SNV - Earnings call transcript Q4 2019 | Synovus Financial Corp.

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Operator

Hello, and welcome to Synovus Financial Corp. Fourth Quarter 2019 Results Conference Call. [Operator Instructions] Please note this event is being recorded.

I would now like to turn the conference over to your host today, Kevin Brown. Please go ahead.

Kevin Brown

morning. good and you, Thank

During the press Relations the and be of today, that are we'll release Investor website, referencing available our slides synovus.com. call within section the

and talk Financial Officer, Kevin Chief goals. will the and Chairman Kessel the will comments more Operating about Blair, who outlook Executive then fourth long-term Jamie Chief by Officer, quarter; be begin and Stelling, our Gregory, XXXX call; Chief detailed followed will on providing who Officer, and President

available answer your is the team of the Instructions] at management [Operator end executive Our to questions call.

our of as started, otherwise, cause release to our vary the assume SEC uncertainties, which could do get statements are website. statements information, to obligation result in or required new results and forward-looking we press are let may early Such our might results and except actual materially. as Before filings, differ available me We materially We may remind that on our statements. be a and by the not comments list law. you subject these forward-looking update risks to any that in include factors developments

non-GAAP During performance. the company's related reference to call, the measures financial we will

our measures reconciliation the may appendix You see in the to of these presentation.

here's now, Stelling. And Kessel

Kessel Stelling

good welcome XXXX quarter and earnings Thank morning, year everyone, you, to Kevin, end call. and and our fourth

named they take be Before and will that efficiency, for to carve have our work a year ahead Synovus, new and thank I of entire paths COO and to team. congratulate on challenging the do to moment just that as a offer team responsibilities continue was year leadership President want a the want will his few our I rewarding also work we for to recently for both I in growth additional the Blair, comments took and on the ago. adding quarter, year he as Kevin to who done

to designed this in efficiency new In that party revenue to this recently on us third opportunities of presentation. partnered important customer to sponsor performance provide experience. he'll the as as as and later regard, in work a well improve ask assist executive identifying the have serve Kevin we comments initiative, more ongoing and with I'll

Before I'll sequentially Slide of the Diluted share year-over-year. walk and were highlights earnings X.X% quarter noted through us to the Jamie, briefly I over call up turn fourth was adjusted. EPS $X.XX $X.XX X. X% down the on per Adjusted or

production transaction million. Period end was loan million $XXX of XX billion. And from $XXX or growth end growth from million Period deposits deposit annualized loan increased total total cost points Core X.X% annualized. XX.X% $XXX prior resulting was declined deposit funded $X.X or quarter. the basis

was basis interest margin X.XX%, decline prior points quarter. from a of X Net the

margin Excluding quarter. of interest the purchase down the X.XX%, accounting net was adjustments, from prior points basis impact X the

quarter, from the year activities. by quarter $XX fiduciary million Non-interest of prior from and $XX million $X.X the fourth led in capital and million income was quarter, increase an the prior markets

net charge-off ratio X The X.XX%. And quality asset prior X.XX% metrics ratio non-performing the by non-performing with was from ratio declining quarter remained and X.XX%, to the and loan basis credit the points solid, respectively.

year. million the reduced were We Outstanding repurchased from our during repurchase or beginning quarter, $XX.X XX% share stock the completed million. shares of million X.X of XXXX in $XXX authorization common shares the which

Our XXXX share repurchase around to CETX authorization with X%. should ratio allow continue operating us a

increase dividend. in to X April effective share with $X.XX report the to of stock quarterly Board dividend common per pleased approved also that I’m our XX% a the

over Jamie I’ll a look now for detailed turn at the call XXXX. to more

Andrew Gregory

Kessel. you, Thank

book experiencing with $X.X in footprint direct asset was had increasing quarter XX consumer types. with loans. X CRE $XXX lending classes, in broad billion. growth on X Slide with the growing million of loan nearly growth We on all based begin across another net increase Let’s of C&I a growth strong of and production product The the of

profile loan we and of remain credit in confident this was the our The quality quarters, growth book. prior with consistent of

a have robust the M&A industries directly and marketplace activity footprint. following and competitive pipeline more across industry changes We recent starting the loan from in And to benefit we're consolidation.

core highlights deposit X, include Slide quality a members' continued footprint. team of direct On increase reflection a This performance deposits. transaction in growing across our relationships our is

inflows points In non-interest-bearing by offset We growth strategic for the quarter. deposit deposits more basis in continued fell cost deposits, deposits, fourth supported July the to from remix reductions book the money peak with and higher-cost of run basis reasonable quarter, we markets, in continued runoff in off. This the priced public which previous focus the fund the our efforts that XX and from deposits. allowing to seasonal XX total points

core can see X.X%. the points X, net on to you margin basis X Slide interest decreased As

Excluding in accretion, resulted yields point deposits. purchase the lower in accounting a XX cost point loan basis interest XX rates in a of and reduction reduction basis

full purchase the from As NII a will The in a from million. of $XX fourth into approximately to reminder, balance towards going in GAAP substantially XXXX. growth, accounting was the of to margin pipelines X.XX% and was which benefit provide loan of the timing accretion, Strong tailwinds total XXXX weighted end million at year purchase $X decline accounting sheet quarter. the which benefited quarter,

is increased the Included continued fee On success we non-interest you'll increase in an Slide $XX adjusted. our or million $X X, equity investments. fair in income $XX GAAP million of revenue which see million to in had value have growth, certain

which $X capital the In and led fiduciary by mortgage million, quarter, reductions of as and was respectively, fee in million $X income. areas activities such than fourth offset markets growth more revenue banking

successfully objective. to example a XX% strategic success this by includes improve average key solutions. of of An implementations year-over-year Non-interest increase in treasury and execute payment income as a as we continues percentage this on assets

years. $XXX X FDIC past of which from with $X Significant million, million slide, certain million increase the expenses reflect increase an reclassification previous adjusted of associated on over in shows X $X noted increases, Slide of is categories expense quarter. the the loan the a

revenue-producing was more higher with that expense with in additional offset renegotiation of resulted was million a consumer lending from opportunistic partnership. than increased third-party also There increase hires a revenue income. servicing non-interest a $X and Expenses also

our new long the importance our will continue by we expense talent model, to technology. company emphasize recalibrate As strategies term. and These improving serve operating that and efficiency paybacks to we profitability the from short-term of customer-facing well base have investments execute

