U. S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 29549


                                   FORM 10-QSB



                   QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                    FOR QUARTERLY PERIOD ENDED JUNE 30, 1999

                         COMMISSION FILE NUMBER 33-67528


                         PINNACLE FINANCIAL CORPORATION
        (Exact name of small business issuer as specified in its charter)

        GEORGIA                                    58-1538862
-------------------------------                    ----------
(State or other jurisdiction of         (I.R.S. Employer Identification Number)
incorporation or organization

884 ELBERT STREET,
P.O. BOX 430, ELBERTON, GEORGIA                          30635-0430
----------------------------------------                 ----------
(Address of principal executive offices)                 (Zip Code)


Issuer's telephone number, including area code: (706) 283-2854
                                                --------------

Check  whether the issuer (1) filed all reports  required to be filed by Section
13 or 15(d) of the  Exchange  Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports),  and (2) has been
subject to such filing requirements for the past 90 days. Yes X   No
                                                             ---     ---

   State the number of shares outstanding of each of the issuer's classes of
                common equity, as of the latest practicable date:

   AS OF JULY 31, 1999 THERE WERE 768,000 SHARES OF COMMON STOCK OUTSTANDING.
   --------------------------------------------------------------------------



<PAGE>

                         PINNACLE FINANCIAL CORPORATION


                                      INDEX


                                                                       PAGE NO.
                                                                       --------
PART I -    FINANCIAL INFORMATION

Item 1.     Financial Statements

            Consolidated Statements of Financial Position at
            June 30, 1999 and December 31, 1998                              1

            Consolidated Statements of Income for the Three
            Months ended June 30, 1999 and 1998                              2

            Consolidated Statements of Income for the Six
            Months ended June 30, 1999 and 1998                              3

            Consolidated Statements of Cash Flows for the
            Six Months Ended June 30, 1999 and 1998                          4

Item 2.     Managements Discussion and Analysis or Plan of
            Operation                                                        6


PART II -   OTHER INFORMATION                                                13




                                    I


<PAGE>















                         PINNACLE FINANCIAL CORPORATION

                         PART I - FINANCIAL INFORMATION

                          ITEM 1. FINANCIAL STATEMENTS



























                                    II


<PAGE>

                           PINNACLE FINANCIAL CORPORATION & SUBSIDIARY
                                   CONSOLIDATED BALANCE SHEETS
                               JUNE 30, 1999 AND DECEMBER 31, 1998
                                           (UNAUDITED)
<TABLE>
<CAPTION>

                                                                    JUNE 30,         DECEMBER 31,
                                                                      1999              1998
<S>                                                              <C>                <C>
ASSETS

       Cash and due from banks                                   $   9,097,092      $ 10,083,914
       Federal funds sold                                            4,140,000         7,150,000

       Securities available for sale                               100,108,019        92,807,286

       Loans, net of allowance for credit losses
           of $2,088,713 and $2,070,005, respectively              141,029,094       142,025,057

       Premises and equipment                                        8,383,449         8,636,788
       Accrued interest receivable                                   2,595,037         2,653,111
       Foreclosed real estate                                          350,434           495,566
       Other assets                                                  2,167,823         1,335,761
                                                                 -------------      ------------

           Total assets                                          $ 267,870,948      $265,187,483
                                                                 =============      ============

LIABILITIES
       Demand deposits                                           $  43,909,003      $ 41,417,077
       Savings and NOW deposits                                     69,202,436        67,996,928
       Other time deposits                                         110,794,841       111,527,553
                                                                 -------------      ------------

           Total deposits                                          223,906,280       220,941,558

       Federal funds purchased                                               0                 0
       Accrued interest and other liabilities                        3,341,646         3,598,216
                                                                 -------------      ------------

           Total liabilities                                       227,247,926       224,539,774
                                                                 -------------      ------------

SHAREHOLDERS' EQUITY
       Common stock, $10 par value; 5,000,000 shares
           authorized, 768,000 shares issued and outstanding         7,680,000         7,680,000
       Capital surplus                                               7,280,000         7,280,000
       Retained earnings                                            26,294,196        24,669,429
       Accumulated other comprehensive income                         (631,174)        1,018,280
                                                                 -------------      ------------
           Total shareholders' equity                               40,623,022        40,647,709
                                                                 -------------      ------------

        TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY               $ 267,870,948      $265,187,483
                                                                 =============      ============

   THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>


                                    1

<PAGE>
                             PINNACLE FINANCIAL CORPORATION & SUBSIDIARY
                                  CONSOLIDATED STATEMENTS OF INCOME
                          FOR THE THREE MONTHS ENDED JUNE 30, 1999 AND 1998
                                             (UNAUDITED)
<TABLE>
<CAPTION>
                                                                       THREE MONTHS    THREE MONTHS
                                                                          ENDED           ENDED
                                                                         JUNE 30,        JUNE 30,
                                                                           1999            1998
<S>                                                                      <C>            <C>
INTEREST INCOME
---------------
       Loans                                                             $3,535,976     $3,749,336
       Securities available for sale                                      1,446,819      1,360,249
       Federal funds sold                                                    77,661        113,466
                                                                         ----------     ----------

           Total interest income                                          5,060,456      5,223,051
                                                                         ----------     ----------

INTEREST EXPENSE
----------------
       Deposits                                                           1,844,384      1,994,294
       Fed Funds Purchased                                                        0              0
                                                                         ----------     ----------

           Total interest expense                                         1,844,384      1,994,294
                                                                         ----------     ----------


NET INTEREST INCOME                                                       3,216,072      3,228,757
-------------------
       Provision for credit losses                                           75,000         75,000
                                                                         ----------     ----------

           Net interest income after provision for credit losses          3,141,072      3,153,757
                                                                         ----------     ----------

OTHER INCOME
------------
       Service charges on deposit accounts                                  336,723        321,456
       Other service charges and fees                                       218,332        242,103
       Net realized gains on sales of securities available for sale               0         17,140
       Other income                                                          72,084         47,225
                                                                         ----------     ----------

           Total other income                                               627,139        627,924
                                                                         ----------     ----------

OTHER EXPENSES
--------------
       Salaries and employee benefits                                     1,142,628      1,123,705
       Occupancy expense                                                    286,056        270,315
       Net realized losses on sales of securities available for sale          5,969              0
       Other expenses                                                       465,985        485,651
                                                                         ----------     ----------

           Total other expenses                                           1,900,638      1,879,671
                                                                         ----------     ----------

Income before income taxes                                                1,867,573      1,902,010
Income tax expense                                                          581,000        587,500
                                                                         ----------     ----------

NET INCOME                                                               $1,286,573     $1,314,510
----------                                                               ==========     ==========

Net income per share of common stock                                     $     1.68     $     1.71
                                                                         ==========     ==========

Average shares outstanding                                                  768,000        768,000
                                                                         ==========     ==========

           THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>


                                    2

<PAGE>
                             PINNACLE FINANCIAL CORPORATION & SUBSIDIARY
                                  CONSOLIDATED STATEMENTS OF INCOME
                           FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
                                             (UNAUDITED)
<TABLE>
<CAPTION>
                                                                            YTD             YTD
                                                                           JUNE 30,        JUNE 30,
                                                                            1999            1998
<S>                                                                      <C>             <C>
INTEREST INCOME
---------------
       Loans                                                             $ 7,045,816     $ 7,428,104
       Securities available for sale                                       2,853,365       2,657,300
       Federal funds sold                                                    173,443         198,276
                                                                         -----------     -----------

           Total interest income                                          10,072,624      10,283,680
                                                                         -----------     -----------

INTEREST EXPENSE
----------------
       Deposits                                                            3,734,369       3,960,112
       Fed Funds Purchased                                                         0             267
                                                                         -----------     -----------

           Total interest expense                                          3,734,369       3,960,379
                                                                         -----------     -----------

NET INTEREST INCOME                                                        6,338,255       6,323,301
-------------------
       Provision for credit losses                                           150,000         150,000
                                                                         -----------     -----------

           Net interest income after provision for credit losses           6,188,255       6,173,301
                                                                         -----------     -----------

OTHER INCOME
------------
       Service charges on deposit accounts                                   668,778         651,525
       Other service charges and fees                                        448,725         442,402
       Net realized gains on sales of securities available for sale                0          17,225
       Other income                                                          106,481         103,658
                                                                         -----------     -----------

