BNC Bancorp (NASDAQ:BNCN) Files An 8-K Other Events
Item8.01
| Other Events. |
On May25, 2017, a putative class action complaint was filed in
the United States District Court for the Middle District of North
Carolina against BNC Bancorp (BNC), the members of BNCs board of
directors and Pinnacle Financial Partners, Inc. (Pinnacle),
alleging, among other things, that the defendants violated
Section14(a) and Section20(a) of the Securities Exchange Act of
1934 and Rule 14a-9 promulgated thereunder by not disclosing
certain allegedly material facts in the joint proxy
statement/prospectus, dated May3, 2017 (the Proxy Statement),
which was filed with the U.S. Securities and Exchange Commission
(SEC) and mailed on or about May5, 2017 to shareholders of record
as of the close of business on April28, 2017 of BNC and of
Pinnacle in connection with the previously announced proposed
merger between BNC and Pinnacle.
The following information, dated as of June2, 2017, supplements,
and should be read in conjunction with, the Proxy Statement. To
the extent that information herein differs from or updates
information contained in the Proxy Statement, the information
contained herein supersedes the information contained in the
Proxy Statement. Any defined terms used but not defined herein
shall have the meanings set forth in the Proxy Statement.
BNC believes that no further disclosure is required to supplement
the Proxy Statement under applicable law; however, to avoid the
risk that the putative class action may delay or otherwise
adversely affect the consummation of the merger with Pinnacle and
to minimize the expense of defending such actions, BNC wishes to
voluntarily make the supplemental disclosures related to the
proposed merger set forth below.
Supplements to the Proxy Statement
Opinion of Pinnacles Financial Advisor
The Proxy Statement is hereby amended and supplemented by
adding the following as a new paragraph before the last paragraph
in the subsection entitled Pinnacle Selected Companies Analysis
on pages 70-71 of the Proxy Statement:
The low and high stock price-to-tangible book value per share
multiples of the Pinnacle selected companies were 1.92x and
3.96x, respectively. The low and high stock price-to-2017
estimated EPS multiples of the Pinnacle selected companies were
16.5x and 21.2x, respectively. The low and high stock
price-to-2018 estimated EPS multiples of the Pinnacle selected
companies were 14.4x and 18.5x, respectively.
The Proxy Statement is hereby amended and supplemented by
adding the following as a new paragraph before the last paragraph
in the subsection entitled BNC Selected Companies Analysis on
pages 72-73 of the Proxy Statement:
The low and high stock price-to-tangible book value per share
multiples of the BNC selected companies were 1.31x and 2.82x,
respectively. The low and high stock price-to-2017 estimated EPS
multiples of the BNC selected companies were 15.2x and 26.8x,
respectively. The low and high stock price-to-2018 estimated EPS
multiples of the BNC selected companies were 12.2x and 23.7x,
respectively.
The Proxy Statement is hereby amended and supplemented by
adding the following as a new paragraph before the last paragraph
in the subsection entitled Select Transactions Analysis on pages
74-75 of the Proxy Statement:
The low and high transaction price-to-tangible book value
multiples of the selected transactions were 1.02x and 2.62x,
respectively. The low and high core deposit premiums of the
selected transactions were 0.8% and 35.4%, respectively. The low
and high transaction price-to-LTM EPS multiples of the selected
transactions were 5.4x and 22.9x, respectively. The low and high
transaction price-to-estimated EPS multiples of the selected
transactions were 13.1x and 21.1x, respectively. The low and high
one-day market premiums of the selected transactions were 0.7%
and 39.1%, respectively.
Financial Analyses of BNC Bancorps Financial
Advisors
The Proxy Statement is hereby amended and supplemented by
amending and restating the first paragraph of the subsection
entitled Net Present Value Analyses on pages 91-92 of the Proxy
Statement as follows:
Net Present Value Analyses. Sandler
ONeill and BSP Securities performed an analysis that estimated
the net present value per share of BNC common stock assuming BNC
performed in accordance with publicly available mean analyst
earnings per share estimates for the years ending December31,
2017 and December31, 2018 and an estimated long-term annual
earnings growth rate and dividends per share for BNC for the
years thereafter, as provided by the senior management of BNC.