Key quarter. reductions for metrics XX rate charge-off credit for by of on a Slide quality was declined net that X including achieved favorable, NPA XX net remain ratios These basis and with points charge-off the ratio basis basis the The year. each points. points NPL X were

prior to to net costs remains expense net of the Provision purchase compared charge-offs in million Provision $XXX accounting. associated a expense loan elevated impact included $XX.X due of increase with the from million the growth period.

off renew. Under selection, provision the credit our mark through or acquired loan flows than loans accounting pay as rather NII

think we favorable our allowance, ratios about continues to As remained credit as overall coverage look the quality healthy.

that confident share reduction operating and additional were overall beginning of to X.X in a On Total reduced capital of quarter are for $XX shares repurchase continues current report an included $XXX liquidity Ongoing provide our of reflected million the to support our million ratios. XX. and Slide remain capital completed repurchase authorization XX% million, to activity in position pleased analysis at shares. we which the year. from We the XXXX. This fourth

our discuss will outlook. Kevin now And

Kevin Brown

Jamie. Thanks,

achieved am we me XXXX. progress in about very and minute with success the XXXX, talk our during reflect expect I what pleased a let take Before year. I to on

new the beginning diversify in were operating of the better organization out enhance sources growth. as to rolled model we As the and year, a experience as of align to our well objectives our our further customer expand

trust, we new serve. this and revenue-producing helped contributed XX the added we our including the on private will impact in team net payment have our in business an XXXX XXXX, Various footprint units and treasury of needle wealth many bigger The In and in members attraction markets brokerage, XXXX. banking to which growth, management, of move wholesale across even talent mortgage, fastest-growing solutions.

and classes productivity also production funded asset forma during experienced in banker to CRE C&I, billion, consumer up increasing. X.X% XX% led total a year loans in or strong with increase from We the Moreover, of $XX.X with in all outstandings the $X production XXXX. billion pro loan growth growth

we markets, our including multiple across fee assets saw also capabilities on growth grow and Synovus versus Strong as and FCB pro management management basis. income fiduciary XXXX, capital presence which and asset the In businesses, under XXXX growth we expand continue forma across XX% delivered businesses, delivered our mortgage, card footprint. XX.X% a was to

fourth As in the quarter. revenue a increase the the our these totaling percentage result growth of categories, saw of income we derived in year, XX% now fee the throughout from

FCB integration we the capital of with pleased of the The XX% the previously growing record with market on loans the million, Community continued our $XX team by members. year, and accounts discussed, X% of wholesale path during newest Bank year, deposit year-over-year. we increasing team of the completed As during we're contributions legacy and levels a growth million income of up $XXX Florida

FCB as month higher the The branches. branch performed XX, in Credit we quality book year, during sales XXXX, supporting in legacy also of acquired expected internal credit of branch performance and gains with overall Synovus FCB with also than metrics portfolio. the reviews saw network unit the per the the slightly legacy

My in units very also growth. the We We of release formed, preparing and XXXX. and XXXX time, and already division middle consumer to period digital new In new of generate Synovus, business the are technology $XXX in was of our released portal million XXXX, commercial in invested has Synovus commitments. loan for platform in the generated digital structured a lending in our short

this out much this stronger affluent customer quarter. release will for the associated our the also program segment across piloting franchise and building year solutions and and the We mass a proposition spent value

do the even So simplification make enhancements It efforts will map as road that with. opportunistic calls growth, and new we while margin. to business us investments, helping follow And expansion enter similar fund will for easier that XXXX, to the process from headwinds efficiency a our mitigate course. additional will and

our The engaged strategic back in months road of informed XXXX work X our long-term the the building over importantly, In last September but has map, goals. XXXX. a more we guidance, third-party

provide over as the side reviewed as We revenue well efficiencies. have that incremental opportunities growth for from initiatives XX additional

that final efficiency horizon begin the But in the be XX stages in during the generally, prioritizing to initiatives opportunities a realized are delivered XXXX. We while revenue longer-term to be XXXX. of will will have X opportunities

the constructive been opportunities us have that real staffing will third-party and spend, estate rationalization. the center efficiency around past, categories for Our in

will provide around transparency continue engagement, with forward opportunities progress. the to move we updates we as the greater and as this well As

These a lower-for-longer Now tailwinds growth the will resulted economic believe modest We Southeast in guidance and moving on continue. that XXXX based and environment economic economic growth. that the long-term in to our above-average targets. rate are have

favorable on and growth. clients Our business environment, the we their outlook maintain supporting are focused a on

in growth which pleased and X growth, stronger balance talent, sales been are driven our of the as markets. Tier enhancement sheet has by larger capabilities with We in new well positive tools the momentum the as

Our support approach X% expected asset is growth XXXX. X% to continue momentum of to and to the in

pipeline Funded XXXX, a base. deposit increased remixed loan and throughout the ended with funded production by robust year

market we expect frontline further relationships, relationships XXXX, growth grow loan growth bankers. to exceed economic deepen and as existing For continue of hiring new we

this to in and broad-based industries. result across markets growth loan We expect

growth core We will focus fund this with continued transaction deposits. growing a on

to higher-cost, reduce continue single-service efforts as deposits. in reduce will deposits selectively high-cost Our we XXXX

of One most purchase reduce from which is are by million statement significant XXXX. the accounting income revenues headwinds expected to XXXX approximately $XX to adjustments, the

rates slightly, to net to mix. income expect returns. assuming interest interest as the the actively optimize to similar net interest X% margin continue well X% we down do PAA, adjusted sheet as manage flat balance should our balance margin We sheet to as Excluding and be increase

with continued markets, hiring product well areas Adjusted with income growth as growth. is to solutions non-interest share efforts in existing a expected such as payment relationships. of X% in X% broad-based is as fee of in to expansion increase the of function income and higher-opportunity treasury The wallet

