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

Third 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 October 20, 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 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 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 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 July 21, 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

• Aggressively dealing with credit issues

Aggressively dealing with credit issues

• Building the core earnings capacity of the firm

St bili i k t t d

• Stabilizing market trends
• Continuing to seize on competitive vulnerabilities

3

Third Quarter 2010 Highlights

Aggressively dealing with Credit Issues Building Core Earnings Capacity Credit Issues

• NCOs

Earnings Capacity

• Net Interest Income
• NPAs
• NPA inflows
• DDAs
• Core Deposits
• NPLs
• Potential Problem Loans

Core Deposits

• EPS
• Past Dues
• C&D Exposure

C&D Exposure

4

Third Quarter 2010 Highlights

• Significant quarter to quarter reduction in NCOs from

$33 5 $7 3 $33.5mm to $7.3 mm

• 5.7% decrease in NPA’s in 3Q
• Allowance at 2.60% at Sept. 30 compared to 2.61% at June 30
• Continued rapid reduction in C&D book
• Core deposit growth of 20.7%
• Growth in DDA’s up 9.7% linked quarter, 15.2% y/y

p % q , % y/y

• Net interest margin of 3.23%
• $0 02 fully diluted EPS

5

• $0.02 fully diluted EPS

Aggressively Dealing with Credit Issues

• Routine regulatory exam completed
• Construction book down $165.5 million since year end ’09

$ y

• Including restructured loans, total NPA’s decreased from

5.05% to 5.01% between year end and September 30, 2010

• NPLs and ORE decreased by $9.1 million
• Approximately $43.1 million in NPA resolutions during

Approximately $43.1 million in NPA resolutions during 3Q10

• 13 new hires since Jan 2009 focused on Special Assets, Loan

p , Review, and Compliance

6

Asset Quality Metrics – Risk Rating Trends

Risk rating trends reflect continued improvement

7

Asset Quality Metrics

Decline in potential problem loans and criticized and classified assets

$587 $625 $614

$600 $700 9 5% 10.5%

sets

• ans

8.63% 9.30% 8.23%

$364 $515 $518

$400 $500 $600 7.5% 8.5% 9.5%

Classified Ass

loans/Total lo

7.24% 7.18%

$100 $200 $300 4 5% 5.5% 6.5%

ticized and C

ntial Problem

4.03%

$0 $100 3.5% 4.5% 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10

Total Crit

Poten

8

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 3Q10 p (*) 3Q10 y (*)

• Const. and land

development

2.03% 1.65% 15.28% 15.37%

CRE – Own Occupied

0 19% 0 72% 2 33% 3 05%

CRE Own Occupied

0.19% 0.72% 2.33% 3.05%

CRE – Investment

0.00% 0.84% 1.01% 3.89%

Total real estate

0.57% 1.17% 4.01% 5.58%

C&I

0.54% 0.76% 1.72% 2.31%

Total loans

0.55% 1.16% 3.28% 4.25% (*) Uniform Bank Performance Report – 6/10

9

Asset Quality Metrics

• Sept. 30,

2010 As a % of l l June 30, 2010 As a % of l l

Past Dues > 30 Days

2010 total loans 2010 total loans Nonaccrual loans past due $ 65,426 2.01% $ 90,424 2.72% Managed by Special Assets: > 90 days $ 3,100 0.10% $ 2,752 0.08% 30 to 89 days 12,712 0.39% 14,115 0.42% $ 15,812 0.49% $ 16,867 0.52% $ , $ , Managed by Relationship Managers: > 90 days $ 539 0.02% $ 364 0.01% 30 to 89 days 5,316 0.16% 4,924 0.15% $ 5 855 0 18% $ 5 288 0 16%

10

$ 5,855 0.18% $ 5,288 0.16%

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

$5 000 $10,000 $15,000

Net

$0 $5,000

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

11

Asset Quality Metrics

ORE Categories

Balances Fair value as a % Average

(dollars in thousands)

September 30, 2010 (dollars in thousands)

• f book value

Appraisal Age in Months

ORE categories: New home construction $2,811 103% 6.6 Developed lots 13,497 120% 6.6 Undeveloped land 13 029 119% 4 9 Undeveloped land 13,029 119% 4.9 Other 19,373 118% 4.7 Total ORE $48,710 118% 5.7

