Pinnacle posts larger-than-expected loss

More cautious Turner says he'll hold on to TARP cash a little longer

Email | Print By Geert De Lombaerde

UPDATE 11:59 a.m.: After an early-session dip, shares of Pinnacle (Ticker: PNFP) are up almost 5 percent on above-average volume. We will have more info from the company's conference call this afternoon.

As originally reported:

Pinnacle Financial Partners late Tuesday reported a third-quarter loss of $4.9 million as it continues to battle loans gone bad, especially in its real estate portfolio. Per diluted share, the bank’s loss was 15 cents, six cents worse than analysts had been expecting.

CEO Terry Turner said his team was disappointed by the worsening credit quality situation and doesn’t now expect a meaningful turnaround for several quarters.

“We believe Nashville and Knoxville were late in feeling the impact of this credit cycle,” Turner said. “We have added significant resources to address problem assets, including the reassignment of experienced professionals to these areas to pursue the aggressive resolution of these matters.”

In the meantime, Pinnacle will – contrary to Turner’s earlier stated intention to repay – retain the $95 million it received late last year from the U.S. Treasury as part of the TARP program “until we are both confident that there has been sufficient improvement in economic conditions and we see reductions in the growth of our problem assets.”

There’s no such reduction in sight: Nonperforming loans rose to almost 4 percent and potential problem loans spiked to more than 7 percent of Pinnacle’s portfolio. The nine-year-old bank’s loan loss allowance now stands at $83.0 million, or 2.3 percent of total loans – more than double the year-ago number.

One of the few bright spots for the quarter was the growth in net interest margin to 3.05 percent from 2.75 percent on June 30. Like its local peer Tennessee Commerce, Pinnacle’s lenders have been hiking prices on their products.

Given Turner’s more pessimistic comments, shares of Pinnacle are likely to come under pressure Wednesday. Year to date, they’re down 60 percent.