Pinnacle Financial Expands Profitability in Second Quarter 2011

NASHVILLE, Tenn.--(BUSINESS WIRE)--Pinnacle Financial Partners, Inc. (Nasdaq/NGS: PNFP) today reported that its net income per fully diluted common share available to common stockholders was $0.14 for the quarter ended June 30, 2011, compared to net loss per fully diluted common share available to common stockholders of $0.85 for the quarter ended June 30, 2010, and net income per fully diluted common share available to common shareholders of $0.06 for the quarter ended March 31, 2011.

“We are particularly pleased with the progress we made during the second quarter in resolution of troubled assets, which is also having a positive impact on our margin. As anticipated, we experienced continued reductions in troubled asset inflows and believe those trends will continue into the third quarter.”

Net income per fully diluted common share available to common stockholders was $0.20 for the six months ended June 30, 2011, compared to net loss per fully diluted common share available to common stockholders of $1.02 for the first six months of 2010.

“We are pleased with another quarter of progress on our two primary priorities of expanding the core earnings capacity of the firm and aggressively dealing with credit issues,” said M. Terry Turner, Pinnacle’s president and chief executive officer. “We intend to maintain continued and significant progress on key measures of credit quality and core earnings, which include capitalizing on the growth opportunities in the Nashville and Knoxville markets.”

Aggressively Dealing with Credit Issues

During the second quarter, Pinnacle reduced classified assets by $49.1 million, a linked-quarter reduction of 15.4 percent and the fifth consecutive quarter of net reductions. Classified assets are composed primarily of nonperforming assets and potential problem loans. Classified assets are down 43.7 percent from their peak at the end of June 2010.

• Nonperforming assets declined by $20.2 million, a linked-quarter reduction of 15.3 percent and the fourth consecutive quarterly reduction. Pinnacle resolved $38.7 million in nonperforming assets during the second quarter of 2011, compared to resolutions of $33.5 million during the first quarter of 2011.
• Nonperforming loans declined by $16.6 million during the second quarter of 2011, a linked-quarter reduction of 21.8 percent and the fifth consecutive quarterly reduction. Nonperforming loans are down 49.5 percent from a year ago. Additionally, nonperforming loan inflows decreased from $25.4 million during the first quarter of 2011 to $18.4 million in the second quarter of 2011.
• Potential problem loans also decreased from $170.6 million at March 31, 2011, to $148.5 million at June 30, 2011, a linked-quarter decrease of 13.0 percent and the fourth consecutive quarter of net reductions. Potential problem loans are down by 53.3 percent from their peak in June 2010.
• Exposure to construction and land development loans declined from $411.5 million at June 30, 2010, to $282.1 million at June 30, 2011, a decrease of 31.4 percent. Construction and land development loans are down 6.2 percent from $300.7 million at March 31, 2011. Residential land development loans declined from $142.3 million at June 30, 2010, to $84.8 million at June 30, 2011. Residential land development loans were $97.5 million at March 31, 2011.

Expanding the Core Earnings Capacity of the Firm

• Net interest margin increased to 3.55 percent for the quarter ended June 30, 2011, from 3.23 percent for the quarter ended June 30, 2010. Net interest margin for the quarter ended March 31, 2011, was 3.40 percent.
• Average balances of noninterest bearing deposit accounts were $629 million in the second quarter of 2011, an increase of 5.8 percent over first quarter 2011 average balances of $595 million and an increase of 24.7 percent over the same quarter last year.

• Loans at June 30, 2011, were $3.21 billion, a decrease of $10.3 million from $3.22 billion at March 31, 2011. Commercial and industrial loans combined with owner-occupied commercial real estate loans were $1.60 billion at June 30, 2011, an increase of $6.58 million from $1.59 billion at March 31, 2011, the third consecutive quarter of net growth.
• Revenue for the quarter ended June 30, 2011, amounted to $47.60 million, compared to $44.34 million for the first quarter of 2011 and $46.27 million for the same quarter of last year, a linked-quarter increase of 7.1 percent.
• Four years after expanding to the Knoxville market, Pinnacle’s operation in Knoxville reached over $500 million in loans at the end of the second quarter 2011.
• Income before income taxes and TARP expenses increased from $3.50 million for the quarter ended March 31, 2011, to $6.66 million for the quarter ended June 30, 2011, a 90.3 percent increase.

“Our second quarter net interest margin of 3.55 percent was achieved primarily by continued reductions in our funding costs as time deposits continue to reprice downward,” Turner said. “We are particularly pleased with the progress we made during the second quarter in resolution of troubled assets, which is also having a positive impact on our margin. As anticipated, we experienced continued reductions in troubled asset inflows and believe those trends will continue into the third quarter.”

Turner also noted that the firm continues to explore the availability of the U.S. Treasury’s Small Business Lending Fund.

“We continue to talk with our regulators about our potential participation in the SBLF,” Turner said. “Although the likelihood of participation is significantly diminished by recent guidance from the U.S. Treasury regarding SBLF eligibility for bank holding companies who, like us, are restricted in their ability to pay dividends without the prior approval of the Federal Reserve, we are encouraged by our second quarter results and remain hopeful that we can repay TARP with minimal dilution to our common shareholders regardless of SBLF participation.”

