Pinnacle Financial Reports Record Loan Growth and Earnings of $0.33 Per Fully Diluted Share for Fourth Quarter of 2007

Pinnacle Financial Partners Inc. (Nasdaq/NGS: PNFP) today reported strong earnings and continued rapid loan growth for the quarter ended Dec. 31, 2007. Fully diluted earnings per share were $0.33 for the quarter ended Dec. 31, 2007, compared to $0.34 per fully diluted share for the quarter ended Dec. 31, 2006. Excluding merger related expenses associated with its recent acquisition of Mid-America Bancshares Inc. on Nov. 30, 2007, fully diluted earnings per share were $0.35 for the quarter ended Dec. 31, 2007. Fully diluted earnings per share were $1.34 for the year ended Dec. 31, 2007, compared to $1.18 per fully diluted share for the year ended Dec. 31, 2006. Excluding merger related expenses associated with its recent acquisition of Mid-America Bancshares, fully diluted earnings per share were $1.36 for the year ended Dec. 31, 2007. For the year ended Dec. 31, 2006, fully diluted earnings per share were $1.25 excluding merger related expenses associated with the Cavalry Bancorp Inc. acquisition consummated on March 15, 2006. Pinnacle also reported a record $155 million in organic loan growth in the fourth quarter of 2007 which contributed to a higher provision expense for the fourth quarter of 2007 when compared to prior quarters. FOURTH QUARTER 2007 HIGHLIGHTS: Earnings: Net income for the fourth quarter of 2007 was $6.2 million, up 10.6 percent from the prior year’s fourth quarter net income of $5.6 million. Revenue (the sum of net interest income and noninterest income) for the quarter ended Dec. 31, 2007, amounted to $28.62 million, compared to $22.33 million for the same quarter of last year, an increase of 28.2 percent. Superior credit quality: Net charge-offs as a percentage of average loan balances were 0.07 percent for the year ended Dec. 31, 2007. Nonperforming assets were 0.78 percent of total loans and other real estate at Dec. 31, 2007, compared to 0.54 percent at Dec. 31, 2006. Approximately $11.3 million of nonperforming assets at Dec. 31, 2007, or 0.41 percent of total loans and other real estate, were acquired from the Mid-America acquisition. As a result, nonperforming assets associated with the legacy Pinnacle franchise were 0.37 percent of total loans and other real estate at Dec. 31, 2007. Past due loans over 30 days, excluding nonperforming loans, were only 0.45 percent of total loans and other real estate at Dec. 31, 2007, compared to 0.74 percent of total loans and other real estate at Dec. 31, 2006. Strong balance sheet growth: Loans at Dec. 31, 2007, were $2.75 billion, up $1.25 billion from $1.50 billion at Dec. 31, 2006. The annual increase in loans includes $389 million, or 26 percent, in organic growth and $863 million in loans acquired in conjunction with the Mid-America merger. Loans increased by $1.018 billion during the fourth quarter of 2007, with $155 million of the increase from organic growth, compared to $92 million in organic growth during the same quarter in 2006. Total deposits at Dec. 31, 2007, were $2.93 billion, up $1.31 billion from $1.62 billion at Dec. 31, 2006. The increase includes $344 million in organic growth and $987 million in deposits acquired in conjunction with the Mid-America merger. Investments in future growth: Pinnacle has hired 21 highly experienced associates for the denovo expansion to Knoxville that was announced on April 9, 2007. Pinnacle opened a full service office in May, a loan production office in the Fountain City area of Knoxville in June and is involved in ongoing negotiations on another full service Knoxville location which is expected to open during the last half of 2008. Costs of the Knoxville expansion negatively impacted earnings in 2007 by approximately $0.08 per fully-diluted share for the full year and $0.03 per fully-diluted share in the fourth quarter of 2007. Pinnacle’s total associate base at Dec. 31, 2007, including the Knoxville expansion and the Mid-America merger, was 702 full-time equivalents (FTEs). Approximately 220 FTEs were added to Pinnacle’s associate base in conjunction with the Mid-America merger. Excluding Mid-America, Pinnacle’s associate base increased by 78 associates, or by 19.3 percent, during 2007. The in-market acquisition of Mid-America was completed on Nov. 30, 2007 adding 11 branches in the Nashville MSA, including three counties not previously served by Pinnacle. Market Share: Based on FDIC market share data as of June 30, 2007, completion of the Mid-America acquisition provides Pinnacle with a No. 4 market share position in the Nashville MSA with only 8.7 percent of deposits leaving significant opportunity for continued dramatic growth. This places Pinnacle behind Regions, SunTrust and Bank of America – all out-of-state regional banks with negative market share trends in Nashville. "We believe our simple but aggressive plan to hire the best, most experienced bankers in the market will continue to distinguish Pinnacle’s financial performance from that of the banks with whom we compete,” said M. Terry Turner, Pinnacle’s president and CEO. "At a time when most banks are experiencing slowing loan demand and increasing credit costs, Pinnacle’s