Fourth Quarter 2010 Investor Call Investor Call Terry Turner, - - PowerPoint PPT Presentation

Fourth Quarter 2010 Investor Call Investor Call

Terry Turner, President and CEO Harold Carpenter, EVP and CFO Harvey White Chief Credit Officer Harvey White, Chief Credit Officer January 19, 2011

Safe Harbor Statements

Forward‐looking statements

Certain of the statements in this presentation may constitute forward-looking statements within the meaning of Section 27A of the Securities Act

• f 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 “ “suggest” and similar expressions are intended to identify such forward looking intend, plan, believe, should, seek, estimate, suggest 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 to differ materially from any results expressed or implied by such forward-looking statements. Such factors 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 continued reduction of Pinnacle Financial’s loan balances, and conversely, the inability of Pinnacle Financial to ultimately grow its loan portfolio in the Nashville-Davidson-Murfreesboro-Franklin MSA and the Knoxville MSA; (iv) changes in loan y g p ; ( ) g underwriting, credit review or loss reserve policies associated with economic conditions, examination conclusions, or regulatory developments; (v) increased competition with other financial institutions; (vi) greater than anticipated deterioration or lack of sustained growth in the national or local economies including the Nashville-Davidson-Murfreesboro-Franklin MSA and the Knoxville MSA, particularly in commercial and residential real estate markets; (vii) rapid fluctuations or unanticipated changes in interest rates; (viii) the results of regulatory examinations; (ix) the development of any new market other than Nashville or Knoxville; (x) a merger or acquisition; (xi) any matter that would cause Pinnacle Financial to conclude that there was impairment of any asset, including intangible assets; (xii) the impact of governmental requirements on entities ti i ti i it l f th U S D t t f th T (th “T ”) ( iii) f th d t i ti i th l ti f th l participating in capital programs of the U.S. Department of the Treasury (the “Treasury”); (xiii) further deterioration in the valuation of other real estate owned; (xiv) inability to comply with regulatory capital requirements and to secure any required regulatory approvals for capital actions; and (xv) changes in state and federal legislation, regulations or policies applicable to banks and other financial service providers, including regulatory or legislative developments arising out of current unsettled conditions in the economy, including implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act; and (xvi) Pinnacle Financial recording a further valuation allowance related to its deferred tax

• asset. A more detailed description of these and other risks is contained in Pinnacle Financial's most recent annual report on Form 10-K filed with

the Securities and Exchange Commission on February 26, 2010 and most recent quarterly reports on Form 10-Q filed with the Securities and the Securities and Exchange Commission on February 26, 2010 and most recent quarterly reports on Form 10 Q filed with the Securities and Exchange Commission on May 7, 2010, July 21, 2010, and October 20, 2010. Many of such factors are beyond Pinnacle Financial's ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. Pinnacle Financial disclaims any

• bligation to update or revise any forward-looking statements contained in this presentation, whether as a result of new information, future events
• r otherwise.

2

Opening Comments A i l d li i h di i

• Aggressively dealing with credit issues
• Building core earnings capacity
• Building core earnings capacity

3

Fourth Quarter 2010 Highlights

Aggressively Dealing with Credit Issues Building Core Earnings Capacity Credit Issues

• NCOs

Earnings Capacity

• EPS
• NPAs
• NPA inflows
• Net Interest Margin
• Non IB Deposits
• NPLs
• Crit/Class Loans

Non IB Deposits

• Core Deposits
• C&I Owner/occupied

/

• Past Dues
• C&D Exposure

C&I, Owner/occupied CRE loans C&D Exposure

4

Aggressively Dealing with Credit Issues

• Total NPLs and ORE decreased from $160.9 million to $140.5

$ $ million between June 30, 2010 and December 31, 2010

• ORE constitutes approximately 42% of NPAs
• Approximately $37.3 million in NPA resolutions during

4Q10

• Three consecutive quarters of net NPL and

criticized/classified asset reductions

• Construction book down $194 million, or 37%, since year

end ’09

5

Aggressively Dealing with Credit Issues

Potential Problem Loans and Total Criticized and Classified Assets Continue to Decline

8 63%

$598 $625 $614 $524

$600 $700 8 0% 9.0% 10.0%

sets

and

7.24% 7.18% 8.63% 9.30% 8.23% 6.95%

$364 $515 $524 $490

$400 $500 6.0% 7.0% 8.0%

Classified Ass

/Total loans a al loans

4.03% 1 86% 2.58% 2.59% 2.61% 2.60% 2.60% 2.57%

$200 $300 3.0% 4.0% 5.0%

ticized and C

roblem loans/ lowance / Tota

1.86%

$0 $100 0.0% 1.0% 2.0%

Total Crit

Potential Pr All

2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10

6

Aggressively Dealing with Credit Issues

NPLs Continue to Decline Ahead of Peers

NPLs Expressed as a % of Total Loans within Category

PNFP NPLs and PNFP NPLs and PNFP NPLs and Peer NPLs and > 90 days

NPLs Expressed as a % of Total Loans within Category

NPLs and > 90 days 4Q10 NPLs and > 90 days 3Q10 NPLs and > 90 days 2Q10 > 90 days (*) 3Q10

