EXHIBIT 99.1 (PINNACLE FINANCIAL PARTNERS LOGO) FOR IMMEDIATE RELEASE MEDIA CONTACT: Vicki Kessler 615-320-7532 FINANCIAL CONTACT: Harold Carpenter 615-744-3742 WEBSITE: www.mypinnacle.com PINNACLE FINANCIAL CONTINUES RAPID GROWTH ASSETS CLIMB TO $498 MILLION AND EARNINGS PER SHARE INCREASE 210 PERCENT IN 2003 NASHVILLE, Tenn., January 20, 2004 - Pinnacle Financial Partners, Inc. (Nasdaq: PNFP), the holding company for Pinnacle National Bank, today reported that net income for the year ended December 31, 2003, was $2,555,000, or $0.65 per diluted share, an increase of 210 percent when compared to Pinnacle's net income of $648,000, or $0.21 per diluted share for the year ended December 31, 2002. Total assets grew to $498 million as of December 31, 2003, up 63 percent from the $305 million reported at December 31, 2002. Loans as of December 31, 2003 were $297 million compared to $210 million a year earlier. Total deposits increased to $391 million at December 31, 2003, compared to $234 million on December 31, 2002. Net loan growth for the year ended December 31, 2003, was $87 million, compared to $76 million during 2002. Total deposit growth for the year ended December 31, 2003, was $157 million, compared to $101 million during 2002. "Our firm has experienced extraordinary growth in its first three years as evidenced by the fact that we are now the largest of the 181 commercial banks chartered in the United States during 2000. We are particularly pleased that the volume of growth during 2003 continued to escalate over the growth we had in our previous two years," said M. Terry Turner, President and CEO of Pinnacle Financial Partners. "During 2003, we recruited 37 associates to our firm, a 66% increase when compared to the number of associates at the end of last year. Also, during the fourth quarter of 2003, we continued to be successful in attracting several associates to the firm, all of whom have significant experience and have been actively involved in the Middle Tennessee banking and wealth management arena for many years. During 2003, we opened two new full service banking offices in the Rivergate and Cool Springs areas, and plan to open an office in the West End area of Nashville and another office in nearby Franklin, Tennessee in 2004. During the fourth quarter of 2003, we were successful in issuing $10 million in trust preferred securities. This should provide, under Pinnacle Reports Continued Growth - 2 of 3 current guidelines, the regulatory capital we need to support our anticipated growth in 2004 and for the foreseeable future without diluting our current shareholder base." Net interest income for the year ended December 31, 2003, was $12.9 million, compared to $8.2 million for year ended December 31, 2002. The net interest margin for 2003 was 3.5 percent, compared to a net interest margin of 3.8 percent for the year ended December 31, 2002. The net interest margin for the fourth quarter of 2003 was 3.6 percent, compared to a net interest margin of 3.5 percent for the third quarter of 2003 and 3.6 percent for the fourth quarter of 2002. The provision for loan losses was $1.2 million for the year ended December 31, 2003, compared to $938,000 during 2002. The provision for loan losses was $204,000 for the fourth quarter of 2003, compared to $318,000 for the third quarter of 2003 and $250,000 for the fourth quarter of 2002. The allowance for loan losses represented 1.25 percent of total loans at December 31, 2003. Noninterest income for the year ended December 31, 2003, was $3.3 million, compared to $1.7 million during 2002. This increase was due to the continued development of Pinnacle's new mortgage origination unit, gains recognized on loan participations sold, increased depositor service charges due to more deposit accounts, increased investment services income from Pinnacle Asset Management and gains on the sale of investment securities. Noninterest income for the fourth quarter of 2003 was $924,000, compared to $1,024,000 for the third quarter of 2003 and $469,000 for the fourth quarter of 2002. For the year ended December 31, 2003, noninterest income represented approximately 20.3 percent of total revenues (the sum of net interest