12 properties with values > $1m 2 properties > 1 year old Largest balance ‐ $ 12.4M All properties in Middle TN except one property totaling $207 000 All properties in Middle TN except one property totaling $207,000 $12.1 million under contract Average age of portfolio is 143 days

12

NPA Disposition Activity

(dollars in thousands)

$68,847

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

$26 102 $42,022 $33,566 $43,096

$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 3Q10

13

Balance Sheet Strength

Strong capital base

Sept 30 June 30 March 31

• Dec. 31,

Sept 30

• Sept. 30,

2010 June 30, 2010 March 31, 2010 , 2009

• Sept. 30,

2009

Tangible common equity 7.2% 7.1% 7.4% 7.3% 7.5% Tangible common to Tangible common to risk weighted assets 9.3% 9.0% 9.1% 8.9% 9.1% Tier 1 leverage 10.5% 10.4% 10.7% 10.7% 10.9% Tier 1 risk based capital 13.5% 13.1% 13.4% 13.1% 13.1% Total risk based capital 15.1% 14.8% 15.0% 14.8% 14.7% Tangible Common Book Value per Common Share $10.12 $10.04 $10.60 $10.71 $10.99

14

Building Core Earnings Capacity

• Core funding growth at annualized rate of 20.7% during 3Q10
• 2Q10 core funding growth was 15.8%

N t i t t i f 3Q10 f $36 1M d t $35 7M t 2Q10

• Net interest income for 3Q10 of $36.1M compared to $35.7M at 2Q10
• Net interest margin of 3.23% at 3Q, declining cost of funds with

moderate rise in average loan yields

• Cost of funds of 1.35% at 3Q compared to 1.43% at 2Q10
• Loan yields were 4.96% for 3Q compared to 4.74% at 6/30
• $230mm in average FFS in 3Q – excess liquidity likely to remain

elevated in 4Q10

• Absent increased liquidity factor, margin continues to perform well
• Loans will be flat to down for remainder of year

Loans will be flat to down for remainder of year

• 3Q10 decrease was $82 million compared to 2Q10 loan decrease of

$146 million

15

Positive Trends in Core Funding Continue

100%

Core Funding Relationship Based Non‐Core Funding Wholesale Funding 26% 26% 24% 24% 23% 24% 16% 12% 10% 7%

70% 80% 90% 100%

28% 24% 26%

50% 60% 70%

49% 51% 59% 62% 66% 69%

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

16

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

Positive DDA trends

(dollars in millions)

$517 $ $504 $534

$550

$456 $463 $496 $504

$450 $500

alances

$418

$400 $450

Average Ba

$350

DDA A

$300

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

17

Net Interest Margin

Net Interest Margin Trend

Key Margin Drivers:

• Excess cash holding resulting in margin dilution

3 19% 3.35% 3.40% 3.45% 3.41%

3.3% 3.4% 3.5%

g g g

• Higher renewal rates continue to drive core loan

yields up

• Increased core deposits help continue to help our

margins

N I I

3.05% 3.19% 3.25% 3.23% 3.23% 2 89% 3.19%

3.0% 3.1% 3.2%

margins

• Bond portfolio continues to experience significant

principal reduction on mortgage backs $37.0 $36.6 $ $36 1 $36 2

36 38

Net Interest Income

(in millions)

2.75% 2.89%

2.7% 2.8% 2.9%

$35.7 $36.1 $36.2

30 32 34

2.75%

2.6% 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10

Actual E l di ti i t f NPL

30 4Q09 1Q10 2Q10 3Q10 4Q10

Excluding negative impact of NPLs

18

Net Interest Margin Analysis

Key Takeaways:

• Continued progress on loan

yields and reducing cost of yields and reducing cost of funds

• Treasury yields influenced

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

19

Net Interest Income

• CD repricing opportunities ‐ $220mm in Client CD’s maturing over next

three months. Goal at renewal should be approx. 1.00% to 1.50% for client CD’s or transfer borrowers to money market accounts.

Average Renewal Rates Client CD’s – Avg. Rate (%)

CD s or transfer borrowers to money market accounts.