• Const. and land

development

13.15% 15.28% 15.75% 15.66%

CRE – Owner Occupied

1.89% 2.33% 2.61% 3.12%

CRE – Investment

0.43% 1.01% 2.31% 3.88%

T t l l t t

% % % %

Total real estate

3.06% 4.01% 4.56% 5.23%

C&I

1.47% 1.72% 1.70% 2.15%

Total loans

2.52% 3.28% 3.64% 4.22% (*) Uniform Bank Performance Report

7

Aggressively Dealing with Credit Issues

Decline in NPLs Results in Increased Allowance Coverage

$100 328 $121,726 $124,709 $131,381 $118,331 $103,127 102.1%

100% 120%

$120,000 $140,000 s

ans

$100,328 $80,863 65 9% 68.2% 73.7% 68.5% 73.6% 82.0%

60% 80%

$80,000 $100,000 ance to NPL’s

performing Loa

65.9%

20% 40%

$40,000 $60,000 Allowa

Total Nonp

0% 20%

$0 $20,000

2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10

8

Aggressively Dealing with Credit Issues

ORE is 42% of NPAs with Average Age of 141 Days

Balances Fair value as a % Average December 31, 2010 (dollars in thousands)

• f book value*

Appraisal Age in Months

ORE categories: New home construction/condo’s $ 10,370 101.2% 2.33 Developed lots 14,037 112.2% 4.73 Undeveloped land 18 675 112 2% 4 73 Undeveloped land 18,675 112.2% 4.73 Other 16,526 131.4% 4.54 Total ORE $ 59,608 115.4% 4.01

7 properties > 1 year old Largest balance ‐ $ 4.64M All properties in Middle TN $8.2 million under contract at par or better $8.2 million under contract at par or better

* Excludes costs to sell

9

Aggressively Dealing with Credit Issues

NPA Disposition Activity Suggests Quarterly Run Rate of $30m ‐ $45m

$68,847

$70,000 $80,000

$42,022 $43,096

$40 000 $50,000 $60,000

$26,102 $24,026 $33,566 $37,251

$20 000 $30,000 $40,000

$6,777

$0 $10,000 $20,000 $0 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10

10

Aggressively Dealing with Credit Issues

Past Dues Expressed as a % of Total Loans within Category

Past Due Levels Indicate Limited New Problems Surfacing

Past Dues Expressed as a % of Total Loans within Category

PNFP 30-90 days past PNFP 30-90 days past PNFP 30-90 days past Peer 30-90 days past days past due 4Q10 days past due 3Q10 days past due 2Q10 days past due (*) 3Q10

• Const. and land

development

0.65% 2.03% 0.89% 1.64%

CRE – Own Occupied

0.30% 0.19% 0.51% 0.73%

CRE – Investment

0.00% 0.00% 0.02% 0.83%

T t l l t t

% % % %

Total real estate

0.36% 0.57% 0.59% 1.17%

C&I

0.16% 0.54% 0.47% 0.72%

Total loans

0.29% 0.55% 0.66% 1.14% (*) Uniform Bank Performance Report

11

Aggressively Dealing with Credit Issues

Past Due Levels Indicate Problem Loans are Actively Managed

• Dec. 31,

2010 As a % of l l

• Sept. 30,

2010 As a % of l l 2010 total loans 2010 total loans Nonaccrual loans past due $ 47,662 1.48% $ 65,426 2.01% Accruing loan managed by Special Assets: Special Assets: > 90 days $ 113 0.00% $ 3,100 0.10% 30 to 89 days 5,329 0.17% 12,712 0.39% $ 5,442 0.17% $ 15,812 0.49% Accruing loans managed by R l i hi M Relationship Managers: > 90 days $ 24 0.00% $ 539 0.02% 30 to 89 days 4,124 0.13% 5,316 0.16%

12

$ 4,148 0.13% $ 5,855 0.18%

Aggressively Dealing with Credit Issues

Risk Rating Trends Reflect Decreasing Problem Loan Inflows

$200,000 $250,000 $150,000 P/F F/P $100,000 F/P Net Chg $0 $50,000 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410 Q109 Q209 Q309 Q409 Q110 Q210 Q310 Q410

13

Building Core Earnings Capacity

• Net interest margin for 4Q10 of 3.29%
• Modest noninterest income growth over 3Q
• Modest noninterest income growth over 3Q
• Modest noninterest expense reduction from 3Q
• Core deposit growth at annualized rate of 17.2% during 4Q10
• Increased emphasis on loan growth

14

Building Core Earnings Capacity

• Lower cost of funds helping to advance margin

Net Interest Margin Trend

Net Interest Margin – Number 1 Priority

• Bond portfolio continues to experience above

average pre-payments on mortgage backs.

• Higher core deposit volumes and repricing existing

accounts drive down cost of funds

• Interest rates are projected to remain flat for extended 3.3%

3.4%

Net Interest Margin Trend

• Interest rates are projected to remain flat for extended

period of time.

• The reduction of excess liquidity should positively

impact the margin in future periods.