processes expected will drivers that non-interest The savings will during include be These partially have relative efficiency to people, initiatives. investments the investments and Adjusted short-term in expense increase realized strategic by paybacks. is X%. X% execution of offset to continued technology primary our

items non-deductible as as rate that effective well rate were expenses additional the of tax are merger-related was well Elimination expected significant initiatives also certain impacted as expenses future negative. certain in tax these realignment aforementioned negatively substantially. XXXX tax discrete of that strategic as The and subsidiaries will not the XX% by of XXXX reduce

recoveries ratio We matures any XX credit credit widespread net the no and expect of are to the There charge-off cycle deterioration. XX as points indications basis subside. of

as offs However, impacted is from accounting acquired by of the resulting portfolio adoption. changes CECL unwound be net will charge purchase mark credit the at

be life highly CECL as of As we losses will expense loan be statements the XXXX, projected expectations growth for forward change economic the current to and dependent look the to largest payoffs. financial both as net tenure as elevated implementation. of involves impact and provide Provision a levels we elevated environment, of going on will reserves of the of credit of loans, continuation loan the profile well forward and unfunded

growth ratio for throughout Given basis the our for up we of points current the profile provisioning the allowance and anticipate the to credit of losses loan adding to economy, XXXX in expectations change for loans. to to account XX life

remains CECL be Our which fundamentals in quarter impact, underlying unchanged not book. appendix. changes estimated to any day This can provision the X found the forecasted the from incremental loan credit expense is related in of our previous

competitive first, to X% capital optimized balance capital growth, a current to, funding completed under stock subordinated debt, profile. size and shares, with third, which and risk We committed reiterated XX we our given organic million issuances of current sheet CETX and ratio on maintaining are capital. the the effectively dividend, In preferred Moving second, XXXX, and effective deployment. purchased and the stack, conditions comfort a

common be XX% such, to of we As will XX%. increasing XXXX, a by payout in XX% targeting dividend the ratio

organic continuously our manage Moreover, tailor capital we positions. and will our through loan capital monitor and as share accordingly growth repurchases we liquidity consumption

road the goals successful execution of map. long-term our strategic Our reflect

We efficiencies vision and of forward to the new identify in and implement of and passion avenues path and clarity bank always our the commitment better. growth aggressively we've team the and in the our be but confident are I’m been, organization. committed entire to for our our throughout

goals on of leverage, operating fully and We've moved top quartile balance a our positive delivering eye aligned - on forward growth we're diversified profitability metrics. sheet with keen moving

it turn to back I’ll for remarks. over Kessel, you closing

Kessel Stelling

before Thank contributions we And our again, their Kevin. Q&A, our to to successful year you, move I, for thank to for Synovus want another company. team

proud our organic customers improving as Our reflect momentum well results and and communities. the ability supports an to gives each team. to back footprint, team unified with so way execute I’m fully continued serves our of across growth our a our greater always other,

Operator, available we’re for questions. now

Operator

Thank with the [Operator America from Poonawala And Instructions] Securities. you. question first Ebrahim comes of Bank

Ebrahim Poonawala

morning. Good

Kessel Stelling

Morning.

Ebrahim Poonawala

just end if growth lower to first the to be year? question, kind lower growth expense the How - guess, at guidance at about the lower to should asset the wanted end. X% think for I end, X%. to of of is should at the expenses the I Is we revenue - looking we expense expect tied

Or about more think your to in just do about first decisions expenses right it investment earnings, And operating you're incumbent the that? the how And also you we where love on to way we that expect plan efficiency is leverage sooner for the Would update to terms an quarter of that update just an do get thoughts the than think out? by making? could shake is year. of get in terms expect or on

Andrew Gregory

So Thanks Ebrahim, Jamie. this the question. is for

lot X% And We that expect, a XXXX. things to that of XXXX. happened growth as to say, we for has do with expense in X%

growth with expense X% about the associated have of we servicing. So third-party

negatively just expenses that's growth That's quarter. in the also this a renegotiation that book. impacted so And

in impact made another 'XX. hires of thing, are second the Another half we

our so going in be there we've And negative first really been line into that's we to the to XXXX. impact head a growing field. as expenses out And

You're growth impact definitely right. that. The will

You commission saw of fee revenue expense with the half being strong that because the the just businesses. 'XX higher in when of in performance second -

on And the XXXX excited efforts. dependent Kevin somewhat in we script, right. our is our about you're that. the as for with so initiatives to mentioned opportunity flight, opportunities about improve transformation And talking on this. It But many we're have

Kevin Blair

when I a to more I'll the little initiatives. the Ebrahim, We giving to themselves. call, around relates are answer as transparency year. guidance Yes, quarter full question generate Obviously, additional order the clarity on spend in provide we want earnings as to at think the Kevin. understand to be we'll what first initiatives third-party savings. will the this the And is it the

a that quarter, year high But expenses as what will we'll as off is the first and you'll hit trail then continues. think Jamie mentioned, see quarterly with our expenses watermark in I

the we'll most towards and as at operating we half get generate XXXX. year, of we the so certainly, leverage be second And able positive to as look

Ebrahim Poonawala

relative morning. the helpful. That's dividend you see we here any on? gauge just build? we the least as should moving of growth, the guidance buybacks, from of and you CETX X.XX% assume capital. to at X% year your the Is given that this at capital buybacks to raised quickly way it not may safe let - to think target, And to sort early about part asset Like what's and right obviously

Andrew Gregory

that we in Yes, maintain X% around expect currently, confident to feel are the Ebrahim, we level. level we and where CETX

our be be and we'll plays repurchases. we'll at into capital wouldn't assume so I on right, you're off that And grow means that looking ratios. share sheet how that But we how balance holding that,

Ebrahim Poonawala

the should So we or expect we share see first repurchases - could in quarter?

Andrew Gregory

guidance not to repurchases. at stay to giving X% the But We're share level. the of timing we're going

that, you to the giving, our shares that repurchase I As And of would look forecast over probably the million of growth loan year. X course be million we're may X say, guidance at we the will in XXXX. with and

Ebrahim Poonawala

it. for my questions. Thanks taking Got

Andrew Gregory

Thank you, Ebrahim.

