Subordinated Debt and Other borrowings

9 Months Ended

Sep. 30, 2019

Note 11. Subordinated Debt and Other Borrowings

Pinnacle Financial has twelve wholly-owned subsidiaries that are statutory business trusts created for the exclusive purpose of issuing 30-year capital trust preferred securities. Pinnacle Financial also has a $75.0 million revolving credit facility, of which it had no outstanding borrowings as of September 30, 2019. Additionally, Pinnacle Financial and Pinnacle Bank have entered into, or assumed in connection with acquisitions, certain other subordinated debt agreements as outlined below as of September 30, 2019 (in thousands):



Name	Date Established	Maturity	Total Debt Outstanding		Interest Rate at September 30, 2019		Coupon Structure
Trust preferred securities
Pinnacle Statutory Trust I	December 29, 2003	December 30, 2033	$	10,310	4.94	%	30-day LIBOR + 2.80%
Pinnacle Statutory Trust II	September 15, 2005	September 30, 2035	20,619		3.50	%	30-day LIBOR + 1.40%
Pinnacle Statutory Trust III	September 7, 2006	September 30, 2036	20,619		3.75	%	30-day LIBOR + 1.65%
Pinnacle Statutory Trust IV	October 31, 2007	September 30, 2037	30,928		4.97	%	30-day LIBOR + 2.85%
BNC Capital Trust I	April 3, 2003	April 15, 2033	5,155		5.55	%	30-day LIBOR + 3.25%
BNC Capital Trust II	March 11, 2004	April 7, 2034	6,186		5.15	%	30-day LIBOR + 2.85%
BNC Capital Trust III	September 23, 2004	September 23, 2034	5,155		4.70	%	30-day LIBOR + 2.40%



Name	Date Established	Maturity	Total Debt Outstanding			Interest Rate at September 30, 2019		Coupon Structure
BNC Capital Trust IV	September 27, 2006	December 31, 2036	7,217			3.80	%	30-day LIBOR + 1.70%
Valley Financial Trust I	June 26, 2003	June 26, 2033	4,124			5.21	%	30-day LIBOR + 3.10%
Valley Financial Trust II	September 26, 2005	December 15, 2035	7,217			3.61	%	30-day LIBOR + 1.49%
Valley Financial Trust III	December 15, 2006	January 30, 2037	5,155			4.00	%	30-day LIBOR + 1.73%
Southcoast Capital Trust III	August 5, 2005	September 30, 2035	10,310			3.60	%	30-day LIBOR + 1.50%

Subordinated Debt
Pinnacle Bank Subordinated Notes	July 30, 2015	July 30, 2025	60,000			4.88	%	Fixed ⁽¹⁾
Pinnacle Bank Subordinated Notes	March 10, 2016	July 30, 2025	70,000			4.88	%	Fixed ⁽¹⁾
Avenue Subordinated Notes	December 29, 2014	December 29, 2024	20,000			6.75	%	Fixed ⁽²⁾
Pinnacle Financial Subordinated Notes	November 16, 2016	November 16, 2026	120,000			5.25	%	Fixed ⁽³⁾
Pinnacle Financial Subordinated Notes	September 11, 2019	September 15, 2029	300,000			4.13	%	Fixed ⁽⁴⁾
BNC Subordinated Notes	September 25, 2014	October 1, 2024	60,000			5.50	%	Fixed ⁽⁵⁾

Other Borrowings
Revolving credit facility ⁽⁶⁾	April 25, 2019	April 24, 2020	—			3.94	%	30-day LIBOR + 1.50%

Debt issuance costs and fair value adjustments			(12,507		)
Total subordinated debt and other borrowings			$	750,488

(1) Migrates to three month LIBOR + 3.128% beginning July 30, 2020 through the end of the term.

(2) Migrates to three month LIBOR + 4.95% beginning January 1, 2020 through the end of the term.

(3) Migrates to three month LIBOR + 3.884% beginning November 16, 2021 through the end of the term.

(4) Migrates to three month LIBOR + 2.775% beginning September 15, 2024 through the end of the term.

(5) Migrates to three month LIBOR + 3.59% beginning October 1, 2019 through the end of the term if not redeemed on that date.

(6) Borrowing capacity on the revolving credit facility is $75.0 million. At September 30, 2019, there were no amounts outstanding under this facility. An unused fee of 0.30% is assessed on the average daily unused amount of the loan.

On September 11, 2019, Pinnacle Financial issued $300.0 million aggregate principal amount of 4.13% Fixed-to-Floating Rate Subordinated Notes due 2029 (the 2029 Notes) in a public offering. From, and including, the date of issuance to, but excluding, September 15, 2024, the 2029 Notes will bear interest at an initial fixed rate of 4.13% per annum, payable semi-annually in arrears on March 15 and September 15, commencing on March 15, 2020. Thereafter, from September 15, 2024 through the maturity date, September 15, 2029, or earlier redemption date, the 2029 Notes will bear interest at a floating rate equal to the then-current three month LIBOR, plus 277.5 basis points for each quarterly interest period (subject to certain provisions regarding use of an alternative base rate upon certain LIBOR transition events), payable quarterly in arrears on March 15, June 15, September 15 and December 15 of each year, commencing on September 15, 2024.

The offering and sale of the 2029 Notes yielded net proceeds of approximately $296.5 million after deducting the underwriting discount and offering expenses payable by Pinnacle Financial. Pinnacle Financial used approximately $8.8 million of such proceeds to redeem the previously outstanding Subordinated Note due October 15, 2023, which Pinnacle Financial assumed in the BNC merger and which carried an interest rate of 7.23% at the time of such redemption. Pinnacle Financial intends to use approximately $210.0 million of the net proceeds of this offering to redeem certain other of its and Pinnacle Bank’s subordinated notes, including the $20.0 million aggregate principal amount of Avenue subordinated notes and $60.0 million aggregate principal amount of BNC subordinated notes, each listed in the table above. Pinnacle Financial also presently intends to redeem the $130.0 million aggregate principal amount of subordinated notes issued by Pinnacle Bank listed in the table above after such notes become eligible for redemption on July 30, 2020. The redemption of the $130.0 million aggregate principal amount of subordinated notes issued by Pinnacle Bank is subject to receipt of all regulatory permissions for such redemption, which Pinnacle Financial has not yet sought, and Pinnacle Financial’s ultimate determination to redeem such notes after they become eligible for redemption. Pinnacle Bank is under no obligation to redeem its subordinated notes. Pinnacle Financial intends to use the remainder of the net proceeds from the offering of the 2029 Notes for general corporate purposes, including providing capital to support the growth of Pinnacle Bank and Pinnacle Financial’s business.