3.25% 3.23% 3.23% 3.29%

3.2% 3.3%

18 20

Interest Expense

(in millions)

3.19%

3.1% 3.2%

$16.7 $16.1 $15.2 $14.6 $13.0

12 14 16

3.05%

3.0% 3.1%

15

10 4Q09 1Q10 2Q10 3Q10 4Q10

3Q09 4Q09 1Q10 2Q10 3Q10 4Q10

Building Core Earnings Capacity

4.00%

Margin Improvement Built on Success with Clients

3.60% 3.80%

• Continued progress on loan

yields and reducing cost of funds

• Treasury yields influenced

3.20% 3.40%

heavily by rapid pay downs and repricing of bond portfolio as well as maintenance of excess liquidity since early summer

2 60% 2.80% 3.00% Treasury Margin Customer Margin

liquidity since early summer

2.20% 2.40% 2.60% Customer Margin Net Interest Margin 2.00% 1Q2009 2Q2009 3Q2009 4Q2009 1Q2010 2Q2010 3Q2010 4Q2010

16

Building Core Earnings Capacity

$3,117,266

1 65%

$3,200,000

1.70%

Significant Growth in Core Deposits & Concurrent Reduction in COF

$2,765,833 $2,924,424

1.65%

$2 800 000 $3,000,000

1 50% 1.60%

$2,515,163 $2,644,791 $ , ,

$2,600,000 $2,800,000

1.40% 1.50%

$2,129,487

1.22%

$2,200,000 $2,400,000

1.20% 1.30%

$1 800 000 $2,000,000

1 00% 1.10%

$1,800,000

1.00%

3Q09 4Q09 1Q10 2Q10 3Q10 4Q10 17

Building Core Earnings Capacity

COF Reduction Opportunities Remain

• CD repricing opportunities ‐ $232mm in Client CD’s maturing over next

three months. Goal at renewal should be approx. 0.75% to 1.25% for client CD’s or transfer borrowers to money market accounts.

Average Renewal Rates Client CD’s – Avg. Rate (%) 1st Quarter 2010 2 03% 1 Quarter 2010 2.03% 2nd Quarter 2010 1.84% 3rd Quarter 2010 1.69% 4th Quarter 2010 1.18% 1st Quarter 2011 Average Maturing CD Rates 2.10%

18

Building Core Earnings Capacity

Core Funding Relationship Based Non‐Core Funding Wholesale Funding

Positive Trends in Core Funding Enhance NII Long‐Term

24% 20% 24% 16% 12% 10% 7% 6%

80% 90% 100%

24% 26% 26% 24% 24%

60% 70% 80%

51% 59% 62% 66% 69% 74%

30% 40% 50%

51%

0% 10% 20%

19

0% 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10

Building Core Earnings Capacity

$600

Positive DDA Trends Reflect Ability to Grow Client Base

$517 $534 $576

$550 $600

es

$442 $456 $463 $517 $496 $504

$450 $500

ge Balance

$442 $418

$400 $450

DA Averag

$300 $350

DD

20

$300

4Q08 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10

Building Core Earnings Capacity

Net Loan Activity Trends Improving

$40 $20 $0 $20 $40 $80 ‐$60 ‐$40 ‐$20 Total Loans C&I d O/O CRE $140 ‐$120 ‐$100 ‐$80 C&I and O/O CRE Loans ‐$160 ‐$140

1Q10 Net Change 2Q10 Net Change 3Q10 Net Change 4Q10 Net Change

21

Building Core Earnings Capacity

Noninterest Income – Run Rates Stabilizing

4Q10 3Q10 2Q10 1Q10 4Q09 Service charges $2,353 $2,444 $2,429 $2,365 $2,595 Investment services 1 264 1 234 1 315 1 236 1 136 Investment services 1,264 1,234 1,315 1,236 1,136 Insurance commissions 907 954 904 1,099 895 Gains on loan sales 1,352 1,310 921 519 1,167 Trust fees 495 726 755 897 706 Trust fees 495 726 755 897 706 Other: Gain on sales of investments

• 2,259

365

• Other

2,295 1,925 1,986 2,005 1,677 Total noninterest income $8,666 $8,593 $10,569 $8,486 $8,176

Less: Gain on sales of investments

• (2,259)

(365)

• Less: Insurance contingency fees
• (325)
• Core noninterest income

$8,666 $8,593 $8,310 $7,796 $8,176

22

Building Core Earnings Capacity

Expense Containment Yields Improving Core Efficiency

4Q10 3Q10 2Q10 1Q10 4Q09 Salaries and benefits $15,708 $16,069 $16,191 $16,659 $15,037 Incentive Expense

• (345)

345

• Equipment and occupancy

4,988 5,231 5,493 5,366 5,064 Other real estate owned 7,874 8,522 7,411 5,402 8,393 Marketing and BD 937 748 794 754 1,116 Supplies and Postage 467 636 701 734 755 Intangible amortization 744 744 746 746 774 Other expenses 5,733 5,822 5,500 6,161 4,411 Total noninterest expense $36 451 $37 772 $36 491 $36 167 $35 448 Total noninterest expense $36,451 $37,772 $36,491 $36,167 $35,448 Efficiency ratio 81.5% 84.6% 78.9% 80.3% 78.4%

