It makes perfect sense: If you want to grow your business, you need to be where your customers are. Banking is no different, which might explain why so many banks that have been operating in nearby communities are moving into the Nashville market.
“The whole Middle Tennessee area, for a long period of time, before the slowdown, was a pretty attractive market for people looking to expand into,” says Timothy Amos, vice president of the Tennessee Bankers Association.
“But people don’t move just because they think it is a nice place to be. They move because there is a business reason to do so. If you are F&M Bank in Clarksville and you are on the outskirts of the Nashville market, and the growth is somewhere between Nashville and Clarksville, it makes a lot of sense to serve your customers and move some of your facilities or branches into Davidson County.”
Pinnacle’s officers certainly thought there was value in the market when it was founded 12 years ago with one office and about 40 associates. Now it is the largest locally owned bank in the area with 29 offices in Middle Tennessee, another three in Knoxville and about 750 associates.
But Pinnacle doesn’t consider itself large when compared to the larger banks that hold most of the market share in Middle Tennessee – Regions, SunTrust and Bank of America. But that doesn’t mean they won’t go after their business.
“We really built and engineered this company specifically to compete with large regional banks,” Pinnacle CEO Terry Turner explains. “The goal of it seems simple to me. It is not a vengeful thing. That is just where all the clients were. That is where all the vulnerability was. And that is what we set out to do, to get up under those large regional banks and try to take their best associates and their best clients, and that is how we have gone about our business now for almost 12 years.”
The founding group for Pinnacle came out of the sale of First American Corporation, a $20 billion holding company headquartered in Nashville. It was a large regional bank with a six-state span that was sold to AmSouth, which subsequently sold to Regions.
Turner says Pinnacle’s continued success has been in maintaining a small-bank mentality while still providing the advanced technology customers have grown to expect from larger corporations.
“We have all of the sophisticated services that those large regional banks have, but we treat our clients as if we are a small community bank,” he says. “We are able to do that because we came out of large regional banks. We built systems and engineered systems. If you aim to take business from all the large regional banks, you have to have the same products they have to be effective in moving that market share.”
Regions Bank, which has had roots in Middle Tennessee for nearly 130 years, touts similar services and products among reasons customers should choose them over smaller banks. But it is not the only reason, says Jim Schmitz, Regions’ Middle Tennessee-area president.
“We are a customer-centric organization,” he says. “We want to be in the position to provide our customers with the best financial advice that we can and get them the right products and services to meet their individual needs, whether that is a retail customer and consumer, or a small business or large corporate customer.”
After AmSouth merged with First American and Regions merged with Memphis-based Union Planters, those two entities combined in 2006 to become what is now Regions.
But being big – Regions services a 16-state area – should not lump the bank in with the “too-big-to-fail” institutions associated with the financial crisis, Schmitz says.
“JP Morgan Chase, Goldman Sachs, the big banks in New York, they deal in worldwide financial markets,” he explains. “They take risks, they do different things as investment banks than we, as regional, community banks, we don’t do. And I think the ire against banks is misplaced when you are talking about local banks that are there to try to take care of individual customers, consumers, and small business, day in and day out.
“We are not out taking big risks in the derivatives market,” he adds. “We are just trying to take care of our customers, give them the best advice and give them the best products and service that we can so that they can reach their financial goals.”
Jim Rieniets, CEO and president of INSBANK, says his bank’s success comes not from catering to the masses, but specializing in a niche group of customers. INSBANK has had presence in Nashville for 12 years and was founded by a group of insurance agents. It was originally named Insurors Bank of Tennessee, with a target market of independent insurance agents in Tennessee.
Today, it has expanded its market to include other small business and residential clientele throughout Tennessee.
“We had a very small amount of capital, and we kind of grew in a boring and steady fashion,” Rieniets says. “We have taken care of our clients and have organically grown our business over the years by word of mouth.
“Today, our business is more a broad mix of commercial banking, but we certainly maintain a really good niche with the insurance agents and independent business which has continued to serve us well. Being a niche is what the whole bank is built around.”
And the fact that INSBANK is different from large banks or other community banks ends up working in every bank’s favor, Rieniets says.
“Thirty years ago, all community banks looked alike, and that is changing for sure,” he says. “While we have broadened our customer approach, we are not trying to be all things to all people. Our approach is much more about commercial banking and small business on the lending side.
“We don’t try to develop a lot of consumer-fee income. So we are probably an example of where banks will tend to maintain a niche or specialty so they can better serve the client. If we all try to maintain the same business model, as an industry we will all end up being pretty mediocre.”
So what makes Middle Tennessee such a desirable place for banks to be? Amos says that while other parts of the country has experienced some downturn, business growth in Middle Tennessee, especially the counties surrounding Davidson, has great appeal.
“Over time, you have gotten a very significant number of corporations that moved here,” he says. “Starting with Nissan and Nissan’s plant expansion in Murfreesboro and building a headquarters facility in Franklin. If you pick up the paper, every day we have a new medical supplier, doctor, management, or some kind of health care company moving here, people putting up call centers. All of that creates growth and that growth generates potential activity.”
FirstBank has been around for more than a century, and opened its first Nashville branch a decade ago. Since that time, bank president Chris Holmes says his bank has slowly expanded in this market with 10 branches total, all based on building relationships within the community.
“Nashville is one of the best places you can be,” he says. “With this being our state capital, the economic vitality of the market, plus having been in several smaller communities outside of the market, it made sense for us.”
Plus, FirstBank’s small size allows decisions to be made locally, as opposed to corporate guidelines with no wiggle room.
“We generally have local people who are running our banks, and usually they have some local knowledge to be able to act on that is a little unusual in the marketplace today,” Holmes says. “Many times decision making is being centralized, but not here. I think that is a key element to our success and core to the way we do business.
“We have all the products and services that 99 percent of the business or consumers could want or need to meet all of their banking needs,” he adds. “And we are able to deliver a more personalized brand of banking. We feel like we are at a very good size to appeal to a broad section of the market.”
Overall, Tennessee is a great place for any bank to be if you look at the numbers, Amos says, adding nearly 400 banks have failed nationally in the past five years, but none in Tennessee prior to this year when there were three.
“We have probably weathered the recession better than most states, certainly in the banking environment,” he says. “That is a real indication that there is a more stable economy, and slightly more conservative lending practices in particular. Fortunately, in Tennessee, we have very good banking regulations.”