investor presentation: private placement of common stock - pinnacle … · 2019. 5. 13. · 4...

Investor Presentation: Private Placement of Common StockApril 2019

Confidential Materials

Legal Disclaimer:

The information contained herein is a summary and it is not complete. It has been prepared for use only in connection with the private placement (the “Placement”) of securities (the “Securities”) of Pinnacle Financial Corporation (the “Company”). The Securities have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), and are being offered in a private placement exempt from registration under the Securities Act and other applicable securities laws, and may not be re-offered or re-sold absent registration or an applicable exemptions from the registration requirements. The Securities are not a deposit or an account that is insured by the Federal Deposit Insurance Corporation (“FDIC”) or any other government agency. The information contained herein is being furnished solely for the purpose of enabling prospective investors to determine whether they wish to proceed with further investigation of the Company and the Placement. As it is a summary, such information is not intended to and does not contain all the information that you will require to form the basis of any investment decision. The information contained herein speaks as of the date hereof. Neither the delivery of this information or any eventual sale of the Securities shall, under any circumstances, imply that the information contained herein is correct as of any future date or that there has been no change in the Company’s business affairs described herein after thedate hereof. Nothing contained herein is, or should be relied upon as, a promise or representation as to future performance. Neither the Company nor any of its affiliates undertakes any obligation to update or revise this presentation. The Company anticipates providing you with the opportunity to ask questions, receive answers, obtain additional information and complete your own due diligence review concerning the Company and the Placement prior to entering into any agreement to purchase Securities. By accepting delivery of the information contained herein, you agree to undertake and rely upon your own independent investigation and analysis and consult with your own attorneys, accountants, and other professional advisors regarding the Company and the merits and risks of an investment in the Securities, including all related legal, investment, tax, and other matters. The Company shall not have any liability for any information included herein or otherwise made available in connection with the Placement, except for liabilities expressly assumed by the Company. The information contained herein does not constitute an offer to sell or a solicitation of an offer to purchase the Securities described herein nor shall there be any sale of such Securities in any state or jurisdiction in which such an offer or solicitation is not permitted or would be unlawful. Each investor must comply with all legal requirements in each jurisdiction in which it purchases, offers, or sells theSecurities, and must obtain any consent, approval, or permission required by it in connection with the Securities or the Placement. The Company does not make any representation or warranty regarding, and has no responsibility for, the legality of an investment in the Securities under any investment, securities, or similar laws.

THE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION (“SEC”), THE FDIC, OR ANY OTHER GOVERNMENT AGENCY, NOR HAS THE SEC, THE FDIC, OR ANY OTHER GOVERNMENT AGENCY PASSED ON THE ADEQUACY OR ACCURACY OF THIS PRESENTATION. ANY REPRESENTATION TO THE CONTRARY IS UNLAWFUL.

Confidentiality and Recipient’s Undertakings:

The information contained herein is confidential and proprietary to the Company and its subsidiaries. By accepting delivery of this information, the intended recipient is deemed to have acknowledged and agreed to the following:The information contained herein will be used by the recipient solely for the purpose of deciding whether to proceed with a further investigation of the Company and its subsidiaries.

This information will be kept in strict confidence and will not, whether in whole or in part, be released or discussed by the recipient, nor will any reproductions of such information be made, for any other purpose other than an analysis of the merits of an eventual investment in the Company by its intended recipient. Upon written request of the Company, this information, any other documents or information furnished and any and all reproductions thereof and notes relating thereto will be promptly returned to the Company or destroyed.

Forward-Looking Statements:

This presentation contains forward-looking statements. Any statements about the Company’s expectations, beliefs, plans, predictions, forecasts, objectives, assumptions, future events or performance are not historical facts and may be forward-looking. Recipients can identify forward-looking statements by the use of forward-looking terminology such as “believes,” “expects,” “could,” “may,” “will,” “should,” “seeks,” “likely,” “intends,” “plans,” “pro forma,” “projects,” “estimates” or “anticipates” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and that do not relate solely to historical matters. Recipients can also identify forward-looking statements bydiscussions of strategy, plans or intentions. Forward-looking statements involve numerous risks and uncertainties and recipients should not rely on them as predictions of future events. Forward-looking statements depend on assumptions, data, or methods that may be incorrect or imprecise, and the Company may not be able to realize them. The Company does not guarantee that the transactions and events described will happen as described (or that they will happen at all). The following factors, among others, could cause actual results and future events to differ materially from those set forth or contemplated in the forward-looking statements: business and economic conditions generally and in the bank and non-bank financial services industries, nationally and within the Company’s local market area; the Company’s ability to mitigate its risk exposures; the Company’s ability to maintain its earnings trends; risks related to the integration of acquired businesses and any future acquisitions and new business lines and other strategic business opportunities; changes in management personnel; interest rate risk; ability to execute on planned expansion and organic growth; credit risk and concentrations associated with the Company’s loan portfolio; lack of seasoning in certain portions of the Company’s loan portfolio; asset quality and loan charge-offs; time and effort necessary to resolve nonperforming assets; inaccuracy of the assumptions and estimates management of the Company makes in establishing reserves for probable loan losses and other estimates; lack of liquidity; fluctuations in the fair value and liquidity of the securities the Company holds for sale; impairment of investment securities, goodwill or other intangible assets; the Company’s risk management strategies; environmental liability associated with the Company’s lending activities and owned real estate; increased competition in the bank and non-bank financial services industries, nationally, regionally or locally, which may adversely affect pricing and terms; the accuracy of the Company’s financial statements and related disclosures; material weaknesses in the Company’s internal control over financial reporting; system failures or failures to prevent breaches of our network security; the institution and outcome of litigation and other legal proceedings against the Company or to which the Company becomes subject; changes in federal tax law or policy; the impact of recent and future legislative and regulatory changes, including changes in banking, securities and tax laws and regulations and their application by our regulators; governmental monetary and fiscal policies; changes in the scope and cost of the FDIC insurance and other coverages; failure to receive regulatory approval to for future acquisitions planned by the Company or other expansionary activities; failure to effectively integrate future acquisitions; increases in capital requirements; and risks related to this offering. While forward-looking statements reflect the good-faith beliefs of the Company’s management, they are not guarantees of future performance. All forward-looking statements are necessarily only estimates of future results. Accordingly, actual results may differ materially from those expressed in or contemplated by the particular forward-looking statement, and, therefore, recipients are cautioned not to place undue reliance on such statements. Any forward-looking statement is qualified in its entirety by reference to the matters discussed in this presentation. Further, any forward-looking statement speaks only as of the date on which it is made, and the Company undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events or circumstances, except as required by applicable law. As used on this slide, the “Company” refers to Pinnacle Financial Corporation and its subsidiary bank, Pinnacle Bank, on a consolidated basis.

