Pinnacle Financial Partners posted a first-quarter profit of $2.0 million, reversing a year-ago loss, and pushed its net interest margin to its highest level in more than three years. Earnings per diluted share came in at six cents, three cents higher than analysts had expected.

Executives at Nashville-based Pinnacle said their improved numbers were due to a drop in bad loans, lower deposit costs and the first real signs of renewed economic growth. The bank holding company grew its commercial/industrial and owner-occupied commercial real estate loan books by $50 million during the quarter. Overall loans rose $5 million.

“We continue to see progress regarding our two critical priorities of aggressively dealing with credit issues and expanding the core earnings capacity of the firm,” said President and CEO Terry Turner of his company’s third straight quarterly profit. “We are also pleased with the loan growth we experienced […] We attribute this result to some increasing optimism among our clients and our sales force’s continued success in moving relationships.”

On the credit quality front, Pinnacle’s loan loss provision fell by more than $7 million from a year ago to $6.1 million. Also promising for future quarters is the fact that potential problem loans fell by more than 23 percent during the quarter to $171 million and now stand at 5.3 percent of total loans, four point lower than last June. Turner said many of the bank’s customers “began to reflect sustained profitability warranting risk rating upgrades” during the first three months of this year.

Shares of Pinnacle (Ticker: PNFP) closed Monday trading at $15.84, down 1.5 percent on the day. Year to date, they’ve risen 17 percent.