For Pinnacle and Cavalry Bank Associates Only
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FILED PURSUANT TO RULE 425
FILING PERSON: PINNACLE FINANCIAL PARTNERS, INC.
SUBJECT COMPANY: CAVALRY BANCORP, INC.
COMMISSION FILE NO. 0-23605
ASSOCIATE Q & A
PINNACLE/CAVALRY ANNOUNCEMENT
OCTOBER 3, 2005
ALL ASSOCIATES
Q: WHAT IS THE RATIONALE FOR COMBINING THE TWO FIRMS?
A: 1. THE MERGER WILL CREATE IMMEDIATE VALUE AS WELL AS SIGNIFICANT
LONG-TERM UPSIDE FOR SHAREHOLDERS, CLIENTS AND ASSOCIATES OF BOTH
FIRMS.
SHAREHOLDERS
- The transaction will be accretive to earnings per share in
2006.
- The combined firm is expected to experience increased float
and liquidity of stock.
- Getting synergies and successfully integrating the firms will
be easier than in most mergers due to several factors.
Pinnacle had de novo plans to enter the Rutherford County
market the end of this year. Pinnacle will also fill many of
the 40 new positions in its 2006 growth plan with Cavalry
associates, reducing the number of positions that will be
eliminated (projected at around 6% of the combined company's
370 associates).
CLIENTS
- Clients will benefit from an expanded service delivery system
and an expanded portfolio of products and services.
> Cavalry clients will have access to treasury
management, financial planning services, courier
deposit pickup for commercial clients and Pinnacle's
system of free use of any ATM anywhere around the
world for many account types. Cavalry clients will
benefit from Pinnacle's strong commercial banking
experience.
> No client contact positions at Cavalry are expected
to be eliminated. No office is expected to close.
> Pinnacle will benefit from Cavalry's greater focus on
retail and strong presence in the retail and
commercial real estate sectors. Pinnacle will
leverage Cavalry's merchant services and its trust
and insurance capabilities across the enterprise.
> The combination also increases our capacity to serve
our larger credit clients.
> The company will have 17 offices in the most
attractive trade areas in Middle Tennessee.
ASSOCIATES
- Cavalry associates will participate in Pinnacle's annual and
long-term incentive plan, a key driver of the strong teamwork
that has led to Pinnacle's rapid growth and success.
- No client contact positions at Cavalry are expected to be
eliminated. No office is expected to close.
- Since 100% of all associates will be shareholders, the
combined firm is expected to experience increased float and
liquidity of stock.
1 October 3, 2005
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2. THE COMBINED INSTITUTION WILL HAVE A VERY STRONG FOOTPRINT IN
THE BEST MARKETS FOR FINANCIAL SERVICES IN MIDDLE TENNESSEE.
- The Cavalry name and identity will be changed to Pinnacle
Financial Partners when a common systems platform is in place
(projected for mid-2006).
- With over $1.6 billion in assets projected at closing Pinnacle
will be the 2nd largest bank holding company headquartered in
Tennessee and have the fifth largest market share in the
Nashville-Davidson-Murfreesboro MSA.
- Rutherford County has the fastest growing annual job growth
rate in the nation. Pinnacle had already planned to enter the
Rutherford County market on a de novo basis; the acquisition
gives Pinnacle an immediate associate and client base in this
attractive market.
- The combined firm will operate under one platform that takes
advantage of the superior aspects of both current systems.
Pinnacle's deposit operations, item processing and data
processing will relocate to a Cavalry property in Murfreesboro
in the second quarter of 2006, while Cavalry will have the
benefit of Pinnacle's extensive treasury management
capabilities.
3. KEY CAVALRY LEADERSHIP WILL HAVE ROLES AT PINNACLE FINANCIAL
PARTNERS.
- Ed Loughry, chairman and CEO of Cavalry, will become vice
chairman of the board of directors of Pinnacle Financial
Partners. Two other Cavalry board members are expected to join
him as part of the Pinnacle board.
- Bill Jones, Cavalry EVP and chief administrative officer, will
become Pinnacle's area executive for Rutherford County and a
member of the Pinnacle Leadership Team.
