Merger brings together the top two community banks in Nashville,
Tennessee
Immediately accretive to operating earnings
Webcast to begin at 8:30 a.m. CST
Jan. 29, 2016
Presentation
and streaming audio: http://www.pnfp.com
Audio
only: 1-877-602-7944
Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) (“Pinnacle”) and
Avenue Financial Holdings, Inc. (Nasdaq/NGS: AVNU) (“Avenue”) jointly
announced today the signing of a definitive agreement for Avenue to
merge into Pinnacle. The proposed merger of Avenue with and into
Pinnacle has been approved unanimously by each company’s Board of
Directors and is expected to close either late in the second quarter or
early in the third quarter of 2016. Completion of the transaction is
subject to satisfaction of customary closing conditions, including the
receipt of required regulatory approvals and the approval of Avenue’s
shareholders. Avenue’s bank subsidiary, Avenue Bank, and Pinnacle Bank
are expected to merge simultaneously with the merger of the respective
parent companies.
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Ron Samuels, Avenue’s chairman and chief executive officer, will be
named vice chairman of Pinnacle’s board of directors once the
acquisition is consummated. He will serve on Pinnacle’s Senior
Leadership Team and will report to Pinnacle’s president and chief
executive officer, M. Terry Turner.
Samuels will be responsible for continuing Avenue’s development of a
national franchise focused on the music industry as well as ensuring
that Avenue’s history of strong growth continues in the combined firm.
Under the terms of the merger agreement, Avenue shareholders will
receive 0.36 shares of Pinnacle’s common stock and $2.00 in cash for
every Avenue share. All fractional shares will be cashed out based on
the average 10-day closing price of Pinnacle common stock as of the
closing. Additionally, Avenue’s outstanding stock options will be fully
vested upon consummation of the merger pursuant to Avenue’s stock option
plan, and all outstanding Avenue options that are unexercised prior to
the closing will be cashed out at $20 per share. At closing, and
assuming all outstanding Avenue options are cashed out as of the merger
date, Avenue shareholders will own approximately 8.1 percent of the
combined firm on a fully diluted basis.
The transaction is currently valued at approximately $201.4 million
based on Pinnacle’s 10-day average closing price through Jan. 28, 2016,
and is comprised of stock consideration of approximately 3.7 million
shares of PNFP common stock and $23.2 million in cash. In addition to
the merger consideration, Pinnacle will assume $20.0 million of
subordinated debt previously issued by Avenue.
“Both we and Pinnacle have been committed to the idea that Nashville
deserves a large and impactful local bank. Bringing Nashville’s two best
locally owned banks together is a fabulous thing for this city,” Samuels
said. “By joining forces, Pinnacle and Avenue can grow faster and more
efficiently, realize more value for our shareholders and provide a
broader array of banking services to the client base than we could as
independent firms. Since Avenue’s founding in 2006 we have focused on
offering sophisticated services to Middle Tennessee’s businesses and
their owners with a personal touch, and we will continue that tradition
with Pinnacle.”
The combination of Pinnacle and Avenue provides many opportunities to
both companies’ shareholders, including:
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Deposit market share growth in one of the nation’s best banking
markets, Nashville, Tennessee. To achieve Pinnacle’s vision of
building a $13-15 billion bank in the state’s four largest markets,
the firm needs to achieve a top three market share in each of those
markets with a goal to be No. 1 in the Nashville MSA. Pinnacle and
Avenue had a combined $5.3 billion in deposits on the most recent FDIC
Summary of Deposits, narrowing the gap with No. 3 SunTrust at $5.9
billion.
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Complementary cultures and similar strategies. Both firms have
been named in the top five “Best Banks to Work For” in the United
States for the past two years. This focus on work environment has
allowed Avenue to recruit high performing financial professionals who
will prosper in the combined firm. The two companies also focus on
businesses and their owners, with Avenue specializing in several key
industry segments, including music and entertainment, healthcare,
commercial real estate and not-for-profit organizations.
