Note 10. Variable Interest Entities

Under ASC 810, Pinnacle Financial is deemed to be the primary beneficiary and required to consolidate a variable interest entity (VIE) if it has a variable interest in the VIE that provides it with a controlling financial interest. For such purposes, the determination of whether a controlling financial interest exists is based on whether a single party has both the power to direct the activities of the VIE that most significantly impact the VIEs economic performance and the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. ASC 810 requires continual reconsideration of conclusions reached regarding which interest holder is a VIEs primary beneficiary and disclosures surrounding those VIEs which have not been consolidated. The consolidation methodology provided in this footnote for the quarter ended September 30, 2014, and the year ended December 31, 2013, has been prepared in accordance with ASC 810.

At September 30, 2014, Pinnacle Financial did not have any consolidated VIEs to disclose but did have several nonconsolidated VIEs. As discussed more fully in the Annual Report on Form 10-K for the fiscal year ended December 31, 2013, Pinnacle Financial has the following non-consolidated variable interest entities: low income housing partnerships, trust preferred issuances and accruing restructured commercial loans.

The following table summarizes VIE's that are not consolidated by Pinnacle Financial as of September 30, 2014 and December 31, 2013 (in thousands):

September 30, 2014

December 31, 2013

Type

Assets Recognized (maximum loss)

Liability

Recognized

Assets Recognized (maximum loss)

Liability

Recognized

Balance Sheet

Classification

Low income housing partnerships

9,450

7,945

Other assets

Trust preferred issuances

N/A

82,476

N/A

82,476

Subordinated debt

Commercial troubled debt restructurings

3,415

15,273

Loans

Managed discretionary trusts

N/A