Pinnacle Financial Reports Net Income up 66 Percent over Last Year; As

Pinnacle Financial Reports Net Income up 66 Percent over Last Year; Assets Grow to $787 Million and Diluted Earnings Per Share Is $0.19

    Business Editors

    NASHVILLE, Tenn.--(BUSINESS WIRE)--April 18, 2005--Pinnacle Financial Partners Inc. (Nasdaq: PNFP) today reported record earnings for the first quarter of 2005.

FIRST QUARTER 2005 HIGHLIGHTS:

-- Record net income of $1.78 million, up 66 percent from prior year's $1.07 million

-- Record diluted earnings per share of $0.19, up 46 percent from prior year's $0.13

-- Strong balance sheet growth:

-- Average loans up 59 percent from the same period last year

-- Average deposits up 48 percent from the same period last year

-- Superior credit quality:

-- Net charge-offs as a percentage of average loans of only 0.04 percent

-- Past due loans over 30 days of only 0.27 percent of total loans

-- Nonperforming assets of only 0.12 percent of total loans and other real estate

    "This marks the ninth consecutive quarter where year over year quarterly net income growth exceeded 60 percent," said M. Terry Turner, President and CEO of Pinnacle Financial Partners.

    FINANCIAL PERFORMANCE

--	Return on average assets for the quarter ended March 31, 2005, was 0.96 percent compared to 0.85 percent for the same quarter last year.
--	Return on average stockholders' equity for the quarter ended March 31, 2005, was 12.48 percent compared to 12.03 percent for the same quarter last year.
--	Efficiency ratio (noninterest expense divided by net interest income and noninterest income) improved to 59.6 percent during the first quarter of 2005 compared to 62.8 percent during the first quarter of 2004.

    Total assets grew to $787 million as of March 31, 2005, up $246 million or 45 percent from the $541 million reported at March 31, 2004. Loans as of March 31, 2005, were $517 million, or 60 percent higher than the $323 million reported at March 31, 2004. Total deposits increased to $619 million at March 31, 2005, or 41 percent higher than the $438 million reported at March 31, 2004.
    "Loan and deposit growth continues to be the primary influencer of current and future profitability," said Turner. "First quarter 2005 loan growth was exceptionally strong at 68 percent greater than the loan growth we experienced in the first quarter of 2004. Given the outstanding loan growth and the increased loan loss provision that accompanies loan growth, we are very pleased that our return on average assets advanced to 0.96 percent for the quarter. Additionally, having just completed a significant follow-on stock offering in the third quarter of last year, we are also pleased that the demand for our loan and deposit services has enabled us to leverage the additional capital quickly. We have already achieved a return on average equity which approximates pre-follow-on stock offering levels."

REVENUE

-- Revenue (the sum of net interest income and noninterest income) for the quarter ended March 31, 2005 amounted to $7.7 million compared to $5.3 million for the same quarter of last year, an increase of 45 percent.

-- Net interest income for the quarter ended March 31, 2005, was $6.5 million compared to $4.2 million for the quarter ended March 31, 2004.

-- Net interest margin for the first quarter of 2005 was 3.78 percent, compared to a net interest margin of 3.49 percent reported during the first quarter in 2004.

-- Percentage of daily floating rate loans to total loans was 54.4 percent at March 31, 2005, compared to 52.4 percent at March 31, 2004.

-- Noninterest income for the quarter ended March 31, 2005, was $1,178,000 compared to $1,131,000 during the same quarter in 2004.

