Pinnacle Agrees to Acquire Additional Interest in Bankers Healthcare Group

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.

 

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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.