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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q
(mark one)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2021
or
TRANSITION REPORT PURSUANT TO SECTION 13 OF 15(d) OF THE SECURITIES AND EXCHANGE ACT OF 1934

For the transition period from ____ to ____
Commission File Number: 000-31225
Pinnacle Financial Partners Inc.
, Inc.
(Exact name of registrant as specified in its charter)
Tennessee 62-1812853
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
150 Third Avenue South, Suite 900Nashville,TN 37201
(Address of principal executive offices) (Zip Code)
(615) 744-3700
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changes since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes      No     

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for shorter period that the registrant was required to submit such files).  Yes      No     

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.  (Check one):

Large Accelerated Filer                            Accelerated Filer     
Non-accelerated Filer                              Smaller reporting company
(do not check if you are a smaller reporting company)                Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes      No     

Securities registered pursuant to Section 12(b) of the Exchange Act:
Title of Each ClassTrading SymbolName of Exchange on which Registered
Common Stock, par value $1.00PNFPThe Nasdaq Stock Market LLC
Depositary Shares (each representing 1/40th interest in a share of 6.75% Fixed-Rate Non-Cumulative Perpetual Preferred Stock, Series B)PNFPPThe Nasdaq Stock Market LLC

As of April 30, 2021 there were 76,094,901 shares of common stock, $1.00 par value per share, issued and outstanding.


Table of Contents
Pinnacle Financial Partners, Inc.
Report on Form 10-Q
March 31, 2021
TABLE OF CONTENTSPage No.
  
  