Disclosures

Confidential Materials2

Section I. Overview of Private Placement Pg.3

Section II. Investment Thesis Pg.5

Section III. Overview of Pinnacle Pg.10

Section IV. M&A Transaction History Pg.15

Section V. Historical Financials Pg.18

Section VI. Financial Profile and Performance Pg.24

Section VII. Management Team and Board Pg.32

Section VIII. Projection Model Pg.38

Table of Contents

Section IOverview of Private Placement


Private Placement Overview

Issuer

Offering Size

Type of Offering / Accreditation

Use of Proceeds

Transferability Restrictions

Anticipated Closing Date

Securities Offered

Pricing

Minimum Investment

■ Pinnacle Financial Corporation (“Holding Company”, the “Company”, “Pinnacle”), parent of Pinnacle Bank (“Bank”). The Bank is a commercial bank, state bank and Fed non-member, supervised by the FDIC.

■ Offering up to $15MM

■ Rule 506 Private Placement

■ Common Stock

■ $135 per share

■ Post Raise:1.55x projected 6/30/19 TBV; 11.24x projected 2019 EPS

■ $25,000

■ Restricted securities under the Securities Act of 1933

■ 6/30/2019

Valuation

■ Boost consolidated capital ratios, funding for organic growth and future acquisitions

Corporate Status ■ Currently operating under “C” Corp status (effective 1/1/2019)

Timeline ■ Preliminary indications no later than May 2019; Binding agreement expected June 2019

Placement Agent ■ SunTrust Robinson Humphrey for institutional investors

Placement Agent Fee ■ 5%

Closing Conditions ■ Minimum raise of $10MM

Warrant Attached ■ Offer warrant to purchase 1 share for each common share purchased in the offering at $135

Section IIInvestment Thesis


• Strong growth in northeast Georgia

• Operating in the northern suburbs of Atlanta

• Disruption from other announced mergers

• Acquirer of choice for smaller companies

• Enhanced growth / value of Pinnacle investment

• Assets: $972MM

• Tangible Book Value: $89MM

• TBVPS: $87.36

• Projected 2019 EPS: $12.01

• Projected Annual Dividend / Share: $4.00

Investment Overview

Post Raise Highlights (6/30/2019) (1) Value Proposition

Pinnacle has executed successful acquisitions in the recent past and continues to seek merger partners that will enhance shareholder value. Additional capital will allow Pinnacle the flexibility to execute on this strategy.

(1) Assumes $15MM raise @ $135/share(2) Unlevered capital invested at a rate of 2.25%

Pinnacle is seeking to raise $15MM in new equity capital

Pinnacle Shares valued at $135 / share

P / TBV (Post Raise): 154.5%

P / 2019 EPS: 11.24x


Pro Forma Ownership

Assumptions:

$15MM in new capital raised

Pinnacle shares priced at $135 per share

Does not include impact of potential warrants

Pro Forma Share Count (1)

Common Shares

Pinnacle Capital Raise Post Raise

910,922 111,111 1,022,033

• Board and Management currently own ~63% of capital

• Post raise, Board and Management will own 57% of capital

• CEO Jackson McConnell is committed to $750,000 investment

• Every board member has committed to participate in the offering

(1) Assumes $15MM raise @ $135/share; does not include impact of potential warrants


Georgia Community Banks by Asset Size

(1) Analysis excludes State Bank and Trust Company and Fidelity Bank due to pending sales(2) Data as of 12/31/2018 (excluding pending acquisitions)

Pinnacle ranks 6th among Georgia community banks with less than $10B in assets, and is the largest community bank in Northeast Georgia:

Rank Company Name City Assets ($000) Loans ($000) Deposits ($000)

1 Metro City Bank Doraville 1,435,822 1,204,932 1,256,303

2 United Bank Zebulon 1,389,578 644,165 1,253,092

3 Colony Bank Fitzgerald 1,249,790 781,526 1,086,063

4 Queensborough National Bank Louisville 1,171,496 766,029 1,059,091

5 Piedmont Bank Peachtree Corners 980,609 784,406 863,695

6 Pinnacle Bank Elberton 947,125 685,072 835,211

7 Thomasville National Bank Thomasville 879,101 731,991 752,313

8 Morris Bank Dublin 749,629 613,787 657,983

9 Heritage Bank Hinesville 590,842 359,548 534,712

10 PrimeSouth Bank Waycross 574,790 457,749 499,699


Source: S&P Global Market Intelligence

Branch Map and Potential Expansion Areas

NE Georgia and South Carolina

Pinnacle Branch

Section IIIOverview of Pinnacle


BHC: Pinnacle Financial CorporationHeadquarters: Elberton, GA

Source: S&P Global Market Intelligence and Pinnacle Bank; Bank level data

Pinnacle Overview

Locally owned community

bank established in

1934

Number one deposit

market share in Elbert,

Franklin, and Hart counties

16 full service branches

across Northeast GA

$947MM in total assets and $835MM in deposits as

of 2018Y

1

2

3

4

• Converted to C Corp status effective 1/1/19 (Subchapter S Corp since 2003)

• Approximately 115 shareholders

• 5 Members of Executive Management Team

• 12 Members of Board of Directors (20+ year average tenure)