1st Quarter 2010 2.03% 2nd Quarter 2010 1.84% 3rd Quarter 2010 1.69% 4th Quarter 2010 Average Maturing CD Rates 2.08% Significant opportunity to l t f f d

20

lower cost of funds

Fee income

(dollars in thousands) 3Q10 2Q10 1Q10 4Q09 3Q09 3Q10 2Q10 1Q10 4Q09 3Q09 Service charges $2,444 $2,429 $2,365 $2,595 $2,559 Investment services 1,234 1,315 1,236 1,136 1,112 Insurance commissions 954 904 1,099 895 906 su a ce co ss o s 95 90 ,099 895 906 Gains on loan sales 1,310 921 519 1,167 978 Trust fees 726 755 897 706 586 Other: Gain on sales of investments

• 2,259

365

• Other

1,925 1,986 2,005 1,677 1,596 Total noninterest income $8,593 $10,569 $8,486 $8,176 $7,737

Less: Gain on sales of investments

• (2,259)

(365)

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

$8,593 $8,310 $7,796 $8,176 $7,737

21

Expenses

(dollars in thousands) 3Q10 2Q10 1Q10 4Q09 3Q09 $ $ $ $ $ Salaries and benefits $16,069 $16,191 $16,659 $15,037 $14,245 Incentive Expense

• (345)

345

• Equipment and occupancy

5,231 5,493 5,366 5,064 4,446 Other real estate owned 8 522 7 411 5 402 8 393 1 250 Other real estate owned 8,522 7,411 5,402 8,393 1,250 Marketing and BD 748 794 754 1,116 512 Supplies and Postage 636 701 734 755 515 Intangible amortization 744 746 746 774 777 Intangible amortization 744 746 746 774 777 Other expenses 5,822 5,500 6,161 4,411 5,535 Total noninterest expense $37,772 $36,491 $36,167 $35,448 $27,280 Efficiency ratio 84.6% 78.9% 80.3% 78.4% 64.5%

Total noninterest expense – excluding other real estate $29,250 $29,080 $30,765 $27,055 $26,030 Efficiency ratio, excl. ORE and Efficiency ratio, excl. ORE and securities gains 65.5% 66.10% 68.9% 76.3% 61.5% 22

Building Core Earnings Capacity

• Margin opportunities
• Reducing our NPA’s from 4.60% to 1.50% could yield an additional $4.5 mm in interest

i (@ %) income (@ 4.5%)

• At a 1.50% NPA level, NPA’s impact our margin by approx. 0.20% currently
• Reduce deposit pricing by 0.20% in IB deposits could yield an additional $6.6 mm in NII (@

current rates), thus impact NIM by 0.25%

• At 1.47% for third quarter, deposit pricing remains well above in‐market competitor

deposit pricing data

• Reducing current liquidity levels would also contribute to NIM accretion
• Provision opportunities
• Before 2009 PNFP avg net charge off rate for the period from ‘02‐’08 was less than 0 08%

Before 2009, PNFP avg. net charge off rate for the period from 02 08 was less than 0.08%

• Given business model, long‐term net c/o rate target of <0.30% seems reasonable
• However credit costs to remain elevated for next several quarters

23

Building Core Earnings Capacity

• Expense opportunities
• Branch buildout substantially complete in Nashville

ffi f i l i ’

• Current staffing of special asset group is 28 FTE’s
• Ancillary costs associated with increased level of NPL’s
• Excluding ORE expense and securities gains, YTD efficiency ratio of approximately 66.8%
• Target efficiency ratio of < 60%

24

The Case for Growth

• Premier banking markets
• Economic development momentum

l bl i

• Vulnerable competitors
• 66% of middle market banking customers willing to consider new banking partner

(Greenwich Research)

• Largest locally‐owned bank in Nashville with 91% of clients willing to recommend

Pinnacle

• Best place to work
• 95% retention ratio
• Outsized core deposit growth
• Year over year growth of 30 5%

Year over year growth of 30.5%

25

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

26

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

* preliminary

Client Satisfaction Results – 1Q10 and 2Q10

Regions Bank S T t 30%

Pinnacle vs. Regional Competitors

Regional A

SunTrust First Tennessee 20% 25%

Regional C Regional B

First Tennessee Pinnacle Financial Bank of America 15% 20% Customer Penetration (%)

Regional D Regional C

Wells Fargo/ Wachovia Home Federal Bank of BB&T 5% 10%

Regional F Regional E

FSGBank Wilson Bank & Trust Home Federal Bank of Tennessee 0% 5% 30% 40% 50% 60% 70% 80% 90% 100% Excellent Client Satisfaction

