Pinnacle execs forecast further growth

Q2 profits up 84%; more talk of dividend option

The leaders of Pinnacle Financial Partners on Wednesday said they are confident the 13-year-old bank can continue to add market share in Nashville and Knoxville after reporting better-than-expected second-quarter earnings.

Downtown-based Pinnacle reported second-quarter profits of $14.3 million, a jump of 84 percent from the number of a year ago. Per diluted share, earnings were 42 cents versus the analyst consensus of 39 cents. That performance was helped by a $3.4 million jump in net interest income and a drop of more than $3 million in noninterest expenses. On top of that, fee income rose $1.4 million from the spring of 2012.

Pinnacle grew its balance sheet by more than $150 million during the quarter, powered by strong growth in bread-and-butter commercial and industrial loans. But, as Turner and Carpenter have predicted in recent quarters, loan yields slipped some more, coming in at 4.41 percent versus 4.58 percent in the first quarter and 4.65 percent a year ago.

On their call with analysts and investors, President and CEO Terry Turner and CFO Harold Carpenter said their team is still looking to trim their costs where possible but repeatedly emphasized that loan and deposit growth will continue to be priority No. 1.

"The primary way to improve leverage is growth," Carpenter said. "We will keep emphasizing what we do best and that is gather clients."

Pinnacle has in the past two years lured more than a dozen veteran relationship managers who Turner has said can be counted on to bring to the bank about $1.3 billion in loans between year-end 2011 and year-end 2014. Halfway through that timeframe, the new hires are on track, having brought in $634 million in loans. Turner, pictured, said he intends to continue to add veteran bankers "as a path to the future beyond what we've talked about."

A fair portion of today's conference call addressed that loan growth but the conversation also repeatedly turned to the prospects of Pinnacle launching a regular dividend. Carpenter said the leadership team is still assessing new bank capital rules but pointed out that Pinnacle generated more than enough capital during the first half to cover an eventual dividend.

"On the surface, it appears we could support double-digit growth and employ a dividend strategy," Carpenter said, later adding that, "based on what we've done in the past six quarters, both [loan growth and a dividend] would be attainable."

Shares of Pinnacle (Ticker: PNFP) rose slightly on the news Wednesday. In afternoon trading, they were up 0.8 percent to $27.54. So far this year, they have climbed 45 percent.