           Total other income                                              1,223,984       1,214,810
                                                                         -----------     -----------

OTHER EXPENSES
--------------

       Salaries and employee benefits                                      2,309,819       2,239,193
       Occupancy expense                                                     567,846         518,282
       Net realized losses on sales of securities available for sale           5,969               0
       Other expenses                                                        921,038         913,185
                                                                         -----------     -----------

           Total other expenses                                            3,804,672       3,670,660
                                                                         -----------     -----------

Income before income taxes                                                 3,607,567       3,717,451
Income tax expense                                                         1,138,000       1,169,655
                                                                         -----------     -----------

NET INCOME                                                               $ 2,469,567     $ 2,547,796
----------                                                               ===========     ===========

Net income per share of common stock                                     $      3.22     $      3.32
                                                                         ===========     ===========

Average shares outstanding                                                   768,000         768,000
                                                                         ===========     ===========

             THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>

                                    3

<PAGE>
                             PINNACLE FINANCIAL CORPORATION & SUBSIDIARY
                                CONSOLIDATED STATEMENTS OF CASH FLOWS
                           FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
                                             (UNAUDITED)
<TABLE>
<CAPTION>

                                                                               JUNE 30,          JUNE 30,
                                                                                1999               1998
<S>                                                                         <C>               <C>
CASH FLOW FROM OPERATING ACTIVITIES
Net income                                                                  $  2,469,567      $  2,547,796
Adjustments to reconcile net income to net
       Cash provided by operating activities:
           Depreciation and amortization                                         310,006           245,728
           Provision for credit losses                                           150,000           150,000
           Net realized (gains) losses on securities available for sale            5,969           (17,225)
           (Increase) decrease in accrued interest and other assets             (628,856)         (566,144)
           Decrease in accrued expenses and other liabilities                   (256,570)          (36,993)
                                                                            ------------      ------------
           Total adjustments                                                    (419,451)         (224,634)
                                                                            ------------      ------------

Net cash provided by operating activities                                      2,050,116         2,323,162
                                                                            ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in federal funds sold                                  3,010,000        (1,902,830)
Purchase of securities available for sale                                    (28,634,779)      (21,585,055)
Proceeds from sales of securities available for sale                           1,511,094         1,249,880
Proceeds from maturities of securities available for sale                     18,155,789        12,240,035
Net decrease (increase) in loans                                                 845,963          (663,553)
Purchases of premises and equipment                                              (44,927)         (366,991)
                                                                            ------------      ------------

Net cash used by investing activities                                         (5,156,860)      (11,028,514)
                                                                            ------------      ------------

CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in non-interest bearing demand deposits,
       Savings and NOW deposit accounts                                        3,697,434         6,231,390
Net (decrease) increase in time deposits                                        (732,712)          116,651
Net decrease in federal funds purchased                                                0          (360,000)
Dividends paid                                                                  (844,800)         (768,000)
                                                                            ------------      ------------

Net cash provided by financing activities                                      2,119,922         5,220,041
                                                                            ------------      ------------

Net decrease in cash and due from banks                                         (986,822)       (3,485,311)
Cash and due from banks at January 1                                          10,083,914        10,789,675
                                                                            ------------      ------------

Cash and due from banks at June 30                                          $  9,097,092      $  7,304,364
                                                                            ============      ============

Interest paid                                                               $  3,664,007      $  3,658,983
                                                                            ============      ============

Income taxes paid                                                           $  1,055,635      $  1,100,965
                                                                            ============      ============

             THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
</TABLE>

                                    4

<PAGE>



                  PINNACLE FINANCIAL CORPORATION AND SUBSIDIARY
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                 FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998

(1)        BASIS OF PRESENTATION
           ---------------------
           The  consolidated   financial  statements  include  the  accounts  of
Pinnacle  Financial  Corporation (the Company) and its  wholly-owned  commercial
bank subsidiary,  Pinnacle Bank, N.A. All significant intercompany accounts have
been eliminated in consolidation.

