Breaking down walls, Pinnacle Financial Partners grows in the Upstate

A market newcomer alters the banking play book

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Pinnacle
Pinnacle leadership L-R: Charles Williams, senior vice president & trust portfolio advisor; Edward Stein, regional president; Blair Miller, area manager; and Robert Moore, head of Spartanburg office. Photo by Will Crooks.

Sometime next year, motorists turning the corner at the busy intersection of St. John and East Main streets in Spartanburg may see piles of debris where Pinnacle Financial Partners’ existing office now stands.

That’s because the Nashville, Tennessee-based bank recently decided to tear down the more-than-50-year-old structure across from Converse College and erect a new facility to better serve its clients.

“That’s our first priority when it comes to physical branches,” said Edward Stein, Pinnacle Financial’s regional president based in Greenville, adding that the number of offices for associates will increase from seven to nine. The conversion project, now in its early stages, will at some point include the opening of a temporary business office to house current associates. A demolition date has not been set.

The take-down, build-up activity planned for Spartanburg is symbolic of the way Pinnacle Financial Partners has approached customer service and business growth: Tear down barriers to lending; build up teams of associates who often worked with one another at other banks; and, market by market, create a culture that leads strong performers to stay put.

Founded with a single location in Nashville in 2000, Pinnacle now boasts $25.6 billion in assets and operates in 11 markets in Tennessee, the Carolinas, and Virginia. In one of a string of acquisitions, it entered the Upstate after acquiring North Carolina’s BNC Bancorp in 2017.

In the Upstate, Pinnacle offers credit, mortgage, insurance, trust, and investment products through three offices in Greenville County (Pelham Road, Laurens Road, and Butler Road), in Easley, and in Spartanburg, and at its main banking and administrative offices at 550 E. McBee St. in Greenville.

Pinnacle’s associates talk of a “firm” rather than a “bank” to help differentiate the breadth of its offerings as well as its approach to lending. Rather than off-loading lending decisions to remote committees as is done by larger banks, Pinnacle confers senior credit officers in local markets with substantial sign-off power “north of 10 million,” said regional president Stein.

And while its small-business unit uses a scoring process for rapid decisions, with $1 million the typical threshold, there’s some flexibility to go above that number should a loan lack complexity or if a particular parameter is not met by the scoring system, noted Blair Miller, Pinnacle’s area manager.

“Our local leadership … have the ability to decision those loans based on our knowledge of the client and mitigating factors,” Miller said.

That knowledge is often the result of two key events: an associate’s understanding of existing clients as he or she is recruited and their decision to commit to Pinnacle long-term.

Pinnacle makes a point of recruiting proven revenue producers from other organizations with the understanding they will bring with them a high-quality book of business.

“From day one when the firm was started, we are in a constant recruiting mode,” Stein said, and often lenders who worked well together at larger institutions find themselves together again at Pinnacle, making the transition to a less stratified business model even easier.

“In fact, our primary organic growth strategy is through hiring,” said Joe Bass, Pinnacle’s communications strategist, with invitations to join the firm extended only to individuals with a minimum of 10 years’ experience and with many recruits possessing 20 years. Unsolicited applications are not accepted.

To better balance the firm’s portfolio, there’s been an emphasis away from the commercial real estate lending emphasized by BNC toward recruiting talent with strong commercial and industrial portfolios, said Stein. Overall, he said, “We typically see a pretty clean portfolio” brought along by new hires.

In 2018, Pinnacle hired 107 new client-facing revenue producers, including nine in the Upstate since inception for a total of 60 regional associates. Over the corporation’s first 18 years, Bass added, the retention rate for associates stood at 91.3%, further cementing the company’s relationships with clients.

To retain its people, Pinnacle fosters shared values and camaraderie, sprinkled with a heavy dose of financial rewards.

Associates participate in a book club that allows them to better understand the thinking of CEO Terry Turner and bond with co-workers. Club meetings are held at group leaders’ homes and feature dinner, drinks, and conversation.

“We’ve covered a lot of books, but the cycle happening right now is on ‘First, Break All the Rules’ from Gallup,” said Bass in an email. “It was one of the early books we did, back when we had around 200-250 associates, so it’s a good time to revisit it now that we’re up to 2,300.”

In a similar vein, revenue producers invite small-business owners to an eight-week book club based on “The E-Myth Revisited,” aimed at helping them think through the evolution of their own company’s growth. “Our singular goal is to bring owners together to facilitate discussion,” Miller said.

Each January, the company holds a systemwide gathering at which associates are informed about performance payouts. The payouts are based on three “top-of-the-house” yardsticks – revenue growth, earnings growth, and asset quality – rather than an individual’s local-market production, Stein said.

Through its somewhat unorthodox way of doing business, Pinnacle continues to reap rewards in terms of revenues and reputation.

Systemwide, loans at March 31 stood at a record $18.2 billion, for year-over-year growth of 11.3%. Year-over-year deposits increased 12% while revenues for Q1 2019 displayed a growth rate of 9% from the first quarter of 2018.

In the Upstate, full-year deposits grew by more than 15%; loans, by 21%.

Pinnacle Financial Partners continues to garner accolades. Fortune listed the firm among its “100 Best Companies to Work For” in each of the last three years while American Banker recognized Pinnacle as one of “America’s Best Banks to Work For” for six consecutive years.

“It’s a culture that runs from top to bottom to sideways,” said Robert Moore, head of the Spartanburg office.

“Everybody’s pullin’ on the rope in the same direction,” added Charles Williams, who worked with Stein at two other banks and is now senior vice president and trust portfolio adviser in Greenville.

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