Fair Value of Financial Instruments (Tables)

12 Months Ended

Dec. 31, 2020

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present the financial instruments carried at fair value on a recurring basis as of December 31, 2020 and 2019, by caption on the consolidated balance sheets and by FASB ASC 820 valuation hierarchy (as described above) (in thousands):


	Total carrying value in the consolidated balance sheet		Quoted market prices in an active market (Level 1)		Models with significant observable market parameters (Level 2)		Models with significant unobservable market parameters (Level 3)
December 31, 2020
Investment securities available-for-sale:
U.S. treasury securities	$	82,209	$	—	$	82,209	$	—
U.S. government agency securities	76,403		—		76,403		—
Mortgage-backed securities	1,689,191		—		1,689,191		—
State and municipal securities	1,443,363		—		1,427,866		15,497
Asset-backed securities	177,936		—		177,936		—
Corporate notes and other	117,579		—		117,579		—
Total investment securities available-for-sale	3,586,681		—		3,571,184		15,497
Other investments	73,395		—		25,636		47,759
Other assets	242,470		—		242,470		—
Total assets at fair value	$	3,902,546	$	—	$	3,839,290	$	63,256

Other liabilities	$	177,025	$	—	$	177,025	$	—
Total liabilities at fair value	$	177,025	$	—	$	177,025	$	—

December 31, 2019
Investment securities available-for-sale:
U.S. treasury securities	$	72,867	$	—	$	72,867	$	—
U.S. government agency securities	79,692		—		79,692		—
Mortgage-backed securities	1,463,907		—		1,463,907		—
State and municipal securities	1,714,453		—		1,698,550		15,903
Asset-backed securities	152,972		—		152,972		—
Corporate notes and other	56,104		—		56,104		—
Total investment securities available-for-sale	3,539,995		—		3,524,092		15,903
Other investments	63,291		—		25,135		38,156
Other assets	134,040		—		134,040		—
Total assets at fair value	$	3,737,326	$	—	$	3,683,267	$	54,059

Other liabilities	$	87,613	$	—	$	87,613	$	—
Total liabilities at fair value	$	87,613	$	—	$	87,613	$	—

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

The following table presents assets measured at fair value on a nonrecurring basis as of December 31, 2020 and 2019 (in thousands):


December 31, 2020	Total carrying value in the consolidated balance sheet		Quoted market prices in an active market (Level 1)		Models with significant observable market parameters (Level 2)		Models with significant unobservable market parameters (Level 3)
Other real estate owned	$	12,360	$	—	$	—	$	12,360
Collateral dependent loans (1)	43,795		—		—		43,795
Total	$	56,155	$	—	$	—	$	56,155

December 31, 2019
Other real estate owned	$	29,487	$	—	$	—	$	29,487
Impaired loans, net (1)	32,477		—		—		32,477
Total	$	61,964	$	—	$	—	$	61,964

(1)The carrying value of collateral dependent loans at December 31, 2020 is net of a valuation allowance of $3.5 million, and the carrying value of impaired loans at December 31, 2019 is net of a valuation allowance of $3.3 million.

Rollforward of the Balance Sheet Amounts, Unobservable Input Reconciliation


	For the year ended December 31,
	2020						2019
	Available-for-sale Securities		Other investments		Other liabilities		Available-for-sale Securities		Other investments		Other liabilities
Fair value, Jan. 1	$	15,903	$	38,156	$	—	$	14,595	$	26,422	$	—
Total net realized gains (losses) included in income	110		1,067		—		116		2,785		—
Change in unrealized gains/losses included in other comprehensive income for assets and liabilities still held at Dec. 31	627		—		—		2,710		—		—
Purchases	—		11,663		—		—		11,297		—
Issuances	—		—		—		—		—		—
Settlements	(1,143)		(3,127)		—		(1,518)		(2,348)		—
Transfers out of Level 3	—		—		—		—		—		—
Fair value, Dec. 31	$	15,497	$	47,759	$	—	$	15,903	$	38,156	$	—
Total realized gains (losses) included in income related to financial assets and liabilities still on the consolidated balance sheet at Dec. 31	$	110	$	1,067	$	—	$	116	$	2,785	$	—

Carrying Amounts, Estimated Fair Value and Placement in the Fair Value Hierarchy of Financial Instruments

The following table presents the carrying amounts, estimated fair value and placement in the fair value hierarchy of Pinnacle Financial's financial instruments at December 31, 2020 and 2019. This table excludes financial instruments for which the carrying amount approximates fair value. For short-term financial assets such as cash, cash equivalents, and restricted cash, the carrying amount is a reasonable estimate of fair value due to the relatively short time between the origination of the instrument and its expected realization. For financial liabilities such as non-interest bearing demand, interest-bearing demand, and savings deposits, the carrying amount is a reasonable estimate of fair value due to these products having no stated maturity (in thousands).


December 31, 2020	Carrying/ Notional Amount		Estimated Fair Value (1)		Quoted market prices in an active market (Level 1)		Models with significant observable market parameters (Level 2)		Models with significant unobservable market parameters (Level 3)
Financial assets:
Securities held-to-maturity	$	1,028,359	$	1,066,531	$	—	$	1,066,531	$	—
Loans, net	22,139,451		22,407,546		—		—		22,407,546
Consumer loans held-for-sale	87,821		89,625		—		89,625		—
Commercial loans held-for-sale	31,200		31,841		—		31,841		—
Financial liabilities:
Deposits and securities sold under agreements to repurchase	27,833,739		26,929,142		—		—		26,929,142
Federal Home Loan Bank advances	1,087,927		1,189,035		—		—		1,189,035
Subordinated debt and other borrowings	670,575		677,521		—		—		677,521
Off-balance sheet instruments:
Commitments to extend credit (2)	9,692,607		24,887		—		—		24,887

December 31, 2019
Financial assets:
Securities held-to-maturity	$	188,996	$	201,217	$	—	$	201,217	$	—
Loans, net	19,693,099		19,171,845		—		—		19,717,845
Consumer loans held-for-sale	81,820		82,986		—		82,986		—
Commercial loans held-for-sale	17,585		17,836		—		17,836		—
Financial liabilities:
Deposits and securities sold under agreements to repurchase	20,307,382		19,647,392		—		—		19,647,392
Federal Home Loan Bank advances	2,062,534		2,078,514		—		—		2,078,514
Subordinated debt and other borrowings	749,080		712,220		—		—		712,220
Off-balance sheet instruments:
Commitments to extend credit (2)	8,141,920		3,786		—		—		3,786

(1)Estimated fair values are consistent with an exit-price concept. The assumptions used to estimate the fair values are intended to approximate those that a market-participant would realize in a hypothetical orderly transaction.

(2)At the end of each period, Pinnacle Financial evaluates the inherent risks of the outstanding off-balance sheet commitments, including both commitments for unfunded loans and standby letters of credit. In making this evaluation, Pinnacle Financial utilizes credit loss expectations on funded loans from our allowance for credit losses methodology and evaluates the probability that the outstanding commitment will eventually become a funded loan. As a result, at December 31, 2020 and 2019, Pinnacle Financial included in other liabilities $23.2 million and $2.4 million, respectively, representing expected credit losses on off-balance sheet commitments, which are reflected in the estimated fair values of the related commitments. Also included in the fair values at December 31, 2020 and 2019, are unamortized fees related to these commitments of $1.7 million and $1.4 million, respectively.