10-Q

 UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(mark one)

x     QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

or

o         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

, 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 900, Nashville, Tennessee	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  x No  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for shorter period that the registrant was required to submit and post such files).

Yes  x No  o

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

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  o No  x

As of October 23, 2012 there were 34,694,003 shares of common stock, $1.00 par value per share, issued and outstanding.

Pinnacle Financial Partners, Inc.

Report on Form 10-Q

September 30, 2012

TABLE OF CONTENTS		Page No.
PART I – Financial Information:
	Item 1.  Consolidated Financial Statements (Unaudited)	3
	Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations	30
	Item 3.  Quantitative and Qualitative Disclosures about Market Risk	46
	Item 4.  Controls and Procedures	46
PART II – Other Information:
	Item 1.  Legal Proceedings	47
	Item 1A.  Risk Factors	47
	Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds	47
	Item 3.  Defaults Upon Senior Securities	47
	Item 4.  Mine Safety Disclosures	48
	Item 5.  Other Information	48
	Item 6.  Exhibits	48
Signatures		49

Page 1

FORWARD-LOOKING STATEMENTS

Certain of the statements in this quarterly report 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 inability of Pinnacle Financial to grow its loan portfolio in the Nashville-Davidson-Murfreesboro-Franklin MSA (“the Nashville 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 adverse conditions in the national or local economies including the Nashville 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 ability to attract additional financial advisors or to attract customers from other financial institutions and conversely, the inability to realize the economic benefits of newly hired financial advisors; (xiv) further deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xv) inability to comply with regulatory capital requirements, including those resulting from recently proposed changes to capital calculation methodologies and required capital maintenance levels; and (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 (the “Dodd-Frank Act”). A more detailed description of these and other risks is contained in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 2, 2012.  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 quarterly report, whether as a result of new information, future events or otherwise.

Page 2

Item 1.                                     Part I.  Financial Information

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	September 30, 2012			December 31, 2011
ASSETS
Cash and noninterest-bearing due from banks	$	70,730,026		$	63,015,997
Interest-bearing due from banks		76,678,278			108,422,470
Federal funds sold and other		730,583			724,573
Cash and cash equivalents		148,138,887			172,163,040
Securities available-for-sale, at fair value		738,705,182			894,962,246
Securities held-to-maturity (fair value of $586,813 and $2,369,118 at September 30, 2012 and December 31, 2011, respectively)		574,843			2,329,917
Mortgage loans held-for-sale		39,245,780			35,363,038
Loans		3,525,164,123			3,291,350,857
Less allowance for loan losses		(69,092,075	)		(73,974,675	)
Loans, net		3,456,072,048			3,217,376,182
Premises and equipment, net		74,536,714			77,127,361
Other investments		25,871,346			44,653,840
Accrued interest receivable		15,774,555			15,243,366
Goodwill		244,044,967			244,076,492
Core deposits and other intangible assets		5,786,703			7,842,267
Other real estate owned		21,816,528			39,714,415
Other assets		100,818,517			113,098,540
Total assets	$	4,871,386,070		$	4,863,950,704
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	844,480,484		$	717,378,933
Interest-bearing		673,083,495			637,203,420
Savings and money market accounts		1,606,698,275			1,585,260,139
Time		595,024,885			714,496,974
Total deposits		3,719,287,139			3,654,339,466
Securities sold under agreements to repurchase		134,786,974			131,591,412
Federal Home Loan Bank advances		190,887,031			226,068,796
Subordinated debt and other borrowings		106,783,292			97,476,000
Accrued interest payable		1,570,473			2,233,330
Other liabilities		45,246,690			42,097,132
Total liabilities		4,198,561,599			4,153,806,136
Stockholders’ equity:
Preferred stock, no par value; 10,000,000 shares authorized; 71,250shares issued and outstanding at December 31, 2011		-			69,096,828
Common stock, par value $1.00; 90,000,000 shares authorized;34,691,659 shares and 34,354,960 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively		34,691,659			34,354,960
Common stock warrants		-			3,348,402
Additional paid-in capital		543,042,267			536,227,537
Retained earnings		75,656,530			49,783,584
Accumulated other comprehensive income, net of taxes		19,434,015			17,333,257
Total stockholders’ equity		672,824,471			710,144,568
Total liabilities and stockholders’ equity	$	4,871,386,070		$	4,863,950,704

See accompanying notes to consolidated financial statements.

Page 3

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2012			2011			2012		2011
Interest income:
Loans, including fees	$	40,405,396		$	38,571,893		$	118,331,163	$	115,830,529
Securities:
Taxable		3,973,717			5,952,599			13,356,957		18,792,778
Tax-exempt		1,621,541			1,819,642			4,972,539		5,593,341
Federal funds sold and other		440,254			543,496			1,557,831		1,684,376
Total interest income		46,440,908			46,887,630			138,218,490		141,901,024
Interest expense:
Deposits		3,986,328			7,138,053			13,112,653		24,869,045
Securities sold under agreements to repurchase		99,379			204,107			370,405		931,120
Federal Home Loan Bank advances and other borrowings		1,422,845			1,189,742			4,114,008		3,929,119
Total interest expense		5,508,552			8,531,902			17,597,066		29,729,284
Net interest income		40,932,356			38,355,728			120,621,424		112,171,740
Provision for loan losses		1,412,575			3,632,440			3,080,892		16,358,767
Net interest income after provision for loan losses		39,519,781			34,723,288			117,540,532		95,812,973
Noninterest income:
Service charges on deposit accounts		2,531,707			2,361,803			7,295,045		6,953,466
Investment services		1,676,601			1,698,886			4,934,262		4,844,398
Insurance sales commissions		987,222			1,001,716			3,415,945		3,055,194
Gain on mortgage loans sold, net		1,978,935			1,295,278			4,930,190		2,693,913
(Loss) gain on sale of investment securities, net		(49,784	)		376,509			162,733		827,708
Trust fees		767,042			753,551			2,332,716		2,253,474
Other noninterest income		2,537,863			2,592,170			7,217,879		7,585,231
Total noninterest income		10,429,586			10,079,913			30,288,770		28,213,384
Noninterest expense:
Salaries and employee benefits		19,470,535			19,015,217			58,500,279		55,462,370
Equipment and occupancy		5,156,131			4,942,917			15,217,897		15,009,641
Other real estate expense		2,399,232			5,079,127			10,179,572		13,238,853
Marketing and other business development		834,661			751,094			2,359,760		2,271,267
Postage and supplies		637,906			509,279			1,816,925		1,544,253
Amortization of intangibles		683,430			715,514			2,055,564		2,147,323
Other noninterest expense		4,396,465			4,662,073			13,183,603		15,059,685
Total noninterest expense		33,578,360			35,675,221			103,313,600		104,733,392
Income before income taxes		16,371,007			9,127,980			44,515,702		19,292,965
Income tax expense (benefit)		5,021,882			(16,973,019	)		14,361,979		(16,684,605	)
Net income		11,349,125			26,100,999			30,153,723		35,977,570
Preferred stock dividends		-			1,213,889			1,660,868		3,602,083
Accretion on preferred stock discount		-			349,817			2,153,172		983,448
Net income available to common stockholders	$	11,349,125		$	24,537,293		$	26,339,683	$	31,392,039
Per share information:
Basic net income per common share available to common stockholders	$	0.33		$	0.74		$	0.78	$	0.94
Diluted net income per common share available to common stockholders	$	0.33		$	0.72		$	0.76	$	0.92
Weighted average shares outstanding:
Basic		33,939,248			33,372,980			33,879,186		33,398,029
Diluted		34,523,076			33,993,914			34,473,895		34,037,739

See accompanying notes to consolidated financial statements.

Page 4

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2012		2011			2012		2011
Net income:	$	11,349,125	$	26,100,999		$	30,153,723	$	35,977,570
Other comprehensive income, net of tax:
Increase (decrease) in net gains on securities available-for-sale, net of deferred tax expense (benefit)		1,941,547		(1,352,934	)		2,100,758		9,922,126
Total comprehensive income	$	13,290,672	$	24,748,065		$	32,254,481	$	45,899,696

See accompanying notes to consolidated financial statements.

Page 5

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited)

	Preferred									Common			Additional						Accumulated		Total
	Stock			Common Stock						Stock			Paid-in			Retained			Other Comp.		Stockholders’
	Amount			Shares			Amount			Warrants			Capital			Earnings			Income, net		Equity
Balances, December 31, 2010	$	90,788,682			33,870,380		$	33,870,380		$	3,348,402		$	530,829,019		$	12,996,202		$	5,624,600	$	677,457,285
Exercise of employee common stock options and related tax benefits		-			131,923			131,923			-			833,107			-			-		965,030
Issuance of restricted common shares, net of forfeitures		-			287,565			287,565			-			(287,565	)		-			-		-
Issuance of salary stock units		-			37,151			37,151			-			487,072			-			-		524,223
Restricted shares withheld for taxes		-			(20,092	)		(20,092	)		-			(270,697	)		-			-		(290,789	)
Compensation expense for restricted shares		-			-			-			-			2,428,988			-			-		2,428,988
Compensation expense for stock options		-			-			-			-			951,956			-			-		951,956
Accretion on preferred stock discount		983,448			-			-			-			-			(983,448	)		-		-
Preferred dividends paid		-			-			-			-			-			(3,562,498	)		-		(3,562,498	)
Net income		-			-			-			-			-			35,977,570			-		35,977,570
Other comprehensive income		-			-			-			-			-			-			9,922,126		9,922,126
Balances, September 30, 2011	$	91,772,130			34,306,927		$	34,306,927		$	3,348,402		$	534,971,880		$	44,427,826		$	15,546,726	$	724,373,891
Balances, December 31, 2011	$	69,096,828			34,354,960		$	34,354,960		$	3,348,402		$	536,227,537		$	49,783,584		$	17,333,257	$	710,144,568
Exercise of employee common stock options and related tax benefits		-			230,718			230,718			-			1,297,396			-			-		1,528,114
Repurchase of preferred stock		(71,250,000	)		-			-			-			-			-			-		(71,250,000	)
Issuance of restricted common shares, net
of forfeitures		-			95,890			95,890			-			(95,890	)		-			-		-
Issuance of salary stock units		-			57,508			57,508			-			942,565			-			-		1,000,073
Restricted shares withheld for taxes		-			(47,417	)		(47,417	)		-			(741,427	)		-			-		(788,844	)
Compensation expense for restricted shares		-			-			-			-			2,489,334			-			-		2,489,334
Compensation expense for stock options		-			-			-			-			329,350			-			-		329,350
Cancellation of outstanding warrants		-			-			-			(3,348,402	)		2,593,402			-			-		(755,000	)
Accretion on preferred stock discount		2,153,172			-			-			-			-			(2,153,172	)		-		-
Preferred dividends paid		-			-			-			-			-			(2,127,605	)		-		(2,127,605	)
Net income		-			-			-			-			-			30,153,723			-		30,153,723
Other comprehensive income		-			-			-			-			-			-			2,100,758		2,100,758
Balances, September 30, 2012	$	-			34,691,659		$	34,691,659		$	-		$	543,042,267		$	75,656,530		$	19,434,015	$	672,824,471

See accompanying notes to consolidated financial statements.

Page 6

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months ended September 30,
	2012			2011
Operating activities:
Net income	$	30,153,723		$	35,977,570
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization/accretion of premium/discount on securities		5,697,121			5,474,970
Depreciation and amortization		7,548,657			8,221,400
Provision for loan losses		3,080,892			16,358,767
Gain on mortgage loans sold, net		(4,930,190	)		(2,693,913	)
Gain on sale of investment securities, net		(162,733	)		(827,708	)
Gain (loss) on sale of premises		171,623			(955	)
Stock-based compensation expense		3,818,757			3,905,168
Deferred tax expense (benefit)		2,128,122			(20,236,438	)
Losses on dispositions of other real estate and other investments		9,313,372			11,242,202
Excess tax benefit from stock compensation		(31,524	)		(10,010	)
Mortgage loans held for sale:
Loans originated		(354,271,377	)		(249,141,853	)
Loans sold		355,189,000			244,202,474
Decrease in other assets		25,787,538			23,679,693
Increase in other liabilities		2,486,701			11,020,121
Net cash provided by operating activities		85,979,682			87,171,488
Investing activities:
Activities in securities available-for-sale:
Purchases		(43,610,007	)		(252,396,360	)
Sales		35,420,503			158,418,558
Maturities, prepayments and calls		162,369,154			179,823,239
Activities in securities held-to-maturity:
Maturities, prepayments and calls		1,755,000			1,719,998
Increase (decrease) in loans, net		(250,553,288	)		(79,929,662	)
Purchases of software, premises and equipment		(2,852,918	)		(1,662,017	)
Decrease (increase) in other investments		18,503,170			(393,304	)
Net cash (used in) provided by investing activities		(78,968,386	)		5,580,452
Financing activities:
Net increase (decrease) in deposits		64,947,672			(120,365,027	)
Net increase (decrease) in securities sold under agreements to repurchase		3,195,562			(17,340,629	)
Advances from Federal Home Loan Bank:
Issuances		495,000,000			50,000,000
Payments/maturities		(530,124,164	)		(10,218,835	)
Increase in other borrowings		9,307,292			-
Exercise of common stock options and stock appreciation rights		739,270			674,241
Excess tax benefit from stock compensation		31,524			10,010
Preferred dividends paid		(2,127,605	)		(3,562,498	)
Repurchase of preferred shares outstanding		(71,250,000	)		-
Repurchase of outstanding warrants		(755,000	)		-
Net cash used in financing activities		(31,035,449	)		(100,802,738	)
Net decrease in cash and cash equivalents		(24,024,153	)		(8,050,798	)
Cash and cash equivalents, beginning of period		172,163,040			188,586,181
Cash and cash equivalents, end of period	$	148,138,887		$	180,535,383

See accompanying notes to consolidated financial statements.

Page 7

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 bank 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 Bank provides a full range of banking services in its primary market areas of the Nashville-Davidson-Murfreesboro-Franklin, Tennessee and Knoxville, Tennessee Metropolitan Statistical Areas.

Effective September 4, 2012, Pinnacle National converted from a national bank to a Tennessee state bank and its legal name changed from Pinnacle National Bank to Pinnacle Bank.  As a result of the charter conversion, the bank’s primary regulator changed from the Office of the Comptroller of the Currency (OCC) to the Tennessee Department of Financial Institutions (TDFI) and the Federal Deposit Insurance Corporation (FDIC).

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 Pinnacle Financial consolidated financial statements and related notes appearing in the 2011 Annual Report previously filed on Form 10-K.

These consolidated financial statements include the accounts of Pinnacle Financial and its wholly-owned subsidiaries. PNFP Statutory Trust I, PNFP Statutory Trust II, PNFP Statutory Trust III, and PNFP Statutory Trust IV are affiliates of Pinnacle Financial and 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 loan losses, any potential impairment of intangible assets, including goodwill and the valuation of deferred tax assets, other real estate owned, and our investment portfolio, including other-than-temporary impairment. These financial statements should be read in conjunction with Pinnacle Financial’s Annual Report on Form 10-K for the year ended December 31, 2011. There have been no significant changes to Pinnacle Financial’s significant accounting policies as disclosed in Pinnacle Financial’s Annual Report on Form 10-K for the year ended December 31, 2011.

Recently Adopted Accounting Pronouncements —  In May 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (Topic 820)-Fair Value Measurement (ASU 2011-04), to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards. ASU 2011-04 changes certain fair value measurement principles and enhances the disclosure requirements particularly for level 3 fair value measurements. ASU 2011-04 was effective for Pinnacle Financial during the first quarter of fiscal 2012 and was applied prospectively.

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income — Presentation of Comprehensive Income. This ASU eliminates the option to present the components of other comprehensive income as part of the statement of stockholders’ equity. Rather, it gives an entity the choice to present the components of net income and other comprehensive income in either a single continuous statement or two separate but consecutive statements. The components of comprehensive income and timing of reclassification of an item to net income do not change with this update. ASU 2011-05 requires retrospective application and is effective for annual and interim periods beginning after December 15, 2011. Pinnacle Financial adopted this ASU in the first quarter of 2012 and has presented separate Consolidated Statements of Comprehensive Income.

In September 2011, the FASB issued ASU No. 2011-8, Intangibles — Goodwill and Other, regarding testing goodwill for impairment. The new guidance provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity determines that this is the case, it is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized for that reporting unit (if any). Based on the qualitative assessment, if an entity determines that the fair value of a reporting unit is more than its carrying amount, the two-step goodwill impairment test is not required. The new guidance was adopted by Pinnacle Financial beginning January 1, 2012 and was used in our annual assessment as of September 30, 2012. The results of our qualitative assessment indicated that the fair value of our reporting units was more than its carrying value, and accordingly, the two-step goodwill impairment test was not performed.

Page 8

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Cash Flow Information — Supplemental cash flow information addressing certain cash and noncash transactions for each of the nine months ended September 30, 2012 and 2011 was as follows:

	For the nine months ended September 30,
	2012		2011
Cash Transactions:
Interest paid	$	18,317,526	$	32,356,615
Income taxes paid, net		5,699,106		1,638,414
Noncash Transactions:
Loans charged-off to the allowance for loan losses		11,265,378		27,201,443
Loans foreclosed upon and transferred to other real estate owned		8,489,792		26,689,198

Income Per Common Share — Basic net income per common share available to common stockholders (EPS) is computed by dividing net income available to common stockholders by the weighted average common shares outstanding for the period.  Weighted average common shares outstanding also include salary stock units issued to the named executive officers.  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 shares outstanding is attributable to common stock options, common stock appreciation rights, warrants and restricted shares with time-based vesting criteria. The dilutive effect of outstanding options, common stock appreciation rights, warrants and restricted shares with time-based vesting criteria is reflected in diluted EPS by application of the treasury stock method.

For the three and nine months ended September 30, 2012, approximately 584,000 and 595,000 shares associated with dilutive stock options, stock appreciation rights, and restricted shares with time-based vesting criteria were included in the net income per share calculation, respectively.  For the three and nine months ended September 30, 2011, there were approximately 621,000 and 640,000 shares associated with dilutive stock options, stock appreciation rights, and time-based restricted shares with time-based vesting criteria outstanding to purchase common shares that were included in the net income per share calculation, respectively.

The following is a summary of the basic and diluted net income per share calculations for the three and nine months ended

September 30, 2012 and 2011:

	For the three months ended September 30,				For the nine months ended September 30,
	2012		2011		2012		2011
Basic net income per share calculation:
Numerator - Net income available to common stockholders	$	11,349,125	$	24,537,293	$	26,339,683	$	31,392,039
Denominator - Average common shares outstanding		33,939,248		33,372,980		33,879,186		33,398,029
Basic net income per share available to common stockholders	$	0.33	$	0.74	$	0.78	$	0.94
Diluted net income per share calculation:
Numerator – Net income available to common stockholders	$	11,349,125	$	24,537,293	$	26,339,683	$	31,392,039
Denominator - Average common shares outstanding		33,939,248		33,372,980		33,879,186		33,398,029
Dilutive shares contingently issuable		583,828		620,934		594,709		639,710
Average diluted common shares outstanding		34,523,076		33,993,914		34,473,895		34,037,739
Diluted net income per share available to common stockholders	$	0.33	$	0.72	$	0.76	$	0.92

Note 2. Participation in U.S. Treasury Capital Purchase Program (CPP)

On December 12, 2008, Pinnacle Financial issued 95,000 shares of preferred stock to the U.S. Treasury (the Treasury) for $95 million pursuant to the CPP.  For the time the CPP preferred stock was outstanding, the CPP preferred stock was non-voting, other than having class voting rights on certain matters, and paid cumulative dividends quarterly at a rate of 5% per annum. Pinnacle Financial redeemed the preferred shares issued to the Treasury under the CPP in two payments.   During the fourth quarter of 2011, Pinnacle Financial redeemed 23,750 of the preferred shares in a transaction totaling approximately $23.9 million.  During the second quarter of 2012, Pinnacle Financial completed the redemption of the remaining 71,250 preferred shares outstanding to the Treasury in a transaction totaling $71.6 million which included accrued but unpaid dividends of $346,000.  Concurrently, Pinnacle Financial accelerated the accretion of the remaining preferred stock discount of approximately $1.66 million during the second quarter of 2012.

Page 9

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Additionally, Pinnacle Financial issued warrants to purchase 534,910 shares of common stock to the Treasury as a condition to its participation in the CPP.  The warrants had an exercise price of $26.64 each, were immediately exercisable and expired 10 years from the date of issuance.  On June 16, 2009, Pinnacle Financial completed the sale of 8,855,000 shares of its common stock in a public offering, resulting in net proceeds to Pinnacle Financial of approximately $109 million.  As a result, and pursuant to the terms of the warrants, the number of shares issuable upon exercise of the warrants was reduced by 50%, or 267,455 shares.  During the third quarter of 2012, Pinnacle Financial repurchased all of the remaining outstanding warrants held by the Treasury for $755,000.

Note 3. Securities

The amortized cost and fair value of securities available-for-sale and held-to-maturity at September 30, 2012 and December 31, 2011 are summarized as follows (in thousands):

	September 30, 2012
	Amortized  Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Securities available-for-sale:
U.S. government agency securities		$	11,267		$	89		$	-		$	11,356
Mortgage-backed securities			501,082			23,484			-			524,566
State and municipal securities			175,725			15,690			2			191,413
Corporate notes and other			9,768			1,602			-			11,370
		$	697,842		$	40,865		$	2		$	738,705
Securities held-to-maturity:
State and municipal securities		$	575		$	12		$	-		$	587
		$	575		$	12		$	-		$	587

	December 31, 2011
	Amortized  Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Securities available-for-sale:
U.S. Government agency securities		$	41,978		$	344		$	9		$	42,313
Mortgage-backed securities			623,684			22,254			371			645,567
State and municipal securities			182,206			13,768			22			195,952
Corporate notes and other			9,687			1,443			-			11,130
		$	857,555		$	37,809		$	402		$	894,962
Securities held-to-maturity:
State and municipal securities		$	2,330		$	39		$	-		$	2,369
		$	2,330		$	39		$	-		$	2,369

At September 30, 2012, approximately $633.3 million of securities within Pinnacle Financial’s investment portfolio were either pledged to secure public funds and other deposits or securities sold under agreements to repurchase.

Page 10

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The amortized cost and fair value of debt securities as of September 30, 2012 by contractual maturity are shown below. Actual maturities may differ from contractual maturities of mortgage-backed securities since the mortgages underlying the securities may be called or prepaid with or without penalty. Therefore, these securities are not included in the maturity categories in the following summary (in thousands):

	September 30, 2012
	Available-for-sale				Held-to-maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	4,071	$	4,129	$	200	$	202
Due in one year to five years		39,790		41,341		375		385
Due in five years to ten years		103,442		114,608		-		-
Due after ten years		49,457		54,061		-		-
Mortgage-backed securities		501,082		524,566		-		-
	$	697,842	$	738,705	$	575	$	587

At September 30, 2012 and December 31, 2011, included in securities were the following available-for-sale investments with unrealized losses.  The information below classifies these investments according to the term of the unrealized losses of less than twelve months or twelve months or longer (in thousands):

	Investments with an Unrealized Loss of less than 12 months				Investments with an Unrealized Loss of 12 months or longer				Total Investments with an Unrealized Loss
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
At September 30, 2012:
U.S. government agency securities	$	-	$	-	$	-	$	-	$	-	$	-
Mortgage-backed securities		-		-		-		-		-		-
State and municipal securities		625		1		330		1		955		2
Corporate notes		-		-		-		-		-		-
Total temporarily-impaired securities	$	625	$	1	$	330	$	1	$	955	$	2
At December 31, 2011:
U.S. government agency securities	$	5,452	$	9	$	-	$	-	$	5,452	$	9
Mortgage-backed securities		41,598		341		17,826		30		59,424		371
State and municipal securities		1,967		17		1,205		5		3,172		22
Corporate notes		-		-		-		-		-		-
Total temporarily-impaired securities	$	49,017	$	367	$	19,031	$	35	$	68,048	$	402

The applicable date for determining when securities are in an unrealized loss position is September 30, 2012.  As such, it is possible that a security had a market value that exceeded its amortized cost on other days during the past twelve-month period, but is in the “Investments with an Unrealized Loss of less than 12 months” category above.

As shown in the tables above, at September 30, 2012, Pinnacle Financial had approximately $2,000 in unrealized losses on $955,000 of available-for-sale securities. Any unrealized losses associated with these investment securities are driven by changes in interest rates and are not due to the credit quality of the securities.  These securities will continue to be monitored as a part of our ongoing impairment analysis, but are expected to perform even if the rating agencies reduce the credit rating of the bond issuers.  Management evaluates the financial performance of the issuers on a quarterly basis to determine if it is probable that the issuers can make all contractual principal and interest payments.  Because Pinnacle Financial currently does not intend to sell those securities that have an unrealized loss at September 30, 2012, and it is not more-likely-than-not that Pinnacle Financial will be required to sell the securities before recovery of their amortized cost bases, which may be maturity, Pinnacle Financial does not consider these securities to be other-than-temporarily impaired at September 30, 2012.

Periodically, available-for-sale securities may be sold or the composition of the portfolio realigned to improve yields, quality or marketability, or to implement changes in investment or asset/liability strategy, including maintaining collateral requirements, and raising funds for liquidity purposes. Additionally, if an available-for-sale security loses its investment grade, tax-exempt status, the underlying credit support is terminated or collection otherwise becomes uncertain based on factors known to management, Pinnacle Financial will consider selling the security, but will review each security on a case-by-case basis as these factors become known. The table below shows the fair value of securities that have been sold during 2012 and the amount of gain or loss recognized on those securities as well as any other-than-temporary impairment identified during 2012 (in thousands).

Page 11

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

For the quarter ended,	Fair Value of securities sold			Gain recognized		Loss recognized		Net		Other-than-temporary impairment (OTTI)			Gain(loss) on the sale of securities, net of OTTI
March 31, 2012	$	14,360	(1)	$	148	$	-	$	148	$	34	(2)	$	114
June 30, 2012		18,273	(3)		99		-		99		-			99
September 30, 2012		2,791	(4)		7		-		7		57	(4)		(50	)

(1) During the first quarter of 2012, Pinnacle Financial sold these securities due to their relatively short terms until maturity and a weighted average coupon of 0.50%.

(2) During the first quarter of 2012, Pinnacle Financial determined four mortgage-backed securities were OTTI because of management’s intent to sell them in the second quarter of 2012. The decision to sell was based on their relative underperformance compared to expectations.

(3) During the second quarter of 2012, Pinnacle Financial sold the four securities previously identified as OTTI in the first quarter. Additionally, two securities issued by municipalities in the state of California, which management believed could be adversely affected by state budgetary issues, were also sold during the second quarter.

(4) During the third quarter of 2012, Pinnacle Financial determined one security was OTTI due to its distinct underperformance relative to the interest rate environment. Pinnacle Financial recognized approximately $57,000 in OTTI and the bond was subsequently sold for a gain of approximately $7,000.

The carrying values of Pinnacle Financial’s investment securities could decline in the future if the financial condition of issuers deteriorates and management determines it is probable that Pinnacle Financial will not recover the entire amortized cost bases of the securities.  As a result, there is a risk that other-than-temporary impairment charges may occur in the future.

Note 4. Loans and Allowance for Loan Losses

For financial reporting purposes, Pinnacle Financial classifies its loan portfolio based on the underlying collateral utilized to secure each loan. This classification is consistent with those utilized in the Quarterly Report of Condition and Income filed with the Federal Deposit Insurance Corporation (FDIC).

The information presented herein for December 31, 2011, has been reclassified from the presentation in our Annual Report on Form 10-K for the year ended December 31, 2011 to conform to the September 30, 2012 presentation. Troubled debt restructurings previously included in accruing loans are now presented separately.

Commercial loans receive risk ratings by the assigned financial advisor that are subject to validation by our independent loan review department.  Risk ratings are categorized as pass, special mention, substandard, substandard-impaired or doubtful-impaired.  Pinnacle Financial believes that our categories follow those outlined by Pinnacle Bank’s primary regulator.  At September 30, 2012, approximately 75% of our loan portfolio was analyzed as a commercial loan type with a specifically assigned risk rating in the allowance for loan loss assessment.  Consumer loans and small business loans are generally not assigned an individual risk rating but are evaluated as either accrual or nonaccrual based on the performance of the loan.  However, certain consumer real estate-mortgage loans and certain consumer and other loans receive a specific risk rating due to the loan proceeds being used for commercial purposes even though the collateral may be of a consumer loan nature.

Risk ratings are subject to continual review by the loan officer.  At least annually, our credit policy requires that every risk rated loan of $500,000 or more is subject to a formal credit risk review process. Each loan grade is also subject to review by our independent loan review department.  Currently, our independent loan review department targets reviews of at least 70% of our risk rated portfolio annually.  Included in the 70% coverage are independent loan reviews of loans in targeted higher-risk portfolio segments such as certain commercial and industrial loans, land loans and/or loan types in certain geographies.

The following table presents our loan balances by primary loan classification and the amount within each risk rating category.  Pass rated loans include all credits other than those included in special mention, substandard, substandard-nonaccrual and doubtful-nonaccrual which are defined as follows:

Page 12

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

● Special mention loans have potential weaknesses that deserve management’s close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in Pinnacle Financial’s credit position at some future date.

● Substandard loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any.  Assets so classified must have a well-defined weakness or weaknesses that jeopardize collection of the debt.  Substandard loans are characterized by the distinct possibility that Pinnacle Financial will sustain some loss if the deficiencies are not corrected.

● Substandard-nonaccrual loans are substandard loans that have been placed on nonaccrual status.

● Doubtful-nonaccrual loans have all the characteristics of substandard-nonaccrual loans with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.  All doubtful-nonaccrual loans are on nonaccrual status.

The following table outlines the amount of each loan classification categorized into each risk rating category as of September 30, 2012 and December 31, 2011 (in thousands):

September 30, 2012	Commercial real estate - mortgage		Consumer real estate - mortgage		Construction and land development		Commercial and industrial		Consumer and other		Total
Accruing loans
Pass	$	1,062,132	$	643,667	$	254,763	$	1,226,386	$	84,890	$	3,271,838
Special Mention		16,997		6,351		32,545		26,629		-		82,522
Substandard (1)		56,393		14,293		19,251		20,204		2		110,143
Total		1,135,522		664,311		306,559		1,273,219		84,892		3,464,503
Impaired loans
Nonperforming loans
Substandard-nonaccrual		14,983		10,250		5,857		4,810		287		36,187
Doubtful-nonaccrual		-		298		-		86		-		384
Total nonperforming loans		14,983		10,548		5,857		4,896		287		36,571
Troubled debt restructurings(2)
Pass		4,812		3,821		72		693		121		9,519
Special Mention		-		-		-		-		-		-
Substandard		11,819		2,210		300		242		-		14,571
Total troubled debt restructurings		16,631		6,031		372		935		121		24,090
Total impaired loans		31,614		16,579		6,229		5,831		408		60,661
Total loans	$	1,167,136	$	680,890	$	312,788	$	1,279,050	$	85,300	$	3,525,164
December 31, 2011
Accruing loans
Pass	$	994,059	$	643,924	$	204,696	$	1,098,898	$	63,218	$	3,004,795
Special Mention		19,403		15,225		27,553		17,029		649		79,859
Substandard (1)		72,160		18,235		28,957		16,073		1		135,426
Total		1,085,622		677,384		261,206		1,132,000		63,868		3,220,080
Impaired loans
Nonperforming loans
Substandard-nonaccrual		9,962		11,990		12,965		11,194		551		46,662
Doubtful-nonaccrual		-		497		-		696		-		1,193
Total nonperforming loans		9,962		12,487		12,965		11,890		551		47,855
Troubled debt restructurings(2)
Pass		193		3,631		77		949		242		5,092
Special Mention		-		-		-		-		-		-
Substandard		15,185		2,243		-		896		-		18,324
Total troubled debt restructurings		15,378		5,874		77		1,845		242		23,416
Total impaired loans		25,340		18,361		13,042		13,735		793		71,271
Total loans	$	1,110,962	$	695,745	$	274,248	$	1,145,735	$	64,661	$	3,291,351

(1) Potential problem loans represent those loans with a well-defined weakness and where information about possible credit problems of borrowers has caused management to have doubts about the borrower’s ability to comply with present repayment terms.  This definition is believed to be substantially consistent with the standards established by Pinnacle Bank’s primary regulators for loans classified as substandard, excluding the impact of substandard nonperforming loans and substandard troubled debt restructurings. Potential problem loans, which are not included in nonperforming assets, amounted to approximately $110.1 million at September 30, 2012, compared to $135.4 million at December 31, 2011.

(2) Troubled debt restructurings are presented as an impaired loan; however, they continue to accrue interest at contractual rates.

Page 13

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

At September 30, 2012 and December 31, 2011, all loans classified as nonaccrual were deemed to be impaired.  The principal balances of these nonaccrual loans amounted to $36.6 million and $47.9 million at September 30, 2012 and December 31, 2011, respectively, and are included in the table above.  For the nine months ended September 30, 2012, the average balance of nonaccrual loans was $40.1 million as compared to $63.9 million for the twelve months ended December 31, 2011.  At the date such loans were placed on nonaccrual status, Pinnacle Financial reversed all previously accrued interest income against current year earnings.  Had these nonaccruing loans been on accruing status, interest income would have been higher by $415,000 and $1.5 million, respectively, for the three and nine months ended September 30, 2012 compared to $678,000 and $7.6 million, respectively, for the three and nine months ended September 30, 2011, respectively.

The following table details the recorded investment, unpaid principal balance and related allowance and average recorded investment of our nonaccrual loans at September 30, 2012 and December 31, 2011 by loan classification and the amount of interest income recognized on a cash basis throughout the quarter and year-to-date period then ended, respectively, on these loans that remain on the balance sheets (in thousands):

	At September 30, 2012						For the nine months ended September 30, 2012
	Recorded investment		Unpaid principal balance		Related allowance(1)		Average recorded investment		Interest income recognized
Collateral dependent nonaccrual loans:
Commercial real estate – mortgage	$	14,020	$	14,620	$	-	$	16,325	$	-
Consumer real estate – mortgage		8,228		8,571		-		10,875		-
Construction and land development		2,890		3,032		-		3,313		-
Commercial and industrial		2,710		2,895		-		3,464		-
Consumer and other		-		-		-		-		-
Total		27,848		29,118		-		33,977		-
Cash flow dependent nonaccrual loans:
Commercial real estate – mortgage		963		1,027		218		1,075		-
Consumer real estate – mortgage		2,320		2,466		526		6,988		-
Construction and land development		2,967		3,060		192		4,230		-
Commercial and industrial		2,186		2,399		1,071		2,728		-
Consumer and other		287		310		65		522		-
Total		8,723		9,262		2,072		15,543		-
Total nonaccrual loans	$	36,571	$	38,380	$	2,072	$	49,520	$	-

	At December 31, 2011						For the year ended December 31, 2011
Collateral dependent nonaccrual loans:
Commercial real estate – mortgage	$	9,345	$	12,099	$	-	$	12,450	$	5
Consumer real estate – mortgage		9,248		9,961		-		10,140		-
Construction and land development		6,917		9,093		-		9,288		37
Commercial and industrial		3,036		3,546		-		3,689		-
Consumer and other		-		-		-		-		-
Total		28,546		34,699		-		35,567		42
Cash flow dependent nonaccrual loans:
Commercial real estate – mortgage		617		661		57		792		-
Consumer real estate – mortgage		3,239		4,902		301		5,005		-
Construction and land development		6,048		6,822		1,264		7,074		-
Commercial and industrial		8,854		11,041		2,767		11,497		-
Consumer and other		551		856		51		857		-
Total		19,309		24,282		4,440		25,225		-
Total nonaccrual loans	$	47,855	$	58,981	$	4,440	$	60,792	$	42

(1) Collateral dependent loans are typically charged-off to their net realizable value pursuant to requirements of our primary regulators and no specific allowance is carried related to those loans.

Page 14

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Pinnacle Financial’s policy is that once a loan is placed on nonaccrual status each subsequent payment is reviewed on a case-by-case basis to determine if the payment should be applied to interest or principal pursuant to regulatory guidelines. Pinnacle Financial recognized no interest income from cash payments received on nonaccrual loans during the nine months ended September 30, 2012 and $42,000 of interest income during the year ended December 31, 2011.

Impaired loans also include loans that Pinnacle Bank has elected to formally restructure when, due to the weakening credit status of a borrower, the restructuring may facilitate a repayment plan that seeks to minimize the potential losses that Pinnacle Bank may have to otherwise incur.  If on nonaccruing status as of the date of restructuring, the loans are included in nonperforming loans. Loans that have been restructured that were performing as of the restructure date and continue to perform in accordance with the restructured terms are reported separately as troubled debt restructurings.

At September 30, 2012 and December 31, 2011, there were $24.1 million and $23.4 million, respectively, of troubled debt restructurings that were performing as of their restructure date and which are accruing interest. These troubled debt restructurings are considered impaired loans pursuant to U.S. GAAP. Troubled commercial loans are restructured by specialists within our Special Assets Group, and all restructurings are approved by committees and credit officers separate and apart from the normal loan approval process.  These specialists are charged with reducing Pinnacle Financial’s overall risk and exposure to loss in the event of a restructuring by obtaining some or all of the following:  improved documentation, additional guaranties, increase in curtailments, reduction in collateral release terms, additional collateral or other similar strategies.

The following table outlines the amount of each troubled debt restructuring categorized by loan classification during the nine months ended September 30, 2012 and September 30, 2011 (in thousands):

	September 30, 2012						September 30, 2011
	Number of contracts		Pre Modification Outstanding Recorded Investment		Post Modification Outstanding Recorded Investment, net of related allowance		Number of contracts		Pre Modification Outstanding Recorded Investment		Post Modification Outstanding Recorded Investment, net of related allowance
Commercial real estate – mortgage		6	$	6,264	$	4,523		6	$	11,888	$	11,881
Consumer real estate – mortgage		3		694		643		8		3,153		3,044
Construction and land development		1		360		333		-		-		-
Commercial and industrial		1		59		50		15		3,146		2,700
Consumer and other		1		39		34		-		-		-
		12	$	7,416	$	5,583		29	$	18,187	$	17,265

During the twelve months ended September 30, 2012, two commercial real estate loans totaling $3.2 million, eight commercial and industrial loans totaling $873,000 and two consumer loans totaling $153,000 which were previously classified as troubled debt restructurings subsequently defaulted.

In addition to the loan metrics above, Pinnacle Financial analyzes its commercial loan portfolio to determine if a concentration of credit risk exists to any industries.  Pinnacle Financial utilizes broadly accepted industry classification systems in order to classify borrowers into various industry classifications.  Pinnacle Financial has a credit exposure (loans outstanding plus unfunded lines of credit) exceeding 25% of Pinnacle Bank’s total risk-based capital to borrowers in the following industries at September 30, 2012 with the comparative exposures for December 31, 2011 (in thousands):

	At September 30, 2012
	Outstanding Principal Balances		Unfunded Commitments		Total exposure		Total Exposure at December 31, 2011
Lessors of nonresidential buildings	$	371,707	$	42,107	$	413,814	$	509,003
Lessors of residential buildings		175,563		14,627		190,190		177,414
Land subdividers		101,102		15,338		116,440		119,106

Page 15

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The table below presents past due balances at September 30, 2012 and December 31, 2011, by loan classification and segment allocated between performing and nonperforming status (in thousands):

September 30, 2012	30-89 days past due and performing		90 days or more past due and performing		Total past due and performing		Nonperforming(1)		Current and performing		Total Loans
Commercial real estate:
Owner-occupied	$	2,733	$	-	$	2,733	$	10,833	$	589,167	$	602,733
All other		468		-		468		4,150		559,785		564,403
Consumer real estate – mortgage		7,096		-		7,096		10,548		663,246		680,890
Construction and land development		980		162		1,142		5,857		305,789		312,788
Commercial and industrial		603		-		603		4,896		1,273,551		1,279,050
Consumer and other		275		-		275		287		84,738		85,300
	$	12,155	$	162	$	12,317	$	36,571	$	3,476,276	$	3,525,164
December 31, 2011
Commercial real estate:
Owner-occupied	$	2,489	$	-	$	2,489	$	6,735	$	572,746	$	581,970
All other		3,260		-		3,260		3,227		522,505		528,992
Consumer real estate – mortgage		2,589		254		2,843		12,487		680,415		695,745
Construction and land development		1,572		-		1,572		12,965		259,711		274,248
Commercial and industrial		648		604		1,252		11,890		1,132,593		1,145,735
Consumer and other		526		-		526		551		63,584		64,661
	$	11,084	$	858	$	11,942	$	47,855	$	3,231,554	$	3,291,351

(1) Approximately $13.1 million and $25.5 million of nonaccrual loans as of September 30, 2012 and December 31, 2011, respectively, are currently performing pursuant to their contractual terms.

The following table shows the allowance allocation by loan classification for accruing and nonperforming loans atSeptember 30, 2012 and December 31, 2011 (in thousands):

					Impaired Loans
	Accruing Loans				Nonaccrual Loans				Troubled Debt Restructurings(1)				Total Allowance for Loan Losses
	September 30, 2012		December 31, 2011		September 30, 2012		December 31, 2011		September 30, 2012		December 31, 2011		September 30, 2012		December 31, 2011
Commercial real estate –mortgage	$	18,145	$	20,581	$	218	$	57	$	2,560	$	2,759	$	20,923	$	23,397
Consumer real estate – mortgage		8,663		9,485		526		301		808		516		9,997		10,302
Construction and land development		9,594		10,764		192		1,264		38		12		9,824		12,040
Commercial and industrial		20,577		17,740		1,071		2,767		138		282		21,786		20,789
Consumer and other		1,342		1,037		65		51		18		37		1,425		1,125
Unallocated		-		-		-		-		-		-		5,137		6,322
	$	58,321	$	59,607	$	2,072	$	4,440	$	3,562	$	3,606	$	69,092	$	73,975

(1) Troubled debt restructurings of $24.1 million and $23.4 million as of September 30, 2012 and December 31, 2011, respectively, are classified as impaired loans pursuant to U.S. GAAP; however, these loans continue to accrue interest at contractual rates.

