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.
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.
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