2

Table of Contents
FORWARD-LOOKING STATEMENTS

All statements, other than statements of historical fact, included in this report, are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "expect," "anticipate," "intend," "may," "should," "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 statements. These forward-looking statements are subject to known and unknown risks, uncertainties and other factors that could cause the actual results to differ materially from the statements, including, but not limited to: (i) deterioration in the financial condition of borrowers of Pinnacle Bank and its subsidiaries or BHG resulting in significant increases in loan losses and provisions for those losses and, in the case of BHG, substitutions; (ii) the effects of the emergence of widespread health emergencies or pandemics, including the magnitude and duration of the COVID-19 pandemic and its impact on general economic and financial market conditions and on Pinnacle Financial's and its customers' business, results of operations, asset quality and financial condition; (iii) the speed with which the COVID-19 vaccines can be widely distributed, decisions of governmental agencies to pause the use of one or more vaccines, those vaccines' efficacy against the virus and public acceptance of the vaccines; (iv) the failure of announced or anticipated stimulus programs to be timely approved, or approved at all, or the failure of such programs to provide sufficient relief when approved, and the resulting impact on the economy and our customers and their businesses; (v) the inability of Pinnacle Financial, or entities in which it has significant investments, like BHG, to maintain the long-term historical growth rate of its, or such entities', loan portfolio; (vi) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (vii) effectiveness of Pinnacle Financial's asset management activities in improving, resolving or liquidating lower-quality assets; (viii) the impact of competition with other financial institutions, including pricing pressures and the resulting impact on Pinnacle Financial’s results, including as a result of compression to net interest margin; (ix) adverse conditions in the national or local economies including in Pinnacle Financial's markets throughout Tennessee, North Carolina, South Carolina, Georgia and Virginia,  particularly in commercial and residential real estate markets; (x) fluctuations or differences in interest rates on loans or deposits from those that Pinnacle Financial is modeling or anticipating, including as a result of Pinnacle Bank's inability to better match deposit rates with the changes in the short-term rate environment, or that affect the yield curve; (xi) the results of regulatory examinations; (xii) Pinnacle Financial's ability to identify potential candidates for, consummate, and achieve synergies from, potential future acquisitions; (xiii) difficulties and delays in integrating acquired businesses or fully realizing costs savings and other benefits from acquisitions; (xiv) BHG's ability to profitably grow its business and successfully execute on its business plans; (xv) risks of expansion into new geographic or product markets; (xvi) the ability to grow and retain low-cost core deposits and retain large, uninsured deposits, including during times when Pinnacle Bank is seeking to lower rates it pays on deposits; (xvii) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including goodwill or other intangible assets; (xviii) the ineffectiveness of Pinnacle Bank's hedging strategies, or the unexpected counterparty failure or hedge failure of the underlying hedges; (xix) reduced ability to attract additional financial advisors (or failure of such advisors to cause their clients to switch to Pinnacle Bank), to retain financial advisors (including as a result of the competitive environment for associates) or otherwise to attract customers from other financial institutions; (xx) deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xxi) inability to comply with regulatory capital requirements, including those resulting from changes to capital calculation methodologies, required capital maintenance levels or regulatory requests or directives, particularly if Pinnacle Bank's level of applicable commercial real estate loans were to exceed percentage levels of total capital in guidelines recommended by its regulators; (xxii) approval of the declaration of any dividend by Pinnacle Financial's board of directors; (xxiii) the vulnerability of Pinnacle Bank's network and online banking portals, and the systems of parties with whom Pinnacle Bank contracts, to unauthorized access, computer viruses, phishing schemes, spam attacks, human error, natural disasters, power loss and other security breaches; (xxiv) the possibility of increased compliance and operational costs as a result of increased regulatory oversight (including by the Consumer Financial Protection Bureau), including oversight of companies in which Pinnacle Financial or Pinnacle Bank have significant investments, like BHG, and the development of additional banking products for Pinnacle Bank's corporate and consumer clients; (xxv) the risks associated with Pinnacle Financial and Pinnacle Bank being a minority investor in BHG, including the risk that the owners of a majority of the equity interests in BHG decide to sell the company or all or a portion of their ownership interests in BHG if not prohibited from doing so by Pinnacle Financial or Pinnacle Bank; (xxvi) the possibility of increased personal or corporate tax rates and the resulting reduction in our and our customers' businesses as a result of any such increases; (xxvii) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, like BHG, including regulatory or legislative developments; (xxviii) the availability of and access to capital; (xxiv) adverse results (including costs, fines, reputational harm, inability to obtain necessary approvals and/or other negative effects) from current or future litigation, regulatory examinations or other legal and/or regulatory actions, including as a result of Pinnacle Bank's participation in and execution of government programs related to the COVID-19 pandemic; and (xxx) general competitive, economic, political and market conditions. Additional factors which could affect the forward looking statements can be found in Pinnacle Financial's Annual Report on Form 10-K, Quarterly Reports on Form 10-Q (including this report), and Current Reports on Form 8-K filed with the SEC and available on the SEC's website at http://www.sec.gov. Pinnacle Financial disclaims any obligation to update or revise any forward-looking statements contained in this report, which speak only as of the date hereof, whether as a result of new information, future events or otherwise.

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Item 1.Part I. Financial Information