Page 16

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following table details the changes in the allowance for loan losses from December 31, 2010 to December 31, 2011 to September 30, 2012 by loan classification (in thousands):

	Commercial real estate – mortgage			Consumer real estate – mortgage			Construction and land development			Commercial and industrial			Consumer and other			Unallocated			Total
Balances, December 31, 2010	$	19,252		$	9,898		$	19,122		$	21,426		$	1,874		$	11,003		$	82,575
Charged-off loans		(3,044	)		(5,076	)		(10,157	)		(15,360	)		(1,213	)		-			(34,850	)
Recovery of previously charged-off loans		116			495			1,530			2,167			144			-			4,452
Provision for loan losses		7,073			4,985			1,545			12,556			320			(4,681	)		21,798
Balances, December 31, 2011	$	23,397		$	10,302		$	12,040		$	20,789		$	1,125		$	6,322		$	73,975
Charged-off loans		(1,676	)		(3,857	)		(1,638	)		(3,267	)		(828	)		-			(11,266	)
Recovery of previously charged-off loans		215			793			1,086			1,131			78			-			3,303
Provision for loan losses		1,013			(2,759	)		1,664			(3,133	)		(1,050	)		1,185			3,080
Balances, September 30, 2012	$	20,923		$	9,997		$	9,824		$	21,786		$	1,425		$	5,137		$	69,092

The adequacy of the allowance for loan losses is assessed at the end of each calendar quarter.  The level of the allowance is based upon evaluation of the loan portfolio, past loan loss experience, current asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect the borrowers’ ability to repay (including the timing of future payment), the estimated value of any underlying collateral, composition of the loan portfolio, economic conditions, historical loss experience, industry and peer bank loan quality indications and other pertinent factors, including regulatory recommendations.

At September 30, 2012, Pinnacle Financial had granted loans and other extensions of credit amounting to approximately $9.6 million to current directors, executive officers, and their related entities, of which $8.9 million had been drawn upon.  At December 31, 2011, Pinnacle Financial had granted loans and other extensions of credit amounting to approximately $10.8 million to directors, executive officers, and their related entities, of which approximately $9.6 million had been drawn upon.  These loans and extensions of credit were made on substantially the same terms customary for other persons similarly situated for the type of loan involved.   None of these loans to directors, executive officers, and their related entities were impaired at September 30, 2012 or December 31, 2011.

Residential Lending

At September 30, 2012, Pinnacle Financial had approximately $39.2 million of mortgage loans held-for-sale compared to approximately $35.4 million at December 31, 2011.  Pinnacle Financial generally has an agreement for the subsequent sale of the mortgage loan prior to the loan being closed with the borrower.  Pinnacle Financial sells loans to third-party investors on a loan-by-loan basis and has not entered into any forward commitments with investors for future bulk loan sales.  All of these loan sales transfer servicing rights to the buyer.  During the three and nine months ended September 30, 2012, Pinnacle Financial recognized $2.0 million and $4.9 million, respectively, in gains on the sale of these loans, net of commissions paid, compared to $1.3 million and $2.7 million, respectively, during the three and nine months ended September 30, 2011.

These mortgage loans held-for-sale are originated internally and are primarily to borrowers in Pinnacle Bank’s geographic markets. These sales are typically on a best efforts basis to investors that follow conventional government sponsored entities (GSE) and the Department of Housing and Urban Development/U.S. Department of Veterans Affairs (HUD/VA) guidelines. Generally, loans sold to the HUD/VA are underwritten by Pinnacle Bank while the majority of the loans sold to other investors are underwritten by the purchaser of the loans.

Each purchaser has specific guidelines and criteria for sellers of loans, and the risk of credit loss with regard to the principal amount of the loans sold is generally transferred to the purchasers upon sale. While the loans are sold without recourse, the purchase agreements require Pinnacle Bank to make certain representations and warranties regarding the existence and sufficiency of file documentation and the absence of fraud by borrowers or other third parties such as appraisers in connection with obtaining the loan. If it is determined that the loans sold were in breach of these representations or warranties, Pinnacle Bank has obligations to either repurchase the loan for the unpaid principal balance and related investor fees or make the purchaser whole for the economic benefits of the loan.

Page 17

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

From inception of Pinnacle Bank’s mortgage department in January 2003 through September 30, 2012, Pinnacle Bank originated and sold approximately 12,500 mortgage loans totaling $2.688 billion to third-party purchasers.  Of the approximately 12,500 mortgage loans, Pinnacle Bank underwrote approximately 3,100 conventional loans at an 80% or less loan-to-value that were sold to other investors and underwrote 2,600 loans that were sold to the HUD/VA.  To date, repurchase activity pursuant to the terms of these representations and warranties has been insignificant to Pinnacle Bank. The remaining mortgage loans were underwritten by the purchasers of those loans, but funded by Pinnacle Bank until settlement with the purchaser.  

Based on information currently available, management believes that it does not have material exposure to losses that may arise relating to the representations and warranties that it has made in connection with its mortgage loan sales.

Due to the current focus on foreclosure practices of financial institutions nationwide, Pinnacle Bank evaluated its foreclosure process related to home equity and consumer mortgage loans within its loan portfolio. At September 30, 2012, Pinnacle Bank has $648.2 million of home equity and consumer mortgage loans which are secured by first or second liens on residential properties. Foreclosure activity in this portfolio has been minimal. Any foreclosures on these loans are handled by designated Pinnacle Bank personnel and external legal counsel, as appropriate, following established policies regarding legal and regulatory requirements. Pinnacle Bank has not imposed any freezes on foreclosures. Based on information currently available, management believes that it does not have material exposure to faulty foreclosure practices.

Note 5. Income Taxes

  ASC 740, Income Taxes, defines the threshold for recognizing the benefits of tax return positions in the financial statements as “more-likely-than-not” to be sustained by the taxing authority.  As of September 30, 2012, Pinnacle Financial had no unrecognized tax benefits related to Federal or State income tax matters and does not currently anticipate any material increase or decrease in unrecognized tax benefits relative to any tax positions taken prior to September 30, 2012.  As of September 30, 2012, Pinnacle Financial has accrued no interest and no penalties related to uncertain tax positions.

Pinnacle Financial and its subsidiaries file consolidated U.S Federal and state of Tennessee income tax returns.  The IRS concluded its examination of the 2007, 2008, and 2009 federal tax returns during 2011.  Pinnacle Financial remains open to audit under the statute of limitations by the IRS for the years ended December 31, 2008 through 2011 and the state of Tennessee for the years ended December 31, 2008 through 2011.

Pinnacle Financial's effective tax rate for the nine-month period ended September 30, 2012 of 32.3% differs from the Federal income tax statutory rate of 35% and state income tax rate of 6.50% primarily due to our investments in bank qualified municipal securities, our real estate investment trust and bank-owned life insurance offset in part by meals and entertainment and compensation expense for which we are not entitled to a deduction.  Our income tax expense for the nine months ended September 30, 2011, differs from the blended statutory rate due to the reversal of the valuation allowance against our deferred tax assets.

Note 6. Commitments and Contingent Liabilities

In the normal course of business, Pinnacle Financial has entered into off-balance sheet financial instruments which include commitments to extend credit (i.e., including unfunded lines of credit) and standby letters of credit. Commitments to extend credit are usually the result of lines of credit granted to existing borrowers under agreements that the total outstanding indebtedness will not exceed a specific amount during the term of the indebtedness.  Typical borrowers are commercial concerns that use lines of credit to supplement their treasury management functions, thus their total outstanding indebtedness may fluctuate during any time period based on the seasonality of their business and the resultant timing of their cash flows.  Other typical lines of credit are related to home equity loans granted to consumers.  Commitments to extend credit generally have fixed expiration dates or other termination clauses and may require payment of a fee.  At September 30, 2012, these commitments amounted to $965.3 million.

Standby letters of credit are generally issued on behalf of an applicant (our customer) to a specifically named beneficiary and are the result of a particular business arrangement that exists between the applicant and the beneficiary.  Standby letters of credit have fixed expiration dates and are usually for terms of two years or less unless terminated beforehand due to criteria specified in the standby letter of credit.  A typical arrangement involves the applicant routinely being indebted to the beneficiary for such items as inventory purchases, insurance, utilities, lease guarantees or other third party commercial transactions.  The standby letter of credit would permit the beneficiary to obtain payment from Pinnacle Financial under certain prescribed circumstances.  Subsequently, Pinnacle Financial would then seek reimbursement from the applicant pursuant to the terms of the standby letter of credit.  At September 30, 2012, these commitments amounted to $72.6 million.

Page 18

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Pinnacle Financial follows the same credit policies and underwriting practices when making these commitments as it does for on-balance sheet instruments.  Each customer’s creditworthiness is evaluated on a case-by-case basis, and the amount of collateral obtained, if any, is based on management’s credit evaluation of the customer.  Collateral held varies but may include cash, real estate and improvements, marketable securities, accounts receivable, inventory, equipment, and personal property.

The contractual amounts of these commitments are not reflected in the consolidated financial statements and only amounts drawn upon would be reflected in the future.  Since many of the commitments are expected to expire without being drawn upon, the contractual amounts do not necessarily represent future cash requirements.  However, should the commitments be drawn upon and should our customers default on their resulting obligation to us, Pinnacle Financial's maximum exposure to credit loss, without consideration of collateral, is represented by the contractual amount of those commitments.

During the fourth quarter of 2011, a customer of Pinnacle Bank filed a putative class action lawsuit (styled John Higgins, et al, v. Pinnacle Financial Partners, Inc., d/b/a Pinnacle National Bank) in Davidson County, Tennessee Circuit Court against Pinnacle Bank and Pinnacle Financial, on his own behalf, as well as on behalf of a purported class of Pinnacle Bank’s customers within the State of Tennessee alleging that Pinnacle Bank’s method of ordering debit card transactions had caused customers of Pinnacle Bank to incur higher overdraft charges than had a different method been used.  In support of his claims, the plaintiff asserts theories of breach of contract, breach of implied covenant of good faith and fair dealing, unjust enrichment of unconscionability.  The plaintiff is seeking, among other remedies, an award of unspecified compensatory damages, pre-judgment interest, costs and attorneys’ fees.  Pinnacle Financial and Pinnacle Bank are vigorously contesting this matter.  On January 17, 2012, Pinnacle Financial and Pinnacle Bank filed a motion to dismiss the complaint. The motion to dismiss was denied on April 13, 2012, and Pinnacle Financial and Pinnacle Bank filed an answer on May 30, 2012.  Based on our current knowledge, Pinnacle Financial does not believe that any liability arising from this legal matter will have a material adverse effect on Pinnacle Financial’s consolidated financial condition, operating results or cash flows.

Various legal claims also arise from time to time in the normal course of business.   In the opinion of management, the resolution of these routine claims outstanding at September 30, 2012 will not have a material impact on Pinnacle Financial’s financial statements.

Note 7. Stock Options, Stock Appreciation Rights and Restricted Shares

As described more fully in the Annual Report on Form 10-K, Pinnacle Financial has two equity incentive plans.  Additionally, Pinnacle Financial has assumed equity plans in connection with acquisitions of Cavalry Bancorp, Inc. (Cavalry) and Mid-America Bancshares, Inc. (Mid-America) under which it has granted stock options and stock appreciation rights to its employees to purchase common stock at or above the fair market value on the date of grant and granted restricted share awards to employees and directors.

As a result of an amendment to the 2004 Plan approved by shareholders on April 17, 2012, total shares remaining available for issuance under the 2004 Equity Incentive Plan were increased, and at September 30, 2012, totaled 709,000.

Common Stock Options and Stock Appreciation Rights

As of September 30, 2012, there were approximately 1,332,000 stock options and 7,300 stock appreciation rights outstanding to purchase common shares.  A summary of the stock option and stock appreciation rights activity within the equity incentive plans during the nine months ended September 30, 2012 and information regarding expected vesting, contractual terms remaining, intrinsic values and other matters is as follows:

Page 19

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

	Number			Weighted- Average Exercise Price		Weighted- Average Contractual Remaining Term (in years)		Aggregate Intrinsic Value (000’s)
Outstanding at December 31, 2011		1,581,038		$	20.81		3.62	$	3,683	(1)
Granted		-			-
Exercised		(230,718	)		6.58
Forfeited		(10,678	)		27.14
Outstanding at September 30, 2012		1,339,642		$	23.21		3.36	$	2,562	(2)
Outstanding and expected to vest as ofSeptember 30, 2012		1,339,618		$	23.21		3.36	$	2,562	(2)
Options exercisable at September 30, 2012		1,306,171		$	23.25		3.31	$	2,562	(2)

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted closing price of Pinnacle Financial common stock of $18.35 per common share at December 31, 2011 for the approximately 348,208 options and stock appreciation rights that were in-the-money at September 30, 2012.

(2) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted closing price of Pinnacle Financial common stock of $19.32 per common share at September 30, 2012 for the approximately 353,285 options and stock appreciation rights that were in-the-money at September 30, 2012.

During the nine months ended September 30, 2012, approximately 96,000 option awards vested at an average exercise price of $27.58 with no intrinsic value.

As of September 30, 2012, there was approximately $77,000 of total unrecognized compensation cost related to unvested stock, options granted under our equity incentive plans. That cost is expected to be recognized over a weighted-average period of 0.30 years.

During the three and nine months ended September 30, 2012, Pinnacle Financial recorded stock option compensation expense of $79,000 and $329,000, respectively, based on Black-Scholes valuation at the date of grant compared to $271,000 and $952,000, respectively, for the three and nine months ended September 30, 2011.  For these awards, Pinnacle Financial has recognized compensation expense using a straight-line amortization method. Stock-based compensation expense has been reduced for estimated forfeitures.

Restricted Share Awards

Additionally, Pinnacle Financial’s 2004 Plan and the plans assumed in connection with the acquisition of Mid-America provide for the granting of restricted share awards and other performance or market-based awards.  There were no market-based awards outstanding as of September 30, 2012 under any of these plans.  During the nine months ended September 30, 2012, Pinnacle Financial awarded 147,945 shares of restricted common stock to certain associates and outside directors.

A summary of activity for unvested restricted share awards for the quarter ended September 30, 2012 is as follows:

	Number			Grant Date Weighted- Average Cost
Unvested at December 31, 2011		849,703		$	15.61
Shares awarded		147,945			16.47
Restrictions lapsed and shares released to associates/directors		(201,494	)		16.06
Shares forfeited(1)		(51,705	)		18.32
Unvested at September 30, 2012		744,449		$	15.56

(1) Represents 30,132 shares forfeited due to failure to meet performance targets and 21,923 shares forfeited due to employee termination and retirement.

Page 20

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Pinnacle Financial grants restricted share awards to associates, executive management and outside directors with a combination of time and performance vesting criteria. The following table outlines restricted stock grants that were made, grouped by similar vesting criteria, during the nine months ended September 30, 2012:

Grant Year	Group(1)	Vesting Period in years		Shares awarded		Restrictions Lapsed and shares released to participants		Shares Forfeited by participants			Shares Unvested
Time Based Awards (2)
2012	Associates		5		132,965		-		6,625	(4)		126,340
Outside Director Awards (3)
2012	Outside directors		1		14,980		-		-			14,980

(1) Groups include our employees (referred to as associates above) and our outside directors.  When the restricted shares are awarded, a participant receives voting rights with respect to the shares, but is not able to transfer the shares until the restrictions have lapsed.  Once the restrictions lapse, the participant is taxed on the value of the award and, may elect to sell shares to pay the applicable income taxes associated with the award.

(2) These shares vest in equal annual installments on the anniversary date of the grant.

(3) Restricted share awards are issued to the outside members of the board of directors in accordance with their board compensation plan.  Restrictions lapse on the one year anniversary date of the award based on each individual board member meeting their attendance goals for the various board and board committee meetings to which each member was scheduled to attend.

(4) These shares represent forfeitures resulting from associate terminations during the nine months ended September 30, 2012.

Compensation expense associated with performance-based restricted share awards, which are issued from time-to-time, is recognized over the performance period that the restrictions associated with the awards are anticipated to lapse based on a graded vesting schedule such that each performance traunche is amortized separately.  Compensation expense associated with the time-based restricted share awards is recognized on a straight-line basis over the time period that the restrictions associated with the awards lapse based on the total cost of the award at the grant date.  For the three and nine months ended September 30, 2012, Pinnacle Financial recognized approximately $818,000 and $2,489,000, respectively, in compensation costs attributable to all restricted share awards, compared to $859,000 and $2,429,000, respectively, for the three and nine months ended September 30, 2011.

Restricted Stock Units

Pinnacle Financial granted 144,350 restricted share units to the senior executive officers and the Leadership Team in the first quarter of 2012.  These restricted share units will be converted to restricted shares in 2013 on a tiered scale based on actual 2012 results.  The number of units that ultimately convert to unvested restricted shares will be determined after the 2012 earnings are finalized based upon the achievement of certain predetermined profitability goals for 2012 that were established on January 13, 2012 by the Human Resources and Compensation Committee of Pinnacle Financial (HRCC).  The number of restricted shares issuable in settlement of these restricted share units could range between 0% to 100% based on the level of 2012 profitability.  Once these restricted share units are converted to restricted share awards, the forfeiture restrictions on the number of restricted shares issued in settlement of these restricted share units will lapse in 20% increments over the following five years based on the achievement of soundness thresholds to be set by the HRCC in January of each respective fiscal year.   As the specific value of the award that will ultimately be granted to the recipients of these restricted share units and the associated performance targets cannot yet be determined, no grant was deemed to have been made, and therefore, no expense has been recognized related to these awards. Following the redemption of the preferred stock issued to the US Treasury as a part of the CPP, the HRCC also granted 164,858 restricted stock units to our senior executive officers in the second quarter of 2012. The settlement of these restricted share units into shares of restricted stock and subsequent vesting criteria for these awards are similar to those of the restricted share units granted during the first quarter of 2012, except that the number of restricted share awards issued will be determined based on earnings for the third and fourth quarters of 2012.

Salary Stock Unit Awards

During 2011, the HRCC of Pinnacle Financial adopted and approved the issuance of Salary Stock Units (SSU) to Pinnacle Financial’s named executive officers. The SSUs were designed to comply with the Treasury’s Interim Final Rule on TARP Standards for Compensation and Corporate Governance issued on June 15, 2009.  SSUs were accrued and earned by the named executive officers over the course of the year during each payroll period, subject to such executive officer’s continued employment with Pinnacle Financial. Generally, SSUs granted to named executive officers are immediately vested (and therefore not subject to forfeiture) and are payable in shares of Pinnacle Financial’s common stock on, or as soon as administratively practical following, December 30, 2012 (Settlement Date), but in no event later than two and one-half months following the Settlement Date. Following the redemption of all of the remaining outstanding preferred stock issued to the Treasury as part of the CPP, the HRCC terminated issuances of salary stock unit awards to these named executive officers effective June 30, 2012.  As such, no share issuance and no expense was recorded in the three months ended September 30, 2012.  For the nine months ended September 30, 2012, Pinnacle Financial issued 57,508 SSUs and recognized approximately $1,000,000 in compensation costs attributable to the SSUs compared to 12,511 and 18,680 and approximately $194,000 and $291,000, respectively, for the three and nine month periods ended September 30, 2011.

Page 21

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 8. Regulatory Matters

Under Tennessee banking law, Pinnacle Bank is subject to restrictions on the payment of dividends to Pinnacle Financial, which are similar to those applicable to national banks.  Prior to the repurchase of the preferred stock, Pinnacle Financial was also subject to limits on payment of dividends to its shareholders by its participation in the CPP.  Pursuant to Tennessee banking law, Pinnacle Bank may not, without the prior consent of the TDFI, pay any dividends to Pinnacle Financial in a year in excess of the total of Pinnacle Bank’s net income for that year plus the retained net income for the preceding two years.  As of September 30, 2012, Pinnacle Bank could pay approximately $26.2 million of dividends to Pinnacle Financial without prior TDFI approval. In May 2010, Pinnacle Financial informally agreed to obtain prior approval of the Federal Reserve Bank of Atlanta before making stock dividends or repurchases and trust preferred distributions or causing Pinnacle Bank to pay dividends. In April 2012, this informal agreement was terminated.Pinnacle Financial has not paid any cash dividends on its common stock since inception, and it does not currently anticipate that it will consider paying such dividends in the foreseeable future.

 Pinnacle Financial and its banking subsidiary are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions, by regulators that, if undertaken, could have a direct material effect on the financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, Pinnacle Financial and Pinnacle Bank must meet specific capital guidelines that involve quantitative measures of the assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices.

Quantitative measures established by regulation to ensure capital adequacy require Pinnacle Financial and its banking subsidiary to maintain minimum amounts and ratios of Total and Tier I capital to risk-weighted assets and for Pinnacle Bank of Tier I capital to average assets. Management believes, as of September 30, 2012, that Pinnacle Financial and Pinnacle Bank met all capital adequacy requirements to which they are subject.  To be categorized as well-capitalized under applicable banking regulations, Pinnacle Financial and Pinnacle Bank must maintain minimum Total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the following table and not be subject to a written agreement, order or directive to maintain a higher capital level.  Pinnacle Financial and Pinnacle Bank’s actual capital amounts and ratios are presented in the following table

(in thousands):

	Actual					Regulatory Minimum Capital Requirement					Regulatory Minimum To Be Well-Capitalized
At September 30, 2012	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total capital to risk weighted assets:
Pinnacle Financial	$	536,359		13.4	%	$	321,164		8.0	%	$	403,442		10.0	%
Pinnacle Bank	$	531,092		13.3	%	$	320,496		8.0	%	$	402,617		10.0	%
Tier I capital to risk weighted assets:
Pinnacle Financial	$	485,929		12.1	%	$	160,582		4.0	%	$	242,065		6.0	%
Pinnacle Bank	$	480,765		12.0	%	$	160,248		4.0	%	$	241,570		6.0	%
Tier I capital to average assets (*):
Pinnacle Financial	$	485,929		10.5	%	$	184,513		4.0	%	NA		NA
Pinnacle Bank	$	480,765		10.5	%	$	183,875		4.0	%	$	229,845		5.0	%

(*) Average assets for the above calculations were based on the most recent quarter.

Note 9. Derivative Instruments

Financial derivatives are reported at fair value in other assets or other liabilities.  The accounting for changes in the fair value of a derivative depends on whether it has been designated and qualifies as part of a hedging relationship.  For derivatives not designated as hedges, the gain or loss is recognized in current earnings.Pinnacle Financial enters into interest rate swaps (swaps) to facilitate customer transactions and meet their financing needs.  Upon entering into these instruments to meet customer needs, Pinnacle Financial enters into offsetting positions with a large U.S. financial institution in order to minimize the risk to Pinnacle Financial.  These swaps are derivatives, but are not designated as hedging instruments.  At September 30, 2012 and 2011, Pinnacle Financial had not entered into any derivative contracts to assist in managing its own interest rate sensitivity and has no derivatives designated as hedges.

Page 22

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Interest rate swap contracts involve the risk of dealing with counterparties and their ability to meet contractual terms.  When the fair value of a derivative instrument contract is positive, this generally indicates that the counter party or customer owes Pinnacle Financial, and results in credit risk to Pinnacle Financial.  When the fair value of a derivative instrument contract is negative, Pinnacle Financial owes the customer or counterparty and therefore, has no credit risk.

A summary of Pinnacle Financial’s interest rate swaps as of September 30, 2012 and December 31, 2011 is included in the following table (in thousands):

	September 30, 2012					December 31, 2011
	Notional Amount		Estimated Fair Value			Notional Amount		Estimated Fair Value
Interest rate swap agreements:
Pay fixed / receive variable swaps	$	242,183	$	17,858		$	257,639	$	17,937
Pay variable / receive fixed swaps		242,183		(18,084	)		257,639		(18,147	)
Total	$	484,366	$	(226	)	$	515,278	$	(210	)

Note 10. Fair Value of Financial Instruments

FASB ASC 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value in U.S. GAAP and expands disclosures about fair value measurements.  The definition of fair value focuses on the exit price, i.e., the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, not the entry price, i.e., the price that would be paid to acquire the asset or received to assume the liability at the measurement date.  The statement emphasizes that fair value is a market-based measurement; not an entity-specific measurement.  Therefore, the fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability.

Valuation Hierarchy

FASB ASC 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

● Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

● Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

● Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  Following is a description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy.

Assets

Securities available-for-sale – Where quoted prices are available for identical securities in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include highly liquid government securities and certain other financial products. If quoted market prices are not available, then fair values are estimated by using pricing models that use observable inputs or quoted prices of securities with similar characteristics and are classified within Level 2 of the valuation hierarchy. In certain cases where there is limited activity or less transparency around inputs to the valuation and more complex pricing models or discounted cash flows are used, securities are classified within Level 3 of the valuation hierarchy.

Page 23

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Impaired loans – A loan is considered to be impaired when it is probable Pinnacle Financial will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement. Impaired loans are measured based on the present value of expected payments using the loan’s original effective rate as the discount rate, the loan’s observable market price, or the fair value of the collateral less selling costs if the loan is collateral dependent. If the recorded investment in the impaired loan exceeds the measure of fair value, a valuation allowance may be established as a component of the allowance for loan losses or the expense is recognized as a charge-off. Impaired loans are classified within Level 3 of the hierarchy due to the unobservable inputs used in determining their fair value such as collateral values and the borrower’s underlying financial condition.

Alternative investments – Included in other investments are alternative investments in certain nonpublic private equity funds.  The valuation of nonpublic private equity investments requires significant management judgment due to the absence of observable quoted market prices, inherent lack of liquidity and the long-term nature of such assets. These investments are valued initially based upon transaction price. The carrying values of other investments are adjusted either upwards or downwards from the transaction price to reflect expected exit values as evidenced by financing and sale transactions with third parties, or when determination of a valuation adjustment is confirmed through ongoing reviews by senior investment managers. A variety of factors are reviewed and monitored to assess positive and negative changes in valuation including, but not limited to, current operating performance and future expectations of the particular investment, industry valuations of comparable public companies and changes in market outlook and the third-party financing environment over time. In determining valuation adjustments resulting from the investment review process, emphasis is placed on current company performance and market conditions. These investments are included in Level 3 of the valuation hierarchy as these funds are not widely traded and the underling investments of such funds are often privately-held and/or start-up companies for which market-values are not readily available.

Other real estate owned – Other real estate owned (OREO) represents real estate foreclosed upon by Pinnacle Bank through loan defaults by customers.  Substantially all of these amounts relate to lots, homes and development projects that are either completed or are in various stages of construction for which Pinnacle Financial believes it has adequate collateral.  Upon foreclosure, the property is recorded at the lower of cost or fair value, based on appraised value, less selling costs estimated as of the date acquired with any loss recognized as a charge-off through the allowance for loan losses.  Additional OREO losses for subsequent valuation downward adjustments are determined on a specific property basis and are included as a component of noninterest expense along with holding costs.  Any gains or losses realized at the time of disposal are also reflected in noninterest expense, as applicable.  OREO is included in Level 3 of the valuation hierarchy due to the lack of observable market inputs into the determination of fair value.  Appraisal values are property-specific and sensitive to the changes in the overall economic environment.

Other assets – Included in other assets are certain assets carried at fair value, including the cash surrender value of bank owned life insurance policies and interest rate swap agreements.  Pinnacle Financial uses financial information received from insurance carriers indicating the performance of the insurance policies and cash surrender values in determining the carrying value of the bank owned life insurance.  Pinnacle Financial reflects these assets within Level 3 of the valuation hierarchy due to the unobservable inputs included in the valuation of these items. Pinnacle Financial does not consider the fair values of these policies to be materially sensitive to changes in these unobservable inputs.  The carrying amount of interest rate swap agreements is based on Pinnacle Financial’s pricing models that utilize observable market inputs obtained from a third party bank.  Pinnacle Financial reflects these assets within Level 2 of the valuation hierarchy as these assets are valued using similar transactions that occur in the market.

Liabilities

Other liabilities – Pinnacle Financial has certain liabilities carried at fair value including certain interest rate swap agreements.  The fair value of these liabilities is based on Pinnacle Financial’s pricing models that utilize observable market inputs obtained from a third party bank and is reflected within Level 2 of the valuation hierarchy.

Page 24

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

The following tables present the financial instruments carried at fair value as of September 30, 2012 and December 31, 2011, by caption on the consolidated balance sheets and by FASB ASC 820 valuation hierarchy (as described above) (in thousands):

September 30, 2012	Total carrying value in the consolidated balance sheet		Quoted market prices in an active market (Level 1)		Models with significant observable market parameters (Level 2)		Models with significant unobservable market parameters (Level 3)
Investment securities available-for-sale:
U.S. government agency securities	$	11,356	$	-	$	11,356	$	-
Mortgage-backed securities		524,566		-		524,566		-
State and municipal securities		191,413		-		191,413		-
Corporate notes and other		11,370		-		11,370		-
Total investment securities available-for-sale		738,705		-		738,705	$	-
Alternative investments		3,406		-		-		3,406
Other assets		68,067		-		17,858		50,209
Total assets at fair value	$	810,178	$	-	$	756,563	$	53,615
Other liabilities	$	18,084	$	-	$	18,084	$	-
Total liabilities at fair value	$	18,084	$	-	$	18,084	$	-
December 31, 2011
Investment securities available-for-sale:
U.S. government agency securities	$	42,313	$	-	$	42,313	$	-
Mortgage-backed securities		645,567		-		645,567		-
State and municipal securities		195,952		-		195,952		-
Corporate notes and other		11,130		-		11,130		-
Total investment securities available-for-sale		894,962		-		894,962		-
Alternative investments		3,400		-		-		3,400
Other assets		67,319		-		17,937		49,382
Total assets at fair value	$	965,681	$	-	$	912,899	$	52,782
Other liabilities	$	18,147	$	-	$	18,147	$	-
Total liabilities at fair value	$	18,147	$	-	$	18,147	$	-

September 30, 2012	Total carrying value in the consolidated balance sheet		Quoted market prices in an active market (Level 1)		Models with significant observable market parameters (Level 2)		Models with significant unobservable market parameters (Level 3)		Total gains (losses) for the period ended
Other real estate owned	$	21,817	$	-	$	-	$	21,817	$	(3,178	)
Nonperforming loans, net (1)		34,506		-		-		34,506		(2,819	)
Total	$	56,323	$	-	$	-	$	56,323	$	(5,997	)
December 31, 2011
Other real estate owned	$	39,714	$	-	$	-	$	39,714	$	(6,890	)
Nonperforming loans, net (1)		43,415		-		-		43,415		(8,661	)
Total	$	83,129	$	-	$	-	$	83,129	$	(15,551	)

(1) Amount is net of a valuation allowance of $2.0 million at September 30, 2012 and $4.4 million at December 31, 2011 as required by ASC 310-10, “Receivables.”

Page 25

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

In the case of the bond portfolio, Pinnacle Financial monitors the valuation technique utilized by various pricing agencies to ascertain when transfers between levels have been affected.  The nature of the remaining assets and liabilities is such that transfers in and out of any level are expected to be rare.  For the nine months ended September 30, 2012, there were no transfers between Levels 1, 2 or 3.

The table below includes a rollforward of the balance sheet amounts for the nine months ended September 30, 2012 (including the change in fair value) for financial instruments classified by Pinnacle Financial within Level 3 of the valuation hierarchy for assets and liabilities measured at fair value on a recurring basis. When a determination is made to classify a financial instrument within Level 3 of the valuation hierarchy, the determination is based upon the significance of the unobservable factors to the overall fair value measurement. However, since Level 3 financial instruments typically include, in addition to the unobservable or Level 3 components, observable components (that is, components that are actively quoted and can be validated to external sources), the gains and losses in the table below include changes in fair value due in part to observable factors that are part of the valuation methodology (in thousands):

	For the nine months ended September 30,
	2012				2011
	Other assets		Other liabilities		Other assets		Other liabilities
Fair value, January 1	$	52,782	$	-	$	50,962	$	-
Total realized gains included in income		644		-		1,130		-
Change in unrealized gains/losses included in other comprehensive income for assets and liabilities still held at September 30		-		-		-		-
Purchases, issuances and settlements, net		189		-		393		-
Transfers out of Level 3		-		-		-		-
Fair value, September 30	$	53,615	$	-	$	52,485	$	-
Total realized gains included in income related to financial assets and liabilities still on the consolidated balance sheet at September 30	$	644	$	-	$	1,130	$	-

The following methods and assumptions were used by Pinnacle Financial in estimating its fair value disclosures for financial instruments that are not measured at fair value. In cases where quoted market prices are not available, fair values are based on estimates using discounted cash flow models. Those models are significantly affected by the assumptions used, including the discount rates, estimates of future cash flows and borrower creditworthiness. The fair value estimates presented herein are based on pertinent information available to management as of September 30, 2012 and December 31, 2011.  Such amounts have not been revalued for purposes of these consolidated financial statements since those dates and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

Held-to-maturity securities - Estimated fair values for investment securities are based on quoted market prices where available.  If quoted market prices are not available, then fair values are estimated by using pricing models that use observable inputs or quoted prices of securities with similar characteristics.

Loans - The fair value of our loan portfolio includes a credit risk factor in the determination of the fair value of our loans.  This credit risk assumption is intended to approximate the fair value that a market participant would realize in a hypothetical orderly transaction.  Our loan portfolio is initially fair valued using a segmented approach. We divide our loan portfolio into the following categories: variable rate loans, impaired loans and all other loans. The results are then adjusted to account for credit risk.

For variable-rate loans that reprice frequently and have no significant change in credit risk, fair values approximate carrying values. Fair values for impaired loans are estimated using discounted cash flow models or based on the fair value of the underlying collateral.  For other loans, fair values are estimated using discounted cash flow models, using current market interest rates offered for loans with similar terms to borrowers of similar credit quality. The values derived from the discounted cash flow approach for each of the above portfolios are then further discounted to incorporate credit risk to determine the exit price.

Mortgage loans held-for-sale - Mortgage loans held-for-sale are carried at the lower of cost or fair value.  The estimate of fair value is equal to the carrying value of these loans as they are usually sold within a few weeks of their origination.

Deposits, Securities sold under agreements to repurchase, Federal Home Loan Bank advances, Subordinated debt and other borrowings - The carrying amounts of demand deposits, savings deposits, securities sold under agreements to repurchase, floating rate advances from the Federal Home Loan Bank, floating rate subordinated debt and other borrowings, and floating rate loans approximate their fair values. Fair values for certificates of deposit, fixed rate advances from the Federal Home Loan Bank and fixed rate subordinated debt are estimated using discounted cash flow models, using current market interest rates offered on certificates, advances and other borrowings with similar remaining maturities.  For fixed rate subordinated debt, the maturity is assumed to be as of the earliest date that the indebtedness will be repriced.

Page 26

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Off-Balance Sheet Instruments - The fair values of Pinnacle Financial's off-balance-sheet financial instruments are based on fees charged to enter into similar agreements. However, commitments to extend credit do not represent a significant value to Pinnacle Financial until such commitments are funded.

The following table presents the carrying amounts, estimated fair value and placement in the fair value hierarchy of Pinnacle Financial's financial instruments at September 30, 2012 and December 31, 2011.  This table excludes financial instruments for which the carrying amount approximates fair value.  For short-term financial assets such as cash and cash equivalents, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization.  For financial liabilities such as non-interest bearing demand, interest-bearing demand, and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity.

(in thousands) September 30, 2012	Carrying/ Notional Amount		Estimated Fair Value (1)		Quoted market prices in an active market (Level 1)		Models with significant observable market parameters (Level 2)		Models with significant unobservable market parameters (Level 3)
Financial assets:
Securities held-to-maturity	$	575	$	587	$	-	$	587	$	-
Loans, net		3,456,072		3,196,924		-		-		3,196,924
Mortgage loans held-for-sale		39,246		39,246		-		-		39,246
Financial liabilities:
Deposits and securities sold under agreements to repurchase		3,854,074		3,798,351		-		3,798,351		-
Federal Home Loan Bank advances		190,887		191,400		-		-		191,400
Subordinated debt and other borrowings		106,783		84,691		-		84,691		-
Off-balance sheet instruments:
Commitments to extend credit (2)		965,331		748		-		-		748
Standby letters of credit (3)		72,580		450		-		-		450
December 31, 2011
Financial assets:
Securities held-to-maturity	$	2,330	$	2,369	$	-	$	2,369	$	-
Loans, net		3,217,376		2,893,526		-		-		2,893,526
Mortgage loans held for sale		35,363		35,363						35,363
Financial liabilities:
Deposits and securities sold under agreements to repurchase		3,785,931		3,752,490		-		3,752,490		-
Federal Home Loan Bank advances		226,069		226,460		-		-		226,460
Subordinated debt and other borrowings		97,476		72,030		-		72,030		-
Off-balance sheet instruments:
Commitments to extend credit (2)		937,084		1,031		-		-		1,031
Standby letters of credit (3)		76,176		259		-		-		259

(1) Estimated fair values are consistent with an exit-price concept. The assumptions used to estimate the fair values are intended to approximate those that a market-participant would realize in a hypothetical orderly transaction.

(2) At the end of each quarter, Pinnacle Financial evaluates the inherent risks of the outstanding off-balance sheet commitments.  In making this evaluation, Pinnacle Financial evaluates the credit worthiness of the borrower, the collateral supporting the commitments and any other factors similar to those used to evaluate the inherent risks of our loan portfolio.  Additionally, Pinnacle Financial evaluates the probability that the outstanding commitment will eventually become a funded loan.  As a result, at September 30, 2012 and December 31, 2011, Pinnacle Financial included in other liabilities $0.7 million and $1.0 million, respectively, representing the inherent risks associated with these off-balance sheet commitments.

Page 27

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(3) At September 30, 2012 and December 31, 2011, the fair value of Pinnacle Financial’s standby letters of credit was $450,000 and $259,000, respectively.  This amount represents the unamortized fee associated with these standby letters of credit and is included in the consolidated balance sheet of Pinnacle Financial and is believed to approximate fair value.  This fair value will decrease over time as the existing standby letters of credit approach their expiration dates.

Note 11. Variable Interest Entities

Under ASC 810, Pinnacle Financial is deemed to be the primary beneficiary and required to consolidate a variable interest entity (VIE) if it has a variable interest in the VIE that provides it with a controlling financial interest. For such purposes, the determination of whether a controlling financial interest exists is based on whether a single party has both the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. ASC 810, requires continual reconsideration of conclusions reached regarding which interest holder is a VIE’s primary beneficiary and disclosures surrounding those VIE’s which have not been consolidated. The consolidation methodology provided in this footnote for the quarter ended September 30, 2012, and the year ended December 31, 2011 has been prepared in accordance with ASC 810.

At September 30, 2012, Pinnacle Financial did not have any consolidated VIEs to disclose but did have several nonconsolidated VIEs.  As discussed more fully in form 10-K, Pinnacle Financial has the following non-consolidated variable interest entities: low income housing partnerships, trust preferred issuances, accruing restructured commercial loans, and managed discretionary trusts.

The following table summarizes VIE’s that are not consolidated by Pinnacle Financial as of September 30, 2012 and December 31, 2011 (in thousands):

	September 30, 2012				December 31, 2011
Type	Assets Recognized (maximum loss)		Liability Recognized		Assets Recognized (maximum loss)		Liability Recognized		Balance Sheet Classification
Low income housing partnerships	$	5,812	$	-	$	5,917	$	-	Other assets
Trust preferred issuances		N/A		82,476		N/A		82,476	Subordinated debt
Commercial troubled debt restructurings		17,566		-		17,223		-	Loans
Managed discretionary trusts		N/A		N/A		N/A		N/A		N/A

Note 12. Other borrowings

On June 15, 2012, Pinnacle Financial entered into a loan agreement with a bank for $25 million (the Loan Agreement). Borrowings under the Loan Agreement, combined with available cash, were used for the redemption, on June 20, 2012, of the remaining 71,250 shares of preferred stock owned by the Treasury that had been issued under the CPP.

Pinnacle Financial’s borrowings under the Loan Agreement bear interest at rates that, at Pinnacle Financial’s option, can be either:

● A base rate generally defined as the sum of (i) the highest of (x) the lender’s “base” or “prime” rate, (y) the average overnight federal funds effective rate plus one-half percent (0.50%) per annum or (z) one-month LIBOR plus one percent (1%) per annum and (ii) an applicable margin as noted below; or

● A LIBOR rate generally defined as the sum of (i) the average of the offered rates of interest quoted in the London Inter-Bank Eurodollar Market for U.S. Dollar deposits with prime banks (as published by Reuters or other commercially available source) for one, two or three months (all as selected by the Company), and (ii) an applicable margin.

The applicable margin under the Loan Agreement ranges from 2.25% (225 basis points) to 3.00% (300 basis points) depending on the total aggregate principal amount outstanding under the Loan Agreement. The initial applicable margin for both base rate and LIBOR rate loans is 3.00% (300 basis points).  At September 30, 2012, the interest rate paid on this debt was 3.25%.

Page 28

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Pinnacle Financial is required to make quarterly principal payments of $625,000 beginning on June 30, 2012, and the loan matures on June 15, 2017. Pinnacle Financial is permitted to prepay all or a portion of the principal amount outstanding under the Loan Agreement without penalty (in minimum aggregate amounts of $100,000) at any time so long as no event of default or unmatured event of default has occurred and is continuing.

The Loan Agreement includes negative covenants that limit, among other things, certain fundamental transactions, additional indebtedness, transactions with affiliates, liens, sales of assets and dividends. The Loan Agreement specifically restricts transfers or encumbrances of the shares of the capital stock of Pinnacle Financial’s bank subsidiary. The Loan Agreement also includes financial covenants related to Pinnacle Financial’s, and in some cases, Pinnacle Bank’s, capitalization, levels of risk-based capital, ratio of nonperforming assets to tangible primary capital and ratio of allowance for loan and lease losses to nonperforming loans. The Loan Agreement also includes a fixed charge coverage ratio requiring the sum of Pinnacle Financial’s net income plus the amount of any goodwill amortization expense and contractually due interest divided by the sum of Pinnacle Financial’s contractually due interest and principal amounts (assuming annual principal amortization of $2.5 million under the Loan Agreement), to be not less than 125% on an annualized single quarter basis through September 30, 2012 and on a rolling four quarter basis starting December 31, 2012.

The Loan Agreement also contains other customary affirmative and negative covenants, representations, warranties and events of default, which include but are not limited to, payment defaults, breaches of representations and warranties, covenant defaults, events of bankruptcy and insolvency, and the institution of certain regulatory enforcement actions against Pinnacle Financial or Pinnacle Bank. If an event of default occurs and is continuing, Pinnacle Financial may be required immediately to repay all amounts outstanding under the Loan Agreement.

Debt issuance costs associated with the Loan Agreement of approximately $200,000 consisting primarily of professional fees are included in other assets in the accompanying consolidated balance sheet.  These debt issuance costs are being amortized over three years using the straight-line method which approximates the interest method that is required by U.S. GAAP.

Page 29

ITEM 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion of our financial condition at September 30, 2012 and December 31, 2011 and our results of operations for the three and nine months ended September 30, 2012 and 2011.  The purpose of this discussion is to focus on information about our financial condition and results of operations which is not otherwise apparent from the consolidated financial statements.  The following discussion and analysis should be read along with our consolidated financial statements and the related notes included elsewhere herein.

Overview

General.  Our diluted net income per common share available to common stockholders for the three and nine months ended September 30, 2012 was $0.33 and $0.76, respectively, compared to $0.72 and $0.92, respectively, for the same periods in 2011.  Net income per diluted common share for the three and nine months ended September 30, 2011, includes an income tax benefit of $22.5 million, or $0.51 per diluted common share, as a result of the release of the valuation allowance for deferred tax assets. Financial results for the nine-month period ended September 30, 2012, also includes the accretion of the remaining preferred stock discount associated with the TARP preferred stock redemption. The redemption resulted in a one-time, non-cash charge to net income available to common stockholders of approximately $1.7 million in the second quarter of 2012.  At September 30, 2012, loans had increased to $3.525 billion, as compared to $3.291 billion at December 31, 2011, and total deposits increased to $3.719 billion at September 30, 2012 from $3.654 billion at December 31, 2011.