• Pinnacle Bank was founded in September 1934 in Elberton, GA• As of 12/31/18, the Company has ~$950 million in assets and operates sixteen banking

offices across northeast Georgia with approximately 240 employees

• Management team with 100+ years of collective experience led by Chairman and CEO Jackson McConnell, a 30 year banking veteran in Georgia

• Strong alignment between current management / board and shareholders

• Conservative approach and valued client relationships has led to steady and sustainable growth with a low loss loan portfolio

- 2018 ROAA(2): ~1.3% - 2018 Loan Growth: ~9.2%- 2018 Efficiency Ratio: ~65.9% - 2019 Annual Dividend per Share Guidance: $4.00

• Georgia markets: Elbert, Franklin, Hart, Newton, Walton, Gwinnett, Hall, Oglethorpe, Jackson, Clarke, Oconee

• Largest market share in Elbert, Franklin, and Hart

• Q1 2019 Consolidated Net Income of $2.8MM

Pinnacle Financial Corporation

Top Tier Growth & Performance (1)

Experienced Management Team

Market Overview

Pinnacle Overview (cont.)

Current Year Performance (3)

(1) Bank level data(2) Adjusted for “C” Corp status using a 22% tax rate; LTM as of 12/31/18; Normalized to remove a $1,382MM security write down (see earnings note on slide 20)(3) 2019 net income represents a C-Corp, post tax number (Pinnacle became a C Corp effective 1/1/2019)


Branch Overview

• 16 attractive branches in excellent locations

• 1 new branch in Hall County under development

• Hall County is one of GA’s highest growth areas

• 1 Loan Production Office (Mortgage)• Athens, GA call center

• Branch designs are retail friendly with modern design

• Universal bankers for excellent customer experience (no teller line)

• Cutting edge technology to benefit customers and maximize efficiency

• 31 Interactive Teller Machines for extended hours and efficient operations

• Average of 12.5 “Pinny Agents” manage ITMs

• Agents available from 7am to 7pm Mon. to Fri. and 8am to 2pm Sat.

• 6 telephone customer reps in Athens call center

Pinnacle Bank has 16 full service branches strategically located throughout northeast GA:


Market Demographics

• Large deposit base covering multiple counties across Northeast Georgia

• Largest market share in Elbert, Franklin, and Hart counties


2019 2010-2019 2019 2019-2024

Elbert 1 3 205,079 63.3% 18,962 -6.0% 39,659 8.1%

Franklin 1 3 133,248 34.5% 23,165 4.9% 40,405 9.0%

Hart 1 1 100,432 26.9% 25,969 3.0% 41,863 4.4%

Newton 5 1 87,350 8.7% 110,196 10.2% 51,082 3.0%

Walton 5 2 66,764 6.6% 93,659 11.8% 59,833 8.0%

Gwinnett 28 1 49,333 0.3% 943,134 17.1% 72,973 12.9%

Hall 15 1 36,962 1.0% 203,931 13.5% 61,076 9.0%

Oglethorpe 2 1 31,388 28.3% 15,000 0.7% 45,423 0.2%

Jackson 10 1 26,496 3.6% 69,961 15.7% 61,465 8.1%

Clarke 13 1 25,079 0.7% 129,527 11.0% 37,645 14.4%

Oconee 9 1 9,177 1.0% 39,456 20.3% 85,989 8.9%

Projected HH Income Change (%)

Total Population

(Actual)

Population Change (%)

Median Household Income ($)

CountyMarket Rank

Number of Branches

Deposits In Market ($000)

Deposit Market Share (%)

Section IVM&A Transaction History


Execute Accretive M&A Strategy Consistent with Prior TransactionsSuccessful M&A Track Record

Pinnacle has a proven M&A track record, completing multiple bank, branch, and portfolio acquisitions in the Pinnacle area. Most recently, Pinnacle closed an all cash acquisition of Independence Bank of

Georgia:

2000 2005 2010 2015 2018

NBank Corp.

1 Branch:

Lexington, GA Office

Closed: 06/2002

SynovusFinancial Corp.

1 Branch:

Commerce, GA Office

Closed: 10/2008

Georgia CentralBancshares, Inc.

Whole bank:

Social Circle, GA

Closed: 07/2007

Persons Banking Company, Inc.

1 Branch:

Covington, GA Office

Closed: 02/2015

IndependenceBank of GA

Whole Bank:

Braselton, GA

Closed: 11/2016

Georgia Bank and Trust

Loan Portfolio:

Closed: 11/2010

Essex Bank

Loan Portfolio:

Closed: 09/2013



Execute Accretive M&A Strategy Consistent with Prior TransactionsSuccessful M&A Track Record – Independence Bank of GA Acquisition

• In November 2016, Pinnacle acquired Braselton based Independence Bank of Georgia

