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Loans and Allowance for Loan Losses (Tables)
 3 Months Ended
Mar. 31, 2014
Loans and Allowance for Loan Losses [Abstract]  
Summary of Amount of Each Loan Classification, Categorized into Each Risk Rating Class
The following table outlines the amount of each loan classification categorized into each risk rating category as of March 31, 2014 and December 31, 2013 (in thousands):

 
 
Commercial real estate - mortgage
  
Consumer real estate - mortgage
  
Construction and land development
  
Commercial and industrial
  
Consumer
and other
  
Total
 
March 31, 2014
 
  
  
  
  
  
 
Accruing loans
 
  
  
  
  
  
 
        Pass
 
$
1,410,425
  
$
676,486
  
$
252,406
  
$
1,515,110
  
$
158,088
  
$
4,012,515
 
        Special Mention
  
7,997
   
3,557
   
30,083
   
12,814
   
149
   
54,600
 
        Substandard (1)
  
22,726
   
13,900
   
10,465
   
36,614
   
154
   
83,859
 
        Total
  
1,441,148
   
693,943
   
292,954
   
1,564,538
   
158,391
   
4,150,974
 
Impaired loans
                        
        Nonaccrual loans
                        
                Substandard-nonaccrual
  
7,145
   
5,679
   
990
   
1,538
   
254
   
15,606
 
                Doubtful-nonaccrual
  
-
   
-
   
-
   
-
   
-
   
-
 
        Total nonaccrual loans
  
7,145
   
5,679
   
990
   
1,538
   
254
   
15,606
 
        Troubled debt restructurings(2)
                        
                Pass
  
143
   
1,657
   
111
   
277
   
286
   
2,474
 
                Special Mention
  
7,736
   
2,313
   
-
   
2,584
   
-
   
12,633
 
                Substandard
  
-
   
-
   
-
   
-
   
-
   
-
 
         Total troubled debt restructurings
  
7,879
   
3,970
   
111
   
2,861
   
286
   
15,107
 
Total impaired loans
  
15,024
   
9,649
   
1,101
   
4,399
   
540
   
30,713
 
Total loans
 
$
1,456,172
  
$
703,592
  
$
294,055
  
$
1,568,937
  
$
158,931
  
$
4,181,687
 

 
 
Commercial real estate - mortgage
  
Consumer real estate - mortgage
  
Construction and land development
  
Commercial and industrial
  
Consumer
and other
  
Total
 
December 31, 2013
 
  
  
  
  
  
 
Accruing loans
 
  
  
  
  
  
 
        Pass
 
$
1,332,387
  
$
670,412
  
$
275,876
  
$
1,557,923
  
$
143,032
  
$
3,979,630
 
        Special Mention
  
8,282
   
1,824
   
31,835
   
20,065
   
-
   
62,006
 
        Substandard (1)
  
20,296
   
14,107
   
7,297
   
23,174
   
154
   
65,028
 
        Total
  
1,360,965
   
686,343
   
315,008
   
1,601,162
   
143,186
   
4,106,664
 
Impaired loans
                        
        Nonaccrual loans
                        
                Substandard-nonaccrual
  
9,017
   
5,289
   
1,070
   
2,565
   
242
   
18,183
 
                Doubtful-nonaccrual
  
-
   
-
   
-
   
-
   
-
   
-
 
        Total nonaccrual loans
  
9,017
   
5,289
   
1,070
   
2,565
   
242
   
18,183
 
        Troubled debt restructurings(2)
                        
