SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

~~(mark~~ (mark one)

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

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~March 31,~~June 30, 2013

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

Smaller reporting companyo

~~March 31,~~June 30, 2013

FORWARD-LOOKING STATEMENTS

Certain of the statements in this 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”~~"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~~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~~Nashville-Davidson-Murfreesboro-Franklin MSA and the Knoxville MSA, particularly in commercial and residential real estate markets; (viii) rapid fluctuations or unanticipated changes in interest rates; (ix) the results of regulatory examinations; (x) the ability to retain large, uninsured deposits with the expiration of the FDIC's transaction account guarantee program; (xi) the development of any new market other than Nashville or Knoxville; ~~(xi)~~(xii) a merger or acquisition; ~~(xii)~~(xiii) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including intangible assets; ~~(xiii)~~(xiv) 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) the ability to retain large, uninsured deposits with the expiration of the FDIC’s transaction account guarantee program;institutions; (xv) further deterioration in the valuation of other real estate owned and increased expenses associated therewith; (xvi) inability to comply with regulatory capital ~~requirements;~~requirements, including those resulting from recently adopted changes to capital calculation methodologies and required capital maintenance levels; and, (xvii) 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”).~~Act. A more detailed description of these and other risks is contained in ~~“Item 1A. Risk Factors” of the Company’s Annual Report~~Pinnacle Financial's most recent annual report on Form 10-K filed with the Securities and Exchange Commission on February 22, ~~2013.~~2013, Pinnacle Financial's most recent quarterly report on Form 10-Q filed with the Securities and Exchange Commission on May 3, 2013, and in Part II, Item 1A. Risk Factors below. Many of such factors are beyond Pinnacle ~~Financial’s~~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,~~release, whether as a result of new information, future events or otherwise.

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~~Ite~~mItem 1.

Part I. Financial Information

PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

	March 31, 2013			December 31, 2012			June 30, 2013			December 31, 2012
ASSETS
Cash and noninterest-bearing due from banks	$	57,906,350		$	51,946,542		$	70,623,888		$	51,946,542
Interest-bearing due from banks		38,860,678			111,535,083			162,365,672			111,535,083
Federal funds sold and other		2,792,238			1,807,044			8,181,484			1,807,044
Cash and cash equivalents		99,559,266			165,288,669			241,171,044			165,288,669

Securities available-for-sale, at fair value		683,545,006			706,577,806			687,832,401			706,577,806
Securities held-to-maturity (fair value of $40,376,745 and $583,212 at March 31, 2013 and December 31, 2012, respectively)		40,458,642			574,863
Securities held-to-maturity (fair value of $39,010,480 and $583,212 at
June 30, 2013 and December 31, 2012, respectively)								40,056,711			574,863
Mortgage loans held-for-sale		30,326,709			41,194,639			27,962,675			41,194,639

Loans		3,772,363,758			3,712,162,430			3,925,364,586			3,712,162,430
Less allowance for loan losses		(69,411,493	)		(69,417,437	)		(68,694,868	)		(69,417,437	)
Loans, net		3,702,952,265			3,642,744,993			3,856,669,718			3,642,744,993

Premises and equipment, net		75,760,671			75,804,895			75,840,853			75,804,895
Other investments		27,311,943			26,962,890			30,371,218			26,962,890
Accrued interest receivable		16,940,917			14,856,615			15,654,018			14,856,615
Goodwill		244,011,793			244,040,421			243,900,240			244,040,421
Core deposits and other intangible assets		4,582,286			5,103,273			4,334,100			5,103,273
Other real estate owned		16,802,183			18,580,097			15,991,835			18,580,097
Other assets		128,683,433			98,819,455			133,383,112			98,819,455
Total assets	$	5,070,935,114		$	5,040,548,616		$	5,373,167,925		$	5,040,548,616

LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Noninterest-bearing	$	977,495,990		$	985,689,460		$	1,098,887,282		$	985,689,460
Interest-bearing		788,631,493			760,786,247			817,562,583			760,786,247
Savings and money market accounts		1,564,517,135			1,662,256,403			1,607,689,457			1,662,256,403
Time		572,250,233			606,455,873			572,438,682			606,455,873
Total deposits		3,902,894,851			4,015,187,983			4,096,578,004			4,015,187,983
Securities sold under agreements to repurchase		129,099,508			114,667,475			117,345,727			114,667,475
Federal Home Loan Bank advances		200,796,066			75,850,390			325,762,333			75,850,390
Subordinated debt and other borrowings		105,533,292			106,158,292			99,908,292			106,158,292
Accrued interest payable		1,235,441			1,360,598			1,037,150			1,360,598
Other liabilities		39,942,214			48,252,519			35,967,600			48,252,519
Total liabilities		4,379,501,372			4,361,477,257			4,676,599,106			4,361,477,257
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; 35,022,487 and 34,696,597 shares issued and outstanding at March 31, 2013 and December 31, 2012, respectively		35,022,487			34,696,597
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;
35,073,763 and 34,696,597 shares issued and outstanding
at June 30, 2013 and December 31, 2012, respectively								35,073,763			34,696,597
Additional paid-in capital		544,619,717			543,760,439			545,963,974			543,760,439
Retained earnings		100,834,814			87,386,689			115,145,346			87,386,689
Accumulated other comprehensive income, net of taxes		10,956,724			13,227,634			385,736			13,227,634
Total stockholders’ equity		691,433,742			679,071,359
Total liabilities and stockholders’ equity	$	5,070,935,114		$	5,040,548,616
Total stockholders' equity								696,568,819			679,071,359
Total liabilities and stockholders' equity							$	5,373,167,925		$	5,040,548,616

See accompanying notes to consolidated financial statements

(unaudited).

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~~INNACLE~~PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended March 31,				Three Months Ended June 30,					Six Months Ended June 30,
	2013		2012		2013			2012		2013			2012
Interest income:
Loans, including fees	$	41,514,213	$	38,637,719	$	42,149,149		$	39,288,048	$	83,663,362		$	77,925,767
Securities:
Taxable		3,670,934		4,929,284		3,650,766			4,453,956		7,321,700			9,383,240
Tax-exempt		1,656,408		1,703,146		1,483,965			1,647,852		3,140,373			3,350,998
Federal funds sold and other		314,772		553,939		260,440			563,638		575,212			1,117,577
Total interest income		47,156,327		45,824,088		47,544,320			45,953,494		94,700,647			91,777,582

Interest expense:
Deposits		3,412,396		4,827,476		2,955,985			4,298,849		6,368,381			9,126,325
Securities sold under agreements to repurchase		77,816		155,576		70,823			115,450		148,639			271,026
Federal Home Loan Bank advances and other borrowings		907,641		1,337,031		918,762			1,354,132		1,826,403			2,691,163
Total interest expense		4,397,853		6,320,083		3,945,570			5,768,431		8,343,423			12,088,514
Net interest income		42,758,474		39,504,005		43,598,750			40,185,063		86,357,224			79,689,068
Provision for loan losses		2,172,404		1,034,245		2,774,048			634,072		4,946,452			1,668,317
Net interest income after provision for loan losses		40,586,070		38,469,760		40,824,702			39,550,991		81,410,772			78,020,751

Noninterest income:
Service charges on deposit accounts		2,480,244		2,323,962		2,540,866			2,439,376		5,021,110			4,763,338
Investment services		1,792,640		1,646,778		1,895,398			1,610,883		3,688,038			3,257,661
Insurance sales commissions		1,393,304		1,287,560		1,107,696			1,141,163		2,501,000			2,428,723
Gain on mortgage loans sold, net		1,813,488		1,494,472		1,948,531			1,456,783		3,803,942			2,951,255
Gain on sale of investment securities, net		-		113,600
(Loss) gain on sale of investment securities, net						(25,241	)		98,917		(25,241	)		212,517
Trust fees		944,332		795,435		880,204			770,239		1,824,536			1,565,674
Other noninterest income		3,478,348		2,287,531		2,978,266			2,392,485		6,414,691			4,680,016
Total noninterest income		11,902,356		9,949,338		11,325,720			9,909,846		23,228,076			19,859,184

Noninterest expense:
Salaries and employee benefits		19,572,356		19,792,566		20,570,753			19,237,178		40,143,109			39,029,744
Equipment and occupancy		5,113,050		5,008,655		5,204,159			5,053,111		10,317,209			10,061,766
Other real estate expense		720,962		4,676,064		1,390,606			3,104,276		2,111,568			7,780,340
Marketing and other business development		790,671		785,325		987,171			739,774		1,777,842			1,525,099
Postage and supplies		591,488		563,294		517,667			615,725		1,109,155			1,179,019
Amortization of intangibles		520,987		686,067		248,186			686,067		769,173			1,372,134
Other noninterest expense		5,130,495		4,307,735		1,943,190			4,479,403		7,073,683			8,787,138
Total noninterest expense		32,440,009		35,819,706		30,861,732			33,915,534		63,301,739			69,735,240
Income before income taxes		20,048,417		12,599,392		21,288,690			15,545,303		41,337,109			28,144,695
Income tax expense		6,600,292		4,234,438		6,978,160			5,105,659		13,578,452			9,340,097
Net income		13,448,125		8,364,954		14,310,530			10,439,644		27,758,657			18,804,598
Preferred stock dividends		-		900,519		-			760,349		-			1,660,868
Accretion on preferred stock discount		-		258,647		-			1,894,525		-			2,153,172
Net income available to common stockholders	$	13,448,125	$	7,205,788	$	14,310,530		$	7,784,770	$	27,758,657		$	14,990,558
Per share information:
Basic net income per common share available to common stockholders	$	0.40	$	0.21	$	0.42		$	0.23	$	0.81		$	0.44
Diluted net income per common share available to common stockholders	$	0.39	$	0.21	$	0.42		$	0.23	$	0.81		$	0.44
Weighted average shares outstanding:
Basic		33,987,265		33,811,871		34,172,274			33,885,779		34,080,281			33,848,825
Diluted		34,206,202		34,423,898		34,431,054			34,470,794		34,319,796			34,447,526

See accompanying notes to consolidated financial ~~statements.~~

statements (unaudited).

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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended March 31,						Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012			2013			2012
Net income	$	13,448,125		$	8,364,954		$	14,310,530		$	7,784,770		$	27,758,657		$	14,990,558
Other comprehensive income, net of tax:
Decrease in net gains on securities available-for-sale, net of tax		(2,270,910	)		(771,981	)
Net gains on sale of investment securities reclassified from other comprehensive income into net income, net of tax		-			(75,431	)
Change in fair value on available-for-sale securities, net of tax								(13,933,693	)		1,066,735			(16,204,604	)		288,357
Increase in fair value of cash flow hedges, net of income tax								3,347,367			-			3,347,367			-
Net gain (loss) on sale of investment securities reclassified from other comprehensive income into net income, net of tax								15,339			(60,112	)		15,339			(129,147	)
Total comprehensive income	$	11,177,215		$	7,517,542		$	3,739,543		$	8,791,393		$	14,916,759		$	15,149,768

See accompanying notes to consolidated financial ~~statements.~~

statements (unaudited).

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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS’~~STOCKHOLDERS' EQUITY

(Unaudited)

	Preferred								Common		Additional						Accumulated			Total
	Stock		Common Stock						Stock		Paid-in			Retained			Other Comp.			Stockholders’						Common Stock
	Amount		Shares			Amount			Warrants		Capital			Earnings			Income, net			Equity			Preferred Stock Amount			Shares			Amount			Common Stock Warrants		Additional Paid-in Capital			Retained Earnings			Accumulated Other Comp. Income, net			Total Stockholders' Equity

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		$	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		-		180,487			180,487			-		304,428			-			-			484,915
Issuance of restricted common shares, net of forfeitures				95,912			95,912			-		(95,912	)		-			-			-
Exercise of employee common stock
options and related tax benefits																								-			213,760			213,760			-		1,150,474			-			-			1,364,234
Repurchase of preferred stock																								(71,250,000	)		-			-			-		-			-			-			(71,250,000	)
Issuance of restricted common shares, net
of forfeitures																								-			94,110			94,110			-		(94,110	)		-			-			-
Issuance of salary stock units		-		27,672			27,672			-		449,891			-			-			477,563			-			57,508			57,508			-		942,565			-			-			1,000,073
Restricted shares withheld for taxes		-		(43,018	)		(43,018	)		-		(36,459	)		-			-			(79,477	)		-			(44,425	)		(44,425	)		-		(686,321	)		-			-			(730,746	)
Compensation expense for restricted shares		-		-			-			-		857,160			-			-			857,160			-			-			-			-		1,671,568			-			-			1,671,568
Compensation expense for stock options		-		-			-			-		153,801			-			-			153,801			-			-			-			-		250,653			-			-			250,653
Accretion on preferred stock discount		258,647		-			-			-		-			(258,647	)		-			-			2,153,172			-			-			-		-			(2,153,172	)		-			-
Preferred dividends paid		-		-			-			-		-			(890,624	)		-			(890,624	)		-			-			-			-		-			(2,127,605	)		-			(2,127,605	)
Net income		-		-			-			-		-			8,364,954			-			8,364,954			-			-			-			-		-			18,804,598			-			18,804,598
Other comprehensive loss		-		-			-			-		-			-			(847,412	)		(847,412	)
Balances, March 31, 2012	$	69,355,475		34,616,013		$	34,616,013		$	3,348,402	$	537,860,446		$	56,999,267		$	16,485,845		$	718,665,448
Other comprehensive income																								-			-			-			-		-			-			159,212			159,212
Balances, June 30, 2012																							$	-			34,675,913		$	34,675,913		$	3,348,402	$	539,462,366		$	64,307,405		$	17,492,469		$	659,286,555

Balances, December 31, 2012	$	-		34,696,597		$	34,696,597		$	-	$	543,760,439		$	87,386,689		$	13,227,634		$	679,071,359		$	-			34,696,597		$	34,696,597		$	-	$	543,760,439		$	87,386,689		$	13,227,634		$	679,071,359
Exercise of employee common stock options and related tax benefits		-		88,845			88,845			-		902,533			-			-			991,378
Issuance of restricted common shares, net of forfeitures		-		274,545			274,545			-		(274,545	)		-			-			-
Exercise of employee common stock
options and related tax benefits																								-			123,239			123,239			-		1,282,323			-			-			1,405,562
Issuance of restricted common shares, net
of forfeitures																								-			293,441			293,441			-		(293,441	)		-			-			-
Restricted shares withheld for taxes		-		(37,500	)		(37,500	)		-		(731,679	)		-			-			(769,179	)		-			(39,514	)		(39,514	)		-		(781,156	)		-			-			(820,670	)
Compensation expense for restricted shares		-		-			-			-		950,498			-			-			950,498			-			-			-			-		1,983,339			-			-			1,983,339
Compensation expense for stock options		-		-			-			-		12,471			-			-			12,471			-			-			-			-		12,470			-			-			12,470
Net income		-		-			-			-		-			13,448,125			-			13,448,125			-			-			-			-		-			27,758,657			-			27,758,657
Other comprehensive loss		-		-			-			-		-			-			(2,270,910	)		(2,270,910	)		-			-			-			-		-			-			(12,841,898	)		(12,841,898	)
Balances, March 31, 2013	$	-		35,022,487		$	35,022,487		$	-	$	544,619,717		$	100,834,814		$	10,956,724		$	691,433,742
Balances, June 30, 2013																							$	-			35,073,763		$	35,073,763		$	-	$	545,963,974		$	115,145,346		$	385,736		$	696,568,819

See accompanying notes to consolidated financial ~~statements.~~statements (unaudited).