Total noninterest expense – 23 Total noninterest expense excluding other real estate $28,577 $29,250 $29,080 $30,765 $27,055 Efficiency ratio, excl. ORE and securities gains 63.9% 65.5% 66.10% 68.9% 76.3%

Looking Forward

• Capital
• Balance Sheet Growth Opportunities
• Margin Expansion

E C t i t O t iti

• Expense Containment Opportunities

24

Looking Forward

Capital

• Dec. 31,

Sept 30 June 30 March 31

• Dec. 31,

, 2010

• Sept. 30,

2010 June 30, 2010 March 31, 2010 , 2009

Tangible common equity 7.1% 7.2% 7.1% 7.4% 7.3% Tangible common to Tangible common to risk weighted assets 9.1% 9.3% 9.0% 9.1% 8.9% Tier 1 leverage 10.6% 10.5% 10.4% 10.7% 10.7% Tier 1 risk based capital 13.6% 13.5% 13.1% 13.4% 13.1% Total risk based capital 15.2% 15.1% 14.8% 15.0% 14.8% Tangible Common Book Value per Common Share $9.80 $10.12 $10.04 $10.60 $10.71

25

Looking Forward

Capital

SBLF Provides Opportunity to Refinance TARP with No Dilutive Impact

• Consider replacing TARP with $110 mm of SBLF preferred

d i f $ f f d ld i l d

SBLF Provides Opportunity to Refinance TARP with No Dilutive Impact

• Redemption of $95 mm of TARP preferred would include

$4 mm charge to APIC and corresponding charge to FDEPS

• Still under advisement

26

Looking Forward

P f d Middl M k t C i l L d i Middl

Balance Sheet Growth Opportunities

• Preferred Middle Market Commercial Lender in Middle

Tennessee

• Track Record for Market Share Movement
• 66% of Mid‐sized Businesses Will Consider Switching Banks (*)

27 (*) Greenwich Research

Looking Forward

Balance Sheet Growth Opportunities

Pinnacle Has Leveraged Client Satisfaction to Take Share

28

Question: Using a 5-point scale, from “1” poor to “5” excellent, how do you rate your overall satisfaction with the bank? Note: Evaluations are based on a 5-point scale, "5" excellent to "1" poor. An Excellent rating is a "5" on a 5-point scale. Cross-hairs are set at the top 10 mean for market penetration (Y-axis) and excellent client satisfaction (X-axis). Source: 2010 Greenwich Associates Market Tracking Program (Pinnacle Financial $1-500 Million - Nashville - Q1-Q3 2010).

Looking Forward

Balance Sheet Growth Opportunities

Pinnacle Has Established Market Leadership Position

23% 22% 18% 17% 77% 78%

Pinnacle Financial Customers Lead Relationships as % of Total Market Lead Relationships as % of Total Customers

28% 22% 28% 16% 17% 20% 57% 78% 73%

Regional A

2009 YTD 2010

26% 13% 26% 15% 8% 15% 56% 63% 60%

Regional B Regional C

2009

19% 13% 23% 7% 8% 10% 35% 63% 46%

Regional D

29

Question: Which bank or non-bank do you consider to be your company’s single most important or lead provider for banking services? Which bank(s) or non-bank(s) does your company currently use for any product? Source: 2010 Greenwich Associates Market Tracking Program (Pinnacle Financial $1-500 Million - Nashville - Q1-Q3 2010).

Looking Forward

Margin Expansion Opportunities

4Q 2010 Net Interest Margin 3.29% Opportunities:

• 1. NPA Resolution

0.05% to 0.09%

• 2. Continued reduction in COF

0.12% to 0.21% 3 Liquidity reductions 0 03% to 0 09%

• 3. Liquidity reductions

0.03% to 0.09%

Notes:

• 1. Excluding impact of reversed interest, considers reduction in NPA levels to 1.50% of loans and

ORE t d f 2 50% t 4 00% f i t ORE at new spread of 2.50% to 4.00% on performing asset.

• 2. Considers a COF reduction from 1.22% to a range of 1.00% to 1.10%.
• 3. Assumes spread increase on $100mm in liquid assets from 1.08% avg. yield to a yield of 2.50% to

5.00% in investments. 30

Looking Forward

Expense Opportunities

• Branch buildout substantially complete in Nashville
• Current staffing of special asset group is 27 FTE’s

g p g p

• Ancillary costs associated with increased level of NPLs
• Excluding ORE expense and securities gains YTD efficiency
• Excluding ORE expense and securities gains, YTD efficiency

ratio of approximately 63.9%

• Target efficiency ratio excluding ORE expense of < 60%

31

Final Thoughts

• Aggressively addressing problem credits
• Pursue meaningful NPA resolution

g

• Continued reductions in exposure to C&D
• Attractive markets
• Attractive markets
• Economic stabilization and recovery
• Ability to seize competitive opportunities
• Responsibly growing core earnings capacity
• Continued core funding growth
• Continued margin expansion

32

Q&A Q&A

Fourth Quarter 2010 Investor Call

Terry Turner, President and CEO Harold Carpenter, EVP and CFO Harvey White Chief Credit Officer Harvey White, Chief Credit Officer January 19, 2011

