Pinnacle Financial Partners, Inc. Aktie

Well, thanks, everybody. We're going to continue the mid-cap bank track with Pinnacle Financial Partners. We're happy to have Kevin Blair, the President and CEO with us and Jamie Gregory, the CFO. So thanks very much, guys, for joining us.

Thanks for having us.

Maybe just starting off, we're now roughly 6 months beyond the merger close. When you think about what's gone better than expected, what's required more work than expected and what surprised you the most? How would you assess where integration stands today?

Well, look, Jared, I go back to the questions that we received post deal announcement. And whether that was in July of last year or whether that was in -- on January 1 this year, there's a great deal of skepticism around 3 things. Number one, will we be able to continue to grow at an elevated pace. Number two, will we be able to attract and retain top talent. And number three, will the clients like this merger. And look, the skeptics are not wrong. When you look at other MOEs that have occurred in recent years, there's been a lot of challenges.

So what gets me super excited is, I think we've answered those levels of skepticism with real data points that say, yes, we not only can do it, we've actually accelerated some of the performance in those areas. Number one, we've grown loans 12% year-to-date, we've grown deposits 6% year-to-date, both of those ahead of our internal projections. We've grown earnings per share of 26%. So the merger itself is a distraction, but it has not slowed down our frontline team members. It has not slowed down their ability to generate growth.

Number two, people were concerned about the ability to attract talent. We have added 124 revenue producers through June. We said we had another 34 in July. Those numbers are up 13% year-over-year versus what the combined companies would have done last year. So it's showing that this model is so attractive that even with a little uncertainty around a merger, we're able to attract talent and two, voluntary turnover we look back at legacy company history. And last year, it was about 7%. This year, we're running 6%. So we're tracking at a faster pace, and we're retaining at even a better clip than we would in previous years. So I would tell you that should silence the skeptics.

The third was on clients. We look at our Net Promoter Scores, and we just look at the Greenwich data on the commercial side. We have the #1 Net Promoter Score in the Southeast. We got the first quarter results back and our Net Promoter Score declined about 3 points, which is as expected. Greenwich just told us any company that's going through a merger generally sees a 15% to 20% decline in their Net Promoter Scores. We saw a 3-point decline. It still puts us as #1. So it shows us that our clients are still dealing with the same people every day, which gives them confidence. What has been more difficult, it's what you guys want to talk about. It's bringing 2 companies together and unifying an operating model and a culture. And that's not easy, but we've been very successful at being able to do that.

And it requires paying attention to the little things that people talk about when no one is around, how you hire, how you talk about things, how you make decisions. And all of the leadership team, all of our leadership team has spent a disproportionate amount of their time dealing with that so that we can unify our culture and then build upon it. And then what's been most surprising, I would just say it's been the momentum. It's been the ability to maintain the growth to have the legacy Synovus team begin to hire at a pace that's similar to the legacy Pinnacle team. What's been exciting is when you look at the growth of the firm, it's been so diversified across all of our geographies and all of our specialties. So I think we're out of the gates. I give ourselves an A. But if Terry Turner were here today, what he would say is his high school basketball coach told him there were no trophies handed out at halftime. So we're not giving ourselves any trophies yet.

Yes. I guess maybe drilling into some of those themes a little bit before the merger, as you said, a lot of people were questioning whether the Pinnacle model could really scale across a much larger organization. Maybe just spend a little time drilling into what's given you that confidence that the culture and incentive structure and sort of decentralized operating model can work effectively at this size? And I guess, how big could that potentially scale up to with keeping that model?

Yes. The #1 question we get. And when I talk with Terry, he says #1 question he got for 26 years. Everybody kept saying, well, will you be able to do it next year? Will you be able to do it next year. And I think the track record has been pretty successful at being able to do it each and every year. It goes -- to me, it's the hiring model itself, right? Our hiring model is very specific where we're looking for high-performing team members that have a great deal of experience, 10-plus years of experience. And it's an invitation-only type hiring model, where we are selectively looking for individuals that fit that but you have to be validated by someone that has worked with you in the past. And I think that's the incredibly important part of the hiring model is that we want people to fit not only from a skill set perspective, but from a cultural perspective.

And so when you hire someone from a firm and they're able to identify that there are others that look like them that should join our firm, it makes it a whole lot easier. Number two, this decentralized model. A lot of banks run a decentralized model. It's not the hierarchy of decentralization. It's the war on bureaucracy and it's the desire to want to take out all of those administrative tasks that make our job less fun than it needs to be. And so we spend a lot of time and energy even as we're bringing our companies together, looking at every process, whether it's a loan approval process or how to get a wire executed all the way down to understanding how can we take out steps that make people's lives easier. And we ensure that we're putting resources as close to the action as possible. The servicing platform is all local. The credit people are all local.

And that's really the collaborative nature of the model that people love because you're in a team that's winning together and losing together. And your third point was on the incentive plan. The incentive plan at the end of the day is an incentive plan where we -- it's all for one and one for all. The company hits its target, everyone gets paid. I think we -- if you haven't lived in that model, you would underestimate the power of that incentive plan to make people work together and to not point the finger on the other side and that you get in the boat, you're rowing in the same direction, focused on a shared ambition, a common goal. And that helps back office to front office. It helps between our specialty units.

And that, at the end of the day, is a secret sauce that brings these teams together and makes it a fun place to work. And when you have the level of team member engagement that we have, we just did a survey, again, in the middle of the merger, and we have an 85% team member engagement number. Most companies would like that outside of a merger. So it makes people give you discretionary effort. And when people love what they do, it's kind of like raving client fans. This is a raving team member fan that goes out and tells others, this is the model you want to work in. Now your last question, and I'll stop answering them in 12 minutes. Is it scalable? Of course, it's scalable because the model, every time you hire someone, the Rolodex expands. That person knows 5 people. And so I look out, we're doing our 3- to 5-year strategic plan today, and we look at the markets that we're in.

There, if you look at the hiring year-to-date, the numbers that we've hired this year may surprise you that they've largely come out of Tennessee and Georgia and South Florida where we've been. We have a tremendous opportunity to add density in the markets we're already in. Then you add on top of that some of our expansionary markets, the National Capital Region, Richmond, Virginia, where we just opened our first office in August, expanding down, we hired a new team in Mobile, Alabama that's adding, our North Florida, Jacksonville, Orlando market is expanding. When you start looking at where we have opportunities to hire, the opportunities in front of us. There's not a shortage of talent. Now one thing that I've been saying this morning, and I think maybe it's been a little bit of a misnomer. When we talk about 124 revenue producers year-to-date, that's not all commercial bankers.

That includes our private wealth area. That includes our brokerage area, our Pinnacle Asset Management. It includes fiduciary and it also includes branch managers. So I think some people get fixated on the number and say they're all commercial relationship managers or financial advisers. It's all revenue producers, including our treasury sales area. So when you start breaking it down by group, it becomes much more bite size. It's not an order of magnitude that's hard to replicate. And as you've seen in our documents, we've said this year is $250 million next year is $275 million, and you can follow the trajectory in doing that. We think that's very attainable.

We're still waiting on the systems conversion, a lot of work in the background to prepare for that. How -- give us an update on how that's going and where you see sort of some of the near-term milestones for that.

Well, I hope our team members took a minute out of their busy day that are working on that to listen in to our conversation today because I want to thank them. There has been a lot of work ongoing to ensure that we're in a place on March 15 to be able to convert the core system. But we're not waiting until March 15 to get through conversions this month, we'll convert our mortgage platform, our HR platform. We previously converted our imaging platform. So there are lots of things happening prior to the core conversion. And what I would tell you is we're on track. If you compare our conversion to some of the others that have occurred more recently, you can see that we're taking a little more time. And why is that? Early on, we wanted to go through and do full business requirements.

And when we said we were going to choose the best of both companies, we wanted to evaluate the solutions on both sides. And although we may not have chosen a legacy solution, we understood when there was functionality or capabilities that existed on that solution that would not be on the end-state solution. We've spent these last several months making sure that, that capability or functionality gets built into the end-state solution. I'll give you an example, our consumer digital portal that we're going to didn't have a couple functionalities that existed on the other platform. We've already incorporated, built them in. We've done a release last month that put 2 of those functionalities out there. So we are on schedule to be able to deliver.

And I would tell you the technical conversion is one part of it. We have the brand conversion, which will also occur that weekend. And that sounds almost like a tactical aspect of the merger. But in many cases, our clients have forgotten that we're merging. It's not until that new sign goes up, that they're like, what's going on here. So the real work between now and then outside of the technical conversion is change management. We need to make sure that every team member is fully prepared to administer the new products, service under the new platforms, execute under the new processes. We need to make sure that they can answer the clients' questions. And so there's a lot of job aids and work going on around that.

Number two, we have to educate our clients. It's not just about new logins, it's new products, it's new processes, things that will happen. We'll have to do that as well. And as you know, the timing on that is so important. If we start training someone today for something that's going to happen in March, they're likely to forget it by that point. So we're planting seeds and doing things today that will ultimately put us on the glide path to be in a position in March that we think we will successfully be able to execute on it. And in the case that something were to go wrong, we have already started to play out contingency plans. So our Head of -- our Chief Operating Officer has already added 140 call center agents to make sure that if something were to go wrong, those -- we believe we hope that those people may be sitting around twiddling their thumbs on March 17.

But if not, people aren't going to wait in the queue. There is going to be extra staff there to answer the calls and so that people aren't sitting in the queue for 4 hours, wondering what's going on. So not only are we preparing for conversion, we're going to have robust contingency plans that mitigate and remediate any issues that come out of it.

If you look at what you all had done with Synovus over the prior few years really building out a lot of capacity on fee income lines on the CIB and treasury management. Are you able to -- I know that the synergies weren't really built into the deal metrics, but are you able to expand some of those offerings right now at the legacy Pinnacle or do you really have to wait until the conversion?

On both sides, Jared. We said this year a very modest target of $20 million in revenue synergies. I think we're at about $10 million. And you'll see where we've been able to do that, it's on those things that don't require us to be on the same platform, things like our capital markets platform, where you can take things through our syndication or derivatives platform where we have USDA capabilities where the other side didn't have it where Legacy Pinnacle had equipment finance capabilities that we didn't have. That's about $1 million in revenue that's just been sold into the legacy Synovus footprint. I just was on a call the other day about the Homeowners Association, our Community Association Group has had tremendous success in some of our legacy Synovus marketplaces.

So $10 million revenue synergies year-to-date, we think we'll achieve our $20 million. And if you go back to our longer-term goal of $100 million to $130 million, we believe that we'll be able to execute on those. But to your point, it becomes a whole lot easier when we're on the common platforms post March.

Yes. You operate in some of the fastest-growing markets in the country, but also some of the most competitive, how would you characterize competition today? And where do you think the combined franchise has become stronger winning new business?

So you're getting me today, I'm a little squirrely. So I'm going to talk -- we always get these questions on competition. And I don't know that's the right question because we have 4,500 banks competing with us. That number has been shrinking, obviously, but it doesn't get any easier every day. I think the question is generally built around what does that mean to loan spreads, what does it mean to deposit pricing, right? That's going to remain competitive. I don't know that I'll ever sit in front of you and say, like, it's just easy. But I think what the real question is, is how are you winning? How are -- in this competitive landscape if you're saying price is not the most important factor, how are you winning?

And that's where the Pinnacle model is one where you provide distinctive service and effective advice and you build real trusted relationships. That doesn't mean you don't have to pay a competitive rate on deposits or give someone a great yield on their loans. But we're winning market share consistently because we're hiring great talent, and we're consolidating relationships under a model that creates loyal clients.

And so as we look down the road, I was telling Jamie earlier today, Jamie can talk about the margin and the potential impact of any margin compression that comes from this environment, but that will not prevent us from continuing to grow the top line. It will not prevent us from continuing to grow EPS. And I think that maybe the way that we win is built on trust, and that is harder to compete away than is price. And so I think that it's a competitive landscape, but our model allows us to continue to take market share. Being a bigger bank, the term that I've used is called scale with a soul and I think it resonates with me. It's resonated with our 8,500 team members. The scale portion is we're now $125 billion bank. So we have a bigger balance sheet. We have additional investment dollars to deploy on functionality, capabilities, technology, products, tools. We need to make sure we're doing that.

And we have a wider breadth of services, whether that's specialty units, whether that's a bigger geographic unit. All of those things should serve as a better competitive advantage versus our competition because it allows us to generate revenue and meet the needs of our clients. But what's lost in this often is as you get larger, you forget what got you there. You forget the competitive advantage. And that's the soul portion. What allows us to win is not having a bigger balance sheet or having those products. We've been winning the whole time without the scale, if we can keep the culture, which we will, if we can keep this model that empowers people to serve their clients in a way that's second to none, we will win, and we will do that.

And then when you add scale on top of it, it just opens up a new segment of clients you haven't been able to touch or it allows you to deepen the wallet share of the clients you already have. So I look at the scale as an accelerant, but the soul is what allows us to continue to win every day.

You and Terry before you often talked about sort of the embedded future growth from the people that are already on board from the hiring that you brought on board. How should we think about the earnings power that's already sitting inside the franchise from bankers hired over the past several years that haven't fully matured.

That number, we've talked about previously being around $20 billion of embedded growth that's talent sitting in our firm today that have not fully consolidated their book of business to where -- what they believe they can do. So that exists today. I think that is a very powerful element that allows us not just to grow, but it allows us to remain on what I call this treadmill of hiring. I think people look at the embedded growth and say, that's great. I look at the embedded growth and say that allows us to continue to invest each year in new revenue producers. I think where this model to your first point, starts to break down is if you get into a year where you can't add talent because that means at some point in the future, you're going to have a down year in terms of growth.

And Jamie and I have talked a lot about what we think it's going to take to rerate our stock. And it's simply consistent execution. I think people have seen our first 2 quarters. They feel very good about what we're doing, but they want to see more of it. They want to see future quarters of growth. And the #1 way to do that is the embedded growth that's already here and that, in turn, allows us to continue to add. At any point, when we stop growing or stop adding people, there's going to be some skeptics that says, okay, now they're not running the model. So that embedded growth is going to give us growth in the balance sheet and the P&L for years to come, and it gives us the embedded expense of revenue to be able to incur the expense to continue to hire at an accelerated pace.

Loan growth has remained exceptionally strong despite the merger, and it's been broad-based across markets, specialties and business lines. As you look across the footprint today, where are you seeing the strongest opportunities and what are clients telling you about demand?

Well, look, it's all -- our growth is predominantly C&I and client sentiment has remained very strong. Pipelines have remained strong. We are in a great footprint, which is helpful. But as I mentioned earlier, part of that growth is the hiring that we made this year and previous years. I love looking at it by geography. If you look at it on an absolute growth, our 2 biggest growth markets are Tennessee and Georgia are the areas where we have the most density. If you look at it on a percentage basis, our fastest growing is the National Capital Region and Greater Florida, that North Florida. They are smaller market shares today, but present a tremendous amount of growth.

And then when you go down in our specialty banking units, whether it's equipment finance, whether it's restaurant services, alternative energy, structured lending, ABL or our music, sports and entertainment business, all of those are growing double digit. So it goes back to your lead-in tremendously diversified, not concentrated and it means if we look at pipelines going forward, I think you're going to see a sustainable level of growth because you're getting it across the board. Number two, your question was about -- what was the second part of the question I missed?

Just what are the clients saying...

Yes, I'm sorry -- so you just, see, you jogged my memory. We just finished our third quarter survey from clients. And ironically, with all of the geopolitical risk that we've dealt with this year, the uncertainty around inflation and rates, our clients remain tremendously resilient. 80% of our clients believe over the next 12 months, their business will either stay the same or grow. That's incredible, given some of the uncertainties that we face. And that number has not changed for the last 3 quarters. So about 18% to 20% of our clients believe their business will shrink over the next 12 months. But the other side of that 80% believe it will stay the same or grow. And that, to me, is encouraging that clients can continue to remain fairly resilient despite some of the uncertainty.

So one question mark, and maybe the biggest concern does remain inflation. And this quarter, they reiterate what they said last quarter, the concern is input prices continue to go up. They can't pass on that increase to their clients, which means their margins are going to compress. So I think we should assume that's going to happen. But it doesn't mean that they're going to become insolvent. It doesn't mean that their business model doesn't work. It just means they're going to be a little less profitable.

Yes. I think this sort of ties into this question where, yes, I think one of the more impressive aspects of second quarter was that growth remained strong, even while maintaining that pricing discipline. As you look out, how are you balancing growth and profitability? And I guess where are you willing to say no.

Yes. We've had a lot of discussions this morning about that with investors. Spreads have remained pretty good. When you look at what our loan yield is for new production and where deposits have been 370-ish right, 360, 370. Our goal is to invest all of our capital that we can with our clients. We think that's the best return for shareholders. We think that's the best thing for our firm. What we're managing to is a phenomenon now that some are worried that the next loan that you generate is having to be wholesale funded. Well, I had our team run a normal loan through a wholesale funding model to say what's the profitability of that stand-alone loan? Well, it's about 15% return on capital. So if we're just doing a loan, wholesale funded, not great returns, not horrible.

So that just shows that if you do that loan, and even if it's wholesale funded, if you bring over a deposit relationship, if you bring over some level of ancillary fee, you're back above a 20% return on capital. So we believe that next dollar of capital, that next loan, if we're following our model, we're not a transactional bank. We'll do a loan for someone when it comes to a relationship.

And even though that loan may have to be wholesale funded, that individual loan you can still get a more than adequate return if you're getting the full relationship.

And I guess maybe getting a little deeper into the NII and margin. You've made the point several times that really investors should be focusing on the NII growth rather than simply margin. As you think about the next several years, how should investors weigh the impact of strong loan production, deposit pricing discipline, a fixed-rate asset repricing benefits and the additional liquidity you're building as part of the Cat 4?

That's where I get to hand the baton over to Jamie to talk a little bit about to avoid this.

Look, as we look forward for the next 2, 3 years, our strategy will deliver loan growth that's funded by core deposit growth if you think about it in dollar terms, and that's where we look at longer term. And that's the spread Kevin is talking about. That's -- we're growing loans at 620 area, deposits about 260 area. We expect that kind of spread like that feels good to us. Now we're not immune to the pricing pressure that every other bank is feeling, but if you look at our performance, we had 6 of 8 geographies with wider spreads in the second quarter. We had 9 of 11 specialties with wider spreads in the second quarter. Like that shows that this model can deliver pricing power even in an environment where a lot of banks are talking about spread compression. And we're seeing that continue into the third quarter, that pricing power. And so that's a good trend.

But again, we're not immune forever. And so -- as we look forward, we expect the profitability of our growth to be in the same context of what we're experiencing now. We talk about a 17% to 18% return on tangible. We think that's sustainable. And the reason for that is when you look at our growth, if you're funding loans with core deposits at 360, 370 spread, like that is -- that's very accretive to the shareholder. Then on the other side, at the same pace we're growing those loans. We're going to grow securities, and that's where the whole margin conversation comes in because we're growing securities and it might be 1% or even a little less spread to wholesale funding. And that's what causes that NIM compression. And so we get into the NIM conversation.

But people forget that those securities in large part are 0% risk-weighted and so they're not consuming capital. They're not dilutive to return on tangible, they're NII-accretive, and it's just what we need to do for liquidity purposes. And so that's where the whole conversation ends up going. But we think that our multiyear outlook because it's funded by key hires of just core commercial banking and with wealth and treasury and capital markets, like that's what makes it sustainable and not dilutive to the profitability of the shareholder.

Yes. I guess when you're looking at building out Cat 4 liquidity, how are you thinking about that trade-off between optimizing near-term earnings, building that balance sheet that you ultimately need in line.

First, we're very comfortable with our liquidity profile. We have significant contingent liquidity. Really the only question on liquidity is what's the marginal cost? And so we feel good at where we are today. But we do plan to build cash and securities to assets that go through the next 2 to 3 years. And you'll see that come through over time. There's no real rush to do that. You saw in the debt issuance we did in May. We originally targeted $500 million, but because there's over $3 billion in demand, we ended up upsizing it to $750 million. That got us ahead of the schedule we laid out last summer when we said $1 billion a year for 3 years. We had modeled $200 million, $500 million issuances each year. And so we'll just continue to kind of slowly build liquidity in that fashion.

As part of Category 4, we do need to be mindful of the whole capital stack. Long term, we would expect to have 1% in Tier 1 and kind of have the full capital stack built out, but at 70 basis points on that today, we're fine where we are. It's just something we'll be mindful of as we continue to grow.

Okay. That's good color. I guess shifting a little bit to BHG, you gave an update last -- or in the summer about their ability and desire to hold more on balance sheet, how sort of the trends going there? And any real thought to your view of BHG's role at Pinnacle?

BHG just continues to perform really well. The team there is fantastic. You saw the performance in the second quarter, just strong production increase. The outlook is brighter today than it even was when we talked in July. And so it's a positive trend there. We're really pleased with that. What we like about our strategic plan is we are sacrificing near-term earnings, and this is what we started talking about in Q1. We are sacrificing near-term earnings to enhance future earnings. But what it also does, it reduces the balance sheet that's on the bank clients' balance sheets. And so that reduces the uncertainty about future buyback costs for BHG, which makes it easier to analyze the company.

And so whether their future plans are to continue doing what they're doing and execute and grow their company or if it involves strategic alternatives, their plan that they are executing today positions them really well for whichever path they choose. And I think if they continue doing what they're doing right now, it's going to be pretty fun to watch over the next 12 to 24 months.

Great. One thing that we were speaking about with all of the banks, I'm sure in a lot of your meetings is AI and technology. It's evolved obviously significantly over the past few years. Where are you seeing the most tangible benefits today? And how has your view changed regarding where AI is most likely to create value inside the bank?

We have a lot of work streams in the AI world right now, and we're really excited about it. I mean, it adds value day to day in most of our employees' lives. And the one that has me most excited today is on the integration as we look towards conversion, we had a meeting yesterday, and we were talking to the data team. And the way AI is helping them run tests, run traps to make sure that every effort we're making today is preparing us for March 15 is real positive to see. And so we have -- we've rolled out Claude to a lot of the team, and we're using on the lending side. We're using it to help with appraisals. We're using it in Investor Relations significantly. It's just exciting to see the path we're taking on AI. But I would just say that it's very broad in the company. It's having an impact, I get really excited about how it's helping us with the conversion, get really excited about how it's helping us with client meetings, underwriting credits. It's really everywhere in the company.

As you sort of look at budgeting for next year, is that becoming its own category? Or is that still just part of the tech spend and if there is anything to be offset with something else?

Right now, it's part of the tech spend. Truthfully, token cost is not something that would come up on your radar if you are at the top of the company. We track it because obviously, it's a steep increase when you look at month-over-month spend. But we're mindful of that, and we're just kind of just working to be smart about how we do it. I mean truthfully one of our main goals right now is for the team to get excited about how AI can help us be better. So like I really don't want to tap the brakes too much. I mean that cost is small enough that I'm fine with it. I want everybody to become individually engaged with AI to be better at what they do.

And so -- that's what's exciting to me. That's the priority today. I mean these numbers get big or bigger, then we'll have to think about it. But truthfully, the easy thing is just to tone down the models and say, "Hey, instead of using Stable for this or OPUS 4.8, like we're going to drop you down." We're going to -- and that's an easy choice. And many times, they probably should be using the lower models. And so it's -- we're active in it, working on the data pipelines, getting info from Databricks or S&P and all these, it's pretty fun to see what's happening.

And remember, Jared, our philosophy is high-tech meets high touch. So it's not replacing human beings, it's capacitizing folks. And we'll get a big lift post conversion because legacy Pinnacle was on a mainframe platform. We're on cloud based to be able to roll out our AI infrastructure that we have, the legacy Pinnacle people will get it post conversion. So to Jamie's point, we're going to have a lot of folks that have capabilities and tools that they haven't had in the past to make them perform at a higher level and be more productive.

And that is our focus today. Like there's nowhere in our outlook that you'll hear us say we have this cost save associated with them. I mean I'm sure that will come down the road long, but right now, it's about helping us be better, helping our Net Promoter Score, helping our team member engagement, it's all those things.

Yes. You're shifting to the capital at quarter end, CET1 increased to 9.9%, and you've been clear that supporting organic growth remains a priority. As you think about capital deployment over the next several years, how do you balance growth, the liquidity build, future buybacks and potential benefits from regulatory change?

Yes. I mean, look, I think our earnings power has become clear in the first half of the year, where you see the capital accretion we've had since legal close, despite a 12% annualized loan growth. And so we're building -- so that shows the flexibility we have. Now look, we're trying to get to -- and that's our objective. And so we'll continue to get there. But to be building capital at this rate with 12% annualized loan growth is pretty powerful. So what you'll see from us is to build up to that 10.25%. Now there are a lot of moving parts right now. We have the Fed NPR that's out there, and I look forward to that being finalized, that will be a big benefit to us. We don't have a lot of AOCI that will get dropped into capital.

The RWA benefit for us is a little less than others because we have less residential mortgages. But net-net, if we pick up 35 to 40 basis points from that NPR, like that gets us to our 10.25%. Further, if you look at stress capital in the adverse scenarios, they all -- every one of the scenarios has low rates. And so the AOCI -- and so that should be a benefit as well. So all of those things play together as we think about what should our capital target be? When will we get there. And so we look forward to that rule being finalized so we can think through it in the future state. And so hopefully, that's sooner rather than later.

Let's see if there's anybody in the audience that has any questions? I guess -- so wrapping up, if we're sitting here, hopefully a year from now and investors believe the merger's exceeded the expectations you've laid out, what are the milestones or accomplishments you think will have been most important to getting there?

Well, look, I said -- I saw a presentation years ago. It was the CEO of Kroger and someone asked him what do you look at on your KPIs. And he says, I look at 2 things. I look at the number of people checking out through my cash register and I look at the average ticket size per purchase. He said, "Look, that tells me everything I need to know." Do we put our stores in the right place, what are our product pricing, what's it getting people to spend. And so this is a complex business. But if you ask me to break it down to 2 things, it would be team member engagement and client loyalty. If we can maintain industry-leading team member engagement, which the combined firms would have been right around 90%, and we can have those Net Promoter Scores that are industry-leading, everything else is going to take care of itself.

Now there are subcomponents in each of it. And I've used this one statistic I hammered it home earlier, team member turnover. If you want to know the health of our culture, look at the turnover numbers. And today, a voluntary turnover at 6% says that we've actually ticked down year-over-year in turnover. And that tells us that our messaging is resonating, the model is a good place to work. We do a lot of surveys. We'll do our second team member engagement survey. I said earlier, we're at 85%. That was our midyear pulse survey. We'll do another one in November. And we're not doing that to put them on the annual report. I'm not doing that to come out and celebrate it on an earnings call, we're doing it to hear from our team members, are we delivering on our promises. And I think that's the message. Just like with investors, Jamie and I and the entire leadership team, all 8,500 team members want to deliver on our promises.

And I think we've been delivering on those. Our clients would tell you we're delivering on that, help them reach their full potential and ultimately, I think we'll continue with our promises, both with our team members and our clients. That, in turn, allows us to generate a level of growth and profitability that you won't find with other regional banks. And I think the biggest challenge that we have going forward is getting our stock to rerate where we think it belongs. You asked me about my surprise earlier. The surprise is we're generating these type of results and trading for this type of multiple. I think that, that doesn't make sense to me. And it just takes us winning one quarter, one banker and one client at a time. And at some point, I think people are going to realize what they're missing out on.

Well, thanks very much for joining us, and I hope you have a great rest of the day.

Thank you, Jared.

Thank you.

Good morning, and welcome to the Pinnacle Financial Partners Second Quarter 2026 Earnings Call. [Operator Instructions] Please note this event is being recorded.

I will now turn the call over to Sam Tyagi, Senior Director, Investor Relations. Please go ahead.

Thank you, and good morning. During today's quarterly earnings call, we will reference the slides and press release that are available within the Investor Relations section of our website, pnfp.com. President and CEO, Kevin Blair will begin the call. He will be followed by our Chief Financial Officer, Jamie Gregory, and they will be available to answer your questions at the end of the call.

Our comments include forward-looking statements. These statements are subject to risks and uncertainties, and the actual results could vary materially. We will list these factors that might cause results to differ materially in our press release and in our SEC filings, which are available on our website.

We do not assume any obligation to update any forward-looking statements because of new information, early developments or otherwise, except as may be required by law. During the call, we will reference non-GAAP financial measures related to the company's performance. You may see the reconciliation of these measures in the appendix to our presentation.

And now Kevin Blair will provide an overview of the quarter.

Thank you, Sam, and good morning, everyone. We have remained focused on the leverage points that help us deliver on our commitments and continue a long and proud heritage of growth and success. This quarter is another proof point of that focus. For the second quarter of 2026, we reported diluted EPS of $2.07 and adjusted diluted EPS of $2.50, excluding $82 million of pretax adjusted items. Year-to-date, adjusted EPS is up 26% versus the same period last year. We are maintaining our 2026 guidance with our year-to-date performance giving us added conviction in the ranges we set.

Starting with the balance sheet. Loans grew $2.9 billion linked quarter, ahead of our expectations. Deposits were up $795 million, stronger than the combined firm's historical second quarter performance which is typically our seasonally lightest given municipal outflows and tax-related payments. This strong growth in earning assets, up 4% quarter-over-quarter led to 2% growth in net interest income. This is the broad-based high-quality growth that has long been the hallmark of this firm and the combination is making it even more powerful.

Fee income is another area where our differentiation shows up with double-digit year-to-date growth on a combined firm basis. Core banking, wealth management and capital markets all posted strong year-over-year growth. As we have seen, most firms lose a step during integration, yet we are gaining share and deepening client relationships in the middle of a merger. On the expenses, we stayed disciplined while continuing to invest in the areas where we see the greatest opportunity to accelerate long-term growth. Those are not competing priorities at Pinnacle. They are the same priority.

Credit performance continues to be a real strength. As expected, charge-offs remain low and NPAs declined this quarter to 50 basis points. The quality of what we are putting on the books stands out. The reserve on new production is coming in lower than the portfolio as a whole, which is one reason our ACL ratio moved down this quarter. Growth, credit discipline and yields holding firm on new production. That is 3 things working at the same time and none of it happens without 2 things that come first, top talent and disciplined client selection.

Moving to capital. Preliminary CET1 increased 12 basis points this quarter reflecting the strength of our core earnings profile and the ability to generate capital, inclusive of roughly 14% annualized loan growth we experienced in Q2. We added 74 experienced revenue producers this quarter, up 48% from first quarter and up 14% versus the combined second quarter of 2025. Momentum has carried into the third quarter with another 34 producers who have already started or accepted offers in the first half of July. Of the 124 producers added year-to-date, approximately 50% are from what we consider core Synovus markets. That number matters as it says the model is working across the full franchise. Also, we have not lowered our standards to get there.

Recruiting at Pinnacle is a consistent operating rhythm built through deep pipelines and clarity on our value proposition. That is what turns hiring into durable compounding growth. We are also holding onto the bankers we already have. Retention, excluding merger-related synergies, is 94% year-to-date. Client satisfaction and loyalty scores remain best-in-class and it goes without saying when bankers stay, clients stay.

Now let me tell you why the best is still in front of us, 3 advantages compound from here. First, our markets. The Southeast footprint continues to grow at roughly twice the national average. Combine that backdrop with the scale of this franchise and the power of the Pinnacle model and the long-term growth opportunity in front of us is as compelling as any in the industry.

Second, the competitive environment is moving in our direction. Larger competitors are dealing with bureaucracy, disruption and slower decision-making, and it shows in their Net Promoter Scores. In fact, Coalition Greenwich's first quarter report placed Pinnacle first amongst peers in business momentum, the net percentage of clients who plan to do more with a bank versus those who plan to do less and by a wide margin. That is exactly the backdrop that lets us keep taking share and growing.

Third, talent dislocation is elevated and it is not slowing down. The best bankers want an environment where they are empowered, supported and able to win. That is exactly what Pinnacle offers, and it is why we continue to be a destination of choice across every market and specialty we operate in. Strategy is a plan. Execution is a result. We are 6 months in and the results are doing the talking. Balance sheet growing, core client fee income up significantly, credit strong, capital ratios increasing, bankers joining, retention of team members high, clients responding with loyalty. I am proud of what this team has delivered and even more excited about where we're headed from here.

With that, I'll turn it over to Jamie to walk through the second quarter results in more detail. Jamie?

Thank you, Kevin. Before turning to the drivers, let me anchor to the bottom line. Adjusted diluted EPS increased 5% versus the prior quarter and 25% versus second quarter 2025 results. Included in this accretion is the revenue increase from the loan mark and first quarter securities restructuring, which was completely offset by increased intangible amortization resulting in 0 net impact from merger accounting.

Relative to stand-alone consensus earnings estimates at the time of announcement, this represents approximately 19% of adjusted diluted EPS accretion year-to-date. A clear proof point that the combination is delivering the earnings power we underwrote. That is also translating into strong profitability, with year-to-date adjusted return on average tangible common equity of 17.7%. In the second quarter, earning assets were up 4% or 15% annualized due to the combination of strong loan and securities growth. Period-end loans increased $2.9 billion or 14% annualized from the first quarter.

The majority of growth came from C&I lending and was broad-based across our geographic markets and further supported by continued strength in our specialty lending platforms. On a year-to-date combined basis, period-end loans increased 6% or 12% annualized, excluding the purchase accounting loan mark, exceeding prior guidance. Period-end deposits grew $795 million on a linked-quarter basis. This growth included normal headwinds such as tax season and seasonality in public funds, which generally reversed in the second half of the year and promote what is normally outsized growth in the fourth quarter.

Excluding the decline in public funds, core deposits grew $963 million or 1% in the second quarter. On a year-to-date combined basis, period-end deposits increased 2%, which, along with the more positive seasonal trends should keep us on pace for full year deposit growth of 8% to 10%. During the quarter, we executed transactions in line with the liquidity strategies we outlined at the merger announcement last year. We repositioned approximately $1 billion of municipal securities into more liquid investments improving both portfolio duration and our level of high-quality liquid assets, while having no material impact on net interest income or CET1.

In addition, we issued $750 million of senior debt would serve to strengthen and diversify our liquidity and funding profile and is consistent with the issuance path communicated last year. This balance sheet growth carried into net interest income which was $956 million, up 2% or 10% annualized from the first quarter. Net interest margin came in at 3.44%, down 9 basis points versus the first quarter or roughly 6 basis points, excluding the first quarter nonrecurring items.

Other factors that proved headwinds during the quarter included a modest decline in loan yields, which were impacted by a roughly 3 to 4 basis point average decline in SOFR rates and an increase in the higher cost funding as seasonality in deposits pressed our loan-to-deposit ratio higher. We expect this dynamic to reverse as we go through the back half of the year. For further context, our loan yield was 6.11% in the second quarter versus 6.14% in the first quarter.

Our cost of core deposits was stable quarter-over-quarter at approximately 1.95%. Total deposit costs increased 1 basis point, and our aggregate effective cost of funds increased 2 basis points. Adjusted non-interest revenue declined $12 million from the first quarter, driven largely by lower BHG income. Income from our equity method investment in BHG totaled $24 million in the second quarter, performing in line with our expectations as BHG shifts its loan placement strategy. Core client income streams include core banking, wealth management and capital markets all delivered linked quarter and robust year-on-year growth.

Core banking and capital markets fees both increased 3% in the first quarter. Strong loan production and revenue synergies drove another quarter of capital markets execution and is further evidence that integration of key products and services is accelerating. We maintained disciplined expense management while continuing to invest strategically for long-term growth. Our adjusted tangible efficiency ratio was 49.8% and as expected at this stage of the merger integration. We incurred $51 million of nonrecurring merger expenses during the quarter, primarily related to personnel and technology-related integration costs.

On a linked quarter basis, adjusted non-interest expense was down 2% as realized merger synergies and seasonally lower personnel costs more than offset continued investments in revenue producers and technology. Head count was relatively flat from the first quarter, reflecting ongoing integration progress netted by growth-related hiring. Credit quality remains a clear point of strength. Net charge-offs were $48 million or 22 basis points for the quarter, consistent with expectations. The nonperforming asset ratio improved to 0.5%, down from 0.58% in the first quarter demonstrating continued stability and disciplined underwriting.

The allowance for credit losses in the second quarter at 1.17% compared to 1.19% at the end of March. Our preliminary common equity Tier 1 ratio ended the quarter at 9.93%, up 12 basis points from the first quarter. Our priority is clear. We will deploy the capital we generate in the high-return client-driven growth while steadily building CET1 towards our 10.25% target.

With that, I'll turn it back to Kevin to review our 2026 financial outlook.

Thanks, Jamie. Our broad guidance ranges are unchanged for 2026. And importantly, our performance to date reinforces that view. Let me be specific about where we're landing inside those ranges. Loan growth is tracking at the top end of our 9% to 11% range and deposits in the middle of our 8% to 10% range. That earning asset growth is the engine of this outlook. It drives strong continuous growth in NII as we progress through this second half of 2026 even as margin compresses modestly.

We are now expecting full year NIM in the 3.44% to 3.47% range. Importantly, when combining the robust NII growth with the continued strength in fee income across our core client business that we have seen to date, we continue to expect to be well within our revenue outlook and trending more specifically to $5.05 billion to $5.1 billion.

On the balance of ranges, we expect adjusted expenses in the middle of our $2.675 billion to $2.775 billion guidance. We anticipate an increase versus the first half of the year, driven by revenue producer hiring, market expansion, incremental expenses associated with third-party partnership revenue and normal inflationary and growth-related costs. These are deliberate investments tied directly to future growth.

Our adjusted effective tax rate is expected to land in the middle of the 20% to 21% range, inclusive of the second quarter municipal repositioning Jamie noted earlier. Credit remains within our 20 to 25 basis point charge-off range, and our profitability outlook remains strong as we continue to drive the EPS accretion we laid out last summer.

Stepping back, the closing message is the same one I opened with. We are focused on the leverage points that have always driven this firm, and this quarter is another proof point that they are working. Growth, recruiting, credit, pricing, culture, synergy realization, every one of them is moving in the direction we said it would. We are not declaring victory. We are 6 months in and there is more to execute. The 26% adjusted EPS growth year-to-date is a real measure of success and a reflection of this team's hard work, but we're not done. We are going to keep on pushing and getting better from here. This is scale with the soul. The model, the culture and the people to the team members across the franchise. Thank you. You are the reason this is working.

And to those who have questioned what this combination could be, I understand the skepticism, and we intend to keep answering it the only way we know how, 1 quarter, 1 client, 1 banker at a time. That is the work and you have my personal commitment that we will keep doing it. The future is bright and the best of what we can do together is still ahead.

With that, operator, let's transition to the Q&A portion of today's call.

We will now begin the question-and-answer session. [Operator Instructions] Your first question is coming from Stephen Scouten from Piper Sandler.

I wanted to ask, maybe first starting off, I thought the quarter was really good, of course. But curious what changed from the mid-quarter update that you gave around the margin versus the 9 basis points of decline that we saw? And was it primarily this higher growth that led to more higher cost funds needed in the interim?

And maybe how does that play into what you guys disclosed for every 1% higher growth. There may be some NIM compression, but still NII upside. Just a little color around that would be great.

Yes, Stephen, it's Jamie. Thanks for the question. The change from our guide that we gave in early June is really on the asset side. And so you think about the decline in SOFR rates as well as PAA coming in a little lighter than expected. Those impacts are definitely different than what we said in early June. And if you think about the PAA, that's really just due to slower prepayments in our C&I book largely and then the SOFR rate has largely recovered here in the month of July. So we think that that's going to be a little tailwind to the third quarter.

As you can tell, when you compare average balances to ending balances, you can also see that we grew the balance sheet a decent bit in the month of June with cash and securities to assets coming up higher as we approach quarter end. So I would attribute the change to those 3 things largely in the second quarter.