fourth quarter organic loan growth was the largest in the firm’s history. Our charge-offs were only 0.07 percent of average loans. We believe this performance compares very favorably to our peers. "We also remain confident about our potential in the Knoxville market. We established aggressive balance sheet growth goals for our Knoxville expansion believing we could replicate our Nashville model there. Our Knoxville associates exceeded our target for loan growth with approximately $109 million in loans outstanding at Dec. 31, 2007, just eight months following our office opening. This is well ahead of the pace we set in Nashville in our first eight months of operations,” said Turner. FINANCIAL PERFORMANCE AND BALANCE SHEET GROWTH Return on average assets for fourth quarter 2007 was 0.89 percent compared to 1.07 percent for the fourth quarter of 2006. Excluding the impact of the Knoxville expansion and Mid-America merger expenses, return on average assets for the fourth quarter of 2007 would have approximated 1.02 percent. Return on average stockholders’ equity for the quarter ended Dec. 31, 2007, was 8.00 percent compared to 8.83 percent for the fourth quarter of 2006. Excluding the impact of the Knoxville expansion and Mid-America merger expenses, return on average stockholders’ equity for the fourth quarter of 2007 would have approximated 9.20 percent. Return on average tangible stockholders’ equity (average stockholders’ equity less goodwill and core deposit intangibles) for the quarter ended Dec. 31, 2007, was 17.65 percent. Total assets grew to $3.80 billion as of Dec. 31, 2007, up $1.66 billion from the $2.14 billion reported at the same time last year. The increase in assets includes $536 million in organic growth and $1.12 billion in assets acquired in conjunction with the Mid-America merger. The securities to total assets ratio decreased from 16.17 percent at Dec. 31, 2006, to 13.75 percent at Dec. 31, 2007. CREDIT QUALITY Provision for loan losses was $2,260,000 for the fourth quarter of 2007, compared to $1,051,000 in the fourth quarter of 2006. During the fourth quarter of 2007, the firm recorded net charge-offs of $462,000, compared to net charge-offs of $105,000 during the same period in 2006. Annualized net charge-offs to total average loans were 0.07 percent for the year ended Dec. 31, 2007, compared to 0.05 percent for the same period in 2006. The increase in provision expense between the fourth quarter of 2007 and the fourth quarter of 2006 was primarily due to the increase in loan balances recorded during the fourth quarter of 2007 over the amount recorded in the fourth quarter of 2006. Allowance for loan losses represented 1.04 percent of total loans at Dec. 31, 2007, compared to 1.08 percent a year ago. Nonperforming assets as a percentage of total loans and other real estate increased to 0.78 percent at Dec. 31, 2007, from 0.54 percent at Dec. 31, 2006. Loan balances (excluding nonperforming loans) with payments past due more than 30 days as a percentage of total loans and other real estate decreased to 0.45 percent at Dec. 31, 2007, from 0.74 percent at Dec. 31, 2006. The ratio of the allowance for loan losses to nonperforming loans was 144.7 percent at Dec. 31, 2007, compared to 228.0 percent at Dec. 31, 2006. "There is no doubt that the health of Nashville’s residential real estate market is not as good today as it was a year ago. Yet, compared to other large urban markets in the Southeast and around the country, Nashville is holding up very well. We are cautiously optimistic that our disciplined real estate lending practices and other actions we implemented in 2007 will continue to benefit our asset quality metrics in 2008,” said Turner. Pinnacle reported that approximately 52 percent of its nonperforming assets were related to residential construction. REVENUE Net interest income for fourth quarter 2007 was $22.01 million, compared to $17.39 million for the same quarter last year, an increase of 26.5 percent. Net interest margin for the fourth quarter of 2007 was 3.49 percent, compared to a net interest margin of 3.74 percent for the same period last year. Noninterest income for fourth quarter 2007 was $6.61 million, a 34.0 percent increase over the $4.93 million recorded during the same quarter in 2006. "After one month of combined operations, the Mid-America merger contributed approximately $3.1 million to our net interest income in the fourth quarter,” said Harold Carpenter, chief financial officer of Pinnacle Financial Partners. "Mid-America’s net interest margin improved in recent months such that its net interest margin approximated 3.43 percent in December. Additionally, recent Fed funds decreases have not materially impacted our net interest margins. We do, however, anticipate continued rate decreases in 2008, which will require our continued focus for the remainder of 2008. To mitigate the impact of these decreases, we will continue to reduce the cost of our short-term and maturing funding sources to the extent possible; however, in a competitive marketplace like Nashville, we will always prioritize maintaining valuable customer relationships above short-term margin considerations.” Carpenter also reported that the firm