Operator

Thank from you. next And the question with Stafford Stephens. Tyler comes

Tyler Stafford

from but expenses in Jamie, I I take above to fourth XXXX the to saw quarter fourth not triangulate relative we X%, think Hi. meaningfully? expense The guide X% guys. adjustments the quarter's expectations. at significant fairly that out up last Good comment stepped then XXXX and the to was trying that run in about expenses to that morning, of quarter, the call rate XXXX to on the just guess, I'm looking opportunities just here. - And

about relative to happened outlook talking and what of quarter were simply, the growth? quarter Just of I you the X% X% call to in that expense the the guess, what to fourth here on happened guys thought I outlook third

Andrew Gregory

things. I'd few say Tyler. a Yes, Well,

have in of did lot fourth we strong quarter. First, a the growth

You the sheet balance growth. saw

You revenue saw the fee growth.

And so contributed our to that expenses.

fourth the added It $XX expenses had it's and accretive just the to will bigger XXXX so or minute ago as We reminder, a NII the $X to impact that million relationship expenses. But add, renegotiation so of quarter to well. to as by it'll million also a in Ebrahim, that's mentioned as another add third-party I shareholder. a offset

and we to rate fourth assessment when the reduce had categories certain looked identify was And Also third-party X loan to related to at reclassification years. past went that, going over of the forward. that And quarter, in a FDIC expense. in we the opportunities the also engaged we

a that XXXX, then we so And will compensation also actually be expense. to positive net a but had higher

There ebbs the compensation and but due benefit some reduce efforts $X were legacy expense, plans feel confident did in We to in the going million about defined flows to making that hit us we efficiency rate forward. do quarter. certain we're fourth higher have

us mentioned, expense. million Kevin due the As be little But to expect probably quarter $X personnel seasonal excited about streams leverage we're is That we targeting impact positive operating first have in back rate we million. actually get leverage, to and work year-on-year going the to of operating XXXX. help returning higher play in to positive to late and our we're improve a run $X forward to help

Tyler Stafford

to the speaking Is to But growth outlook. to, already clear, the in X% that is you're right? efficiency X% that be reflective Okay. that expense opportunities

Andrew Gregory

X% effort. couple expenses transformation a to the X% associated doesn't with outlook, of any with things that. One, So that include the

run at is rate calendar clear benefit end that. to nearly the benefit But the to be the not year year. of the I'll much as So XXXX as on

revenue to We initiatives the not improve these both going significant. impact expense expect that complete forward. is But to many XXXX will of and

Tyler Stafford

Okay.

XXXX, really expense point the lower being implying continue base expense I greater providing efficiencies is think, you're the exit XXXX? what base - in the So for should exit into That year. low

Kessel Stelling

right. That's

Tyler Stafford

rate? expense lower growth a And

Kessel Stelling

That's right.

Tyler Stafford

Okay.

Kessel Stelling

And is Tyler, Kessel. this

effect enter Kevin the those summarize on and this kind Let in year the happened But that have what really throughout both said year, those XXXX. Nothing early. one to call, away the seen that has of because go investments and didn't half we have of the me as the lot already what just e-mail off. Jamie happened. really middle question back we investments of the happened in What maybe question in salaries, morning XXXX, in made the but is paid of you a

quite But in in we've the with reductions out aggressive cost the been taking thoughtful, some half, quarter very throughout the that, midst in back in staff and our of either fourth frankly all company. in

you leave know our to about or this control. impression we're It's don't I I I expense think that we've forgotten So us that call see. on with don't today, you want to the to to commitment things just and like don't I about me, guide -- this

that And color are term. and a expense aggressively can and of of rate, very the term give opportunity you amount to so more we we short as run party with working the third amount so revenue long

the make on commitment so to I you ever. executing to as as And just want that sure that strong understand is

Tyler Stafford

guys. you, Thank Okay.

Kessel Stelling

Tyler. Thanks,

Operator

And the Gailey next comes from with KBW. Brady question

Brady Gailey

Good thanks. Hey, guys. morning,

I I that the to basis basis sure, rest something think by earlier about expect throughout points. loss you to wasn't the I Or CECL? XX somehow reserve ratio related loan XXXX? reserve in to XX build CECL, heard are after referring call of is you the the points being build

Andrew Gregory

we Brady, on Jamie. impact That to we're referring the is to are credit day referring the losses. X for and CECL allowance this if

was Like components impact there's loan at mix. factors, of we guidance credit by XXXX of impact look an growth, There's give right? there, of the to the As of impacted there's CECL loan prepayments. multiple and an impact

the you of expense the If There's of big unfunded economic it duration accelerated in of your to your impact that and book there. average impact your as assumptions you due prepayments, have environment, well commitments CECL. put extends, the provision negatively as impacts general the

extends just the we as assumptions flat using the that in slight uncertainty. And duration increase fact still the of a Clearly, due forward percent we the percentage as through see the we credit average of any may look a lot book CECL, little on there's for a think to bit. so loans in allowance that our a kind to marginally economic that of of We allowance We're not X a the losses day year. impact the forecasting go we when economy. of increase expect deterioration

no looking There's very and just It's credit in really an duration credit change are the just the indicators impact good different portfolios. performance. We all within now. right the forecasting - forward-looking slightly longer strong of

Brady Gailey

FCB. Kessel, a since you All then right. been it's That's year helpful. And closed

where Your was in points has year about X? Any come a you're at some currency at bit, it back on XXXX. M&A to back next relative update little or the least how thinking in

Kessel Stelling

Year position Well. come X enough Brady. some different us but think, a might to, or X be I participate Currencies in not to things, back transaction right now.