• Deal Value Per Share: $16.03

• Total Transaction Value: $30.37MM

• Pro Forma Loans: $600MM

• Pro Forma Deposits: $730MM

• Total Capital: $79MM

• Deal Value / Common Equity: 126.1%

• Deal Value / TCE: 126.1%

• Deal Value / Earnings: 17.7x

• Deal Value / Assets: 16.07% 2015 2016 2017 2018

$673,722

$849,015$876,891Independence

Acquisition

Pinnacle Bank Total AssetsTransaction Overview

Transaction Highlights

Post-close performance for acquired branches significantly better than budgeted

$947,125


Section VHistorical Financials


Bank Balance Sheet - Historical

Balance Sheet ($000's) 2013 2014 2015 2016 2017 2018Assets

Cash & Bals Due Dep Inst $47,037 $60,794 $61,536 $49,423 $70,317 $95,336

Securities $132,988 $159,176 $170,429 $129,358 $121,052 $108,063

Fed Funds & Reverse Repos $0 $0 $0 $593 $0 $0

Gross Loans $368,703 $366,410 $394,763 $607,454 $626,392 $684,413

Loans & Leases Held for Sale $0 $452 $656 $1,803 $1,067 $660

Total Reserves $5,049 $4,485 $4,060 $4,310 $5,950 $6,178

Net Loans $363,654 $361,925 $390,703 $603,144 $620,442 $678,235

Intangible Assets $10,069 $9,920 $10,085 $20,687 $19,665 $19,593

OREO $4,011 $4,033 $3,310 $1,927 $2,634 $1,633

Fixed Assets $15,968 $15,461 $17,233 $22,622 $21,620 $23,073

Other Assets $18,216 $18,310 $19,770 $19,458 $20,094 $20,532

Total Assets $591,943 $630,071 $673,722 $849,015 $876,891 $947,125

Liabilities and Shreholder's Equity

Deposits $519,499 $549,419 $594,235 $748,582 $765,373 $835,211

Fed Funds & Repos $1,332 $1,140 $1,092 $2,085 $1,992 $1,264

Other Borrowings $5,000 $5,000 $0 $0 $0 $0

Subordinated Debt $0 $0 $0 $0 $0 $0

Other Liabilities $2,602 $2,666 $3,000 $3,753 $4,945 $4,235

Tot Liabilities (Excl Min Int) $528,433 $558,225 $598,327 $754,420 $772,310 $840,710

Preferred Equity $0 $0 $0 $0 $0 $0

Common Equity $63,511 $71,847 $75,394 $94,594 $104,581 $106,415

Total Equity and Liabilities $591,943 $630,071 $673,722 $849,015 $876,891 $947,125



Bank Income Statement - Historical

Income Statement (000's) 2013 2014 2015 2016 2017 2018

Total Interest Income $23,488 $23,768 $24,031 $26,810 $35,032 $38,151

Loans $19,651 $19,898 $20,060 $23,203 $31,684 $34,338

Securities $3,768 $3,767 $3,811 $3,348 $3,016 $3,103

Other $69 $103 $160 $259 $332 $710

Total Interest Expense $1,187 $921 $819 $725 $917 $1,187

Deposits $1,165 $894 $803 $723 $908 $1,124

Other $22 $27 $16 $2 $9 $63

Net Interest Income $22,301 $22,847 $23,212 $26,085 $34,115 $36,964

Provision for Loan & Lease Losses $4,757 $1,704 $640 $800 $3,000 $1,200

Net Interest Income (post provision) $17,544 $21,143 $22,572 $25,285 $31,115 $35,764

Total Noninterest Income $7,796 $6,977 $9,051 $9,588 $13,173 $11,111

Realized Gain on Securities $562 $137 $156 $740 ($5) ($1,382)

Total Noninterest Expense $19,735 $19,893 $22,485 $24,767 $28,786 $32,265

Pre Tax Income $6,167 $8,364 $9,294 $10,846 $15,497 $13,228

Income Taxes $0 $0 $0 $0 $0 $0

Net Income $6,167 $8,364 $9,294 $10,846 $15,497 $13,228


Note to 2018 Earnings: Contributing to the higher expenses was a write-off due to obsolescence of equipment held in other real estate owned amounting to $1.3 million on a commercial credit which had been foreclosed on several years prior. Additionally, the board elected to sell two security positions as a Sub “S” resulting in a realized loss of $1.4MM.


(2) (1)(3)

Historical Performance and Capitalization (Pinnacle Bank)

(1) 2018 Net Income normalized to remove $1,382MM security write off(2) Adjusted for S-Corp Status using 22% tax rate; normalized to remove $1,328MM security write offSource: S&P Global Market Intelligence; bank level data

Capitalization 2015Y 2016Y 2017Y 2018YGRB: Total Equity Capital $75,394 $94,594 $104,581 $106,415Tangible Equity $65,309 $73,907 $84,916 $86,822Tangible Common Equity $65,309 $73,907 $84,916 $86,822Tier 1 Capital $65,264 $76,484 $85,487 $89,674Tier 1 Common Capital (CET1) $65,264 $76,484 $85,487 $89,674Equity/ Assets (%) 11.2% 11.1% 11.9% 11.2%Tang Equity/ Tang Assets (%) 9.8% 8.9% 9.9% 9.4%Tang Common Eqty/ Tang Assts (%) 9.8% 8.9% 9.9% 9.4%Risk Based Capital Ratio (%) 13.0% 11.0% 12.2% 12.2%Tier 1 Risk-based Ratio (%) 12.2% 10.4% 11.4% 11.4%Tier 1 Common Capital (CET1) RB Ratio (%) 12.2% 10.4% 11.4% 11.4%Leverage Ratio (%) 10.1% 9.2% 10.2% 9.9%

Performance Measures (%) 2015Y 2016Y 2017Y 2018YNet Income ($000) (1) (2) $7,249 $8,460 $12,088 $11,396ROAA (2) 1.02% 1.06% 1.26% 1.29%ROAE (2) 8.99% 9.34% 10.50% 10.98%Cost of Int-bearing Deposits 0.19% 0.16% 0.17% 0.20%Yield on Loans 5.55% 5.78% 5.56% 5.53%Interest Income/ Avg Assets (%) 3.73% 3.74% 4.15% 4.32%Interest Expense/ Avg Assets (%) 0.13% 0.10% 0.11% 0.13%Net Interest Income/ Avg Assets (%) 3.60% 3.64% 4.04% 4.19%Noninterest Income/ Avg Assets 1.40% 1.34% 1.56% 1.26%Noninterest Expense/ Avg Assets 3.49% 3.46% 3.41% 3.65%Net Interest Margin 4.11% 4.47% 4.75% 4.77%Yield/ Cost Spread (%) 4.07% 4.44% 4.71% 4.71%Operating Exp. / Operating Rev. 68.89% 69.22% 60.33% 66.55%


0.98%1.02%

1.26%

1.06%

2014 2015 2016 2017 2018

Pinnacle Bank ROAA(1)

Historical Financial Trends

$8,364

$9,294 $10,846

$15,497

2014 2015 2016 2017 2018

Pinnacle Bank Net Income (Sub–S) (2)

