EXHIBIT 99.1 [PINNEACLE FINANCIAL PARTNERS LOGO] FOR IMMEDIATE RELEASE MEDIA CONTACT: Tiffany Carpenter 615-320-7532 FINANCIAL CONTACT: Harold Carpenter 615-744-3742 WEBSITE: www.mypinnacle.com PINNACLE FINANCIAL REPORTS CONTINUED RAPID GROWTH IN SECOND QUARTER QUARTERLY EARNINGS UP 250 PERCENT AND ASSETS REACH $403 MILLION NASHVILLE, Tenn., July 15, 2003 - Pinnacle Financial Partners Inc. (Nasdaq: PNFP), the holding company for Pinnacle National Bank, today reported net income for the quarter ended June 30, 2003, of $537,000, or $0.14 per diluted share, compared to a net income of $107,000, or $0.04 per diluted share for the quarter ended June 30, 2002, an increase of 250 percent. Total assets grew to $403 million as of June 30, 2003, up 75 percent from the $230 million reported at June 30, 2002, and up $98 million from December 31, 2002. Deposits in the second quarter rose to $309 million at June 30, 2003, an 83 percent increase from $169 million in deposits at June 30, 2002 and up $75 million from December 31, 2002. "We are extremely pleased with the company's continued growth in the second quarter," said M. Terry Turner, president and CEO of Pinnacle Financial Partners. "At the time of our follow-on stock offering in June of 2002, we projected that we would grow to $400 million in total assets by December 31, 2004. We believe achievement of this milestone 18 months early demonstrates the strong and growing desire by Nashville's business owners and consumers to deal with a local bank staffed with experienced professionals." Net interest income for the second quarter of 2003 was $3.0 million, compared to $1.8 million for the second quarter of 2002. The net interest margin for the second quarter of 2003 was 3.5 percent, compared to a net interest margin of 3.7 percent for the second quarter of 2002. Net interest income for the first six months of 2003 was $5.6 million, compared to $3.5 million for the same period in 2002. The provision for loan losses was $347,000 for the second quarter of 2003, compared to $232,000 for the second quarter of 2002. The provision for loan losses for the second quarter of 2003 was $59,000 greater than the provision for the first quarter of 2003. The - more - Pinnacle Reports Continued Growth - 2 of 3 provision for loan losses was $635,000 for the first six months of 2003, compared to $441,000 for the same period in 2002. "Loan growth for the second quarter was exceptional. As a result, the associated provision expense related to these new loans was higher than our usual quarterly charge," said Turner. "We attribute much of the loan growth to the addition of banking relationships with many of Nashville's most respected owner-managed businesses and consumers." Net loan growth for the three months ended June 30, 2003, was $26.6 million compared to $19.1 million for the first quarter of 2003, an increase of $7.5 million, or 38 percent. Pinnacle funded a portion of the increased loan volume by altering the mix of its earning assets by selling approximately $7 million of its securities available-for-sale at a gain. The allowance for loan losses represented 1.25 percent of total loans at June 30, 2003. Noninterest income for the second quarter of 2003 was $877,000, compared to $462,000 for the second quarter of 2002. This increase was due to the development of a new mortgage origination unit, gains recognized on loan participations sold, increased depositor service charges due to more deposit accounts and gains on the sale of investment securities. Noninterest income for the first six months of 2003 was $1,339,000, compared to $761,000 for the same period in 2002. For the second quarter of 2003 noninterest income represented approximately 22.7 percent of total revenues (the sum of net interest income and noninterest income). Noninterest expense for the second quarter of 2003 was $2.7 million, compared to $1.9 million for the second quarter of 2002. Noninterest expense for the first six months of 2003 was $4.9 million, compared to $3.6 million for the same period in 2002. The efficiency ratio for the second quarter of 2003 improved to 69.3 percent, compared to 82.2 percent for the second quarter of 2002. During the second quarter of 2003, Pinnacle opened its new office in the Rivergate area of Davidson County. This brings the company's total number of locations to four in the metropolitan Nashville market. Additionally, Pinnacle accelerated expenses associated with new initiatives intended to capitalize on continued market opportunities, including: - Began construction of a new office scheduled to open in late fall or winter of this year in the Cool Springs area in Williamson County. Williamson County was recently ranked by American City Business Journals Inc. as the 15th most affluent - more - Pinnacle Reports