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Announcements:

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

Pinnacle Financial Reports Net Income Up 66 Percent over Last Year
Assets grow to $787 million and diluted earnings per share is $0.19

NASHVILLE, Tenn., Apr. 18, 2005 - Pinnacle Financial Partners Inc. (Nasdaq: PNFP) today reported record earnings for the first quarter of 2005.

First Quarter 2005 Highlights:

• Record net income of $1.78 million, up 66 percent from prior year's $1.07 million
• Record diluted earnings per share of $0.19, up 46 percent from prior year's $0.13
• Strong balance sheet growth:
  • Average loans up 59 percent from the same period last year
  • Average deposits up 48 percent from the same period last year
• Superior credit quality:
  • Net charge-off's as a percentage of average loans of only 0.04 percent
  • Past due loans over 30 days of only 0.27 percent of total loans
  • Nonperforming assets of only 0.12 percent of total loans and other real estate

"This marks the ninth consecutive quarter where year over year quarterly net income growth exceeded 60 percent," said M. Terry Turner, President and CEO of Pinnacle Financial Partners.

Financial Performance

• Return on average assets for the quarter ended March 31, 2005, was 0.96 percent compared to 0.85 percent for the same quarter last year.
• Return on average stockholders' equity for the quarter ended March 31, 2005, was 12.48 percent compared to 12.03 percent for the same quarter last year.
• Efficiency ratio (noninterest expense divided by net interest income and noninterest income) improved to 59.6 percent during the first quarter of 2005 compared to 62.8 percent during the first quarter of 2004.

Total assets grew to $787 million as of March 31, 2005, up $246 million or 45 percent from the $541 million reported at March 31, 2004. Loans as of March 31, 2005, were $517 million, or 60 percent higher than the $323 million reported at March 31, 2004. Total deposits increased to $619 million at March 31, 2005, or 41 percent higher than the $438 million reported at March 31, 2004.

"Loan and deposit growth continues to be the primary influencer of current and future profitability," said Turner. "First quarter 2005 loan growth was exceptionally strong at 68 percent greater than the loan growth we experienced in the first quarter of 2004. Given the outstanding loan growth and the increased loan loss provision that accompanies loan growth, we are very pleased that our return on average assets advanced to 0.96 percent for the quarter. Additionally, having just completed a significant follow-on stock offering in the third quarter of last year, we are also pleased that the demand for our loan and deposit services has enabled us to leverage the additional capital quickly. We have already achieved a return on average equity which approximates pre-follow-on stock offering levels."

Revenue

• Revenue (the sum of net interest income and noninterest income) for the quarter ended March 31, 2005 amounted to $7.7 million compared to $5.3 million for the same quarter of last year, an increase of 45 percent.
• Net interest income for the quarter ended March 31, 2005, was $6.5 million compared to $4.2 million for the quarter ended March 31, 2004.
• Net interest margin for the first quarter of 2005 was 3.78 percent, compared to a net interest margin of 3.49 percent reported during the first quarter in 2004.
• Percentage of daily floating rate loans to total loans was 54.4 percent at March 31, 2005, compared to 52.4 percent at March 31, 2004.
• Noninterest income for the quarter ended March 31, 2005, was $1,178,000 compared to $1,131,000 during the same quarter in 2004.

"Our net interest margin was consistent with the fourth quarter of 2004 and higher than the net interest margin we reported in the first quarter of 2004," said Harold Carpenter, Chief Financial Officer of Pinnacle Financial Partners. "Last year at this time, we reported we were asset sensitive and that our margins should improve once the Federal Reserve Board initiated increases to the Fed funds rate. Since that time the Fed funds rate has increased 1.75 percent and our margin has expanded by almost 30 basis points over the first quarter of last year. This expansion is a tribute to our associates who have been growing our client base in a very competitive pricing market. Given the current environment in Nashville, we do not believe we will experience any significant margin expansion for the remainder of this year and could, in fact, see modest contraction in order to meet competitive pricing pressures."

At March 31, 2005, the ratio of investment securities to total assets declined to 25.7 percent compared to 30.0 percent at March 31, 2004. Pinnacle anticipates that this ratio will approximate 26.0 to 29.0 percent for the remainder of 2005.

The increase in noninterest income was due to the further development of Pinnacle's mortgage origination unit, increased service charges due to more deposit accounts and increased investment services income from Pinnacle Asset Management. These increases were partially offset by decreased revenue from the gains on sales of loans and loan participations and gains on sales of investment securities. For the quarter ended March 31, 2005, noninterest income represented approximately 15.3 percent of total revenues, compared to 21.4 percent for the same quarter in 2004.

Noninterest Income

• Noninterest expense for the quarter ended March 31, 2005, was $4.6 million compared to $3.3 million for the same quarter in 2004.

Compensation and employee benefits expense increased approximately 37 percent over the same quarter last year due primarily to an increase in personnel. At March 31, 2005, Pinnacle employed 131.5 full-time equivalent personnel compared to 95.0 at March 31, 2004, an increase of approximately 38 percent. Equipment and occupancy expenses increased 55 percent over the same period last year due in large part to increased square footage for operating units at our headquarters location and additional branch offices.

"We continue to be successful in adding experienced and successful bankers, brokers and mortgage originators, primarily from the larger regional and national franchises in Nashville. Pinnacle has and will continue to increase expense levels over time in order to capitalize on current and future market opportunities and to provide the necessary infrastructure to support our expectation for continued rapid growth," said Turner.