- Ronnie Knight, Cavalry president and chief operating officer,
will serve as a consultant to Pinnacle, focusing his efforts
on client retention and business development.
PINNACLE ASSOCIATES
Q. HOW WILL THIS CHANGE OUR 2005-2007 STRATEGIC PLAN AND POSITIONING?
A. Pinnacle is positioned as an urban-community bank, which simply means
that we offer the sophisticated products and advice typically available
at large regional banks with the hands-on, friendly, personal service
typically available at a small community bank.
Pinnacle's brand consists of two distinguishing impacts on clients:
1. Distinctive service
2. Effective advice
This transaction is not intended to modify either the urban-community
bank positioning or the "service and advice" brand.
As you recall, our 2005-2007 plan contemplated a continuation of the same
five strategies that we have been executing since we founded the firm in
2000:
1. Focus on small businesses and affluent consumers
2. Give distinctive service
3. Provide effective financial advice
4. Offer convenient access
5. Build strategic alliances
2 October 3, 2005
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The plan also called for the continued rapid growth of the firm, achieving
$1 billion in assets by the conclusion of 2005 (our fifth year) with very
strong asset growth in 2006 and 2007.
Cavalry is also an urban-community bank primarily focused on Rutherford
County with a tradition of and commitment to excellent client service. They
also plan very rapid growth. Due to the robustness of Rutherford County and
Cavalry's position in that market, Cavalry's four-year cumulative annual
growth rate for loans, deposits and assets has been 16%, 12% and 12%
respectively - extremely fast growth when compared to the national average.
As it relates to Pinnacle's 2005-2007 plan, obviously, we will be combining
the assets and earnings capacities of the two firms for 2006 and 2007. In
addition to normal planned growth for the two firms, we will be adding
additional financial advisors to focus on commercial middle-market firms in
Rutherford County and intend to aggressively market our state-of-the-art
treasury management services in that market. This should enable us to
deploy our proven formula for growth in one of the counties with the
highest annual job growth rate in the nation.
Additionally, this combination will enable us to expand our ability to
serve Pinnacle's existing clients with insurance and trust offerings, as an
example, and to better serve retail clients with financial services perhaps
more geared to "mass-market" consumers.
We expect this combination to dramatically improve our performance on
important strategic challenges like net interest margin and revenue
diversification.
Q: WHAT DOES THIS DO TO OUR 2005 BHAG (BIG HAIRY AUDACIOUS GOAL)?
A: This transaction is not expected to close until first quarter 2006.
Pinnacle may incur some "one time" costs associated with this transaction
during 2005. Any such costs would be excluded from measurement against the
BHAG or any incentive compensation calculations for 2005.
Q. WILL WE HAVE MORE OF A RETAIL FOCUS IN OUR CURRENT PINNACLE LOCATIONS?
A. Yes, to some degree. Pinnacle has focused exclusively on small businesses
and affluent households. While Cavalry serves these markets, they also have
been extremely effective with products and services more geared toward
"mass-market" consumers. Certainly we will want to take advantage of their
capabilities in that regard such that you may have an "additional arrow or
two in your quiver."
As you know, we have relied on the excellence of our associates and the
engagement of our clients to build roughly a $1 billion bank having never
run an ad. Though our merger with Cavalry will enable us to better serve
"mass-market" consumers with a few additional product offerings, gathering
clients "by invitation" and "word-of-mouth" reputation will continue to be
the primary marketing and sales approach for all of the combined firm going
forward as opposed to advertising.
Additionally, you should expect no changes to things like hours of
operation, office staffing models, etc.
3 October 3, 2005
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Q: WILL WE ADD ANY OF CAVALRY'S PRODUCTS OR SERVICES TO OUR MIX?
A: Yes. At a minimum, we will want to take advantage of Cavalry's insurance
products, trust and investment management products and a number of consumer
products such as overdraft protection. Additionally, consistent with our
2006 initiative, this will bolster our current construction and development
lending as a result of their expertise and infrastructure.
