XML 39 R28.htm IDEA: XBRL DOCUMENT

Fair Value of Financial Instruments (Tables)

9 Months Ended

Sep. 30, 2023

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables present financial instruments measured at fair value on a recurring basis as of September 30, 2023 and December 31, 2022, 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)
September 30, 2023
Investment securities available-for-sale:
U.S. Treasury securities	$	729,156	$	—	$	729,156	$	—
U.S. Government agency securities	255,105		—		255,105		—
Mortgage-backed securities	887,907		—		887,907		—
State and municipal securities	1,411,123		—		1,410,652		471
Agency-backed securities	163,462		—		163,462		—
Corporate notes and other	416,944		—		416,944		—
Total investment securities available-for-sale	3,863,697		—		3,863,226		471
Other investments	178,040		—		21,377		156,663
Other assets	264,118		—		264,118		—
Total assets at fair value	$	4,305,855	$	—	$	4,148,721	$	157,134

Other liabilities	$	154,119	$	—	$	154,119	$	—


	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)
Total liabilities at fair value	$	154,119	$	—	$	154,119	$	—

December 31, 2022
Investment securities available-for-sale:
U.S. Treasury securities	$	194,184	$	—	$	194,184	$	—
U.S. Government agency securities	396,157		—		396,157		—
Mortgage-backed securities	971,576		—		971,576		—
State and municipal securities	1,412,306		—		1,411,677		629
Agency-backed securities	117,403		—		117,403		—
Corporate notes and other	467,244		—		467,244		—
Total investment securities available-for-sale	3,558,870		—		3,558,241		629
Other investments	153,011		—		22,029		130,982
Other assets	190,629		—		190,629		—
Total assets at fair value	$	3,902,510	$	—	$	3,770,899	$	131,611

Other liabilities	$	96,483	$	—	$	96,483	$	—
Total liabilities at fair value	$	96,483	$	—	$	96,483	$	—

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 September 30, 2023 and December 31, 2022 (in thousands):


September 30, 2023	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	$	2,555	$	—	$	—	$	2,555

Collateral dependent loans (1)	60,284		—		—		60,284
Total	$	62,839	$	—	$	—	$	62,839

December 31, 2022
Other real estate owned	$	7,952	$	—	$	—	$	7,952
Collateral dependent loans (1)	33,767		—		—		33,767
Total	$	41,719	$	—	$	—	$	41,719

(1) The carrying values of collateral dependent loans at September 30, 2023 and December 31, 2022 are net of valuation allowances of $10.5 million and $6.5 million, respectively.

Rollforward of the Balance Sheet Amounts, Unobservable Input Reconciliation

The table below includes a rollforward of the balance sheet amounts for the three and nine months ended September 30, 2023 and 2022 (including the change in fair value) for financial instruments classified by Pinnacle Financial within Level 3 of the valuation hierarchy measured at fair value on a recurring basis including changes in fair value due in part to observable factors that are part of the valuation methodology (in thousands):


	For the Three months ended September 30,									For the Nine months ended September 30,
	2023				2022					2023	2022
	Available-for-sale Securities		Other investments			Available-for-sale Securities		Other investments			Available-for-sale Securities		Other investments		Available-for-sale Securities		Other investments
Fair value, beginning of period	$	479	$	151,762		$	656	$	121,611		$	629	$	130,982	$	828	$	100,996
Total realized gains included in income	1		(77)			2		725			3		3,597		5		9,104
Changes in unrealized gains/losses included in other comprehensive income (loss)	(9)		—			(28)		—			(2)		—		(45)		—
Purchases	—		8,015			—		8,481			—		27,947		—		27,244
Issuances	—		—			—		—			—		—		—		—
Settlements	—		(3,037)			—		(5,638)			(159)		(5,863)		(158)		(12,165)
Transfers out of Level 3	—		—			—		—			—		—		—		—
Fair value, end of period	$	471	$	156,663		$	630	$	125,179		$	471	$	156,663	$	630	$	125,179
Total realized gains included in income	$	1	$	(77)		$	2	$	725		$	3	$	3,597	$	5	$	9,104

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

The following tables present the carrying amounts, estimated fair value and placement in the fair value hierarchy of Pinnacle Financial's financial instruments at September 30, 2023 and December 31, 2022. 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):


	Carrying 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)
September 30, 2023
Financial assets:
Securities purchased with agreement to resell	$	500,000	$	449,620	$	—	$	—	$	449,620
Securities held-to-maturity	3,018,579		2,581,232		—		2,581,232		—
Loans, net	31,597,092		30,375,663		—		—		30,375,663
Consumer loans held-for-sale	119,489		119,678		—		119,678		—
Commercial loans held-for-sale	20,513		20,545		—		20,545		—

Financial liabilities:
Deposits and securities sold under
agreements to repurchase	38,491,808		37,240,824		—		—		37,240,824
Federal Home Loan Bank advances	2,110,598		2,114,924		—		—		2,114,924
Subordinated debt and other borrowings	424,718		457,802		—		—		457,802


	Carrying 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)

December 31, 2022
Financial assets:
Securities purchased with agreement to resell	$	513,276	$	440,390	$	—	$	—	$	440,390
Securities held-to-maturity	3,079,050		2,744,946		—		2,744,946		—
Loans, net	28,740,940		27,901,662		—		—		27,901,662
Consumer loans held-for-sale	42,237		42,353		—		42,353		—
Commercial loans held-for-sale	21,093		21,151		—		21,151		—

Financial liabilities:
Deposits and securities sold under
agreements to repurchase	35,156,148		34,435,447		—		—		34,435,447
Federal Home Loan Bank advances	464,436		477,673		—		—		477,673
Subordinated debt and other borrowings	424,055		430,884		—		—		430,884

(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.