                Pass
  
2,564
   
1,666
   
113
   
320
   
276
   
4,939
 
                Special Mention
  
-
   
-
   
-
   
-
   
-
   
-
 
                Substandard
  
10,889
   
2,318
   
-
   
1,500
   
-
   
14,707
 
         Total troubled debt restructurings
  
13,453
   
3,984
   
113
   
1,820
   
276
   
19,646
 
Total impaired loans
  
22,470
   
9,273
   
1,183
   
4,385
   
518
   
37,829
 
Total loans
 
$
1,383,435
  
$
695,616
  
$
316,191
  
$
1,605,547
  
$
143,704
  
$
4,144,493
 

(1)
Potential problem loans represent those loans with a well-defined weakness and where information about possible credit problems of borrowers has caused management to have doubts about the borrower's ability to comply with present repayment terms. This definition is believed to be substantially consistent with the standards established by Pinnacle Bank's primary regulators for loans classified as substandard, excluding the impact of substandard nonaccrual loans and substandard troubled debt restructurings. Potential problem loans, which are not included in nonaccrual loans, amounted to approximately $83.9 million at March 31, 2014, compared to $65.0 million at December 31, 2013.
(2)
Troubled debt restructurings are presented as an impaired loan; however, they continue to accrue interest at contractual rates.
Summary of Recorded Investment, Unpaid Principal Balance and Related Allowance and Average Recorded Investment of Impaired Loans
The following table details the recorded investment, unpaid principal balance and related allowance and average recorded investment of our nonaccrual loans at March 31, 2014 and December 31, 2013 by loan classification and the amount of interest income recognized on a cash basis throughout the fiscal year-to-date period then ended, respectively, on these loans that remain on the balance sheets (in thousands):

 
 
At March 31, 2014
  
Three Months Ended
March 31, 2014
 
 
 
Recorded investment
  
Unpaid principal balance
  
Related allowance(1)
  
Average recorded investment
  
Interest income recognized
 
Collateral dependent nonaccrual loans:
 
  
  
  
  
 
    Commercial real estate – mortgage
 
$
5,192
  
$
5,712
  
$
-
  
$
5,225
  
$
-
 
    Consumer real estate – mortgage
  
2,413
   
2,476
   
-
   
2,427
   
-
 
    Construction and land development
  
545
   
545
   
-
   
545
   
-
 
    Commercial and industrial
  
1,060
   
1,168
   
-
   
1,074
   
-
 
    Consumer and other
  
-
   
-
   
-
   
-
   
-
 
Total
 
$
9,210
  
$
9,901
  
$
-
  
$
9,271
  
$
-
 
 
                    
Cash flow dependent nonaccrual loans:
                    
    Commercial real estate – mortgage
 
$
1,953
  
$
2,152
  
$
161
  
$
1,964
  
$
-
 
    Consumer real estate – mortgage
  
3,266
   
3,514
   
875
   
3,289
   
-
 
    Construction and land development
  
445
   
516
   
14
   
450
   
-
 
    Commercial and industrial
  
478
   
658
   
162
   
879
   
-
 
    Consumer and other
  
254
   
270
   
86
   
260
   
-
 
Total
 
$
6,396
  
$
7,110
  
$
1,298
  
$
6,842
  
$
-
 
Total nonaccrual loans
 
$
15,606
  
$
17,011
  
$
1,298
  
$
16,113
  
$
-
 

 
 
At December 31, 2013:
  
For the year ended
December 31, 2013
 
 
 
Recorded investment
  
Unpaid principal balance
  
Related allowance(1)
  
Average recorded investment
  
Interest income recognized
 
Collateral dependent nonaccrual loans:
 
  
  
  
  
 
    Commercial real estate – mortgage
 
$
7,035
  
$
7,481
  
$
-
  
$
6,522
  
$
-
 
    Consumer real estate – mortgage
  
2,162
   
2,209
   
-
   
2,234
   
-
 
    Construction and land development
  
545
   
545
   
-
   
938
   
-
 
    Commercial and industrial
  
1,828
   
1,901
   
-
   
3,911
   
-
 
    Consumer and other
  
-
   
-
   
-
   
-
   
-
 
Total
 
$
11,570
  
$
12,136
  
$
-
  
$
13,605
  
$
-
 
 
                    
Cash flow dependent nonaccrual loans:
                    
    Commercial real estate – mortgage
 
$
1,982
  
$
2,166
  
$
142
  
$
2,448
  
$
-
 
    Consumer real estate – mortgage
  
3,127
   
3,334
   
722
   
3,405
   
-
 
    Construction and land development
  
525
   
609
   
33
   
568
   
-
 
    Commercial and industrial
  
737
   
1,029
   
218
   
1,216
   
-
 
    Consumer and other
  
242
   
252
   
72
   
242
   
-
 
Total
 
$
6,613
  
$
7,390
  
$
1,187
  
$
7,879
  
$
-
 
Total nonaccrual loans
 
$
18,183
  
$
19,526
  
$
1,187
  
$
21,484
  
$
-
 

(1)    
Collateral dependent loans are typically charged-off to their net realizable value pursuant to requirements of our primary regulators and no specific allowance is carried related to those loans.
Amount of Troubled Debt Restructuring Categorized by Loan Classification
The following table outlines the amount of each troubled debt restructuring categorized by loan classification made during the three months ended March 31, 2014 and 2013 (dollars in thousands):
 