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PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Three Months ended March 31,						Six months ended June 30,
	2013			2012			2013			2012
Operating activities:
Net income	$	13,448,125		$	8,364,954		$	27,758,657		$	18,804,598
Adjustments to reconcile net income to net cash provided by operating activities:
Net amortization/accretion of premium/discount on securities		988,811			1,971,889			2,373,927			3,879,647
Depreciation and amortization		2,432,535			2,660,347			4,622,942			4,923,028
Provision for loan losses		2,172,404			1,034,245			4,946,452			1,668,317
Gain on mortgage loans sold, net		(1,813,488	)		(1,494,472	)		(3,803,942	)		(2,951,255	)
Gain on sale of investment securities, net		-			(113,600	)
Loss (gain) on sale of investment securities, net								25,241			(212,517	)
Stock-based compensation expense		962,969			1,488,522			1,995,809			2,922,294
Deferred tax benefit		(698,661	)		(1,831,027	)		67,794			1,664,563
(Gains) losses on dispositions of other real estate and other investments		(866,306	)		4,283,855
Losses on dispositions of other real estate and other investments								1,877,964			7,222,829
Excess tax benefit from stock compensation		(28,628	)		(4,978	)		(140,181	)		(11,243	)
Mortgage loans held for sale:
Loans originated		(107,845,659	)		(105,694,598	)		(226,714,093	)		(222,373,087	)
Loans sold		120,569,000			119,023,000			243,750,000			224,388,000
Decrease in other assets		3,050,703			15,794,855			10,576,616			18,852,041
Decrease in other liabilities		(8,339,670	)		(3,128,767	)		(12,608,365	)		(2,652,747	)
Net cash provided by operating activities		24,032,135			42,354,225			54,728,821			56,124,468

Investing activities:
Activities in securities available-for-sale:
Purchases		(65,052,729	)		(17,954,670	)		(128,922,089	)		(37,244,793	)
Sales		-			14,359,785			1,213,584			32,632,321
Maturities, prepayments and calls		43,551,916			56,585,619			77,932,668			106,431,284
Activities in securities held-to-maturity:
Purchases								(2,045,030	)		-
Maturities, prepayments and calls		(75,868	)		1,280,000			2,325,000			1,575,000
Increase in loans, net		(63,167,119	)		(54,941,031	)		(221,126,597	)		(166,516,932	)
Purchases of software, premises and equipment		(1,442,076	)		(1,271,826	)		(3,388,292	)		(1,940,817	)
Purchase of bank owned life insurance		(30,000,000	)		-			(30,000,000	)		-
Increase in other investments		(303,750	)		(286,569	)		(3,325,587	)		(1,149,065	)
Net cash used in investing activities		(116,489,626	)		(2,228,692	)		(307,336,343	)		(66,213,002	)

Financing activities:
Net decrease in deposits		(112,293,132	)		(66,220,256	)
Net increase in deposits								81,390,021			55,480,883
Net increase (decrease) in securities sold under agreements to repurchase		14,432,033			(13,502,880	)		2,678,252			(3,968,857	)
Advances from Federal Home Loan Bank:
Issuances		240,000,000			215,000,000			324,038,282			285,000,000
Payments/maturities		(115,036,641	)		(215,017,901	)		(74,091,731	)		(240,035,833	)
Decrease in other borrowings		(625,000	)		-
(Decrease) increase in other borrowings								(6,250,000	)		25,000,000
Exercise of common stock options and stock appreciation rights		222,200			405,438			584,892			633,487
Excess tax benefit from stock compensation		28,628			4,978			140,181			11,243
Preferred dividends paid		-			(890,624	)		-			(2,127,605	)
Net cash provided by (used in) financing activities		26,728,088			(80,221,245	)
Net decrease in cash and cash equivalents		(65,729,403	)		(40,095,712	)
Repurchase of preferred shares outstanding								-			(71,250,000	)
Net cash provided by financing activities								328,489,897			48,743,318
Net increase in cash and cash equivalents								75,882,375			165,288,669
Cash and cash equivalents, beginning of period		165,288,669			172,163,040			165,288,669			172,163,040
Cash and cash equivalents, end of period	$	99,559,266		$	132,067,328		$	241,171,044		$	210,817,824

See accompanying notes to consolidated financial ~~statements.~~

statements (unaudited).

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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.

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 2012 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~~Financial's Annual Report on Form 10-K for the year ended December 31, 2012. There have been no significant changes to Pinnacle ~~Financial’s~~Financial's significant accounting policies as disclosed in Pinnacle ~~Financial’s~~Financial's Annual Report on Form 10-K for the year ended December 31, 2012.

Recently Adopted Accounting Pronouncements — In February 2013, the FASB issued Accounting Standards Update 2013-02, "Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income" which provides disclosure guidance on amounts reclassified out of AOCI by component. The adoption did not have any impact on our financial position or results of operations but has impacted our financial statement disclosure. As shown on the statement of other comprehensive income for the three and six months ended ~~March 31, 2012,~~June 30, 2013, Pinnacle Financial reclassified approximately ~~$75,000,~~$15,000 of net ~~of tax,~~losses out of ~~accumulated~~ other comprehensive income into ~~net income related to net gains~~gain (loss) on the sale of investment ~~securities.~~securities, net compared to reclassifications of net gains for the three and six months ended June 30, 2012, of approximately $60,000, and $129,000, respectively, net of tax.

Cash Flow Information — Supplemental cash flow information addressing certain cash and noncash transactions for each of the ~~three~~six months ended ~~March 31,~~June 30, 2013 and 2012 was as follows:

	For the three months ended March 31,				For the six months ended June 30,
	2013		2012		2013		2012
Cash Transactions:
Interest paid	$	4,540,692	$	6,659,856	$	8,701,479	$	12,717,236
Income taxes paid, net		7,100,000		7,825,894		15,600,009		(1,474,106	)
Noncash Transactions:
Loans charged-off to the allowance for loan losses		3,557,313		4,925,559		11,377,491		8,774,855
Loans foreclosed upon and transferred to other real estate owned		550,000		4,574,792		1,780,131		7,103,792
Available-for-sale securities transferred to held-to-maturity portfolio		39,959,647		-		39,959,647		-

~~Page 8~~

~~Table of Contents~~

~~PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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~~For the three and six months ended June 30, 2012, 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 six months ended ~~March 31,~~June 30, 2013, ~~approximately 219,000~~there were 258,780 and 239,515 shares associated with dilutive stock options, stock appreciation rights and restricted shares with time-based vesting criteria that were included in the net income per share calculation. For the three and six months ended ~~March 31,~~June 30, 2012, there were ~~approximately 612,000~~585,015 and 598,701 shares associated with dilutive stock options, stock appreciation rights, warrants 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.

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The following is a summary of the basic and diluted net income per share calculations for the three and six months ended ~~March 31,~~June 30, 2013 and 2012:

	For the three months ended June 30,				For the six months ended June 30,
	2013		2012		2013		2012
Basic net income per share calculation:
Numerator - Net income available to common stockholders	$	14,310,530	$	7,784,770	$	27,758,657	$	14,990,558

Denominator - Average common shares outstanding		34,172,274		33,885,779		34,080,281		33,848,825
Basic net income per share available to common stockholders	$	0.42	$	0.23	$	0.81	$	0.44

Diluted net income per share calculation:
Numerator – Net income available to common stockholders	$	14,310,530	$	7,784,770	$	27,758,657	$	14,990,558

Denominator - Average common shares outstanding		34,172,274		33,885,779		34,080,281		33,848,825
Dilutive shares contingently issuable		258,780		585,015		239,515		598,701
Average diluted common shares outstanding		34,431,054		34,470,794		34,319,796		34,447,526
Diluted net income per share available to common stockholders	$	0.42	$	0.23	$	0.81	$	0.44

For the three months ended
March 31,

2013 2012
Basic net income per share calculation:
Numerator - Net income available to common stockholders
$ 13,448,125 $ 7,205,788

Denominator - Average common shares outstanding
33,987,265 33,811,871
Basic net income per share available to common stockholders $ 0.40 $ 0.21

Diluted net income per share calculation:
Numerator – Net income available to common stockholders
$ 13,448,125 $ 7,205,788

Denominator - Average common shares outstanding
33,987,265 33,811,871
Dilutive shares contingently issuable 218,937 612,027
Average diluted common shares outstanding 34,206,202 34,423,898
Diluted net income per share available to common stockholders $ 0.39 $ 0.21

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 transactions. During the fourth quarter of 2011, Pinnacle Financial redeemed 23,750 of the preferred shares in a transaction totaling approximately $23.9 million, including accrued but unpaid dividends of $142,000. During the second quarter of 2012, Pinnacle Financial completed the redemption of the remaining 71,250 preferred shares outstanding 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 $1.7 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.

~~Page 9~~

~~Table of Contents~~

~~PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Note 3. Securities

The amortized cost and fair value of securities available-for-sale and held-to-maturity at ~~March 31,~~June 30, 2013 and December 31, 2012 are summarized as follows (in thousands):

	June 30, 2013
	Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Securities available-for-sale:
U.S. Treasury securities		$	4,998		$	-		$	-		$	4,998
U.S. government agency securities			139,602			11			9,999			129,614
Mortgage-backed securities			383,634			9,938			6,299			387,273
State and municipal securities			131,716			6,903			745			137,874
Asset-backed securities			17,426			-			112			17,314
Corporate notes and other			9,631			1,136			8			10,759
		$	687,007		$	17,988		$	17,163		$	687,832
Securities held-to-maturity:
State and municipal securities		$	40,057		$	4		$	1,051		$	39,010
		$	40,057		$	4		$	1,051		$	39,010

	December 31, 2012
	Amortized Cost			Gross Unrealized Gains			Gross Unrealized Losses			Fair Value
Securities available-for-sale:
U.S. Treasury securities		$	-		$	-		$	-		$	-
U.S. government agency securities			110,817			49			414			110,452
Mortgage-backed securities			360,504			15,770			623			375,651
State and municipal securities			177,364			14,489			126			191,727
Asset-backed securities			17,361			-			9			17,352
Corporate notes and other			9,881			1,519			4			11,396
		$	675,927		$	31,827			1,176		$	706,578
Securities held-to-maturity:
State and municipal securities		$	575		$	8		$	-		$	583
		$	575		$	8		$	-		$	583

March 31, 2013

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
Value

Securities available-for-sale:
U.S. government agency securities $ 139,609 $ 55 $ 1,420 $ 138,244
Mortgage-backed securities 358,702 14,750 1,595 371,857
State and municipal securities 134,731 10,563 187 145,107
Agency-backed securities 17,393 - 35 17,358
Corporate notes and other 9,512 1,469 2 10,979
$ 659,947 $ 26,837 $ 3,239 $ 683,545
Securities held-to-maturity:
State and municipal securities $ 40,459 $ 9 $ 91 $ 40,377
$ 40,459 $ 9 $ 91 $ 40,377

December 31, 2012

Amortized
Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair
Value

Securities available-for-sale:
U.S. government agency securities $ 110,817 $ 49 $ 414 $ 110,452
Mortgage-backed securities 360,504 15,770 623 375,651
State and municipal securities 177,364 14,489 126 191,727
Agency-backed securities 17,361 - 9 17,352
Corporate notes and other 9,881 1,519 4 11,396
$ 675,927 $ 31,827 $ 1,176 $ 706,578
Securities held-to-maturity:
State and municipal securities $ 575 $ 8 $ - $ 583
$ 575 $ 8 $ - $ 583

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At ~~March 31,~~June 30, 2013, approximately ~~$612.3~~$643.6 million of securities within Pinnacle ~~Financial’s~~Financial's investment portfolio were either pledged to secure public funds and other deposits or securities sold under agreements to repurchase.

During the first quarter of 2013, approximately $40.0 million of available-for-sale securities were transferred to the held-to-maturity portfolio. The transfers of debt securities into the held-to-maturity category from the available-for-sale category were made at fair value at the date of transfer. The unrealized holding gain or loss at the date of transfer was retained in other comprehensive income and in the carrying value of the held-to-maturity securities. Such amounts will be amortized to interest income over the remaining life of the securities.