For the years ending December31, 2019 and December31, 2020,
Sandler ONeill and BSP Securities utilized an assumed annual
dividend per share for BNC of $0.20, as provided by the senior
management of BNC. To approximate the terminal value of a share
of BNC common stock at December31, 2020, Sandler ONeill and BSP
Securities applied price to 2020 estimated earnings per share
multiples ranging from 19.0x to 24.0x and price to estimated
December31, 2020 tangible book value per share multiples ranging
from 230% to 280%. Sandler ONeill and BSP Securities selected
these price to earnings and tangible book value multiples on the
basis of their respective experience and professional judgment,
including their respective review of, among other matters, the
trading multiples of selected companies that Sandler ONeill and
BSP Securities deemed to be comparable to BNC, as discussed
above. The terminal values were then discounted to present values
using different discount rates ranging from 10.0% to 13.0% which
were chosen to reflect different assumptions regarding required
rates of return of holders or prospective buyers of BNC common
stock. Sandler ONeill and BSP Securities utilized the equity
build-up method to calculate the appropriate discount rate for
BNC common stock. As detailed in the following table, which sets
forth the calculation of the 10.89% discount rate utilized by
Sandler ONeill and BSP Securities in certain of its net present
value analyses, the discount rate equals the sum of the risk free
rate, the equity risk premium, the size premium and the industry
premium:
|
Risk free rate |
2.48 | % | ||
|
Equity risk premium |
5.80 | % | ||
|
Size premium |
1.70 | % | ||
|
Industry premium |
0.91 | % | ||
|
Discount rate |
10.89 | % |
The risk free rate is represented as the yield on the 10-year
U.S. Treasury note as of January20, 2017. The equity risk
premium, size premium and industry premium were sourced from the
Duff Phelps 2016 Valuation Handbook. As illustrated in the
following tables, the analysis indicated an imputed range of
values per share of BNC common stock of $29.03 to $40.64 when
applying multiples of earnings per share and $29.71 to $40.11
when applying multiples of tangible book value per share.
The Proxy Statement is hereby amended and supplemented by
adding the following before the last sentence of the first
paragraph in the subsection entitled Pro Forma Merger Analysis on
page 94 of the Proxy Statement:
For the pro forma merger analysis, the assumptions provided by
senior management of Pinnacle to Sandler ONeill and BSP
Securities included the following:
Purchase Accounting Assumptions:
|
$57 million loan mark, net of BNCs existing discount and reversal of allowance for loan loss; and |
|
Core deposit intangible of 1.18% ($53 million) on non-time deposits, amortized over 10 years, sum-of-the-years digits. |
Cost Savings:
|
25% of BNCs estimated 2017 noninterest expense based on mean consensus estimates; and |
|
Expected annual BNC lost revenue / incremental expense of $5 million pre-tax related to the regulatory impact of crossing $10 billion in assets. |
Transaction Costs:
| Expected to be approximately $100 million pre-tax. |
Certain Unaudited Prospective Financial
Information
The Proxy Statement is hereby amended and supplemented by
amending and restating the last sentence of the first paragraph
of the subsection entitled Certain Unaudited Prospective
Financial Information of BNC on pages 95-96 of the Proxy
Statement as follows:
The earnings per share information consists of unadjusted IBES
consensus estimates of earnings per share for calendar years 2017
and 2018, and BNC management approved extrapolation for calendar
years 2019 and 2020 based on an assumed 8.0% long-term earnings
per share growth rate. The assumed dividends per share
information was provided by BNC management.
The Proxy Statement is hereby amended and supplemented by
adding the following row at the end of the table entitled Summary
Financial Forecasts of BNC, For the Calendar Years Ending
December31, on page 96 of the Proxy Statement:
|
Dividends Per Share . . . . . . . . . . |
$ | 0.20 | $ | 0.20 | $ | 0.20 | $ | 0.20 |
Forward-Looking Statements
All statements, other than statements of historical fact,
included in this filing, are forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, Section27A of the Securities Act and Section21E of the
Exchange Act. The words expect, anticipate, intend, plan,
believe, seek, estimate and similar expressions are intended to
identify such forward-looking statements, but other statements
not based on historical information may also be considered
forward-looking including statements about the benefits to
Pinnacle and BNC of the proposed mergers of Pinnacle and BNC and
Pinnacle Bank and Bank of North Carolina (the proposed mergers),
Pinnacles and BNCs future financial and operating results
(including the anticipated impact of the proposed mergers on
Pinnacles and BNCs earnings and tangible book value) and
Pinnacles and BNCs plans, objectives and intentions. All
forward-looking statements are subject to risks, uncertainties
and other facts that may cause the actual results, performance or
achievements of Pinnacle and BNC to differ materially from any
results expressed or implied by such forward-looking statements.
Such factors include, among others, (1)the risk that the cost
savings and any revenue synergies from the proposed mergers may
not be realized or take longer than anticipated to be realized,
(2)disruption from the proposed mergers with customers,
suppliers, employee or other business partners relationships,
(3)the occurrence of any event, change or other circumstances
that could give rise to the termination of the merger agreement
between Pinnacle and BNC, (4)the risk of successful integration
of the two companies businesses, (5)the failure to obtain the
necessary approvals by Pinnacle and BNC shareholders, (6)the
amount of the costs, fees, expenses and charges related to the
proposed mergers, (7)reputational risk and the reaction of the
parties customers, suppliers, employees or other business
partners to the proposed mergers, (8)the failure of the closing
conditions to be satisfied, or any unexpected delay in closing
the proposed mergers, (9)the risk that the integration of
Pinnacles and BNCs operations will be materially delayed or will
be more costly or difficult than expected, (10)the possibility
that the proposed mergers may be more expensive to complete than
anticipated, including as a result of unexpected factors or
events, (11)the dilution caused by Pinnacles issuance of
additional shares of its common stock in the proposed merger with
BNC and (12)general competitive, economic, political and market
conditions. Additional factors which could affect the forward
looking statements can be found in Pinnacles Annual Report on
Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on
Form 8-K, or BNCs Annual Report on Form 10-K, Quarterly Reports
on Form 10-Q, and Current Reports on Form 8-K, in each case filed
with the SEC and available on the SECs website at
http://www.sec.gov. Pinnacle and BNC disclaim any obligation to
update or revise any forward-looking statements contained in this
filing, which speak only as of the date hereof, whether as a
result of new information, future events or otherwise.