And then when we speak to growth, the growth impact of the margin, we laid out the impact and how it is margin dilutive. But what I want to say about that is if you look at our NII guide progressing through 2026, what you see there is a steady 2%-ish increase quarter-on-quarter as you go through the year. And that growth is built on banker hires that we made in prior years. And so it's a steady sustainable growth in NII. And the beauty of that growth in NII is that there's not a lot of marginal expense associated with it.

And so when you think about profitability and how that drops to the bottom line, what we're doing here is we're producing loans at the same rate. So we're not competing on price when you look at production rates. We're growing the balance sheet, growing core deposits at a similar rate over time as loans. But even in that marginal growth where we're funding it with wholesale funding, basically, it's accretive to the shareholder because we're able to maintain return on tangible common equity because expense growth is happening at a much slower rate.

And so that's why we believe in it. We believe in the steady growth in NII, having a lower than 50% adjusted tangible efficiency ratio. We believe that, that will drive sustained double-digit PPNR growth, double-digit EPS growth and doing it the right way.

Yes. That's great color. And a lot of new detail on the slide deck. I appreciate all of that. One other -- my follow-up would be around maybe Slide 13, where you guys disclosed this funded production and loan spreads. Just kind of curious how you're thinking about that within all of your forward expectations. If that's something that you would think would compress slightly given all the competition headwinds we're kind of hearing industry-wide?

And if, again, that dynamic would kind of be similar to this -- the spreads might compress as growth is higher, but NII still moves higher regardless.

I think the second quarter is a great data point on that. And so if you look at our spreads on production, right, we were wider quarter-on-quarter. But it's not just a mixed story on that. Basically, 6 of our 8 geographies had wider spreads in the second quarter than the first quarter. 9 of 11 of our specialty groups had wider spreads in the second quarter than the first quarter.

And so the point I want you to know is that this is happening across our businesses. We are not out there driving in lower spreads to try to accelerate growth. This is our bankers out there delivering on the promises we've made in a steady, sustainable way. So our outlook does not have material spread tightening. We're assuming similar spreads and we believe that, that's justified given what we've seen. Obviously, the environment can change and competition can go even higher, but we're not seeing that spread tightening that we're hearing from some of the others.

Your next question is coming from John McDonald from Truist Securities.

I was wondering if you could unpack the deposit outlook for the rest of the year, including kind of what you see in terms of mix, both the noninterest bearing and what you call the core deposits inside your outlook?

Yes. John, great question. And we are forecasting strong growth in deposits in the second half of the year. Obviously, we're pleased with the core deposit growth when you back out public funds in the second quarter. We believe that, that shows the momentum in what is typically a challenging quarter due to tax payments. But as we look forward into the second half of the year, we believe the seasonal impacts will contribute $1.5 billion to $2 billion to growth in the second half of the year.

Just like our loan forecast, prior year hires will also contribute to growth. As they build their books of business as they grow and bring in the deposits of their clients. And so we believe that that's why we'll continue to see strong production. Deposit production has been over $1 billion every month this year. We expect that to continue. In the second half of the year, you will see growth in broker deposits. So broker deposits have been relatively stable year-to-date, we are expecting some growth in broker deposits in the second half of the year. And what gives us confidence in that growth I would point you to the chart that compares core deposit growth in seasonal year-to-date in our earnings deck.

If you were just to run that outperformance forward to the end of the year, it would point to $4.5 billion to $5 billion of core deposit growth from here. But one thing that's underneath the covers of that is that includes underperformance or less growth in public funds year-to-date. We have strategically allowed public funds to attrite this year. We're about $700 million behind the seasonal average and growth on public funds year-to-date. And we expect getting back to that average growth and with the second half seasonals and public funds, that's more than $1 billion in growth in that book of business.

And so -- as you look forward through the rest of the year, I would just say we do expect to see that seasonal growth in core deposits. We do expect to see some growth in public funds and then I would say that we expect broker deposits for the full year to grow at a similar rate as core deposits.

And just as a follow-up to that, obviously, we all hear a lot of talk about how competitive the pricing of deposits is in your markets. You did really enable -- the deposit pricing was very stable this quarter. What enabled that to be pretty stable amid all the competition?

John, I'll take that. Look, we don't compete on price. I mean, look, we're a relationship bank and clients value more than just the rate on deposits. Now we pay a fair rate. As you know, the deposit marketplace is very efficient. And so when you're adding new deposits, you're having to pay a market rate. But as Jamie said earlier, the real core to our model is hiring new revenue producers. And those new revenue producers come over and bring their clients with them. Ultimately, that allows us to produce at a higher level and use a market rate to do it. So we're not having to go out and do promotional rates.

And so as Jamie mentioned earlier, our forecast for NIM would assume that, that would continue. And so if you look at that going on rate for new loans minus the going-on rate for new deposits, that was roughly stable at a 3.72 spread this quarter. which was very similar to last quarter, and that should continue. So it's our model, it's hiring talent. It's allowing us to compete on things other than just rate.

Your next question is coming from Ebrahim Poonawala from Bank of America.

So I guess, maybe, Jamie, if you could go to like Slide 22, so great detail there on the margin outlook. And I appreciate your point about all of this growth is as profitable or more profitable than the back book. But maybe just looking at the pieces that you lay out there as we incrementally think about and as all of us figure out where this margin lands over the next 12, 18, 24 months. My assumption is we are headed lower somewhere into the 3.30s by this time next year. So one, and I know you've not given 2027 guidance, but is there any reason why that assumption that we could be closer to 3.30 versus 3.40 this time next year, why that may not be the right assumption?

And then in terms of the build-out for the Cat IV liquidity, should we expect additional impact on the margin as you continue through that process over the coming quarters?

Yes, Ebrahim, look, let's just talk -- first, I'll talk about the rest of this year. We have -- you think specifically about the margin, there are headwinds due to what you just mentioned about the Cat IV liquidity, growing cash and securities to assets. There's the headwind due to debt issuance and then a little bit of a nuance to the margin. There's a headwind just 1 basis point due to day count but there are also tailwinds. So we will continue to see a benefit through fixed rate asset repricing. In the second half of the year, we are forecasting core deposit growth to outpace loan growth. That will be a tailwind.

As I mentioned earlier, SOFR is firming, and so that will be a tailwind. And then we do -- this will be very marginal, but we do expect PAA to normalize. And so those are the tailwinds that go along with, and that's really how you're thinking about the second half of the year.

Obviously, it's early for us to give 2027 guidance. But you're right to think about the liquidity impacts in 2027 being a further headwind. And I guess the way I would characterize it is $1 billion of long-term debt is about 1 to 1.5 basis points margin per billion.

On cash and securities to assets, increasing cash and securities to assets about 1%. I would argue that we're were 2% to 3% below where we expect to be over the next few years. So that will be a slow process. That's about 2 to 3 basis points per 1% and then the impact of growth as you get further along, actually, the relative impact diminishes because when your starting point of the margin is closer to 3.30, which we say the incremental margin of the growth, then that impact of the future growth is less on the margin.

So I guess that's how I would think about the margin going forward, and that will point to a little bit of incremental pressure. But I do want to circle back to the first answer we gave in the Q&A is we still expect high single-digit NII growth. And because of that, that will give -- that should lead to -- and I'm assuming the economy and rates and everything are consistent with what we see today, that should lead to double-digit PPNR growth, double-digit EPS growth while maintaining return on tangible common equity. And so that's how we view it. And we think that it's very sustainable. And that's how when we look further out, that's our current outlook.

Got it. And I guess, maybe quickly this keeps coming up as we think about BHG, just if you don't mind revisiting the outlook there?

And also in terms of strategically, how do you think about the business, there's constant questions around whether you might think about taking some strategic actions there. So I would appreciate any color.

Yes. Before I answer your question, I want to get into a little bit of the income statement impact because sometimes I think that it's a little bit misunderstood but indicative of the depth of our relationship with BHG, we have multiple ways the partnership hits the income statement. We often speak to the impact of the equity investment because that was the largest driver of profitability. However, there is significant revenue and expense outside of the investment income. We expect to have approximately $40 million in revenue and $20 million in expense in 2026 due to these. That's outside of the investment income.

In the second quarter, we paused one of the distribution channels as we repapered some of our operating agreements. These have since resumed and will result in a resumption of typical quarterly fees and revenues. The pause resulted in a couple of things that impacted the second quarter. First, our fee revenue as well as the associated NIE were lower than the prior quarter. These flows have already resumed in the third quarter, and we expect that will result in just under $10 million revenue and a similar amount of expense in the third quarter.

Second, it impacted the investment income. The production remained on balance sheet, which led to an increase in provision at BHG as they account for the life of loan loss estimate. This, along with the distribution change we previously discussed led to a $7 million decline in investment income. So I hit that to start just because there are a lot of moving parts on the Pinnacle income statement due to BHG this quarter. Just wanted to hit that. But the performance of BHG just could not be stronger.

If you look at production, this quarter, it's up almost $1 billion from the prior quarter. It's up $900 million. And we are very pleased with the partnership is delivering on everything that we expect. The credit performance remains strong. And so the outlook is exactly what we've discussed in prior quarters, but stronger. And so as we look forward, we raised our revenue guide on the investment side for 2026. We believe that momentum there is very strong and positions us well for the rest of this year as well as 2027. And so -- we're very pleased with the partnership.

There is no update to give on their strategic options. We think that the best path is just continuing to execute, continuing to drive business growth, continuing with the business -- the distribution shift we think that will deliver the most value over time. And so there's no real update there.

Your next question is coming from Casey Haire from Autonomous.

Great. I wanted to touch on the loan growth, very strong here in the second quarter. Wondering if there is upside. I know you guys are guiding to the higher end of the range, wondering if there is upside to that guidance?

Casey, yes. Look, we're pleased with the loan growth as well. And I think it's primarily because it's broad-based and it's diversified. When you look at the first half of the year, we've had roughly 50% of the growth coming from our geographic banking units and 50% coming from our specialty areas. And it's -- as you can see, it's primarily being driven from C&I. What's interesting is CRE has not been a growth engine. You know that story, elevated payoffs at current rates, we're not seeing a great deal of production, although that is picking up. And that's what allows us to show that quarter-over-quarter increase in production overall 20% increase.

Yes, there's upside. Maybe some of the things that kept us at the 9% to 11%, the high end of the range. This quarter, we had 127 basis points of improvement in utilization. That was roughly $0.5 billion of growth. As you know, we customarily do not include changes in utilization in our forecast. So we have not included any future changes in utilization. We do expect to see some ongoing churn in the CRE book just with payoff activity.

And we did have some specialty areas that had some outsized growth in the first half of the year that we're not expecting to see in the second half. So we said the high end of the range. But look, this model is robust, and our pipelines are strong. And I would expect to continue to see strong loan growth across both the specialties and the geographic areas.

The one thing I do want to point out, because you hear lots of conversation. Our competitors are out there saying that we're giving it away on rate and that's how we're winning. As Jamie talked about earlier, our spreads and our production rates actually went up quarter-on-quarter. So I'm optimistic that we'll continue to see strong loan growth. It's not rate driven and it's broad-based. So it gives me a lot of confidence that we could see some upside from here.

Got it. And then -- as my follow-up, I wanted to touch on the loan-to-deposit ratio. The deposit outlook sounds very positive and upbeat. But the loan-to-deposit ratio is a little bit above where the Pinnacle -- legacy Pinnacle lived as well as Cat IV peers. Just wondering, is there a governor? Is there a ceiling on that ratio? And where do you -- where would you like to see that land longer term?

Loan-to-deposit ratio is not a metric that we really manage to, but I'll speak to since you asked the question. We do expect it to decline as we progress through the second half of the year. As we previously discussed, we expect core deposits to growth to outpace loan growth in the second half of the year. And so we expect it to decline. But what we look at the most when we think about liquidity and access to liquidity is more how we on cash and securities to assets.

And so said another way, that's the metric that we look at to make sure that we have adequate liquidity as loan-to-deposit ratio, we don't believe is a key driver of where we need to be on the liquidity side.

Your next question is coming from John Pancari from Evercore.

Just on the -- back to the loan spreads comment, it's encouraging to hear that you did see spreads increase across most of your verticals and in most of your geographies. We are seeing spread compression across many of your peers even some of the larger banks. And curious what do you think the different -- the driver of that difference is? Why are you not seeing that spread compression? Is it a function of these relationships that are coming over and the hiring that's bringing it over and you're not competing as aggressively for it? Like why do you see that, that's not showing up in terms of these numbers?

John, it's a great question. As I said it earlier, I think we compete on a different value proposition. We're winning business based on providing distinctive service and effective advice and that's built through trusted relationships. Our bankers aren't doing the same level of prospecting that you may see at other institutions because we have an opportunity to consolidate the portfolios of the bankers that they bring over when they joined the firm. And so they've already built a relationship. So they're not having to go and win a new relationship based on leading with a low price. They're leading with that value that they've often provided in the historical relationship. So I think that's a big part of it and it can't be underestimated.

Number two, I think our team has a good pricing rigor. We all are owners of this company. Everyone has equity everyone is on the same incentive plan, and they understand how pricing loans and pricing deposits have an impact on the bottom line and helping us to achieve our big hairy audacious goal. So I think people are motivated to pricing loans fairly and not just relying on rate to win a new piece of business.

Okay, Kevin. I appreciate it. And then part of speaking of investors, part of your discount multiple versus the peers is really around concerns around how you're going to fund the loan growth to meet your or how are you going to drive deposits to meet the funding of the loan growth? And what it means for your net interest income. This quarter, you did temper your margin guide your total revenue guidance unchanged despite bumping up the fee guide. So some could be that there's a modest downside a bit of pressure on the NII growth expectation. Could you just discuss your confidence that in your outlook here on NII on -- in that this modest adjustment that we see this quarter is a derisking or could there how do you dispel any of the concerns out there that there could be more revisions to come as you look at this outlook?

John, I guess what I would say is just look at the performance. It's we are doing what we need to do for today by maintaining pricing discipline, both on loans and deposits. We're delivering on the growth, we're delivering on the hiring great bankers across the footprint that will deliver tomorrow's growth. And so it's just if you're -- whatever KPI you want to look at as far as is this sustainable? Is this repeatable? I believe we're delivering you proof points.

Now to be clear, we are 2 quarters in on this merger. And so there are not but so many proof points we can deliver. But we intend to continue driving this performance. It's why we laid out more specifics this quarter than we have in the past, and we will continue to be as transparent as we can to give confidence in that outlook. We believe that this does derisk external perceptions of our outlook going forward.

We believe that the enhanced disclosures are useful and hopefully helps you all see what we see internally. But for us, what we're going to do, we're going to leave here today and go back to the team and keep doing what we have been doing. We want to grow the business by doing the same thing we did yesterday, the same thing we're going to do tomorrow at the right spread at the right deposit costs, and it is sustainable.

Now to be clear, that growth -- that incremental growth when you're growing where we are in 2026. The incremental growth does come with higher cost funding. But again, it comes with very little expense. And so in the one line of the income statement of NII, it is less incremental NII. But when you look at PPNR, you get it back through lower expense.

And so for the shareholder, you're getting these earnings back in PPNR. And so I think that's the message. We're going to keep delivering. We're going to keep each quarter coming to you and sharing that. But that's how we look at the world. We think that's where the shareholder value is. And so that's how our plan is just to keep doing that.

And John, to Jamie's point, I go back and look at the waterfall and what Jamie said earlier, what drove the NIM compression this quarter was not the growth model. It was -- deposits were up 1 basis point, and that's total cost of deposits. And so -- as Jamie said, there's modest headwinds when you grow. That's not the main factor here. We are acclimating into being a Cat IV bank. So you see debt issuance, you see building cash and securities that at some point is going to be done.

I also would hark to what Jamie has been saying all year, which is there is a floor here of 3.30% because that's what the going on rates would be over time. And so we're not talking about a NIM that's in free fall. We're talking about a NIM that's moderating.

And as Jamie mentioned earlier, that's still contributing high single-digit NIIs. And I know everyone has to focus on different components, but I look at NII as a component of an outcome. And the outcome is growth in revenue and growth in NII, and that's what we're focused on.

Your next question is coming from Michael Rose from Raymond James.

Kevin, obviously, the hiring continues at a pretty rapid clip. I think one of the things that I hear from investors is there that many good lenders to hire year in, year out. Obviously, Pinnacle has done that for a long period of time, but there is kind of the law of large numbers, and there's a lot more hiring activity in and around your markets than there has been in many years. So what would you say to some of the skeptics out there.

The same thing that Terry has said for years, and I'll reiterate is it's a cycle that builds on itself, Michael. When you hire revenue producer, they bring Rolodex with them. And they talk to our team about which team members need to join with them. And so what you see when we hire is it's not one individual, it generally comes with 2 and 3 and 4.

And the best marketing tool we can have is when they come over here and they're able to call the folks back at their previous employer and say that is exactly what they were promised. It's a great environment. It offers them the autonomy and the ability and empowerment to serve their clients the way they want to do it.

And so absolutely, there are enough bankers to continue to add. You just listened to our prepared remarks today, we had 34 individuals that have already signed on in July. So it's not slowing down, it's picking up. And when you add more people, we're up about 13% year-over-year on a combined basis. It just gives us a better pipeline of talent to be able to continue to hire.

Very helpful. Appreciate the color. And then maybe just one quick one on loan growth. It looks like the SNC balances were up fairly meaningfully this quarter, about 12.5% of the book. What's the comfort level there? And it did look like the amount that the percentage of the agent went up as well. So I think that's important. But what's the comfort level in terms of size or percentage of the book as we think about the next couple of years?

It's not an area of growth for us. There are a couple of things happened there. To your point, we did have some lead arranger fees this quarter as we go up market and we're playing in that space. You're going to see more deals there where we're leading. Our lead arranger fees were up significantly over historical levels and quarter-on-quarter. So that's what you're seeing there. We also have some large payoffs coming in the second half of the year, and we prefunded some of those with some other SNCs.

So just I would look at second quarter more as an anomaly. And we've always said that, that portfolio would represent less than 10% of the total loans, and that's not something you would see us change.

Your next question is coming from Bernard Von Gizycki from Deutsche Bank.

On credit, it was stable. And Kevin, you mentioned the reserve on new production is coming in lower than the portfolio as a whole, which drove the ACL ratio lower. Are you targeting higher-quality assets? What's driving the change and just thoughts on reserve growth through the rest of the year?

I don't know if we're targeting higher-quality assets. I just think that where our production has been has resulted in production in asset classes that just are carrying a lower lifetime loss. But it's really just right down the middle of the fairway. As I mentioned earlier, some of our geographies, just doing core C&I lending, it's our specialty areas. We had great growth in our structured lending division this quarter, which carries low-risk weightings. So it's more of just doing what we do best. It's going down the middle and not having to stretch on either price or credit to generate growth. .

And then maybe just a follow-up. On the $130 million of revenue synergies, can you just give some updates on how that's progressing and any update on how much to expect in 2026?

Yes. So we said in the past, we felt like, given that we're on separate systems this year, we had targeted roughly $20 million of revenue recognition from those synergies. Through June, we're right at 50%. And most of the revenue synergies have come in through our capital markets platform. I mentioned earlier with Michael's question, we've expanded our syndication capabilities, and that's resulted in more joint lead arranger fees. We've also expanded on the FX side.

We've seen expansions on hedging, which has driven some of the growth. We've used a little bit of our hold limits. I think that's generated almost $1 million of incremental revenue and our -- some of our new specialties, like equipment finance or generating synergies.

So we're right on $10 million year-to-date. We're on track to deliver the $20 million. The real value will come once we're all on the same platform, and that will come in conversion in March of '27. But no, we're on right on track and there's nothing we're seeing there that makes us feel as if that original $130 million is not attainable.

Your next question is coming from Jared Shaw from Barclays.

I guess just sticking on the prior topic, after the systems conversion, which I know is the main focus now -- has there been any thoughts of new tech initiatives or investments that you've started thinking about over the last quarter or so, just given some of the potential benefits from AI out there?

Jared, number one, we're leveraging AI internally. We have almost 20 AI engineers that we employ. We rolled out technology and capabilities to 40 power users across the franchise. And those individuals are using the tools to become more efficient, to add capacity and generate, I think, new sources of revenue down the road. I would also tell you that we're relying a lot on our strategic business partners, the people that provide our technology solutions. They are generating new sources of revenue for us from AI.

We've deployed something 2 years ago on our consumer platform where we have AI insights that go both to our clients and to our advisers where they're giving insights on clients' behaviors and that generally leads to opportunities for a conversation in some situations, a sale.

So -- if you ask me today, we've always talked about we've got to convert, then we'll innovate. The innovation lens that we'll have, you'll see us spend a lot on the commercial treasury side. I think there's a lot to do with payments, payment portals. We're working on things that will make our clients' life easier, including ERP integration. We're looking at things that will add our client efficiency initiatives, whether that's back-office efficiencies, receivables, payables, things like that.

But to me, the key is continuing to focus on the things our clients want. So we're asking what are the capabilities, what are the functionalities that you desire. That's what's going to show up on our road map. I don't think you're going to see us go out there and create new business units. But I think you'll see us focus on how do we deepen relationships with adding technology and capabilities and AI is going to be a big component of that.

Okay. And maybe shifting back to the growth in the loan growth and the revenue producer growth. You all have hired so many people over the last few years. I mean are you starting to see the donor banks change their behavior, doing anything to try to more actively retain those employees or those clients I hear you're not competing on price, but are you seeing any other ways that other banks are trying to react to what you're doing?

I mean I think it's always been competitive. And I think the banks are responding maybe in ways they always have, maybe it's just the magnitude of how they do it, whether it's offering pay to stays or giving equity. I think with clients, I've always said that the challenge with moving clients over to the bank, especially on the commercial side, is how tied in people's cash management systems are to their ERPs, to their payroll system.

And so the biggest impediment for moving clients isn't really I think the bank doing something differently. It's how tied in technology has made the relationship. So it just means we have to work harder to be able to convince someone that it's worth making that switch and converting their systems. But I mean, it's the traditional defensive mechanisms, they're offering their bankers more money to stay.

And the argument there is they didn't offer to you before, they only offer to you after you were leaving. So in many cases, the team member is going to go ahead and leave. But yes, we've had situations where people have accepted and then reneged on the offer just based on things like that. But again, look at the numbers. I mean we're up 13% year-over-year, 124 revenue producers. We're on track to do 250, which will be a record level. So it hasn't slowed us down.

Your next question is coming from Anthony Elian from JPMorgan.

Jamie, on fee income, you listed the outlook. Can you talk to us about where you expect the step up fees to occur in the second half outside of BHG?

Yes. Great question, Tony. As we look at the second half, we do see continued growth across the board. What I would point to as far as a step-up, I largely point to our wealth business. We'd like to see that increase in revenue fairly strongly as we look into the second half of the year. Beyond that, core banking fees should have steady increases as we go quarter-by-quarter. Capital markets has very, very strong momentum. We see that continue. So we have the inflection with BHG that I described earlier. But I would say the bigger quarter-on-quarter increases will largely come from core banking fees and wealth management.

And then on capital, do you still expect to get to the 10.25% CET1 target at the end of this year? Or what's the timing on that?

It's a great question. It's hard to know exactly where we will land on that. But here's how I would think about it. Each quarter, we generate about 30 basis points of capital before risk-weighted asset increases. And so it really depends on how our growth comes through in the second half of the year. If we grow a couple of billion dollars in loans each quarter in the second half of the year, that's going to consume 15 to 20 basis points of that 30%, and the rest will drop to capital accretion. So do we get to 10.25% in the second half of the year? I don't know if we get there by 12/31, but we should be trending in the right direction.

Now that being said, if growth comes in faster if the right growth is there, again, we're not competing on price or structure, then that will slow that accretion down.

But we do expect to see material accretion in the second half of the year. And I'll remind you that the Fed NPR is out there as well, and that should give us another 40 basis points of capital on top of that. And we expect that in 2027 and when you think about capital targets in the world of the new FED NPR that changes how you can look at it because in our opinion AOCI is countercyclical. So you have to revisit your target and think about where you want capital ratios to be post-implementation of the Fed NPR.

So there are a lot of moving parts, but I would say we expect continued strong capital accretion getting to our target the Fed NPR will be a positive. We're looking forward to the implementation of that. And then we'll be where we expect to be.

Your next question is coming from David Chiaverini from Jefferies.

I wanted to ask about rate sensitivity. No Fed actions are assumed in your guide. What's the impact on NII or NIM in the quarters following a rate hike?

It's largely neutral. Now -- to be clear, our sensitivity, we've actually balanced more since last quarter, and I believe that we're really neutral to the front end of the curve. And so I would say it's immaterial to us. As you're aware, our balance sheet is naturally asset sensitive. So to get to a spot of neutrality to the front of the curve, we have hedges in place.

And so if you go out and you look at year 2 and year 3 that asset sensitivity just naturally comes back as hedges roll off. And so I would say to the front of the curve, we're neutral in a multiyear period, you would see asset sensitivity to the belly and long in the curve, we remain asset sensitive.

And then on your ROTCE target, 18% is what you guys are looking for out in 2027, you're nearly there at adjusted 17.7%. Is this kind of the steady state level? Could there be upside as you progress through the merger?

So as we look at return on tangible as we discussed earlier, we believe that the growth impact of -- the impact of growth on return on tangible is neutral. We are putting assets on the book that will drop to the bottom line, and we expect return on tangible to be stable. We're at 17.7% right now. The only caveat I would give to that is as we accrete capital, as I just discussed, over the next few quarters or a couple of quarters to get to our target, that will be a slight headwind to return on tangible.

So there's no impact to return on tangible for the growth. There is a slight headwind due to growing absolute levels of capital.

And then going forward, once we achieve our objectives on capital target, that's when we'll be balanced on share repurchases, things like that. And that's where you may -- you should expect to see maybe a little bit of a tailwind there.

Your next question is coming from Janet Lee from TD Cowen.

For your deposit growth, somewhere in the $6.5 billion range in the second half of 2026. Are you able to -- you talked about broker deposits are likely going to increase maybe $1.5 billion to $2 billion of seasonal. As you look at the composition of that expected growth in the second half, should we think about the mix is pretty much the same as what you have like 20% NIB -- or how should we think about the totality of the composition of the deposit growth?

If you look at the mix of our deposits, and these comments are based on a combined basis for prior year, it is really stable. 20% to 21% NIB you have approximately 1/3 of the book is money market and similar amount is NOW accounts. We expect that to continue. And so -- as we look into the second half of the year, we think that, that core deposit growth will come in at pretty similar levels as where we are today.

And the only thing I'd say, Janet, is we've really leaned a little more into money market versus time deposits. Those don't have a significantly different rate paid there, but you'll see greater growth in money market this year than you would have seen in time. But to Jamie's point, all the other categories are growing roughly at a similar rate.

Got it. And sorry to beat a dead horse but where do you currently stand in terms of deposit pricing? Are you around the middle of the pack in your markets? Or are you -- and based on your comments, as you're obviously growing much faster than peers, should we -- is it fair to say you may be a little bit, you will be willing to be a little bit above the market on pricing as long as it's accretive to NII. And maybe if you could give us a spot rate on interest-bearing deposit costs versus 2.69%, that would be helpful.

Yes. As we look at the competitive landscape, we all kind of use the similar pricing service. We believe that we are in line with others and not especially an outlier on deposit pricing. From time to time, there are markets where you may have a special rate but in large part, we're not an outlier on deposit costs. And it kind of circles back to the prior conversation where our deposit production coming in, in the 2.50s is similar as our prior quarters. We've been very stable in those rates.

And so we're not doing anything different than what we have done in the past. And so those have been very stable. We think we're kind of middle of the pack. But that's where we are. And then you asked a question on interest-bearing. On interest-bearing deposit costs, we were up 1 basis point, and it's right at 2.53%

And I should just say, when you look at -- you asked where do we stack up relative to our competition, Janet. Jamie was right on the production. You look at it relative to our peers, we would show a little higher. And part of that, just remember that about 70% of our mix is commercial. So we have less consumer deposits. And so that's why our rate paid is going to be a little higher than some of our peers, especially in the Category IV comparisons where you have folks that have bigger branch networks. But I would argue that within each peer set amongst the liability classes, we're very competitive, but kind of middle of the pack.

And Janet, that interest-bearing number was interest-bearing core.

Okay. So it's not apples-to-apples 2.69%?

Yes, yes. That's right. That's total interest-bearing is 2.69%.

Okay. So what was that in the second quarter for the core?

2.53%.

Your next question is coming from Christopher Marinac from Brean Capital.

Jamie, I just wanted to go back to the capital discussion from a few minutes ago. Where do share repurchases in '27 land? Is that a possibility? Or is the growth really going to cover kind of how you manage that?

It's absolutely a possibility. As we look to 2027 and the capital accretion we're seeing so far in 2026, and we expect to see for the rest of the year is part of the plan. And so as we look forward, we believe that the earnings generation of this company will be strong enough to sustain both really strong best-in-class loan growth as well as capital actions to help balance capital ratios.

And so again, we feel we're very comfortable where we are. As we look forward, we think that longer-term capital planning will be balanced as far as core organic growth and then capital management actions led by share repurchases.

Your next question is coming from Catherine Mealor from KBW.

I wanted to just circle back one thing on just the average earning assets and the cash build this quarter. If you mentioned, Jamie, part of it happened really late in the quarter, late in June. And so if we look at that $7.6 billion in cash kind of exiting the quarter. How do we think about what that looks like over the next couple of quarters like a lot of that build was in June. And so can you give us a little bit of color on what you expect for the pace of that build over the back half of the year? .

In cash itself, I actually would not expect to build in the second half of the year. You should expect to see average cash balances consistent to the second quarter, but I would probably give a range of $4 billion to $4.5 billion for cash balances in the second half of the year.

So $4 million to $4.5 million relative to the $6 million that you have in the second quarter?

To the end of period, yes. But relative to the $4.5 billion average for the second quarter.

Got it. Okay. So you're saying the average will not expand to where you were on an end-of-period basis. You're going to -- from an end of period basis, you're going to come back down.

Exactly.

Got it. Okay. That's helpful. And then maybe turning to expenses. I think the lower expenses this quarter was great, but I know from your guide that's going to be increasing over the back half of the year. Can you give us a sense -- I know we're not '27 yet, but any kind of updates on how you're thinking about the expense growth into '27?

And just what that means from both impact from recent hires and then the impact of cost savings. It feels like cost savings are coming in a little bit better than expected so far this year. I'm just curious what that means next year.

The deal synergies are coming in as planned. We're going to achieve our 40% target for this year, and we're on track for 75% next year. So we feel really good about our prior commitments there. And what I would say is when you look to next year, they assume high single-digit expense growth driven by continued hiring, continued winning and bringing over experienced team members and then subtract out the incremental synergies, which is the 35% of the $250 million. And so -- that's how we look at 2027.

For the rest of this year, you're right. Expenses will increase a little bit in the third quarter. We will see a slight increase but a part of that is driven by BHG. Part of that is driven by personnel costs. The combination of those 2 is a $20 million quarter-on-quarter increase heading into the third quarter.

And so we'll see expenses increase here in the second half of the year. But again, we expect strong positive operating leverage in 2027, and we'll give more color on that as we get during the year.

Okay. Helpful. And actually, can I just have one more on the balance sheet. I'm just playing with this -- so if I'm not going to take my cash to where you were end of period, does that mean borrowings on an end-of-period basis will also come down from that level in the next quarter?

From end of period, yes.

Thank you. This concludes our question-and-answer session. I'd now like to turn the conference back over to Kevin Blair for any closing remarks.

Thank you, Matthew. Tomorrow marks 1 year from the announcement of our combination in a little over 6 months since we've closed. On our original call, we said we were creating the Southeastern Growth Champion. What I'm most pleased about is pretty simple. We are executing and delivering on what we said we would. This is scale with the soul in practice. I want to make sure that doesn't get lost in the quarter-to-quarter noise.

We are delivering strong results. EPS and revenue are growing at a significant pace, driven by strong balance sheet and core client fee income momentum. Credit is strong. Capital is building team member retention is high and others are joining at an elevated pace.

And best of all, the most recent industry surveys point to clients and prospects saying they want to do more business with Pinnacle more so than any of our peers. The leverage points of this proven model are working, and it comes down to strong execution by 8,500 passionate team members. And so to each of you, again, thank you. We have real runway ahead and it involves taking share 1 quarter, 1 client and 1 banker at a time.

As our Founder and Chairman, Terry Turner has said for 25 years, the energy in this firm is about advancing the ball and moving forward. We intend to keep doing exactly that.

Thanks for listening in today and your continued interest. And with that, Matthew, we will conclude today's call.

Thank you for joining us today. That concludes the Pinnacle Financial Partners Second Quarter 2026 Earnings Call. Have a good day.

All right. Let's get started. So we are delighted to have with us today, Kevin Blair, President and CEO of Pinnacle; and Rob McCabe, Founder, Vice Chairman and Chief Banking Officer. So Kevin and Rob, thanks so much for joining us today.

Thank you for having us.

So let's start with strategy. It's been almost a year since you announced the merger. What surprised you most about this journey that you weren't expecting?

I'll start. Rob, you bring it up. I talked about it a lot, culture eats strategy for breakfast every day and twice on Sunday. And the hard part about bringing 2 companies together is not about aligning your strategic intent. It's aligning the cultures of the company. And maybe that is a surprise just because it shows you how deeply embedded these cultures are now. I think our results to date have shown how we've spent a disproportionate amount of our time working on culture, where we brought 2 firms together with both strong heritages and legacy, and we've been able to maintain the momentum. That's there.

Number two, I think the Pinnacle model. The Pinnacle model is something that people want to work in and they're attracted to. So it's no secret what Rob and Terry built was a platform that takes bureaucracy out of the process, which is what attracts bankers to the platform. So you can imagine when we're talking to our legacy Synovus team members and saying, you're now going to be working under this Pinnacle model, many would think that there would be a challenge in getting people to move there. Quite frankly, they've enjoyed the movement. It does remove bureaucracy. It provides empowerment back to the frontline so they can better serve their clients.

The one negative is maybe how the market continues to perceive the deal. And I think it's predicated on other MOEs and trying to consistently deliver something that everyone is looking for the next misstep. And each time, I think we've been able to deliver on our promises, and I recognize we still have a conversion in front of us, and that's what keeps me up at night because we've got to convert half our client base onto new platforms and originate new processes inside the 4 walls of our firm. But I think we're making great progress, and it's just going to take a little time and continued execution to prove out the story.

And as you think about integration to date, there are a lot of steps to the -- what are the 1 or 2 steps that you think you've really gotten right? And where is there more room to do work?

Well, look, I think where we got it right is we took a little extra time. Most integrations aren't taking 14 months. We sat down the very beginning and said, let's look at what both firms do, both technologically as well as from a process orientation. And let's select what is the best outcome from both firms. A lot of firms that are doing these things just slam in one process, one technology, and they can do it in 4 to 5 months because they're not evaluating the best of both.

Number two, when we looked at our platforms, even though we chose the provider, we recognize where there was a functionality or capability that the other provider had previously with the other side of the client docket, and we're building those capabilities into the future state. So if we're using our consumer digital portal and legacy Pinnacle had a functionality that we didn't want the client to lose, we went to our provider and said, here are 1 or 2 or 3 functionalities you've got to build in. So we like that.

The third is change management. It takes a tremendous amount of work to get your team members ready and your clients ready. And we've talked to Greenwich and J.D. Power about the best practices on mergers and what they would say, there's no secret, it's over communication. And so we spent a lot of time and energy with our team. We still have 9 months in front of us to be able to get all the change management in place. If you train your team members too early, then they're going to forget it by the time we get some conversion. If you do it too late, you're going to be up against the wall in terms of getting it done.

So I think it's just all the steps that we've taken, the planning process, the change management that we're executing on and the fact that we are going to be in a great position by March and people are going to not be surprised by what's coming.

I think what I was most pleased with was the like-mindedness since day 1 back in July. So we were able to spend really from August through December planning for legal day 1, which was January 1. And the good surprise for me was that we really had no retention issues with employees on both sides. We had a little frictional issues in overlapping markets, primarily in Atlanta, maybe secondarily in Birmingham, but they were minor, didn't involve any essential talent.

And then if your bankers are happy and feel engaged and feel positive about the transaction, then your clients will feel the same. So those 2 things were the most important to me on the people side and the client side. Then the receptivity of the Synovus partners for the Pinnacle geographic model. Synovus ran a combination of geography and lines of business. So we had to convert the lines of business more to geographic ownership by market leaders.

So picking qualified market leaders, both in our major urban hubs that control a lot of specialty businesses and then rural markets where that person has to be the king and the most influential person in the market, we're able to really retain and win the hearts and minds, I think, of both of those teams.

Come up that culture eats strategy for lunch. And we've heard from a lot of bank CEOs over time that culture is one of the most important drivers of what makes a good deal. So how would each of you describe what your vision for the combined culture is?

Well, one of our goals is 95% retention. So most of our programs, I think we have 28 or 30 different programs that bolster our work environment. And we generally have run historically 70% to 75% top scores on a no-names basis from 4,000 clients -- 4,000 employees at Pinnacle. We need to maintain that because if the employees are loyal, they're happy in their job. If it's not worked to them, they don't turn over. If they don't turn over, we have continuity with our clients, and they reward us over time with more of their business.

So most of the cultural tools that we have are primarily to drive retention and enthusiasm. And the Synovus side of the business has been thirsty there. They already had good programs, but I think ours in combination have been very well received.

And Rob said it well, but the tagline that I've used is scale with the soul. So you can't bring 2 companies together and not get some advantage out of scale. We're going to leverage our size to build a bigger balance sheet, greater capabilities, leverage for more innovation. But we're not going to change who we are. We're not going to change the empowerment that exists throughout our footprint to serve our clients with a level of trust that has created the top Net Promoter Score in the United States. And so scale at the soul means that you're going to get the benefits of size without changing who we are.

And to Rob's point, who we are is a very family-oriented company that has low turnover, high engagement. And how do you do that? You empower your team members. You remove bureaucracy. We're built around 7 values and those 7 values we talk about every Monday when I onboard all of our new team members at 2:00 Eastern Time, every new team member that joins Pinnacle comes to Nashville and is onboarded in our welcome aboard process. And I think that's so important to set the tone from day 1 on who we are, what our culture is, what's our purpose, what's our mission, what's our vision. And so we don't have to talk about culture because you're going to feel it. But if it starts to change and you lose your soul, we're going to lose our competitive advantage.

In our company, it really starts with the market leader. That person he or she has a tremendous amount of authority. and they have to have the knowledge, skills and attributes to be effective at it. And so far, I think we've picked the right team, as I mentioned earlier, and the associates, team members below them respond. We've worked well with the line of business disassembly and putting it into the geography. And our incentive plans really reward team performance. So there's been no real resistance to that because people like psychological credit, but nobody benefits from disproportionate financial benefit. So that's been a leveling factor here in this integration.

All right. So on time line, it seems like March 2027 is still the target for full operational and brand conversion. What are the milestones between now and then that you're tracking most closely?

Yes. It's what I said earlier. We have really until now and September to put fingers on keyboards and to make sure that all of the technological changes are made, whether that's translation tables, whether that's training curriculum, the work is between now and end of September. And then beginning in October, we'll start testing. And so if we're testing in the fourth quarter, that gives us a great deal of flexibility if we find things that aren't going according to plan.

So before we get to March of next year, we're able to make some modifications to the things we're doing. So a lot of work between now and the end of September just to get fingers off keyboards and then a lot of testing for the next 90 days. And then we'll have the last 90 days for the conversion activities as well as change management activities.

On the banking side, we're more completing the implementation of the model. So we have a great belief that we pick the best system options for the company in combination and that they'll be implemented properly. What we're trying to do is be prepared to receive them. We want to make sure our client contact people know they have a job, that they'll be well informed and well trained on the systems, and they'll be able to handle their client day 1. Those are the things that are on their mind.