OTHER SECOND QUARTER 2011 HIGHLIGHTS:

• Core Deposits
  • Core deposits amounted to $3.18 billion at June 30, 2011, an increase of 14.4 percent from the $2.78 billion at June 30, 2010. Core deposits at March 31, 2011, were $3.11 billion.
• Operating results
  • Net income available to common stockholders for the second quarter of 2011 was $4.84 million, compared to the prior year’s second quarter net loss available to common stockholders of $27.87 million. First quarter 2011 net income available to common stockholders totaled $2.01 million.
  • Net interest income for the second quarter of 2011 was $37.80 million, compared to $36.02 million for the first quarter of 2011 and $35.70 million for the same quarter last year.
  • Noninterest income for the quarter ending June 30, 2011, was $9.8 million (including $0.6 million of net securities gains), compared to $8.3 million (net of $0.2 million of net securities losses) in the prior quarter and $10.6 million (including $2.3 million of net securities gains) the same quarter last year. Excluding the impact of net securities gains, noninterest income was up 8.4 percent on a linked-quarter basis and 10.7 percent over the same quarter last year.
  • Wealth management revenues, which include investment services, trust and insurance, were $3.41 million during the second quarter of 2011, an increase of 14.7 percent over the same period last year.

“In addition to our net interest margin increasing to 3.55 percent, our net interest income increased by approximately 4.93 percent from the first quarter results,” said Harold R. Carpenter, Pinnacle’s chief financial officer. “Contributing to this increase were reduced funding costs and the continued reduction in nonperforming assets.”

“We believe we will continue to have opportunities to expand margins in future quarters primarily by reducing the funding cost associated with the firm’s time deposit portfolio,” Carpenter said.

• Capital
  • At June 30, 2011, Pinnacle’s ratio of tangible common stockholders’ equity to tangible assets was 7.7 percent, compared to 7.1 percent at June 30, 2010, and 7.4 percent at March 31, 2011. At June 30, 2011, Pinnacle’s total risk-based capital ratio was 15.5 percent, compared to 14.8 percent at June 30, 2010, and 15.2 percent at March 31, 2011.
• Credit quality
  • Net charge-offs were $8.61 million for the quarter ended June 30, 2011, down from $33.46 million for the quarter ended June 30, 2010, and $9.73 million for the first quarter of 2011.
  • The allowance for loan losses represented 2.40 percent of total loans at June 30, 2011, compared to 2.46 percent at March 31, 2011, and 2.61 percent at June 30, 2010.
  • Nonperforming assets were 3.44 percent of total loans plus other real estate at June 30, 2011, compared to 4.04 percent at March 31, 2011, and 4.77 percent at June 30, 2010. The ratio of the allowance for loan losses to nonperforming loans increased to 128.9 percent at June 30, 2011, from 103.4 percent at March 31, 2011.
  • Past due loans over 30 days, excluding nonperforming loans, were 0.40 percent of total loans at June 30, 2011, compared to 0.36 percent at March 31, 2011, and 0.66 percent at June 30, 2010.

The following is a summary of the activity in various nonperforming asset and restructured accruing loan categories for the quarter ended June 30, 2011:

(in thousands)	Balances Mar. 31, 2011		Payments, Sales and Reductions			Foreclosures			Inflows		Balances June 30, 2011
Restructured accruing loans:
Residential construction and development	$	-	$	-		$	-		$	-	$	-
Commercial construction and development		-		-			-			-		-
Other		15,285		(3,402	)		-			1,107		12,990
Totals		15,285		(3,402	)		-			1,107		12,990
Nonperforming loans:
Residential construction and development		12,508		(1,578	)		-			446		11,376
Commercial construction and development		24,391		(393	)		(8,440	)		4,718		20,276
Other		39,469		(21,511	)		(3,166	)		13,283		28,075
Totals		76,368		(23,482	)		(11,606	)		18,447		59,727
Other real estate:
Residential construction and development		18,611		(2,847	)		-			-		15,764
Commercial construction and development		25,013		(6,116	)		8,440			-		27,337
Other		12,376		(6,248	)		3,166			-		9,294
Totals		56,000		(15,211	)		11,606			-		52,395
Total nonperforming assets and restructured accruing loans	$	147,653	$	(42,095	)	$	-		$	19,554	$	125,112

• Noninterest expense and taxes
  • Noninterest expense for the quarter ended June 30, 2011, was $34.36 million, compared to $36.49 million in the second quarter of 2010 and $34.70 million in the first quarter of 2011.
  • Compensation expense was $18.52 million during the second quarter of 2011, compared to $15.85 million during the second quarter of 2010 and $17.92 million during the first quarter of 2011.
  • Included in noninterest expense for the second quarter of 2011 was $3.83 million in other real estate expenses, compared to $7.41 million in the second quarter of 2010. First quarter 2011 other real estate expense was approximately $4.33 million.
  • Included in income tax expense for the second quarter of 2011 was $288,000 related to the resolution of a recently completed federal tax examination for fiscal years 2007-2009.

Carpenter noted that compensation costs for the second quarter of 2011 increased by 3.35 percent over the first quarter of 2011, driven largely by increased incentive accruals pursuant to the firm’s annual cash incentive plan.

“Given our performance so far this year on credit quality and earnings, the two primary influences on our annual cash incentive payments, we increased our incentive allocation to a potential full payout of our plan award to participating associates,” Carpenter said. “We expect compensation expense to level out for the remainder of the year except for modest increases related to several new relationship managers we are actively recruiting.”

Excluding the impact of OREO expenses, the second quarter of 2011 noninterest expense was approximately $30.53 million, compared to $30.37 million in the first quarter of 2011 and $29.08 million in the second quarter of 2010. Included in the other real estate expense for the quarter was $1.6 million of additional write downs of existing balances based on updated appraisals. The firm also recorded $796,000 in losses related to the disposition of $15.2 million of other real estate properties. Carpenter noted that the firm anticipates foreclosures of approximately $20 million in the third quarter of 2011 but that final resolution of several larger properties will affect other real estate balances for the third quarter.