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(dollars in thousands, except per share data)March 31, 2021December 31, 2020
ASSETS  
Cash and noninterest-bearing due from banks$189,251 $203,296 
Restricted cash 162,834 223,788 
Interest-bearing due from banks2,780,137 3,522,224 
Federal funds sold and other55,186 12,141 
Cash and cash equivalents3,187,408 3,961,449 
Securities purchased with agreement to resell450,000  
Securities available-for-sale, at fair value3,677,019 3,586,681 
Securities held-to-maturity (fair value of $1.0 billion and $1.1 billion, net of allowance for credit losses of $198 and $191 at March 31, 2021 and Dec. 31, 2020, respectively)1,014,345 1,028,359 
Consumer loans held-for-sale85,769 87,821 
Commercial loans held-for-sale12,541 31,200 
Loans23,086,701 22,424,501 
Less allowance for credit losses(280,881)(285,050)
Loans, net22,805,820 22,139,451 
Premises and equipment, net289,515 290,001 
Equity method investment327,512 308,556 
Accrued interest receivable98,477 104,078 
Goodwill1,819,811 1,819,811 
Core deposits and other intangible assets40,130 42,336 
Other real estate owned10,651 12,360 
Other assets1,480,707 1,520,757 
Total assets$35,299,705 $34,932,860 
LIABILITIES AND SHAREHOLDERS' EQUITY  
Deposits:  
Noninterest-bearing$8,103,943 $7,392,325 
Interest-bearing5,814,689 5,689,095 
Savings and money market accounts11,361,620 11,099,523 
Time3,012,688 3,524,632 
Total deposits28,292,940 27,705,575 
Securities sold under agreements to repurchase172,117 128,164 
Federal Home Loan Bank advances888,115 1,087,927 
Subordinated debt and other borrowings671,002 670,575 
Accrued interest payable15,359 24,934 
Other liabilities300,648 411,074 
Total liabilities30,340,181 30,028,249 
Shareholders' equity:  
Preferred stock, no par value, 10.0 million shares authorized; 225,000 shares non-cumulative perpetual preferred stock, Series B, liquidation preference $225.0 million, issued and outstanding at March 31, 2021 and Dec. 31, 2020, respectively217,126 217,126 
Common stock, par value $1.00; 180.0 million shares authorized; 76.1 million and 75.9 million shares issued and outstanding at March 31, 2021 and Dec. 31, 2020, respectively76,088 75,850 
Additional paid-in capital3,027,311 3,028,063 
Retained earnings1,515,451 1,407,723 
Accumulated other comprehensive income, net of taxes123,548 175,849 
Total shareholders' equity4,959,524 4,904,611 
Total liabilities and shareholders' equity$35,299,705 $34,932,860 
See accompanying notes to consolidated financial statements (unaudited).
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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(dollars in thousands, except per share data)Three months ended
March 31,
 20212020
Interest income:
Loans, including fees$227,372 $236,420 
Securities:
Taxable7,728 10,268 
Tax-exempt15,498 13,824 
Federal funds sold and other1,319 2,557 
Total interest income251,917 263,069 
Interest expense:
Deposits17,468 50,698 
Securities sold under agreements to repurchase72 115 
Federal Home Loan Bank advances and other borrowings11,507 18,704 
Total interest expense29,047 69,517 
Net interest income222,870 193,552 
Provision for credit losses7,235 99,889 
Net interest income after provision for credit losses215,635 93,663 
Noninterest income:
Service charges on deposit accounts8,307 9,032 
Investment services8,191 9,239 
Insurance sales commissions3,225 3,240 
Gain on mortgage loans sold, net13,666 8,583 
Investment gains on sales, net 463 
Trust fees4,687 4,170 
Income from equity method investment28,950 15,592 
Other noninterest income25,683 20,058 
Total noninterest income92,709 70,377 
Noninterest expense:
Salaries and employee benefits102,728 80,480 
Equipment and occupancy23,220 20,978 
Other real estate (income) expense, net(13)2,415 
Marketing and other business development2,349 3,251 
Postage and supplies1,806 1,990 
Amortization of intangibles2,206 2,520 
Other noninterest expense22,400 25,715 
Total noninterest expense154,696 137,349 
Income before income taxes153,648 26,691 
Income tax expense (benefit)28,220 (1,665)
Net income125,428 28,356 
Preferred stock dividends(3,798) 
Net income available to common shareholders$121,630 $28,356 
Per share information:
Basic net income per common share$1.61 $0.37 
Diluted net income per common share$1.61 $0.37 
Weighted average common shares outstanding:
Basic75,372,883 75,803,402 
Diluted75,657,149 75,966,295 