Just in terms of what's going on with the model, we have several delicate things that have cultural impact and people impact. One, the branches in Alabama and Georgia have been managed centrally. The management of the branches will be dispersed to the geography. So that's a delicate issue in those 2 states. We'll distribute treasury advisers that do all the consultation to the geographies in advance too, even though we're working on 2 systems. We want the deposit gatherers, the treasury people closer to the line of scrimmage.

And then we have a significant number, I guess, 8 or 9 deposit specialties that we will develop subject matter experts and market champions, especially in Georgia and Alabama that will help us get ahead on the deposit gathering side prior to conversion. So those are the things I'm working on to sort of put the bows on the operating model.

Now a lot of the regional banks, you call them regional, if you want, at our conference have discussed going more national over the last few years. And it seems like Pinnacle is more focused on winning deep in your select markets. Why is that the right strategy for Pinnacle?

Well, we operate, I guess, in 9 states and District of Columbia. We have to mine the business of the geography first. We want density in our geographies, whether it's urban or rural. That's where all our fixed costs are. That's where our leveraging opportunities are. So all of our geographic bankers in our 18 lending specialties and 8 or 9 deposit specialties, that's their first obligation to mine the business of the geography.

On the other hand of this national comment, we do a lot of business outside of these 9 states. We have equipment based in Dallas. We have aircraft in Austin, aircraft people in Boston. We have franchise lenders in Phoenix, Arizona. We have our credit officer for our specialty businesses in Minnesota. We have our asset managers for the asset-intensive lending specialties in Chicago.

So we will probably -- in our equipment business, 25% of our equipment business is outside of the geography. And as a contrast in our franchise businesses, probably 75% is outside of the geography. So priority one, create density and share in the markets, but to get the growth that we need and take full advantage of the capabilities we have with national stature. We operate in probably 25, 30 other states.

And to Rob's point, you can listen to our words or you can listen to the feedback from the clients. As I mentioned earlier, legacy Pinnacle ranked #1 in the country out of 4,500 banks in satisfaction Net Promoter Score, legacy Synovus ranked 6th in the country. So I think it's so important to listen to what the clients are saying. They value trusted relationships. And you have to be local. You have to be in that market with your resources so that you're not doing a fly in once a year and trying to build a relationship. You build a relationship every day. And that's with proactive, effective advice so that our bankers aren't in the fulfillment business. They're out there working with our clients, seeing them in the community and helping them with their financial objectives versus flying in once a year even with the expertise.

As Rob mentioned, we have those capabilities. So we'll fly in the specialists, but that's not in replacement of having your local banker. You've got to build that local expertise. You've got to, as Rob said earlier, have a presence that builds a trusted relationship, and then you can introduce some of these national specialists, like Rob said.

You could expect specialists for most of our specialties in Atlanta and Nashville and Charlotte for sure, and probably down the road in Jacksonville. Wherever we have a sufficient share of market or size of bank, we will add a specialist. And they will -- they are at the behest of the geography and provide that expertise beyond what an internist can give them. They're more like a pulmonologist, a neurologist or cardiologist, whatever it is. They will help improve our advisory positioning with the client, help us compete against larger, more sophisticated companies that purport expertise and help the banker book that business with a local banker.

All right. Let's dig into some of the merger specifics, 47% efficiency ratio target. I appreciate that your business mix is part of that, but what are the other puts and takes to getting there?

Well, I mean, you nailed it. I mean the biggest thing is business mix. Jamie talked about this today. By the end of this year, we'll have a tangible efficiency ratio in the 40s. So you won't have to listen to rhetoric, you'll get to see it in our financials. And that's a function of a top line revenue number that's moving very quickly. We are a growth-oriented bank. And we're able to grow with positive operating leverage because we're able to get some cost synergies from the merger itself. So we're largely a commercial bank.

Commercial Banking segments generally have efficiency ratios in the 30% range. We're not as large on the retail side. We're getting larger on the wealth side. That's a higher efficiency business, great return on capital. But when you look at our business mix, that's the large driver. And bringing the companies together, we talk about cost synergies. We'll get cost synergies. But I remind everyone that what we talked about when we announced this deal was a no regrets cost synergy equation, which is largely a very small percentage of cost synergies driving the economics of this deal. We said that we would only reduce our staffing by roughly 4% to 5% across the combined company.

We've seen other MOEs, other mergers that have had far greater. It's hard to build a bank built around culture and growth if you're building the value proposition from cost synergies. So it's business mix and we'll get the necessary cost synergies that we have to have.

It's always good to have a low efficiency ratio because it's great to talk about. But again, it depends on the business mix. So we ought to operate with a very favorable mix efficiency ratio as we grow. But if you're a banker in our company, about 95% of our employees, including all of our bankers, they're paid on revenue growth. Their incentive is based on revenue growth and EPS growth. So those are the 2 things. Once they meet a credit quality threshold of criticized and classified assets, they're focused on those 2 things. We're not talking to them about efficiency ratio, which is a derivative number, but also, again, a function of what businesses you're in. But that's the mindset of the company to grow revenue and EPS.

Growth and culture brings us to hiring and attracting talent. So how would you characterize the competitive landscape today in hiring bankers?

Well, I'd say it's intense. One of the things we worried about the most when this deal was announced is every bank that we compete against thought we were a happy hunting ground to hire our people, okay? And they were unsuccessful because we have great share, great work environment, great Net Promoter Scores, people like their job and like their company. But there was always this feeling of what's going to happen and nothing's really happened.

So the first thing was to keep who you have, correct? I think we've done that very effectively, except I mentioned earlier some frictional losses in a couple of markets. Now if you're going to grow faster than the market, you're going to have to add capacity. So we have a very robust hiring plan. Pinnacle had one -- I think we hired 120, 125 people last year. Our aspiration this year is to produce -- is to hire an additional 250 revenue producers across all business lines, core banking, specialty and wealth sides of the business.

We're well on track to do that here through the first 5.5 months. But we -- it's a purposeful and systematic effort for us. It's not just an HR-driven process. Our market leaders have the responsibility for hiring. And we collaborate with our bankers in the market to determine who would be the best fit for us, who has a lot of experience, a large book of business, has sticky business that can migrate with that person versus staying with the bank. And we have these list by market, and they're required to cultivate these individuals at least once a quarter, right?

So they call on these people once a quarter. And over time, you'd be surprised at the yield. Even people that are very satisfied and whose name is even ingrained with another brand over a period of time, there will be some risk point there for that bank where we'll have a conversation and generally prevail. But it has to be, as I say, purposeful and systematic. It can't be episodic or just I'm going to go call on this person and hire them. We know who we want to hire.

And as we think about the competitive landscape for talent, is there any difference in national bigger players coming into your markets versus some of the more local players?

Well, we've got 80 banks in Nashville. I know that, so we've got something for everybody. But we've never really had a problem with compensation for people. It's more about brand, the power of that brand, work environment, who they're going to work for, reputation in the market and where they're comfortable.

So sure, JPMorgan announced they're going to put their name on a building here in town. So we're watching them. But we don't -- what has happened is the cost of good talent has just dramatically gone up in the last several years. Base pay incentive target percentages and special bonuses have really gone up. But we don't new entrants to the market don't bother us. It's really the same problem with a different code.

And if I could add on to that, Rob, you nailed it. The people that have joined this institution have joined because they see a world of lower bureaucracy. They see a world where they're empowered. They see a world where they have peers that they worked with in the past who are saying this is a work environment that they wish they would have joined 10 years prior, as Rob has mentioned.

So when a large bank comes in and tries to recruit our talent, the last thing they want to do is go back to one of these bulge bracket firms or large firms that reek of bureaucracy and lack of empowerment and LOB-driven silos that require them to have hand-to-hand combat with their partners on who gets credit on a deal, right? That's what they've left.

And bankers talk among themselves. They have a good idea and a pipeline of their own about what's a good place to work and who you're going to be working for, what's life like. There's a certain amount of comfort in our great work environment. There's a certain amount of comfort in our market leaders who are strong. And to go to another bank that has some of the characteristics that Kevin mentioned is a personal risk in terms of moving their book or what's life really going to be like.

So our overall formula of work environment, geographic decision-making, very flat organization, specialists that help you book business and competitive pay is a pretty good formula.

All right. Let's talk about loan growth. So when you look across your footprint and the specialty lending that you do as well, where are you seeing the most activity? Is there a specific geography or industry where you're seeing any inflection? How much is AI CapEx related?

Well, our best markets for loan growth have been Tennessee, they'd probably be North and Central Florida and Georgia Atlanta. I think Charlotte is not far behind, but I would expect that those trends will continue. I think in terms of our specialties, to give you an idea, if we do $10 billion of loan growth this year, $1 billion of it will come from our equipment specialists. 75% of that will be from the geography, 25% outside. So we have all these weapons that I've referenced that will produce probably 40% to 55% of the loan growth in or out of the geography. The specialties will do that.

But our best markets, we have big share in Tennessee makes a big difference. I'd say Jacksonville will come on. As I said, Atlanta will do well. We need Charlotte to be a little stronger. That would be what would be our aspiration.

And Rob, I'd add, this is not coming from line utilization. It's not coming from rising tide, lift all boats. This is coming from the hiring that's occurred over the last several years, the new talent that we have in all the markets Rob has referenced. It comes from the new talent we have in these specialty areas. And it's so broad-based that we're not having to be overly reliant on any particular area. And again, that's the great thing about this model. We're not just trying to garner our share of the market that's growing. We're taking more than our fair share because we're adding resources that are consolidating their books of business to Pinnacle.

Yes. I mean we're in renewable energy, small ticket leasing, large equipment. We've introduced dealer finance, primarily floor plans to the Synovus geographies, which is really growing. In Music, Sports and Entertainment, we're the #1 catalog lender in the world, at least we've been told, so we'll take credit for it. And so we do a lot of financing in that business. It's probably more of a credit-driven business than I had originally understood.

But we're in quick service restaurants, other franchise types activities like Planet Fitness. And we do a lot of solar within renewable. So we have lots of different capabilities that create loan growth that probably wouldn't have surfaced or we wouldn't have been in an advisory expert position to pull out of the geographies. And that's just helped magnify our loan growth and get -- for example, equipment alone has done $2 billion in 3 years that our existing geographies felt they've done all the equipment loans that they could do. But by bringing in an expert, they've uncovered another $2 billion worth of loan growth. And loan growth is one of our strengths.

That's a trivial exposure to AI infrastructure. We have a couple of data centers, but it's not what's driving the growth.

So when you talk to clients, and I think investors in the room are trying to figure out what's driving so much of the C&I loan growth that we're seeing across the industry. So when you talk to clients, if it's not coming from AI infrastructure build-out, what's really driving the demand at its core?

In our marketplace, it's the demographics. I mean we continue to have population inflow in these markets that Rob just referenced. And so it's driving economic growth. It's the hiring that we've talked about before. We talk about our survey that we do every quarter. And what's interesting is like most news, you focus on the negativity. But when you look at the surveys that our clients provide back, 80% of our clients say that their business is going to produce the same amount or a higher amount of business in the next 12 months. That's 80%.

So that means only 20% expects their business to decline. So the marketplace is very constructive. The problem that they're seeing today when you talk to clients, and it's what we all see is inflation is driving up input costs. And what they're telling us is that the concern is that the end user, the consumer or the business is no longer going to accept a price increase. So what we should expect is you could continue to see loan demand and growth, but it's going to come at compressed margin because they can't pass on the full input price increase on to their end user. That doesn't slow growth that much. It just changes margins.

And so we feel like we're in a constructive economic environment. Obviously, there's a lot of geopolitical risk. There's a lot of inflation risk that exists today. But being in the markets that Rob oversees, there's still a constructive overall sentiment on growth.

And I guess most of the banks in our peer group, 35% of their loan portfolio being commercial real estate.

That's right.

And probably 4,400 out of the top 4,500 have about an average of 35% rough numbers. I don't -- I can't totally recite that. But our growth has not been coming for CRE in the last year or so. It's still an important part of our portfolio. Market conditions and exits and a lot of completed projects have held up additional lending. But I would expect that to increase, but our business has been driven by a very diversified portfolio of C&I capabilities with industry expertise and geographic connectivity.

I definitely want to dig in on the margin side. So is that coming more from loan spreads being tighter or deposit costs being more competitive?

Yes. When I'm talking about margin, I'm talking about the business' operating margin. But let's talk about our margin. Our margin is right around 3.50%. Jamie talked about it. That's really stable versus the first quarter, what we're expecting to see in the second quarter because we had day count and we had a bond transaction that gave us an extra basis point. So we're stable.

We're seeing deposit cost on new production largely stable with first quarter. We said that number in the first quarter was 262. Loan yields are holding up. The reason that you're seeing any sort of margin compression here at Pinnacle is not to do with the everyday business. It's having to do with the fact that we're having to issue debt. We're increasing our securities and cash as a percentage of total assets. And that's what's condensing the margin a little bit. But we feel like the environment today, the new loans and deposits that we're able to generate are still in a very favorable position as it relates to margin.

I think our loan yields are really right on plan.

All right. Thank you for clarifying that. And then on deposits, are you seeing any change in competitive pressure right now?

I mean I don't -- I can't remember in my 30-plus years, Rob, you tell me where it's ever not been competitive. So it's always competitive. I try to look at the actual data to answer that question. And what we look at is the pricing service that we subscribe to, the median prices of promo rates have not changed, whether that's a promo money market or a promo CD, the median rates are about the same. Are there banks that have increase their rate by 25 basis points? Sure. There are banks have increased it by 10. There are other banks that have reduced it.

So the competitive landscape has not changed. I believe what many are saying with loans growing faster, they're feeling a level of competition. And I think most going into this year expected rate cuts. So we expected deposit costs to come down. And as we've all seen, that hasn't occurred. So I don't know that it's a hypercompetitive pricing market for deposits. I think it has to do with the overall rate environment, the fact that loans are growing faster, but when you look at the median rates, they're not changing that much.

But we all know that every bank out there this year, when I go read their expectations, they want to be growth banks, right? They recognize that. And it's easier in their mind to go out and grow loans than it is deposits. So it just puts that narrative on deposit growth is so important. And I think if you saw our deck that we put out 2 nights ago, you would see that year-to-date, we've -- if you just take the midpoint of our deposit guidance, we would be up almost 6%. That's nothing to sneeze at. This quarter is a seasonal decline because of public funds, municipal deposits, tax season. So we provided a seasonal chart that shows that what's occurring in the second quarter is not anything out of the ordinary. It does mean that the back half of the year, we'll have to see substantial growth to get to that high single-digit deposit growth that we've talked about in our expectations.

The single most frequent conversation that I would have in a market is about a deposit, competition for a deposit, what's an appropriate rate, what's our relationship advantage, what's our relationship disadvantage. And the legacy Pinnacle was really a bank started from scratch. So it never had a large consumer small business funding base. So we were used to that being job 1, growing deposits. Job 2, we could get the loans. The question is, we wanted to -- we need to fund our loan growth with 80% of core deposits. So that's all we worked about. That's at the top of conversation list along with lending growth and hiring in our sales and service meetings. But it is the single most frequently discussed topic about how to respond for a deposit.

And on the subject of the slides that went out overnight and second quarter trends, anything else that you want to comment on the second quarter, help investors unpack the changes in.

Yes. I mean, look, the big headline for me is core momentum continues, right? Loan growth is coming in higher than expected. Hiring is coming in faster than expected. The deposit growth update was largely as expected given seasonality. If you could pick on anything that we talked about, it was that our revenue guidance for the year would come in slightly below median. And that was largely due to a strategic decision that we made in partnership with BHG to change some of their production model into being more forward flow and securitization versus going into the community bank model. Short run, that reduces fees. Long run, it makes the -- I think, the franchise way more valuable. And so it's something we were willing to do.

So we were able to bring our expenses down slightly below minimum as well -- below median, excuse me. So I would tell you, I think the outlook is still very strong. And I think where people have questioned us is our ability to continue this momentum and not to have turnover. We've said publicly that our target this year is 7%, and we're on top of that. So we're not seeing elevated turnover. And when you look at that expectation or our projections for the year and you do the math, it shows that we're going to have a 20% plus EPS growth in 2026. That's pretty strong year to have when you're going through an MOE.

And again, I go through all the questions that everyone's had around our ability to maintain and actually accelerate and embellish this Pinnacle model, it's working. And I want to publicly thank Rob McCabe because he has been the architect of bringing the Synovus team members under the Pinnacle model. He's done a sensational job of getting us to a place where we're acting as one company, and he's the person that's ensuring every Monday when we have a sales and service call that everyone is laser-focused on delivering on these expectations that we talk about, which I think we're doing.

I have to ask about AI topic of the day. So since AI is moving so fast, what are your priorities on the AI topic? And what are your thoughts on the conversation of AI maybe driving competitive speed and deposit sorting?

Look, we're a big believer in AI and how it can affect our operating model and how it can make us better. Our 3 focus areas are banker enablement, conversion support and overall efficiency. So we have 16 internal AI engineers that are employed today at Pinnacle, who are working on those 3 elements. We have many use cases that we've already deployed, things like AML, BSA, things like appraisal review, and it's going to make us more efficient. We have 1,800 individuals today who have licensed that are using AI tools to make them more efficient. And so that's important to us.

As we look forward, I think we'll be a more scalable, efficient organization, and we're going to have better tools to offer our clients. In the short run, I think the greatest concern is Agentic AI and how it's going to put every consumer out there with an agent that's going to move their money every night. Maybe that's going to happen. I've heard some of our peers today talk about the fact that the median balance per account is so low that it's not worth their while to go out and move the deposits.

Just know for Pinnacle, we already pay an above-market rate on our deposits. You guys go look and compared to our peers. This is one time I can brag about having a higher cost of deposits because we're paying a fair market rate. Two, we skew more towards commercial. And I would tell you today that commercial clients are already sophisticated. They don't need AI to sweep those excess deposits every night out of their operating accounts into a repo product or a money market product, they're already doing it.

So if people are concerned that this is going to disintermediate Pinnacle, it's actually going to make us stronger because I can tell you that clients value relationships, not just the price on the deposit. And if you're in the transaction business, I'd be worried. But if you're in the relationship business, this is going to give us a competitive advantage.

All right. So to wrap up, as you look out over the next 12 to 24 months, what are you personally most focused on delivering? And what's the key message to investors in the room you think about that, Rob?

Well, we've got this conversion coming up next spring. I think we'll be well prepared for that. We've talked about that. I don't want that to be a distraction from any of my bankers. Again, we want them to accept the systems we've got, use them with confidence, not labor over where they don't have their favorite toy. And then we want to protect our bankers, preparing them to have the information they need to handle the client, feel good about keeping their job and the client be satisfied with that result. That is a very simple equation, but it's complex in people's minds.

What I've got to do is continue to perfect this geographic model. I mentioned that we need to distribute branch management in Georgia and Alabama. That will be a big deal. We need to distribute treasury advisors, as I mentioned. That is a different deal than Synovus is accustomed to, but it will help us with deposit gathering. And then we've got to get these deposit specialties available in the new geographies to generate these incremental deposits in these specialty programs.

Then we've got to continue our hiring momentum so that we can grow faster than the market. We've got to retain our people. We've got to maintain good credit quality, which I think we're in good shape. We have a lot of granularity in our loan portfolio. So when we first started January 1, we had most of the elements of the model in place and our tagline was we needed business-as-usual momentum. And there's some evidence that we had business as usual momentum first quarter looking at the volumes and lack of turnover in the hiring.

So we want to continue that. We want to build an impression that we've had a seamless transition and the computer conversion is just a little yellow line that we're crossing and we'll pull back over, right?

And I'll just -- I'll maybe put a bow on it. I want us to be the top Net Promoter Score in the country in both J.D. Power and Greenwich, and I think we have the opportunity to do that. And that goes against the grain because they would tell you that when you go through a merger, it's hard to maintain your Net Promoter Scores. I want to be -- I want to get the 11th consecutive year being Great Place to Work in Fortune Magazine. And as we've talked about in the merger math, and Jamie knows this, we're going to deliver on that merger math because no one said we could do it, which makes us the fastest-growing regional bank, the highest client satisfaction regional bank and the most profitable and efficient regional bank. When we pull all that off, then I think the doubting Thomas won't have much to doubt.

Excellent. Well, Kevin and Rob, thank you so much for joining us.

Thank you.

Thank you. Appreciate it.

Good morning, and welcome to the Pinnacle Financial Partners First Quarter 2026 Earnings Call. [Operator Instructions] Please note, this event is being recorded.

I will now turn the call over to Jennifer Demba, Senior Director, Investor Relations. Please go ahead.

Thank you, and good morning. During today's quarterly earnings call, we will reference the slides and press release that are available within the Investor Relations section of our website, pnfp.com. President and CEO, Kevin Blair will begin the call. He will be followed by our Chief Financial Officer, Jamie Gregory, and they will be available to answer your questions at the end of the call.

Our comments include forward-looking statements. These statements are subject to risks and uncertainties, and the actual results could vary materially. We list these factors that might cause results to differ materially in our press release and in our SEC filings, which are available on our website. We do not assume any obligation to update any forward-looking statements because of new information, early developments or otherwise, except as may be required by law. During the call, we will reference non-GAAP financial measures related to the company's performance. You may see the reconciliation of these measures in the appendix to our presentation. And now Kevin Blair will provide an overview of the quarter.

Thank you, Jennifer. Good morning, everyone, and thanks for joining us. January 1st marked the official close of our merger with Synovus. And rather than slow down, we hit the ground running. We're choosing to lead. In our first 90 days together, we focused on what has always mattered at Pinnacle, building the best team, delivering exceptional client experiences and translating that into sustainable, profitable growth. The early results speak for themselves.

For the first quarter, Pinnacle delivered diluted earnings per share of $0.89 and adjusted diluted EPS of $2.39. On an organic basis, we generated over $2 billion in loan growth and almost $2 billion in core deposit growth, right in line with our 2026 expectations. The net interest margin expanded into the top half of our target range and adjusted noninterest revenue grew over 20% versus combined results in the first quarter of 2025. Moreover, credit remained stable, and we continue to see strength in key metrics and ratios such as adjusted return on tangible common equity and adjusted tangible efficiency.

As expected, our results this quarter included $275 million of merger-related costs. At the same time, our recruiting engine continues to do what it does best, when. We added 50 experienced revenue producers during the quarter, up 22% on a combined basis from the fourth quarter of 2025 and up 11% on a combined basis from the prior year. This momentum has carried into April with another 37 new hires or accepted offers. That's not a coincidence.

Great bankers are drawn to environments that are empowering, engaging and frictionless making it easier to deliver distinctive seamless client service. Integration is progressing ahead of plan, and importantly, without losing the soul of what makes Pinnacle work. Our operating model is in full motion.

Leadership accountability is clear. Technology and system decisions are largely complete, and we remain firmly on track for operational and brand conversion by March 2027. Most importantly, our clients noticed positively. In the latest Coalition Greenwich survey, legacy Pinnacle ranked #1 nationally in Best Bank awards earned while Synovus ranked 6. According to Coalition Greenwich, outcomes like this are exceptionally rare in bank mergers and they don't happen by accident. We have never viewed this as a merger of 2 companies. It's a merger of relationships, and that has met one clear mandate from day 1, maintain what clients value and make it better. These results tell us we're doing both.

Our team members felt it too. This month, Pinnacle was named #12 on the Fortune 100 Best Companies to Work For List, our tenth consecutive year earning that recognition. Through a period of real change, our culture didn't fade, it showed up.

Finally, last month, Pinnacle joined the KBW NASDAQ Bank Index or BKX. This transition from the KRX places us amongst a select group of banks recognized globally for scale, consistency and strong returns, and reflects the outstanding reputation we have built with investors. As we look ahead, we remain firmly focused on executing the Pinnacle playbook. Our priorities are clear, consistent and unchanged.

We remain focused on top quartile organic growth, disciplined hiring of experienced revenue producers and sustained earnings expansion. These priorities are supported by strong risk management and fundamentals built to perform through cycles and deliver superior results over time. Scale only matters if it makes you better, and this combination does exactly that.

With that, I'll turn it over to Jamie to walk through the quarter and the key drivers in more detail. Jamie?

Thank you, Kevin. Our first quarter sequential and year-over-year comparisons are significantly impacted by the Synovus merger, which closed on January 1. As a result, we will make selected references to combined results for legacy Pinnacle and Synovus in prior quarters to give you a clear view of our organic growth in the first quarter. The primary driver between our reported EPS and adjusted EPS in the first quarter was $275 million of merger-related expenses. Net interest income was $933 million in the first quarter driven by excellent balance sheet growth. Period-end loans excluding the day 1 purchase accounting loan mark, increased $2.1 billion or 10% annualized from the combined firm's fourth quarter 2025.

The majority of the organic loan growth was in C&I credits, with contributions from our geographic markets as well as in our specialty lending lines. Linked quarter organic core deposit growth was $1.9 billion or 8% annualized in the first quarter. This healthy growth in core deposits was driven by higher interest-bearing demand deposits and money market accounts and was broad-based across our geographic business units.

Total deposit growth was impacted by a strategic reduction of broker deposits. The net interest margin expanded to 3.53%, which was in line with our previous guidance of 3.45% to 3.55% and driven by purchase accounting, balance sheet marks and fixed rate asset repricing. Recall that in January, we repositioned a portion of the legacy Synovus securities portfolio. These transactions reduced interest rate risk in the securities portfolio, support our Level 1 HQLA position and eliminated approximately all of the PAA associated with the securities portfolio. We also took other securities actions during the first quarter to enhance balance sheet liquidity and yield.

On a combined basis, adjusted noninterest revenue increased over 20% year-over-year and was stable compared to the fourth quarter. Core banking, wealth management and capital markets fee growth was strong year-over-year. Income from our equity method investment in BHG was $31 million during the first quarter, in line with expectations. We remain disciplined with noninterest expense control while continuing to invest in revenue-producing talent and technology, partially offset by the realization of some of our merger-related cost synergies.

Our adjusted tangible efficiency ratio was 51%, in line with expectations for this phase of the merger integration. We incurred $275 million of nonrecurring merger expense in the first quarter. On a combined basis, our nonmerger-related linked quarter growth was driven by higher employment expenses largely due to seasonally higher personnel costs. Also, on a combined basis, head count was down 2% sequentially. We realized the majority of our 2026 merger-related expense synergies in the first quarter.

Credit trends remained very healthy in the first quarter. Net charge-offs were in line with expectations at $49 million or 23 basis points. This compares to 25 basis points for the combined firm in the fourth quarter and 19 basis points for the combined firm in 2025. The nonperforming asset ratio was 0.58%, which was largely impacted by 2 senior housing relationships that were previously rated, have a specific reserve and should be resolved this year.

The allowance for credit losses ended the first quarter at 1.19% compared to 1.17% for legacy Pinnacle at the end of December. This increase in the reserve was driven by net loan growth, a deterioration in the economic forecast and an increase in individually analyzed loans. These factors were partially offset by a decline in qualitative reserves. For your reference, we have included slides in the appendix on our nondepository financial institution loan portfolio and the private credit exposure within this portfolio.

As you can see, Pinnacle's NDFI loan exposure is approximately $7.3 billion. In the first quarter, approximately $700 million of legacy Pinnacle music catalog loans that were previously classified as general C&I credits were reclassified as NDFI. Our common equity Tier 1 ratio ended the quarter at 9.8%.

Our intent remains to deploy capital generated through earnings to client growth as we proceed through 2026, while building CET1 to the low end of the range.

I will now hand it back to Kevin to review our 2026 financial outlook.

Thank you, Jamie. Pinnacle's differentiated revenue producer hiring model continues to be the engine of our growth, and it performs well through cycles. That's not a claim, it's a track record. The momentum we're building today through disciplined hiring and client consolidation is what drives our confidence in the path ahead.

Our 2026 outlook is unchanged from what we shared in January, and our first quarter results reinforce it. We expect period-end loan growth of 9% to 11%, excluding the purchase accounting loan mark versus combined balances at year-end 2025. We're on track with 3% organic period-end loan growth, excluding the purchase accounting loan mark in the first quarter. Importantly, our assumptions are not dependent on changes in line utilization rates or moderation in current paydown and payoff activity. Same model, same results, our bankers win clients, and these clients consolidate to Pinnacle.

Total deposits should grow 8% to 10% versus combined year-end 2025 balances. That growth will be driven by continued recruiting momentum, core commercial client deepening and the ongoing contribution from our specialty deposit verticals. Our adjusted revenue outlook remains $5 billion to $5.2 billion for the full year. The net interest margin is expected to be approximately 3.5% with the marginal benefits of near- to medium-term fixed rate asset repricing within the legacy Pinnacle portfolio generally offset by a methodical increase in our on-balance sheet liquidity position. Our net interest margin range assumes a forward rate path consistent with current market expectations.

The balance sheet remains approximately 1% asset sensitive to the front end of the curve and 1.5% asset sensitive to long-term rates. And our goal continues to be towards managing a relatively neutral posture for the foreseeable horizon. We continue to expect approximately $1.1 billion in adjusted noninterest revenue this year, driven by sustained execution in treasury management, capital markets and wealth management. This guidance also includes a projection for BHG investment income of approximately $105 million to $115 million for 2026. The slight headwind relative to our prior estimate is not a reflection of BHG's core performance. Rather, this is part of a strategic effort to further optimize their funding and delivery platforms, a decision which presents a modest near-term revenue recognition headwind, but which we believe best positions BHG to enhance long-term profitability and enterprise value.

We're managing for the right outcome, not just the next quarter. Our adjusted noninterest expense forecast remains in the range of $2.675 billion to $2.775 billion. We expect to realize approximately 40% or $100 million of our merger-related savings this year. Underlying tangible expense growth is driven by revenue producer hiring from the back half of 2025, continued 2026 recruiting, real estate build-out to support market expansion and normal inflationary items. We now estimate $400 million to $450 million of the $720 million in nonrecurring merger-related and LFI charges will be incurred this year, excluding merger-related equity acceleration cost.

We continue to operate in a constructive credit environment. Net charge-offs are expected to be in the range of 20 to 25 basis points for the full year, consistent with combined company performance in 2025. The fundamentals underpinning that outlook are sound, and we see nothing on the horizon that changes our view. Our focus for capital management for the rest of 2026 remains on managing our CET1 ratio towards our target of 10.25% while continuing to prioritize deployment for core client growth. As it relates to the most recent capital NPR, we estimate the proposal could have a 60 basis point positive impact to our CET1 ratio.

We continue to expect an adjusted effective tax rate of approximately 20% to 21% for the year.

In summary, Pinnacle is navigating this year from a position of strength. While some question the pace, complexity or disruption inherent in a merger of this size, the first quarter delivered exactly what we said it would and in a meaningful way. Top quartile revenue growth, expanding merger synergies and disciplined execution across every geography and specialty banking unit reinforce our conviction and what lies ahead. Integration is progressing. The team is performing and the model built over the past 25 years is precisely what this environment rewards.

We are only one quarter in ahead of pace and exceeding expectations, but make no mistake, this is just the opening act. The model works, the team is motivated and we're locked in on proving that this is built to last.

With that, operator, let's transition to the Q&A portion of today's call.

[Operator Instructions] Your first question is coming from John McDonald from Truth Securities.

Just wondering if you guys could drill down a bit into the outlook for loan and deposit growth. The things that you've seen so far this quarter that give you confidence in both? And maybe just a reminder, how much is driven by the seasoning of hires that have already been done and how much is coming from other factors?

John, it's a great question. As we've talked about the first quarter, I think, answered the question of whether the combined companies can continue to grow. And what gave me a great deal of confidence was the diversification across the geographies and the specialties and the momentum that we continue to see in our pipelines in all of those areas is what gives me a great deal of confidence in the trajectory that this is not just a 1 quarter or 2 quarter growth story. As you recall, the combined companies back in fourth quarter also grew double digits. .

We had about $4.2 billion in funded production this past quarter. As you saw in the deck, it was largely across all of our geographies and our specialty units. And so that gives me a great deal of comfort that it's not coming from one asset class or one area. We know that the bankers that we've hired in previous years continue to generate a lot of that growth. Also, we know that some of the hires that we made this year, the 50 that we talked about are already hitting the ground running. So, for me, the pipelines are robust. The combination of the benefits from previous hiring as well as the cross-selling opportunities that we have from introducing each of the organization's capabilities to the other client base. That's what gives me confidence.

And so you saw we maintain our guidance. Same thing on the deposit side. It's coming from the new hires. It's coming from some of our deposit specialties. And again, it's fairly broad-based. And that, again, gives us confidence that we reiterated the guidance for the year.

Great. And maybe just a follow-up on the deposits for Jamie. The core deposit growth was plus 6% and -- the total was plus 6%, the core was plus 8%. You mentioned a little bit of strategic reduction of brokered. Can you give us a little color on that? And do you see the core deposit growth kind of accelerating up a bit as you go through the year?

Yes, John. As we look into 2026, we do expect to see deposit growth to be more back-end loaded as we look to the seasonals and the growth, as Kevin mentioned, from the hires. The first quarter was very strong. I mean growing core deposits at $1.9 billion, pretty much in line with loan growth gives us a lot of flexibility. And so what do we do with that flexibility? We reduced our broker deposits. Basically, it's just a cost optimization play and wanted to reduce costs where we could.

Your next question is coming from Timur Braziler from UBS. .

First question is just any change in the go-to-market strategy on either side of the bank and just wondering what the reception has been early on from any changes made.

Yes, go-to-market strategy. As we've talked about, Timur, it's really moving to the Pinnacle model. And what that means is that we're adopting the rapid hiring of revenue producers. And I think what you can see this quarter is about 40% of the producers that were hired were hired in what I would consider the legacy Synovus footprint. And that is about a 50% increase over what we would have done in the same period last year. So the model of hiring has been rolled out and is actually being executed within that Synovus model, within the Synovus footprint.

The model that we're executing on the Pinnacle side has to do with autonomy, a decentralized framework that allows specialty bankers to support the local geographies that's been rolled out. Our bankers on the legacy Synovus side love it. It quite frankly, is what they were used to years ago within Synovus, so it wasn't a great deal of change. I would tell you that the engagement level with our frontline team members is very high. And I think you can see that with the results. This could have been a quarter where people were focused on distractions and talking about the merger and changes, but reality is everyone continue to serve their clients and generate the growth that we thought they could generate. And so I would say the model changed a little bit from the Synovus side, but it was well received, and it's already in the process of being well executed.

On the Pinnacle side, really no changes. We -- as I said, we've kept the incentive structure, we've kept the hiring model. We've kept the decentralized geographic framework. So there shouldn't be a lot of changes on that side.

Okay. Great. And then one on expenses, as my follow-up. We got the guide for this year. I'm just wondering, as we go out into next year, and we get the majority of the cost saves starting to hit, just how do those flow through? Are you expecting there to be net reduction of expenses as you get the majority of the cost saves? Or are we in growth mode where investment into the franchise is going to maybe eat into some of those, and it's still going to drive increased expenses maybe at a decelerated growth rate.

Yes, Timur, as we look at 2027, there are 2 components, and you hit them both. First is we will continue to operate in this model where we expect to be winning with recruiting, bringing bankers over. We expect that to continue. And so you should look at the historical kind of core NIE growth rate of legacy Pinnacle, and that's in line with how we're looking at longer term. And so for 2027, you could see that be in the high single digits. And then from there, you back out the synergies. And we said our target for 2027 is 75% of the overall synergies, so going from the 40% to the 75% will offset a portion of that core NIE spend, but just a portion of it.

Your next question is coming from John Pancari from Evercore.

On the -- on the loan front, I think your organic growth was pretty solid in the quarter against your 9% to 11% guide. Could you give us a little bit more detail in terms of what you're seeing in terms of credit spreads and new money loan yields? Are you seeing any competitive pressure there? And then also on the lending front, if you can give us a little bit more granularity what you're seeing in terms of loan demand and line utilization in the quarter, how that's faring?

John, I'll start with the end. We actually didn't see a lot of change in line utilization this quarter. It was actually down a little bit. But we did put on about $8.2 billion of commitments versus just $4.2 billion of funded loans. So I think you could see some fund-ups happen over the next several quarters based on this quarter's production, but the growth this quarter was not driven from line utilization increases. .

When we look at loan pricing this quarter, our yields came in right around $620 million on new loans. And I think that's within our expectations and essentially flat with kind of where the combined company's fourth quarter experience would have been. So I don't think there's any surprises. I've heard a lot on the deposit front as it relates to competition and hypercompetitive environment. We came in at $262 million roughly on production there. It was up about 6 basis points from last quarter when you combine the organization. That was really more just movement into the money market category.

So I think in general, when we analyze the competitive landscape, not only on loans but also on deposits, I think it's pretty rational. I think what's different is that a lot of folks expected some of these promotional rates to come down. And they haven't come down. They've remained fairly stable. But it's a competitive world we're living in, but we're not seeing anything that's irrational or anything that we can't compete with. And so we feel pretty good about where we are on a pricing standpoint, and there's nothing in that competitive data that would make us change our outlook on NIM or on growth.

Got it. All right. And then I appreciate the color on the competitive dynamics on both side to the balance sheet. Separately, on the broader growth strategy, and I certainly appreciate your commitment to the 9% to 11% loan growth and the 8% to 10% deposit growth and the whole growth strategy and the hiring behind it. In this backdrop, certainly some uncertainty out there, if the macro backdrop does weaken and you tighten standards on the credit front, what does that mean for your growth expectations? How do you expect that you could modify and adapt to the backdrop and still -- would you still be confident in these targets on the lending side?

John, that's the beauty of this model is that a lot of the growth that we're talking about is predicated on bankers bringing their books over. And so we put some slides out there in the past laying out the book of business that we expect to build just based on bankers that have already been hired. And that still exists. And you could say that on the Pinnacle side, there's $15 billion to $20 billion of growth embedded and people who are on the team today, and they will bring clients over, build their books to where they used to be, where we've seen all the rest of the bankers build their books. And that's not economic dependent.

And so sure, a stronger economy is a positive, stronger growth is a positive, being in the Southeast as a positive. But our growth is more predicated on that hiring than anything else. And in that number, the $15 million to $20 million, that doesn't include the prior Synovus hires, and that may be another $5 billion on top of that. And so -- we see a lot of growth just from bankers, bringing over books of business, building their books. And it's more about that than it is the general volatility of the economy.

And Jamie, just to add on to that, John, we do -- as you know, we look at all of our transaction activity, we analyze pipelines, but we also survey over 400 commercial clients every quarter. We also look at the actual cash inflows and outflows of 24 industry categories. And looking at that survey this quarter, as Jamie said, we don't rely on the underlying economic growth to drive it. But the bottom line is, I think we're operating in a great footprint. -- and our clients are remaining constructive even in this environment. Now not euphoric, but they're durable -- and I think they're adapting and finding efficiencies and they're leaning in a little bit. And so we saw that the overall sentiment of our client base hasn't really changed even with all these geopolitical risk and some of the uncertainty that's out there. So I think that gives us confidence that the economy at this point won't serve as a headwind.

Your next question is coming from the line of Ebraham Poonawala from Bank of America.

I just wanted to go back to sort of the net interest margin. When we think about the purchase accounting benefit and then the loan deposit growth dynamic, when you look at the first quarter growth that came on the balance sheet, is that around the same ballpark? I'm just trying to figure out what the resiliency of the 3.5%-ish margin is in a world where there's no big change in the interest rate backdrop. And maybe tied to that, Jamie, what's your sense of noninterest-bearing deposits as the mix of total changing from here? Do you see that going thing flat, going up or going down?

Yes, Ebrahim, it's a great question. As we look at growth, kind of circling back to the prior question, the growth in core deposits is a huge positive in the first quarter, tying that out with the with loan growth. As we look forward, we expect to see strong core deposit growth continuing relatively in line with loan growth a little bit behind. And that will help us out in the funding mix. But in the first quarter. Kevin mentioned loan production rate was 6.2%. On the deposit side, it was 2.62%. And so you think about that margin, it's about 3.6% and between loan yields and deposit costs of just the growth in the first quarter.