Results of Operations.  Our net interest income increased $2.5 million to $40.9 million for the third quarter of 2012 compared to $38.4 million for the third quarter of 2011.  Our net interest income increased $8.4 million to $120.6 million for the nine months ended September 30, 2012 compared to $112.2 million for the same period in the prior year. The net interest margin (the ratio of net interest income to average earning assets) for the three and nine months ended September 30, 2012 was 3.78% and 3.76%, respectively, compared to 3.60% and 3.52%, respectively, for the same periods in 2011.

Our provision for loan losses was $1.4 million and $3.1 million, respectively, for the three and nine month periods endedSeptember 30, 2012 compared to $3.6 million and $16.4 million, respectively, for the same periods in 2011.  The decrease in our provisioning expense correlates with the reduction in both net charge-offs and the overall level of our allowance for loan losses.  Net charge-offs were $1.9 million and $8.0 million, respectively, for the three and nine month periods ended September 30, 2012, compared to $5.7 million and $24.1 million, respectively, for the same periods in the prior year.  Our allowance for loan losses as a percentage of total loans decreased from 2.25% at December 31, 2011 to 1.96% at September 30, 2012, as a result of improving credit metrics within our loan portfolio.

Noninterest income increased by $350,000 and $2.1 million, respectively, during the three and nine months ended September 30, 2012, compared to the same periods in the prior year, which is primarily attributable to elevated mortgage loan refinance activity as a result of the current rate environment.

Noninterest expense decreased by $2.1 million and $1.4 million, respectively, during the three and nine months ended September 30, 2012, as compared to the three and nine month periods ended September 30, 2011. Costs associated with the disposal and maintenance of other real estate owned decreased by $2.7 million and $3.1 million, respectively, and other noninterest expense decreased by $266,000 and $1.9 million, respectively, during the three and nine months ended September 30, 2012, when compared to the same periods in 2011. However, costs associated with salaries and employee benefits increased by $455,000 and $3.0 million, respectively, during the three and nine months ended September 30, 2012, when compared to the same periods in 2011.

During the three and nine months ended September 30, 2012, Pinnacle Financial recorded income tax expense of $5.0 million and $14.4 million, respectively.   Pinnacle Financial's effective tax rate for the first nine months of 2012 of 32.3% differs from the combined federal and state income tax statutory rate of 39.2% primarily due to investments in bank qualified municipal securities, our real estate investment trust, and bank owned life insurance offset in part by meals and entertainment and compensation for which we are not entitled to a deduction.  Our income tax benefit for the nine months ended September 30, 2011, was primarily due to the reversal of the valuation allowance against our deferred tax assets.

Our efficiency ratio (the ratio of noninterest expense to the sum of net interest income and noninterest income) was 65.4% and 68.5%, respectively, for the three and nine month periods ended September 30, 2012, compared to 73.7% and 74.6%, respectively, for the same periods in 2011.

Page 30

Net income available to common stockholders for the three and nine months ended September 30, 2012 was $11.3 million and $26.3 million, respectively, compared to net income available to common stockholders of $24.5 million and $31.4 million, respectively, for the same periods in 2011. Net income available to common stockholders for the three months ended September 30, 2012 reflected no charge related to preferred stock dividends and accretion of the preferred stock discount related to our participation in the CPP compared to the charge of $1.6 million for the same prior year period. For the nine months ended September 30, 2012 there was approximately $3.8 million of charges related to preferred stock dividends and accretion of the preferred stock discount related to our participation in the CPP compared to $4.6 million for the same period in the prior year.  The preferred stock dividends and accretion variance between the two periods is attributable to the recognition, in the second quarter of 2012, of the remaining preferred stock discount associated with the redemption in June 2012 of the remaining outstanding preferred shares originally sold to the Treasury offset by the redemption of 25% of the preferred shares originally issued to the Treasury during the fourth quarter of 2011.

Financial Condition.  Net loans increased $238.7 million during the first nine months of 2012.  Total deposits were $3.719 billion at September 30, 2012, compared to $3.654 billion at December 31, 2011, an increase of $64.9 million, or 1.8%.  In comparing the deposit balances at September 30, 2012 with the balances at December 31, 2011, we have increased our non-interest bearing deposits $127.1 million and reduced our time deposits $119.5 million.  This continued reduction in higher cost non-core time deposits has contributed to the expansion in net interest margin.

Capital and Liquidity.  At September 30, 2012, our capital ratios exceeded the levels required to be considered well capitalized at the bank and holding company levels.  To support the capital needs of Pinnacle Bank and holding company cash requirements, at September 30, 2012, we had approximately $13.8 million of cash at the holding company.

Critical Accounting Estimates

The accounting principles we follow and our methods of applying these principles conform with U.S. GAAP and with general practices within the banking industry. There have been no significant changes to our Critical Accounting Policies as described in our Annual Report on Form 10-K for the year ended December 31, 2011.

Results of Operations

The following is a summary of our results of operations (in thousands):

	Three months ended					2012-2011			Nine months ended					2012-2011
	September 30,					Percent			September 30,					Percent
	2012		2011			Increase (Decrease)				2012		2011		Increase (Decrease)
Interest income	$	46,441	$	46,888			(1.0	%)	$	138,218	$	141,901			(2.6	%)
Interest expense		5,509		8,532			(35.4	%)		17,597		29,729			(40.8	%)
Net interest income		40,932		38,356			6.7	%		120,621		112,172			7.5	%
Provision for loan losses		1,413		3,632			(61.1	%)		3,080		16,359			(81.2	%)
Net interest income after provision for loan losses		39,519		34,724			13.8	%		117,541		95,813			22.7	%
Noninterest income		10,430		10,080			3.5	%		30,289		28,213			7.4	%
Noninterest expense		33,578		35,675			(5.9	%)		103,314		104,733			(1.4	%)
Net income  before income taxes		16,371		9,129			79.3	%		44,516		19,293			130.7	%
Income tax expense (benefit)		5,022		(16,973	)	NM(1)				14,362		(16,685	)	NM(1)
Net income		11,349		26,102			(56.5	%)		30,154		35,978			(16.2	%)
Preferred dividends and discount accretion		-		1,564			(100.0	%)		3,814		4,586			(16.8	%)
Net income available to common stockholders	$	11,349	$	24,538			(53.7	%)	$	26,340	$	31,392			(16.1	%)
Basic net income  per common share available to common stockholders	$	0.33	$	0.74			(55.4	%)	$	0.78	$	0.94			(17.0	%)
Diluted net income  per common share available to common stockholders	$	0.33	$	0.72			(54.2	%)	$	0.76	$	0.92			(17.4	%)

(1) NM—The percentage change is not considered meaningful.

Page 31

Net Interest Income.Net interest income (the difference between the interest earned on assets and the interest paid on deposits and other liabilities) is the single largest component of our revenue.  We seek to actively manage this revenue source to provide optimal levels of revenue while seeking to balance interest rate, credit, and liquidity risks.  Net interest income totaled $40.9 million and $120.6 million, respectively, for the three and nine months ended September 30, 2012, an increase of $2.5 million and $8.4 million, respectively, from the levels recorded in the same periods of 2011. We were able to increase net interest income for 2012 compared to 2011 due primarily to our focus on reducing our funding costs and growing our loan portfolio.

The following tables set forth the amount of our average balances, interest income or interest expense for each category of interest-earning assets and interest-bearing liabilities and the average interest rate for interest-earning assets and interest-bearing liabilities, net interest spread and net interest margin for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three months ended September 30, 2012							Three months ended September 30, 2011
	Average Balances		Interest		Rates/ Yields			Average Balances		Interest		Rates/ Yields
Interest-earning assets:
Loans (1)	$	3,488,736	$	40,405		4.62	%	$	3,207,213	$	38,572		4.78	%
Securities:
Taxable		585,782		3,974		2.70	%		747,784		5,953		3.16	%
Tax-exempt (2)		180,765		1,622		4.77	%		191,994		1,820		5.02	%
Federal funds sold and other		124,459		440		1.55	%		161,719		543		1.44	%
Total interest-earning assets		4,379,742	$	46,441		4.28	%		4,308,710	$	46,888		4.38	%
Nonearning assets
Intangible assets		250,274							253,102
Other nonearning assets		230,378							224,673
Total assets	$	4,860,394						$	4,786,485
Interest-bearing liabilities:
Interest bearing deposits
Interest checking	$	672,057	$	637		0.38	%	$	564,077	$	821		0.58	%
Savings and money market		1,606,189		1,959		0.49	%		1,622,200		3,299		0.81	%
Time		627,918		1,390		0.88	%		841,480		3,018		1.42	%
Total interest-bearing deposits		2,906,164		3,986		0.55	%		3,027,757		7,138		0.94	%
Securities sold under agreements to repurchase		136,918		99		0.29	%		145,050		204		0.56	%
Federal Home Loan Bank advances		214,271		621		1.15	%		111,699		532		1.89	%
Subordinated debt  and other borrowings		112,406		802		2.84	%		97,476		658		2.68	%
Total interest-bearing liabilities		3,369,759		5,508		0.65	%		3,381,982		8,532		1.00	%
Noninterest-bearing deposits		799,508		-		-			671,796		-		-
Total deposits and interest-bearing liabilities		4,169,267	$	5,508		0.53	%		4,053,778	$	8,532		0.84	%
Other liabilities		21,454							23,734
Stockholders' equity		669,673							708,973
Total liabilities and stockholders’ equity	$	4,860,394						$	4,786,485
Net interest income			$	40,933						$	38,356
Net interest spread (3)						3.63	%						3.38	%
Net interest margin (4)						3.78	%						3.60	%

(1) Average balances of nonperforming loans are included in the above amounts.

(2) Yields based on the carrying value of those tax exempt instruments are shown on a fully 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 three months ended September 30, 2012 would have been 3.76% compared to a net interest spread of 3.54% for the three months ended September 30, 2011.

(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.

Page 32

	Nine months ended September 30, 2012							Nine months ended September 30, 2011
	Average Balances		Interest		Rates/ Yields			Average Balances		Interest		Rates/ Yields
Interest-earning assets:
Loans (1)	$	3,390,838	$	118,331		4.67	%	$	3,203,346	$	115,831		4.84	%
Securities:
Taxable		636,516		13,357		2.80	%		779,585		18,793		3.22	%
Tax-exempt (2)		183,572		4,973		4.83	%		194,447		5,593		5.13	%
Federal funds sold and other		143,311		1,558		1.58	%		170,192		1,684		1.43	%
Total interest-earning assets		4,354,237	$	138,219		4.30	%		4,347,570	$	141,901		4.43	%
Nonearning assets
Intangible assets		250,969							253,806
Other nonearning assets		237,805							225,640
Total assets	$	4,843,011						$	4,827,016
Interest-bearing liabilities:
Interest bearing deposits
Interest checking	$	674,086	$	2,243		0.44	%	$	582,832	$	2,765		0.63	%
Savings and money market		1,562,930		6,068		0.52	%		1,599,737		11,149		0.93	%
Time		657,073		4,802		0.98	%		916,510		10,955		1.60	%
Total interest-bearing deposits		2,894,089		13,113		0.61	%		3,099,079		24,869		1.07	%
Securities sold under agreements to repurchase		132,523		370		0.37	%		168,594		931		0.74	%
Federal Home Loan Bank advances		228,378		1,847		1.08	%		112,181		1,952		2.32	%
Subordinated debt and other borrowings		104,003		2,267		2.91	%		98,446		1,977		2.69	%
Total interest-bearing liabilities		3,358,993		17,597		0.70	%		3,478,300		29,729		1.14	%
Noninterest-bearing deposits		752,491		-		-			632,075		-		-
Total deposits and interest-bearing liabilities		4,111,484	$	17,597		0.57	%		4,110,375	$	29,729		0.97	%
Other liabilities		28,881							22,332
Stockholders' equity		702,646							694,309
Total liabilities and stockholders’ equity	$	4,843,011						$	4,827,016
Net interest income			$	120,622						$	112,172
Net interest spread (3)						3.60	%						3.29	%
Net interest margin (4)						3.76	%						3.52	%

(1) Average balances of nonperforming loans are included in the above amounts.

(2) Yields based on the carrying value of those tax exempt instruments are shown on a fully 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 nine months ended September 30, 2012 would have been 3.73% compared to a net interest spread of 3.46% for the nine months ended September 30, 2011.

(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.

For the third quarters of 2012 and 2011, our net interest spread was 3.63% and 3.38%, respectively, while the net interest margin was 3.78% and 3.60%, respectively. For the nine month periods ended September 30, 2012 and 2011, our net interest spread was 3.60% and 3.29%, respectively, while the net interest margin was 3.76% and 3.52%, respectively.  The improving net interest margin reflected management’s efforts to maximize earnings by focusing on deposit pricing. During the three and nine month periods ended September 30, 2012, total funding rateswere less than those rates for the same periods in the prior year by 31 and 40 basis points, respectively.  The net decrease was largely impacted by the continued shift in our deposit mix, as we increased our checking accounts (both interest bearing and non-interest bearing) and concurrently reduced balances of higher cost time deposits and higher-cost wholesale funding and the cost of funds associated with these types of fundings.

Loan pricing for creditworthy borrowers continues to be competitive in our markets and limits our ability to increase our yields on new and renewed loans over the last several quarters.  Lower levels of nonperforming loans positively impacted our net interest margin during the three and nine months ended September 30, 2012 when compared to the same periods in 2011.  Average nonperforming loans were $40.1 million for the nine months ended September 30, 2012, which was a decrease from the $63.9 million for the twelve months ended December 31, 2011.

We continue to deploy various asset liability management strategies to manage our risk to interest rate fluctuations.  We currently believe that short term rates will remain stable for an extended period of time.  We believe that our net interest margin could experience pressure due to increased pricing competition for quality loan opportunities as well as fewer opportunities to reduce our funding costs due to the low level of deposit rates as a result of the current interest rate environment.

Page 33

Provision for Loan Losses.The provision for loan losses represents a charge to earnings necessary to establish an allowance for loan losses that, in management’s evaluation, should be adequate to provide coverage for the inherent losses on outstanding loans.   Based upon management's assessment of the loan portfolio, we adjust our allowance for loan losses to an amount deemed appropriate to adequately cover probable losses inherent in the loan portfolio.  Our allowance for loan losses as a percentage of total loans decreased from 2.25% at December 31, 2011 to 1.96% at September 30, 2012.  Our allowance for loan losses as a percentage of our nonperforming loans has increased from 154.6% at December 31, 2011 to 188.9% at September 30, 2012.  Based upon our evaluation of the loan portfolio, we believe the allowance for loan losses to be adequate to absorb our estimate of probable losses existing in the loan portfolio at September 30, 2012.  While our policies and procedures used to estimate the allowance for loan losses, as well as the resultant provision for loan losses charged to operations, are considered adequate by management and are reviewed from time to time by our regulators, they are necessarily approximate and imprecise.  There are factors beyond our control, such as conditions in the local and national economy, local real estate market, or particular industry or borrower-specific conditions, which may materially negatively impact our asset quality and the adequacy of our allowance for loan losses and, thus, the resulting provision for loan losses.

The provision for loan losses amounted to $1.4 million and $3.6 million for the three months ended September 30, 2012 and 2011, respectively, and $3.1 million and $16.4 million for the nine months ended September 30, 2012 and 2011, respectively. Provision expense for the three and nine month periods ended September 30, 2012 has decreased as compared to the same periods in 2011, primarily due to a reduction in both net charge-offs and in the overall amount of the allowance for loan losses that resulted from the overall improvement in the loan portfolio between the two periods.

Noninterest Income.Our noninterest income is composed of several components, some of which vary significantly between quarterly and annual periods.  Service charges on deposit accounts and other noninterest income generally reflect customer growth trends, while fees from investment services, the origination of mortgage loans and gains and losses on the sale of securities will often reflect market conditions and fluctuate from period to period.

The following is the makeup of our noninterest income for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three months ended					2012-2011			Nine months ended				2012-2011
	September 30,					Percent			September 30,				Percent
	2012			2011		Increase (Decrease)				2012		2011	Increase (Decrease)
Noninterest income:
Service charges on deposit accounts	$	2,532		$	2,362		7.2	%	$	7,295	$	6,953		4.9	%
Investment services		1,677			1,699		(1.3	%)		4,934		4,844		1.9	%
Insurance sales commissions		987			1,002		(1.5	%)		3,416		3,055		11.8	%
Gains on mortgage loans sold, net		1,979			1,295		52.8	%		4,930		2,694		83.0	%
(Loss) gain on sale of investment securities, net		(50	)		377		(113.3	%)		163		828		(80.3	%)
Trust fees		767			754		1.7	%		2,333		2,253		3.6	%
Other noninterest income:
ATM and other consumer fees		1,657			1,731		(4.3	%)		4,517		4,741		(4.7	%)
Bank-owned life insurance		242			296		(18.2	%)		723		874		(17.3	%)
Other noninterest income		639			564		13.3	%		1,978		1,971		0.4	%
Total other noninterest income		2,538			2,591		(2.0	%)		7,218		7,586		(4.8	%)
Total noninterest income	$	10,430		$	10,080		3.5	%	$	30,289	$	28,213		7.4	%

The increase in service charges on deposit accounts in 2012 compared to the first nine months of 2011 is primarily related to an increase in transactional deposit accounts subject to service charges during the first nine months of 2012.

Also included in noninterest income are commissions and fees from investment services at our financial advisory unit, Pinnacle Asset Management, a division of Pinnacle Bank.  At September 30, 2012, Pinnacle Asset Management was receiving commissions and fees in connection with approximately $1.24 billion in brokerage assets held with Raymond James Financial Services, Inc. compared to $988 million at September 30, 2011.  Insurance commissions were approximately $987,000 and $3.4 million for the three and nine months ended September 30, 2012 compared to approximately $1.0 million and $3.1 million, respectively, for the three and nine months ended September 30, 2011. Substantially all of our insurance revenue is attributable to our insurance subsidiary, Miller Loughry Beach. Included in insurance income for the first nine months of 2012 was $287,000 of contingent income received based on 2011 sales production compared to $87,000 recorded in the same prior-year period.  Additionally, at September 30, 2012, our trust department was receiving fees on approximately $761.6 million in assets compared to $607.7 million at September 30, 2011.

Page 34

Gains on mortgage loans sold, net consists of fees from the origination and sale of mortgage loans. These mortgage fees are for loans originated in both the Middle Tennessee and Knoxville markets that are subsequently sold to third-party investors.  All of these loan sales transfer servicing rights to the buyer.  Generally, mortgage origination fees increase in lower interest rate environments and more robust housing markets and decrease in rising interest rate environments and more challenging housing markets.  As a result, mortgage origination fees may fluctuate greatly in different rate or housing environments.  The fees from the origination and sale of mortgage loans have been netted against the commission expense associated with these originations. Gains on mortgage loans sold, net were $2.0 million and $4.9 million for the three and nine month periods ended September 30, 2012 as compared to $1.3 million and $2.7 million for the same periods in the prior year.  The increase is attributable to increased refinance activity between the two periods.

During the three and nine months ended September 30, 2012, we realized approximately $7,000 and $254,000, respectively, in net gains from the sale of $2.8 million and $35.4 million, respectively, of available-for-sale securities. There were four distinct sales of securities during the first nine months of 2012. In the first quarter of 2012, twenty relatively smaller sized agency securities that had primarily been purchased over time to satisfy certain collateral requirements were sold. We decided to sell these securities due to their relatively short terms until maturity. In the second quarter of 2012, we decided to sell, in the second quarter of 2012, four underperforming mortgage-backed securities that were determined to be OTTI during the first quarter. Also in the second quarter of 2012, we decided to sell two securities which were issued by municipalities in the state of California because management believed there to be some possibility they could be adversely affected by state budgetary issues.  In the third quarter of 2012, we sold one security deemed to be OTTI due to its distinct underperformance relative to the interest rate environment. Gains on the sale of securities were reduced by OTTI of $57,000 and $91,000 for the three and nine months ended September 30, 2012.

Included in other noninterest income are miscellaneous consumer fees, such as ATM revenues and other consumer fees.  The fees realized in the first nine months of 2012 decreased 4.7% as compared to the same period in the prior year. Based on the changes under the Dodd-Frank Act, we expect income from check card and interchange fees to decline over time. While we are exempt from the cap on debit interchange fees because of our current asset size, we believe that there is the potential for downward pressure on interchange fees as debit networks compete for transaction volume.  We believe that this potential reduction in interchange fees will likely happen gradually over an extended period of time.

Additionally, noninterest income from increases in the cash surrender value of bank-owned life insurance was $242,000 and $723,000, respectively, for the three and nine months ended September 30, 2012 compared to $296,000 and $874,000, respectively, for the three and nine months ended September 30, 2011. Pinnacle has not had any additional investments in bank-owned life insurance policies during 2012.   The assets that support these policies are administered by the life insurance carriers and the income we receive (i.e., increases or decreases in the cash surrender value of the policies) on these policies is dependent upon the returns the insurance carriers are able to earn on the underlying investments that support the policies.  Earnings on these policies generally are not taxable.

Noninterest Expense.Noninterest expense consists of salaries and employee benefits, equipment and occupancy expenses, other real estate expenses, and other operating expenses.  The following is the makeup of our noninterest expense for the three and nine months ended September 30, 2012 and 2011 (in thousands):

	Three months ended				2012-2011			Nine months ended				2012-2011
	September 30,				Percent			September 30,				Percent
	2012		2011		Increase (Decrease)				2012		2011	Increase (Decrease)
Noninterest expense:
Salaries and employee benefits:
Salaries	$	12,280	$	10,690		14.9	%	$	38,480	$	32,620		18.0	%
Commissions		1,051		1,057		(0.6	%)		3,190		3,070		3.9	%
Cash incentives and related payroll taxes		3,075		3,065		0.3	%		7,129		6,657		7.1	%
Employee benefits and other		3,064		4,203		(27.1	%)		9,701		13,115		(26.0	%)
Total salaries and employee benefits		19,470		19,015		2.4	%		58,500		55,462		5.5	%
Equipment and occupancy		5,156		4,395		17.3	%		15,218		13,234		15.0	%
Other real estate expense		2,399		5,079		(52.8	%)		10,180		13,239		(23.1	%)
Marketing and business development		835		1,298		(35.7	%)		2,360		4,046		(41.7	%)
Postage and supplies		638		509		25.3	%		1,817		1,544		17.7	%
Amortization of intangibles		683		716		(4.6	%)		2,056		2,147		(4.2	%)
Other noninterest expense		4,397		4,663		(5.7	%)		13,183		15,061		(12.5	%)
Total noninterest expense	$	33,578	$	35,675		(5.9	%)	$	103,314	$	104,733		(1.4	%)

Page 35

The increase in total salaries and employee benefits expense is primarily related to incentive compensation costs for the three and nine month periods ended September 30, 2012 as compared to the same periods in the prior year.We believe that variable pay incentives are a valuable tool in motivating an employee base that is focused on providing our clients effective financial advice and increasing shareholder value. As a result, and unlike many other financial institutions, all of our salary-based employees participate in our annual cash incentive plan. Under the plan, the targeted level of incentive payments requires achievement of a certain soundness threshold, a revenue component and a targeted level of earnings (subject to certain adjustments). To the extent that the soundness threshold is met and revenues and earnings are above or below the targeted amount, the aggregate incentive payments are increased or decreased. Historically, we have paid between 0% and 120% of our targeted bonus. We currently believe that our performance for fiscal 2012 will be in line with our targets and we are currently accruing incentive costs in 2012 at target levels.

Additionally, included in employee benefits and other expense for the three and nine months ended September 30, 2012, were approximately $896,000 and $2.8 million, respectively, of compensation expenses related to stock options and restricted share awards compared to $1.4 million and $3.9 million, respectively, for the three and nine months ended September 30, 2011.  We also believe that equity incentives provide an excellent vehicle for all associates to become meaningful stockholders of Pinnacle Financial over an extended period of time and create a stockholder centric culture throughout our organization. Thus, we provide a broad-based equity incentive plan for all associates. The decrease in expense between the current year periods and prior year periods is attributable to the new restricted share unit structure that was implemented during the first quarter of 2012 for our Leadership Team members.  Because the number of restricted shares that will be issued in settlement of the restricted share units is based on our profitability for 2012 and accordingly cannot be determined at this point, no expense will be recognized related to these awards in 2012. After the number of restricted shares is established in early 2013, the cost of these awards will be recognized over the subsequent five-year vesting period.

Also included in employee benefits and other expenses are costs related to salary stock units issued to our senior executives. In connection with these awards, the executive officers received salary stock units throughout the period which are settled in our common stock on a one-for-one basis.  No salary stock expense was included in employee benefits and other expenses during the three months ended September 30, 2012, as the program was terminated by the HRCC effective June 30, 2012 following the redemption of all of the preferred shares issued pursuant to the CPP as these senior executives’ are now eligible to participate in our annual cash incentive plan effective July 1, 2012. For the nine months ended September 30, 2012, approximately $1.0 million in costs were incurred related to the salary stock units issued to our senior executives. For the three and nine months ended September 30, 2011, $233,000 and $524,000, respectively, were included in employee benefits and other expenses related to salary stock units.

Equipment and occupancy expenses for the three and nine months ended September 30, 2012, were consistent with the same periods in the prior year.  We have recently purchased land in the Knoxville MSA and expect to expand our retail operations beginning in 2013 in that market which may lead to higher equipment and occupancy expenses as well as related increases in salaries and benefits expense in future periods.

At September 30, 2012, we had $21.8 million in OREO compared to $39.7 million at December 31, 2011.  Other real estate expense was $2.4 million and $10.2 million, respectively, for the three and nine months ended September 30, 2012, compared to $5.1 million and $13.2 million, respectively, for the same periods in the prior year.  Approximately $1.9 million and $8.8 million, respectively, of the other real estate expense incurred during the three and nine months ended September 30, 2012, were realized losses on dispositions and holding losses due to reduced valuations of OREO properties compared to $4.3 million and $10.1 million, respectively, for the same periods in the prior year.  The remaining other real estate expense consisted of carrying costs to maintain or improve the properties.

Until we are able to significantly reduce the absolute level of our OREO portfolio,other real estate expense will likely remain elevated and could fluctuate quarter to quarter depending on market conditions as we maintain and market for sale various foreclosed properties. These properties could also be subject to future valuation adjustments as a result of updated appraisal information and further deterioration in real estate values, thus causing additional fluctuations in our quarterly other real estate expense.  Additionally, we will continue to incur expenses associated with maintenance costs and property taxes associated with these assets.

Management’s strategy is to aggressively pursue disposition of nonperforming loans and OREO in order to ultimately reduce the expense associated with carrying these nonperforming assets and better position the firm for increased future profitability.  A key component of our disposition strategy has been to negotiate sales of foreclosed properties on a property-by-property basis.  We have also utilized both traditional and online auctions. Our strategy is reviewed on an on-going basis and could change in the future.

Noninterest expense related to the amortization of intangibles relates primarily to the intangibles acquired in the Mid-America and Cavalry mergers.  The core deposit intangibles are being amortized over ten years for Mid-America and over seven years for Cavalry, in each case using an accelerated method which anticipates the life of the underlying deposits to which the intangible is attributable.  Amortization expense associated with these core deposit intangibles will approximate $700,000 to $1.0 million per year for the next nine years with amounts declining each year for the remaining amortization period.  Additionally, in connection with our acquisition of an insurance brokerage firm in July of 2008, we recorded a customer list intangible of $1,270,000 which is being amortized over 20 years on an accelerated basis.  Amortization of the customer list intangible amounted to approximately $30,000 and $78,000, respectively, for the three and nine month periods ended September 30, 2012 and September 30, 2011.

Page 36

Total other noninterest expenses decreased by $1.9 million, or by 12.5%, during the nine months ended September 30, 2012 when compared to 2011.  A substantial portion of the decrease in this expense is attributable to decreased FDIC deposit insurance assessments slightly offset by increased lending related expenses related to problem assets, including appraisal, legal and other charges, and other expenses which are incidental variable costs related to deposit gathering and lending.  Also included in total other noninterest expenses are expenses related to ATM networks, correspondent bank service charges, check losses, and closing attorney expenses.

Our efficiency ratio (ratio of noninterest expense to the sum of net interest income and noninterest income) was 65.4% and 68.5% for the three and nine months ended September 30, 2012, respectively, compared to 73.7% and 74.6% for the three and nine months ended September 30, 2011, respectively. The efficiency ratio measures the amount of expense that is incurred to generate a dollar of revenue. Our efficiency ratio continues to be elevated by OREO and other credit related costs, including the increase in associates dedicated to problem loan resolution.

Income Taxes.  During the three and nine months ended September 30, 2012, we recorded income tax expense of $5.0 million and $14.4 million, respectively, compared to an income tax benefit of $17.0 million and $16.7 million, respectively, for the three and nine months ended September 30, 2011. Our income tax expense for the nine months ended September 30, 2012 reflects an effective income tax rate of 32.3%, which is principally impacted by our investments in municipal securities, our real estate investment trust and bank-owned life insurance offset in part by meals and entertainment and compensation for which we are not entitled to a deduction. In the prior year, our income tax benefit was primarily impacted by the release of the valuation allowance against our deferred tax assets.    

Preferred stock dividends and discount accretion.  Preferred stock dividends decreased in fiscal 2012 as a result of the redemption of 25% of the shares of Series A preferred stock on December 28, 2011, and the further redemption of the remaining Series A preferred stock in the second quarter of 2012.  Accordingly, net income available for common stockholders was not impacted by preferred stock dividends or discount accretion for the three months ended September 30, 2012, compared to a combined impact of $1.6 million for the three months ended September 30, 2011. Net income available for common stockholders was reduced by $3.8 million and $4.6 million, respectively, for the nine month periods ended September 30, 2012 and 2011, for preferred stock dividends and discount accretion. The variance in the two periods is attributable to the recognition in the second quarter of 2012 of the approximately $1.7 million remaining preferred stock discount triggered by the redemption of the remaining preferred shares originally sold to the Treasury.

Financial Condition

Our consolidated balance sheet at September 30, 2012 reflects an increase in total loans outstanding to $3.525 billion at September 30, 2012 compared to $3.291 billion at December 31, 2011. Total deposits increased by $64.9 million between December 31, 2011 and September 30, 2012.  Total assets were $4.871 billion at September 30, 2012 compared to $4.864 billion at December 31, 2011.

Loans.  The composition of loans at September 30, 2012 and at December 31, 2011 and the percentage (%) of each classification to total loans are summarized as follows (in thousands):

	September 30, 2012					December 31, 2011
	Amount		Percent			Amount		Percent
Commercial real estate – mortgage	$	1,167,136		33.1	%	$	1,110,962		33.8	%
Consumer real estate – mortgage		680,890		19.3	%		695,745		21.1	%
Construction and land development		312,788		8.9	%		274,248		8.3	%
Commercial and industrial		1,279,050		36.3	%		1,145,735		34.8	%
Consumer and other		85,300		2.4	%		64,661		2.0	%
Total loans	$	3,525,164		100.0	%	$	3,291,351		100.0	%

Page 37

The primary changes within the composition of our loan portfolio at September 30, 2012 as compared to December 31, 2011 reflects increased loan demand in both the commercial and industrial and commercial real estate segments.  The commercial real estate – mortgage category includes owner-occupied commercial real estate loans.  At September 30, 2012, approximately 51.6% of the outstanding principal balance of our commercial real estate mortgage loans was secured by owner-occupied properties. Owner-occupied commercial real estate is similar in many ways to our commercial and industrial lending in that these loans are generally made to businesses on the basis of the cash flows of the business rather than on the valuation of the real estate.

The following table classifies our fixed and variable rate loans at September 30, 2012 according to contractual maturities of (1) one year or less, (2) after one year through five years, and (3) after five years.  The table also classifies our variable rate loans pursuant to the contractual repricing dates of the underlying loans (in thousands):

	Amounts atSeptember 30, 2012						Percentage
	Fixed		Variable				AtSeptember 30,
	Rates		Rates		Totals		2012
Based on contractual maturity:
Due within one year	$	232,228	$	772,808	$	1,005,036		28.5	%
Due in one year to five years		757,194		755,415		1,512,609		42.9	%
Due after five years		393,432		614,087		1,007,519		28.6	%
Totals	$	1,382,854	$	2,142,310	$	3,525,164		100.0	%
Based on contractual repricing dates:
Daily floating rate (*)	$	-	$	1,119,118	$	1,119,118		31.8	%
Due within one year		232,228		529,622		761,850		21.6	%
Due in one year to five years		757,194		259,428		1,016,622		28.8	%
Due after five years		393,432		234,142		627,574		17.8	%
Totals	$	1,382,854	$	2,142,310	$	3,525,164		100.0	%

The above information does not consider the impact of scheduled principal payments.

(*) Daily floating rate loans are tied to Pinnacle Bank’s prime lending rate or a national interest rate index with the underlying loan rates changing in relation to changes in these indexes.  Interest rate floors are currently in effect on approximately $874 million of our daily floating rate loan portfolio and on approximately $457 million of the variable rate loan portfolio at varying maturities.  The weighted average rate of the floors for the daily floating rate portfolio is 4.72% and the weighted average rate of the floors for the remaining variable rate portfolio is 4.39%.  As a result, interest income on these loans will not adjust until the contractual rate on the underlying loan exceeds the interest rate floor.

Performing Loans in Past Due Status.  The following table is a summary of our performing loans that were past due at least 30 days but less than 89 days and 90 days or more past due as of September 30, 2012 and December 31, 2011 (in thousands):

	September 30,			December 31,
Performing loans past due 30 to 89 days:	2012			2011
Commercial real estate – mortgage	$	3,201		$	5,749
Consumer real estate – mortgage		7,096			2,589
Construction and land development		980			1,572
Commercial and industrial		603			648
Consumer and other		275			526
Total performing loans past due 30 to 89 days	$	12,155		$	11,084
Performing loans past due 90 days or more:
Commercial real estate – mortgage	$	-		$	-
Consumer real estate – mortgage		-			254
Construction and land development		162			-
Commercial and industrial		-			604
Consumer and other		-			-
Total performing loans past due 90 days or more	$	162		$	858
Ratios:
Performing loans past due 30 to 89 days as a percentage of total loans		0.34	%		0.34	%
Performing loans past due 90 days or more as a percentage of total loans		0.01	%		0.03	%
Total performing loans in past due status as a percentage of total loans		0.35	%		0.36	%

Potential Problem Loans. Potential problem loans, which are not included in nonperforming assets, amounted to approximately $110.1 million or 3.1% of total loans at September 30, 2012 compared to $135.4 million or 4.1% of total loans at December 31, 2011.  Potential problem loans represent those loans with a well-defined weakness and where information about possible credit problems of borrowers has caused management to have serious doubts about the borrower’s ability to comply with present repayment terms.  This definition is believed to be substantially consistent with the standards established by bank regulators, for loans classified as substandard, excluding the impact of substandard nonaccrual loans and substandard troubled debt restructurings.  Troubled debt restructurings are not included in potential problem loans.   Approximately $6.7 million of potential problem loans were past due at least 30 days but less than 90 days as of September 30, 2012.

Page 38

Non-Performing Assets and Troubled Debt Restructurings.  At September 30, 2012, we had $58.4 million in nonperforming assets compared to $87.6 million at December 31, 2011.  Included in nonperforming assets were $36.6 million in nonperforming loans and $21.8 million in OREO at September 30, 2012 and $47.9 million in nonperforming loans and $39.7 million in OREO assets at December 31, 2011.   At September 30, 2012 and December 31, 2011, there were $24.1 million and $23.4 million, respectively, of troubled debt restructurings, all of which were performing as of the restructured date and remain in a performing status but are considered impaired loans pursuant to U.S. GAAP.

The following table is a summary of our nonperforming assets and troubled debt restructurings at September 30, 2012 and December 31, 2011 (in thousands):

	At December 31, 2011			Payments, Sales and Reductions(2)			Foreclosures(3)			Inflows (4)		At September 30, 2012
Nonperforming assets:
Nonperforming loans:
Commercial real estate – mortgage	$	9,962		$	(4,274	)	$	(1,756	)	$	11,051	$	14,983
Consumer real estate – mortgage		12,487			(10,673	)		(3,517	)		12,251		10,548
Construction and land development		12,965			(6,370	)		(2,864	)		2,126		5,857
Commercial and industrial		11,890			(11,658	)		(46	)		4,710		4,896
Consumer and other		551			(959	)		41			654		287
Total nonperforming loans (1)		47,855			(33,934	)		(8,142	)		30,792		36,571
Other real estate owned		39,714			(26,387	)		8,490			-		21,817
Total nonperforming assets		87,569			(60,321	)		348			30,792		58,388
Troubled debt restructurings:
Commercial real estate – mortgage		15,378			(5,011	)		-			6,264		16,631
Consumer real estate – mortgage		5,873			(536	)		-			694		6,031
Construction and land development		77			(65	)		-			360		372
Commercial and industrial		1,844			(774	)		(194	)		59		935
Consumer and other		244			(8	)		(154	)		39		121
Total troubled debt restructurings		23,416			(6,394	)		(348	)		7,416		24,090
Total nonperforming assets and troubled debt restructurings	$	110,985		$	(66,715	)	$	-		$	38,208	$	82,478
Ratios:
Nonperforming loans to total loans		1.45	%										1.04	%
Nonperforming assets to total loans plus other real estate owned		2.75	%										1.65	%
Nonperforming assets plus troubled debt restructurings to total loans and other real estate owned		3.33	%										2.33	%
Nonperforming assets, potential problem loans and troubled debt restructurings to Pinnacle BankTier I capital and allowance for loan losses		45.15	%										35.04	%

(1)  Approximately $13.1 million and $25.5 million as of September 30, 2012 and December 31, 2011, respectively, of nonperforming loans included above are currently paying pursuant to their contractual terms.

(2)  Payments, sales and reductions in nonperforming loans are primarily attributable to payments we have collected from borrowers, charge-offs of recorded balances, and nonaccrual loans that have been returned to accruing status during the nine months ended September 30, 2012.  Payments, sales and reductions in other real estate owned represent either the sale, disposition or valuation adjustment on properties which had previously been foreclosed upon or acquired by deed in lieu of foreclosure.  Payments, sales and reductions in troubled debt restructurings are those loans which were previously restructured whereby the borrower has satisfactorily performed in accordance with the restructured terms. Additionally, troubled-debt restructurings which have defaulted under their restructured terms that are charged-off would also be included in payments, sales and reductions.

(3) Foreclosures in nonperforming loans and troubled debt restructuring are representative of transfers of balances to OREO during the nine months ended September 30, 2012.

(4) Inflows in nonperforming loans are attributable to loans where we have discontinued the accrual of interest at some point during the nine months ended September 30, 2012.  Increases in OREO represent the value of properties that have been foreclosed upon or acquired by deed in lieu of foreclosure during the first nine months of 2012.  Increases in troubled debt restructurings are those loans where we have granted the borrower a concession due to the deteriorating financial condition of the borrower during the nine months ended September 30, 2012.  These concessions can be in the form of a reduced interest rate, extended maturity date or other matters.

Page 39

At September 30, 2012, we owned $21.8 million in other real estate which we had acquired (usually through foreclosure) from borrowers, compared to $39.7 million at December 31, 2011, substantially all of which is located within our principal markets.  We segment our OREO into four categories: new home construction, developed lots, undeveloped land, and other.  The other category primarily consists of condos, office buildings and existing homes.  The following table shows the classification of our OREO (in thousands):

	September 30,		December 31,
	2012		2011
Developed lots	$	3,140	$	7,091
Undeveloped land		14,026		22,455
Other		4,651		10,168
	$	21,817	$	39,714

Allowance for Loan Losses (allowance).   We maintain the allowance at a level that our management deems appropriate to adequately cover the probable losses inherent in the loan portfolio.  As of September 30, 2012 and December 31, 2011, our allowance for loan losses was $69.1 million and $74.0 million, respectively, which our management deemed to be adequate at each of the respective dates.  The judgments and estimates associated with our allowance determination are described under Critical Accounting Estimates in our Annual Report on Form 10-K for the year ended December 31, 2011.

The following table sets forth, based on management's best estimate, the allocation of the allowance to categories of loans as well as the unallocated portion as of September 30, 2012 and December 31, 2011 and the percentage of loans in each category to total loans (in thousands):

	September 30, 2012					December 31, 2011
	Amount		Percent			Amount		Percent
Commercial real estate - mortgage	$	20,923		33.1	%	$	23,397		33.8	%
Consumer real estate - mortgage		9,997		19.3	%		10,302		21.1	%
Construction and land development		9,824		8.9	%		12,040		8.3	%
Commercial and industrial		21,786		36.3	%		20,789		34.8	%
Consumer and other		1,425		2.4	%		1,125		2.0	%
Unallocated		5,137	NA				6,322	NA
Total allowance for loan losses	$	69,092		100.0	%	$	73,975		100.0	%

The following is a summary of changes in the allowance for loan losses for the nine months ended September 30, 2012 and for the year ended December 31, 2011 and the ratio of the allowance for loan losses to total loans as of the end of each period (in thousands):

	Nine months ended September 30, 2012			Year ended December 31, 2011
Balance at beginning of period	$	73,975		$	82,575
Provision for loan losses		3,080			21,798
Charged-off loans:
Commercial real estate – mortgage		(1,676	)		(3,044	)
Consumer real estate – mortgage		(3,857	)		(5,076	)
Construction and land development		(1,638	)		(10,157	)
Commercial and industrial		(3,267	)		(15,360	)
Consumer and other loans		(828	)		(1,213	)
Total charged-off loans		(11,266	)		(34,850	)
Recoveries of previously charged-off loans:
Commercial real estate – mortgage		215			116
Consumer real estate – mortgage		793			495
Construction and land development		1,086			1,530
Commercial and industrial		1,131			2,167
Consumer and other loans		78			144
Total recoveries of previously charged-off loans		3,303			4,452
Net charge-offs		(7,963	)		(30,398	)
Balance at end of period	$	69,092		$	73,975
Ratio of allowance for loan losses to total loans outstanding at end of period		1.96	%		2.25	%
Ratio of net charge-offs to average total loans outstanding for the period (1)		0.30	%		0.92	%

(1) Net charge-offs for the nine months ended September 30, 2012 have been annualized.