As lot probably partners. is are know, I out smaller there. of you for think looking there lot a a of There chatter banks exit

I agree think than are now. buyers more are all there would lot we a sellers right there

very, on operations, on But that our internal Tyler returns, to. our we're growth, focused just on both controlling expense spoke very, growth organic Ebrahim improving the and on very

I into throughout answer really fully So focus, team thesis reputation as established, investment that, the state short team building hedge keep internal has on term, that well think I become FCB down, the performing Florida. the integrated keep is our on the proving entire we've and think, of

there be currency, if thought year, XXXX. disciplined. anticipate again, opportunity, So just was the will I this late right very right we say And had would of currency, where regardless would would we XXXX the that have a look there to we XXXX be being XXXX, that But see, plenty in being will of wouldn't at sellers well. as that think and I I believe a I something. event certainly

Brady Gailey

guys. it. Thanks, Got

Kessel Stelling

Thanks.

Operator

comes the you. question Thank with SunTrust. from Demba next Jennifer And

Jennifer Demba

Good you. morning. Thank

Kessel Stelling

Jennifer. morning, Good

Jennifer Demba

that think towards X% you to said Does the expect the to expenses core that the does expense guidance? of more to your X% low Jamie, take the rationalization guidance - bias back it weighted I growth, topic. to expenses, that expenses bias of end that for X% X% the towards year. to you end of efforts be Back

Andrew Gregory

that, low at that can end that We think think opportunities range. we're be to the the the our can there low the of definitely the earlier, are mean, our I end. within - be I is you Jennifer, a scenarios right Kessel get that's the of faster. in the end. gets But move looking middle guidance lot high think as range. And things at there But case or that lever base right – is going to are mentioned to we

We as in the call, that are mentioned teed are now. Kevin to at looked There process we've XX over right - initiatives. up go things on and

And now. we feel the I so can I you But best guidance it. good is give guess, about that right

Jennifer Demba

Okay. on off XX-person offensive you be hires. will on How base this year? And in question XXXX last hiring

Kessel Stelling

Well, to hire Jennifer, number attractive I I platform because And continue really continue not higher-growth have think really of and pretty our that we've as footprint throughout again, add hiring expense off covers all backed believe, the in a our got And that on markets, selfishly, we be. - to. front. we well to we'll depth to of

people leaders to. the people to I early of actually hire of joining spoke and he we talk to in of we And who very the number this our other morning who have the selective to continue opportunity Allen because our some here Barker, said on that our be interested who's he me, Atlanta are of market President as team. to about number

That pressure on puts number. continue revenue aggressive. be we'll think I to that So

But in sure again, disruption, make in with bankers that a of are couple Atlanta recruiting. certainly front And some our seeing visited of there we're them good the just made in couple me attracts people while ago what feel company weeks good. and Howard that is while he's want just to there a with really spoke market, Kevin to decision. and we center I

revenue mean disciplined. again, that. aggressive, generate the in with be cost hiring to a market while cover to but especially middle space, we'll because, So comes a I the it takes

shorter-term can payback make us what hiring So balance we we'll give terms sure longer-term the of in payback. versus

decisions again, hiring say, revenue, would does growth last you the that XXXX. push I our reflect success the quarter the in of it in loans throughout But and really look at fee if

Jennifer Demba

Okay. Thank you.

Kessel Stelling

Thanks, Jennifer.

Operator

comes And Fitzsimmons Kevin you. next from with D.A. question the Davidson. Thank

Kevin Fitzsimmons

Good morning, everyone.

Kessel Stelling

Kevin. Morning,

Kevin Fitzsimmons

being Just a was? step wanted - the these about knew offset Was before about process in I'm bit a it or back that? where that way at just had you you the process looking, engaged Or and on was you investments it taking curious back to a way in needed third-party look you thought just made what I'm way September. you to a wanted versus curious certain ratios? thought more the peers on said stepping a - you all that. stood with

Kessel Stelling

always - think we I just a Look, is will take Kevin. fresh of Yes, I'll some that, look good.

You when XX remember have and I have engaged as did in a on organization, we XXXX, we initiatives. investments. XX. major made grown, we integrated the as like it And us and as another or anybody a past, for this well we yesterday, know million, as third-party as was call, we've have major $XXX

And I can our not been fresh was we while looking products, we team offering, a we - a we're what out, don't doing, our credit who really products give has cost at look had good thought very it everything to it ways in take been want had we're how pricing diligent we're at third-party since procurement. to a

to stream. I have mean Jamie and the work Kevin been

work far. combination been at We just you and just you maybe fresh and the least raises didn't a pleased very opportunity or that, So it so gives a look that a time was little ideas more we've to of do. it's got recognize of

Kevin Blair

efficiency technology as Quite to if new efficiency grow ratio. I to efficient. add on and to it Kessel's trying that. capacity bank. let we're that XXXX well to we're current very at the to we And talent were our to And frankly, our offense, peers we we felt more But for look in you not relative ratio, and continue that we invest still Kessel's to point, we that looking knew had needed be we were find an to think To and relates to at point, which me show Kevin, XX%, outlier. at

efficiency to And with a lives customers. the about. But better, team addition only have not of that's initiatives at reengineering make our and in to revenue us automation our but also going initiatives, looking do with, we're we easier to make process also importantly, lot members' talking we're most business

we customers. come as looking at serve growth. want get So earlier, a We're as mentioned we generating continue for better We're to a there today, parochially And it's focused just teammates at Kessel we're members looking platform great well. we're to for not efficiency. better revenue, team or - looking to as becoming us, and we're to institution and at our for on

Kevin Fitzsimmons

Okay. Great. quick one follow-up. And

accounting year? excluding purchase what the know the be it roughly. would course I margin of on mentioned on the Just you core, over

forward flow? when some point to at we expect looking it it But in to How we're quarters, some midyear? expect but more should would stabilization compression you then see

Andrew Gregory

us. feel Yes. good we looking would about things. quarter at investment would you exactly so from what I portfolio continue X.XX%, margin the we is That's that. just it at it. benefit of benefited And and One Kevin, that'll couple -- expect. to core a the really nailed fourth repositioning, the say

our third-party as us the XXXX. into relationships And benefit as as head well we second of also is renegotiation That'll those.

that So X.XX%. we have tailwind got that the us to

the X the in But of loan One most I as things that. are - at expect we guide I that first just had would say, There fourth full just slightly in is expect quarter. growth XXXX, we say the for I look we would such would strong quarter. year, down. driving - that

at quarter The end move third just strong And first loan growth the has is second already the of to the is, October. that the Fed thing was date. quarter thing

that And so full a didn't get quarter reduction. rate we of

down I year, so would And the the quarter. towards say, slightly biased for first

Kevin Fitzsimmons

guys. Thanks, Great.