Now you can't use that and just say, okay, well, that's actually not accretive for the rest of the year if you continue to do that because there are other things that go into that, and you will see us do some actions as we go through the year for liquidity management, there will be a little bit of a headwind to the margin. So I think the right way to look at it longer term kind of when we get beyond 2026, as you think about the legacy Pinnacle margin, which was approximately 3.3%, just below premerger, that's probably a decent margin for future incremental growth. And if you use that as a proxy for incremental margin of growth beyond 2026, then what you see is slight -- very slight headwind to the margin in the out years. And so that's generally how I'm thinking about it.

For this year, we're saying a 350 margin for the full year 2026, coming off the 353 in the first quarter. I will just say that in the first quarter, there are a couple of positives that will not reoccur in the second quarter. And that's day count is a little positive and also our securities repositioning in the month of January was slightly positive to the margin. So a good baseline for Q1. Adjusted for those is in the 350 area. And basically, what we're saying is that's a good full year number as well. With regard to NIB, we do expect that to remain relatively stable at around 20% of deposits.

Got it. That is good color. And just one quick follow-up. I believe when we did the deal -- so you talked about a lot of growth coming from banker hiring. Are there opportunities given the larger balance sheet size to bring on wallet of existing relationships, which are on the balance sheet and where you could see a bit more loan growth beyond what's coming from the hiring? Like is that something we should be thinking about? Is that a real opportunity? .

Well, Ebrahm, I will start with some successes we had in the first quarter. We had 6 capital markets deals that totaled $10 million in revenue that basically they are lead arranger fees, investment banking advisory, I mean these are some of the benefits when you have more balance sheet, more clients you get more of this type of business. So that's fee revenue, it's not exactly what you're asking, but that's the type of business that has a $120 billion bank that we're going to see more and more of. And so we're really pleased to see that in the first quarter post close to hit the ground running with that. And yes, obviously, we can have bigger whole limits, things like that on the balance sheet. But in all aspects, we're just more relevant to the larger clients here in the Southeast.

And Ebrahim, you recall, we put $100 million to $130 million in revenue synergies, and one of the categories was relationship expansion. And a lot of that had to do with being able to offer the other client base, some of the services that the company would bring to the combined firm. This quarter, equipment finance, we were able to put up about $120 million guidance facilities in the legacy Synovus footprint coming from the Pinnacle Equipment Finance team.

On the dealer finance side, we have about $650 million in the pipeline coming from the legacy Synovus footprint, asset-based lending. We have about $200 million of new market deals that are in process. And then in capital markets, we were able to do $110 million in multicurrency syndications which we wouldn't have been able to do in legacy Pinnacle. So you're already starting to see, as Jamie mentioned, on fee income and lending, the fruits of bringing the companies together, but we're in the early innings there. And I think it's going to continue to drive growth. But that would obviously be embedded in our expectations for this year.

Your next question is coming from Casey Haire from Autonomous.

So I wanted to touch on the recruiting strategy. Very good momentum here at 87% or so year-to-date. I was wondering if there is upside to that 250 target for 2026. And then are you still getting the same economics on these hires, but just noticed the expense guide, while it's the same, it does imply a bit of a step up going forward versus flat.

Previously. Well, Casey, I don't want to bet against ourselves and up our targets today. But as I said, I feel really great about what we've been able to accomplish in the first quarter not just because of the numbers. But I think, as you know, many people were questioning whether we could continue to hire with a merger weighing on some of these decisions where bankers may be waiting, watching and taking a pause. So I think first quarter shows that the model itself is the attraction point and the merger has not changed that. .

Could we go over that number? Sure. I mean but we're still focused on where we are today. You saw the 50 that we've hired another 37 that have already accepted offers. I think 22 of those individuals are already in the bank and have started working here. And so I'm super excited about it. And as I mentioned in my earlier comment, the fact that when we look at some of our legacy Synovus leaders, they've already started to execute on the model, seeing a 50% increase there. So in terms of the economics, I think we go into this expecting similar economics. I can't tell you whether the 50 we hired to date are going to exceed or fall below that. But what we've been seeing in tracking gives me -- it gives me a great deal of confidence and no change into what those individuals will bring to the bank. And it goes back to what Jamie said earlier.

The model isn't just about hiring. We're not bringing over people using headhunters. We're recruiting people that have worked with other Pinnacle team members so that there is a great deal, a higher probability of success because we know what their work was at their previous institution. And so I think that you'll continue to see that growth. Jamie mentioned earlier, $15 billion to $20 billion of embedded growth on the Pinnacle side, let's say, another $5 million from the legacy Synovus hires. I'm incredibly bullish on our ability to continue to add. And what's interesting to me when I look at it across the geography, it came from every geography, and it came from every specialty. 28 geographic hires, 22 specialty hires. And so I think there's a lot of additional hires that will happen this year.

Great. And just switching to capital. Is there any -- just some updated thoughts on potential BHG monetization or making use of the Greystar JV with credit risk transfers to speed up the CET1 rebuild.

No update on the BHG side as far as a liquidity event. But I will say that we spend a lot of time with that team and -- we really do believe in their strategy going forward of remixing their distribution. We think that it will improve long-term profitability as well as improve enterprise value. So we appreciate that partnership.

On capital ratios, starting here at 983 on CET1, our intention is to build capital as we go through the year to get to the low end of that target range, get to the 1,025 area. There is a chance that we would use some sort of a CRT or SRT strategy to help with capital, but it would have to be the right situation and the right cost of capital. Right now, we're not really contemplating anything in that regard, but that is definitely a tool in the toolkit should we find the right fit at the right cost. So we'll continue to evaluate those options as we go through the year.

Your next question is coming from Michael Rose from Raymond James.

Maybe just to touch on the revenue synergy slide. Obviously, I understand that all the ranges provided were reiterated. But any sense on what could -- what areas we could see progress maybe a little bit sooner versus later in that 2- to 3-year dynamic? And then I guess just from the outside looking in, how do we get comfortable because it's always hard to see, I think, from the outside looking in that you're actually realizing those revenue synergies. So any sort of comfort there would be helpful. .

Thanks, Michael. I'm glad I brought it up because I think the context does matter here because we are only 1 quarter in, and we're still operating on 2 separate systems, which create some barriers to be able to offer the other organizations products. I think where you'll see the early wins are more concentrated in the accelerated RM hiring, which was one of the areas that we thought we would see early wins. And then the specialty cross-sell pollination that I mentioned earlier, whether that's equipment finance, asset-based lending, dealer finance, family office, those sort of things we can offer without being on the same platform. So still feel very comfortable with the $100 million to $130 million.

I think if you remember in one of the industry conferences we were at, we said we expected a modest, I think, $20 million in 2026, and what we're seeing in our pipelines and the opportunities there, I think we'll be able to achieve that within this year's numbers. And so we'll be very transparent as we get to those numbers, we'll share where they're coming from, and we'll go back and show you those relative to what our targets were so that you can see the pull-through, but I would just say one quarter in, we're still on 2 systems. The synergy story is coming to life. And I think when we put the combined toolkit in front of our bankers on one platform, these numbers will really begin to accelerate.

Okay. Very helpful. Appreciate that, Kevin. And then maybe just as my follow-up. Obviously, a really good start on the hiring front. It's been brought up a couple of times here. I think in these types of deals, though, we always worry about retention. And I think that was 1 of the key attributes of Pinnacle over a very long time period was just the high level of retention. Can you just talk to that there? Because obviously, it seems like the backdrop for hiring, everybody is hiring at this point and more so than they have in the past couple of years at least. So maybe you can just talk to some of the retention of lenders and associates and how that should trend moving forward?

Yes, Michael. Like internally, to your point, not only do we set the goals for hiring, we also set a retention goal for voluntary turnover at 7%. And that was the combined retention number of both organizations. And you could argue that's a fairly aggressive target given that we're going through a merger. And through the first 90 days of the year, we're right on that target. And yes, we've had a couple of folks leave the organization. A lot of them retired. I think of our producers that have left, almost 20% were due to retirement. And so I think we're ahead of the game there. As you know, once you pay out bonuses, you generally see a higher level of turnover. And so that percentage that we have to this point that's been annualized. We would expect it to continue to decline from here.

So I think others have said this merger would be a huge opportunity to poach Pinnacle team members that just hasn't happened. And I think, again, it has everything to do with the model and the fact that these team members are deeply engaged in our company, they are successful and they're not searching out another opportunity. And that's, I think, what's different from what you've seen from other mergers.

Your next question is coming from Jared Shaw from Barclays.

I guess, just sticking on the hiring question. Are you, at this point, looking to expand into any new geographies? Or is most of the hiring just getting more concentration in markets you're already in?

Jared, no new expansion markets at this point. If you recall, we recently expanded into the national capital region within the last 5 years. We continue to hire in that Maryland District of Columbia, Virginia market. It's continued to be a great growth engine for us that has expanded down into Richmond. We're making hires in Central Virginia, and that is a growth engine. I would tell you that this quarter, the state of Florida has been our best growth both in kind of the Northern, Central Florida as well as South Florida. I think that's a real opportunity because as we've shared in the past, even though we have a strong presence there, we believe we can add a lot of density in each of those markets.

And then more recently, we added a new -- Pinnacle data, a new market in mobile Alabama, and that's been a real growth engine for us. And so I would tell you, we will continue to focus on the 9 states in the District of Columbia that we're in today, and there is lots of opportunity within those. And the pipelines that we have today are largely focused on those markets.

Okay. And then just as a follow-up, I know the systems conversion is still a little ways out, but how are you -- I guess how are you looking at AI and maybe seeing how that could change your ultimate either tech spend or tech opportunity as you're moving towards this broader tech integration?

Well, look, number one, yes, we're still focused on March 2027. We know that, that conversion will be the first time that our clients will fill the impact of this merger. And so we're progressing on plan, and we're in a good place to be able to have all the systems conversion -- all the systems converted. We've decisioned over 250 technology platforms, and now we've gone through a built processes to be able to complement those technology decisions. So AI is something that we've been deploying for some time. I think we're kind of through the pilot phase. .

If you may recall, we rolled something out at Synovus several, I guess, a year ago that was called ChatPFP, which is kind of an internal policy forms and procedures platform. I think we've answered now 18,000 banker questions. And I think we've saved over 3,000 hours from the work that we've done there. We also have 13 portfolio initiatives that are in flight. And I would tell you that our AI focus is around 3 things: banker and team member productivity, where we can use it to not replace team members, but to make them more effective at doing their job.

Number two, credit intelligence, where we can use it to really reduce the time that it takes from client application to closing. And then third, leveraging the capabilities with our business partners so that we can use the technology, the AI technology that they're deploying. We will leverage some of the AI tools as we do conversion. We've used it on process reengineering. We'll use it on some of the coding that we have to do. And so it is fully embedded in our culture today. And we're rolling out lots of tools across the organization to help all of our bankers be more effective.

Your next question is coming from Anthony Elian from JPMorgan.

A follow-up on capital. I know you have the buyback authorization in place, but Jamie, the expectation to get to the low end of the 1,025 CET1 target before you begin or contemplate any amount of buybacks.

Tony, that's our plan. And so when you think about our capital accretion, it remains similar to what we discussed last quarter. The capital waterfall in today's earnings deck is a pretty good illustration of that. So we have 38 basis points of capital generated in the first quarter from earnings, and then we deployed 8 basis points of that to our common dividends. And when you look at the remaining 30 basis points, that is what gets either delivered to clients or is either used for -- to grow capital ratios or to be deployed to something like share repurchases.

And in the first quarter, we deployed 24 basis points to clients. Now that was a little bit higher than what we said in January when we said that we would expect to deploy about 20 basis points, but truthfully, that resulted from the growth in commitments more than the growth in loans. And so as we look forward, I think that's a healthy way to look at capital accretion each quarter. We still think that there are many scenarios where capital -- where RWA growth consumes about 20 basis points, but you could see quarters like this quarter where it's a little bit higher than 20.

Okay. And then on Slide 27 in the appendix, what drove the decline in the total loan mark to $675 million and the year 1 purchase accounting now expected at $90 million, which I think is at the low end of the previous range. .

Yes, Tony, that's largely driven by rates. There's a little bit of a shift in the valuation due to kind of where the marks came out by loan product. And so that was really just a rate story. But what I'll say on the PAA and amortization going forward, 70% of that is in residential mortgages. And so you look at those residential mortgages, the average rate is around 4.25%, the average underlying loan rate, and we're assuming about a 7% prepay rate on those mortgages. So the volatility around PAA amortization should be relatively light. And so -- unless rates decline significantly. And so that's generally how you should think about the PAA amortization from year-end evaluation.

Your next question is coming from Stephen Scouten from Piper Sandler.

I wanted to go back to BHG really quickly. I think, Kevin, you mentioned some of the change in guide was relative to adapting funding mechanisms. I'm just curious, looking at the slide, it looks like originations were up year-over-year. Could that revenue be a little bit more episodic around securitizations? Or kind of how should we think about the cadence of BHG and kind of what that looks like longer term? .

The BHG outlook remains strong. As I mentioned earlier, it's a great partnership. I mean the team down there just continues to dominate in consumer lending. And we're pretty pleased with everything they're doing. When you look at the production in 2026, I mean, there's a strong increase from 2025. The real change is the distribution. And the way to think about that from our perspective is that the price received on the loans of bank partnerships is just simply a lot higher than the price received on securitization or whole loan sales. And so the reason you would choose the lower price, though, is because you don't have any ongoing costs to voluntary repurchases, things like that. And so we think the right strategy is to take the lower premium today by selling more into securitizations and loan sales to asset managers, and improve long-term profitability. But it also should improve enterprise value.

And the reason for that is it gives people more certainty into that forward earnings profile when it's just based on the production and the price of production of the loan sales. And so we're really pleased with the strategy. We look forward to seeing it play out, but it will result in lower fee revenue for us in 2026, but it's the right long-term move.

Got it. Great color there. And then just one other piggyback on all the hiring questions. I know you said mobile a newer market. How long do you think today the existing footprint can kind of drive this level of growth? And if you had to expand markets, is it fair to think of you guys moving west slightly with all the dislocation that's occurred in those markets? .

For me, Steve, for the foreseeable future, there's so much opportunity. When we look at the market share data and you look at the Greenwich data, I mean, look, we haven't talked about that today, but for legacy Pinnacle to be #1 in the country and the Net Promoter Score and legacy Synovus to be #6 in the country, it shows you we have 2 strong organizations coming together, creating a loyal client base. When we look at the data in the markets we serve today, the only thing that people are hired than Pinnacle on is market share. And the market share that some of these bigger banks have, they're also those same banks that have very low Net Promoter Scores. And so our opportunity to hire in the existing markets and to take share from those bigger institutions is right in front of us, and we're doing it every day. So that's going to fuel the growth.

As it relates to expanding into new markets, what I think we've proven out is it's less about choosing a market and trying to then go and find talent. What we've done is we find the talent regardless of where the market is. If you get the right leader, that person will be able to bring over the right team, and we'll be able to grow by rolling out that Pinnacle model.

Your next question is coming from Bernard Von Gizycki from Deutsche Bank.

Just on credit, the allowance for credit losses during the quarter. Just I wanted to see if you could unpack a few of the things, the deterioration economic forecast, the increase in the individually analyzed loans and just the decline in the qualitative reserves that you show on Slide 34 of the deck. Could you just unpack the drivers a little bit here for us?

Yes, it's a great question. I mean when you look at the economic impact, a couple of things were happening there. One, we obviously use the updated forecast from Moody's. But as you can see in the appendix, we also adjusted the weightings of the scenarios. And the reason we did that was because of the economic uncertainty, everything that's going on in the world. We just wanted to put a little heavier weighting on slow growth and basically just acknowledge what's going on out there. And that drove the change in the economic outlook. And then what was the rest of your question?

Qualitative.

The qualitative -- the qualitative reserves, obviously, we have those in there. each quarter, it's a fairly significant amount of the allowance. Those ebb and flow based on the differences or how we see the outlook of individual portfolios. That came down this quarter based on us just seeing a little bit reduced risk in some of those portfolios that we had allocated. We had it in multifamily and a few others. And our outlook has improved on those areas, and we reduced the qualitative accordingly.

Great. And just my follow-up. In case I missed this, just there's no change in the full year guide of the 1.1 to 1.15 of the adjusted fee income, despite the reductions in BHG, like you mentioned, from optimizing their funding. Just what areas helped offset this? I mean, Jamie, you mentioned some of the capital markets deals. I'm thinking something from there. Just any thoughts on what the offsets were?

Yes. When you look at the rest of the year, first, I'll kind of get the starting point on the first quarter. You had core banking fees up 11%, wealth up 14%, capital Markets more than doubled when you look at year-over-year comparison. So we have great momentum to start the year. And as we look forward, we really expect to see that continue. So embedded in that guidance is mid- to upper single-digit growth in each of those categories. We expect that in core banking fees and wealth and in capital markets. And then that will be offset partially by that reduction in BHG revenue.

Your next question is coming from Catherine Mealor from KBW.

It was nice to see the average earning assets ahead of expectations. Can you give any update to how you're thinking about the building cash and securities as we move through the year? .

Yes, Catherine, in the first quarter, you saw us grow the securities portfolio by about $750 million. And you should expect to see us continue growing the securities portfolio as we go through the year. and we could end the year up $1.5 billion to $2 billion. Longer term, I would expect to see the securities portfolio grow to 19%, 20% of assets over time, and you'll just continue to see us build towards those levels.

Okay. Great. And then maybe one follow-up on just the reserve question. You gave your net charge-off guidance of 20 to 25 basis points. As we think about the reserve, do you view that as more stable bias upward or bias lower just as you kind of sit here at our -- at the current reserve and how you're thinking forward about the credit risk.

A lot of that depends on the economic outlook. And as we just discussed, we increased the weighting to slower growth. And if the economic outlook improves, well, that would be a tailwind to reducing the allowance. But we believe outside of that, we expect it to be relatively stable. And you didn't ask the question, but as I think about it, in provision expense, you should continue to see what you saw this quarter outside of the change in the ratio, you should expect to see a provision about $20 million higher than charge-offs just due to strong loan growth and providing for that loan growth.

Your next question is coming from David Chiaverini from Jefferies.

So overall growth was stronger than expected in the first quarter. You previously mentioned earlier this year that the first half might be slower than the second half. Is it fair to say that growth could be more consistent through the year than originally expected?

Well, there are seasonal in the second half of the year that we would expect to play out. And so we view the first quarter as being ahead of schedule. And so it's a strong quarter for us with regards to growth in both loans and core deposits. And so we're going to strive to maintain that momentum, but this is definitely being ahead of schedule.

Great. And then back on to capital. Can you talk about the Basel III end game and the impact that could have on your capital ratios? And how you might deploy any incremental capital that may result that?

Yes. That's the question of the day from my perspective, strategically, the proposed rules can really work to our advantage. The impact of AOCI inclusion is fairly immaterial to us at these rate levels, but the changes in risk weightings further enhance the attractiveness of our core client business, C&I lending and commercial real estate lending relationships. So we feel that we are very well positioned for this, both in our go-to-market strategy and our balance sheet management. Of the estimated 60 basis points benefit in the risk-weighting asset changes, about 35 to 40 basis points comes from commercial lending and about between 10 to 15 basis points comes from residential mortgages. So we await the finalization of these -- of the rules.

We look forward to getting through the comment period and implementing in the new regime because we think it will just really only enhance what we do and how we serve our clients. But your question on the incremental capital, we're not going to make any decisions today based on this until we get to the final rules and the rules implemented, but it's definitely going to -- it definitely looks like it's going to be a positive to our capital ratios.

Your next question is coming from Gary Tenner from D.A. Davidson.

I had clarifying question about the NIM roll forward in the deck. It included securities mark benefit of 7 or 8 basis points. I'm just curious how that -- it was 9 basis points. But with the bond repositioning in the first quarter, I'm surprised that it was reflected quite that way. So could you talk about that item versus kind of ongoing securities yield and in the wake of the repositioning?

Yes, that was going to come through one way or another. By doing the repositioning, it came through in NII instead of PAA. And so that's really basically at close, we marked that book to market, the securities portfolio. And so that's really just a placement on the income statement difference between the two. And I think that's a testament to the permanence of PAA when it's rate driven. I mean basically, with loans and securities, you can make that PAA go away and turn it in NII by executing a market trade. And so we feel really good about the future of NII from the marking of the Synovus balance sheet. And I think that, that just kind of shows the longevity of it. But really one way or another, that was going to be in the margin in the first quarter, but the trades just made it traditional NII.

Okay. So that was just the margin benefit, not necessarily the accretion. Can you give us, Jamie, just what the kind of net accretion benefit was in the quarter overall?

Yes. The way to think about that is -- so securities accretion, PAA accretion would have been $25 million a quarter is kind of a good number. If you look at loan accretion, it's about $20 million a quarter. And that's, again, as I mentioned earlier, that 70% of that is coming from residential mortgages. And so that's the general accretion that's in the margin each quarter.

Your next question is coming from Chris Marinac from Brean Capital Research.

Can you talk about the NDFI business line in terms of is there an upper bound to where you want that to go over time? And I appreciate the disclosure you gave on NDFI to?

Chris, you saw it on Slide 37, it's 9% or $7 billion. And I think what's important, you see the headlines, only about $1.7 billion in private credit, less than 2%. And look, just think about the backdrop, I know the media investors are painting this picture of all NDFI exposure being the same. And I just don't believe that to be accurate. And it's not how we manage the book. Where we do have exposure there -- our protection is structural. We said on the very top of the capital structure, senior secured first lien loans. And we largely have effective advance rates when you factor in the liquidity and the eligibility buffers of around 50%. So we are well structured there.

The biggest part of that book for us is our structured lending division, which is about $3.4 billion. And so we've been operating that for the last 7 years, and that group has not produced a single charge-off and hasn't had an NPA since 2019. So I think they execute with a great deal of credit and operational discipline. So I don't believe that there's an upper bounds. We believe that each loan that we're bringing on today is well structured, secured and performing well. like any asset class once you start getting a 10% or larger, I think you have to start thinking about whether you have concentration risk, and so we would look at that. But the great thing about this book, as you heard, Jamie, even the catalog music business, these loans, although they are contained in one bucket, they're very different, and they're very granular.

And so I would hate to set a target for something based on an asset category that, quite frankly, has different underlying structural components that are not homogeneous in nature, and hence, likely are not likely to perform similarly through different economic scenarios.

No, that makes sense. And then the reserve assigned to these is just part of the general C&I bucket, correct?

That's correct. .

Your next question is coming from Robert Rutschow from Wells Fargo.

I guess, first, do you expect to have a Visa gain, and would there be any impact to capital from that?

No. No, we do not.

Okay. And then second, if I could just follow up on the retention question. Do you think you'll provide that retention number going forward? And is there a period where you might expect sort of elevated churn in the legacy Synovus employee base over the next, say, 12 to 18 months?

Look, we are a transparent organization. We'll be happy to provide that data. The real answer to that is this last quarter. If you have folks that don't want to be part of the new company, the first quarter is the period in which they would have self-selected based on the fact that bonuses are paid, and generally, that's when recruiting picks up. So I would tell you the kind of the worst is behind us and the fact that we're on track tells me that it should only get better from here, but we will be extremely transparent on that. .

This concludes our question-and-answer session. I'd now like to turn the conference back over to Kevin Blair for any closing remarks.

Thank you, Matthew, and thank you all for your thoughtful questions and for your continued investment in what we are building here. I think one quarter in as a combined company, the results speak for themselves. Loan growth, deposit growth, margin expansion, recruiting momentum and a culture that just didn't survive the merger, it's strengthening and scaling. That doesn't happen by accident. It happens because of the model, the people and the strong commitment from leadership to doing the right thing. .

And doing things the right way matters. While some of our industry peers go through mergers and they've leaned in on things like elevated promotional deposit rates as a big client retention tool, that's not how we operate. Our retention strategy has one solid foundation, and that's talent. The best bankers attract the best clients, the best clients stay. It's that simple, and it works. People are what makes the difference.

What the first quarter tells me is that we didn't merge into mediocrity. The Pinnacle model is fully intact. We're actively expanding. We're producing exactly the results it was built to produce. What particularly energizes me, as I said earlier, is the speed at which our Synovus leaders have embraced and applied the Pinnacle hiring model, up 50% year-over-year. As excited as I am about the progress we've made, we're not perfect. There have been moments in this integration where we've moved too fast. We've had to course correct or we didn't have the immediate answer. That will continue, and undertaking of this size doesn't come without its share of bumps, and I wouldn't suggest otherwise. But I'd tell you this, the wins have greatly and consistently outweighed the misses, and we learn from every one of them.

One quarter will not define us, but it will set a standard that we intend to exceed, and we're not done proving it. Culture is what I think about every single day because results follow it, not the other way around. And the culture is holding. The recruiting momentum, the systems conversion ahead, the revenue synergies being locked in and the client relationships deepening across our 9 states, those are the chapters that are still to be written. We have shown that this model can do what it does and do it well. The best of what this firm has to offer is still in front of us.

Before I close, I want to speak directly to our team members because no number in this presentation, no metric we reported today happens without you. Many of you didn't ask for this merger. Many of you had real concerns about your role, your market, your clients and your future. Those concerns are valid, and I never want to minimize them. Change of this magnitude is hard, and you faced it head on. You showed up, you served your clients without missing a beat. You welcome new team members you've never met, and you made them felt like they belong. That kind of character cannot be manufactured, it cannot be taken for granted. Your efforts, your passion, your dedication is exactly why I have no doubt about where this firm is headed. You're the reason it works, and I'm deeply grateful.

I also want to recognize Jennifer Demba, our Director of Investor Relations, who will be retiring in June. Jennifer, over the past 3 years, you've been an extraordinary partner, elevating our investor relationships, and leading the function better than you found it. Your impact from this organization will be felt long after June. Thank you, and we wish you nothing but success in this well-deserved next chapter of your life.

As we wrap up today's call, I'll end where we started. We entered 2026 with a promise to deliver for our shareholders, our clients and our communities and, most importantly, our team. One quarter end, we've delivered. We did exactly what we said we would do. And this is just the opening act. The model has proven, the team is unified, and we are locked in on executing every promise we have made. We look forward to seeing many of you at upcoming conferences. And with that, Matthew, we can conclude today's call.

Certainly. Thank you for joining us today. That concludes the Pinnacle Financial Partners first quarter 2026 earnings call. Have a good day.

Get started. So we have obviously saved the best for the last. And so -- for my last bank fireside of the conference, we have with us Pinnacle Financial from Pinnacle, I'm delighted to welcome Kevin Blair, President and CEO; and Jamie Gregory, Chief Financial Officer. So thank you both for being here.

Thank you.

And obviously, I mean, I think everything about Pinnacle over the last 6 to 9 months has been the merger announcement, getting the merger closed and just how investors have digested what the transaction means.

But maybe, Kevin, just like you spent a lot of time talking to Pinnacle employees being in town halls. And I think the 1 thing that you hear, I hear often is, can they keep the Pinnacle model intact when we think about growth outlook, like can these cultures come together? Just talk to us what the messaging has been, what the feedback has been?

Yes. It's an interesting where -- place to start, and we released a press release this morning that talked about the Greenwich awards. So 50 Greenwich awards for the combined organization, 32 for legacy Pinnacle, 18 for legacy Synovus, which puts us at #1 and #6 in the country for client satisfaction. And so I think when people talk about running the Pinnacle model and 2 cultures coming together, we're obviously different in ways. But I would submit to you that we're way more similar than we are different.

If you look at our competitive positioning, both companies talk about creating a great place to work, i.e., team member engagement. Pinnacle has a 93% team member engagement, legacy Synovus and 89%. Both places rate very high on Glassdoor amongst regional banks, Synovus #1, Pinnacle #2. And then we talk about client satisfaction, client loyalty, Net Promoter Scores. I think Greenwich is a great example just out this morning, where you get a full year of results where we rank 1 and 6, #1 when you aggregate it, in a year where we've announced a merger.

So there is uncertainty. There are team members wondering what's going to change. So I would submit to you, Ebrahim, that our companies are way more, similar than they are dissimilar. And we've spent those 6 months talking about those similarities.

Now I think everyone buys into that. So what we've really spent our time on are the areas where we're different. And when I talk with the Pinnacle legacy team members, what they would say is that they want to maintain this Pinnacle model.

Pinnacle model, so for everyone, just to break it down in the layman terms, is a geographically based model that allows for local decision-making, there's an incentive plan structure that's based on everyone getting paid based on the company attaining its top line revenue and EPS targets. So there's no individual incentive plans.

They're very adamant that they want to maintain that. And we committed in this merger to maintain it. Our team members on the Synovus side, wanted to understand what that meant. It was very clear to us that they embrace the geographic model, Synovus for many years was geographically based. The question for us was not that local autonomy and the war on bureaucracy that Pinnacle builds its model upon. Our team loves that.

It was getting them comfortable with the incentive plan, which was much more of a incentive plan that is based on company performance versus individual. And when we sat down with our bankers in the fourth quarter and calibrated their compensation to the new incentive plan, they realized that, that compensation would be calibrated to having more money in base pay, less money at risk. But knowing if they had an exceptional year, there was upside for their compensation.

And so getting through those discussions, I think we -- it was kind of the final stage of having both sides acknowledge that we're keeping the things that both sides want. We're scaling the things that made both sides successful, but we're -- the things that we're changing are the things that I think our bankers generally will like.

And included on the Pinnacle side, 1 of the things that they wanted was some enhanced technology and capabilities. And I think that's where Synovus has some things we'll bring to the table that will enable their team members to have a better tool set to be able to serve their clients.

So look, we spent a lot of time on the culture and meshing our 2 companies, and I would give ourselves an A+ in sitting here today in doing that. And that's not just my feeling, but when you look at the fact that we've been able to continue to hire new team members and we haven't had any increase in attrition. It tells me that the data supports that assessment.

And you mentioned the incentive structure. Just remind us, is the plan to have all bankers on the same sort of incentive structure. So the Synovus Bank would also...

Ansolutely.

How long will it take to sort of fully get there?

Well, we're there. So we spent the fourth quarter getting everybody calibrated and there are new compensation plans were given to them in the fourth quarter. So as they entered 2026, they already knew what their new incentive structure would look like. We rolled out our internal plans that shows their internal team members what the EPS target will be for the year and what the revenue target will be for the year.

The 1 thing that Jamie can talk about on cost synergies we didn't know Ebrahim when we would actually close this deal. 160 days from announcement to closing, it was a great outcome, but that happened on January 1. And when we built in the model math, we didn't assume that we would move to the entire Pinnacle incentive plan in 2026.

And what do I mean by that? Part of the Pinnacle incentive plan is that every team member in our company will now receive equity every year, every team member, all 8,500.

Number 2, every team member in our company will be on an incentive plan that is -- those individuals will be rewarded if we achieve our EPS and revenue target. That translated into an incremental $30 million of expense accelerating into '26 and we had planned it for '27 where now Jamie came out and said, "Look, we're still committed to our cost synergies just know that in '26, it's only going to be 40% versus 50% because we accelerated some of those dissynergies."

And we felt like that was important because what Pinnacle has proven is when you can get your entire 8,500 team member base in the boat, rowing in the same direction, focused on the things that they can contribute to help the company achieve those goals, it's powerful.

So you can imagine when I had the privilege of announcing to all of our legacy Synovus team members that they were going to receive equity and that everybody was on a bonus plan, that was a substantial uplift in morale for our team. So we entered the year thinking about the Synovus folks having to move over to this model, and most of them are related because they've just been given an opportunity monetarily that's significant.

So I want to come up -- come back to the business. But Jamie, since the deal closed on Jan 1, and I think just the history of sort of putting mergers together, from again, from outside-in, looking for investors, folks in my seat. There's always some nervousness around how these balance sheets are going to come together, the interest rate marks, et cetera. Just give us a sense of, obviously, you gave us an update with results last month. Just how smooth has that process been? Where were differences relative to when you announced the deal, like what we should be sort of thinking about as we get closer to first quarter results.

Yes. Thanks, Ebrahim. As we think about the merger math and the PAA and the marks on the balance sheet, obviously, securities was easy. We did that at the beginning of the year, and we can talk about the restructuring that we did right after that as well. But nothing has really changed on the loan marks outside of the rate environment is lower.

If you look at where rates were in the belly of the curve, we announced the deal to year-end, it's about a 25, 30 basis point drop. Now our loan yields are down maybe -- or I would say, fixed rate asset yields are down maybe 15 to 20 basis points. We haven't finalized all the valuation on the loan side yet. We're still working through that.

But everything is consistent with what we laid out in our earnings deck. And what you saw there is the valuation, the price is a little bit higher than what we originally said because those rates were a little bit lower. So you get a little less PAA. There was 1 nuance in kind of our estimate as of the earnings deck is that the unrealized loss or the mark in the securities -- in the loan book has shifted more to mortgages, and so they're a little bit longer duration.

And so if you look at the PAA change from what we said at announcement to what we said in January, some of that's rate and some of it is a shift in kind of where we're seeing the mark on the loan book. But everything is consistent with what we said at earnings. But it's proceeding, we feel good about it. That's all embedded in our guidance. It's what -- nothing really changed as we kind of work through this.

Got it. I think the other thing, that's been sort of a point of discussion been around just the time line for systems conversion, which obviously falls into 2027. Just maybe help us understand, Kevin, what cannot be achieved between now and then that will be easier to do post conversion? Or does it not -- is not a major factor.

So 1 of the questions, Ebrahim, that we receive when you compare our transaction to some of the others that are out there is that our conversion window is a little longer, and that was intentional. Number one, we wanted to make sure that as we brought both companies together, I want to get rid of this MOE concept, merger of equals, because that's talking about us internally. We call it an MOC, it's a merger of clients, right? It's not a merger of equals.

And when you think about putting your clients in the center of the room, stop worrying about how fast you can get systems conversions done so that Jamie can get cost savings, you start thinking about what's best for our clients. And so what we said is we're going to start by doing an assessment of both companies, technology, products, capabilities. And based on that assessment, we were going to choose which system and solutions that we would offer post conversion, that's different than other banks because we -- from day 1 said we were going to be going to our core platform with FIS.

Most banks want you choose the core or just going to choose those platforms that are already hardwired into the core are already API-ed in. But we didn't do that. We went through and did an assessment. That assessment will actually not conclude fully until March because we want to make sure that we understand what our clients like about the solutions, what are the gaps.

Now when we've made selections and we've already decisioned 222 of the technology selections, we haven't gone public with that because we're in the process of negotiating with those vendors. And if we told you who they were, we would lose a little bit of leverage. So we haven't done that.

But what we've also done is if we're moving to 1 platform and we look at the other platform, and it had 2 capabilities that the new platform doesn't have. We're using this 14-month window to ensure that when our clients migrate to the new platform, those capabilities will be there because the last thing we want to happen is to sell to our clients how scale matters and you're going to get better solutions and better capabilities in the day 1 when they log in, they're like, where is my ABC functionality.

So we've identified some of those gaps and will ensure that the target state that we're moving to has most of those capabilities. There may be 1 or 2 that doesn't make it, so that's number one.

Number two, our biggest conversion are with our complex commercial clients because these individuals have fully integrated their payables, their receivables, their ERPs, everything is integrated into the commercial platform. Between now and conversion in March of '27, our more complex clients will take the opportunity to go ahead and move them over and take our time in doing sort of a full concierge white glove service migration because there's nothing preventing us from doing that, so much so, what we've said is that as we onboard new clients, if they're not destined to go on the in-state platform, we'll go ahead and onboard them on the end-state platform.

And we've set up an internal workforce that will allow us to service that client even though they would have been under the other platform previously.

So we've done a lot of things that will allow us in the interim to onboard new clients on the end state. We're building an end-state platform that I think will meet and exceed people's expectations. We're trying to ensure that when we do a conversion, that's white glove, lots of training, both for bankers and for clients before we migrate.

And then I would just say, lastly, any system that's not hardwired into FIS will convert beforehand, things like our mortgage platform or things that aren't necessarily tied to the to the core platform. So we'll get all of that done.

That will get us to CD 1. And then we talk about -- that's integration, then we talk about optimization. So now that we have the new systems, how do we optimize to make sure the other side is using the capabilities, and then we get to the third phase, which is progression.

And 1 of the things that we want to do, as we call scaling with the soul is put out our 3-year road map for our bankers to see here are the capabilities that are going to come online over the next 3 years that our size and our scale enables us to invest in to show them that this will create new solutions and new sources of revenue for our company and ultimately, new services to provide their clients. And so that's kind of the road map and how we're thinking about it.

Got it. Excellent. I guess maybe just thinking about the near-term outlook on the '26, I think your loan growth guidance, 9% to 11% growth. I think a big part of like how investors and the Street is measuring this is, can we keep the growth momentum going?

So are there sort of disclaimers to that loan growth, whether it's back half heavy versus 1Q? Or we often tend to think about distractions when mergers are closing that derail some of the organic growth momentum. So how should we think about the 9% to 11%? And what gets you to 11% versus 9%

I'll start, and Jamie, please add in. I actually think there's obviously a natural ramp for loan growth as we go throughout the year. Just when you look at what the growth is predicated upon is from adding bankers. Most of the growth, 99% of the growth that will come in 2026 is based on bankers we've already hired. So I don't want you to think that we've built in our plan, hiring a bunch of bankers in '27, hoping that, that generates growth. As you know, there's a lag effect here.

But as we brought on bankers in '26, as they get more familiar with the systems as they continue to bring over relationships from their prior bank that's going to continue to generate loan growth. But what gives us confidence in that 9% to 11% is solely when you look at what we delivered in the fourth quarter.

The combined company delivered 10% loan and deposit growth. And when you look at the loan side of it, that was Pinnacle, legacy Pinnacle delivering 12% and legacy Synovus delivering 8%. And I think that's been 1 of the questions, Ebrahim, is that Pinnacle over a long period of time has proven they can generate double-digit loan growth predicated on hiring those bankers.

Synovus has run a little lower. And I think our long-term average is 4% to 5% But in the fourth quarter, we generated 8% annualized growth. And that was with commercial real estate down 5%. So it really comes down to the momentum that the legacy Synovus franchise had built. It comes down to what Pinnacle has continued to do over the last 25 years, which is generating growth from new hires.

And so Synovus, our production in the fourth quarter was up 117% versus the same period last year, fourth quarter. It was actually up 50% third quarter to fourth quarter. So that flywheel, that level of production from our bankers, having pipelines in that similar range entering the first quarter of 2026 gives us great confidence, as we've talked about in the past, some of the puts and takes on loan growth has been elevated payoff and pay down activities.

Well, that's just kind of a core run rate now. It's normalized. I mean it's higher for CRE, but we've gotten that in our run rate. It's where it is. We're not anticipating a bunch of line utilization increases. But what we know is that as interest rates decline, line utilization generally ticks up. So for many reasons, I think that gives us confidence that the loan growth will build throughout the year, but it's not like we're entering first quarter with a lack of momentum. I think you're going to see good loan growth in the first quarter.

And then Jamie, I don't know if you want to talk about the puts and takes on high end, low end?

Yes. I mean, first, as Kevin said, a sustained performance. When we think about how do we get to the high end of loan growth, I mean, a lot of it can come down to CRE. We believe that we have a lot of opportunities in commercial real estate. We think that 2026 could be a good year there, pivot and you haven't seen a ton of growth in that historically. And so that could be a good inflection.

Line utilization could be go either way on you, but that could be a tailwind to 2026 as well. And we continue to see strength in our specialty businesses, our specialty teams are firing on all cylinders. Those are some of our highest ROE businesses. So it's really accretive to the shareholder. We feel really good about those as well.

