Is North Carolina Next in Line for Tennessee's Pinnacle?

Pinnacle Financial in Nashville, Tenn., is ready to expand beyond its home state.

The $11 billion-asset company, fresh off its $200 million acquisition of former Music City rival Avenue Financial, is looking at targets in several out-of-state markets, including North Carolina.

De novo activity, fueled by hiring opportunities, is another possibility, according to Terry Turner, Pinnacle's president and chief executive, who spoke during a conference call Wednesday tied to the company's third-quarter results.

"There are a number of attractive high-growth markets scattered around the Southeast that are dominated by the same cast of regional banks with whom we compete in Tennessee," Turner said.

Pinnacle's three-year strategic plan "contemplates our exploration of opportunities" in a number of new markets, Turner added.

During the call, he listed North Carolina's Charlotte and Raleigh markets as potential opportunities for expansion. He also added Atlanta; Charleston, S.C.; and Richmond, Va., to a list of desirable cities.

"We are in the relatively early stage of exploration," Turner cautioned. "We've had conversations with a number of people that I would characterize as casual."

Still, he said Pinnacle was eyeing at least one unidentified market where "there is a group of people who I think would be capable of a de novo start similar to what we've done" in Tennessee's major urban markets. "In the case of deal flow, I do think there's just more chatter than I have seen in a very long time."

Pinnacle, meanwhile, isn't ignoring the markets it has aggressively developed since its formation in 2000. The company has the ability to organically increase assets in Tennessee by 36% between now and 2020, to $15 billion, while maintaining a return on assets of 1.2% to 1.4%, Turner said.

The focus would involve adding market share to the state's four biggest cities — Nashville, Knoxville, Memphis and Chattanooga — without pursuing any new acquisitions.

"We are an urban community bank, which just means we target the urban markets and compete with a community bank level of service," Turner said. "We compete aggressively and win against the large bureaucratic regionals … based on service and advice, which includes access to local decision makers."