27

Overall client satisfaction compared to customer penetration – businesses with $1 million to $500 million in sales in Nashville and Knoxville – Greenwich Research

Client Loyalty Results – 1Q10 and 2Q10

Pinnacle vs. Regional Competitors

Regions Bank SunTrust Pinnacle Bank of America 2009 Q1 & Q2 '10 2009 Q1 & Q2 '10 2009 Q1 & Q2 '10 2009 Q1 & Q2 '10 2009 Q1 & Q2 '10 Base

(83) (49) (109) (47) (66) (39) (55) (33) (44) (25)

Regional A Regional D Regional C Regional B

Loyalty Index

71 73 82 75 78 76 84 88 74 74

Likeliness to Recommen d Bank

70 73 84 69 78 77 93 91 63 89

Expected Change in Amount of Business Conducted with Bank

13 25 34 22 33 31 45 58 37 13

with Bank

13 25 34 22 33 31 45 58 37 13

Likelihood to Continue Using for Future Banking Needs

79 72 93 85 90 90 92 94 76 90

Needs

79 72 93 85 90 90 92 94 76 90 Client loyalty net performance ‐ businesses with $1 million to $500 million in sales in Nashville and Knoxville Source ‐ Greenwich Research 28

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

29

Q&A Q&A

Third Quarter 2010 Investor Call

Terry Turner, President and CEO Harold Carpenter, EVP and CFO Harvey White Chief Credit Officer Harvey White, Chief Credit Officer October 20, 2010

30

S l t l I f ti Supplemental Information

Third Quarter 2010 Investor Call

Terry Turner, President and CEO Harold Carpenter, EVP and CFO Harvey White Chief Credit Officer Harvey White, Chief Credit Officer October 20, 2010

31

Loan Categories

Comparison of 3Q10 to 2Q10, year end 2009, 2008

*Continued reduction in C&D exposure

Amts. 3Q10 %’s 3Q10 Amts. 2Q10 %’s 2Q10 Amts. 4Q09 %’s 4Q09 Amts. 4Q08 %’s 4Q08 C&D and Land $359.7 11.1% $ 411.5 12.4% $ 525.3 14.7% $ 645.4 19.2% Consumer RE 720.1 22.1% 709.1 21.3% 756.0 21.2% 675.6 20.1% CRE – Owner Occ. 516.2 15.9% 521.5 15.6% 535.1 15.0% 371.6 11.1% CRE Investment 534 9 16 4% 551 1 16 5% 543 5 15 3% 554 9 16 6% CRE – Investment 534.9 16.4% 551.1 16.5% 543.5 15.3% 554.9 16.6% Other RE loans 52.2 1.6% 53.2 1.6% 39.5 1.1% 50.4 1.5% Total real estate 2,183.1 67.1% 2,246.4 67.4% 2,399.4 67.3% 2,297.9 68.5% C&I 995.7 30.6% 1,010.0 30.3% 1,071.4 30.1% 965.1 28.8% Other loans 73.1 2.3% 77.5 2.3% 92.6 2.6% 91.9 2.7% Total loans $3,251.9 100.0% $3,333.9 100.0% $3,563.4 100.0% $3,354.9 100.0% $ , $ , $ , $ , 32

Asset Quality Metrics

$103.1 MM nonaccruing loans

Other 2 1%

Nonaccrual Loans

3.17% of loan balances

Land Develop 38.7% Resid Const 14.6% 2.1% Nonaccrual loans $ 103.1 ORE 48.7 Total NPA’s $ 151.8 NPA’s as a % of Total loans + ORE 4.60% C&I 15.3% 1‐4 Family CRE

