Nashville’s largest locally owned bank is continuing to lose money as it tries to recover from large real estate loan losses. Pinnacle Financial Partners reported a more than $5 million loss in the first quarter.
Analysts expected the first three months of this year would be Pinnacle’s turnaround. But instead, the company posted its fourth consecutive quarterly loss.
Pinnacle CEO Terry Turner says one reason is that people aren’t asking to borrow.
“I would say that loan demand is as weak as I remember.”
Also contributing to the loss, Turner says, is that the bank has tripled its staff that helps troubled borrowers work out loans they can no longer afford. Pinnacle is also intentionally lowering the number of loans to developers, particularly in residential construction.
Pinnacle CFO Harold Carpenter says the bank remains optimistic that a turnaround is on the horizon and profits are in sight.
“I’ll tell you, we think it’s going to happen this year.”
Pinnacle still wants to pay back the $95 million it took as part of the Troubled Asset Relief Program or TARP. To have the confidence to pay back the U.S. Treasury, bank officials say they need real estate prices to recover and the number of loans going bad to stop growing.
In the most troubled sector, residential construction and land development, borrowers paying more than a month late jumped from half a percent late last year to more than six percent in the first quarter.