 
Three months ended March 31, 2014
  
Three months ended March 31, 2013
 
 
 
Number
of contracts
  
Pre
Modification Outstanding Recorded Investment
  
Post Modification Outstanding Recorded Investment, net of related allowance
  
Number of contracts
  
Pre
Modification Outstanding Recorded Investment
  
Post
Modification Outstanding Recorded Investment, net of related allowance
 
Commercial real estate – mortgage
  
-
  
$
-
  
$
-
   
-
  
$
-
  
$
-
 
Consumer real estate – mortgage
  
-
   
-
   
-
   
1
   
432
   
359
 
Construction and land development
  
-
   
-
   
-
   
-
   
-
   
-
 
Commercial and industrial
  
6
   
2,584
   
565
   
-
   
-
   
-
 
Consumer and other
  
-
   
-
   
-
   
1
   
200
   
170
 
 
  
6
  
$
2,584
  
$
565
   
2
  
$
632
  
$
529
 
Troubled Debt Restructurings on Financing Receivables [Table Text Block]
The following table outlines the amount of each troubled debt restructuring categorized by loan classification made during the three months ended March 31, 2014 and 2013 (dollars in thousands):
 
 
Three months ended March 31, 2014
  
Three months ended March 31, 2013
 
 
 
Number
of contracts
  
Pre
Modification Outstanding Recorded Investment
  
Post Modification Outstanding Recorded Investment, net of related allowance
  
Number of contracts
  
Pre
Modification Outstanding Recorded Investment
  
Post
Modification Outstanding Recorded Investment, net of related allowance
 
Commercial real estate – mortgage
  
-
  
$
-
  
$
-
   
-
  
$
-
  
$
-
 
Consumer real estate – mortgage
  
-
   
-
   
-
   
1
   
432
   
359
 
Construction and land development
  
-
   
-
   
-
   
-
   
-
   
-
 
Commercial and industrial
  
6
   
2,584
   
565
   
-
   
-
   
-
 
Consumer and other
  
-
   
-
   
-
   
1
   
200
   
170
 
 
  
6
  
$
2,584
  
$
565
   
2
  
$
632
  
$
529
 
Summary of Loan Portfolio Credit Risk Exposure

Pinnacle Financial analyzes its commercial loan portfolio to determine if a concentration of credit risk exists to any industry.  Pinnacle Financial utilizes broadly accepted industry classification systems in order to classify borrowers into various industry classifications.  Pinnacle Financial has a credit exposure (loans outstanding plus unfunded lines of credit) exceeding 25 % of Pinnacle Bank's total risk-based capital to borrowers in the following industries at March 31, 2014 with the comparative exposures for December 31, 2013 (in thousands):

 
At March 31, 2014:
 
 
 
Outstanding Principal Balances
 
Unfunded Commitments
 
Total exposure
 
Total Exposure at December 31, 2013
 
 
 
  
  
  
 
Lessors of nonresidential buildings
 
$
501,891
  
$
53,584
  
$
555,475
  
$
515,240
 
Lessors of residential buildings
  
240,296
   
27,544
   
267,840
   
270,773
 
Past Due Balances by Loan Classification
The table below presents past due balances at March 31, 2014 and December 31, 2013, by loan classification and segment allocated between accruing and nonaccrual status (in thousands):

March 31, 2014
 
30-89 days past due and accruing
  
90 days or more past due and accruing
  
Total past due and accruing
  
Nonaccrual(1)
  
Current
and accruing
  
Total
Loans
 
Commercial real estate:
 
  
  
  
  
  
 
    Owner-occupied
 
$
125
  
$
-
  
$
125
  
$
6,906
  
$
694,296
  
$
701,327
 
    All other
  
844
   
7,736
(2) 
  