As of September 30, 2010

13.3% 16.0%

33

Construction and Land Categories

Comparison of 3Q10 to 2Q10, year end 2009, 2008

* PNFP continues to reduce exposure to residential construction and development

Amts. 3Q10 %’s(*) 3Q10 Amts. 2Q10 %’s(*) 2Q10 Amts. 4Q09 %’s(*) 4Q09 Amts. 4Q08 %’s (*) 4Q08 Residential Spec $ 22 2 0 7% $ 28 1 0 8% $ 44 2 1 2% $ 96 9 2 9% Residential – Spec $ 22.2 0.7% $ 28.1 0.8% $ 44.2 1.2% $ 96.9 2.9% Residential – Custom 9.4 0.3% 12.8 0.4% 18.6 0.5% 29.0 0.9% Residential – Condo 26.1 0.8% 31.6 1.0% 38.1 1.1% 48.5 1.4% Commercial Constr ct 54 0 1 7% 46 6 1 4% 84 5 2 4% 77 1 2 3% Commercial Construct. 54.0 1.7% 46.6 1.4% 84.5 2.4% 77.1 2.3% Land Dev– Residential 125.2 3.8% 142.3 4.3% 184.0 5.2% 243.2 7.2% Land Dev – Commercial 99.4 3.1% 107.1 3.2% 117.2 3.3% 114.2 3.4% L d U ifi d 23 4 0 7% 43 0 1 3% 38 6 1 1% 36 5 1 1% Land – Unspecified 23.4 0.7% 43.0 1.3% 38.6 1.1% 36.5 1.1% Total C&D $ 359.7 11.1% $ 411.5 12.4% $ 525.3 14.7% $ 645.4 19.2%

(*) as a percentage of total loans

34

Construction and Land Categories

* Almost 50% of C&D book managed by Special Asset Group personnel. * Almost 60% of land categories managed by SAG.

Total Portfolio 3Q10 Total Portfolio 2Q10 Total Portfolio 1Q10 NPL’s 3Q10 NPL’s 2Q10 NPL’s 1Q10

Performing Criticized 3Q10 Performing Criticized 2Q10 Performing Criticized 1Q10

Almost 60% of land categories managed by SAG.

Residential – Spec $ 22.2 $ 28.1 $ 39.0 $ 1.4 $ 1.8 $ 5.5 $ 6.4 $ 10.9 $ 11.6 Residential – Custom 9.4 12.8 18.8 0.0 0.5 1.0 0.5 0.5 0.4 Residential – 26.1 31.6 37.9 13.7 19.5 22.0 6.8 5.7 10.0 Residential Condo 26.1 31.6 37.9 13.7 19.5 22.0 6.8 5.7 10.0 Commercial Construct. 54.0 46.6 57.5 0.0 0.0 2.1 8.2 0.0 0.0 Land Dev– Residential 125.2 142.3 173.1 23.2 21.7 34.4 47.8 66.9 64.2 Residential Land Dev – Commercial 99.4 107.1 124.9 16.2 19.3 6.0 32.3 41.0 66.6 Land – Unspecified 23.4 43.0 35.1 0.4 1.5 1.3 12.5 13.3 5.0 Total C&D $ 359.7 $ 411.5 $ 486.3 $ 55.0 $ 64.3 $ 72.3 $ 114.6 $ 138.3 $ 157.8 As a percentage of total C&D loans 15.3% 15.6% 14.9% 31.9% 33.6% 32.4%

35

Construction and Land Categories

Analysis of Pass‐rated AC&D loans

* Pass rated credits have minimal past dues with downgrades slowing. Avg.

Pass rated 3Q10 Pass rated 2Q10 Pass rated 1Q10 Past due 3Q10 Past due 2Q10 Past due 1Q10 Pass to Fail During 3Q10 Pass to Fail During 2Q10 Pass to Fail During 1Q10

ticket size of about $400,000.

3Q10 2Q10 1Q10

Residential – Spec $ 14.3 $ 15.4 $ 21.9 $ - $ - $ - $ - $ 1.1 $ 2.4 Residential – Custom 8.8 11.4 17.5

• 0.4

0.1 Custom Residential – Condo 5.6 6.5 5.9

• 0.4
• Commercial

Construct. 45.8 46.6 55.4

• 7.8
• Land Dev–

Residential 54.3 53.5 74.3 1.1

• 0.5

18.7 9.2 Land Dev – Commercial 50.9 46.8 52.3

• 0.3

2.5 3.6 23.9 L d U ifi d 10 5 28 1 28 8 0 2 0 7 0 9 Land – Unspecified 10.5 28.1 28.8

• 0.2
• 0.7

0.9 Total C&D $190.2 $208.3 $256.1 $1.1 $0.2 $0.3 $10.8 $24.9 $36.5

36

Land Loan and ORE locations

> $250,000 properties, approx. $248 mm balances, 10% in ORE

37

Commercial Real Estate

Vacancy Rates

Nashville CRE Vacancy Rates (*) National CRE Vacancy Rates (*) 3Q 2010 YE 2009 YE 2008 YE 2007 YE 2006 YE 2005 3Q 2010 Warehouse 10.8% 10.6% 9.6% 8.9% 8.6% 9.1% 14.0% 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 8.5% 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 15.9%