    "Our net interest margin was consistent with the fourth quarter of 2004 and higher than the net interest margin we reported in the first quarter of 2004," said Harold Carpenter, Chief Financial Officer of Pinnacle Financial Partners. "Last year at this time, we reported we were asset sensitive and that our margins should improve once the Federal Reserve Board initiated increases to the Fed funds rate. Since that time the Fed funds rate has increased 1.75 percent and our margin has expanded by almost 30 basis points over the first quarter of last year. This expansion is a tribute to our associates who have been growing our client base in a very competitive pricing market. Given the current environment in Nashville, we do not believe we will experience any significant margin expansion for the remainder of this year and could, in fact, see modest contraction in order to meet competitive pricing pressures."
    At March 31, 2005, the ratio of investment securities to total assets declined to 25.7 percent compared to 30.0 percent at March 31, 2004. Pinnacle anticipates that this ratio will approximate 26.0 to 29.0 percent for the remainder of 2005.
    The increase in noninterest income was due to the further development of Pinnacle's mortgage origination unit, increased service charges due to more deposit accounts and increased investment services income from Pinnacle Asset Management. These increases were partially offset by decreased revenue from the gains on sales of loans and loan participations and gains on sales of investment securities. For the quarter ended March 31, 2005, noninterest income represented approximately 15.3 percent of total revenues, compared to 21.4 percent for the same quarter in 2004.

    NONINTEREST EXPENSE

    -- Noninterest expense for the quarter ended March 31, 2005, was
    $4.6 million compared to $3.3 million for the same quarter in
    2004.

    Compensation and employee benefits expense increased approximately 37 percent over the same quarter last year due primarily to an increase in personnel. At March 31, 2005, Pinnacle employed 131.5 full-time equivalent personnel compared to 95.0 at March 31, 2004, an increase of approximately 38 percent. Equipment and occupancy expenses increased 55 percent over the same period last year due in large part to increased square footage for operating units at our headquarters location and additional branch offices.
    "We continue to be successful in adding experienced and successful bankers, brokers and mortgage originators, primarily from the larger regional and national franchises in Nashville. Pinnacle has and will continue to increase expense levels over time in order to capitalize on current and future market opportunities and to provide the necessary infrastructure to support our expectation for continued rapid growth," said Turner.

CREDIT QUALITY

-- Provision for loan losses was $601,000 for the first quarter of 2005 compared to $354,000 in the first quarter in 2004. The provision for loan losses was significantly higher in the first quarter of 2005 due to:

-- Loan growth in the first quarter of 2005 of $44 million compared to loan growth of $26 million in the first quarter of 2004 and

-- Net charge-offs of $53,000 in the first quarter of 2005 compared to net charge-offs of $30,000 during the same period in 2004. Net charge-offs to average loans were 0.04 percent for both the first quarter of 2005 and the first quarter of 2004.

-- Allowance for loan losses represented 1.20 percent of total loans at March 31, 2005, compared to 1.25 percent at March 31, 2004.

-- Nonperforming assets as a percentage of total loans and other real estate increased to 0.12 percent at March 31, 2005, from 0.03 percent at March 31, 2004.

    "We are extremely pleased with the credit quality of our firm," said Turner. "Last year, we experienced a charge-off rate of 0.27 percent largely due to the write-down of one particular relationship. In the first quarter of this year, asset quality indicators returned to the superior levels we have experienced through most of the life of this firm. Specifically, our nonperforming assets, net charge-off and past due ratios are at exceptional levels and better than national peer group averages. We continue to believe that our asset quality is the best predictor of our ability to create long-term shareholder value."

