The following is a summary of the activity in various nonperforming asset and troubled debt restructuring categories for the quarter ended Sept. 30, 2012:
|(in thousands)||Balances June 30, 2012||Payments, Sales and Reductions||Foreclosures||Inflows||Balances Sept. 30, 2012|
|Troubled debt restructurings:|
|Commercial real estate – mortgage||$||19,040||(3,162||)||-||753||$||16,631|
|Consumer real estate – mortgage||6,045||(14||)||-||-||6,031|
|Construction and land development||434||(62||)||-||-||372|
|Commercial and industrial||983||(48||)||-||-||935|
|Consumer and other||124||(3||)||-||-||121|
|Commercial real estate – mortgage||15,236||(1,260||)||(725||)||1,732||14,983|
|Consumer real estate – mortgage||13,644||(4,272||)||(553||)||1,729||10,548|
|Construction and land development||6,039||(200||)||(18||)||36||5,857|
|Commercial and industrial||5,443||(1,483||)||-||936||4,896|
|Consumer and other||459||(228||)||(90||)||146||287|
|Other real estate:|
|Residential construction and development||8,829||(1,167||)||18||-||7,680|
|Commercial construction and development||11,850||(1,919||)||-||-||9,931|
|Total nonperforming assets and troubled debt restructurings||$||92,897||(15,751||)||-||5,332||$||82,478|
OTHER THIRD QUARTER 2012 HIGHLIGHTS:
Improving Balance Sheet Composition
- The firm has continued to reposition its deposit base so that average balances for noninterest-bearing demand, interest checking, savings and money market accounts increased to $3.08 billion for the third quarter of 2012 from $2.98 billion for the second quarter of 2012. That represents a growth rate of 3.4 percent on a linked-quarter basis and 13.4 percent annualized. In comparison to the prior year’s third quarter, average balances for noninterest-bearing demand, interest checking, savings and money market accounts increased 30.8 percent, while average balances for higher-cost time deposits decreased 25.4 percent.
- Average balances for noninterest-bearing demand and interest checking made up 39.7 percent of average total deposits at Sept. 30, 2012, up from 33.4 percent for the quarter ended Sept. 30, 2011.
- As a result of growing loan demand, the firm has steadily reduced the size of its investment portfolio by $158.0 million since the beginning of 2012, primarily through bond maturities, calls and mortgage-backed securities principal pay-downs.
- At Sept. 30, 2012, Pinnacle’s ratio of tangible common stockholders’ equity to tangible assets was 9.2 percent, compared to 8.7 percent at June 30, 2012, and 8.2 percent at Sept. 30, 2011.
- At Sept. 30, 2012, Pinnacle’s total risk-based capital ratio was 13.4 percent, compared to 13.5 percent at June 30, 2012, and 15.9 percent at Sept. 30, 2011.
“We continue to be pleased with the loan growth that occurred during the third quarter and anticipate continued loan growth in the fourth quarter given our current business development pipelines,” said Harold R. Carpenter, Pinnacle’s chief financial officer. “We are also pleased with the double-digit growth in average noninterest bearing deposit accounts, which now make up approximately 21.6 percent of our average deposits.”
- Net interest income for the quarter ended Sept. 30, 2012, was $40.9 million, compared to $40.2 million in the second quarter of 2012 and $38.4 million for the third quarter of 2011. Net interest income for the third quarter of 2012 was at its highest quarterly level since the firm’s founding in 2000.
Noninterest income for the quarter ended Sept. 30, 2012, was $10.4
million, compared to $9.9 million for the second quarter of 2012
and $10.1 million for the same quarter last year. Excluding the
impact of net securities gains, noninterest income was up 6.8
percent on a linked-quarter basis.
- Gains on mortgage loans sold, net of commissions, were $2.0 million during the third quarter of 2012, compared to $1.5 million during the second quarter of 2012 and $1.3 million during the third quarter of 2011.
“Our margin expansion in recent quarters has been largely attributable to reductions in our cost of funds,” Carpenter said. “We have additional opportunities to reduce our funding costs, but the pace of improvement should decrease in future quarters. Declining loan yields are another headwind facing our industry, so we were pleased our third quarter results experienced only a slight decrease on yields.”
Noninterest and income tax expense
Noninterest expense for the quarter ended Sept. 30, 2012, was
$33.6 million, compared to $35.7 million in the third quarter of
2011 and $33.9 million in the second quarter of 2012.
- Salaries and employee benefits costs increased by 1.2 percent from the second quarter of 2012 and 2.4 percent from the same period last year.
- Included in noninterest expense for the third quarter of 2012 was $2.4 million in other real estate expenses, compared to $5.1 million in the third quarter of 2011 and $3.1 million in the second quarter of 2012.
- Income tax expense was $5.0 million for the third quarter of 2012, compared to a benefit of $17.0 million in the third quarter of 2011 and expense of $5.1 million in the second quarter of 2012. The income tax benefit in the third quarter of 2011 was the result of the release of the valuation allowance against our deferred tax assets.
- Noninterest expense for the quarter ended Sept. 30, 2012, was $33.6 million, compared to $35.7 million in the third quarter of 2011 and $33.9 million in the second quarter of 2012.
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