Page 40

Management assesses the adequacy of the allowance prior to the end of each calendar quarter.  This assessment includes procedures to estimate the allowance and test the adequacy and appropriateness of the resulting balance.  The level of the allowance is based upon management’s evaluation of the loan portfolios, past loan loss experience, known and inherent risks in the portfolio, the views of Pinnacle Bank’s regulators, adverse situations that may affect the borrower’s ability to repay (including the timing of future payments), the estimated value of any underlying collateral, composition of the loan portfolio, economic conditions, industry and peer bank loan quality indications and other pertinent factors.  This evaluation is inherently subjective as it requires material estimates including the amounts and timing of future cash flows expected to be received on impaired loans that may be susceptible to significant change.  For further discussion regarding our allowance for loan losses, refer to the Annual Report on Form 10-K as of and for the year ended December 31, 2011.

Investments.Our investment portfolio, consisting primarily of Federal agency bonds, mortgage-backed securities, and state and municipal securities amounted to $739.3 million and $897.3 million at September 30, 2012 and December 31, 2011, respectively. Our investment portfolio serves many purposes including serving as a stable source of income, collateral for public funds and as a potential liquidity source. As a result of the current bond market and growing loan demand, we have reduced the size of our investment portfolio, primarily through bond maturities and calls. A summary of our investment portfolio at September 30, 2012 and December 31, 2011 follows:

	September 30, 2012			December 31, 2011
Weighted average life	3.21 years			4.25 years
Effective duration		2.08	%		2.45	%
Weighted average coupon		4.23	%		4.26	%
Tax equivalent yield		3.19	%		3.60	%

Deposits and Other Borrowings.We had approximately $3.719 billion of deposits at September 30, 2012 compared to $3.654 billion at December 31, 2011.  Our deposits consist of noninterest and interest-bearing demand accounts, savings accounts, money market accounts and time deposits.  Additionally, we entered into agreements with certain customers to sell certain securities under agreements to repurchase the security the following day.  These agreements (which are typically associated with comprehensive treasury management programs for our clients and provide them with short-term returns for their excess funds) amounted to $134.8 million at September 30, 2012 and $131.6 million at December 31, 2011.   Additionally, at September 30, 2012, and December 31, 2011, we had borrowed $190.6 million and $226.1 million, respectively, in advances from the Federal Home Loan Bank of Cincinnati.   At September 30, 2012, Pinnacle Bank also has approximately $115.0 million in availability with the Federal Home Loan Bank of Cincinnati.

Generally, we have classified our funding base as either core funding or non-core funding.  Core funding consists of all deposits other than time deposits issued in denominations greater than $250,000. All other funding is deemed to be non-core.  The following table represents the balances of our deposits and other fundings and the percentage of each type to the total at September 30, 2012 and December 31, 2011 (in thousands):

	September 30,					December 31,
	2012		Percent			2011		Percent
Core funding:
Noninterest-bearing deposit accounts	$	844,480		20.3	%	$	717,379		17.5	%
Interest-bearing demand accounts		673,083		16.2	%		637,203		15.5	%
Savings and money market accounts		1,606,698		38.7	%		1,585,260		38.6	%
Time deposit accounts less than $250,000		452,164		10.9	%		501,705		12.2	%
Total core funding		3,576,425		86.1	%		3,441,547		83.8	%
Non-core funding:
Relationship based non-core funding:
Reciprocating time deposits (1)		50,347		1.2	%		108,507		2.6	%
Other time deposits		92,515		2.2	%		104,284		2.5	%
Securities sold under agreements to repurchase		134,787		3.3	%		131,591		3.2	%
Total relationship based non-core funding		277,649		6.7	%		344,382		8.4	%
Wholesale funding:
Federal Home Loan Bank advances		190,887		4.6	%		226,069		5.5	%
Holding Company Loan		24,307		0.6	%		-		-
Subordinated debt – Pinnacle Bank		-		0.0	%		15,000		0.3	%
Subordinated debt – Pinnacle Financial		82,476		2.0	%		82,476		2.0	%
Total wholesale funding		297,670		7.2	%		323,545		7.8	%
Total non-core funding		575,319		13.9	%		667,927		16.2	%
Totals	$	4,151,744		100.0	%	$	4,109,474		100.0	%

Page 41

(1) The reciprocating time deposit category consists of deposits we receive from the Certificate of Deposit Account Registry Services network (CDARS) in connection with deposits of our customers in excess of our FDIC coverage limit that we place with the CDARS network.

Our funding policies limit the amount of non-core funding we can utilize.  Periodically, we may exceed our policy limitations, at which time management will develop plans to bring our core funding ratios back within compliance.  At September 30, 2012 and December 31, 2011, we were in compliance with our core funding policies. As noted in the table above, our core funding as a percentage of total funding increased from 83.8% at December 31, 2011 to 86.1% atSeptember 30, 2012.  Continuing to grow our core deposit base is a key strategic objective of our firm.

The amount of time deposits as of September 30, 2012 amounted to $595.0 million.  The following table shows our time deposits, in denominations of $250,000 and less and those of denominations greater than $250,000 by category based on time remaining until maturity of (1) three months or less, (2) over three but less than nine months, (3) over nine but less than twelve months and (4) over twelve months and the weighted average rate for each category (in thousands):

	Balances		Weighted Avg. Rate
Denominations less than $250,000
Three months or less	$	121,783		0.53	%
Over three but less than six months		120,611		0.88	%
Over six but less than twelve months		132,486		0.74	%
Over twelve months		127,631		1.18	%
	$	502,511		0.83	%
Denomination $250,000 and greater
Three months or less	$	24,637		0.94	%
Over three but less than six months		19,568		0.76	%
Over six but less than twelve months		29,528		0.75	%
Over twelve months		18,782		1.58	%
	$	92,515		0.97	%
Totals	$	595,026		0.86	%

Subordinated debt and other borrowings.  We have four wholly-owned Pinnacle Financial subsidiaries that are statutory business trusts. We are the sole sponsor of the Trusts and acquired each Trust’s common securities. The Trusts were created for the exclusive purpose of issuing 30-year capital trust preferred securities and used the proceeds to acquire junior subordinated debentures (Subordinated Debentures) issued by Pinnacle Financial.  The sole assets of the Trusts are the Subordinated Debentures.  At September 30, 2012, our $2,476,000 investment in the Trusts is included in other investments in the accompanying consolidated balance sheets and our $82,476,000 obligation is reflected as subordinated debt.

	Date Established	Maturity	Common Securities		Subordinated Debentures		Floating Interest Rate	Interest Rate at September 30, 2012
Trust I	December 29, 2003	December 30, 2033	$	310,000	$	10,000,000	Libor + 2.80%		3.19	%
Trust II	September 15, 2005	September 30, 2035		619,000		20,000,000	Libor + 1.40%		1.76	%
Trust III	September 7, 2006	September 30, 2036		619,000		20,000,000	Libor + 1.65%		2.01	%
Trust IV	October 31, 2007	September 30, 2037		928,000		30,000,000	Libor + 2.85%		3.24	%

The securities bear a floating interest rate based on a spread over 3-month LIBOR which is set each quarter.  Distributions are payable quarterly.  The Trust Preferred Securities are subject to mandatory redemption upon repayment of the Subordinated Debentures at their stated maturity date or their earlier redemption in an amount equal to their liquidation amount plus accumulated and unpaid distributions to the date of redemption.  We guarantee the payment of distributions and payments for redemption or liquidation of the Trust Preferred Securities to the extent of funds held by the Trusts.  Pinnacle Financial’s obligations under the Subordinated Debentures together with the guarantee and other back-up obligations, in the aggregate, constitute a full and unconditional guarantee by Pinnacle Financial of the obligations of the Trusts under the Trust Preferred Securities.

The Subordinated Debentures are unsecured, bear interest at a rate equal to the rates paid by the Trusts on the Trust Preferred Securities and mature on the same dates as those noted above for the Trust Preferred Securities.  Interest is payable quarterly.  We may defer the payment of interest at any time for a period not exceeding 20 consecutive quarters provided that the deferral period does not extend past the stated maturity.  During any such deferral period, distributions on the Trust Preferred Securities will also be deferred and our ability to pay dividends on our common shares and preferred shares will be restricted.

Page 42

The Trust Preferred Securities may be redeemed prior to maturity at our option.  The Trust Preferred Securities may also be redeemed at any time in whole (but not in part) in the event of unfavorable changes in laws or regulations that result in (1) the Trust becoming subject to federal income tax on income received on the Subordinated Debentures, (2) interest payable by the parent company on the Subordinated Debentures becoming non-deductible for federal tax purposes, (3) the requirement for the Trust to register under the Investment Company Act of 1940, as amended, or (4) loss of the ability to treat the Trust Preferred Securities as “Tier I capital” under the Federal Reserve capital adequacy guidelines.

On August 5, 2008, Pinnacle Bank entered into a $15 million subordinated term loan with a bank.  During the third quarter of 2012, Pinnacle Bank repaid this subordinated term loan.

On June 15, 2012, Pinnacle Financial entered into a loan agreement with a bank for $25 million.  Pinnacle Financial’s borrowings under the Loan Agreement bear interest at rates that, at Pinnacle Financial’s option, can be either:

● A base rate generally defined as the sum of (i) the highest of (x) the lender’s “base” or “prime” rate, (y) the average overnight federal funds effective rate plus one-half percent (0.50%) per annum or (z) one-month LIBOR plus one percent (1%) per annum and (ii) an applicable margin as noted below; or

● A LIBOR rate generally defined as the sum of (i) the average of the offered rates of interest quoted in the London Inter-Bank Eurodollar Market for U.S. Dollar deposits with prime banks (as published by Reuters or other commercially available source) for one, two or three months (all as selected by the Company), and (ii) an applicable margin.

The applicable margin under the Loan Agreement ranges from 2.25% (225 basis points) to 3.00% (300 basis points) depending on the total aggregate principal amount outstanding under the Loan Agreement. The initial applicable margin for both base rate and LIBOR rate loans is 3.00% (300 basis points).

Pinnacle Financial is required to make quarterly principal payments of $625,000 beginning on September 30, 2012, and the loan matures on June 15, 2017. Pinnacle Financial is permitted to prepay all or a portion of the principal amount outstanding under the Loan Agreement without penalty (in minimum aggregate amounts of $100,000) at any time so long as no event of default or unmatured event of default has occurred and is continuing.

The Loan Agreement includes negative covenants that limit, among other things, certain fundamental transactions, additional indebtedness, transactions with affiliates, liens, sales of assets and dividends. The Loan Agreement specifically restricts transfers or encumbrances of the shares of the capital stock of Pinnacle Financial’s bank subsidiary. The Loan Agreement also includes financial covenants related to Pinnacle Financial’s, and in some cases, Pinnacle Bank’s, capitalization, levels of risk-based capital, ratio of nonperforming assets to tangible primary capital and ratio of allowance for loan and lease losses to nonperforming loans. The Loan Agreement also includes a fixed charge coverage ratio requiring the sum of Pinnacle Financial’s net income plus the amount of any goodwill amortization expense and contractually due interest divided by the sum of Pinnacle Financial’s contractually due interest and principal amounts (assuming annual principal amortization of $2.5 million under the Loan Agreement), to be not less than 125% on an annualized single quarter basis through September 30, 2012 and on a rolling four quarter basis starting December 31, 2012.

The Loan Agreement also contains other customary affirmative and negative covenants, representations, warranties and events of default, which include but are not limited to, payment defaults, breaches of representations and warranties, covenant defaults, events of bankruptcy and insolvency, and the institution of certain regulatory enforcement actions against Pinnacle Financial or Pinnacle Bank. If an event of default occurs and is continuing, Pinnacle Financial may be required immediately to repay all amounts outstanding under the Loan Agreement.

Debt issuance costs associated with the Loan Agreement of approximately $218,000 consisting primarily of professional fees are included in other assets in the accompanying consolidated balance sheet.  These debt issuance costs are being amortized over three years.

Capital Resources.  At September 30, 2012 and December 31, 2011, our stockholders’ equity amounted to $672.8 million and $710.1 million, respectively, a decrease of approximately $37.3 million.  During the second quarter of 2012, Pinnacle Financial redeemed the remaining 71,250 of the preferred shares originally issued to the Treasury under the CPP in a transaction totaling approximately $71.6 million. Offsetting this decrease in stockholders’ equity is our comprehensive net income in the nine months ended September 30, 2012 of $32.3 million. Also, during the third quarter of 2012, Pinnacle Financial repurchased for $755,000 common stock warrants issued to the US Treasury in connection with our participation in the Troubled Assets Repurchase Program.  The warrants were initially valued at $3.3 million, therefore, our additional paid in capital increased $2.5 million due to the difference between the initial valuation and the repurchase amount.

Page 43

Dividends.  Under Tennessee banking law, Pinnacle Bank is subject to restrictions on the payment of dividends to Pinnacle Financial which are similar to those applicable to national banks.  Prior to the repurchase of the preferred stock, Pinnacle Financial was subject to limits on payment of dividends to its shareholders by its participation in the CPP.  Pursuant to Tennessee banking law, Pinnacle Bank may not, without the prior consent of the TDFI, pay any dividends to Pinnacle Financial in a year in excess of the total of Pinnacle Bank’s net profits for that year plus the retained profits for the preceding two years.  As of September 30, 2012, Pinnacle Bank could pay approximately $26.2 million of dividends to Pinnacle Financial without prior TDFI approval. In May 2010, Pinnacle Financial informally agreed to obtain prior approval of the Federal Reserve Bank of Atlanta before making stock dividends or repurchases and trust preferred distributions or causing Pinnacle Bank to pay dividends. In April 2012, this informal agreement was terminated.Pinnacle Financial has not paid any cash dividends on its common stock since inception, and it does not currently anticipate that it will consider paying such dividends in the foreseeable future.  Future dividend policy will depend on Pinnacle Financial's earnings, capital position, financial condition and other factors.

Market and Liquidity Risk Management

Our objective is to manage assets and liabilities to provide a satisfactory, consistent level of profitability within the framework of established liquidity, loan, investment, borrowing, and capital policies.  Our Asset Liability Management Committee (ALCO) is charged with the responsibility of monitoring these policies, which are designed to ensure acceptable composition of asset/liability mix.  Two critical areas of focus for ALCO are interest rate sensitivity and liquidity risk management.

Interest Rate Sensitivity.  In the normal course of business, we are exposed to market risk arising from fluctuations in interest rates.  ALCO measures and evaluates the interest rate risk so that we can meet customer demands for various types of loans and deposits.  ALCO determines the most appropriate amounts of on-balance sheet and off-balance sheet items.  Measurements which we use to help us manage interest rate sensitivity include an earnings simulation model and an economic value of equity model.  These measurements are used in conjunction with competitive pricing analysis.

· Earnings simulation model.We believe that interest rate risk is best measured by our earnings simulation modeling.  Earning assets, interest-bearing liabilities, and off-balance sheet financial instruments are combined with ALCO forecasts of interest rates for the next 12 months and are combined with other factors in order to produce various earnings simulations.  To limit interest rate risk, we have guidelines for our earnings at risk which seek to limit the variance of net interest income in both gradual and instantaneous changes to interest rates.  For changes up or down in rates from management’s flat interest rate forecast over the next twelve months, limits in the decline in net interest income are as follows:

· -15.5% for a gradual change of 400 basis points; -31.0% for an instantaneous change of 400 basis points

· -10.5% for a gradual change of 300 basis points; -21.0% for an instantaneous change of 300 basis points

· -6.5% for a gradual change of 200 basis points; -13.0% for an instantaneous change of 200 basis points

· -3.0% for a gradual change of 100 basis points; -6.0% for an instantaneous change of 100 basis points

· Economic value of equity. Our economic value of equity model measures the extent that estimated economic values of our assets, liabilities and off-balance sheet items will change as a result of interest rate changes.  Economic values are determined by discounting expected cash flows from assets, liabilities and off-balance sheet items, which establishes a base case economic value of equity.  To help limit interest rate risk, we have a guideline stating that for an instantaneous 400 basis point change in interest rates up or down, the economic value of equity should not decrease by more than 40 percent from the base case; for a 300 basis point instantaneous change in interest rates up or down, the economic value of equity should not decrease by more than 30 percent; for a 200 basis point instantaneous change in interest rates up or down, the economic value of equity should not decrease by more than 20 percent; and for a 100 basis point instantaneous change in interest rates up or down, the economic value of equity should not decrease by more than 10 percent.

At September 30, 2012, our model results indicated that our balance sheet is slightly liability sensitive to parallel shifts in interest rates in increments of 100 to 200 basis points.  The slight liability sensitivity present at the 100 to 200 bps increment level is primarily attributable to the fact that our loan floors will prevent the rise in yields on our loan portfolio from out-pacing the potential rise in deposit costs.  We become asset-sensitive once those rate increments reach 200 to 250 basis points as we break through interest rate floors placed on variable and floating rate loans at a more substantial level.  Absent any other asset liability strategies an interest rate increase of a 200 to 250 basis point level could result in slightly increased margins. Over time, we expect to reduce our slight liability sensitivity as we engage in initiatives to bring our firm toward an interest rate neutral position over the next several quarters.

Page 44

Each of the above analyses may not, on its own, be an accurate indicator of how our net interest income will be affected by changes in interest rates.  Income associated with interest-earning assets and costs associated with interest-bearing liabilities may not be affected uniformly by changes in interest rates.  In addition, the magnitude and duration of changes in interest rates may have a significant impact on net interest income.  For example, although certain assets and liabilities may have similar maturities or periods of repricing, they may react in different degrees to changes in market interest rates.  Interest rates on certain types of assets and liabilities fluctuate in advance of changes in general market rates, while interest rates on other types may lag behind changes in general market rates.  In addition, certain assets, such as adjustable rate mortgage loans, have features (generally referred to as interest rate caps and floors) which limit changes in interest rates.  Prepayment and early withdrawal levels also could deviate significantly from those assumed in calculating the maturity of certain instruments. The ability of many borrowers to service their debts also may decrease during periods of rising interest rates.  ALCO reviews each of the above interest rate sensitivity analyses along with several different interest rate scenarios as part of its responsibility to provide a satisfactory, consistent level of profitability within the framework of established liquidity, loan, investment, borrowing, and capital policies.

We may also use derivative financial instruments to improve the balance between interest-sensitive assets and interest-sensitive liabilities and as one tool to manage our interest rate sensitivity while continuing to meet the credit and deposit needs of our customers.  We also enter into interest rate swaps (swaps) to facilitate customer transactions and meet their financing needs.  These swaps qualify as derivatives, but are not designated as hedging instruments. At September 30, 2012 and 2011, we had not entered into any derivative contracts designated as hedging instruments to assist managing our interest rate sensitivity.

Liquidity Risk Management.  The purpose of liquidity risk management is to ensure that there are sufficient cash flows to satisfy loan demand, deposit withdrawals, and our other needs.  Traditional sources of liquidity for a bank include asset maturities and growth in core deposits.  A bank may achieve its desired liquidity objectives from the management of its assets and liabilities and by internally generated funding through its operations.  Funds invested in marketable instruments that can be readily sold and the continuous maturing of other earning assets are sources of liquidity from an asset perspective.  The liability base provides sources of liquidity through attraction of increased deposits and borrowing funds from various other institutions.

Changes in interest rates also affect our liquidity position.  We currently price deposits in response to market rates and our management intends to continue this policy.  If deposits are not priced in response to market rates, a loss of deposits could occur which would negatively affect our liquidity position.

Scheduled loan payments are a relatively stable source of funds, but loan payoffs and deposit flows fluctuate significantly, being influenced by interest rates, general economic conditions and competition. Additionally, debt security investments are subject to prepayment and call provisions that could accelerate their payoff prior to stated maturity.  We attempt to price our deposit products to meet our asset/liability objectives consistent with local market conditions.  Our ALCO is responsible for monitoring our ongoing liquidity needs.  Our regulators also monitor our liquidity and capital resources on a periodic basis.

In addition, Pinnacle Bank is a member of the Federal Home Loan Bank of Cincinnati (FHLB).  As a result, Pinnacle Bank receives advances from the FHLB, pursuant to the terms of various borrowing agreements, which assist it in the funding of its home mortgage and commercial real estate loan portfolios.   Additionally, Pinnacle Financial recognized a discount on FHLB advances in conjunction with previous acquisitions.  The remaining discount was $261,000 and $406,000 at September 30, 2012 and December 31, 2011, respectively.  Under the borrowing agreements with the FHLB, Pinnacle Bank has pledged certain qualifying residential mortgage loans and, pursuant to a blanket lien, all qualifying commercial mortgage loans as collateral.  At September 30, 2012, Pinnacle Bank had received advances from the FHLB totaling $190.6 million at the following rates and maturities (in thousands):

	Amount		Interest Rates(1)
2012	$	80,000		0.21	%
2013		-		-
2014		75,000		2.01	%
2015		-		-
Thereafter		35,626		2.15	%
Total	$	190,626
Weighted average interest rate				1.28	%

(1) Some FHLB advances include variable interest rates and could increase in the future.  The table reflects rates in effect as of September 30, 2012.

Pinnacle Bank also has accommodations with upstream correspondent banks for unsecured short-term advances which aggregate $155.0 million.  These accommodations have various covenants related to their term and availability, and in most cases must be repaid within less than a month.  There were no outstanding borrowings under these agreements at September 30, 2012, or during the quarter then ended under such agreements.  Pinnacle Bank also has approximately $1.0 billion in available Federal Reserve discount window lines of credit.

Page 45

At September 30, 2012 and December 31, 2011, excluding any reciprocating time deposits issued through the CDARS network, we had no brokered certificates of deposit.  Historically, we have issued brokered certificates through several different brokerage houses based on competitive bid.  Typically, these funds have been for varying maturities of up to two years and were issued at rates which were competitive to rates we would be required to pay to attract similar deposits within our local markets as well as rates for FHLB advances of similar maturities.  Although we consider these deposits to be a ready source of liquidity under current market conditions, we anticipate that these deposits will represent an insignificant percentage of our total funding in 2012 as we seek to maintain a higher level of core deposits.

At September 30, 2012, we had no significant commitments for capital expenditures although we expect we will construct a branch facility in the Knoxville MSA in 2013.  Our management believes that we have adequate liquidity to meet all known contractual obligations and unfunded commitments, including loan commitments and reasonable borrower, depositor, and creditor requirements over the next twelve months.

Off-Balance Sheet Arrangements.  At September 30, 2012, we had outstanding standby letters of credit of $72.6 million and unfunded loan commitments outstanding of $965.3 million.  Because these commitments generally have fixed expiration dates and many will expire without being drawn upon, the total commitment level does not necessarily represent future cash requirements.  If needed to fund these outstanding commitments, Pinnacle Bank has the ability to liquidate Federal funds sold or on a short-term basis to borrow and purchase Federal funds from other financial institutions.

Impact of Inflation

The consolidated financial statements and related consolidated financial data presented herein have been prepared in accordance with U.S. GAAP and practices within the banking industry which require the measurement of financial position and operating results in terms of historical dollars without considering the changes in the relative purchasing power of money over time due to inflation. Unlike most industrial companies, virtually all the assets and liabilities of a financial institution are monetary in nature. As a result, interest rates have a more significant impact on a financial institution's performance than the effects of general levels of inflation.

 Recent Accounting Pronouncements

With the exception of those noted in the Notes to the Consolidated Financial Statements herein, there are currently no new accounting standards that have been issued that will have a significant impact on the Company’s financial position, results of operations or cash flows upon adoption.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by this Item 3 is included on pages 44 through 46 of Part I - Item 2 - “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Pinnacle Financial maintains disclosure controls and procedures, as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed by it in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to Pinnacle Financial’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.  Pinnacle Financial carried out an evaluation, under the supervision and with the participation of its management, including its Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of its disclosure controls and procedures as of the end of the period covered by this report.  Based on the evaluation of these disclosure controls and procedures, the Chief Executive Officer and Chief Financial Officer concluded that Pinnacle Financial’s disclosure controls and procedures were effective.

Changes in Internal Controls

There were no changes in Pinnacle Financial’s internal control over financial reporting during Pinnacle Financial’s fiscal quarter ended September 30, 2012 that have materially affected, or are reasonably likely to materially affect, Pinnacle Financial’s internal control over financial reporting.

Page 46

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Various legal proceedings to which Pinnacle Financial or a subsidiary of Pinnacle Financial is a party arise from time to time in the normal course of business. Except as described below, there are no material pending legal proceedings to which Pinnacle Financial is a party or of which any of their property is the subject.

During the fourth quarter of 2011, a customer of Pinnacle Bank’s filed a putative class action lawsuit (styled John Higgins, et al, v. Pinnacle Financial Partners, Inc., d/b/a Pinnacle National Bank) in Davidson County, Tennessee Circuit Court against Pinnacle Bank and Pinnacle Financial, on his own behalf, as well as on behalf of a purported class of Pinnacle Bank’s customers within the State of Tennessee alleging that Pinnacle Bank’s method of ordering debit card transactions had caused customers of Pinnacle Bank to incur higher overdraft charges than had a different method been used.  In support of his claims, the plaintiff asserts theories of breach of contract, breach of implied covenant of good faith and fair dealing, unjust enrichment of unconscionability.  The plaintiff is seeking, among other remedies, an award of unspecified compensatory damages, pre-judgment interest, costs and attorneys’ fees. Pinnacle Financial and Pinnacle Bank are vigorously contesting this matter. On January 17, 2012, Pinnacle Financial and Pinnacle Bank filed a motion to dismiss the complaint. The motion to dismiss was denied on April 13, 2012, and Pinnacle Financial and Pinnacle Bank filed an answer on May 30, 2012.  Based on our current knowledge, Pinnacle Financial does not believe that any liability arising from this legal matter will have a material adverse effect on Pinnacle Financial’s consolidated financial condition, operating results or cash flows.

ITEM 1A. RISK FACTORS

Investing in Pinnacle Financial involves various risks which are particular to our company, our industry and our market area. We believe all significant risks to investors in Pinnacle Financial have been outlined in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2011. However, other risks may prove to be important in the future, and new risks may emerge at any time. We cannot predict with certainty all potential developments which could materially affect our financial performance or condition.  There has been no material change to our risk factors as previously disclosed in the above described Report.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Period	Total Number of Shares Repurchased (1)		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares That May Yet Be Purchased Under the Plans or Programs
July1, 2012 to July 31, 2012		-	$	-		-		-
August 1, 2012 to August 31, 2012		1,748		19.35		-		-
September 1, 2012 to September 30, 2012		-		-		-		-
Total		1,748	$	19.35		-		-

(1) During the quarter ended September 30, 2012, 8,050 shares of restricted stock previously awarded to certain of our associates vested.  We withheld 1,748 shares to satisfy tax withholding requirements for these associates.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

Not applicable

Page 47

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION

None

ITEM 6. EXHIBITS

31.1	Certification pursuant to Rule 13a-14(a)/15d-14(a)
31.2	Certification pursuant to Rule 13a-14(a)/15d-14(a)
32.1	Certification pursuant to 18 USC Section 1350 – Sarbanes-Oxley Act of 2002
32.2	Certification pursuant to 18 USC Section 1350 – Sarbanes-Oxley Act of 2002
101.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.LAB	XBRL Label Linkbase Document
101.PRE	XBRL Presentation Linkbase Document
101.DEF	XBRL Definition Linkbase Document

Page 48

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	PINNACLE FINANCIAL PARTNERS, INC.
October 25, 2012	/s/ M. Terry Turner
	M. Terry Turner
	President and Chief Executive Officer

October 25, 2012	/s/ Harold R. Carpenter
	Harold R. Carpenter
	Chief Financial Officer

Page 49

EX-31.1

Exhibit 31.1

Certifications

I, M. Terry Turner, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Pinnacle Financial Partners, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

October 25, 2012	Signature:	/s/ M. Terry Turner
		M. Terry Turner
		President and Chief Executive Officer
		Pinnacle Financial Partners, Inc.

EX-31.2

Exhibit 31.2

Certifications

I, Harold R. Carpenter, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Pinnacle Financial Partners, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

October 25, 2012	Signature:	/s/ Harold R. Carpenter
		Harold R. Carpenter
		Chief Financial Officer
		Pinnacle Financial Partners, Inc.

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Pinnacle Financial Partners (the “Company”) on Form 10-Q for the period ending September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, M. Terry Turner, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

October 25, 2012	/s/ M. Terry Turner
	M. Terry Turner
	President and Chief Executive Officer
	Pinnacle Financial Partners, Inc.

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Pinnacle Financial Partners (the “Company”) on Form 10-Q for the period ending September 30, 2012, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Harold R. Carpenter, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities and Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

October 25, 2012	/s/ Harold R. Carpenter
	Harold R. Carpenter
	Chief Financial Officer
	Pinnacle Financial Partners, Inc.

XML

Commitments and Contingent Liabilities (Details) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Commitments to Extend Credit [Member]
Loss Contingencies [Line Items]
Amount of commitment	965,300
Standby Letters of Credit [Member]
Loss Contingencies [Line Items]
Amount of commitment	72,600
Maximum [Member]
Loss Contingencies [Line Items]
Expiry period of standby letter of credit, maximum	2 years

XML

Loans and Allowance for Loan Losses (Details) (USD $)	9 Months Ended		12 Months Ended
	Sep. 30, 2012		Dec. 31, 2011
Loans and Allowance for Loan Losses [Abstract]
Percentage of loan portfolio as commercial loan (in hundredths)	75.00%
Risk rated loans	$ 500,000
Percentage of risk rated annual portfolio, minimum (in hundredths)	70.00%
Financing Receivable, Recorded Investment [Line Items]
Loans	3,525,164,123		3,291,350,857
Potential problem loans not included in nonperforming assets	110,100,000		135,400,000
Increase in interest income if, non accruing loans been on accruing status	40,100,000		63,900,000
Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	1,279,050,000		1,145,735,000
Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	312,788,000		274,248,000
Consumer Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	680,890,000		695,745,000
Commercial Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	1,167,136,000		1,110,962,000
Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	85,300,000		64,661,000
Impaired Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	60,661,000		71,271,000
Impaired Loans [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	5,831,000		13,735,000
Impaired Loans [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	6,229,000		13,042,000
Impaired Loans [Member] | Consumer Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	16,579,000		18,361,000
Impaired Loans [Member] | Commercial Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	31,614,000		25,340,000
Impaired Loans [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	408,000		793,000
Accruing Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	3,464,503,000		3,220,080,000
Accruing Loans [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	1,273,219,000		1,132,000,000
Accruing Loans [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	306,559,000		261,206,000
Accruing Loans [Member] | Consumer Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	664,311,000		677,384,000
Accruing Loans [Member] | Commercial Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	1,135,522,000		1,085,622,000
Accruing Loans [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	84,892,000		63,868,000
Nonaccrual Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	36,571,000		47,855,000
Nonaccrual Loans [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	4,896,000		11,890,000
Nonaccrual Loans [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	5,857,000		12,965,000
Nonaccrual Loans [Member] | Consumer Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	10,548,000		12,487,000
Nonaccrual Loans [Member] | Commercial Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	14,983,000		9,962,000
Nonaccrual Loans [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	287,000		551,000
Troubled Debt Restructurings [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	24,090,000	[1]	23,416,000	[1]
Troubled Debt Restructurings [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	935,000	[1]	1,845,000	[1]
Troubled Debt Restructurings [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	372,000	[1]	77,000	[1]
Troubled Debt Restructurings [Member] | Consumer Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	6,031,000	[1]	5,874,000	[1]
Troubled Debt Restructurings [Member] | Commercial Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	16,631,000	[1]	15,378,000	[1]
Troubled Debt Restructurings [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	121,000	[1]	242,000	[1]
Pass [Member] | Accruing Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	3,271,838,000		3,004,795,000
Pass [Member] | Accruing Loans [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	1,226,386,000		1,098,898,000
Pass [Member] | Accruing Loans [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	254,763,000		204,696,000
Pass [Member] | Accruing Loans [Member] | Consumer Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	643,667,000		643,924,000
Pass [Member] | Accruing Loans [Member] | Commercial Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	1,062,132,000		994,059,000
Pass [Member] | Accruing Loans [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	84,890,000		63,218,000
Pass [Member] | Troubled Debt Restructurings [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	9,519,000	[1]	5,092,000	[1]
Pass [Member] | Troubled Debt Restructurings [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	693,000	[1]	949,000	[1]
Pass [Member] | Troubled Debt Restructurings [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	72,000	[1]	77,000	[1]
Pass [Member] | Troubled Debt Restructurings [Member] | Consumer Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	3,821,000	[1]	3,631,000	[1]
Pass [Member] | Troubled Debt Restructurings [Member] | Commercial Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	4,812,000	[1]	193,000	[1]
Pass [Member] | Troubled Debt Restructurings [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	121,000	[1]	242,000	[1]
Special Mention [Member] | Accruing Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	82,522,000		79,859,000
Special Mention [Member] | Accruing Loans [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	26,629,000		17,029,000
Special Mention [Member] | Accruing Loans [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	32,545,000		27,553,000
Special Mention [Member] | Accruing Loans [Member] | Consumer Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	6,351,000		15,225,000
Special Mention [Member] | Accruing Loans [Member] | Commercial Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	16,997,000		19,403,000
Special Mention [Member] | Accruing Loans [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0		649,000
Special Mention [Member] | Troubled Debt Restructurings [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	[1]	0	[1]
Special Mention [Member] | Troubled Debt Restructurings [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	[1]	0	[1]
Special Mention [Member] | Troubled Debt Restructurings [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	[1]	0	[1]
Special Mention [Member] | Troubled Debt Restructurings [Member] | Consumer Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	[1]	0	[1]
Special Mention [Member] | Troubled Debt Restructurings [Member] | Commercial Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	[1]	0	[1]
Special Mention [Member] | Troubled Debt Restructurings [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	[1]	0	[1]
Substandard [Member] | Accruing Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	110,143,000	[2]	135,426,000	[2]
Substandard [Member] | Accruing Loans [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	20,204,000	[2]	16,073,000	[2]
Substandard [Member] | Accruing Loans [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	19,251,000	[2]	28,957,000	[2]
Substandard [Member] | Accruing Loans [Member] | Consumer Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	14,293,000	[2]	18,235,000	[2]
Substandard [Member] | Accruing Loans [Member] | Commercial Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	56,393,000	[2]	72,160,000	[2]
Substandard [Member] | Accruing Loans [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	2,000	[2]	1,000	[2]
Substandard [Member] | Nonaccrual Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	36,187,000		46,662,000
Substandard [Member] | Nonaccrual Loans [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	4,810,000		11,194,000
Substandard [Member] | Nonaccrual Loans [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	5,857,000		12,965,000
Substandard [Member] | Nonaccrual Loans [Member] | Consumer Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	10,250,000		11,990,000
Substandard [Member] | Nonaccrual Loans [Member] | Commercial Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	14,983,000		9,962,000
Substandard [Member] | Nonaccrual Loans [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	287,000		551,000
Substandard [Member] | Troubled Debt Restructurings [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	14,570,000	[1]	18,324,000	[1]
Substandard [Member] | Troubled Debt Restructurings [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	242,000	[1]	896,000	[1]
Substandard [Member] | Troubled Debt Restructurings [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	300,000	[1]	0	[1]
Substandard [Member] | Troubled Debt Restructurings [Member] | Consumer Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	2,210,000	[1]	2,243,000	[1]
Substandard [Member] | Troubled Debt Restructurings [Member] | Commercial Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	11,819,000	[1]	15,185,000	[1]
Substandard [Member] | Troubled Debt Restructurings [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0	[1]	0	[1]
Doubtful [Member] | Nonaccrual Loans [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	384,000		1,193,000
Doubtful [Member] | Nonaccrual Loans [Member] | Commercial and Industrial [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	86,000		696,000
Doubtful [Member] | Nonaccrual Loans [Member] | Construction and Land Development [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0		0
Doubtful [Member] | Nonaccrual Loans [Member] | Consumer Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	298,000		497,000
Doubtful [Member] | Nonaccrual Loans [Member] | Commercial Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	0		0
Doubtful [Member] | Nonaccrual Loans [Member] | Consumer and Other [Member]
Financing Receivable, Recorded Investment [Line Items]
Loans	$ 0		$ 0

[1] Troubled debt restructurings are presented as an impaired; however, they continue to accrue interest at contractual rates.

[2] Potential problem loans represent those loans with a well-defined weakness and where information about possible credit problems of borrowers has caused management to have doubts about the borrower's ability to comply with present repayment terms. This definition is believed to be substantially consistent with the standards established by Pinnacle Bank's primary regulator for loans classified as substandard, excluding the impact of substandard nonperforming loans and substandard troubled debt restructurings. Potential problem loans, which are not included in nonperforming assets, amounted to approximately $110.1 million at September 30, 2012, compared to $135.4 million at December 31, 2011.

XML

Regulatory Matters (Tables)

9 Months Ended

Sep. 30, 2012

Regulatory Matters [Abstract]

Summary of regulatory capital requirement

Quantitative measures established by regulation to ensure capital adequacy require Pinnacle Financial and its banking subsidiary to maintain minimum amounts and ratios of Total and Tier I capital to risk-weighted assets and for Pinnacle Bank of Tier I capital to average assets. Management believes, as of September 30, 2012, that Pinnacle Financial and Pinnacle Bank met all capital adequacy requirements to which they are subject.  To be categorized as well-capitalized under applicable banking regulations, Pinnacle Financial and Pinnacle Bank must maintain minimum Total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the following table and not be subject to a written agreement, order or directive to maintain a higher capital level.  Pinnacle Financial and Pinnacle Bank's actual capital amounts and ratios are presented in the following table

(in thousands):

	Actual					Regulatory Minimum Capital Requirement					Regulatory Minimum To Be Well-Capitalized
At September 30, 2012	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total capital to risk weighted assets:
Pinnacle Financial	$	536,359		13.4	%	$	321,164		8.0	%	$	403,442		10.0	%
Pinnacle Bank	$	531,092		13.3	%	$	320,496		8.0	%	$	402,617		10.0	%
Tier I capital to risk weighted assets:
Pinnacle Financial	$	485,929		12.1	%	$	160,582		4.0	%	$	242,065		6.0	%
Pinnacle Bank	$	480,765		12.0	%	$	160,248		4.0	%	$	241,570		6.0	%
Tier I capital to average assets (*):
Pinnacle Financial	$	485,929		10.5	%	$	184,513		4.0	%	NA		NA
Pinnacle Bank	$	480,765		10.5	%	$	183,875		4.0	%	$	229,845		5.0	%

(*) Average assets for the above calculations were based on the most recent quarter.

XML

Derivative Instruments (Details) (Not Designated as Hedging Instrument [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Interest rate swap agreements [Abstract]
Notional Amount of Interest rate swap	$ 484,366	$ 515,278
Estimated Fair Value of Interest rate swap	(226)	(210)
Pay Fixed / Receive Variable Swaps [Member]
Interest rate swap agreements [Abstract]
Notional Amount of Interest rate swap	242,183	257,639
Estimated Fair Value of Interest rate swap	17,858	17,937
Pay Variable / Receive Fixed Swaps [Member]
Interest rate swap agreements [Abstract]
Notional Amount of Interest rate swap	242,183	257,639
Estimated Fair Value of Interest rate swap	$ (18,084)	$ (18,147)

XML

Loans and Allowance for Loan Losses, Allowance for Credit Losses (Details) (USD $)	3 Months Ended			9 Months Ended			12 Months Ended
	Sep. 30, 2012		Sep. 30, 2011	Sep. 30, 2012		Sep. 30, 2011	Dec. 31, 2011
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance				$ 73,975,000		$ 82,575,000	$ 82,575,000
Charged-off loans				(11,265,378)		(27,201,443)	(34,850,000)
Recovery of previously charged-off loans				3,303,000			4,452,000
Provision for loan losses				3,080,000			21,798,000
Ending Balance	69,092,000			69,092,000			73,975,000
Loans and other extensions of credit granted to directors, executive officers, and their related entities	9,600,000			9,600,000			10,800,000
Amount drawn from loans and other extensions of credit granted	8,900,000			8,900,000			9,600,000
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	69,092,075			69,092,075			73,974,675
Troubled debt restructuring, nonperforming, accrual of interest	24,100,000			24,100,000			23,400,000
Mortgage loans held-for-sale	39,245,780			39,245,780			35,363,038
Gain loss on sale of loans held for sale	1,978,935		1,295,278	4,930,190		2,693,913
Number of mortgage loans sold to third party				12,500
Mortgage loans sold				2,688,000,000
Number of conventional loans underwrote by the entity				3,100
Number of loans underwrote				2,600
Percentage at which loans underwrote, maximum (in hundredths)				80.00%
Secured financing receivable	648,200,000			648,200,000
Commercial And Industrial [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance				20,789,000		21,426,000	21,426,000
Charged-off loans				(3,267,000)			(15,360,000)
Recovery of previously charged-off loans				1,131,000			2,167,000
Provision for loan losses				(3,133,000)			12,556,000
Ending Balance	21,786,000			21,786,000			20,789,000
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	21,786,000			21,786,000			20,789,000
Construction and Land Development [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance				12,040,000		19,122,000	19,122,000
Charged-off loans				(1,638,000)			(10,157,000)
Recovery of previously charged-off loans				1,086,000			1,530,000
Provision for loan losses				1,664,000			1,545,000
Ending Balance	9,824,000			9,824,000			12,040,000
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	9,824,000			9,824,000			12,040,000
Unallocated [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance				6,322,000		11,003,000	11,003,000
Charged-off loans				0			0
Recovery of previously charged-off loans				0			0
Provision for loan losses				1,185,000			(4,681,000)
Ending Balance	5,137,000			5,137,000			6,322,000
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	5,137,000			5,137,000			6,322,000
Consumer Real Estate - Mortgage [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance				10,302,000		9,898,000	9,898,000
Charged-off loans				(3,857,000)			(5,076,000)
Recovery of previously charged-off loans				793,000			495,000
Provision for loan losses				(2,759,000)			4,985,000
Ending Balance	9,997,000			9,997,000			10,302,000
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	9,997,000			9,997,000			10,302,000
Commercial Real Estate - Mortgage [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance				23,397,000		19,252,000	19,252,000
Charged-off loans				(1,676,000)			(3,044,000)
Recovery of previously charged-off loans				215,000			116,000
Provision for loan losses				1,013,000			7,073,000
Ending Balance	20,923,000			20,923,000			23,397,000
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	20,923,000			20,923,000			23,397,000
Consumer and Other [Member]
Financing Receivable, Allowance for Credit Losses [Roll Forward]
Beginning Balance				1,125,000		1,874,000	1,874,000
Charged-off loans				(828,000)			(1,213,000)
Recovery of previously charged-off loans				78,000			144,000
Provision for loan losses				(1,050,000)			320,000
Ending Balance	1,425,000			1,425,000			1,125,000
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	1,425,000			1,425,000			1,125,000
Accruing Loans [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	58,321,000			58,321,000			59,607,000
Accruing Loans [Member] | Commercial And Industrial [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	20,577,000			20,577,000			17,740,000
Accruing Loans [Member] | Construction and Land Development [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	9,594,000			9,594,000			10,764,000
Accruing Loans [Member] | Unallocated [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	0			0			0
Accruing Loans [Member] | Consumer Real Estate - Mortgage [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	8,663,000			8,663,000			9,485,000
Accruing Loans [Member] | Commercial Real Estate - Mortgage [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	18,145,000			18,145,000			20,581,000
Accruing Loans [Member] | Consumer and Other [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	1,342,000			1,342,000			1,037,000
Nonaccrual Loans [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	2,072,000			2,072,000			4,440,000
Nonaccrual Loans [Member] | Commercial And Industrial [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	1,071,000			1,071,000			2,767,000
Nonaccrual Loans [Member] | Construction and Land Development [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	192,000			192,000			1,264,000
Nonaccrual Loans [Member] | Unallocated [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	0			0			0
Nonaccrual Loans [Member] | Consumer Real Estate - Mortgage [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	526,000			526,000			301,000
Nonaccrual Loans [Member] | Commercial Real Estate - Mortgage [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	218,000			218,000			57,000
Nonaccrual Loans [Member] | Consumer and Other [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	65,000			65,000			51,000
Troubled Debt Restructurings [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	3,562,000	[1]		3,562,000	[1]		3,606,000	[1]
Troubled Debt Restructurings [Member] | Commercial And Industrial [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	138,000	[1]		138,000	[1]		282,000	[1]
Troubled Debt Restructurings [Member] | Construction and Land Development [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	38,000	[1]		38,000	[1]		12,000	[1]
Troubled Debt Restructurings [Member] | Unallocated [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	0	[1]		0	[1]		0	[1]
Troubled Debt Restructurings [Member] | Consumer Real Estate - Mortgage [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	808,000	[1]		808,000	[1]		516,000	[1]
Troubled Debt Restructurings [Member] | Commercial Real Estate - Mortgage [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	2,560,000	[1]		2,560,000	[1]		2,759,000	[1]
Troubled Debt Restructurings [Member] | Consumer and Other [Member]
Allowance allocation by loan classification for accruing and impaired loans [Abstract]
Total Allowance for Loan Losses	$ 18,000	[1]		$ 18,000	[1]		$ 37,000	[1]

[1] Troubled debt restructurings of $24.1 million and $23.4 million as of September 30, 2012 and December 31, 2011, respectively, are classified as impaired loans pursuant to U.S. GAAP; however, continue to accrue interest at contractual rates.