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Impact to Pinnacle’s operating earnings and tangible book value.
Assuming a mid-year closing of the transaction, a late third quarter
2016 technology conversion and excluding the impact of merger-related
expenses, expectations are that the financial results for the
remainder of 2016 will be modestly accretive by 1.3 percent to
Pinnacle’s fully diluted earnings per share, while 2017 fully diluted
earnings per share should be impacted positively by approximately 4.2
percent. The firm anticipates that Pinnacle’s tangible book value per
share will be diluted by 1.0 percent as of the merger date with an
earn-back period of approximately two years. The firm anticipates that
once the technology conversion has occurred that approximately 40
percent of Avenue’s expense base will be eliminated. The expectations
noted above also consider the impact of the firm’s total assets
exceeding $10 billion post-merger.
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Excellent credit quality from both institutions. Both firms
believe that one of the principal determinants of a financial
institution’s ability to provide long-term shareholder value is a
track record of excellent credit quality. At year end 2016, the pro
forma firm would have reported a ratio of nonperforming assets to
total loans and other real estate of 0.51 percent.
“In our march to dominate the four urban markets in Tennessee, we have
said for some time that we would be seeking in-market merger
opportunities. This merger is consistent with Pinnacle’s strategy to
grow rapidly and become the dominant bank in the commercial banking and
affluent consumer segments in Nashville,” Pinnacle CEO Turner said.
“Avenue’s success can be attributed to the team assembled by its senior
leadership, its experienced financial services professionals and the
culture they have created. My personal admiration for Ron Samuels goes
back to our involvement in Leadership Nashville in the early ’90s, and I
am very excited that we are now on the same team.”
Avenue had approximately $1.162 billion in total assets, $865.3 million
in loans and $969.6 million in deposits as of Dec. 31, 2015 and
currently operates a corporate headquarters and four retail locations in
Nashville. During the fourth quarter of 2015, Avenue recorded loan
growth of $34.9 million, or an annualized linked-quarter increase of
16.8 percent over its third quarter ending balances. Avenue also
recorded deposit growth of $68.8 million, or an annualized
linked-quarter increase of 30.6 percent over its third quarter ending
balances.
Avenue’s tangible book value per common share approximated $8.91 per
common share as of Dec. 31, 2015, and the firm recorded fourth quarter
2015 net income per fully diluted share of $0.21 per common share, a
16.7 percent increase over the third quarter. Avenue’s return on average
assets for the fourth quarter of 2015 was 0.75 percent, compared to 0.65
percent in the third quarter.
Pinnacle, with 44 offices in Nashville, Knoxville, Memphis and
Chattanooga, reported total assets of $8.7 billion and total deposits of
nearly $7.0 billion as of Dec. 31, 2015.
Because Pinnacle and Avenue offices are in similar locations, the firms
anticipate that Avenue’s Cool Springs, Cummins Station and West End
offices will be consolidated into Pinnacle offices. Pinnacle plans to
close its Green Hills office and consolidate into Avenue’s space.
Upon consummation of the merger, Kent Cleaver, Avenue’s president and
chief operating officer, will become a member of Pinnacle’s Senior
Leadership Team along with Samuels and will be responsible for a team of
commercial and private relationship bankers. Andy Moats, Avenue’s chief
credit officer and bank group director, will work with Samuels to
develop a nationwide music vertical for the combined firm and will join
Pinnacle’s Leadership Team.
In addition to Samuels, three Avenue directors and long-time members of
Nashville’s business community are expected to be appointed to the
combined firm’s board of directors after the merger closes: Marty
Dickens, former regional executive with AT&T, David Ingram, CEO of
Ingram Entertainment, and Joe Galante, former chairman of Sony Music,
Nashville.
“Avenue has built a strong bank that closely follows the Pinnacle model:
to create an engaging culture so associates provide distinctive service
to clients, thereby generating high profitability for shareholders,”
Pinnacle Chairman Robert A. McCabe Jr. said. “Their directors have
played an influential role in Avenue’s success, and we expect that Ron,
Marty, David and Joe will make significant contributions to Pinnacle’s
board.”
