Synovus Financial (SNV) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Pinnacle reported Fourth Quarter adjusted EPS of $2.24, stable quarter over quarter and up 18% year over year [8] - Synovus reported Fourth Quarter adjusted diluted EPS of $1.45, stable quarter over quarter and increased 16% year over year [10] - Net interest income for Pinnacle increased 3% from the third quarter and 12% year over year, while Synovus saw a 2% quarter over quarter and 7% year over year increase [8][10] - Pinnacle's net interest margin increased one basis point to 3.27%, while Synovus' net interest margin expanded four basis points to 3.45% [8][10] - Pinnacle's CET1 ratio ended the quarter at 10.88%, and Synovus' CET1 ratio reached an all-time high of 11.28% [9][11] Business Line Data and Key Metrics Changes - Pinnacle's period-end loans grew 3% quarter over quarter and 10% year over year, while Synovus' period-end loans increased by 2% from the prior quarter and 5% from the previous year [8][10] - Pinnacle's adjusted non-interest revenue declined 6% from the third quarter but increased 25% year over year, driven by higher service charges and wealth management revenue [8][9] - Synovus generated healthy growth in adjusted non-interest revenue, which grew 6% from the prior quarter and 16% year over year to $144 million [10] Market Data and Key Metrics Changes - Both companies reported strong performance in their respective markets, with Pinnacle achieving a number one Net Promoter Score ranking and Synovus ranking third among top market share banks [5][6] - The merger between Pinnacle and Synovus was completed swiftly, demonstrating effective integration and operational excellence [6] Company Strategy and Development Direction - The company aims to produce strong, above-peer revenue, earnings per share, and tangible book value growth, focusing on exceptional client service and industry-leading loyalty [4][5] - The goal for 2026 includes hiring 250 total revenue producers, with expectations for period-end loans to grow to $91-$93 billion, representing a 9%-11% increase [14][15] - The company plans to target a common equity tier one ratio of 10.25%-10.75% and anticipates adjusted non-interest revenue of approximately $1.1 billion in 2026 [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving loan growth targets despite a competitive backdrop, citing a constructive client sentiment and the ability to generate growth through hiring [38][39] - The company expects to realize 40% of its annualized merger-related expense savings in 2026, with underlying expense growth driven by revenue producer hiring and normal inflationary expenses [17] - Management acknowledged potential challenges in 2026 but emphasized readiness to tackle them, highlighting a strong earnings performance outlook [18] Other Important Information - The company has undertaken a significant repositioning within the legacy Synovus securities portfolio, selling approximately $4.4 billion and purchasing new securities with an average yield of 4.7% [12] - A $400 million common share repurchase program has been authorized to manage capital in multiple growth scenarios [18] Q&A Session Summary Question: What can the combined bank not do today that it will be able to do a year from now post-conversion? - The combined bank will move to an nCino platform that will provide new capabilities, functionality, and products, enhancing revenue synergies [28] Question: When do you think you would initiate buybacks? - The company is likely to accrete capital for a time period and reassess buybacks later in the year, with no purchases expected in the first quarter [31] Question: How confident are you in achieving the loan growth target given market conditions? - The company generated 10% loan growth in the fourth quarter and is confident in achieving the 9%-11% growth target based on existing team members and recent hires [36][39] Question: Can you provide updates on the timing for further build and liquidity in the bond portfolio? - The company completed a $4.4 billion repositioning of the securities portfolio, improving liquidity and reducing risk-weighted assets, with plans for additional debt issuances in 2026 [75]