Pinnacle National Bank has disposed of a package of distressed real estate to a local company, putting a bow on a series of transactions that epitomize the financial pain being inflicted on banking institutions in the current climate.
Pinnacle earlier this month sold the 57 Hermitage lots to Tenn. Contractors Inc. for $2.3 million, about three-quarters of the balance remaining on its commitment. The lots are part of the Towering Oaks development off Stewarts Ferry Pike and landed on the bank's books after it foreclosed on the original developer, Towering Oaks Development Co. LLC. That company filed for Chapter 11 bankruptcy in August of 2008.
According to those filings, Towering Oaks had originally been issued a promissory note from Pinnacle for $2.8 million in August of 2007. The note was secured by the real estate in question. By the time of the bankruptcy, the bank's claim on the developer had grown to $3 million with interest and additional charges.
“The development of the Real Property has not been completed by the Debtor,” a filing from Pinnacle said during the proceedings. According to the same filing, the bank's appraisal at the time valued the unfinished land at $1.9 million.
A Pinnacle representative said the sale to Tenn. Contractors was a private transaction and that the bank could not release further information. Calls to the Cool Springs-based buyer were not immediately returned Friday afternoon.
Though it held out longer than many of its peers as the economy worsened last year, Pinnacle has in recent quarters had to recognize much larger loan losses, especially in its construction and land development portfolios, where writeoffs totaled almost $16 million in the second quarter alone. Its second-quarter ratio of nonperforming assets to total assets topped 3 percent, more than double that of the first quarter.