    OTHER FIRST QUARTER 2005 DEVELOPMENTS

--	Launched an enhancement project to the company's suite of treasury management products and services designed for Nashville's commercial clients. The enhancements will include a robust web-based platform and highlight technologically advanced delivery of information via image and other emerging technologies. Specifically, the project includes enhancements such as "image lockbox" whereby customer payment receipts are accessed by commercial clients via Pinnacle's website. Although substantially all of the capital outlays and feature/functionality enhancements will occur during 2005, the total project represents a commitment to be phased in over a 24-36 month period. "Our objective is simply to be the best provider of treasury management services in Nashville," said Robert A. McCabe, Jr., Chairman of the Board of Pinnacle Financial Partners. "Our current treasury management services have been well received by business clients. With this new initiative, we are continuing to invest in the latest technology and additional people to ensure we have a significant competitive edge. We are doing this at a time when the larger regional and national franchises are consolidating treasury management operations outside of Nashville. While others in the market may have comparable technology, we do not believe they have the local treasury management expertise to address clients' needs face-to-face the way we can. We believe that with our local expertise and the enhancements to our current treasury management offerings, no other firm in Nashville will be able to match our capabilities."
--	Pinnacle currently has 133 associates (131.5 full-time equivalent) at March 31, 2005, with 96 working in client contact areas and 37 in operational and corporate areas. This represents an increase of 10 employees from the 123 employees as of December 31, 2004. Pinnacle's annual retention rate rose to 99.2 percent at March 31, 2005, representing a very high level of engagement for Pinnacle's associates. Approximately 26 associate additions are currently planned for the remainder of 2005 with 14 to be in client contact areas.
--	Pinnacle opened its seventh office, located in Franklin, Tenn., which is the county seat of Williamson County. The Franklin office is the firm's third office in Williamson County, which has the highest per capita income and one of the highest growth rates of all Tennessee counties.
--	Pinnacle began construction of its eighth office in Hendersonville, Tenn., a high-growth area of the Nashville MSA. It is located northeast of Nashville's central business district. The firm anticipates this office to be open in mid-2005. With a population of over 50,000, Hendersonville is the largest city in Sumner County, another one of the fastest growing counties in Tennessee. Additionally, Pinnacle is considering a ninth location to be opened in late 2005 in the Nashville MSA. Pinnacle expects to add another two offices in the Nashville MSA in 2006, which would bring the company's total number of offices to 11.

    INVESTMENT OUTLOOK

    Management has developed several financial forecast scenarios for the next several quarters. Based on anticipated growth trends and future investments in the franchise, Pinnacle estimates its second quarter 2005 diluted earnings per share will approximate $0.19 to $0.21. Pinnacle tightened the estimate for diluted earnings per share for the year ending Dec. 31, 2005, to range between $0.84 and $0.88. Additionally, Pinnacle has increased its estimate for total asset balances to range between $950 million and $1 billion by the end of 2005 as a result of continued organic growth. Pinnacle anticipates more than previously anticipated loan demand for the remainder of 2005 and, as a result, has considered the increased provision for loan losses associated with increased loan balances in these estimates. Additionally, Pinnacle has included in these estimates additional compensation expense associated with increased number of personnel and, due to accelerated growth and earnings performance, incentive expense associated with Pinnacle's annual cash bonus plan which has been forecasted to be greater than the 80 percent of targeted incentives awarded to associates in 2004. "This exceptional balance sheet growth during the remainder of 2005 should put us in a position to continue extraordinary earnings growth during 2006," said Carpenter.
    As noted previously, management has developed several scenarios under which these estimates can be achieved and believes these estimates to be reasonable based on these scenarios. However, unanticipated events or developments, including the execution of any initiative involving the development of any market other than the current Nashville franchise, the opportunity to hire more seasoned professionals than anticipated or the ability to grow loans significantly in excess of the levels contemplated, may cause the actual results of Pinnacle to differ materially from these estimates.
    The estimates do not include compensation expense related to the expensing of stock options that have been and may be granted to employees under the firm's broad-based stock option plans. Compensation expense attributable to the expensing of stock options would have approximated $0.02 to $0.03 per fully diluted share in the last six months of 2005, but consistent with recent announcements by the Securities and Exchange Commission, Pinnacle will begin including such compensation expense in its statement of income in 2006.
    Pinnacle Financial Partners, the largest financial services firm headquartered in Nashville, provides a full range of banking, investment and insurance products and services targeted at small- to mid-sized businesses and their owners/operators. Pinnacle provides financial planning services by a certified financial planner (CFP (R)), and a number of Pinnacle's senior financial advisors provide comprehensive wealth management services to help clients increase, protect and distribute their assets.
    Pinnacle opened its first office in October 2000 in Commerce Center in Downtown Nashville. Since then the firm has added Nashville offices in the Rivergate, Green Hills and West End areas and offices in Brentwood, Cool Springs and Franklin in Williamson County.
    Additional information concerning Pinnacle can be accessed at www.pnfp.com.
    Certain of the statements in this release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"). The words "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate" and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking. All forward-looking statements are subject to risks, uncertainties and other facts that may cause the actual results, performance or achievements of Pinnacle to differ materially from any results expressed or implied by such forward-looking statements. Such factors include, without limitation, (i) unanticipated deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses, (ii) increased competition with other financial institutions, (iii) lack of sustained growth in the economy in the Nashville, Tennessee area, (iv) rapid fluctuations or unanticipated changes in interest rates, (v) the inability of Pinnacle to satisfy regulatory requirements for its expansion plans, (vi) the inability of Pinnacle to execute its branch expansion plans and (i) changes in the legislative and regulatory environment. A more detailed description of these and other risks is contained in Pinnacle's most recent annual report on Form 10-K. Many of such factors are beyond Pinnacle's ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. Pinnacle disclaims any obligation to update or revise any forward-looking statements contained in this release, whether as a result of new information, future events or otherwise.

