Pinnacle Financial Partners(PNFP) - 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 [10] - Net interest income increased 3% from the third quarter and 12% year over year [10] - Period-end loans grew at a strong 3% from the prior quarter and 10% year over year [10] - Core deposit growth was healthy at 3% quarter over quarter and 10% year over year [10] - Adjusted non-interest revenue declined 6% from the third quarter but jumped 25% year over year [10] - Synovus reported strong fourth quarter adjusted diluted EPS of $1.45, stable quarter over quarter and increased 16% year over year [11] Business Line Data and Key Metrics Changes - Legacy Pinnacle grew adjusted diluted EPS by 22% in 2025, while Legacy Synovus grew adjusted diluted EPS by 28% [7] - BHG contributed $31 million in fee revenue to Pinnacle [11] - Synovus generated healthy growth in adjusted non-interest revenue, which grew 6% from the prior quarter and 16% year over year to $144 million [12] Market Data and Key Metrics Changes - The merger between Pinnacle and Synovus was completed on January 1st, demonstrating effective integration [8] - The combined company expects period-end loans to grow to $91-$93 billion, or up 9%-11% versus combined loans at year-end 2025 [17] - Total deposits are expected to grow to $106.5-$108.5 billion, or up 8%-10% this year [18] Company Strategy and Development Direction - The company aims to deliver exceptional client service and industry-leading loyalty, focusing on attracting and retaining revenue producers [5][6] - The goal is to hire 250 total revenue producers in 2026, with loan growth supported by financial advisors hired in the past three years [17] - The company plans to realize $100 million in annualized merger-related expense savings in 2026 [20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving loan growth targets despite competitive pressures and economic uncertainties [44] - The company anticipates a constructive credit environment with net charge-offs estimated to be in the range of 20-25 basis points for the year [20] - Management is optimistic about the potential for revenue synergies and expects strong earnings performance in 2026 [21] Other Important Information - The company has undertaken a meaningful repositioning within the legacy Synovus securities portfolio, selling approximately $4.4 billion and purchasing new securities with an average yield of 4.7% [15] - The CET1 ratio ended the quarter at 10.88% for Pinnacle and at an all-time high of 11.28% for Synovus [11][14] 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? - Management indicated that both companies will operate on existing legacy platforms until conversion, but new capabilities and products will arise post-conversion [33] Question: When do you think you would actually initiate buybacks? - Management stated that they would reassess buybacks later in the year, with no purchases expected in the first or second quarter due to capital ratios [38] Question: Can you walk us through your confidence in achieving loan growth targets? - Management highlighted that fourth quarter pro forma company generated 10% loan growth already, with confidence stemming from existing team members and recent hires [44] Question: What is the outlook for fee income guidance for the capital markets business? - Management expressed optimism about capital markets as a growth area, expecting strong growth in capital markets fees in 2026 [54] Question: How do you plan to handle higher hold limits? - Management clarified that higher hold limits would allow for slightly larger loan sizes while still utilizing a strong syndicated platform to manage risk [80]