And I think to Jamie's point, Ebrahim, when you look at what both sides brings to the table, the equipment finance arm at Pinnacle, our team is super excited to have in-house equipment finance sales force and they've already hit the ground running. So when you build out the other question that we've gotten today is just revenue synergies and when we showed our slide for revenue synergies of $100 million to $130 million over the next 3 years, we did it based on an analysis that went through our both books, and we made certain assumptions, like if 1 group is producing $10 in derivatives for every $100 in production and 1 group is doing $5, you would say, over time, we can get both groups at $10, but that takes time. It's human behavior.

It requires that, but there are certain things that we looked at, even though in 2026, and we said this earlier, that the amount of revenue synergies we built in our guidance was minuscule less than half of 1%. So very small. But there are certain things that are turnkey and some of those things are on the lending side, equipment finance is being -- is a great example. Some of our specialty areas where we get a new footprint to be able to call in those specialty areas.

Those sort of things will generate loan growth pretty quickly. And then lastly, I do believe I said that our growth this year is not predicated on new hires. But some of the people that I've talked with and that we recruited and that have already signed up this year, I think those guys are going to hit the ground running, and it's going to generate loan growth.

And I know when Jamie and I sat down in we built the budget with Harold and Terry, we didn't make a big assumption that this year's hires would make a lot of movement on the balance sheet. And I think getting people earlier in the year will allow us to generate some loan growth. And again, that's where it starts to ramp up.

That's good. I guess the other side of it, is intense deposit pricing landscape, right, it's always competitive and Southeast more so than most of the parts of the country. Just talk to us in terms of your confidence level in getting deposits and deposits -- like core deposits at a certain price point to sort of be consistent with your margin outlook, NII growth?

You want me to start?

Sure.

Well, look, again, I go back to, our deposit growth is going to be built off bringing in new bankers that are bringing over relationships. And when you have those bankers that are generating growth not by trying to squeeze more juice out of the orange but actually bringing over new relationships, it gives you a balanced growth profile because you're bringing over their loans.

And in many cases, when you bring over a client, sometimes deposits will come first. The loan may have a prepayment penalty. They may be locked in and they don't want to refinance. And so generally, the easier thing to move is the deposits in the treasury first and a loan may come thereafter.

So because a lot of our growth comes from those bankers bringing in relationships, as long as we're hiring the bankers and they're being successful, you get the deposit growth with it.

Number 2 is we have a lot of deposit specialties. And I know both sides had spent A lot of both sides had spent a lot of resources and energy in the last couple of years, ensuring that we continue to invest in those to generate just deposits from a vertical standpoint. And those have to continue to deliver. We get excited on the legacy Synovus side to bring over the HOA business that Pinnacle has. We didn't have that product. And imagine in some of our markets in Florida and other places, there's a fruitful market to be able to sell that.

And then the third thing for me in deposits, and Jamie talks about this a lot internally, we can turn on the spigot for deposits. To your point, at what cost. And so we have capabilities to add deposits and so we'll have balanced growth. Our goal is to have somewhat correlated growth with our business side so that you can manage not only the deposit growth, but actually the NIM that comes with it.

And generally, I think as we think about the outlook for the margin, just talk to us, rate cuts, how meaningful are those? Or do you think otherwise is the franchise at a steady-state level that you would consider normalized for this balance sheet that you have?

Yes. First, our philosophy on managing interest rate risk has not changed. I mean, we still will target neutrality to the front end of the curve, and will allow a little bit of asset sensitivity to the belly of the curve. And that's kind of where we are right now.

I would say we are about 1% asset sensitive to the front end and about 1.5% to the belly of the curve. Over time, I would expect for us to neutralize the front-end exposure, but we're working through beta assumptions, et cetera, and modeling right now to make sure, dialed in on what that looks like.

So rate cuts are not particularly impactful to us. There will be a little bit of a headwind. There's a little bit of the lead lag impact that we've discussed in the past with loans repricing before deposits. Our assumptions, our guidance had 2 rate cuts this year. And I know with this morning's report, maybe if you shift those back a little bit, timing is less important to the full year guide than how many there are in the course of the year. But just a little bit asset sensitive at the moment, and that's something that we're constantly kind of reviewing and working on.

On the expense front, so obviously, there's a lot of focus on the expense synergies tied to the transaction. But just when we think about even BAU for both banks, like just talk to us, are there other productivity opportunities that are coming through, which should lead to a more efficient, more profitable franchise ex the immediate synergies that we are focused on.

Yes. As we look at the expense synergies, as Kevin mentioned at the outset, first and foremost, we're focused on our team, how the team has treated, our clients, how the clients are treated. Those are our priorities before you get to, how fast can we achieve the $250 million net synergies. And that's why we went from 50% to 40% in year 1, as Kevin said earlier.

And we feel really good about all those decisions. We're not -- we haven't changed our assumption of total net synergies. And just to be clear, those are net synergies. We have dissynergies that are including that like cost of LFI is included in that the cost of pay normalization across the companies is including that.

And so we feel really good about all those assumptions. But 1 thing we've noticed is, there are a lot of opportunities in process to be more efficient in how we go to market, how we operate in the back office. Those are not necessarily in that $250 million. I mean there's clearly there's song, there's redundant systems, there's excess there. But as you look further out, post conversion day, you get into 2027, 2028, I think there are a lot of opportunities for us to get more efficient.

And we often get the question of, well, hold on, you're saying your efficiency ratio in the 40s. There are no other Cat IV banks at that efficiency ratio? Like how do you say you can get more efficient from there?

Well, I would say we're 100% not satisfied with the efficiency at that level. And why I say that is because if you decompose efficiency ratios across Cat IV banks and you look at consumer, commercial and wealth, we're actually kind of about median with where everybody is for the segments.

And I think, there are ways we can be more efficient. Our efficiency ratio is really a result of business mix and the fact that commercial business is the lowest efficiency of those 3 segments.

And so we feel good about where we are. We feel good about delivering on our commitments that we made an announcement but we're never going to be satisfied with that. There are a lot of ways we can get more efficient and deliver a better team experience and deliver a better client experience beyond kind of what we've been talking about as far as the merger math.

I guess, outside of level of growth, I think, banker retention is sort of a big focus for investors. Correct me if you don't think that's the right metric to look at. But just talk to us in terms of retention of bankers, when you have large deals, you worry about, like some of the good people going to leave, competitors are going to come and poach. So how is that playing out?

And then also talk about just banker hiring has the attractiveness of the franchise increased or decreased due to the deal?

Look, to your point, banker retention is the earliest warning signal that you as an investor should be looking at because I can get up here and wax poetically and tell you what a wonderful company this is and how great we are. But people vote with their feet. They decide whether they want to be part of that. And so I think what you've seen Ebrahim is that we've had a few people leave, but our voluntary turnover numbers for the year, we set a goal for our company at 7%. Now you could ask other banks what their voluntary turnover is, and their company, it's much higher than 7%. That would put us in the top decile of companies and we're doing that in a year where we're doing a merger.

The places that we've seen a little bit of turnover are the places we expected them, quite frankly, it's where we had overlapping markets, and I've shared with this group in the past. If you look at other MOEs, which again, we call MOCs, is where you have banks that have tremendous overlap. There is a tremendous amount of discernment and detention that happens because these people are competing for jobs and the mergers that have had the most overlap are the ones that have performed before us.

And so we have very little overlap. We talked about this from the onset. We had 6 markets, 6% of the pro forma deposits that were in relatively similar-sized portfolio. So where we've had overlap, we've had team members that said, look, we can't have 2 market executives. So one, is going to be market executive and the other one may leave, and they have, in some cases. But We have not seen any unexpected attrition bankers, I think, are generally -- they work at our company, as I said earlier, because we have a great team member experience.

What we hear from the Pinnacle side is, they love the war on bureaucracy. They love the accountability and the autonomy to be able to do their jobs and none of that is changing. We're running the Pinnacle model.

On our side, our team wanted to understand their incentive plans. We've explained that. Then they want to understand what the Pinnacle model means to them. And generally, that's been well received, more autonomy, more authority and lack of bureaucracy, who doesn't like that. So it hasn't resulted in a lot of turnover. But I would say knock on wood.

I mean, every day, as you see and you talk to other banks, they're trying to attract talent. And I can't worry about what they're doing. We have to make this the best place to work and the best place to serve their clients and make it fun. And when we're doing that, which we have, there's no impetus for anyone to leave.

As it relates to hiring new bankers Jamie knows last night, we were recruiting a banker here in South Florida, and we've been recruiting for 4 years, and he signed on the bottom line to come over and it will bring his team and he'll be a needle mover. And the questions that he asked, we were recruiting from legacy Synovus was, well, I like the team. I've been talking to them for some time. Tell me how this merger is going to change? And as long as I deal with these people, I'm willing to work here.

So they want to know if there are going to be personnel changes, what is the strategy changing? Are we going to serve our clients when you sit down with folks and have that discussion and explain to them that nothing is really changing. They buy in.

Conversely, I was talking with a prospect up in 1 of the legacy Pinnacle markets, and he wanted to know he said, "Look, I've been wanting to come for some time. I think it's time now. But everybody that I've worked with in the past tells me is such a great environment, it's easy to do business, is that changing?" So they want to hear from the new CEO.

And when they hear our commitment to this Pinnacle model, they're bought in. So I would tell you that there's been no loss of momentum in the first quarter. People continue to come over, and it's all predicated on the fact that they want to work in this environment predominantly because they have friends, families and colleagues that have worked with them who are telling them, like this is an awesome place to work.

And that's what I hear more often than not really on both sides, people that we recruit to our companies will say, I wish I would have come years earlier because it is a great place to work. So that's our focus. And so having that focus on the retention portion actually really helps us on the attraction because those individuals serve as our referral source to bring in these new bankers.

But that's what, to me, if you're looking at the biggest success to this point, it's been that. Lack of turnover and continuing to hire new bankers who believe this is going to be the best financial services firm in the United States.

And you mentioned, Kevin, the banker hiring done last year kind of, it felt like has locked in all else equal, the growth for this year. I'm wondering, does the scale like the doubling of the balance sheet? Does it create more capacity for the bankers who've been around for a long time to bring in sort of more loans or bring back some of the loans that were syndicated away just...

Some. I think -- look, I would tell you that syndications are just a part of risk management, not so much just hold limit. I think it's a prudent strategy when you get to some size of credit to participate that out and share in the risk and to generate fee income off that. But yes, we've gone through and we've looked at all of our clients who are at threshold levels at hold limits, those that are over a threshold limit.

And what you can imagine is that's less than 100 clients. But the reality is some of those clients don't need extra capital, right? So we can go do a formula that says, "Hey, we got $10 million of extra capacity, $12 million, $20 million, we can do that math. But the reality is what we're doing is we're talking to the clients, telling them that there's extra capacity.

And as there is a need, we would address it. So it's not as immediate as you would think that hold limits go up and suddenly you start to see loan growth. It will happen over time. And I think more important than the actual outstandings, it's the confidence that it gives to bankers, to call on some of their larger clients to say, now we have a bigger balance sheet because who you're banking with today hasn't syndicated out that loan, they want a single borrower and now we have capacity to do that.

So I think you'll see the benefit with some of these existing clients over the next year or 2, but it will also help us with bringing over some of the large clients that were in their previous book that they maybe wouldn't have brought over because it needed to be syndicated.

Got it. I think the other sort of differentiated business within Pinnacles, BHG. I think Jamie, you were talking about maybe spending some time with them yesterday. Just talk to us when you think about that business, inside of the bank today, like what your sort of expectations are for that business? How do you think that sort of evolve from here?

First off, it's a great team over there, and we've really enjoyed getting to know them better. I mean, as you're aware, legacy Synovus had a relationship with BHG as well for the merger. They are firing on all cylinders, simply put.

If you look at the fourth quarter to Pinnacle, we had $30 million in revenue from BHG, you should normalize ex there's about $5 million, which is a true-up from the third quarter. So it's really about $25 million. And when you look at our guidance for 2026, I mean, that's like 25%, 35% increase in revenue as they continue to grow their production, grow their business.

So it's firing on all cylinders. We're really pleased with their plans. And our meetings while we're here down here in Florida, we're just really around what's the best path forward as far as valuation, like how do we make this the most valuable company possible working together as we can.

If you look at a 2-year horizon, a 3-year horizon, what does that look like? And so that was the nature of the conversation. I think that the legacy Synovus history with GreenSky and other partnerships is really additive. I think we can bring some thoughts and ideas to the table to help them win. And it's something that we're pretty excited about. And so we're glad to be along the ride. I hope we can help them be more successful because we win alongside them.

Just 1 thing, it's become a theme of over the last 2 days, it's about AI. And when we think about AI in banks in terms of productivity, there's obviously this new emerging piece of like disruption risk. So one, talk to us in terms of from a productivity standpoint, use cases, how further along like just are you super bullish on what it could mean for Synovus? And then when you think about credit quality and underwriting, how do you think about just the disruption risk to your borrowers because of AI?

So look, we've talked about AI for some time. We have a 9-person staff at legacy Synovus that we've deployed mainly into the back office functions, trying to find ways to capacitize our bankers to remove manual tasks. And we had some pretty good success stories.

The 1 that I would highlight is we took all of our policies and procedures and we built out something called PFP, which I chuckle about Policies, Forms and Procedures. That was before the Pinnacle Financial Partners deal. So we had an internal tool with AI called PFP, but our front line says it's been a game changer.

So if you're retail team member, and you were looking for something obscure in a policy, you may be able to do a search function, but largely, you had to read the policy. We built AI capabilities that provide prompt functions where now it's more queryable and it's going to come back with not just a policy is going to give you the solution.

And so it has really, I think, capacitized many of our frontline bankers. We had a project called Operation Excel, which was on the manual task side, looking at old repetitive tasks that we do, whether it's in deposit operations or loan closing, how you deploy our AI tools to be able to do those tasks. And so we have a requisition right now for 15 additional FTEs to add into our AI group, and that's to deploy as we move towards conversion as we build out the next-gen process for everything we're doing instead of coming in behind the reengineering and applying AI.

We're trying to use AI as we rewrite those processes to build in a more scalable solution. But we're not in a place where we feel like it's going to result in a bunch of headcount reduction. It's just going to capacitize our bankers reduce errors, which are important from an audit standpoint and ultimately, as those groups move on, we're going to continue to do it.

We have certain AI tools that we deploy today on the front office, things like fraud identification, greatly reduced our fraud. We were able to catch on the front end of all digital account opening. That's been great. Our fraud was down 40% last year in legacy Synovus. I think a large piece of that was some of the tools.

We've also deployed it on our consumer platform through a couple insight-driven products that provide insights to our clients and our bankers based on their transactions, AIs behind the scenes. Evaluating the transactions and provide insight. So we do believe it's a great opportunity.

As it relates to credit, we only have about $200 million of exposure to software. So very small, nothing there. I think any industry that has the risk of being impacted by AI, we're evaluating it. I mean it's a very manual process in underwriting. And I would tell you that our credit officers try to understand that.

And it's not just AI, any sort of business. We have to understand what are the risks to their model and how do you underwrite given that. So look, I feel like AI is way more of an opportunity for us. And I think if you're thinking about banks, Ebrahim, we were talking about this with Pankaj and others. The biggest risk to banks are less about AI is really about payments.

It's about all the payment companies that are trying to get, their pipes tied into moving money there at some point, and this has been the problem for 20 years. We've talked about this as a bank. If you get in and start processing payments, then likely you could come in and start taking deposits and you can start to disintermediate banks I think that's the biggest risk that continues to exist in banks, less about somebody using AI to change how we do business.

And I go back to how I started, we won all those awards in Greenwich because we build trusted relationships. And I don't think that an AI tool can replace the human interaction that we provide on a daily basis with our clients because we're providing distinctive service and effective advice person to person.

And I'd love for the AI to capacitize all of our financial advisers, so they can be even more effective at that. But I don't think you can disintermediate what we're doing in terms of building those relationships.

Anything on credit quality outside just generally speaking, like any soft spots?

No, we got some questions last quarter said that we were going to be stable in the first quarter versus fourth quarter, which was kind of the high end of our stated annual range of 20% to 25%. I mean credit losses are going to be a little episodic where you're going to have onesie-twosies. Bur we feel like it's a fairly constructive benign credit environment.

We've generally seen improvements in credit metrics across the board. We haven't seen anything systemic. So we feel like 2026 should be -- the credit story should be a fairly muted story. But as we saw, the 1 -- a couple of large credits in CRE that some of our peers had in the fourth quarter, it got people's anxiety up again. But no, we're not seeing anything internally that would lead us on that path.

And I think, Jamie, you mentioned this when talking about loan growth, like CRE, other banks have talked about maybe things bottoming out on the CRE side, maybe you see more production coming through, like when do you -- do you think things are about to stabilize? Like do you -- are you seeing sort of light at the end of the tunnel in terms of new production coming on and driving growth?

I mean as we go through this year, we expect to see some growth as we go through the year. But I mean, again, center we said at the beginning, we expect to be a little more back-end loaded. But I feel like all the right recipes for success are there, especially if you get a rate cut or 2.

Just last question around capital. So it means you have a $400 million authorization in place, but you're building capital through the first half of the year, and what after that?

Yes, our current estimate of CET1 when we close will be about 10%. When you include AOCI, it's about 20 bps lower I think that's the right way to look at it, including AOCI, we're above median in CET1. So we feel really good about where we'll be.

The way to think about capital for us in '26 is we will, the first quarter has some merger expenses. So there won't be a lot of capital accretion that we did the waterfall on the earnings day, but generated about 35 basis points of capital each quarter post dividends that you kind of deploy towards growth at a 10% kind of growth rate using the midpoint of our guide, you'd consume about 25 basis points.

So we expect to accrete about 10 basis points of capital a quarter. We do want to accrete into our range of 10.25% to 10.75% and then we'll just reassess. We'll look at the economic outlook. We'll look at what peers are doing and reassess. But we're not -- we don't feel compelled to be in the middle or the high end of the range, just get into the range and then we'll kind of take a look at it and see what we think.

The $400 million is really in case there's a situation where industry-wide loan growth is much slower or things like that, we want to be nimble, be able to step into the market if we need to manage that way.

Jamie , Kevin, thank you so much.

Thank you.

Thank you.

Good morning, and welcome to the Pinnacle Financial Partners Fourth Quarter 2025 Earnings Call [Operator Instructions]

Please note this event is being recorded. [Operator Instructions]

I'll now turn the call over to Jennifer Demba, Senior Director, Investor Relations. Please go ahead.

Thank you, and good morning. During today's call, we will reference the presentation and press release that are available within the Investor Relations section of our website, pnfp.com. President and Chief Executive Officer, Kevin Blair, will discuss our newly combined company's future and outline our 2026 financial outlook. Chief Financial Officer, Jamie Gregory, will review Pinnacle and [indiscernible] stand-alone fourth quarter 2025 results.

Finally, Chairman, Terry Turner will make some closing remarks, and then our team will be available to answer your questions. Our comments include forward-looking statements. These statements are subject to risks and uncertainties, and the actual results could vary materially. We list these factors that might cause results to differ materially in our press release and in our SEC filings, which are available on our website. We do not assume any obligation to update any forward-looking statements because of new information, early developments or otherwise, except as may be required by law. During the call, we will reference non-GAAP financial measures related to the company's performance. You may see the reconciliation of these measures in the appendix to our presentation. And now President and CEO, Kevin Blair will open the call.

Thank you, Jennifer. Good morning, and welcome to our fourth quarter 2025 earnings call. At Pinnacle Financial Partners enters its next chapter, we do so with the belief that true success comes from staying grounded in who we are inspired by where we're headed and united by a relentless commitment to outperformance. As we do so, we reaffirm our commitment to the investment community with renewed energy, clarity and confidence in the path ahead. Pinnacle's focus is producing strong above-peer revenue earnings per share and tangible book value growth. Our strategies and plans for execution are clear. We're committed to delivering exceptional client in an industry-leading loyalty as verified by external sources such as crystal Elition Grid and J.D. Power. .

At the same time, we aim to be an employer of choice in regional banking by fostering a uniquely collaborative empowered and rewarding culture. These priorities enable us to attract and retain revenue producers at an outsized pace fueling our continued growth. By pursuing these goals with passion and purpose across the entire franchise, we strive to continue to create exceptional value for our shareholders and set the standard for growth and profitability in the industry.

Our strong performance in 2025 demonstrates the focus of our teams during more volatile economic times in the midst of a pending merger. Legacy Pinnacle grew adjusted diluted earnings per share by 22% in 2025, while legacy Synovus grew adjusted diluted earnings per share by 28%. The commitment and focus of both firms on creating a differentiated client experience resulted in legacy Pinnacle's #1 Net Promoter Score ranking in its footprint in legacy Synovus' #3 Net Promoter Score ranking in its footprint amongst top market share banks. These results underscore that our team is fully engaged, focused on our clients and delivering meaningful value for our shareholders.

We are a competitive team committed to sustaining top quartile growth and profitability. The merger between Pinnacle and Synovus was completed on January 1, just 160 days after announcement, demonstrating the strengths of both companies and are resolved to swift and effective integration. Over the past 2 quarters, both organizations have successfully completed key milestones. These achievements highlight our strategic focus and reinforce a solid foundation for continued growth and operational excellence. The team has hit the ground running in January, already executing across all elements of the proven Pinnacle operating model.

For example, the firm has brought legacy Synovus team members into the Money Morning Sales and Service meeting series, an anchor of the Pinnacle operating rhythm, led by Chief Banking Officer, Rob McCabe. This long-standing successful practice helps teams align around core priorities, promotes cross-team collaboration and establishes shared ambitions and goals around growth, hiring, pipeline activities and service expectations. We are thoughtfully combining the strengths of Synovus and Pinnacle building on similar legacies and shared values and remaining true to what really sets us apart. Pinnacle's exceptional operating model is our foundation and the engine of our growth, guiding us through every opportunity and challenge. We're not just building another bank, we're scaling with the soul.

And now Jamie will view both Pinnacle and Synos stand-alone or order 2025 financial results. Jamie?

Thank you, Kevin. Even in the midst of a merger integration, both Pinnacle and Synovus continued to demonstrate strong financial performance over the past 2 quarters. Pinnacle reported fourth quarter adjusted EBITDA of $2.24, which was stable quarter-over-quarter and up 18% from the prior year. Net interest income increased 3% from the third quarter and 12% year-over-year. Balance sheet growth remained well above peers. Period-end loans grew a strong 3% from the prior quarter and 10% year-over-year, driven by recruiting, particularly in our ancient geographic markets. .

Core deposit growth was also quite healthy at 3% quarter-over-quarter and 10% year-over-year. The net interest margin increased 1 basis point to 3.27%. The Meanwhile, adjusted noninterest revenue declined 6% from the third quarter, but jumped 25% year-over-year. Year-over-year growth was largely as a result of higher service charges, wealth management revenue and income from BHG. As expected, BHG contributed $31 million in fee revenue to Pinnacle. Adjusted noninterest expense was stable quarter-over-quarter and up 13% year-over-year. Pinnacle's fourth quarter credit metrics remained healthy and capital levels continue to build. Net charge-offs were contained at $27 million or 28 basis points, 63% of which was from a single nonowner-occupied CRE loan.

The CET1 ratio ended the quarter at 10.88%. The Meanwhile, Cenovus reported strong fourth quarter adjusted diluted EPS of $1.45, which was stable quarter-over-quarter and increased 16% year-over-year. Results were highlighted by healthy loan, core deposit and noninterest revenue growth. Net interest income increased 2% quarter-over-quarter and 7% year-over-year.

Period-end loan growth was a healthy $872 million or 2% from prior quarter and 5% from the previous year, driven by broad-based C&I lending. Core deposits grew at [ $895 ] million or up 2% quarter-over-quarter. The net interest margin continued to expand, up 4 basis points sequentially to 3.45%. The NIM was supported by various factors, including continued fixed rate asset repricing and the funding cost benefits of the core deposit growth. Cenovus also continued to generate healthy, consistent growth in adjusted noninterest revenue. which grew 6% from the prior quarter and 16% year-over-year to $144 million. The drivers were broad-based, and I would highlight $16 million in capital markets fees, up 30% year-over-year. This performance highlights the team's focus on delivering for our clients while also focusing on the merger integration. Adjusted noninterest expense increased 2% from the third quarter and was up 5% year-over-year.

The linked quarter increase included higher incentive payments and charitable donations. Credit metrics remained healthy and net charge offs were $24 million or 22 basis points in the fourth quarter. Our common equity Tier 1 ratio ended the year at an all-time high of 11.8% as we prepared for the merger closing. Also, we [indiscernible] hired $200 million of subordinated Tier 2 notes in October before issuing $500 million in December. Both Pinnacle and Synovus continue to be successful in hiring new teamers in the fourth quarter with 41 new revenue producers. This brings the total to 217 both firms together in 2025.

We continue our work to finalize the valuation marks on the Synovus book, which we expect to be completed later in the first quarter. Our current estimated mark on the balance sheet is generally in line with the original merger expectations. We expect this valuation impact as well as other considerations to result in a CET1 ratio of approximately 10% at the end of the first quarter.

This estimate includes the realization of $225 million to $250 million of first quarter merger-related expense and excludes legacy Pinnacle equity acceleration costs, which are capital neutral. Since the transaction closed, we have undertaken a meaningful repositioning with the legacy Senova securities portfolio. As part of that effort, we sold approximately $4.4 billion and purchased roughly $4.4 billion of new securities with an average yield of 4.7% and estimated duration of 4.25 years. These transactions helped to support our Level 1 HQLA position, reduced risk-weighted assets and also serve to eliminate approximately 98% of the PAA associated with the securities portfolio.

I will now hand it back to Kevin to review our 2026 financial outlook.

Thank you, Jamie. Pinnacle's proven revenue producer hiring model allows our balance sheet growth to be more resilient and sustainable regardless of economic growth, interest rate levels and the like. loan and core deposit growth in 2026 should be supported by revenue producers who have not yet completed the consolidation of their portfolio to us. We also expect to continue hiring the new producers an accelerated pace this year, especially as the former Synovus team embraces the rigors of the Pinnacle hiring process. Our goal is to hire 250 total new producers in 2026. As we look to our first year as a combined company, we expect our period-end loans to grow to $91 million to $93 billion or up 9% to 11% versus our combined loans at year-end 2025. We expect 35% of this growth to come from financial advisers who have been hired in the past 3 years as they build their book, another 35% to come from specialty verticals and the remainder to come from the legacy market growth. Our loan growth assumptions do not assume any change in line utilization rates or recent pay down or payoff levels. On the funding front, we expect total deposits to grow to $106.5 million to $108.5 billion or up 8% to 10% this year, driven by the previously mentioned recruiting core commercial client growth and momentum from our specialty deposit verticals that support our markets.

Our adjusted revenue outlook is $5 billion to $5.2 billion in 2026. We the net interest margin is estimated in the 3.45% to 3.55% range, which assumes the immediate benefit of purchase accounting balance sheet marks and more near- to medium-term fixed rate asset repricing of the legacy Pinnacle loan portfolio. Those benefits are somewhat offset by an increase in balance sheet liquidity over the next several quarters and marginal headwinds from 225 basis fee interest rate cuts as implied by the recent market expectations. We expect initial balance sheet profile to be modestly asset sensitive split between short rate and long rate exposures. Anticipate adjusted noninterest revenue of approximately $1.1 billion this year. Growth should be primarily attributable to continued execution in areas such as treasury management, capital markets and wealth management as well as approximately $125 million to $135 million in BHG investment income.

Adjusted noninterest expense is expected to be approximately $2.7 billion to $2.8 billion in 2026. We expect to realize 40% or $100 million of our annualized merger-related expense savings in 2026. The Underlying expense growth should be driven by revenue producer hiring from the second half of 2025 and continued hiring in 2026. Also, real estate expansion to support market growth as well as normal inflationary expenses. Excluding legacy Pinnacle equity acceleration cost an estimated $450 million to $500 million of the $720 million in nonrecurring merger-related and LFI expense should be incurred this year versus $64 million recognized in 2025.

We continue to operate in a constructive credit environment. We estimate net charge-offs should be in the range of 20 to 25 basis points for the year, which is consistent with 2025 performance for the combined company. [indiscernible] Capital, we will target a common equity Tier 1 ratio of 10.25% to 10.75%. Beginning in the first quarter, our quarterly common equity dividend will be $0.50 per share. Our priority on capital deployment remains client loan growth. The Board recently authorized a $400 million common share repurchase program that gives us flexibility to manage capital in multiple growth scenarios.

Finally, we anticipate the tax rate should be approximately 20% to 21% in 2026. It is a privilege to lead this team at such a defining moment, with our above-peer revenue trajectory and the growing benefits of merger-related efficiencies, we expect strong earnings performance in 2026. I am more excited than ever about the road ahead. Together, we lay the foundation to build the best financial services firm in the country.

We fully recognize that 2026 will bring its own challenges, especially as we prepare for conversion in the first quarter of 2027, but we are more than ready for the task, our momentum, unity and shared ambition gives me tremendous confidence in what we will achieve. And now I warn it over to Terry for some closing remarks before we open the call for questions. Terry?

Thanks, guys. Let me start here. As you listen to Kevin and Jamie, I hope you can see why I'm so fired up about what we've created with this merger. Next month, it'll be 26 years since we put our original founder group together to form a bank specifically to take advantage of the rapidly declining service levels at the large regional banks that dominated the Southeast at that time. all we had were some deeply held convictions about how you produce long-term sustainable shareholder value.

First of all, we intended to differentiate ourselves from the competitors based on distinctive service and effective advice. Of course, distinctive service and effective advice sounded like blah, blah, blah back then and still does to many even today. I know as investors, you've never had anybody say they intended to give poor service and bad advice, but truthfully, many do. According to Greenwich, with an 84% Net Promoter Score, we've created the single best client engagement, not just in the Southeast, but in the country.

And their data also suggests we've amassed the best relationship managers, the best treasury management capabilities and the best credit processes in the Southeast. And that talent attraction model, which has proven to be the best in the Southeast based both on the quantity of talent we've been able to attract and the quality of talent we've been able to attract goes forward in the combined firm under Kevin's leadership, led by my long-term friend and partner, Rob McCabe, who's the Chief Banking Officer. Those proven credit processes that have provided best-in-class service from our clients' perspective and such strong asset quality over decades, continue forward in the combined firm under Kevin's leadership led by Carissa Summerlin as Chief Credit Officer going forward, who is the Chief Credit Officer for Legacy Pinnacle. Secondly, we intend not only to attract the best talent, but to excite and engage them in such a way so as to get their best effort, their discretionary effort, which will always be better than the stereotypical scorecard management approach used by all of our peers. As a matter of employee engagement, Fortune Magazine ranks us as the third best financial services from the work for in the country behind only American Express. Things like granting equity to every single employee, so they feel like owners and including every salary-based employee and the annual cash incentive plan are critical to the reliability of our outsized growth that we produced for 25 years. And of course, all of that goes forward in the combined firm under Kevin's leadership. Thirdly, one of our most important principles was alignment, aligning shareholders with management and employees. I believe there's overwhelming evidence that shareholder returns are primarily correlated to only 3 metrics: revenue per share growth, earnings per share growth and tangible book value accretion. And so at legacy Pinnacle, all annual management and employee incentives were linked to revenue per share growth earnings per share growth.

Think about that. All 3,500 employees [indiscernible] to grow revenue and earnings. Over our first 25 years, we're the fastest revenue grower among banks greater than $10 billion in assets and the fastest compounder of earnings per share in the country. And of course, that same incentive methodology now aligns our almost 9,000 employees under Kevin's leadership all around revenue and earnings growth going forward. And finally, we've always relied on the principle that expect a shape behavior.

It wasn't just that we incented all our employer based on revenue and EPS growth rates. We always set our targets for revenue and EPS growth rates to be at least top quartile performance. Think about that. To target a top quartile revenue and EPS growth for 25 years in a row led to this extraordinary compounding of the metrics that matter most in terms of shareholder return, which again explains the fact that over our 25-year history, we had the second highest total shareholder return of all the publicly traded banks in the country. And that same target setting methodology is continuing forward in the combined firm under Kevin's Leshi. Frankly, we both have been asked if Kevin can run the Pinnacle model. I want to make sure you understand that I know we can -- he is my handpicked successor -- and it's my expectation that executing this now proven model with his proven leadership capabilities will propel this firm to levels we would never have achieved on our own.

Operator, we'll stop there and take questions.

[Operator Instructions]

Your first question is coming from Ebrahim Poonawala from Bank of America.

I guess maybe just starting at the top, Kevin and Terry, around with the merger conversion, systems conversion next year, just talk to us 2 things. One, what can the combined banks not do today that it will be able to do a year from now post conversion? And secondly, as we think about the new banker hiring new sort of client onboarding, how are you handling that in terms of -- are they coming on the new systems, old systems? Just color around all of that would be helpful.

Yes, Ebrahim, this is Kevin. Obviously, as we move to conversion in the first quarter of '27, both companies will be operating on their existing legacy platforms. And so that doesn't encumber our ability to originate new business. It doesn't encumber our ability to be able to expand the share of wallet. We have been successful in both companies being able to use our existing systems. So there's nothing that's missing. What will change is that will move to an end-state platform that takes the best of both organizations.

And so there will be capabilities that arise on both sides where we move to the new platform, there will be new capabilities, new functionality, new products that we'll be able to offer. So there's revenue synergies that come with that. In the interim, when we bring on, we know which systems we are moving to when we have a client that's a more complex client and we onboard them in '26, we're going to onboard that client on to the end-state platform and start to service that relationship there versus having to do another conversion in '27. So the real challenge is you're just having to manage a workforce, a sales force that has 2 sets of products and 2 systems, but it's not stopping our ability to grow the business. As it relates to hiring, again, same situation. We bring on new team members, if it's a legacy Pinnacle market, they would be onboarded onto the Pinnacle platform.

If it's on a legacy Synovus market, they would start to sell the Synovus products and use those systems. But again, we have lots of workarounds that we can leverage that it's not going to create a bad client experience when we go to that migration. The other thing I would just mention, Terry mentioned it in the prepared remarks, the #1 thing we're focused on is the Net Promoter Scores and ensuring that our clients continue to receive that distinctive service and effective advice. And that all comes down to the people. So we can talk about the products and the technology, but the people are staying the same and that's what builds the strong relationships.

Got it. And I guess maybe just another follow-up around -- I think you mentioned the Board approved a $400 million buyback authorization. Give us a sense of when you think you would actually initiate buybacks? Is it more to do with if there's a pullback in the stock, you step in? Or should we expect some level of buybacks to resume starting as early as this quarter?

Ebrahim, it's Jamie. Great question. The first thing I would say is we would love to be buying back stock at these prices. We think it's pretty attractive. But as we look at capital ratios and look at our expectation is that we closed the deal in the 3/31, our CET1 ratio is 10%.

And if you include AOCI is 9.8%. Looking at that ratio, we are fine with regards to internal stress tests. We're fine with how we expect CCAR or FTB or any of that to play out. We feel like we do have excess capital on a headline number, we would screen low relative to category 4 peers. If you include ASCI at 9.8%, we would screen higher than median compared to category 4 peers. But I kind of give that background is just the fundamental how we think about it. We do not want to screen the lowest of a peer group.

We don't want to be at low end [indiscernible]. It's likely that we will accrete capital for a time period and just allow earnest to drop to our capital ratios as we go through 2026 and then reassess. That's why we put that range of $10.25 to $10.75 out there. The 1 thing I will note is, in the first quarter, you can see the capital waterfall the earnings impact of merger expenses, et cetera, will lead to not a lot of capital accretion this quarter. So you should not expect to see share repurchase this quarter. It's unlikely you would see them in the second quarter, but then we will reassess as we get into -- later into the year.

Your next question is coming from John Pancari from Evercore.

On the loan growth front, the loan growth projection implies that 11% range on a pro forma basis. Can you just kind of walk us through your degree of confidence in achieving this, given the -- we're here netops getting a bit more competitive. There's a little bit of uncertainty around CapEx related demand. So I guess from a demand perspective as well as from an underlying organic and the hiring perspective, can you help us just kind of walk through your confidence in teaming that target?

John, it starts with not just talking qualitatively, but when you look at the fourth quarter for the pro forma company, we generated 10% loan growth already. And so to your point, our growth, as we shared in the slide deck is going to come from existing team members that are already in the market, the recent hires that we've made in the last 3 years as well as our specialty growth businesses. And for me, you asked a question about just general client sentiment.

We do a quarterly survey in legacy Synovus. The clients continue to remain relatively constructive the backdrop continues to have some uncertainty. It's not lost on anyone that tariffs still play a risk factor for our clients, but we've seen the economic growth pick up. And when we query those clients, they expect their business activity to pick up over the next 12 months. So part of that is being in the Southeast. We know we're in a great footprint. So I think our client sentiment is positive there's still headwinds, but there's been this appetite for capital that I think was delayed, resulting from the uncertainty that happened in '25 that we expect to get. But look, we said this in the prepared remarks, unlike other banks, we're not waiting for the economy to grow to be able to generate growth. It will come from being able to hire folks. You've seen this past year, Jamie mentioned 217 new revenue producers. And although that number needs to go to 250 on the Synovus side, I was pleased that our growth picked up about 20% year-over-year. And as Perry said, the real opportunity is for Cenovus to start hiring at the same pace that Legacy Pinnacle was hiring. And that will generate some growth this year.

But the real growth has come from the people that we've hired over the last 3 years and the embedded growth that will come from those individuals continue to build out their book. So I think a constructive environment I think we have all the tools and resources to be able to generate the growth. As we've talked about in the past, the biggest headwinds have been unexpected payoff activities. And we've kind of built that into our forecast this year. Fourth quarter was no exception to that. We saw elevated paydown activities. But for the first time, we actually saw a little bit of line utilization helped to offset that. So our production goals are not predicated based on economic growth. It's based on going from a bottoms-up forecasting perspective, looking at what each individual can bring to the table. And that gives us great confidence in being able to deliver that 9% to 11%.

Got it. All right. Kevin, that's helpful. And then separately on expenses. I know in December, I think at a conference disclosure, you pushed back your timing of your cost save recognition from 50% in '26 to 40%. Can you just remind us of that related to -- and is there a risk of future delay in the recognition of the cost seeds as you work through the integration?

John, it's Jamie. As we work through this merger, our prioritization first was, let's get to close. And we were very successful in having a Jan 1 close on the deal. And when you -- because that moved as quickly as it did, it basically pushed back some of the systems because they weren't as fast as the close. And so that delay in there pushed back a little bit of the cost synergies. I would also say that we've been leaning in on some of the benefits associated with the deal and how we've decided to take best-in-class benefits on both sides. But those 2 things really drove the 50% down to 40% on the year 1 cost saves. But you'll note that we didn't change year 2. We didn't change the total sales. So it's really a timing difference. We feel really good about all of the merger math from there. I feel good about our ability to achieve those synergies. But it's really in year 1, we just dropped it from the 50 to the 40. .

Your next question is coming from Jared Shaw from Barclays Capital.

Maybe looking at the fee income side, what's embedded in the fee income guidance for the capital markets business? And maybe just some color on how long you think it takes to integrate some of those fee income lines?

Yes, Jared, it's a great question. I mean I love that you're focusing in on capital markets because we view that as a big area of opportunity for us. Just in general, both Pinnacle and Synovus have had great success and growing fee revenue. If you look at 2025 and you combine the companies, you have over 10% growth in account analysis fees. You have over 10% growth in overall core banking fees. Do you have over 10% growth in wealth management fees. But in capital markets that you mentioned, that's been a great success. And we've had over 15% growth in swaps swap fees. But the capital markets platforms are a great area to show what are the opportunities for revenue synergies because we have the effectiveness of the swap delivery. We also have lead arranger fees and syndications that we can actually grow on both sides. But then on the Pinnacle side, they're bringing to the table the ability for M&A advisory, and that's something that's new to the [indiscernible] side. So we see strong growth in capital market fees in '2026, consistent with kind of what you've seen in the past, double-digit growth.