Continued Growth - 3 of 3 county in the United States based on per capita income, home values, managerial and professional jobs and other factors. - Continued to recruit experienced individuals in the Nashville market with strong client relationships and the ability to provide distinctive service and effective financial advice. During the first half of 2003, the company added 18 associates and anticipates continued hiring of market proven professionals during the remainder of this year. Fourteen of the new employees have been assigned to client contact positions and four were assigned to the company's operational areas. - Began the site selection process for two new offices anticipated to open in 2004. Based on these incremental investments, anticipated growth trends and the anticipated results from these trends, Pinnacle estimates its third quarter 2003 diluted earnings per share will approximate $0.16 to $0.19. Additionally, diluted earnings per share for the year ending December 31, 2003, are currently estimated to be $0.59 to $0.65. 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 may cause the actual results, performance or achievements of Pinnacle to differ materially from these estimates. Pinnacle Financial Partners, a Nashville-based financial services firm, was founded in March 2000 by prominent Nashville business leaders, including five former First American Corporation executives. Pinnacle, which opened for business October 2000, offers a full-range of banking, investment, and insurance products targeted at small and medium-sized businesses and their owner/managers. Pinnacle operates four offices in the downtown, Green Hills and Rivergate areas of Nashville and in Brentwood, Tennessee. Additional information concerning Pinnacle can be accessed at www.mypinnacle.com. ### 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, and (vi) changes in the legislative and regulatory environment, a more detailed description of various risks is contained in Pinnacle's most recent annual report on Form 10-KSB. 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. PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS - UNAUDITED =============================================================================================== JUNE 30, DECEMBER 31, 2003 2002 - ----------------------------------------------------------------------------------------------- ASSETS Cash and noninterest-bearing due from banks ................ $ 15,432,885 $ 8,061,300 Interest-bearing due from banks ............................ 486,100 4,195,647 Federal funds sold and securities purchased under agreements to resell .................................... 19,272,996 685,182 ------------- ------------- Cash and cash equivalents ............................. 35,191,981 12,942,129 Securities available-for-sale, at fair value ............... 99,968,214 73,980,054 Mortgage loans held-for-sale ............................... 2,311,700 -- Loans ...................................................... 255,448,309 209,743,436 Less allowance for loan losses ............................. (3,188,610) (2,677,043) ------------- ------------- Loans, net ................................................. 252,259,699 207,066,393 Premises and equipment, net ................................ 5,676,540 3,611,504 Other assets ............................................... 7,821,229 7,678,894 ------------- ------------- Total assets ...................................... $ 403,229,363 $ 305,278,974 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest-bearing demand ............................ $ 51,094,951 $ 31,599,897 Interest-bearing demand ............................... 15,705,948 13,234,956 Savings and money market accounts ..................... 96,884,781 75,995,881 Time .................................................. 145,403,698 113,185,655 ------------- ------------- Total deposits .................................... 309,089,378 234,016,389 Securities sold under agreements to repurchase ............. 17,803,361 15,050,208 Federal Home Loan Bank advances ............................ 41,500,000 21,500,000 Other liabilities .......................................... 1,209,284 2,308,730 ------------- ------------- Total liabilities ................................. 369,602,023 272,875,327 Commitments and contingent liabilities Stockholders' equity: Preferred stock, no par value; 10,000,000 shares authorized; no shares issued and outstanding ...... -- -- Common stock, par value $1.00; 10,000,000 shares authorized; 3,692,053 issued and outstanding at June 30, 2003 and December 31, 2002 ............... 3,692,053 3,692,053 Additional paid-in capital ............................ 30,682,947 30,682,947 Accumulated deficit ................................... (1,833,947) (2,743,794) Accumulated other comprehensive income, net ........... 