Systems conversions are scheduled to be completed during the third or
fourth quarter of 2016. Until that time, Avenue will continue to operate
under its current brand as a division of Pinnacle Bank once the merger
is consummated.
Sandler O’Neill + Partners, L.P. served as financial advisor to
Pinnacle, and Bass, Berry & Sims PLC was Pinnacle’s legal advisor.
Keefe, Bruyette & Woods acted as financial advisors to Avenue, and
Bradley Arant Boult Cummings was Avenue’s legal advisor.
In connection with the proposed acquisition of Avenue, Pinnacle will
file with the Securities and Exchange Commission a registration
statement on Form S-4 to register the shares of Pinnacle common stock to
be issued to the shareholders of Avenue.
Pinnacle will host a webcast conference call to discuss the definitive
agreement and other aspects of the business combination at 8:30 a.m. CST
on Friday, Jan. 29, 2016. To access the call for audio only, please call
1-877-602-7944. For the presentation and streaming audio, please access
the webcast on the investor relations page of Pinnacle’s website at www.pnfp.com.
For those unable to participate in the webcast, it will be archived on
the investor relations page of Pinnacle’s website at www.pnfp.com
for 90 days following the presentation.
About Pinnacle
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.
About Avenue Financial Holdings, Inc.
Avenue Financial Holdings, Inc., headquartered in Nashville, Tennessee,
was formed as a single-bank holding company in 2006 and operates
primarily through its subsidiary, Avenue Bank. The Company’s operations
are concentrated in the Nashville MSA, with the vision of building
Nashville’s signature bank and serving clients who value creativity,
expertise and an exceptional level of personal service. Avenue Bank
provides a wide range of business and personal banking services,
including mortgage loans, with a special emphasis on commercial, private
client, healthcare and music & entertainment banking. The Company serves
clients through five locations (a corporate headquarters and four retail
branches), a limited deposit courier service (mobile branch) for select
commercial clients and mobile and online banking services.
Additional Information and Where to Find It
In connection with the proposed merger, Pinnacle Financial Partners,
Inc. (“Pinnacle”) intends to file a registration statement on Form S-4
with the Securities and Exchange Commission (the “SEC”) to register the
shares of Pinnacle common stock that will be issued to Avenue Financial
Holdings, Inc.’s (“Avenue”) shareholders in connection with the
transaction. The registration statement will include a proxy
statement/prospectus (that will be delivered to Avenue’s shareholders in
connection with their required approval of the proposed merger) and
other relevant materials in connection with the proposed merger
transaction involving Pinnacle and Avenue.
INVESTORS AND SECURITY HOLDERS ARE ENCOURAGED TO READ THE PROXY
STATEMENT/PROSPECTUS WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT
DOCUMENTS TO BE FILED WITH THE SEC IN CONNECTION WITH THE PROPOSED
TRANSACTION BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT
PINNACLE, AVENUE AND THE PROPOSED TRANSACTION.
Investors and security holders may obtain free copies of these documents
once they are available through the website maintained by the SEC at http://www.sec.gov.
Free copies of the proxy statement/prospectus also may be obtained by
directing a request by telephone or mail to Pinnacle Financial Partners
Inc., 150 3rd Avenue South, Suite 980, Nashville, TN 37201,
Attention: Investor Relations (615) 744-3742 or Avenue Financial
Holdings, Inc., 111 10th Avenue South, Suite 400, Nashville,
TN 37203, Attention: Investor Relations (615) 252-2265.
This communication shall not constitute an offer to sell or the
solicitation of an offer to buy securities, nor shall there be any sale
of securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of such jurisdiction.
