Acquisitions and Intangibles

12 Months Ended

Dec. 31, 2014

Acquisitions and Intangibles [Abstract]

Acquisitions and Intangibles

Note 2. Acquisitions and Intangibles

Acquisition – Mid-America Bancshares, Inc. (Mid-America) On November 30, 2007, we consummated a merger with Mid-America, a two-bank holding company located in Nashville, Tennessee. Pinnacle Financial recognized $9.4 million as a core deposit intangible. This identified intangible is being amortized over ten years using an accelerated method which anticipates the life of the underlying deposits to which the intangible is attributable. For the years ended December 31, 2014, 2013, and 2012 approximately $860,000, $896,000 and $987,000, respectively, was recognized in the accompanying consolidated statement of operations as amortization of intangibles. Amortization expense associated with this identified intangible will approximate $691,000 to $825,000 per year for the next three years.

Acquisition – Cavalry Bancorp, Inc. (Cavalry) On March 15, 2006, Pinnacle Financial consummated its merger with Cavalry, a one-bank holding company located in Murfreesboro, Tennessee. Pinnacle Financial recognized $13.2 million as a core deposit intangible. This identified intangible was being amortized over seven years using an accelerated method which anticipated the life of the underlying deposits to which the intangible is attributable. This intangible was fully amortized during the year ended December 31, 2014. For the years ended December 31, 2013 and 2012 approximately $273,000 and $1.6 million, respectively, was recognized in the accompanying consolidated statements of operations as amortization of intangibles.

Acquisition - Beach & Gentry. During the third quarter of 2008, Pinnacle Bank acquired Murfreesboro, Tennessee based Beach & Gentry Insurance LLC (Beach & Gentry). Concurrently, Beach & Gentry merged with Miller & Loughry Insurance & Services Inc., a wholly-owned subsidiary of Pinnacle Bank, also located in Murfreesboro. In connection with this acquisition, Pinnacle Financial recorded a customer list intangible of $1.3 million which is being amortized over 20 years on an accelerated basis. Amortization of this intangible amounted to $91,000, $97,000, and $103,000 respectively, during the years ended December 31, 2014, 2013 and 2012.

Acquisition - Bankers Healthcare Group, LLC. On February 1, 2015, Pinnacle Bank acquired a 30% interest in Bankers Healthcare Group, LLC (BHG) for $75 million in cash. Pinnacle Bank will account for this investment pursuant to the equity method for unconsolidated subsidiaries and will recognize its interest in BHG's profits and losses in noninterest income with corresponding adjustments to the BHG investment account. Additionally, Pinnacle Bank will not separately recognize any goodwill or other intangible asset associated with the transaction, however, it will recognize amortization expense associated with certain amounts related to BHG's customer list and data processing capabilities. In connection with this acquisition, Pinnacle Bank borrowed $40 million from a national banking franchise pursuant to a loan agreement which requires Pinnacle Financial and Pinnacle Bank maintain certain financial covenants including minimum capital ratios, liquidity requirements and other matters. The loan has a 5-year maturity and bears interest at approximately 2.95% per annum currently.