Bank earnings mixed in fourth quarter
Profits rose in the fourth quarter for two regional banks operating in Chattanooga, but one of the nation’s biggest banks reported a drop in net income last fall.
PINNACLE BANK
Pinnacle Financial Partners, Inc., the Nashville-based banking firm that operates Pinnacle Bank as the fourth biggest bank in Chattanooga, reported net income in the fourth quarter of $1.42 per share, up 12.7% from the $1.26 earned in the same period a year ago.
For all of 2020, however, Pinnacle earnings fell to $4.03 per share from $5.22 the previous year.
“As we all know, the 2020 operating environment was very challenging,” said M. Terry Turner, Pinnacle’s president and chief executive officer. “In spite of all the hardships in 2020, we are very pleased to report diluted earnings per share growth over 12% (over 24% on an adjusted basis) over the fourth quarter of 2019…Our hiring pipelines continue to grow across our markets as we remain excited about the opportunity to produce outsized earnings and tangible book value per share growth going into 2021.”
SMARTBANK
SmartFinancial, Inc., the parent company of SmartBank, said Tuesday it earned $9 million, or 59 cents per share, in the fourth quarter of 2020, up from the $6.4 million, or 42 cents per share earned by the bank a year earlier.
Deposits for the Knoxville-based bank increased by 23.1%, or $153.2 million, during the fourth quarter, and COVID loan modifications declined to 0.7% of total loans.
“The fourth quarter of 2020 and the entire year of 2020 exceeded our expectations,” SmartBank Chairman Miller Welborn said. “This COVID pandemic has affected a tremendous number of people and the SmartBank team continues to help our clients and the communities we serve.”
Billy Caroll, president and CEO of SmartFinancial, said the bank’s focus on diversification of revenue and work on efficiency gains “are being seen in our metrics, and that, coupled with our solid credit quality, keeps us very excited about our future.”
BANK OF AMERICA
Bank of America’s fourth-quarter profits fell 18% from a year ago, as lower interest rates weighed down its results. However the bank was able to release more than $800 million from its credit reserves, a sign that it sees the U.S. economy improving in the coming months.
The North Carolina-based bank said Tuesday that it earned a profit of $5.47 billion, or 59 cents a share, down from a profit $6.99 billion, or 74 cents per share, in the same period a year earlier. Analysts were expecting BofA to earn 56 cents a share, according to Zacks Investment Research.
Like its Wall Street competitors, Bank of America was able to release hundreds of millions of dollars from its loan-loss reserves — money the bank had set aside earlier in the pandemic to cover loans that might be now be unpayable. But as the economy has relatively improved, banks have been able to free up some of those reserves.
In the quarter, BofA released $828 million from its credit reserves. This type of release goes straight to a bank’s bottom line, but it’s largely because the money was moved out of an escrow-like account and was now free to be used again.
Low interest rates were the biggest drag on BofA’s results compared to last year. The Federal Reserve sharply cut rates once the pandemic hit. Bank of America’s balance sheet is heavily weighted toward short-term interest rates, so it was hit harder than the rest of its competitors. Interest revenue in the quarter went from $12.14 billion to $10.25 billion.