Equity method investment

3 Months Ended

Mar. 31, 2023

Equity Method Investments and Joint Ventures [Abstract]

Note 2. Equity method investment

A summary of BHG's financial position as of March 31, 2023 and December 31, 2022 and results of operations as of and for the three months ended March 31, 2023 and 2022, were as follows (in thousands):


	As of
	March 31, 2023		December 31, 2022
Assets	$	4,470,032	$	4,375,643

Liabilities	3,916,653		3,821,725
Equity interests	553,379		553,918
Total liabilities and equity	$	4,470,032	$	4,375,643


	For the three months ended March 31,
	2023		2022
Revenues	$	301,951	$	238,612
Net income	$	46,643	$	69,826

At March 31, 2023, technology, trade name and customer relationship intangibles associated with Pinnacle Bank's investment in BHG, net of related amortization, totaled $6.2 million compared to $6.3 million as of December 31, 2022. Amortization expense of $87,000 was included for the three months ended March 31, 2023 compared to $128,000 for the same period in the prior year. Accretion income of $95,000 was included in the three months ended March 31, 2023 compared to $243,000 for the same period in the prior year.

During the three months ended March 31, 2023, Pinnacle Bank received dividends of $24.0 million from BHG compared to $12.2 million received by Pinnacle Financial and Pinnacle Bank in the aggregate during the three months ended March 31, 2022. The investment in BHG previously held by Pinnacle Financial was contributed to Pinnacle Bank effective September 30, 2022. Earnings from BHG are included in Pinnacle Financial's consolidated tax return. Profits from intercompany transactions are eliminated. During the three months ended March 31, 2023 and 2022, Pinnacle Bank purchased no loans from BHG. At March 31, 2023 and December 31, 2022, there were $329.3 million and $350.6 million, respectively, of BHG joint venture program loans held by Pinnacle Bank. These loans were purchased at par whereby BHG and Pinnacle Bank share proportionately in the credit risk of the acquired loans

based on the rate on the loan and the rate of the purchase. The yield on this portfolio to Pinnacle Bank is anticipated to be between 4.50% and 6.00% per annum.