Pinnacle Financial Partners, Inc.

Good morning and welcome to the Pinnacle Financial Partners first quarter 2026 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing star zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. 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 89 cents 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 non-interest 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, win. 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 systems 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 number one nationally in best bank awards earned, while Synovus ranked sixth. 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 two companies. It's a merger of relationships, and that has met one clear mandate from day one, 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 number 12 on the Fortune 100 Best Companies to Work For list, our 10th 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's sequential and year-over-year comparisons are significantly impacted by the Synovus merger, which closed on January 1st. 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 one 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 CNI credits, with contributions from our geographic markets as well as in our specialty lending lines. Link 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 one 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 non-interest 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 remained disciplined with non-interest expense control while continuing to invest in revenue-producing talent and technology, partially offset by the realization of some of our merger-related call synergies. Our adjusted tangible efficiency ratio was 51%, in line with expectations for this phase of the merger integration. We incurred $275 million of non-recurring merger expense in the first quarter. On a combined basis, our non-merger-related linked quarter growth was driven by higher employment expenses, largely due to seasonally higher personnel costs. Also, on a combined basis, headcount 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 non-performing asset ratio is 0.58%, which was largely impacted by two 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 non-depository 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 CNI 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 pay down and payoff activity. Same model, same results. Our bankers win clients, and these clients consolidate to pinnacles. 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 non-interest 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 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 non-interest expense forecast remains in the range of $2.675 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 to $450 million of the $720 million in non-recurring merger-related and LFI charges will be incurred this year, excluding merger-related equity acceleration costs. 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 discipline execution across every geography and specialty banking unit reinforce our conviction in 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.

Certainly. We will now begin the question and answer session. To ask a question, please press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. In the interest of time, please limit yourself to one question and one follow-up. Your first question is coming from John McDonald from Truist Securities. Your line is live.

Thank you. Good morning. I was 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.

Yeah, 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 one-quarter or two-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've 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 six, and the total was plus six, and the core was plus eight. You mentioned a little bit of strategic reduction of brokerage. 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?

Yeah, John. As we look into 2026, we do expect to see deposit growth be more back-end loaded as we look forward. to the seasonals and the growth that 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 did we do with that flexibility? We reduced our broker deposits. Basically, it was just a cost optimization play and wanted to reduce costs where we could.

Okay.

Thank you.

Thank you. Your next question is coming from Tamir Brazzler from UBS. Your line is live. Hi, good morning.

Morning. First question is just any change in the go-to-market strategy on either sides of the bank? And just wondering what the reception has been early on for many changes made.

Yeah, 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 this same period last year. So the model of hiring has been rolled out and is actually being executed within that Synovus model, within that 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 continued 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 Sanova side, but it was well received and it's already in the process of being well executed. On the Pinnacle side, really no changes. 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, you know, investment into the franchise is going to maybe eat into some of those and it's going to drive increased expenses maybe at a decelerated growth rate though.

Yeah, Timur, you know, as we look at 2027, you know, there are two 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've said our target for 2027 is 75% of the overall synergy. So going from the 40% to the 75% will offset a portion of that core NIE spend, but just a portion of it.

Thank you.

Your next question is coming from John Pancari from Evercore. Your line is live.

Morning.

Morning, John.

On the... On the loan front, I think your organic growth was pretty solid in the quarter against your 9% or 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 what you're seeing in terms of loan demand and line utilization in the quarter, how that's faring.

Thanks. Yeah, John, I'll start with the end. You know, 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 by from line utilization increases. When we look at loan pricing this quarter, our yields came in right around 620 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 hyper-competitive environment You know, we came in at 262 roughly on production there. It was up about six 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 expect it some of these promotional rates to come down and they haven't come down. They've remained fairly stable, but you know, 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 at a pricing standpoint. And there's nothing in that competitive data that would make us change our outlook on them or on growth.

Got it. Thanks, Kevin. And then I appreciate the color on the competitive dynamics on both sides of the balance sheet. Separately on the broader growth strategy, and I certainly appreciate your commitment to the 9-11% loan growth and the 8-10% 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, you know, and adapt to the backdrop and still, you know, would you still be confident in these targets on the lending side? Thanks.

John, that's the beauty of this model is that, you know, 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. You could say that on the Pinnacle side, there's 15 to 20 billion of growth embedded in people who are on the team today. 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 is a positive. But our growth is more predicated on that hiring than anything else. And in that number, the 15 to 20, 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, I'll just, you know, to add onto that, John, you know, what 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, you know, 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 this 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. Thanks, Kevin.

Appreciate it.

Thank you. Your next question is coming from the line of Abraham Poonawalla from Bank of America. Your line is live.

