Pinnacle Standing Out In A Crowded Field

Markets like Tennessee, North Carolina, South Carolina, and Virginia are among the most competitive in the U.S., with established players like BB&T (BBT), Bank of America (BAC), First Horizon (FHN), and Wells Fargo (WFC) facing increasing competition from rivals like Fifth Third (FITB) and U. S. Bancorp (USB) attracted by the region’s above-average population growth and rising household income. Although that’s not great news for Tennessee’s Pinnacle Financial Partners (PNFP), this commercial-focused bank has a few tricks up its sleeve, including a differentiated corporate culture and customer service model, and some attractive specialty lending operations.

Pinnacle’s high deposit beta is a threat, as is its heavy commercial exposure and higher-cost deposit base, but I expect Pinnacle to outgrow its peer group in 2020 and over the next five and 10 years. If annualized core earnings growth in the high single digits is in fact a reasonable expectation, Pinnacle shares look undervalued below the mid-$60s.

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Pinnacle Standing Out In A Crowded Field