Kessel Stelling

Thank you.

Operator

Pancari next Evercore ISI. And have John we you. with Thank

John Pancari

Morning.

Kessel Stelling

John. Morning,

John Pancari

What see think the term? initiatives do to everything. in? you given you expense level Thanks. again, On topic ratio the efforts efficiency dial these and just efficiency ratio being is your and the impact for your once appropriate benefits longer-term the Where do long-term longer expected the you

Andrew Gregory

It's a question. yes. great John,

before for for an we're XX in of low area. the at really low But given change we've the the that striving I ratio about are talked in shooting efficiency XXs mean underlying the the environment. interest XXs. rate We kind

But to how look, business with We be think be more think efficient in go mix, better we have to opportunities improve. and can market. we we our we

customers. Kevin experience As that's improve mentioned, and to our the we associates for think going our

that. excited will there. We these we're us initiatives believe so get that And about help

John Pancari

X% maybe on Okay. down deposits? the X% And in growth, guidance, And securities? some asset separately, of growth. loan the How the on it. that give other color break then does then on us Got to side on by terms your components

Andrew Gregory

portfolio. look at investment we're as XXXX, material change - We the Yes. in Yes. forecasting not really we any

mentioned You security.

you loan-to-deposit liquidity we if our we're with ratio, our So look are at profile. comfortable where

And expect and to balanced change. expect growth both that I see loans from mean, would so I deposits. wouldn't just I - on so to us And

John Pancari

then some it. and Got for jumped on they Okay. have separately, changed? Got the you credit quarter. it. side, that And color classified like how then Thanks. lastly, linked criticized XX% that? Can the on look you And what drove do assets your and give the - about us quarter delinquencies

Robert Derrick

I'll little color collection in try normal you this our did Yes, We that. large credit one that to provide have carried end. on at process. is It's John, quarter C&I with Bob. a

that are low, So from those one, fact have needle when so out. it standpoint you move the called due percentage can levels as given past a the you

obviously, We grade ongoing renewed we inflow current or me, speaking. past our real still fluctuation, you they're will at that grade relatively be are originations of basis, risk credit new an no excuse still these From And showing risk while and there being overall better some still levels, levels. our signs - low see minimal, deterioration. get quarter-to-quarter than got inflows when dues, to

credits move coming substandard no the about to the names have book, or within going here that list. comment special quarter. there's is rated mention John, real But throughout you're again, or Your new there some onto

normal just there. business course it's So of

Kevin Blair

add just this And I'll John, is Bob's comments. to Kevin.

our $X.X fourth in and the the of only Bob the production levels risk have at look you the up NPAs roughly over heard billion quarter. that we we have book was we And the had low in mentioned, Kessel When at not mention third you and portfolio, quarter. delinquencies As That look XX% we making growth rating eye during the that's average strategy profile quality see on expect that coming to sure that us consistent into risk credit similar relates new it is the with gives we keen prudent we weighted improving quarter production as that average that confidence see a coming to an risk have great each that on to and weighting. quarters.

portfolio Bob and a to as seeing side. just we're what us episodic in numbers they're the ebbs from because on you're flows have production or that small, there's And going so nothing from mentioned, some either concerns but those

John Pancari

assets And did quarter? you you sorry, that were imply that the - it. the would Got stable criticized in state then the Okay. or classified --

Andrew Gregory

Yes.

John Pancari

Thank right. you. All it. got Okay,

Operator

Rose you. the James. comes Thank Michael And question Raymond with next from

Michael Rose

guys. Hey,

So it sounds like mid-single-digit loan growth is kind of targeting. what you guys are

share this guys as You growth it XXXX? into think give are hires the that you've but relative next Is think upstream about - is guys had growth drivers Can we you market color growth loan some made, C&I which industry. Is the really how to wealth the year. us all? management it of weighted about new Are quarter, I should towards the about hires? at as just growth it strong talk more moving takeaway? Just you some we in XXXX, some think of new especially to Thanks.

Kevin Blair

of Fourth No. that strong Michael, some tremendous owner-occupied some profitability a but quarter competition not great from at year mortgages, see leave look us. was ironically, million of on our that a competitors it's the We it I are the C&I based our amount quite look owner-occupied at let was question. long-term $XXX fixed And of We've rate, category. requirements. C&I estate frankly, real and of offering a I growth. and quarter, almost worth in

is So and our added in in wholesale growth this and XX up bank. The Georgia our Florida really the South individuals Alabama we We're and year. Carolina. wholesale bank have And coming footprint where seeing there. is C&I we're on the in producers growth front from across revenue

recall, on as and you'll progressed, it's moved build put line unfunded coming a both also a on a commensurate as change across different lead at think momentum that growing group. Kevin to they and to are of debt industries. rate. and any really been fourth strong industry. But we that It's credit Howard has on. And many in those the has one not year We're commitments, I the funded side the continued it's on that's quarter, seeing it

from will So half competitors, that that we're the we in Kessel we the optimistic And growth that mentioned saw lending will fourth Not that have from XXXX in is quarter. the the division, a the very year. into into of taking we've continue. we're brought that business growth continue also share brought on that, us bankers and structured just but from XXXX. second on and from continued for the that, third which And new optimistic

is our we're treasury solutions. those look only payment and but And growth, in news really of getting when good we're loan getting we're treasury The not customers. a point lot of at doing, about with on a the you talked data that operating we've what is amount lot and a the side, upgrade tremendous accounts nice

But number up when we implementations were versus XXXX XX%. you XXXX, of in that look at the we've had

So the of XX% putting that customers. more we're solutions means hands in our

about very optimistic the most see So that continue, able to that we're relationships we're to we're new growth but excited garner.

Michael Rose

Okay.

of dovetails correct? which it next kind that quarter. balanced continue got seems on the traction kind that seems into like DDA getting year, It some around you be deposit growth of will the So this with comments as side, But you'll like well.

