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

Second 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 July 21, 2010

Safe Harbor Statements

Forward‐looking statements

Certain of the statements in this release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words "expect," "anticipate," “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 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 underwriting ultimately grow its loan portfolio in the Nashville-Davidson-Murfreesboro-Franklin 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) 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

• f 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 restrictions on entities participating in the p y , g g ; ( ) p g p p g Capital Purchase Program, of the U.S. Department of the Treasury (the “Treasury”); (xiii) further deterioration in the valuation of other real estate

• wned; (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 passage and 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

th S iti d E h C i i F b 26 2010 d t t t l t F 10 Q fil d ith th S iti d the Securities and Exchange Commission on February 26, 2010 and most recent quarterly report on Form 10-Q filed with the Securities and Exchange Commission on May 7, 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 obligation to update or revise any forward-looking statements contained in this release, whether as a result of new information, future events or otherwise.

2

Opening Comments

Two Important Themes

• Focus on aggressively dealing with credit issues

Focus on aggressively dealing with credit issues

• Building the core earnings capacity of the firm

3

Opening Comments

Two Important Themes

• Aggressively dealing with credit issues

Aggressively dealing with credit issues

• Construction book down $113 million since year end ’09
• Increased allowance to total loans to 2.61%

c eased a o a ce o o a oa s o 6 %

• 2nd Qtr NCO’s of $33.5 million
• Including restructured loans, total NPA’s increased from 5.05% to

5.09% between year end and June 30, 2010

• NPLs and ORE increased by $5 million

$

• Approximately $68.8 million in NPA resolutions during 2Q10
• 12 new hires since Jan 2009 focused on Special Assets, Loan Review,

and Compliance p

4

Opening Comments

Two Important Themes

• Building the core earnings capacity of the firm

g g p y

• Core funding growth at annualized rate of 15.8% during 2Q10
• 4 new branches since June 30, 2009 and 39 FTE’s in customer

contact roles

• Net interest income growth of 17.00% over 2Q09

N t i t t i f 3 23% d t 2 75% f th d

• Net interest margin of 3.23% compared to 2.75% for the second

quarter of last year

• Loan growth will likely be flat to down for remainder of year
• 2Q10 loan decrease of $146 million

5

Commercial Real Estate

Vacancy Rates

Nashville CRE Vacancy Rates (*) National CRE Vacancy Rates (*) 2Q 2010 YE 2009 YE 2008 YE 2007 YE 2006 YE 2005 2Q 2010 Warehouse 9.5% 10.6% 9.6% 8.9% 8.6% 9.1% 11.4% ** Multifamily 8.8% 9.6% 7.6% 5.2% 5.5% 6.2% 7.8% Multifamily 8.8% 9.6% 7.6% 5.2% 5.5% 6.2% 7.8% Retail 8.3% 8.1% 6.3% 7.0% 6.3% 6.6% 10.9% Office 13.8% 12.7% 10.5% 10.5% 11.1% 10.6% 17.4%

* REIS

PNFP CRE Portfolio

* REIS ** As of 12/31/09

Retail 17.5% Comm Const 4.2% Other 11.3% Office 11.3% Warehse 9.1% Own/Occ 46.6%

6

Asset Quality Metrics

Past Dues and NPLs Expressed as a % of Total Loans within Category

PNFP 30-90 days past due Peer 30-90 days past due PNFP NPLs and > 90 days Peer NPLs and > 90 days 2Q10 p (*) 2Q10 y (*)

• Const. and land

development

0.89% 2.12% 15.75% 15.35%

CRE – Own Occupied

0 51% 0 95% 2 61% 2 86%

CRE Own Occupied

0.51% 0.95% 2.61% 2.86%

CRE – Investment

0.02% 1.07% 2.31% 4.06%

Total real estate

0.59% 1.45% 4.56% 5.86%

C&I

0.47% 0.96% 1.70% 2.56%

Total loans

0.66% 1.38% 3.64% 4.55% (*) Uniform Bank Performance Report – 3/10

7

Asset Quality Metrics

$118 MM nonaccruing loans

Land Develop Resid Const Other 1.7%

3.55% of loan balances

Land Develop 35.9% 18.4% Nonaccrual loans $118,331,000 ORE 42,616,000 Total NPA’s $160,947,000 C&I NPA’s as a % of Total loans + ORE 4.77% 14.4% 1‐4 Family 8.4% CRE 21.2%