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - UNAUDITED

March 31, December 31, 2005 2004 ------------- ------------- ASSETS

Cash and noninterest-bearing due from banks $ 19,956,737 $ 15,243,796 Interest-bearing due from banks 444,090 379,047 Federal funds sold 24,528,028 11,122,944 ------------- ------------- Cash and cash equivalents 44,928,855 26,745,787

Securities available-for-sale, at fair value 174,646,784 180,573,820 Securities held-to-maturity (fair value of $26,723,605 and $27,134,913 at March 31, 2005 and December 31, 2004, respectively) 27,576,457 27,596,159 Mortgage loans held-for-sale 2,837,900 1,634,900

Loans 516,733,302 472,362,219 Less allowance for loan losses (6,197,895) (5,650,014) ------------- ------------- Loans, net 510,535,407 466,712,205

Premises and equipment, net 11,582,991 11,130,671 Investments in unconsolidated subsidiary and other entities 3,929,811 3,907,807 Accrued interest receivable 3,124,989 2,639,548 Other assets 8,272,424 6,198,553 ------------- ------------- Total assets $787,435,618 $727,139,450 ============= =============

LIABILITIES AND STOCKHOLDERS' EQUITY

Deposits: Noninterest-bearing demand $119,212,181 $114,318,024 Interest-bearing demand 57,112,842 51,751,320 Savings and money market accounts 207,534,995 199,058,240 Time 235,160,749 205,599,425 ------------- ------------- Total deposits 619,020,767 570,727,009 Securities sold under agreements to repurchase 46,388,184 31,927,860 Federal Home Loan Bank advances 51,500,000 53,500,000 Subordinated debt 10,310,000 10,310,000 Accrued interest payable 937,207 769,300 Other liabilities 1,622,480 2,025,106 ------------- ------------- Total liabilities 729,778,638 669,259,275

Stockholders' equity: Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding - - Common stock, par value $1.00; 20,000,000 shares authorized; 8,391,371 issued and outstanding at March 31, 2005 and 8,389,232 issued and outstanding at December 31, 2004 8,391,371 8,389,232 Additional paid-in capital 44,388,278 44,376,307 Unearned compensation (29,750) (37,250) Retained earnings 6,906,776 5,127,023 Accumulated other comprehensive (loss) income, net (1,999,695) 24,863 ------------- ------------- Total stockholders' equity 57,656,980 57,880,175 ------------- ------------- Total liabilities and stockholders' equity $787,435,618 $727,139,450 ============= =============

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED

Three months ended March 31, 2005 2004 ---------- ---------- Interest income: Loans, including fees $6,954,365 3,946,572 Securities: Taxable 1,951,085 1,550,859 Tax-exempt 272,122 85,975 Federal funds sold and other 92,162 82,716 ---------- ---------- Total interest income 9,269,734 5,666,122 ---------- ----------