XML

Participation in US Treasury Capital Purchase Program (CPP)

9 Months Ended

Sep. 30, 2012

Participation in U.S. Treasury Capital Purchase Program (CPP) [Abstract]

Participation in U.S. Treasury Capital Purchase Program

Note 2. Participation in U.S. Treasury Capital Purchase Program

On December 12, 2008, Pinnacle Financial issued 95,000 shares of preferred stock to the U.S. Treasury (the Treasury) for $95 million pursuant to the CPP.  For the time the CPP preferred stock was outstanding, the CPP preferred stock was non-voting, other than having class voting rights on certain matters, and paid cumulative dividends quarterly at a rate of 5% per annum. Pinnacle Financial redeemed the preferred shares issued to the Treasury under the CPP in two payments.   During the fourth quarter of 2011, Pinnacle Financial redeemed 23,750 of the preferred shares in a transaction totaling approximately $23.9 million.  During the second quarter of 2012, Pinnacle Financial completed the redemption of the remaining 71,250 preferred shares outstanding to the Treasury in a transaction totaling $71.6 million which included accrued but unpaid dividends of $346,000.  Concurrently, Pinnacle Financial accelerated the accretion of the remaining preferred stock discount of approximately $1.66 million during the second quarter of 2012.

Additionally, Pinnacle Financial issued warrants to purchase 534,910 shares of common stock to the Treasury as a condition to its participation in the CPP.  The warrants had an exercise price of $26.64 each, were immediately exercisable and expired 10 years from the date of issuance.  On June 16, 2009, Pinnacle Financial completed the sale of 8,855,000 shares of its common stock in a public offering, resulting in net proceeds to Pinnacle Financial of approximately $109 million.  As a result, and pursuant to the terms of the warrants, the number of shares issuable upon exercise of the warrants was reduced by 50%, or 267,455 shares.  During the third quarter of 2012, Pinnacle Financial repurchased all of the remaining outstanding warrants held by the Treasury for $755,000.

XML

Fair Value of Financial Instruments (Details) (USD $)																													9 Months Ended																																																																																		9 Months Ended		12 Months Ended
	Sep. 30, 2012		Dec. 31, 2011		Sep. 30, 2012 Commitments to Extend Credit [Member]	Sep. 30, 2012 Standby Letters of Credit [Member]	Sep. 30, 2012 Carrying / Notional Amount [Member]	Dec. 31, 2011 Carrying / Notional Amount [Member]	Sep. 30, 2012 Carrying / Notional Amount [Member] Commitments to Extend Credit [Member]		Dec. 31, 2011 Carrying / Notional Amount [Member] Commitments to Extend Credit [Member]		Sep. 30, 2012 Carrying / Notional Amount [Member] Standby Letters of Credit [Member]		Dec. 31, 2011 Carrying / Notional Amount [Member] Standby Letters of Credit [Member]		Sep. 30, 2012 Estimated Fair Value [Member]		Dec. 31, 2011 Estimated Fair Value [Member]		Sep. 30, 2012 Estimated Fair Value [Member] Commitments to Extend Credit [Member]		Dec. 31, 2011 Estimated Fair Value [Member] Commitments to Extend Credit [Member]		Sep. 30, 2012 Estimated Fair Value [Member] Standby Letters of Credit [Member]		Dec. 31, 2011 Estimated Fair Value [Member] Standby Letters of Credit [Member]		Sep. 30, 2012 Other liabilities [Member]	Sep. 30, 2011 Other liabilities [Member]	Sep. 30, 2012 Other assets [Member]	Sep. 30, 2011 Other assets [Member]	Sep. 30, 2012 U.S. Government Agency Securities [Member]	Dec. 31, 2011 U.S. Government Agency Securities [Member]	Sep. 30, 2012 Mortgage-backed Securities [Member]	Dec. 31, 2011 Mortgage-backed Securities [Member]	Sep. 30, 2012 State and Municipal Securities [Member]	Dec. 31, 2011 State and Municipal Securities [Member]	Sep. 30, 2012 Corporate Notes and Other [Member]	Dec. 31, 2011 Corporate Notes and Other [Member]	Sep. 30, 2012 Quoted market prices in an active market (Level 1) [Member]	Dec. 31, 2011 Quoted market prices in an active market (Level 1) [Member]	Sep. 30, 2012 Quoted market prices in an active market (Level 1) [Member] Commitments to Extend Credit [Member]		Dec. 31, 2011 Quoted market prices in an active market (Level 1) [Member] Commitments to Extend Credit [Member]		Sep. 30, 2012 Quoted market prices in an active market (Level 1) [Member] Standby Letters of Credit [Member]		Dec. 31, 2011 Quoted market prices in an active market (Level 1) [Member] Standby Letters of Credit [Member]		Sep. 30, 2012 Models with significant observable market parameters (level 2) [Member]	Dec. 31, 2011 Models with significant observable market parameters (level 2) [Member]	Sep. 30, 2012 Models with significant observable market parameters (level 2) [Member] Commitments to Extend Credit [Member]		Dec. 31, 2011 Models with significant observable market parameters (level 2) [Member] Commitments to Extend Credit [Member]		Sep. 30, 2012 Models with significant observable market parameters (level 2) [Member] Standby Letters of Credit [Member]		Dec. 31, 2011 Models with significant observable market parameters (level 2) [Member] Standby Letters of Credit [Member]		Sep. 30, 2012 Models with significant unobservable market parameters (Level 3) [Member]	Dec. 31, 2011 Models with significant unobservable market parameters (Level 3) [Member]	Sep. 30, 2012 Models with significant unobservable market parameters (Level 3) [Member] Commitments to Extend Credit [Member]		Dec. 31, 2011 Models with significant unobservable market parameters (Level 3) [Member] Commitments to Extend Credit [Member]		Sep. 30, 2012 Models with significant unobservable market parameters (Level 3) [Member] Standby Letters of Credit [Member]		Dec. 31, 2011 Models with significant unobservable market parameters (Level 3) [Member] Standby Letters of Credit [Member]		Sep. 30, 2012 Recurring [Member]	Dec. 31, 2011 Recurring [Member]	Sep. 30, 2012 Recurring [Member] U.S. Government Agency Securities [Member]	Dec. 31, 2011 Recurring [Member] U.S. Government Agency Securities [Member]	Sep. 30, 2012 Recurring [Member] Mortgage-backed Securities [Member]	Dec. 31, 2011 Recurring [Member] Mortgage-backed Securities [Member]	Sep. 30, 2012 Recurring [Member] State and Municipal Securities [Member]	Dec. 31, 2011 Recurring [Member] State and Municipal Securities [Member]	Sep. 30, 2012 Recurring [Member] Corporate Notes and Other [Member]	Dec. 31, 2011 Recurring [Member] Corporate Notes and Other [Member]	Sep. 30, 2012 Recurring [Member] Quoted market prices in an active market (Level 1) [Member]	Dec. 31, 2011 Recurring [Member] Quoted market prices in an active market (Level 1) [Member]	Sep. 30, 2012 Recurring [Member] Quoted market prices in an active market (Level 1) [Member] U.S. Government Agency Securities [Member]	Dec. 31, 2011 Recurring [Member] Quoted market prices in an active market (Level 1) [Member] U.S. Government Agency Securities [Member]	Sep. 30, 2012 Recurring [Member] Quoted market prices in an active market (Level 1) [Member] Mortgage-backed Securities [Member]	Dec. 31, 2011 Recurring [Member] Quoted market prices in an active market (Level 1) [Member] Mortgage-backed Securities [Member]	Sep. 30, 2012 Recurring [Member] Quoted market prices in an active market (Level 1) [Member] State and Municipal Securities [Member]	Dec. 31, 2011 Recurring [Member] Quoted market prices in an active market (Level 1) [Member] State and Municipal Securities [Member]	Sep. 30, 2012 Recurring [Member] Quoted market prices in an active market (Level 1) [Member] Corporate Notes and Other [Member]	Dec. 31, 2011 Recurring [Member] Quoted market prices in an active market (Level 1) [Member] Corporate Notes and Other [Member]	Sep. 30, 2012 Recurring [Member] Models with significant observable market parameters (level 2) [Member]	Dec. 31, 2011 Recurring [Member] Models with significant observable market parameters (level 2) [Member]	Sep. 30, 2012 Recurring [Member] Models with significant observable market parameters (level 2) [Member] U.S. Government Agency Securities [Member]	Dec. 31, 2011 Recurring [Member] Models with significant observable market parameters (level 2) [Member] U.S. Government Agency Securities [Member]	Sep. 30, 2012 Recurring [Member] Models with significant observable market parameters (level 2) [Member] Mortgage-backed Securities [Member]	Dec. 31, 2011 Recurring [Member] Models with significant observable market parameters (level 2) [Member] Mortgage-backed Securities [Member]	Sep. 30, 2012 Recurring [Member] Models with significant observable market parameters (level 2) [Member] State and Municipal Securities [Member]	Dec. 31, 2011 Recurring [Member] Models with significant observable market parameters (level 2) [Member] State and Municipal Securities [Member]	Sep. 30, 2012 Recurring [Member] Models with significant observable market parameters (level 2) [Member] Corporate Notes and Other [Member]	Dec. 31, 2011 Recurring [Member] Models with significant observable market parameters (level 2) [Member] Corporate Notes and Other [Member]	Sep. 30, 2012 Recurring [Member] Models with significant unobservable market parameters (Level 3) [Member]	Dec. 31, 2011 Recurring [Member] Models with significant unobservable market parameters (Level 3) [Member]	Sep. 30, 2012 Recurring [Member] Models with significant unobservable market parameters (Level 3) [Member] U.S. Government Agency Securities [Member]	Dec. 31, 2011 Recurring [Member] Models with significant unobservable market parameters (Level 3) [Member] U.S. Government Agency Securities [Member]	Sep. 30, 2012 Recurring [Member] Models with significant unobservable market parameters (Level 3) [Member] Mortgage-backed Securities [Member]	Dec. 31, 2011 Recurring [Member] Models with significant unobservable market parameters (Level 3) [Member] Mortgage-backed Securities [Member]	Sep. 30, 2012 Recurring [Member] Models with significant unobservable market parameters (Level 3) [Member] State and Municipal Securities [Member]	Dec. 31, 2011 Recurring [Member] Models with significant unobservable market parameters (Level 3) [Member] State and Municipal Securities [Member]	Sep. 30, 2012 Recurring [Member] Models with significant unobservable market parameters (Level 3) [Member] Corporate Notes and Other [Member]	Dec. 31, 2011 Recurring [Member] Models with significant unobservable market parameters (Level 3) [Member] Corporate Notes and Other [Member]	Sep. 30, 2012 Nonrecurring [Member]		Dec. 31, 2011 Nonrecurring [Member]		Sep. 30, 2012 Nonrecurring [Member] Quoted market prices in an active market (Level 1) [Member]		Dec. 31, 2011 Nonrecurring [Member] Quoted market prices in an active market (Level 1) [Member]		Sep. 30, 2012 Nonrecurring [Member] Models with significant observable market parameters (level 2) [Member]		Dec. 31, 2011 Nonrecurring [Member] Models with significant observable market parameters (level 2) [Member]		Sep. 30, 2012 Nonrecurring [Member] Models with significant unobservable market parameters (Level 3) [Member]		Dec. 31, 2011 Nonrecurring [Member] Models with significant unobservable market parameters (Level 3) [Member]
Assets at fair value [Abstract]
Total investment securities available-for-sale	$ 738,705,000		$ 894,962,000																														$ 11,356,000	$ 42,313,000	$ 524,566,000	$ 645,567,000	$ 191,413,000	$ 195,952,000	$ 11,370,000	$ 11,130,000																															$ 738,705,000	$ 894,962,000	$ 11,356,000	$ 42,313,000	$ 524,566,000	$ 645,567,000	$ 191,413,000	$ 195,952,000	$ 11,370,000	$ 11,130,000	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 738,705,000	$ 894,962,000	$ 11,356,000	$ 42,313,000	$ 524,566,000	$ 645,567,000	$ 191,413,000	$ 195,952,000	$ 11,370,000	$ 11,130,000	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0	$ 0
Alternative investments																																																																							3,406,000	3,400,000										0										0									3,406,000	3,400,000
Other assets																																																																							68,067,000	67,319,000										0									17,858,000	17,937,000									50,209,000	49,382,000
Total assets at fair value																																																																							810,178,000	965,681,000										0									756,563,000	912,899,000									53,615,000	52,782,000									56,323,000		83,129,000		0		0		0		0		56,323,000		83,129,000
Liabilities at fair value [Abstract]
Other liabilities																																																																							18,084,000	18,147,000									0	0									18,084,000	18,147,000									0	0
Total liabilities at fair value																																																																							18,084,000	18,147,000									0	0									18,084,000	18,147,000									0	0
Assets and liabilities measured at fair value on a nonrecurring basis [Abstract]
Other real estate owned	21,816,528		39,714,415																																																																																																												21,816,528		39,714,415		0		0		0		0		21,816,000		39,714,000
Nonperforming loans, net																																																																																																															34,506,000	[1]	43,415,000	[1]	0	[1]	0	[1]	0	[1]	0	[1]	34,506,000	[1]	43,415,000	[1]
Total																																																																							810,178,000	965,681,000										0									756,563,000	912,899,000									53,615,000	52,782,000									56,323,000		83,129,000		0		0		0		0		56,323,000		83,129,000
Gain (losses) on Other real estate owned																																																																																																															(3,178,000)		(6,890,000)
Gain (losses) on Impaired loans, net																																																																																																															(2,819,000)	[1]	(8,661,000)	[1]
Total gains (losses)																																																																																																															(5,997,000)		(15,551,000)
Valuation allowance of impaired loans	2,072,000	[2]	4,440,000	[2]
Assets measured on recurring basis, unobservable input reconciliation, calculation [Roll Forward]
Fair value, January 1																													0	0	52,782,000	50,962,000
Total realized gains included in income																													0	0	1,130,000	1,130,000
Change in unrealized gains/losses included in other comprehensive income for assets and liabilities still held at March 31																													0	0	0	0
Purchases, issuances and settlements, net																													0	0	189,000	393,000
Transfers out of Level 3																													0	0	0	0
Fair value, March 31																													0	0		52,485,000
Total realized gains included in income related to financial assets and liabilities still on the consolidated balance sheet at March 31																													0	0	1,130,000	1,130,000
Financial assets [Abstract]
Securities held-to-maturity	587,000		2,369,000				575,000	2,330,000									587,000		2,369,000	[3]																	587,000	2,369,000			0	0									587,000	2,369,000									0	0
Loans, net							3,456,072,000	3,217,376,000									3,196,924,000	[3]	2,893,526,000	[3]																					0	0									0	0									3,196,924,000	2,893,526,000
Mortgage loans held-for-sale							39,246,000	35,363,000									39,246,000		35,363,000	[3]																					0										0										39,246,000	35,363,000
Financial liabilities [Abstract]
Deposits and securities sold under agreements to repurchase							3,854,074,000	3,785,931,000									3,798,351,000	[3]	3,752,490,000	[3]																					0	0									3,798,351,000	3,752,490,000									0	0
Federal Home Loan Bank advances							190,887,000	226,069,000									191,400,000	[3]	226,460,000	[3]																					0	0									0	0									191,400,000	226,460,000
Subordinated debt and other borrowings							106,783,000	97,476,000									84,691,000	[3]	72,030,000	[3]																					0	0									84,691,000	72,030,000									0	0
Off balance sheet instruments [Abstract]
Off-balance sheet instruments					965,300,000	72,600,000			965,331,000	[4]	937,084,000	[4]	72,580,000	[5]	76,176,000	[5]					748,000	[3],[4]	1,031,000	[3],[4]	450,000	[3],[5]	259,000	[3],[5]															0	[4]	0	[4]	0	[5]	0	[5]			0	[4]	0	[4]	0	[5]	0	[5]			748,000	[4]	1,031,000	[4]	450,000	[5]	259,000	[5]
Standby by letter of credit included in other liabilities	$ 45,246,690		$ 42,097,132

[1] Amount is net of a valuation allowance of $2.0 million at September 30, 2012 and $4.4 million at December 31, 2011 as required by ASC 310-10, "Receivables."

[2] Collateral dependent loans are typically charged-off to their net realizable value pursuant to requirements of our primary regulator and no specific allowance is carried related to those loans.

[3] Estimated fair values are consistent with an exit-price concept. The assumptions used to estimate the fair values are intended to approximate those that a market-participant would realize in a hypothetical orderly transaction.

[4] At the end of each quarter, Pinnacle Financial evaluates the inherent risks of the outstanding off-balance sheet commitments. In making this evaluation, Pinnacle Financial evaluates the credit worthiness of the borrower, the collateral supporting the commitments and any other factors similar to those used to evaluate the inherent risks of our loan portfolio. Additionally, Pinnacle Financial evaluates the probability that the outstanding commitment will eventually become a funded loan. As a result, at September 30, 2012 and December 31, 2011, Pinnacle Financial included in other liabilities $1.0 million, respectively, representing the inherent risks associated with these off-balance sheet commitments.

[5] At September 30, 2012 and December 31, 2011, the fair value of Pinnacle Financial's standby letters of credit was $450,000 and $259,000, respectively. This amount represents the unamortized fee associated with these standby letters of credit and is included in the consolidated balance sheet of Pinnacle Financial and is believed to approximate fair value. This fair value will decrease over time as the existing standby letters of credit approach their expiration dates.

XML

Summary of Significant Accounting Policies (Details) (USD $)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Cash Transactions [Abstract]
Interest paid			$ 18,317,526	$ 32,356,615
Income taxes paid, net			5,699,106	1,638,414
Noncash Transactions:
Loans charged-off to the allowance for loan losses			11,265,378	27,201,443	34,850,000
Loans foreclosed upon and transferred to other real estate owned			8,489,792	26,689,198
Income Per Common Share [Abstract]
Number of incentive stocks outstanding (in shares)	584,000	621,000	595,000	640,000
Basic earnings per share calculation [Abstract]
Numerator - Net income available to common stockholders	11,349,125	24,537,293	26,339,683	31,392,039
Denominator - Average common shares outstanding (in shares)	33,939,248	33,372,980	33,879,186	33,398,029
Basic net income per share available to common stockholders (in dollars per share)	$ 0.33	$ 0.74	$ 0.78	$ 0.94
Diluted earnings per share calculation [Abstract]
Numerator - Net income available to common stockholders	$ 11,349,125	$ 24,537,293	$ 26,339,683	$ 31,392,039
Denominator - Average common shares outstanding (in shares)	33,939,248	33,372,980	33,879,186	33,398,029
Dilutive shares contingently issuable (in shares)	583,828	620,934	594,709	639,710
Average diluted common shares outstanding (in shares)	34,523,076	33,993,914	34,473,895	34,037,739
Diluted net income per share available to common stockholders (in dollars per share)	$ 0.33	$ 0.72	$ 0.76	$ 0.92

XML

Variable Interest Entities (Tables)

9 Months Ended

Sep. 30, 2012

Variable Interest Entities [Abstract]

Summary of variable interest entities

The following table summarizes VIE's that are not consolidated by Pinnacle Financial as of September 30, 2012 and December 31, 2011 (in thousands):

	September 30, 2012				December 31, 2011
Type	Assets Recognized (maximum loss)		Liability Recognized		Assets Recognized (maximum loss)		Liability Recognized		Balance Sheet Classification
Low income housing partnerships	$	5,812	$	-	$	5,917	$	-	Other assets
Trust preferred issuances		N/A		82,476		N/A		82,476	Subordinated debt
Commercial troubled debt restructurings		17,566		-		17,223		-	Loans
Managed discretionary trusts		N/A		N/A		N/A		N/A	N/A

XML

Variable Interest Entities (Details) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Low Income Housing Partnerships [Member] | Other Asset [Member]
Classification of carrying amount of assets and liabilities of VIE [Abstract]
Assets Recognized (maximum loss)	$ 5,812	$ 5,917
Liability Recognized	0	0
Trust Preferred Issuances [Member] | Subordinated Debt [Member]
Classification of carrying amount of assets and liabilities of VIE [Abstract]
Liability Recognized	82,476	82,476
Commercial Troubled Debt Restructurings [Member] | Loans [Member]
Classification of carrying amount of assets and liabilities of VIE [Abstract]
Assets Recognized (maximum loss)	17,566	17,223
Liability Recognized	$ 0	$ 0

XML

Participation in US Treasury Capital Purchase Program (CPP) (Details) (USD $)	3 Months Ended			12 Months Ended	9 Months Ended	12 Months Ended	9 Months Ended
	Jun. 30, 2012	Jun. 30, 2012 Preferred Stock [Member]	Dec. 31, 2011 Preferred Stock [Member]	Dec. 31, 2008 Preferred Stock [Member]	Sep. 30, 2012 Common Stock [Member]	Dec. 31, 2009 Common Stock [Member]	Sep. 30, 2012 Warrants [Member]
Class of Stock [Line Items]
Preferred stock issued to treasury (in shares)				95,000		8,855,000
Preferred stock issued to treasury				$ 95,000,000		$ 109,000,000
Preferred stock dividend rate (in hundredths)				5.00%
Number of preferred shares redeemed under CPP (in shares)		71,250	23,750
Value of preferred shares redeemed under CPP		71,600,000	23,900,000
Accrued but unpaid dividends	346,000
Accretion of discount	1,660,000
Warrants issued to purchase common stock (in shares)							534,910
Exercise price of warrants (in dollars per share)							$ 26.64
Expiry period of warrants from the date of issuance							10 years
Sale of common stock in public offering (in shares)				95,000		8,855,000
Net proceed from sale of common stock in public offering				$ 95,000,000		$ 109,000,000
Percentage of number of shares reduced issuable upon exercise of warrants (in hundredths)					50.00%
Number of shares reduced issuable upon exercise of warrants (in shares)					267,455
Repurchased outstanding warrants held by treasury (in shares)							755,000

XML

Securities (Details) (USD $)	Sep. 30, 2012	Dec. 31, 2011
Securities available-for-sale: [Abstract]
Amortized Cost	$ 697,842,000	$ 857,555,000
Gross Unrealized Gains	40,865,000	37,809,000
Gross Unrealized Losses	2,000	402,000
Fair Value	738,705,000	894,962,000
Securities held-to-maturity: [Abstract]
Amortized Cost	575,000	2,330,000
Gross Unrealized Gains	12,000	39,000
Gross Unrealized Losses	0	0
Fair Value	587,000	2,369,000
Securities pledged as collateral to secure public funds and other deposits or securities sold under agreements to repurchase	633,300,000
Available-for-sale, Amortized Cost [Abstract]
Due in one year or less	4,071,000
Due in one year to five years	39,790,000
Due in five years to ten years	103,442,000
Due after ten years	49,457,000
Mortgage-backed securities	501,082,000
Amortized Cost	697,842,000
Available-for-sale, Fair Value [Abstract]
Due in one year or less	4,129,000
Due in one year to five years	41,341,000
Due in five years to ten years	114,608,000
Due after ten years	54,061,000
Mortgage-backed securities	524,566,000
Fair Value	738,705,000
Held-to-maturity, Amortized Cost [Abstract]
Due in one year or less	200,000
Due in one year to five years	375,000
Due in five years to ten years	0
Due after ten years	0
Mortgage-backed securities	0
Amortized Cost	575,000
Held-to-maturity, Fair Value [Abstract]
Due in one year or less	202,000
Due in one year to five years	385,000
Due in five years to ten years	0
Due after ten years	0
Mortgage-backed securities	0
Fair Value	587,000
U.S. Government Agency Securities [Member]
Securities available-for-sale: [Abstract]
Amortized Cost	11,267,000	41,978,000
Gross Unrealized Gains	89,000	344,000
Gross Unrealized Losses	0	9,000
Fair Value	11,356,000	42,313,000
Mortgage-backed Securities [Member]
Securities available-for-sale: [Abstract]
Amortized Cost	501,082,000	623,684,000
Gross Unrealized Gains	23,484,000	22,254,000
Gross Unrealized Losses	0	371,000
Fair Value	524,566,000	645,567,000
State and Municipal Securities [Member]
Securities available-for-sale: [Abstract]
Amortized Cost	175,725,000	182,206,000
Gross Unrealized Gains	15,690,000	13,768,000
Gross Unrealized Losses	2,000	22,000
Fair Value	191,413,000	195,952,000
Securities held-to-maturity: [Abstract]
Amortized Cost	575,000	2,330,000
Gross Unrealized Gains	12,000	39,000
Gross Unrealized Losses	0	0
Fair Value	587,000	2,369,000
Corporate Notes and Other [Member]
Securities available-for-sale: [Abstract]
Amortized Cost	9,768,000	9,687,000
Gross Unrealized Gains	1,602,000	1,443,000
Gross Unrealized Losses	0	0
Fair Value	$ 11,370,000	$ 11,130,000

XML

Summary of Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Note 1.  Summary of Significant Accounting Policies

Nature of Business — Pinnacle Financial Partners, Inc. (Pinnacle Financial) is a bank 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 Bank provides a full range of banking services in its primary market areas of the Nashville-Davidson-Murfreesboro-Franklin, Tennessee and Knoxville, Tennessee Metropolitan Statistical Areas.

Effective September 4, 2012, Pinnacle National converted from a national bank to a Tennessee state bank and its legal name changed from Pinnacle National Bank to Pinnacle Bank.  As a result of the charter conversion, the bank's primary regulator changed from the Office of the Comptroller of the Currency (OCC) to the Tennessee Department of Financial Institutions (TDFI) and the Federal Deposit Insurance Corporation (FDIC).

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 Pinnacle Financial consolidated financial statements and related notes appearing in the 2011 Annual Report previously filed on Form 10-K.

These consolidated financial statements include the accounts of Pinnacle Financial and its wholly-owned subsidiaries. PNFP Statutory Trust I, PNFP Statutory Trust II, PNFP Statutory Trust III, and PNFP Statutory Trust IV are affiliates of Pinnacle Financial and 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 loan losses, any potential impairment of intangible assets, including goodwill and the valuation of deferred tax assets, other real estate owned, and our investment portfolio, including other-than-temporary impairment. These financial statements should be read in conjunction with Pinnacle Financial's Annual Report on Form 10-K for the year ended December 31, 2011. There have been no significant changes to Pinnacle Financial's significant accounting policies as disclosed in Pinnacle Financial's Annual Report on Form 10-K for the year ended December 31, 2011.

Recently Adopted Accounting Pronouncements —  In May 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards (Topic 820)-Fair Value Measurement (ASU 2011-04), to provide a consistent definition of fair value and ensure that the fair value measurement and disclosure requirements are similar between U.S. GAAP and International Financial Reporting Standards. ASU 2011-04 changes certain fair value measurement principles and enhances the disclosure requirements particularly for level 3 fair value measurements. ASU 2011-04 was effective for Pinnacle Financial during the first quarter of fiscal 2012 and was applied prospectively.

In June 2011, the FASB issued ASU No. 2011-05, Comprehensive Income —Presentation of Comprehensive Income. This ASU eliminates the option to present the components of other comprehensive income as part of the statement of stockholders' equity. Rather, it gives an entity the choice to present the components of net income and other comprehensive income in either a single continuous statement or two separate but consecutive statements. The components of comprehensive income and timing of reclassification of an item to net income do not change with this update. ASU 2011-05 requires retrospective application and is effective for annual and interim periods beginning after December 15, 2011. Pinnacle Financial adopted this ASU in the first quarter of 2012 and has presented separate Consolidated Statements of Comprehensive Income.

In September 2011, the FASB issued ASU No. 2011-8, Intangibles — Goodwill and Other, regarding testing goodwill for impairment. The new guidance provides an entity the option to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If an entity determines that this is the case, it is required to perform the currently prescribed two-step goodwill impairment test to identify potential goodwill impairment and measure the amount of goodwill impairment loss to be recognized for that reporting unit (if any). Based on the qualitative assessment, if an entity determines that the fair value of a reporting unit is more than its carrying amount, the two-step goodwill impairment test is not required. The new guidance was adopted by Pinnacle Financial beginning January 1, 2012 and was used in our annual assessment as of September 30, 2012. The results of our qualitative assessment indicated that the fair value of our reporting units was more than its carrying value, and accordingly, the two-step goodwill impairment test was not performed.

Cash Flow Information — Supplemental cash flow information addressing certain cash and noncash transactions for each of the nine months ended September 30, 2012 and 2011 was as follows:

	For the nine months ended September 30,
	2012		2011
Cash Transactions:
Interest paid	$	18,317,526	$	32,356,615
Income taxes paid, net		5,699,106		1,638,414
Noncash Transactions:
Loans charged-off to the allowance for loan losses		11,265,378		27,201,443
Loans foreclosed upon and transferred to other real estate owned		8,489,792		26,689,198

Income Per Common Share — Basic net income per common share available to common stockholders (EPS) is computed by dividing net income available to common stockholders by the weighted average common shares outstanding for the period.  Weighted average common shares outstanding also include salary stock units issued to the named executive officers.  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 shares outstanding is attributable to common stock options, common stock appreciation rights, warrants and restricted shares with time-based vesting criteria. The dilutive effect of outstanding options, common stock appreciation rights, warrants and restricted shares with time-based vesting criteria is reflected in diluted EPS by application of the treasury stock method.

For the three and nine months ended September 30, 2012, approximately 584,000 and 595,000 shares associated with dilutive stock options, stock appreciation rights, and restricted shares with time-based vesting criteria were included in the net income per share calculation, respectively.  For the three and nine months ended September 30, 2011, there were approximately 621,000 and  640,000 shares associated with dilutive stock options, stock appreciation rights, and time-based restricted shares with time-based vesting criteria outstanding to purchase common shares that were included in the net income per share calculation, respectively.

The following is a summary of the basic and diluted net income per share calculations for the three and nine months ended September 30, 2012 and 2011:

	For the three months ended September 30,				For the nine months ended September 30,
	2012		2011		2012		2011
Basic net income per share calculation:
Numerator - Net income available to common stockholders	$	11,349,125	$	24,537,293	$	26,339,683	$	31,392,039
Denominator - Average common shares outstanding		33,939,248		33,372,980		33,879,186		33,398,029
Basic net income per share available to common stockholders	$	0.33	$	0.74	$	0.78	$	0.94
Diluted net income per share calculation:
Numerator – Net income available to common stockholders	$	11,349,125	$	24,537,293	$	26,339,683	$	31,392,039
Denominator - Average common shares outstanding		33,939,248		33,372,980		33,879,186		33,398,029
Dilutive shares contingently issuable		583,828		620,934		594,709		639,710
Average diluted common shares outstanding		34,523,076		33,993,914		34,473,895		34,037,739
Diluted net income per share available to common stockholders	$	0.33	$	0.72	$	0.76	$	0.92

XML

Securities, AVAILABLE FOR SALE (Details) (USD $)	3 Months Ended							9 Months Ended
	Sep. 30, 2012		Jun. 30, 2012		Mar. 31, 2012		Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Available-for-sale securities, continuous unrealized loss position [Abstract]
Investments with an Unrealized Loss of less than 12 months, Fair Value	$ 625,000							$ 625,000		$ 49,017,000
Investments with an Unrealized Loss of less than 12 months, Unrealized Losses	1,000							1,000		367,000
Investments with an Unrealized Loss of 12 months or longer, Fair Value	330,000							330,000		19,031,000
Investments with an Unrealized Loss of 12 months or longer, Unrealized Losses	1,000							1,000		35,000
Total Investments with an Unrealized Loss, Fair Value	955,000							955,000		68,048,000
Total Investments with an Unrealized Loss, Unrealized Losses	2,000							2,000		402,000
Available-for-sale Securities, Total	738,705,182							738,705,182		894,962,246
Available-for-sale securities, gross realized gain (loss) [Abstract]
Fair Value of securities sold	2,791,000	[1]	18,273,000	[2]	14,360,000	[3]		35,420,503	158,418,558
Gain recognized	7,000		99,000		148,000
Loss recognized			0		0
Net	7,000		99,000		148,000
Other-than-temporary impairment	57,000	[1]	0		34,000	[4]
Gain on the sale of securities, net	(49,784)		99,000		114,000		376,509	162,733	827,708
Weighted average coupon of securities (in hundredths)								0.50%
Number of mortgage backed securities as other-than-temporarily impaired								4
Number of securities sold from the state of California	2							2
Number of securities OTTI due to distinct underperformance relative to the interest rate	1
U.S. Government Agency Securities [Member]
Available-for-sale securities, continuous unrealized loss position [Abstract]
Investments with an Unrealized Loss of less than 12 months, Fair Value	0							0		5,452,000
Investments with an Unrealized Loss of less than 12 months, Unrealized Losses	0							0		9,000
Investments with an Unrealized Loss of 12 months or longer, Fair Value	0							0		0
Investments with an Unrealized Loss of 12 months or longer, Unrealized Losses	0							0		0
Total Investments with an Unrealized Loss, Fair Value	0							0		5,452,000
Total Investments with an Unrealized Loss, Unrealized Losses	0							0		9,000
Mortgage-backed Securities [Member]
Available-for-sale securities, continuous unrealized loss position [Abstract]
Investments with an Unrealized Loss of less than 12 months, Fair Value	0							0		41,598,000
Investments with an Unrealized Loss of less than 12 months, Unrealized Losses	0							0		341,000
Investments with an Unrealized Loss of 12 months or longer, Fair Value	0							0		17,826,000
Investments with an Unrealized Loss of 12 months or longer, Unrealized Losses	0							0		30,000
Total Investments with an Unrealized Loss, Fair Value	0							0		59,424,000
Total Investments with an Unrealized Loss, Unrealized Losses	0							0		371,000
State and Municipal Securities [Member]
Available-for-sale securities, continuous unrealized loss position [Abstract]
Investments with an Unrealized Loss of less than 12 months, Fair Value	625,000							625,000		1,967,000
Investments with an Unrealized Loss of less than 12 months, Unrealized Losses	1,000							1,000		17,000
Investments with an Unrealized Loss of 12 months or longer, Fair Value	330,000							330,000		1,205,000
Investments with an Unrealized Loss of 12 months or longer, Unrealized Losses	1,000							1,000		5,000
Total Investments with an Unrealized Loss, Fair Value	955,000							955,000		3,172,000
Total Investments with an Unrealized Loss, Unrealized Losses	2,000							2,000		22,000
Corporate Notes [Member]
Available-for-sale securities, continuous unrealized loss position [Abstract]
Investments with an Unrealized Loss of less than 12 months, Fair Value	0							0		0
Investments with an Unrealized Loss of less than 12 months, Unrealized Losses	0							0		0
Investments with an Unrealized Loss of 12 months or longer, Fair Value	0							0		0
Investments with an Unrealized Loss of 12 months or longer, Unrealized Losses	0							0		0
Total Investments with an Unrealized Loss, Fair Value	0							0		0
Total Investments with an Unrealized Loss, Unrealized Losses	0							0		0
Total Available for Sale Securities [Member]
Available-for-sale securities, continuous unrealized loss position [Abstract]
Available-for-sale Securities, Total	$ 955,000							$ 955,000

[1] During the third quarter of 2012, Pinnacle Financial determined one security was OTTI due to its distinct underperformance relative to the interest rate environment. After the assignment of approximately $57,000 in OTTI, the bond was sold for a gain of approximately $7,000.

[2] During the second quarter of 2012, Pinnacle Financial sold the four securities previously identified as OTTI in the first quarter. Additionally, two securities issued by municipalities in the state of California, which management believed could be adversely affected by state budgetary issues, were also sold during the second quarter.

[3] Pinnacle Financial sold these securities due to their relatively short terms until maturity and a weighted average coupon of 0.50%.

[4] During the first quarter of 2012, Pinnacle Financial determined four mortgage-backed securities were OTTI because of management's intent to sell them in the second quarter of 2012. The decision to sell was based on their relative underperformance compared to expectations.

XML

Stock Options, Stock Appreciation Rights and Restricted Shares (Details) (USD $)	9 Months Ended			12 Months Ended				3 Months Ended		9 Months Ended			3 Months Ended		9 Months Ended			9 Months Ended				3 Months Ended	9 Months Ended			3 Months Ended	9 Months Ended
	Sep. 30, 2012		Sep. 30, 2011	Dec. 31, 2011		Sep. 30, 2012 Stock Options [Member]	Sep. 30, 2012 Stock Appreciation Rights (SARs) [Member]	Sep. 30, 2012 Restricted Share [Member]	Sep. 30, 2011 Restricted Share [Member]	Sep. 30, 2012 Restricted Share [Member]		Sep. 30, 2011 Restricted Share [Member]	Sep. 30, 2012 Common Stock Options and Stock Appreciation Rights [Member]	Sep. 30, 2011 Common Stock Options and Stock Appreciation Rights [Member]	Sep. 30, 2012 Common Stock Options and Stock Appreciation Rights [Member]	Sep. 30, 2011 Common Stock Options and Stock Appreciation Rights [Member]	Dec. 31, 2011 Common Stock Options and Stock Appreciation Rights [Member]	Sep. 30, 2012 Time Based Awards [Member]		Sep. 30, 2012 Outside Director Awards [Member]		Sep. 30, 2012 Restricted Stock Units (RSUs) [Member]	Sep. 30, 2012 Restricted Stock Units (RSUs) [Member]	Sep. 30, 2012 Restricted Stock Units (RSUs) [Member] Minimum [Member]	Sep. 30, 2012 Restricted Stock Units (RSUs) [Member] Maximum [Member]	Sep. 30, 2011 Salary Stock Unit Awards [Member]	Sep. 30, 2012 Salary Stock Unit Awards [Member]	Sep. 30, 2011 Salary Stock Unit Awards [Member]
Stock Options, Stock Appreciation Rights and Restricted Shares [Abstract]
Number of equity incentive plan	2
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares available for issuances (in shares)	709,000
Number of stocks outstanding to purchase to purchase common stock (in shares)						1,332,000	7,300
Stock options and SAR outstanding to purchase common shares (in shares)													1,339,642		1,339,642
Number [Roll Forward]
Outstanding, Beginning Balance (in shares)															1,581,038
Granted (in shares)															0
Exercised (in shares)															(230,718)
Forfeited (in shares)															(10,678)
Outstanding, Ending Balance (in shares)													1,339,642		1,339,642
Outstanding and expected to vest (in shares)													1,339,618		1,339,618
Options exercisable (in shares)													1,306,171		1,306,171
Weighted average exercise price [Abstract]
Outstanding, Beginning Balance (in dollars per share)	$ 20.81
Granted (in dollars per share)	$ 0
Exercised (in dollars per share)	$ 6.58
Forfeited (in dollars per share)	$ 27.14
Outstanding, Ending Balance (in dollars per share)	$ 23.21			$ 20.81
Outstanding and expected to vest (in dollars per share)	$ 23.21
Options exercisable (in dollars per share)	$ 23.25
Weighted average contractual remaining term [Abstract]
Outstanding	3 years 4 months 9 days			3 years 7 months 13 days
Outstanding	3 years 4 months 9 days			3 years 7 months 13 days
Outstanding and expected to vest	3 years 4 months 9 days
Options exercisable	3 years 3 months 21 days
Aggregate intrisic value [Abstract]
Outstanding	$ 3,683	[1]
Outstanding	2,562			3,683	[1]
Outstanding and expected to vest	2,562
Options exercisable	2,562
Quoted closing price of common stock (in dollars per share)													$ 19.32		$ 19.32		$ 18.35
Number of awards used in aggregate intrinsic value (in shares)													353,285		353,285		348,208
Number of award option vested with no intrinsic value (in shares)															96,000
Average exercise price of option awards with no intrinsic value (in dollars per share)															$ 27.58
Unrecognized compensation cost related to unvested stock options granted													77,000		77,000
Weighted average recognition period of unrecognized compensation cost															3 months 18 days
Stock option compensation expense recorded using the Black-Scholes valuation model													79,000	271,000	329,000	952,000
Number [Roll Forward]
Unvested (in shares)										849,703
Shares awarded (in shares)										147,945								132,965	[2]	14,980	[3]	144,350	164,858
Restrictions lapsed and shares released to associates/directors (in shares)										(201,494)								0	[2]	0	[3]
Shares forfeited (in shares)										(51,705)	[4]							(6,625)	[2],[5]	0	[3]
Unvested (in shares)								744,449		744,449								126,340	[2]	14,980	[3]
Grant date weighted average cost [Roll Forward]
Unvested (in dollars per share)										$ 15.61
Shares awarded (in dollars per share)										$ 16.47
Restrictions lapsed and shares released to associates/directors (in dollars per share)										$ 16.06
Shares forfeited (in dollars per share)										$ 18.32	[4]
Unvested (in dollars per share)								$ 15.56		$ 15.56
Shares forfeited due to failure to meet performance targets (in shares)										30,132
Shares forfeited due to employee termination and retirement										21,923
Restricted stock grants grouped by similar vesting criteria [Abstract]
Vesting Period in years																		5 years	[2]	1 year	[3]
Shares awarded (in shares)										147,945								132,965	[2]	14,980	[3]	144,350	164,858
Restrictions lapsed and shares released to participants (in shares)										201,494								0	[2]	0	[3]
Shares forfeited by participants (in shares)										51,705	[4]							6,625	[2],[5]	0	[3]
Shares Unvested (in shares)								744,449		744,449								126,340	[2]	14,980	[3]
Compensation costs attributable to all restricted share awards								818,000	859,000	2,489,000		2,429,000
Restricted share units granted to the senior executive officers (in shares)										147,945								132,965	[2]	14,980	[3]	144,350	164,858
Percentage of number of restricted shares eligible for conversion (in hundredths)																								0.00%	100.00%
Percentage of incremental awards to vest (in hundredths)																							20.00%
Salary stock unit Awards issued during period (in shares)																										12,511	57,508	18,680
Compensation costs attributable to the SSUs	$ 3,818,757		$ 3,905,168																							$ 194,000	$ 1,000,000	$ 291,000

[1] The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted closing price of Pinnacle Financial common stock of $18.35 per common share at December 31, 2011 for the approximately 348,208 options and stock appreciation rights that were in-the-money at September 30, 2012.