33

S l t l I f ti Supplemental Information

Fourth Quarter 2010 Investor Call

Terry Turner, President and CEO Harold Carpenter, EVP and CFO Harvey White Chief Credit Officer Harvey White, Chief Credit Officer January 19, 2011

34

Loan Categories

Comparison of 4Q10 to 3Q10, year end 2009, 2008

*Continued reduction in C&D exposure

Amts. 4Q10 %’s 4Q10 Amts. 3Q10 %’s 3Q10 Amts. 4Q09 %’s 4Q09 Amts. 4Q08 %’s 4Q08 C&D and Land $331.3 10.3% $359.7 11.1% $ 525.3 14.7% $ 645.4 19.2% Consumer RE 705.5 22.0% 720.1 22.1% 756.0 21.2% 675.6 20.1% CRE – Owner Occ. 531.9 16.6% 516.2 15.9% 535.1 15.0% 371.6 11.1% CRE Investment 519 8 16 2% 534 9 16 4% 543 5 15 3% 554 9 16 6% CRE – Investment 519.8 16.2% 534.9 16.4% 543.5 15.3% 554.9 16.6% Other RE loans 42.9 1.3% 52.2 1.6% 39.5 1.1% 50.4 1.5% Total real estate 2,131.4 66.4% 2,183.1 67.1% 2,399.4 67.3% 2,297.9 68.5% C&I 1,012.1 31.5% 995.7 30.6% 1,071.4 30.1% 965.1 28.8% Other loans 68.9 2.1% 73.1 2.3% 92.6 2.6% 91.9 2.7% Total loans $3,212.4 100.0% $3,251.9 100.0% $3,563.4 100.0% $3,354.9 100.0% 35 $ , $ , $ , $ ,

Asset Quality Metrics

Nonaccrual Loans

$80.9 MM nonaccruing loans

Other 1 3%

2.52% of loan balances

Resid Const 11 1% 1.3% Nonaccrual loans $ 80.9 ORE 59.6 Total NPAs $ 140.5 Land Develop 42.7% C&I 11.1% NPAs as a % of Total loans + ORE 4.29% 18.2% 1‐4 Family 11 2% CRE 15.5%

As of December 31, 2010

36

11.2%

Construction and Land Categories

Comparison of 4Q10 to 3Q10, year end 2009, 2008

* PNFP continues to reduce exposure to residential construction and development

Amts. 4Q10 %’s(*) 4Q10 Amts. 3Q10 %’s(*) 3Q10 Amts. 4Q09 %’s(*) 4Q09 Amts. 4Q08 %’s (*) 4Q08 Residential Spec $ 19 9 0 6% $ 22 2 0 7% $ 44 2 1 2% $ 96 9 2 9% Residential – Spec $ 19.9 0.6% $ 22.2 0.7% $ 44.2 1.2% $ 96.9 2.9% Residential – Custom 9.9 0.3% 9.4 0.3% 18.6 0.5% 29.0 0.9% Residential – Condo 20.7 0.6% 26.1 0.8% 38.1 1.1% 48.5 1.4% Commercial Constr ct 50 2 1 6% 54 0 1 7% 84 5 2 4% 77 1 2 3% Commercial Construct. 50.2 1.6% 54.0 1.7% 84.5 2.4% 77.1 2.3% Land Dev– Residential 111.6 3.5% 125.2 3.8% 184.0 5.2% 243.2 7.2% Land Dev – Commercial 105.3 3.3% 99.4 3.1% 117.2 3.3% 114.2 3.4% L d U ifi d 13 7 0 4% 23 4 0 7% 38 6 1 1% 36 5 1 1% Land – Unspecified 13.7 0.4% 23.4 0.7% 38.6 1.1% 36.5 1.1% Total C&D $ 331.3 10.3% $ 359.7 11.1% $ 525.3 14.7% $ 645.4 19.2%

(*) as a percentage of total loans

37

Construction and Land Categories

* Almost 38.9% of C&D book managed by Special Asset Group personnel. * Almost 44.4% of land categories managed by SAG.

Total Portfolio 4Q10 Total Portfolio 3Q10 Total Portfolio 2Q10 NPLs 4Q10 NPLs 3Q10 NPLs 2Q10

Performing Criticized 4Q10 Performing Criticized 3Q10 Performing Criticized 2Q10

Residential – $ 19.9 $ 22.2 $ 28.1 $ 0.8 $ 1.4 $ 1.8 $ 6.2 $ 6.4 $ 10.9 Spec Residential – Custom 9.9 9.4 12.8 0.0 0.0 0.5 0.4 0.5 0.5 Residential – Condo 20.7 26.1 31.6 8.2 13.7 19.5 6.6 6.8 5.7 Condo Commercial Construct. 50.2 54.0 46.6 0.0 0.0 0.0 8.5 8.2 0.0 Land Dev– Residential 111.6 125.2 142.3 17.5 23.2 21.7 39.9 47.8 66.9 Land Dev – Commercial 105.3 99.4 107.1 16.7 16.2 19.3 35.5 32.3 41.0 Land – Unspecified 13.7 23.4 43.0 0.4 0.4 1.5 2.1 12.5 13.3 Total C&D $ 331 3 $ 359 7 $ 411 5 $ 43 6 $ 55 0 $ 64 3 $ 99 2 $ 114 6 $ 138 3

38

Total C&D $ 331.3 $ 359.7 $ 411.5 $ 43.6 $ 55.0 $ 64.3 $ 99.2 $ 114.6 $ 138.3 As a percentage of total C&D loans 13.2% 15.3% 15.6% 30.0% 31.9% 33.6%

Construction and Land Categories

Analysis of Pass‐rated AC&D loans

* Pass rated credits have minimal past dues with downgrades slowing. Avg. ticket size of about $414,000.