1,086,287 772,441 ------------- ------------- Total stockholders' equity ........................ 33,627,340 32,403,647 ------------- ------------- Total liabilities and stockholders' equity ........ $ 403,229,363 $ 305,278,974 ============= ============= PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED =================================================================================================================== THREE MONTHS ENDED SIX MONTHS ENDED JUNE 30, JUNE 30, 2003 2002 2003 2002 - ------------------------------------------------------------------------------------------------------------------- INTEREST INCOME: Loans, including fees ............................ $3,356,843 $2,463,873 $6,320,353 $4,733,465 Securities, available-for-sale Taxable ..................................... 930,427 350,228 1,833,697 624,450 Tax-exempt .................................. 42,523 -- 85,162 -- Federal funds sold and other ..................... 39,690 57,466 76,101 91,628 ---------- ---------- ---------- ---------- Total interest income ........................ 4,369,483 2,871,567 8,315,313 5,449,543 ---------- ---------- ---------- ---------- INTEREST EXPENSE: Deposits ......................................... 1,119,586 936,448 2,192,258 1,732,574 Securities sold under agreements to repurchase ... 12,170 20,118 26,966 41,729 Federal funds purchased and other borrowings ..... 253,060 100,161 475,189 173,829 ---------- ---------- ---------- ---------- Total interest expense ....................... 1,384,816 1,056,727 2,694,413 1,948,132 ---------- ---------- ---------- ---------- Net interest income .......................... 2,984,667 1,814,840 5,620,900 3,501,411 PROVISION FOR LOAN LOSSES ............................. 347,266 232,000 635,292 441,000 ---------- ---------- ---------- ---------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES ... 2,637,401 1,582,840 4,985,608 3,060,411 NONINTEREST INCOME: Service charges on deposit accounts .............. 120,360 66,826 222,113 120,466 Investment services .............................. 176,292 275,051 332,224 456,561 Fees from origination of mortgage loans .......... 197,906 12,094 244,093 12,094 Gain on loan participations sold ................. 124,039 23,267 126,229 44,959 Gain on sale of investment securities, net ....... 116,573 -- 134,270 -- Other noninterest income ......................... 141,879 84,814 280,304 127,226 ---------- ---------- ---------- ---------- Total noninterest income ..................... 877,049 462,052 1,339,233 761,306 ---------- ---------- ---------- ---------- NONINTEREST EXPENSE: Compensation and employee benefits ............... 1,693,685 1,229,159 3,128,597 2,337,471 Equipment and occupancy .......................... 445,961 338,068 842,786 678,939 Marketing and other business development ......... 103,775 45,496 179,264 91,394 Administrative ................................... 183,692 92,802 321,913 191,605 Postage and supplies ............................. 106,229 70,595 179,491 125,509 Other noninterest expense ........................ 141,685 96,071 265,242 152,187 ---------- ---------- ---------- ---------- Total noninterest expense .................... 2,675,027 1,872,191 4,917,293 3,577,105 ---------- ---------- ---------- ---------- INCOME BEFORE INCOME TAXES ............................ 839,423 172,701 1,407,548 244,612 Income tax expense ............................... 302,556 65,526 497,702 92,853 ---------- ---------- ---------- ---------- NET INCOME ............................................ $ 536,867 $ 107,175 $ 909,846 $ 151,759 ========== ========== ========== ========== PER SHARE INFORMATION: Basic net income per common share ................ $ 0.15 $ 0.04 $ 0.25 $ 0.06 ========== ========== ========== ========== Diluted net income per common share .............. $ 0.14 $ 0.04 $ 0.24 $ 0.06 ========== ========== ========== ========== Weighted average shares outstanding: Basic ....................................... 3,692,053 2,521,723 3,692,053 2,416,888 Diluted ..................................... 3,880,642 2,555,844 3,861,137 2,437,365 PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED ================================================================================================================================== (DOLLARS IN THOUSANDS, JUNE MAR DEC SEPT JUNE MAR EXCEPT PER SHARE DATA) 2003 2003 2002 2002 2002 2002 ================================================================================================================================== BALANCE SHEET DATA, AT QUARTER END: Total assets ........................... $ 403,229 348,366 305,279 278,750 229,795 192,476 Total loans ............................ 