Tennessee's biggest banks reported sharp declines in first quarter profits compared with a year ago, due primarily to an increase in loan provisions in anticipation of the economic slowdown caused by the business shutdowns made to limit the spread of the coronavirus.
First Horizon National Corp., the state's biggest bank based in Memphis, reported Tuesday that its first-quarter earnings fell by 86% from a year ago to an adjusted 5 cents per share.
Pinnacle Financial Partners, the Nashville-based parent company of Pinnacle Bank, reported net income per diluted share of 37 cents, down nearly 70% from a year earlier.
First Horizon missed Wall Street expectations that it would earn 22 cents per share in the first three months of 2020. As a result, First Horizon shares fell by more than 3.6% in trading Tuesday on the New York Stock Exchange.
Pinnacle shares fell even more, dropping by 8.5% in trading on the Nasdaq exchange.
"The COVID-19 pandemic has created unprecedented challenges for our nation, our communities and companies of all sizes," said Bryan Jordan, chairman and CEO of First Horizon. "We believe our dedicated employees, diverse businesses, balance sheet capacity and ample liquidity have helped position First Horizon to help our clients and communities navigate through this difficult time."
Despite the drop in earnings and economic challenges ahead, Jordan said First Horizon's planned $31.7 billion merger with Louisiana's biggest bank, Iberiabank Corp., remains on track to close later this spring.
Pinnacle CEO M. Terry Turner said the bank has had to shift its focus and resources amid the coronavirus pandemic.
"We have historically set high performing targets and executed with discipline," Turner said. "2020 began in much the same way. Nevertheless, during the quarter, our primary focus became protecting our associates, clients, communities and shareholders from the rapidly progressing COVID-19 pandemic. Things like building on-balance sheet liquidity and significantly increasing our allowance for credit losses in response to potential impacts of the COVID-19 pandemic superseded previous operating plans and impacted operations."
In spite of a drop in net income in the first quarter, Pinnacle succeeded in boosting its deposits in the Chattanooga market by nearly 33.7% in the past year to nearly $1.3 billion.