Wednesday, April 21, 2010

Pinnacle posts loss because of problem loans

Nashville-based Pinnacle Financial Partners lost $5.4 million during the first quarter of the year, a sign that smaller banks are still wrestling with the aftermath of real estate loan losses.
Pinnacle's stock fell nearly 7 percent Tuesday to close at $16.74 on Nasdaq after trading as much as $1.20 per share lower than that earlier in the day.

Pinnacle, whose flagship downtown Nashville office building recently opened, has doubled its allowance for loan losses since the first quarter of last year to $90 million in the most recent quarter; and it tripled its net charge-offs for bad loans since last year to $15 million.

Many of its problem loans are in residential construction or real estate.

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"Real estate prices are down and things are moving slowly,'' said analyst Stephen Moss with Janney Montgomery Scott. "It was a tough quarter.''

Moss kept a neutral rating on the stock. He predicts Pinnacle won't be profitable until the second quarter of next year.

Two other analysts downgraded the stock on Tuesday. Mike Rose of Raymond James cut his outlook for Pinnacle down to "market perform" from an earlier rating of "strong buy," and Wunderlich Securities' analyst Kevin Reynolds downgraded the stock to "hold" from "buy."

Peyton Green, an analyst with Sterne, Agee & Leach, kept a buy rating on the stock, though, and said the long-term prospects for the bank appear good. Green said the bank is gaining low-cost checking and savings accounts and will be able to put that money to work in the form of loans as the economy rebounds.

"Right now, there's not much demand for money,'' Green said. The bank's loan portfolio fell by $84 million during the quarter to $3.48 billion, much of that as a result of reducing loans to builders and developers.

Contact Naomi Snyder at 615-259-8284 or

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