“We made meaningful progress during the second quarter on our priorities of improving the core earnings capacity of the firm and aggressively dealing with credit issues, and we would expect continued progress on those priorities in the third quarter,” Carpenter said.

WEBCAST AND CONFERENCE CALL INFORMATION

Pinnacle will host a webcast and conference call at 8:30 a.m. (CDT) on Wednesday, July 20, 2011, to discuss second quarter 2011 results and other matters. To access the call for audio only, please call 1-877-602-7944. For the presentation and streaming audio, please access the webcast on the investor relations page of Pinnacle’s website at www.pnfp.com.

For those unable to participate in the webcast, it will be archived on the investor relations page of Pinnacle’s website at www.pnfp.com for 90 days following the presentation.

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.

The firm began operations in a single downtown Nashville location in Oct. 2000 and has since grown to over $4.83 billion in assets at June 30, 2011. In 2007, Pinnacle launched an expansion into Knoxville, Tennessee. At June 30, 2011, Pinnacle is the second-largest bank holding company headquartered in Tennessee, with 31 offices in eight Middle Tennessee counties and three offices in Knoxville. The firm was also added to Standard & Poor’s SmallCap 600 index in 2009.

Additional information concerning Pinnacle can be accessed at www.pnfp.com.

Certain of the statements in this release 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,” “goal,” “objective,” “intend,” “plan,” “believe,” “should,” “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. All forward-looking statements are subject to risks, uncertainties and other factors that may cause the actual results, performance or achievements of Pinnacle Financial to differ materially from any results expressed or implied by such forward-looking statements. Such risks include, without limitation, (i) deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses; (ii) continuation of the historically low short-term interest rate environment; (iii) the reduction of Pinnacle Financial’s loan balances, and conversely, the inability of Pinnacle Financial to ultimately grow its loan portfolio in the Nashville-Davidson-Murfreesboro-Franklin MSA and the Knoxville MSA; (iv) changes in loan underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (v) effectiveness of Pinnacle Financial’s asset management activities in improving, resolving or liquidating lower-quality assets; (vi) increased competition with other financial institutions; (vii) greater than anticipated deterioration or lack of sustained growth in the national or local economies including the Nashville-Davidson-Murfreesboro-Franklin MSA and the Knoxville MSA, particularly in commercial and residential real estate markets; (viii) rapid fluctuations or unanticipated changes in interest rates; (ix) the results of regulatory examinations; (x) the development of any new market other than Nashville or Knoxville; (xi) a merger or acquisition; (xii) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including intangible assets; (xiii) the impact of governmental restrictions on entities participating in the Capital Purchase Program, of the U.S. Department of the Treasury (the “Treasury”); (xiv) further deterioration in the valuation of other real estate owned; (xv) inability to comply with regulatory capital requirements and to secure any required regulatory approvals for capital actions; (xvi) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, including regulatory or legislative developments arising out of current unsettled conditions in the economy, including implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act; and (xvii) Pinnacle Financial recording a further valuation allowance related to its deferred tax asset. A more detailed description of these and other risks is contained in Pinnacle Financial’s most recent annual report on Form 10-K filed with the Securities and Exchange Commission on February 23, 2011 and most recent quarterly report on Form 10-Q filed with the Securities and Exchange commission on May 5, 2011. Many of such factors are beyond Pinnacle Financial’s ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. Pinnacle Financial disclaims any obligation to update or revise any forward-looking statements contained in this release, whether as a result of new information, future events or otherwise.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS – UNAUDITED
	June 30, 2011			December 31, 2010
ASSETS
Cash and noninterest-bearing due from banks	$	62,316,425		$	40,154,247
Interest-bearing due from banks		147,703,476			140,647,481
Federal funds sold and other		6,231,745			7,284,685
Short-term discount notes		-			499,768
Cash and cash equivalents		216,251,646			188,586,181
Securities available-for-sale, at fair value		922,780,234			1,014,316,831
Securities held-to-maturity (fair value of $2,791,215 and $4,411,856 at June 30, 2011 and December 31, 2010, respectively)		2,727,272			4,320,486
Mortgage loans held-for-sale		14,161,572			16,206,034
Loans		3,207,104,232			3,212,440,190
Less allowance for loan losses		(76,970,502	)		(82,575,235	)
Loans, net		3,130,133,730			3,129,864,955
Premises and equipment, net		79,999,621			82,374,228
Other investments		42,757,144			42,282,255
Accrued interest receivable		15,723,962			16,364,573
Goodwill		244,083,193			244,090,311
Core deposit and other intangible assets		9,273,297			10,705,105
Other real estate owned		52,395,174			59,608,224
