Anticipated accretion to diluted EPS of approximately 2% in 2016
and 4% in 2017
Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) announced today
that it and its subsidiary, Pinnacle Bank, have entered into an
agreement to acquire an additional 19 percent interest in Bankers
Healthcare Group (“BHG”), a privately held company, for $114 million
payable with a mix of cash and 912,000 shares of Pinnacle common stock.
The amount of cash consideration will equal the difference between the
total purchase price and the value of the stock consideration on the
closing date, which is expected to occur in late February or early March.
Upon completion of this investment, Pinnacle’s total interest in BHG
will be 49 percent. The firm acquired a 30 percent interest in BHG in
February 2015, which contributed an estimated $0.26 to Pinnacle’s fully
diluted earnings per share in 2015.
BHG is a leading provider of financing solutions for healthcare
professionals throughout the United States. BHG’s loan originations are
sourced through a variety of distribution channels and primarily sold
through an online auction process to a network of approximately 400
community banks. BHG’s total revenues for the year ended Dec. 31, 2015
approximated $144.8 million with a pretax income of approximately $77.7
million.
“Our investment in BHG has exceeded our expectations over the past 11
months and we expect their growth trajectory to remain strong,” said M.
Terry Turner, Pinnacle’s president and chief executive officer. “We look
forward to building on the solid partnership that we have established
and continuing to offer financial services through their national
distribution channel. This additional investment will allow us to
further increase and diversify our fee income.”
BHG’s other three founders and executive officers will retain a 51
percent beneficial ownership interest in BHG and have contractually
agreed to remain with the firm for an extended period of time.
“Our partnership with Pinnacle has better positioned us to continue our
rapid growth and profitability,” said Al Crawford, BHG’s chief executive
officer and one of its three founders. “We expect that this additional
investment will open up new opportunities for both firms.”
Pinnacle expects that the 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. Pinnacle expects to fund the investment through a
combination of cash and bank level subordinated indebtedness.
Sandler O'Neill + Partners, L.P. acted as financial advisor to Pinnacle
Financial Partners, Inc. and Pinnacle Bank in connection with the
transaction.
Completion of Pinnacle’s investment is subject to satisfaction of
customary closing conditions and Pinnacle Financial Partners’ election
to become a financial holding company becoming effective.
ABOUT BANKERS HEALTHCARE GROUP
Since 2001, Bankers Healthcare Group has been committed to providing
financing solutions to healthcare professionals, including personal and
commercial loans, credit cards and insurance services. BHG has provided
more than $2 billion in funding to thousands of satisfied customers
nationwide. Inc. magazine has recognized the company 10 times for
growth and job creation. For additional information, please visit www.bhg-inc.com.
ABOUT PINNACLE FINANCIAL PARTNERS
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.
Certain of the statements in this release 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) failure of the
closing conditions to Pinnacle Financial’s additional investment in BHG
to be satisfied; (ii) Pinnacle Bank’s inability to issue debt financing
in amounts and on terms acceptable to it; (iii) deterioration in the
financial condition of borrowers resulting in significant increases in
loan losses and provisions for those losses; (iv) continuation of the
historically low short-term interest rate environment; (v) the inability
of Pinnacle Financial, or companies in which Pinnacle Financial has
significant investments, to maintain the historical growth rate of its,
or such other companies’, loan portfolio; (vi) changes in loan
underwriting, credit review or loss reserve policies associated with
economic conditions, examination conclusions, or regulatory
developments; (vii) effectiveness of Pinnacle Financial's asset
management activities in improving, resolving or liquidating
lower-quality assets; (viii) increased competition with other financial
institutions; (ix) 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; (x) rapid fluctuations
or unanticipated changes in interest rates on loans or deposits; (xi)
the results of regulatory examinations; (xii) the ability to retain
large, uninsured deposits; (xiii) the development of any new market
other than the Nashville, Knoxville, Chattanooga or Memphis MSAs; (xiv)
a merger or acquisition; (xvi) risks of expansion into new geographic or
product markets, like the expansion into the Chattanooga and Memphis
MSAs; (xvii) any matter that would cause Pinnacle Financial to conclude
that there was impairment of any asset, including intangible assets;
(xviii) 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; (xix) further deterioration in the
valuation of other real estate owned and increased expenses associated
therewith; (xx) inability to comply with regulatory capital
requirements, including those resulting from changes to capital
calculation methodologies and required capital maintenance levels; (xxi)
risks associated with litigation, including the applicability of
insurance coverage; (xxii) the risk that the cost savings and any
revenue synergies from the mergers with CapitalMark and Magna may not be
realized or take longer than anticipated to be realized; (xxiii)
disruption from the CapitalMark and Magna mergers with customers,
suppliers or employee relationships; (xxiv) the risk of successful
integration of CapitalMark's and Magna's business with ours; (xxv) the
amount of the costs, fees, expenses and charges related to the
CapitalMark and Magna mergers; (xxvi) reputational risk and the reaction
of Pinnacle Financial's, CapitalMark's and Magna's customers to the
CapitalMark and Magna mergers; (xxvii) 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;
(xxvii) approval of the declaration of any dividend by Pinnacle
Financial's board of directors; (xxix) 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; (xxx) 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; (xxxi) 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; and (xxxii) 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, August 7, 2015 and
November 9, 2015. Many of such factors are beyond Pinnacle Financial's
ability to control or predict, and readers are cautioned not to put
undue reliance on such forward-looking statements. Pinnacle Financial
disclaims any obligation to update or revise any forward-looking
statements contained in this report, whether as a result of new
information, future events or otherwise.
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