PNFP CRE Portfolio

Office 10.7% O /O Warehouse 9.4% Own/Occ 46.8%

38

Net Charge‐off’s

• Largest Charge‐off’s during 3Q10
• #1 ‐ $1,608,000 land development
• #2 ‐ $781,000 residential land development
• #3 ‐ $453,000 retail sales
• #4 ‐ $447,000 commercial property

$ , p p y

• #5 ‐ $431,000 condo development

39

Nonperforming Loans

• Largest NPL’s
• #1

$8 6 million condo development $1 3 million in

• #1 ‐ $8.6 million condo development ‐ $1.3 million in

paydowns were received in the 3rd quarter

• #2 ‐ $5.0 million land development – foreclosure in process
• #3 ‐ $4.8 million commercial land – contract pending for partial

sale would reduce exposure by 27% ‐ possible foreclosure in 4th quarter

• #4 ‐ $4.6 million condo development – foreclosure occurred in

October $

• #5 ‐ $4.5 million commercial real estate development –

foreclosure occurred in October – contract pending for partial sale would reduce exposure by 30%

• Approximately 220 accounts make up remaining NPLs

40

Historical ORE Disposition Activity

Sales > $250,000 YTD 2010 ORE at Sept. 30, 2010

As a % ‐ original As a % ‐ F/C As a % ‐ ORE Bal As a % ‐ original As a % ‐ F/C loan amt loan amt Original loan amount 100% 100% Customer 11% 18% payments 11% 18% Charge off’s prior to foreclosure 18% 19% Balance @ Balance @ foreclosure 71% 100% 62% 100% Valuation losses while in ORE 12% 17% 11% 18% Balance in ORE 59% 83% 100% 51% 82% Loss on disposition 7% 11% 13%

(*) Asset dispositions > $250,000

41 Net realized 51% 72% 87%

OREO Properties

• Largest OREO Properties:
• #1

$12 4 million commercial real estate development – contract

• #1 ‐ $12.4 million commercial real estate development – contract

pending for partial sale would reduce exposure by 20%

• #2 ‐ $5.7 million residential development – contract pending for

i l l ld d b partial sale would reduce exposure by 28%

• #3 ‐ $3.8 million residential land development
• #4

$3 5 million residential land development

• #4 ‐ $3.5 million residential land development
• #5 ‐ $3.0 million residential land development

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Investment Portfolio

Conservative bond portfolio

Corporates Treasuries

Average yield on bond

Municipals Corporates 1.1% Treasuries 1.1%

Average yield on bond portfolio = 3.97% (TEY)

Average life = 4.35 years Effective Duration 2 66% MBS pass Agency

21.5%

Effective Duration = 2.66%

(millions)

MTD QTD

MBS pass thrus 62.2% A Agency Notes 9.9%

Purchases $37.7 174.8 Sales ‐ ‐ Mat/Calls (36.3) (77.2) Pre‐pays (15.6) (37.1)

Agency CMOs 4.2% FNMA, FHLMC and GNMA

As of September 30, 2010

43

Funding sources

Positive trends in funding continue

Quarter over Quarter over Quarter % Change Core Funding: Noninterest‐bearing deposit accounts 9.7% 581,181 13.7% 529,867 11.3% Interest‐bearing demand accounts ‐0.2% 526,164 12.4% 527,144 11.0% Savings and money market accounts 7.5% 1,439,594 34.0% 1,339,161 27.2% Time deposit accounts less than $100 000 1 8% 378 734 8 9% 385 576 9 2% 30‐Sep‐10 Percent 30‐Jun‐10 Percent Time deposit accounts less than $100,000 ‐1.8% 378,734 8.9% 385,576 9.2% Total core funding 5.2% 2,925,673 69.1% 2,781,748 58.7% Non‐core funding: Relationship based non‐core funding: Time deposit accounts greater than $100,000 Reciprocating time deposits 19.5% 259,192 6.1% 216,894 5.2% Other time deposits 12 4% 570 379 13 5% 651 116 14 4% Other time deposits ‐12.4% 570,379 13.5% 651,116 14.4% Securities sold under agreements to repurchase 20.0% 191,392 4.5% 159,490 6.2% Total relationship based non‐core funding ‐0.6% 1,020,963 24.1% 1,027,500 25.9% Wholesale funding: Time deposit accounts greater than $100,000 Public funds ‐100.0% ‐ 0.0% 60,000 0.9% Brokered deposits 51 0% 70 390 1 7% 143 642 7 5% Brokered deposits ‐51.0% 70,390 1.7% 143,642 7.5% Federal Home Loan Bank advances, Federal funds purchased and other borrowings ‐7.6% 121,435 2.9% 131,477 4.8% Subordinated debt 0.0% 97,476 2.3% 97,476 2.2% Total wholesale funding ‐33.1% 289,301 6.9% 432,595 15.5% Total non‐core funding ‐10.3% 1,310,264 30.9% 1,460,095 41.3% Totals 0 1% 4 235 937 100 0% 4 241 843 100 0%

