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Loans and Allowance for Loan Losses (Tables)
 6 Months Ended
Jun. 30, 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 June 30, 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
 
June 30, 2014
 
 
 
 
 
 
Accruing loans
 
 
 
 
 
 
        Pass
$
1,417,022
 
$
672,747
 
$
253,501
 
$
1,634,704
 
$
168,287
 
$
4,146,261
 
        Special Mention
 
16,291
  
2,667
  
26,739
  
23,163
  
146
  
69,006
 
        Substandard (1)
 
17,268
  
12,932
  
11,550
  
35,162
  
154
  
77,066
 
        Total
 
1,450,581
  
688,346
  
291,790
  
1,693,029
  
168,587
  
4,292,333
 
Impaired loans
                  
        Nonaccrual loans
                  
                Substandard-nonaccrual
 
6,754
  
6,239
  
978
  
1,387
  
320
  
15,678
 
                Doubtful-nonaccrual
 
-
  
-
  
-
  
-
  
-
  
-
 
        Total nonaccrual loans
 
6,754
  
6,239
  
978
  
1,387
  
320
  
15,678
 
        Troubled debt restructurings(2)
                  
                Pass
 
-
  
66
  
107
  
263
  
83
  
519
 
                Special Mention
 
-
  
820
  
-
  
-
  
200
  
1,020
 
                Substandard
 
-
  
3,057
  
-
  
2,955
  
-
  
6,012
 
         Total troubled debt restructurings
 
-
  
3,943
  
107
  
3,218
  
283
  
7,551
 
Total impaired loans
 
6,754
  
10,182
  
1,085
  
4,605
  
603
  
23,229
 
Total loans
$
1,457,335
 
$
698,528
 
$
292,875
 
$
1,697,634
 
$
169,190
 
$
4,315,562
 

(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 nonaccrual loans and troubled debt restructurings. Potential problem loans, which are not included in nonaccrual loans, amounted to approximately $77.1 million at June 30, 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.

 
 
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 nonaccrual loans and troubled debt restructurings. Potential problem loans, which are not included in nonaccrual loans, amounted to approximately $77.1 million at June 30, 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 June 30, 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 June 30, 2014
  
For the six months ended
June 30, 2014
 
 
 
Recorded investment
  
Unpaid principal balance
  
Related allowance(1)
  
Average recorded investment
  
Interest income recognized
 
Collateral dependent nonaccrual loans:
 
  
  
  
  
 
    Commercial real estate – mortgage
 
$
4,814
  
$
5,407
  
$
-
  
$
4,913
  
$
-
 
    Consumer real estate – mortgage
  
2,336
   
2,416
   
-
   
2,366
   
-
 
    Construction and land development
  
545
   
545
   
-
   
545
   
-
 
    Commercial and industrial
  
1,018
   
1,161
   
-
   
1,053
   
-
 
    Consumer and other
  
-
   
-
   
-
   
-
   
-
 
Total
 
$
8,713
  
$
9,529
  
$
-
  
$
8,877
  
$
-
 
 
                    
Cash flow dependent nonaccrual loans:
                    
    Commercial real estate – mortgage
 
$
1,940
  
$
2,145
  
$
190
  
$
1,967
  
$
-
 
    Consumer real estate – mortgage
  
3,903
   
4,185
   
1,089
   
4,045
   
-
 
    Construction and land development
  
433
   
512
   
16
   
443
   
-
 
    Commercial and industrial
  
369
   
375
   
145
   
469
   
-
 
    Consumer and other
  
320
   
338
   
126
   
333
   
-
 
Total
 
$
6,965
  
$
7,555
  
$
1,566
  
$
7,257
  
$
-
 
Total nonaccrual loans
 
$
15,678
  
$
17,084
  
$
1,566
  
$
16,134
  
$
-
 

 
 
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 and six months ended June 30, 2014 and 2013 (dollars in thousands):


 
 
Three months ended June 30, 2014
  
Six months ended June 30, 2014
 
 
 
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
  
-
   
-
   
-
   
-
   
-
   
-
 
Construction and land development
  
-
   
-
   
-
   
-
   
-
   
-
 
Commercial and industrial
  
1
   
75
   
59
   
7
   
2,955
   
2,099
 
Consumer and other
  
-
   
-
   
-
   
-
   
-
   
-
 
 
  