Credit Quality

• Provision for loan losses was $601,000 for the first quarter of 2005 compared to $354,000 in the first quarter in 2004. The provision for loan losses was significantly higher in the first quarter of 2005 due to:
  • Loan growth in the first quarter of 2005 of $44 million compared to loan growth of $26 million in the first quarter of 2004 and
  • Net charge-offs of $53,000 in the first quarter of 2005 compared to net charge-offs of $30,000 during the same period in 2004. Net charge-offs to average loans were 0.04 percent for both the first quarter of 2005 and the first quarter of 2004.
• Allowance for loan losses represented 1.20 percent of total loans at March 31, 2005, compared to 1.25 percent at March 31, 2004.
  • Nonperforming assets as a percentage of total loans and other real estate increased to 0.12 percent at March 31, 2005, from 0.03 percent at March 31, 2004.

"We are extremely pleased with the credit quality of our firm," said Turner. "Last year, we experienced a charge-off rate of 0.27 percent largely due to the write-down of one particular relationship. In the first quarter of this year, asset quality indicators returned to the superior levels we have experienced through most of the life of this firm. Specifically, our nonperforming assets, net charge-off and past due ratios are at exceptional levels and better than national peer group averages. We continue to believe that our asset quality is the best predictor of our ability to create long-term shareholder value."

Other First Quarter 2005 Developments

• Launched an enhancement project to the company's suite of treasury management products and services designed for Nashville's commercial clients. The enhancements will include a robust web-based platform and highlight technologically advanced delivery of information via image and other emerging technologies. Specifically, the project includes enhancements such as "image lockbox" whereby customer payment receipts are accessed by commercial clients via Pinnacle's website. Although substantially all of the capital outlays and feature/functionality enhancements will occur during 2005, the total project represents a commitment to be phased in over a 24-36 month period. "Our objective is simply to be the best provider of treasury management services in Nashville," said Robert A. McCabe, Jr., Chairman of the Board of Pinnacle Financial Partners. "Our current treasury management services have been well received by business clients. With this new initiative, we are continuing to invest in the latest technology and additional people to ensure we have a significant competitive edge. We are doing this at a time when the larger regional and national franchises are consolidating treasury management operations outside of Nashville. While others in the market may have comparable technology, we do not believe they have the local treasury management expertise to address clients' needs face-to-face the way we can. We believe that with our local expertise and the enhancements to our current treasury management offerings, no other firm in Nashville will be able to match our capabilities."
• Pinnacle currently has 133 associates (131.5 full-time equivalent) at March 31, 2005, with 96 working in client contact areas and 37 in operational and corporate areas. This represents an increase of 10 employees from the 123 employees as of December 31, 2004. Pinnacle's annual retention rate rose to 99.2 percent at March 31, 2005, representing a very high level of engagement for Pinnacle's associates. Approximately 26 associate additions are currently planned for the remainder of 2005 with 14 to be in client contact areas.
• Pinnacle opened its seventh office, located in Franklin, Tenn., which is the county seat of Williamson County. The Franklin office is the firm's third office in Williamson County, which has the highest per capita income and one of the highest growth rates of all Tennessee counties.
• Pinnacle began construction of its eighth office in Hendersonville, Tenn., a high-growth area of the Nashville MSA. It is located northeast of Nashville's central business district. The firm anticipates this office to be open in mid-2005. With a population of over 50,000, Hendersonville is the largest city in Sumner County, another one of the fastest growing counties in Tennessee. Additionally, Pinnacle is considering a ninth location to be opened in late 2005 in the Nashville MSA. Pinnacle expects to add another two offices in the Nashville MSA in 2006, which would bring the company's total number of offices to 11.

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 second quarter 2005 diluted earnings per share will approximate $0.19 to $0.21. Pinnacle tightened the estimate for diluted earnings per share for the year ending Dec. 31, 2005, to range between $0.84 and $0.88. Additionally, Pinnacle has increased its estimate for total asset balances to range between $950 million and $1 billion by the end of 2005 as a result of continued organic growth. Pinnacle anticipates more than previously anticipated loan demand for the remainder of 2005 and, as a result, has considered the increased provision for loan losses associated with increased loan balances in these estimates. Additionally, Pinnacle has included in these estimates additional compensation expense associated with increased number of personnel and, due to accelerated growth and earnings performance, incentive expense associated with Pinnacle's annual cash bonus plan which has been forecasted to be greater than the 80 percent of targeted incentives awarded to associates in 2004. "This exceptional balance sheet growth during the remainder of 2005 should put us in a position to continue extraordinary earnings growth during 2006," said Carpenter.

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 execution of any initiative involving the development of any market other than the current Nashville 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.

The estimates do not include compensation expense related to the expensing of stock options that have been and may be granted to employees under the firm's broad-based stock option plans. Compensation expense attributable to the expensing of stock options would have approximated $0.02 to $0.03 per fully diluted share in the last six months of 2005, but consistent with recent announcements by the Securities and Exchange Commission, Pinnacle will begin including such compensation expense in its statement of income in 2006.

Pinnacle Financial Partners, the largest financial services firm headquartered in Nashville, provides a full range of banking, investment and insurance products and services targeted at 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 and offices in Brentwood, Cool Springs and Franklin in Williamson County.

Additional information concerning Pinnacle can be accessed at www.pnfp.com.

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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 (the "Securities Act"). 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) increased competition with other financial institutions, (iii) lack of sustained growth in the economy in the Nashville, Tennessee area, (iv) rapid fluctuations or unanticipated changes in interest rates, (v) the inability of Pinnacle to satisfy regulatory requirements for its expansion plans, (vi) the inability of Pinnacle to execute its branch expansion plans and (i) 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.