8,580
   
239
   
746,026
   
754,845
 
Consumer real estate – mortgage
  
5,239
   
-
   
5,239
   
5,679
   
692,674
   
703,592
 
Construction and land development
  
849
   
147
   
996
   
990
   
292,069
   
294,055
 
Commercial and industrial
  
1,191
   
52
   
1,243
   
1,538
   
1,566,156
   
1,568,937
 
Consumer and other
  
2,096
   
8
   
2,104
   
254
   
156,573
   
158,931
 
 
 
$
10,344
  
$
7,943
  
$
18,287
  
$
15,606
  
$
4,147,794
  
$
4,181,687
 

December 31, 2013
 
30-89 days past due and accruing
  
90 days or more past due and accruing
  
Total past due and accruing
  
Nonaccrual(1)
  
Current
and accruing
  
Total
Loans
 
Commercial real estate:
 
  
  
  
  
  
 
    Owner-occupied
 
$
2,534
  
$
-
  
$
2,534
  
$
7,750
  
$
669,014
  
$
679,298
 
    All other
  
27
   
2,232
   
2,259
   
1,267
   
700,611
   
704,137
 
Consumer real estate – mortgage
  
2,215
   
-
   
2,215
   
5,289
   
688,112
   
695,616
 
Construction and land development
  
4,839
   
-
   
4,839
   
1,070
   
310,282
   
316,191
 
Commercial and industrial
  
1,847
   
825
   
2,672
   
2,565
   
1,600,310
   
1,605,547
 
Consumer and other
  
1,488
   
289
   
1,777
   
242
   
141,685
   
143,704
 
 
 
$
12,950
  
$
3,346
  
$
16,296
  
$
18,183
  
$
4,110,014
  
$
4,144,493
 

(1) Approximately $10.9  million of nonaccrual loans as of March 31, 2014 and December 31, 2013, respectively, were currently performing pursuant to their contractual terms.
(2) Represents one commercial real estate loan which, subsequent to March 31, 2014, was brought current with a principal curtailment of $7.6 million.
Details of Changes in the Allowance for Loan Losses

The following table shows the allowance allocation by loan classification and accrual status at March 31, 2014 and December 31, 2013 (in thousands):

 
 
  
Impaired Loans
  
 
 
 
Accruing Loans
  
Nonaccrual Loans
  
Troubled Debt Restructurings(1)
  
Total Allowance
for Loan Losses
 
 
 
March 31, 2014
  
December 31, 2013
  
March 31, 2014
  
December 31, 2013
  
March 31, 2014
  
December 31, 2013
  
March 31, 2014
  
December 31, 2013
 
Commercial real estate –mortgage
 
$
19,636
  
$
19,298
  
$
161
  
$
142
  
$
753
  
$
1,932
  
$
20,550
  
$
21,372
 
Consumer real estate – mortgage
  
6,426
   
7,090
   
875
   
722
   
521
   
543
   
7,822
   
8,355
 
Construction and land development
  
6,737
   
7,186
   
14
   
33
   
14
   
16
   
6,765
   
7,235
 
Commercial and industrial
  
25,951
   
24,660
   
162
   
218
   
597
   
256
   
26,710
   
25,134
 
Consumer and other
  
1,764
   
1,521
   
86
   
72
   
36
   
39
   
1,886
   
1,632
 
Unallocated
  
-
   
-
   
-
   
-
   
-
   
-
   
3,791
   
4,242
 
 
 
$
60,514
  
$
59,755
  
$
1,298
  
$
1,187
  
$
1,921
  
$
2,786
  
$
67,524
  
$
67,970
 

(1)    
Troubled debt restructurings of $15.1 million and $19.6 million as of March 31, 2014 and December 31, 2013, respectively, are classified as impaired loans pursuant to U.S. GAAP; however, these loans continue to accrue interest at contractual rates.