Q. HAVE THEY SURVEYED ASSOCIATE SATISFACTION? IF SO, WHAT DID IT SAY?
A. Yes. Cavalry recently completed a work environment survey. In general,
like Pinnacle, Cavalry associates enjoy working at Cavalry and the
working relationships with peers. The greatest concern among Cavalry
associates was regarding compensation.
While the base pay and incentive compensation plans at the two firms are
different, because of our commitment to including everyone in annual cash
incentives and equity-based compensation, we are hopeful that we can help
alleviate their concern relative to compensation.
We will continue our commitment to being the best financial services firm
and the best place to work in Middle Tennessee. Obviously, following the
combination, we will utilize our work environment survey to ensure a very
high level of associate engagement throughout the combined firm.
Q. WHEN WILL WE START INCLUDING THEIR CLIENTS IN OUR CLIENT SURVEYS?
A. We will begin including Cavalry clients in our client surveys shortly after
the systems conversion which is currently planned for mid-2006.
We will likely ask Cavalry to conduct service quality surveys of their
clients prior to that time in order to establish a baseline.
4 October 3, 2005
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Q. WILL CAVALRY HAVE THE SAME CREDIT DISCIPLINE WE HAVE?
A. Yes.
Cavalry's credit experience has been exceptional versus any benchmarks. Key
asset quality comparisons between Cavalry and Pinnacle are listed below:
CAVB PNFP
---- ----
Non performing assets/loans .24% .11%
Net charge offs/average loans .12% .22%
Reserves/non performing assets 457% 1117%
Both firms have been extraordinarily high-performing firms in terms of
credit quality.
Because of Cavalry's strong commitment to credit quality, we expect the
integration of the two credit cultures to be relatively smooth.
Undoubtedly, simply converting to one operating standard will require some
changes for Cavalry associates. Examples of changes that will be required
for Cavalry associates include adopting Pinnacle's file documentation
standards, credit authorization forms, cash flow calculations, loan grading
system, etc. These sorts of process changes are required in virtually any
merger. Nevertheless, Cavalry's credit experience speaks for itself.
In general, we will continue our approach to loan approval, the basic
tenants of which are:
- Signature system (personal accountabilities; no credit
committee)
- Limited individual authorities
- An ability to get relatively large deals done quickly with
local market lenders
- Additional "credit administration" signature approval on
larger deals
- Speedy response to clients with up to 30 days to finalize
credit documentation after the approval
Q. WILL WE CONVERT CAVALRY TO PINNACLE SYSTEMS?
A. No, not necessarily. Obviously we will run one integrated operating
environment for the entire firm. However, we will select the software and
processes that will best service the needs of the combined firm.
At this point, it appears that ITI-Fiserv, Cavalry's core banking platform
(e.g. deposit and loan systems), may better serve the combined firm's needs
than OSI, our current vendor. Should that remain the case after a more
thorough analysis, we would migrate Pinnacle accounts to that platform.
Conversely, at this point, it appears Pinnacle's Treasury Management
platform (e.g. wholesale lockbox, wire transfer and remote deposit) may
better serve the combined firm's needs than the Cavalry software providers,
so we would continue to utilize the Pinnacle software solution should this
remain true after a more detailed analysis.
5 October 3, 2005
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Q: WHY ARE WE CONSIDERING CONVERSION TO CAVALRY'S CORE BANKING PLATFORM?
A: There are a number of reasons that ITI-Fiserv may in fact be a better
solution for the combined firm than our current platform that is provided
by OSI.
1. It is our perception that ITI's focus is on meeting the changing
requirements of small, medium and large commercial banks, whereas it is
our perception that OSI, due to its concentration of credit union
users, is largely focused on the requirements of lower volume, more
consumer oriented credit unions. It would appear to us that ITI-Fiserv
has allocated resources to software development to meet critical needs
of large commercial banks like Pinnacle such as loan participation
accounting, high volume ACH origination, etc.
2. Despite the fact that Cavalry has fewer assets than Pinnacle, it has
substantially more clients, accounts and transaction volumes. Due to
our more limited volumes, it may be easier to convert Pinnacle's
clients to Cavalry's core banking platform than vice versa.