income and noninterest income), compared to 17.4 percent for the same period in 2002. Noninterest expense for the year ended December 31, 2003, was $11.0 million, compared to $8.0 million for the same period in 2002. Noninterest expense for the fourth quarter of 2003 was $3.3 million, compared to $2.8 million for the third quarter of 2003 and $2.2 million for the fourth quarter of 2002. The efficiency ratio (noninterest expense divided by total revenues) for the year ended December 31, 2003, improved to 68.3 percent, compared to 80.4 percent for the year ended December 31, 2002. Additionally, Pinnacle continues to increment expense levels to capitalize on continued market opportunities, including: o During the fourth quarter of 2003, Pinnacle successfully recruited four of Nashville's most experienced private banking and wealth management professionals, all of whom are focused on serving the affluent market segment of Nashville and Middle Tennessee. During 2003, Pinnacle has added 37 associates Pinnacle Reports Continued Growth - 3 of 3 and anticipates continued hiring of market proven professionals for the foreseeable future. Twenty-nine of these associates have been assigned to customer contact areas and eight have been assigned to operational areas. o Further office expansion in 2003, with plans to open two new offices in 2004 - one in the West End area of Nashville and the other in Franklin, Tennessee. These offices will represent the firm's sixth and seventh locations. Based on these anticipated growth trends and the anticipated results from these trends, Pinnacle estimates its first quarter 2004 diluted earnings per share will approximate $0.23 to $0.25. Diluted earnings per share for the year ending December 31, 2004, are estimated to be $1.15 to $1.25. 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, 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. A number of Pinnacle's senior financial advisors provide comprehensive wealth management services to help clients 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 Rivergate and Green Hills and in Brentwood and the Cool Springs area of Williamson County. 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 ======================================================================================================== DECEMBER 31, DECEMBER 31, 2003 2002 - -------------------------------------------------------------------------------------------------------- ASSETS Cash and noninterest-bearing due from banks ..................... $ 13,768,278 $ 8,061,300 Interest-bearing due from banks ................................. 1,180,371 4,195,647 Federal funds sold .............................................. 32,235,401 685,182 ------------- ------------- Cash and cash equivalents .................................. 47,184,050 12,942,129 Securities available-for-sale, at fair value .................... 139,944,238 73,980,054 Mortgage loans held-for-sale .................................... 1,582,600 -- Loans ........................................................... 297,004,110 209,743,436 Less allowance for loan losses .................................. (3,718,598) (2,677,043) ------------- ------------- Loans, net ................................................. 293,285,512 207,066,393 Premises and equipment, net ..................................... 6,911,359 3,611,504 Other assets .................................................... 9,512,899 7,678,894 ------------- ------------- Total assets ........................................... $ 498,420,658 $ 305,278,974 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Noninterest-bearing demand ................................. $ 60,796,396 $ 31,599,897 Interest-bearing demand .................................... 31,407,213 13,234,956 Savings and money market accounts .......................... 140,383,878 75,995,881 Time ....................................................... 157,981,525 113,185,655 ------------- ------------- Total deposits ......................................... 390,569,012 234,016,389 Securities sold under agreements to repurchase .................. 15,050,110 15,050,208 Federal Home Loan Bank advances ................................. 