           In the opinion of management, the accompanying unaudited consolidated
financial  statements  contain  all  adjustments   (consisting  only  of  normal
recurring  adjustments)  necessary  for  fair  statements  of  the  consolidated
financial  position and the results of operations of the Company for the interim
periods.  The results of operations for the six month period ended June 30, 1999
are not  necessarily  indicative  of the results  which may be expected  for the
entire year.

(2)        INCOME TAXES
           ------------
           Deferred  income  taxes are  recorded  as  required  by FAS No.  109,
"Accounting for Income Taxes",  using the liability  method under which deferred
tax assets and liabilities are determined  based on the differences  between the
financial accounting and tax basis of assets and liabilities.

(3)        ACCOUNTING FOR IMPAIRED LOANS
           -----------------------------
           FAS 114,  "Accounting  by  Creditors  for  Impairment  of a Loan" was
adopted as of January  1, 1995 as  required.  Loans  having  carrying  values of
$1,232,000  as of June 30, 1999 have been  recognized  as impaired in conformity
with FAS 114.  The total  allowance  for credit  losses  related to the impaired
loans is $523,000.  For  impairment  recognized in conformity  with FAS 114, the
entire  change in the present  value of  expected  cash flows is reported as bad
debt expense in the same manner in which the initial  impairment  was recognized
or as a reduction  in the amount of bad debt  expense  that  otherwise  would be
reported.  The company has recognized  specific  allowances in prior periods for
each of these loans based on previous  methodology for calculating its allowance
for credit losses.



                                     5

<PAGE>



ITEM 2.   MANAGEMENTS DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

          Management's  Discussion and Analysis or Plan of Operation of Pinnacle
Financial  Corporation  (hereinafter  "Pinnacle" or the "Company")  analyses the
major  elements of  Pinnacle's  consolidated  balance  sheets and  statements of
income. The financial  condition and operating results of Pinnacle are primarily
determined by its wholly-owned subsidiary bank, Pinnacle Bank, N.A. (hereinafter
the "Bank").

          Pinnacle  continues  to  weigh  the  merits  of  additional   business
combinations  while  maintaining a focus on its general  mission to  responsibly
serve the needs of its customers and communities and to enhance profit potential
and shareholder value.

          For a comprehensive presentation of Pinnacle's financial condition and
results of operations,  the following analysis should be viewed along with other
information  contained in this report,  including the financial  statements  and
accompanying disclosures. All amounts throughout this section are rounded to the
nearest  1,000  dollars,  the  nearest .1 million  dollars and to the nearest .1
percent to represent approximations of reported amounts.


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------

          The  objective  of  liquidity  management  is to  maintain  cash flows
adequate to meet immediate and ongoing  future needs of credit  demand,  deposit
withdrawal,  maturing  liabilities and corporate  operating  expenses.  Pinnacle
seeks to meet liquidity requirements primarily through the management of federal
funds and the investment  securities  portfolio.  At June 30, 1999,  7.1% of the
investment  securities  portfolio had maturity dates within the next year and an
additional 67.8% matures within the next 5 years. All investment  securities are
classified  as  available  for  sale  and may be sold  or  used as a  source  of
collateralized  borrowings in the event of a liquidity shortfall.  Other sources
of liquidity are payments on commercial and  installment  loans and repayment of
maturing   single   payment  loans.   Pinnacle   retains  short  term  borrowing
relationships  with two  correspondent  banks  that  could  provide up to $10.75
million on short notice.  Additionally,  the Bank has established  membership in
the Federal Home Loan Bank of Atlanta and has granted a blanket floating lien on
its mortgage  portfolio that  collaterizes  up to $20 million of borrowings on a
short or long term basis.  Pinnacle's  management intends to continue to closely
monitor  and  maintain   appropriate  levels  of  interest  bearing  assets  and
liabilities  in  future  periods  so that  maturities  of  assets  are such that
adequate funds are provided to meet customer withdrawals and loan requests while
net interest margins are maximized.

          Regulatory  policy  generally  requires the maintenance of a liquidity
ratio of 25%, which is generally defined as cash plus liquid investments divided
by deposits plus  borrowings due within one year. The desired level of liquidity
is determined by management based in part on Pinnacle's commitment to make loans
and an  assessment  of its  ability to generate  funds.  At June 30,  1999,  the
liquidity ratio for Pinnacle was 42%.


