Chapter 14 Acquisitions

The reason I selected Pinnacle Financial Partners as my company to follow is because I was intrigued by the company’s aggressive acquisition strategy. Pinnacle’s CEO has stated publicly that he plans to grow the company by acquiring competitors. The company has used the horizontal merger strategy to gobble up competitors and enter new markets. It’s most recent acquisition was the acquisition of North-Carolina-based BNC Bankcorp. This deal allows Tennessee-based Pinnacle to expand into Virginia and the Carolinas. Other acquisitions include: Avenue Bank, Mid-America Bankshares, Magna Bank and CapitalMark Bank. Each acquisition allows Pinnacle to grow larger and stronger, entering new markets and gaining market share. This is a smart strategy because by acquiring existing banks, the company has a built-in customer base when it enters new markets.

Chapter 13 Grizzlies Banking

Pinnacle Financial Partners announced in August 2016 that it has a partnership with the Memphis Grizzlies. The arrangement seems like a licensing agreement, but the company refers to it as an alliance. The partnership introduces Grizzlies Banking which allows Pinnacle to use the Grizzlies brand on its debit and credit cards and target Grizzlies fans with customized promotions. As part of the partnership, Pinnacle is launching grizzliesbanking.com. The partnership will provide exclusive naming rights dubbed the Pinnacle Level concourse and seating at the FedEx Forum. Pinnacle has been dubbed the exclusive Grizzlies marketing partner. This agreement has components of a strategic alliance and components of a licensing agreement. The competitive benefit to Pinnacle is that the company can take advantage of the brand equity that comes along with being affiliated with the Grizzlies. Pinnacle now has an avenue to introduce itself to Grizzlies fans and possibly convert them to new customers.

Chapter 12

Pinnacle Financial Partners has an M form organizational structure. The company released a new organizational structure that shows how the company will be organized once its merger with Mid-America Bancshares is completed. It’s hard to see but there is a board of directors at the top and the two yellow highlighted positions are the two executives from Mid-America that were merged into Pinnacles existing corporate structure.

 

According to the company, three Mid-America board members will become directors of Pinnacle’s board.

 

	•		David Major will be Pinnacle’s area chairman and will retain broad oversight responsibilities for Wilson County.

 

·         Gary Scott will be Pinnacle’s area chairman and will retain broad oversight responsibilities for Dickson, Cheatham and part of Williamson counties.

	•		Sam Short, president and COO of Bank of the South, will become Pinnacle’s area executive for Wilson County and a member of Pinnacle’s Leadership Team.

 

·         Jason West, president and COO of PrimeTrust Bank, will become Pinnacle’s area executive for Dickson, Cheatham and part of Williamson County and a member of Pinnacle’s Leadership Team.

Diversification of Service Lines

While Pinnacle Financial Partners is a bank, the company has diversification of revenue streams. The company is involved in five areas of diversification: Financial Planning, asset management, wealth advisors, trust and insurance. The company also has diversification within its area of core competency, which is consumer banking. Within the consumer banking arena, Pinnacle has specific target areas such as mortgages, loans, online banking, health savings accounts, and Grizzlies Banking for Grizzlies fans. Customers who sign up for Grizzlies Banking get extra benefits such as a free Grizzlies debit card with not usage fees.

The five areas mentioned above are extra service lines that provide a cash flow for Pinnacle. It’s a way for the company to protect itself from market influences. For example, if Pinnacle is not making money from mortgage loans, it might still have an opportunity to get additional revenue from selling insurance.