reduced interest income by approximately $202,000 during the fourth quarter of 2007 as a result of loans being transferred to nonperforming status. The 34.0 percent increase in noninterest income between the fourth quarter of 2007 and the fourth quarter of 2006 was due primarily to increased revenues from existing customers, the continued addition of financial advisors, approximately $543,000 in fees from Mid-America recognized in the fourth quarter of 2007, record investment sales commissions from Pinnacle Asset Management and record gains on the sales of mortgage loans from the firm’s mortgage origination unit. During 2007, Pinnacle’s mortgage origination unit sold $166.4 million of mortgage loans compared to $132.9 million in 2006, an increase of 25.2 percent. Noninterest income during the fourth quarter of 2007 represented approximately 23.10 percent of total revenues, compared to 22.10 percent for the same quarter in 2006. NONINTEREST EXPENSE Noninterest expense for the quarter ended Dec. 31, 2007, was $17.76 million ($17.09 million, excluding merger expenses) compared to $13.14 million in the fourth quarter of 2006. Approximately $691,000 of noninterest expense was associated with the Knoxville expansion and approximately $1.72 million of noninterest expense was associated with the former Mid-America franchise during the quarter (exclusive of merger related expenses). Compensation expense increased to $9.98 million during the fourth quarter of 2007, compared to $8.15 million during the fourth quarter of 2006, an increase of 22.5 percent. During the fourth quarter of 2007 Pinnacle recognized compensation expense related to the expensing of stock options in accordance with Statement of Financial Accounting Standards No. 123R ("SFAS No. 123R”) of approximately $451,000, compared to $303,000 during the same quarter of 2006. For the year ended Dec. 31, 2007, Pinnacle recognized $1.70 million in equity compensation expense related to the expensing of stock options, compared to $1.01 million during 2006. The efficiency ratio (noninterest expense divided by net interest income and noninterest income) was 62.1 percent during the fourth quarter of 2007 compared to 62.2 percent for the third quarter of 2007 and 58.8 percent in the fourth quarter of 2006. Excluding merger related expenses, the efficiency ratio was 59.8 percent in the fourth quarter of 2007 compared to an efficiency ratio of 58.6 percent in the fourth quarter of 2006. Carpenter noted that linked quarter expense growth of $2.7 million between the third and fourth quarters of 2007 was primarily attributable to increased expenses from the Knoxville expansion, the Mid-America merger, the increased number of associates and increasing variable costs associated with the dramatic growth of the firm. PROGRESS OF THE MID-AMERICA ACQUISITION On Aug. 15, 2007, Pinnacle reported that the firm had entered into a definitive agreement to acquire the stock of Mid-America Bancshares Inc., a two-bank holding company headquartered in Nashville, Tenn., with assets of approximately $1.1 billion. Pinnacle completed the acquisition of Mid-America on Nov. 30, 2007. "At this point, we have completed or planned actions that should enable us to achieve our $7 million first-year synergy target,” said Turner. "Additionally, we expect that total deal costs, including those costs incurred by Mid-America prior to Nov. 30, 2007, will approximate the $19 million that we initially forecasted at the time of the announcement. Included in that amount is approximately $6.2 million which will be incurred as merger related expense during 2008. We remain on plan to complete systems conversions and all other major integration milestones during the first quarter of 2008. "Many times it is difficult for high-growth companies to acquire other companies without sacrificing balance sheet and earnings growth for some period of time. It is particularly difficult to continue marketing momentum during the merger integration period. We are pleased to report that during the last half of 2007, Pinnacle experienced organic loan growth of $223 million while Mid-America grew its loan balances by $100 million, which represents more combined organic loan growth than the entities had experienced over previous comparable time periods. This is a great tribute to our associates at both Pinnacle and the former Mid-America who continue to take advantage of the competitive vulnerabilities in the market and execute our growth strategies with precision.” 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, including the impact of the Knoxville expansion, Pinnacle estimates its first quarter 2008 diluted earnings per share will approximate $0.32 to $0.36 per fully diluted share, excluding merger related expenses and that its 2008 diluted earnings per share will approximate $1.56 to $1.68 per fully diluted share, excluding merger related expenses. Pinnacle noted that its first quarter 2008 results will be impacted by yet to be realized synergies from Mid-America, compensation increases, and anticipated seasonality in noninterest bearing deposit balances. Concerning the Knoxville expansion, Pinnacle anticipates that Knoxville will be modestly accretive in 2008. 