Other assets		101,045,934			100,284,697
Total assets	$	4,831,332,779		$	4,909,003,880
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	662,017,752		$	586,516,637
Interest-bearing		572,465,335			573,670,188
Savings and money market accounts		1,634,633,008			1,596,306,386
Time		892,403,408			1,076,564,179
Total deposits		3,761,519,503			3,833,057,390
Securities sold under agreements to repurchase		124,513,664			146,294,379
Federal Home Loan Bank advances		111,190,714			121,393,026
Subordinated debt		97,476,000			97,476,000
Accrued interest payable		3,031,394			5,197,925
Other liabilities		34,373,482			28,127,875
Total liabilities		4,132,104,757			4,231,546,595
Stockholders’ equity:
Preferred stock, no par value; 10,000,000 shares authorized; 95,000 shares issued and outstanding at June 30, 2011 and December 31, 2010		91,422,313			90,788,682
Common stock, par value $1.00; 90,000,000 shares authorized; 34,136,163 issued and outstanding at June 30, 2011 and 33,870,380 issued and outstanding at December 31, 2010		34,136,163			33,870,380
Common stock warrants		3,348,402			3,348,402
Additional paid-in capital		533,557,342			530,829,019
Retained earnings		19,864,142			12,996,202
Accumulated other comprehensive income, net of taxes		16,899,660			5,624,600
Stockholders’ equity		699,228,022			677,457,285
Total liabilities and stockholders’ equity	$	4,831,332,779		$	4,909,003,880
This information is preliminary and based on company data available at the time of the presentation.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS – UNAUDITED
	Three Months Ended					Six Months Ended
	June 30					June 30
	2011		2010			2011		2010
Interest income:
Loans, including fees	$	38,905,155	$	40,323,693		$	77,258,636	$	81,398,800
Securities:
Taxable		6,479,280		8,058,265			12,840,179		17,145,853
Tax-exempt		1,837,811		1,985,946			3,773,699		4,036,199
Federal funds sold and other		566,874		560,611			1,140,880		1,037,753
Total interest income		47,789,120		50,928,515			95,013,394		103,618,605
Interest expense:
Deposits		8,306,751		12,925,139			17,730,992		26,388,954
Securities sold under agreements to repurchase		345,444		364,648			727,013		916,961
Federal Home Loan Bank advances and other borrowings		1,341,546		1,941,437			2,739,377		4,055,492
Total interest expense		9,993,741		15,231,224			21,197,382		31,361,407
Net interest income		37,795,379		35,697,291			73,816,012		72,257,198
Provision for loan losses		6,587,189		30,508,685			12,726,327		43,734,605
Net interest income after provision for loan losses		31,208,190		5,188,606			61,089,685		28,522,593
Noninterest income:
Service charges on deposit accounts		2,330,206		2,429,200			4,591,663		4,794,511
Investment services		1,637,426		1,315,263			3,145,512		2,551,646
Insurance sales commissions		1,004,246		904,359			2,053,478		2,003,378
Gain on loans sold, net		789,258		908,611			1,398,635		1,423,809
Net gain on sale of investment securities		610,302		2,259,124			451,199		2,623,674
Trust fees		769,935		754,515			1,499,923		1,651,088
Other noninterest income		2,668,041		1,998,082			4,993,061		4,006,694
Total noninterest income		9,809,414		10,569,154			18,133,471		19,054,800
Noninterest expense:
Salaries and employee benefits		18,523,531		15,847,121			36,447,153		32,851,647
Equipment and occupancy		5,060,014		5,492,406			10,066,724		10,858,593
Other real estate owned		3,825,608		7,411,206			8,159,726		12,813,359
Marketing and other business development		766,422		793,696			1,520,173		1,547,614
Postage and supplies		545,097		700,505			1,034,974		1,434,044
Amortization of intangibles		715,905		746,001			1,431,809		1,492,002
Other noninterest expense		4,920,766		5,500,424			10,397,612		11,660,655
Total noninterest expense		34,357,343		36,491,359			69,058,171		72,657,914
Income (loss) before income taxes		6,660,261		(20,733,599	)		10,164,985		(25,080,521	)
Income tax expense		288,414		5,630,431			288,414		5,106,734
Net Income (loss)		6,371,847		(26,364,030	)		9,876,571		(30,187,255	)
Preferred dividends		1,200,694		1,200,694			2,388,194		2,388,194
Accretion on preferred stock discount		327,657		306,466			633,631		664,459
Net income (loss) available to common stockholders	$	4,843,496	$	(27,871,190	)	$	6,854,746	$	(33,239,908	)
Per share information:
Basic net income (loss) per common share available to common stockholders	$	0.14		($0.85	)	$	0.21		($1.02	)
Diluted net income (loss) per common share available to common stockholders	$	0.14		($0.85	)	$	0.20		($1.02	)
Weighted average shares outstanding:
Basic		33,454,229		32,675,221			33,410,385		32,616,943
Diluted		34,095,636		32,675,221			34,054,746		32,616,943
This information is preliminary and based on company data available at the time of the presentation.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED
	Three months ended						Three months ended
(dollars in thousands)	June 30, 2011						June 30, 2010
	Average Balances		Interest		Rates/ Yields		Average Balances		Interest		Rates/ Yields
Interest-earning assets:
Loans (1)	$	3,211,591	$	38,905	4.87	%	$	3,418,928	$	40,324	4.74	%
Securities:
Taxable		779,882		6,479	3.33	%		760,338		8,058	4.25	%
Tax-exempt (2)		192,868		1,838	5.04	%		202,063		1,986	5.20	%
Federal funds sold and other		163,211		567	1.50	%		146,142		561	1.65	%
Total interest-earning assets		4,347,552	$	47,789	4.47	%		4,527,471	$	50,929	4.58	%
Nonearning assets
Intangible assets		253,803						256,753
Other nonearning assets		225,376						212,224
Total assets	$	4,826,731					$	4,996,448
Interest-bearing liabilities:
Interest-bearing deposits:
Interest checking	$	592,374	$	989	0.67	%	$	531,157	$	901	0.68	%
