Acquisitions (Tables)

6 Months Ended

Jun. 30, 2016

Schedule of Business Acquisitions, by Acquisition

Acquisition - CapitalMark Bank & Trust. On July 31, 2015, Pinnacle Financial consummated its merger with CapitalMark Bank & Trust (CapitalMark). Pursuant to the terms of the Agreement and Plan of Merger dated as of April 7, 2015 by and among Pinnacle Financial, Pinnacle Bank, and CapitalMark (the CapitalMark Merger Agreement), CapitalMark merged with and into Pinnacle Bank, with Pinnacle Bank continuing as the surviving corporation (the CapitalMark Merger).

The following summarizes consideration paid and a preliminary allocation of purchase price to net assets acquired (dollars in thousands):

	Number of Shares		Amount
Equity consideration:
Common stock issued		3,306,184	$	175,525
Fair value of stock options assumed				30,430
Total equity consideration			$	205,955

Non-equity consideration - Cash				19,675
Total consideration paid			$	225,630

Allocation of total consideration paid:
Fair value of net assets assumed including estimated identifiable intangible assets			$	67,432
Goodwill				158,198
			$	225,630

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

CapitalMark

	As of July 31, 2015
	CapitalMark Historical Cost Basis		Fair Value Adjustments				As Recorded by Pinnacle Financial
Assets
Cash and cash equivalents	$	28,021	$	-			$	28,021
Investment securities⁽¹⁾		150,799		(399	)			150,400
Loans⁽²⁾		880,115		(22,600	)	⁽⁶⁾		857,515
Mortgage loans held for sale		1,791		-				1,791
Other real estate owned		1,728		-				1,728
Core deposit intangible⁽³⁾		-		6,193				6,193
Other assets⁽⁶⁾⁽⁷⁾		43,526		6,046				49,572
Total Assets	$	1,105,980	$	(10,760	)		$	1,095,220

Liabilities
Interest-bearing deposits⁽⁴⁾	$	758,492	$	891			$	759,383
Non-interest bearing deposits		193,798		-				193,798
Borrowings⁽⁵⁾		32,874		228				33,102
Other liabilities		35,751		-				35,751
Total Liabilities	$	1,020,915	$	1,119			$	1,022,034
Net Assets Acquired	$	85,065	$	(11,879	)		$	73,186

Explanation of certain fair value adjustments:

⁽¹⁾	The amount represents the adjustment of the book value of CapitalMark's investment securities to their estimated fair value on the date of acquisition.
⁽²⁾	The amount represents the adjustment of the net book value of CapitalMark's loans to their estimated fair value based on current interest rates and expected cash flows, which includes estimates of expected credit losses inherent in the portfolio.
⁽³⁾	The amount represents the fair value of the core deposit intangible asset representing the intangible value of the deposit base created in the acquisition.
⁽⁴⁾	The adjustment is necessary because the weighted average interest rate of CapitalMark's deposits exceeded the cost of similar funding at the time of acquisition. The fair value adjustment will be amortized to reduce future interest expense over the life of the portfolio.
⁽⁵⁾	The adjustment is necessary because the weighted average interest rate of CapitalMark's FHLB advances exceeded the cost of similar funding at the time of acquisition. The fair value adjustment will be amortized to reduce future interest expense over the life of the portfolio.
⁽⁶⁾	During 2016, an additional adjustment of $400,000 to goodwill was made to reduce the value of an acquired investment to zero after determining the investment was worthless. Further a reduction in the loan fair value adjustment was recorded upon the receipt of the final loan mark valuation in the amount of $206,000.

⁽⁷⁾

The amount represents the deferred tax asset recognized on the fair value adjustment of CapitalMark's acquired assets and assumed liabilities as well as the fair value adjustment on premises and equipment, and was increased by $6.3 million during the second quarter of 2016 as a result of the completion of the 2015 tax return.

Magna Bank [Member]

Business Acquisition [Line Items]

Schedule of Business Acquisitions, by Acquisition

Acquisition of Magna Bank. On September 1, 2015, Pinnacle Financial consummated its previously announced acquisition of Magna Bank ("Magna"). Pursuant to the terms of the Agreement and Plan of Merger dated as of April 28, 2015 by and among Pinnacle Financial, Pinnacle Bank and Magna (the Magna Merger Agreement), Magna merged with and into Pinnacle Bank, with Pinnacle Bank continuing as the surviving corporation (the Magna Merger).

The following summarizes consideration paid and a premilinary allocation of purchase price to net assets acquired (dollars in thousands):

	Number of Shares		Amount
Equity consideration:
Common stock issued		1,371,717	$	63,538
Total equity consideration			$	63,538

Non-equity consideration
Cash paid to redeem common stock			$	19,453
Cash paid to exchange outstanding stock options				847
Total consideration paid			$	83,838

Allocation of total consideration paid:
Fair value of net assets assumed including estimated identifiable intangible assets			$	52,371
Goodwill				31,467
			$	83,838

Schedule of Recognized Identified Assets Acquired and Liabilities Assumed

Magna

	As of September 1, 2015
	Magna Historical Cost Basis		Preliminary Fair Value Adjustments				As Recorded by Pinnacle Financial
Assets
Cash and cash equivalents	$	17,832	$	-			$	17,832
Investment securities⁽¹⁾		60,018		(280	)			59,738
Loans⁽²⁾		453,108		(10,760	)	⁽⁸⁾		442,348
Mortgage loans held for sale		18,886		-				18,886
Other real estate owned⁽³⁾		1,471		139				1,610
Core deposit intangible⁽⁴⁾		-		3,170				3,170
Other assets⁽⁵⁾		31,057		3,976				35,033
Total Assets	$	582,372	$	(3,755	)		$	578,617

Liabilities
Interest-bearing deposits⁽⁶⁾	$	402,535	$	1,268			$	403,803
Non-interest bearing deposits		48,851		-				48,851
Borrowings⁽⁷⁾		46,900		506				47,406
Other liabilities		28,043		-				28,043
Total Liabilities	$	526,329	$	1,774			$	528,103
Net Assets Acquired	$	56,043	$	(5,529	)		$	50,514

Explanation of certain fair value adjustments:

⁽¹⁾	The amount represents the adjustment of the book value of Magna's investment securities to their estimated fair value on the date of acquisition.
⁽²⁾	The amount represents the adjustment of the net book value of Magna's loans to their estimated fair value based on current interest rates and expected cash flows, which includes estimates of expected credit losses inherent in the portfolio.
⁽³⁾	The amount represents the adjustment to the book value of Magna's OREO to fair value on the date of acquisition.
⁽⁴⁾	The amount represents the fair value of the core deposit intangible asset representing the intangible value of the deposit base created in the acquisition.
⁽⁵⁾	The amount represents the deferred tax asset recognized on the fair value adjustment of Magna's acquired assets and assumed liabilities as well as the fair value adjustment for the mortgage servicing right and property and equipment. The value of the deferred tax asset was decreased by $1.9 million as a result of the completion of the 2015 tax return.
⁽⁶⁾	The adjustment is necessary because the weighted average interest rate of Magna's deposits exceeded the cost of similar funding at the time of acquisition. The fair value adjustment will be amortized to reduce future interest expense over the life of the portfolio.
⁽⁷⁾	The adjustment is necessary because the weighted average interest rate of Magna's FHLB advances exceeded the cost of similar funding at the time of acquisition. The fair value adjustment will be amortized to reduce future interest expense over the life of the portfolio.
⁽⁸⁾	A reduction in the loan fair value adjustment was recorded upon receipt of the final loan mark valuation in the amount of $426,000.