Kevin Blair

Yes.

DDA grew consumer front we average checking accounts, number well. you on So as up at was for the the quarter. account of When look

exciting some be get these to And to that And big that's as relates greater going XXXX traction in was of sure area focus it to we're of for we to operating that to commercial deposit see. commercial make So relationships. starting us accounts get for growth. a

deposit, one sticky end on as of very that the comes a cost and lower spectrum that's it's Obviously, the well.

resources will on. that something focused make that that to adding we're be very cover So treasury we're that every new sure day we And market.

Michael Rose

some efforts? maybe more on the one million. Can give these who to it item, helpful. been going question. it of grow we line into we is? work Should at year you to then of move kind And next through very kind just expect of you that around $XX right, has Maybe little you've as bit as to a expenses. color that All just back third-party I’m follow-up engaged, go

Andrew Gregory

this is Yes, Jamie.

We Group, into many been diving they've have and and of our been And Consulting you're businesses working our Boston right. products. with

go we see expenses to and go clear XXXX, with be associated as will We the this those NIE of forward. we about through impact as will we

Michael Rose

taking for All Thanks questions. right. my

Operator

Zerbe Morgan the comes Ken you. Thank from Stanley. with question And next

Ken Zerbe

question payback, another ask the enough you've from about I the talk that But about of not guess, figure I expenses. brief for try those to the I'll thanks. day. let's given expenses. Great, rest about

I you're we people, got a to hired if you I X%. think growing of you X% see get in - about And this X% like way the assets fee So and sorry, XXXX, X% growth. that - to like, bunch quarter

higher people year question than the higher and but XXXX? X% like, like, imply X% that to all and those that than this growth should X% the does and done into should fee be once be up running, My is, growth initiatives X%, and asset these are to not

Kevin Blair

that, I'll Yes. Ken. take

payback we ROI, NPV it's So that calculated have a position and we period. hire obviously each

of we less So to or a Kessel year yes, our that typically X than it trailing earn-backs. payback. positions, look those takes so are earlier, middle you wealth months we benefits. a market terms revenue bankers for of in mentioned those go But know And some at when the

grow. the because And to the the will revenue flat some of operating expense over these time, and time, over pick you'll up and positions for new leverage continues stay

those stay constant So all the else flat. while held positions, increases yes, on the expenses revenue

XX.X% When this this That new our in you year, hires. and we income year. did aided by what for guidance fee year, was we XXXX were think about next up the

have If number. you We it some income businesses just that a year-over-year next at why basis. some mid-single-digit those those another year, as added resources relates see in this see of a fee on to we businesses. you'll XX% look That's you growth year anchors same

be businesses markets, had rates, where little mortgage, it we this where capital on will we year. like record interest For seasonally, a where lower based year, a see

that pace, double-digit we've to to become XX%. But efficient. time, So to grow will over hard more that businesses a continue at grow will in those continue it's invested and at

Ken Zerbe

it. Got

going of then, did going provision in terms helps. just CECL's your the elevated. provision completely volatility drive was you to other greater in that guess, That I understand to expense. but question, be Okay. mention And it expense, I

or about of equal your say, all ratio, think course. call also reserve roughly that XX% adding, you're expense to right your higher, if it XX to it, things XX% provision basis Is be, should allowance, points about your

the logic forward? the did this like will that quarter, is it XX? So something instead mean XX to going I of right be you about think

Andrew Gregory

put of an allowance what think think answer and the ending the about losses build provision allowance balance the be, there year it right than loan the and Yes, way build. get credit see going it's would expansion saying. different what little forward to I the to required just would a to for you're be bit to

Ken Zerbe

more. It you But that little is. I am guess bit I'll have about good. Thank a I okay, think to much. very

Andrew Gregory

Ken. Thanks,

Operator

you. Piper Sandler. have Brad Thank with line, And now on Milsaps we

Brad Milsaps

morning. good Hey,

Kessel Stelling

Good Brad. morning,

Brad Milsaps

end CECL's payoffs think [ph] pretty question. If what? book? I on no through up year. the that the much that any is fact, of back for you'll Some or provision, that my account just reserve where that you be on wanted targeting Ken's right, the discount by around of XXX end to might get does take If the acquired follow-up also in account matter math's that correct, for accreting does you also like a looks you that's, into

Andrew Gregory

impact XX%. still X XX% And over in we confident feel the course that year. to expect the slight the some We of expansion the allowance then day of

it accounting aware, well the purchase you're CECL wrapped XXXX. the into in As into impact, - up gets

Brad Milsaps

interest-bearing back, that How on the speak, funding can or accretion you million, mark with come XX points of Or income through to reductions deposit Do again, $XX of think And quarter around than basis I that, side, takes you costs, sort obviously, understanding reduction longer is, is so. of sort away you to had couple year. million speak? My sticking so this quickly that you earn Okay. do that? you this of $XX in to a it costs a had secondly, think recapture quarters just the through, it then quarter. deposit goes in this think nice you so

Andrew Gregory

And goes repricing Yes, we deposit of deposits Ken on the you're first year-end. right, benefit opportunity PAA Brad the away in quarter. at in some expect

there. decline some us. is largely of complete the remixing see benefit to expect for we so But And

Brad Milsaps

you. Okay. Great. Thank

Operator

JPMorgan. comes you. And with from next Steven Alexopoulos Thank the question

Steven Alexopoulos

Good Hey. everybody. morning,

Kessel Stelling

Morning.

Steven Alexopoulos

you your manage to leverage question. outcome to revenue I go to expenses want basis? a full the in positive back Ebrahim's to on full to year response year first operating plan Do XXXX and deliver

Andrew Gregory

No.