Savings and money market		1,597,216		3,789	0.95	%		1,286,115		4,538	1.42	%
Time		904,094		3,529	1.57	%		1,495,347		7,486	2.01	%
Total interest-bearing deposits		3,093,684		8,307	1.08	%		3,312,619		12,925	1.57	%
Securities sold under agreements to repurchase		175,705		345	0.79	%		210,798		365	0.69	%
Federal Home Loan Bank advances and other borrowings		114,072		679	2.42	%		147,491		1,059	2.88	%
Subordinated debt		97,476		663	2.73	%		97,476		882	3.63	%
Total interest-bearing liabilities		3,480,937		9,994	1.15	%		3,768,384		15,231	1.62	%
Noninterest-bearing deposits		628,929		-	-			504,354		-	-
Total deposits and interest-bearing liabilities		4,109,866	$	9,994	0.98	%		4,272,738	$	15,231	1.43	%
Other liabilities		25,845						19,524
Stockholders' equity		691,020						704,186
Total liabilities and stockholders' equity	$	4,826,731					$	4,996,448
Net interest income			$	37,795					$	35,697
Net interest spread (3)					3.32	%					2.96	%
Net interest margin (4)					3.55	%					3.23	%
(1) Average balances of nonperforming loans are included in the above amounts.
(2) Yields computed on tax-exempt instruments on a tax equivalent basis.
(3) Yields realized on interest-bearing assets less the rates paid on interest-bearing liabilities. The net interest spread calculation excludes the impact of demand deposits. Had the impact of demand deposits been included, the net interest spread for the quarter ended June 30, 2011 would have been 3.49% compared to a net interest spread of 3.15% for the quarter ended June 30, 2010.
(4) Net interest margin is the result of annualized net interest income calculated on a tax equivalent basis divided by average interest-earning assets for the period.
This information is preliminary and based on company data available at the time of the presentation.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED
	Six months ended						Six months ended
(dollars in thousands)	June 30, 2011						June 30, 2010
	Average Balances		Interest		Rates/ Yields		Average Balances		Interest		Rates/ Yields
Interest-earning assets:
Loans (1)	$	3,201,381	$	77,259	4.87	%	$	3,469,161	$	81,399	4.74	%
Securities:
Taxable		795,749		12,840	3.25	%		792,192		17,146	4.36	%
Tax-exempt (2)		195,694		3,774	5.13	%		205,292		4,036	5.23	%
Federal funds sold and other		174,498		1,141	1.42	%		122,565		1,037	1.85	%
Total interest-earning assets		4,367,322	$	95,013	4.45	%		4,589,210	$	103,618	4.62	%
Nonearning assets
Intangible assets		254,164						257,132
Other nonearning assets		226,131						212,914
Total assets	$	4,847,617					$	5,059,256
Interest-bearing liabilities:
Interest-bearing deposits:
Interest checking	$	592,365	$	1,944	0.66	%	$	503,640	$	1,702	0.68	%
Savings and money market		1,588,320		7,850	1.00	%		1,268,909		8,837	1.40	%
Time		954,646		7,937	1.68	%		1,562,665		15,850	2.05	%
Total interest-bearing deposits		3,135,331		17,731	1.14	%		3,335,214		26,389	1.60	%
Securities sold under agreements to repurchase		180,561		727	0.81	%		242,530		917	0.76	%
Federal Home Loan Bank advances and other borrowings		113,889		1,420	2.52	%		163,298		2,326	2.87	%
Subordinated debt		97,476		1,319	2.73	%		97,476		1,729	3.58	%
Total interest-bearing liabilities		3,527,257		21,197	1.21	%		3,838,518		31,361	1.65	%
Noninterest-bearing deposits		611,885		-	-			500,006		-	-
Total deposits and interest-bearing liabilities		4,139,142	$	21,197	1.03	%		4,338,524	$	31,361	1.46	%
Other liabilities		21,620						15,055
Stockholders' equity		686,855						705,677
	$	4,847,617					$	5,059,256
Net interest income			$	73,816					$	72,257
Net interest spread (3)					3.24	%					2.97	%
Net interest margin (4)					3.47	%					3.24	%
(1) Average balances of nonperforming loans are included in the above amounts.
(2) Yields computed on tax-exempt instruments on a tax equivalent basis.
(3) Yields realized on interest-earning assets less the rates paid on interest-bearing liabilities. The net interest spread calculation excludes the impact of demand deposits. Had the impact of demand deposits been included, the net interest spread for the six months ended June 30, 2011 would have been 3.42% compared to a net interest spread of 3.16% for the six months ended June 30, 2010.
(4) Net interest margin is the result of annualized net interest income calculated on a tax equivalent basis divided by average interest-earning assets for the period.
This information is preliminary and based on company data available at the time of the presentation.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
	June			March		December		September		June		March
(dollars in thousands)	2011			2011		2010		2010		2010		2010
Balance sheet data, at quarter end:
Commercial real estate - mortgage loans	$	1,091,283		1,102,533		1,094,615		1,103,261		1,125,823		1,144,246
Consumer real estate - mortgage loans		708,280		698,693		705,487		720,140		709,121		730,247
Construction and land development loans		282,064		300,697		331,261		359,729		411,455		486,296
Commercial and industrial loans		1,058,263		1,047,754		1,012,091		995,743		1,009,991		1,031,512
Consumer and other		67,214		67,753		68,986		73,052		77,510		87,235
Total loans		3,207,104		3,217,430		3,212,440		3,251,923		3,333,900		3,479,536
Allowance for loan losses		(76,971	)	(78,988	)	(82,575	)	(84,550	)	(87,107	)	(90,062	)
Securities		925,508		984,200		1,018,637		968,532		907,296		989,325
Total assets		4,831,333		4,820,991		4,909,004		4,961,603		4,958,478		5,021,689
Noninterest-bearing deposits		662,018		608,428		586,517		581,181		529,867		522,928
Total deposits		3,761,520		3,731,883		3,833,057		3,825,634		3,853,400		3,836,362