See accompanying notes to consolidated financial statements (unaudited).
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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(dollars in thousands)
 Three months ended
March 31,
 20212020
Net income$125,428 $28,356 
Other comprehensive income (loss), net of tax:
Change in fair value on available-for-sale securities, net of tax(33,372)32,872 
Change in fair value of cash flow hedges, net of tax(17,742)61,084 
Accretion of net unrealized gains on securities transferred from available-for-sale to held-to-maturity, net of tax(1,691)(467)
Loss on cash flow hedges reclassified from other comprehensive income into net income, net of tax504 1,825 
Net gain on sale of investment securities reclassified from other comprehensive income into net income, net of tax (342)
Total other comprehensive income (loss), net of tax(52,301)94,972 
Total comprehensive income$73,127 $123,328 

See accompanying notes to consolidated financial statements (unaudited).
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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
(dollars and shares in thousands)Common Stock  
 Preferred Stock
 Amount
SharesAmountsAdditional Paid-in CapitalRetained EarningsAccumulated Other Comp. Income (Loss), netTotal Shareholders' Equity
Balance at December 31, 2019$— 76,564 $76,564 $3,064,467 $1,184,183 $30,534 $4,355,748 
Exercise of employee common stock options & related tax benefits— 1 1 4 — — 5 
Common stock dividends paid ($0.16 per share)— — — — (12,442)— (12,442)
Repurchase of common stock— (1,015)(1,015)(49,775)— — (50,790)
Issuance of restricted common shares, net of forfeitures— 198 198 (198)— —  
Issuance of common stock pursuant to restricted stock unit agreement, net of shares withheld for taxes & related tax benefits— 84 84 (2,552)— — (2,468)
Restricted shares withheld for taxes & related tax benefit— (32)(32)(1,926)— — (1,958)
Compensation expense for restricted shares & performance stock units— — — 5,501 — — 5,501 
Net income— — — — 28,356 — 28,356 
Cumulative effect of change in accounting principle— — — — (31,796)— (31,796)
Other comprehensive income— — — — — 94,972 94,972 
Balance at March 31, 2020$— 75,800 $75,800 $3,015,521 $1,168,301 $125,506 $4,385,128 

Balance at December 31, 2020$217,126 75,850 $75,850 $3,028,063 $1,407,723 $175,849 $4,904,611 
Exercise of employee common stock options & related tax benefits— 13 13 291 — — 304 
Preferred dividends paid ($16.88 per share) — — — — (3,798)— (3,798)
Common dividends paid ($0.18 per share)— — — — (13,902)— (13,902)
Issuance of restricted common shares, net of forfeitures— 172 172 (172)— —  
Issuance of common stock pursuant to restricted stock unit agreement, net of shares withheld for taxes & related tax benefits — 87 87 (3,848)— (3,761)
Restricted shares withheld for taxes & related tax benefits— (34)(34)(2,422)— — (2,456)
Compensation expense for restricted shares & performance stock units— — — 5,399 — — 5,399 
Net income— — — — 125,428 — 125,428 
Other comprehensive loss— — — — — (52,301)(52,301)
Balance at March 31, 2021$217,126 76,088 $76,088 $3,027,311 $1,515,451 $123,548 $4,959,524 