Okay. And I guess maybe shifting to the loan growth side or back to the loan growth side. You called out the ability to hold higher balances as a result of the bigger balance sheet. How quickly do those higher hold limits flow through? And if we look at sort of the Slide 25 drivers of loan growth, do you think of that as more part of the contribution from the existing legacy markets?

That's correct. Yes. So Jared, when you -- it can happen immediately. I mean we have new hold limits today. But as you can imagine, not every client needs additional capital above where they are today. But what we've done with our bankers is cross-tabulate the current hold limits versus where our appetite is, and it shows where we have the ability to get more capacity to our clients, and we're going to communicate that. So that we'll be able to generate incremental loan growth as a result of that starting this quarter and moving into the future. And I consider that we included that in the bucket for revenue synergies along with just hiring because I think that's just blocking and tackling. That's allowing us to fully use the capacity of our balance sheet to meet our clients' needs. We're still going to be, as Jamie said, in the leaner Rager business, we're going to be syndicating deals. But there will be some incremental growth there that will allow us to grow loans.

But it's not big enough to call out an individual number. I think between hold limits and utilization, which we would expect, although we didn't build it into our forecast given lower interest rates, we would think both of those areas would just serve as tailwinds to growth for 2016 and beyond.

Your next question is coming from Ben Gerlinger from Citi.

Pretty clear that you guys are now clearly focused on the outlook and you have a pretty high degree of confidence in the continued legacy Pinnacle hire in terms -- when you look at kind of what you see today in the market disruption, it's not necessarily the legacy footprint of either 1 of you 2? Or is there opportunity to kind of expand hires or even LTOs? Or is it or is it something that's still in footprint only focused? I'm just trying to figure out where the additional or incremental revenue producer might come from geographically?

Well, look, we've said we try not to highlight specific markets, it kind of led to your competition know where you're coming to play. But I think you should think about any metro market in any of our 9-state footprint provides us with an opportunity. And it's I would tell you that disruption is our friend. But the biggest opportunity we have is what Terry said earlier, is continuing to make this a great place to work. .

And when bankers evaluate opportunities to hone their craft, they want to work for an institution that removes bureaucracy. They want to work for an institution that allows them to do what they do best, which is serve their clients. And so the best tool we have is continuing to create a team member base that is actively engaged and becomes our biggest recruiters because when they join our company, everyone hears from their peers. And when they say what a great company it is, it just gives us the opportunity to continue to hire. So we'll hire across the 9-state footprint.

The biggest opportunity, as you've seen on the slides, Pinnacle has been adding at an outsized pace and doing a wonderful job. Rob McCabe and his team have worked with our Synovus geographic leaders to install that hiring model, which is not an overnight model. As Terry said in the past, we're not hiring headhunters, we're not taking applications on LinkedIn. It's identifying who the best bankers are in each market and continuing to call on those bankers and really emboldening ourselves and showing why this is the best platform for them. So I don't think there's a big risk in generating 250 new hires this year. I don't think there's a big risk in generating 275 in the year after that. I think there's adequate opportunity across the market. And that doesn't include where we could continue to expand some of our specialty offerings where you could bring on new teams and continue to add more errors to our quiver to support that geographic banking model. So I'm very confident in what I've been impressed with -- Terry this, the rigors of their model and the success factor is not by happen chance. It is because they are very good at what they do in identifying those prospects and continuing to follow up and ensuring that they bring them on to the platform.

Got you. That's helpful. So I mean, pretty confidence in the net loan growth outlook via those hires over the next 2 or 3 or 4 years. So I was kind of curious, in terms of just kind of growth, generally lead with the credit and you get the whole relationship quickly thereafter. But Jamie, if we're thinking about like if loan growth starts to get overly accelerated, is there an area or avenue that you might gravitate towards rate dependent on kind of backfilling the funding side of that before the deposits arrive? .

Well, if loan growth happens before deposit growth, which actually is somewhat consistent with the forecast because deposit growth is more back-end loaded yes, we would use some higher cost sources to fund that growth. But all of that is embedded in our guidance. Everything that we're saying about our margin outlook, et cetera, include seasonality of deposit growth relative to loan growth and our expectations of these bankers that we've hired over years bringing their books over. So it all holds together when you see the loan forecast, the deposit forecast and then the underlying quarterly impact. But yes, if loans come in before deposits, yes, we will use wholesale funding to bridge the gap.

I just jump in and add for clarity. I think on the hiring, the hiring is what gives us confidence in the long-term sustainability of the growth. And if you look at the pace at which we're accelerating the growth in hiring, it's a really modest increase in 2026 and not -- I wouldn't say a huge increase in 2027. So those are pretty reasonable targets. And what that has to do with is the long-term sustainability of the balance sheet growth and therefore, the earnings of the company. What gives us confidence in the short-term ability to grow loans is the people that we have onboarded over the last 3 or 4 years. Those people are in the process of consolidating their book to business from where they used to work to us. And we're not looking for anything special. We're simply looking for those people to produce at the average rates they have produced for 25 years. And so again, the confidence on the loan growth comes from the people that we have already onboarded.

Your next question is coming from Bernard Von Gizycki from Deutsche Bank.

Just on the NIM. In your 2016 outlook, you assume a range of $345 million to $355 million, inclusive of the purchase accounting accretion. I know back in mid-December, you laid out in size the contributions from the accretion from the fixed rate asset repricing. And offset by some of the debt and adding the securities, the liquidity measures you're doing. Given the changes you laid out, could you just provide updates there?

Yes. As you look at the margin, the way I would think about it is, clearly, in the fourth quarter, you had Pinnacle had a 3.27 tax equivalent margin -- for the Senova side, when you mark the book, when you mark all of our assets, you should expect to get to a margin in the 375, 380 area. When you combine those 2 you get to 350, low 350s. And so that's generally how we think about these coming together. The yields on the Synovus book are a little bit lower than we originally modeled with the merger because interest rates have declined a little bit when you look at the belly of the curve. And so that's generally the math. That's why the CET1 ratio at close will be a little bit higher than we originally modeled. It's why the PAA will be a little bit lower than we originally mode.

And then just on the revenue synergies on Slide 28, the $100 million to $130 million. I know it's supposed to be realized over the next 2 to 3 years, does that start in 2027 post the completion of the integration process? Any color you can share [indiscernible]

It starts today. I mean, we're already working on it. So our guidance that we provided for '26 would incorporate some of those revenue synergies as they materialize, things like I talked about earlier, like hold limits, being able to hire new folks. There are certain capabilities on the capital market side that we don't have to be on the same platforms, syndication fees, FX those are being cross-pollinated across our organization. And then when you add on some of these specialty verticals I've mentioned in the past, like equipment finance, the pebble legacy team is already calling in the legacy Synovus footprint. So instead of trying to give you a line item reconciliation of all those, we'll start to incorporate those into our annual guidance. And as we sit here today, I think we're as excited about the $100 million to $130 million, and we think we can exceed that target over the 3 years. But yes, the '26 guidance would incorporate the benefits that we see in these early stages.

Your question is coming from Michael Rose from Raymond James.

Maybe just going back to the comment in the slide decks around higher hold limits I assume that's just a step function of a larger balance sheet. But if you can kind of expand upon that, I mean, do you plan to kind of move upstream? Or is this just, hey, we're going to do the same types of loans that we've always done on both sides. And then maybe just syndicate out -- just trying to get some better color around that. And then secondarily, if you can just comment on the outlook for some of the specialty businesses. I know that's been a big focus at least a legacy Synovus over the past couple of years. What does that look like as we kind of move through this integration. .

Yes, Michael, I think it's the latter of your question. I don't think that it's allowing us to pursue new opportunities upmarket. We have -- both companies have been moving upmarket with middle-market banking, some of our corporate banking initiatives that we've had in some of the specialty areas. What it really does is just increase that ability to have slightly larger hold limits on those clients. And so as I said earlier, we're not talking about major step functions. It's not doubling the size of the whole limit, but it gives us a little more capacity. And so what you should see from that is slightly higher loan size that we would keep on balance sheet. But again, we built a strong syndicated platform to be able to manage our risk overall. And so we'll continue to participate out some of the larger loans, but it just gives us a little extra capacity. As it relates to the specialty units, as I've said in the past, both sides bring some unique businesses to the table. I get really excited about the equipment finance area, auto dealer business that Pinnacle has been building. On the Synovus side, we have things like asset-based lending, structured lending. We have a family office on the wealth management side. those organizations are working across the broader organization to make sure that their capabilities are well known. And when we have an opportunity to introduce a client, we're going to make those introductions. And so we haven't gone through and shared what the individual growth of each of those businesses will be. But I can tell you, a large portion, as you saw on the pie chart to your loan growth will come from those specialty businesses. And it's just from the introduction to the other side's footprint and a client base that we haven't called on in the past. So again, excited about it. We've been having sales meetings on Mondays where those individuals have been working to share their products and capabilities and has already been joint calling efforts.

So we're well underway there. And again, it's going to generate a large percentage of our growth as we look both on the loan side as well as the deposit side. We have some depot verticals that we've been focused on that we'll be able to introduce to the other legacy bankers. Very helpful. And then maybe just as a follow-up, I know there's some debate about if the asset thresholds get lifted here at some point. I know you guys have some onetime costs built in for that. But if those rules do get changed. I assume you'll still use some of that, but I assume some of it that you probably wouldn't or you could slow that pace. What would you do with those extra dollars -- would it be kind of further acceleration on the hiring front? Is there other projects or systems that you'd like? I know we're not talking a huge number, but certainly, it would be helpful for any color.

Yes, Michael, those calls, as we look at it, if $100 billion was raised and it was not in our near-term horizon with strong organic growth, we would still do the data work we're doing now, which is a large portion of that expense. And so we will still incur a good bit of that expense that we've modeled out even if that's increased, we would surely save on some head count in our back office functions. But but we would still continue to work on the data side. But when you think about what will we do with those expense dollars, I guess I would just reframe that and say that we will spend for good hires with or without those savings from LFI changing. And so we're going to lean into hiring the right talent because we see the value to long-term sustainable growth, long-term sustainable growth in assets and tailorable book value. And that's our strategy. So I just would disassociate the savings from LFI or really anything else with the hiring because we are leaning into that really in all scenarios.

Your next question is coming from Catherine Mealor from KBW.

Jamie, you talked in your prepared remarks about some restructuring that you've already done to the bond portfolio. Can you Talk to us a little bit about what you're expecting in terms of the timing for further build in liquidity as we move through '26. Just trying to frame you give us loan growth expectations, but trying to think about what the size of the bond book would look like over the course of the year and how average earning asset growth will build through the year. .

Yes. It's a great question, Catherine. And first, I'll give a little bit of color on the trade. So I mentioned it on the call, but we did $4.4 billion swap in the securities portfolio. The way I would think about the securities portfolio from legacy Synovus is, our book yield was about 350 coming at the end of the year. When you marked it to market, you got to about $40 million yield on the securities portfolio. And then we did the repositioning and the repositioning did multiple things. First, we shortened duration. Second, an improved liquidity, high HQLA improved. Third, it reduced risk-weighted assets. Fourth, it eliminate 98% of the PAA associated with the securities portfolio. So it achieved a lot of objectives to us. I mean we're trying to reduce AOCI volatility. We're trying to reduce PAA. All those things played out with this repositioning. So we're very pleased with how that happened. Those trades because we did shorten duration reduced the legacy Synovus security yield to about [ $435 million ]. And so when you bring those together, you get a security portfolio that has a nominal yield of around 4%, a tax equivalent yield of around 4.15%. And so that's kind of where we are in the securities portfolio. as we proceed through 2026, we do have debt issuances in the forecast. We're contemplating a couple debt issuances that could be $1 billion this calendar year, likely 2 different issuances, one in the first half or in the second half of the year, and that's embedded in there. Now consistent with the prior conversations, the impact of average earning assets just depends on the growth of loans and deposits and how all that plays out. But that's at a high level how we're thinking about 2026.

Right. [indiscernible] still put that $1 billion of debt into the '26 number feels like.

That's right. That's right.

Great. Okay. That's really helpful. And then maybe within the on deposits. both on a legacy basis, Pinnacle and Synovus had a nice reduction in deposit costs, but this came in better than I was expecting. So that was great to see. And so maybe can you help us think about as you see this accelerated growth into next year, and I know rates are moving, but let's just kind of on a static basis, where are kind of new deposit costs coming in today? And where should we expect maybe on a pro forma basis, deposit costs to kind of settle in outside of any kind of big move in rates on a pro forma basis?

So if we look at just like the going on rate this quarter, Catherine, on the Synovus side, it was around $3.14, a little higher on the Pinnacle side. But we expect those to continue to come down. Obviously, we built in 2 rate cuts. Just quarter-on-quarter, our rate paid was off about 30 basis points. So it's still a rational pricing market where you're seeing continued competitive tension is when you're going after high rate CDs, and I think both sides have really rationalized our demand for those. But as we go forward, as Jamie said earlier, part of our growth story is relying on these bankers to bring over their relationships when they get the loan. So we're not having to go out and rely on promotional deposits that have to generate the $8 billion in deposit growth this year.

So I think you would continue to see those going on rates come down as rates come down, and we'll be very thoughtful. As we've said in the past, we can grow deposits as much as we would like. It's just at what rate, and we're trying to grow them at a marginal rate. I always like to give you this from a Sonova standpoint when you look at loan rates for the quarter, we were at [ $6. 23 ] deposits, as I said, at 3.14.So you're still getting almost a 3.10 basis point spread on your new production, which, again, we monitor that just to make sure that we're balanced in how we think about the going on yields for loans and what we're having to pay for deposits.

Your next question is coming from Casey Haire from Autonomous.

I want to circle back on the recruiting strategy. So the -- I think you guys mentioned 41 hires in the fourth quarter. Just Wondering what the success rate was on that, I think it was 90% historically. And then just looking forward, what is the pipeline looking like as you guys target 2.50 this year? Or how many offers do you have outstanding? .

Yes. I would say on the success rates or the kill rates for hiring remained roughly the same as it as it was all year. The average number hired resembled to average for the year, the fill rate was similar for the year. I wouldn't detect any particular difference in our success at closing the recruitment cycle and turning them into hires. I think as we go forward, you heard what Kevin said, this methodology is just -- it's just that. It's a routine methodology that we have run for an extended period of time, and it feels like it will produce I would say, at least what we've committed in our guidance there. Again, if you look at the relative increase for 2026 over 2025, it's a pretty modest increase with at least for me, I don't feel like we've hung ourselves out on some big lift here. But anyway, that's my thought. I don't get your spot on.

And look, again, you don't have to go to the legacy Pinnacle leaders and ask them about their pipelines. They work them 3 times a week. What's changing is our legacy Synovus team is starting to exercise that same process, and they're building their pipeline. So it won't -- That's why we said over time that Synovus in '26 would still lag the hiring that happens at Pinnacle. But by '27, we would expect both sides to be adding a similar rate just based on that building of the pipeline. And I've had the opportunity to be on a lot of recruiting calls in the last 30 days. And I can tell you, that they're not slowing down. People want to be part of this company. And ultimately, they have validation from the people that have already joined that this is a great place to work.

I joke [indiscernible] all the time when I talk with the folks at Pinnacle, that have just joined. I said, how is it going? They said, "I wish I had joined 10 years ago. That's the #1 answer I get from those folks.

Okay. Great. And then just -- so you guys restructured the Synovus bond book. Just anything else that you guys are kind of entertaining as you look at the pro forma balance sheet and and maybe some updated thoughts on the BHG liquidity event, given what's a pretty favorable backdrop for them.

No, we have a lot of different things that we are working on the background on the balance sheet, but it's really too early to think about whether or not they're viable or attractive to us none of which are that material to the earnings outlook. And so we will continue to look at options to either improve liquidity of the securities portfolio. or reduce related assets or anything similar to what we've done in the past. With regards to BHG, those -- the team down there just continues to deliver. You can see that with their performance in 2025. You can see it with the outlook we have in 2026.

If you look at the fourth quarter of fee revenue, from BHG, we have $30 million in the fourth quarter, including a true-up of $5 million from the third quarter BHG earnings. And so to use the baseline $25 million in the fourth quarter, that's really strong growth as you play it out through 2026. I mean we're talking 25% to 35%, both for the company. So they continue to perform. And I go through all that because it just shows that they are focused on their core business. They're focused on growing it, adding value.

And I think whatever we do with the liquidity event or how they approach that, all I would just say is that they are positioning themselves well for choosing their own destiny with regards to that.

Your next question is coming from Anthony Elian from JPMorgan.

Jamie, on Slide 23, could you provide us with the updated assumptions specifically on the loan marks for 2026. Do you have a comment on the footnote that you shifted the mark to longer duration loans. But I'm curious if you could give us some sensitivities to NII if you shift the loan mark back to a shorter duration. .

Yes. As we look at our current expectation for the loan marks, we believe that approximately 2/3 of the PAA is going to come from residential mortgages, which are clearly long duration. And so that's the shift that we're referring to there. I would not expect these marks to move materially between products between now and finalization, but that's something that the team continues to work on. And that's what basically reduces that PAA benefit that plus the rate decline in 2026.

Okay. And then my follow-up, I'm curious, could you give us updated thoughts on deposit beta going forward for the combined company, assuming the forward curve plays out this year? .

Yes. If you look at the blended deposit beta in this easing cycle to now for both companies combined, you get to about a 48% deposit beta. And when we look forward at the next 2 cuts, which is our current expectation, we think that a 45% to 50% deposit beta is appropriate for the rest of this year. And clearly, there's a lot of uncertainties to go into that with deposit mix and pricing and what the Fed actually does. But we think that, that's a reasonable assumption, and that's what we're working towards in '26.

Your next question is coming from John McDonald from Truist Securities.

Lots of good thoughts on the '26 outlook. As we pull up a bit and think about the long-term promise of the merger and the case for the stock, could you share some thoughts on the long-term earnings power of the company at announcement, you showed an illustrative EPS of $11.63 using consensus '27 as a base. So maybe just any updated thoughts on that or broadly any puts and takes against that? Or how we might think about the run rate EPS as we exit '27?

John, I will start on this one. The first thing I'll say is both companies ended 2025 on a really strong note, and that positions us for success in 2026. And when I sit and I look at the guidance we put out this morning and you see it, it's strong guidance. I mean it's higher than consensus. We have a lot of confidence in our ability to drive towards this performance that we're laying out today, and we feel really good about that. The merger math is actually a little bit of a headwind to us because rates are lower. And so the PAA is lower and the mark on the novus book is lower. But the offset to that is you're seeing growth being better than what the original consensus was when we laid out the merger math. And so you have the offsetting positive of increased loan growth, beating expectations with the headwind of interest rates being lower. And so that's generally how we're thinking about it. I didn't mention expenses and all that because we haven't changed our expectations there on synergies.

Let me just add one thing. So Jamie talked about the forecast. Terry has mentioned it. Look, if we continue to provide the type of distinctive service that we provide. We're going to create an environment. You saw the slide in there, the market share opportunity that is in front of us are with these banks that have very low loyalty scores. And so our ability to grow and meet those targets are all predicated on continuing to wow our clients hiring talent and growing the balance sheet. And everything we've seen since the announcement, we haven't lost 1 bit of traction and momentum on being able to do those things. So I know it feels like we're early in this process and people would say that. But everything that we've seen over the last 5 to 6 months has further proven to me that by installing this model and delivering and executing, I feel like those numbers are not only attainable but we can actually deliver something that, as we've said in the beginning, the most profitable regional bank, the most efficient regional bank and the bank that has the highest level of client service, that's what gets me excited. .

Kevin, feel sustainable over time to me, which is an important idea. I talked about it a minute ago, but the fact that we've already hired people that produce the growth that's immediately in front office is important. The fact that we can continue to hire people sustains the growth over an extended period of time. And when you put that on top of the footprint, which is the most advantaged footprint in the United States and then look at the market share vulnerability chart, it's just hard to keep from being excited about what the long-term earnings opportunity are for this company. On your we're passionate about that question.

That's really helpful. It makes sense. Maybe 1 follow-up just to clean up some credit questions that have come in. Jamie, just in the world with no CECL double count, how does the mark kind of affect provisioning going forward? Does taking that mark pre-provided for some losses and let you provide a little less? And maybe just where the loan loss ratio is starting? And how should we think about provision relative to charge-offs going through '26?

Yes, John, just think about it as you would normally think about it, where the allowance we have today, we expect to kind of stay in this same area given our outlook of allowance to loan ratio. The only areas where I would say it kind of prefunds charge-offs is if it's for something that we see in the near term. a specific reserve on a loan. And so I would just think of it as normal going through 2026.

Okay. And then flattish charge-offs in the first quarter, you both had some individual kind of one-offs in the fourth quarter. Are there still some cleanups that happened in the first quarter? Maybe just comment on that.

Yes. I mean, look, I think if you step back and look at this quarter, we noted a couple of items, not because they're discrete, but we just wanted to provide some attribution for what drove the charge-off levels. I think it's important to note, if you look at pro forma charge-offs, it would have been roughly 25 -- or 25 basis points for the combined company. And as you saw, our full year guidance is still 20 to 25, but we're working through a couple of credits to your point, that we've already reserved for and likely taking charge-offs in the first quarter. So we just expect the levels to stay stable versus where they were this quarter. But we are not seeing anything that's indicative of any systemic change, any asset classes. It's really kind of a status quo for charge-offs. But the first quarter will kind of be stable with where we were.

Your next question is coming from David Chiaverini from Jefferies.

So you mentioned that loan growth should accelerate through the year. Is it reasonable to think kind of mid- to high single digit in the first half of the year and kind of high single to low double digit in the second half of the year? Any color there would be helpful.

Yes, I think that's reasonable. And it's reasonable just based on, as Terry said earlier, as the portfolios continue to be moved over from new hires, it will build throughout the year, and it will accelerate. So I think mid-single digit to high single digit in the first half and then accelerating to double digit in the second half.

Helpful. And then in terms of loan pricing, can you talk about any changes in spreads that you've observed in recent months?

This quarter, we saw about a 10 basis point decline in spreads versus our internal transfer pricing. So just think about a 190 spread on production. That compares to about a 200 basis point spread that we had seen for the first 3 quarters. So some of that has to do with mix and the size of -- we moved upmarket with our production this quarter. I think maybe that's what's lost, and hopefully, I can highlight that now is our production for the combined companies was up 63% versus the same quarter last year. So back to hitting on all cylinders, the team is producing. Some of those loans were in kind of our upper market businesses that generally carry lower spreads. But about a 10 basis point decline, we've said that, that's been a trend that we've been monitoring. I think it's within our expectations, and our guidance for next year would include spreads in that general range.

Our next question comes from Christopher Marinac from Janney Montgomery Scott.

Just real quick on deposit incentives. Are these any different for the combined company as it would have been separate at Pinnacle and Synovus? Just curious on how deposit incentives are comparing across the new company.

It's what Terry said earlier, Chris, our company is going to be -- everyone will be incented on the same measurements, which is revenue growth and EPS growth. And it's our job as the leadership team to ensure that deposit growth is a key component of that and being able to manage our margins. So everyone's incented on the company making its top of house goals. There are no individual incentives for production any longer and people won't be focused on filling buckets or meeting a scorecard. It's all going to be based on top of house, and it's our job to make sure, as I said earlier, that $8 billion to $9 billion in deposit growth that we're able to develop a clear plan for how to execute on it. And it would give us risk, obviously, if we don't generate that because it would put a lot of pressure on the margin. So no individual intends but everyone will understand the position of what it takes to achieve those EPS and revenue targets.

Thank you. This concludes our question-and-answer session. I would now like to turn the conference back over to Kevin Balir for any closing remarks. .

Thank you, Matthew, and thank you all again for your questions and your continued engagement and support. As you've heard throughout today's call, we entered 2026 from a position of strength, commercially, financially, culturally and strategically. The merger of Pinnacle and Synovus is more than a combination of 2 high-performing franchises, it's the beginning of something bigger, something that I think will reshape the premier financial services firm across the industry. What energizes me most is not where we stand today, but what we're building together. We have a proven model, a unified team, a deep bench of talent and a clear path forward and we're executing with focus, speed and discipline. Our commitments are transparent and our expectations are high, and our responsibility now is pretty simple, deliver. Deliver for our shareholders, deliver for our clients, deliver for our communities and deliver for our team. We fully recognize that '26 will come with its own set of challenges. They always do in periods of transformation and growth. But if there's one thing that both companies have demonstrated over the years is that we thrive when expectations are highest. Our momentum is real. Our integration is on schedule, and our culture is strong and aligned, and we've never been more unified around this ambition to become the best financial services firm in the country. So as we look ahead, now that we are confident we are cut, and we are absolutely determined to execute on every promise we made. Thanks, again for your partnership and belief in the future we're building. We look forward to continuing these conversations with many of you at upcoming industry conferences. Before I close, I want to express my deep gratitude to Terry and Harold for their extraordinary contributions. Their passion and for entrusting us to care for this to they've left their fingerprints on so much of what makes this firm so special, and I know they will continue to serve as champions for this organization and support our path forward for both of you, truly a job exceptionally well done. With that, operator, I'd like to conclude today's call.

Thank you for joining us today. That concludes that Pinnacle Financial Partners Fourth Quarter 2025 Earnings Call. Have a good day.

Awesome. Well, up next, we have the Pinnacle and Synovus team joining us for the fifth or sixth time for some of us, while others, it's joining us for the first time. I think it's safe to say this group has probably had the busiest year of any company here announcing their Transformational Merger of Equals in July and they recently received regulatory approval and on target to close early next year.

Once the deal closes, Kevin Blair will be the CEO of the combined company. Kevin, welcome back. Also joining us for the first time, Terry Turner, who is CEO of Pinnacle and becomes Chairman of the combined company.

So with that, today's presentation is going to be a fireside chat. I'm sure most of you saw that the company had a handful of slides out yesterday. So we'll be going over some questions that will likely reference some of those slides. So welcome and glad you guys are here.

So Kevin, Terry, you've met with a lot of investors over the past 4 months or so since the deal was announced. Which do you think of their key concerns have largely -- you've been able to sufficiently address? And which key concerns do you think are still out there that are weighing on the stock at this point?

Well, I think in terms of reservations from the announcement so forth, I think the biggest overarching concern is, hey, this is just going to be Truist 2.0. We're going to destroy a lot of value here in a Merger of Equals and so forth. That's been the thing that we've spent a lot of time addressing. What's important here is we spent time addressing it before the announcement. And so at least my judgment, we had a leak. So we had to sort of bring it out from 10 yards deep in the end zone here to sort of get the message out.

I think the message is really pretty simple. What distinguishes this transaction is all the work Kevin and I did at the outset which was to make decisions like what's the go-to-market strategy. And there are some banks that have been through MOEs that, in my opinion, cannot tell you today what the go-to-market strategy is. They're not sure if they're trying to be BB&T or SunTrust or some combination or Wells or JPMorgan or whatever.

For us, we agreed early on before we got very far into the negotiation that we're going to use the Pinnacle model. That's what we're going to use. And that's an important decision because it's helped us accelerate our execution here. I think people will be surprised by that. One brand, some of these folks have thrown both brands out. They got to win a new brand for everybody, not for us. We're sticking with the Pinnacle brand because we're running the Pinnacle model. I would say the most important thing that we have tried to help people see, and I think people are beginning to get it a lot of the value destruction in the other transaction had to do with not declaring a long-term CEO.

And so you get somebody running in this direction for a while, somebody running in that direction for a while. It destroyed the loyalty of associates and of clients. And of course, we were beneficiaries of that. We did the hard work to say we've got to have one long-term CEO. I don't mind telling you, I didn't show up at Kevin's door saying, "Hey, I want to get out of being the CEO. " That would seek me just fine to run this company. But I'm convinced that's a sure path to destroy value. And so we said we're going to have one long-term CEO. And of course, once you cross that bridge, that's not hard you go with the 54-year-old instead of the 70-year-old and that choice.

Same thing with systems. A lot of these deals, they throw out systems. It creates great risk because now you got to reconvert, retrain every associate, every employee. We chose right from the start, we'll go with FIS, which is the platform that Synovus runs. We know it's the most scalable system to run. And so because we made that choice, all these other choices going down through here have been easier. So I think that's the biggest message that we've had to push back on and try to change people's mind. My sense is we're making headway, but we'll see.

And that's super helpful. And I guess, Kevin, as you'll be running the day-to-day, what do you see as the biggest execution risk for the transaction? I guess up until this point, obviously, we haven't fully closed, but what has been more challenging than expected as we move into the next integration period?

Well, [ Ryan ], we've talked a lot about this and Terry referenced it when you think about why other MOEs have failed. The #1 factor is generally overlapping markets. You've seen that from some of the recent studies that were published in Bank Director. The good news is, as Terry said upfront, we looked at our markets, and we only had 11 markets that were overlapping, of which 6 were both sides had similar scale, which only represents about 6% of the pro forma deposits. So that shouldn't be an issue.

Maybe for me, the challenge is, and we've used the terminology that culture eats strategy for breakfast. To Terry's point, maybe the questions I've heard is you have this fast-growing Pinnacle Bank that has been highly successful for 25 years. And you're now going to merge with Synovus, which is slower growth. How are those 2 going to function together? Do they have different cultures? Can they coexist? I think what was important when Terry and I met back in May of this year, the first thing we talked about was not doing a deal. We talked about what our philosophy has been in terms of building our banks. Terry, over 25 years, me sitting in the seat for 4 years. And what was incredibly gratifying for me is that Terry talked about creating the best place to work which really is shown through their recognition in being the best place to work, but through their team member engagement scores. They have 93% team member engagement.

He also talked about creating a loyal client base. And you look at -- we've been bragging on Terry all day today, the third quarter numbers came out from Greenwich on the commercial side with an 84 Net Promoter Score. I've never seen that before. That means it's an incredible score that the clients are saying that Pinnacle has created a unique experience for them.

Well, if you go back and look at our Investor Day 4 years ago, we said we wanted to do the same thing. We wanted to create an environment at Synovus that, that was the best place to work. Our engagement scores are now up to 89%. So we're moving in the right direction.

We said that we have to create a loyal client base. And last year, J.D. Power, we moved up 11 points, the highest of any bank in the top 50 and our Net Promoter Score sits third in the Southeast, and it was up 3 points this quarter in Greenwich. So Terry and I said, well, gosh, it looks like we're trying to do the same thing. The one difference that we have not been doing is adding producers at the pace that Pinnacle has been adding. And so we've spent the last 6 months since that meeting up through this past week, working on what it's going to take to make Synovus grow at the same pace that Pinnacle has been growing, and it really comes down to the hiring model. The hiring model that Terry has installed and proven time in and time out, adding 130 to 150 resources every year and not just adding them, but also on the other side, retaining them.

And so I'm excited. I've told Terry, I've been a student of the game. What they've done is phenomenal. We'll be able to execute on that. I think our companies are way more aligned than they are different. And so as we are able to do that, Ryan, I think you're going to see that our growth rate will triangulate around something that Pinnacle has been able to do for some period of time. And that's why in our deck yesterday morning, we provided the balance sheet growth showing 9% to 11%, both on the loan and deposit side because we see that energy on our side, and we see the ability to accelerate the growth trajectory.

And before we get into some of the new targets and guidance that you guys put out, I just wanted to touch on one more question. Obviously, business development is a huge part of your model and now the consolidated model. I think Rob McCabe had committed to being your Chief Banking Officer for another year. Maybe just talk about, given the importance of it, the process of replacing him, do you have a candidate or a successor? What are you looking for? Will it be internal or external? And when do you think we should hear from you guys on this?

Well, Ryan, I think if Rob were here, he would tell you that he has signed on for a year as the Chief Banking Officer, but he's also signed on for 3 additional years as an adviser to me and the company. So one thing you guys should know is with both Terry and Rob, these individuals built this bank. They are founders. And so whether they have a 1-year contract, 3-year contract, they are friends for life. And I think they'll do whatever it takes to make the bank successful.

What I asked Rob to do in this first year is to install the Pinnacle model, is to go and sit over top of our businesses, both geographic businesses as well as the specialty businesses and instill those qualities that have made Pinnacle so unique, both from a client service standpoint, but also from a hiring standpoint. So we've spent the last several months already doing that. So we're not going to enter January 1, thinking how are we executing in '26. Rob has already instilled those qualities. We've built the plan. People will execute that on January 1.

For the full year '26, I told Rob, the goal is to go ahead and identify his successors, and it may not be one person. It may be multiple individuals. But we've already started that process. He acknowledged that there is ample talent within the company to be able to do that. I have been blown away by some of the individuals I've met on the Pinnacle side. I think Terry has met some of our bankers on the Synovus side. I think we have a very deep bench on the revenue producers, the leaders that lead that group to be able to replace Rob. But as I said, replacing Rob on a functional org chart is one thing. We're not going to lose his support. We're not going to lose his guidance, and that will stay on for 4 years.

Got it. So Kevin, you referenced the 9% to 11% loan and deposit growth for 2026. Obviously, it seems like a little bit of an uptick from the individualized run rate. Maybe just break down how much is coming from each of the legacies? What are the main areas driving growth, including organic and from recruiting? And lastly, can you sustain these type of growth rates over the medium term?

Yes. So if you just think about it and you try to take it at a granular level, I would just suggest that Pinnacle has been growing a 5-year CAGR about 12%. So assume that, that would continue on the Pinnacle side. And so if you're backing in the math to get to 9% and 11%, you would say that Synovus would have to grow roughly 8%.

Now if you look at our 5-year CAGR, it would show something around 3%, but that's largely because we've been optimizing the balance sheet over the last 4 years, selling the medical office portfolio, downsizing some other asset classes that we wanted to minimize.

I think our more organic growth has been somewhere around 4% to 5%. So that means that Synovus to be able to get to this 9% to 11% next year, we've got to step up our game. And that's going to come from a couple of different things.

Number one, as you've seen in the slide, we've been successful at adding revenue producers this year. So we're already on that treadmill, and those individuals will be coming on. They've come on this year. They're going to produce growth next year.

Number two, Terry and I have given other examples on the revenue synergy slide that both companies have specialties that the other company didn't have coming into this integration. So things like equipment finance or dealer finance, those are areas that Terry and his group have built out. They've grown rapidly within the Pinnacle model. We're going to turn those groups loose in our footprint and be able to sell those assets or sell those products into our banking units. And just for example, with equipment finance, we had an outsourced partner we would refer that business to. Anytime you got to refer a loan outside the bank to a third party, it's just not a good relationship.

So I'm excited to have the equipment finance team in footprint, working with our teams. They're already syncing up with our bankers to make sure that they're going to offer those products January 1. But that's the second leg of the stool.

The third, I would say, we've recognized that payoff activity has been a headwind for some of the growth we've had this year and last year. We believe that's moderating. And I'm not -- when I say moderating, I don't think payoff activity is going down greatly, but it's staying flat. At the same time, our production levels continue to increase. We're up 52% in funded production this year, and we expect that to continue. So as production ramps up and that moderates, stays the same, you're going to see greater growth from the production that we've enjoyed.

And then maybe the wildcard will be we think that interest rates are obviously largely correlated with line utilization numbers. As interest rates come down, and we expect that to continue, we think we'll get some tailwind from line utilization, which we haven't had for some time.

So maybe to dig in a little bit more on the revenue synergies. You gave a ton of color on the slides on $100 million to $130 million. Talk about the timing of these? And is this different from -- is this coming from the existing employee base? Do you need to add more hires to achieve this? And maybe talk about what's coming from each side to drive this?

It's both. And that's why we've got a couple of questions today. How much of this would be embedded in the guidance? All of this will be embedded in the guidance when we get to fourth quarter earnings call in January, and we're one company, Jamie and his team will put out full year guidance for '26. And so you won't have to wonder whether we're giving balance sheet guidance and is the revenue synergies on top of that, does it include it? So we'll be very specific there.

But if you look at those buckets, the first bucket we call the low-hanging fruit because it's the model we're going to run. We're going to be adding bankers at a faster pace, and that's going to drive incremental loan growth and revenue growth. We also believe that there are hold limit increases on individual clients as well as portfolios. We know at Synovus, we've kind of anchored the size of our structured lending division and our senior housing division at existing levels with a bigger balance sheet, now we can open up the growth in those asset classes.

Those, we say are low-hanging fruit. They're hard to do, but they're within our model. The rest are a lot of products and capabilities that both sides bring to the table, whether that's capital markets, we look at each side and we say, Pinnacle and Synovus, what percent of the variable rate loans are produced with a swap. Well, when we see differences, we say if we just normalize that in the company, it's going to result in incremental fee income.

When we look at the amount of debt capital markets revenue we get from an existing public company that's in capital markets, we look at that and we try to equalize it. So it's really about looking at our capabilities using some estimate or benchmark to say if both sides execute in a similar fashion, it's going to translate into incremental growth.

The last piece is where we just introduced brand-new products. So like at Synovus, we have an FX product, foreign exchange that Terry and his team doesn't have today. And so introducing that to the financial advisers, they'll be able to sell those products. So that $100 million to $130 million, we believe, will flow in over 2 to 3 years. It will be included, obviously, in our guidance. And we think that there's probably more outside of that. And those are the revenue synergies that we'll find as we start to operate, but these were the ones that were obvious to us when we looked at the portfolio of products and solutions and the differences in performance that if we move towards a similar level of performance, it would generate that sort of upside.

So a question for both of you. So you put out revenue producer hiring targets, almost 500 incremental employees over the next 2 years. Terry, for you, it looks more like business as usual. Kevin, for you, it looks like we're going to have a bit of an uptick. So maybe for both of you, just talk about what are some of the key areas or geographies you'll be hiring in? How do you ensure hiring this many people and bringing the culture together? And how do you maintain that industry-leading growth, manage the culture and bring in all these people?

You want to go first? Yes. So it's probably important just to think through what the hiring model is. So how does all this come about? We run a methodology where it's a continuous recruitment cycle. We're always trying to hire the great bankers in the market. If you take a market like Kevin will tell you, Jacksonville, Florida, we're using the Pinnacle person to run that market. First meeting he has with Kevin, he says, look, there are 140 relationship managers in this market. I know which ones I'm interested in. And so I recruit those people on a continuous basis. I'll hire them all when I can. It will take time to get them in and so forth.

The way he comes up with that list is these are people that either he knows or people in his company know, and they have said that person is good at what they do and they will fit in, both of those things. When you use that methodology, it's markedly different than people that are using a headhunter to hire people, people are using a recruiting department to hire people, people that are hiring folks that come in to fill out applications and so forth. It drives up the certainty that you're going to get somebody that's going to move that book of business to you. So that's a really important element.

Secondly, we always have a requirement for at least 10 years' experience on average, experience is 18 years for the people that we hire. So when you think about that phenomenon, the people have been handling a book of business for 2 decades, they can move it quickly. So you get rapid asset growth and it produces great asset quality because they know the credits that they're moving. They also know which ones are bad and they leave those behind. It's the opposite adverse selection.

So that's sort of the methodology for how the growth occurs. What we found over a period of time is that you generally get a similar loan and deposit for asset and liability growth out of those people, and it comes generally over a 5-year period of time, roughly on a straight-line basis. So that's sort of how the economics of the hiring goes.

The case is when you run this model of hiring people, people have been saying to me for 20 years, at least, Terry, surely, you've hired all the people that you can hire, right. The case is the more people that you do hire, the more people you can hire because of what I talked about on this networking and so forth.

