Wednesday’s Pinnacle Financial earnings conference call ended on a chilling note when Stephens Inc. analyst Matt Olney asked CEO Terry Turner to compare his bank’s bad-loan levels with those of competitors in Nashville. “My belief is that our credit quality is better,” Turner said. “Other operators in this market have been taking significant losses over an extended period of time… We’re later getting to the table.” That’s pretty strong stuff when you consider that Pinnacle’s nonperforming asset ratio ballooned to 3.3 percent in the first half and is quite a bit higher than most Nashville-area banks’. (Generally, bankers start to get nervous when their NPAs approach 2 percent. For the parent of GreenBank, the number now stands at almost 5 percent.) But if Turner’s right, it means many of his Middle Tennessee peers — who were much more aggressive than Pinnacle in pursuing land development deals during the boom — still aren’t owning up to many of their credit problems. And Turner isn’t upbeat about the region’s real estate sector. Asked what he’s hearing from the trenches, he was blunt. "In the case of real estate, the sentiment would be awful. You wouldn't find any optimism among builders, among developers, among folks that loan to them,” he said. “There’s some activity, but you couldn’t translate that into optimism." Banks around the country that relied on lending to homebuilders are now gasping for air. And, while we don’t really want to admit it, parts of Greater Nashville look a good bit like parts of Greater Atlanta, where a fistful of banks have gone under this year. Given a little more time, why should our situation be all that different? Without getting too dramatic, it’s time to start preparing for the first Middle Tennessee bank failure of this crisis. One Friday afternoon soon, the friendly folks at the FDIC will unveil their first Tennessee intervention, adding to a 2009 list that now stands at 57. And oh, by the way, in case you had the thought: Don’t look for Pinnacle to be a buyer when that happens. Turner on Wednesday told analysts his team is “not particularly interested in FDIC workouts.” That’s not terrible surprising, since he also said most of his crew's current credit quality troubles stem from the acquisitions of Cavalry Banking and Mid-America Bancshares.
Jul 23, 2009 6:47 AM
Talking to Bloomberg News, Pinnacle Financial CEO Terry Turner says his company will look to soon rid itself of the scarlet letter that TARP has become.
Banks that keep TARP funds will be viewed as troubled because they will face more onerous regulations and be unable to hire highly paid executives because of government limits on compensation, Turner said. “The risks are significant as Congress, the Treasury and regulators continue to roll out more constraints,” Turner said.Shares of Pinnacle (Ticker: PNFP) are bucking the overall market today, trading up almost 2 percent. UPDATE 6 p.m.: Pinnacle has wrapped up its stock offering.
Jun 16, 2009 12:52 PM
The third-largest bank in Nashville (Ticker: STI) says it will raise more than $1 billion in equity by selling common stock and another $300 million by dumping some investments. Throw in the buyback of some hybrid securities and the company says it's on track to wrap up the plan that was born from the government's stress tests.
Jun 1, 2009 7:54 AM
Analyst Jeff Davis at Howe Barnes has raised his rating on the shares of Pinnacle Financial (Ticker: PNFP) to 'neutral' after their slide from $25 to $14 in two months. Davis expects the bank to raise anywhere between $75 million and $125 million before the end of the year, which likely won't help the stock in the coming weeks.
Near-term, the pending common raise will act as a governor on the shares unless 2Q09 results materially surprise to the upside in conjunction with a drop in NPAs; that seems unlikely.
Jun 1, 2009 6:50 AM
The biggest bank in Middle Tennessee will sell $1 billion in common stock and $250 million in preferred shares that will convert to common by the end of 2010 at the latest. The move comes two weeks after the government's stress test called on Regions (Ticker: RF) to find $2.5 billion in new capital and two days after Moody's cut the bank's credit rating with the following commentary.
Although Regions entered this period with relatively sound capital ratios -- at March 31, 2009, Tier 1 risk-based was 10.41% and Moody's adjusted tangible common equity (TCE) ratio was 7.77% - Moody's believes Regions' capital position is likely to be increasingly challenged by the substantial credit costs it faces. Moody's negative outlook on Regions considers the possibility that in a more pronounced economic downturn than is currently expected, the company's performance might be negatively impacted, not only from asset quality deterioration, but also from pressure on businesses dependent on the level of asset prices, such as trust and investment management. That could weaken earnings and add to the downward pressure on Regions' capital base.SEE ALSO: If the capital-raising plan doesn't work, there's always the 'For sale' sign option.
May 20, 2009 8:33 AM