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Loans and Allowance for Loan Losses (Tables)
 9 Months Ended
Sep. 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 September 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
 
September 30, 2014
            
Accruing loans
            
        Pass
 
$
1,441,581
  
$
680,485
  
$
283,725
  
$
1,640,609
  
$
188,486
  
$
4,234,886
 
        Special Mention
  
7,834
   
2,660
   
26,293
   
32,674
   
143
   
69,604
 
        Substandard (1)
  
21,968
   
13,496
   
6,598
   
45,440
   
1
   
87,503
 
        Total
  
1,471,383
   
696,641
   
316,616
   
1,718,723
   
188,630
   
4,391,993
 
Impaired loans
                        
        Nonaccrual loans
                        
                Substandard-nonaccrual
  
7,486
   
6,248
   
5,474
   
1,948
   
496
   
21,652
 
                Doubtful-nonaccrual
  
-
   
-
   
-
   
-
   
-
   
-
 
        Total nonaccrual loans
  
7,486
   
6,248
   
5,474
   
1,948
   
496
   
21,652
 
        Troubled debt restructurings(2)
                        
                Pass
  
-
   
64
   
-
   
253
   
79
   
396
 
                Special Mention
  
-
   
815
   
-
   
-
   
200
   
1,015
 
                Substandard
  
-
   
3,033
   
-
   
3,162
   
-
   
6,195
 
         Total troubled debt restructurings
  
-
   
3,912
   
-
   
3,415
   
279
   
7,606
 
Total impaired loans
  
7,486
   
10,160
   
5,474
   
5,363
   
775
   
29,258
 
Total loans
 
$
1,478,869
  
$
706,801
  
$
322,090
  
$
1,724,086
  
$
189,405
  
$
4,421,251
 
  
 
  
 
  
 
  
 
  
 
  
 
 
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 $87.5 million at September 30, 2014, compared to $65.0 million at December 31, 2013.
(2)
Troubled debt restructurings are presented as impaired loans; however, they continue to accrue interest at modified 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 September 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 September 30, 2014
  
For the nine months ended
September 30, 2014
 
  
Recorded investment
  
Unpaid principal balance
  
Related allowance(1)
  
Average recorded investment
  
Interest income recognized
 
Collateral dependent nonaccrual loans:
          
    Commercial real estate – mortgage
 
$
5,679
  
$
6,363
  
$
-
  
$
5,847
  
$
-
 
    Consumer real estate – mortgage
  
1,700
   
1,707
   
-
   
1,562
   
-
 
    Construction and land development
  
4,810
   
4,810
   
-
   
4,992
   
205
 
    Commercial and industrial
  
975
   
1,154
   
-
   
989
   
-
 
    Consumer and other
  
-
   
-
   
-
   
-
   
-
 
Total
 
$
13,164
  
$
14,034
  
$
-
  
$
13,390
  
$
205
 
                     
Cash flow dependent nonaccrual loans:
                    
    Commercial real estate – mortgage
 
$
1,807
  
$
2,003
  
$
62
  
$
1,819
  
$
-
 
    Consumer real estate – mortgage
  
4,548
   
4,870
   
571
   
4,568
   
-
 
    Construction and land development
  
664
   
755
   
47
   
673
   
-
 
    Commercial and industrial
  
973
   
1,004
   
110
   
1,110
   
-
 
    Consumer and other
  
496
   
517
   
435
   
500
   
-
 
Total
 
$
8,488
  
$
9,149
  
$
1,225
  
$
8,670
  
$
-
 
Total nonaccrual loans
 
$
21,652
  
$
23,183
  
$
1,225
  
$
22,060
  
$
205
 

  
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 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 nine months ended September 30, 2014 and 2013 (dollars in thousands):

  
Three months ended September 30, 2014
  
Nine months ended September 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
   
215
   
171
   
8
   
3,162
   
2,273
 
Consumer and other
  
-
   
-
   
-
   
-
   
-
   
-
 
   
1
  
$
215
  
$
171
   
8
  
$
3,162
  
$
2,273
 

  
Three months ended September 30, 2013
  
Nine months ended September 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
   
368
 
Construction and land development
  
-
   
-
   
-
   
1
   
50
   
43
 
Commercial and industrial
  
1
   
37
   
32
   
2
   
1,537
   
1,322
 
Consumer and other
  
1
   
58
   
51
   
2
   
258
   
223
 
   
2
  
$
95
  
$
83
   
6
  
$
2,273
  
$
1,956
 
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 September 30, 2014 with the comparative exposures for December 31, 2013 (in thousands):

