The stock was one of the biggest gainers of the day on the exchange, closing at a straight $11 per share.
The publicly traded bank made a profit of $549,000, or 2 cents per share, in the third quarter that ended Sept. 30, compared with a loss of $4.85 million in the same quarter a year ago and an average analyst expectation of a 29-cent loss for the quarter.
"The (stock) market is very sensitive to changes and surprises," said Sterne, Agee & Leach analyst Peyton Green, saying the bank's loan loss provision at $4.8 million in the quarter, a key indicator of future losses, was much lower than investors had expected and a sign that some of the bank's borrowers have improving balance sheets.
Bank President and Chief Executive Officer Terry Turner said some borrowers have successfully reduced expenses, even if revenues have not improved.
"The local market is stabilizing,'' he said. "I'm cautious about saying it's really improving."
Although it wasn't much of a profit, the third quarter ended a string of five straight quarterly losses for the bank because of bad loans, many of them to real estate developers and builders.
"We are working to address problem loans," Turner said. "I look at this as more as a culmination of our efforts over the last 12 months."
Pinnacle's net interest margin improved in the quarter. Revenue rose 5.6 percent to $44.7 million compared with a year ago. Plus, the bank foreclosed on bad loans, and its non-performing loan portfolio shrunk during the quarter, falling 13 percent to $118 million.
One foreclosure scheduled for the third quarter was a partly completed Franklin condo project called Jamison Station on Liberty Parkway, with an empty row for retail shops on its ground floor. Pinnacle had given investors with Chicago-based Centrum Properties a $17 million loan to construct the project.
Centrum Properties investors, including Vista-Pro Automotive executive Roger Brown, also had an interest in the Seanachie building at 329 Broadway in downtown Nashville, a former bar that has been empty for eight years. Pinnacle foreclosed on that building Friday. The bank foreclosed on it for $2.7 million, according to deeds recorded Tuesday with the Davidson County Register of Deeds.
Michael Hayes, vice president at C.B. Ragland Co., which owns several downtown buildings, said that property has been held up by a string of buyers who haven't been able to turn the building into anything. But with Jimmy Buffett's Margaretville Café opening across the street later this year, he didn't think the prominent location on Broadway would remain empty for long.
Contact business reporter Naomi Snyder at 259-8284 or nsnyder@tennessean.com.
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