255,448 228,842 209,743 191,299 170,427 151,280 Allowance for loan losses .............. (3,189) (2,860) (2,677) (2,427) (2,182) (2,041) Securities available-for-sale .......... 99,968 94,600 73,980 57,062 37,950 20,302 Total deposits ......................... 309,089 266,732 234,016 212,914 168,752 149,460 Securities sold under agreements to repurchase ............ 17,803 15,846 15,050 16,720 16,855 10,223 Advances from FHLB ..................... 41,500 32,500 21,500 15,500 11,500 11,500 Total stockholders' equity ............. 33,627 32,403 32,404 32,089 31,402 18,172 BALANCE SHEET DATA, QUARTERLY AVERAGES: Total assets ........................... $ 365,385 326,108 285,929 243,284 204,592 177,994 Total loans ............................ 245,383 217,690 201,290 181,005 158,076 143,402 Securities available-for-sale .......... 95,351 87,124 63,150 42,007 24,904 19,438 Total deposits ......................... 277,592 243,545 215,617 181,844 163,146 137,933 Securities sold under agreements to repurchase ....................... 11,728 14,106 16,685 13,091 10,496 10,644 Advances from FHLB ..................... 38,137 29,994 18,054 14,196 11,500 8,600 Total stockholders' equity ............. 32,944 32,675 32,167 31,808 18,694 18,292 STATEMENT OF OPERATIONS DATA, FOR THE THREE MONTHS ENDED: Interest income ........................ $ 4,369 3,946 3,691 3,425 2,872 2,573 Interest expense ....................... 1,385 1,310 1,268 1,146 1,057 891 ----------- --------- --------- --------- --------- --------- Net interest income .................. 2,984 2,636 2,423 2,279 1,815 1,682 Provision for loan losses .............. 347 288 250 247 232 209 ----------- --------- --------- --------- --------- --------- Net interest income after provision for loan losses ............ 2,637 2,348 2,173 2,032 1,583 1,473 Noninterest income ..................... 877 462 469 497 462 304 Noninterest expense .................... 2,675 2,242 2,230 2,182 1,872 1,705 ----------- --------- --------- --------- --------- --------- Net income before taxes ................ 839 568 412 347 173 72 Income tax expense ..................... 302 195 127 136 66 27 ----------- --------- --------- --------- --------- --------- Net income ............................. $ 537 373 285 211 107 45 =========== ========= ========= ========= ========= ========= PER SHARE DATA: Earnings - basic ....................... $ 0.15 0.10 0.08 0.06 0.04 0.02 Earnings - diluted ..................... $ 0.14 0.10 0.08 0.06 0.04 0.02 Book value at quarter end (1) .......... $ 9.11 8.78 8.78 8.69 8.51 7.86 Weighted avg. shares - basic ........... 3,692,053 3,692,053 3,692,053 3,692,053 2,521,723 2,312,053 Weighted avg. shares - diluted ......... 3,880,642 3,841,631 3,795,967 3,745,272 2,555,844 2,323,076 Common shares outstanding .............. 3,692,053 3,692,053 3,692,053 3,692,053 3,692,053 2,312,053 CAPITAL RATIOS (2): Equity to total assets ................. 10.9% 12.1% 13.8% 15.1% 18.6% 12.2% Leverage ............................... 8.9% 10.1% 11.1% 13.1% 14.7% 9.5% Tier 1 risk-based ...................... 10.6% 12.1% 12.7% 13.0% 15.4% 9.4% Total risk-based ....................... 11.7% 13.2% 13.8% 14.0% 16.6% 10.4% - -------------------------------- (1) Book value per share computed by dividing total stockholders' equity by common shares outstanding (2) Capital ratios are for Pinnacle Financial Partners, Inc. and are defined as follows: Equity to total assets - Total stockholders' equity as a percentage of end of period assets. Leverage - Tier 1 capital (pursuant to risk-based capital guidelines) as a percentage of adjusted average assets. Tier 1 risk-based - Tier 1 capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets. Total risk-based - Total capital (pursuant to risk-based capital guidelines) as a percentage of total risk-weighted assets. PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED ================================================================================================================================ (DOLLARS IN THOUSANDS, JUNE MAR DEC SEPT JUNE MAR EXCEPT PER SHARE DATA) 2003 2003 2002 2002 2002 2002 - -------------------------------------------------------------------------------------------------------------------------------- PERFORMANCE RATIOS AND OTHER DATA: Return on average assets ............................... 0.59 0.46% 0.40% 0.34% 0.21% 0.10% Return on average stockholders' equity ................. 6.54 4.63% 3.52% 2.64% 1.83% 0.98% Net interest margin (3) ................................ 3.48 3.46% 3.59% 3.97% 3.74% 4.10% Noninterest income to total revenue (4) ................ 22.7% 14.9% 16.2% 17.9% 20.3% 15.1% Noninterest income to avg. assets ...................... 0.96 0.57% 0.65% 0.81% 0.90% 0.68% Noninterest exp. to avg. assets ........................ 