Pinnacle Financial Partners has charged off a $21.6 million loan to a bank that has been placed into receivership by federal regulators.
Pinnacle officials didn't disclose the name of the troubled lender, but it appears to be Atlanta-based Silverton Bank, a correspondent bank to which PrimeTrust (which Pinnacle acquired in early 2008) first extended a $10 million loan in late 2007. The Office of the Comptroller of the Currency late Friday said it had placed the Federal Deposit Insurance Corp. of Silverton after 'unsafe and unsound practices' had left the bank with insufficient capital.
In their most recent quarterly report, Pinnacle officials had pointed out that they had downgraded the loan to 'substandard' from 'criticized.' At the time, Pinnacle appeared to be adequately collateralized and its managers said "the borrower had initiated steps to cure its capital issues," steps that ultimately came up short.
"Apparently, this borrower was unable to satisfy regulatory concerns with respect to its capital position which we believe deteriorated rapidly and contributed to [Friday’s] unanticipated regulatory action," said CEO Terry Turner. "We look forward to putting this behind us so we can continue to focus on those things that have made Pinnacle successful."
Turner said the charge-off will have a minimal effect on the bank's capital ratios, but it will impact Pinnacle's earnings big time: The largest bank based in Nashville (Ticker: PNFP) earned about $30 million last year, but less than $700,000 in the first quarter.
To view Pinnacle's statement, click here.