Terry Turner is CEO of Pinnacle Financial Partners.Less than 18 months after completing its $187 million purchase of CapitalMark Bank in Chattanooga, the parent company of Pinnacle Bank is planning a major expansion into Virginia and the Carolinas through a $1.9 billion purchase of BNC Bancorp, the parent company of the Bank of North Carolina.
The purchase, which has already been approved by the boards of directors for both banks and is expected to be completed this fall, would give the Nashville-based Pinnacle Financial Partners a footprint in four states and in a dozen of the top markets in the Southeast. The combination of the two banks, each of which are among the fastest growing in their respective states, will create a bank with $20 billion in assets.
Pinnacle CEO Terry Turner said the combined bank will be ideally positioned to compete with major regional banks in the South and he forecasts the merger should help boost Pinnacle's per-share earnings by 10 percent in 2018.
Pinnacle has made bank acquisitions in Chattanooga, Memphis and Nashville in the past couple of years, but the purchase of BNC Bancorp will be its biggest acquisition so far. To help fund the merger and future acquisitions, Pinnacle announced Monday it will also issue $175 million of stock.
BNC Bancorp is the holding company for the Bank of North Carolina, which is based in High Point, N.C., with $6.8 billion in assets, according to the Federal Deposit Insurance Corp. Bank of North Carolina has 76 offices across its three-state footprint, including Charlotte, N.C.; Richmond, Va.; and Charleston, S.C.
"This merger is consistent with Pinnacle's strategy to become the dominant bank in Southeastern commercial banking," Turner said in a statement. "BNC's success can be attributed to its experienced financial services professionals and the culture they have created."
Under the terms of the agreement, BNC shareholders will have the option to convert their outstanding shares into 0.5 shares of Pinnacle's common stock.
"Both we and Pinnacle have been committed to the idea that the Southeast deserves an impactful financial services firm with significant scale that operates with the culture of a community bank with local decision making led by banking professionals that are experienced and established in each market," said Richard Callicutt, president and CEO of BNC. "Bringing two of the Southeast's best community banks together is a great thing for the region.
After the acquisition is complete, Callicutt will be named chairman of the Carolinas and Virginia for Pinnacle. He and three other BNC directors will join Pinnacle's board of directors.
The merger will create one of America's 50 largest banks by assets.
During a conference call Monday, Turner said he's not interested in "fixer-uppers," and said the merger is the "single best opportunity" to enter new markets in the Southeast.
"Pinnacle management has demonstrated that it is adept at growth both through organic means and acquisition," Jeff Davis, a banking analyst and managing director at Mercer Capital in Nashville, told the Nashville Tennessean on Monday.
Callicutt said he doesn't anticipate any "significant branch closures" for BNC.
"We have an integration team that has been working on all the acquisitions at BNC," Callicutt said during the conference call.
Investors greeted the merger on Wall Street. Shares of Pinnacle rose 95 cents per share, or 1.5 percent, to close at $64.95 per share. BNC Bancorp rose 14 cents per share, or nearly 0.5 percent, to close at $33.35 per share.
Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.