So again, people talk about why are you going to -- are there enough bankers in the market for you to hire? Honestly, it almost seems like an absurd question to me. When you look at the Southeast, we -- our combined Southeastern footprint, we'll have about 6% share. Bank of America -- I'm talking about businesses, not consumers. Businesses will have about 6%. Bank of America, maybe 7%, Wells, maybe 8%, Truist, 10-ish or something like that. Those 3 banks that are bigger than us are vulnerable. They have high turnover rates, and they have got large attrition rates. And so not to be tight, but it's a little like the gift that keeps on giving. I mean my belief is we'll continue to hire in that pool. It's not the only pool we hire from, but we'll continue to hire in that pool. So...

And look, to Terry's point, I mean, we've installed this model. We used the statistic, Ryan, a couple of quarters ago, we said when we looked at the original math, it looked like Pinnacle had 570 revenue producers to Synovus 270. And so just put that in perspective, similar-sized banks, they got 2.1x the number of revenue producers.

So imagine Terry taking his model, applying it to our 270 revenue producers. We have Synovus. They all know folks. The difference in the model in the past is I would have -- it's only me, I would have given them a budget that said in Atlanta, you get 4 FTEs you have to add in Orlando, you get 3. This new model is, look, in Atlanta, our new leader in Atlanta, Charlie Clark, we're like go find every great banker, just like were doing in Jacksville, -- if there are 140 there, that means Atlanta has probably got 250, find -- of those 250 who you want to hire and let's go hire them.

So our team is in a place to be able to do that in the markets that you asked for, it's really no specific market. I joked with Terry last week. I said maybe there's one market we wouldn't want to add in Nashville because they control the market. And I think he added a new resource there last week. So it shows me that I don't know. But in markets like Atlanta, there's opportunity for density in markets like Orlando and Tampa and South Florida, huge opportunity. And then I look at some of the markets that Terry has recently expanded into like Richmond and D.C., there's tremendous opportunity there. And imagine in the state of Virginia, if you can go down in Hampton Roads in that area, they're already in Roanoke. So there is enough opportunity for us to be adding for the foreseeable future. And that's just complemented by the fact that at Synovus, we haven't had the density in the past. So you go into our markets and put a similar density and you're going to see good growth.

I guess for Terry's been running this model for a while. Obviously, it's going to be a change for a lot of the legacy Synovus people. And historically, both institutions, I think, had low attrition. But Kevin, how did you assess the risk of higher attrition. Someone decides they don't want to be part of this large organization, they don't want to be part of this model. I'm sure Terry is going to tell me reasons why that would be crazy. But maybe you can just fill us in on how you guys thought about this when the deal came together.

No, it's a great question because I think back to your first question on what people were most concerned about, they said, "Gosh, you're going to take these 2 banks and put them together and where you guys have been the hunter, you're now going to be the hunt it, right? And I think what people are missing is both banks ran an anti-big bank model.

And when I say anti-big bank model, it's not we're anti-bigger balance sheet. What we're anti is becoming a bigger bank and losing your soul. And what I would suggest to you is that we're trying to build a bank with scale but maintain our soul because as the banks get bigger, what you lose sight of, and Terry referenced it, those big banks that have all the market share, their Net Promoter Scores are 20 to 40. I mean they're way down there. They're forgetting what got them there, which is creating a work environment that attracts the best talent and creating an environment that creates a client experience that's unparalleled.

So what we said is, look, if both of us are striving to create a unique environment where people want to work and we both want to create a client experience that's second to none, what banker doesn't want to work at that bank because we're going to be bigger, and now we're going to have the capabilities and functionality that are enabled or that we are enabled to be able to go and invest in because we're a little larger. And if we maintain who we are, we maintain that soul, then this is a winning proposition.

Now if we go out there and become a Cat 4 bank and start acting like the rest of the Cat 4 banks as we've seen from their Net Promoter Score, this is a bad outcome. And that's where Terry [indiscernible] from day 1 said that cannot be the outcome. We have to be very thoughtful as we become an LFI institution. It means that all of the rigors that come with that regulatory process cannot be passed down and create a bunch of bureaucracy and red tape for our bankers because that's a recipe for disaster.

So we went into it eyes wide open, and we -- I think we've figured out Terry's had between 3% and 7% turnover for 25 years. Our turnover this year is down to 11%, the lowest it's been in my time here in 10 years, and most of that comes out of our retail network. But we're both focused on the same thing. And I think if we create an environment that takes the best of both companies, I don't think we have to worry about a big turnover number.

Ryan, if I could jump in on that. You have these obvious assumptions that we've been in the business a long time. So okay, we got this merger here, all this vulnerability, somebody is going to lose people. But I would submit to you the things that are in place that cause people to love our company are all here.

The things that are causing disgruntlement among those other companies are still in place. So all the elements that cause this rapid hiring opportunity to work are still in place. And here's an example of it. We -- since we announced this deal, Synovus has a small operation in Mobile, Alabama. We weren't there at all. We had an opportunity to lift out a team in Mobile that came to us after we came to Pinnacle, after we announced this deal and ultimately ends up being the President of the combined market for the 2 of us down there.

And so in the discussions with her, she's like, yes, well, I was ready to come, but help me think through this deal. And basically, the conclusion she came to is just what I said, "Hey, all the things I'm leaving are still there, all the things I'm going to are still there. I just need to go ahead and make this move. And so I think it's a pretty illustrative case for why we're not going to lose all these people.

Got you. I know the comments about the big bank were not glared at my big bank. No, of course. So maybe let's just switch gears and talk about capital for a little bit. You're expected to have close to 10% CET1 at closing. You're expecting to grow it by to over 10%. And I think you put out an initial target of 10.5%. I guess maybe just talk about your expectations to getting to that target over time. And given what sounds like really robust growth, how to think about uses of capital, particularly share repurchases? And how do you think about toggling the idea that you've got really significant growth opportunities, but I'm assuming neither of you are thrilled with where the share price is today.

No. Yes, we can agree on that. Terry and I are locked arms there. Look, but we also agree that tangible book value growth is something that shareholders want. And so we're -- depending on where rates end up, Ryan, I know we're down to the final stages here, but we could be at the end of the first quarter, we could be at 10.2%, 10.3% in CET1 levels.

And what Jamie has said in the past is that we've put that 10.5% number out there just because when we're looking at it from a competitive landscape, we don't want to be an outlier. And as largely most of our AOCI will be out of the numbers. So adjusted for that, it would put us in very good relative range with the other Cat 4 banks.

But ultimately, this company is a capital generator. Well, after dividends, still create about 35 basis points of CET1 every quarter. And so as you suggested, Terry and I have talked about, the best use of that capital is to go out and give it to our clients to facilitate growth.

Second best use, if we feel like we have excess capital, is we could go back and do some share repurchase just to get us in the right relative range. But for us, I would much rather focus on growing faster. I would love for the Federal Reserve to come up with some new tailoring rules. So we don't have to spend $70 million, $80 million on LFI. We'd go and spend that money on more resources to grow even faster, and we have the capital to do it.

So we'll monitor capital levels. We think we have adequate capital day 1. We'll watch what happens around us with all the regulatory changes. But just know, even at 10.5%, if we were to run our own internal CCAR stress test, we feel like that's more than adequate, more than adequate, and we have flexibility to leverage that capital in other ways. But we're a growth bank.

So what you'll see is the dividend is going to come in a little lower than the historical Synovus dividend. And you won't see us relying heavily on share repurchase because we think the best way to generate value is to grow our tangible book value.

Ryan, if I could, this is an important idea. You mentioned share price. You're right. I don't like where the share price is. But I didn't do this deal believing that it was going to run. My expectation was that it exceeded my expectation, but my expectation was that stock would trade down at the announcement. You can't do a deal like this unless you're convicted it's going to work because you know you're going to get all this turmoil at the announcement.

So all I would say to you is I did a really similar transaction, which was the BNC transaction in 2017. Stock traded down. What we did when we put our model on that footprint was compound loan growth at 10%, deposit growth at 14% over 7 or 8 years and outperformed the KRX 2x from the day we announced that deal and 3x from the trough because it did trade down there and then it came back. And so that has been my conviction about this transaction. That's my expectation for this transaction.

Maybe just switching gears a little bit to the near term. Obviously, you both put out slide decks yesterday. Terry reiterating no change to the full year guide. Kevin, sort of some puts and takes. Maybe just a quick update on anything that you guys are seeing in the market that you think is noteworthy to highlight.

Yes. I mean, look, I'll start and Terry can add in. I mean, look, I think we -- our update was a little positive from a revenue standpoint. But I think the message you should take away from that, Ryan, is that this merger and all the work that's been going on by hundreds of people in our company have not slowed down the momentum that we've both been building on.

Our clients are not feeling any impact. We're generating growth, both on loan and deposits, and it's translating into a good quarter for both companies. And I think that's -- we've talked about -- Terry and I've talked about the #1 opportunity for us is just continuing to execute and executing in third quarter, which both companies did, executing again in fourth quarter and then giving you a little bit of insights, obviously, to the targets for next year, saying that, that's going to also launch us into '26 with some powerful growth trajectory. So not a lot of key themes there other than just executing on the core principles that is allowing us to deliver on our expectations.

Maybe one financial and I see we've got Jamie sitting in the audience, so I'll make you put your old CFO hat back on, Kevin. You put out a target NIM of 3.5%. You laid out where you expect short-term rates. Maybe just talk about your degree of confidence in sustaining this over what time frame? And what are some of the key assumptions such as deposit repricing or an upside and downside risk to this over time?

It's like Jamie said earlier today, if you just take the Synovus margin, it's like a 3.80%. You take the Pinnacle margin, it's a 3.40%. You put it together, it's probably closer to 3.60%, day 1 because of the mark for the balance sheet. But over time, some of that PAA will come in, and that's why we came up with kind of the normalized 3.50%.

And look, if you ask me what the puts and takes are? It's -- we can't project the interest rate environment. We've largely, though, tried to manage the balance sheet where we're fairly neutral to the front end of the curve. We have a little bit of asset sensitivity in the belly of the curve. So there's some rate movements there that could drive the margin. But we've said this, we don't want to be an investment for you guys based on a bet on rates. We want to be an investment based on growth. So the margin itself would kind of materialize in that 3.50% range.

And the question that we've gotten today, and I think the rightful question is if you're having to generate deposit growth of 9% to 11%, are you going to see pressure on the betas as a result of having to lean into pricing. We don't believe so. We think that what Terry and his team have been able to do over the last 25 years, you've seen a correlated level of loan and deposit growth because when you're hiring talent, you're just not hiring asset generators, you're hiring folks that are bringing over full relationships, which bring deposits with them. Terry and his team have also built out a very strong deposit vertical, several deposit verticals that we'll be able to leverage in the Synovus franchise.

So the biggest question for NIM to me is just that funding of the growth and where you're going to have to price it in order to generate that. And look, we could grow deposits 10% every year if you want to do 7% CDs. That's not our plan. We want to bring them in at kind of the normal levels.

Thank you for saying that, that's not our plan.

It's not our plan.

One thing that I did want to ask about when we were talking about capital was BHG. I know there's been talk of the principals potentially pursuing a liquidity event. I guess if your investment is sold, how much capital would be available? And what would be the uses? And how would you think about replacing the earnings of that over time?

Yes. So I think the case is just to level set, Pinnacle on a stand-alone basis, more or less headed toward an exit at a reasonable price, not because it wasn't a good investment, but because we just never could carry the day. We couldn't get the valuation out of it among bank investors and so forth. So update, I guess, is 2 principles own 51% of that company. We own 49% of that company. My belief is those 2 principles are more interested today in a liquidity event than at any time that I remember. And so I would say that increases the likelihood of a liquidity event.

The case is for Pinnacle, we don't have to travel with them. We have tag-along rights if we want, so we can liquidate our position as they liquidate there, but we don't have to do that. And so I think what Kevin and I have agreed is BHG was a much larger portion of our income stream than it is of the combined company. And so I think we generally like the company. We like the asset. We like the earnings stream. We're going to see a few more cards before we decide exactly what we're going to do. But Kevin, do you want to...

No. As Ryan, as you may know, we're a participant in their syndicate. So we know BHG from a Synovus side. To Terry's point, if they remain -- if we keep our 49% interest, we'd be fine with that. We think it's a great company. If they were to monetize, our goal would be to take the capital generated by that and try to replace that earnings stream.

For the combined company, it's roughly 6% of revenues. And so whether that's through share repurchase, purchase portfolios, the other thing that we would try to do is partner with whoever we to purchase BHG as we have certain relationships today like with Sixth Street and GreenSky, where we're able to help facilitate that banking transaction. So at the end of the day, eyes wide open. We know what we're getting to. We like the business. If something were to happen, we would use that capital to help replace that revenue stream.

So I heard the applause from [indiscernible] means we're coming up against time. But I guess, in conclusion, obviously, we covered a lot of ground here. You guys put out a ton of information. I guess any sort of concluding remarks in terms of just positioning into next year, things that you think the market is still under appreciating, whether it's about the integration, the growth profile that you guys want to highlight as we close out the year here?

I mean we both -- we're running out of time. Look, we have been very focused on this integration. We've got a lot of work done. We got an approval in 124 days with the Fed. I think it speaks to our relationship with our regulators. And we're in a position on day 1 to launch this company and to do what I said before, build a bank with scale with the soul. And I think it puts us in a competitive position that ultimately will win clients on a daily basis. And then just go back to the merger math. If you look at what we're going to deliver in 2027, we're going to be the fastest-growing regional bank with the highest profit, the most efficiency and ultimately with the best client scores. If you don't want to own that bank, then you probably don't want to own regional banks.

Great. Well, please join me in thanking Terry and Kevin.

Good afternoon. Next up, we're very happy to have Pinnacle Financial Partners as well as Synovus Financial with us this afternoon. As most know in July, both banks announced an agreement to combine in an all-stock transaction, creating a high-performing regional bank focused on the fastest-growing markets in the Southeast. Combined assets at that point, $116 billion. On a pro forma basis, the company is expected to generate top quartile revenue and net income growth and the best efficiency ratio among their peer group looking out into 2027.

With us today, we have Terry Turner, President and CEO of Pinnacle, positions that he's held since the bank was founded back in 2000. And then to his right, Kevin Blair, Chairman, President and CEO of Synovus. Kevin was named CEO and President back in '21, Chairman in '23. And since joining the company in 2016, he's also held the CFO and Chief Operating titles. Thank you both for being here. Format pretty straightforward, Q&A. And then after that I'll open it up to the audience.

First off, let's just start today's -- today was a special shareholder meeting vote. Can you just expand on that meeting and how it went this morning?

Yes. So it's an uneventful deal, different than most shareholder meetings there. For us, I think we ended up having about 79% of the outstanding votes cast and 93% of those votes in favor of the transaction. So pretty good support.

Same for Synovus. As Terry said, we had around 75%, 76% vote and right around 69%, 70% affirmative. And to Terry's point, it's uneventful, but it just is affirmation for us that our message has resonated with our shareholders and they're supportive and looking forward to the value that we've been talking about building as a combined organization.

Great. And then have you noticed -- has there been any noticeable changes in employee or client attrition since the merger announcement back in July?

For us, there's no change. Generally, we're running a 95% retention rate, and that's really what it has been since the announcement. So pretty lofty retention.

And just to add to that, as we all -- Terry and I talked about on the third quarter earnings call, both sides added revenue producers in the third quarter. which I think shows that the momentum and the message is resonating with folks that are in a position to say what's this future Pinnacle look like? I was blessed this week to be called by 2 of Terry's leaders to talk to some individuals that were interested in joining our organization.

And what they wanted to hear is what my vision was for the future of the company and whether the Pinnacle model, one that allows folks to have autonomy and to be empowered in the marketplace will continue and that they can continue to add revenue producers and spent hours on the phone with both of those individuals. And I would like to think I heard last night, Terry, I think both those individuals will be joining us. So it's interesting. They built a model of getting somewhere around 125 to 175 new revenue producers every year.

And we're in real time having discussions with those individuals who know there's a merger forthcoming, and they know the model that they want to join. And their big question is, is that going to continue? And once they've had an opportunity to hear how we're adopting the go-to-market Pinnacle strategy and how it's largely going to remain unchanged, it gives them the confidence to be able to move over in the middle of a merger. And as Terry and I have talked about that, there are a lot of reasons that people may not want to do that. But they're still doing it, as Terry showed in the third quarter with their numbers. And I think we're going to be able to prove out that fourth quarter will be another positive quarter for growth, and that will allow us to continue that momentum into 2026.

Kevin, one thing I might just tag on you alluded to, we sort of hired at the same pace in the third quarter that we had previously and expect the same thing in the fourth quarter. But what's fascinating to me is we're successful hiring people even in markets where we have crossover. We're successful in hiring people, which is pretty interesting.

Great. And then can you just run through the primary HR-related or chart-related tasks that the company would like to achieve before closing the transaction?

Yes, I'll start with that one. And Terry and I have talked a lot about this. We have become students of mergers. I think it was a [indiscernible] that was released in Bank Director earlier in this quarter or maybe it was back in the third quarter that they looked at the last 15 mergers. And in those 15 mergers, they discerned that about 2/3 of those MOEs failed and 1/3 of the MOEs were successful. And they were able to correlate a couple of factors that would determine success or failure.

The 2 factors that were most present in failure was a tremendous amount of overlap, which Terry just touched on. And secondly, that you had one high-performing company buying a poor performing company. And so I would submit to you that in our situation, neither one of those cases exist. We only had about 6% of our pro forma deposits in markets that we consider to be overlapping where we had -- both teams had a tremendous amount of market share. And I would argue, based on -- you've seen our last 5 years of EPS growth and TSR, both companies have been performing. So that's not the case.

On the other side, we saw that what was most likely to create a higher probability of success was lack of overlapping markets; and two, a company that had an operating model that was similar. And Terry and I have been spending a lot of time over the last several months talking about our operating model, bringing our teams together. We are both just in Nashville yesterday. We have about 200 bankers in Nashville talking about the go-forward strategy where we've already aligned individuals. And so it's a long-winded answer to say that, look, what we learned from some of these other mergers is that people didn't want to make the tough decisions. They continue to defer those decisions. And what that meant was that people throughout the organization filled the lack of information with fear and it created turnover, it created disengagement.

So Terry and I committed upfront from almost day 1, we had our ELT established. Shortly thereafter, we had press releases that had ELT plus 1. We then announced our entire production team on the LOB side. And so by the end of this quarter, we will largely have every individual in a box in an org chart. And most of that's already occurred. We're already at kind of the SLT, ELT plus 3 layers. So people have already been notified of their jobs. And so by the end of this month, even before legal day 1, most every team member in the company will know where they stand. And I think that's -- Terry and I are committed to that because we think that takes a lot of risk off the table and ensures greater probability of success on the other side.

Kevin, I think one thing that's important in that idea is probably the area where we are most advanced is what you might call the banking operation, I think the cost takeouts are outside of that, which lets you run faster there, which, of course, is the game we're trying to win here. And so I think we're really advanced in terms of just how the banking operations.

Terry, to your point, and I've had some jokes from some of our investors that if we're going to put out another press release with about another 90 names on it because we keep adding to the specificity that you guys can see through each of our markets that we're down several layers and naming market executives, the people that work for the market executives. And so to your point, our go-to-market, our revenue producers are largely intact, and they're in a place today where they're already hitting the ground running. But when we get to legal day 1, there's not going to be some level of uncertainty around how am I going to deliver for my clients.

Great. And then what surprised you the most since the merger announcement? What's gone better than expected? And maybe talk about any challenges.

Yes. So I think probably the thing that has been most fascinating to me, I mentioned this progress that we're making within the banking unit I think when we announced the deal, we felt confident we could take this Pinnacle model and make it work, but I think there were skeptics as to whether we could or couldn't. And my exposure, of course, I know the Pinnacle people extraordinarily well, but now I'm exposed to the Synovus people. And I'm astounded at the people that will run me down and say, man, we're so excited to be a part of this model. This is the way we grew up in the banking business and all those kinds of things.

I've sort of been shocked at the receptivity. Your big fear is, okay, we're going to lose a bunch of revenue producers. But I remember in a conversation Kevin and I and 2 or 3 other people were having about how you put this thing together. And I was pushing pretty hard to say, you guys are pretty sure we can convince these people they like this model. And a guy that works for Kevin said, trust me, we've had a geographic focus most of the existence of this company. And if we announce we're going to a geographic model like Pinnacle runs, they'll be shooting fireworks and guns in the streets. And so there has been some of that sort of sentiment among the client-facing people that, hey, we're back to what we'd like to do.

The thing I'd add to that is, look, Terry and I spent several months. We talked about that in the S-4. So there weren't a lot of surprises going into this because I think we tried to make as many decisions upfront, and we went into this eyes wide open. We both knew this would be hard work. And I want everybody here to know that there's been a lot of hard work because any time you bring 2 companies together, as much as we talk about the similarities, as much as we talk about how this thing is going to work, you've got to get through there and understand what are these pain points that people are observing and we got to squash them before they become an issue.

And so Terry and I have been working on that. So no real surprises. I would kind of say what Terry said, in this meeting that we had yesterday, I asked both sides, the Pinnacle side and the Synovus side to submit a template before we had our meeting. And I ask them, give me the 3 things that, in your eyes, where you work today that you don't want to see change, and give me 3 things that you would like to see change.

And what was so exciting for me is that the Pinnacle team talked about they want the geographic model. They want the enterprise-wide incentive plans. They want empowerment. They want the things that -- being able to hire at a rapid pace, all the things that Terry, you've talked about that make Pinnacle special. On the Synovus side, the things that they didn't want to change was our focus on modernization and technology and tools and products and serving our clients. When then you got to the things that everybody wants to change, some of the rhetoric that came from the Pinnacle side, we'd love to have better products and innovation, and we'd love to have better tools. And what did our side say to Terry's point, we want more empowerment. We want autonomy. We want decision-making.

And so when I put that together, it's not just the geography that fits together like a glove. It's that both sides are coming together, both receptive to what they both want and both wanting to change the things and the other side can help to make that change a reality. So when we execute on this, I think you're -- as Terry said, you're not going to have to convince people that this is a better place to work. It should fit together and some of the weaknesses that both sides bring to the table can be offset by what the other side brings.

And Kevin, you talked about the hiring on the Synovus side recently. Could you just talk about assimilating the Synovus revenue producers into the Pinnacle model?

Yes. Look, as Terry mentioned, I mean, our revenue producers, I don't think it's a big change to go into the Pinnacle model. What will change will be their compensation structure. And we've talked about this in previous meetings. What Pinnacle runs and what we agreed to match for -- and I'll talk about why, is largely each producer within the company will be compensated based on how well the company achieves its revenue and EPS growth targets. And in most banks around the U.S., most individual producers are paid based on their individual production.

And as Terry has talked about, that creates a lot of internal competition. It also creates a mindset that what's best for me is what gets me paid. That may not be what's best for the company. It may not be best for what my team member is trying to accomplish. And so when we sat down with Terry early in the process, I was excited about adopting that model because -- not just because I think it's a good way to structure it, but look at the track record.

Terry has been able to hire 150 bankers a year, pulling them from these larger institutions using that same incentive structure. He just talked about the level of turnover in his company, 3% to 5% shows you once you come there, the incentive plan is not something that creates a disengagement. They actually like it. And the biggest opportunity for us is we've produced a lot of high-performing producers, revenue producers at Synovus, but my fallacy is I think sometimes we've created an individual mindset mentality where people care more about producing and what they do.

So I embrace this concept of if it's best for Pinnacle, it's best for that team member. So we're going to calibrate their compensation. They won't get paid less. Quite frankly, more will be placed into their base pay. So more will be guaranteed. And as Terry and I have talked about, as they've been able to attract other folks, generally, people like that. Now that doesn't mean there's not accountability. There's going to be KPIs. There's going to be performance reporting. So we'll know who's performing and who's not. But I like that concept that we're going to have a lot of bankers all in the boat rowing in the same direction, focusing on the same ideals, which are top line revenue growth and EPS growth. And so that's really the change.

Outside of that, as Terry mentioned, not a lot of overlap. We haven't had to make a lot of reorganizations. And what our bankers are hearing is that they're going to have more accountability on pricing and decisions with clients and ability to hire. And so they're getting very excited about it. Now the reality is some of our team leaders, what I've learned from Terry and what I've been most impressed about is the rigor at how his team goes about recruiting. We may have 3 pipeline meetings a week, Terry, about loans. They have 3 pipeline meetings a week about talent.

And so getting our team members, it won't be a light switch overnight, but getting our team leaders across all of the markets that we serve, focusing that intently on a pipeline of talent. Once that kicks in, you're going to see the inflection point where our team is able to hire at the same pace as the legacy Pinnacle team, that's when you're really going to start seeing the payday. And again, that's, I think, a self-fulfilling prophecy where then those team members are going to be excited because they're growing their team. There's not a single person in a bank that doesn't get excited about growth and winning. And that's what gets me excited.

When you're winning, everybody wants to be in the team picture.

So much there.

Yes.

Then moving on to the conversion -- operational conversion not until the first quarter of '27. Could it happen sooner? And could that delay impact balance sheet growth, client growth at all before the conversion occurs.

Yes. I mean, it could. I will never say never. We made the decision to do it in March of '27 for one reason. Both companies have an impeccable record of serving clients. And you can believe, Terry and I, you can go look at the Net Promoter Scores in Greenwich and J.D. Power. We're pretty proud of that. And what we don't want to have happened is a client conversion to new systems causing a major hiccup in that service quality. And so we've committed to a slightly longer conversion period to make sure that we take a concierge-like approach to that conversion.

And what does that look like? That means that if you're going to convert somebody from a commercial portal to a new one, we're going to have proper training for the commercial clients. We'll have videos. We'll send technical consultants out to make sure that everything hooks up. We're not going to do it based on our timetable to get it done as fast as possible because we wanted to go as smoothly as we go. Secondly, we've seen when companies merge, a lot of MOEs will merge to a platform and one side of the company has to give up some capability or functionality because the other side didn't have it.

We're going through an exhaustive evaluation right now to understand which systems we're going to move to and which capabilities would be a give up. And then we would spend that same 14 months ensuring that if we were -- if Pinnacle is moving to a Synovus system or vice versa, if there's one capability that was a give up, we would try to ensure that the product that we're moving to could have that capability at the time of conversion.

So it's nothing more than making sure that we get it right. And some of the things we will do in the interim, if there's a large complex client that's coming on board, during 2026, and we know that at some point, they'd have to migrate, we may go ahead and put them on the end-state system that year instead of having them convert twice. So there will be certain things that we set up as mitigants to try to avoid bad client situations from that longer time frame. But we really believe it's going to give us an opportunity to get it right and make sure that conversion goes very smoothly.

Kevin, if I could add to that, I think one of the things that's so important here is we've got synergies, cost synergies that we've got to get, but they're pretty modest. The thesis for this deal is revenue, and that's all tied up in service delivery and reputation and all those kinds of things. And so to your point, I mean, we could scramble in here. There's no doubt we could get through a conversion more quickly than we're going to get through. But again, that's less important in this transaction than many that I've been associated with because the emphasis is on revenue, not on expense cutting.

That's well said.

And then what's the pro forma annualized balance sheet growth target?

I mean, Terry and I have talked about it. You guys know the historical growth rate. Pinnacle has been high single digits, low double digits. Synovus has been mid-single digit. And so if you just do the math, we should be high single digit to low double digit. And that's because if we're saying that the Synovus model is moving to the Pinnacle model and we'll be able to add revenue producers faster, you should assume that the organization over a period of time should triangulate around that high single-digit, low double-digit growth rate.

And then let's shift to the cost saves next year. Could you just talk about the cadence of the cost saves in 2026? And then how much will be realized immediately?

So Terry nailed it. When we look at the combined expenses of the organization, we're talking about $250 million, 9% of the combined expense base. We said 50% would be achieved in 2026. 75% by 2027 and the residual in 2028. And Terry said it best. I mean we're not going into this saying that cost synergies are the reason we're coming together, which is why that's a little prolonged. We're going into this. And maybe that's -- if you asked me earlier, what I'm most concerned about is cost synergies because no one wants to leave this company.

They all want to be part of what this company has built and what it's going to build. And so that's the hard part. When you're growing and you're able to create an environment, a place people want to work, it's hard to want to cut FTEs. And so you'll see about 50% this year, 75% in '26, another 25% aggregate in '27, the residual after that. But it only represents about a 5% to 6% headcount reduction for the company. So again, to Terry's earlier point, this is not a large cut as it relates to the combined companies and compared to other MOEs.

And then on revenue synergies, will you be able to communicate revenue synergies over the next 2 to 3 years? And what are the top few categories that represent the best opportunity?

So Terry and I have been spending a lot of time talking about this because it's not fun to talk about cost synergies. It's fun to talk about revenue synergies. And we've done a back of the envelope calculation a little more than that. But we think the number could be $100 million to $130 million in the next several years. And I would put it in 2 large buckets. About 50% of it comes from what I call core revenue synergies. Those are things like balance sheet size going up, so you have higher hold limits, pricing just hiring faster on our side, that can generate about 50% of those cost synergies.

The other 50%, what I call is full capacity or full utilization using the best of both companies. So whether that's looking at Terry's world in some of the specialty lending areas like equipment finance or other things that they've done extremely well, dealer, applying that to our franchise, to our footprint, if it's looking at things like treasury and payment solutions where one side has a product that the other side doesn't have. We're not saying we're going to go out and be best-in-class. We're just saying try to get to the same penetration ratio on both sides.

And the third is on capital markets, different capabilities on both sides, M&A capabilities, FX capabilities, just different. And so just moving both companies to the same penetration rate -- that's the other 50%. So that contributes about $100 million to $130 million over the next couple of years. And that's not adding a bunch of expense. That's just using the tools and resources that we have available to us today.

And then maybe a question on capital. When could the company begin repurchasing stock?

Terry tells me we'll never have to repurchase stock because we're going to be growing so fast. So the company could be buying back shares day 1. I mean we said at the end of third quarter that we're estimating that at close, we'll have a 10.1% CET1 ratio, which we think is sufficient. Rates have actually come in a little bit, so it might be a little higher than that.

But we feel like we start day 1 with enough capital. Our #1 use of capital, our highest priority is to deploy that capital for client growth. And if we get the client growth, then we won't have to buy back shares. But just know that we have that as a lever, and we believe we'll have lots of excess capital. If there's one thing this company will do is it will generate a lot of capital. It is an earnings machine. And so it gives us a lot of capability and flexibility strategically to use share repurchase if we would like.

And since we've got both Terry and Kevin in the audience, I'm going to stop a little earlier and see if there's questions out in the audience.

Right now here with Steve, just 1 second. We get the mic, please. And if you don't mind just repeating the question.

Go ahead, Steve. We'll repeat the question. Go ahead.

Kevin, you talked about changing the mentality of it on the Synovus side to run the playbook, right, weekly recruiting meetings, comp model. I had 2 questions actually. What's your best guess? How long will it to actually start running this. It's not going to happen day 1. Is it months? Is it quarters, years? How long?

I think it's months. And I say running it, they'll start -- they're running it today. The whole team is in Nashville today, learning the playbook, talking about the routines. They'll start the sales meetings. They've already started the sales meeting. So our geographic heads are already doing it. I think the question is when will they become proficient. And one of the questions that Terry and I talked about, the CEO from Bank of North Carolina, where Terry acquired back in 2017, was at the meeting, we asked Rick.

We said, Rick, you obviously became part of Pinnacle. You adopted the model. how long did it take? He said, look, it doesn't happen overnight, success. But you can start to display the activities and do the things. He said, but after about 12 months, and Terry, you lived it, he said he felt like they had fully accomplished what they had intended to do in terms of changing people's mindset and activities. And then thereafter, Terry shared this on one of the slides since that point, that franchise has grown loans at a 10% CAGR and deposits at a 14% CAGR. So it worked. But he said it's not overnight to your point. It took them about a year to get their sea legs for the proficiency to come through.

Steve, if I could, I would add to that. If I were looking at this thing from the outside and new companies really well, I said, boy, that looks like that's going to be hard and take a long time. I think the power of it is Rob McCabe, who's my long-time partner and who has run our banking business, the selling platform, all that sort of stuff is the Chief Banking Officer here.

And so Kevin and I are up here talking to investors, Rob is holding a meeting with everybody in his footprint, my footprint that's a geographic decision maker. And so they're coming off the ball even today on here's how we do it, here's what the meeting frequency is, here's what the KPIs, here's what you're going to be measured on, here's how you do it, all those sorts of things and working on messaging just to help on both sides tell this story about what is the service level here, what's the net promoter score? How are we so sure we're going to continue to deliver this white glove service that Kevin was talking about. So at least for me, that's a pretty powerful thing in execution of making this transition.

And my follow-up is, so we're all trained to not trust MOEs, right? [indiscernible] was up there is like we won't do it. And you're saying all the right things, right? We don't have overlap. We don't have this -- you look at your stock, it's pretty wild. There's still a lot of skepticism in the stock. And I think you'll ultimately need to prove to the market that playbook is running, and that's going to be that high single-digit, low double-digit growth. How long until start to see that after the deal? Is it 1 year, Kevin, to get everything in and then year 2? Like what set expectations for us on this?

That feels right to me. I mean I don't think you can say that in year 1, it's going to be working like a well-oiled machine. But I mean I would submit to you, we had already planned on growing a good clip next year. So it's not like we're growing 0 and having to get to double digits. So Synovus has been focusing on things that can generate growth. As we shared going into this year, we were going to add about 30% to our revenue producers over the next 3 years. And so this year, we've been successful.

So I think you'll see it ramp up in '26 and then you'll see in '27. I feel like we're in a pretty good place. And I've said that to Terry as Chairman of our Board. To me, you can't give someone forever to prove it out. So we -- I have a little bit of urgency into this, but I want to get it in place, and I want to be able to show the investment community, and I want our team members to be able to see the success of that. So I think it's fair for you to expect that within year 2, you should start to see an organization that is operating as one. And we shouldn't have to talk about the Synovus and the Pinnacle legacy growth. It's one growth, and it should look like what you would expect from historical growth rates.

Kevin, you had been trimming some parts of your portfolio over the last few years. You had really good commercial production below that, but the bottom line loan growth was a little weak as you were rightsizing it. When you look at the pro forma balance sheet, how are you looking at concentration? Is there any areas you think that you need to run off before you get to that high single-digit, low double-digit growth? Or do you feel like the mix is where you want it to be?

Yes. It's -- Terry and I were joking about due diligence. The balance sheet also fit together pretty well. There weren't any concentrations that were created in some of the specialty areas like equipment, finance and auto dealer and music entertainment, different categories of growth. We have things like structured lending. Our C&I book was built around some different industry verticals. We had our corporate and investment bank. So there's not a lot of industry overlap. The one place you could argue that there's some concentration is on the real estate side.

And interesting enough, Pinnacle has been a little more focused on construction and multifamily. Synovus was more focused on term lending there. So again, it fit together pretty well. So there's nothing that we saw or we had to build in from an optimization standpoint on the balance sheet to say that we're at a concentration level there, so let's trim it.

In many ways, putting the companies together creates a lot of organic growth, predominantly on the C&I side and across some other industry categories. So it actually makes us a little more diversified and actually gives us some capacity to grow in areas that we didn't have before, places like senior housing, where we had $3 billion in outstandings. Now we have twice the balance sheet, not as big a concentration as it was before. So in many ways, the combination gives us more capacity in some of the areas, and we really didn't see any areas that we need to trim.

[Jared], I might just add to that on the Pinnacle part of it. I think you're aware, we have intentionally driven our concentration limits down in CRE. And so we hit the targets that we said we would. And so we have been back in that business over the last 2 quarters or so, which is just to say that you got to burn through the equity in those projects before those things fund up, but we've been booking CRE loans. And so I think that will be a tailwind for us on growth. If in the Pinnacle footprint, we were growing at 8% or 9%, we were doing that net of probably 3% tied into CRE. So anyway, a little tailwind coming, I think, on loan production.

Jon Arfstrom from RBC. Maybe a silly question, but how important was the shareholder vote. The spread was negative for a while. There was a lot of noise around it. Never in doubt or now that it's done, are there things you can do that maybe you couldn't do before and accelerate it?

I mean, to me, it's a nonevent. I mean I wasn't in doubt, but it's just another step in the journey. I think it's just something that as you go through the process in any plan, you want to get through certain gating criteria, and this is just another step in the process. The regulatory approval would be next, Jon. For me, I focus a little less on trying to tell the story to your point, Steve. Terry and I can sit up here and tell you how excited we are and how great we think it's going to be, but I think we both recognize that what's going to change people's sentiment is actually execution and delivery.

And so having the shareholders vote affirmatively is wonderful. But that doesn't change my thought process. It doesn't change any time frame. I want to get as -- I want to get to legal day 1 and get this process and I'm thinking about the growth. I mean, think about it for the first year, we won't even be on the same platform. We're going to have different systems. And so we're not converting until March of '27. So it's another year of making sure that the company is coming together so when we get the conversion day 1 that we really are a well-oiled machine. So it's another step in the journey. It's great to get that affirmative vote. But for me, it's kind of anticlimactic. If you'd add anything, Terry?

I don't think so.

Okay. And then an update on going over $100 billion with the merger. Is this something we should worry about -- just give us your updated thoughts there.

I mean, Jon, I don't think you should worry, but the people and the new Pinnacle are going to have to put a lot of time and energy into it, no. You shouldn't worry. I mean we've been preparing for this for some time. Those of you that probably haven't gone in depth about what LFI and enhanced prudential standards really means. It means we're going to spend a lot of money. We've rolled that out as part of the cost synergies, about $35 million in run rate, about $45 million in upfront cost and about $45 million in debt just to build the balance sheet from a high-quality liquid asset side.

So it cost a lot of money. But I would tell you, think about it in 3 ways. Number one, enhanced risk reporting. There's going to be a lot of new reporting that's required from the organization now that's over $100 billion. Y-15, you can name the reports, just a lot of effort to get those reports out. Some of those come into effect in 2026. So we'll have some of them starting in the first half of the year and going through the second half of the year.

Then you also now have to do a full CCAR analysis. So you're doing a full capital stress testing analysis. Both companies were already doing capital stress testing analysis. And so yes, we'll improve our models. We'll improve some of the output. But the real work there is to produce the report that will go to the Fed that helps to justify that stress test scenario. And then the third is really liquidity coverage ratio. So the LCR, the 2052a report, the stress testing that goes into your liquidity book. And that's more of a real-time report. And so there's a lot of effort that goes into that.

What I would submit to you, outside of all of the resources that we're going to hire to make sure that we comply with those rules, the biggest issue is making sure that you have all the data to be able to do the reporting that the Fed expects. And so that's the long pole in the tent. We've already been spending time building the data models and now applying those to the Pinnacle data side, and aggregating that so that we can be in a position to do it.

So it's a lot of work. It's a lot of expense when you think about it that way, but I wouldn't worry about it. We're at a position where we have individuals that have worked at Cat 4 institutions who have done it before, who are overseeing this, and we feel like we're going to be in a great position to be able to comply as those time frames come in. Most of the deliverables will happen in '27 and one in actually '28 and actually '28. So it's not like it starts day 1.

Jon, if I could, I might just go back and add to really focusing more on the first part of the question there about the shareholder vote and so forth. No doubt, you got 2 big milestones you got to clear, right? You got to get the shareholder vote and you got to get the regulatory approval. My sense is those processes have worked just right and on time and so forth. What's been more important to me, I think Steve started with the question, hey, there's been a lot of skepticism demonstrated in the share price collapse.

And so for me, I've just adopted a stance that, hey, it turned into a prove it story. There's such bad experience about previous MOEs in our markets that haven't worked. My belief is we did the hard work to make these decisions that will let us execute in a different way, and we'll have to prove that. And so job one, throughout our company, I promise you, if you were in Nashville today and talk to anybody and say, hey, what's important here? They say, we're supposed to deliver the third quarter results. We're supposed to deliver the fourth quarter results, get this deal closed in the first quarter and then begin to show the balance sheet growth and P&L growth that we've projected here.

So that's more the game for me is just about the execution. Again, I view those as more formalities there on the shareholder approval and regulatory approval. Clearly, we've got to get them done, but the game is about execution.

