Pinnacle Financial Downgraded At KBW On Valuation

In a report published Thursday, Keefe, Bruyette & Woods analyst Jefferson Harralson downgraded the rating on Pinnacle Financial Partners PNFP from Outperform to Market Perform, based on valuation.

The company reported robust results for Q2, driven primarily by expense control and, to a lesser degree, from provision and fees. Spread income rose 4 percent, on an annualized linked quarter basis, with loan growth of an annualized 10 percent, along with a decline in NIM. Core fees also increased by an annualized 22 percent, helping drive the Q2 beat.

This was also the first full quarter of the Banker Healthcare Group deal, which proved to be accretive at least by an estimated 11 percent, adding $0.07 to the EPS.

According to the KBW report, "The bulk of PNFP's earnings beat came through expense reduction providing an additional $0.03 with the majority coming from lower OREO cost, which was down $0.5 million on the quarter and came in with a recovery of $0.1 million."

The 2015 EPS has been raised from $2.47 to $2.54, based on the marginally stronger loan growth in Q2. The 2016 EPS estimate has been raised from $2.75 to $2.80, "although we admit the estimates may be low if the deal accretion comes through as expected," Harralson added.