As of June 30, 2010

8

Net Charge‐off Trend

(dollars in thousands)

$44,579

$45,000 $50,000

$33,463

$35,000 $40,000 $20,000 $25,000 $30,000

$4 760 $5,228 $6,789 $15,123

$10,000 $15,000

$4,760 $5,228 1

$0 $5,000

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

9

Asset Quality Metrics

ORE Classifications

Balances Fair value as a % Average

(dollars in thousands)

June 30, 2010 (dollars in thousands)

• f book value

Appraisal Age in Months

ORE classifications: New home construct $3,579.2 113.3% 5.3 Developed lots 360.1 106.8% 4.7 Undeveloped land 30 778 6 112 7% 3 1 Undeveloped land 30,778.6 112.7% 3.1 Other 7,898.0 108.2% 3.4 Total ORE $42,615.9 111.9% 3.8

12 properties with values > $1m 1 property > 1 year old Largest balance ‐ $5,000,000 All properties in Middle TN All properties in Middle TN $11.1 mm under contract Average age of portfolio is 123 days

10

NPA Disposition Activity

(dollars in thousands)

$68,847

$70 000 $80,000 $50 000 $60,000 $70,000

$26 102 $42,022 $33,566

$30 000 $40,000 $50,000

$6 777 $26,102 $24,026

$10 000 $20,000 $30,000

$6,777

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

11

Balance Sheet Strength

Strong capital base

June 30 March 31

• Dec. 31,

Sept 30 June 30, June 30, 2010 March 31, 2010 , 2009

• Sept. 30,

2009 , 2009

Tangible common equity 7.1% 7.4% 7.3% 7.5% 7.4% Tangible common to Tangible common to risk weighted assets 9.0% 9.1% 8.9% 9.1% 9.0% Tier 1 leverage 10.4% 10.7% 10.7% 10.9% 11.1% Tier 1 risk based capital 13.1% 13.4% 13.1% 13.1% 13.3% Total risk based capital 14.8% 15.0% 14.8% 14.7% 15.0% Tangible Common Book Value per Common Share $10.04 $10.60 $10.71 $10.99 $10.80

12

Positive Trends in Core Funding continue

100%

Core Funding Relationship Based Non‐Core Funding Wholesale Funding 26% 26% 24% 22% 23% 24% 16% 12% 10%

70% 80% 90% 100%

31% 28% 24% 26%

50% 60% 70%

47% 49% 51% 59% 62% 66%

20% 30% 40% 0% 10% 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10

13

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

Net Interest Margin

Net Interest Margin Trend

Key Margin Drivers:

• Impact from NPLs negatively impact loan yields

3.19% 3.35% 3.40% 3.45%

3 2% 3.3% 3.4% 3.5%

• Greater spreads to index, drive core loan yields up
• Higher core funding volumes reduce overall COF

Gap Widening

N I I

3.05% 3.19% 3.25% 3.23% 2.89%

2 9% 3.0% 3.1% 3.2%

$30 5 $34.5 $37.0 $36.6 $35.7

$30 $40

Net Interest Income

(in millions)