 
At September 30, 2014
  
 
Outstanding Principal Balances
 
Unfunded Commitments
 
Total exposure
 
Total Exposure at December 31, 2013
 
         
Lessors of nonresidential buildings
 
$
492,242
  
$
68,316
  
$
560,558
  
$
515,240
 
Lessors of residential buildings
  
276,848
   
39,529
   
316,377
   
270,773
 
Past Due Balances by Loan Classification
The table below presents past due balances at September 30, 2014 and December 31, 2013, by loan classification and segment allocated between accruing and nonaccrual status (in thousands):

September 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
$
245
 
$
-
 
$
245
 
$
7,486
 
$
720,352
 
$
728,083
 
    All other
 
-
  
-
  
-
  
-
  
750,786
  
750,786
 
Consumer real estate – mortgage
 
4,327
  
-
  
4,327
  
6,248
  
696,226
  
706,801
 
Construction and land development
 
863
  
-
  
863
  
5,474
  
315,753
  
322,090
 
Commercial and industrial
 
3,615
  
75
  
3,690
  
1,948
  
1,718,448
  
1,724,086
 
Consumer and other
 
4,967
  
8
  
4,975
  
496
  
183,934
  
189,405
 
 
$
14,017
 
$
83
 
$
14,100
 
$
21,652
 
$
4,385,499
$
4,421,251
 
 
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 $15.6 million and $10.9 million of nonaccrual loans as of September 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 shows the allowance allocation by loan classification and accrual status at September 30, 2014 and December 31, 2013 (in thousands):

  
Impaired Loans
  
 
Accruing Loans
 
Nonaccrual Loans
 
Troubled Debt Restructurings(1)
 
Total Allowance
for Loan Losses
 
 
September 30, 2014
 
December 31, 2013
 
September 30, 2014
 
December 31, 2013
 
September 30, 2014
 
December 31, 2013
 
September 30, 2014
 
December 31, 2013
 
Commercial real estate –mortgage
$
18,597
 
$
19,298
 
$
62
 
$
142
 
$
35
 
$
1,932
 
$
18,694
 
$
21,372
 
Consumer real estate – mortgage
 
6,052
  
7,090
  
571
  
722
  
758
  
543
  
7,381
  
8,355
 
Construction and land development
 
5,763
  
7,186
  
47
  
33
  
-
  
16
  
5,810
  
7,235
 
Commercial and industrial
 
26,460
  
24,660
  
110
  
218
  
714
  
256
  
27,284
  
25,134
 
Consumer and other
 
2,150
  
1,521
  
435
  
72
  
61
  
39
  
2,646
  
1,632
 
Unallocated
 
-
  
-
  
-
  
-
  
-
  
-
  
4,345
  
4,242
 
 
$
59,022
 
$
59,755
 
$
1,225
 
$
1,187
 
$
1,568
 
$
2,786
 
$
66,160
 
$
67,970
 

(1)    
Troubled debt restructurings of $7.6 million and $19.6 million as of September 30, 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 September 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
  
(875
)
 
(1,075
)
 
(301
)
 
(2,336
)
 
(1,047
)
 
-
  
(5,634
)
    Recovery of previously charged-off loans
  
416
  
232
  
271
  
990
  
322
  
-
  
2,231
 
    Provision for loan losses
  
(2,219
)
 
(131
)
 
(1,395
)
 
3,496
  
1,739
  
103
  
1,593
 
Balance at September 30, 2014
 
$
18,694
 
$
7,381
 
$
5,810
 
$
27,284
 
$
2,646
 
$
4,345
 
$
66,160
 
                       
Collectively evaluated for impairment
 
$
18,597
 
$
6,052
 
$
5,763
 
$
26,460
 
$
2,150
    
$
59,022
 
Individually evaluated for impairment
  
97
 
 
1,329
  
47
  
824
  
496
     
2,793
 
Loans acquired with deteriorated credit quality
  
-
 
 
-
  
-
  
-
  
-
     
-
 
Balance at September 30, 2014
 
$
18,694
 
$
7,381
 
$
5,810
 
$
27,284
 
$
2,646
    
$
66,160
 
                       
Loans:
                      
Collectively evaluated for impairment
 
$
1,471,383
 
$
696,641
 
$
316,616
 
$
1,718,723
 
$
188,630
    
$
4,391,993
 
Individually evaluated for impairment
 
 
7,486
 
 
10,160
 
 
5,474
 
 
5,363
 
 
775
    
 
29,258
 
Loans acquired with deteriorated credit quality
 
 
-
 
 
-
 
 
-
 
 
-
 
 
-
    
 
-
 
Balance at September 30, 2014
 
$
1,478,869
 
$
706,801
 
$
322,090
 
$
1,724,086
 
$
189,405
    
$
4,421,251