Hugh Queener will lead a team including Randy Withrow and Cannon Loughry,
Cavalry's Chief Information Officer, that will conduct a thorough
investigation and analysis in order to finalize system recommendations and
conversion schedules.
Q. WE HAVE BEEN CONSTRAINED FOR SPACE IN DOWNTOWN NASHVILLE AS WE HAVE GROWN
AND EXPANDED. DOES THIS COMBINATION PROVIDE ANY RELIEF FOR ADDITIONAL
SPACE?
A. Yes. Cavalry runs a state-of-the-art Operations Center in downtown
Murfreesboro with plenty of space to meet the operating space requirements
of the combined firm for the foreseeable future.
Heretofore, we have been committed to keeping all operating units in the
Commerce Center in downtown Nashville because of the great impact that has
on teamwork. Unfortunately, due to the fact that there is no available
space in the Commerce Center, it appears inevitable that we will need
additional space in another facility for operating units. Consequently,
this merger provides a great solution for our additional space
requirements.
It is anticipated that, in general, we will house I.T., Item Processing and
Deposit Operations in Cavalry's existing Operations Center in Murfreesboro.
Q. WHO IN OPS WILL HAVE TO RELOCATE TO MURFREESBORO? WHEN?
A. The current plan contemplates locating Deposit Operations and Item
Processing in Murfreesboro. At this point in time we do not intend to ask
ANYONE to relocate to Murfreesboro.
The total number of jobs in both Murfreesboro and in Nashville will not
change dramatically; therefore while we may be reducing a segment of the
workforce in Nashville in an area like Deposit Operations, we will be
adding to the Nashville workforce in Treasury Management Services, Loan
Operations, etc.
Also, we anticipate that a number of our associates that currently work in
Nashville may want to work in Murfreesboro based on where they live and
their current commute.
6 October 3, 2005
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The goal is for no one to be forced to relocate their place of work. If you
DESIRE to relocate to Murfreesboro, please let Hugh Queener know.
The integration team will be keeping everyone up to date on how the
ultimate job force will need to be defined geographically. We will notify
you at least monthly on progress we are making.
Q: HOW MUCH INTERNAL FOCUS WILL INTEGRATION REQUIRE?
A: This is an extraordinary opportunity to accelerate growth, capabilities and
the earnings capacity of Pinnacle. While the integration appears much
easier than most integrations with which many of our associates are
familiar, it remains the largest project Pinnacle has yet undertaken.
Hugh Queener, who has led a number of integrations larger in scope than
this one, will lead an implementation team in the complete planning and
execution of this project. He will be naming a cross functional group of
Pinnacle associates to participate on that team.
Bill Jones, our Rutherford County Area Executive, will be appointing Cannon
Loughry, Cavalry's Chief Information Officer, and a cross functional team
from Cavalry to participate on the team.
The combined team is expected to be announced by October 7 and should
complete the plan by October 31.
While this will be a monumental undertaking on our operating staff, it is
expected to have only modest impact on our client contact associates,
enabling the continued rapid growth of the two firms.
Q: WHAT DOES THIS DO TO THE PINNACLE MODEL OF HIRING ONLY EXPERIENCED BANKERS
AND BROKERS AND FOCUSING ON SMALL BUSINESSES AND THEIR OWNERS?
A: We are not aware of any other bank that has utilized the philosophy of
hiring no one with less than 10 years experience. As you know, it is an
integral part of our approach to giving distinctive service and effective
advice. Experienced associates are best prepared to deliver on those two
promises. This philosophy has also contributed to the fact that it takes
the average bank our size 65% more people per million dollars in assets.
Given its proven success, in general, we will want to continue this
philosophy going forward for future hiring, but obviously with no impact to
any Cavalry associates who currently don't meet that requirement.
While Cavalry's approach has been different, it has been no less
successful. They have "engineered" their bank in order to have the number
one market share position in the fastest growing county in the U.S. (in
terms of job growth). They have executed their commitment to distinctive
service and extraordinary convenience by offering extended hours on
weeknights and Saturdays as an example. While we do not currently plan to
expand hours in the Pinnacle footprint, we do intend to continue expanded
hours in the Cavalry footprint. This approach is perfect for clients who
live in Rutherford County and work in Nashville and Brentwood.