See accompanying notes to consolidated financial statements (unaudited).
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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(dollars in thousands)Three months ended
March 31,
 20212020
Operating activities:  
Net income$125,428 $28,356 
Adjustments to reconcile net income to net cash provided by operating activities:  
Net amortization/accretion of premium/discount on securities12,195 6,799 
Depreciation, amortization and accretion14,049 10,219 
Provision for credit losses7,235 99,889 
Gain on mortgage loans sold, net(13,666)(8,583)
Investment gains on sales, net (463)
Stock-based compensation expense5,399 5,501 
Deferred tax expense (benefit)7,537 (11,799)
Losses (gains) on dispositions of other real estate and other investments(132)2,309 
Income from equity method investment(28,950)(15,592)
  Dividends received from equity method investment9,993 7,957 
Excess tax benefit from stock compensation(1,565)(862)
Gain on commercial loans sold, net(1,184)(597)
Commercial loans held for sale originated(115,154)(78,671)
Commercial loans held for sale sold134,997 90,003 
Consumer loans held for sale originated(640,024)(366,423)
Consumer loans held for sale sold655,743 369,581 
Decrease (increase) in other assets70,174 (113,848)
Increase (decrease) in other liabilities(118,902)32,834 
Net cash provided by operating activities123,173 56,610 
Investing activities:  
Activities in securities available-for-sale:  
Purchases(302,867)(407,122)
Sales 30,204 
Maturities, prepayments and calls126,841 88,164 
Activities in securities held-to-maturity:  
Maturities, prepayments and calls9,653 1,743 
Increase in securities purchased under agreements to resell(450,000) 
Increase in loans, net(672,239)(611,836)
Purchases of software, premises and equipment(5,704)(6,334)
Proceeds from sale of other real estate1,980 1,796 
Proceeds from derivative instruments 35,680 
Proceeds from sale of FHLB stock7,883  
Increase in other investments(20,456)(10,893)
Net cash used in investing activities(1,304,909)(878,598)
Financing activities:  
Net increase in deposits587,418 1,152,246 
Net increase in securities sold under agreements to repurchase43,954 60,194 
Federal Home Loan Bank: Advances 650,000 
Federal Home Loan Bank: Repayments/maturities(200,000)(395,014)
Advances of other borrowings, net of issuance costs (65)
Repayments of other borrowings (80,000)
Principal payments of finance lease obligation(64)(59)
Issuance of common stock pursuant to restricted stock unit agreement, net of shares withheld for taxes(3,761)(2,468)
Exercise of common stock options, net of shares surrendered for taxes(2,152)(1,953)
Repurchase of common stock (50,790)
Common stock dividends paid(13,902)(12,442)
Preferred stock dividends paid(3,798) 
Net cash provided by financing activities407,695 1,319,649 
Net increase (decrease) in cash, cash equivalents, and restricted cash(774,041)497,661 
Cash, cash equivalents, and restricted cash, beginning of period3,961,449 526,707 
Cash, cash equivalents, and restricted cash, end of period$3,187,408 $1,024,368 

See accompanying notes to consolidated financial statements (unaudited).
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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1. Summary of Significant Accounting Policies

Nature of Business — Pinnacle Financial Partners, Inc. (Pinnacle Financial) is a financial holding company whose primary business is conducted by its wholly-owned subsidiary, Pinnacle Bank. Pinnacle Bank is a commercial bank headquartered in Nashville, Tennessee. Pinnacle Financial completed its acquisitions of CapitalMark Bank & Trust (CapitalMark), Magna Bank (Magna), Avenue Financial Holdings, Inc. (Avenue), BNC Bancorp (BNC) and Advocate Capital, Inc. (Advocate Capital) on July 31, 2015, September 1, 2015, July 1, 2016, June 16, 2017 and July 2, 2019, respectively. Pinnacle Financial and Pinnacle Bank also collectively hold a 49% interest in Bankers Healthcare Group, LLC (BHG), a company that primarily serves as a full-service commercial loan provider to healthcare and other professional practices. Pinnacle Bank provides a full range of banking services, including investment, mortgage, insurance, and comprehensive wealth management services, in its 12 primarily urban markets within Tennessee, the Carolinas, Virginia and Georgia.

Basis of Presentation — The accompanying unaudited consolidated financial statements have been prepared in accordance with instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with U.S. generally accepted accounting principles (U.S. GAAP). All adjustments consisting of normally recurring accruals that, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods covered by the report have been included. The accompanying unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes appearing in Pinnacle Financial's Annual Report on Form 10-K for the year ended December 31, 2020 (2020 10-K).

These consolidated financial statements include the accounts of Pinnacle Financial and its wholly-owned subsidiaries. Certain statutory trust affiliates of Pinnacle Financial, as noted in Note 11. Other Borrowings are included in these consolidated financial statements pursuant to the equity method of accounting. Significant intercompany transactions and accounts are eliminated in consolidation.

