. 3.42% 5.30 (1.88)% 2 Regions Financial Corp % 29.06% (14.81)% 3 Regions 14.69% (3.56)% Other 25.31% 16.87% 8.44% Other 19.56% 19.03% 0.53% Total 100% 100% Total 100% 100% Source: FDIC Summary of Deposits 2015; Amounts reflect aggregation of previously merged banks. (1): First year Pinnacle s deposits were reflected in FDIC Summary of Deposits data. Market share at 6/30/00 for Nashville reflects impact of Cavalry Bancorp, Inc. which was acquired by Pinnacle in March of

46 PNFP Profile PNFP has a track record for best-in-market share movement Chattanooga TN-GA MSA Memphis, TN-MS-AR MSA Top 10 Market Share Rank Holding Company Market Share 6/30/15 Market Share 6/30/14 % Change in Share Top 10 Market Share Rank Holding Company Market Share 6/30/15 Market Share 6/30/14 % Change in Share 6 Bank of America Corp. 3.75% 2.67% 40.45% 4 Bank of America Corp. 4.10% 3.45% 18.84% 4 Pinnacle Financial Partners 6.59% 6.01% 9.65% 3 SunTrust Banks Inc % 8.77% 16.31% 9 BankCap Equity Fund LLC 3.50% 3.23% 8.36% 1 First Horizon National Corp % 26.06% 14.62% 2 SunTrust Banks Inc % 18.74% 3.63% 8 Landmark Community Bank 2.04% 1.87% 9.09% 10 Sequatchie Valley Bancshares Inc. 3.27% 3.27% 0.0% 6 Trustmark Corp. 2.85% 2.90% (1.72%) 5 First Volunteer Corp. 4.74% 4.89% (3.07%) 9 Metropolitan BancGroup Inc. 1.98% 2.09% (5.26%) 1 First Horizon National Corp % 24.23% (3.18%) 7 Independent Holdings Inc. 2.83% 3.09% (8.41%) 3 Regions Financial Corp % 13.58% (3.31%) 2 Regions Financial Corp % 18.36% (12.09%) 7 SmartFinancial Inc. 3.68% 3.90% (5.64%) 5 BancorpSouth Inc. 3.36% 3.90% (13.85%) 8 First South Bancorp Inc. 3.67% 4.32% (15.05%) 10 Wells Fargo & Co. 1.72% 2.01% (14.43%) Other 14.79% 15.15% (2.4%) 11 Pinnacle Financial Partners 1.65% 1.77% (6.78%) Total 100% 100.% Other 23.25% 25.74% (9.67%) Total 100% Source: FDIC Summary of Deposits 2015; Amounts reflect aggregation of previously merged banks. (1): Market share at 6/30/14 for Chattanooga and Memphis reflects impact of the recently completed acquisitions of CapitalMark Bank & Trust and Magna Bank, respectively. 46

47 Supplemental Information Economic & Market Conditions 47

48 PNFP operates in advantaged markets Top 20 MSAs Total Deposits ($Ms) Tennessee Market Demographics E E Current Population Population Growth Current Median Median HHI Growth (000s) (%) HHI ($) (%) Nashville-Davidson-Murfreesboro-Franklin TN 48,022 1, % 55, % Memphis TN-MS-AR 27,064 1,347 2% 49, % Knoxville TN 13, % 47,037 7% Chattanooga TN-GA 8, % 48, % Kingsport-Bristol-Bristol TN-VA 4, % 41, % Clarksville TN-KY 3, % 50, % Johnson City TN 2, % 38, % Jackson TN 2, % 42, % Cookeville TN 2, % 34, % Sevierville TN 1, % 44, % Cleveland TN 1, % 44, % Tullahoma-Manchester TN 1, % 42, % Morristown TN 1, % 42, % Union City TN-KY 1, % 37, % Athens TN % 40, % Crossville TN % 39, % McMinnville TN % 37, % Greeneville TN % 36, % Dyersburg TN % 43, % Shelbyville TN % 43, % Tennessee 128,539 6, % 46, % United States 9,228, , % 55, % Source: SNL Financial Note: Deposit data is a 2016 ProForma 48

