Nashville Is Music To Ears Of Pinnacle Financial

Nashville Is Music To Ears Of Pinnacle Financial

Investors Business Daily
November 12, 2015

Nashville is more than just a music capital. The font of country melodies has also become a great place for less entertaining pursuits — banking, for one — thanks to a booming economy fueled by an influx of corporations, health care jobs, investment money and new residents.

And one of Nashville's busiest banking concerns, Pinnacle Financial Partners (NASDAQ:PNFP), the second-largest bank holding company based in Tennessee, has been reaping the rewards.

"During the recession, we lost 10% of our jobs, but we've recouped all of those jobs and another 12%," Harold Carpenter, Pinnacle's chief financial officer, said in an interview.

Companies from both coasts have opened offices in Nashville, drawn by low taxes and the recruitment efforts of the governor's office, he says. The metro region's 4.3% jobless rate is among the lowest in the nation.

"It's been a growth market for several years," Carpenter said.

Pinnacle has reflected that growth and more.

Double-digit growth

It's grown assets 10% to 12% annually, not counting two acquisitions that closed in the third quarter to add roughly $2 billion in assets for a total of $8.5 billion. It also expanded its presence into two new markets, Chattanooga and Memphis.

Loan growth is 14.4% a year, says Andrew Stapp, an analyst with Hilliard Lyons.

"That's huge. And it's all organic. Most banks are growing mid- to high single digits annually," Stapp said, calling Pinnacle a "super-community bank."

Pinnacle was founded in 2000 and has up until now essentially stuck to its Nashville hometown, with some operations in Knoxville, serving mostly middle-market commercial clients and affluent customers. It's especially big in commercial and industrial loans; in Nashville, Pinnacle is viewed as the leading lender in those areas, even though it's the fourth-largest bank there overall, after Bank of America (NYSE:BAC), Regions Financial (NYSE:RF) and SunTrust Banks (NYSE:STI) .

To reach $8.5 billion in assets in just 15 years is "great growth," Stapp said.

Acquisitions aside, Pinnacle grew assets mostly by hiring good lending agents from competitors, especially larger banks, who brought quality loans from their clients with them, Stapp says. Other than its two acquisitions in recent months, Pinnacle has purchased only two other banks since its founding, the last one in 2007.

Carpenter doesn't deny that its recruitment effort is a top priority. He calls it the firm's "secret sauce." Hiring targets, he says, are mostly employed with rival banks with greater market share such as SunTrust, Bank of America, Regions and First Tennessee Bank, part of First Horizon National (NYSE:FHN), the largest bank holding company based in Tennessee. First Horizon is No. 1 in Knoxville.

"They've got the business. We need their people. We recruit their people," Carpenter said.

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