Pinnacle Financial Exceeds Q3 Expectations; Shares Jump 2% After-Hours

Pinnacle Financial Partners, Inc. (PNFP) reported better-than-expected third-quarter results driven by solid loan growth, higher recruitments across segments, strong fee income generated from a mortgage rebound, and increased valuations of the underlying portfolio of venture fund investments. Following the news, shares of the bank jumped 2% in the extended trading session on October 12.

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The company reported adjusted earnings of $1.75 per share, up 20.7% year-over-year, and significantly beat analyst estimates of $1.55 per share. (See Insiders’ Hot Stocks on TipRanks)

To add to that, revenue climbed 14.8% to $341.64 million compared to the year-ago period and surpassed the Street’s estimate of $330.33 million. Moreover, net interest income grew 15% year-over-year to $237.5 million, while non-interest income jumped 14.3% to $104.1 million.

Additionally, the company’s Board declared a quarterly cash dividend of $0.18 per common share to be paid on November 26 to shareholders of record on November 5.

Commenting on the results, M. Terry Turner, Pinnacle’s President, and CEO said, “Our business model continued to serve us well during the third quarter…We continue to see increased lending opportunities as a result of our now two-decade-long focus on hiring the best bankers in our markets.”

Turner added, “Our current belief is that our 2022 loan growth, with our new markets and the strength of our hiring over the last few years, should produce low-double-digit growth assuming an economic environment similar to the one we operate in presently.”

Recently, Wells Fargo analyst Jared Shaw maintained a Buy rating on the stock with a price target of $110, implying 13.1% upside potential to current levels.

In a Mid-cap Banks Q3 preview, Shaw said, “We expect stock performance around 3Q21 earnings to be driven most heavily by loan growth, or lack thereof, followed by credit performance, and the ability to maintain positive operating leverage in the face of record liquidity and lower levels of (Paycheck Protection Program) PPP income.”

The analyst added, “With that said, we look for loan growth to pull-back off the surprisingly strong 2Q21 pace, as most management teams continue to cite a challenging backdrop for commercial loan growth and utilization rates, while a pull-back in mortgage production will likely impact residential and warehouse production.”

Overall, the stock has a Moderate Buy consensus rating based on 4 Buys and 2 Holds. The average Pinnacle Financial Partners price target of $102 implies 4.9% upside potential to current levels. Shares have gained 149.1% over the past year.