Pass rated 4Q10 Pass rated 3Q10 Pass rated 2Q10 Past due 4Q10 Past due 3Q10 Past due 2Q10 Pass to Fail During 4Q10 Pass to Fail During 3Q10 Pass to Fail During 2Q10

Residential – Spec $ 12.8 $ 14.3 $ 15.4 $ 0.2 $ - $ - $ 0.4 $ - $ 1.1 Residential – Custom 9.5 8.8 11.4

• 0.4

Residential – 5 9 5 6 6 5

• 0 4

Residential Condo 5.9 5.6 6.5 0.4 Commercial Construct. 41.7 45.8 46.6

• 7.8
• Land Dev–

Residential 54.2 54.3 53.5

• 1.1
• 1.8

0.5 18.7 Residential Land Dev – Commercial 53.1 50.9 46.8

• 0.6

2.5 3.6 Land – Unspecified 11.3 10.5 28.1 0.2

• 0.2
• 0.7

39

Total C&D $188.5 $190.2 $208.3 $0.4 $1.1 $0.2 $2.8 $10.8 $24.9

Land Loan and Land‐related ORE locations

4% 3% 25% 7% 5% Rutherford Williamson Davidson 7% Wilson Other TN Other US 25% 16% 8% Other US Sumner Knox Maury 16% Maury > $250,000 properties, approx. $232.4 mm balances

40

Commercial Real Estate

Vacancy Rates

Nashville CRE Vacancy Rates (*) National CRE Vacancy Rates (*) Q3 2010 YE 2009 YE 2008 YE 2007 YE 2006 YE 2005 Q3 2010 Warehouse 10.9% 10.6% 9.6% 8.9% 8.6% 9.1% 11.6% Multifamily 7.5% 9.6% 7.6% 5.2% 5.5% 6.2% 7.1% Multifamily 7.5% 9.6% 7.6% 5.2% 5.5% 6.2% 7.1% Retail 8.4% 8.1% 6.3% 7.0% 6.3% 6.6% 10.9% Office 13.4% 12.7% 10.5% 10.5% 11.1% 10.6% 17.6%

* REIS

PNFP CRE Portfolio

* REIS

Retail 17.2% Other 15.7%

PNFP CRE Portfolio

Office 10.3% Warehouse O /O

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Warehouse 8.3% Own/Occ 48.5%

Asset Quality Metrics

(dollars in thousands)

$44,579

$45,000 $50,000

$33,463

$30 000 $35,000 $40,000

–off’s

$20,000 $25,000 $30,000

t Charge –

$4,760 $5,228 $6,789 $15,123 $7,346 $7,146

$5 000 $10,000 $15,000

Net

$0 $5,000

1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10

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Net Charge‐off’s

• Largest Charge‐offs During 4Q10
• #1 ‐ $619,000
• #2 ‐ $503,000
• #3 ‐ $500,000
• #4 ‐ $475,000

$ ,

• #5 ‐ $451,000
• These credits make up 35 7% of net charge offs for the
• These credits make up 35.7% of net charge offs for the

4Q10

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Nonperforming Loans

• Largest NPLs
• #1 ‐ $7.9 million condo loan
• #2 ‐ $5.3 million commercial development loan
• #3 ‐ $4.8 million commercial development loan
• #4 ‐ $3.2 million commercial development loan
• #5 ‐ $2.8 million residential development loan
• Approximately 180 accounts make up remaining NPLs
• Approximately 180 accounts make up remaining NPLs
• Represents 30% of NPL balances

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Historical ORE Disposition Activity

YTD ORE Dispositions (*) h l thru

• Dec. 31, 2010

ORE Balance at

• Dec. 31, 2010

As a % ‐ original loan

Original loan amount 100% 100% Customer payments 11% 26% Charge off’s prior to foreclosure 20% 19% Balance @ foreclosure 69% 55% Valuation losses while in ORE 14% 11% Balance in ORE 55% 44% Balance in ORE 55% 44% Loss on disposition 6% Net realized 49%

(*) ORE dispositions > $250,000 45

OREO Properties

• Largest OREO Properties:

$

• #1 ‐ $4.6 million condo property
• #2 ‐ $4.3 million condo property
• #3 ‐ $3.8 million residential development
• #4 ‐ $3.0 million commercial development
• #5 ‐ $2.9 million residential development
• These balances make up 31.2% of the total OREO book at

