Pinnacle Financial CEO’s tale of success

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Quick quiz: Which $34 billion asset bank with more than 700 employees in North Carolina is ranked the 14th best place to work in the U.S. by Fortune and has stock that has returned nearly 430% over the last decade?

Quick answer: Pinnacle Financial Partners, a Nashville, Tenn.-based company that bought BNC Bancorp in 2017. Pinnacle now has 42 offices around the state, mostly in the four big metro areas.

That kind of record doesn’t just happen, so it was interesting to hear CEO Terry Turner describe Pinnacle’s priorities during his keynote address last week to the annual economic forecast event last week sponsored by the NC Chamber and the N.C. Bankers Association.

Pinnacle was formed in 2000, a year after the Tennessee capital lost its last big locally owned bank. Turner and two former colleagues at First American Bank gradually expanded Pinnacle into Georgia, North Carolina, South Carolina and Virginia. Since 2000, Pinnacle’s shares have increased more than 1,200%, according to the bank. The total return since 2006 tops all but one other publicly traded bank, says Turner, who owns about 422,500 shares according to the 2020 proxy. (That would be worth nearly $30 million.)

Turner says the bank excels because it has a 95% employee retention rate, which he calls “unbelievable” in the banking industry. “The number one deterrent to good service and good advice is employee turnover,” he said.

Key to retention is a culture based on teamwork, accountability and performance, he says. Everyone says that, of course, but Pinnacle has made it work by steady expansion and offering each employee annual cash bonuses that are based on corporate results, not individual departments. The bonuses typically run 10% to 20% of annual pay, he said. Each employee also receives shares of stock starting from day one. Overall, staffers own about $500 million worth of shares, or about 10% of the bank’s $5 billion market value, he said.

Turner also cites Pinnacle’s refusal to hire trainees or recruit bankers unhappy in their current jobs. Instead, managers seek experienced people mainly  based on referrals.

An old-school customer service focus also matters; Turner insists that phone calls be answered within three rings by a real person, not an automated assistant.

Then there are the book clubs. Pre-pandemic, about two-thirds of Pinnacle staffers took part in voluntary groups that read such titles as Good to Great by James Collins, Love Works by Joel Manby, Mojo by Marshall Goldsmith and Energy Bus by Jon Gordon. About 15 folks typically meet at someone’s home, share a meal and discuss the book, hoping to build camaraderie. This year, some virtual clubs convened. It builds better relationships, Turner says.

In North Carolina, Pinnacle’s top executives include four former BNC executives. Ex-CEO Rick Callicutt, who is chairman of the Carolinas and Virginia. Ex-CFO David Spencer is an executive vice president responsible for the three states. Reid Marks is regional president of the central N.C./Triad region, while Mark Carlton and Rob Ellenburg oversee the eastern North Carolina and Charlotte areas, respectively. Callicutt and former Wachovia CEO Ken Thompson are Pinnacle directors.

Sustaining success isn’t easy. Over the last three and five years, at least four N.C.-based banks have had better shareholder returns than Pinnacle. (The leader is First Citizens, which is up nearly 50% over three years and 155% over five.)

But Pinnacle shares have nearly doubled since late September and trade near record levels. Analysts expect earnings per share to gain 18% in 2021, on average. Turner is counting on a distinctive style to keep the momentum. His mantra is management theorist Peter Drucker’s saying that “Culture beats strategy for lunch” — provided the “culture is well-aligned.”

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