[2] These shares vest in equal annual installments on the anniversary date of the grant.

[3] Restricted share awards are issued to the outside members of the board of directors in accordance with their board compensation plan. Restrictions lapse on the one year anniversary date of the award based on each individual board member meeting their attendance goals for the various board and board committee meetings to which each member was scheduled to attend.

[4] Represents 30,132 shares forfeited due to failure to meet performance targets and 21,923 shares forfeited due to employee termination and retirement.

[5] These shares represent forfeitures resulting from associate terminations during the nine months ended September 30, 2012.

XML

CONSOLIDATED BALANCE SHEET (Unaudited) (USD $)	Sep. 30, 2012	Dec. 31, 2011
ASSETS
Cash and noninterest-bearing due from banks	$ 70,730,026	$ 63,015,997
Interest-bearing due from banks	76,678,278	108,422,470
Federal funds sold and other	730,583	724,573
Cash and cash equivalents	148,138,887	172,163,040
Securities available-for-sale, at fair value	738,705,182	894,962,246
Securities held-to-maturity (fair value of $586,813 and $2,369,118 at September 30, 2012 and December 31, 2011, respectively)	574,843	2,329,917
Mortgage loans held-for-sale	39,245,780	35,363,038
Loans	3,525,164,123	3,291,350,857
Less allowance for loan losses	(69,092,075)	(73,974,675)
Loans, net	3,456,072,048	3,217,376,182
Premises and equipment, net	74,536,714	77,127,361
Other investments	25,871,346	44,653,840
Accrued interest receivable	15,774,555	15,243,366
Goodwill	244,044,967	244,076,492
Core deposits and other intangible assets	5,786,703	7,842,267
Other real estate owned	21,816,528	39,714,415
Other assets	100,818,517	113,098,540
Total assets	4,871,386,070	4,863,950,704
Deposits:
Noninterest-bearing	844,480,484	717,378,933
Interest-bearing	673,083,495	637,203,420
Savings and money market accounts	1,606,698,275	1,585,260,139
Time	595,024,885	714,496,974
Total deposits	3,719,287,139	3,654,339,466
Securities sold under agreements to repurchase	134,786,974	131,591,412
Federal Home Loan Bank advances	190,887,031	226,068,796
Subordinated debt and other borrowings	106,783,292	97,476,000
Accrued interest payable	1,570,473	2,233,330
Other liabilities	45,246,690	42,097,132
Total liabilities	4,198,561,599	4,153,806,136
Stockholders' equity:
Preferred stock, no par value; 10,000,000 shares authorized; 71,250 shares issued and outstanding at December 31, 2011	0	69,096,828
Common stock, par value $1.00; 90,000,000 shares authorized; 34,691,659 shares and 34,354,960 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively	34,691,659	34,354,960
Common stock warrants	0	3,348,402
Additional paid-in capital	543,042,267	536,227,537
Retained earnings	75,656,530	49,783,584
Accumulated other comprehensive income, net of taxes	19,434,015	17,333,257
Total stockholders' equity	672,824,471	710,144,568
Total liabilities and stockholders' equity	$ 4,871,386,070	$ 4,863,950,704

XML

Other borrowings (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Debt Instrument [Line Items]
Face amount	$ 25,000,000
Interest rate paid	3.25%
Frequency of periodic payment	quarterly
Quarterly principal payments	625,000
Date of first required payment	Jun. 30, 2012
Maturity date	Jun. 15, 2017
Minimum prepayment amount	100,000
Annual principal amortization	2,500,000
Fixed charge coverage ratio required, minimum (in hundredths)	125.00%
Debt issuance costs associated with Loan Agreement	$ 200,000
Amortization period of debt issuance costs	3 years
Minimum [Member]
Debt Instrument [Line Items]
Applicable margin (in hundredths)	2.25%
Maximum [Member]
Debt Instrument [Line Items]
Applicable margin (in hundredths)	3.00%
Base Rate [Member]
Debt Instrument [Line Items]
Description of interest rate terms	A base rate generally defined as the sum of (i) the highest of (x) the lender's "base" or "prime" rate, (y) the average overnight federal funds effective rate plus one-half percent (0.50%) per annum or (z) one-month LIBOR plus one percent (1%) per annum and (ii) an applicable margin as noted below; or
Applicable margin (in hundredths)	3.00%
LIBOR Rate [Member]
Debt Instrument [Line Items]
Description of interest rate terms	A LIBOR rate generally defined as the sum of (i) the average of the offered rates of interest quoted in the London Inter-Bank Eurodollar Market for U.S. Dollar deposits with prime banks (as published by Reuters or other commercially available source) for one, two or three months (all as selected by the Company), and (ii) an applicable margin.
Applicable margin (in hundredths)	3.00%
Preferred Stock [Member]
Debt Instrument [Line Items]
Number of shares of preferred stock redeemed with borrowings under Loan Agreement (in shares)	71,250

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) (USD $)	Preferred Stock [Member]	Common Stock [Member]	Warrants [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comp. Income, net [Member]	Total
Balances at Dec. 31, 2010	$ 90,788,682	$ 33,870,380	$ 3,348,402	$ 530,829,019	$ 12,996,202	$ 5,624,600	$ 677,457,285
Balances (in shares) at Dec. 31, 2010		33,870,380
Exercise of employee common stock options and related tax benefits	0	131,923	0	833,107	0	0	965,030
Exercise of employee common stock options and related tax benefits (in shares)		131,923
Issuance of restricted common shares, net of forfeitures	0	287,565	0	(287,565)	0	0	0
Issuance of restricted common shares, net of forfeitures (in shares)		287,565
Issuance of salary stock units	0	37,151	0	487,072	0	0	524,223
Issuance of salary stock units (in shares)		37,151
Restricted shares withheld for taxes	0	(20,092)	0	(270,697)	0	0	(290,789)
Restricted shares withheld for taxes (in shares)		(20,092)
Compensation expense for restricted shares	0	0	0	2,428,988	0	0	2,428,988
Compensation expense for stock options	0	0	0	951,956	0	0	951,956
Accretion on preferred stock discount	983,448	0	0	0	(983,448)	0	0
Preferred dividends paid	0	0	0	0	(3,562,498)	0	(3,562,498)
Net income	0	0	0	0	35,977,570	0	35,977,570
Other comprehensive income	0	0	0	0	0	9,922,126	9,922,126
Balances at Sep. 30, 2011	91,772,130	34,306,927	3,348,402	534,971,880	44,427,826	15,546,726	724,373,891
Balances (in shares) at Sep. 30, 2011		34,306,927
Balances at Dec. 31, 2011	69,096,828	34,354,960	3,348,402	536,227,537	49,783,584	17,333,257	710,144,568
Balances (in shares) at Dec. 31, 2011		34,354,960
Exercise of employee common stock options and related tax benefits	0	230,718	0	1,297,396	0	0	1,528,114
Exercise of employee common stock options and related tax benefits (in shares)		230,718
Repurchase of preferred stock	(71,250,000)	0	0	0	0	0	(71,250,000)
Issuance of restricted common shares, net of forfeitures	0	95,890	0	(95,890)	0	0	0
Issuance of restricted common shares, net of forfeitures (in shares)		95,890
Issuance of salary stock units	0	57,508	0	942,565	0	0	1,000,073
Issuance of salary stock units (in shares)		57,508
Restricted shares withheld for taxes	0	(47,417)	0	(741,427)	0	0	(788,844)
Restricted shares withheld for taxes (in shares)		(47,417)
Compensation expense for restricted shares	0	0	0	2,489,334	0	0	2,489,334
Compensation expense for stock options	0	0	0	329,350	0	0	329,350
Cancellation of outstanding warrants	0	0	(3,348,402)	2,593,402	0	0	(755,000)
Accretion on preferred stock discount	2,153,172	0	0	0	(2,153,172)	0	0
Preferred dividends paid	0	0	0	0	(2,127,605)	0	(2,127,605)
Net income	0	0	0	0	30,153,723	0	30,153,723
Other comprehensive income	0	0	0	0	0	2,100,758	2,100,758
Balances at Sep. 30, 2012	$ 0	$ 34,691,659	$ 0	$ 543,042,267	$ 75,656,530	$ 19,434,015	$ 672,824,471
Balances (in shares) at Sep. 30, 2012		34,691,659					34,691,659

XML

Loans and Allowance for Loan Losses, Troubled Debt Restructurings (Details) (USD $)	9 Months Ended								9 Months Ended						9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012 Lessors of Nonresidential Buildings [Member]	Dec. 31, 2011 Lessors of Nonresidential Buildings [Member]	Sep. 30, 2012 Lessors of Residential Buildings [Member]	Dec. 31, 2011 Lessors of Residential Buildings [Member]	Sep. 30, 2012 Land Subdividers [Member]	Dec. 31, 2011 Land Subdividers [Member]	Sep. 30, 2012 Commercial and Industrial [Member]	Sep. 30, 2011 Commercial and Industrial [Member]	Sep. 30, 2012 Construction and Land Development [Member]	Sep. 30, 2011 Construction and Land Development [Member]	Sep. 30, 2012 Consumer Real Estate - Mortgage [Member]	Sep. 30, 2011 Consumer Real Estate - Mortgage [Member]	Sep. 30, 2012 Commercial Real Estate - Mortgage [Member]	Sep. 30, 2011 Commercial Real Estate - Mortgage [Member]	Sep. 30, 2012 Consumer and Other [Member]	Sep. 30, 2011 Consumer and Other [Member]
Troubled debt restructuring categorized by loan classification [Abstract]
Number of contracts	12	29							1	15	1	0	3	8	6	6	1	0
Pre Modification Outstanding Recorded Investment	$ 7,416,000	$ 18,187,000							$ 59,000	$ 3,146,000	$ 360,000	$ 0	$ 694,000	$ 3,153,000	$ 6,264,000	$ 11,888,000	$ 39,000	$ 0
Post Modification Outstanding Recorded Investment net of related allowance	5,583,000	17,265,000							50,000	2,700,000	333,000	0	643,000	3,044,000	4,523,000	11,881,000	34,000	0
Number of reclassified loans									8						2
Loans previously classified as troubled debt restructurings to nonaccrual status									873,000						3,200,000
Number of reclassified consumer loans	2
Consumer loan previously classified as troubled debt restructurings to nonaccrual status	153,000
Percentage of credit exposure to risk based capital, minimum (in hundredths)	25.00%
Loan portfolio credit risk exposure [Abstract]
Outstanding principal balance			371,707,000		175,563,000		101,102,000
Unfunded commitment			42,107,000		14,627,000		15,338,000
Total exposure			$ 413,814,000	$ 509,003,000	$ 190,190,000	$ 177,414,000	$ 116,440,000	$ 119,106,000

XML

Securities (Tables)

9 Months Ended

Sep. 30, 2012

Securities [Abstract]

Summary of amortized cost and fair value of available-for-sale and held-to-maturity securities

The amortized cost and fair value of securities available-for-sale and held-to-maturity at September 30, 2012 and December 31, 2011 are summarized as follows (in thousands):

	September 30, 2012
	Amortized  Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Securities available-for-sale:
U.S. government agency securities		$	11,267		$	89		$	-		$	11,356
Mortgage-backed securities			501,082			23,484			-			524,566
State and municipal securities			175,725			15,690			2			191,413
Corporate notes and other			9,768			1,602			-			11,370
		$	697,842		$	40,865		$	2		$	738,705
Securities held-to-maturity:
State and municipal securities		$	575		$	12		$	-		$	587
		$	575		$	12		$	-		$	587
	December 31, 2011
	Amortized  Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Securities available-for-sale:
U.S. Government agency securities		$	41,978		$	344		$	9		$	42,313
Mortgage-backed securities			623,684			22,254			371			645,567
State and municipal securities			182,206			13,768			22			195,952
Corporate notes and other			9,687			1,443			-			11,130
		$	857,555		$	37,809		$	402		$	894,962
Securities held-to-maturity:
State and municipal securities		$	2,330		$	39		$	-		$	2,369
		$	2,330		$	39		$	-		$	2,369

Amortized cost and fair value of debt securities by contractual maturity

The amortized cost and fair value of debt securities as of September 30, 2012 by contractual maturity are shown below. Actual maturities may differ from contractual maturities of mortgage-backed securities since the mortgages underlying the securities may be called or prepaid with or without penalty. Therefore, these securities are not included in the maturity categories in the following summary (in thousands):

	September 30, 2012
	Available-for-sale				Held-to-maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	4,071	$	4,129	$	200	$	202
Due in one year to five years		39,790		41,341		375		385
Due in five years to ten years		103,442		114,608		-		-
Due after ten years		49,457		54,061		-		-
Mortgage-backed securities		501,082		524,566		-		-
	$	697,842	$	738,705	$	575	$	587

Classification of investments according to term of unrealized losses of less than twelve months or twelve months or longer

At September 30, 2012 and December 31, 2011, included in securities were the following available-for-sale investments with unrealized losses.  The information below classifies these investments according to the term of the unrealized losses of less than twelve months or twelve months or longer (in thousands):

	Investments with an Unrealized Loss of less than 12 months				Investments with an Unrealized Loss of 12 months or longer				Total Investments with an Unrealized Loss
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
At September 30, 2012:
U.S. government agency securities	$	-	$	-	$	-	$	-	$	-	$	-
Mortgage-backed securities		-		-		-		-		-		-
State and municipal securities		625		1		330		1		955		2
Corporate notes		-		-		-		-		-		-
Total temporarily-impaired securities	$	625	$	1	$	330	$	1	$	955	$	2
At December 31, 2011:
U.S. government agency securities	$	5,452	$	9	$	-	$	-	$	5,452	$	9
Mortgage-backed securities		41,598		341		17,826		30		59,424		371
State and municipal securities		1,967		17		1,205		5		3,172		22
Corporate notes		-		-		-		-		-		-
Total temporarily-impaired securities	$	49,017	$	367	$	19,031	$	35	$	68,048	$	402

Summary of fair value of securities sold, gain or loss recognized and any other-than-temporary impairment identified

Periodically, available-for-sale securities may be sold or the composition of the portfolio realigned to improve yields, quality or marketability, or to implement changes in investment or asset/liability strategy, including maintaining collateral requirements, and raising funds for liquidity purposes. Additionally, if an available-for-sale security loses its investment grade, tax-exempt status, the underlying credit support is terminated or collection otherwise becomes uncertain based on factors known to management, Pinnacle Financial will consider selling the security, but will review each security on a case-by-case basis as these factors become known. The table below shows the fair value of securities that have been sold during 2012 and the amount of gain or loss recognized on those securities as well as any other-than-temporary impairment identified during 2012 (in thousands).

For the quarter ended,	Fair Value of securities sold			Gain recognized		Loss recognized		Net		Other-than-temporary impairment(OTTI)			Gain(loss) on the sale of securities, net of OTTI
March 31, 2012	$	14,360	(1)	$	148	$	-	$	148	$	34	(2)	$	114
June 30, 2012		18,273	(3)		99		-		99		-			99
September 30, 2012		2,791	(4)		7				7		57	(4)		(50	)

(1) During the first quarter 2012, Pinnacle Financial sold these securities due to their relatively short terms until maturity and a weighted average coupon of 0.50%.

(2) During the first quarter of  2012, Pinnacle Financial determined four mortgage-backed securities were OTTI because of management's intent to sell them in the second quarter of 2012. The decision to sell was based on their relative underperformance compared to expectations. 

(3) During the second quarter of 2012, Pinnacle Financial sold the four securities previously identified as OTTI in the first quarter. Additionally, two securities issued by municipalities in the state of California, which management believed could be adversely affected by state budgetary issues, were also sold during the second quarter.

(4) During the third quarter of 2012, Pinnacle Financial determined one security was OTTI due to its distinct underperformance relative to the interest rate environment. Pinnacle Financial recognized of approximately $57,000 in OTTI, and the bond was subsequently sold for a gain of approximately $7,000.

XML

Loans and Allowance for Loan Losses, Financing Receivables Past Due (Details) (USD $)	Sep. 30, 2012		Dec. 31, 2011
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 To 89 days past due and performing	$ 12,155,000		$ 11,084,000
90 days or more past due and performing	162,000		858,000
Total past due and performing	12,317,000		11,942,000
Nonperforming	36,571,000	[1]	47,855,000	[1]
Current and performing	3,476,276,000		3,231,554,000
Total Loans	3,525,164,000		3,291,351,000
Currently performing impaired loans	13,100,000		25,500,000
Commercial And Industrial [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 To 89 days past due and performing	603,000		648,000
90 days or more past due and performing	0		604,000
Total past due and performing	603,000		1,252,000
Nonperforming	4,896,000	[1]	11,890,000	[1]
Current and performing	1,273,551,000		1,132,593,000
Total Loans	1,279,050,000		1,145,735,000
Construction and Land Development [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 To 89 days past due and performing	980,000		1,572,000
90 days or more past due and performing	162,000		0
Total past due and performing	1,142,000		1,572,000
Nonperforming	5,857,000	[1]	12,965,000	[1]
Current and performing	305,789,000		259,711,000
Total Loans	312,788,000		274,248,000
Consumer Real Estate - Mortgage [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 To 89 days past due and performing	7,096,000		2,589,000
90 days or more past due and performing	0		254,000
Total past due and performing	7,096,000		2,843,000
Nonperforming	10,548,000	[1]	12,487,000	[1]
Current and performing	663,246,000		680,415,000
Total Loans	680,890,000		695,745,000
Commercial Real Estate Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 To 89 days past due and performing	468,000		3,260,000
90 days or more past due and performing	0		0
Total past due and performing	468,000		3,260,000
Nonperforming	4,150,000	[1]	3,227,000	[1]
Current and performing	559,785,000		522,505,000
Total Loans	564,403,000		528,992,000
Commercial Real Estate Owner Occupied [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 To 89 days past due and performing	2,733,000		2,489,000
90 days or more past due and performing	0		0
Total past due and performing	2,733,000		2,489,000
Nonperforming	10,833,000	[1]	6,735,000	[1]
Current and performing	589,167,000		572,746,000
Total Loans	602,733,000		581,970,000
Consumer and Other [Member]
Financing Receivable, Recorded Investment, Past Due [Line Items]
30 To 89 days past due and performing	275,000		526,000
90 days or more past due and performing	0		0
Total past due and performing	275,000		526,000
Nonperforming	287,000	[1]	551,000	[1]
Current and performing	84,738,000		63,584,000
Total Loans	$ 85,300,000		$ 64,661,000

[1] Approximately $13.1 million and $25.5 million of nonaccrual loans as of September 30, 2012 and December 31, 2011, respectively, are currently performing pursuant to their contractual terms.

XML

Stock Options, Stock Appreciation Rights and Restricted Shares (Tables)

9 Months Ended

Sep. 30, 2012

Stock Options, Stock Appreciation Rights and Restricted Shares [Abstract]

Summary of stock option and stock appreciation rights activity

As of September 30, 2012, there were approximately 1,332,000 stock options and 7,300 stock appreciation rights outstanding to purchase common shares.  A summary of the stock option and stock appreciation rights activity within the equity incentive plans during the nine months ended September 30, 2012 and information regarding expected vesting, contractual terms remaining, intrinsic values and other matters is as follows:

	Number			Weighted- Average Exercise Price		Weighted- Average Contractual Remaining Term (in years)		Aggregate Intrinsic Value (000's)
Outstanding at December 31, 2011		1,581,038		$	20.81		3.62	$	3,683	(1)
Granted		-			-
Exercised		(230,718	)		6.58
Forfeited		(10,678	)		27.14
Outstanding at September 30, 2012		1,339,642		$	23.21		3.36	$	2,562	(2)
Outstanding and expected to vest as ofSeptember 30, 2012		1,339,618		$	23.21		3.36	$	2,562	(2)
Options exercisable at September 30, 2012		1,306,171		$	23.25		3.31	$	2,562	(2)

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted closing price of Pinnacle Financial common stock of $18.35 per common share at December 31, 2011 for the approximately 348,208 options and stock appreciation rights that were in-the-money at September 30, 2012.

(2) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted closing price of Pinnacle Financial common stock of $19.32 per common share at September 30, 2012 for the approximately 353,285 options and stock appreciation rights that were in-the-money at September 30, 2012.

Summary of activity for unvested restricted share awards

A summary of activity for unvested restricted share awards for the quarter ended September 30, 2012 is as follows:

	Number			Grant Date Weighted-Average Cost
Unvested at December 31, 2011		849,703		$	15.61
Shares awarded		147,945			16.47
Restrictions lapsed and shares released to associates/directors		(201,494	)		16.06
Shares forfeited(1)		(51,705	)		18.32
Unvested at September 30, 2012		744,449		$	15.56

(1) Represents 30,132 shares forfeited due to failure to meet performance targets and 21,923 shares forfeited due to employee termination and retirement.

        Pinnacle Financial grants restricted share awards to associates, executive management and outside directors with a combination of time and performance vesting criteria. The following table outlines restricted stock grants that were made, grouped by similar vesting criteria, during the nine months ended September 30, 2012:

Grant Year	Group(1)	Vesting Period in years		Shares awarded		Restrictions Lapsed and shares released to participants		Shares Forfeited by participants			Shares Unvested
Time Based Awards (2)
2012	Associates		5		132,965		-		6,625	(4)		126,340
Outside Director Awards (3)
2012	Outside directors		1		14,980		-		-			14,980

(1) Groups include our employees (referred to as associates above) and our outside directors.  When the restricted shares are awarded, a participant receives voting rights with respect to the shares, but is not able to transfer the shares until the restrictions have lapsed.  Once the restrictions lapse, the participant is taxed on the value of the award and, may elect to sell shares to pay the applicable income taxes associated with the award.

(2) These shares vest in equal annual installments on the anniversary date of the grant.

(3) Restricted share awards are issued to the outside members of the board of directors in accordance with their board compensation plan.  Restrictions lapse on the one year anniversary date of the award based on each individual board member meeting their attendance goals for the various board and board committee meetings to which each member was scheduled to attend.

(4) These shares represent forfeitures resulting from associate terminations during the nine months ended September 30, 2012.

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $)	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Operating activities:
Net income	$ 30,153,723	$ 35,977,570
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization/accretion of premium/discount on securities	5,697,121	5,474,970
Depreciation and amortization	7,548,657	8,221,400
Provision for loan losses	3,080,892	16,358,767
Gain on mortgage loans sold, net	(4,930,190)	(2,693,913)
Gain on sale of investment securities, net	(162,733)	(827,708)
Gain (loss) on sale of premises	171,623	(955)
Stock-based compensation expense	3,818,757	3,905,168
Deferred tax expense (benefit)	2,128,122	(20,236,438)
Losses on dispositions of other real estate and other investments	9,313,372	11,242,202
Excess tax benefit from stock compensation	(31,524)	(10,010)
Mortgage loans held for sale:
Loans originated	(354,271,377)	(249,141,853)
Loans sold	355,189,000	244,202,474
Decrease in other assets	25,787,538	23,679,693
Increase in other liabilities	2,486,701	11,020,121
Net cash provided by operating activities	85,979,682	87,171,488
Activities in securities available-for-sale:
Purchases	(43,610,007)	(252,396,360)
Sales	35,420,503	158,418,558
Maturities, prepayments and calls	162,369,154	179,823,239
Activities in securities held-to-maturity:
Maturities, prepayments and calls	1,755,000	1,719,998
Increase (decrease) in loans, net	(250,553,288)	(79,929,662)
Purchases of software, premises and equipment	(2,852,918)	(1,662,017)
Other investments	18,503,170	(393,304)
Net cash (used in) provided by investing activities	(78,968,386)	5,580,452
Financing activities:
Net increase (decrease) in deposits	64,947,672	(120,365,027)
Net increase (decrease) in securities sold under agreements to repurchase	3,195,562	(17,340,629)
Advances from Federal Home Loan Bank:
Issuances	495,000,000	50,000,000
Payments/maturities	(530,124,164)	(10,218,835)
Increase in other borrowings	9,307,292	0
Exercise of common stock options and stock appreciation rights	739,270	674,241
Excess tax benefit from stock compensation	31,524	10,010
Preferred dividends paid	(2,127,605)	(3,562,498)
Repurchase of preferred shares outstanding	(71,250,000)	0
Repurchase of outstanding warrants	(755,000)	0
Net cash used in financing activities	(31,035,449)	(100,802,738)
Net decrease in cash and cash equivalents	(24,024,153)	(8,050,798)
Cash and cash equivalents, beginning of period	172,163,040	188,586,181
Cash and cash equivalents, end of period	$ 148,138,887	$ 180,535,383

XML

CONSOLIDATED BALANCE SHEET (Unaudited) (Parenthetical) (USD $)	Sep. 30, 2012	Dec. 31, 2011
ASSETS
Securities held-to-maturity, fair value	$ 586,813	$ 2,369,118
Stockholders' equity:
Preferred stock, par value (in dollars per share)	$ 0	$ 0
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	71,250
Preferred stock, shares outstanding (in shares)	0	71,250
Common stock, par value (in dollars per share)	$ 1.00	$ 1.00
Common stock, shares authorized (in shares)	90,000,000	90,000,000
Common stock, shares issued (in shares)	34,691,659	34,354,960
Common stock, shares outstanding (in shares)	34,691,659	34,354,960

XML

Fair Value of Financial Instruments

9 Months Ended

Sep. 30, 2012

Fair Value of Financial Instruments [Abstract]

Fair Value of Financial Instruments

Note 10.  Fair Value of Financial Instruments

FASB ASC 820, Fair Value Measurements and Disclosures, which defines fair value, establishes a framework for measuring fair value in U.S. GAAP and expands disclosures about fair value measurements.  The definition of fair value focuses on the exit price, i.e., the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, not the entry price, i.e., the price that would be paid to acquire the asset or received to assume the liability at the measurement date.  The statement emphasizes that fair value is a market-based measurement; not an entity-specific measurement.  Therefore, the fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability.

Valuation Hierarchy

FASB ASC 820 establishes a three-level valuation hierarchy for disclosure of fair value measurements. The valuation hierarchy is based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:

· Level 1 – inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

· Level 2 – inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

· Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

A financial instrument's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.  Following is a description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such assets and liabilities pursuant to the valuation hierarchy.

Assets

Securities available-for-sale – Where quoted prices are available for identical securities in an active market, securities are classified within Level 1 of the valuation hierarchy. Level 1 securities include highly liquid government securities and certain other financial products. If quoted market prices are not available, then fair values are estimated by using pricing models that use observable inputs or quoted prices of securities with similar characteristics and are classified within Level 2 of the valuation hierarchy. In certain cases where there is limited activity or less transparency around inputs to the valuation and more complex pricing models or discounted cash flows are used, securities are classified within Level 3 of the valuation hierarchy.

Impaired loans – A loan is considered to be impaired when it is probable Pinnacle Financial will be unable to collect all principal and interest payments due in accordance with the contractual terms of the loan agreement. Impaired loans are measured based on the present value of expected payments using the loan's original effective rate as the discount rate, the loan's observable market price, or the fair value of the collateral less selling costs if the loan is collateral dependent. If the recorded investment in the impaired loan exceeds the measure of fair value, a valuation allowance may be established as a component of the allowance for loan losses or the expense is recognized as a charge-off. Impaired loans are classified within Level 3 of the hierarchy due to the unobservable inputs used in determining their fair value such as collateral values and the borrower's underlying financial condition.

Alternative investments – Included in other investments are alternative investments in certain nonpublic private equity funds.  The valuation of nonpublic private equity investments requires significant management judgment due to the absence of observable quoted market prices, inherent lack of liquidity and the long-term nature of such assets. These investments are valued initially based upon transaction price. The carrying values of other investments are adjusted either upwards or downwards from the transaction price to reflect expected exit values as evidenced by financing and sale transactions with third parties, or when determination of a valuation adjustment is confirmed through ongoing reviews by senior investment managers. A variety of factors are reviewed and monitored to assess positive and negative changes in valuation including, but not limited to, current operating performance and future expectations of the particular investment, industry valuations of comparable public companies and changes in market outlook and the third-party financing environment over time. In determining valuation adjustments resulting from the investment review process, emphasis is placed on current company performance and market conditions. These investments are included in Level 3 of the valuation hierarchy as these funds are not widely traded and the underling investments of such funds are often privately-held and/or start-up companies for which market-values are not readily available.

Other real estate owned – Other real estate owned (OREO) represents real estate foreclosed upon by Pinnacle Bank through loan defaults by customers.  Substantially all of these amounts relate to lots, homes and development projects that are either completed or are in various stages of construction for which Pinnacle Financial believes it has adequate collateral.  Upon foreclosure, the property is recorded at the lower of cost or fair value, based on appraised value, less selling costs estimated as of the date acquired with any loss recognized as a charge-off through the allowance for loan losses.  Additional OREO losses for subsequent valuation downward adjustments are determined on a specific property basis and are included as a component of noninterest expense along with holding costs.  Any gains or losses realized at the time of disposal are also reflected in noninterest expense, as applicable.  OREO is included in Level 3 of the valuation hierarchy due to the lack of observable market inputs into the determination of fair value.  Appraisal values are property-specific and sensitive to the changes in the overall economic environment.

Other assets – Included in other assets are certain assets carried at fair value, including the cash surrender value of bank owned life insurance policies and interest rate swap agreements.  Pinnacle Financial uses financial information received from insurance carriers indicating the performance of the insurance policies and cash surrender values in determining the carrying value of the bank owned life insurance.  Pinnacle Financial reflects these assets within Level 3 of the valuation hierarchy due to the unobservable inputs included in the valuation of these items. Pinnacle Financial does not consider the fair values of these policies to be materially sensitive to changes in these unobservable inputs.  The carrying amount of interest rate swap agreements is based on Pinnacle Financial's pricing models that utilize observable market inputs obtained from a third party bank.  Pinnacle Financial reflects these assets within Level 2 of the valuation hierarchy as these assets are valued using similar transactions that occur in the market.

Liabilities

Other liabilities – Pinnacle Financial has certain liabilities carried at fair value including certain interest rate swap agreements.  The fair value of these liabilities is based on Pinnacle Financial's pricing models that utilize observable market inputs obtained from a third party bank and is reflected within Level 2 of the valuation hierarchy.

The following tables present the financial instruments carried at fair value as of September 30, 2012 and December 31, 2011, by caption on the consolidated balance sheets and by FASB ASC 820 valuation hierarchy (as described above) (in thousands):

September 30, 2012	Total carrying value in the consolidated balance sheet		Quoted market prices in an active market (Level 1)		Models with significant observable market parameters (Level 2)		Models with significant unobservable market parameters (Level 3)
Investment securities available-for-sale:
U.S. government agency securities	$	11,356	$	-	$	11,356	$	-
Mortgage-backed securities		524,566		-		524,566		-
State and municipal securities		191,413		-		191,413		-
Corporate notes and other		11,370		-		11,370		-
Total investment securities available-for-sale		738,705		-		738,705	$	-
Alternative investments		3,406						3,406
Other assets		68,067				17,858		50,209
Total assets at fair value	$	810,178	$		$	756,563	$	53,615
Other liabilities	$	18,084	$	-	$	18,084	$	-
Total liabilities at fair value	$	18,084	$	-	$	18,084	$	-
December 31, 2011
Investment securities available-for-sale:
U.S. government agency securities	$	42,313	$	-	$	42,313	$	-
Mortgage-backed securities		645,567		-		645,567		-
State and municipal securities		195,952		-		195,952		-
Corporate notes and other		11,130		-		11,130		-
Total investment securities available-for-sale		894,962		-		894,962		-
Alternative investments		3,400		-		-		3,400
Other assets		67,319		-		17,937		49,382
Total assets at fair value	$	965,681	$	-	$	912,899	$	52,782
Other liabilities	$	18,147	$	-	$	18,147	$	-
Total liabilities at fair value	$	18,147	$	-	$	18,147	$	-

September 30, 2012	Total carrying value in the consolidated balance sheet		Quoted market prices in an active market (Level 1)		Models with significant observable market parameters (Level 2)		Models with significant unobservable market parameters (Level 3)		Total gains (losses) for the period ended
Other real estate owned	$	21,817	$	-	$	-	$	21,817	$	(3,178	)
Nonperforming loans, net (1)		34,506		-		-		34,506		(2,819	)
Total	$	56,323	$	-	$	-	$	56,323	$	(5,997	)
December 31, 2011
Other real estate owned	$	39,714	$	-	$	-	$	39,714	$	(6,890	)
Nonperforming loans, net (1)		43,415		-		-		43,415		(8,661	)
Total	$	83,129	$	-	$	-	$	83,129	$	(15,551	)

(1) Amount is net of a valuation allowance of $2.0 million at September 30, 2012 and $4.4 million at December 31, 2011 as required by ASC 310-10, "Receivables."

In the case of the bond portfolio, Pinnacle Financial monitors the valuation technique utilized by various pricing agencies to ascertain when transfers between levels have been affected.  The nature of the remaining assets and liabilities is such that transfers in and out of any level are expected to be rare.  For the nine months ended September 30, 2012, there were no transfers between Levels 1, 2 or 3.

The table below includes a rollforward of the balance sheet amounts for the nine months ended September 30, 2012 (including the change in fair value) for financial instruments classified by Pinnacle Financial within Level 3 of the valuation hierarchy for assets and liabilities measured at fair value on a recurring basis. When a determination is made to classify a financial instrument within Level 3 of the valuation hierarchy, the determination is based upon the significance of the unobservable factors to the overall fair value measurement. However, since Level 3 financial instruments typically include, in addition to the unobservable or Level 3 components, observable components (that is, components that are actively quoted and can be validated to external sources), the gains and losses in the table below include changes in fair value due in part to observable factors that are part of the valuation methodology (in thousands):

	For the nine months ended September 30,
	2012				2011
	Other assets		Other liabilities		Other assets		Other liabilities
Fair value, January 1	$	52,782	$	-	$	50,962	$	-
Total realized gains included in income		644		-		1,130		-
Change in unrealized gains/losses included in other comprehensive income
for assets and liabilities still held at September 30		-		-		-		-
Purchases, issuances and settlements, net		189		-		393		-
Transfers out of Level 3		-		-		-		-
Fair value, September 30	$	53,615	$	-	$	52,485	$	-
Total realized gains included in income related to financial assets and liabilities
still on the consolidated balance sheet at September 30	$	644	$	-	$	1,130	$	-

The following methods and assumptions were used by Pinnacle Financial in estimating its fair value disclosures for financial instruments that are not measured at fair value. In cases where quoted market prices are not available, fair values are based on estimates using discounted cash flow models. Those models are significantly affected by the assumptions used, including the discount rates, estimates of future cash flows and borrower creditworthiness. The fair value estimates presented herein are based on pertinent information available to management as of September 30, 2012 and December 31, 2011.  Such amounts have not been revalued for purposes of these consolidated financial statements since those dates and, therefore, current estimates of fair value may differ significantly from the amounts presented herein.

Held-to-maturity securities - Estimated fair values for investment securities are based on quoted market prices where available.  If quoted market prices are not available, then fair values are estimated by using pricing models that use observable inputs or quoted prices of securities with similar characteristics.

Loans - The fair value of our loan portfolio includes a credit risk factor in the determination of the fair value of our loans.  This credit risk assumption is intended to approximate the fair value that a market participant would realize in a hypothetical orderly transaction.  Our loan portfolio is initially fair valued using a segmented approach. We divide our loan portfolio into the following categories: variable rate loans, impaired loans and all other loans. The results are then adjusted to account for credit risk.

For variable-rate loans that reprice frequently and have no significant change in credit risk, fair values approximate carrying values. Fair values for impaired loans are estimated using discounted cash flow models or based on the fair value of the underlying collateral.  For other loans, fair values are estimated using discounted cash flow models, using current market interest rates offered for loans with similar terms to borrowers of similar credit quality. The values derived from the discounted cash flow approach for each of the above portfolios are then further discounted to incorporate credit risk to determine the exit price.

Mortgage loans held-for-sale - Mortgage loans held-for-sale are carried at the lower of cost or fair value.  The estimate of fair value is equal to the carrying value of these loans as they are usually sold within a few weeks of their origination.

Deposits, Securities sold under agreements to repurchase, Federal Home Loan Bank advances, Subordinated debt and other borrowings - The carrying amounts of demand deposits, savings deposits, securities sold under agreements to repurchase, floating rate advances from the Federal Home Loan Bank, floating rate subordinated debt and other borrowings, and floating rate loans approximate their fair values. Fair values for certificates of deposit, fixed rate advances from the Federal Home Loan Bank and fixed rate subordinated debt are estimated using discounted cash flow models, using current market interest rates offered on certificates, advances and other borrowings with similar remaining maturities.  For fixed rate subordinated debt, the maturity is assumed to be as of the earliest date that the indebtedness will be repriced.

Off-Balance Sheet Instruments - The fair values of Pinnacle Financial's off-balance-sheet financial instruments are based on fees charged to enter into similar agreements. However, commitments to extend credit do not represent a significant value to Pinnacle Financial until such commitments are funded.

The following table presents the carrying amounts, estimated fair value and placement in the fair value hierarchy of Pinnacle Financial's financial instruments at September 30, 2012 and December 31, 2011.  This table excludes financial instruments for which the carrying amount approximates fair value.  For short-term financial assets such as cash and cash equivalents, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization.  For financial liabilities such as non-interest bearing demand, interest-bearing demand, and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity.

(in thousands) September 30, 2012	Carrying/ Notional Amount		Estimated Fair Value (1)		Quoted market prices in an active market (Level 1)		Models with significant observable market parameters (Level 2)		Models with significant unobservable market parameters (Level 3)
Financial assets:
Securities held-to-maturity	$	575	$	587	$	-	$	587	$	-
Loans, net		3,456,072		3,196,924		-		-		3,196,924
Mortgage loans held for sale		39,246		39,246		-		-		39,246
Financial liabilities:
Deposits and securities sold under
agreements to repurchase		3,854,074		3,798,351		-		3,798,351		-
Federal Home Loan Bank advances		190,887		191,400		-		-		191,400
Subordinated debt and other borrowings		106,783		84,691		-		84,691		-
Off-balance sheet instruments:
Commitments to extend credit (2)		965,331		748		-		-		748
Standby letters of credit (3)		72,580		450		-		-		450
December 31, 2011
Financial assets:
Securities held-to-maturity	$	2,330	$	2,369	$	-	$	2,369	$	-
Loans, net		3,217,376		2,893,526		-		-		2,893,526
Mortgage loans held for sale		35,363		35,363						35,363
Financial liabilities:
Deposits and securities sold under
agreements to repurchase		3,785,931		3,752,490		-		3,752,490		-
Federal Home Loan Bank advances		226,069		226,460		-		-		226,460
Subordinated debt and other borrowings		97,476		72,030		-		72,030		-
Off-balance sheet instruments:
Commitments to extend credit (2)		937,084		1,031		-		-		1,031
Standby letters of credit (3)		76,176		259		-		-		259

(1) Estimated fair values are consistent with an exit-price concept. The assumptions used to estimate the fair values are intended to approximate those that a market-participant would realize in a hypothetical orderly transaction.

(2) At the end of each quarter, Pinnacle Financial evaluates the inherent risks of the outstanding off-balance sheet commitments.  In making this evaluation, Pinnacle Financial evaluates the credit worthiness of the borrower, the collateral supporting the commitments and any other factors similar to those used to evaluate the inherent risks of our loan portfolio.  Additionally, Pinnacle Financial evaluates the probability that the outstanding commitment will eventually become a funded loan.  As a result, at September 30, 2012 and December 31, 2011, Pinnacle Financial included in other liabilities $0.7 million and $1.0 million, respectively, representing the inherent risks associated with these off-balance sheet commitments.

(3) At September 30, 2012 and December 31, 2011, the fair value of Pinnacle Financial's standby letters of credit was $450,000 and $259,000, respectively.  This amount represents the unamortized fee associated with these standby letters of credit and is included in the consolidated balance sheet of Pinnacle Financial and is believed to approximate fair value.  This fair value will decrease over time as the existing standby letters of credit approach their expiration dates.

XML

Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Oct. 23, 2012
Document and Entity Information [Abstract]
Entity Registrant Name	PINNACLE FINANCIAL PARTNERS INC
Entity Central Index Key	0001115055
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		34,694,003
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012

XML

Variable Interest Entities

9 Months Ended

Sep. 30, 2012

Variable Interest Entities [Abstract]

Variable Interest Entities

Note 11.  Variable Interest Entities

Under ASC 810, Pinnacle Financial is deemed to be the primary beneficiary and required to consolidate a variable interest entity (VIE) if it has a variable interest in the VIE that provides it with a controlling financial interest. For such purposes, the determination of whether a controlling financial interest exists is based on whether a single party has both the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. ASC 810, requires continual reconsideration of conclusions reached regarding which interest holder is a VIE's primary beneficiary and disclosures surrounding those VIE's which have not been consolidated. The consolidation methodology provided in this footnote for the quarter ended September 30, 2012, and the year ended December 31, 2011 has been prepared in accordance with ASC 810.

At September 30, 2012, Pinnacle Financial did not have any consolidated VIEs to disclose but did have several nonconsolidated VIEs.  As discussed more fully in form 10-K, Pinnacle Financial has the following non-consolidated variable interest entities: low income housing partnerships, trust preferred issuances, accruing restructured commercial loans, and managed discretionary trusts.