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Cavalry benefits from proximity to the MTSU student population, which is a
readily available work force that is particularly well suited to the
extended hour programs. Given that we intend to continue operating branch
offices with extended hours in the Cavalry footprint, we will certainly
want to continue to take advantage of that work force as an exception to
the "10 years experience" requirement.
Q: DOES THIS MEAN WE'LL ESTABLISH A CALL CENTER?
A: Cavalry currently runs a very effective call center.
Pinnacle's 2005-2007 Strategic Plan contemplated the development of one. At
this point, we anticipate merging the two into one unit.
While no decision has been made as to the physical location of the call
center, Cavalry's software support would facilitate running a virtual call
center. In other words, call center associates could actually perform their
job function from anywhere.
Consequently, it is not anticipated at this point that any Cavalry or
Pinnacle associates would be relocated in order to form the combined unit.
Q: WILL ANY PINNACLE POSITIONS BE ELIMINATED DUE TO CONSOLIDATION?
A: No existing Pinnacle positions will be eliminated. Our 2005-2007 plan
contemplated that we would hire approximately 40 associates in 2006 and
approximately 25 in 2007 to support the very rapid growth we have planned.
As a result of this combination, we will take advantage of positions that
would otherwise be eliminated at Cavalry in order to reduce the number of
intended new hires at Pinnacle to approximately 25 in 2006 and
approximately 20 in 2007. In other words, by reducing the number of new
hires at Pinnacle, we can save approximately 20 positions without affecting
anyone personally.
This approach has been critical in minimizing disruption and any job
eliminations at Cavalry as well as easing the hiring burden at Pinnacle to
support the dramatic growth. This is another example of benefits resulting
from this combination.
Q: WILL THIS RESULT IN ANY CHANGES IN OUR COMPENSATION, INCENTIVE OR BENEFITS
PLANS?
A: The Cavalry merger will have no impact on Pinnacle's compensation or
incentive plans.
We are still reviewing benefit plans at the two firms. It is likely that
there may be modest changes to other benefit plans as we seek to find the
best solutions possible; however, you should not expect any degradation or
major changes to your existing benefit plans.
8 October 3, 2005
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CAVALRY ASSOCIATES
Q. WHAT'S IN THIS FOR ME?
A. With this financial merger, we are all still headquartered in Middle
Tennessee and decisions will continue to be made in Middle Tennessee. It
gives us a chance to be a part of a firm that is also a values-driven
company with a recognized commitment to distinctive service for clients and
an invigorating, engaging work environment for associates. Pinnacle has
been recognized by the Nashville Business Journal as the Best Place to Work
in Nashville for the last two years.
Feel free to go to their website at www.pnfp.com to explore the mission,
vision and values of the firm.
We have spent several years looking for the right fit that would give
Cavalry additional locations in the very attractive Davidson and Williamson
County markets and the desired growth potential for our stock. Pinnacle has
eight locations in the most desirable trade areas in Davidson, Williamson
and Sumner counties. Additionally, their stock, which we will now hold, has
been one of the highest performing bank stocks in the nation -- up 93% last
year and 83% the year before.
Obviously, we could have chosen to be a very small part of a large,
unwieldy regional bank or a large part of a smaller, high performing
company. We chose the latter.
We believe that Pinnacle is a good fit that is in the best interest of our
shareholders, clients and associates.
Q. HOW DOES THIS AFFECT MY BENEFITS?
A. A quality benefit program for associates of both institutions is a
priority. We know that your healthcare plan is very important to you. There
almost certainly will be some changes in the healthcare plan. Your
expectation should be that you will continue to have a program that
provides access to quality physicians and hospitals at a fair and
affordable price for you. At this time we don't know all the options that
may be available in the marketplace with our now greater negotiating
position or the timeframe in which changes will be implemented. We expect
to update you at least monthly on decisions such as these in order to keep
you informed of any decisions that are being made.