Securities sold under agreements to repurchase		124,514		165,132		146,294		191,392		159,490		200,489
FHLB advances and other borrowings		111,191		111,351		121,393		121,435		131,477		157,319
Subordinated debt		97,476		97,476		97,476		97,476		97,476		97,476
Total stockholders’ equity		699,228		681,226		677,457		686,529		681,915		700,261
Balance sheet data, quarterly averages:
Total loans	$	3,211,591		3,191,076		3,217,738		3,295,531		3,418,928		3,520,012
Securities		972,750		1,010,344		993,236		954,869		962,401		1,032,957
Total earning assets		4,347,552		4,387,331		4,441,672		4,519,956		4,527,471		4,651,695
Total assets		4,826,731		4,868,745		4,937,181		5,001,373		4,996,448		5,122,773
Noninterest-bearing deposits		628,929		594,651		575,606		534,171		504,354		495,610
Total deposits		3,722,613		3,772,092		3,814,572		3,859,124		3,816,973		3,853,671
Securities sold under agreements to repurchase		175,705		185,471		194,283		210,037		210,798		274,614
FHLB advances and other borrowings		114,072		113,705		121,414		126,130		147,491		179,280
Subordinated debt		97,476		97,476		97,476		97,476		97,476		97,476
Total stockholders’ equity		691,020		682,638		689,976		686,898		704,186		707,210
Statement of operations data, for the three months ended:
Interest income	$	47,789		47,224		49,079		50,650		50,929		52,690
Interest expense		9,994		11,204		13,023		14,590		15,231		16,130
Net interest income		37,795		36,020		36,056		36,060		35,697		36,560
Provision for loan losses		6,587		6,139		5,172		4,789		30,509		13,226
Net interest income after provision for loan losses		31,208		29,881		30,884		31,271		5,189		23,334
Noninterest income		9,809		8,324		8,666		8,594		10,569		8,486
Noninterest expense		34,357		34,701		36,452		37,774		36,491		36,167
Income (loss) before taxes		6,660		3,504		3,098		2,091		(20,734	)	(4,347	)
Income tax expense (benefit)		288		-		(697	)	-		5,630		(525	)
Preferred dividends and accretion		1,529		1,492		1,547		1,542		1,507		1,545
Net income (loss) available to common stockholders	$	4,843		2,011		2,248		549		(27,871	)	(5,368	)
Profitability and other ratios:
Return on avg. assets (1)		0.40	%	0.17	%	0.18	%	0.04	%	(2.24	%)	(0.42	%)
Return on avg. equity (1)		2.81	%	1.19	%	1.29	%	0.32	%	(15.88	%)	(3.08	%)
Net interest margin (1) (2)		3.55	%	3.40	%	3.29	%	3.23	%	3.23	%	3.25	%
Noninterest income to total revenue (3)		20.61	%	18.77	%	19.38	%	19.25	%	22.84	%	18.84	%
Noninterest income to avg. assets (1)		0.82	%	0.69	%	0.70	%	0.68	%	0.85	%	0.67	%
Noninterest exp. to avg. assets (1)		2.86	%	2.89	%	2.93	%	3.00	%	2.93	%	2.86	%
Efficiency ratio (4)		72.17	%	78.25	%	81.51	%	84.59	%	78.87	%	80.29	%
Avg. loans to average deposits		86.27	%	84.60	%	84.35	%	85.40	%	89.57	%	91.34	%
Securities to total assets		19.16	%	20.41	%	20.75	%	19.52	%	18.30	%	19.70	%
Average interest-earning assets to average interest-bearing liabilities		124.90	%	122.75	%	121.62	%	120.26	%	120.14	%	118.99	%
Brokered time deposits to total deposits (16)		0.00	%	0.00	%	0.03	%	1.80	%	3.70	%	5.40	%
This information is preliminary and based on company data available at the time of the presentation.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
	June			March		December		September		June		March
(dollars in thousands)	2011			2011		2010		2010		2010		2010
Asset quality information and ratios:
Nonperforming assets:
Nonaccrual loans	$	59,727		76,368		80,863		103,127		118,331		131,381
Other real estate (ORE)		52,395		56,000		59,608		48,710		42,616		24,704
Total nonperforming assets	$	112,122		132,368		140,471		151,837		160,947		156,085
Past due loans over 90 days and still accruing interest	$	481		1,151		138		3,639		3,116		395
Restructured accruing loans (5)		12,990		15,285		20,468		13,468		10,861		9,534
Net loan charge-offs	$	8,605		9,726		7,146		7,346		33,463		15,123
Allowance for loan losses to nonaccrual loans		128.9	%	103.4	%	102.1	%	82.0	%	73.6	%	68.5	%
As a percentage of total loans:
Past due accruing loans over 30 days		0.40	%	0.36	%	0.30	%	0.67	%	0.66	%	1.54	%
Potential problem loans (6)		4.62	%	5.31	%	6.95	%	8.23	%	9.30	%	8.63	%
Allowance for loan losses		2.40	%	2.46	%	2.57	%	2.60	%	2.61	%	2.59	%
Nonperforming assets to total loans and ORE		3.44	%	4.04	%	4.29	%	4.60	%	4.77	%	4.45	%
Nonperforming assets to total assets		2.32	%	2.75	%	2.86	%	3.06	%	3.25	%	3.11	%
Annualized net loan charge-offs year-to-date to avg. loans (7)		1.14	%	1.22	%	1.96	%	2.26	%	2.84	%	1.74	%
Avg. commercial loan internal risk ratings (6)		4.8		4.8		4.8		4.9		4.9		4.9
Interest rates and yields:
Loans		4.87	%	4.88	%	4.99	%	4.96	%	4.74	%	4.74	%
Securities		3.67	%	3.58	%	3.48	%	3.97	%	4.45	%	4.63	%
Total earning assets		4.47	%	4.43	%	4.45	%	4.51	%	4.58	%	4.66	%
Total deposits, including non-interest bearing		0.90	%	1.01	%	1.16	%	1.27	%	1.36	%	1.42	%
Securities sold under agreements to repurchase		0.79	%	0.83	%	0.81	%	0.82	%	0.69	%	0.82	%
FHLB advances and other borrowings		2.42	%	2.65	%	2.60	%	2.90	%	2.88	%	2.87	%
Subordinated debt		2.73	%	2.73	%	2.72	%	3.78	%	3.63	%	3.52	%
Total deposits and interest-bearing liabilities		0.98	%	1.09	%	1.22	%	1.35	%	1.43	%	1.49	%
Capital ratios (8):
Stockholders’ equity to total assets		14.5	%	14.1	%	13.8	%	13.8	%	13.8	%	13.9	%
Leverage		11.2	%	11.0	%	10.7	%	10.5	%	10.4	%	10.6	%
Tier one risk-based		13.9	%	13.6	%	13.8	%	13.5	%	13.1	%	13.4	%
Total risk-based		15.5	%	15.2	%	15.4	%	15.1	%	14.8	%	15.0	%
Tangible common equity to tangible assets		7.7	%	7.4	%	7.1	%	7.2	%	7.1	%	7.4	%
Tangible common equity to risk weighted assets		9.6	%	9.1	%	9.1	%	9.3	%	9.0	%	9.1	%