Additional Information About the Proposed Transaction and
Where to Find It
Investors and security holders are urged to carefully review and
consider each of Pinnacles and BNCs public filings with the SEC,
including but not limited to their Annual Reports on Form 10-K,
their proxy statements, their Current Reports on Form 8-K and
their Quarterly Reports on Form 10-Q.
The documents filed by Pinnacle with the SEC may be obtained free
of charge at Pinnacles website at www.pnfp.com, under the heading
About Pinnacle and the subheading Investor Relations, or at the
SECs website at www.sec.gov. These documents may also be obtained
free of charge from Pinnacle by requesting them in writing to
Pinnacle Financial Partners, Inc., 150 Third Avenue South, Suite
900, Nashville, Tennessee 37201, Attention: Investor Relations,
or by telephone at (615)744-3700.
The documents filed by BNC with the SEC may be obtained free of
charge at BNCs website at www.bncbanking.com under the Investor
Relations section, or at the SECs website at www.sec.gov. These
documents may also be obtained free of charge from BNC by
requesting them in writing to BNC Bancorp, 3980 Premier Drive,
Suite 210, High Point, North Carolina 27265, Attention: Investor
Relations, or by telephone at (336)869-9200.
In connection with the proposed transaction, Pinnacle has filed a
registration statement on Form S-4 with the SEC, as amended,
including a joint proxy statement of Pinnacle and BNC and a
prospectus of Pinnacle, and each party will file other documents
regarding the proposed transaction with the SEC. Before making
any voting or investment decision, investors and security holders
of
Pinnacle and BNC are urged to carefully read the entire
registration statement and the joint proxy statement/prospectus
as well as any amendments or supplements to these documents and
any other relevant documents filed with the SEC, because they
contain important information about the proposed transaction. The
joint proxy statement/prospectus has been sent to the
shareholders of each institution seeking the required shareholder
approvals. Investors and security holders may obtain the
registration statement and the joint proxy statement/prospectus
free of charge from the SECs website or from Pinnacle or BNC as
described in the paragraphs above.
This filing shall not constitute an offer to sell or the
solicitation of an offer to buy securities, nor shall there be
any sale of securities in any jurisdiction in which such offer,
solicitation or sale would be unlawful prior to registration or
qualification under the securities laws of such jurisdiction.
Participants in the Solicitation
Pinnacle, BNC and certain of their directors and executive
officers may be deemed participants in the solicitation of
proxies from Pinnacles and BNCs shareholders in connection with
the proposed transaction. Information about the directors and
executive officers of Pinnacle and their ownership of Pinnacle
common stock is set forth in the definitive proxy statement for
Pinnacles 2017 annual meeting of shareholders, as previously
filed with the SEC on March9, 2017, and other documents
subsequently filed by Pinnacle with the SEC. Information about
the directors and executive officers of BNC and their ownership
of BNC common stock is set forth in Amendment No.1 to BNCs 2016
Annual Report on Form 10-K, as previously filed with the SEC on
March24, 2017, and other documents subsequently filed by BNC with
the SEC. Shareholders may obtain additional information regarding
the interests of such participants by reading the registration
statement and the joint proxy statement/prospectus. Free copies
of these documents may be obtained as described in the paragraphs
above.
About BNC Bancorp (NASDAQ:BNCN)
BNC Bancorp is a bank holding company for Bank of North Carolina (BNC or the Bank). BNC is a full service commercial bank principally engaged in the business of attracting deposits from the general public and using those deposits, together with other funding from its lines of credit, to make primarily consumer and commercial loans. It operates through two segments: banking operations and mortgage origination. The primary purpose of the mortgage origination segment is the origination and subsequent sale of residential mortgage loans, while all other banking activities are performed in the banking operations segment. BNC also offers brokerage services, including financial planning, wealth management, private banking and insurance products. The Bank invests in government-sponsored mortgage-backed securities, the United States and government agency securities, municipal and corporate debt securities, and equity securities, among others. BNC Bancorp (NASDAQ:BNCN) Recent Trading Information
BNC Bancorp (NASDAQ:BNCN) closed its last trading session up +0.35 at 32.40 with 177,051 shares trading hands.