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MEDIA CONTACT: Vicki Kessler 615-320-7532
FINANCIAL CONTACT: Harold Carpenter 615-744-3742
WEBSITE: www.pnfp.com

PINNACLE FINANCIAL EXCEEDS $1 BILLION IN TOTAL ASSETS AND REPORTS RECORD EARNINGS
Assets grow to $1.02 billion

NASHVILLE, Tenn., January 17, 2006- Pinnacle Financial Partners, Inc. (Nasdaq: PNFP) today reported record earnings, superior credit quality and achievement of its asset target of $1 billion as of and for the year ended Dec. 31, 2005.

Fourth Quarter 2005 Highlights:

Record earnings growth:

Record net income for the fourth quarter of 2005 of $2.24 million, up 32.5 percent from the prior year's fourth quarter of $1.69 million. Net income for the year ended Dec. 31, 2005 was $8.06 million, up 51.4 percent from the prior year's $5.32 million.
Record diluted earnings per share for the fourth quarter of 2005 of $0.24, up 33.3 percent from the prior year's fourth quarter of $0.18. Diluted earnings per share for the year ended Dec. 31, 2005 was $0.85, up 39.3 percent from the prior year's $0.61.
Revenue (the sum of net interest income and noninterest income) for the quarter ended Dec. 31, 2005 amounted to $9.79 million, compared to $7.52 million for the same quarter of last year, an increase of 30.1 percent and compared to $8.76 million for the third quarter of 2005, an annualized increase of 47 percent over the previous quarter.

Superior credit quality:

Past due loans over 30 days of only 0.58 percent of total loans with no loan over 90 days past due at Dec. 31, 2005
Nonperforming assets of only 0.07 percent of total loans

Strong balance sheet growth:
- Average loans up 41.5 percent from the same period last year
- Average total deposits up 41.5 percent from the same period last year, with average noninterest bearing demand deposit accounts up 43.1 percent from the same period last year

"Achieving $1 billion in assets through organic growth in five years is remarkable," said M. Terry Turner, president and CEO of Pinnacle Financial Partners. "In my view, this can largely be attributed to our philosophy of hiring a large group of the most respected and experienced bankers and brokers in our market."

Financial Performance and Balance Sheet Growth

Return on average assets for the quarter ended Dec. 31, 2005, was 0.90 percent, compared to 0.95 percent for the same quarter last year.
Return on average stockholders' equity for the quarter ended Dec. 31, 2005, was 14.05 percent, compared to 11.61 percent for the same quarter last year.

Total assets grew to $1.017 billion as of Dec. 31, 2005, up $290 million or 39.9 percent from the $727 million reported at Dec. 31, 2004. Loans as of Dec. 31, 2005, were $648 million, up $176 million or 37.2 percent from the $472 million reported at Dec. 31, 2004. Total deposits increased to $810 million at Dec. 31, 2005, or 42.0 percent higher than the $571 million reported a year ago.

Revenue

Net interest income for the quarter ended Dec. 31, 2005, was $8.29 million compared to $6.28 million for the quarter ended Dec. 31, 2004, an increase of 32.0 percent.

Net interest margin for the fourth quarter of 2005 was 3.58 percent, compared to a net interest margin of 3.78 percent reported during the fourth quarter in 2004 and 3.48 percent for the third quarter of 2005.
Percentage of daily floating rate loans to total loans was 53.5 percent at Dec. 31, 2005.

Noninterest income for the quarter ended Dec. 31, 2005, was $1,501,000, a 20.5 percent increase over the $1,246,000 recorded during the same quarter in 2004.

"As we move into a period where some are concerned about our industry's ability to grow top-line revenues, we are encouraged by the acceleration in our revenue growth rate during the fourth quarter of 2005 as well as our sales pipelines for the first quarter of 2006," said Mr. Turner.

"Our net interest margin improved from the previous quarter," said Harold Carpenter, chief financial officer of Pinnacle Financial Partners. "Our internal models continue to indicate that our balance sheet remains structurally asset sensitive."

"Net loan growth for the quarter ended December 31, 2005 was approximately $44 million, which was consistent with previous quarters. Based on current sales pipelines, we anticipate another strong quarter of loan growth in the first quarter of 2006. Our net interest income was approximately $8.29 million for the fourth quarter, compared to $7.46 million in the third quarter of 2005 and compared to $6.28 million in the same period last year. This represents a year over year growth of 32.0 percent in net interest income which we directly attribute to our associates' focus on growth in high quality customer relationships," said Harold Carpenter.