The amortized cost and fair value of debt securities as of ~~March 31,~~June 30, 2013 by contractual maturity are shown below. Actual maturities may differ from contractual maturities of mortgage- and asset-backed securities since the mortgages and assets 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):

	June 30, 2013
	Available-for-sale				Held-to-maturity
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due in one year or less	$	8,453	$	8,471	$	736	$	735
Due in one year to five years		26,983		27,553		12,414		12,276
Due in five years to ten years		142,827		143,297		16,011		15,553
Due after ten years		107,684		103,924		10,896		10,446
Mortgage-backed securities		383,634		387,273		-		-
Asset-backed securities		17,426		17,314		-		-
	$	687,007	$	687,832	$	40,057	$	39,010

March 31, 2013
Available-for-sale Held-to-maturity

Amortized
Cost

Fair
Value
Amortized Cost
Fair
Value

Due in one year or less $ 9,570 $ 9,717 $ 1,891 $ 1,891
Due in one year to five years 20,923 21,543 1,016 1,021
Due in five years to ten years 142,376 149,503 9,510 9,509
Due after ten years 110,983 113,567 28,042 27,956
Mortgage-backed securities 358,702 371,857 - -
Asset-backed securities 17,393 17,358 - -
$ 659,947 $ 683,545 $ 40,459 $ 40,377

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~~Table of Contents~~

~~PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

At ~~March 31,~~June 30, 2013 and December 31, 2012, ~~included in securities were~~ the following ~~available-for-sale~~ investments ~~with~~had 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 June 30, 2013:

U.S. Treasury securities	$	-	$	-	$	-	$	-	$	-	$	-
U.S. government agency securities		132,918		9,999		-		-		132,918		9,999
Mortgage-backed securities		146,214		6,299		-		-		146,214		6,299
State and municipal securities		47,838		1,796		-		-		47,838		1,796
Asset-backed securities		17,314		112		-		-		17,314		112
Corporate notes		807		8		-		-		807		8
Total temporarily-impaired securities	$	345,091	$	18,214	$	-	$	-	$	345,091	$	18,214

At December 31, 2012:

U.S. Treasury securities	$	-	$	-	$	-	$	-	$	-	$	-
U.S. government agency securities		78,899		414		-		-		78,899		414
Mortgage-backed securities		40,988		623		-		-		40,988		623
State and municipal securities		5,179		126		-		-		5,179		126
Asset-backed securities		17,353		9		-		-		17,353		9
Corporate notes		162		4		-		-		162		4
Total temporarily-impaired securities	$	142,581	$	1,176	$	-	$	-	$	142,581	$	1,176

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 March 31, 2013:

U.S. government agency securities $ 121,169 $ 1,420 $ - $ - $ 121,169 $ 1,420
Mortgage-backed securities 67,940 1,595 - - 67,940 1,595
State and municipal securities 41,084 187 - - 41,084 187
Agency-backed securities 17,358 35 - - 17,358 35
Corporate notes 364 2 - - 364 2
Total temporarily-impaired securities $ 247,915 $ 3,239 $ - $ - $ 247,915 $ 3,239

At December 31, 2012:

U.S. government agency securities $ 78,899 $ 414 $ - $ - $ 78,899 $ 414
Mortgage-backed securities 40,988 623 - - 40,988 623
State and municipal securities 5,179 126 - - 5,179 126
Agency-backed securities 17,353 9 - - 17,353 9
Corporate notes 162 4 - - 162 4
Total temporarily-impaired securities $ 142,581 $ 1,176 $ - $ - $ 142,581 $ 1,176

The applicable dates for determining when securities are in an unrealized loss position are ~~March 31,~~June 30, 2013 and December 31, 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 periods ended ~~March 31,~~June 30, 2013 and December 31, 2012, but is in the ~~“Investments~~"Investments with an Unrealized Loss of less than 12 ~~months”~~months" category above.

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As shown in the tables above, at ~~March 31,~~June 30, 2013, Pinnacle Financial had approximately ~~$3.2~~$18.2 million in unrealized losses on ~~$247.9~~$345.1 million 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 ~~March 31,~~June 30, 2013, 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 ~~March 31,~~June 30, 2013.

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. NoAvailable-for-sale securities of $1.2 million were sold during the ~~three months~~quarter ended ~~March 31,~~June 30, 2013.

The carrying values of Pinnacle ~~Financial’s~~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).

~~Page 11~~

~~Table of Contents~~

~~PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Commercial loans receive risk ratings by the assigned financial advisor subject to validation by Pinnacle ~~Financial’s~~Financial's independent loan review department. Risk ratings are categorized as pass, special mention, substandard, substandard-nonaccrual or doubtful-nonaccrual. Pinnacle Financial believes that its categories follow those used by Pinnacle ~~Bank’s~~Bank's primary regulators. At ~~March 31,~~June 30, 2013, approximately ~~75%~~76% 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 individual loans. 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 be subject to a formal credit risk review process. Each loan grade is also subject to review by our independent loan review department, which reviews a significant portion of our risk rated portfolio annually. Included in the coverage are independent loan reviews of loans in targeted higher-risk portfolio segments.

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.

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.~~

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.

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The following table outlines the amount of each loan classification categorized into each risk rating category as of ~~March 31,~~June 30, 2013 and December 31, 2012 (in thousands):

March 31, 2013	Commercial real estate - mortgage		Consumer real estate - mortgage		Construction and land development		Commercial and industrial		Consumer and other		Total
June 30, 2013													Commercial real estate - mortgage		Consumer real estate - mortgage		Construction and land development		Commercial and industrial		Consumer and other		Total
Accruing loans
Pass	$	1,203,486	$	649,150	$	257,668	$	1,349,725	$	107,814	$	3,567,843	$	1,238,668	$	671,079	$	249,392	$	1,451,678	$	116,086	$	3,726,903
Special Mention		10,556		2,601		27,696		24,947		-		65,800		14,325		2,711		35,715		22,251		-		75,002
Substandard (1)		38,829		11,414		19,201		26,774		-		96,218		29,381		15,108		11,963		26,021		-		82,473
Total		1,252,871		663,165		304,565		1,401,446		107,814		3,729,861		1,282,374		688,898		297,070		1,499,950		116,086		3,884,378
Impaired loans
Nonaccrual loans
Substandard-nonaccrual		11,064		7,494		1,799		1,372		103		21,832		12,513		4,581		1,320		2,088		59		20,561
Doubtful-nonaccrual		1		-		-		3		-		4		-		-		-		-		-		-
Total nonaccrual loans		11,065		7,494		1,799		1,375		103		21,836		12,513		4,581		1,320		2,088		59		20,561
Troubled debt restructurings(2)
Pass		316		2,778		69		433		315		3,911		312		2,762		119		376		262		3,831
Special Mention		-		-		-		-		-		-		-		-		-		-		-		-
Substandard		14,387		2,195		-		174		-		16,756		13,674		1,249		-		1,672		-		16,595
Total troubled debt restructurings		14,703		4,973		69		607		315		20,667		13,986		4,011		119		2,048		262		20,426
Total impaired loans		25,768		12,467		1,868		1,982		418		42,503		26,499		8,592		1,439		4,136		321		40,987
Total loans	$	1,278,639	$	675,632	$	306,433	$	1,403,428	$	108,232	$	3,772,364	$	1,308,873	$	697,490	$	298,509	$	1,504,086	$	116,407	$	3,925,365

December 31, 2012	Commercial real estate - mortgage		Consumer real estate - mortgage		Construction and land development		Commercial and industrial		Consumer and other		Total
Accruing loans
Pass	$	1,093,628	$	649,571	$	259,878	$	1,390,207	$	93,712	$	3,486,996
Special Mention		12,670		4,242		29,472		23,133		-		69,517
Substandard ⁽¹⁾		42,343		13,896		19,622		29,513		-		105,374
Total		1,148,641		667,709		308,972		1,442,853		93,712		3,661,887
Impaired loans
Nonaccrual loans
Substandard-nonaccrual		9,290		5,877		4,509		3,035		79		22,790
Doubtful-nonaccrual		1		29		-		3		-		33
Total nonaccrual loans		9,291		5,906		4,509		3,038		79		22,823
Troubled debt restructurings⁽²⁾
Pass		4,705		3,623		71		502		119		9,020
Special Mention		-		-		-		-		-		-
Substandard		15,559		2,688		-		185		-		18,432
Total troubled debt restructurings		20,264		6,311		71		687		119		27,452
Total impaired loans		29,555		12,217		4,580		3,725		198		50,275
Total loans	$	1,178,196	$	679,926	$	313,552	$	1,446,578	$	93,910	$	3,712,162

~~Page 12~~

~~Table of Contents~~

~~PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

December 31, 2012
Commercial
real estate -
mortgage

Consumer
real estate -
mortgage

Construction
and land
development

Commercial
and
industrial

Consumer
and other
Total
Accruing loans
Pass $ 1,093,628 $ 649,571 $ 259,878 $ 1,390,207 $ 93,712 $ 3,486,996
Special Mention 12,670 4,242 29,472 23,133 - 69,517
Substandard (1)
42,343 13,896 19,622 29,513 - 105,374
Total 1,148,641 667,709 308,972 1,442,853 93,712 3,661,887
Impaired loans
Nonaccrual loans
Substandard-nonaccrual 9,290 5,877 4,509 3,035 79 22,790
Doubtful-nonaccrual 1 29 - 3 - 33
Total nonaccrual loans 9,291 5,906 4,509 3,038 79 22,823
Troubled debt restructurings(2)

Pass 4,705 3,623 71 502 119 9,020
Special Mention - - - - - -
Substandard 15,559 2,688 - 185 - 18,432
Total troubled debt restructurings 20,264 6,311 71 687 119 27,452
Total impaired loans 29,555 12,217 4,580 3,725 198 50,275
Total loans $ 1,178,196 $ 679,926 $ 313,552 $ 1,446,578 $ 93,910 $ 3,712,162

(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~~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~~Bank's primary regulators for loans classified as substandard, excluding the impact of substandard nonaccrual loans and substandard troubled debt restructurings. Potential problem loans, which are not included in nonaccrual loans, amounted to approximately ~~$96.2~~$82.5 million at ~~March 31,~~June 30, 2013, compared to $105.4 million at December 31, 2012.

(2)

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

At ~~March 31,~~June 30, 2013 and December 31, 2012, all loans classified as nonaccrual were deemed to be impaired. The principal balances of these nonaccrual loans amounted to ~~$21.8~~$20.6 million and $22.8 million at ~~March 31,~~June 30, 2013 and December 31, 2012, respectively, and are included in the table above. For the ~~three~~six months ended ~~March 31,~~June 30, 2013, the average balance of nonaccrual loans was ~~$24.2~~$22.3 million as compared to ~~$32.6~~$38.4 million for the twelve months ended December 31, 2012. At the date such loans were placed on nonaccrual status, Pinnacle Financial reversed all previously accrued interest income against current year earnings. Had these nonaccrual loans been on accruing status, interest income would have been higher by ~~$292,000, respectively,~~$573,000, for the ~~three~~six months ended ~~March 31,~~June 30, 2013 ~~compared to $759,000, respectively,~~and by $618,000, for the ~~three~~six months ended ~~March 31, 2012, respectively.~~June 30, 2012.

Page 12

Table of Contents

The following table details the recorded investment, unpaid principal balance and related allowance and average recorded investment of our nonaccrual loans at ~~March 31,~~June 30, 2013 and December 31, 2012 by loan classification and the amount of interest income recognized on a cash basis throughout the ~~quarter and~~fiscal year-to-date period then ended, respectively, on these loans that remain on the balance sheets (in thousands):

	At March 31, 2013						For the three months ended March 31, 2013				At June 30, 2013						For the six months ended June 30, 2013
	Recorded investment		Unpaid principal balance		Related allowance(1)		Average recorded investment		Interest income recognized		Recorded investment		Unpaid principal balance		Related allowance⁽¹⁾		Average recorded investment		Interest income recognized
Collateral dependent nonaccrual loans:
Commercial real estate – mortgage	$	8,352	$	8,772	$	-	$	9,220	$	-	$	12,034	$	13,267	$	-	$	12,592	$	-
Consumer real estate – mortgage		5,030		5,158		-		5,162		-		2,419		2,425		-		2,615		-
Construction and land development		1,516		1,605		-		1,526		-		978		1,946		-		1,690		-
Commercial and industrial		690		724		-		699		-		1,592		1,712		-		1,653		-
Consumer and other		-		-		-		-		-		-		-		-		-		-
Total	$	15,588	$	16,259	$	-	$	16,607	$	-	$	17,023	$	19,350	$	-	$	18,550	$	-

Cash flow dependent nonaccrual loans:
Commercial real estate – mortgage	$	2,713	$	2,773	$	571	$	2,901	$	-	$	484	$	547	$	157	$	486	$	-
Consumer real estate – mortgage		2,464		2,582		852		2,488		-		2,160		2,369		699		2,276		-
Construction and land development		283		350		111		297		-		340		380		110		341		-
Commercial and industrial		685		1,989		174		1,770		-		495		856		66		545		-
Consumer and other		103		128		40		104		-		59		61		19		60		-
Total	$	6,248	$	7,822	$	1,748	$	7,560	$	-	$	3,538	$	4,213	$	1,051	$	3,708	$	-
Total nonaccrual loans	$	21,836	$	24,081	$	1,748	$	24,167	$	-	$	20,561	$	23,563	$	1,051	$	22,258	$	-

	At December 31, 2012						For the year ended December 31, 2012
	Recorded investment		Unpaid principal balance		Related allowance⁽¹⁾		Average recorded investment		Interest income recognized
Collateral dependent nonaccrual loans:
Commercial real estate – mortgage	$	8,740	$	11,187	$	-	$	11,194	$	-
Consumer real estate – mortgage		3,641		6,394		-		6,394		-
Construction and land development		1,546		2,062		-		2,063		-
Commercial and industrial		1,547		1,761		-		1,896		-
Consumer and other		-		-		-		-		-
Total	$	15,474	$	21,404	$	-	$	21,547	$	-

Cash flow dependent nonaccrual loans:
Commercial real estate – mortgage	$	551	$	1,841	$	154	$	3,228	$	-
Consumer real estate – mortgage		2,265		4,473		573		5,828		-
Construction and land development		2,963		4,701		201		5,102		-
Commercial and industrial		1,491		2,459		814		2,528		-
Consumer and other		79		179		22		180		-
Total	$	7,349	$	13,653	$	1,764	$	16,866	$	-

Total nonaccrual loans	$	22,823	$	35,057	$	1,764	$	38,413	$	-

~~Page 13~~

~~Table of Contents~~

~~PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

At December 31, 2012
For the year ended
December 31, 2012

Recorded
investment

Unpaid
principal
balance

Related
allowance(1)

Average
recorded
investment

Interest
income
recognized

Collateral dependent nonaccrual loans:
Commercial real estate – mortgage $ 8,740 $ 11,187 $ - $ 9,612 $ -
Consumer real estate – mortgage 3,641 6,394 - 5,266 -
Construction and land development 1,546 2,062 - 1,753 -
Commercial and industrial 1,547 1,761 - 2,064 -
Consumer and other - - - - -
Total $ 15,474 $ 21,404 $ - $ 18,695 $ -

Cash flow dependent nonaccrual loans:
Commercial real estate – mortgage $ 551 $ 1,841 $ 154 $ 2,893 $ -
Consumer real estate – mortgage 2,265 4,473 573 4,656 -
Construction and land development 2,963 4,701 201 4,147 -
Commercial and industrial 1,491 2,459 814 2,089 -
Consumer and other 79 179 22 143 -
Total $ 7,349 $ 13,653 $ 1,764 $ 13,928 $ -

Total nonaccrual loans $ 22,823 $ 35,057 $ 1,764 $ 32,623 $ -

(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~~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 three and six months ended ~~March 31,~~June 30, 2013 or during the year ended December 31, 2012.