Q. WHAT IS THE DIFFERENCE IN THE PAY AT CAVALRY AND AT PINNACLE?
A. We have not completed a detailed analysis of the two compensation plans.
Your expectation should be that you will have the opportunity to earn at
least as much in cash compensation in 2006 under Pinnacle's compensation
plan as you would have had under Cavalry's plan.
Nevertheless, some important compensation philosophies will guide any
modifications to compensation plans for Cavalry's associates.
9 October 3, 2005
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- All non-commissioned Cavalry associates will be included in
Pinnacle's annual cash incentive.
- All associates will be included in Pinnacle's equity based
compensation.
- Our commitment is to provide a salary administration program
built on fairness.
- The primary focus is to make sure what we pay associates is
fair in relationship to job responsibilities, market
comparisons and performance (or results).
- Motivation to achieve superior results comes by linking an
associate's pay to their performance.
As Cavalry associates are converted to Pinnacle compensation plans, there
will be a limited number of associates who may receive base pay increases
to offset any reduction in annual cash incentive if their incentive
opportunity is less at Pinnacle than at Cavalry; however, for the most
part, given the inclusion of virtually all associates in Pinnacle's annual
cash incentive plan and equity based incentive plan, most associates are
expected to have the opportunity for increased compensation under the
Pinnacle plan.
Q. HOW DOES PINNACLE'S INCENTIVE PLAN WORK? WHEN WILL WE CHANGE TO THEIR
PLAN?
A. Pinnacle has worked hard to build a "principle-centered" firm. Three very
important values that influence all decisions, but that strongly influence
Pinnacle's incentive plan are:
- Results - They achieve superior results and outperform
competitors. They make a recognizable difference to their
clients and their community. They fulfill their commitments.
- Partnership - They nurture mutually beneficial relationships
characterized by trust, respect and responsibility.
- Fairness - They treat clients, shareholders, business partners
and each other the way they want to be treated. They pursue
solutions that are fair to everyone concerned. In short, they
do the right thing.
Here's how the plan works:
- Every non-commissioned associate is included in the incentive
plan.
- Each associate is assigned to a 10%, 20% or 30% tier, which
simply means that the target incentive award will be 10% of
base pay, 20% of base pay, etc.
- If the criticized and classified asset to capital ratio for
the firm is less than a predetermined target, then all
associates who have been rated "meets expectations" are
eligible to receive incentive compensation. This ratio is
utilized as the best predictor of whether poor loans are being
booked that escalate current earnings but that may jeopardize
the future earnings of the firm. We simply cannot afford poor
loan quality.
- If the firm hits its predetermined earnings per share
(EPS) target, all associates would receive their
target award (e.g., 10% of base pay, etc.)
- If the firm exceeds the EPS targets, all associates
would receive more than their target awards (e.g.,
10% tier associates might receive 12%, 20% tier
associates might receive 24%, etc.)
- If the firm falls short of the EPS targets, all
associates would receive less than target awards
(e.g., 10% tier associates might receive 8%, 20% tier
associates might receive 16%, etc.)
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In general, incentive awards for Pinnacle associates have ranged
between 80 and 120% of target.
This incentive approach creates:
- RESULTS. Incentives are only paid if the firm achieves the
desired results expressed as loan quality and earnings per
share.
- PARTNERSHIP. There is no arguing about whose client it is.
There is no arguing about who should get the "commission."
There is no arguing about who should take the charge-off.
Tellers cannot let clients close accounts and leave which
would reduce revenues. Everyone needs to get the fees and
service charges collected. NO ONE GETS PAID UNLESS EVERYONE
GETS PAID.
- FAIRNESS. We will only hit the very aggressive performance
targets we set for ourselves if everyone gives 100%.
Therefore, what could be more fair than including everyone in
the incentive payout.
Cavalry associates will be included in the Pinnacle annual cash incentive
plan for the 2006 calendar year.
Q. WHAT ABOUT MY 401-K PLAN?
A. Pinnacle's associates broadly participate in Pinnacle's 401-K plan, which
today is structured such that the employer matches 50% of the first 6%
contributed by the associate.
