Synovus’ Blair ready to run Pinnacle’s ‘air raid offense’

• Key insight: Speaking at Barclay’s Global Financial Conference in New York, Synovus CEO Kevin Blair took pains to assure investors he’s ready and willing to implement Pinnacle Financial’s incentive plan when he takes the reins of the merged company. 
• Forward look: Pinnacle CEO Terry Turner said he doesn’t relish giving up his job and becoming the merger company’s chairman, but he called the younger Blair the “single best person” to serve as CEO. 
• What’s at stake: The share prices of both companies dropped the day the merger was unveiled in July and have yet to return to pre-deal levels. 

Kevin Blair believes his job as the CEO of merged Pinnacle Financial Partners will be similar to that of a football offensive coordinator inheriting a high-powered passing attack.
Blair is the CEO of Synovus Financial , which reached a merger deal with Pinnacle this summer. He’s planning to stay on as chief executive of the combined company, notwithstanding the fact that the $55 billion-asset Pinnacle has had the faster growth trajectory.

“If you have the best running back in the country, you’d better run the ball 100 times a game,” Blair said Tuesday during a presentation at the Barclays Global Financial Services Conference in New York. “If you have the best quarterback in the game, it’s the Air Raid offense. That’s what these guys run.”

In July, Nashville-based Pinnacle agreed to merge with Atlanta-based Synovus to create a $116 billion-asset Southeastern superregional bank.

The $61 billion-asset Synovus and Pinnacle argue that the deal, which is expected to close in the first quarter, will marry white-glove service with industry-leading earnings power, but shareholders have proved skeptical. Shares in both companies plummeted on July 24, the day they unveiled the deal, and have yet to return to pre-announcement levels.

“Mergers of equals can unlock meaningful value, though they often carry execution risk, can take time to integrate, and may face investor skepticism, as evidenced by the negative market reaction” to the Pinnacle-Synovus deal, Jefferies analyst David Chiaverini wrote last month in a research note.

It was that underperformance that prompted the companies to release a revised investor presentation late last month, and which brought both Blair and Terry Turner, his Pinnacle counterpart, to New York on Tuesday. They appeared jointly in an effort to reassure skittish investors that they have decisively addressed all the issues that bedeviled previous mergers of equals.

In particular, the CEOs stressed that they would retain Pinnacle’s more generous incentive system and its liberal hiring bent.

“Pinnacle runs a very unique incentive plan where everyone in the company, every associate, is incented based on how the company does at the top of the house, both from revenue growth as well as earnings-per-share growth,” Blair said. “I love the idea.”

Pinnacle’s plan “changes the dialogue in the company,” Turner said. “I literally have tellers grab me in the elevator wanting to know how come we’re short on EPS,” he said.

Blair also praised Pinnacle’s aggressive hiring strategy, which has emphasized adding talented bankers and support staff, even if the new arrivals place a temporary strain on the company’s budget.

“Someone doesn’t get a budget each year that says you can hire 10 people. What Terry has said is, `If you can hire 100 good people, go hire them. We’ll figure out how to [manage] the expense numbers and offset them with revenue,'” Blair said.

“I would submit to you that we haven’t been that entrepreneurial, ” Blair added, referring to his own company. “We’re in more of a traditional mode. … What we’re going to have to do to empower our team members is allow them to make those [hiring] decisions.”

For his part, Turner said both he and Blair ensured that the key decisions necessary to ensure a smooth integration — including the identity of the CEO — were made prior to the July 24 announcement date.

While it may have struck some observers as odd to elevate Synovus’ CEO and then charge him with implementing what is largely the Pinnacle business model, Turner strongly endorsed the 54-year-old Blair. “The main thing I’m betting on, the main thing that I believe in, is that Kevin Blair is the single best person to run the next leg of the race at Pinnacle,” he said.

It wasn’t an easy admission to make, added Turner, who is 70. He will serve as the merged company’s chairman.

“I haven’t met with a CEO yet that doesn’t like having CEO after their name. They like that, including me,” Turner said. “My own preference would be, I want to run this thing. I didn’t show up saying, `Kevin, buddy, I’m trying to get out, how about you jump in?'”

Turner, however, said that giving the top job to one CEO for a limited period, followed by the elevation of another executive, is ultimately destabilizing.

“I just had to say, `All right, we’re going with one long-term CEO,'” he said. “Then it didn’t take long to [conclude] we’re going with the 54-year-old instead of the 70-year-old.”