These balances make up 31.2% of the total OREO book at December 31, 2010

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Investment Portfolio

Conservative bond portfolio

Corporates Treasuries

Average yield on bond

Municipals 21 7% Corporates 1.1% Treasuries 0.0%

Average yield on bond portfolio = 3.39% (TEY)

Average life = 4.09 years Effective Duration 3 23%

Agency N t 21.7%

Effective Duration = 3.23%

(millions)

MTD QTD

MBS pass thrus 64.0% Agency

Notes 9.3% Purchases $66.9 $125.9 Sales ‐ ‐ Mat/Calls (1.2) (4.8) Pre‐pays (19.8) (55.0)

CMOs 3.9%

$290 mm in securities purchases in last six months ‐ Effective duration of 1.73% ‐ Avg. age of 3.8 years

FNMA, FHLMC and GNMA

As of December 31, 2010

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• Avg. age of 3.8 years

Investment Portfolio

Municipal portfolio

Credit ratings # of Issuances Balances % “A” or better 369 $207,240 96.0% Baa3/BBB‐ to Baa3/BBB to Baa1/BBB+ 24 8,736 4.0% Noninvestment grade ‐ ‐ ‐ Unrated Unrated ‐ ‐ ‐ Totals 393 $215,976 100.0% Location # of Issuances Balances % Other information: Tennessee 118 $ 50,370 23.3% Florida 2 544 0.3% California 7 2,716 1.3%

• Avg. life of municipal book –

7.9 years

• Percentage of municipal book

related to state agencies – Nevada 1 301 0.2% Michigan 20 9,075 4.2% Illinois 20 16,310 7.6% related to state agencies – 5.3%

• Avg. tax equivalent yield –

5.0%

• Unrealized gain as a

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Other – 30 states 225 136,660 63.1% Totals 393 $ 215,976 100.0% percentage of cost – 102.3%

Funding sources

Positive trends in funding continue

12/31/2010 Percent 12/31/2009 Percent Core Funding: Noninterest‐bearing deposit accounts 586,517 14.0% 498,087 11.3% Interest‐bearing demand accounts 573,670 13.7% 483,274 11.0% Savings and money market accounts 1,596,306 38.0% 1,198,012 27.2% Time deposit accounts less than $100,000 361,476 8.6% 407,312 9.2% Total core funding 3,117,969 74.3% 2,586,685 58.7% Non‐core funding: Relationship based non‐core funding: Time deposit accounts greater than $100,000 Reciprocating time deposits 188,510 4.5% 228,941 5.2% Other time deposits 512,349 12.2% 636,521 14.4% p , , Securities sold under agreements to repurchase 146,294 3.5% 275,465 6.2% Total relationship based non‐core funding 847,153 20.2% 1,140,927 25.9% Wholesale funding: Time deposit accounts greater than $100,000 Public funds ‐ 0.0% 40,005 0.9% Brokered deposits 14,229 0.3% 331,447 7.5% p , , Federal Home Loan Bank advances, Federal funds purchased and other borrowings 121,393 2.9% 212,655 4.8% Subordinated debt 97,476 2.3% 97,476 2.2% Total wholesale funding 233,098 5.6% 681,583 15.5% Total non‐core funding 1,080,251 25.7% 1,822,510 41.3% Totals 4,198,220 100.0% 4,409,195 100.0%

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Totals 4,198,220 100.0% 4,409,195 100.0%

Taxes

DTA Key Points

A. At June 30, PNFP was in a 3‐year cumulative loss position B. In Q4, we recorded an increase to the valuation allowance of $5.4 million through AOCI related to the , g decrease in our unrealized gain on the securities portfolio. We recognized an income tax benefit of $697 thousand due to the decrease in our exposed net deferred tax asset. C. The valuation allowance will continue to be impacted by net changes in our deferred tax assets and liabilities until the ultimate reversal of the valuation allowance. Fluctuations in those accounts, either increases or decreases will impact future fully diluted earnings per share as well as other comprehensive

(dollars in millions)

Current A t Deferred for F t P i d Totals increases or decreases, will impact future fully diluted earnings per share as well as other comprehensive income (loss). Amounts Future Periods Tax related assets $12.9 $43.6 $56.5 Tax related liabilities ‐ (21.1) (21.1) N t t t b f Net tax assets before valuation allowance 12.9 22.5 35.4 Valuation allowance ‐ (22.5) (22.5) Net tax assets after $12 9 $0 0 $12 9 Net tax assets after valuation allowance $12.9 $0.0 $12.9

50

Taxes

(i h d d d)

Balances as of Sept 30 2010 Net change during 4Q10 Balances as of Dec 31 2010

(in thousands, rounded)

• Sept. 30, 2010

4Q10

• Dec. 31, 2010

Deferred tax items impacting operations: Deferred tax assets: Allowance for loan losses $ 33.1 $ (0.8) $ 32.3 Other assets 11.5 (0.2) 11.3 Total deferred tax assets 44.6 (1.0) 43.6 All other deferred tax liabilities (14.3) 0.3 (14.0) Net DTAs impacting operations 30 3 (0 7) 29 6 Net DTAs impacting operations 30.3 (0.7) 29.6 Deferred tax items impacting other comprehensive income (loss): Unrealized gain on AFS securities (12.5) 5.4 (7.1) Net DTAs before valuation allowance 17.9 4.7 22.5 Valuation allowance 17.8 4.7 22.5 Net DTA’s after valuation allowance $ 0.1 $ (0.1) $ 0.0