That is slightly different than Cavalry's current plan.
Certainly a 401-K plan will continue to be available following the merger
with Pinnacle.
At this time, we do not know what changes will be made from Cavalry's
current plan, if any, or the timing of those changes.
We expect to update you at least monthly on decisions such as these.
Q. WILL ANY OF OUR TITLES CHANGE?
A. No. There will be no change to officer titles (e.g. Senior Vice President,
Vice President, etc.)
Pinnacle had the advantage of starting with a "clean sheet of paper" when
they formed their firm in 2000. They set out to build a different kind of
financial services experience. Consequently, you will find many new and
different things as a part of their culture than you might find in a
traditional bank. One of those differences is that they place very little
emphasis on officer titles. For client contact personnel who are involved
in business development, they tend to err on the side of granting lofty
titles so that clients can know they are dealing with decision makers.
Pinnacle places much more emphasis on functional titles than officer titles
and those titles are intended to be descriptive of their client focus. A
few examples you will soon encounter include:
11 October 3, 2005
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Traditional Title Pinnacle Title
----------------- --------------
Lender Financial Advisor
Relationship Manager Financial Advisor
CSR Client Service Specialist
Teller Service Specialist
Broker Financial Consultant
Branch Manager Office Manager
Executive Management Leadership Team
Q. WHEN WILL WE KNOW WHICH JOBS WILL BE ELIMINATED?
A. The target date is October 31, 2005.
Hugh Queener, Pinnacle's Chief Administrative Officer, will lead an
implementation team in the complete planning and execution of this project.
He will be naming a cross functional group of Pinnacle associates to
participate on that team.
Bill Jones, Cavalry's Chief Administrative Officer who will become
Pinnacle's Rutherford County Area Executive, will be appointing Cannon
Loughry, Cavalry's Chief Information Officer, and a cross functional team
from Cavalry to participate on the team.
The combined team is expected to be announced by October 7 and should
complete the plan by October 31.
All position eliminations will be communicated upon completion of the plan.
Q. WILL THERE BE SEVERANCE PACKAGES AVAILABLE FOR THOSE WHO WON'T BE STAYING?
A. Yes. There will be severance and outplacement consideration provided. In
general, your expectation should be that any severance would be at least
equivalent to any pre-existing Cavalry plan. At this time, severance plans
have not been finalized. We expect to update you at least monthly on
decisions such as these in order to keep you informed of any decisions that
are being made.
Q. WHO FROM CAVALRY WILL BE INVOLVED IN THE INTEGRATION PLANNING?
A. Bill Jones, our Rutherford County Area Executive, will be appointing Cannon
Loughry, Cavalry's Chief Information Officer, and a cross functional team
from Cavalry to participate on the combined integration planning team.
The combined team is expected be announced by October 7 and should complete
the plan by October 31.
12 October 3, 2005
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Q. HOW DO WE RESPOND TO PEOPLE IN THE COMMUNITY WHO ARE DISAPPOINTED THAT WE
WILL NO LONGER BE A RUTHERFORD COUNTY OWNED BANK?
A.
o We have spent several years looking for the right fit that
would give Cavalry additional locations in the very attractive
Davidson and Williamson County markets and the desired growth
potential for our stock. Pinnacle has eight locations in the
most desirable trade areas in Davidson, Williamson and Sumner
counties.
o Additionally, their stock, which we will now hold, has been
one of the highest performing bank stocks in the nation -- up
93% last year and 83% the year before.
o In fact, roughly 42% of the combined firm will be owned by
Cavalry shareholders.
o Obviously, we could have chosen to be a very small part of a
large, unwieldy regional bank or a large part of a smaller,
high performing company. We chose the latter.
o We will still be part of a firm headquartered in Middle
Tennessee.
o Pinnacle plans to relocate its Operations Center to Cavalry
facilities in Murfreesboro, which protects so many Rutherford
County jobs.
o The combined company will create additional jobs in client
contact positions in Rutherford County. Although a few
overlapping positions will be eliminated, the number is small
when compared to virtually any other merger.