Interest expense: Deposits 2,153,961 1,171,188 Securities sold under agreements to repurchase 150,262 9,293 Federal funds purchased and other borrowings 462,537 333,349 ---------- ---------- Total interest expense 2,766,761 1,513,830 ---------- ---------- Net interest income 6,502,973 4,152,292 Provision for loan losses 601,250 353,848 ---------- ---------- Net interest income after provision for loan losses 5,901,723 3,798,444

Noninterest income: Service charges on deposit accounts 261,700 163,845 Investment sales commissions 437,424 389,579 Gain on loans and loan participations sold, net (a) (b) 160,555 219,620 Gain on sales of investment securities, net 114,410 248,353 Other noninterest income 203,710 110,042 ---------- ---------- Total noninterest income 1,177,799 1,131,439 ---------- ----------

Noninterest expense: Compensation and employee benefits (b) 2,970,558 2,173,425 Equipment and occupancy 784,026 505,690 Marketing and other business development 113,168 149,158 Postage and supplies 135,538 99,138 Other noninterest expense 577,584 391,468 ---------- ---------- Total noninterest expense 4,580,874 3,318,879 ---------- ---------- Income before income taxes 2,498,648 1,611,014 Income tax expense 718,895 539,992 ---------- ---------- Net income $1,779,753 1,071,022 ========== ==========

Per share information: Basic net income per common share $ 0.21 0.15 ========== ========== Diluted net income per common share $ 0.19 0.13 ========== ==========

Weighted average shares outstanding: Basic 8,389,256 7,384,106 Diluted 9,437,183 8,213,730

Reclassifications impacting previously reported amounts:

(a) Amounts reflect the reclassification of noninterest income previously reported as "Fees from the origination of mortgage loans" to "Gain on loans and loan participations sold".

(b) Sales commission expenses associated with mortgage loan originations previously included in "Compensation and employee benefits" have been reclassified to offset noninterest income included in "Gain on loans and loan participations sold".

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED

(dollars in thousands, except per Mar Dec Sept share data) 2005 2004 2004 ---------- ---------- -----------

Balance sheet data, at quarter end: Total assets $ 787,436 727,139 685,408 Total loans 516,733 472,362 434,909 Allowance for loan losses (6,198) (5,650) (5,434) Securities 202,223 208,170 191,323 Total deposits 619,021 570,727 541,859 Securities sold under agreements to repurchase 46,388 31,928 22,958 Advances from FHLB 51,500 53,500 51,500 Subordinated debt 10,310 10,310 10,310 Total stockholders' equity 57,657 57,880 56,668

Balance sheet data, quarterly averages: Total assets $ 756,884 707,131 618,694 Total loans 488,313 448,611 392,220 Securities 208,253 203,728 183,721 Total earning assets 708,690 670,839 589,554 Total deposits 597,358 562,936 485,300 Securities sold under agreements to repurchase 38,149 23,520 25,953 Advances from FHLB 50,233 48,022 49,000 Subordinated debt 10,310 10,310 10,310 Total stockholders' equity 58,420 57,721 43,868

Statement of operations data, for the three months ended: Interest income $ 9,270 8,574 7,214 Interest expense 2,767 2,296 1,915 ---------- ---------- ----------- Net interest income 6,503 6,278 5,299 Provision for loan losses 601 1,134 1,012 ---------- ---------- ----------- Net interest income after provision for loan losses 5,902 5,144 4,287 Noninterest income 1,178 1,246 1,534 Noninterest expense 4,581 4,127 3,860 ---------- ---------- ----------- Income before taxes 2,499 2,263 1,961 Income tax expense 719 574 570 ---------- ---------- ----------- Net income $ 1,780 1,689 1,391 ========== ========== ===========