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 which could include the development of any markets other than metropolitan Nashville or Knoxville, any merger or acquisition, the opportunity to hire more seasoned professionals than anticipated, deterioration in economic conditions that impact our borrowers’ ability to repay their loans 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. Pinnacle Financial Partners provides a full range of banking, investment and insurance products and services designed for small- to mid-sized businesses and their owners, real estate professionals and individuals interested in a comprehensive relationship with their financial institution. Comprehensive wealth management services, such as financial planning and trust, help clients increase, protect and distribute their assets. The firm also has a well-established expertise in commercial real estate. The firm began operations in a single downtown Nashville location in October 2000 and has since grown to $3.8 billion in assets. In 2007, Pinnacle launched an expansion into Knoxville, another high growth MSA. The addition of Mid-America has made Pinnacle the second-largest bank holding company headquartered in Tennessee, with an anticipated 30 offices in the Nashville area once the integration is complete and two in Knoxville. Additional information concerning Pinnacle can be accessed at www.pnfp.com. Certain of the statements in this release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words "expect," "anticipate," "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) the inability of Pinnacle to continue to grow its loan portfolio at historic rates in the Nashville-Davidson-Murfreesboro-Franklin MSA or projected rates in the Knoxville MSA, (iii) increased competition with other financial institutions, (iv) lack of sustained growth in the economy in the Nashville-Davidson-Murfreesboro-Franklin MSA and the Knoxville MSA, (v) rapid fluctuations or unanticipated changes in interest rates, (vi) the inability of Pinnacle to satisfy regulatory requirements for its expansion plans, (vii) the inability of Pinnacle to execute its expansion plans and (viii) changes in the legislative and regulatory environment. Additionally, risk factors exist in connection with Pinnacle’s merger with Mid-America including, among others, (1) the risk that the cost savings and any revenue synergies from the merger may not be realized or take longer than anticipated, (2) disruption from the merger with customers, suppliers or employee relationships, and (3) the risk of successful integration of the two companies’ businesses. 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         December 31, 2007   December 31, 2006 ASSETS Cash and noninterest-bearing due from banks $ 76,941,931 $ 43,611,533 Interest-bearing deposits due from banks 24,706,966 1,041,174 Federal funds sold and other   20,854,966       47,866,143   Cash and cash equivalents 122,503,863 92,518,850   Securities available-for-sale, at fair value 495,651,939 319,237,428 Securities held-to-maturity (fair value of $26,883,473 and $26,594,235 at December 31, 2007 and 2006, respectively) 27,033,356 27,256,876 Mortgage loans held-for-sale 11,251,652 5,654,381   Loans 2,749,640,689 1,497,734,824 Less allowance for loan losses   (28,470,207 )     (16,117,978 ) Loans, net 2,721,170,482 1,481,616,846   Premises and equipment, net 68,385,946 36,285,796 Investments in unconsolidated subsidiaries and other entities 22,636,029 16,200,684 Accrued interest receivable 18,383,004 11,019,173 Goodwill 243,687,885 114,287,640 Core deposit intangible 17,325,988 11,385,006 Other assets   53,204,117       26,724,183   Total assets $ 3,801,234,261     $ 2,142,186,863     LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest-bearing demand $ 400,120,147 $ 300,977,814 Interest-bearing demand 410,661,187 236,674,425 Savings and money market accounts 742,354,465 485,935,897 Time   1,372,183,317       598,823,167   Total deposits 2,925,319,116 1,622,411,303 Securities sold under agreements to repurchase 156,070,830 141,015,761 Federal Home Loan Bank advances and other borrowings 141,666,133 53,725,833 Subordinated debt 82,476,000 51,548,000 Accrued interest payable 10,374,538 4,952,422 Other liabilities   18,912,434       12,516,523     Total liabilities 3,334,819,051 1,886,169,842 Stockholders’ equity: Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding - - Common stock, par value $1.00; 90,000,000 shares authorized; 22,264,817 issued and outstanding at December 31, 2007 and 15,446,074 issued and outstanding at December 31, 2006 22,264,817 15,446,074 Additional paid-in capital 390,977,308 211,502,516 Retained earnings 54,150,679 31,109,324 Accumulated other comprehensive loss, net   (977,594 )     (2,040,893 ) Stockholders’ equity   466,415,210       256,017,021   Total liabilities and stockholders’ equity $ 3,801,234,261     $ 2,142,186,863     PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME – UNAUDITED         Three Months Ended Year Ended December 31, December 31,     2007   2006   2007   2006 Interest income: Loans, including fees $ 37,605,268 $ 27,809,767 $ 129,888,784 $ 92,005,602 Securities: Taxable 3,833,771 3,364,168 13,961,714 12,614,623 