44,500,000 21,500,000 Subordinated debt ............................................... 10,310,000 -- Other liabilities ............................................... 3,655,155 2,308,730 ------------- ------------- Total liabilities ...................................... 464,084,277 272,875,327 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 December 31, 2003 and 2002 ............................................... 3,692,053 3,692,053 Additional paid-in capital ................................. 30,682,947 30,682,947 Accumulated deficit ........................................ (189,155) (2,743,794) Accumulated other comprehensive income, net ................ 150,536 772,441 ------------- ------------- Total stockholders' equity ............................. 34,336,381 32,403,647 ------------- ------------- Total liabilities and stockholders' equity ............. $ 498,420,658 $ 305,278,974 ============= ============= PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS - UNAUDITED ========================================================================================================================= THREE MONTHS ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, 2003 2002 2003 2002 - ------------------------------------------------------------------------------------------------------------------------- INTEREST INCOME: Loans, including fees ................................... $ 3,714,091 $2,944,295 $13,709,159 $10,509,655 Securities, available-for-sale: Taxable............................................. 1,401,480 678,102 4,158,064 1,837,574 Tax-exempt.......................................... 79,022 23,518 217,284 35,085 Federal funds sold and other ............................ 49,408 40,510 177,404 178,618 ----------- ---------- ----------- ----------- Total interest income .............................. 5,244,001 3,686,425 18,261,911 12,560,932 ----------- ---------- ----------- ----------- INTEREST EXPENSE: Deposits ................................................ 1,087,724 1,083,861 4,349,365 3,813,019 Securities sold under agreements to repurchase........... 23,483 25,861 65,716 91,034 Federal funds purchased and other borrowings............. 240,220 157,766 948,023 457,576 ----------- ---------- ----------- ----------- Total interest expense .............................. 1,351,427 1,267,488 5,363,104 4,361,629 ----------- ---------- ----------- ----------- Net interest income ................................. 3,892,574 2,418,937 12,898,807 8,199,303 PROVISION FOR LOAN LOSSES .................................... 203,920 250,000 1,157,280 938,000 ----------- ---------- ----------- ----------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES .......... 3,688,654 2,168,937 11,741,527 7,261,303 NONINTEREST INCOME: Service charges on deposit accounts...................... 153,863 80,378 513,074 281,009 Investment services...................................... 341,231 132,555 998,119 809,837 Fees from origination of mortgage loans.................. 177,848 - 666,853 - Gain on loan participations sold......................... 132,783 62,300 334,249 120,297 Gain on sale of investment securities, net............... - - 247,978 - Other noninterest income ................................ 118,049 197,767 527,207 520,800 ----------- ---------- ----------- ----------- Total noninterest income ............................ 923,774 473,000 3,287,480 1,731,943 ----------- ---------- ----------- ----------- NONINTEREST EXPENSE: Compensation and employee benefits ...................... 2,250,040 1,472,330 7,260,982 5,236,792 Equipment and occupancy ................................. 504,258 392,853 1,827,260 1,442,288 Marketing and other business development................. 123,071 82,382 386,905 244,500 Administrative .......................................... 164,264 113,709 655,729 436,984 Postage and supplies .................................... 74,517 70,711 347,684 255,624 Other noninterest expense................................ 151,227 98,441 570,062 372,874 ----------- ---------- ----------- ----------- Total noninterest expense ........................... 