Per share data: Earnings - basic $ 0.21 0.20 0.18 Earnings - diluted $ 0.19 0.18 0.16 Book value at quarter end (1) $ 6.87 6.90 6.75

Weighted avg. shares - basic 8,389,256 8,389,232 7,832,512 Weighted avg. shares - diluted 9,437,183 9,448,696 8,857,015 Common shares outstanding 8,391,371 8,389,232 8,389,232

Capital ratios (2): Equity to total assets 7.3% 8.0% 8.3% Leverage 9.2% 9.7% 10.9% Tier 1 risk-based 10.6% 11.7% 12.4% Total risk-based 11.5% 12.7% 13.4%

Investor information: Closing sales price $ 20.72 22.62 21.50 High sales price during quarter $ 24.05 25.10 23.70 Low sales price during quarter $ 20.72 22.05 17.70

June Mar Dec 2004 2004 2003 ---------- ---------- -----------

Balance sheet data, at quarter end: Total assets 586,313 541,052 498,421 Total loans 355,267 323,416 297,004 Allowance for loan losses (4,466) (4,042) (3,719) Securities 165,528 162,315 139,944 Total deposits 467,321 437,601 390,569 Securities sold under agreements to repurchase 23,772 14,699 15,050 Advances from FHLB 47,500 40,500 44,500 Subordinated debt 10,310 10,310 10,310 Total stockholders' equity 35,125 36,266 34,336

Balance sheet data, quarterly averages: Total assets 555,437 508,260 454,700 Total loans 343,974 306,549 283,387 Securities 169,192 149,802 137,243 Total earning assets 527,070 482,572 432,691 Total deposits 439,964 402,603 356,030 Securities sold under agreements to repurchase 17,523 14,868 16,013 Advances from FHLB 45,736 42,379 43,630 Subordinated debt 10,310 10,310 655 Total stockholders' equity 35,542 35,705 33,935

Statement of operations data, for the three months ended: Interest income 6,225 5,666 5,244 Interest expense 1,689 1,514 1,351 ---------- ---------- ----------- Net interest income 4,536 4,152 3,893 Provision for loan losses 449 354 204 ---------- ---------- ----------- Net interest income after provision for loan losses 4,087 3,798 3,689 Noninterest income 1,067 1,131 852 Noninterest expense 3,499 3,318 3,196 ---------- ---------- ----------- Income before taxes 1,655 1,611 1,345 Income tax expense 487 540 487 ---------- ---------- ----------- Net income 1,168 1,071 858 ========== ========== ===========

Per share data: Earnings - basic 0.16 0.15 0.12 Earnings - diluted 0.14 0.13 0.11 Book value at quarter end (1) 4.74 4.91 4.65

Weighted avg. shares - basic 7,397,920 7,384,106 7,384,106 Weighted avg. shares - diluted 8,279,114 8,213,730 8,114,888 Common shares outstanding 7,404,586 7,384,106 7,384,106

Capital ratios (2): Equity to total assets 6.0% 6.7% 6.8% Leverage 8.4% 9.0% 10.5% Tier 1 risk-based 10.2% 11.2% 11.8% Total risk-based 11.2% 12.1% 12.8%

Investor information: Closing sales price 18.30 15.25 11.75 High sales price during quarter 18.67 15.50 12.95 Low sales price during quarter 13.50 11.65 9.68

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED

(dollars in thousands, except per Mar Dec Sept share data) 2005 2004 2004 ---------- ---------- ----------- Performance ratios and other data: Return on average assets 0.96% 0.95% 0.89% Return on avg. stockholders' equity 12.48% 11.61% 12.58% Net interest margin (3) 3.78% 3.78% 3.62% Noninterest income to total revenue (4) 15.3% 16.6% 22.5% Noninterest income to avg. assets 0.62% 0.70% 0.99% Noninterest exp. to avg. assets 2.42% 2.33% 2.50% Efficiency ratio (5) 59.6% 54.9% 56.5% Avg. loans to average deposits 81.7% 79.7% 80.8% Securities to total assets 25.7% 29.1% 27.9% Average interest-earning assets to average interest-bearing liabilities 119.0% 121.9% 121.0% Brokered time deposits to total deposits 8.3% 7.6% 8.2%