Pinnacle and Avenue, and certain of their respective directors,
executive officers and other members of management and employees may be
deemed to be participants in the solicitation of proxies from the
shareholders of Avenue in respect of the proposed merger. Certain
information about the directors and executive officers of Pinnacle is
set forth in its Annual Report on Form 10-K for the year ended December
31, 2014, which was filed with the SEC on February 25, 2015 and its
proxy statement for its 2015 annual meeting of shareholders, which was
filed with the SEC on March 10, 2015, and its Current Reports on Form
8-K, which were filed with the SEC on June 18, 2015, July 27, 2015,
August 5, 2015 and September 3, 2015. Certain information about the
directors and executive officers of Avenue is set forth in its Annual
Report on Form 10-K for the year ended December 31, 2014, which was
filed with the SEC on March 30, 2015, its proxy statement for its 2015
annual meeting of shareholders, which was filed with the SEC on April
30, 2015. Other information regarding the participants in the proxy
solicitations and a description of their direct and indirect interests,
by security holdings or otherwise, will be included in the proxy
statement/prospectus and other relevant documents filed with the SEC
when they become available.
Forward-Looking Statements
All statements, other than statements of historical fact included in
this release, are 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,” “intend,” “plan,” “believe,” “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 including statements about the
benefits to Pinnacle and Avenue of the proposed merger transaction,
Pinnacle’s future financial and operating results (including the
anticipated impact of the merger on Pinnacle’s earnings and tangible
book value) and Pinnacle’s and Avenue’s plans, objectives and
intentions. All forward-looking statements are subject to risks,
uncertainties and other facts that may cause the actual results,
performance or achievements of Pinnacle and Avenue to differ materially
from any results expressed or implied by such forward-looking
statements. Such factors include, among others, (1) the risk that the
cost savings and any revenue synergies from the merger may not be
realized or take longer than anticipated to be realized, (2) disruption
from the merger with customers, suppliers or employee relationships, (3)
the occurrence of any event, change or other circumstances that could
give rise to the termination of the merger agreement, (4) the risk of
successful integration of the two companies’ businesses, (5) the failure
of Avenue’s shareholders to approve the merger, (6) the amount of the
costs, fees, expenses and charges related to the merger, (7) the ability
to obtain required governmental approvals of the proposed terms of the
merger, (8) reputational risk and the reaction of the parties’ customers
to the proposed merger, (9) the failure of the closing conditions to be
satisfied, (10) the risk that the integration of Avenue’s operations
with Pinnacle’s will be materially delayed or will be more costly or
difficult than expected, (11) the possibility that the merger may be
more expensive to complete than anticipated, including as a result of
unexpected factors or events, (12) the dilution caused by Pinnacle’s
issuance of additional shares of its common stock in the merger and (13)
general competitive, economic, politics of and market conditions.
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.
Pinnacle Financial Partners and Avenue Financial Holdings
Merger
Fact Sheet
Jan. 28, 2016
Anticipated Size at Closing (Projected for third quarter 2016)
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More than $10 billion in assets
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Pinnacle – $8.7 billion (as of Dec. 31, 2015)
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Avenue – $1.162 billion (as of Dec. 31, 2015)
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Second-largest bank holding company headquartered in Tennessee
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Fourth-largest market share in the Nashville-Davidson-Murfreesboro
MSA
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Current Offices
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Associates as of 12/31/15
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Trading Symbols
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Pinnacle: PNFP (Nasdaq/NGS)
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Avenue: AVNU (Nasdaq/NGS)
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County
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Pinnacle
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Avenue
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Anderson
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1
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Bedford
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1
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Blount
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1
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Bradley
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1
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Cheatham
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1
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Davidson
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9
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4*
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Dickson
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1
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Hamilton
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1
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Knox
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6
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Rutherford
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8
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Shelby
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5
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Sumner
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1
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Wilson
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4
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Williamson
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4
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* The firms anticipate that Avenue’s Cool Springs, Cummins Station
and West End offices will be consolidated into Pinnacle offices.
Pinnacle plans to close its Green Hills office and consolidate into
Avenue’s space.
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