1
  
$
75
  
$
59
   
7
  
$
2,955
  
$
2,099
 

 
 
Three months ended June 30, 2013
  
Six months ended June 30, 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
   
428
   
355
 
Construction and land development
  
1
   
51
   
44
   
1
   
51
   
44
 
Commercial and industrial
  
1
   
1,500
   
1,290
   
1
   
1,500
   
1,290
 
Consumer and other
  
-
   
-
   
-
   
1
   
193
   
164
 
 
  
2
  
$
1,551
  
$
1,334
   
4
  
$
2,172
  
$
1,853
 
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 June 30, 2014 with the comparative exposures for December 31, 2013 (in thousands):

 
At June 30, 2014:
 
 
 
Outstanding Principal Balances
 
Unfunded Commitments
 
Total exposure
 
Total Exposure at December 31, 2013
 
 
 
  
  
  
 
Lessors of nonresidential buildings
 
$
477,902
  
$
73,210
  
$
551,112
  
$
515,240
 
Lessors of residential buildings
  
245,782
   
33,609
   
279,391
   
270,773
 
 
Past Due Balances by Loan Classification
The table below presents past due balances at June 30, 2014 and December 31, 2013, by loan classification and segment allocated between accruing and nonaccrual status (in thousands):

June 30, 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
 
$
914
  
$
280
  
$
1,194
  
$
6,754
  
$
694,903
  
$
702,851
 
    All other
  
21
   
-
   
21
   
-
   
754,463
   
754,484
 
Consumer real estate – mortgage
  
5,402
   
-
   
5,402
   
6,239
   
686,887
   
698,528
 
Construction and land development
  
5,083
   
-
   
5,083
   
978
   
286,814
   
292,875
 
Commercial and industrial
  
3,581
   
51
   
3,632
   
1,387
   
1,692,615
   
1,697,634
 
Consumer and other
  
3,561
   
318
   
3,879
   
320
   
164,991
   
169,190
 
 
 
$
18,562
  
$
649
  
$
19,211
  
$
15,678
  
$
4,280,673
  
$
4,315,562
 
December 31, 2013
            
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 $10.7 million and $10.9 million of nonaccrual loans as of June 30, 2014 and December 31, 2013, respectively, were performing pursuant to their contractual terms at those dates.
Details of Changes in the Allowance for Loan Losses
The following table details the changes in the allowance for loan losses from December 31, 2012 to December 31, 2013 to June 30, 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
    
$
4,144,493
 
 
                     

 
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
 
(393
)
 
(418
)
 
(7
)
 
(1,777
)
 
(674
)
 
-
  
(3,269
)
    Recovery of previously charged-off loans
 
216
  
126
  
240
  
624
  
239
  
-
  
1,445
 
    Provision for loan losses
 
(1,856
)
 
145
  
(1,054
)
 
3,502
  
739
  
(734
)
 
742
 
Balance at June 30, 2014
$
19,339
 
$
8,208
 
$
6,414
 
$
27,483
 
$
1,936
 
$
3,508
 
$
66,888
 
 
                     
Collectively evaluated for impairment
$
19,149
 
$
6,292
 
$
6,376
 
$
26,663
 
$
1,751
    
$
63,739
 
Individually evaluated for impairment
 
190
 
$
1,916
  
38
  
820
  
185
     
3,149
 
Loans acquired with deteriorated credit quality
 
-
 
$
-
  
-
  
-
  
-
     
-
 
Balance at June 30, 2014
$
19,339
 
$
8,208
 
$
6,414
 
$
27,483
 
$
1,936
    
$
66,888
 
 
                     
Loans:
                     
Collectively evaluated for impairment
$
1,450,581
 
$
688,346
 
$
291,790
 
$
1,693,029
 
$
168,587
    
$
4,292,333
 
Individually evaluated for impairment
$
6,754
 
$
10,182
 
$
1,085
 
$
4,605
 
$
603
    
$
23,229
 
Loans acquired with deteriorated credit quality
$
-
 
$
-
 
$
-
 
$
-
 
$
-
    
$
-
 
Balance at June 30, 2014
$
1,457,335
 
$
698,528
 
$
292,875
 
$
1,697,634
 
$
169,190
    
$
4,315,562