At Dec. 31, 2005, the ratio of investment securities to total assets declined to 27.4 percent from the 29.1 percent reported a year ago. Pinnacle anticipates that this ratio will approximate 25.0 to 28.0 percent during 2006.

Noninterest income of $1,501,000 during the fourth quarter of 2005 represented approximately 15.3 percent of total revenues, compared to 16.6 percent for the same quarter in 2004.

Noninterest Expense

Noninterest expense for the quarter ended Dec. 31, 2005, was $5.97 million, compared to $4.13 million for the same quarter in 2004 and compared to $5.52 million for the quarter ended Sept. 30, 2005.
Efficiency ratio (noninterest expense divided by net interest income and noninterest income) was 61.0 percent during the fourth quarter of 2005, compared to 54.9 percent during the fourth quarter of 2004 and compared to 63.1 percent for the quarter ended Sept. 30, 2005.

Compensation and employee benefits expense increased approximately 61.6 percent over the same quarter last year due primarily to an increase in personnel and incentive expense. At Dec. 31, 2005, Pinnacle employed 156.5 full-time equivalent personnel compared to 122.0 at Dec. 31, 2004, an increase of approximately 28.3 percent. Equipment and occupancy expenses increased 35.6 percent over the same period last year due in large part to increased square footage for operating units at the firm’s downtown Nashville location and additional branch offices, including the Franklin location in Williamson County and the Hendersonville location in Sumner County.

Credit Quality

Provision for loan losses was $702,000 for the fourth quarter of 2005, compared to $1,134,000 in the fourth quarter in 2004. The following impacted the amount of the provision for loan losses in the fourth quarter of 2005 when compared to the same period in 2004:

Loan growth in the fourth quarter of 2005 of $44 million, compared to loan growth of $37 million in the fourth quarter of 2004.

During the fourth quarter of 2005, the firm recorded net charge-offs of $76,000 compared to net charge-offs of $918,000 during the same period in 2004.
Allowance for loan losses represented 1.21 percent of total loans at Dec. 31, 2005, compared to 1.20 percent at Dec. 31, 2004.

Due to a significant recovery received during the third quarter of 2005, the firm's recoveries have exceeded gross charge-offs such that on an annualized basis, the net recovered position approximates 0.01 percent of average loans for 2005 compared to a net charge-off position of 0.27 percent for 2004.
Nonperforming assets as a percentage of total loans and other real estate decreased to 0.07 percent at Dec. 31, 2005, from 0.12 percent at Dec. 31, 2004.

"We remain extremely pleased with the credit quality of our firm," said Turner. "Throughout this year, our asset quality indicators have been excellent. We continue to believe that our asset quality is a key predictor of our ability to create long-term shareholder value."

Other 2005 Developments

Pinnacle continued to focus on treasury management services and growth in demand deposit and customer securities sold under agreements to repurchase accounts. For the quarter ended Dec. 31, 2005, average noninterest-bearing deposit balances averaged $136 million compared to $95 million for the same quarter last year, an increase of 43 percent. Securities sold under repurchase agreements, a low-cost funding source associated with treasury management activities, also averaged $68 million during the fourth quarter of 2005 compared to $24 million for the same quarter in 2004, an increase of 189 percent.
Pinnacle concluded the offering of $20 million in trust preferred securities to provide regulatory capital to support Pinnacle's continued rapid growth.
Pinnacle grew to 159 associates (156.5 full-time equivalents) at Dec. 31, 2005, with 111 working in client contact areas and 48 in operational and corporate reas. This represents an increase of 37 employees from the 122 employees as of Dec. 31, 2004. Pinnacle's annual retention rate was 94.3 percent at Dec. 31, 2005, representing a very high level of engagement by Pinnacle's associates.
Pinnacle was named as the "Best Place to Work" among Middle Tennessee's large companies. This marks the third consecutive year Pinnacle received top honors in the annual Nashville Business Journal award program.
Pinnacle received the 2005 Community Partnership Award for affordable housing and community investment achievement from the Federal Home Loan Bank of Cincinnati. The housing award is presented annually to one of 740 FHLB-Cincinnati members in Tennessee, Kentucky, and Ohio. The award recipient exemplifies outstanding achievement through the FHLB-Cincinnati's affordable housing programs and investment in its service community.
Pinnacle is planning to open a ninth location to be opened in 2006 in the Donelson/Hermitage area of Davidson County within the Nashville-Davidson-Murfreesboro MSA. Additionally, Pinnacle has been successful in recruiting, Mary Smith, a 16-year veteran from a large regional bank holding company to lead Pinnacle's efforts at that location.