                                    6

<PAGE>

          Management continues to give priority to the importance of maintaining
high levels of assets with interest rate sensitivity.  Cash and cash equivalents
decreased  during the first six months of 1999 from  December 31, 1998 levels by
$4.0 million and securities available for sale increased by $7.3 million or 7.9%
from December 31, 1998 to June 30, 1999. The average balance in these investment
securities  increased by $10.1  million in the current year  compared to the six
months ended June 30, 1998. The average balance of Federal Funds sold during the
first six months of 1999 was $7.1 million.

          Total  interest-earning  assets  increased by $3.3 million or 1.4% for
the current  period when compared with December 31, 1998.  Average net loans for
the Bank decreased $0.6 million (0.4%) to $141.7 million in the six months ended
June 30,  1999 from the same 1998  period,  primarily  as a result of  increased
competition and reduced loan demand in Northeast Georgia.

          The  allowance  for credit  losses is  established  by management at a
level  estimated to be adequate to absorb losses inherent in the loan portfolio.
The  allowance  was  unchanged at $2.1 million at June 30, 1999 and December 31,
1998. The Bank  experienced loan charge-offs of $210,000 in the six months ended
June 30, 1999  compared to $77,000 in the same period of 1998.  Net  charge-offs
amounted to $131,000 in 1999  compared to $14,000 for the six months  ended June
30,  1998.  The  allowance  for credit  losses  represents  1.5% of total  loans
outstanding at June 30, 1999 and 1.4% at December 31, 1998.

          As a result of the sale of four  properties and the foreclosure on one
new  property in the six months  ending June 30,  1999,  other real estate owned
decreased by $146,000 to $350,000 at June 30, 1999 from $496,000 at December 31,
1998. The accrual of interest has been discontinued on loans totaling $18,000 as
of June 30,  1999  representing  .01% of total  loans  compared  to  $139,000 at
December  31,  1998.  Unrecorded  income on these loans for the six months ended
June 30, 1999 was $3,000.  All non-accrual loans at June 30, 1999 are classified
as unsecured.

          Pinnacle  continues to maintain a concentration  of core deposits from
an established  customer base which provides a stable funding  source.  Deposits
increased $3.0 million to $223.9 million at June 30, 1999 from $220.9 million at
December 31, 1998, due primarily to normal growth. Non-interest bearing deposits
increased $2.5 million to $43.9 million from December 31, 1998. Interest bearing
deposits increased $.5 million for the six months ended June 30, 1999.

          Shareholders'  equity was  unchanged at $40.6 million at June 30, 1999
when compared to December 31, 1998. Net earnings  retained during the six months
amounted to $1.6 million  while equity  decreased  $1.6 million as a result of a
change from a $1.0 million net unrealized gain on investments available for sale
to an unrealized loss of $630,000 due to a decrease in values in the bond market
caused by increasing interest rates. All unrealized amounts are presented net of
their tax impact.


                                    7

<PAGE>

          Pinnacle  continues  to maintain  adequate  capital  ratios (see "Risk
Based Capital Ratios" below and see "Results of Operations" below for discussion
of dividend levels.) Pinnacle  maintained a level of capital, as measured by its
average equity to average assets ratio,  of 15.2% during the first six months of
1999, compared to 15.0% for the year which ended December 31, 1998.

          Management is not aware of any known trends,  events or  uncertainties
that are reasonably  likely to have a material  effect on Pinnacle's  liquidity,
capital resources, or results of operation. Pinnacle is not aware of any current
recommendations by the regulatory authorities which, if implemented,  would have
such an effect.  Loans  classified  for regulatory  purposes as loss,  doubtful,
substandard or special mention do not represent  trends or  uncertainties  which
management reasonably expects will materially impact future operational trends.


RESULTS OF OPERATIONS (for the three month period ended June 30, 1999)
---------------------

          Pinnacle's  operating  results primarily depend on the earnings of the
Bank.  Its  earnings  depend  to a large  degree  on net  interest  income,  the
difference between the interest income received from investments (such as loans,
investment  securities,  federal funds sold, etc.) and the interest expense paid
on deposits and borrowings.