Use of Estimates — The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the balance sheet date and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term include the determination of the allowance for credit losses and determination of any impairment of goodwill or intangible assets. It is reasonably possible Pinnacle Financial's estimate of the allowance for credit losses and determination of impairment of goodwill or intangible assets could change as a result of the continued impact of the COVID-19 pandemic on the economy. The resulting change in these estimates could be material to Pinnacle Financial's consolidated financial statements. There have been no significant changes to Pinnacle Financial's significant accounting policies as disclosed in the 2020 10-K.

Cash Flow Information — Supplemental cash flow information addressing certain cash and noncash transactions for the three months ended March 31, 2021 and 2020 was as follows (in thousands):
 For the three months ended
March 31,
 20212020
Cash Transactions:  
Interest paid$38,362 $77,748 
Income taxes paid, net433 620 
Operating lease payments3,516 3,424
Noncash Transactions:  
Loans charged-off to the allowance for credit losses14,274 11,693 
Loans foreclosed upon and transferred to other real estate owned139 1,800 
Available-for-sale securities transferred to held-to-maturity portfolio 873,613 
Right-of-use asset recognized during the period in exchange for lease obligations531 716 

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Income Per Common Share — Basic net income per common share (EPS) is computed by dividing net income available to common shareholders by the weighted average common shares outstanding for the period. Diluted EPS reflects the dilution that could occur if securities or other contracts to issue common stock were exercised or converted. The difference between basic and diluted weighted average common shares outstanding is attributable to common stock options, restricted share awards, and restricted share unit awards. The dilutive effect of outstanding options, restricted share awards, and restricted share unit awards is reflected in diluted EPS by application of the treasury stock method.

The following is a summary of the basic and diluted net income per common share calculations for the three months ended March 31, 2021 and 2020 (in thousands, except per share data):
 Three months ended
March 31,
 20212020
Basic net income per common share calculation:
Numerator - Net income available to common shareholders
$121,630 $28,356 
Denominator - Weighted average common shares outstanding
75,373 75,803 
Basic net income per common share$1.61 $0.37 
Diluted net income per common share calculation:
Numerator – Net income available to common shareholders
$121,630 $28,356 
Denominator - Weighted average common shares outstanding
75,373 75,803 
Dilutive common shares contingently issuable284 163 
Weighted average diluted common shares outstanding75,657 75,966 
Diluted net income per common share$1.61 $0.37 

Recently Adopted Accounting Pronouncements  In January 2020, the FASB issued Accounting Standards Update 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815. These amendments, among other things, clarify that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investments-Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. The amendments also clarify that when determining the accounting for certain forward contracts and purchased options a company should not consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair value option. The guidance is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. An entity should apply ASU 2020-01 prospectively at the beginning of the interim period that includes the adoption date. The amendments became effective for Pinnacle Financial on January 1, 2021 and had no impact on Pinnacle Financial's consolidated financial statements.

In December 2019, the FASB issued Accounting Standards Update No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes to simplify various aspects of the current guidance to promote consistent application of the standard among reporting entities by moving certain exceptions to the general principles. The amendments are effective for fiscal years beginning after December 15, 2020. The amendments became effective for Pinnacle Financial on January 1, 2021 and had no impact on Pinnacle Financial's consolidated financial statements.

In March 2020, the FASB issued Accounting Standards Update 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting, and has issued subsequent amendments thereto, which provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. It is intended to help stakeholders during the global market-wide reference rate transition period. The guidance is effective for all entities as of March 12, 2020 through December 31, 2022. Pinnacle Financial is implementing a transition plan to identify and modify its loans and other financial instruments, including certain indebtedness, with attributes that are either directly or indirectly influenced by LIBOR. Pinnacle Financial is assessing ASU 2020-04 and its impact on the transition away from LIBOR for its loans and other financial instruments.

