Pinnacle Financial to buy Bank of North Carolina parent

Pinnacle Financial in Nashville, Tenn., has agreed to buy BNC Bancorp in High Point, N.C.

The $11.2 billion-asset Pinnacle said in a press release Sunday that it will pay $1.9 billion, or $35.70 a share, for the $7.4 billion-asset BNC. The all-stock deal, which is expected to close in the third quarter, values BNC at 291% of its tangible book value.

The deal will create a bank that covers four states and will have roughly $14 billion in loans and $15 billion in deposits.

"BNC represents the single-best platform to expand our presence in urban, high-growth metropolitan markets," Terry Turner, Pinnacle's president and CEO, said in the release. "This merger is consistent with Pinnacle's strategy to become the dominant bank in southeastern commercial banking."

Turner said in a letter to Pinnacle employees that his role at the company will "shift somewhat" and that he will be "somewhat less involved in managing day-to-day activities in each market." Rob McCabe, Pinnacle's chairman, will lead the company's Tennessee market, while Rick Callicutt II, BNC's president and CEO, will become chairman of the Carolinas and Virginia.

Callicutt "is a strong leader with a great track record for performance," Turner said in his letter. "I'm confident in his ability to lead his team in executing the Pinnacle strategy and integrating the culture in his markets."

Pinnacle said it plans to raise at least $175 million in Tier 1 capital prior to completing the acquisition to cover a change in how trust-preferred securities will count toward key ratios. The company filed a shelf registration to sell common and preferred stock, among other types of securities.

The deal is expected to be accretive to Pinnacle's 2018 earnings per share by 10%, excluding about $100 million in merger-related expenses. The acquisition is expected to be accretive to Pinnacle's tangible book value.

Pinnacle plans to cut BNC's annual noninterest expenses by 25%, or roughly $41 million. Pinnacle also expects to lose about $5 million in pretax revenue tied to a cap on BNC's interchange fees.

Keefe, Bruyette & Woods and Bass, Berry & Sims advised Pinnacle. Banks Street Partners; Sandler O'Neill; Wachtell, Lipton, Rosen & Katz; and Troutman Sanders advised BNC.