Wondering if you could comment around the tone of the regulatory discussions at all? And then I'll ask a follow-up to Terry. There's been a nice step-up in the activity levels and profit contribution from BHG. How sustainable is that? And maybe Kevin can talk about kind of the role of BHG and how that fits into the new Pinnacle.

I would just say the tone with the regulators have been very constructive. Both organizations have stellar track records and the things we've done, both from a community development standpoint as well as risk management. And so it's going through the process. Obviously, because this is crossing through $100 billion, we're having to go through some additional evaluation. But as Terry said, I think it's gone according to plan, and I use the word constructive because it feels like we have partners with our regulators that are trying to find ways to have more banks cross over $100 billion and actually show that it's something that's very doable. So I think that's there. Terry about BHG?

Yes. I'd tag on to Kevin's comment. I have viewed it to be extremely constructive. And I do think there is a mindset that they would like to demonstrate that they can approve these deals more quickly. So again, I think that served us well and made it easy on us. As it relates to BHG, BHG is in a great spot. They sort of had to weather the credit storm. I would classify it as sort of a post-COVID issue there. And -- so I think they've done that. You can see the numbers. The credit is stable. The volumes have picked up dramatically. They've got great demand on both sides of the equation, both the loans that they originate, but also on purchasers for their credit, be it through the bank network or other securitizations and so forth.

So they're in a sweet spot, to be honest with you, and it feels like it's going to run that way for a while. You have heard me say before, I think over time, over the long haul, I'd like to have a less prominent position in my P&L statement for BHG. Half of that gets solved with this transaction, right? I mean, it cuts the proportion of our income that's derived from that.

I do think the principles at BHG are probably personally more focused on a liquidity event than I have seen them in the not-too-distant past, really. So again, I think momentum is picking up there. I think the multiples and valuations that they can get are moving in the right direction. And so I wouldn't be surprised to see a liquidity event of some variety. I don't know if that's 1 year or 2 years or what it is, but I just think there's momentum in that direction. But to the extent that we continue a position in that company, I do think their results are sustainable and actually can further accelerate as they move forward.

And just to add, we're very familiar with BHG. We've been involved with the syndicate. They actually are co-located in our Fort Lauderdale offices. So we know them pretty well. And so as Terry mentioned, we're very comfortable with the company. And as you know, we also have a partnership with the GreenSky, Sixth Street Group, where we're a commercial sponsor with that group. So a lot of the work that we do there translates well into this BHG relationship.

So we'll continue, as Terry said, to take advantage of that. And if something were to happen from a liquidity event, then that would just create capital that we would use to be able to go and offset some of the revenue there. But I think the combined company would be 4% or 5% of the company's revenue. So it really diminishes its overall share to the total pie.

And maybe one last question. Your total deposit costs, plus or minus a basis point last quarter. Can you just talk about the deposit composition in your footprint given the recent Fed cut?

Look, it's -- the deposit composition is going to be a competitive landscape going forward. Terry and I probably have slightly elevated costs relative to maybe the median, but we both believe that you may pay a premium to your clients in order to facilitate growth. Now our betas gives us a little bit of movement as rates come down, and we've talked about through-the-cycle betas should be an advantage for both companies. And so we'll continue to manage that.

I think both companies have been very prudent in pricing with things like odd term CDs or promotional rates, and it's not something we're going to go and lean in on. And as I've said, I don't think we'll ever live in an environment where we say that there's not competition for deposits, but it feels like today, it's rational. And if you want to compete and if you want to get hot money CDs, you can go do that. And I think maybe that's the one thing that I think most people miss is when you look at totally deposit growth, I mean, we can grow deposits as fast as you want us to. It's just at what rate. And I think both companies have taken a posture that we're going to have prudent growth using practical pricing strategies to be able to generate that growth. But if we need to grow faster, the capacity is there. You just have to pay up a little more to do it.

Great. Please join me in thanking Terry and Kevin. Thank you.

Thank you.

Good morning, everyone, and welcome to the Pinnacle Financial Partners Third Quarter 2025 Earnings Conference Call. Hosting the call today from Pinnacle Financial Partners is Mr. Terry Turner, Chief Executive Officer; and Mr. Harold Carpenter, Chief Financial Officer.

Please note, Pinnacle's earnings release and this morning's presentation are available on the Investor Relations page of their website at www.pnfp.com. Today's call is being recorded and will be available for replay on Pinnacle Financial's website for the next 90 days. [Operator Instructions]

During this presentation, we may make comments which may constitute forward-looking statements. All forward-looking statements are subject to risks, uncertainties and other facts that may cause the actual results, performance or achievements of Pinnacle Financial to differ materially from any results expressed or implied by such forward-looking statements. Many of such factors are beyond Pinnacle Financial's ability to control or predict, and listeners are cautioned not to put undue reliance on such forward-looking statements. A more detailed description of these and other risks is contained in Pinnacle Financial's annual report on Form 10-K for the year ended December 31, 2024, and its subsequently filed quarterly reports. Pinnacle Financial disclaims any obligation to update or revise any forward-looking statements contained in this presentation, whether as a result of new information, future events or otherwise.

In addition, these remarks may include certain non-GAAP financial measures as defined by SEC Regulation G. A presentation of the most directly comparable GAAP financial measures and a reconciliation of the non-GAAP measures to the comparable GAAP measures will be made available on Pinnacle Financial's website at www.pnfp.com.

With that, I'm now going to turn the presentation over to Mr. Terry Turner, Pinnacle's President and CEO.

Thank you, Matthew, and thanks for joining us. I'm sure no one is keeping track, but next week will be Pinnacle's 25th anniversary, which makes this the 100th quarterly close for Harold and me. Happily, this is one of the best in a long history of beating Ray's quarters. This has been our custom for a very long time. We begin every quarterly call with the same shareholder value dashboard. GAAP measures first, followed by the non-GAAP measures, which are the ones that I focus on to manage the firm. .

As you can see across the bottom row, our asset quality metrics remain well below pre-COVID median levels with all problem loan metrics continuing to operate at or near historical lows. On the middle row, of course, everything is up and to the right, you can see the balance sheet continues to reliably build quarter after quarter with double-digit CAGR for loans and core deposits over nearly a 5-year period of time. That's largely attributable to our ability to recruit and retain proven revenue producers and consolidate their relationships.

We expect balance sheet growth to continue based on the revenue producers that are currently on our payroll, but have not yet completed consolidating their books to us. And we've continued hiring at a similar pace in 2025, which should help to continue to further produce balance sheet growth, more on future balance sheet growth expectations and hiring in a minute.

And then moving on to the top row, you can see that the sustainable and reliable balance sheet growth has resulted in rapid revenue and EPS and the double-digit CAGR for tangible book value per share growth, which we believe are the 3 metrics most highly correlated with total shareholder return. That's been our relentless pursuit over the last 25 years and has resulted in the second highest total shareholder return among all the publicly traded banks in the country since our NASDAQ listing in 2002.

A number of times over the years, I've used the flywheel concept, which was developed by Jim Collins in Good to Gray to help crystallize for investors the sustainable momentum that we built in this firm. I think I last used it in 2022, and it's hard to imagine that many are unfamiliar with the concept, but the idea is that through a series of disciplined, consistent efforts in the right direction, you eventually produce accelerated and sustained growth. I don't think that could be a better descriptor Pinnacle over time than accelerated and sustained growth. For us, that hedgehog strategy, that disciplined and consistent effort in the right direction, is our continuous recruitment and retention market-leading revenue producers. I've developed in previous quarterly investor calls, how that hiring translates into the kind of sustainable balance sheet growth you saw on the previous slide.

In last quarter's earnings call, I demonstrated how our hiring to date could yield approximately $19 billion in loan growth that would materialize over the next 5 years, again, with no further hiring and irrespective of tariffs, Fed rate moves, general economic conditions and so forth, simply based on the continued consolidation of relationships by the relationship managers on our payroll at that time.

And third quarter '25 is just another quarter on that march with third quarter linked quarter annualized growth rates of 14.5% for noninterest-bearing deposits, 10.6% for core deposits, 8.9% for loans, 31.5% for revenue and 54% for adjusted EPS. So for those who wondered whether we could sustain momentum post merger, I hope we've at least put that question to bed.

Annual FDIC data were released in the third quarter, which made clear not only the success that we've enjoyed over the last decade, but why we are so optimistic about the future. We've long targeted the market share leaders in our markets. Here, you can see the magnitude of their vulnerability given up over the last decade, as noted in the red circles, 10.3% in Nashville, 15.1% Chattanooga, 13.9% in Knoxville and 16.7% in Memphis. That is major vulnerability. And then across the bottom in the blue circle, you see the incredible effectiveness of the Pinnacle model in the same time period. Picking up another 3% in Nashville, where we enjoy the #1 rank and not by a little, but by a lot; 8.4% in Chattanooga; 7.8% in Knoxville and 5.1% in Memphis. Hopefully, this illustrates our excitement about the ongoing match up, our ability to continue rapid balance sheet growth and ultimately, to produce outsized revenue and EPS growth.

And here, you're looking at the same data across other Southeastern markets where you can see fundamentally the same competitive vulnerabilities. Along the bottom row, you see the magnitude of the vulnerability we're attempting to seize from those share leaders that we target, look at these markets like 11.9% share loss in Greensburg, North Carolina; 11.9% share loss in Raleigh, North Carolina; 10.8% share loss in Greenville, South Carolina; 9.1% share loss in Charleston, South Carolina; 12.1% share loss in Atlanta, Georgia, where post merger, we'll have the #4 market share position. Honestly, that is one of the things that decides me most about our combination with Synovus.

When you combine that FDIC data with the Greenwich data demonstrating the differentiated service level that Pinnacle provides when combined with Synovus, you can see why we believe that we'll be the fastest growing, most dynamic large regional bank in the country. Here, you're looking at Greenwich data for businesses with sales from $1 million to $500 million in the legacy Pinnacle footprint. North and South, we're plotting market share; East and West, we're plotting Net Promoter Scores. Obviously, the goal is to get to the top right quadrant.

So the first observation is that with this merger, we will have arrived, combining Pinnacle's share with Synovus' share in our existing footprint, puts us on the heels of the 3 market share leaders, which are in the top left box. That's an 8% share position -- lead share position. And that leads to the second even more important observation, combining Pinnacle's Net Promoter Scores with Synovus' Net Promoter Scores in our footprint, we retained the highest Net Promoter Score. And all of that leads to the third and single most important observation. This merger is unique in its ability to run a differentiated service model, literally the best with a combined Net Promoter Score near 80%, and we'll be competing against banks who masked great share in previous decades but who have lost an engagement of their clients. Some of Net Promoter Scores in the 20s, making them likely to continue giving up share, particularly to a bank like ours with similar mass in the market, but with a meaningfully differentiated service level. In my career, I have never seen a more advantaged competitive position than the one we enjoy post merger.

I recognize some have been concerned about the loss of momentum post merger announcement. As you saw earlier, there was certainly no loss of momentum in terms of financial performance in Q3. And here, you can see there was no loss of hiring momentum in Q3. Hiring almost exactly the number of revenue producers as we hired on average in the first 2 quarters of 2025 pre-announcement and consistent with the quarterly run rate over the previous 4 quarters. Interestingly, the kill rate on job offers, meaning the turning job offers into hires, it remained unchanged post announcement, hiring 91.5% of those that were offered jobs in the first 2 quarters pre-announcement and 91.6% in the third quarter. And so from 30,000 feet drawn on March 20, rumors of our untimely demise were greatly exaggerated. Our flat wheel continues to spend. And when you overlay this model on the Synovus franchise, the growth revenue producers and therefore, the growth in revenue should be extraordinary.

So with that, let me turn it over to Harold for a detailed look at the quarter.

Thanks, Terry. And I guess Mark as well. There you go. Good morning, everybody. We will again start with loans. End-of-period loans increased 8.9% linked quarter annualized, but a little less than we anticipated, but still a strong effort by our relationship managers, one that does not cause us to think any less about the fourth quarter. As our fourth quarter pipelines and quarter-to-date results are in great shape, we will continue to lean on our new markets and new revenue producers to provide the punch for our loan growth.

Given third quarter results and fourth quarter pipeline, we've adjusted our end-of-period loan outlook range to consider 9% to 10% growth this year. We're also pleased with how our loan yields performed during the third quarter. Although the lift from fixed rate repricing is not as opportunistic as it once was, we will anticipate continued lift in fixed rate loan rates, loan yields should decrease in the fourth quarter consistent with Fed funds rate decreases, but these decreases, we believe, will be at consistent betas and obviously, we will offset these decreases with corresponding decreases in deposit rates.

EOP deposit growth came in at 6.4% linked quarter annualized. Over the years, we typically experienced more deposit growth in the second half of the year than the first half. As a result, we are increasing the low end of our estimated growth rate for total end-of-period deposits to 8% and maintaining the high end at 10% in deposit growth for 2025. As we highlighted in the press release last night, we are very excited about the performance of our noninterest-bearing deposits and the growth we have seen this year. To see the rebound in those dollars this year is very much a tailwind in our spread income as we head into the fourth quarter and 2026. Many thanks to our revenue producers, treasury professionals and specialty deposit units for all the hard work getting these very valuable operating accounts.

We're also very pleased with how deposit pricing has performed thus far and how both of our loan and deposit betas have performed through the current rate cycle. We anticipate our betas will remain consistent given we anticipate incremental rate cuts in the fourth quarter.

We anticipate a modest increase in NIM in the third quarter, so we're pleased that our NIM finished up 3 basis points at 3.26%. Our outlook for the fourth quarter of 2025 is more bullish as our NIM should continue to increase with the anticipated 2 additional rate cuts. After our 2025 outlook for net interest income, we have increased our estimated growth range for net interest income and now believe our growth outlook will approximately in the range of 13% to 14% over 2024 results. Obviously, any surprise, Fed funds rate decisions and the slope of the yield curve will have influence on how all of this plays out for the remainder of this year.

As to rate cut, we've modeled out many scenarios and again, feel we're in pretty good shape to manage through most freight forecasts that are talked about in the markets today. Our current Fed funds rate forecast contemplates a rate cut in October and another in December. At this time, we do believe more rate cuts are helpful. But given the timing, we believe whatever might happen otherwise will not have a substantial impact on our anticipated 2025 results.

As to credit, our net charge-offs decreased 18 basis points in the third quarter from 20 basis points in the second quarter. For the full year 2025, our net charge-off outlook is unchanged as we estimate net charge-offs for 2025 coming in at approximately 18 to 20 basis points. We've increased our estimated 2025 outlook for our provision to average loans to 27 basis points. This increase is partially attributable to the increase in our reserve for unfunded commitments. That increase is very much volume related and consistent with increased outstanding unfunded lines of credit issued to our borrowers in the third quarter.

A quick word about BHG. BHG had an exceptional third quarter, providing fee revenues to us of over [ $40 ] million. Production was again strong in the third quarter. Credit losses also were improved third quarter compared to second quarter. Off-balance sheet loan sales were at spreads in excess of 10%, while margins for on balance sheet loans are now in excess of 11%.

Now that said, we are anticipating BHG's fourth quarter results to be less in earnings than the third quarter. For the fourth quarter, we are estimating BHG's results should contribute approximately $30 million to our noninterest income. Given these matters, we and BHG are both comfortable in raising our earnings estimate for BHG earnings growth in 2025 to approximate 85% to 90% growth over the results reported in 2024. Several factors are contributing to this decision, stronger production lead flow, great spreads, better credit performance and better operating margins, all of which should point to what should be a very strong year for BHG.

Lastly, to our outlook for 2025. I mentioned much of the information on the slide. Again, the investments we've made in our new markets and our hiring success are the building blocks we will lean into in order to position us for top quartile, growth in EPS and tangible book value per share amongst our peers. As to noninterest income, banking fees and wealth management are performing well. Along with BHG's estimated growth this year, we are comfortable increasing our guidance for noninterest income from 12% to 15% growth to now 20% to 22% growth this year.

As I mentioned previously, BHG will likely approximate $30 million in the fourth quarter and make up most of the overall variance between our third quarter and fourth quarter anticipated results. As to expenses, our prior outlook reflected 115% of target award for our associates, which now given our positive outlook for the year, we are increasing to an anticipated 125% target as of September 30.

Through all of that, we are modifying our total expense outlook to a range of $1.15 billion to $1.155 billion for estimated expenses for this year. As the slide indicates above, we are projecting an effective tax rate for 2025 in the low 18% range, which will basically be consistent with last year.

Now as to PPNR and summing all of that up, we look at our fourth quarter PPNR, excluding BHG and merger costs, we think fourth quarter will be flat to up from the third quarter. And as to year-over-year PPNR, we think we'll be in the 7% to 8% range in growth. Even as all the uncertainties around rates and tariffs play out, we are confident that 2025 will shape up to be one of the best years we've experienced in our 25-year history and provides a great deal of momentum as we prepare to head into 2026 with our new partners at Synovus. If there's anything investors know us, it is that we are very competitive, and we love to prove things to the downers. All of our associates are in for a lot of work next year, but also, in my opinion, all of these associates will have a lot of fun as we continue to hire more people, grow revenues and grow earnings as we work to build the Southeast growth champion.

With that, I will hand it back over to Terry.

Okay. Thanks, Harold. Speaking to build in the Southeast Growth Champion. When we announced the deal, we disclosed the compelling financial and client-centric metrics for this transaction, literally peer-leading growth and profitability. We also talked about the stark contrast between this deal and others as a result of doing the hard work to hash out critical decisions pre-merger. For any of you who've been through this kind of thing before, you know that, to have decided on exactly what the ongoing go-to-market strategy would be, the specific model that we'll run, to have selected the ongoing brand premerger, to have made and clarify for the whole organization, one ongoing long-term CEO, to have already determined the core processor. Those premerger decisions have indeed been powerful in terms of propelling the integration of these 2 great firms. We were able to move quickly. We finalized all the key leadership positions, having now pushed it down 3 levels into the organization. We were able to evaluate and make most key system decisions, though not all have been finalized and announced as we complete negotiations with various systems providers, mailed the proxy materials and undergo premerger exams by the Fed.

And we're rapidly progressing through the final milestones toward an anticipated first quarter close, including holding the special shareholder meeting on November 6, completing the entire org chart literally down to each individual by November 10, and ultimately closing sometime in the first quarter. I suspect that I have yet to convince everyone of the power of the merger with Synovus, but I expect you'll recall when we announced the deal, we showcased our projections for ongoing revenue and EPS growth profitability and so forth, virtually all key metrics were peer leading or number one, it seems to me the only reason you wouldn't want to own shares and that company is that you need to see it to believe it. And so it is my hope that our third quarter performance and continuing hiring momentum has delivered the first proves.

Operator, with that, we'll stop and take questions.

[Operator Instructions] Your first question is coming from Jared Shaw from Barclays Capital.

So I'm just looking at Slide 11 and the pace of hiring by revenue producers and the success rate of the offer acceptance rate. As we go forward and we look at the company as a pro forma company, you referenced the ability to add 300 RMs. I guess -- are there 300 RMs that fit the Pinnacle model out in that market? And what type of increase in the pace should we expect as we look at '26 and '27?

Yes. I think -- on the question of are there 300 in the market, there may not be 300 in the market right this minute, but there'll be 300 in the market over time. And all I mean by that is when we hire people, it has not been uncommon in our history to hire somebody from another bank have that bank backfill with somebody else, and we go back 3 or 4 years later and hire the person that they backfilled with. And so again, I don't -- I'm not concerned about will there be enough talent to hire. I think, Jared, if I can say this, you didn't exactly ask this, but I know a lot of people have questions about the competitive landscape or are you going to be able to keep hiring people and so forth. Jared, I think you've heard me answer that question. I've been asked that question since 2002 when we first were listed on NASDAQ. I get asked that question all the time. Every year, we keep hiring at record paces in terms of the people that we hire.

And the point of that is the more people that you do hire, the more people that you can hire. And that's a really important idea. We got -- I'll use -- haven't grown up in Georgia, I use the standard phrase. We got the carpet baggers coming to the Southeast who don't know, don't have people use traditional hiring models, all that sort of stuff. Our approach of using the people that we've hired to lead us to others to hire is, I think, time tested in a competitive landscape there.

In terms of the incremental hiring, the biggest partner and one of the great excitement to me in this transaction is to overlay this model, which I think is running hitting on all overlay this model on the Synovus footprint. And I know Kevin has fired up for the same reason. They've done an extraordinary job compounding EPS growth, the movements toward revenue producers. I think they had a commitment to hire roughly 45 relationship managers a year was the previous commitment they had, had. And so we think that will accelerate by 35 to, call it, 80 a year in that footprint. And so again, that's the magic is to put this model on that footprint, gin up the revenue growth to match what happens in the Pinnacle footprint. And not only all that to grow the earnings, but it ought to grow the multiple as well. So that's the game plan.

Okay. And then just shifting over to BHG. Obviously, it was a great quarter there and guidance for still a strong quarter and fourth quarter. I guess how does the bigger pro forma balance sheet? Or does the bigger pro forma Pinnacle balance sheet change the thought process on what the best use case of BHG is? And do you expect the pro forma balance sheet to maybe hold more BHG loans?

Yes, Jared, this is Harold. I'll take the first -- I'll take that question and let Terry talk about what might happen in the future. I think BHG's growth is going to be consistent going into next year. Their quarterly run rates right now have improved meaningfully over the last 4 quarters. So I think there's a great deal of opportunity available to the new Pinnacle as it goes into 2026. I don't think Synovus or Kevin, I'll say it better this way. Kevin, Jamie and the leadership that will be at the new Pinnacle has any different approach towards BHG than we do currently. So I think there's a lot of options available to us with respect to BHG. Right now, they seem to be all positive.

Yes, Jared, I would just say I think the optionality is as high today as it's been in a number of years. To Harold's point, you got rapid growth, which is good if you hold it, but it also increases its attractiveness to potential acquirers. And I don't think there have been any noticeable change in our partners. I think we've said for some time, we expect them and see them more interested in our liquidity event today than what they have expressed in years gone by. So rate, I think we're just exactly at the same spot we've been at.

Your next question is coming from Catherine Mealor from KBW.

Just one follow-up on the BHG question. Is there any reason to assume that -- I mean that was an amazing growth this quarter. We got another one coming this quarter for BHG earnings. Is there -- I mean is it fair to still assume growth in BHG into '26 relative to kind of the record levels we're seeing in '26? So clearly, not the 80% to 90% growth rate, right, that will moderate. But just -- is there any reason to assume to not assume that we shouldn't still grow BHG next year off of these levels?

No, it will grow. I think the quarterly run rates will be consistent going into next year as far as, call it, the third and fourth quarter. And I think there will be a more reasonable growth path once you annualize call it, the third and fourth quarter going into 2026. So I mean, it will still be an outsized year-over-year number, but they're really excited about the way the production flows are coming in. They're really excited about the appetite for their volumes, and they think they can continue to kind of move this franchise forward.

Okay. Great. And then fee income even separately from BHG was really strong at both Pinnacle and Synovus this quarter. Is that -- would you say that, that is encapsulated? As we think about the merger slide deck and kind of looking towards that [ 11 60 ] kind of pro forma [ 2070 ], this kind of strength in fee income reflected in that? Or is this even coming in better than you would have expected as you think about that pro forma run rate?

Yes. I think -- and we got to listen to most of the Synovus call this morning, I think Jamie described it well. The areas where we complement each other are really good and strong. And I think when you merge these 2 questions -- the 2 companies together, you get the strength at Synovus in these various fee areas, and you match with the strength in Pinnacle in our various fee areas, I think there's going to be a lot of opportunity to put some real tailwind into some of this fee revenue going forward, whether it be around wealth management or capital markets or wherever, we think we're going to be able to approach the market with a lot of strength once we kind of push these 2 companies together.

Catherine, let me add to Harold's comment. I echo his thoughts on the potential revenue synergies. We'll get in the position soon to sort of quantify those for the marketplace. But again, my belief is we've got very strong revenue synergies. But more to your question about so what's the current run rate, how does that impact, what the original case that we discussed when we announced the deal. And I think you know that merger model is just built on what consensus estimates were. And I can't say I always that 100% of the time I bet the consent assessment, but I don't think there was every time I didn't think I was going through or intended not to meet the consent assessment. So my only point about that is that our expectation -- my expectation is to run faster than consensus estimates. And I think this growth rate that you're seeing right now would be still higher than the plan that we had laid, which would be higher than consensus. So at any rate, I do think there's a lot of momentum in fee income as it relates to the original projected growth.

Yes, perfect. That's what I had -- I was hoping and assumed to you saying, yes, you do have a history of beating consensus, Terry. All right. Great.

Your next question is coming from Anthony Elian from JPMorgan.

Terry, on hiring, I'm wondering if anything will change on legacy Pinnacle's hiring strategy post deal close given the organization will be doubling its assets, right? So I know on Slide 11, you're forecasting another strong year for hiring next year and in '27. But what gives you confidence that the existing strategy you've had in place for 2 decades now will continue to be successful after you close the deal?

Tony, I think I'd turn it around the other way, if I could. I mean what would keep it from being successful, I guess, is really a better question. You know what we do. We hire people. When we hire those people, we pull them on who else do you know that's really good where you work, and they would fit in, in this company. Will you help us recruit them because they fall in love with this company.

I cannot imagine what would interrupt that cycle. As I said earlier, the more people that we do hire, the more people that we can hire because of the way we go at it. It is a wildly different -- historically different model than what all of our competitors do for recruiting. Most of those people will rely on headhunters. Most of those people will have a big recruiting function as part of their HR operation. Most of them resort to the STACK of resumes that have been sent in by unhappy, unsuccessful people. Most of them are hiring out of pole applications of folks that came in to apply it because they were unhappy unsuccessful somewhere else. And so it's just a different model altogether, but it's -- I'll just have to be honest, I cannot see what would interrupt it. I think you've seen the slide that we put out in the 8-K at the time we filed a registration statement, but we talked about the skepticism when we did the BNC transaction. And these numbers won't be exactly right, but they're close. I would say we were probably an $11 billion bank or something on that order. BNC was a $7.5 billion bank when we made the acquisition. And there was near universal skepticism about our ability to continue the model on this bigger footprint, bigger asset base and so forth. And so you've seen the numbers. We -- I heard the heck out of people. We compounded the balance sheet at a double-digit rate, and we outperformed the KRX 2x from the date of that announcement. And so again, I get the question because it's the same question I have faced so many times. But again, I would just turn around and say, "Hey, I don't see what would interrupt it.

Terry, and then my follow-up on BHG, what specifically drove the growth in originations in the third quarter? And given the strong results on both originations and credit in 3Q, what's driving the expected decline in BHG income in 4Q to $30 million?

Yes, Tony, I'll -- as far as the third quarter growth rate, it was just merely about production, and they do business with several credit aggregators. They run them through the BHG filter. And so that's what the primary the growth rate came from. There was also some holdover inventory from the previous quarter that facilitated that. Their demand for their product is extremely high right now, not only from the community bank network but from institutional buyers. As to the fourth quarter, I think that's a little bit of caution for us. We believe that as they head into the fourth quarter, they're a private company, I'm sure there's going to be some year-end kind of things that they're going to want to do, but they believe their production will be as strong going into the fourth quarter. So we're kind of putting the caution flag up for the fourth quarter because we just believe that there might be some, call it, personnel costs and other things that come into the fourth quarter to cause us to be a little more cautious.

Your next question is coming from Stephen Scouten from Piper Sandler.

I appreciate the time. So I wanted to go back to Slide 9. This feels like the whole story to me. I love this slide. I feel like it proves a great point. I mean -- is that the right way to think about it, like the right side of the slide, in particular, the expansion markets and who knows like we might see some of these banks in here go away as well, which could even only increase the opportunity. But you guys have this now establish stability over the next at least handful of years, whereas there's still dislocation and the opportunity for you to take a bunch of market share. Can you kind of confirm that for me maybe if that is, as I see it, the whole story and really how you think about that opportunity set?

Yes. Stephen, thanks for the question. I have said for a long time, any time I'm trying to orient a new investor to our company, I'll talk about the markets that we're in, the size of the growth dynamics and so forth because, as you know, all these markets up here you go look at the household income growth or the population growth or whatnot. I mean they're the best markets in the United States in terms of size and growth dynamics. But you're on the right point. What is more important and what drives the revenue engine of this company is the market share takeaway opportunity that exists. The people that dominate the market are giving up share at a dramatic pace. And so yes, that's exactly what we're trying to do to seize that vulnerability if you think about getting up there into the top right quadrant. Man, that's a dream of a lifetime for me. I've been fighting 25 years to get into that top quadrant, and we're here. And when you look at the share position, the mass that we have in the Southeast, man, we're in the hunt. Two of the market leaders are at 9%, we're at 8%. Then our Net Promoter Score combined with Synovus is near 80 and theirs is near 20. Man, you probably wish I hadn't asked the question. You can tell I get wound up about that. That is the opportunity that this company has.

I'm just wondering if Kevin is going to be able to get you to step back at all in 2 or 4 years on all that, that's really the question. It feels like that excitement is real opportunity to real. So that's a great answer. I appreciate it.

On site that was scaring to...

That's a good fear. I like it. And maybe like on the flip side of this, I mean, everything sounds like it's going great. The deal sounds like it's on schedule. This is maybe a stupid question because I don't hear it, but is there anything that is an incremental risk at all? Is there anything that you're worried about as you've gotten into this? Or anything you're like if something were to crack. This is where my energy is focused? Or is it really just, hey, I mean, we're on the offense and we're just full steam ahead.

Steve, that's a great question. I think in terms of broad risk categories like is there something that we're discovering on the balance sheet or is something happening from a competitive or a regulatory standpoint that would cause us to feel different in any way. I don't think there's anything there, everything we've encountered thus far is really on the positive side of the ledger. I wouldn't want you to walk away and say, "Hey, man, it's just all roses there." Man, this is harder. And I wouldn't want anybody to think it's not. We are working extraordinarily hard to get these companies put together to protect our people. The existing revenue producers that we have. And I think you saw there we still running 93% subsidy retention rate, which I'm proud of. But it's hard work for sure. But in terms of the financial outcomes, and the client-centric outcomes that we believed in when we announced the transaction, I'd say I'm more convicted as opposed to this.

That's great. And maybe just one last follow-up on what you just said, Terry. And forgive me for not looking this up. I know you used to put it at the bottom of the press release, but that employee retention, like as memory serves me, it's always kind of floated in this 91% to 96% range for years and years. So that's pretty consistent with what you guys have delivered on over the long term, correct?

Yes. I would say somebody just said, Terry gave me a band of where it's been over a decade. I'd say 93% to 96%, sort of where it operates. And so yes, the substate retention rate over the last 12 months was 93%. The associate retention rate in the first 2 quarters of this deal prior to the announcement was 93%. Third quarter is 93%. So yes, it's solid.

Your next question is coming from Brett Rabatin from Hovde Group.

Wanting to first go back to the margin. And in the slide deck, you referenced margin tailwinds and I think, Harold, you said you think the 4Q margin going to be a little stronger. Can you just talk about the tailwinds as you see them? Is that primarily on the deposit beta side? And just anything else you would say about kind of the dynamic with the margin as we go into 4Q?

Yes, Brett, I think the 3 things that we look to as far as a tailwind for the margin, obviously, is debate on the deposit side, and we consistently believe we've got significant room yet to go as the Fed rate -- as the Fed lowers rates. The growth in these noninterest-bearing deposit accounts, we think is very impactful and also how we reprice these fixed-rate credits. So we're still seeing a meaningful lift in that book. As a matter of fact, I think we have a negative beta in our fixed rate loans right now and anticipate that to continue. So those 3 things are the primary things. I know a lot of people believe that it's what's that maybe field of dreams where you just build it, they'll come. There's a lot of work going on to maintain these margins and to increase these margins. And so a lot of relationship managers are out there working to make that happen. So it just doesn't happen automatically is what I'm trying to say.

Okay. That's helpful. And then the other question I had was around strong DDA growth in the quarter, and I think, obviously, some of that was related to specialty deposits. Can you talk about that dynamic, how much of that was maybe specialty deposits. And then as we think about those specialty businesses, what kind of share you're at in those businesses and -- is that something you can continue to grow at the pace you have?

Yes. It's like -- I guess it goes into leadership and management. For years, we've been aimed at operating accounts. But over the last, call it, 12 months -- 9 to 12 months, we put particular emphasis on the sales side about that and particularly around small business. We've seen some great results there here in the last few months that have really kind of been again, not to overuse the word, but the tailwind for that growth.

Okay. But Harold, is it fair that, that kind of pace can continue or any thoughts on...

We don't have any reason to believe we won't see continued growth in that. We typically see some seasonality going into the last quarter of the year as people build cash balances and for incentives and taxes and whatnot. But I think we'll also see absolute sales growth with respect to those operating accounts.

Brett, you know the numbers as well as I do, but -- so you got [ 14.5% ] annualized -- third quarter annualized growth rate. But I think the year-to-date number is 12.8%, near the 13%. So it's a pretty rough solid growth.

Your next question is coming from Michael Rose from Raymond James.

I was just looking at Slide 28, where you have the loan growth kind of by expansion markets versus legacy markets. Looks like you've had some headwinds in the legacy markets over the past couple of quarters. Can you just address that? And then separately, once you guys combine, I know your C&D and construction -- CRE concentrations are below where you wanted to get them. But is that an opportunity for growth on a combined basis once the deal is closed as we move forward?

Yes. I'll hit a couple of things, Michael. So if you -- looking at that slide, you're talking about there. We have several components to it, right? You got a category that's called legacy. And what that really means is not the legacy market. It is the legacy bankers in a legacy market. So it's people have probably been here on average 20 years and they have big books of business. And so when you go through periods of slack loan demand, which we've certainly been there over the last couple of years, you get limited growth. In fact, it's hard for those guys to cover their amortization when there's no loan demand. If you get loan demand, then that becomes the increment in that category. But the way we produce the growth is through hiring, both in the legacy footprint. So again, a lot of our new hires are in legacy footprints. And so that's where the growth comes from is the continued market share play there. And then, of course, the specialty businesses have provided a great growth engine for us over the last, I would say, 3 years or something like that. I think as it relates to the go forward, yes, we would expect to continue similar growth trends going forward for the foreseeable future. If we get elevated loan demand, that would be an increment to what we intend to produce.

And you're on the right track on CRE. I didn't spend any time on that. We grew 8.9% in total volume. But the drag, you had big growth in C&I, nearly 18% or something like that. But we had $500-something, $560 million, I think, in early payoffs in the CRE book. As you know, some time ago, we decided to lower our concentration limits in CRE. And so we have been about that. We've now hit those targets, and we have weighted back into the market. But as you know, the payoffs continue, but it takes a while for the loans that you're making today to get burned through the equity that's in front of you and get to a fund up period. And so to get down to the bottom of the stack here, yes, I believe CRE will be a meaningful increment to us in terms of loan volume going forward.

Very helpful, Terry. And maybe just one follow-up, and I know it's minor credit has been very good. But on Slide 15, you did have a little bit of pickup in classified potential problems, things like that. Anything that you guys are more broadly looking at? I know there's a lot of concern around some of these structured credit, NBFI stuff. I know the bank showed up in a loss position last night in other credit. But anything that you guys are just broadly keeping a closer eye on or a little bit concerned about?

Yes, Michael. So far, we feel pretty good about where that NDFI book sits. It's a pretty granular book. I think our average outstanding to that is about $4 million per account. So there's a lot of accounts in it. We feel like that we've got our arms around it and are being more diligent with respect to all the loans that we -- we're not the lead bank on for sure. As to the increase in potential problems, that's primarily attributed to one credit. It's a health care client that we've had our eyes on for a while. They only recently put a new manager into the CEO slot there, somebody that a seasoned turnaround specialists and not a position. And so we think we're in pretty good shape in that one credit.

Your next question is coming from Casey Haire from Autonomous Research.

So earlier today, we -- Kevin and Jamie talked about capital and you don't have capital ratio targets post deal. But just wanted to touch on -- I know you guys have tended to run with more capital to make your clients feel better and I'm just wondering if that dynamic will hold? Or does it mitigate somewhat given you're now over $100 billion in assets?

Yes. Well, obviously, Kevin and Jamie will direct traffic on that once the transaction closes. But we've not -- we're not planning on any kind of additional capital strategies than what we've traditionally deployed. We need capital to support this loan growth engine, and we think that will continue. I think one of the things that was, I believe, put forth in the merger deck is the dividend. I think ours will go up and theirs will come down. But other than that, I don't know of any significant other changes. I know Jamie has mentioned several times about the capital accretion that will occur post merger. And if for some reason, we don't hit our growth targets then there's a lot of opportunities to get into some buyback programs.

Okay. Great. And just another follow-up on Slide 11, the recruiting strategy, a bit of a 2-parter. So one, have the terms of your hires? Have they been similar or have you had to maybe sweeten the economics a little bit? And then two, you guys have talked about Texas in the past and expanding there. A lot of M&A activity there could be a market that would -- your guys' recruiting strategy would resonate well. Just some thoughts there.

Yes. I think on the recruitment -- current recruitment conditions, terms and conditions and so forth. I don't think there's any doubt that it is a -- it's probably a more competitive hiring landscape today than it would have been 10 years ago or something like that. So there is elevated competition and sometimes that will bear on pricing. But Casey, I think one of the things that people forget at least in terms of the way we look at it, the profit leverage on our commercial relationship manager is so wide. I would say even -- commercial relationship managers, you probably make something on the order of $2 million a year on and you got some you make $12 million a year in contribution. And so if you have to bid up $50,000 on the comp expense is just not a road block to making the higher. Again, the profit leverage is so strong in those experienced relationship management. Now again, you waste your money. You can hire trading needs. They don't bring a book, don't have revenue and all that sort of stuff. But again, using the model that you're hiring people that on average have 18 years of experience and consolidate the book pretty rapidly, the profit leverage is so strong. I'm not fearful about the impacts of competitive pricing, but you're on the right point. It is a competitive environment out there to hire people.

I think as it relates to Texas, what I've always tried to say is we're focused on the Southeast because of some of the things we've talked about on this call, of course, if you're just looking at size and growth dynamics, those Texas markets are unmatched. They're fabulous. And you're right, consolidation will change the landscape, but the Southeast has been more attractive to me than Texas because of that phenomenon where the market share leaders are vulnerable and giving up share at a rapid pace. And to date, that hasn't been the case in Texas. But you're right, as the consolidation picks up speed there, there probably will be incremental opportunities.

Your next question is coming from Brian Martin from Janney.

Just -- most of mine were answered, but just one question bacteria, Harold, to the CRE concentration just in terms of kind of picking up a little bit of steam there. Is your expectation, it sounds like to stay -- still stay below those targeted guidelines even with the growth you're expecting, as you get -- through the combination of the 2 companies, the pro forma company will still be below that [ 70 25 ] even with the meaningful incremental growth you expect, Terry?

I think that's generally the case. I think you might have a temporary blip, Brian measured against capital with some tangible book value dilution and so forth, but at the start of the transaction, but it's a quick earnback. And yes, fundamentally, that is to continue to operate at those more peer median like numbers.

Got you. Okay. That's helpful. And then just on the with the rate environment, are you guys expecting a couple of cuts here in the fourth quarter, just the outlook in terms of the -- where you're putting on new loans and kind of where you expect those. Can you just talk a little bit about where the new origination yields are today and what you expect over the next couple of quarters?

Yes. I think the best thing to do, Brian, is to see the trends over the last couple of quarters on those loan originations. I think that will be fairly consistent in applying the same betas. And on deposits, we fully intend to kind of keep our beta numbers where they are. If they're not grow them over the next 2, 3, 4 rate cuts.

Thank you. That completes our Q&A session. Everyone, this concludes today's event. You may disconnect at this time, and have a wonderful day. Thank you for your participation.