Bank merger to expand Nashville's Pinnacle into Carolinas and Virginia
Nashville's largest homegrown banking company has agreed to acquire a North Carolina bank holding company and expand its presence outside of Tennessee.
On Sunday Pinnacle Financial Partners Inc. announced a roughly $1.9 billion merger deal with High Point, N.C.-based BNC Bancorp, which upon closing in the third quarter will expand its footprint to North Carolina, South Carolina and Virginia.
Post-merger, Pinnacle will rank among the nation's 50 largest public banking franchises by assets. The combined bank will have $20 billion in assets, $14 billion in loans and $15 billion in deposits with a four-state footprint concentrated in 12 of the Southeast's largest urban markets.
"This merger is consistent with Pinnacle’s strategy to become the dominant bank in southeastern commercial banking," said Pinnacle's Chief Executive M. Terry Turner.
The deal is Pinnacle's largest to date and the latest since it acquired the parent company of Nashville-based Avenue Bank for roughly $200 million last summer to add about $1.2 billion of assets.
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"Pinnacle management has demonstrated that it is adept at growth both through organic means and acquisition," said Jeff Davis, a banking analyst and managing director at Mercer Capital in Nashville. "I think investors will be okay with the size of the transaction given management’s track record."
Upon adding the parent company of Bank of North Carolina to its fold, Pinnacle will have new significant presence in Charlotte, Raleigh, Greensboro, Winston-Salem, N.C. and in Greenville-Spartanburg and Charleston, S.C.
BNC's CEO Richard D. “Rick” Callicutt II will be named chairman of the post-merger bank's Carolinas and Virginia region, which will be run out the soon-to-be acquired company's existing corporate headquarters in High Point. He will join Pinnacle’s board along with three other BNC directors.
Under the all-stock transaction, BNC shareholders will receive 0.5235 shares of Pinnacle common stock for every BNC share. Based on Pinnacle’s 20-day trailing average closing price as of Friday, the transaction is valued at roughly $35.70 per share, And based on Pinnacle’s most recent dividend, BNC shareholders will receive a roughly 47 percent increase to their current $0.05 quarterly dividend per share upon completion of the transaction.
Each company’s board has approved the deal, which remains subject to closing conditions including approval by banking regulators and shareholders of each banking company.
Pinnacle expects the acquisition with cost savings fully phased in and other adjustments to add roughly 10 percent to its 2018 earnings per share, That's also assuming a fourth-quarter 2017 technology conversion, including completion of an equity raise to support Tier I regulatory capital and excluding acquisition-related and integration costs associated with the transaction.
Currently. the nearly 17-year-old Pinnacle has more than $11.2 billion in assets with 45 offices and operations in Nashville, Memphis, Knoxville and Chattanooga and several surrounding counties. With total assets of $7.4 billion, Bank of North Carolina has 76 banking offices including 26 locations in South Carolina and nine locations in Virginia operate as BNC Bank.
Keefe, Bruyette & Woods served as financial advisor to Pinnacle, while law firm Bass, Berry & Sims PLC was that banking company's legal advisor in the transaction. Banks Street Partners LLC and Sandler O’Neill + Partners L.P., served as financial advisors to BNC with Wachtell, Lipton, Rosen & Katz and Troutman Sanders LLP serving as that bank's legal advisors.
Reach Getahn Ward at gward@tennessean.com or 615-726-5968 and on Twitter @getahn.