2.75%

2.6% 2.7% 2.8% 2.9%

$30.5

$0 $10 $20 2.5% 2Q09 3Q09 4Q09 1Q10 2Q10

Actual E l di ti i t f NPA

$0 2Q09 3Q09 4Q09 1Q10 2Q10

Excluding negative impact of NPAs

14

Net Interest Income

• Core Loan yields continue to rise as new and repricing loan opportunities

exceed goal of > 5.25% Q2 Historical Trend

New or Renewing $$ New or Renewed Rate %

April 2010 $131.8 5.51% p May 2010 $130.4 5.53% June 2010 $153.7 5.49%

Q3 Repricing Opportunities

Upcoming Maturing/ Repricing Loan $ Maturing Rate %

pp

p g $ g

July 2010 $85.4 3.95% August 2010 $141.5 4.16% September 2010 $48.1 4.26%

15

Net Interest Income

• CD repricing opportunities ‐ $208mm in Client CD’s maturing over next

three months. Goal at renewal should be approx. 1.50% to 2.00% for client CD’s or transfer borrowers to money market accounts. CD s or transfer borrowers to money market accounts.

Q2 Historical Trend Client CD’s ‐ $ Client CD’s – Avg. Rate (%) April 2010 $107 0 1 99% April 2010 $107.0 1.99% May 2010 $91.6 1.91% June 2010 $98.2 1.60% Q3 Repricing Opportunities Client CD’s ‐ $ Client CD’s – Avg. Rate (%) July 2010 $71 5 2 18% July 2010 $71.5 2.18% August 2010 $69.4 2.21% September 2010 $67.8 2.04%

16

Fee income

(dollars in thousands) 2Q10 1Q10 4Q09 3Q09 2Q09 2Q10 1Q10 4Q09 3Q09 2Q09 Service charges $2,429 $2,365 $2,595 $2,559 $2,568 Investment services 1,315 1,236 1,136 1,112 1,078 Insurance commissions 904 1,099 895 906 919 su a ce co ss o s 90 ,099 895 906 9 9 Gains on loan sales 931 566 1,108 900 1,633 Trust fees 755 897 706 586 642 Other: Gain on sales of investments 2,259 365

• 2,116

Other 1,976 1,958 1,736 1,674 1,645 Total noninterest income $10,569 $8,486 $8,176 $7,737 $10,602

Less: Gain on sales of investments

(2,259) (365)

• (2,116)

Less: Insurance contingency fees

• (325)
• Adjusted noninterest income

$8,310 $7,796 $8,176 $7,737 $8,486

17

Expenses

(dollars in thousands) 2Q10 1Q10 4Q09 3Q09 2Q09 $ $ $ $ $ Salaries and benefits $16,191 $16,659 $15,037 $14,245 $13,747 Incentive Expense (345) 345

• (1,072)

Equipment and occupancy 5,493 5,366 5,064 4,446 4,310 Other real estate owned 7 411 5 402 8 393 1 250 3 914 Other real estate owned 7,411 5,402 8,393 1,250 3,914 Marketing and BD 794 754 1,116 512 466 Supplies and Postage 701 734 755 515 829 Intangible amortization 746 746 774 777 759 Intangible amortization 746 746 774 777 759 Other expenses 5,500 6,161 4,411 5,535 7,654 Total noninterest expense $36,491 $36,167 $35,448 $27,280 $30,607 Efficiency ratio 78.9% 80.3% 78.4% 64.5% 74.4%

Total noninterest expense – excluding other real estate $29,080 $30,765 $27,055 $26,030 $26,693 Efficiency ratio, excl. ORE and Efficiency ratio, excl. ORE and securities gains 66.10% 68.9% 76.3% 61.5% 68.4% 18

Taxes

(dollars in millions)

Current Amounts Deferred for Future Periods Totals

Key points: A. At June 30, PNFP was in a

Tax related assets $10.9 $44.1 $55.0 Tax related liabilities ‐ (24.7) (24.7)

, 3‐year cumulative loss position B. Unlikely that PNFP will record any tax expense or

Net tax assets before valuation allowance 10.9 19.4 30.3 Valuation allowance ‐ (17.4) (17.4)

y p benefit for next several quarters C. Once profitability is reasonably assured for

Net tax assets after valuation allowance $10.9 $2.0 $12.9 (*) (*) Represents the aggregate amount of carryback potential.

