A Foolish Take: The David That's Beating Goliath in the Bank Industry

When most people think about the story of David and Goliath, they imagine a small shepherd wielding a slingshot who prevailed against almost insurmountable odds.

But this isn't quite right, as Malcolm Gladwell points out in David and Goliath: Underdogs, Misfits, and the Art of Battling Giants.

Goliath brought a sword, javelin, and spear to the fight. Intimidating? Yes. But against a skilled practitioner of the slingshot, this was akin in the modern world to bringing knives to a gunfight.

It's through this prism that one can understand the success of Pinnacle Financial Partners (NASDAQ: PNFP). Starting from a single location in downtown Nashville, Tennessee, 17 years ago, Pinnacle has gone on to amass nearly $21 billion in assets.

Data source: Pinnacle Financial Partners. Chart by author.

It's done so by stealing market share from the banking behemoths that many industry observers have long believed to be invulnerable to attack from below.

Culture has been Pinnacle's weapon of choice, wielding its reputation as a great place to work in order to attract the best bankers (and their books of business) away from its bigger and better-funded competitors.

And in doing so, Pinnacle has not only grown at a breakneck pace, but it has also produced outstanding shareholder returns. A $10,000 investment at its start would be worth approximately $133,000 today.

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John Maxfield has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.