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 nonaccrual status as of the date of restructuring, the loans are included in nonaccrual 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 ~~March 31,~~June 30, 2013 and December 31, 2012, there were ~~$20.7~~$20.4 million and $27.5 million, respectively, of troubled debt restructurings that were performing as of their restructure date and which were 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~~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.

Page 1413

Table of Contents

~~PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

The following table outlines the amount of each troubled debt restructuring categorized by loan classification made during the three and six months ended ~~March 31,~~June 30, 2013 and 2012 (dollars in thousands):

	March 31, 2013						March 31, 2012						Three months ended June 30, 2013						Six months ended June 30, 2013
	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		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		-	$	-	$	-		-	$	-	$	-		-	$	-	$	-		-	$	-	$	-
Consumer real estate – mortgage		1		432		359		1		343		288		-		-		-		1		428		355
Construction and land development		-		-		-		-		-		-		1		51		44		1		51		44
Commercial and industrial		-		-		-		1		39		32		1		1,500		1,290		1		1,500		1,290
Consumer and other		1		200		170		-		-		-		-		-		-		1		193		164
		2	$	632	$	529		2	$	382	$	320		2	$	1,551	$	1,334		4	$	2,172	$	1,853

	Three months ended June 30, 2012						Six months ended June 30, 2012
	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		9	$	19,040	$	16,283		9	$	19,040	$	16,283
Consumer real estate – mortgage		14		5,702		4,970		15		6,045		5,258
Construction and land development		2		734		407		2		434		407
Commercial and industrial		12		947		814		13		983		846
Consumer and other		3		124		107		3		124		107
		40	$	26,547	$	22,581		42	$	26,626	$	22,901

There were no troubled debt restructurings that defaulted during the three month periods ended June 30, 2013 or 2012. During the ~~three~~six months ended ~~March 31,~~June 30, 2013, two consumer real estate loans totaling $1.0 million which were previously classified as troubled debt restructurings subsequently ~~defaulted.~~defaulted due to their lack of performance. During the ~~three~~six months ended ~~March 31,~~June 30, 2012, four commercial loans totaling $194,000 and two consumer loans totaling $154,000 which were previously classified as troubled debt restructurings defaulted due to their lack of performance. A default is defined as an occurrence which violates the terms of the ~~receivable’s~~receivable's contract.

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.~~industry. 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~~Bank's total risk-based capital to borrowers in the following industries at ~~March 31,~~June 30, 2013 with the comparative exposures for December 31, 2012 (in thousands):

	At June 30, 2013
	Outstanding Principal Balances		Unfunded Commitments		Total exposure		Total Exposure at December 31, 2012

Lessors of nonresidential buildings	$	431,666	$	42,692	$	474,358	$	440,237
Lessors of residential buildings		222,869		23,778		246,647		215,899
Land subdividers		79,644		14,085		93,729		108,283

At March 31, 2013

Outstanding
Principal
Balances

Unfunded
Commitments
Total exposure
Total Exposure
at December 31,
2012

Lessors of nonresidential buildings $ 419,148 $ 46,935 $ 466,083 $ 440,237
Lessors of residential buildings 197,042 27,838 224,880 215,899
Land subdividers 87,587 13,797 101,384 108,283

Page 14

Table of Contents

The table below presents past due balances at ~~March 31,~~June 30, 2013 and December 31, 2012, by loan classification and segment allocated between accruing and nonaccrual status (in thousands):

March 31, 2013	30-89 days past due and accruing		90 days or more past due and accruing		Total past due and accruing		Nonaccrual(1)		Current and accruing		Total Loans
June 30, 2013														30-89 days past due and accruing		90 days or more past due and accruing		Total past due and accruing		Nonaccrual⁽¹⁾		Current and accruing		Total Loans
Commercial real estate:
Owner-occupied	$	1,681	$	94	$	1,775	$	7,150	$	609,333	$	618,258	$	2,882	$	-	$	2,882	$	8,232	$	636,005	$	647,119
All other		-		-		-		3,915		656,466		660,381		-		-		-		4,281		657,468		661,749
Consumer real estate – mortgage		1,663		-		1,663		7,494		666,475		675,632		6,267		747		7,014		4,581		685,897		697,492
Construction and land development		486		-		486		1,799		304,148		306,433		1,817		-		1,817		1,320		295,373		298,510
Commercial and industrial		4,314		-		4,314		1,375		1,397,739		1,403,428		2,769		-		2,769		2,088		1,499,231		1,504,088
Consumer and other		387		58		445		103		107,684		108,232		1,019		-		1,019		59		115,329		116,407
	$	8,531	$	152	$	8,683	$	21,836	$	3,741,845	$	3,772,364	$	14,754	$	747	$	15,501	$	20,561	$	3,889,303	$	3,925,365

December 31, 2012	30-89 days past due and accruing		90 days or more past due and accruing		Total past due and accruing		Nonaccrual⁽¹⁾		Current and accruing		Total Loans
Commercial real estate:
Owner-occupied	$	462	$	-	$	462	$	8,091	$	585,848	$	594,401
All other		41		-		41		1,200		582,554		583,795
Consumer real estate – mortgage		3,870		-		3,870		5,906		670,150		679,926
Construction and land development		3,511		-		3,511		4,509		305,532		313,552
Commercial and industrial		2,549		-		2,549		3,038		1,440,991		1,446,578
Consumer and other		444		-		444		79		93,387		93,910
	$	10,877	$	-	$	10,877	$	22,823	$	3,678,462	$	3,712,162

~~Page 15~~

~~Table of Contents~~

~~PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

December 31, 2012
30-89 days
past due and
accruing

90 days or
more past
due and
accruing

Total past
due and
accruing

Nonaccrual(1)

Current
and accruing

Total
Loans

Commercial real estate:
Owner-occupied $ 462 $ - $ 462 $ 8,091 $ 585,848 $ 594,401
All other 41 - 41 1,200 582,554 583,795
Consumer real estate – mortgage 3,870 - 3,870 5,906 670,150 679,926
Construction and land development 3,511 - 3,511 4,509 305,532 313,552
Commercial and industrial 2,549 - 2,549 3,038 1,440,991 1,446,578
Consumer and other 444 - 444 79 93,387 93,910
$ 10,877 $ - $ 10,877 $ 22,823 $ 3,678,462 $ 3,712,162

(1)

Approximately ~~$6.0~~$10.6 million and $9.4 million of nonaccrual loans as of ~~March 31,~~June 30, 2013 and December 31, 2012, respectively, are currently performing pursuant to their contractual terms.

The following table shows the allowance allocation by loan classification and accrual status at ~~March 31,~~June 30, 2013 and December 31, 2012 (in thousands):

					Impaired Loans																Impaired Loans
	Accruing Loans				Nonaccrual Loans				Troubled Debt Restructurings(1)				Total Allowance for Loan Losses				Accruing Loans				Nonaccrual Loans				Troubled Debt Restructurings⁽¹⁾				Total Allowance for Loan Losses
	March 31, 2013		December 31, 2012		March 31, 2013		December 31, 2012		March 31, 2013		December 31, 2012		March 31, 2013		December 31, 2012		June 30, 2013		December 31, 2012		June 30, 2013		December 31, 2012		June 30, 2013		December 31, 2012		June 30, 2013		December 31, 2012
Commercial real estate –mortgage	$	18,582	$	16,642	$	571	$	154	$	2,276	$	2,838	$	21,429	$	19,634	$	17,722	$	16,642	$	157	$	154	$	2,121	$	2,838	$	20,000	$	19,634
Consumer real estate – mortgage		7,236		7,336		852		573		692		853		8,780		8,762		7,419		7,336		699		573		572		853		8,690		8,762
Construction and land development		8,871		8,953		111		201		10		10		8,992		9,164		8,082		8,953		110		201		18		10		8,210		9,164
Commercial and industrial		22,548		23,829		174		814		92		95		22,814		24,738		23,929		23,829		66		814		292		95		24,287		24,738
Consumer and other		1,356		1,055		40		22		48		17		1,444		1,094		1,384		1,055		19		22		39		17		1,442		1,094
Unallocated		-		-		-		-		-		-		5,952		6,025		-		-		-		-		-		-		6,066		6,025
	$	58,593	$	57,815	$	1,748	$	1,764	$	3,118	$	3,813	$	69,411	$	69,417	$	58,536	$	57,815	$	1,051	$	1,764	$	3,042	$	3,813	$	68,695	$	69,417

(1)

Troubled debt restructurings of ~~$20.7~~$20.4 million and $27.5 million as of ~~March 31,~~June 30, 2013 and December 31, 2012, 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, 2011 to December 31, 2012 to ~~March 31,~~June 30, 2013 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, 2011 $ 23,397 $ 10,302 $ 12,040 $ 20,789 $ 1,125 $ 6,322 $ 73,975
Charged-off loans (4,667 ) (6,731 ) (2,530 ) (4,612 ) (1,117 ) - (19,657 )
Recovery of previously charged-off loans 285 818 1,155 7,175 97 - 9,530
Provision for loan losses 619 4,373 (1,501 ) 1,386 989 (297 ) 5,569
Balances, December 31, 2012 $ 19,634 $ 8,762 $ 9,164 $ 24,738 $ 1,094 $ 6,025 $ 69,417
Charged-off loans (1,513 ) (694 ) (24 ) (1,224 ) (103 ) - (3,558 )
Recovery of previously charged-off loans 15 466 127 705 67 - 1,380
Provision for loan losses 3,293 246 (275 ) (1,405 ) 386 (73 ) 2,172
Balances, March 31, 2013 $ 21,429 $ 8,780 $ 8,992 $ 22,814 $ 1,444 $ 5,952 $ 69,411

Commercial real estate –

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, current asset quality trends, known and inherent risks in the portfolio, adverse situations that may affect the ~~borrowers’~~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.

~~PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

At ~~March 31,~~June 30, 2013, Pinnacle Financial had granted loans and other extensions of credit amounting to approximately ~~$7.0~~$5.2 million to current directors, executive officers, and their related entities, of which ~~$6.4~~$4.4 million had been drawn upon. At December 31, 2012, Pinnacle Financial had granted loans and other extensions of credit amounting to approximately $8.8 million to directors, executive officers, and their related entities, of which approximately $8.1 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 ~~March 31,~~June 30, 2013 or December 31, 2012.

At ~~March 31,~~June 30, 2013, Pinnacle Financial had approximately ~~$30.3~~$28.0 million of mortgage loans held-for-sale compared to approximately $41.2 million at December 31, 2012. 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~~six months ended ~~March 31,~~June 30, 2013, Pinnacle Financial recognized ~~$1.8~~$1.9 million in gains on the sale of these loans, net of commissions paid, compared to $1.5 million during the ~~three~~six months ended ~~March 31,~~June 30, 2012.

These mortgage loans held-for-sale are originated internally and are primarily to borrowers in Pinnacle ~~Bank’s~~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~~Bank's mortgage department in January 2003 through ~~March 31,~~June 30, 2013, Pinnacle Bank originated and sold approximately ~~13,650~~14,000 mortgage loans totaling ~~$3.0~~$3.1 billion to third-party purchasers. Of the approximately ~~13,650~~14,000 mortgage loans, Pinnacle Bank underwrote approximately ~~3,500~~3,700 conventional loans at an 80% or less loan-to-value that were sold to other investors and underwrote ~~2,900~~3,100 loans that were sold to the HUD/VA. The remaining mortgage loans were underwritten by the purchasers of those loans, but funded by Pinnacle Bank until settlement with the purchaser. To date, repurchase activity pursuant to the terms of these representations and warranties has been insignificant to Pinnacle Bank.

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 focus on foreclosure practices of financial institutions nationwide, Pinnacle Bank has evaluated its foreclosure process related to home equity and consumer mortgage loans within its loan ~~portfolio~~.portfolio. At ~~March 31,~~June 30, 2013, Pinnacle Bank has ~~$689.5~~$762.4 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”~~"more-likely-than-not" to be sustained by the taxing authority. As of ~~March 31,~~June 30, 2013, 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 ~~March 31,~~June 30, 2013. As of ~~March 31,~~June 30, 2013, Pinnacle Financial has accrued no interest and no penalties related to uncertain tax positions.

~~PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Pinnacle Financial and its subsidiaries file consolidated ~~U.S~~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, ~~2009~~2010 through 2012 and by the ~~state~~State of Tennessee ~~for the years ended~~from December 31, 2009 through 2012.