44

Totals ‐0.1% 4,235,937 100.0% 4,241,843 100.0%

Taxes and Goodwill

(dollars in millions)

Current Amounts Deferred for Future Periods Totals

DTA Key Points

A At June 30 PNFP was in a 3 year Tax related assets $11.9 $44.7 $56.6 Tax related liabilities ‐ (26.8) (26.8) A. At June 30, PNFP was in a 3‐year cumulative loss position B. In Q3, we increased the VA by the amount equal to the current period benefit we would have Net tax assets before valuation allowance 11.9 17.9 29.8 Valuation allowance ‐ (17.8) (17.8) recognized absent being in a VA position C. Once profitability is reasonably assured for future periods, deferred tax allowance will be Net tax assets after valuation allowance $11.9 $0.1 $12.0 deferred tax allowance will be reversed

Goodwill Goodwill

A. September 30, 2010 is our annual evaluation date B. Many subjective factors have to be considered in the assessment including a “control” premium as well as fair value determinations for loans, deposits, core deposit intangibles. C. Our testing indicated no impairment

45

g p

Non‐GAAP Financial Measures – Net Interest Margin

3Q10 2Q10 1Q10 4Q09 3Q09

• Avg. net earning assets

$4,519,955 $4,527,471 $4,651,695 $4,690,347 $4,576,473 Net interest income $36,060 $35,697 $36,560 $37,031 $34,548 Impact of tax exempt instruments 0.06% 0.07% 0.06% 0.06% 0.06% Net interest margin 3.23% 3.23% 3.25% 3.19% 3.05% Negative impact of NPLs ** $2,043 $2,425 $1,662 $1,890 $1,530 Net interest margin with negative $38 103 $38 122 $38 222 $38 921 $36 078 impact of NPL’s $38,103 $38,122 $38,222 $38,921 $36,078 NIM excluding NPL Impact 3.41% 3.45% 3.40% 3.35% 3.19% ** 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. 46

Non‐GAAP Financial Measures – Efficiency Ratio

3Q10 2Q10 1Q10 4Q09 3Q09 $ $ $ $ $ Total non‐interest expense $37,774 $36,491 $36,167 $35,448 $27,280 Less: ORE expenses (8,522) (7,411) (5,402) (8,393) (1,250) Non‐Interest expense, excluding ORE $29,252 $29,080 $30,765 $27,055 $26,030 Total non‐interest income $8,594 $10,569 $8,486 $8,176 $7,737 Less: Securities gains ‐ (2,259) (365) ‐ ‐ Non‐interest income, excluding securities gains $8,594 $8,310 $8,121 $8,176 $7,737 , g g $ , $ , $ , $ , $ , Net interest income $36,060 $35,697 $36,560 $37,031 $34,548 Total Revenues, excluding securities gains $44,654 $44,007 $44,681 $45,207 $42,285 Efficiency ratio, excl. ORE and securities gains 65.5% 66.10% 68.9% 76.3% 61.5%

47

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

• Jackson National Life, Omnicell, Lowes Hotels
• 1,000 jobs through 2012 to 2013
• New Music City Convention center ‐ $600 mm, late 2012
• Omni Hotel ‐ $250 mm, 800 rooms

48

Market Stabilization

Nashville Residential Real Estate Trends

• Median home prices in Sept. 2010 up

more than 7% over last Sept. 2009

• Residential inventories up only 1.2%

in Sept 2009 from Sept 2008 in Sept. 2009 from Sept. 2008

• 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.

49

Source: GNAR