3,267,377 2,230,426 11,048,622 7,989,062 ----------- ---------- ----------- ----------- INCOME BEFORE INCOME TAXES ................................... 1,345,051 411,511 3,980,385 1,004,184 Income tax expense....................................... 486,826 126,688 1,425,746 356,124 ----------- ---------- ----------- ----------- NET INCOME ................................................... $ 858,225 $ 284,823 $ 2,554,639 $ 648,060 =========== ========== =========== =========== PER SHARE INFORMATION: Basic net income per common share........................ $ 0.23 $ 0.08 $ 0.69 $ 0.21 =========== ========== =========== =========== Diluted net income per common share...................... $ 0.21 $ 0.08 $ 0.65 $ 0.21 =========== ========== =========== =========== Weighted average shares outstanding: Basic .............................................. 3,692,053 3,692,053 3,692,053 3,054,471 Diluted ............................................ 4,057,444 3,795,967 3,938,003 3,118,422 PINNACLE FINANCIAL PARTNERS, INC. AND SUBSIDIARIES SELECTED QUARTERLY FINANCIAL DATA - UNAUDITED ======================================================================================================================= (DOLLARS IN THOUSANDS, DEC SEPT JUNE MAR DEC SEPT EXCEPT PER SHARE DATA) 2003 2003 2003 2003 2002 2002 - ----------------------------------------------------------------------------------------------------------------------- BALANCE SHEET DATA, AT QUARTER END: Total assets...................... $498,421 440,693 403,229 348,366 305,279 278,750 Total loans....................... 297,004 279,702 255,448 228,842 209,743 191,299 Allowance for loan losses......... (3,719) (3,492) (3,189) (2,860) (2,677) (2,427) Securities available-for-sale..... 139,944 115,421 99,968 94,600 73,980 57,062 Total deposits.................... 390,569 347,191 309,089 266,732 234,016 212,914 Securities sold under agreements to repurchase..... 15,050 19,291 17,803 15,846 15,050 16,720 Advances from FHLB................ 44,500 39,500 41,500 32,500 21,500 15,500 Total stockholders' equity........ 34,336 33,245 33,627 32,403 32,404 32,089 BALANCE SHEET DATA, QUARTERLY AVERAGES: Total assets...................... $454,700 406,142 365,385 326,108 285,929 243,284 Total loans....................... 283,387 269,703 245,383 217,690 201,290 181,005 Securities available-for-sale..... 137,243 107,162 95,351 87,124 63,150 42,007 Total deposits.................... 356,030 314,302 277,592 243,545 215,617 181,844 Securities sold under agreements to repurchase..... 16,013 16,136 11,728 14,106 16,685 13,091 Advances from FHLB................ 43,630 40,239 38,137 29,994 18,054 14,196 Total stockholders' equity........ 33,935 32,542 32,944 32,675 32,167 31,808 STATEMENT OF OPERATIONS DATA, FOR THE THREE MONTHS ENDED: Interest income................... $ 5,244 4,702 4,369 3,946 3,691 3,425 Interest expense.................. 1,351 1,317 1,385 1,310 1,268 1,146 -------- ------- ------- ------- ------ ------- Net interest income............. 3,893 3,385 2,984 2,636 2,423 2,279 Provision for loan losses......... 204 318 347 288 250 247 -------- ------- ------- ------- ------ ------- Net interest income after provision for loan losses....... 3,689 3,067 2,637 2,348 2,173 2,032 Noninterest income................ 924 1,024 877 462 469 497 Noninterest expense............... 3,268 2,864 2,675 2,242 2,230 2,182 -------- ------- ------- ------- ------ ------- Net income before taxes........ 1,345 1,228 839 568 412 347 Income tax expense................ 487 441 302 195 127 136 -------- ------- ------- ------- ------ ------- Net income..................... $ 858 787 537 373 285 211 ======== ======= ======= ======= ====== ------- PER SHARE DATA: Earnings - basic.................. $ 0.23 0.21 0.15 0.10 0.08 0.06 Earnings - diluted................ $ 0.21 0.20 0.14 0.10 0.08 0.06 Book value at quarter end (1)..... $ 9.19 9.00 9.11 8.78 8.78 8.69 Weighted avg. shares - basic...... 3,692,053 3,692,053 3,692,053 3,692,053 3,692,053 3,692,053 Weighted avg. shares - diluted.... 4,057,444 3,972,327 3,880,642 3,841,631 3,795,967 3,745,272 Common shares outstanding......... 3,692,053 3,692,053 3,692,053 3,692,053 3,692,053 3,692,053 CAPITAL RATIOS (2): Equity to total assets............ 