The following table summarizes VIE's that are not consolidated by Pinnacle Financial as of September 30, 2012 and December 31, 2011 (in thousands):

	September 30, 2012				December 31, 2011
Type	Assets Recognized (maximum loss)		Liability Recognized		Assets Recognized (maximum loss)		Liability Recognized		Balance Sheet Classification
Low income housing partnerships	$	5,812	$	-	$	5,917	$	-	Other assets
Trust preferred issuances		N/A		82,476		N/A		82,476	Subordinated debt
Commercial troubled debt restructurings		17,566		-		17,223		-	Loans
Managed discretionary trusts		N/A		N/A		N/A		N/A	N/A

XML

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Interest income:
Loans, including fees	$ 40,405,396	$ 38,571,893	$ 118,331,163	$ 115,830,529
Securities:
Taxable	3,973,717	5,952,599	13,356,957	18,792,778
Tax-exempt	1,621,541	1,819,642	4,972,539	5,593,341
Federal funds sold and other	440,254	543,496	1,557,831	1,684,376
Total interest income	46,440,908	46,887,630	138,218,490	141,901,024
Interest expense:
Deposits	3,986,328	7,138,053	13,112,653	24,869,045
Securities sold under agreements to repurchase	99,379	204,107	370,405	931,120
Federal Home Loan Bank advances and other borrowings	1,422,845	1,189,742	4,114,008	3,929,119
Total interest expense	5,508,552	8,531,902	17,597,066	29,729,284
Net interest income	40,932,356	38,355,728	120,621,424	112,171,740
Provision for loan losses	1,412,575	3,632,440	3,080,892	16,358,767
Net interest income after provision for loan losses	39,519,781	34,723,288	117,540,532	95,812,973
Noninterest income:
Service charges on deposit accounts	2,531,707	2,361,803	7,295,045	6,953,466
Investment services	1,676,601	1,698,886	4,934,262	4,844,398
Insurance sales commissions	987,222	1,001,716	3,415,945	3,055,194
Gain on mortgage loans sold, net	1,978,935	1,295,278	4,930,190	2,693,913
(Loss) gain on sale of investment securities, net	(49,784)	376,509	162,733	827,708
Trust fees	767,042	753,551	2,332,716	2,253,474
Other noninterest income	2,537,863	2,592,170	7,217,879	7,585,231
Total noninterest income	10,429,586	10,079,913	30,288,770	28,213,384
Noninterest expense:
Salaries and employee benefits	19,470,535	19,015,217	58,500,279	55,462,370
Equipment and occupancy	5,156,131	4,942,917	15,217,897	15,009,641
Other real estate expense	2,399,232	5,079,127	10,179,572	13,238,853
Marketing and other business development	834,661	751,094	2,359,760	2,271,267
Postage and supplies	637,906	509,279	1,816,925	1,544,253
Amortization of intangibles	683,430	715,514	2,055,564	2,147,323
Other noninterest expense	4,396,465	4,662,073	13,183,603	15,059,685
Total noninterest expense	33,578,360	35,675,221	103,313,600	104,733,392
Income before income taxes	16,371,007	9,127,980	44,515,702	19,292,965
Income tax expense (benefit)	5,021,882	(16,973,019)	14,361,979	(16,684,605)
Net income	11,349,125	26,100,999	30,153,723	35,977,570
Preferred stock dividends	0	1,213,889	1,660,868	3,602,083
Accretion on preferred stock discount	0	349,817	2,153,172	983,448
Net income available to common stockholders	$ 11,349,125	$ 24,537,293	$ 26,339,683	$ 31,392,039
Per share information:
Basic net income per common share available to common stockholders (in dollars per share)	$ 0.33	$ 0.74	$ 0.78	$ 0.94
Diluted net income per common share available to common stockholders (in dollars per share)	$ 0.33	$ 0.72	$ 0.76	$ 0.92
Weighted average shares outstanding:
Basic (in shares)	33,939,248	33,372,980	33,879,186	33,398,029
Diluted (in shares)	34,523,076	33,993,914	34,473,895	34,037,739

XML

Income Taxes

9 Months Ended

Sep. 30, 2012

Income Taxes [Abstract]

Income Taxes

Note 5.  Income Taxes

 ASC 740, Income Taxes, defines the threshold for recognizing the benefits of tax return positions in the financial statements as "more-likely-than-not" to be sustained by the taxing authority.  As of September 30, 2012, Pinnacle Financial had no unrecognized tax benefits related to Federal or State income tax matters and does not currently anticipate any material increase or decrease in unrecognized tax benefits relative to any tax positions taken prior to September 30, 2012.  As of September 30, 2012, Pinnacle Financial has accrued no interest and no penalties related to uncertain tax positions.

Pinnacle Financial and its subsidiaries file consolidated U.S Federal and state of Tennessee income tax returns.  The IRS concluded its examination of the 2007, 2008, and 2009 federal tax returns during 2011.  Pinnacle Financial remains open to audit under the statute of limitations by the IRS for the years ended December 31, 2008 through 2011 and the state of Tennessee for the years ended December 31, 2008 through 2011.

Pinnacle Financial's effective tax rate for the nine-month period ended September 30, 2012 of 32.3% differs from the Federal income tax statutory rate of 35% and state income tax rate of 6.50% primarily due to our investments in bank qualified municipal securities, our real estate investment trust and bank-owned life insurance offset in part by meals and entertainment and compensation expense for which we are not entitled to a deduction.  Our income tax expense for the nine months ended September 30, 2011, differs from the blended statutory rate due to the reversal of the valuation allowance against our deferred tax assets.

XML

Loans and Allowance for Loan Losses

9 Months Ended

Sep. 30, 2012

Loans and Allowance for Loan Losses [Abstract]

Loans and Allowance for Loan Losses

Note 4.  Loans and Allowance for Loan Losses

For financial reporting purposes, Pinnacle Financial classifies its loan portfolio based on the underlying collateral utilized to secure each loan. This classification is consistent with those utilized in the Quarterly Report of Condition and Income filed with the Federal Deposit Insurance Corporation (FDIC).

The information presented herein for December 31, 2011, has been reclassified from the presentation in our Annual Report on Form 10-K for the year ended December 31, 2011 to conform to the September 30, 2012 presentation. Troubled debt restructurings previously included in accruing loans are now presented separately.

Commercial loans receive risk ratings by the assigned financial advisor that are subject to validation by our independent loan review department.  Risk ratings are categorized as pass, special mention, substandard, substandard-impaired or doubtful-impaired.  Pinnacle Financial believes that our categories follow those outlined by Pinnacle Bank's primary regulator.  At September 30, 2012, approximately 75% of our loan portfolio was analyzed as a commercial loan type with a specifically assigned risk rating in the allowance for loan loss assessment.  Consumer loans and small business loans are generally not assigned an individual risk rating but are evaluated as either accrual or nonaccrual based on the performance of the loan.  However, certain consumer real estate-mortgage loans and certain consumer and other loans receive a specific risk rating due to the loan proceeds being used for commercial purposes even though the collateral may be of a consumer loan nature.

Risk ratings are subject to continual review by the loan officer.  At least annually, our credit policy requires that every risk rated loan of $500,000 or more is subject to a formal credit risk review process. Each loan grade is also subject to review by our independent loan review department.  Currently, our independent loan review department targets reviews of at least 70% of our risk rated portfolio annually.  Included in the 70% coverage are independent loan reviews of loans in targeted higher-risk portfolio segments such as certain commercial and industrial loans, land loans and/or loan types in certain geographies.

The following table presents our loan balances by primary loan classification and the amount within each risk rating category.  Pass rated loans include all credits other than those included in special mention, substandard, substandard-nonaccrual and doubtful-nonaccrual which are defined as follows:

· Special mention loans have potential weaknesses that deserve management's close attention.  If left uncorrected, these potential weaknesses may result in deterioration of the repayment prospects for the asset or in Pinnacle Financial's credit position at some future date.

· Substandard loans are inadequately protected by the current sound worth and paying capacity of the obligor or of the collateral pledged, if any.  Assets so classified must have a well-defined weakness or weaknesses that jeopardize collection of the debt.  Substandard loans are characterized by the distinct possibility that Pinnacle Financial will sustain some loss if the deficiencies are not corrected.

· Substandard-nonaccrual loans are substandard loans that have been placed on nonaccrual status.

· Doubtful-nonaccrual loans have all the characteristics of substandard-nonaccrual loans with the added characteristic that the weaknesses make collection or liquidation in full, on the basis of currently existing facts, conditions and values, highly questionable and improbable.  All doubtful-nonaccrual loans are on nonaccrual status.

        The following table outlines the amount of each loan classification categorized into each risk rating category as of September 30, 2012 and December 31, 2011 (in thousands):

September 30, 2012	Commercial real estate - mortgage		Consumer real estate - mortgage		Construction and land development		Commercial and industrial		Consumer and other		Total
Accruing loans
Pass	$	1,062,132	$	643,667	$	254,763	$	1,226,386	$	84,890	$	3,271,838
Special Mention		16,997		6,351		32,545		26,629		-		82,522
Substandard (1)		56,393		14,293		19,251		20,204		2		110,143
Total		1,135,522		664,311		306,559		1,273,219		84,892		3,464,503
Impaired loans
Nonperforming loans
Substandard-nonaccrual		14,983		10,250		5,857		4,810		287		36,187
Doubtful-nonaccrual		-		298		-		86		-		384
Total nonperforming loans		14,983		10,548		5,857		4,896		287		36,571
Troubled debt restructurings(2)
Pass		4,812		3,821		72		693		121		9,519
Special Mention		-		-		-		-		-		-
Substandard		11,819		2,210		300		242		-		14,570
Total troubled debt restructurings		16,631		6,031		372		935		121	$	24,090
Total impaired loans		31,614		16,579		6,229		5,831		408	$	60,661
Total loans	$	1,167,136	$	680,890	$	312,788	$	1,279,050	$	85,300	$	3,525,164
December 31, 2011
Accruing loans
Pass	$	994,059	$	643,924	$	204,696	$	1,098,898	$	63,218	$	3,004,795
Special Mention		19,403		15,225		27,553		17,029		649		79,859
Substandard (1)		72,160		18,235		28,957		16,073		1		135,426
Total		1,085,622		677,384		261,206		1,132,000		63,868		3,220,080
Impaired loans
Nonperforming loans
Substandard-nonaccrual		9,962		11,990		12,965		11,194		551		46,662
Doubtful-nonaccrual		-		497		-		696		-		1,193
Total nonperforming loans		9,962		12,487		12,965		11,890		551		47,855
Troubled debt restructurings(2)
Pass		193		3,631		77		949		242		5,092
Special Mention		-		-		-		-		-		-
Substandard		15,185		2,243		-		896		-		18,324
Total troubled debt restructurings		15,378		5,874		77		1,845		242		23,416
Total impaired loans		25,340		18,361		13,042		13,735		793		71,271
Total loans	$	1,110,962	$	695,745	$	274,248	$	1,145,735	$	64,661	$	3,291,351

(1) Potential problem loans represent those loans with a well-defined weakness and where information about possible credit problems of borrowers has caused management to have doubts about the borrower's ability to comply with present repayment terms.  This definition is believed to be substantially consistent with the standards established by Pinnacle Bank's primary regulators for loans classified as substandard, excluding the impact of substandard nonperforming loans and substandard troubled debt restructurings. Potential problem loans, which are not included in nonperforming assets, amounted to approximately $110.1 million at September 30, 2012, compared to $135.4 million at December 31, 2011.

(2) Troubled debt restructurings are presented as an impaired loan; however, they continue to accrue interest at contractual rates.

At September 30, 2012 and December 31, 2011, all loans classified as nonaccrual were deemed to be impaired.  The principal balances of these nonaccrual loans amounted to $36.6 million and $47.9 million at September 30, 2012 and December 31, 2011, respectively, and are included in the table above.  For the nine months ended September 30, 2012, the average balance of nonaccrual loans was $40.1 million as compared to $63.9 million for the twelve months ended December 31, 2011.  At the date such loans were placed on nonaccrual status, Pinnacle Financial reversed all previously accrued interest income against current year earnings.  Had these nonaccruing loans been on accruing status, interest income would have been higher by $415,000 and $1.5 million, respectively, for the three and nine months ended September 30, 2012 compared to $678,000 and $7.6 million, respectively, for the three and nine months ended September 30, 2011, respectively.

The following table details the recorded investment, unpaid principal balance and related allowance and average recorded investment of our nonaccrual loans at September 30, 2012 and December 31, 2011 by loan classification and the amount of interest income recognized on a cash basis throughout the quarter and year-to-date period then ended, respectively, on these loans that remain on the balance sheets (in thousands):

	At September 30, 2012						For the nine months ended September 30, 2012
	Recorded investment		Unpaid principal balance		Related allowance(1)		Average recorded investment		Interest income recognized
Collateral dependent nonaccrual loans:
Commercial real estate – mortgage	$	14,020	$	14,620	$	-	$	16,325	$	-
Consumer real estate – mortgage		8,228		8,571		-		10,875		-
Construction and land development		2,890		3,032		-		3,313		-
Commercial and industrial		2,710		2,895		-		3,464		-
Consumer and other		-		-		-		-		-
Total		27,848		29,118		-		33,977		-
Cash flow dependent nonaccrual loans:
Commercial real estate – mortgage		963		1,027		218		1,075		-
Consumer real estate – mortgage		2,320		2,466		526		6,988		-
Construction and land development		2,967		3,060		192		4,230		-
Commercial and industrial		2,186		2,399		1,071		2,728		-
Consumer and other		287		310		65		522		-
Total		8,723		9,262		2,072		15,543		-
Total nonaccrual loans	$	36,571	$	38,380	$	2,072	$	49,520	$	-

	At December 31, 2011						For the year ended December 31, 2011
Collateral dependent nonaccrual loans:
Commercial real estate – mortgage	$	9,345	$	12,099	$	-	$	12,450	$	5
Consumer real estate – mortgage		9,248		9,961		-		10,140		-
Construction and land development		6,917		9,093		-		9,288		37
Commercial and industrial		3,036		3,546		-		3,689		-
Consumer and other		-		-		-		-		-
Total	$	28,546	$	34,699	$	-	$	35,567	$	42
Cash flow dependent nonaccrual loans:
Commercial real estate – mortgage	$	617	$	661	$	57	$	792	$	-
Consumer real estate – mortgage		3,239		4,902		301		5,005		-
Construction and land development		6,048		6,822		1,264		7,074		-
Commercial and industrial		8,854		11,041		2,767		11,497		-
Consumer and other		551		856		51		857		-
Total	$	19,309	$	24,282	$	4,440	$	25,225	$	-
Total nonaccrual loans	$	47,855	$	58,981	$	4,440	$	60,792	$	42

(1) Collateral dependent loans are typically charged-off to their net realizable value pursuant to requirements of our primary regulators and no specific allowance is carried related to those loans.

Pinnacle Financial's policy is that once a loan is placed on nonaccrual status each subsequent payment is reviewed on a case-by-case basis to determine if the payment should be applied to interest or principal pursuant to regulatory guidelines. Pinnacle Financial recognized no interest income from cash payments received on nonaccrual loans during the nine months ended September 30, 2012 and $42,000 of interest income during the year ended December 31, 2011.

Impaired loans also include loans that Pinnacle Bank has elected to formally restructure when, due to the weakening credit status of a borrower, the restructuring may facilitate a repayment plan that seeks to minimize the potential losses that Pinnacle Bank may have to otherwise incur.  If on nonaccruing status as of the date of restructuring, the loans are included in nonperforming loans. Loans that have been restructured that were performing as of the restructure date and continue to perform in accordance with the restructured terms are reported separately as troubled debt restructurings.

At September 30, 2012 and December 31, 2011, there were $24.1 million and $23.4 million, respectively, of troubled debt restructurings that were performing as of their restructure date and which are accruing interest. These troubled debt restructurings are considered impaired loans pursuant to U.S. GAAP. Troubled commercial loans are restructured by specialists within our Special Assets Group, and all restructurings are approved by committees and credit officers separate and apart from the normal loan approval process.  These specialists are charged with reducing Pinnacle Financial's overall risk and exposure to loss in the event of a restructuring by obtaining some or all of the following:  improved documentation, additional guaranties, increase in curtailments, reduction in collateral release terms, additional collateral or other similar strategies.

The following table outlines the amount of each troubled debt restructuring categorized by loan classification during the nine months ended September 30, 2012 and September 30, 2011 (in thousands):

	September 30, 2012						September 30, 2011
	Number of contracts		Pre Modification Outstanding Recorded Investment		Post Modification Outstanding Recorded Investment, net of related allowance		Number of contracts		Pre Modification Outstanding Recorded Investment		Post Modification Outstanding Recorded Investment, net of related allowance
Commercial real estate – mortgage		6	$	6,264	$	4,523		6	$	11,888	$	11,881
Consumer real estate – mortgage		3		694		643		8		3,153		3,044
Construction and land development		1		360		333		-		-		-
Commercial and industrial		1		59		50		15		3,146		2,700
Consumer and other		1		39		34		-		-		-
		12	$	7,416	$	5,583		29	$	18,187	$	17,265

During the twelve months ended September 30, 2012, two commercial real estate loans totaling $3.2 million, eight commercial and industrial loans totaling $873,000 and two consumer loans totaling $153,000 which were previously classified as troubled debt restructurings subsequently defaulted.

In addition to the loan metrics above, Pinnacle Financial analyzes its commercial loan portfolio to determine if a concentration of credit risk exists to any industries.  Pinnacle Financial utilizes broadly accepted industry classification systems in order to classify borrowers into various industry classifications.  Pinnacle Financial has a credit exposure (loans outstanding plus unfunded lines of credit) exceeding 25% of Pinnacle Bank's total risk-based capital to borrowers in the following industries at September 30, 2012 with the comparative exposures for December 31, 2011 (in thousands):

	At September 30, 2012
	Outstanding Principal Balances		Unfunded Commitments		Total exposure		Total Exposure at December 31, 2011
Lessors of nonresidential buildings	$	371,707	$	42,107	$	413,814	$	509,003
Lessors of residential buildings		175,563		14,627		190,190		177,414
Land subdividers		101,102		15,338		116,440		119,106

The table below presents past due balances at September 30, 2012 and December 31, 2011, by loan classification and segment allocated between performing and nonperforming status (in thousands):

September 30, 2012	30-89 days past due and performing		90 days or more past due and performing		Total past due and performing		Nonperforming(1)		Current and performing		Total Loans
Commercial real estate:
Owner-occupied	$	2,733	$	-	$	2,733	$	10,833	$	589,167	$	602,733
All other		468		-		468		4,150		559,785		564,403
Consumer real estate – mortgage		7,096		-		7,096		10,548		663,246		680,890
Construction and land development		980		162		1,142		5,857		305,789		312,788
Commercial and industrial		603		-		603		4,896		1,273,551		1,279,050
Consumer and other		275		-		275		287		84,738		85,300
	$	12,155	$	162	$	12,317	$	36,571	$	3,476,276	$	3,525,164
December 31, 2011
Commercial real estate:
Owner-occupied	$	2,489	$	-	$	2,489	$	6,735	$	572,746	$	581,970
All other		3,260		-		3,260		3,227		522,505		528,992
Consumer real estate – mortgage		2,589		254		2,843		12,487		680,415		695,745
Construction and land development		1,572		-		1,572		12,965		259,711		274,248
Commercial and industrial		648		604		1,252		11,890		1,132,593		1,145,735
Consumer and other		526		-		526		551		63,584		64,661
	$	11,084	$	858	$	11,942	$	47,855	$	3,231,554	$	3,291,351

(1) Approximately $13.1 million and $25.5 million of nonaccrual loans as of September 30, 2012 and December 31, 2011, respectively, are currently performing pursuant to their contractual terms.

The following table shows the allowance allocation by loan classification for accruing and nonperforming loans atSeptember 30, 2012 and December 31, 2011 (in thousands):

					Impaired Loans
	Accruing Loans				Nonaccrual Loans				Troubled Debt Restructurings(1)				Total Allowance for Loan Losses
	September 30, 2012		December 31, 2011		September 30, 2012		December 31, 2011		September 30, 2012		December 31, 2011		September 30, 2012		December 31, 2011
Commercial real estate –mortgage	$	18,145	$	20,581	$	218	$	57	$	2,560	$	2,759	$	20,923	$	23,397
Consumer real estate – mortgage		8,663		9,485		526		301		808		516		9,997		10,302
Construction and land development		9,594		10,764		192		1,264		38		12		9,824		12,040
Commercial and industrial		20,577		17,740		1,071		2,767		138		282		21,786		20,789
Consumer and other		1,342		1,037		65		51		18		37		1,425		1,125
Unallocated		-		-		-		-		-		-		5,137		6,322
	$	58,321	$	59,607	$	2,072	$	4,440	$	3,562	$	3,606	$	69,092	$	73,975

(1) Troubled debt restructurings of $24.1 million and $23.4 million as of September 30, 2012 and December 31, 2011, respectively, are classified as impaired loans pursuant to U.S. GAAP; however, these loans continue to accrue interest at contractual rates.

        The following table details the changes in the allowance for loan losses from December 31, 2010 to December 31, 2011 to September 30, 2012 by loan classification (in thousands):

	Commercial real estate – mortgage			Consumer real estate – mortgage			Construction and land development			Commercial and industrial			Consumer and other			Unallocated			Total
Balances, December 31, 2010	$	19,252		$	9,898		$	19,122		$	21,426		$	1,874		$	11,003		$	82,575
Charged-off loans		(3,044	)		(5,076	)		(10,157	)		(15,360	)		(1,213	)		-			(34,850	)
Recovery of previously charged-off loans		116			495			1,530			2,167			144			-			4,452
Provision for loan losses		7,073			4,985			1,545			12,556			320			(4,681	)		21,798
Balances, December 31, 2011	$	23,397		$	10,302		$	12,040		$	20,789		$	1,125		$	6,322		$	73,975
Charged-off loans		(1,676	)		(3,857	)		(1,638	)		(3,267	)		(828	)		-			(11,266	)
Recovery of previously charged-off loans		215			793			1,086			1,131			78			-			3,303
Provision for loan losses		1,013			(2,759	)		1,664			(3,133	)		(1,050	)		1,185			3,080
Balances,  September 30, 2012	$	20,923		$	9,997		$	9,824		$	21,786		$	1,425		$	5,137		$	69,092

        The adequacy of the allowance for loan losses is assessed at the end of each calendar quarter.  The level of the allowance is based upon evaluation of the loan portfolio, past loan loss experience, current asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect the borrowers' ability to repay (including the timing of future payment), the estimated value of any underlying collateral, composition of the loan portfolio, economic conditions, historical loss experience, industry and peer bank loan quality indications and other pertinent factors, including regulatory recommendations.

At September 30, 2012, Pinnacle Financial had granted loans and other extensions of credit amounting to approximately $9.6 million to current directors, executive officers, and their related entities, of which $8.9 million had been drawn upon.  At December 31, 2011, Pinnacle Financial had granted loans and other extensions of credit amounting to approximately $10.8 million to directors, executive officers, and their related entities, of which approximately $9.6 million had been drawn upon.  These loans and extensions of credit were made on substantially the same terms customary for other persons similarly situated for the type of loan involved.   None of these loans to directors, executive officers, and their related entities were impaired at September 30, 2012 or December 31, 2011.

Residential Lending

At September 30, 2012, Pinnacle Financial had approximately $39.2 million of mortgage loans held-for-sale compared to approximately $35.4 million at December 31, 2011.  Pinnacle Financial generally has an agreement for the subsequent sale of the mortgage loan prior to the loan being closed with the borrower.  Pinnacle Financial sells loans to third-party investors on a loan-by-loan basis and has not entered into any forward commitments with investors for future bulk loan sales.  All of these loan sales transfer servicing rights to the buyer.  During the three and nine months ended September 30, 2012, Pinnacle Financial recognized $2.0 million and $4.9 million, respectively, in gains on the sale of these loans, net of commissions paid, compared to $1.3 million and $2.7 million, respectively, during the three and nine months ended September 30, 2011.

These mortgage loans held-for-sale are originated internally and are primarily to borrowers in Pinnacle Bank's geographic markets. These sales are typically on a best efforts basis to investors that follow conventional government sponsored entities (GSE) and the Department of Housing and Urban Development/U.S. Department of Veterans Affairs (HUD/VA) guidelines. Generally, loans sold to the HUD/VA are underwritten by Pinnacle Bank while the majority of the loans sold to other investors are underwritten by the purchaser of the loans.

Each purchaser has specific guidelines and criteria for sellers of loans, and the risk of credit loss with regard to the principal amount of the loans sold is generally transferred to the purchasers upon sale. While the loans are sold without recourse, the purchase agreements require Pinnacle Bank to make certain representations and warranties regarding the existence and sufficiency of file documentation and the absence of fraud by borrowers or other third parties such as appraisers in connection with obtaining the loan. If it is determined that the loans sold were in breach of these representations or warranties, Pinnacle Bank has obligations to either repurchase the loan for the unpaid principal balance and related investor fees or make the purchaser whole for the economic benefits of the loan.

From inception of Pinnacle Bank's mortgage department in January 2003 through September 30, 2012, Pinnacle Bank originated and sold approximately 12,500 mortgage loans totaling $2.688 billion to third-party purchasers.  Of the approximately 12,500 mortgage loans, Pinnacle Bank underwrote approximately 3,100 conventional loans at an 80% or less loan-to-value that were sold to other investors and underwrote 2,600 loans that were sold to the HUD/VA.  To date, repurchase activity pursuant to the terms of these representations and warranties has been insignificant to Pinnacle Bank. The remaining mortgage loans were underwritten by the purchasers of those loans, but funded by Pinnacle Bank until settlement with the purchaser.

Based on information currently available, management believes that it does not have material exposure to losses that may arise relating to the representations and warranties that it has made in connection with its mortgage loan sales.

Due to the current focus on foreclosure practices of financial institutions nationwide, Pinnacle Bank evaluated its foreclosure process related to home equity and consumer mortgage loans within its loan portfolio. At September 30, 2012, Pinnacle Bank has $648.2 million of home equity and consumer mortgage loans which are secured by first or second liens on residential properties. Foreclosure activity in this portfolio has been minimal. Any foreclosures on these loans are handled by designated Pinnacle Bank personnel and external legal counsel, as appropriate, following established policies regarding legal and regulatory requirements. Pinnacle Bank has not imposed any freezes on foreclosures. Based on information currently available, management believes that it does not have material exposure to faulty foreclosure practices.

XML

Loans and Allowance for Loan Losses (Tables)

9 Months Ended

Sep. 30, 2012

Loans and Allowance for Loan Losses [Abstract]

Summary of amount of each loan classification, categorized into each risk rating class

        The following table outlines the amount of each loan classification categorized into each risk rating category as of September 30, 2012 and December 31, 2011 (in thousands):

September 30, 2012	Commercial real estate - mortgage		Consumer real estate - mortgage		Construction and land development		Commercial and industrial		Consumer and other		Total
Accruing loans
Pass	$	1,062,132	$	643,667	$	254,763	$	1,226,386	$	84,890	$	3,271,838
Special Mention		16,997		6,351		32,545		26,629		-		82,522
Substandard (1)		56,393		14,293		19,251		20,204		2		110,143
Total		1,135,522		664,311		306,559		1,273,219		84,892		3,464,503
Impaired loans
Nonperforming loans
Substandard-nonaccrual		14,983		10,250		5,857		4,810		287		36,187
Doubtful-nonaccrual		-		298		-		86		-		384
Total nonperforming loans		14,983		10,548		5,857		4,896		287		36,571
Troubled debt restructurings(2)
Pass		4,812		3,821		72		693		121		9,519
Special Mention		-		-		-		-		-		-
Substandard		11,819		2,210		300		242		-		14,570
Total troubled debt restructurings		16,631		6,031		372		935		121	$	24,090
Total impaired loans		31,614		16,579		6,229		5,831		408	$	60,661
Total loans	$	1,167,136	$	680,890	$	312,788	$	1,279,050	$	85,300	$	3,525,164
December 31, 2011
Accruing loans
Pass	$	994,059	$	643,924	$	204,696	$	1,098,898	$	63,218	$	3,004,795
Special Mention		19,403		15,225		27,553		17,029		649		79,859
Substandard (1)		72,160		18,235		28,957		16,073		1		135,426
Total		1,085,622		677,384		261,206		1,132,000		63,868		3,220,080
Impaired loans
Nonperforming loans
Substandard-nonaccrual		9,962		11,990		12,965		11,194		551		46,662
Doubtful-nonaccrual		-		497		-		696		-		1,193
Total nonperforming loans		9,962		12,487		12,965		11,890		551		47,855
Troubled debt restructurings(2)
Pass		193		3,631		77		949		242		5,092
Special Mention		-		-		-		-		-		-
Substandard		15,185		2,243		-		896		-		18,324
Total troubled debt restructurings		15,378		5,874		77		1,845		242		23,416
Total impaired loans		25,340		18,361		13,042		13,735		793		71,271
Total loans	$	1,110,962	$	695,745	$	274,248	$	1,145,735	$	64,661	$	3,291,351

(1) Potential problem loans represent those loans with a well-defined weakness and where information about possible credit problems of borrowers has caused management to have doubts about the borrower's ability to comply with present repayment terms.  This definition is believed to be substantially consistent with the standards established by Pinnacle Bank's primary regulators for loans classified as substandard, excluding the impact of substandard nonperforming loans and substandard troubled debt restructurings. Potential problem loans, which are not included in nonperforming assets, amounted to approximately $110.1 million at September 30, 2012, compared to $135.4 million at December 31, 2011.

(2) Troubled debt restructurings are presented as an impaired loan; however, they continue to accrue interest at contractual rates.

Summary of recorded investment, unpaid principal balance and related allowance and average recorded investment of impaired loans

The following table details the recorded investment, unpaid principal balance and related allowance and average recorded investment of our nonaccrual loans at September 30, 2012 and December 31, 2011 by loan classification and the amount of interest income recognized on a cash basis throughout the quarter and year-to-date period then ended, respectively, on these loans that remain on the balance sheets (in thousands):

	At September 30, 2012						For the nine months ended September 30, 2012
	Recorded investment		Unpaid principal balance		Related allowance(1)		Average recorded investment		Interest income recognized
Collateral dependent nonaccrual loans:
Commercial real estate – mortgage	$	14,020	$	14,620	$	-	$	16,325	$	-
Consumer real estate – mortgage		8,228		8,571		-		10,875		-
Construction and land development		2,890		3,032		-		3,313		-
Commercial and industrial		2,710		2,895		-		3,464		-
Consumer and other		-		-		-		-		-
Total		27,848		29,118		-		33,977		-
Cash flow dependent nonaccrual loans:
Commercial real estate – mortgage		963		1,027		218		1,075		-
Consumer real estate – mortgage		2,320		2,466		526		6,988		-
Construction and land development		2,967		3,060		192		4,230		-
Commercial and industrial		2,186		2,399		1,071		2,728		-
Consumer and other		287		310		65		522		-
Total		8,723		9,262		2,072		15,543		-
Total nonaccrual loans	$	36,571	$	38,380	$	2,072	$	49,520	$	-

	At December 31, 2011						For the year ended December 31, 2011
Collateral dependent nonaccrual loans:
Commercial real estate – mortgage	$	9,345	$	12,099	$	-	$	12,450	$	5
Consumer real estate – mortgage		9,248		9,961		-		10,140		-
Construction and land development		6,917		9,093		-		9,288		37
Commercial and industrial		3,036		3,546		-		3,689		-
Consumer and other		-		-		-		-		-
Total	$	28,546	$	34,699	$	-	$	35,567	$	42
Cash flow dependent nonaccrual loans:
Commercial real estate – mortgage	$	617	$	661	$	57	$	792	$	-
Consumer real estate – mortgage		3,239		4,902		301		5,005		-
Construction and land development		6,048		6,822		1,264		7,074		-
Commercial and industrial		8,854		11,041		2,767		11,497		-
Consumer and other		551		856		51		857		-
Total	$	19,309	$	24,282	$	4,440	$	25,225	$	-
Total nonaccrual loans	$	47,855	$	58,981	$	4,440	$	60,792	$	42

(1) Collateral dependent loans are typically charged-off to their net realizable value pursuant to requirements of our primary regulators and no specific allowance is carried related to those loans.

Amount of troubled debt restructuring categorized by loan classification

The following table outlines the amount of each troubled debt restructuring categorized by loan classification during the nine months ended September 30, 2012 and September 30, 2011 (in thousands):

	September 30, 2012						September 30, 2011
	Number of contracts		Pre Modification Outstanding Recorded Investment		Post Modification Outstanding Recorded Investment, net of related allowance		Number of contracts		Pre Modification Outstanding Recorded Investment		Post Modification Outstanding Recorded Investment, net of related allowance
Commercial real estate – mortgage		6	$	6,264	$	4,523		6	$	11,888	$	11,881
Consumer real estate – mortgage		3		694		643		8		3,153		3,044
Construction and land development		1		360		333		-		-		-
Commercial and industrial		1		59		50		15		3,146		2,700
Consumer and other		1		39		34		-		-		-
		12	$	7,416	$	5,583		29	$	18,187	$	17,265

Summary of loan portfolio credit risk exposure

In addition to the loan metrics above, Pinnacle Financial analyzes its commercial loan portfolio to determine if a concentration of credit risk exists to any industries.  Pinnacle Financial utilizes broadly accepted industry classification systems in order to classify borrowers into various industry classifications.  Pinnacle Financial has a credit exposure (loans outstanding plus unfunded lines of credit) exceeding 25% of Pinnacle Bank's total risk-based capital to borrowers in the following industries at September 30, 2012 with the comparative exposures for December 31, 2011 (in thousands):

	At September 30, 2012
	Outstanding Principal Balances		Unfunded Commitments		Total exposure		Total Exposure at December 31, 2011
Lessors of nonresidential buildings	$	371,707	$	42,107	$	413,814	$	509,003
Lessors of residential buildings		175,563		14,627		190,190		177,414
Land subdividers		101,102		15,338		116,440		119,106

Past due balances by loan classification

The table below presents past due balances at September 30, 2012 and December 31, 2011, by loan classification and segment allocated between performing and nonperforming status (in thousands):

September 30, 2012	30-89 days past due and performing		90 days or more past due and performing		Total past due and performing		Nonperforming(1)		Current and performing		Total Loans
Commercial real estate:
Owner-occupied	$	2,733	$	-	$	2,733	$	10,833	$	589,167	$	602,733
All other		468		-		468		4,150		559,785		564,403
Consumer real estate – mortgage		7,096		-		7,096		10,548		663,246		680,890
Construction and land development		980		162		1,142		5,857		305,789		312,788
Commercial and industrial		603		-		603		4,896		1,273,551		1,279,050
Consumer and other		275		-		275		287		84,738		85,300
	$	12,155	$	162	$	12,317	$	36,571	$	3,476,276	$	3,525,164
December 31, 2011
Commercial real estate:
Owner-occupied	$	2,489	$	-	$	2,489	$	6,735	$	572,746	$	581,970
All other		3,260		-		3,260		3,227		522,505		528,992
Consumer real estate – mortgage		2,589		254		2,843		12,487		680,415		695,745
Construction and land development		1,572		-		1,572		12,965		259,711		274,248
Commercial and industrial		648		604		1,252		11,890		1,132,593		1,145,735
Consumer and other		526		-		526		551		63,584		64,661
	$	11,084	$	858	$	11,942	$	47,855	$	3,231,554	$	3,291,351

(1) Approximately $13.1 million and $25.5 million of nonaccrual loans as of September 30, 2012 and December 31, 2011, respectively, are currently performing pursuant to their contractual terms.

Details of changes in the allowance for loan losses

The following table shows the allowance allocation by loan classification for accruing and nonperforming loans atSeptember 30, 2012 and December 31, 2011 (in thousands):

					Impaired Loans
	Accruing Loans				Nonaccrual Loans				Troubled Debt Restructurings(1)				Total Allowance for Loan Losses
	September 30, 2012		December 31, 2011		September 30, 2012		December 31, 2011		September 30, 2012		December 31, 2011		September 30, 2012		December 31, 2011
Commercial real estate –mortgage	$	18,145	$	20,581	$	218	$	57	$	2,560	$	2,759	$	20,923	$	23,397
Consumer real estate – mortgage		8,663		9,485		526		301		808		516		9,997		10,302
Construction and land development		9,594		10,764		192		1,264		38		12		9,824		12,040
Commercial and industrial		20,577		17,740		1,071		2,767		138		282		21,786		20,789
Consumer and other		1,342		1,037		65		51		18		37		1,425		1,125
Unallocated		-		-		-		-		-		-		5,137		6,322
	$	58,321	$	59,607	$	2,072	$	4,440	$	3,562	$	3,606	$	69,092	$	73,975

(1) Troubled debt restructurings of $24.1 million and $23.4 million as of September 30, 2012 and December 31, 2011, respectively, are classified as impaired loans pursuant to U.S. GAAP; however, these loans continue to accrue interest at contractual rates.

        The following table details the changes in the allowance for loan losses from December 31, 2010 to December 31, 2011 to September 30, 2012 by loan classification (in thousands):

	Commercial real estate – mortgage			Consumer real estate – mortgage			Construction and land development			Commercial and industrial			Consumer and other			Unallocated			Total
Balances, December 31, 2010	$	19,252		$	9,898		$	19,122		$	21,426		$	1,874		$	11,003		$	82,575
Charged-off loans		(3,044	)		(5,076	)		(10,157	)		(15,360	)		(1,213	)		-			(34,850	)
Recovery of previously charged-off loans		116			495			1,530			2,167			144			-			4,452
Provision for loan losses		7,073			4,985			1,545			12,556			320			(4,681	)		21,798
Balances, December 31, 2011	$	23,397		$	10,302		$	12,040		$	20,789		$	1,125		$	6,322		$	73,975
Charged-off loans		(1,676	)		(3,857	)		(1,638	)		(3,267	)		(828	)		-			(11,266	)
Recovery of previously charged-off loans		215			793			1,086			1,131			78			-			3,303
Provision for loan losses		1,013			(2,759	)		1,664			(3,133	)		(1,050	)		1,185			3,080
Balances,  September 30, 2012	$	20,923		$	9,997		$	9,824		$	21,786		$	1,425		$	5,137		$	69,092

XML

Other borrowings

9 Months Ended

Sep. 30, 2012

Other borrowings [Abstract]

Other borrowings

Note 12.  Other borrowings

On June 15, 2012, Pinnacle Financial entered into a loan agreement with a bank for $25 million (the Loan Agreement). Borrowings under the Loan Agreement, combined with available cash, were used for the redemption, on June 20, 2012, of the remaining 71,250 shares of preferred stock owned by the Treasury that had been issued under the CPP.

Pinnacle Financial's borrowings under the Loan Agreement bear interest at rates that, at Pinnacle Financial's option, can be either:

• A base rate generally defined as the sum of (i) the highest of (x) the lender's "base" or "prime" rate, (y) the average overnight federal funds effective rate plus one-half percent (0.50%) per annum or (z) one-month LIBOR plus one percent (1%) per annum and (ii) an applicable margin as noted below; or

• A LIBOR rate generally defined as the sum of (i) the average of the offered rates of interest quoted in the London Inter-Bank Eurodollar Market for U.S. Dollar deposits with prime banks (as published by Reuters or other commercially available source) for one, two or three months (all as selected by the Company), and (ii) an applicable margin.

The applicable margin under the Loan Agreement ranges from 2.25% (225 basis points) to 3.00% (300 basis points) depending on the total aggregate principal amount outstanding under the Loan Agreement. The initial applicable margin for both base rate and LIBOR rate loans is 3.00% (300 basis points).  At September 30, 2012, the interest rate paid on this debt was 3.25%.

Pinnacle Financial is required to make quarterly principal payments of $625,000 beginning on June 30, 2012, and the loan matures on June 15, 2017. Pinnacle Financial is permitted to prepay all or a portion of the principal amount outstanding under the Loan Agreement without penalty (in minimum aggregate amounts of $100,000) at any time so long as no event of default or unmatured event of default has occurred and is continuing.

The Loan Agreement includes negative covenants that limit, among other things, certain fundamental transactions, additional indebtedness, transactions with affiliates, liens, sales of assets and dividends. The Loan Agreement specifically restricts transfers or encumbrances of the shares of the capital stock of Pinnacle Financial's bank subsidiary. The Loan Agreement also includes financial covenants related to Pinnacle Financial's, and in some cases, Pinnacle Bank's, capitalization, levels of risk-based capital, ratio of nonperforming assets to tangible primary capital and ratio of allowance for loan and lease losses to nonperforming loans. The Loan Agreement also includes a fixed charge coverage ratio requiring the sum of Pinnacle Financial's net income plus the amount of any goodwill amortization expense and contractually due interest divided by the sum of Pinnacle Financial's contractually due interest and principal amounts (assuming annual principal amortization of $2.5 million under the Loan Agreement), to be not less than 125% on an annualized single quarter basis through September 30, 2012 and on a rolling four quarter basis starting December 31, 2012.

The Loan Agreement also contains other customary affirmative and negative covenants, representations, warranties and events of default, which include but are not limited to, payment defaults, breaches of representations and warranties, covenant defaults, events of bankruptcy and insolvency, and the institution of certain regulatory enforcement actions against Pinnacle Financial or Pinnacle Bank. If an event of default occurs and is continuing, Pinnacle Financial may be required immediately to repay all amounts outstanding under the Loan Agreement.

Debt issuance costs associated with the Loan Agreement of approximately $200,000 consisting primarily of professional fees are included in other assets in the accompanying consolidated balance sheet.  These debt issuance costs are being amortized over three years using the straight-line method, which approximates the interest method that is required by U.S. GAAP.

XML

Regulatory Matters

9 Months Ended

Sep. 30, 2012

Regulatory Matters [Abstract]

Regulatory Matters

Note 8.  Regulatory Matters

Under Tennessee banking law, Pinnacle Bank is subject to restrictions on the payment of dividends to Pinnacle Financial which are similar to those applicable to national banks.  Prior to the repurchase of the preferred stock, Pinnacle Financial was subject to limits on payment of dividends to its shareholders by its participation in the CPP.  Pursuant to Tennessee banking law, Pinnacle Bank may not, without the prior consent of the TDFI, pay any dividends to Pinnacle Financial in a year in excess of the total of Pinnacle Bank's net income for that year plus the retained net income for the preceding two years.  As of September 30, 2012, Pinnacle Bank could pay approximately $26.2 million of dividends to Pinnacle Financial without prior TDFI approval. In May 2010, Pinnacle Financial informally agreed to obtain prior approval of the Federal Reserve Bank of Atlanta before making stock dividends or repurchases and trust preferred distributions or causing Pinnacle Bank to pay dividends. In April 2012, this informal agreement was terminated.Pinnacle Financial has not paid any cash dividends on its common stock since inception, and it does not currently anticipate that it will consider paying such dividends in the foreseeable future.

 Pinnacle Financial and its banking subsidiary are subject to various regulatory capital requirements administered by federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions, by regulators that, if undertaken, could have a direct material effect on the financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, Pinnacle Financial and Pinnacle Bank must meet specific capital guidelines that involve quantitative measures of the assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices.

