Pinnacle Financial to obtain government funds

Pinnacle Financial Partners Inc. said Tuesday it received preliminary approval to obtain $95 million as part of the government's $700 billion bank investment program.

The government investment, administered by the U.S. Treasury Department, is part of a broader program to invest in banks amid the ongoing credit crisis in an effort to stabilize the financial services sector and spur lending between banks and to consumers and other businesses.

Many banks have been hit hard over the past year-and-a-half by a sharp rise in mortgage defaults and a freezing of credit markets. As some financial firms collapsed in recent months, banks shied away from lending to each other and to customers for fear that losses would mount.

The program calls for the U.S. Treasury Department to receive preferred stock and warrants to purchase common stock in return for the investment.

Pinnacle Financial, which operates banks throughout Tennessee, was already considered "well capitalized" by regulatory standards before receiving approval for the government funds.

Shares of Pinnacle Financial fell $1.15, or 4.2 percent, to $26.07 in afternoon trading.