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Investing.com -- Fitch Ratings has affirmed Pinnacle Financial Partners’ (NASDAQ:PNFP) long and short-term issuer default ratings at ’BBB’ and ’F3’ respectively, while revising the outlook to negative from stable.
The rating action follows Pinnacle’s July 24 announcement that it will acquire Synovus Financial Corp (NYSE:SNV). The transaction is expected to close in the first quarter of 2026, pending shareholder and regulatory approvals.
Fitch cited integration and regulatory compliance risks as factors behind the negative outlook, which the agency believes offset the medium-term financial and strategic benefits of the deal. The combined company would have approximately $116 billion in assets at closing and would face enhanced prudential standards after a grace period.
The rating agency identified several integration risks, including those related to senior and mid-level talent, company cultures, risk and compliance frameworks, and associated governance and technology. Despite these concerns, Fitch expects Pinnacle’s track record of successful acquisitions to mitigate some risk.
Fitch’s analysis of combined pro forma metrics indicates a stable credit, earnings and funding profile consistent with Pinnacle’s current ratings. The pro forma Common Equity Tier 1 ratio is projected at 9.8% at closing, or 9.2% when adjusted for accumulated other comprehensive income.
Both banks operate in the U.S. Southeast with similar growth strategies. The merger offers potential benefits including limited deposit branch overlap, $250 million in run-rate cost savings, and further loan portfolio diversification. However, Pinnacle’s compensation model may present challenges in aligning incentives across the combined company.
The merger is expected to maintain the combined entity’s reliance on spread income, with potential for modest earnings improvement through lower pro forma deposit costs. Some noninterest income streams, such as wealth management, could benefit from greater scale and cross-selling opportunities.
Pinnacle’s ratings could face pressure if regulatory or execution challenges cause the acquisition to be terminated. Following closing, failure to achieve deal economic forecasts, operational distractions, deposit or customer attrition, or increased risk appetite could also pressure the rating.
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