Pinnacle Financial Partners Inc. of Nashville said its first-quarter earnings rose 8.3% from a year earlier, to $6.1 million, though earnings per share declined 23.5%, to 26 cents.
The drop was caused in part by the issuance of 6.6 million additional shares after the November acquisition of Mid-America Bancshares of Nashville for $196 million in cash and stock, Harold Carpenter, Pinnacle's chief financial officer, said in an interview Tuesday.
The $3.9 billion-asset Pinnacle reported $3.1 million of acquisition expenses for the quarter, but the acquisition increased Pinnacle's loans, deposits, and noninterest income substantially.
Total loans climbed 85%, to $2.87 billion as of March 31, including $864 million of loans acquired from Mid-America, Pinnacle said. Deposits rose 75%, to $2.97 billion, including $957 million from Mid-America and $313 million of organic growth.
Pinnacle's loan-loss provision jumped 102%, to $1.59 million. Mr. Carpenter said the increase was caused in part by the high increase in loans. In addition, Pinnacle said its return on assets fell 41 basis points, to 0.65%. Without the Mid-America acquisition, the ROA would have been about 0.89%, Pinnacle said. Its return on equity fell 362 basis points, to 5.14%.
Craig Colasono, an analyst with Sandler O'Neill & Partners LP, wrote in a note issued Tuesday that lower credit costs and higher fee revenue helped "offset higher operating expenses and net interest margin compression."
Pinnacle's net interest margin shrank 27 basis points, to 3.37%. Noninterest income climbed 66.5%, to $8.4 million.