$630,071$673,722

$849,015

$876,891

2014 2015 2016 2017 2018

Pinnacle Bank Total Assets

$366,862$395,419

$609,258$627,459

2014 2015 2016 2017 2018

Pinnacle Bank Gross Loans

(1) ROAA adjusted for Subchapter S filing status; normalized to remove $1,328MM security write off(2) Normalized to remove $1,328MM security write offSource: S&P Global Market Intelligence; bank level data

$947,125 $685,072

1.29%$14,610


Checking Account Growth

Retail strategy has led to significant growth in new checking accounts, driving repeatable and expandable revenue creation and growth:

Source: Pinnacle Bank

Retail Checking Accounts Business Checking Accounts

Core Other Income Net Interest Income

Section VIFinancial Profile and Performance


Q1 2019 Financial Snapshot

Source: S&P Global Market Intelligence and Pinnacle Bank

An established credit culture and conservative approach to lending have resulted in a strong balance sheet and well capitalized bank. Consistent lending practices and experienced lenders drive steady

returns, low losses, and strong margins:

Balance Sheet Bank Level

Assets $972,449

Gross Loans $672,772

Deposits $857,226

Securities $113,165

Loans / Deposits 78.5%

Capital Ratios Bank Level Consolidated

TE / TA 9.2% 7.6%

TCE / TA 9.2% 7.6%

Tier 1 Leverage Ratio 9.4% 7.9%

Tier 1 Risk Based Capital Ratio 11.2% 9.3%

Total Risk Based Capital Ratio 12.0% 10.2%

Credit Quality Bank Level

LLR / Gross Loans 1.02%

Noncurrent Loans / Total Loans 0.51%

NPA's (Excluding TDR's) / Assets 0.41%

NPA's / Assets 0.63%

NCO's / Avg. Loans 0.01%

Performance Bank Level

YTD Net Income $2,962

Total Interest Income $10,492

Total Interest Expense $689

Total Noninterest Income $2,877

Total Noninterest Expense $8,327


Source: Pinnacle Bank; Data as of 12/31/2018

Loans and Deposits

Pinnacle Bank Loan Portfolio Pinnacle Bank Deposits

Loan Yield: 5.53% Cost of Deposits: 0.20%

Total Loans: $685,072 Total Deposits: $835,211


Clarke2% Elbert

11%

Franklin9%

Gwinnett7%

Hall6%

Hart7%

Jackson4%

Newton1%

Oconee2%

Oglethorpe2%

Walton4%

Other - Adjacent Counties

36%

Other - Out of Market

9%

(1) Data as of 12/31/18

Loan Portfolio Breakdown By Market (1)Loan Production Trends

Loan Portfolio Detail

Loan Yields

2014 2015 2016 2017 2018

Yield on Loans 5.7% 5.6% 5.8% 5.6% 5.5%

1-4 Family RE 5.7% 5.5% 5.8% 5.8% 5.9%Other RE 5.7% 5.5% 5.7% 5.5% 5.4%Total Real Estate 5.7% 5.5% 5.7% 5.5% 5.5%C&I 5.1% 5.0% 5.0% 4.9% 5.2%Consumer 9.4% 9.5% 9.3% 8.7% 9.1%


Loan Portfolio Detail - Past Due, Nonaccruals, and NPA’s

30 – 89 DPD Loans (000’s)

Nonaccruals (000’s)

Conservative lending strategy coupled with an experienced and knowledgeable lending team has resulted in a loan portfolio with strong credit quality and very few losses:

90+ DPD Loans (000’s)

Net Charge Offs (000’s)



Synovus Financial Corp., 32.03%

Wells Fargo & Co. 20.87%

Liberty First Bank 11.16%

BB&T Corp, 10.45%

Pinnacle Financial Corp., 6.64%

BB&T Corp. (NC), 23.7%

Synovus Financial Corp. 23.1%

Community First Bcshs (MHC) 21.9%

United Bank Corp. 10.3%

Pinnacle Financial Corp. 8.7%

Pinnacle Financial Corp.27%

First Security

Bankshares Inc.27%

Synovus Financial Corp.24%

South State Corporation

14%

First Citizens

BancShares Inc.8%

Pinnacle Financial Corp.

63%

Regions Financial Corp.

First Security Bankshares Inc. 14%

Elberton FS&LA

Elbert Franklin Hart

Cost of Deposits: 0.10%

Deposit Breakdown By County

Pinnacle Financial Corp. 34%

First Security

Bankshares Inc. 30%

First Citizens

BancShares Inc. 18%

Synovus Financial Corp.9%

BB&T Corp.9%

Newton Walton Gwinnett

Cost of Deposits: 0.09% Cost of Deposits: 0.08%

Wells Fargo & Co. 23%

Bank of America Corp. 16.87%

SunTrust 17%

Renasant Corp. 10.60%

BB&T Corp. 6.59%

JPMorgan Chase & Co.

East West Bancorp Inc.

United Community Banks Inc.

Quantum Capital Corp.,

2.2%

Piedmont Bancorp Inc.

Pinnacle Financial Corp.