          Interest income on interest  bearing assets decreased by $163,000 from
the same quarter in 1998 as a decline in average yields from 8.4% to 8.2% offset
an increase in average  earning assets in the second quarter of 1999 as compared
to 1998.  The  decline in yield  reflects a general  decline in  interest  rates
during the one year period as well as an increased  percentage of funds invested
in lower yielding investment securities and federal funds sold. Interest expense
declined  by  $150,000  from the  same  quarter  of 1998 in  spite of  increased
deposits  as a result  of  increased  non-interest  bearing  deposits  and lower
interest rates paid on all deposit accounts.  Consequently,  net interest income
in the three months ended June 30, 1999 decreased by $13,000 or 0.4% as compared
to the same period for the  previous  year.  Management  continues to match rate
sensitive assets with rate sensitive liabilities in such a way that net interest
margins have remained stable from the same period in the prior year.

          The provision  for credit  losses is the charge to operating  expenses
that  management  believes is necessary to fund the allowance for credit losses.
The provision  reflects  management's  estimate of potential loan losses and the
creation of an allowance for loan losses  adequate to absorb losses  inherent in
the portfolio.  Pinnacle provided $75,000 for loan losses in both quarters ended
June 30, 1999 and 1998.

          Other income during the three months ended June 30, 1999 was unchanged
at approximately $627,000 from the same period in 1998. Other operating expenses
during the three  months  ended June 30, 1999  increased  $21,000  from the same
period in the previous year. The increase is attributable to slight increases in
salaries, employee benefits and occupancy expenses.

                                8

<PAGE>


          Pinnacle's  income  tax  expense  decreased  $7,000  for  the  quarter
compared to the same period in the  previous  year due  primarily  to  decreased
taxable income.  The effective income tax rate of 31.1% during the quarter is an
increase of 0.2% over the rate of 30.9% in the same quarter of 1998.

          Results of operations can be measured by various ratio  analyses.  Two
widely recognized performance indicators are return on average equity and return
on average  assets.  Net income  during the three months ended June 30, 1999 was
$1.3 million and represents annualized returns of 12.6% on average shareholders'
equity and 1.91% on average assets. Comparable amounts during the same period of
1998 were $1.3 million, 13.8% and 2.0%, respectively.

          Dividends  declared  and paid during the three  months  ended June 30,
1999 increased $.05 per share to $.55 from $.50 per share during the same period
of 1998.

RESULTS OF OPERATIONS (for the six month period ended June 30, 1999)
---------------------

          Interest  income on interest  bearing  assets for the six months ended
June 30, 1999  decreased by $211,000  from the same period in 1998. A decline in
average  yield from 8.7% to 8.1% was offset by an  increase  in average  earning
assets in the first  half of 1999 as  compared  to 1998.  The  decline  in yield
reflects a general  decline in  interest  rates  during the period as well as an
increased  percentage of funds invested in lower yielding investment  securities
and federal  funds sold.  Interest  expense  declined by $226,000  from the same
period  of  1998 in  spite  of  increased  deposits  as a  result  of  increased
non-interest  bearing  deposits  and lower  interest  rates paid on all  deposit
accounts.  Consequently,  net  interest  income in the six months ended June 30,
1999  increased  by  $15,000  or 0.2% as  compared  to the same  period  for the
previous year.

          The provision  for credit  losses and its purpose is explained  above.
Pinnacle provided $150,000 for credit losses in both periods ended June 30, 1999
and 1998.

          Other  income  during the six months  ended  June 30,  1999  increased
$9,000 to  $1,224,000  from  $1,215,000  from the same  period  in 1998.  Slight
increases  in  service  charges  and  other  miscellaneous   income  offset  the
nonrecurrence of 1998 gains on sales of securities.

          Other  operating  expenses  during the six months  ended June 30, 1999
increased  $134,000 to $3.8 million from $3.7 million for the same period in the
previous  year.  The  increase  in  other  operating  expenses  is  attributable
generally  to normal  increases  in salaries  and  employee  benefits as well as
increased expenses related to a branch opened in late 1998.

          Pinnacle's  income tax  expense  decreased  $32,000 for the six months
ended  June 30,  1999  compared  to the same  period  in the  previous  year due
primarily to decreased taxable income.  The effective income tax rate during the
period of 31.5% is a minor  increase of 0.1% from the effective rate of 31.4% in
1998.