y future periods, deferred tax allowance will be reversed

19

Nashville Flood ‐ May 2‐3, 2010

• Nashville Mayor estimated impact at $1.5 billion
• City of Nashville – Water Treatment, Buildings,

y , g , Roads ‐ $250 mm (largely reimbursed by insurance and Federal government)

• Corps of Engineers projects
• Gaylord Entertainment – Project costs $215 mm to

$225 mm, reopen December 2010

• Nashville Symphony ‐ $42 mm
• FEMA ‐ $143 mm for Individuals and Households and

$101 mm for SBA low interest disaster loans

20

Nashville Residential Real Estate Trends

• Several positives in recent data
• June ’10 saw big increase in

median home prices median home prices

• Monthly closings continued to

rise

• Need more jobs to get inventory

Need more jobs to get inventory back to 4‐6 month range

21

Source: GNAR

Nashville Job Growth

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

, j $ p

• Jackson National Life, Omnicell, Lowes Hotels
• 1 000 jobs through 2012 to 2013
• 1,000 jobs through 2012 to 2013
• New Music City Convention center ‐ $600 mm, late 2012
• Potential Hotel ‐ $200 mm to $300 mm, 700 to 1,000

rooms (land acquired)

22

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 vulnerabilities
• Responsibly growing core earnings capacity
• Continued core funding growth
• Continued margin expansion throughout 2010

23

Q&A Q&A

Second Quarter 2010 Investor Call

Terry Turner, President and CEO Harold Carpenter, EVP and CFO Harvey White Chief Credit Officer Harvey White, Chief Credit Officer July 21, 2010

24

S l t l I f ti Supplemental Information

Second Quarter 2010 Investor Call

Terry Turner, President and CEO Harold Carpenter, EVP and CFO Harvey White Chief Credit Officer Harvey White, Chief Credit Officer July 21, 2010

25

Loan Categories

Comparison of 2Q10 to 1Q10, year end 2009, 2008

*Continued reduction in C&D exposure

Amts. 2Q10 %’s 2Q10 Amts. 1Q10 %’s 1Q10 Amts. 4Q09 %’s 4Q09 Amts. 4Q08 %’s 4Q08 C&D and Land $ 411.5 12.4% $ 486.3 14.0% $ 525.3 14.7% $ 645.4 19.2% Consumer RE 709.1 21.3% 730.2 21.0% 756.0 21.2% 675.6 20.1% CRE – Owner Occ. 521.5 15.6% 545.6 15.7% 535.1 15.0% 371.6 11.1% CRE Investment 551 1 16 5% 547 3 15 7% 543 5 15 3% 554 9 16 6% CRE – Investment 551.1 16.5% 547.3 15.7% 543.5 15.3% 554.9 16.6% Other RE loans 53.2 1.6% 51.4 1.4% 39.5 1.1% 50.4 1.5% Total real estate 2,246.4 67.4% 2,360.8 67.8% 2,399.4 67.3% 2,297.9 68.5% C&I 1,010.0 30.3% 1,031.5 29.7% 1,071.4 30.1% 965.1 28.8% Other loans 77.5 2.3% 87.2 2.5% 92.6 2.6% 91.9 2.7% Total loans $3,333.9 100.0% $3,479.5 100.0% $3,563.4 100.0% $3,354.9 100.0% $ , $ , $ , $ , 26