Pinnacle Financial's effective tax rate for the ~~three-month periods~~three and six months ended ~~March 31,~~June 30, 2013 was 32.8% compared to 32.8% and ~~2012 of 32.9% and 33.6%~~33.2%, respectively, ~~differ~~for the three and six months ended June 30, 2012. The effective tax rate 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 expense and executive compensation expense, portions of which are non-deductible.

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 ~~March 31,~~June 30, 2013, these commitments amounted to $1.1 billion.

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 ~~March 31,~~June 30, 2013, these commitments amounted to ~~$68.6~~$65.7 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~~customer's creditworthiness is evaluated on a case-by-case basis, and the amount of collateral obtained, if any, is based on ~~management’s~~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. At ~~March 31,~~June 30, 2013, and December 31, 2012, Pinnacle Financial had accrued ~~$2.9~~$1.1 million and $1.9 million, respectively, for the inherent risks associated with these off balance sheet commitments. At March 31, 2013, ~~approximately~~the allowance for off-balance sheet exposures totaled $2.9 million, of which $2.0 million was specifically attributable to one standby letter of credit. Subsequent to March 31, 2013, Pinnacle Bank funded the standby letter of ~~credit and recorded a specific allowance in an amount equal to the specific off-balance sheet allowance.~~credit. Accordingly, the off-balance sheet allowance related to this one standby letter of credit ~~will be~~was reduced in the second quarter of 2013. In conjunction with the resolution of this loan during the second quarter of 2013, Pinnacle Financial recorded a charge-off of $3.0 million against the allowance for loan losses related to this relationship.

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~~Bank's customers within the State of Tennessee alleging that Pinnacle ~~Bank’s~~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 ofor unconscionability. The plaintiff is seeking, among other remedies, an award of unspecified compensatory damages, pre-judgment interest, costs and ~~attorneys’~~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 granted without prejudice to Pinnacle Financial and denied as to Pinnacle Bank on April 13, 2012, and Pinnacle Bank filed an answer on May 30, 2012. ~~Based on our current knowledge,~~Pinnacle Financial and Pinnacle Bank reached a tentative settlement agreement with the plaintiff during the second quarter of 2013. Although the settlement has not yet been finalized, Pinnacle Financial does not believe that any liability arising from this legal matter will have a material adverse effect on Pinnacle ~~Financial’s~~Financial's consolidated financial condition, operating results or cash flows.

~~PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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 ~~March 31,~~June 30, 2013 will not have a material impact on Pinnacle ~~Financial’s~~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.

At ~~March 31,~~June 30, 2013, there were approximately ~~555,000~~543,000 shares available for future issuances under these plans.

Common Stock Options and Stock Appreciation Rights

As of ~~March 31,~~June 30, 2013, there were ~~approximately 1,195,500~~1,156,471 stock options and ~~7,100~~6,427 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 ~~three~~six months ended ~~March 31,~~June 30, 2013 and information regarding expected vesting, contractual terms remaining, intrinsic values and other matters is as follows:

Outstanding and expected to vest as of March 31, 2013

Outstanding and expected to vest as of June 30, 2013

(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 $18.84 per common share at December 31, 2012 for the approximately 331,571 options and stock appreciation rights that were in-the-money at December 31, 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 ~~$23.36~~$25.71 per common share at ~~March 31,~~June 30, 2013 for the approximately ~~459,871~~621,084 options and stock appreciation rights that were in-the-money at ~~March 31,~~June 30, 2013.

During the ~~three~~six months ended ~~March 31,~~June 30, 2013, approximately 33,000 option awards vested at an average exercise price of $21.51 with noan intrinsic value of $137,218 at the time of vesting.

During the three and six months ended June 30, 2013, Pinnacle Financial recorded stock option compensation expense of $12,000, based on Black-Scholes valuation at the date of grant compared to $97,000 and $251,000 for the three and six months ended June 30, 2012. For these awards, Pinnacle Financial recognized compensation expense using a straight-line amortization method. As of ~~March 31,~~June 30, 2013, there was no unrecognized compensation cost related to unvested stock options granted under our equity incentive plans.

During the three months ended March 31, 2013, Pinnacle Financial recorded stock option compensation expense of $13,000, based on Black-Scholes valuation at the date of grant compared to $154,000 for the three months ended March 31, 2012. 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.

~~PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Restricted Share Awards

Additionally, Pinnacle ~~Financial’s~~Financial's 2004 Equity Incentive 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 ~~March 31,~~June 30, 2013 under any of these plans. During the ~~three~~six months ended ~~March 31,~~June 30, 2013, Pinnacle Financial awarded ~~125,765~~147,015 shares of restricted common stock to certain associates and outside directors and 193,189 restricted stock units converted to restricted share awards for certain associates.

A summary of activity for unvested restricted share awards for the ~~quarter~~six months ended ~~March 31,~~June 30, 2013 is as follows:

(1)

Represents 18,257 shares forfeited due to failure to meet performance targets and ~~26,152~~28,551 shares forfeited due to employee termination and/or 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 ~~three~~six months ended ~~March 31,~~June 30, 2013:

Shares Forfeited by participants⁽⁵⁾

Time Based Awards⁽²⁾

Performance Based Awards⁽³⁾

Outside Director Awards⁽⁴⁾

Grant
Year
Group(1)

Vesting
Period in
years

Shares
awarded

Restrictions
Lapsed and
shares released to
participants

Shares
Forfeited by
participants(5)

Shares
Unvested

Time Based Awards(2)

2013 Associates 5 114,475 - 2,025 112,450
Performance Based Awards(3)

2013 Leadership team 5 193,189 - - 193,189
Outside Director Awards(4)

2013 Outside directors 1 11,290 - - 11,290

(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)

The forfeiture restrictions on these restricted share awards lapse in separate equal installments should Pinnacle Financial achieve certain earnings and soundness targets over each year of the subsequent vesting period (or alternatively, the cumulative vesting period).

(4)

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.

(5)

These shares represent forfeitures resulting from associate terminations during the ~~three months~~year-to-date period ended ~~March 31,~~June 30, 2013.

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 tranche 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 six months ended ~~March 31,~~June 30, 2013, Pinnacle Financial recognized approximately ~~$951,000~~$1,032,000 and $1,983,000, respectively, in compensation costs attributable to all restricted share awards, compared to ~~$857,000~~$814,000 and $1,672,000, respectively, for the three and six months ended ~~March 31,~~June 30, 2012.

Restricted ~~Stock~~Share Units

Pinnacle Financial granted 128,018 restricted share units to the senior executive officers and the Leadership Team in the first quarter of 2013. These restricted share units will be converted to restricted shares in 2014 on a tiered scale based on actual 2013 results. The number of units that ultimately convert to unvested restricted shares will be determined after the 2013 earnings are finalized based upon the achievement of certain predetermined profitability goals for 2013 that were established on January 11, 2013 by the Human Resources and Compensation Committee of Pinnacle ~~Financial~~Financial's board of directors (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 2013 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.

~~PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Note 8. Regulatory Matters

Pursuant to Tennessee banking law, Pinnacle Bank may not, without the prior consent of the TDFI, pay any dividends to Pinnacle Financial in a calendar year in excess of the total of Pinnacle ~~Bank’s~~Bank's net income for that year plus the retained net income for the preceding ~~two~~2 years. During the ~~first quarter of~~six months ended June 30, 2013, Pinnacle Bank paid ~~a $1.4~~$3.9 million ~~dividend~~in dividends to Pinnacle Financial. As of ~~March 31,~~June 30, 2013, Pinnacle Bank could pay approximately ~~$72.5~~$85.4 million of additional dividends to Pinnacle Financial without prior TDFI approval. Pinnacle Financial has not paid any cash dividends on its common stock since inception; however, it is possible the Board of Directors may consider a ~~sustainable~~ dividend program at some point in the future. Our future dividend policy will depend on our earnings, capital position, financial condition and other factors, including new regulatory capital requirements, as they become known to us.

Pinnacle Financial and Pinnacle Bank 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 Pinnacle Bank 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 ~~March 31,~~June 30, 2013, 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’s~~Financial's and Pinnacle ~~Bank’s~~Bank's actual capital amounts and ratios are presented in the following table (in thousands):

To Be Well-Capitalized

Actual
Minimum Capital
Requirement

Minimum
To Be Well-Capitalized

Amount Ratio Amount Ratio Amount Ratio
At March 31, 2013

Total capital to risk weighted assets:
Pinnacle Financial $ 568,850 13.0 % $ 351,067 8.0 % $ 440,555 10.0 %
Pinnacle Bank $ 560,476 12.8 % $ 350,388 8.0 % $ 439,717 10.0 %
Tier I capital to risk weighted assets:
Pinnacle Financial $ 513,781 11.7 % $ 175,534 4.0 % $ 264,333 6.0 %
Pinnacle Bank $ 505,511 11.6 % $ 175,194 4.0 % $ 263,830 6.0 %
Tier I capital to average assets (*):
Pinnacle Financial $ 513,781 10.8 % $ 175,534 4.0 % $ 264,333 N/A
Pinnacle Bank $ 505,511 10.7 % $ 175,194 4.0 % $ 263,830 5.0 %

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

As noted above, Pinnacle Bank had ~~10.7%~~10.5% of Tier 1 capital to average assets and ~~12.8%~~12.7% of total capital to risk-weighted assets at ~~March 31,~~June 30, 2013.

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.

~~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~~Financial's interest rate swaps as of ~~March 31,~~June 30, 2013 and December 31, 2012 is included in the following table (in thousands):

At March 31, 2013 and December 31, 2012, 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. Subsequent to March 31,During the second quarter of 2013, Pinnacle Financial entered into a forward cash flow hedge relationship to manage our future interest rate exposure. The hedging strategy converts the LIBOR based variable interest rate on forecasted borrowings to a fixed interest rate and protects Pinnacle Financial from floating interest rate variability. The terms of the individual contracts within the relationship are as ~~follows:~~follows (in thousands):

⁽¹⁾

~~(1)~~

^{Pinnacle Financial will pay the fixed interest rate and the counterparties pay Pinnacle Financial the variable rate.}

⁽²⁾

~~(2)~~

^{No cash will be exchanged prior to the term.}

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.

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.

~~Page 22~~

~~Table of Contents~~Level 3 – inputs to the valuation methodology are unobservable and significant to the fair value measurement.

~~PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

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

A financial ~~instrument’s~~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.

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.

Nonaccrual loans – A loan is classified as nonaccrual 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. Nonaccrual loans are measured based on the present value of expected payments using the ~~loan’s~~loan's original effective rate as the discount rate, the ~~loan’s~~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 nonaccrual 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. Nonaccrual 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~~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 interest rate swap ~~agreements.~~agreements to facilitate customer transactions and the cash flow hedging contract. The carrying amount of interest rate swap agreements is based on Pinnacle ~~Financial’s~~Financial's pricing models that utilize observable market inputs obtained. The fair value of the cash flow hedge is determined using the income approach by comparing the discounted fixed rate cash flows with the discounted variable rate cash flows. The difference between these discounted cash flows represents the fair value of the hedge. 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.

~~PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

Other liabilities – Pinnacle Financial has certain liabilities carried at fair value including certain interest rate swap ~~agreements.~~agreements to facilitate customer transactions. The fair value of these liabilities is based on Pinnacle ~~Financial’s~~Financial's pricing models that utilize observable market inputs and is reflected within Level 2 of the valuation hierarchy.

The following tables present ~~the~~ financial instruments ~~carried~~measured at fair value on a recurring basis as of ~~March 31,~~June 30, 2013 and December 31, 2012, by caption on the consolidated balance sheets and by FASB ASC 820 valuation hierarchy (as described above) (in thousands):

Quoted market prices in an active market

Models with significant observable market parameters

Models with significant unobservable market parameters

Quoted market prices in an active market

Models with significant observable market parameters

Models with significant unobservable market

(losses) for the year-to-date period then ended

Nonaccrual loans, net (1)

(1)

Amount is net of a valuation allowance of ~~$1.7~~$1.1 million at ~~March 31,~~June 30, 2013 and $1.8 million at December 31, 2012 as required by ASC 310-10, ~~“Receivables.”~~"Receivables."

~~PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

In the case of the bond portfolio, Pinnacle Financial monitors the valuation techniques 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 three and six months ended ~~March 31,~~June 30, 2013, there were no transfers between Levels 1, 2 or 3.

The table below includes a rollforward of the balance sheet amounts for the three and six months ended ~~March 31,~~June 30, 2013 (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):

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 ~~March 31,~~June 30, 2013 and December 31, 2012. 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~~Securities held-to-maturity- 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, net - 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 based on pricing models and other information.~~

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 based on pricing models and other information.

Deposits, securities sold under agreements to repurchase, Federal Home Loan Bank of Cincinnati (FHLB) 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 FHLB, 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 FHLB 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.

~~PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

~~Deposits, securities sold under agreements to repurchase, Federal Home Loan Bank of Cincinnati (FHLB) 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 FHLB, 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 FHLB 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 ~~March 31,~~June 30, 2013 and December 31, 2012. 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.

Quoted market prices in an active market

Models with significant observable market parameters

Models with significant unobservable market

Commitments to extend credit ⁽²⁾

Standby letters of credit ⁽³⁾

Commitments to extend credit ⁽²⁾

Standby letters of credit ⁽³⁾

(in thousands)
March 31, 2013

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 $ 40,459 $ 40,377 $ - $ 40,377 $ -
Loans, net 3,702,952 3,408,914 - - 3,408,914
Mortgage loans held-for-sale 30,327 30,999 - 30,999 -

Financial liabilities:
Deposits and securities sold under agreements to repurchase 4,031,994 3,988,176 - - 3,988,176
Federal Home Loan Bank advances 200,796 200,526 - - 200,526
Subordinated debt and other borrowings 105,533 80,229 - - 80,229

Off-balance sheet instruments:
Commitments to extend credit (2)
1,118,203 2,605 - - 2,605
Standby letters of credit (3)
68,554 266 - - 266

December 31, 2012
Financial assets:
Securities held-to-maturity $ 575 $ 583 $ - $ 583 $ -
Loans, net 3,642,744 3,358,435 - - 3,358,435
Mortgage loans held for sale 41,195 42,425 - 42,425 -

Financial liabilities:
Deposits and securities sold under agreements to repurchase 4,129,855 4,084,314 - - 4,084,314
Federal Home Loan Bank advances 75,850 76,350 - - 76,350
Subordinated debt and other borrowings 106,158 83,862 - - 83,862

Off-balance sheet instruments:
Commitments to extend credit (2)
1,030,723 1,594 - - 1,594
Standby letters of credit (3)
74,679 304 - - 304

~~PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS~~

~~(Unaudited)~~

(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 ~~March 31,~~June 30, 2013 and December 31, 2012, Pinnacle Financial included in other liabilities ~~$2.9~~$1.1 million and $1.9 million, respectively, representing the inherent risks associated with these off-balance sheet commitments.