Q. PINNACLE IS NOT A RETAIL BANK. HOW WILL OUR RETAIL EMPHASIS FIT IN WITH
THEIR STRATEGY? ARE WE GOING TO CHANGE TO THEIR PROFILE?
A. Pinnacle is combining with Cavalry because of the excellent franchise that
we have built -- including all our business lines. In fact, Pinnacle
currently anticipates taking advantage of many of Cavalry's retail products
like overdraft privilege.
On the other hand, Pinnacle has built an extraordinary ability to serve
owner managed businesses with sophisticated treasury management products.
In order to capitalize on the same growth opportunity that Pinnacle has
been so widely recognized for, our plan is to hire additional relationship
managers in order to increase our focus on middle-market commercial clients
in Rutherford and Bedford counties.
--------------------------------------------------------------------------------
Forward Looking Statements
Certain of the statements in this information may constitute forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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 of the merger
to Pinnacle and Cavalry, future financial and operating results and Pinnacle's
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 to differ materially from any results
expressed or implied by such forward-looking statements. Such factors include,
among others, the risk that the cost savings and any revenue synergies from the
merger may be realized or take longer than anticipated, disruption from the
merger with customers, suppliers or employee relationships, the risk of
successful integration of the two businesses, the failure of Cavalry or
13 October 3, 2005
For Pinnacle and Cavalry Bank Associates Only
DO NOT DUPLICATE OR DISTRIBUTE
Pinnacle shareholders to approve the merger and the ability to obtain required
governmental approvals of the proposed terms and anticipated schedule.
Additional factors which could affect the forward looking statements can be
found in the Annual Reports on Form 10-K and the Quarterly Reports on Form 10-Q
and Current Reports on Form 8-K of both Pinnacle and Cavalry filed with the
Securities and Exchange Commission and available on the Commission's website set
forth below. Pinnacle and Cavalry disclaim any obligation to update or revise
any forward-looking statements contained in this information, whether as a
result of new information, future events or otherwise.
Additional Information and Where to Find It
IN CONNECTION WITH THE PROPOSED MERGER, PINNACLE FINANCIAL PARTNERS, INC. AND
CAVALRY BANCORP, INC. WILL FILE A JOINT PROXY STATEMENT/PROSPECTUS WITH THE
SECURITIES AND EXCHANGE COMMISSION. INVESTORS AND SECURITY HOLDERS ARE
ENCOURAGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS WHEN IT BECOMES
AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION IN CONNECTION WITH THE PROPOSED TRANSACTION BECAUSE THEY
WILL CONTAIN IMPORTANT INFORMATION ABOUT PINNACLE, CAVALRY AND THE PROPOSED
TRANSACTION.
Investors and security holders may obtain free copies of these documents once
they are available through the website maintained by the SEC at
http://www.sec.gov. Free copies of the joint proxy statement/prospectus also may
be obtained by directing a request by telephone or mail to Pinnacle Financial
Partners Inc., 211 Commerce Street, Suite 300, Nashville, TN 37201, Attention:
Investor Relations ((615) 744-3710) or Cavalry Banking Corp., 114 West College
Street, P.O. Box 188, Murfreesboro, TN 37133, Attention: Investor Relations
(615) 849-2272.
This communication 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
The directors and executive officers of Pinnacle and Cavalry may be deemed to be
participants in the solicitation of proxies with respect to the proposed merger.
Information about Pinnacle's directors and executive officers is contained in
the proxy statement filed by Pinnacle with the Securities and Exchange
Commission on March 14, 2005, which is available on Pinnacle's web site
(www.pnfp.com) and at the address provided above. Information about Cavalry's
directors and executive officers is contained in the proxy statement filed by
Cavalry with the Securities and Exchange Commission on March 18, 2005. Other
information regarding the participants in the proxy solicitation and a
description of their direct and indirect interests by security holding or
otherwise, will be contained in the joint proxy statement/prospectus and other
relevant material to be filed with the Securities and Exchange Commission when
they become available.
14 October 3, 2005