51

SBLF

Capital

SBLF is Attractive Capital Alternative

• Senior Perpetual Noncumulative Preferred Stock
• Up to 3% of RWAs, or approximately $110mm
• 5% Initial Coupon

p

• Potential Coupon Reduction Opportunities to 1%
• 9% Maximum Coupon after 4 5 years
• 9% Maximum Coupon after 4.5 years

52

SBLF

Capital

SBLF Provides Incentive to Grow Small Business Loans (*)

Loan Growth Rate (*) SBLF Dividend Rate

Dividend rates upon funding < 2.49% 5% 2.50% – 4.99% 4% and for the following nine calendar quarters, adjusted quarterly (1Q11 thru 2Q13) 5.00% ‐ 7.49% 3% 7.50% ‐ 9.99% 2% > 10.00% 1% Dividend rate for the tenth quarter after funding through the end of the first four and one‐half years If lending has increased at the end of the eighth quarter after funding Rate set as above for the tenth quarter If lending has not increased four and one‐half years (3Q13 thru 3Q15) g at the end of the eighth quarter after funding 7% Dividend rate after first four and one‐half years (post‐ 3Q15) 9% 53 (*) Qualifying Small Business Lending includes C&I and CRE O/O loans to businesses with

• riginal loans and commitments of < $10 mm and revenues < $50 mm

Non‐GAAP Financial Measures – Net Interest Margin

4Q10 3Q10 2Q10 1Q10 4Q09

Avg net earning assets $4 441 671 $4 519 955 $4 527 471 $4 651 695 $4 690 347

• Avg. net earning assets

$4,441,671 $4,519,955 $4,527,471 $4,651,695 $4,690,347 Net interest income $36,056 $36,060 $35,697 $36,560 $37,031 Impact of tax exempt instruments 0.07% 0.06% 0.07% 0.06% 0.06% i i Net interest margin 3.29% 3.23% 3.23% 3.25% 3.19% Impact from reduced NPL’s ** $601 $1,461 $1,272 $1,187 $1,094 Quarterly interest reversals from new NPLs ** $387 $582 $1,153 $475 $796 Net interest margin with negative impact of NPL’s $37,044 $38,103 $38,122 $38,222 $38,921 NIM l di NPL I t 3 37% 3 41% 3 45% 3 40% 3 35% ** Assumes a 1.50% limitation for NPL’s and ORE to Total loans and ORE, that resulting earning assets earn at the average earning asset yield for each quarter and considers aggregate amount of NIM excluding NPL Impact 3.37% 3.41% 3.45% 3.40% 3.35% g g y q gg g interest reversals for loans placed on nonaccrual during quarter are reversed. 54

Non‐GAAP Financial Measures – Efficiency Ratio

4Q10 3Q10 2Q10 1Q10 4Q09 $ $ $ $ Total non‐interest expense 36,451 $37,774 $36,491 $36,167 $35,448 Less: ORE expenses 7,874 (8,522) (7,411) (5,402) (8,393) Non‐Interest expense, excluding ORE $28,577 $29,252 $29,080 $30,765 $27,055 Total non‐interest income $8,666 $8,594 $10,569 $8,486 $8,176 Less: Securities gains ‐ ‐ (2,259) (365) ‐ Non‐interest income, excluding securities gains $8,666 $8,594 $8,310 $8,121 $8,176 , g g $ , $ , $ , $ , $ , Net interest income $36,056 $36,060 $35,697 $36,560 $37,031 Total Revenues, excluding securities gains $44,722 $44,654 $44,007 $44,681 $45,207 Efficiency ratio, excl. ORE and securities gains 63.9% 65.5% 66.10% 68.9% 76.3%

55

Market Stabilization

Unemployment Information

11.00% 9.00% 10.00% 6 00% 7.00% 8.00% Nashville MSA Knoxville MSA 4.00% 5.00% 6.00% US

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Source: US Bureau of Labor Statistics “Not seasonally adjusted”

* preliminary

Market Stabilization

• Several Corporate Relocations / Expansions

Nashville Job Growth

Several Corporate Relocations / Expansions

• Nissan – 1,300 jobs ‐ $1.7 billion expansion

J k N ti l Lif O i ll L H t l IRS

• Jackson National Life, Omnicell, Lowes Hotels, IRS
• 1,200+ jobs through 2012 to 2013
• New Music City Convention center ‐ $600 mm, late 2012
• Omni Hotel ‐ $250 mm, 800 rooms

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Market Stabilization

Nashville Residential Real Estate Trends

• Median home prices in Dec. 2010 up

more than 6% over last Dec. 2009

• Residential inventories down 2.4% in

Dec 2010 from Dec 2009

• Dec. 2010 from Dec. 2009
• Sept 16, 2010 – Forbes ranks

Nashville MSA as 4th nationally as to likelihood of home price appreciation

• ver next three years
• ver next three years.

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Source: GNAR