0.29%

Source: S&P Global Market Intelligence and Pinnacle Bank; Data as of 12/31/18

Cost of Deposits: 0.23% Cost of Deposits: 0.10% Cost of Deposits: 0.07%


Investment Portfolio Detail

Profitable securities portfolio with consistent return and strong yields:

Yield BreakdownSecurities Income

Securities Portfolio 2014 2015 2016 2017 2018U.S. Gov't Agency & Corp Obligations 20,991 24,893 17,474 19,544 17,600

State & Political Obligations 59,102 62,870 48,527 47,058 42,197

Mortgage Backed Securities 58,257 51,517 34,641 34,674 38,022

Other Debt Securities 14,105 24,417 24,523 13,761 13,093

Total Marketable Equity Securities 7,411 7,521 7,645 7,769 0

Total Securities 159,866 171,218 132,810 122,806 110,912

Debt and Equity Securities 2014 2015 2016 2017 2018

Earning Assets 4.5% 4.3% 4.6% 4.9% 4.9%

Treas & Govt Agcy Secs 0.5% 0.5% 0.1% 0.0% 0.6%

Mortgage Backed Secs 2.9% 2.8% 2.9% 3.3% 3.3%

All Other Secs 2.8% 2.6% 2.7% 2.8% 3.0%



Min25th

PercentileMedian

75th Percentile

Max

n

Net Interest Margin 1.79% 3.53% 3.84% 4.19% 4.77% 7.79%

Non Interest Income / Avg. Assets 0.10% 0.48% 0.76% 0.76% 1.26% 15.30%

Efficiency Ratio 84.92% 65.93% 64.24% 59.48% 54.17% 28.52%

ROAA (1) 1.01% 1.15% 1.29% 1.29% 1.46% 3.49%

ROAE (1) 7.45% 10.98% 10.99% 12.66% 14.47% 31.78%

Loan Growth -9.67% 4.52% 8.04% 9.18% 12.89% 146.80%

TE / TA 8.10% 9.14% 9.36% 9.89% 10.63% 12.00%

NPA's / Assets 3.18% 1.01% 0.55% 0.41% 0.27% 0.00%

Cost of Funds 2.01% 0.92% 0.68% 0.42% 0.15% 0.01%

Comparison to Southeast Peer Group

(1) Values adjusted for S Corp Status; Normalized to remove $1,328MM security write offSource: S&P Global Market Intelligence; data as of 12/31/2018

Pinnacle Value

Peer group includes SE banks with assets between $750MM and $2B, ROAA > 1.0%, and TE / TA between 8.0% and 12.0%

Section VIIManagement Team and Board


Organizational Chart

BSA, CRA Officer, Loan Review Officer, Internal

Audit Liaison

Jackson McConnellChief Executive Officer

Leann Smith Mortgage Division

Jenny Wofford VP of Branch

Administration

Mike Starrett

SVP

Melanie Dye Accounting

Dept.

Daryl West Finance Dept.

David VoylesPresident

Donna Webb EVP /

Operations

Amanda MarunichHuman

Resources

Anna Grant Jones

Marketing Dept.

Highland Trust Partners

Investment Services

John GrissomSenior Credit

Officer

Ken Stewart Compliance

Dept.

Martha Fleming Loan Review

Morgan SigmanCredit

Administration

Ronni Rice Sr. Mortgage Underwriter

Jennifer WhitmireBranch

Operations

Josh Collier IT Dept.

Kerri Young Payment

Services Officer

Drew Perry Deposit

Operations Miranda Fleming Loan

Administration

Jennifer Sexton Electronic Banking

John HyltonNorth Market

Stewart York East Market

Mason McWhorter

Central Market

Russell HewattWest Market

Jody Porter South Market

Branch Managers

Customer Call Center

ITM Support Center

Mortgage Loan Operators

Michael ShelbyTreasury

Management

Sherrie WhitmireExecutive Administrative

Assistant

Pinnacle Bank Board of Directors

Scott Wilson

EVP / CFO

Shannon Fortson

EVP / CCO

Susan AnderwsInformation

Security Officer

Carissa Rosenberg Loan

Operations

Amanda Miller Collections and

Recovery

Kim West Mortgage

Operations

Pinnacle Bank is a subsidiary of

Pinnacle Financial Corporation


Management Team

The management team has over 90 years of collective Pinnacle experience:

L. Jackson McConnell, Jr.

Chairman & CEO

Lawson Jackson McConnell Jr., age 52, is the Chairman and Chief Executive Officer of Pinnacle Bank. He began his career in the Commercial Lending Department of Trust Company Bank of Atlanta, now known as SunTrust. He is a graduate of the Georgia Institute of Technology and the University of Colorado's Graduate School of Banking

David Voyles, age 53, has over 26 years of banking experience, serving Pinnacle Bank in various capacities since 2001. He serves as EVP and became a Bank Director in 2007. Prior to his employment by Pinnacle Bank, he served as President and Director of The Gordon Bank (Gordon, Georgia from 1995 – 2001); Vice President of The Gordon Bank (1994-1995); and Assistant Vice President of Trust Company (Athens, Georgia from 1991 to 1994).

D. Scott Wilson, age 53, is the EVP and CFO of Pinnacle Bank. He began his career in banking with Pinnacle in 2005. He is responsible for managing and directing all accounting, financial and reporting activities for the bank and its parent holding company, Pinnacle Financial Corporation. Scott has direct responsibility for the investment portfolio and asset liability management including deposit and loan pricing as well as human resource management and marketing.

Donna M. Webb, age 52, is the EVP Operations Group Manager and has been with Pinnacle Bank since 1999. Prior to joining the bank she worked with Granite City Bank and Synovus Bank in operational and customer service areas. As a leader she increases business value by facilitating growth strategies throughout her 30 year banking career. Donna is a graduate of Georgia Bankers Association Operations and Technology School and Louisiana State University’s Graduate School of Banking.

Shannon Fortson, age 46, is the EVP and Chief Credit Officer and has been with Pinnacle Bank since 1999. He has 27 years of banking experience. Shannon spent several years working throughout the state with NationsBank, was employed in Wachovia’s Middle Markets and Business Banking divisions, and has served in his current role at Pinnacle since 2008. He is a graduate of the University of Georgia and Louisiana State University’s Graduate Banking School (graduating #1 in his class)

David K. Voyles

President

D. Scott Wilson

EVP & CFO

Donna M. Webb

EVP – Operations Group Manager

D. Shannon Fortson

EVP & CCO


Board of Directors

Tenured Board of Directors with a wealth of experience:

Mike Fernandez, age 53, continues to grow the Fernandez family business as Owner of Design Mart. He has held

this position for 23 years but also worked in the business growing up as it was led by his father. It is a

marketing material, online point-of-sale and manufacturing applications business. It deals primarily with

companies in the deathcare industry in the US and Canada.