Tax-exempt 959,662 599,182 3,066,519 2,016,044 Federal funds sold and other   939,052     1,467,809     4,014,424     3,059,750 Total interest income   43,337,753     33,240,926     150,931,441     109,696,019   Interest expense: Deposits 17,634,417 12,818,282 61,671,734 40,032,020 Securities sold under agreements to repurchase 1,707,323 1,759,944 7,371,490 4,329,327 Federal Home Loan Bank advances and other borrowings   1,987,150     1,271,218     6,176,205     4,381,878 Total interest expense   21,328,890     15,849,444     75,219,429     48,743,225 Net interest income 22,008,863 17,391,482 75,712,012 60,952,794 Provision for loan losses   2,259,813     1,051,394     4,719,841     3,732,032 Net interest income after provision for loan losses 19,749,050 16,340,088 70,992,171 57,220,762   Noninterest income: Service charges on deposit accounts 2,257,830 1,494,021 7,941,029 4,645,685 Investment sales commissions 1,002,303 651,777 3,455,808 2,463,205 Insurance sales commissions 657,602 559,756 2,486,884 2,122,702 Gain on loans and loan participations sold, net 477,194 582,575 1,858,077 1,868,184 Trust fees 596,364 504,845 1,908,440 1,180,839 Gain on sale of investment securities 16,472 - 16,472 - Other noninterest income   1,604,299     1,141,311     4,854,217     3,505,903 Total noninterest income   6,612,064     4,934,285     22,520,927     15,786,518   Noninterest expense: Compensation and employee benefits 9,977,978 8,154,910 36,145,588 27,469,275 Equipment and occupancy 3,050,938 2,196,328 10,260,915 7,521,602 Other real estate 88,184 2,085 160,367 2,169 Marketing and other business development 619,363 334,690 1,676,455 1,234,497 Postage and supplies 542,070 391,740 1,995,267 1,510,048 Amortization of core deposit intangible 596,756 534,895 2,144,018 1,783,230 Other noninterest expense 2,264,739 1,467,860 7,475,072 5,467,608 Merger related expense   621,883     53,097     621,883     1,635,831 Total noninterest expense   17,761,911     13,135,605     60,479,565     46,624,260 Income before income taxes 8,599,203 8,138,768 33,033,533 26,383,020 Income tax expense   2,357,363     2,492,875     9,992,178     8,455,987 Net income $ 6,241,840   $ 5,645,893   $ 23,041,355   $ 17,927,033   Per share information: Basic net income per common share $ 0.35   $ 0.37   $ 1.43   $ 1.28 Diluted net income per common share $ 0.33   $ 0.34   $ 1.34   $ 1.18   Weighted average shares outstanding: Basic 17,753,661 15,393,735 16,100,076 13,954,077 Diluted 19,110,851 16,655,349 17,255,543 15,156,837   PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED       Three months ended   Three months ended (dollars in thousands)   December 31, 2007   December 31, 2006   Average Balances   Interest   Rates/ Yields   Average Balances   Interest   Rates/ Yields   Interest-earning assets:         Loans $ 2,063,442 $ 37,606 7.23 % $ 1,442,730 $ 27,810 7.65 % Securities: Taxable 309,353 3,834 4.92 % 268,786 3,364 4.97 % Tax-exempt(1) 100,789 959 4.98 % 65,640 599 4.78 % Federal funds sold and other   68,215     939   5.71 %     102,603     1,468   5.78 %   Total interest-earning assets 2,541,799   $ 43,338   6.82 % 1,879,759   $ 33,241   7.06 %   Nonearning assets: Intangible assets 169,140 126,408 Other nonearning assets   80,730     90,726   Total assets $ 2,791,669   $ 2,096,893     Interest-bearing liabilities: Interest-bearing deposits Interest checking $ 284,121 $ 2,083 2.91 % $ 210,620 $ 1,542 2.91 % Savings and money market 599,127 4,497 2.98 % 487,500 4,149 3.38 % Certificates of deposit   924,859     11,055   4.74 %     605,649     7,127   4.67 %   Total interest-bearing deposits 1,808,107 17,635 3.87 % 1,303,769 12,818 3.90 % Securities sold under agreements to repurchase 201,605 1,707 3.36 % 154,483 1,760 4.52 % Federal Home Loan Bank advances and other borrowings 57,970 673 4.61 % 30,783 383 4.94 % Subordinated debt   72,391     1,314   7.20 %     51,548     889   6.84 %   Total interest-bearing liabilities 2,140,073 21,329 3.95 % 1,540,583 15,850 4.08 % Noninterest-bearing deposits   327,866     -   -       292,996     -   -     Total deposits and interest-bearing liabilities 2,467,939   $ 21,329   3.43 % 1,833,579   $ 15,850   3.43 %   Other liabilities 14,299 9,553 Stockholders' equity   309,431     253,761   $ 2,791,669   $ 2,096,893   Net interest income   $ 22,009     $ 17,391   Net interest spread(2) 2.87 % 2.98 % Net interest margin(3) 3.49 % 3.74 %       (1) Yields computed on tax-exempt instruments on a tax equivalent basis. (2) Yields realized on interest-earning assets less the rates paid on interest-bearing liabilities. (3) 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.   PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES ANALYSIS OF INTEREST INCOME AND EXPENSE, RATES AND YIELDS-UNAUDITED       Year ended   Year ended (dollars in thousands)   December 31, 2007   December 31, 2006   Average Balances   Interest   Rates/ Yields   Average Balances   Interest   Rates/ Yields   Interest-earning assets:         Loans $ 1,723,361 $ 129,889 7.54 % $ 1,226,803 $ 92,006 7.50 % Securities: Taxable 280,668 13,962 4.97 % 254,906 12,615 4.95 % Tax-exempt(1) 82,001 3,066 4.93 % 54,270 2,016 4.90 % Federal funds sold and other   72,344     4,014   5.57 %     53,562     3,059   6.87 %   Total interest-earning assets 2,158,374   $ 150,931   7.04 %   1,589,541   $ 109,696   6.95 %   Nonearning assets: Intangible assets 135,893 100,107 Other nonearning assets   93,782     89,568   Total assets $ 2,388,049   $ 1,779,216     Interest-bearing liabilities: Interest-bearing deposits Interest checking $ 261,163 $ 8,309 3.18 % $ 171,637 $ 4,074 2.37 % Savings and money market 535,468 17,618 3.29 % 435,082 13,532 3.11 % Certificates of deposit   727,724     35,745   4.91 %     516,394     22,426   4.34 %   Total interest-bearing deposits 1,524,355 61,672 4.05 % 1,123,113 40,032 3.56 % Securities sold under agreements to repurchase 181,621 7,371 4.06 % 101,144 4,329 4.28 % Federal Home Loan Bank advances and other borrowings 44,072 2,211 5.02 % 39,728 1,878 4.68 % Subordinated debt   56,759     3,965   6.98 %     37,372     2,504   6.70 %   Total interest-bearing liabilities 1,806,807 75,219 4.16 % 1,301,357 48,743 3.75 % Noninterest-bearing deposits   291,983     -   -       259,585     -   -     Total deposits and interest-bearing liabilities 2,098,790   $ 75,219   3.58 %   1,560,942   $ 48,743   3.12 %   Other liabilities 13,108 11,105 Stockholders' equity   276,151     207,169   $ 2,388,049   $ 1,779,216   Net interest income   $ 75,712     $ 60,953   Net interest spread(2) 2.88 % 3.20 % Net interest margin(3) 3.55 % 3.90 %     (1) Yields computed on tax-exempt instruments on a tax equivalent basis. (2) Yields realized on interest-earning assets less the rates paid on interest-bearing liabilities. (3) 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.   PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED   (dollars in thousands, except per share data)   Dec 2007   Sept 2007   June 2007   Mar 2007   Dec 2006   Sept 2006   Balance sheet data, at quarter end:             Total assets $ 3,801,234 2,368,079 2,315,327 2,193,132 2,142,187 2,052,252 Total loans 2,749,641 1,731,245 1,663,030 1,553,980 1,497,735 1,405,401 Allowance for loan losses (28,470 ) (17,978 ) (17,375 ) (16,792 ) (16,118 ) (15,172 ) Securities 522,685 352,222 339,781 340,255 346,494 330,759 Noninterest-bearing deposits 400,120 316,542 294,631 306,885 300,978 306,296 Total deposits 2,925,319 1,826,884 1,797,536 1,700,132 1,622,411 1,585,238 Securities sold under agreements to repurchase 156,071 145,332 140,443 116,952 141,016 122,354 Advances from FHLB and other borrowings 141,666 55,671 46,699 46,619 53,726 28,739 Subordinated debt 82,476 51,548 51,548 51,548 51,548 51,548 Total stockholders’ equity 466,415 274,636 265,194 262,917 256,017 249,059   Balance sheet data, quarterly averages: Total assets $ 2,791,669 2,378,501 2,229,227 2,149,928 2,096,893 1,987,236 Total loans 2,063,442 1,697,862 1,598,967 1,530,771 1,442,730 1,375,036 Securities 410,142 347,423 347,081 345,630 334,426 317,332 Total earning assets 2,541,799 2,151,583 2,004,884 1,932,298 1,879,759 1,751,559 Noninterest-bearing deposits 327,866 293,701 276,241 269,864 292,996 281,812 Total deposits 2,135,973 1,814,135 1,678,036 1,634,513 1,596,765 1,535,667 Securities sold under agreements to repurchase 201,605 194,774 172,872 157,180 154,483 122,292 Advances from FHLB and other borrowings 57,970 29,946 38,516 37,828 29,817 33,299 Subordinated debt 72,391 51,548 51,548 51,548 51,548 36,084 Total stockholders’ equity 309,431 271,653 264,055 259,466 253,761 244,980   Statement of operations data, for the three months ended: Interest income $ 43,338 38,347 35,508 33,739 33,241 31,340 Interest expense   21,329     19,387     17,847     16,657     15,850     14,181     Net interest income 22,009 18,960 17,661 17,082 17,391 17,159 Provision for loan losses   2,260     772     900     788     1,051     587     Net interest income after provision for loan losses 19,749 18,188 16,761 16,294 16,340 16,572 Noninterest income 6,612 5,332 5,552 5,026 4,934 4,424 Noninterest expense   17,762     15,110     14,484     13,124     13,135     13,054     Income before taxes 8,599 8,410 7,828 8,196 8,139 7,942 Income tax expense   2,357     2,638     2,402     2,594     2,493     2,595     Net income $ 6,242     5,772     5,426     5,602     5,646     5,347       Profitability and other ratios: Return on avg. assets(1) 0.89 % 0.96 % 0.98 % 1.06 % 1.07 % 1.07 % Return on avg. equity(1) 8.00 % 8.43 % 8.24 % 8.76 % 8.83 % 8.66 % Net interest margin(2) 3.49 % 3.54 % 3.58 % 3.64 % 3.74 % 3.95 % Noninterest income to total revenue(3) 23.10 % 21.95 % 23.92 % 22.73 % 22.10 % 20.50 % Noninterest income to avg. assets(1) 0.94 % 0.89 % 1.00 % 0.95 % 0.93 % 0.89 % Noninterest exp. to avg. assets(1) 2.52 % 2.52 % 2.61 % 2.48 % 2.49 % 2.63 % Efficiency ratio(4) 62.06 % 62.20 % 62.40 % 59.36 % 58.84 % 60.48 % Avg. loans to average deposits 96.60 % 93.59 % 95.29 % 93.65 % 90.40 % 89.50 % Securities to total assets 13.75 % 14.87 % 14.68 % 15.51 % 16.17 % 16.12 % Average interest-earning assets to average interest-bearing liabilities 118.77 % 119.75 % 119.75 % 119.75 % 122.00 % 121.20 % Brokered time deposits to total deposits 9.48 % 8.04 % 8.17 % 5.83 % 3.71 % 4.50 %   PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED                             (dollars in thousands, except per share data)   Dec 2007   Sept 2007   June 2007   Mar 