This information is preliminary and based on company data available at the time of the presentation.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
	June			March		December		September		June		March
(dollars in thousands, except per share data)	2011			2011		2010		2010		2010		2010
Per share data:
Earnings (loss) – basic	$	0.14		0.06		0.07		0.02		(0.85	)	(0.16	)
Earnings (loss) – diluted	$	0.14		0.06		0.07		0.02		(0.85	)	(0.16	)
Book value per common share at quarter end (9)	$	17.71		17.19		17.22		17.61		17.61		18.20
Tangible common equity per common share	$	10.38		9.85		9.80		10.12		10.04		10.60
Weighted avg. common shares – basic		33,454,229		33,366,053		33,062,533		32,857,428		32,675,221		32,558,016
Weighted avg. common shares – diluted		34,095,636		34,013,810		33,670,890		33,576,963		32,675,221		32,558,016
Common shares outstanding		34,136,163		34,132,256		33,870,380		33,660,462		33,421,741		33,351,118
Investor information:
Closing sales price	$	15.56		16.54		13.58		9.19		12.85		15.11
High closing sales price during quarter	$	16.82		16.60		13.74		14.33		18.93		16.88
Low closing sales price during quarter	$	14.15		13.55		9.27		8.51		11.81		13.10
Other information:
Gains on sale of loans and loan participations sold:
Mortgage loan sales:
Gross loans sold	$	68,506		70,981		143,793		137,094		92,144		72,196
Gross fees (10)	$	1,380		1,129		2,610		2,503		1,669		1,157
Gross fees as a percentage of mortgage loans originated		2.01	%	1.59	%	1.81	%	1.83	%	1.81	%	1.60	%
Gains (losses) on sales of investment securities, net	$	610		(159	)	-		-		2,259		365
Brokerage account assets, at quarter-end (11)	$	1,101,000		1,110,000		1,038,000		966,000		921,000		974,000
Trust account assets, at quarter-end	$	663,304		730,000		693,000		647,000		627,000		648,000
Floating rate loans as a percentage of total loans (12)		34.7	%	35.4	%	36.9	%	37.9	%	37.8	%	38.9	%
Balance of commercial loan participations sold to other banks and serviced by Pinnacle, at quarter end	$	50,797		60,784		55,632		57,964		66,503		78,529
Core deposits (13)	$	3,182,920		3,109,972		3,117,969		2,925,673		2,781,748		2,676,016
Core deposits to total funding (13)		77.7	%	75.7	%	74.3	%	69.0	%	65.2	%	62.4	%
Risk-weighted assets	$	3,693,390		3,711,179		3,639,095		3,679,436		3,748,498		3,878,884
Total assets per full-time equivalent employee	$	6,538		6,373		6,384		6,349		6,229		6,389
Annualized revenues per full-time equivalent employee	$	261.3		237.7		230.4		235.0		233.1		232.4
Number of employees (full-time equivalent)		739.0		756.5		769.0		781.0		796.0		786.0
Associate retention rate (14)		89.6	%	92.4	%	93.5	%	95.2	%	97.3	%	96.6	%
Selected economic information (in thousands) (15):
Nashville MSA nonfarm employment		743.8		735.5		748.1		741.3		728.8		723.7
Knoxville MSA nonfarm employment		328.8		325.2		326.6		326.7		321.7		317.8
Nashville MSA unemployment		8.5	%	8.3	%	8.1	%	8.4	%	9.0	%	9.5	%
Knoxville MSA unemployment		7.7	%	7.5	%	7.3	%	7.8	%	8.1	%	8.8	%
Nashville residential median home price	$	167.1		166.8		171.0		178.0		171.3		159.4
Nashville inventory of residential homes for sale		14.0		13.0		13.3		14.9		14.9		14.1
This information is preliminary and based on company data available at the time of the presentation.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED
	June			March			December			September			June			March
(dollars in thousands, except per share data)	2011			2011			2010			2010			2010			2010
Reconciliation of certain financial measures:
Tangible assets:
Total assets	$	4,831,333		$	4,820,991		$	4,909,004		$	4,961,603		$	4,958,478		$	5,021,689
Less: Goodwill		(244,083	)		(244,083	)		(244,090	)		(244,097	)		(244,097	)		(244,105	)
Core deposit and other intangibles		(9,273	)		(9,989	)		(10,705	)		(11,450	)		(12,194	)		(12,940	)
Net tangible assets	$	4,577,976		$	4,566,919		$	4,654,208		$	4,706,056		$	4,702,187		$	4,764,644
Tangible equity:
Total stockholders' equity	$	699,228		$	681,226		$	677,457		$	686,529		$	681,915		$	700,261
Less: Goodwill		(244,083	)		(244,083	)		(244,090	)		(244,097	)		(244,097	)		(244,105	)
Core deposit and other intangibles		(9,273	)		(9,989	)		(10,705	)		(11,450	)		(12,194	)		(12,940	)
Net tangible equity		445,872			427,154			422,662			430,982			425,624			443,216
Less: Preferred stock		(91,422	)		(91,094	)		(90,789	)		(90,455	)		(90,127	)		(89,821	)
Net tangible common equity	$	354,449		$	336,060		$	331,873		$	340,527		$	335,497		$	353,395
Ratio of tangible common equity to tangible assets		7.74	%		7.36	%		7.13	%		7.24	%		7.13	%		7.42	%
Tangible common equity per common share	$	10.38		$	9.85		$	9.80		$	10.12		$	10.04		$	10.60
Return on tangible equity (1)		4.36	%		1.91	%		2.11	%		0.51	%		-26.27	%		-4.91	%
Return on tangible common equity (1)		5.48	%		2.43	%		2.69	%		0.64	%		-33.32	%		-6.16	%
	For the three months ended
	June			March			December			September			June			March
(dollars in thousands)	2011			2011			2010			2010			2010			2010
Sum of Net interest income and Noninterest income	$	47,605		$	44,344		$	44,722		$	44,653		$	46,266		$	45,046
Noninterest expense	$	34,357		$	34,701		$	36,452		$	37,774		$	36,491		$	36,167
Other real estate owned expense		3,826			4,334			7,874			8,522			7,411			5,402
Noninterest expense excluding the impact of other real estate owned expense	$	30,532		$	30,367		$	28,578		$	29,252		$	29,080		$	30,765
Efficiency Ratio		72.2	%		78.3	%		81.5	%		84.6	%		78.9	%		80.3	%
Efficiency Ratio excluding the impact of other real estate owned expense		64.1	%		68.5	%		63.9	%		65.5	%		62.9	%		68.3	%
This information is preliminary and based on company data available at the time of the presentation.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED

