Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) announced that earlier today it redeemed 25 percent of the preferred shares the Company originally issued to the U.S. Treasury under the TARP Capital Purchase Program. Pinnacle paid the Treasury approximately $23.9 million, which included accrued dividends of approximately $141,000.
As a result of the redemption, quarterly preferred stock dividends will be reduced by approximately $297,000 per quarter, commencing in the first quarter of 2012. In addition, the Company has recognized the non-cash accretion of 25 percent of its remaining preferred stock discount, which will result in a charge to net income available to common stockholders of approximately $718,000 during the fourth quarter of 2011. Future accretion charges will be reduced by approximately $90,000 per quarter as a result of the redemption.
“We are pleased to begin the redemption of the preferred stock the Company issued to the Treasury,” said M. Terry Turner, Pinnacle’s president and chief executive officer. “The funds for this 25 percent redemption came from the existing cash balances of the Company. Our common shareholders will benefit from a decrease in our dividend payments on our outstanding preferred stock beginning in the first quarter of 2012. We continue to believe we have a solid business case to receive approval for the redemption of our remaining TARP preferred shares over the next year or so with minimal common share dilution to our shareholders.”
In connection with its participation in the TARP Capital Purchase Program, the Company issued to the Treasury 95,000 shares of Fixed Rate Cumulative Perpetual Preferred Stock, Series A (“Series A Preferred Shares”) in December 2008. Following the Company's partial redemption of preferred shares described herein, 71,250 Series A Preferred Shares will remain issued and outstanding and held by the Treasury.
Pinnacle Financial Partners provides a full range of banking, investment, mortgage and insurance products and services designed for small- to mid-sized businesses and their owners and individuals interested in a comprehensive relationship with their financial institution. Comprehensive wealth management services, such as financial planning and trust, help clients increase, protect and distribute their assets.