Scott Fogle, age 54, has invested fifteen years as Co-Founder and CEO of Management Consulting Technology.

His company has a staff of IT advisors and data scientists assisting companies to transform and optimize

technology infrastructure. He started in his career with NCR in 1987 in general purpose computing.

A native of Covington, Greg Herring, age 53, has operated a collections agency, Darnel Quick Recovery in his

hometown since 1991. He joined the Bank Board in 2007. He served as a Board Member and Chairman of the

Board of Directors of Georgia Central Bank prior to its acquisition by Pinnacle Bank.

An Elberton native, Bob Lee, age 67, is a co-owner of Elbert Insurance Agency, where he has worked since

1974. He was named a Bank Director in 1987. Mr. Lee graduated from Elbert County High School in 1969 and

graduated from the University of Georgia in 1974 with a degree in business.

Michael (Mike) FernandezElberton, GA

Scott FogleWatkinsville, GA

Greg T. HerringSocial Circle, GA

Robert E. (Bob) Lee, IIIElberton, GA


Board of Directors

Dr. Dan McAvoy, age 68, is a partner with the Medical Center of Elberton, where he has worked for nearly

three decades as a family practice doctor. He was named a Bank Director in 1986. A native of Tignall, Georgia,

Dr. McAvoy graduated from North Georgia College with a Bachelor of Science in Chemistry in 1972 and the

Medical College of Georgia with his M.D. in 1976. He completed his residency at Martin Army Hospital at Fort

Benning, Georgia.

A native of Elberton, Jackson McConnell, age 52, was named President of Pinnacle Bank in April 2000 after

serving as Executive Vice President. He later assumed the titles of CEO and Chairman in 2006 and 2007,

respectively. He joined the Bank Board in 1996.

Bill McDermott, age 63, has been the CEO and Founder of McDermott Financial Solutions for over seven years.

It provides relationship-based, financial consulting services. Before building this company, he worked in the

banking industry for 32 years including SunTrust as well as several community banks.

An Atlanta native, Dr. Thomas McGarity, age 63, has operated McGarity Dental LLC, located in Jersey, GA,

since 1981. He also oversees a host of ventures, including hunting and tree farm, rental properties and a

restaurant. He was named a Bank Director in 2007, serving previously on the board of Georgia Central Bank.


Dr. Daniel (Dan) McAvoy, M.D.Elberton, GA

L. Jackson McConnell, Jr.Elberton, GA

William McDermottNorcross, GA

Dr. Thomas E. McGarity, D.D.SJersey, GA


Board of Directors

A lifelong resident of Social Circle, Rip Malcom, age 65, worked for the Georgia DOT for 30 years before

retiring. He was also President and CEO of Georgia Central Bank for two years. He joined the Pinnacle Bank

Board in 2007 after serving as a director of Georgia Central Bank since 2000. After retiring as a Senior Vice-

President from Pinnacle Bank, Rip manages and is co-owner of Integrity Valuation Management Group, an

appraisal management company.

Marjorie Moore, age 56, is an interior designer and entrepreneur who owns and operates the Downtown Market

in Royston, GA. The location is in the former Joe T. Cunningham Furniture store also operated by Mrs. Moore

and her family. She has been a Bank Director since 2002.

Mrs. Moore graduated from the University of Georgia in 1987 with a Bachelor’s of Science degree.

David Voyles, age 53, has over twenty-six years of banking experience, serving Pinnacle Bank in various

capacities since 2001. He serves as Executive Vice President and became a Bank Director in 2007. Prior to his

employment by Pinnacle Bank, he served as President and Director of The Gordon Bank (Gordon, Georgia from

1995 – 2001); Vice President of The Gordon Bank (1994-1995); and Assistant Vice President of Trust Company

(Athens, Georgia from 1991 to 1994).

Steve Williams, age 65, owns Tri-State Distributions, a multi state distribution company. Steve received an

Associate of Arts degree from Reinhardt College in 1973. He furthered his studies at the University of Georgia

where he received a BBA degree in 1975. He has been a Bank Director since 1997.


Roy J. (Rip) Malcolm, Jr.Eatonton, GA

Marjorie Bond MooreRoyston, GA

David K. VoylesAthens, GA

Steve A. WilliamsRoyston, GA

Section VIIIProjection Model


Pinnacle Standalone Projection Summary

(1) 2018 Net Income reflects a pre tax Sub –S number; Pinnacle converted to C-Corp status effective 1/1/2019

Pinnacle Cons. Balance Sheet ($ 000's) 2018 Q2 2019 2019 2020 2021 2022 2023

Net Loans $678,241 $693,492 $708,744 $737,094 $766,578 $797,241 $829,130

% Growth 4.5% 4.0% 4.0% 4.0% 4.0%

Total Assets $946,457 $957,696 $976,262 $1,016,753 $1,059,105 $1,103,402 $1,149,727

% Growth 3.1% 4.1% 4.2% 4.2% 4.2%

Deposits $832,449 $832,449 $832,449 $865,747 $900,377 $936,392 $973,848

% Growth 0.0% 4.0% 4.0% 4.0% 4.0%

Total Equity $90,161 $94,400 $112,966 $122,159 $131,881 $142,163 $153,032

% Growth 25.3% 8.1% 8.0% 7.8% 7.6%

Pinnacle Income Statement ($ 000's) 2018 Q2 2019 2019 2020 2021 2022 2023

Net Interest Income (post-prov.) $35,764 $18,442 $37,700 $39,715 $41,344 $42,946 $44,614

