Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) ("Pinnacle") and Magna Bank ("Magna") jointly announced today the signing of a definitive agreement for Pinnacle to acquire Magna via merger. The proposed merger of Magna with and into Pinnacle has been approved by each company's Board of Directors and is expected to close early in the fourth quarter of 2015. Completion of the transaction is subject to satisfaction of customary closing conditions, including the receipt of required regulatory approvals and the approval of Magna's shareholders.

Magna, which is headquartered in Memphis, TN, reported $595.0 million in total assets and $452.1 million in deposits as of March 31, 2015 and currently operates five banking offices in Shelby County: two in East Memphis, two in Germantown and one in Cordova. The company also operates mortgage lending offices in 14 locations in Memphis and Middle Tennessee. During the first quarter of 2015, Magna reported loan growth of $9.7 million, or 8.8 percent linked quarter annualized, and deposit growth of $15.4 million, or 13.7 percent linked quarter annualized.

Magna's tangible equity approximated $9.86 per common share as of March 31, 2015, and the firm reported first quarter 2015 net income of approximately $1.4 million, which represented a growth rate of 33.0 percent over the first quarter of 2014. Magna's return on average assets for the first quarter of 2015 was 1.01 percent, its net interest margin was 3.33 percent, and its noninterest income represented 37.3 percent of total revenues in the first quarter.

In early April Pinnacle announced a definitive agreement to acquire CapitalMark Bank & Trust in Chattanooga, TN. When the CapitalMark and Magna mergers close, the combined companies are projected to have total assets of more than $8.0 billion, with Pinnacle operating 42 offices in 13 Tennessee counties.

Kirk P. Bailey, Magna's chairman, president and chief executive officer, will be named Memphis chairman for Pinnacle after the acquisition is consummated. He will serve on Pinnacle's 11-member Senior Leadership Team and will report to Pinnacle's president and chief executive officer, M. Terry Turner.

"We have focused on building a great place to work and competing by providing better service than the large regionals that have previously dominated this market," Bailey said. "Given Pinnacle's track record as being one of the top banks in the country to work for and their ability to better serve clients, they are an extraordinarily attractive partner for us."

The combination of Pinnacle and Magna provides many opportunities to both companies' shareholders, including:

• Establishment of a strong footprint in all of the four major urban markets in Tennessee. In addition to providing Pinnacle with access to a new market, the firm's locations in Middle and East Tennessee will enhance the service distribution for Magna clients.
• Immediate accretion to Pinnacle's tangible book value and operating earnings in the first 12 months. The merger will expand Pinnacle's geographic reach, increase Magna's lending capacity and realize cost savings that allow the combined companies to achieve a faster earnings growth rate.
• Excellent credit quality from both institutions, which is the principal determinant of a bank's ability to provide long-term shareholder value.

We have long said that we plan to operate in each of Tennessee's four urban markets. Memphis is the largest city and second-largest MSA in the state, and the Magna acquisition will complete our current geographic market expansion plans," Pinnacle CEO Turner said. "We see ample opportunities in Memphis, where the competitive landscape is virtually identical to the markets where we historically have been successful--Nashville and Knoxville. This acquisition provides us an immediate footprint in Memphis from which to leverage our strategy of hiring the best bankers in the market and positions us to reach our goal of at least $2.5 billion in assets in the Memphis MSA."

Under the terms of the merger agreement, Magna shareholders will have the right to elect to convert their outstanding shares of common stock into 0.3369 shares of Pinnacle's common stock plus cash in lieu of any fractional shares, or into a cash payment equal to $14.32 per Magna share, or into a combination of 0.3369 shares of Pinnacle's common stock and $14.32 in cash at a ratio of 75 percent stock and 25 percent cash. Because the maximum amount of stock and cash that Pinnacle will pay in the merger is capped at 75 percent and 25 percent, respectively, of Magna's outstanding shares, those Magna shareholders that elect either all stock or all cash may automatically have their elections adjusted so that, in the aggregate, 75 percent of all Magna shares outstanding will be converted into shares of Pinnacle's common stock and 25 percent will be converted into cash.

Magna's 328,350 stock options will be fully vested upon consummation of the merger pursuant to Magna's stock option plan. At closing, Magna's outstanding unexercised stock options will be settled in cash for the difference between the option's exercise price and $14.32. At the closing, Magna shareholders will own approximately 3.3 percent of the combined firm, assuming all of Magna's options are cashed out.

The transaction is currently valued at approximately $83.4 million based on Pinnacle's closing price on April 28, 2015, based on the issuance of approximately 1.325 million shares of PNFP common stock and $20.7 million in cash, in each case assuming none of the options are exercised prior to closing. Additionally, Pinnacle plans to redeem at closing the $18.35 million in Series C preferred stock issued by Magna in connection with its participation in the U.S. Treasury's Small Business Lending Fund program.

Pinnacle expects its fully diluted earnings per share to be reduced in the fourth quarter of 2015 by less than 1.0 percent, while 2016 earnings should be increased by approximately 3.0 percent. Pinnacle's tangible book value per share should increase as of the merger date.

Pinnacle, with 29 offices in eight Middle Tennessee counties and five offices in Knox County, reported total assets of $6.3 billion and total deposits of nearly $4.8 billion as of March 31, 2015.

Upon consummation of the merger, Magna director Thomas C. Farnsworth III of Farnsworth Holding Company in Memphis is expected to become a director of Pinnacle's board. Additionally, Lisa Foley, an executive vice president and retail banking division manager at Magna, will manage Pinnacle's client services group in Memphis and serve on the firm's Leadership Team. B. Frank Stallworth, Magna's executive vice president responsible for commercial and multifamily real estate lending, will serve as Pinnacle's commercial real estate manager in Memphis and also will join Pinnacle's Leadership Team. Lisa Reid, Magna's executive vice president of residential mortgage in Memphis, will serve as Pinnacle's mortgage manager in Memphis and will join the firm's Leadership Team.

"Magna's strong commercial real estate practice is particularly attractive to us as we work toward our goal of becoming the dominant CRE lender in the markets we serve," Pinnacle Chairman Robert A. McCabe Jr. said. "Pinnacle's expanded treasury management and wealth management services will be a significant opportunity to grow existing relationships with Magna's commercial and affluent client base. We look forward to continuing Magna's strong tradition of giving back to the community with a focus on providing affordable housing resources."

Systems conversions are anticipated to be completed during the fourth quarter of 2015.

Sandler O'Neill + Partners, L.P. served as financial advisor to Pinnacle, and Bass, Berry & Sims PLC was Pinnacle's legal advisor. Stephens Inc. and SunTrust Robinson Humphrey acted as financial advisors to Magna, and Wyatt Tarrant & Combs LLP was Magna's legal advisor.

In connection with the proposed acquisition of Magna, Pinnacle will file with the Securities and Exchange Commission a registration statement on Form S-4 to register the shares of Pinnacle common stock to be issued to the shareholders of Magna.

Pinnacle will host a webcast conference call to discuss the definitive agreement and other aspects of the business combination at 8:30 a.m. CDT on Wednesday, April 29, 2015. To access the call for audio only, please call 1-877-602-7944. For the presentation and streaming audio, please access the webcast on the investor relations page of Pinnacle's website at www.pnfp.com.

For those unable to participate in the webcast, it will be archived on the investor relations page of Pinnacle's website at www.pnfp.com for 90 days following the presentation.