Pinnacle reported nonperforming loan inflows of $5.9 million for the fourth quarter of 2012 compared to $4.6 million in the third quarter of 2012, as well as nonperforming asset resolutions of $22.9 million in the fourth quarter of 2012, up from the third quarter of 2012 resolution amount of $12.5 million. Turner noted that during the fourth quarter of 2012, Pinnacle realized, through a bankruptcy settlement, a $5.6 million recovery of a loan previously charged-off in 2009. Concurrently, Pinnacle accelerated its disposition strategy with respect to certain troubled assets which included a bulk sale of approximately $9.0 million in nonperforming assets. Turner also noted that bulk sales are not a typical disposition strategy for Pinnacle, and he does not expect the firm to adopt bulk sales as a recurring strategy for the future disposition of troubled assets.
The following is a summary of the activity in various nonperforming asset and troubled debt restructuring categories for the quarter ended Dec. 31, 2012:
|(in thousands)||Balances Sept. 30, 2012||Payments, Sales and Reductions||Foreclosures||Inflows||Balances Dec. 31, 2012|
|Troubled debt restructurings:|
|Commercial real estate – mortgage||$||16,631||$||(4,103||)||$||-||$||7,736||$||20,264|
|Consumer real estate – mortgage||6,031||(208||)||-||488||6,311|
|Construction and land development||372||(302||)||-||-||70|
|Commercial and industrial||935||(249||)||-||-||686|
|Consumer and other||121||(2||)||-||-||119|
|Commercial real estate – mortgage||14,983||(8,447||)||-||2,754||9,290|
|Consumer real estate – mortgage||10,548||(5,642||)||(333||)||1,333||5,906|
|Construction and land development||5,857||(1,467||)||(28||)||147||4,509|
|Commercial and industrial||4,896||(3,329||)||-||1,471||3,038|
|Consumer and other||287||(168||)||(202||)||163||80|
|Other real estate:|
|Residential construction and development||7,680||(2,243||)||28||-||5,465|
|Commercial construction and development||9,931||(615||)||-||-||9,316|
|Total nonperforming assets and troubled debt restructurings||$||82,478||$||(27,717||)||$||-||$||14,092||$||68,853|
OTHER FOURTH QUARTER 2012 HIGHLIGHTS:
Improving Balance Sheet Composition
- Average balances for noninterest-bearing demand and interest checking made up 42.9 percent of average total deposits for the quarter ended Dec. 31, 2012, up from 35.4 percent for the quarter ended Dec. 31, 2011. Average core deposits were 88.8 percent of average total deposits for the quarter ended Dec. 31, 2012, up from 86.8 percent for the quarter ended Dec. 31, 2011.
- The firm has steadily reduced the size of its investment portfolio by $190.1 million since the beginning of 2012. At Dec. 31, 2012, securities were just 14.0 percent of total assets, down from 18.4 percent at Dec. 31, 2011.
- Total construction and development loans were $313.6 million at Dec. 31, 2012, down from a peak of $674.4 million or 19.41 percent of total loans at March 31, 2009. Total construction and development loans represented 8.45 percent of total loans at Dec. 31, 2012, compared to 8.87 percent at Sept. 30, 2012, and 8.33 percent at Dec. 31, 2011.
- At Dec. 31, 2012, Pinnacle’s ratio of tangible common stockholders’ equity to tangible assets was 8.97 percent, compared to 9.15 percent at Sept. 30, 2012, and 8.44 percent at Dec. 31, 2011.
“We are very pleased with the effort of our relationship managers in the continued attraction of high quality borrowers,” said Harold R. Carpenter, Pinnacle’s chief financial officer. “Our loan portfolio has changed meaningfully over the last three years as we reduced problem assets and our exposure to residential construction. At the same time, we have been focusing on growing our commercial and commercial real estate portfolios, which have long been the primary focus of our firm. Additionally, our funding base has changed significantly, with core funding comprising 89.9 percent of our funding base at year-end 2012 compared to 58.7 percent at year-end 2009. All of this was accomplished by our relationship managers in an environment of increasing competition from the large regional banks headquartered outside our markets.”
- Net interest income for the quarter ended Dec. 31, 2012, was $42.2 million, compared to $40.9 million in the third quarter of 2012 and $39.3 million for the fourth quarter of 2011. Net interest income for the fourth quarter of 2012 was at its highest quarterly level since the firm’s founding in 2000.
Noninterest income for the quarter ended Dec. 31, 2012, was $13.1
million, compared to $10.4 million for the third quarter of 2012
and $9.7 million for the same quarter last year. Excluding
securities gains, noninterest income was up 6.11 percent on a
linked-quarter basis and at its highest quarterly level since the
- Gains on mortgage loans sold, net of commissions, were $1.77 million during the fourth quarter of 2012, compared to $1.98 million during the third quarter of 2012 and $1.46 million during the fourth quarter of 2011.
Noninterest and income tax expense
Noninterest expense for the quarter ended Dec. 31, 2012, was $34.9
million, compared to $33.6 million in the third quarter of 2012
and $34.4 million in the fourth quarter of 2011.
- Salaries and employee benefits costs increased by 0.44 percent from the third quarter of 2012 and 3.13 percent from the same period last year.
- Included in noninterest expense for the fourth quarter of 2012 was $1.36 million in other real estate expenses, compared to $2.40 million in the third quarter of 2012 and $4.19 million in the fourth quarter of 2011.
- During the fourth quarter of 2012, the firm prepaid $60 million of FHLB advances from current liquidity and, therefore, incurred $2.1 million in prepayment penalties that were included in fourth quarter 2012 noninterest expense. These FHLB advances had an annual effective rate of 1.91 percent.
- Income tax expense was $6.28 million for the fourth quarter of 2012, compared to $1.45 million in the fourth quarter of 2011 and $5.02 million in the third quarter of 2012. The firm ended the year with an effective tax rate of approximately 33.0 percent for 2012 compared to the substantial tax benefit last year attributable to the recapture of the valuation allowance for the firm’s deferred tax assets.
- Noninterest expense for the quarter ended Dec. 31, 2012, was $34.9 million, compared to $33.6 million in the third quarter of 2012 and $34.4 million in the fourth quarter of 2011.
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