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] - 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 declined 6% from the third quarter but jumped 25% year over year, driven by higher service charges and wealth management revenue [10][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 within 160 days [8] - Legacy Pinnacle achieved a number one Net Promoter Score ranking, while legacy Synovus ranked third among top market share banks [7] 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 [5][6] - 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 [17][18] - The company anticipates adjusted revenue of $5-$5.2 billion in 2026, 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 positive client sentiment and a strong hiring model [44][46] - The company expects to realize 40% of its annualized merger-related expense savings in 2026, with a target CET1 ratio of 10.25%-10.75% [20] Other Important Information - The company retired $200 million of subordinated Tier 2 notes in October before issuing $500 million in December [14] - A $400 million common share repurchase program was authorized to manage capital in multiple growth scenarios [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? - The combined bank will move to an in-state platform that takes the best of both organizations, allowing for new capabilities and products [33] Question: When do you think you would actually 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 [38] Question: Can you walk us through your confidence in achieving loan growth targets? - The company generated 10% loan growth in the fourth quarter and expects growth from existing team members and recent hires [44][46] Question: What is the outlook for fee income guidance for the capital markets business? - The capital markets business is expected to show strong growth, with over 15% growth in swap fees and opportunities for revenue synergies [54] Question: How do you plan to handle higher hold limits? - The company plans to increase hold limits slightly, allowing for larger loan sizes while continuing to manage risk through syndication [80]