Hey, good morning.

Good morning.

I just wanted to go back to 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 non-interest bearing deposits as a mix of total changing from here? Do you see that going, staying flat, going up or going down? Thank you.

Yeah, Ibrahim, 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 loan growth. As we look forward, you know, we expect to see a strong core deposit growth continuing relatively in line with loan growth a little bit behind. And that'll 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% 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 nemocritic for the rest of the year if you continue to do that, because there are other things that go into that, and you'll see us do some actions as we go through the year for liquidity management that'll 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, is you think about the legacy pinnacle margin, which was approximately 3.3%, just below pre-merger, 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 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 a slight positive to the margin. So, you know, 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 call. Thanks, Jamie. 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 more 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, Ibrahim, I will start with some successes we had in the first quarter. We had six capital markets deals that totaled $10 million in revenue that, you know, basically they're 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 were asking, but that's the type of business that has $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 hold 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 Ibrahim, you recall, we put $100 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 of 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 multi-currency 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.

Thank you both.

Thank you. Your next question is coming from Casey Hare from Autonomous. Your line is live.

Great. Thanks. Good morning, everyone. So I wanted to touch on the recruiting strategy. Very good momentum here at 87 or so here today. I was wondering if there is upside to that 250 target for 2026. And then, you know, are you still getting the same economics on these hires? I just noticed the expense guide, while it's the same, it does imply a bit of a step up going forward versus, you know, 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've hired to date are going to exceed or fall below that. But what we've been seeing and tracking 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's a great deal 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 to $20 billion of embedded growth on the Pinnacle side. Let's say another five 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.

Okay, great. And just switching to capital, is there any, just some updated thoughts on potential BHG monetization or

making use of the the gray star jv with credit risk transfers to to speed up the uh the cet1 rebuild you know no update on on the bhg side as far as uh in a liquidity event but i will say that you know we spend a lot of time with that team and uh we really do believe in their strategy going forward of remixing uh their distribution we think that it'll improve long-term profitability as well as improve enterprise value. So we appreciate that partnership. On capital ratios, you know, starting here at 983 on CET1, our intention is to build capital to go through the year to get to the low end of that target range, get to the 1025 area. You know, there's 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.

Thank you.

Thank you. Your next question is coming from Michael Rose from Raymond James. Your line is live.

Hey, good morning, guys. Thanks for taking my questions. Maybe just a touch on the revenue synergy slide. I obviously understand that all the ranges provided were – were reiterated, but any sense on, you know, what could, you know, what areas we could see progress maybe a little bit sooner versus, you know, later in that two to three year dynamic. And then, you know, I guess just from the outside looking in, you know, how do we get comfortable, you know, because it's always hard to see, I think, from the outside looking in that you're actually realizing, you know, those revenue synergies. So any sort of comfort there would be helpful. Thanks.

Thanks, Michael. I'm glad I brought it up because I think the context does matter here because we are only one quarter in and we're still operating on two separate systems, which creates some barriers to be able to offer the other organization's 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-cell 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 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 two 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, you know, obviously really good start on the hiring front has been brought up a couple times here. You know, I think in these types of deals, though, we always worry about, you know, retention. And I think that was one of the key attributes of Pinnacle over a very long time period was just the high-level retention. Can you just talk to that there? Because, you know, obviously it seems like the backdrop for hiring, everybody's 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's a trend moving forward. Thanks.

Yeah, 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 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 to continue to decline from here. So I think others have said this merger would be a huge opportunity to poach Pinnacle team members, and 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 and 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.

All right, great. I appreciate the call. I'll step back.

Thank you. Your next question is coming from Jared Shaw from Barclays. Your line is live.

Thanks. Good morning. Yeah, I guess we were 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?

You know, Jared, no new expansion markets at this point. If you recall, we recently expanded into the national capital region within the last five 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 into each of those markets. And then more recently, we added a new – Alabama. And that's been a real growth engine for us. And so I would tell you, we will continue to focus on the nine states and 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, thanks. 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, we're still focused on March 2027. We know that that conversion will be the first time that our clients will feel 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 converted. We've decision over 250 technology platforms and now we've gone through and 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 Chat PFP, which is kind of an internal policies, 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 three things, banker and team member productivity, and 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.

Great. Thanks.

Thank you. Your next question is coming from Anthony Elian from J.P. Morgan. Your line is live.

Hi, everyone. A follow-up on capital. I know you have the buyback authorization in place, but Jamie, is the expectation to get to the low end of the 1025 CT1 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 eight 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 to grow capital ratios or to be deployed to something like Sherry Purchases. 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 one purchase accounting now expected at $90 million, which I think is at the low end of the previous range? Thank you.