2.94 2.79% 3.09% 3.56% 3.64% 3.89% Efficiency ratio (5) ................................... 69.3% 72.4% 77.1% 78.6% 82.2% 85.9% Avg. loans to average deposits ......................... 88.4% 89.4% 93.4% 97.7% 97.1% 103.4% Average interest-earning assets to average interest-bearing liabilities .............. 118.9% 119.4% 120.6% 119.0% 115.0% 114.5% Brokered time deposits to total deposits ............... 15.6% 16.8% 18.0% 19.8% 23.7% 26.5% ASSET QUALITY INFORMATION AND RATIOS: Nonaccrual loans ....................................... $ 1,095 1,095 1,845 70 90 220 Past due loans over 90 days and still accruing interest .................................... $ 60 44 22 41 15 20 Net loan charge-offs ................................... $ 18 105 -- 2 91 -- Allowance for loan losses to total loans ............... 1.25% 1.25% 1.28% 1.27% 1.28% 1.35% Nonperforming assets to total loans and ORE ............ 0.43% 0.48% 0.88% 0.04% 0.05% 0.15% Net loan charge-offs to average loans (annualized) ..... 0.03% 0.19% -- 0.00% 0.23% -- Allowance for loan losses to nonperforming loans ....... 291% 261% 145% 3,467% 2,424% 927% Avg. commercial loan internal risk ratings (6) ......... 3.9 3.9 3.9 4.0 4.0 3.9 Avg. loan account balances (7) ......................... $ 155 158 163 155 151 149 INTEREST RATES AND YIELDS: Loans .................................................. 5.49% 5.52% 5.81% 6.21% 6.18% 6.42% Securities, available-for-sale ......................... 4.14% 4.44% 4.41% 5.16% 5.58% 5.73% Federal funds sold and other ........................... 2.60% 2.22% 2.58% 2.92% 2.15% 2.82% Total deposits, including non-interest bearing ......... 1.62% 1.79% 1.99% 2.17% 2.34% 2.34% Securities sold under agreements to repurchase ......... 0.42% 0.43% 0.61% 0.71% 0.76% 0.82% Federal funds purchased and other borrowings ........... 2.44% 2.63% 3.16% 3.26% 3.45% 2.89% Total deposits and other interest-bearing liabilities .. 1.68% 1.82% 1.99% 2.16% 2.32% 2.28% - ------------------------------- (3) Net interest margin is the result of net interest income on a tax equivalent basis divided by average interest earning assets (4) Total revenue is equal to the sum of net interest income and noninterest income. (5) Efficiency ratio is calculated by dividing noninterest expense by the sum of net interest income and noninterest income. (6) Average risk ratings are based on an internal loan review system which assigns a numeric value of 1 to 10 to all loans to commercial entities based on their underlying risk characteristics as of the end of each quarter. A "1" risk rating is assigned to credits that exhibit Excellent risk characteristics, "2" exhibit Very Good risk characteristics, "3" Good, "4" Satisfactory, "5" Acceptable or Average, "6" Watch List, "7" Criticized, "8" Classified or Substandard, "9" Doubtful and "10" Loss (which are charged-off immediately). Loans rated "8" or worse are considered potential problem credits. Generally, consumer loans are not subjected to internal risk ratings. (7) Computed by dividing the balance of all loans by the number of loan accounts as of the end of each quarter. PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED ======================================================================================================================== (DOLLARS IN THOUSANDS, JUNE MAR DEC SEPT JUNE MAR EXCEPT PER SHARE DATA) 2003 2003 2002 2002 2002 2002 - ------------------------------------------------------------------------------------------------------------------------ INVESTOR INFORMATION: Closing price at end of quarter......... $ 15.95 13.46 12.91 11.19 11.74 9.75 High bid during quarter................. $ 17.00 14.14 13.30 13.00 11.90 10.50 Low bid during quarter.................. $ 13.05 12.76 11.01 10.90 9.70 8.75 OTHER INFORMATION: Brokerage account assets, at quarter-end (8).................... $ 202,000 177,000 171,000 166,000 165,000 169,000 Balance of commercial loan participations sold to other banks and serviced by Pinnacle, at quarter end..................... $ 44,355 41,594 43,089 28,942 29,294 24,355 Total assets per full-time equivalent employee................ $ 5,486 5,318 5,501 5,210 4,462 3,888 Quarterly revenues per full-time equivalent employee................ $ 52.5 47.3 52.1 51.9 44.2 40.1 Number of employees (full-time equivalent)........................ 73.5 65.5 55.5 53.5 51.5 49.5 Associate retention rate (9)............ 94.6% 92.4% 94.5% 94.4% 96.2% 96.2% - --------------------- (8) At market value, based on information obtained from the company's third party broker/dealer for non-FDIC insured financial products and services. (9) Associate retention rate is computed by dividing the number of associates employed at quarter-end less the number of associates that have resigned in the last 12 months by the number of associates employed at quarter-end.