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 [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 - Pinnacle's adjusted non-interest revenue growth was largely due to higher service charges, wealth management revenue, and income from BHG, which contributed $31 million in fee revenue [11] - Synovus generated healthy, consistent 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 the strengths of both companies and their resolve for swift integration [8] - The economic backdrop remains somewhat uncertain, but client sentiment is relatively constructive, with expectations for business activity to pick up over the next 12 months [46] Company Strategy and Development Direction - Pinnacle aims to produce strong, above-peer revenue, earnings per share, and tangible book value growth, focusing on exceptional client service and industry-leading loyalty [5][6] - The company plans to hire 250 total revenue producers in 2026, with loan growth expected to reach $91-$93 billion, up 9%-11% from year-end 2025 [17] - The adjusted revenue outlook for 2026 is projected at $5-$5.2 billion, with a net interest margin estimated in the 345-355 range [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving loan growth targets despite competitive pressures, citing a strong hiring model and existing team members' performance [44][46] - The company anticipates realizing 40% of its annualized merger-related expense savings in 2026, with underlying expense growth driven by revenue producer hiring and normal inflationary expenses [20] Other Important Information - The company retired $200 million of subordinated tier two notes in October before issuing $500 million in December [14] - A quarterly common equity dividend of $0.50 per share will begin in the first quarter [21] 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 their existing legacy platforms until the conversion, which will introduce new capabilities and products [33] Question: When do you think you would actually initiate buybacks? - Management expressed a desire to buy back stock at attractive prices but indicated that capital ratios would be assessed before initiating buybacks, likely not in the first quarter [36][38] Question: Can you walk us through your confidence in achieving the loan growth target? - Management highlighted that the pro forma company generated 10% loan growth in the fourth quarter and emphasized the importance of existing team members and recent hires in achieving future growth [44][46] Question: What is embedded in the fee income guidance for the capital markets business? - Management noted that both Pinnacle and Synovus have had success in growing fee revenue, with expectations for strong growth in capital markets fees in 2026 [52] Question: What is the outlook for some of the specialty businesses? - Management expressed excitement about the growth potential of specialty businesses, with joint efforts already underway to leverage capabilities across the combined organization [81]