Construction and Land Categories

Comparison of 2Q10 to 1Q10, year end 2009, 2008

* PNFP continues to reduce exposure to residential construction and development

Amts. 2Q10 %’s(*) 2Q10 Amts. 1Q10 %’s(*) 1Q10 Amts. 4Q09 %’s(*) 4Q09 Amts. 4Q08 %’s (*) 4Q08 Residential Spec $ 28 1 0 8% $ 39 0 1 1% $ 44 2 1 2% $ 96 9 2 9% Residential – Spec $ 28.1 0.8% $ 39.0 1.1% $ 44.2 1.2% $ 96.9 2.9% Residential – Custom 12.8 0.4% 18.8 0.5% 18.6 0.5% 29.0 0.9% Residential – Condo 31.6 1.0% 37.9 1.1% 38.1 1.1% 48.5 1.4% Commercial Constr ct 46 6 1 4% 57 5 1 6% 84 5 2 4% 77 1 2 3% Commercial Construct. 46.6 1.4% 57.5 1.6% 84.5 2.4% 77.1 2.3% Land Dev– Residential 142.3 4.3% 173.1 5.1% 184.0 5.2% 243.2 7.2% Land Dev – Commercial 107.1 3.2% 124.9 3.6% 117.2 3.3% 114.2 3.4% L d U ifi d 43 0 1 3% 35 1 1 0% 38 6 1 1% 36 5 1 1% Land – Unspecified 43.0 1.3% 35.1 1.0% 38.6 1.1% 36.5 1.1% Total C&D $ 411.5 12.4% $ 486.3 14.0% $ 525.3 14.7% $ 645.4 19.2%

(*) as a percentage of total loans

27

Net Charge‐off’s

• Largest Charge‐off’s during 2Q10
• #1 ‐ $2.6 mm – Finance
• #2 ‐ $2.1 mm – Condo development
• #3 ‐ $1.8 mm – Retail center
• #4 ‐ $1.5 mm – Residential development

$ p

• #5 ‐ $1.3 mm – Residential development

28

Nonperforming Loans

• Largest NPL’s
• #1

$12 5 mm mixed use condo development – foreclosure

• #1 ‐ $12.5 mm mixed‐use condo development – foreclosure

process has started – approximately 50% sold out

• #2 ‐ $9.9 mm retail center – foreclosure in process – several

d h interested parties negotiating to purchase project

• #3 ‐ $9.8 mm Nashville condo development – $5mm reduction

in past 12 months

• #4 ‐ $6.9 mm residential builder and developer – continues to

sell but at a slow pace $

• #5 ‐ $4.7 mm condo development – anticipate foreclosure to

start at the end of July

• Approximately 250 accounts make up remaining NPLs

pp y p g

29

OREO Properties

• Largest OREO Properties:
• #1

$5 0 mm residential development

• #1 ‐ $5.0 mm residential development
• #2 ‐ $3.5 mm residential development
• #3 ‐ $2.9 mm residential development

#3 $2.9 mm residential development

• #4 ‐ $2.2 mm residential development
• #5 ‐ $2.2 mm residential development

30

Conservative Bond Portfolio

Corporates

Average yield on bond

Municipals Corporates 1.3%

Average yield on bond portfolio = 4.10%

Average life = 4.96 years Effective Duration 3 23%

MBS pass thrus p 24.3%

Effective Duration = 3.23%

(millions)

MTD QTD thrus 59.3% Agency Notes 13.1% Purchases $84.2 85.1 Sales (115.7) (115.7) Mat/Calls (8.7) (24.4) Pre‐pays (15.2) (30.8) Agency CMOs 2.0%