Quantitative measures established by regulation to ensure capital adequacy require Pinnacle Financial and its banking subsidiary to maintain minimum amounts and ratios of Total and Tier I capital to risk-weighted assets and for Pinnacle Bank of Tier I capital to average assets. Management believes, as of September 30, 2012, that Pinnacle Financial and Pinnacle Bank met all capital adequacy requirements to which they are subject.  To be categorized as well-capitalized under applicable banking regulations, Pinnacle Financial and Pinnacle Bank must maintain minimum Total risk-based, Tier I risk-based, and Tier I leverage ratios as set forth in the following table and not be subject to a written agreement, order or directive to maintain a higher capital level.  Pinnacle Financial and Pinnacle Bank's actual capital amounts and ratios are presented in the following table

(in thousands):

	Actual					Regulatory Minimum Capital Requirement					Regulatory Minimum To Be Well-Capitalized
At September 30, 2012	Amount		Ratio			Amount		Ratio			Amount		Ratio
Total capital to risk weighted assets:
Pinnacle Financial	$	536,359		13.4	%	$	321,164		8.0	%	$	403,442		10.0	%
Pinnacle Bank	$	531,092		13.3	%	$	320,496		8.0	%	$	402,617		10.0	%
Tier I capital to risk weighted assets:
Pinnacle Financial	$	485,929		12.1	%	$	160,582		4.0	%	$	242,065		6.0	%
Pinnacle Bank	$	480,765		12.0	%	$	160,248		4.0	%	$	241,570		6.0	%
Tier I capital to average assets (*):
Pinnacle Financial	$	485,929		10.5	%	$	184,513		4.0	%	NA		NA
Pinnacle Bank	$	480,765		10.5	%	$	183,875		4.0	%	$	229,845		5.0	%

(*) Average assets for the above calculations were based on the most recent quarter.

XML

Commitments and Contingent Liabilities

9 Months Ended

Sep. 30, 2012

Commitments and Contingent Liabilities [Abstract]

Commitments and Contingent Liabilities

Note 6.  Commitments and Contingent Liabilities

In the normal course of business, Pinnacle Financial has entered into off-balance sheet financial instruments which include commitments to extend credit (i.e., including unfunded lines of credit) and standby letters of credit. Commitments to extend credit are usually the result of lines of credit granted to existing borrowers under agreements that the total outstanding indebtedness will not exceed a specific amount during the term of the indebtedness.  Typical borrowers are commercial concerns that use lines of credit to supplement their treasury management functions, thus their total outstanding indebtedness may fluctuate during any time period based on the seasonality of their business and the resultant timing of their cash flows.  Other typical lines of credit are related to home equity loans granted to consumers.  Commitments to extend credit generally have fixed expiration dates or other termination clauses and may require payment of a fee.  At September 30, 2012, these commitments amounted to $965.3 million.

Standby letters of credit are generally issued on behalf of an applicant (our customer) to a specifically named beneficiary and are the result of a particular business arrangement that exists between the applicant and the beneficiary.  Standby letters of credit have fixed expiration dates and are usually for terms of two years or less unless terminated beforehand due to criteria specified in the standby letter of credit.  A typical arrangement involves the applicant routinely being indebted to the beneficiary for such items as inventory purchases, insurance, utilities, lease guarantees or other third party commercial transactions.  The standby letter of credit would permit the beneficiary to obtain payment from Pinnacle Financial under certain prescribed circumstances.  Subsequently, Pinnacle Financial would then seek reimbursement from the applicant pursuant to the terms of the standby letter of credit.  At September 30, 2012, these commitments amounted to $72.6 million.

Pinnacle Financial follows the same credit policies and underwriting practices when making these commitments as it does for on-balance sheet instruments.  Each customer's creditworthiness is evaluated on a case-by-case basis, and the amount of collateral obtained, if any, is based on management's credit evaluation of the customer.  Collateral held varies but may include cash, real estate and improvements, marketable securities, accounts receivable, inventory, equipment, and personal property.

The contractual amounts of these commitments are not reflected in the consolidated financial statements and only amounts drawn upon would be reflected in the future.  Since many of the commitments are expected to expire without being drawn upon, the contractual amounts do not necessarily represent future cash requirements.  However, should the commitments be drawn upon and should our customers default on their resulting obligation to us, Pinnacle Financial's maximum exposure to credit loss, without consideration of collateral, is represented by the contractual amount of those commitments.

During the fourth quarter of 2011, a customer of Pinnacle Bank filed a putative class action lawsuit (styled John Higgins, et al, v. Pinnacle Financial Partners, Inc., d/b/a Pinnacle National Bank) in Davidson County, Tennessee Circuit Court against Pinnacle Bank and Pinnacle Financial, on his own behalf, as well as on behalf of a purported class of Pinnacle Bank's customers within the State of Tennessee alleging that Pinnacle Bank's method of ordering debit card transactions had caused customers of Pinnacle Bank to incur higher overdraft charges than had a different method been used.  In support of his claims, the plaintiff asserts theories of breach of contract, breach of implied covenant of good faith and fair dealing, unjust enrichment of unconscionability.  The plaintiff is seeking, among other remedies, an award of unspecified compensatory damages, pre-judgment interest, costs and attorneys' fees.  Pinnacle Financial and Pinnacle Bank are vigorously contesting this matter.  On January 17, 2012, Pinnacle Financial and Pinnacle Bank filed a motion to dismiss the complaint. The motion to dismiss was denied on April 13, 2012, and Pinnacle Financial and Pinnacle Bank filed an answer on May 30, 2012.  Based on our current knowledge, Pinnacle Financial does not believe that any liability arising from this legal matter will have a material adverse effect on Pinnacle Financial's consolidated financial condition, operating results or cash flows.

Various legal claims also arise from time to time in the normal course of business.   In the opinion of management, the resolution of these routine claims outstanding at September 30, 2012 will not have a material impact on Pinnacle Financial's financial statements.

XML

Stock Options, Stock Appreciation Rights and Restricted Shares

9 Months Ended

Sep. 30, 2012

Stock Options, Stock Appreciation Rights and Restricted Shares [Abstract]

Stock Options, Stock Appreciation Rights and Restricted Shares

Note 7.  Stock Options, Stock Appreciation Rights and Restricted Shares

As described more fully in the Annual Report on Form 10-K, Pinnacle Financial has two equity incentive plans.  Additionally, Pinnacle Financial has assumed equity plans in connection with acquisitions of Cavalry Bancorp, Inc. (Cavalry) and Mid-America Bancshares, Inc. (Mid-America) under which it has granted stock options and stock appreciation rights to its employees to purchase common stock at or above the fair market value on the date of grant and granted restricted share awards to employees and directors.

As a result of an amendment to the 2004 Plan approved by shareholders on April 17, 2012, total shares remaining available for issuance under the 2004 Equity Incentive Plan were increased, and at September 30, 2012, totaled 709,000.

Common Stock Options and Stock Appreciation Rights

As of September 30, 2012, there were approximately 1,332,000 stock options and 7,300 stock appreciation rights outstanding to purchase common shares.  A summary of the stock option and stock appreciation rights activity within the equity incentive plans during the nine months ended September 30, 2012 and information regarding expected vesting, contractual terms remaining, intrinsic values and other matters is as follows:

	Number			Weighted- Average Exercise Price		Weighted- Average Contractual Remaining Term (in years)		Aggregate Intrinsic Value (000's)
Outstanding at December 31, 2011		1,581,038		$	20.81		3.62	$	3,683	(1)
Granted		-			-
Exercised		(230,718	)		6.58
Forfeited		(10,678	)		27.14
Outstanding at September 30, 2012		1,339,642		$	23.21		3.36	$	2,562	(2)
Outstanding and expected to vest as ofSeptember 30, 2012		1,339,618		$	23.21		3.36	$	2,562	(2)
Options exercisable at September 30, 2012		1,306,171		$	23.25		3.31	$	2,562	(2)

(1) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted closing price of Pinnacle Financial common stock of $18.35 per common share at December 31, 2011 for the approximately 348,208 options and stock appreciation rights that were in-the-money at September 30, 2012.

(2) The aggregate intrinsic value is calculated as the difference between the exercise price of the underlying awards and the quoted closing price of Pinnacle Financial common stock of $19.32 per common share at September 30, 2012 for the approximately 353,285 options and stock appreciation rights that were in-the-money at September 30, 2012.

During the nine months ended September 30, 2012, approximately 96,000 option awards vested at an average exercise price of $27.58 with no intrinsic value.

As of September 30, 2012, there was approximately $77,000 of total unrecognized compensation cost related to unvested stock, options granted under our equity incentive plans. That cost is expected to be recognized over a weighted-average period of 0.30 years.

During the three and nine months ended September 30, 2012, Pinnacle Financial recorded stock option compensation expense of $79,000 and $329,000, respectively, based on Black-Scholes valuation at the date of grant compared to $271,000 and $952,000, respectively, for the three and nine months ended September 30, 2011.  For these awards, Pinnacle Financial has recognized compensation expense using a straight-line amortization method. Stock-based compensation expense has been reduced for estimated forfeitures.

Restricted Share Awards

Additionally, Pinnacle Financial's 2004 Plan and the plans assumed in connection with the acquisition of Mid-America provide for the granting of restricted share awards and other performance or market-based awards.  There were no market-based awards outstanding as of September 30, 2012 under any of these plans.  During the nine months ended September 30, 2012, Pinnacle Financial awarded 147,945 shares of restricted common stock to certain associates and outside directors.

A summary of activity for unvested restricted share awards for the quarter ended September 30, 2012 is as follows:

	Number			Grant Date Weighted-Average Cost
Unvested at December 31, 2011		849,703		$	15.61
Shares awarded		147,945			16.47
Restrictions lapsed and shares released to associates/directors		(201,494	)		16.06
Shares forfeited(1)		(51,705	)		18.32
Unvested at September 30, 2012		744,449		$	15.56

(1) Represents 30,132 shares forfeited due to failure to meet performance targets and 21,923 shares forfeited due to employee termination and retirement.

        Pinnacle Financial grants restricted share awards to associates, executive management and outside directors with a combination of time and performance vesting criteria. The following table outlines restricted stock grants that were made, grouped by similar vesting criteria, during the nine months ended September 30, 2012:

Grant Year	Group(1)	Vesting Period in years		Shares awarded		Restrictions Lapsed and shares released to participants		Shares Forfeited by participants			Shares Unvested
Time Based Awards (2)
2012	Associates		5		132,965		-		6,625	(4)		126,340
Outside Director Awards (3)
2012	Outside directors		1		14,980		-		-			14,980

(1) Groups include our employees (referred to as associates above) and our outside directors.  When the restricted shares are awarded, a participant receives voting rights with respect to the shares, but is not able to transfer the shares until the restrictions have lapsed.  Once the restrictions lapse, the participant is taxed on the value of the award and, may elect to sell shares to pay the applicable income taxes associated with the award.

(2) These shares vest in equal annual installments on the anniversary date of the grant.

(3) Restricted share awards are issued to the outside members of the board of directors in accordance with their board compensation plan.  Restrictions lapse on the one year anniversary date of the award based on each individual board member meeting their attendance goals for the various board and board committee meetings to which each member was scheduled to attend.

(4) These shares represent forfeitures resulting from associate terminations during the nine months ended September 30, 2012.

Compensation expense associated with performance-based restricted share awards, which are issued from time-to-time, is recognized over the performance period that the restrictions associated with the awards are anticipated to lapse based on a graded vesting schedule such that each performance traunche is amortized separately.  Compensation expense associated with the time-based restricted share awards is recognized on a straight-line basis over the time period that the restrictions associated with the awards lapse based on the total cost of the award at the grant date.  For the three and nine months ended September 30, 2012, Pinnacle Financial recognized approximately $818,000 and $2,489,000, respectively, in compensation costs attributable to all restricted share awards, compared to $859,000 and $2,429,000, respectively, for the three and nine months ended September 30, 2011.

Restricted Stock Units

Pinnacle Financial granted 144,350 restricted share units to the senior executive officers and the Leadership Team in the first quarter of 2012.  These restricted share units will be converted to restricted shares in 2013 on a tiered scale based on actual 2012 results.  The number of units that ultimately convert to unvested restricted shares will be determined after the 2012 earnings are finalized based upon the achievement of certain predetermined profitability goals for 2012 that were established on January 13, 2012 by the Human Resources and Compensation Committee of Pinnacle Financial (HRCC).  The number of restricted shares issuable in settlement of these restricted share units could range between 0% to 100% based on the level of 2012 profitability.  Once these restricted share units are converted to restricted share awards, the forfeiture restrictions on the number of restricted shares issued in settlement of these restricted share units will lapse in 20% increments over the following five years based on the achievement of soundness thresholds to be set by the HRCC in January of each respective fiscal year.   As the specific value of the award that will ultimately be granted to the recipients of these restricted share units and the associated performance targets cannot yet be determined, no grant was deemed to have been made and therefore, no expense has been recognized related to these awards. Following the redemption of the preferred stock issued to the US Treasury as a part of the CPP, the HRCC also granted 164,858 restricted stock units to our senior executive officers in the second quarter of 2012. The settlement of these restricted share units into shares of restricted stock and subsequent vesting criteria for these awards are similar to those of the restricted share units granted during the first quarter of 2012, except that the number of restricted share awards issued will be determined based on earning for the third and fourth quarters of 2012.

Salary Stock Unit Awards

During 2011, the HRCC of Pinnacle Financial adopted and approved the issuance of Salary Stock Units (SSU) to Pinnacle Financial's named executive officers. The SSUs were designed to comply with the Treasury's Interim Final Rule on TARP Standards for Compensation and Corporate Governance issued on June 15, 2009.  SSUs were accrued and earned by the named executive officers over the course of the year during each payroll period, subject to such executive officer's continued employment with Pinnacle Financial. Generally, SSUs granted to named executive officers are immediately vested (and therefore not subject to forfeiture) and are payable in shares of Pinnacle Financial's common stock on, or as soon as administratively practical following, December 30, 2012 (Settlement Date), but in no event later than two and one-half months following the Settlement Date. Following the redemption of all of the remaining outstanding preferred stock issued to the Treasury as part of the CPP, the HRCC terminated issuances of salary stock unit awards to these named executive officers effective June 30, 2012.  As such, no share issuance and no expense was recorded in the three months ended September 30, 2012.  For the nine months ended September 30, 2012, Pinnacle Financial issued 57,508 SSUs and recognized approximately $1,000,000 in compensation costs attributable to the SSUs compared to 12,511 and 18,680 and approximately $194,000 and $291,000, respectively, for the three and nine month periods ended September 30, 2011.

XML

Derivative Instruments

9 Months Ended

Sep. 30, 2012

Derivative Instruments [Abstract]

Derivative Instruments

Note 9.  Derivative Instruments

Financial derivatives are reported at fair value in other assets or other liabilities.  The accounting for changes in the fair value of a derivative depends on whether it has been designated and qualifies as part of a hedging relationship.  For derivatives not designated as hedges, the gain or loss is recognized in current earnings.Pinnacle Financial enters into interest rate swaps (swaps) to facilitate customer transactions and meet their financing needs.  Upon entering into these instruments to meet customer needs, Pinnacle Financial enters into offsetting positions with a large U.S. financial institution in order to minimize the risk to Pinnacle Financial.  These swaps are derivatives, but are not designated as hedging instruments.  At September 30, 2012 and 2011, Pinnacle Financial had not entered into any derivative contracts to assist in managing its own interest rate sensitivity and has no derivatives designated as hedges.

Interest rate swap contracts involve the risk of dealing with counterparties and their ability to meet contractual terms.  When the fair value of a derivative instrument contract is positive, this generally indicates that the counter party or customer owes Pinnacle Financial, and results in credit risk to Pinnacle Financial.  When the fair value of a derivative instrument contract is negative, Pinnacle Financial owes the customer or counterparty and therefore, has no credit risk.

A summary of Pinnacle Financial's interest rate swaps as of September 30, 2012 and December 31, 2011 is included in the following table (in thousands):

	September 30, 2012					December 31, 2011
	Notional Amount		Estimated Fair Value			Notional Amount		Estimated Fair Value
Interest rate swap agreements:
Pay fixed / receive variable swaps	$	242,183	$	17,858		$	257,639	$	17,937
Pay variable / receive fixed swaps		242,183		(18,084	)		257,639		(18,147	)
Total	$	484,366	$	(226	)	$	515,278	$	(210	)

XML

Loans and Allowance for Loan Losses, Impaired Financing Receivable (Details) (USD $)	3 Months Ended			9 Months Ended			12 Months Ended
	Sep. 30, 2012		Sep. 30, 2011	Sep. 30, 2012		Sep. 30, 2011	Dec. 31, 2011
Financing Receivable, Impaired [Line Items]
Recorded investment	$ 36,571,000			$ 36,571,000			$ 47,855,000
Unpaid principal balance	38,380,000			38,380,000			58,981,000
Related allowance	2,072,000	[1]		2,072,000	[1]		4,440,000	[1]
Average recorded investment				49,520,000			60,792,000
Interest income recognozed				0			42,000
Increase in interest income if nonaccrual loans were on accrual status	415,000		678,000	1,500,000		7,600,000
Collateral Dependent Nonaccrual Loans [Member]
Financing Receivable, Impaired [Line Items]
Recorded investment	27,848,000			27,848,000			28,546,000
Unpaid principal balance	29,118,000			29,118,000			34,699,000
Related allowance	0	[1]		0	[1]		0	[1]
Average recorded investment				33,977,000			35,567,000
Interest income recognozed				0			42,000
Collateral Dependent Nonaccrual Loans [Member] | Commercial and industrial [Member]
Financing Receivable, Impaired [Line Items]
Recorded investment	2,710,000			2,710,000			3,036,000
Unpaid principal balance	2,895,000			2,895,000			3,546,000
Related allowance	0	[1]		0	[1]		0	[1]
Average recorded investment				3,464,000			3,689,000
Interest income recognozed				0			0
Collateral Dependent Nonaccrual Loans [Member] | Construction and Land Development [Member]
Financing Receivable, Impaired [Line Items]
Recorded investment	2,890,000			2,890,000			6,917,000
Unpaid principal balance	3,032,000			3,032,000			9,093,000
Related allowance	0	[1]		0	[1]		0	[1]
Average recorded investment				3,313,000			9,288,000
Interest income recognozed				0			37,000
Collateral Dependent Nonaccrual Loans [Member] | Consumer Real Estate - Mortgage [Member]
Financing Receivable, Impaired [Line Items]
Recorded investment	8,228,000			8,228,000			9,248,000
Unpaid principal balance	8,571,000			8,571,000			9,961,000
Related allowance	0	[1]		0	[1]		0	[1]
Average recorded investment				10,875,000			10,140,000
Interest income recognozed				0			0
Collateral Dependent Nonaccrual Loans [Member] | Commercial Real Estate - Mortgage [Member]
Financing Receivable, Impaired [Line Items]
Recorded investment	14,020,000			14,020,000			9,345,000
Unpaid principal balance	14,620,000			14,620,000			12,099,000
Related allowance	0	[1]		0	[1]		0	[1]
Average recorded investment				16,325,000			12,450,000
Interest income recognozed				0			5,000
Collateral Dependent Nonaccrual Loans [Member] | Consumer and Other [Member]
Financing Receivable, Impaired [Line Items]
Recorded investment	0			0			0
Unpaid principal balance	0			0			0
Related allowance	0	[1]		0	[1]		0	[1]
Average recorded investment				0			0
Interest income recognozed				0			0
Cash Flow Dependent Nonaccrual Loans [Member]
Financing Receivable, Impaired [Line Items]
Recorded investment	8,723,000			8,723,000			19,309,000
Unpaid principal balance	9,262,000			9,262,000			24,282,000
Related allowance	2,072,000	[1]		2,072,000	[1]		4,440,000	[1]
Average recorded investment				15,543,000			25,225,000
Interest income recognozed				0			0
Cash Flow Dependent Nonaccrual Loans [Member] | Commercial and industrial [Member]
Financing Receivable, Impaired [Line Items]
Recorded investment	2,186,000			2,186,000			8,854,000
Unpaid principal balance	2,399,000			2,399,000			11,041,000
Related allowance	1,071,000	[1]		1,071,000	[1]		2,767,000	[1]
Average recorded investment				2,728,000			11,497,000
Interest income recognozed				0			0
Cash Flow Dependent Nonaccrual Loans [Member] | Construction and Land Development [Member]
Financing Receivable, Impaired [Line Items]
Recorded investment	2,967,000			2,967,000			6,048,000
Unpaid principal balance	3,060,000			3,060,000			6,822,000
Related allowance	192,000	[1]		192,000	[1]		1,264,000	[1]
Average recorded investment				4,230,000			7,074,000
Interest income recognozed				0			0
Cash Flow Dependent Nonaccrual Loans [Member] | Consumer Real Estate - Mortgage [Member]
Financing Receivable, Impaired [Line Items]
Recorded investment	2,320,000			2,320,000			3,239,000
Unpaid principal balance	2,466,000			2,466,000			4,902,000
Related allowance	526,000	[1]		526,000	[1]		301,000	[1]
Average recorded investment				6,988,000			5,005,000
Interest income recognozed				0			0
Cash Flow Dependent Nonaccrual Loans [Member] | Commercial Real Estate - Mortgage [Member]
Financing Receivable, Impaired [Line Items]
Recorded investment	963,000			963,000			617,000
Unpaid principal balance	1,027,000			1,027,000			661,000
Related allowance	218,000	[1]		218,000	[1]		57,000	[1]
Average recorded investment				1,075,000			792,000
Interest income recognozed				0			0
Cash Flow Dependent Nonaccrual Loans [Member] | Consumer and Other [Member]
Financing Receivable, Impaired [Line Items]
Recorded investment	287,000			287,000			551,000
Unpaid principal balance	310,000			310,000			856,000
Related allowance	65,000	[1]		65,000	[1]		51,000	[1]
Average recorded investment				522,000			857,000
Interest income recognozed				$ 0			$ 0

[1] Collateral dependent loans are typically charged-off to their net realizable value pursuant to requirements of our primary regulator and no specific allowance is carried related to those loans.

XML

Summary of Significant Accounting Policies (Tables)

9 Months Ended

Sep. 30, 2012

Summary of Significant Accounting Policies [Abstract]

Summary of supplemental cash flow information

Cash Flow Information — Supplemental cash flow information addressing certain cash and noncash transactions for each of the nine months ended September 30, 2012 and 2011 was as follows:

	For the nine months ended September 30,
	2012		2011
Cash Transactions:
Interest paid	$	18,317,526	$	32,356,615
Income taxes paid, net		5,699,106		1,638,414
Noncash Transactions:
Loans charged-off to the allowance for loan losses		11,265,378		27,201,443
Loans foreclosed upon and transferred to other real estate owned		8,489,792		26,689,198

Summary of the basic and diluted earnings per share calculations

The following is a summary of the basic and diluted net income per share calculations for the three and nine months ended September 30, 2012 and 2011:

	For the three months ended September 30,				For the nine months ended September 30,
	2012		2011		2012		2011
Basic net income per share calculation:
Numerator - Net income available to common stockholders	$	11,349,125	$	24,537,293	$	26,339,683	$	31,392,039
Denominator - Average common shares outstanding		33,939,248		33,372,980		33,879,186		33,398,029
Basic net income per share available to common stockholders	$	0.33	$	0.74	$	0.78	$	0.94
Diluted net income per share calculation:
Numerator – Net income available to common stockholders	$	11,349,125	$	24,537,293	$	26,339,683	$	31,392,039
Denominator - Average common shares outstanding		33,939,248		33,372,980		33,879,186		33,398,029
Dilutive shares contingently issuable		583,828		620,934		594,709		639,710
Average diluted common shares outstanding		34,523,076		33,993,914		34,473,895		34,037,739
Diluted net income per share available to common stockholders	$	0.33	$	0.72	$	0.76	$	0.92

XML

Derivative Instruments (Tables)

9 Months Ended

Sep. 30, 2012

Derivative Instruments [Abstract]

Summary of interest rate swaps

A summary of Pinnacle Financial's interest rate swaps as of September 30, 2012 and December 31, 2011 is included in the following table (in thousands):

	September 30, 2012					December 31, 2011
	Notional Amount		Estimated Fair Value			Notional Amount		Estimated Fair Value
Interest rate swap agreements:
Pay fixed / receive variable swaps	$	242,183	$	17,858		$	257,639	$	17,937
Pay variable / receive fixed swaps		242,183		(18,084	)		257,639		(18,147	)
Total	$	484,366	$	(226	)	$	515,278	$	(210	)

XML

Regulatory Matters (Details) (USD $)	9 Months Ended
	Sep. 30, 2012
Regulatory Matters [Abstract]
Preceding period of retained earnings used in calculation of dividend payable	2 years
Compliance with Regulatory Capital Requirements under Banking Regulations [Line Items]
Amount of dividend could be paid without prior consent of the TDFI	$ 26,200,000
Pinnacle Financial [Member]
Actual Amount [Abstract]
Total capital to risk weighted assets:	536,359,000
Tier I capital to risk weighted assets:	485,929,000
Tier I capital to average assets (*):	485,929,000	[1]
Actual Ratio [Abstract]
Total capital to risk weighted assets:	13.40%
Tier I capital to risk weighted assets:	12.10%
Tier I capital to average assets (*):	10.50%	[1]
Regulatory Minimum Capital Requirement Amount [Abstract]
Total capital to risk weighted assets:	321,164,000
Tier I capital to risk weighted assets:	160,582,000
Tier I capital to average assets (*):	184,513,000	[1]
Regulatory Minimum Capital Requirement Ratio [Abstract]
Total capital to risk weighted assets:	8.00%
Tier I capital to risk weighted assets:	4.00%
Tier I capital to average assets (*):	4.00%	[1]
Regulatory Minimum To Be Well Capitalized Amount [Abstract]
Total capital to risk weighted assets:	403,442,000
Tier I capital to risk weighted assets:	242,065,000
Regulatory Minimum To Be Well Capitalized Ratio [Abstract]
Total capital to risk weighted assets:	10.00%
Tier I capital to risk weighted assets:	6.00%
Pinnacle Bank [Member]
Actual Amount [Abstract]
Total capital to risk weighted assets:	531,092,000
Tier I capital to risk weighted assets:	480,765,000
Tier I capital to average assets (*):	480,765,000	[1]
Actual Ratio [Abstract]
Total capital to risk weighted assets:	13.30%
Tier I capital to risk weighted assets:	12.00%
Tier I capital to average assets (*):	10.50%	[1]
Regulatory Minimum Capital Requirement Amount [Abstract]
Total capital to risk weighted assets:	320,496,000
Tier I capital to risk weighted assets:	160,248,000
Tier I capital to average assets (*):	183,875,000	[1]
Regulatory Minimum Capital Requirement Ratio [Abstract]
Total capital to risk weighted assets:	8.00%
Tier I capital to risk weighted assets:	4.00%
Tier I capital to average assets (*):	4.00%	[1]
Regulatory Minimum To Be Well Capitalized Amount [Abstract]
Total capital to risk weighted assets:	402,617,000
Tier I capital to risk weighted assets:	241,570,000
Tier I capital to average assets (*):	$ 229,845,000	[1]
Regulatory Minimum To Be Well Capitalized Ratio [Abstract]
Total capital to risk weighted assets:	10.00%
Tier I capital to risk weighted assets:	6.00%
Tier I capital to average assets (*):	5.00%	[1]

[1] Average assets for the above calculations were based on the most recent quarter.

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME [Abstract]
Net income:	$ 11,349,125	$ 26,100,999	$ 30,153,723	$ 35,977,570
Other comprehensive income, net of tax:
Increase (decrease) in net gains on securities available-for-sale, net of deferred tax expense (benefit)	1,941,547	(1,352,934)	2,100,758	9,922,126
Total comprehensive income	$ 13,290,672	$ 24,748,065	$ 32,254,481	$ 45,899,696

XML

Securities

9 Months Ended

Sep. 30, 2012

Securities [Abstract]

Securities

Note 3.  Securities

The amortized cost and fair value of securities available-for-sale and held-to-maturity at September 30, 2012 and December 31, 2011 are summarized as follows (in thousands):

	September 30, 2012
	Amortized  Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Securities available-for-sale:
U.S. government agency securities		$	11,267		$	89		$	-		$	11,356
Mortgage-backed securities			501,082			23,484			-			524,566
State and municipal securities			175,725			15,690			2			191,413
Corporate notes and other			9,768			1,602			-			11,370
		$	697,842		$	40,865		$	2		$	738,705
Securities held-to-maturity:
State and municipal securities		$	575		$	12		$	-		$	587
		$	575		$	12		$	-		$	587
	December 31, 2011
	Amortized  Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Securities available-for-sale:
U.S. Government agency securities		$	41,978		$	344		$	9		$	42,313
Mortgage-backed securities			623,684			22,254			371			645,567
State and municipal securities			182,206			13,768			22			195,952
Corporate notes and other			9,687			1,443			-			11,130
		$	857,555		$	37,809		$	402		$	894,962
Securities held-to-maturity:
State and municipal securities		$	2,330		$	39		$	-		$	2,369
		$	2,330		$	39		$	-		$	2,369

At September 30, 2012, approximately $633.3 million of securities within Pinnacle Financial's investment portfolio were either pledged to secure public funds and other deposits or securities sold under agreements to repurchase.

The amortized cost and fair value of debt securities as of September 30, 2012 by contractual maturity are shown below. Actual maturities may differ from contractual maturities of mortgage-backed securities since the mortgages underlying the securities may be called or prepaid with or without penalty. Therefore, these securities are not included in the maturity categories in the following summary (in thousands):

	September 30, 2012
	Available-for-sale				Held-to-maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	4,071	$	4,129	$	200	$	202
Due in one year to five years		39,790		41,341		375		385
Due in five years to ten years		103,442		114,608		-		-
Due after ten years		49,457		54,061		-		-
Mortgage-backed securities		501,082		524,566		-		-
	$	697,842	$	738,705	$	575	$	587

At September 30, 2012 and December 31, 2011, included in securities were the following available-for-sale investments with unrealized losses.  The information below classifies these investments according to the term of the unrealized losses of less than twelve months or twelve months or longer (in thousands):

	Investments with an Unrealized Loss of less than 12 months				Investments with an Unrealized Loss of 12 months or longer				Total Investments with an Unrealized Loss
	Fair Value		Unrealized Losses		Fair Value		Unrealized Losses		Fair Value		Unrealized Losses
At September 30, 2012:
U.S. government agency securities	$	-	$	-	$	-	$	-	$	-	$	-
Mortgage-backed securities		-		-		-		-		-		-
State and municipal securities		625		1		330		1		955		2
Corporate notes		-		-		-		-		-		-
Total temporarily-impaired securities	$	625	$	1	$	330	$	1	$	955	$	2
At December 31, 2011:
U.S. government agency securities	$	5,452	$	9	$	-	$	-	$	5,452	$	9
Mortgage-backed securities		41,598		341		17,826		30		59,424		371
State and municipal securities		1,967		17		1,205		5		3,172		22
Corporate notes		-		-		-		-		-		-
Total temporarily-impaired securities	$	49,017	$	367	$	19,031	$	35	$	68,048	$	402

The applicable date for determining when securities are in an unrealized loss position is September 30, 2012.  As such, it is possible that a security had a market value that exceeded its amortized cost on other days during the past twelve-month period, but is in the "Investments with an Unrealized Loss of less than 12 months" category above.

As shown in the tables above, at September 30, 2012, Pinnacle Financial had approximately $2,000 in unrealized losses on $955,000 of available-for-sale securities. Any unrealized losses associated with these investment securities are driven by changes in interest rates and are not due to the credit quality of the securities.  These securities will continue to be monitored as a part of our ongoing impairment analysis, but are expected to perform even if the rating agencies reduce the credit rating of the bond issuers.  Management evaluates the financial performance of the issuers on a quarterly basis to determine if it is probable that the issuers can make all contractual principal and interest payments.  Because Pinnacle Financial currently does not intend to sell those securities that have an unrealized loss at September 30, 2012, and it is not more-likely-than-not that Pinnacle Financial will be required to sell the securities before recovery of their amortized cost bases, which may be maturity, Pinnacle Financial does not consider these securities to be other-than-temporarily impaired at September 30, 2012.

Periodically, available-for-sale securities may be sold or the composition of the portfolio realigned to improve yields, quality or marketability, or to implement changes in investment or asset/liability strategy, including maintaining collateral requirements, and raising funds for liquidity purposes. Additionally, if an available-for-sale security loses its investment grade, tax-exempt status, the underlying credit support is terminated or collection otherwise becomes uncertain based on factors known to management, Pinnacle Financial will consider selling the security, but will review each security on a case-by-case basis as these factors become known. The table below shows the fair value of securities that have been sold during 2012 and the amount of gain or loss recognized on those securities as well as any other-than-temporary impairment identified during 2012 (in thousands).

For the quarter ended,	Fair Value of securities sold			Gain recognized		Loss recognized		Net		Other-than-temporary impairment(OTTI)			Gain(loss) on the sale of securities, net of OTTI
March 31, 2012	$	14,360	(1)	$	148	$	-	$	148	$	34	(2)	$	114
June 30, 2012		18,273	(3)		99		-		99		-			99
September 30, 2012		2,791	(4)		7				7		57	(4)		(50	)

(1) During the first quarter 2012, Pinnacle Financial sold these securities due to their relatively short terms until maturity and a weighted average coupon of 0.50%.

(2) During the first quarter of  2012, Pinnacle Financial determined four mortgage-backed securities were OTTI because of management's intent to sell them in the second quarter of 2012. The decision to sell was based on their relative underperformance compared to expectations. 

(3) During the second quarter of 2012, Pinnacle Financial sold the four securities previously identified as OTTI in the first quarter. Additionally, two securities issued by municipalities in the state of California, which management believed could be adversely affected by state budgetary issues, were also sold during the second quarter.

(4) During the third quarter of 2012, Pinnacle Financial determined one security was OTTI due to its distinct underperformance relative to the interest rate environment. Pinnacle Financial recognized of approximately $57,000 in OTTI, and the bond was subsequently sold for a gain of approximately $7,000.

The carrying values of Pinnacle Financial's investment securities could decline in the future if the financial condition of issuers deteriorates and management determines it is probable that Pinnacle Financial will not recover the entire amortized cost bases of the securities.  As a result, there is a risk that other-than-temporary impairment charges may occur in the future.

XML

Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value of Financial Instruments [Abstract]

Assets and liabilities measured at fair value on a recurring basis

The following tables present the financial instruments carried at fair value as of September 30, 2012 and December 31, 2011, by caption on the consolidated balance sheets and by FASB ASC 820 valuation hierarchy (as described above) (in thousands):

September 30, 2012	Total carrying value in the consolidated balance sheet		Quoted market prices in an active market (Level 1)		Models with significant observable market parameters (Level 2)		Models with significant unobservable market parameters (Level 3)
Investment securities available-for-sale:
U.S. government agency securities	$	11,356	$	-	$	11,356	$	-
Mortgage-backed securities		524,566		-		524,566		-
State and municipal securities		191,413		-		191,413		-
Corporate notes and other		11,370		-		11,370		-
Total investment securities available-for-sale		738,705		-		738,705	$	-
Alternative investments		3,406						3,406
Other assets		68,067				17,858		50,209
Total assets at fair value	$	810,178	$		$	756,563	$	53,615
Other liabilities	$	18,084	$	-	$	18,084	$	-
Total liabilities at fair value	$	18,084	$	-	$	18,084	$	-
December 31, 2011
Investment securities available-for-sale:
U.S. government agency securities	$	42,313	$	-	$	42,313	$	-
Mortgage-backed securities		645,567		-		645,567		-
State and municipal securities		195,952		-		195,952		-
Corporate notes and other		11,130		-		11,130		-
Total investment securities available-for-sale		894,962		-		894,962		-
Alternative investments		3,400		-		-		3,400
Other assets		67,319		-		17,937		49,382
Total assets at fair value	$	965,681	$	-	$	912,899	$	52,782
Other liabilities	$	18,147	$	-	$	18,147	$	-
Total liabilities at fair value	$	18,147	$	-	$	18,147	$	-

Assets and liabilities measured at fair value on a nonrecurring basis

September 30, 2012	Total carrying value in the consolidated balance sheet		Quoted market prices in an active market (Level 1)		Models with significant observable market parameters (Level 2)		Models with significant unobservable market parameters (Level 3)		Total gains (losses) for the period ended
Other real estate owned	$	21,817	$	-	$	-	$	21,817	$	(3,178	)
Nonperforming loans, net (1)		34,506		-		-		34,506		(2,819	)
Total	$	56,323	$	-	$	-	$	56,323	$	(5,997	)
December 31, 2011
Other real estate owned	$	39,714	$	-	$	-	$	39,714	$	(6,890	)
Nonperforming loans, net (1)		43,415		-		-		43,415		(8,661	)
Total	$	83,129	$	-	$	-	$	83,129	$	(15,551	)

(1) Amount is net of a valuation allowance of $2.0 million at September 30, 2012 and $4.4 million at December 31, 2011 as required by ASC 310-10, "Receivables."

Rollforward of the balance sheet amounts, unobservable input reconciliation

The table below includes a rollforward of the balance sheet amounts for the nine months ended September 30, 2012 (including the change in fair value) for financial instruments classified by Pinnacle Financial within Level 3 of the valuation hierarchy for assets and liabilities measured at fair value on a recurring basis. When a determination is made to classify a financial instrument within Level 3 of the valuation hierarchy, the determination is based upon the significance of the unobservable factors to the overall fair value measurement. However, since Level 3 financial instruments typically include, in addition to the unobservable or Level 3 components, observable components (that is, components that are actively quoted and can be validated to external sources), the gains and losses in the table below include changes in fair value due in part to observable factors that are part of the valuation methodology (in thousands):

	For the nine months ended September 30,
	2012				2011
	Other assets		Other liabilities		Other assets		Other liabilities
Fair value, January 1	$	52,782	$	-	$	50,962	$	-
Total realized gains included in income		644		-		1,130		-
Change in unrealized gains/losses included in other comprehensive income
for assets and liabilities still held at September 30		-		-		-		-
Purchases, issuances and settlements, net		189		-		393		-
Transfers out of Level 3		-		-		-		-
Fair value, September 30	$	53,615	$	-	$	52,485	$	-
Total realized gains included in income related to financial assets and liabilities
still on the consolidated balance sheet at September 30	$	644	$	-	$	1,130	$	-

Carrying amounts, estimated fair value and placement in the fair value hierarchy of financial instruments

The following table presents the carrying amounts, estimated fair value and placement in the fair value hierarchy of Pinnacle Financial's financial instruments at September 30, 2012 and December 31, 2011.  This table excludes financial instruments for which the carrying amount approximates fair value.  For short-term financial assets such as cash and cash equivalents, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization.  For financial liabilities such as non-interest bearing demand, interest-bearing demand, and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity.

(in thousands) September 30, 2012	Carrying/ Notional Amount		Estimated Fair Value (1)		Quoted market prices in an active market (Level 1)		Models with significant observable market parameters (Level 2)		Models with significant unobservable market parameters (Level 3)
Financial assets:
Securities held-to-maturity	$	575	$	587	$	-	$	587	$	-
Loans, net		3,456,072		3,196,924		-		-		3,196,924
Mortgage loans held for sale		39,246		39,246		-		-		39,246
Financial liabilities:
Deposits and securities sold under
agreements to repurchase		3,854,074		3,798,351		-		3,798,351		-
Federal Home Loan Bank advances		190,887		191,400		-		-		191,400
Subordinated debt and other borrowings		106,783		84,691		-		84,691		-
Off-balance sheet instruments:
Commitments to extend credit (2)		965,331		748		-		-		748
Standby letters of credit (3)		72,580		450		-		-		450
December 31, 2011
Financial assets:
Securities held-to-maturity	$	2,330	$	2,369	$	-	$	2,369	$	-
Loans, net		3,217,376		2,893,526		-		-		2,893,526
Mortgage loans held for sale		35,363		35,363						35,363
Financial liabilities:
Deposits and securities sold under
agreements to repurchase		3,785,931		3,752,490		-		3,752,490		-
Federal Home Loan Bank advances		226,069		226,460		-		-		226,460
Subordinated debt and other borrowings		97,476		72,030		-		72,030		-
Off-balance sheet instruments:
Commitments to extend credit (2)		937,084		1,031		-		-		1,031
Standby letters of credit (3)		76,176		259		-		-		259

(1) Estimated fair values are consistent with an exit-price concept. The assumptions used to estimate the fair values are intended to approximate those that a market-participant would realize in a hypothetical orderly transaction.

(2) At the end of each quarter, Pinnacle Financial evaluates the inherent risks of the outstanding off-balance sheet commitments.  In making this evaluation, Pinnacle Financial evaluates the credit worthiness of the borrower, the collateral supporting the commitments and any other factors similar to those used to evaluate the inherent risks of our loan portfolio.  Additionally, Pinnacle Financial evaluates the probability that the outstanding commitment will eventually become a funded loan.  As a result, at September 30, 2012 and December 31, 2011, Pinnacle Financial included in other liabilities $0.7 million and $1.0 million, respectively, representing the inherent risks associated with these off-balance sheet commitments.

(3) At September 30, 2012 and December 31, 2011, the fair value of Pinnacle Financial's standby letters of credit was $450,000 and $259,000, respectively.  This amount represents the unamortized fee associated with these standby letters of credit and is included in the consolidated balance sheet of Pinnacle Financial and is believed to approximate fair value.  This fair value will decrease over time as the existing standby letters of credit approach their expiration dates.

XML

Income Taxes (Details)	9 Months Ended
	Sep. 30, 2012
Income Taxes [Abstract]
Effective income tax rate (in hundredths)	32.30%
Federal income tax statutory rate (in hundredths)	35.00%
State income tax rate (in hundredths)	6.50%
Internal Revenue Service (IRS) [Member] | Maximum [Member]
Income Tax Contingency [Line Items]
Open Tax Year	2011
Internal Revenue Service (IRS) [Member] | Minimum [Member]
Income Tax Contingency [Line Items]
Open Tax Year	2007

XML

Summary of Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2012

Summary of Significant Accounting Policies [Abstract]

Basis of Presentation

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 Pinnacle Financial consolidated financial statements and related notes appearing in the 2011 Annual Report previously filed on Form 10-K.

Consolidation of Financial Statements

These consolidated financial statements include the accounts of Pinnacle Financial and its wholly-owned subsidiaries. PNFP Statutory Trust I, PNFP Statutory Trust II, PNFP Statutory Trust III, and PNFP Statutory Trust IV are affiliates of Pinnacle Financial and 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

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 loan losses, any potential impairment of intangible assets, including goodwill and the valuation of deferred tax assets, other real estate owned, and our investment portfolio, including other-than-temporary impairment. These financial statements should be read in conjunction with Pinnacle Financial's Annual Report on Form 10-K for the year ended December 31, 2011. There have been no significant changes to Pinnacle Financial's significant accounting policies as disclosed in Pinnacle Financial's Annual Report on Form 10-K for the year ended December 31, 2011.

Income per common share policy

Income Per Common Share — Basic net income per common share available to common stockholders (EPS) is computed by dividing net income available to common stockholders by the weighted average common shares outstanding for the period.  Weighted average common shares outstanding also include salary stock units issued to the named executive officers.  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 shares outstanding is attributable to common stock options, common stock appreciation rights, warrants and restricted shares with time-based vesting criteria. The dilutive effect of outstanding options, common stock appreciation rights, warrants and restricted shares with time-based vesting criteria is reflected in diluted EPS by application of the treasury stock method.