The following table details the changes in the allowance for loan losses from December 31, 2012 to December 31, 2013 to March 31, 2014 by loan classification and the allocation of the allowance for loan losses (in thousands):

 
Commercial
real estate –
mortgage
 
Consumer
 real estate – mortgage
 
Construction and
land development
 
Commercial and industrial
 
Consumer and other
 
Unallocated
 
Total
 
Allowance for Loan Losses:
 
 
 
 
 
 
 
Balance at December 31, 2012
$
19,634
 
$
8,762
 
$
9,164
 
$
24,738
 
$
1,094
 
$
6,025
 
$
69,417
 
    Charged-off loans
 
(4,123
)
 
(2,250
)
 
(1,351
)
 
(8,159
)
 
(1,369
)
 
-
  
(17,252
)
    Recovery of previously charged-off loans
 
500
  
1,209
  
1,464
  
4,531
  
244
  
-
  
7,948
 
    Provision for loan losses
 
5,361
  
634
  
(2,042
)
 
4,024
  
1,663
  
(1,783
)
 
7,857
 
Balance at December 31, 2013
$
21,372
 
$
8,355
 
$
7,235
 
$
25,134
 
$
1,632
 
$
4,242
 
$
67,970
 
 
                     
Collectively evaluated for impairment
$
19,298
 
$
7,090
 
$
7,186
 
$
24,660
 
$
1,521
    
$
59,755
 
Individually evaluated for impairment
 
2,074
  
1,265
  
49
  
474
  
111
     
3,973
 
Loans acquired with deteriorated credit quality
 
-
  
-
  
-
  
-
  
-
     
-
 
Balance at December 31, 2013
$
21,372
 
$
8,355
 
$
7,235
 
$
25,134
 
$
1,632
    
$
67,970
 
 
                     
Loans:
                     
Collectively evaluated for impairment
$
1,360,965
 
$
686,343
 
$
315,008
 
$
1,601,162
 
$
143,186
    
$
4,106,664
 
Individually evaluated for impairment
 
22,470
  
9,273
  
1,183
  
4,385
  
518
     
37,829
 
Loans acquired with deteriorated credit quality
 
-
  
-
  
-
  
-
  
-
     
-
 
Balance at December 31, 2013
$
1,383,435
 
$
695,616
 
$
316,191
 
$
1,605,547
 
$
143,704
    
$
4,144
 
 
                     


 
Commercial
real estate -
mortgage
 
Consumer
real estate -
mortgage
 
Construction and
land development
 
Commercial and industrial
 
Consumer and other
 
Unallocated
 
Total
 
Allowance for Loan Losses:
 
 
 
 
 
 
 
 Balance at December 31, 2013
$
21,372
 
$
8,355
 
$
7,235
 
$
25,134
 
$
1,632
 
$
4,242
 
$
67,970
 
    Charged-off loans
 
(123
)
 
(334
)
 
(7
)
 
(824
)
 
(214
)
 
-
  
(1,502
)
    Recovery of previously charged-off loans
 
1
  
72
  
31
  
398
  
66
  
-
  
568
 
    Provision for loan losses
 
(700
)
 
(271
)
 
(494
)
 
2,002
  
402
  
(451
)
 
488
 
Balance at March 31, 2014
$
20,550
 
$
7,822
 
$
6,765
 
$
26,710
 
$
1,886
 
$
3,791
 
$
67,524
 
 
                     
Collectively evaluated for impairment
$
19,636
 
$
6,426
 
$
6,737
 
$
25,951
 
$
1,764
    
$
60,514
 
Individually evaluated for impairment
 
914
 
$
1,396
  
28
  
759
  
122
     
7,010
 
Loans acquired with deteriorated credit quality
 
-
 
$
-
  
-
  
-
  
-
     
-
 
Balance at March 31, 2014
$
20,550
 
$
7,822
 
$
6,765
 
$
26,710
 
$
1,886
    
$
67,524
 
 
                     
Loans:
                     
Collectively evaluated for impairment
$
1,441,148
 
$
693,943
 
$
292,954
 
$
1,564,538
 
$
158,391
    
$
4,150,974
 
Individually evaluated for impairment
$
15,024
 
$
9,649
 
$
1,101
 
$
4,399
 
$
540
    
$
30,713
 
Loans acquired with deteriorated credit quality
$
-
 
$
-
 
$
-
 
$
-
 
$
-
    
$
-
 
Balance at March 31, 2014
$
1,456,172
 
$
703,592
 
$
294,055
 
$
1,568,937
 
$
158,931
    
$
4,182