Selected growth rates, last twelve months (6): Total average assets 48.9% 55.6% 52.3% Average loans 59.3% 58.3% 45.4% Total average deposits 48.4% 58.2% 54.4%

Total revenue (4) 45.4% 58.6% 58.1% Total noninterest expense 38.0% 29.1% 38.4% Diluted earnings per share 46.2% 68.3% 58.5%

Asset quality information and ratios: Nonaccrual loans and other real estate $ 596 561 1,332 Past due loans over 90 days and still accruing interest $ 47 146 95 Net loan charge-offs (7) $ 53 918 43 Allowance for loan losses to total loans 1.20% 1.20% 1.25% As a percentage of total loans and ORE: Past due loans over 30 days 0.27% 0.37% 0.69% Nonperforming assets 0.12% 0.12% 0.31% Potential problem loans (8) 0.08% 0.02% 0.08% Annualized net loan charge-offs (recoveries) to avg. loans (9) 0.04% 0.27% 0.04% Avg. commercial loan internal risk ratings (8) 3.8 3.9 3.8 Avg. loan account balances (10) $ 162 161 157

Interest rates and yields: Loans 5.78% 5.58% 5.25% Securities 4.44% 4.34% 4.33% Federal funds sold and other 3.41% 2.72% 2.50% Total earning assets 5.34% 5.12% 4.90% Total deposits, including non- interest bearing 1.46% 1.30% 1.22% Securities sold under agreements to repurchase 1.60% 0.85% 0.51% Federal funds purchased and FHLB advances 2.61% 2.34% 2.14% Subordinated debt 5.32% 4.77% 4.58% Total deposits and other interest-bearing liabilities 1.88% 1.66% 1.33%

June Mar Dec 2004 2004 2003 ---------- ---------- ----------- Performance ratios and other data: Return on average assets 0.82% 0.85% 0.75% Return on avg. stockholders' equity 12.83% 12.03% 10.02% Net interest margin (3) 3.51% 3.49% 3.62% Noninterest income to total revenue (4) 19.0% 21.4% 18.0% Noninterest income to avg. assets 0.77% 0.89% 0.75% Noninterest exp. to avg. assets 2.52% 2.61% 2.81% Efficiency ratio (5) 62.4% 62.8% 67.4% Avg. loans to average deposits 78.2% 76.6% 80.2% Securities to total assets 28.2% 30.0% 28.1% Average interest-earning assets to average interest-bearing liabilities 118.3% 118.1% 118.7% Brokered time deposits to total deposits 8.8% 8.2% 9.9%

Selected growth rates, last twelve months Total average assets 52.0% 55.9% 59.0% Average loans 40.2% 40.8% 40.8% Total average deposits 58.5% 65.3% 65.1%

Total revenue (4) 48.2% 71.2% 66.6% Total noninterest expense 34.9% 48.9% 46.5% Diluted earnings per share 104.0% 168.6% 181.7%

Asset quality information and ratios: Nonaccrual loans and other real estate 1,339 86 379 Past due loans over 90 days and still accruing interest 35 64 182 Net loan charge-offs (7) 25 30 (23) Allowance for loan losses to total loans 1.26% 1.25% 1.25% As a percentage of total loans and ORE: Past due loans over 30 days 0.21% 0.30% 0.48% Nonperforming assets 0.38% 0.03% 0.13% Potential problem loans (8) 0.11% 0.57% 0.57% Annualized net loan charge-offs (recoveries) to avg. loans (9) 0.03% 0.04% 0.05% Avg. commercial loan internal risk ratings (8) 3.9 3.9 4.0 Avg. loan account balances (10) 149 147 153