                                    9

<PAGE>



          Net income  during the six months ended June 30, 1999 was $2.5 million
and represents  annualized returns of 12.3% on average  shareholders' equity and
1.85% on average assets.  Comparable amounts during the same period of 1998 were
$2.5  million,  13.2% and 2.0%,  respectively.  As indicated  above,  net income
declined  primarily  due to increased  operating  expenses  while the  operating
ratios reflect the decreased  earnings  compared to a slightly  larger asset and
equity base.

          Dividends declared during the six months ended June 30, 1999 increased
$.10 per share to $1.10 from $1.00 per share during the same period of 1998.

YEAR 2000
---------

          Generally,  year 2000 risk  involves  computer  programs  and computer
hardware that are not able to perform without  interruption  into the year 2000.
The arrival of the year 2000 poses a unique  worldwide  challenge to the ability
of all systems to correctly  recognize the date change from December 31, 1999 to
January 1, 2000. If Pinnacle's  systems do not correctly  recognize  such a date
change,  computer  applications that rely on the date field could fail or create
erroneous  results.  Such errors could affect interest,  payment or due dates or
could cause the temporary  inability to process  transactions,  send invoices or
engage in similar normal business activities.  If it is not adequately addressed
by Pinnacle or its suppliers and borrowers,  the year 2000 issue could result in
a material  adverse  impact on  Pinnacle's  financial  condition,  liquidity and
results of operations.

          PINNACLE'S  STATE OF READINESS.  Pinnacle is proceeding on a plan that
will  assure the Bank is ready to process  in the year 2000.  The plan  involves
five phases  consisting of awareness,  assessment,  renovation,  validation  and
implementation for hardware and software in both information  technology systems
("IT")  and  non-information   technology  systems  ("non-  IT"or  environmental
systems) that are potentially  affected by the year 2000. Pinnacle has completed
the  awareness,  assessment,  and validation  (testing)  phases and all critical
business  systems have been renovated.  Renovation of non-critical  systems will
continue  throughout 1999. The implementation  phase has occurred as each system
passed  through the testing  procedures  and will continue  throughout  1999 for
noncritical systems. Modifications and upgrades are performed on the majority of
Pinnacle's IT systems by  third-party  vendors as Pinnacle  performs no internal
programming.

          COST TO ADDRESS THE YEAR 2000 ISSUES. In 1997 and 1998,  Pinnacle made
substantial  investments  in  technology  in the normal  course of  business  to
enhance  operational  efficiency  that included  remediation of many of its year
2000 issues. The cost of assuring readiness to process in the year 2000 has been
budgeted to not exceed  $40,000 for the years 1998 through  2000,  not including
the  investments in technology  referred to above nor the time  associated  with
existing employee  development and  implementation of Pinnacle's year 2000 plan.
Approximately  25% of this amount was expensed in 1998 with the remainder of the
expenses  to be incurred  in 1999.  At this time,  this budget is expected to be


                                    10

<PAGE>

adequate.   The  majority  of  costs   associated  with  hardware  and  software
enhancements to make  Pinnacle's  systems year 2000 compliant are covered in the
annual  maintenance  fees  paid to its  vendors  and are  not  included  in this
budgeted amount.  Any unexpected costs that may arise during  implementation  in
excess of the budgeted amounts will be reported to the Board of Directors.

          RISKS OF  THIRD-PARTY  YEAR  2000  ISSUES.  The  impact  of year  2000
non-compliance by outside parties with whom Pinnacle  transacts  business cannot
be  accurately  estimated.  In addition to the review of IT providers  discussed
above,  Pinnacle has surveyed major  borrowers for year 2000  compliance and has
prepared a  detailed  assessment  of the risk  associated  with each  borrower's
inability to be compliant. In addition, all primary non-IT vendors and suppliers
have   responded  to  inquiries   regarding   year  2000   compliance.   Ongoing
communication with these primary vendors and suppliers is anticipated throughout
1999. At this time,  no material  impact on  Pinnacle's  operations  from vendor
non-compliance  is  anticipated  but no  provider  can assure  Pinnacle  that no
disruptions will occur. Pinnacle would be significantly  impacted by failures in
power and  communication  systems that are largely outside of the control of the
Bank.  Pinnacle  relies upon the Federal  Reserve  System for  electronic  funds
transfers  and check  clearing  and  understands  that its systems are year 2000
compliant.  Initial  testing of the Federal  Reserve systems have been completed
and additional  testing will be performed  through the third quarter of 1999. If
the Federal Reserve does not successfully complete all modifications required by
the date change and is forced to interrupt services to Pinnacle,  Pinnacle could
experience significant difficulties.