% Growth 5.4% 5.3% 4.1% 3.9% 3.9%

Noninterest Income $11,111 $6,407 $12,814 $13,250 $13,912 $14,677 $15,483

% Growth 15.3% 3.4% 5.0% 5.5% 5.5%

Noninterest Expense $32,265 $16,966 $33,932 $35,018 $36,594 $38,204 $39,885

% Growth 5.2% 3.2% 4.5% 4.4% 4.4%

Net Income (1) $13,228 $7,883 $12,271 $13,281 $13,810 $14,370 $14,957

% Growth -7.2% 8.2% 4.0% 4.1% 4.1%

Net Interest Margin 4.2% 4.3% 4.3% 4.4% 4.3% 4.3% 4.3%

Nonineterest Income / Assets 1.2% 1.3% 1.3% 1.3% 1.3% 1.4% 1.4%

Nonineterest Expense / Assets 3.5% 3.5% 3.5% 3.5% 3.5% 3.5% 3.5%

ROAA 1.2% 1.3% 1.3% 1.4% 1.4% 1.4% 1.5%

ROAE 14.9% 12.1% 12.1% 11.3% 10.9% 10.5% 10.1%


Pinnacle Standalone Projections – $15MM Capital Raise

(1) Unlevered capital invested at a rate of 2.25%

Balance Sheet ($ 000's) Q2 2019 Capital Raise Q2 2019 Adj. 2019 2020 2021 2022 2023

Assets Debit Credit

Cash $22,130 $0 $0 $22,130 $24,379 $24,379 $24,379 $24,379 $24,379

Securities $117,000 $14,475 $0 $131,475 $131,475 $131,475 $131,475 $131,475 $131,475

Balances Due/Fed Funds (Int. Co. Funding) $57,301 $0 $0 $57,301 $41,828 $53,969 $66,837 $80,471 $94,906

Investment In Nonbank Subs $0 $0 $0 $0 $0 $0 $0 $0 $0

Gross Loans (ex HFS) $699,707 $0 $0 $699,707 $715,000 $743,600 $773,344 $804,278 $836,449

Loan Loss Reserve $6,214 $0 $0 $6,214 $6,256 $6,506 $6,766 $7,037 $7,319

Net Loans $693,492 $0 $0 $693,492 $708,744 $737,094 $766,578 $797,241 $829,130

Intangibles $19,593 $0 $0 $19,593 $19,593 $19,593 $19,593 $19,593 $19,593

Fixed Assets $25,137 $0 $0 $25,137 $27,200 $27,200 $27,200 $27,200 $27,200

Other Assets $23,043 $0 $0 $23,043 $23,043 $23,043 $23,043 $23,043 $23,043

Total Assets $957,696 $14,475 $0 $972,171 $976,262 $1,016,753 $1,059,105 $1,103,402 $1,149,727

Liabilities and Shareholders' Equity

Deposits $832,449 $0 $0 $832,449 $832,449 $865,747 $900,377 $936,392 $973,848

Federal Funds Sold / Repos $1,264 $0 $0 $1,264 $1,264 $1,264 $1,264 $1,264 $1,264

FHLB Borrowings $7,000 $0 $0 $7,000 $7,000 $7,000 $7,000 $7,000 $7,000

Other Liabilities (FHLB, TRUPS, Subdebt) $22,583 $0 $0 $22,583 $22,583 $20,583 $18,583 $16,583 $14,583

Total Liabilities $863,296 $0 $0 $863,296 $863,296 $894,594 $927,224 $961,239 $996,695

Preferred Equity $0 $0 $0 $0 $0 $0 $0 $0 $0

Common Equity $94,400 $0 $14,475 $108,875 $112,966 $122,159 $131,881 $142,163 $153,032

Total Equity and Liabilities $957,696 $0 $14,475 $972,171 $976,262 $1,016,753 $1,059,105 $1,103,402 $1,149,727

TBVPS $82.12 $87.36 $91.36 $100.35 $109.87 $119.93 $130.56


Pinnacle Standalone Projections – $15MM Capital Raise

(1) Unlevered capital invested at a rate of 2.25%(2) EPS does not include dilution from warrants

Income Statement ($ 000's) 2019 2020 2021 2022 2023

Interest Income $42,826 $44,909 $46,707 $48,575 $50,475

Loans $38,546 $40,421 $42,039 $43,720 $45,430

Securities $3,483 $3,653 $3,799 $3,951 $4,105

Other $797 $836 $869 $904 $939

Invested Capital $163 $329 $337 $344 $352

Interest Expense $3,489 $3,651 $3,753 $3,949 $4,107

Deposit Expense $3,304 $3,457 $3,554 $3,739 $3,889

Other interest Expense $185 $194 $199 $210 $218

Provision Expense $1,800 $1,872 $1,947 $2,025 $2,106

Net Interest Income (post-provision) $37,700 $39,715 $41,344 $42,946 $44,614

Noninterest Income $12,814 $13,250 $13,912 $14,677 $15,483

Noninterest Expense $33,932 $35,018 $36,594 $38,204 $39,885

Gain /Loss on Securites $0 $0 $0 $0 $0

Pre-Tax Income $16,582 $17,947 $18,662 $19,419 $20,213

Tax Provision $4,311 $4,666 $4,852 $5,049 $5,255

Net Income $12,271 $13,281 $13,810 $14,370 $14,957

Dividend (Aggregate) $4,088 $4,088 $4,088 $4,088 $4,088

Per Share $4.00 $4.00 $4.00 $4.00 $4.00

EPS $12.01 $12.99 $13.51 $14.06 $14.63


Warrant Exercise

Based on current projections and assuming a $15MM capital raise, warrants would exercise at the following estimated metrics:

December 31

2021 2022 2023

Shares Outstanding 1,022,033 1,022,033 1,022,033

Tangible Book Value Per Share $109.87 $119.93 $130.56

Earnings Per Share $14.80 $15.40 $16.04

Warrants Exercised at $135 / share 111,111 111,111 111,111

Total Shares (Including Exercised Warrants) 1,133,144 1,133,144 1,133,144

Revised Tangible Book Value / Share $112.33 $121.41 $131.00

Revised Earnings / Share $12.19 $12.68 $13.20

Exercise Price / Tangible Book Value 120.2% 111.2% 103.1%

Exercise Price / Current Year EPS 11.1x 10.6x 10.2x

investor presentation: private placement of common stock - pinnacle … · 2019. 5. 13. · 4...

Documents