Pinnacle Financial Partners Inc. has some lofty goals for its entry into the Jacksonville market.
The Nashville, Tennessee-based banking company announced its plans to expand into Jacksonville as it released year-end earnings Jan. 16.
A day later, it announced it hired a team that formerly ran Truist Financial Corp.’s Jacksonville operations to run Pinnacle’s operations in the area.
Pinnacle operates in 17 markets in the Southeastern U.S. and Jacksonville will be its first move into Florida.
“Our target market has been all the large urban markets in the Southeast, which are so advantaged, where Florida has been our principal void,” Pinnacle CEO Terry Turner said in the company’s conference call with analysts Jan. 16.
“The catalyst for when we decide to extend to a new market is when we have the availability of leadership that we believe can build a $3 billion bank over a five-year period of time in any of those large markets,” he said.
The available leadership started with Scott Keith, who retired as Truist’s regional president of North Florida in September 2021, as Pinnacle’s North Florida regional president.
Pinnacle also hired former Truist Jacksonville Market President Debbie Buckland as its leader for commercial banking in Northeast Florida.
“Jacksonville, Florida, is on par with our other large high-growth markets, extraordinarily healthy and rapidly growing, and it’s ideally suited for us from the perspective of the competitive landscape,” Turner said.
“As I’ve already said, talent availability is what controls the timing,” he said.
“So I think it’s evident why Jacksonville and why now.”
Chief Financial Officer Harold Carpenter said Pinnacle’s entry into Washington, D.C., Atlanta and Birmingham, Alabama, since 2020 has been a large source of loan growth for the company.
“We hire experienced bankers in these new markets and give them the tools and resources to build a large local franchise,” Carpenter said.
“Much of our loan growth is not to new borrowers showing up at Pinnacle Bank with a new idea of a pitch,” he said.
“Our borrowers have extended relationships with relationship managers over, in many cases, decades of working with each other. This is not just true for Charlotte, Nashville, Charleston and other legacy markets, but that applies to Atlanta, D.C., and Birmingham as well as Jacksonville.”
In a research note after Pinnacle’s earnings report, J.P. Morgan analyst Steven Alexopoulos said the company is bucking trends at other banks with its expansion.
“While some regional banks are scaling back balance sheet growth, Pinnacle remains an outlier and is targeting balance sheet growth (both loans and deposits) in the low double digits range as the company remains on offense coupled with 2024 revenue producer hires expected to accelerate vs. 2023 (107 hired in 2023),” he said.
“With Pinnacle targeting to expand into Florida for some time, it has finally found the right team in the right market,” Alexopoulos said.
“However, we were very surprised to hear CEO Terry Turner say on the earnings call that growth from Jacksonville could be on par with what the company has seen from Washington D.C.”
Turner’s goal of $3 billion in deposits or loans in the Jacksonville market is ambitious.
Pinnacle has $914.5 million in deposits in the Washington, D.C., market and it has fewer deposits in its other new cities.
According to the latest Federal Deposit Insurance Corp. data, only Bank of America, EverBank and Wells Fargo are credited with more than $3 billion in deposits in the Jacksonville market, with Truist close behind at $2.9 billion.
EverBank is a national bank that solicits most of its deposit accounts online, and Bank of America’s deposits include large corporate accounts credited to its main branch Downtown.
So, it is difficult to gain $3 billion in deposits from customers in the Jacksonville area.
Pinnacle will try to win business away from existing banks in Northeast Florida.
Jacksonville is “dominated by the same exact competitors that we’ve been facing off with for now 23 years,” Turner said. Pinnacle was founded in 2000.
“The size and growth dynamics are really important in terms of the success in the markets that we’ve been in, but more important than the size and growth dynamics would be the competitive landscape,” he said.
“It’s important to have competitors from whom you can take market share.”