(3)

At ~~March 31,~~June 30, 2013 and December 31, 2012, the fair value of Pinnacle ~~Financial’s~~Financial's standby letters of credit was ~~$266,000~~$242,000 and $304,000, 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

March 31, 2013 December 31, 2012

Type

Assets
Recognized
(maximum loss)

Liability
Recognized

Assets
Recognized
(maximum loss)

Liability
Recognized

Balance Sheet
Classification

Low income housing partnerships $ 5,996 $ - $ 6,096 $ - Other assets
Trust preferred issuances N/A 82,476 N/A 82,476 Subordinated debt
Commercial troubled debt restructurings 15,310 - 20,951 - Loans
Managed discretionary trusts N/A N/A N/A N/A N/A

Interest-earning assets:

Net interest spread (3)

Net interest margin (4)

~~(1)~~

Average balances of nonaccrual loans are included in the above amounts.

~~(2)~~2.

Yields based on the carrying value of those tax exempt instruments are shown on a fully tax equivalent basis.

~~(3)~~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 ~~March 31,~~June 30, 2013 would have been ~~3.88%~~3.75% compared to a net interest spread of ~~3.71%~~3.73% for the three months ended ~~March 31,~~June 30, 2012.

4.	~~(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.

Interest-earning assets:

1.	Average balances of nonaccrual 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.

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 six months ended June 30, 2013 would have been 3.81% compared to a net interest spread of 3.72% for the six months ended June 30, 2012.

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.

Amounts at March 31, 2013
Percentage
Fixed Variable
At March 31,

Rates Rates Totals 2013
Based on contractual maturity:
Due within one year $ 239,598 $ 725,181 $ 964,779 25.4 %
Due in one year to five years 906,707 747,084 1,653,791 43.5 %
Due after five years 486,476 667,318 1,153,794 31.1 %
Totals $ 1,632,781 $ 2,139,583 $ 3,772,364 100.0 %

Based on contractual repricing dates:
Daily floating rate (*) $ - $ 1,086,931 $ 1,086,931 28.6 %
Due within one year 239,598 787,241 1,026,839 27.0 %
Due in one year to five years 906,707 247,071 1,153,778 30.3 %
Due after five years 486,476 18,340 504,816 14.1 %
Totals $ 1,632,781 $ 2,139,583 $ 3,772,364 100.0 %

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

(*) Daily floating rate loans are tied to Pinnacle ~~Bank’s~~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 ~~$872.0~~$879.1 million of our daily floating rate loan portfolio and on approximately ~~$416.0~~$427.0 million of the variable rate loan portfolio at varying maturities. The weighted average rate of the floors for the daily floating rate portfolio is ~~4.63% and~~4.58% compared to the average coupon of 3.77% for this portfolio. The weighted average rate of the floors for the remaining variable rate portfolio is ~~4.09%.~~4.05% compared to the average coupon rate of 3.01% for this portfolio. As a result, interest income on these loans will not adjust until the contractual rate on the underlying loan exceeds the interest rate floor.

March 31, December 31,
Accruing loans past due 30 to 89 days: 2013 2012
Commercial real estate – mortgage $ 1,681 $ 503
Consumer real estate – mortgage 1,663 3,870
Construction and land development 486 3,511
Commercial and industrial 4,314 2,549
Consumer and other 387 444
Total accruing loans past due 30 to 89 days $ 8,531 $ 10,877

Accruing loans past due 90 days or more:
Commercial real estate – mortgage $ 94 $ -
Consumer real estate – mortgage - -
Construction and land development - -
Commercial and industrial - -
Consumer and other 58 -
Total accruing loans past due 90 days or more $ 152 $ -

Ratios:
Accruing loans past due 30 to 89 days as a percentage of total loans 0.23 % 0.29 %
Accruing loans past due 90 days or more as a percentage of total loans 0.00 % 0.00 %
Total accruing loans in past due status as a percentage of total loans 0.23 % 0.29 %

Payments, Sales and Reductions⁽²⁾

Foreclosures⁽³⁾

Commercial and industrial ⁽⁵⁾

Total nonaccrual loans ⁽¹⁾

Total nonaccrual loans (1)

______________________

(1)

Approximately ~~$6.0~~$10.6 million and $9.4 million as of ~~March 31,~~June 30, 2013 and December 31, 2012, respectively, of nonaccrual loans included above are currently paying pursuant to their contractual terms.

(2)

Payments, sales and reductions in nonaccrual 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 ~~quarter~~six months ended ~~March 31,~~June 30, 2013. 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 reduced the outstanding balance of the loan or re-defaulted on the terms of the loan and therefore been charged-off.

(3)

Foreclosures in nonaccrual loans and troubled debt restructurings are representative of transfers of balances to OREO during the ~~quarter~~six months ended ~~March 31,~~June 30, 2013.

(4)

Inflows in nonaccrual loans are attributable to loans where we have discontinued the accrual of interest at some point during the ~~quarter~~six months ended ~~March 31,~~June 30, 2013. Increases in OREO represent the value of properties that have been foreclosed upon or acquired by deed in lieu of foreclosure during 2013. 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 2013. These concessions can be in the form of a reduced interest rate, extended maturity date or other matters.

(5)

Nonperforming loan inflows and payments, sales and reductions for the year-to-date period ended June 30, 2013, include one $8.7 million standby letter of credit that funded during the second quarter of 2013 and became a nonperforming loan. This nonperforming loan was resolved during the second quarter of 2013.

Ratio of net charge-offs to average total loans outstanding for the period ⁽¹⁾

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)

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

TABLETABLE OF CONTENTS	Page No.

PART I – Financial Information:

	Item 1. Consolidated Financial Statements (Unaudited)	3

	Item 2. ~~Management’s~~Management's Discussion and Analysis of Financial Condition and Results of Operations	2825

	Item 3. Quantitative and Qualitative Disclosures about Market Risk	4340

	Item 4. Controls and Procedures	4440

PART II – Other Information:

	Item 1. Legal Proceedings	4441

	Item 1A. Risk Factors	4441

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	4442

	Item 3. Defaults Upon Senior Securities	4542

	Item 4. Mine Safety Disclosures	4542

	Item 5. Other Information	4542

	Item 6. Exhibits	4542

Signatures		4643

	Number			Weighted- Average Exercise Price		Weighted- Average Contractual Remaining Term (in years)		Aggregate Intrinsic Value (000’s)			Number			Weighted- Average Exercise Price		Weighted- Average Contractual Remaining Term (in years)		Aggregate Intrinsic Value (000's)
Outstanding at December 31, 2012		1,318,701		$	23.36		3.14	$	2,203	(1)		1,318,701		$	23.36		3.14	$	2,203	⁽¹⁾
Granted		-										-
Exercised		(88,811	)									(122,829	)
Stock appreciation rights exercised		(34	)									(1,066	)
Forfeited		(27,258	)									(31,908	)
Outstanding at March 31, 2013		1,202,598		$	24.36		2.98	$	2,825	(2)
Outstanding and expected to vest as of March 31, 2013		1,202,598		$	24.36		2.98	$	2,825	(2)
Options exercisable at March 31, 2013		1,202,598		$	24.36		2.98	$	2,825	(2)
Outstanding at June 30, 2013												1,162,898		$	24.64		2.78	$	3,758	⁽²⁾
Outstanding and expected to vest as of June 30, 2013												1,162,898		$	24.64		2.78	$	3,758	⁽²⁾
Options exercisable at June 30, 2013												1,162,898		$	24.64		2.78	$	3,758	⁽²⁾

	For the three months ended March 31,
	2013		2012
Basic net income per share calculation:
Numerator - Net income available to common stockholders	$	13,448,125	$	7,205,788

Denominator - Average common shares outstanding		33,987,265		33,811,871
Basic net income per share available to common stockholders	$	0.40	$	0.21

Diluted net income per share calculation:
Numerator – Net income available to common stockholders	$	13,448,125	$	7,205,788

Denominator - Average common shares outstanding		33,987,265		33,811,871
Dilutive shares contingently issuable		218,937		612,027
Average diluted common shares outstanding		34,206,202		34,423,898
Diluted net income per share available to common stockholders	$	0.39	$	0.21

	At March 31, 2013
	Outstanding Principal Balances		Unfunded Commitments		Total exposure		Total Exposure at December 31, 2012

Lessors of nonresidential buildings	$	419,148	$	46,935	$	466,083	$	440,237
Lessors of residential buildings		197,042		27,838		224,880		215,899
Land subdividers		87,587		13,797		101,384		108,283

	Commercial real estate – mortgage			Consumer real estate – mortgage			Construction and land development			Commercial and industrial			Consumer and other			Unallocated			Total

Balances, December 31, 2011	$	23,397		$	10,302		$	12,040		$	20,789		$	1,125		$	6,322		$	73,975
Charged-off loans		(4,667	)		(6,731	)		(2,530	)		(4,612	)		(1,117	)		-			(19,657	)
Recovery of previously charged-off loans		285			818			1,155			7,175			97			-			9,530
Provision for loan losses		619			4,373			(1,501	)		1,386			989			(297	)		5,569
Balances, December 31, 2012	$	19,634		$	8,762		$	9,164		$	24,738		$	1,094		$	6,025		$	69,417
Charged-off loans		(1,513	)		(694	)		(24	)		(1,224	)		(103	)		-			(3,558	)
Recovery of previously charged-off loans		15			466			127			705			67			-			1,380
Provision for loan losses		3,293			246			(275	)		(1,405	)		386			(73	)		2,172
Balances, March 31, 2013	$	21,429		$	8,780		$	8,992		$	22,814		$	1,444		$	5,952		$	69,411

	Commercial real estate – mortgage			Consumer real estate – mortgage			Construction and land development			Commercial and industrial			Consumer and other			Unallocated			Total

Balances, December 31, 2011	$	23,397		$	10,302		$	12,040		$	20,789		$	1,125		$	6,322		$	73,975
Charged-off loans		(4,667	)		(6,731	)		(2,530	)		(4,612	)		(1,117	)		-			(19,657	)
Recovery of previously charged-off loans		285			818			1,155			7,175			97			-			9,530
Provision for loan losses		619			4,373			(1,501	)		1,386			989			(297	)		5,569
Balances, December 31, 2012	$	19,634		$	8,762		$	9,164		$	24,738		$	1,094		$	6,025		$	69,417
Charged-off loans		(3,260	)		(997	)		(1,351	)		(5,085	)		(684	)		-			(11,377	)
Recovery of previously charged-off loans		129			920			708			3,785			166			-			5,708
Provision for loan losses		3,497			5			(311	)		849			866			41			4,947
Balances, June 30, 2013	$	20,000		$	8,690		$	8,210		$	24,287		$	1,442		$	6,066		$	68,695

	Number			Grant Date Weighted- Average Cost		Number			Grant Date Weighted-Average Cost
Unvested at December 31, 2012		739,909		$	15.45		739,909		$	15.45
Shares awarded		125,765			19.91		147,015			20.82
Conversion of restricted share units to restricted share awards		193,189			21.51		193,189			21.51
Restrictions lapsed and shares released to associates/directors		(146,564	)		16.72		(153,543	)		16.45
Shares forfeited(1)		(44,409	)		15.10		(46,808	)		16.05
Unvested at March 31, 2013		867,890		$	16.97
Unvested at June 30, 2013							879,762		$	17.55

Grant Year	Group⁽¹⁾	Vesting Period in years	Shares awarded	Restrictions Lapsed and shares released to participants	Shares Forfeited by participants⁽⁵⁾	Shares Unvested
Time Based Awards⁽²⁾
2013	Associates	5	135,725	-	2,625	133,100
Performance Based Awards⁽³⁾
2013	Leadership team	5	193,189	-	-	193,189
Outside Director Awards⁽⁴⁾
2013	Outside directors	1	11,290	-	-	11,290

Grant Year	Group(1)	Vesting Period in years		Shares awarded		Restrictions Lapsed and shares released to participants		Shares Forfeited by participants(5)		Shares Unvested
Time Based Awards(2)
2013	Associates		5		114,475		-		2,025		112,450
Performance Based Awards(3)
2013	Leadership team		5		193,189		-		-		193,189
Outside Director Awards(4)
2013	Outside directors		1		11,290		-		-		11,290

	Actual					Minimum Capital Requirement					Minimum To Be Well-Capitalized
	Amount		Ratio			Amount		Ratio			Amount			Ratio
At June 30, 2013

Total capital to risk weighted assets:
Pinnacle Financial	$	586,570		12.9	%	$	362,619		8.0	%	$	454,568			10.0	%
Pinnacle Bank	$	575,109		12.7	%	$	361,853		8.0	%	$	453,623			10.0	%
Tier I capital to risk weighted assets:
Pinnacle Financial	$	529,749		11.7	%	$	181,309		4.0	%	$	272,741			6.0	%
Pinnacle Bank	$	518,406		11.5	%	$	180,927		4.0	%	$	272,174			6.0	%
Tier I capital to average assets (*):
Pinnacle Financial	$	529,749		10.7	%	$	198,563		4.0	%	$	N/	A		N/	A
Pinnacle Bank	$	518,406		10.5	%	$	197,945		4.0	%	$	247,431			5.0	%

