FBR & Co. analyst Christopher Nolan has downgradedCapitala FinanceCorp. to "market perform" from "outperform"after the release of the company's first-quarter earnings.

Nolan said the company's energy exposure is leading to assetquality issues, which continue to drive down the company's net asset value pershare. The analyst expects this decline to slow down in the coming quarters.

Nolan projects a lower revenue generation capacity because Capitalais due to repay $11.5 million in Small Business Administration borrowings inthe third quarter, which will also affect the company's current dividend.

The analyst has a price target of $14 on the company'sstock. EPS estimates were lowered to $1.85 from $1.87 for 2016 and to $1.79from $1.88 for 2017.