1. Ratios are presented on an annualized basis.

2. Net interest margin is the result of net interest income on a tax equivalent basis divided by average interest earning assets.

3. Total revenue is equal to the sum of net interest income and noninterest income.

4. Efficiency ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income.

5. Restructured Accruing Loans include loans where the company, as a result of the borrower’s financial difficulties, has granted a credit concession to the borrower (i.e., interest only payments for a period of time, extending the maturity of the loan, etc.). These loans continue to accrue interest at the contractual rate and are considered to be troubled debt restructurings.

6. Average risk ratings are based on an internal loan review system which assigns a numeric value of 1 to 10 to all loans to commercial entities based on their underlying risk characteristics as of the end of each quarter. A “1” risk rating is assigned to credits that exhibit Excellent risk characteristics, “2” exhibit Very Good risk characteristics, “3” Good, “4” Satisfactory, “5” Acceptable or Average, “6” Watch List, “7” Criticized, “8” Classified or Substandard, “9” Doubtful and “10” Loss (which are charged-off immediately). Additionally, loans rated “8” or worse that are not nonperforming or restructured loans are considered potential problem loans. Generally, consumer loans are not subjected to internal risk ratings.

7. Annualized net loan charge-offs to average loans ratios are computed by annualizing year-to-date net loan charge-offs and dividing the result by average loans for the year-to-date period.

8. Capital ratios are for Pinnacle Financial Partners, Inc. and are defined as follows:

Equity to total assets – End of period total stockholders’ equity as a percentage of end of period assets.

Leverage – Tier one capital (pursuant to risk-based capital guidelines) as a percentage of adjusted average assets.

Tier one risk-based – Tier one capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets.

Total risk-based – Total capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets.

9. Book value per share computed by dividing total stockholders’ equity less preferred stock and common stock warrants by common shares outstanding.

10. Amounts are included in the statement of operations in “Gains on the sale of loans and loan participations sold”, net of commissions paid on such amounts.

11. At fair value, based on information obtained from Pinnacle’s third party broker/dealer for non-FDIC insured financial products and services.

12. Floating rate loans are those loans that are eligible for repricing on a daily basis subject to changes in Pinnacle’s prime lending rate or other factors.

13. Core deposits include all transaction deposit accounts, money market and savings accounts and all certificates of deposit issued in a denomination of less than $100,000. The ratio noted above represents total core deposits divided by total funding, which includes total deposits, FHLB advances, securities sold under agreements to repurchase, subordinated indebtedness and all other interest-bearing liabilities.

14. Associate retention rate is computed by dividing the number of associates employed at quarter-end less the number of associates that have resigned in the last 12 months by the number of associates employed at quarter-end.

15. Employment and unemployment data is from the US Dept. of Labor Bureau of Labor Statistics. Labor force data is not seasonally adjusted. The most recent quarter data presented is as of the most recent month that data is available as of the release date. The Nashville home data is from the Greater Nashville Association of Realtors.

16. Brokered deposits do not include reciprocal balances under the Certificate of Deposit Account Registry Service (CDARS).