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Newly Issued Not Yet Effective Accounting Standards — Other than those pronouncements discussed above which have been recently adopted, Pinnacle Financial does not believe there were any other recently issued accounting pronouncements that are expected to materially impact its consolidated financial statements.

Subsequent Events — ASC Topic 855,  Subsequent Events, establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued. Pinnacle Financial evaluated all events or transactions that occurred after March 31, 2021 through the date of the issued financial statements.

Note 2. Equity method investment

A summary of BHG's financial position as of March 31, 2021 and December 31, 2020 and results of operations as of and for the three months ended March 31, 2021 and 2020, were as follows (in thousands):
 As of
 March 31, 2021December 31, 2020
Assets$1,608,912 $1,330,317 
Liabilities1,334,066 1,088,135 
Equity interests274,846 242,182 
Total liabilities and equity$1,608,912 $1,330,317 
 For the three months ended
March 31,
 20212020
Revenues$157,623 $97,943 
Net income$58,562 $32,471 

At March 31, 2021, technology, trade name and customer relationship intangibles, net of related amortization, totaled $7.4 million compared to $7.6 million as of December 31, 2020. Amortization expense of $188,000 was included for the three months ended March 31, 2021 compared to $293,000 for the same period in the prior year. Accretion income of $452,000 was included in the three months ended March 31, 2021 compared to $564,000 for the same period in the prior year.

During the three months ended March 31, 2021, Pinnacle Financial and Pinnacle Bank received dividends of $10.0 million from BHG in the aggregate compared to $8.0 million for the same period in the prior year. Earnings from BHG are included in Pinnacle Financial's consolidated tax return. Profits from intercompany transactions are eliminated. During the three months ended March 31, 2021, Pinnacle Bank purchased $74.6 million of loans from BHG at par pursuant to BHG's joint venture loan program whereby BHG and Pinnacle share proportionately in the credit risk of the acquired loans based on the rate on the loan and the rate of the purchase. The yield on this portfolio to Pinnacle Bank is anticipated to be 4.75% per annum. No loans were purchased from BHG by Pinnacle Bank for the three months ended March 31, 2020.


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Note 3.  Securities

The amortized cost and fair value of securities available-for-sale and held-to-maturity at March 31, 2021 and December 31, 2020 are summarized as follows (in thousands):
 Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
March 31, 2021:    
Securities available-for-sale:    
U.S. Treasury securities$83,971 $22 $ $83,993 
U.S. government agency securities159,613 1,224 3,381 157,456 
Mortgage-backed securities1,583,670 40,921 14,813 1,609,778 
State and municipal securities1,480,691 40,140 8,471 1,512,360 
Asset-backed securities191,005 382 692 190,695 
Corporate notes and other121,766 2,824 1,853 122,737 
 $3,620,716 $85,513 $29,210 $3,677,019 
Securities held-to-maturity:    
State and municipal securities$1,014,543 $22,320 $3,114 $1,033,749 
 $1,014,543 $22,320 $3,114 $1,033,749 
Allowance for credit losses - securities held-to-maturity(198)
Securities held-to-maturity, net of allowance for credit losses$1,014,345 
December 31, 2020:    
Securities available-for-sale:    
U.S. Treasury securities$82,199 $10 $ $82,209 
U.S. government agency securities74,916 1,547 60 76,403 
Mortgage-backed securities1,623,759 67,759 2,327 1,689,191 
State and municipal securities1,411,288 44,559 12,484 1,443,363 
Asset-backed securities177,878 715 657 177,936 
Corporate notes and other117,256 2,632 2,309 117,579 
 $3,487,296 $117,222 17,837 $3,586,681 
Securities held-to-maturity:    
State and municipal securities$1,028,550 $38,272 $291 $1,066,531 
$1,028,550 $38,272 $291 $1,066,531