2007   Dec 2006   Sept 2006               Asset quality information and ratios: Nonperforming assets: Nonaccrual loans $ 19,677 2,364 2,392 4,705 7,070 3,477 Other real estate 1,673 878 687 927 995 - Past due loans over 90 days and still accruing interest 1,613 633 606 98 737 1,123 Net loan charge-offs(6) 462 169 317 114 105 101 Allowance for loan losses to total loans 1.04 % 1.04 % 1.04 % 1.08 % 1.08 % 1.08 % Allowance for loan losses to nonaccrual loans 144.7 % 760.5 % 726.4 % 356.9 % 228.0 % 436.4 % As a percentage of total loans and ORE: Past due loans over 30 days 0.45 % 0.38 % 0.31 % 0.33 % 0.74 % 0.69 % Nonperforming assets 0.78 % 0.19 % 0.19 % 0.36 % 0.54 % 0.25 % Potential problem loans(5) 0.56 % 0.40 % 0.16 % 0.21 % 0.24 % 0.77 % Annualized net loan charge-offs year-to-date to avg. loans(6) 0.07 % 0.05 % 0.06 % 0.03 % 0.05 % 0.05 % Avg. commercial loan internal risk ratings(5) 4.1 4.1 4.1 4.1 4.1 4.1 Avg. loan account balances(7) $ 160 169 164 156 140 132   Interest rates and yields: Loans 7.23 % 7.65 % 7.66 % 7.68 % 7.65 % 7.72 % Securities 4.92 % 4.99 % 4.98 % 4.96 % 4.97 % 4.91 % Total earning assets 6.82 % 7.12 % 7.15 % 7.13 % 7.06 % 7.14 % Total deposits, including non-interest bearing 3.28 % 3.51 % 3.46 % 3.36 % 3.18 % 3.05 % Securities sold under agreements to repurchase 3.36 % 4.20 % 4.39 % 4.42 % 4.52 % 4.49 % FHLB advances and other borrowings 4.61 % 5.10 % 5.19 % 5.36 % 4.94 % 4.57 % Subordinated debt 7.20 % 6.90 % 6.84 % 6.89 % 6.84 % 6.75 % Total deposits and interest-bearing liabilities 3.43 % 3.68 % 3.67 % 3.59 % 3.43 % 3.26 %   Capital ratios(8): Stockholders’ equity to total assets 12.3 % 11.6 % 11.5 % 12.0 % 11.9 % 12.1 % Leverage 11.6 % 9.2 % 9.5 % 9.5 % 9.5 % 9.2 % Tier one risk-based 9.5 % 10.4 % 10.4 % 10.9 % 10.9 % 10.6 % Total risk-based 10.4 % 11.3 % 11.3 % 11.8 % 11.8 % 12.0 %   PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED                             (dollars in thousands, except per share data)   Dec 2007   Sept 2007   June 2007   Mar 2007   Dec 2006   Sept 2006               Per share data: Earnings – basic $ 0.35 0.37 0.35 0.36 0.37 0.35 Earnings – diluted $ 0.33 0.35 0.33 0.34 0.34 0.32 Book value at quarter end(9) $ 20.95 17.66 17.06 16.93 16.57 16.16   Weighted avg. shares – basic 17,753,661 15,503,284 15,494,522 15,433,442 15,393,735 15,393,735 Weighted avg. shares – diluted 19,110,851 16,609,328 16,664,213 16,617,484 16,655,349 16,655,349 Common shares outstanding 22,264,817 15,553,037 15,545,581 15,530,975 15,446,074 15,409,341   Investor information: Closing sales price $ 25.42 28.82 29.36 30.51 33.18 35.80 High sales price during quarter $ 30.93 31.31 31.48 33.85 36.17 37.41 Low sales price during quarter $ 24.85 21.62 28.27 29.40 31.23 28.93   Other information: Gains on sale of loans and loan participations sold: Mortgage loan sales: Gross loans sold $ 40,273 42,895 52,197 31,044 36,551 37,371 Gross fees(10) $ 750 659 846 544 653 679 Gross fees as a percentage of mortgage loans originated 1.86 % 1.54 % 1.62 % 1.75 % 1.79 % 1.82 % Commercial loan participations sold $ 8 19 167 45 224 31 Gains on sales of investment securities, net $ 16 - - - - - Brokerage account assets, at quarter-end(11) $ 878,000 590,000 643,000 617,000 597,000 553,000 Trust account assets, at quarter-end $ 464,000 512,000 475,000 400,000 380,000 361,000 Floating rate loans as a percentage of loans(12) 41.8 % 44.6 % 45.5 % 46.3 % 46.3 % 47.3 % Balance of commercial loan participations sold to other banks and serviced by Pinnacle, at quarter end $ 233,400 125,370 115,913 114,143 95,398 85,291 Core deposits to total funding(13) 58.2 % 61.4 % 62.3 % 63.7 % 63.3 % 63.7 % Risk-weighted assets $ 3,103,293 1,998,401 1,921,648 1,780,107 1,721,633 1,628,596 Total assets per full-time equivalent employee $ 5,415 5,257 5,250 5,228 5,302 5,189 Annualized revenues per full-time equivalent employee $ 161.8 213.9 211.1 210.8 219.2 218.3 Number of employees (full-time equivalent) 702.0 450.5 441.0 419.5 404.0 395.5 Associate retention rate(14) 89.7 % 89.4 % 88.1 % 85.3 % 85.1 % 91.1 %   Selected economic information(15): Nashville MSA nonfarm employment 795.2 763.6 759.5 757.5 768.8 758.4 Knoxville MSA nonfarm employment 358.7 337.2 335.9 335.2 337.3 335.1 Nashville MSA unemployment 4.2 % 3.5 % 3.7 % 4.0 % 3.5 % 3.5 % Knoxville MSA unemployment 3.9 % 3.2 % 3.4 % 3.8 % 3.3 % 3.2 % Nashville residential median home price $ 187.9 182.3 196.0 173.4 184.6 178.9 Nashville inventory of residential homes for sale 13.4 15.4 14.6 12.9 10.8 11.7   PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES SELECTED QUARTERLY AND YEAR-TO-DATE FINANCIAL DATA – UNAUDITED           (dollars in thousands, except per share data)       As of December 31, 2007   As of December 31, 2006       Reconciliation of certain financial measures: Tangible assets: Total assets $ 3,801,234 $ 2,142,187 Less: Goodwill (243,688 ) (114,288 ) Core deposit intangible   (17,326 )     (11,385 ) Net tangible assets $ 3,540,220     $ 2,016,514     Tangible equity: Total stockholders’ equity $ 466,415 $ 256,017 Less: Goodwill (243,688 ) (114,288 ) Core deposit intangible   (17,326 )     (11,385 ) Net tangible equity $ 205,401     $ 130,344     Tangible equity divided by tangible assets   5.80 %     