          Pinnacle  continues to host educational  seminars,  provide meaningful
information to customers and community  groups  regarding risks and solutions to
plan for Year 2000 uncertainties and provide assistance on prudent activities to
be taken.

          PINNACLE'S  CONTINGENCY  PLANS.  Pinnacle  has  not  developed  system
remediation  contingency  plans as all mission critical systems have been tested
and  certified  as  year  2000  compliant.  Pinnacle  has  prepared  a  business
resumption plan that provides detailed directions for continued operation if one
or more mission critical items (including power and communication systems) fails
due to year 2000 related  issues.  The plan  documents how Pinnacle will recover
from any  critical  system  failures  within  an  acceptable  time  frame  while
delivering an acceptable level of service.  The plan assumes limited transaction
processing  on a manual  basis until the  impacted  systems can be  corrected or
replaced.  The plan has been approved by  Pinnacle's  Board of  Director's.  The
business  resumption plan will be reviewed and certified by an independent third
party and will be tested in the third quarter of 1999.

                                    11

<PAGE>



The following tables present Pinnacle's  Regulatory capital position at June 30,
1999:

                        (Rounded to the nearest thousand)


Total Risk Adjusted Assets                            $ 166,068

Risk Based Capital Ratios:

TIER 1 CAPITAL
     Common stock                                     $   7,680            4.62%
     Surplus                                              7,280            4.38%
     Retained earnings                                   26,294           15.83%
                                                      ---------          ------
     Total Tier 1 capital                                41,254           24.83%
     Tier 1 minimum requirement                           6,643            4.00%
                                                      ---------          ------
     Excess (shortfall)                               $  34,611           20.83%
                                                      =========          ======

TIER 2 CAPITAL
     Tier 1 from above                                $  41,254           24.83%
     Allowance for loan losses, limited to 1.25%
        of risk weighted assets                           2,076            1.25%
                                                      ---------          ------
     Total Tier 2 capital                                43,330           26.08%
     Tier 2 minimum requirement                          13,285            8.00%
                                                      ---------          ------
     Excess (shortfall)                               $  30,045           18.08%
                                                      =========          ======

LEVERAGE RATIO
     Tier 1 capital                                   $  41,254           15.42%
     Minimum requirement                                 10,699            4.00%
                                                      ---------          ------
     Excess (shortfall)                               $  30,555           11.42%
                                                      =========          ======

Average total assets, net of goodwill                 $267,476
                                                      ========


                                     12

<PAGE>



                         PINNACLE FINANCIAL CORPORATION

                                     PART II

ITEM 1.  LEGAL PROCEEDINGS

          Pinnacle is not aware of any pending  material  legal  proceedings  to
which Pinnacle or its subsidiary is a party or to which any of their property is
subject.

ITEM 2.  CHANGES IN SECURITIES

          None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

          None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

          None.

ITEM 5.  OTHER INFORMATION

          None.


ITEM 27. EXHIBITS AND REPORTS ON FORM 8-K

          Exhibit 27 - Financial Data Schedule (for SEC use only).


                                    13

<PAGE>


                                   SIGNATURES



          In  accordance  with  the   requirements  of  the  Exchange  Act,  the
registrant has caused this report to be signed on its behalf by the  undersigned
thereunto duly authorized.


                         PINNACLE FINANCIAL CORPORATION


Date: August 12, 1999               By: /s/ L. Jackson McConnell
      ---------------                  ----------------------------------
                                       L. Jackson McConnell
                                    Chairman and Chief Executive Officer
                                    (Principal Executive and Financial Officer)

Date: August 12, 1999               By: /s/ James E. Purcell
      ---------------                  ----------------------------------
                                       James E. Purcell
                                    President and Chief Credit Officer




                                    14