On the heels of digesting most of their Great Recession troubles, area banks could soon get a bottom-line boost from better pricing if the leaders of Pinnacle Financial Partners have the right hunch.
On their conference call with analysts and investors Tuesday morning, Pinnacle CEO Terry Turner and CFO Harold Carpenter said they are seeing signs that the brutal price competition among regional lenders is beginning to abate. For several years, banks emerging from the downturn looking to lend have had to lower their prices because good-looking borrowers have been courted by multiple competitors.
At Pinnacle, that trend pushed down loan yields from 4.74 percent in late 2011 to 4.64 percent at the end of 2012 to 4.28 percent at year-end 2013. But in the first quarter of this year, that number ticked up to 4.30 percent, giving Turner and Carpenter a small dose of encouragement.
"We are still in a war on loan pricing," Carpenter said. "We may or may not be at the bottom but it does appear to us we have reason to be somewhat optimistic about loan yields for the remainder of this year."
Also on the call, Turner reiterated his plan for Pinnacle to hire about a dozen senior lenders this year. That would follow a similar number of additions in 2012 and last year, hires that have helped Pinnacle grow its loan book by almost $900 million over the past nine quarters. (See chart below.) Over the past six months, the company has recruited a veteran investment pro and small-business and mortgage lenders from local rivals.
Shares of Pinnacle (Ticker: PNFP) were trading down slightly early on Tuesday afternoon at about $34.60. So far this year, they're up about 6 percent.