Yeah, 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 four and a quarter, the average underlying loan rate. And we're assuming about a 7% prepay rate on those mortgages. 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 here and the valuation.

Great. Thank you. Thank you.

Your next question is coming from Steven Scouten from Piper Sandler. Your line is live.

Yeah, thanks. Appreciate it. I want to go back to BHG really quickly. I think, Kevin, you mentioned, you know, some of the change in guide was relative to adapting funding mechanisms. I'm just curious, you know, 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, it'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 of voluntary repurchases, things like that. And so we think that 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, to 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?

You know, for me, Steve, for the foreseeable future, there's so much opportunity. You know, 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 number one in the country in the net promoter score and Legacy Synovus to be number six in the country, it shows you we have two 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 higher 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, you know, 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 will be able to grow by rolling out that pinnacle model.

Yeah, great reminder there. Thanks for the call.

Thank you. Your next question is coming from Bernard Van Gazzicke from Deutsche Bank. Your line is live.

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

Yeah, it's a great question. I mean, when you look at the economic impact, a couple things were happening there. One, we obviously used 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. Qualitative reserves, obviously we have those in there. You know, 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. You know, we had it in multifamily and a few others. And our outlook has improved on those areas and we reduced the qualitative advantage. 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 the 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?

Yeah, you know, when you look at the rest of the year, first I'll kind of give a 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.

Great. Thanks for taking my questions. Thank you. Your next question is coming from Catherine Miller from KBW. Your line is live.

Thanks. Good morning. 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?

Yeah, Katherine, 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 to $2 billion. Longer term, I would expect to see the securities portfolio grow to, you know, 19, 20% of assets, you know, over time. And you will just continue to see us build towards those levels.

Okay, great. And then maybe one follow up on just the reserve question. You give 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 the current reserve and how you're thinking forward about the credit risk?

Thanks. 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, you know, as I think about it, you know, provision expense, you should continue to see what you saw this quarter outside of the change in the ratio. You know, you should expect to see provision, you know, about $20 million higher than charge-offs just due to strong loan growth and providing for that loan growth.

Great. That's great. Thank you.

Thank you. Your next question is coming from David Chiaverni from Jefferies. Your line is live.

Hi, thanks for taking the questions. 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 seasonals 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, you know, we're going to strive to maintain that momentum. But this is definitely being ahead of schedule.

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

Yeah, you know, 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're 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. We await the finalization 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, you know, 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, you know, it definitely looks like it's going to be a positive to our capital ratios.

Very helpful. Thank you.

Thank you. Your next question is coming from Gary Tenner from DA Davidson. Your line is live.

Thanks, and good morning. I had a clarifying question about the NIM roll forward in the deck. It included securities marked benefit of, I think, seven or eight basis points. I'm just curious. how that works. It was non-basis points. But with the bond repositioning in the first quarter, I'm surprised that it was reflected quite that way. So can you talk about that item versus kind of the ongoing securities yield in the wake of the repositioning?

Yeah, that was going to come through one way or another. By doing the repositioning, it came through in NII instead of PAA. That's really basically at close, we mark that book to market, the securities portfolio. And so, you know, 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, you know, make that PAA go away and turn it into NII by executing a market trade. And so... You know, we feel really good about, you know, 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?

Yeah, 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's 70% of that's coming from residential mortgages. And so that's the general accretion that's in the margin each quarter.

Thank you.

Thank you. Your next question is coming from Chris Maranek from Breen Capital Research. Your line is live. Good morning.

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, too.

You know, Chris, you know, you saw it on side 37, it's 9% or $7 billion. And I think what's important, you see the headlines only about a billion seven in private credit or, you know, less than 2%. And look, I 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 sit on the very top of the capital structure, senior secured by 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 seven 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 at 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 or not likely to perform similarly through different economic scenarios.

Nope, that makes sense, and thank you for the color there. And then the reserve assigned to these is just part of the general CNI bucket, correct?

That's correct.

Great. Thank you for taking all of our questions this morning.

Thank you, Chris. Thank you. Your next question is coming from Robert Rutschow from Wells Fargo. Your line is live.

Hi, good morning. Thanks for taking my questions. 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'd 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 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.

Okay. Thank you. 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, 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 a 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 the course correct, or we didn't have the immediate answer. That will continue, and undertaking to 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 nine 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 welcomed new team members you've never met, and you made them feel 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 three years, you've been an extraordinary partner, elevating our investor relationships and leaving the function better than you found it. Your impact on 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 teams. One quarter end, we've delivered. We did exactly what we said we would do. And this is just the opening act. The model is 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.