6.46 %   Tangible equity per common share $ 9.23     $ 8.44   For the three months ended For the year ended December 31, December 31, (dollars in thousands)   2007   2006   2007   2006     Average tangible assets: Total average assets $ 2,791,669 $ 2,096,893 $ 2,388,049 $ 1,779,216 Less: Average intangible assets   (169,140 )     (126,408 )     (135,893 )     (100,107 )   Net average tangible assets $ 2,622,529     $ 1,970,485     $ 2,252,156     $ 1,679,109       Average tangible equity: Total average stockholders’ equity $ 309,431 $ 253,761 $ 276,151 $ 207,169 Less: Average intangible assets   (169,140 )     (126,408 )     (135,893 )     (100,107 )   Net average tangible stockholders’ equity $ 140,291     $ 127,353     $ 140,258     $ 107,062       Net income $ 6,242     $ 5,646     $ 23,041     $ 17,927       Return on average tangible assets (annualized)   0.94 %     1.14 %     1.02 %     1.07 %   Return on average tangible stockholders’ equity (annualized)   17.65 %     17.78 %     16.43 %     16.74 %     Net income $ 6,242 $ 5,646 $ 23,041 $ 17,927 Impact of merger related expense, net of tax   378       32       378       994     Net income before impact of merger related expense $ 6,620     $ 5,678     $ 23,419     $ 18,921     Fully-diluted earnings per share before impact of merger related expense $ 0.35     $ 0.34     $ 1.36     $ 1.25       Net income $ 6,242 $ 5,646 $ 23,041 $ 17,927 Impact of Knoxville expansion, net of tax   557       -       1,546       -     Net income before impact of Knoxville expansion $ 6,799     $ 5,646     $ 24,587     $ 17,927     Fully-diluted earnings per share before impact of Knoxville expansion $ 0.36     $ 0.34     $ 1.42     $ 1.18     Return on average assets before impact of Knoxville expansion   0.97 %     1.07 %     1.03 %     1.01 %   Return on average equity before impact of Knoxville expansion   8.72 %     8.83 %     8.90 %     8.65 %   Return on average assets before impact of Knoxville expansion and merger expenses   1.02 %     1.07 %     1.05 %     1.06 %   Return on average equity before impact of Knoxville expansion and merger expenses   9.20 %     8.88 %     9.04 %     9.13 %     Total expenses $ 17,762 $ 13,136 $ 60,480 $ 46,624 Less: merger expense   (622 )     (53 )     (622 )     (1,636 )   Total expenses before impact of merger related expense $ 17,140     $ 13,083     $ 59,858     $ 44,988       Efficiency ratio before impact of merger related expense   59.89 %     58.60 %     60.93 %     58.63 %   PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES SELECTED QUARTERLY FINANCIAL DATA – UNAUDITED     1. Ratios are presented on an annualized basis. 2. Net interest margin is the result of net interest income on a tax equivalent basis divided by average interest earning assets. 3. Total revenue is equal to the sum of net interest income and noninterest income. 4. Efficiency ratios are calculated by dividing noninterest expense by the sum of net interest income and noninterest income. 5. 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. 6. 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. 7. Computed by dividing the balance of all loans by the number of loan accounts as of the end of each quarter. 8. Capital ratios are for Pinnacle Financial Partners, Inc. and are defined as follows: Equity to total assets – End of period total stockholders’ equity as a percentage of end of period assets. Leverage – Tier one capital (pursuant to risk-based capital guidelines) as a percentage of adjusted average assets. Tier one risk-based – Tier one capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets. Total risk-based – Total capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets. 9. Book value per share computed by dividing total stockholders’ equity by common shares outstanding 10. Amounts are included in the statement of income in "Gains on the sale of loans and loan participations sold”, net of commissions paid on such amounts. 11. At fair value, based on information obtained from Pinnacle’s third party broker/dealer for non-FDIC insured financial products and services. 12. Floating rate loans are those loans that are eligible for repricing on a daily basis subject to changes in Pinnacle’s prime lending rate or other factors. 13. Core deposits include all transaction deposit accounts, money market and savings accounts and all certificates of deposit issued in a denomination of less than $100,000. The ratio noted above represents total core deposits divided by total funding, which includes total deposits, FHLB advances, securities sold under agreements to repurchase, subordinated indebtedness and all other interest-bearing liabilities. 14. Associate retention rate is computed by dividing the number of associates employed at quarter-end less the number of associates that have resigned in the last 12 months by the number of associates employed at quarter-end. 15. Employment and unemployment data is from the US Dept. of Labor Bureau of Labor Statistics. Labor force data is not seasonally adjusted. The most recent quarter data presented is as of the most recent month that data is available as of the release date. The Nashville home data is from the Greater Nashville Association of Realtors.