FNMA, FHLMC and GNMA

As of June 30, 2010

31

Funding sources

Positive trends in funding continue

Quarter over December 31, Quarter % Change Core Funding: Noninterest‐bearing deposit accounts 6.4% 529,867 12.5% 498,087 11.3% Interest‐bearing demand accounts 9.1% 527,144 12.4% 483,274 11.0% Savings and money market accounts 11.8% 1,339,161 31.6% 1,198,012 27.2% Time deposit accounts less than $100,000 ‐5.3% 385,576 9.1% 407,312 9.2% 30‐Jun‐10 Percent , 2009 Percent Time deposit accounts less than $100,000 5.3% 385,576 9.1% 407,312 9.2% Total core funding 7.5% 2,781,748 65.6% 2,586,685 58.7% Non‐core funding: Relationship based non‐core funding: Time deposit accounts greater than $100,000 Reciprocating time deposits ‐5.3% 216,894 5.1% 228,941 5.2% Other time deposits 2 3% 651 116 15 3% 636 521 14 4% Other time deposits 2.3% 651,116 15.3% 636,521 14.4% Securities sold under agreements to repurchase ‐42.1% 159,490 3.8% 275,465 6.2% Total relationship based non‐core funding ‐9.9% 1,027,500 24.2% 1,140,927 25.9% Wholesale funding: Time deposit accounts greater than $100,000 Public funds 50.0% 60,000 1.4% 40,005 0.9% Brokered deposits 56 7% 143 642 3 4% 331 447 7 5% Brokered deposits ‐56.7% 143,642 3.4% 331,447 7.5% Federal Home Loan Bank advances, Federal funds purchased and other borrowings ‐38.2% 131,477 3.1% 212,655 4.8% Subordinated debt 0.0% 97,476 2.3% 97,476 2.2% Total wholesale funding ‐36.5% 432,595 10.1% 681,583 15.5% Total non‐core funding ‐19.9% 1,460,095 34.4% 1,822,510 41.3% T t l 3 8% 4 241 843 100 0% 4 409 195 100 0% Totals ‐3.8% 4,241,843 100.0% 4,409,195 100.0%

32

Non‐GAAP Financial Measures – Net Interest Margin

2Q10 1Q10 4Q09 3Q09 2Q09

• Avg. net earning assets

$4,527,471 $4,651,695 $4,690,347 $4,576,473 $4,523,003 Net interest income $35,697 $36,560 $37,031 $34,548 $30,512 Impact of tax exempt instruments 0.07% 0.06% 0.06% 0.06% 0.04% Net interest margin 3.23% 3.25% 3.19% 3.05% 2.75% Negative impact of NPLs ** $2,425 $1,662 $1,890 $1,530 $1,525 Net interest margin with negative $38 122 $38 222 $38 921 $36 078 $32 034 impact of NPL’s $38,122 $38,222 $38,921 $36,078 $32,034 NIM excluding NPL Impact 3.45% 3.40% 3.35% 3.19% 2.89% ** 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 g g y q gg g interest reversals for loans placed on nonaccrual during quarter are reversed. 33

Non‐GAAP Financial Measures – Efficiency Ratio

2Q10 1Q10 4Q09 3Q09 2Q09 $ $ $ $ $ Total non‐interest expense $36,491 $36,167 $35,448 $27,280 $30,607 Less: ORE expenses (7,411) (5,402) (8,393) (1,250) (3,914) Non‐Interest expense, excluding ORE $29,080 $30,765 $27,055 $26,030 $26,693 Total Non‐Interest income $10,569 $8,486 $8,176 $7,737 $10,602 Less: Securities gains (2,259) (365) ‐ ‐ (2,116) Non‐interest income, excluding securities gains $8,310 $8,121 $8,176 $7,737 $8,486 , g g $ , $ , $ , $ , $ , Net Interest Income $35,697 $36,560 $37,031 $34,548 $30,512 Total Revenues, excluding securities gains $44,007 $44,681 $45,207 $42,285 $38,998 Efficiency ratio, excl. ORE and securities gains 66.10% 68.9% 76.3% 61.5% 68.4%

34

Extremely Attractive Competitive Landscapes

Nashville

60% 70% 80% 70.51%

re

40% 50% 60% 44.06%

Market Shar

20% 30%

Aggregate M

Aggregate market share for the big 3 in Nashville MSA has declined almost 26.5% in the last 9 years. 0% 10%

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 Source: FDIC – June 2009

Top 3 banks in Nashville are Regions, Bank of America and SunTrust

Extremely Attractive Competitive Landscapes

Knoxville

65% 70% 66.62%

hare

55% 60% 53.51%

te Market Sh

45% 50%

Aggregat

Aggregate market share for the big 3 in Knoxville MSA has declined >13% in the last 10 years. 40%

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

Top 3 banks in Knoxville are First Horizon Suntrust and Regions

Source: FDIC – June 2009

Top 3 banks in Knoxville are First Horizon, Suntrust and Regions