Equity method investment

9 Months Ended

Sep. 30, 2023

Equity Method Investments and Joint Ventures [Abstract]

Note 2. Equity method investment

A summary of BHG's financial position as of September 30, 2023 and December 31, 2022 and results of operations as of and for the three and nine months ended September 30, 2023 and 2022, were as follows (in thousands):


	As of
	September 30, 2023		December 31, 2022
Assets	$	4,335,128	$	4,375,643

Liabilities	3,705,350		3,821,725
Equity interests	629,778		553,918
Total liabilities and equity	$	4,335,128	$	4,375,643


	For the three months ended September 30,				For the nine months ended September 30,
	2023		2022		2023		2022
Revenues	$	311,276	$	293,427	$	924,560	$	829,986
Net income	$	48,125	$	80,088	$	152,163	$	257,121

At September 30, 2023, technology, trade name and customer relationship intangibles associated with Pinnacle Bank's investment in BHG, net of related amortization, totaled $6.1 million compared to $6.3 million as of December 31, 2022. Amortization expense of $88,000 and $262,000, respectively, was included for the three and nine months ended September 30, 2023 compared to $128,000 and $384,000, respectively, for the same periods in the prior year. Accretion income of $43,000 and $183,000, respectively, was included in the three and nine months ended September 30, 2023 compared to $164,000 and $595,000, respectively, for the same periods in the prior year.

During the three and nine months ended September 30, 2023, Pinnacle Bank received dividends of $5.6 million and $33.2 million, respectively, from BHG compared to $18.6 million and $59.4 million, respectively, received by Pinnacle Financial and Pinnacle Bank in the aggregate during the three and nine months ended September 30, 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 and nine months ended September 30, 2023, Pinnacle Bank purchased no loans from BHG compared to loan purchases of $49.6 million and $125.6 million, respectively, from BHG during the three and nine months ended September 30, 2022. At September 30, 2023 and December 31, 2022, there were $283.6 million and $350.6 million, respectively, of BHG joint venture program loans held by Pinnacle Bank. These loans were purchased from BHG by Pinnacle Bank 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.