	Forecasted Notional Amount		Variable Interest Rate	Fixed Interest Rate		Term	Asset/ (Liabilities)		Unrealized Gain in Accumulated Other Comprehensive Income
Interest Rate Swap	$	33,000	3 month LIBOR		1.428%	April 2015-April 2018	$	602	$	366
Interest Rate Swap		33,000	3 month LIBOR		1.857%	October 2015-April 2019		817		496
Interest Rate Swap		33,000	3 month LIBOR		1.996%	October 2015-October 2019		915		556
Interest Rate Swap		33,000	3 month LIBOR		2.265%	April 2016-April 2020		943		573
Interest Rate Swap		33,000	3 month LIBOR		2.646%	April 2016-April 2022		1,283		780
Interest Rate Swap		33,000	3 month LIBOR		2.523%	October 2016-October 2020		948		576

(dollars in thousands)	Forecasted Notional Amount		Variable Interest Rate	Fixed Interest Rate			Term
Interest Rate Swap	$	33,000	3 month LIBOR		1.428	%	April 2015-April 2017
Interest Rate Swap		33,000	3 month LIBOR		1.857	%	October 2015-March 2019
Interest Rate Swap		33,000	3 month LIBOR		1.996	%	October 2015-October 2019
Interest Rate Swap		33,000	3 month LIBOR		2.265	%	April 2016-April 2020
Interest Rate Swap		34,000	3 month LIBOR		2.646	%	April 2016-April 2022
Interest Rate Swap		34,000	3 month LIBOR		2.523	%	October 2016-October 2020

March 31, 2013	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)
June 30, 2013									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. Treasury securities									$	4,998	$	4,998	$	-	$	-
U.S. government agency securities	$	138,244	$	-	$	138,244	$	-		129,614		-		129,614		-
Mortgage-backed securities		371,857		-		371,857		-		387,273		-		387,273		-
State and municipal securities		145,107		-		145,107		-		137,874		-		137,874		-
Agency-backed securities		17,358		-		17,358		-		17,314		-		17,314		-
Corporate notes and other		10,979		-		10,979		-		10,759		-		10,759		-
Total investment securities available-for-sale		683,545		-		683,545	$	-		687,832		-		682,834	$	-
Alternative investments		4,663		-		-		4,663		5,726		-		-		5,726
Other assets		16,131		-		15,709		422		17,303		-		17,303		-
Total assets at fair value	$	704,339	$	-	$	699,254	$	5,085	$	710,861	$	-	$	700,137	$	5,726

Other liabilities	$	16,000	$	-	$	16,000	$	-	$	12,077	$	-	$	12,077	$	-
Total liabilities at fair value	$	16,000	$	-	$	16,000	$	-	$	12,077	$	-	$	12,077	$	-

December 31, 2012
Investment securities available-for-sale:
U.S. government agency securities	$	110,452	$	-	$	110,452	$	-	$	110,452	$	-	$	110,452	$	-
Mortgage-backed securities		375,651		-		375,651		-		375,651		-		375,651		-
State and municipal securities		191,727		-		191,727		-		191,727		-		191,727		-
Agency-backed securities		17,352				17,352				17,352		-		17,352		-
Corporate notes and other		11,396		-		11,396		-		11,396		-		11,396		-
Total investment securities available-for-sale		706,578		-		706,578		-		706,578		-		706,578		-
Alternative investments		4,214		-		-		4,214		4,214		-		-		4,214
Other assets		16,599		-		16,132		467		16,599		-		16,132		467
Total assets at fair value	$	727,391	$	-	$	722,710	$	4,681	$	727,391	$	-	$	722,710	$	4,681

Other liabilities	$	16,366	$	-	$	16,366	$	-	$	16,366	$	-	$	16,366	$	-
Total liabilities at fair value	$	16,366	$	-	$	16,366	$	-	$	16,366	$	-	$	16,366	$	-

March 31, 2013	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
June 30, 2013												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 year-to-date period then ended
Other real estate owned	$	16,802	$	-	$	-	$	16,802	$	218		$	15,992	$	-	$	-	$	15,992	$	(1,636	)
Nonaccrual loans, net (1)		20,088		-		-		20,088		2,192			19,510		-		-		19,510		(4,026	)
Total	$	36,890	$	-	$	-	$	36,890	$	2,410		$	35,502	$	-	$	-	$	35,502	$	(5,662	)

December 31, 2012
Other real estate owned	$	18,580	$	-	$	-	$	18,580	$	(5,428	)	$	18,580	$	-	$	-	$	18,580	$	(5,428	)
Nonaccrual loans, net (1)		21,059		-		-		21,059		(4,745	)		21,059		-		-		21,059		(4,745	)
Total	$	39,639	$	-	$	-	$	39,639	$	(10,173	)	$	39,639	$	-	$	-	$	39,639	$	(10,173	)

(in thousands) June 30, 2013	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	$	40,057	$	39,010	$	-	$	39,010	$	-
Loans, net		3,925,365		3,539,830		-		-		3,539,830
Mortgage loans held-for-sale		27,963		27,401		-		27,401		-

Financial liabilities:
Deposits and securities sold under
agreements to repurchase		4,213,924		4,086,657		-		-		4,086,657
Federal Home Loan Bank advances		325,762		325,225		-		-		325,225
Subordinated debt and other borrowings		99,908		74,265		-		-		74,265

Off-balance sheet instruments:
Commitments to extend credit ⁽²⁾		1,117,129		829		-		-		829
Standby letters of credit ⁽³⁾		65,666		242		-		-		242


December 31, 2012
Financial assets:
Securities held-to-maturity	$	575	$	583	$	-	$	583	$	-
Loans, net		3,642,744		3,358,435		-		-		3,358,435
Mortgage loans held for sale		41,195		42,425		-		42,425		-

Financial liabilities:
Deposits and securities sold under
agreements to repurchase		4,129,855		4,084,314		-		-		4,084,314
Federal Home Loan Bank advances		75,850		76,350		-		-		76,350
Subordinated debt and other borrowings		106,158		83,862		-		-		83,862

Off-balance sheet instruments:
Commitments to extend credit ⁽²⁾		1,030,723		1,594		-		-		1,594
Standby letters of credit ⁽³⁾		74,679		304		-		-		304

(in thousands) March 31, 2013	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	$	40,459	$	40,377	$	-	$	40,377	$	-
Loans, net		3,702,952		3,408,914		-		-		3,408,914
Mortgage loans held-for-sale		30,327		30,999		-		30,999		-

Financial liabilities:
Deposits and securities sold under agreements to repurchase		4,031,994		3,988,176		-		-		3,988,176
Federal Home Loan Bank advances		200,796		200,526		-		-		200,526
Subordinated debt and other borrowings		105,533		80,229		-		-		80,229

Off-balance sheet instruments:
Commitments to extend credit (2)		1,118,203		2,605		-		-		2,605
Standby letters of credit (3)		68,554		266		-		-		266

December 31, 2012
Financial assets:
Securities held-to-maturity	$	575	$	583	$	-	$	583	$	-
Loans, net		3,642,744		3,358,435		-		-		3,358,435
Mortgage loans held for sale		41,195		42,425		-		42,425		-

Financial liabilities:
Deposits and securities sold under agreements to repurchase		4,129,855		4,084,314		-		-		4,084,314
Federal Home Loan Bank advances		75,850		76,350		-		-		76,350
Subordinated debt and other borrowings		106,158		83,862		-		-		83,862

Off-balance sheet instruments:
Commitments to extend credit (2)		1,030,723		1,594		-		-		1,594
Standby letters of credit (3)		74,679		304		-		-		304

	Three months ended				2013-2012			Three months ended				2013-2012			Six months ended				2013-2012
	March 31				Percent			June 30				Percent			June 30				Percent
	2013		2012		Increase (Decrease)			2013		2012		Increase (Decrease)				2013		2012	Increase (Decrease)
Interest income	$	47,156	$	45,824		2.9	%	$	47,544	$	45,954		3.5	%	$	94,700	$	91,778		3.2	%
Interest expense		4,398		6,320		(30.4	%)		3,945		5,768		(31.6	)%		8,343		12,089		(31.0	)%
Net interest income		42,758		39,504		8.2	%		43,599		40,186		8.5	%		86,357		79,689		8.4	%
Provision for loan losses		2,172		1,034		110.1	%		2,774		634		337.5	%		4,946		1,668		196.5	%
Net interest income after provision for loan losses		40,586		38,470		5.5	%		40,825		39,552		3.2	%		81,411		78,021		4.3	%
Noninterest income		11,902		9,949		19.6	%		11,326		9,910		14.3	%		23,228		19,859		17.0	%
Noninterest expense		32,440		35,820		(9.4	%)		30,862		33,917		(9.0	)%		63,302		69,735		(9.2	)%
Net income before income taxes		20,048		12,599		59.1	%		21,289		15,545		36.9	%		41,337		28,145		46.9	%
Income tax expense		6,600		4,234		55.9	%		6,978		5,106		36.7	%		13,578		9,340		45.4	%
Net income		13,448		8,365		60.8	%		14,311		10,440		37.1	%		27,759		18,805		47.6	%
Preferred dividends and discount accretion		-		1,159		(100.0	%)		-		2,655		(100.0	)%		-		3,814		(100.0	)%
Net income available to common stockholders	$	13,448	$	7,206		86.6	%	$	14,311	$	7,785		83.8	%	$	27,759	$	14,991		85.2	%
Basic net income per common share available to common stockholders	$	0.40	$	0.21		90.5	%
Diluted net income per common share available to common stockholders	$	0.39	$	0.21		85.7	%
Basic net income per common share available to
common stockholders								$	0.42	$	0.23		82.6	%	$	0.81	$	0.44		84.1	%
Diluted net income per common share available
to common stockholders								$	0.42	$	0.23		82.6	%	$	0.81	$	0.44		84.1	%

	Three months ended March 31, 2013							Three months ended March 31, 2012							Three months ended June 30, 2013							Three months ended June 30, 2012
	Average Balances		Interest		Rates/ Yields			Average Balances		Interest		Rates/ Yields			Average Balances		Interest		Rates/ Yields			Average Balances		Interest		Rates/ Yields
Interest-earning assets:
Loans (1)	$	3,681,686	$	41,514		4.58	%	$	3,280,030	$	38,638		4.74	%	$	3,845,476	$	42,149		4.41	%	$	3,402,671	$	39,288		4.65	%
Securities:
Taxable		537,951		3,671		2.77	%		688,645		4,929		2.88	%		575,611		3,651		2.54	%		635,678		4,454		2.82	%
Tax-exempt (2)		176,153		1,656		5.09	%		186,864		1,703		4.90	%		170,358		1,484		4.66	%		183,117		1,648		4.83	%
Federal funds sold and other		117,483		315		1.25	%		161,434		554		1.50	%		119,089		260		1.04	%		144,249		564		1.70	%
Total interest-earning assets		4,513,273	$	47,156		4.30	%		4,316,973	$	45,824		4.33	%		4,710,534	$	47,544		4.10	%		4,365,715	$	45,954		4.29	%
Nonearning assets
Intangible assets		248,940							251,668							248,439							250,974
Other nonearning assets		229,805							252,310							251,627							230,894
Total assets	$	4,992,018						$	4,820,951						$	5,210,600						$	4,847,583

Interest-bearing liabilities:
Interest bearing deposits:
Interest checking	$	775,136	$	606		0.32	%	$	664,869	$	824		0.50	%	$	790,043	$	536		0.27	%	$	685,353	$	781		0.46	%
Savings and money market		1,632,715		1,624		0.40	%		1,541,559		2,142		0.56	%		1,581,868		1,381		0.35	%		1,540,755		1,967		0.51	%
Time		589,038		1,182		0.81	%		689,083		1,861		1.09	%		578,764		1,039		0.72	%		654,538		1,551		0.95	%
Total interest-bearing deposits		2,996,889		3,412		0.46	%		2,895,511		4,827		0.67	%		2,950,675		2,956		0.40	%		2,880,646		4,299		0.60	%
Securities sold under agreements to repurchase		130,740		78		0.24	%		129,892		156		0.48	%		129,550		71		0.22	%		130,711		115		0.36	%
Federal Home Loan Bank advances		98,989		191		0.78	%		238,578		610		1.03	%		293,581		223		0.31	%		232,606		616		1.07	%
Subordinated debt and other borrowings		106,777		717		2.72	%		97,476		727		3.00	%		102,573		695		2.72	%		101,872		738		2.91	%
Total interest-bearing liabilities		3,333,395		4,398		0.54	%		3,361,457		6,320		1.29	%		3,476,379		3,945		0.46	%		3,345,835		5,768		1.27	%
Noninterest-bearing deposits		952,853		-		-			701,760		-		-			1,012,718		0		0.00	%		755,594		0		0.00	%
Total deposits and interest-bearing liabilities		4,286,248	$	4,398		0.42	%		4,063,217	$	6,320		0.63	%		4,489,097	$	3,945		0.35	%		4,101,429	$	5,768		0.57	%
Other liabilities		17,529							37,946							21,944							27,313
Stockholders' equity		688,241							719,788							699,559							718,841
Total liabilities and stockholders’ equity	$	4,992,018						$	4,820,951
Total liabilities and stockholders' equity															$	5,210,600						$	4,847,583
Net interest income			$	42,758						$	39,504						$	43,599						$	40,186
Net interest spread (3)						3.76	%						3.58	%						3.65	%						3.60	%
Net interest margin (4)						3.90	%						3.74	%						3.77	%						3.76	%

	Six months ended June 30, 2013							Six months ended June 30, 2012
	Average Balances		Interest		Rates/ Yields			Average Balances		Interest		Rates/ Yields
Interest-earning assets:
Loans ⁽¹⁾	$	3,764,033	$	83,663		4.49	%	$	3,341,350	$	77,927		4.70	%
Securities:
Taxable		556,885		7,322		2.65	%		662,162		9,383		2.85	%
Tax-exempt ⁽²⁾		173,240		3,140		4.88	%		184,990		3,351		4.86	%
Federal funds sold and other		118,290		575		1.14	%		152,840		1,117		1.59	%
Total interest-earning assets		4,612,448	$	94,700		4.19	%		4,341,342	$	91,778		4.31	%
Nonearning assets
Intangible assets		248,688							251,321
Other nonearning assets		240,787							241,558
Total assets	$	5,101,923						$	4,834,221

