Acquisitions and Intangibles

3 Months Ended

Mar. 31, 2015

Acquisitions and Intangibles [Abstract]

Acquisitions and Intangibles

Note 2. Acquisition and Intangibles

Acquisition - Bankers Healthcare Group, LLC. On February 1, 2015, Pinnacle Bank acquired a 30% interest in Bankers Healthcare Group, LLC (BHG) for $75 million. Pinnacle Bank accounts for this investment pursuant to the equity-method of accounting and, as such, has recorded its investment in BHG net of identified intangible assets. Earnings on this investment are recorded net of intangible amortization expense as a component of noninterest income. For the first quarter of 2015, Pinnacle Bank recorded earnings of $3.2 million, net of approximately $400,000 in intangible amortization expense in income from equity-method investment.

In connection with this acquisition, Pinnacle Bank borrowed $40 million from an unaffiliated bank pursuant to a loan agreement which requires Pinnacle Financial and Pinnacle Bank to maintain certain financial covenants including minimum capital ratios, liquidity requirements and other non-financial covenants. The loan has a 5-year maturity and bears interest at approximately 2.95% per annum currently.