Progress on Cavalry Acquisition

On Oct. 3, 2005, Pinnacle reported that the firm had entered into a definitive agreement to acquire the common stock of Cavalry Bancorp, a one-bank holding company in Murfreesboro, Tenn., with assets of $632 million as of Sept. 30, 2005. During December, the shareholders of both Pinnacle and Cavalry voted to approve the merger which remains subject to receipt of the required regulatory approvals. Management of both firms believes that regulatory approval will be received before the end of the first quarter of 2006. Pinnacle believes it will incur approximately $1 million in pre-tax merger-related charges in the first and second quarters of 2006.

Investment Outlook

Management has developed several financial forecast scenarios for the next several quarters. Based on anticipated growth trends and future investments in the franchise, Pinnacle estimates its first quarter 2006 diluted earnings per share will approximate $0.22 to $0.25, exclusive of merger-related charges. Additionally, based on anticipated growth trends and future investments in the franchise, Pinnacle estimates its 2006 earnings will approximate $1.14 to $1.22 per fully diluted share, exclusive of merger-related charges. These estimates anticipate the Cavalry merger closing before the end of the first quarter of 2006.

This estimate also includes an estimate for compensation expense related to the expensing of stock-based incentives that have been and may be granted to employees under the firm’s broad-based stock incentive plans.

As noted previously, management has developed several scenarios under which these estimates can be achieved and believes these estimates to be reasonable based on these scenarios. However, unanticipated events or developments, including the failure of the merger with Cavalry to be consummated in the first quarter of 2006 or at all, the execution of any initiative involving the development of any market other than the current Nashville-Davidson County-Murfreesboro franchise, the opportunity to hire more seasoned professionals than anticipated or the ability to grow loans significantly in excess of the levels contemplated, may cause the actual results of Pinnacle to differ materially from these estimates.

Pinnacle Financial Partners, the largest financial services firm headquartered in Nashville provides a full range of banking, investment and insurance products and services designed for small- to mid-sized businesses and their owners/operators. Pinnacle provides financial planning services by a certified financial planner (CFP ®), and a number of Pinnacle’s senior financial advisors provide comprehensive wealth management services to help clients increase, protect and distribute their assets.

Pinnacle opened its first office in October 2000 in Commerce Center in downtown Nashville. Since then the firm has added Nashville offices in the Rivergate, Green Hills and West End areas of Davidson County; in Hendersonville in Sumner County; and in the Brentwood, Cool Springs and Franklin areas in Williamson County.

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Certain of the statements in this release may constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The words "expect," "anticipate," "intend," "plan," "believe," "seek," "estimate" and similar expressions are intended to identify such forward-looking statements, but other statements not based on historical information may also be considered forward-looking. All forward-looking statements are subject to risks, uncertainties and other facts that may cause the actual results, performance or achievements of Pinnacle to differ materially from any results expressed or implied by such forward-looking statements. Such factors include, without limitation, (i) unanticipated deterioration in the financial condition of borrowers resulting in significant increases in loan losses and provisions for those losses, (ii) the inability of Pinnacle to continue to grow its loan portfolio at historic rates in the Nashville-Davidson-Murfreesboro MSA or projected rates in the Knoxville MSA, (iii) increased competition with other financial institutions, (iv) lack of sustained growth in the economy in the Nashville-Davidson-Murfreesboro MSA and the Knoxville MSA, (v) rapid fluctuations or unanticipated changes in interest rates, (vi) the inability of Pinnacle to satisfy regulatory requirements for its expansion plans, (vii) the inability of Pinnacle to execute its expansion plans and (viii) changes in the legislative and regulatory environment. A more detailed description of these and other risks is contained in Pinnacle's most recent annual report on Form 10-K. Many of such factors are beyond Pinnacle's ability to control or predict, and readers are cautioned not to put undue reliance on such forward-looking statements. Pinnacle disclaims any obligation to update or revise any forward-looking statements contained in this release, whether as a result of new information, future events or otherwise.