49 PNFP operates in advantaged markets TENNESSEE Tennessee named top state in the U.S. for economic development for second consecutive year Tennessee ranked top state in the nation for auto manufacturing Tennessee named No. 8 most fiscally healthy state in the nation Business Facilities Business Facilities Mercatus Center NASHVILLE Nashville has achieved it city status, 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 2015: Nashville No. 5 on list of cities Americans are flocking to Nashville now nation s No. 8 housing market Nashville ranked the fourth-best city to be a millennial entrepreneur Nashville named No. 7 of markets to watch in Emerging Trends in Real Estate 2016 KNOXVILLE Forbes Freddie Mac Thumbtack.com MarketWatch Knoxville also enjoys a very healthy and diverse economy with an excellent transportation and technology infrastructure. The Knoxville metropolitan area was the third fastest MSA in the country to fully recover from jobs lost in the recession and currently enjoys the lowest unemployment rate of Tennessee s metro areas. Good news in the third quarter of 2015 includes: Knoxville 4 th best city to start a business Knoxville No. 5 in 10 Best Cities for Small Businesses Tourism spending in Knox County grew 6.2 percent compared with 2013, generating $50 million in state and $23.5 million in local tax revenues SmartAsset CNN Money Knoxville News Sentinel 49

50 PNFP operates in advantaged markets MEMPHIS Memphis offers a diverse, metropolitan workforce. Over the past three decades, the presence of companies like FedEx and the region s superior distribution infrastructure have earned Memphis the title, America s Distribution Center. Memphis named the 7 th Best City to Start a Business Memphis ranked No. 18 in 25 Best Cities for Jobs list CHATTANOOGA WalletHub Glassdoor Chattanooga is Tennessee s fourth-largest MSA as measured by both population and deposits. National publications have declared Chattanooga a tech hub and manufacturing magnet. Economic drivers include: Chattanooga Chamber Named a Best to Invest Top Economic Development Group Volkswagen Chattanooga expansion named a Top North American Deal with an investment by the company of $600 million and the creation of more than 2,000 jobs Site Selection Site Selection 50

51 PNFP operates in advantaged markets Consistent job growth occurring in all four markets 950, ,000 Nashville MSA Nonfarm Payrolls- SA (thru August 2015) 908, , ,000 Knoxville MSA Nonfarm Payrolls- SA (thru August 2015) 386, , , , , , , , , , , , , , , , ,000 Chattanooga MSA Nonfarm Payrolls- SA (thru August 2015) 650,000 Memphis MSA Nonfarm Payrolls- SA (thru August 2015) 250, , , , , , , , , , , , , , , , , ,000 Source: BERC Middle Tennessee State University & Bureau of Labor Statistics, Greater Nashville Area Realtors 51

52 PNFP operates in advantaged markets Rapid job growth leads to rapid real estate absorption Unemployment Rates Seasonally Adjusted (thru August 2015) Nashville Knoxville Chattanooga Memphis US Home Sales Nashville Knoxville Memphis Chattanooga 3Q15 % Change from PY 3Q15 % Change from PY 3Q15 % Change from PY 3Q15 % Change from PY Avg. Qtrly. Median Home Price $ % $ % $128.3 (2.4%) $ % Quarterly Closings 9, % 4, % 4, % 2, % Quarter end Inventory 8,729 (12.0%) 9,283 (9.0%) 6,404 (4.6%) 4,221 (31.7%) Months of Inventory* 3.1 (21.3%) 6.6 (25.6%) % 5.5 (39.5%) *: Calculated as quarter end inventory divided by monthly closings Source: BERC Middle Tennessee State University & Bureau of Labor Statistics, GNAR, GCAR, MAAR, and KAAR 52

53 PNFP Operates in Advantaged Markets Nashville s commercial vacancy rates indicate a healthy market Industrial / Warehouse 3Q15 CRE Vacancy Rates Nashville Knoxville Chattanooga Memphis National % Change from PY 3Q15 % Change from PY 3Q15 % Change from PY 3Q15 % Change from PY 3Q15 % Change from PY 6.1% (15.3%) 8.7% (4.4%) 9.1% (33.6%) 10.1% (17.2%) 7.1% (1.4%) Multifamily 3.7% 15.6% 7.9% 75.6% 7.0% 45.8% 6.6% (22.4%) 8.1% unavailable Retail 6.0% (10.4%) 7.3% 5.8% 7.0% (12.5%) 7.3% (19.8%) 6.4% 1.6% Office 5.4% (22.9%) 7.9% (10.2%) 8.5% (19.0%) 9.7% (21.1%) 6.7% (40.2%) Source: Costar 53

54 Third Quarter 2015 Investor Call M. Terry Turner, President and CEO Harold R. Carpenter, EVP and CFO October 21, 2015