Pinnacle Financial and Bankers Healthcare Group Complete Transaction

Pinnacle announces offering of bank-issued subordinated notes

Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) announced that on March 1, 2016, Pinnacle and its subsidiary, Pinnacle Bank, completed the previously announced purchase of an additional 19 percent interest in Bankers Healthcare Group, Inc. (“BHG”) for $114 million. The transaction was funded with a combination of 860,470 shares of Pinnacle common stock and $74.1 million of cash. As a result, Pinnacle now owns 49 percent of BHG.

Consistent with previous expectations, Pinnacle funded substantially all of the cash portion of the incremental investment with short-term borrowings which it expects to repay with the proceeds of an offering of Pinnacle Bank-issued subordinated indebtedness. On March 3, 2016, Pinnacle Bank agreed to issue an additional $70 million of its 4.875 percent subordinated notes due 2025 to certain institutional investors at a discounted price of 99.023 percent of the principal, resulting in an effective interest rate to the purchasers of the notes of 5.125 percent per annum through July 30, 2020, payable semi-annually. After July 20, 2020, the subordinated notes will bear a floating rate of interest at 90-Day LIBOR + 3.128 percent until the notes mature on July 30, 2025. Pinnacle estimates that the net proceeds from the sale of the notes will be received on or about March 10, 2016 and will approximate $69.3 million before underwriters’ fees and transaction expenses. The notes are expected to qualify as Tier 2 capital for regulatory purposes.

Pinnacle continues to anticipate that the incremental BHG investment will be approximately 2 percent accretive to the firm’s estimated fully diluted earnings per share in 2016 and 4 percent accretive to the estimated fully diluted earnings per share in 2017, inclusive of the aforementioned subordinated indebtedness issuance. 

This press release does not constitute an offer to sell, or the solicitation of an offer to buy, any security and shall not constitute an offer, solicitation or sale in any jurisdiction in which such offering would be unlawful.

Pinnacle Financial Partners provides a full range of banking, investment, trust, mortgage and insurance products and services designed for businesses and their owners and individuals interested in a comprehensive relationship with their financial institution. Pinnacle’s focus begins in recruiting top financial professionals. The American Banker recognized Pinnacle as the third best bank to work for in the country in 2015.

The firm began operations in a single downtown Nashville location in October 2000 and has since grown to more than $8.7 billion in assets at Dec. 31, 2015. As the second-largest bank holding company headquartered in Tennessee, Pinnacle operates in the state’s four largest markets, Nashville, Memphis, Knoxville and Chattanooga, as well as several surrounding counties.

Additional information concerning Pinnacle, which is included in the NASDAQ Financial-100 Index, can be accessed at www.pnfp.com.

 

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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," "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,

 

• failure to close Pinnacle Bank’s subordinated debt financing;

• deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses;

• continuation of the historically low short-term interest rate environment;

• the inability of Pinnacle, or entities in which it has significant investments, like BHG, to maintain the historical growth rate of its, or such entities', loan portfolio;

• changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments;

• effectiveness of Pinnacle's asset management activities in improving, resolving or liquidating lower-quality assets;

• increased competition with other financial institutions;

• 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;

• rapid fluctuations or unanticipated changes in interest rates on loans or deposits;

• the results of regulatory examinations;

• the ability to retain large, uninsured deposits;

• the development of any new market other than the Nashville, Knoxville, Chattanooga or Memphis MSAs;

• a merger or acquisition like our proposed merger with Avenue Financial Holdings, Inc. (“Avenue”);

• risks of expansion into new geographic or product markets, like the expansion into the Chattanooga and Memphis MSAs;

• any matter that would cause Pinnacle to conclude that there was impairment of any asset, including intangible assets;

• reduced ability to attract additional financial advisors (or failure of such advisors to cause their clients to switch to Pinnacle), to retain financial advisors (including those at Avenue) or otherwise to attract customers from other financial institutions;

• further deterioration in the valuation of other real estate owned and increased expenses associated therewith;

• inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies and required capital maintenance levels;

• risks associated with litigation, including the applicability of insurance coverage;

• the risk that the cost savings and any revenue synergies from the mergers with Avenue, CapitalMark Bank & Trust (“CapitalMark”) and Magna Bank (“Magna”), may not be realized or take longer than anticipated to be realized;

• disruption from the Avenue merger with customers, suppliers or employee relationships;

• the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement related to the Avenue merger;

• the risk of successful integration of Avenue's, CapitalMark's and Magna's business with ours;

• the failure of Avenue’s shareholders to approve the merger;

• the amount of the costs, fees, expenses and charges related to the Avenue merger;

• the ability to obtain required governmental approvals of the proposed terms of the Avenue merger;

• reputational risk and the reaction of Pinnacle's and Avenue's customers to the Avenue merger;

• the failure of the closing conditions for the Avenue merger to be satisfied;

• the risk that the integration of Avenue's, CapitalMark's and Magna's operations with Pinnacle's will be materially delayed or will be more costly or difficult than expected;

• approval of the declaration of any dividend by Pinnacle's board of directors;

• the possibility that the Avenue merger may be more expensive to complete than anticipated, including as a result of unexpected factors or events;

• the dilution caused by Pinnacle’s issuance of additional shares of its common stock in the Avenue merger;

• 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;

• the possibility of increased compliance costs as a result of increased regulatory oversight, including oversight of companies in which Pinnacle has significant investments, and the development of additional banking products for our corporate and consumer clients;

• the risks associated with our being a minority investor in BHG, including the risk that the owners of a majority of the equity interests in BHG decide to sell the company if not prohibited from doing so by the terms of our agreement with them;

• the incremental cost and/or decreased revenues associated with exceeding $10 billion in assets will exceed current estimates; and

• 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.

 

Additional factors which could affect the forward looking statements can be found in Pinnacle’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, or Avenue’s Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form 8-K, in each case filed with or furnished to the SEC and available on the SEC's website at http://www.sec.gov Pinnacle and Avenue disclaim any obligation to update or revise any forward-looking statements contained in this release which speak only as of the date hereof, whether as a result of new information, future events or otherwise.