6.8% 7.5% 10.9% 12.1% 13.8% 15.1% Leverage.......................... 9.6% 8.2% 8.9% 10.1% 11.1% 13.1% Tier 1 risk-based................. 11.8% 9.6% 10.6% 12.1% 12.7% 13.0% Total risk-based.................. 12.8% 10.6% 11.7% 13.2% 13.8% 14.0% - ---------------------------- (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 - End of period 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, DEC SEPT JUNE MAR DEC SEPT EXCEPT PER SHARE DATA) 2003 2003 2003 2003 2002 2002 - ----------------------------------------------------------------------------------------------------------------------- PERFORMANCE RATIOS AND OTHER DATA: Return on average assets.......... 0.75% 0.77% 0.59% 0.46% 0.40% 0.34% Return on average stockholders' equity....................... 10.02% 9.59% 6.54% 4.63% 3.52% 2.64% Net interest margin (3)........... 3.62% 3.51% 3.48% 3.46% 3.59% 3.97% Noninterest income to total revenue (4).................. 19.2% 23.2% 22.7% 14.9% 16.2% 17.9% Noninterest income to avg. assets. 0.81% 1.00% 0.96% 0.57% 0.65% 0.81% Noninterest exp. to avg. assets... 2.85% 2.80% 2.94% 2.79% 3.09% 3.56% Efficiency ratio (5).............. 67.9% 65.0% 69.3% 72.4% 77.1% 78.6% Avg. loans to average deposits.... 80.2% 85.7% 88.4% 89.4% 93.4% 97.7% Securities available-for-sale to total assets.............. 28.1% 26.2% 24.8% 27.2% 24.2% 20.5% Average interest-earning assets to average interest-bearing liabilities.................. 118.7% 118.8% 118.9% 119.4% 120.6% 119.0% Brokered time deposits to total deposits............... 9.9% 11.2% 15.6% 16.8% 18.0% 19.8% ASSET QUALITY INFORMATION AND RATIOS: Nonaccrual loans.................. $ 379 1,095 1,095 1,095 1,845 70 Past due loans over 90 days and still accruing interest.. $ 182 88 60 44 22 41 Net loan charge-offs (recoveries)................. $ (23) 15 18 105 -- 2 Allowance for loan losses to total loans.................. 1.25% 1.25% 1.25% 1.25% 1.28% 1.27% Nonperforming assets to total loans and ORE.......... 0.13% 0.39% 0.43% 0.48% 0.88% 0.04% Net loan charge-offs (recoveries) to average loans (annualized)........... (0.02)% 0.02% 0.03% 0.19% -- 0.00% Allowance for loan losses to nonperforming loans.......... 9,813% 319% 291% 261% 145% 3,467% Avg. commercial loan internal risk ratings (6)............. 4.0 3.9 3.9 3.9 3.9 4.0 Avg. loan account balances (7).... $ 153 150 155 158 163 155 INTEREST RATES AND YIELDS: Loans............................. 5.17% 5.41% 5.49% 5.52% 5.81% 6.21% Securities, available-for-sale.... 4.31% 3.65% 4.14% 4.44% 4.41% 5.16% Federal funds sold and other...... 2.26% 2.28% 2.60% 2.22% 2.58% 2.92% Total deposits, including non-interest bearing......... 1.28% 1.35% 1.62% 1.79% 1.99% 2.17% Securities sold under agreements to repurchase..... 0.58% 0.38% 0.42% 0.43% 0.61% 0.71% Federal funds purchased and other borrowings............. 2.05% 2.23% 2.44% 2.63% 3.16% 3.26% Total deposits and other interest-bearing liabilities.................. 1.28% 1.40% 1.68% 1.82% 1.99% 2.16% - -------------- (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, DEC SEPT JUNE MAR DEC SEPT EXCEPT PER SHARE DATA) 2003 2003 2003 2003 2002 2002 - ----------------------------------------------------------------------------------------------------------------------- INVESTOR INFORMATION: Closing price at end of quarter... $ 23.50 19.75 15.95 13.46 12.91 11.19 High bid during quarter........... $ 25.75 19.94 17.00 14.14 13.30 13.00 Low bid during quarter............ $ 19.35 16.00 13.05 12.76 11.01 10.90 OTHER INFORMATION: Brokerage account assets, at quarter-end (8).............. $319,000 247,000 202,000 177,000 171,000 166,000 Balance of commercial loan participations sold to other banks and serviced by Pinnacle, at quarter end.......................... $ 51,653 45,981 44,355 41,594 43,089 28,942 Total assets per full-time equivalent employee.......... $ 5,569 5,474 5,486 5,318 5,501 5,210 Quarterly revenues per full-time equivalent employee..................... $ 53.9 54.8 52.5 47.3 52.1 51.9 Number of employees (full-time equivalent)....... 89.5 83.5 73.5 65.5 55.5 53.5 Associate retention rate (9)...... 96.1% 95.7% 94.6% 92.4% 94.5% 94.4% - --------------------- (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.