Interest rates and yields: Loans 5.27% 5.14% 5.17% Securities 4.00% 4.45% 4.35% Federal funds sold and other 2.20% 1.47% 2.26% Total earning assets 4.78% 4.73% 4.83% Total deposits, including non- interest bearing 1.21% 1.17% 1.21% Securities sold under agreements to repurchase 0.26% 0.25% 0.58% Federal funds purchased and FHLB advances 2.08% 2.19% 2.05% Subordinated debt 3.54% 3.98% 3.98% Total deposits and other interest- bearing liabilities 1.31% 1.29% 1.28%

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED

(dollars in thousands, except per Mar Dec Sept share data) 2005 2004 2004 ---------- ---------- ----------- Other information: Mortgage loan originations Gross loans originated $ 21,360 17,584 22,382 Gross fees (11) $ 364 378 419 Gross fees as a percentage of mortgage loans originated 1.70% 2.14% 1.87% Gains on sales of investment securities, net $ 114 - 109 Brokerage account assets, at quarter-end (12) $ 400,000 398,000 368,000 Floating rate loans as a percentage of loans (13) 54.4% 55.1% 55.8% Balance of loan participations sold to other banks and serviced by Pinnacle, at quarter end $ 58,844 57,678 53,343 Total core deposits to total funding (14) 62.5% 60.8% 61.8% Total assets per full-time equivalent employee $ 5,988 5,960 5,909 Annualized revenues per full-time equivalent employee $ 233.6 246.7 235.6 Number of employees (full-time equivalent) 131.5 122.0 116.0 Associate retention rate (15) 99.2% 98.4% 97.4%

June Mar Dec 2004 2004 2003 ---------- ---------- ----------- Other information: Mortgage loan originations Gross loans originated 16,061 10,845 10,148 Gross fees (11) 266 192 178 Gross fees as a percentage of mortgage loans originated 1.66% 1.77% 1.75% Gains on sales of investment securities, net - 248 - Brokerage account assets, at quarter-end (12) 344,000 351,000 319,000 Floating rate loans as a percentage of loans (13) 52.5% 52.4% 52.7% Balance of loan participations sold to other banks and serviced by Pinnacle, at quarter end 58,530 54,772 51,653 Total core deposits to total funding (14) 59.8% 62.8% 60.1% Total assets per full-time equivalent employee 5,776 5,695 5,569 Annualized revenues per full-time equivalent employee 220.8 222.4 212.1 Number of employees (full-time equivalent) 101.5 95.0 89.5 Associate retention rate (15) 97.5% 97.4% 96.1%

(1) Book value per share computed by dividing total stockholders' equity by common shares outstanding

(2) Capital ratios are for Pinnacle Financial Partners, Inc. and are defined as follows: Equity to total assets - End of period total stockholders' equity as a percentage of end of period assets. Leverage - Tier 1 capital (pursuant to risk-based capital guidelines) as a percentage of adjusted average assets. Tier 1 risk-based - Tier 1 capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets. Total risk-based - Total capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets.

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

(4) Total revenue is equal to the sum of net interest income and noninterest income.

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

(6) Growth rates are calculated by dividing amounts for the current quarter by the same quarter of the previous year.

(7) During the fourth quarter of 2004, the Company incurred two large commercial charge-offs of approximately $850,000 which had been previously on nonaccruing status.

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

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

(10) Computed by dividing the balance of all loans by the number of loan accounts as of the end of each quarter.

(11) Amounts are included in the statement of income in "Gains on the sale of loans and loan participations sold".

(12) At fair value, based on information obtained from the company's third party broker/dealer for non-FDIC insured financial products and services.

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

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

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

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CONTACT: Pinnacle Financial Partners Inc. Media Contact: Vicki Kessler, 615-320-7532 or Financial Contact: Harold Carpenter, 615-744-3742 www.pnfp.com

KEYWORD: TENNESSEE INDUSTRY KEYWORD: BANKING EARNINGS SOURCE: Pinnacle Financial Partners Inc.

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