Pinnacle's credit quality slide produces $33M loss

Charge-offs rise almost tenfold from first quarter

Email | Print By Geert De Lombaerde

Pinnacle Financial Partners late yesterday reported a second-quarter loss of $33.2 million, a number driven primarily by soaring loan loss provisions.

Downtown-based Pinnacle, which in May charged off its $22 million exposure to failed correspondent bank Silverton, saw total charge-offs rise to almost $45 million in the quarter, up from $4.8 million early this year and just $870,000 in the spring of 2008. In addition, nonperforming assets rose to 3.3 percent from 1.5 percent in the first quarter.

"We had a concerted effort to thoroughly evaluate this portfolio and subject maturing loans to modified underwriting procedures," said President and CEO Terry Turner. "As a result of that review and current economic conditions, many of these loans were partially charged off or placed on nonaccruing status."

On the plus side, Turner and CFO Harold Carpenter said the company still intends to repay the TARP money it received late last year and said core loan and deposit growth remain strong. Their bank passed the $5 billion in assets mark during the recent quarter.

"We continue to believe that Nashville and Knoxville are two of the most attractive banking markets in the country and that the competitive landscape continues to offer solid growth potential for our firm," Turner said.

Shares of the largest bank headquartered in Nashville (Ticker: PNFP) fell about 10 percent in early trading Wednesday. They are now trading at their lowest level since the early days of 2004 and at two-thirds their June 30 book value.

To read the company's full earnings statement, click here.