Interest-bearing liabilities:
Interest bearing deposits:
Interest checking	$	782,631	$	1,142		0.29	%	$	675,111	$	1,606		0.48	%
Savings and money market		1,607,151		3,005		0.38	%		1,541,063		4,109		0.54	%
Time		583,873		2,221		0.77	%		671,810		3,412		1.02	%
Total interest-bearing deposits		2,973,655		6,368		0.43	%		2,887,984		9,127		0.64	%
Securities sold under agreements to repurchase		130,141		149		0.23	%		130,301		271		0.42	%
Federal Home Loan Bank advances		196,822		414		0.42	%		235,591		1,226		1.05	%
Subordinated debt and other borrowings		104,663		1,412		2.72	%		99,674		1,465		2.96	%
Total interest-bearing liabilities		3,405,281		8,343		0.49	%		3,353,550		12,089		1.28	%
Noninterest-bearing deposits		982,951		0		0.00	%		728,724		0		0.00	%
Total deposits and interest-bearing liabilities		4,388,232	$	8,343		0.38	%		4,082,274	$	12,089		0.60	%
Other liabilities		19,759							32,633
Stockholders' equity		693,932							719,314
Total liabilities and stockholders' equity	$	5,101,923						$	4,834,221
Net interest income			$	86,357						$	79,689
Net interest spread ⁽³⁾						3.70	%						3.59	%
Net interest margin ⁽⁴⁾						3.83	%						3.75	%

	Amounts at June 30, 2013						Percentage
	Fixed		Variable				At June 30,
	Rates		Rates		Totals		2013
Based on contractual maturity:
Due within one year	$	210,890	$	820,313	$	1,031,203		26.3	%
Due in one year to five years		850,159		826,365		1,676,524		42.7	%
Due after five years		517,179		700,459		1,217,638		31.0	%
Totals	$	1,578,228	$	2,347,137	$	3,925,365		100.0	%

Based on contractual repricing dates:
Daily floating rate (*)	$	-	$	1,860,748	$	1,860,748		47.4	%
Due within one year		210,890		82,166		293,056		7.5	%
Due in one year to five years		850,159		377,003		1,227,162		31.3	%
Due after five years		517,179		27,220		544,399		13.9	%
Totals	$	1,578,228	$	2,347,137	$	3,925,365		100.0	%

	Amounts at March 31, 2013						Percentage
	Fixed		Variable				At March 31,
	Rates		Rates		Totals		2013
Based on contractual maturity:
Due within one year	$	239,598	$	725,181	$	964,779		25.4	%
Due in one year to five years		906,707		747,084		1,653,791		43.5	%
Due after five years		486,476		667,318		1,153,794		31.1	%
Totals	$	1,632,781	$	2,139,583	$	3,772,364		100.0	%

Based on contractual repricing dates:
Daily floating rate (*)	$	-	$	1,086,931	$	1,086,931		28.6	%
Due within one year		239,598		787,241		1,026,839		27.0	%
Due in one year to five years		906,707		247,071		1,153,778		30.3	%
Due after five years		486,476		18,340		504,816		14.1	%
Totals	$	1,632,781	$	2,139,583	$	3,772,364		100.0	%

	June 30,			December 31,
Accruing loans past due 30 to 89 days:	2013			2012
Commercial real estate – mortgage	$	2,882		$	503
Consumer real estate – mortgage		6,267			3,870
Construction and land development		1,817			3,511
Commercial and industrial		2,769			2,549
Consumer and other		1,019			444
Total accruing loans past due 30 to 89 days	$	14,754		$	10,877

Accruing loans past due 90 days or more:
Commercial real estate – mortgage	$	-		$	-
Consumer real estate – mortgage		747			-
Construction and land development		-			-
Commercial and industrial		-			-
Consumer and other		-			-
Total accruing loans past due 90 days or more	$	747		$	-

Ratios:
Accruing loans past due 30 to 89 days as a percentage of total loans		0.38	%		0.29	%
Accruing loans past due 90 days or more as a percentage of total loans		0.02	%		-
Total accruing loans in past due status as a percentage of total loans		0.39	%		0.29	%

	March 31,			December 31,
Accruing loans past due 30 to 89 days:	2013			2012
Commercial real estate – mortgage	$	1,681		$	503
Consumer real estate – mortgage		1,663			3,870
Construction and land development		486			3,511
Commercial and industrial		4,314			2,549
Consumer and other		387			444
Total accruing loans past due 30 to 89 days	$	8,531		$	10,877

Accruing loans past due 90 days or more:
Commercial real estate – mortgage	$	94		$	-
Consumer real estate – mortgage		-			-
Construction and land development		-			-
Commercial and industrial		-			-
Consumer and other		58			-
Total accruing loans past due 90 days or more	$	152		$	-

Ratios:
Accruing loans past due 30 to 89 days as a percentage of total loans		0.23	%		0.29	%
Accruing loans past due 90 days or more as a percentage of total loans		0.00	%		0.00	%
Total accruing loans in past due status as a percentage of total loans		0.23	%		0.29	%

	At December 31, 2012			Payments, Sales and Reductions⁽²⁾			Foreclosures⁽³⁾			Inflows ⁽⁴⁾		At June 30, 2013
Nonperforming assets:
Nonaccrual loans:
Commercial real estate – mortgage	$	9,291		$	(5,235	)	$	-		$	8,457	$	12,513
Consumer real estate – mortgage		5,906			(4,492	)		(1,780	)		4,947		4,581
Construction and land development		4,509			(4,311	)		-			1,122		1,320
Commercial and industrial ⁽⁵⁾		3,038			(13,083	)		-			12,133		2,088
Consumer and other		79			(394	)		-			374		59
Total nonaccrual loans ⁽¹⁾		22,823			(27,515	)		(1,780	)		27,033		20,561
Other real estate owned		18,580			(4,368	)		1,780			0		15,992
Total nonperforming assets		41,403			(31,883	)		-			27,033		36,553
Troubled debt restructurings:
Commercial real estate – mortgage		20,264			(6,277	)		-			0		13,987
Consumer real estate – mortgage		6,311			(2,728	)		-			428		4,011
Construction and land development		71			(3	)		-			51		119
Commercial and industrial		687			(192	)		-			1,554		2,049
Consumer and other		119			(51	)		-			193		261
Total troubled debt restructurings		27,452			(9,251	)		-			2,226		20,427
Total nonperforming assets and troubled debt restructurings	$	68,855		$	(41,134	)	$	-		$	29,259	$	56,980
Ratios:
Nonaccrual loans to total loans		0.61	%										0.52	%
Nonperforming assets to total loans plus other real estate owned		1.11	%										0.93	%
Nonperforming assets plus troubled debt restructurings to total
loans and other real estate owned		1.35	%										1.45	%
Nonperforming assets, potential problem loans and troubled debt
restructurings to Pinnacle Bank Tier I capital and
allowance for loan losses		31.04	%										23.81	%

	At December 31, 2012			Payments, Sales and Reductions(2)			Foreclosures(3)			Inflows (4)		At March 31, 2013
Nonperforming assets:
Nonaccrual loans:
Commercial real estate – mortgage	$	9,291		$	(2,084	)	$	-		$	3,858	$	11,065
Consumer real estate – mortgage		5,906			(1,063	)		(500	)		3,151		7,494
Construction and land development		4,509			(2,872	)		-			162		1,799
Commercial and industrial		3,038			(2,803	)		-			1,140		1,375
Consumer and other		79			(44	)		(50	)		118		103
Total nonaccrual loans (1)		22,823			(8,866	)		(550	)		8,429		21,836
Other real estate owned		18,580			(2,328	)		550			-		16,802
Total nonperforming assets		41,403			(11,194	)		-			8,429		38,638
Troubled debt restructurings:
Commercial real estate – mortgage		20,264			(5,561	)		-			-		14,703
Consumer real estate – mortgage		6,311			(1,771	)		-			433		4,973
Construction and land development		71			(2	)		-			-		69
Commercial and industrial		687			(158	)		-			78		607
Consumer and other		119			(4	)		-			200		315
Total troubled debt restructurings		27,452			(7,496	)		-			711		20,667
Total nonperforming assets and troubled debt restructurings	$	68,855		$	(18,690	)	$	-		$	9,140	$	59,305
Ratios:
Nonaccrual loans to total loans		0.61	%										0.58	%
Nonperforming assets to total loans plus other real estate owned		1.11	%										1.02	%
Nonperforming assets plus troubled debt restructurings to total loans and other real estate owned		1.35	%										1.10	%
Nonperforming assets, potential problem loans and troubled debt restructurings to Pinnacle BankTier I capital and allowance for loan losses		31.04	%										27.06	%

	Six months ended June 30, 2013			Year ended December 31, 2012
Balance at beginning of period	$	69,417		$	73,975
Provision for loan losses		4,946			5,569
Charged-off loans:
Commercial real estate – mortgage		(3,260	)		(4,667	)
Consumer real estate – mortgage		(997	)		(6,731	)
Construction and land development		(1,351	)		(2,530	)
Commercial and industrial		(5,085	)		(4,612	)
Consumer and other loans		(684	)		(1,117	)
Total charged-off loans		(11,377	)		(19,657	)
Recoveries of previously charged-off loans:
Commercial real estate – mortgage		129			285
Consumer real estate – mortgage		920			818
Construction and land development		708			1,155
Commercial and industrial		3,785			7,175
Consumer and other loans		166			97
Total recoveries of previously charged-off loans		5,708			9,530
Net charge-offs		(5,669	)		(10,127	)
Balance at end of period	$	68,694		$	69,417
Ratio of allowance for loan losses to total loans outstanding at end of period		1.75	%		1.87	%
Ratio of net charge-offs to average total loans outstanding for the period ⁽¹⁾		0.30	%		0.29	%

	Three months ended March 31, 2013			Year ended December 31, 2012
Balance at beginning of period	$	69,417		$	73,975
Provision for loan losses		2,172			5,569
Charged-off loans:
Commercial real estate – mortgage		(1,513	)		(4,667	)
Consumer real estate – mortgage		(694	)		(6,731	)
Construction and land development		(24	)		(2,530	)
Commercial and industrial		(1,224	)		(4,612	)
Consumer and other loans		(103	)		(1,117	)
Total charged-off loans		(3,558	)		(19,657	)
Recoveries of previously charged-off loans:
Commercial real estate – mortgage		15			285
Consumer real estate – mortgage		466			818
Construction and land development		127			1,155
Commercial and industrial		705			7,175
Consumer and other loans		67			97
Total recoveries of previously charged-off loans		1,380			9,530
Net charge-offs		(2,178	)		(10,127	)
Balance at end of period	$	69,411		$	69,417
Ratio of allowance for loan losses to total loans outstanding at end of period		1.84	%		1.87	%
Ratio of net charge-offs to average total loans outstanding for the period (1)		0.24	%		0.29	%

	Balances		Weighted Avg. Rate			Balances		Weighted Avg. Rate
Denominations less than $250,000
Three months or less	$	148,496		0.55	%	$	110,869		0.57	%
Over three but less than six months		91,366		0.64	%		103,011		0.48	%
Over six but less than twelve months		108,588		0.63	%		138,533		0.55	%
Over twelve months		136,110		1.09	%		130,649		1.02	%
	$	484,560		0.74	%	$	483,062		0.67	%
Denomination $250,000 and greater
Three months or less	$	27,304		0.62	%	$	19,698		0.51	%
Over three but less than six months		17,248		0.55	%		17,688		1.04	%
Over six but less than twelve months		22,515		1.13	%		34,258		0.58	%
Over twelve months		20,623		1.51	%		17,735		1.57	%
	$	87,690		0.94	%	$	89,379		0.85	%
Totals	$	572,250		0.77	%	$	572,441		0.69	%

	Date Established	Maturity	Common Securities		Subordinated Debentures		Floating Interest Rate	Interest Rate at March 31, 2013			Date Established	Maturity		Common Securities	Subordinated Debentures		Floating Interest Rate	Interest Rate at June 30, 2013
Trust I	December 29, 2003	December 30, 2033	$	310,000	$	10,000,000	Libor + 2.80%		3.08	%	December 29, 2003	December 30, 2033	$	310,000	$	10,000,000	Libor + 2.80%	3.07	%
Trust II	September 15, 2005	September 30, 2035		619,000		20,000,000	Libor + 1.40%		1.68	%	September 15, 2005	September 30, 2035		619,000		20,000,000	Libor + 1.40%	1.67	%
Trust III	September 7, 2006	September 30, 2036		619,000		20,000,000	Libor + 1.65%		1.93	%	September 7, 2006	September 30, 2036		619,000		20,000,000	Libor + 1.65%	1.92	%
Trust IV	October 31, 2007	September 30, 2037		928,000		30,000,000	Libor + 2.85%		3.13	%	October 31, 2007	September 30, 2037		928,000		30,000,000	Libor + 2.85%	3.12	%

Scheduled Maturities	Amount		Interest Rates⁽¹⁾
2013	$	310,000		0.18	%
2014		-		-
2015		-		-
2016		15,000		2.39	%
2017		-		-
Thereafter		565		2.49	%
Total	$	325,565
Weighted average interest rate				0.29	%

Scheduled Maturities	Amount		Interest Rates(1)
2013	$	185,000		0.21	%
2014		-		-
2015		-		-
2016		15,006		2.39	%
2017		-		-
Thereafter		593		2.48	%
Total	$	200,599
Weighted average interest rate				0.38	%

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
April 1, 2013 to April 30, 2013		20	$	23.36		-		-
May 1, 2013 to May 31, 2013		1,098		25.99		-		-
June 1, 2013 to June 30, 2013		896		25.10		-		-
Total		2,014	$	25.57		-		-