Kevin include headwinds revenue so - that revenue mentioned, million. $XX have We PAA impact the

marginally in to just NII guidance. revenue. a see on expect then We the strong fee X%, X% year. and up have we we our to growth So you be had And

And does for positive full leverage so to operating lead not that year. the

Steven Alexopoulos

loan And you Thank the are growth sale. fall XXXX. million look said you. did did per community, Okay. growth, quarter And by Why $XXX to they Florida That's loan of when doing before then at loan you from routinely so their in $XXX them I the growth on much? clear. in total million $XXX million growth

Kevin Blair

Steven. question, great a It's

was produced off compare in XXXX less production. look it it a hundred they and you by production would and their back you When was have XXXX, what So at it in only about million dollars. go to of couple funded

pleased were of see continued. that the to we So production level is what

changed growth a are churn payoffs they million was were million paydowns. and that $XXX do of somewhere of the And they in What seeing with growing maturation as around it fact little $XXX producing customer it the to see recall, you funding it every attrition, And the would you were portfolio quarter. to $XXX level they to million worth million. as had matures, with had the $XXX do portfolio very to of type of and the that actually

So and there wasn't lot of a payoffs paydowns.

to churn. some that starting their their maturity As - they're increase, to continued of book has of see

that's difference. the really So

Steven Alexopoulos

the saying originations you're remained consistent. So have

Kevin Blair

a in strong did a high And the they very, fourth strong. very the was what for And very quarter very for legacy and at watermark FCB consistent it look you it them. Very was team. if quarter,

Steven Alexopoulos

for the color. Thanks Okay.

Kevin Blair

Yeah.

Operator

Shaw And Thank Fargo Jared you. is with Securities. Wells next

Jared Shaw

what quality? you allowance given back I'm a stable the sorry, the of credit can the drove guess, provision. sort circling I the quarter, -- backdrop little on give Just this color on build of

Andrew Gregory

little about to it's spoken a really things. this We've do before, has X Yes. but with -- it bit

in just of And paydowns. provisional level we quarter, paydowns the strong FCB aggregate. get is Kevin paydowns. the the elevated high of book, First still in growth fourth see in book, when the is but in also the have a we mentioned And loan release. second production don't the we benefit

what say, against, growth did you had higher, we net we of million, be it'd And provision $XXX so provisioned growth was loans loan if to we against. not though much that even have the were have of loan

And to so that's what leads increase. that

renewed So offsetting payoffs or them and basically, we then the of have a not did new loans. our growth. and normal against have we ones provision then growth And the where we loan have

Jared Shaw

And I the just guess, NII see and as first how when quarterly down? But incremental benefit That's then as from you on we the first into look Okay. looking NII your should year? I you should the the that - third-party comments renegotiation, margin. at servicing then quarter through maybe looking strong heard the we going expect NII, helpful. actually NII momentum be at well set and stronger trickling at to hear quarter in Or obviously,

Andrew Gregory

Yes.

me terms. rate speak Let just to it in

in -- more expect of the impact the see on quarter more negative first the negative We the yields. to of loan of impact

in of most of first XX that'll but the or see in so happen And first basis will we're on in somewhere loan - a we'll points quarter XX percentage decline quarter. yields expecting year, between happen a the and the in decent XXXX

quarter impact that about the impact about, loan full And rate that growth again, that. of the I talked October recent the it's well same as and move as both

Jared Shaw

you. Okay. Thank

Operator

Marinac And comes question from Janney Scott. you. with Chris the Thank Montgomery next

Chris Marinac

Thanks.

scenarios guidance that, be Just the the What it to a could the quick income actually upper end one are on fee to get that of take the greater? there for year. And range? does

Kevin Blair

added us, happens of the - We've the variables we lot obviously in have So the terms rates that to of and the do of interest fiduciary brokerage equity markets. will what on some are look, for external do it with market and with Those side. a look at. resources

able and as that So market ebb the within be we'll flow range. flows, to

based Also businesses, growth to strong see as service treasury. look our of charges I in with most mentioned, mortgage at we expect year-over-year our if in on you investments

of year. a in represent interest the expect levels us, different a elevated reasons, because capital again. We headwind capital I and of were for this markets that because that mentioned, our fiduciary of mortgage two mortgage The double-digit rates as markets had we see growth just for bit and to business businesses

So within deal our of high have generate end of range in quite with those how the levels to moving success productivity factors. it But the to some internally production our frankly, we will those higher external will can of continue businesses. and

Chris Marinac

very on appreciate Thanks it. Kevin I discussion it. thanks Got the all for and expenses much the morning, this

Kevin Blair

Chris. Thanks,

Kessel Stelling

Chris. Thanks,

Operator

Baird. line in next Garrett And Holland you. with Thank is

Garrett Holland

Thanks morning. and good

ratio had heard time for could XXs, a rate you're targeting efficiency Just this the low I quick on detail top-quartile interest you some type more on a metrics targeting but for there? environment. frame realistic getting updated provide you. follow-up the what's And in of you profitability

Andrew Gregory

ratio doing top this as perform we transformation our And Yes. We efficiency do we work look at strategies, ROA, how get quartile. to we we're to - believe versus in the on about to peers. think ROATCE get these we year in to efforts the believe back

And more longer-term opportunity out on future. where a and the momentum ready to We're of lot have a really think our shake that, improve we in forecast give here performance. that so will guidance to lot we of but we not on on that that we have

Kevin Blair

as - targets we just terms at X Garrett, time frame, But in of X long-term I'll years. look to

X it's to there the set. -- peer years. and amongst Jamie's forecast what commitment in quartile going is to go are forecast. harder hard do, that, that the in industry their made you high just expectations out And to the top that just to be to think change is But it's I X our to the has rates our out point, past variable interest

Garrett Holland

detail. That’s helpful. appreciate the I

Operator

have you. Capital. next, RBC Thank with Duong Steven And we

Steven Duong

Hey. guys. Good morning,

you mentioned - the other side? are the seeing that competition? on portfolio. Was competition tail you what the of multifamily high a of segments Just on the And owner-occupied same level

Kessel Stelling

we asset class a have single that not Steven. that there's doesn't look, Well, serve competition,

across it's board. the So

within owner-occupied, our lot business going that are promotions, longer-tenure, sense chase fixed-rate not model, where smaller the we're of financially. for there Now us And make rate a doing offering business lower loans. again, doesn't they're banks to

doesn't So to that leave of if let have the minimum some we're hurdle. going profitability it us business

seeing think owner-occupied some in I So side. of what the that's you're

sheet. off I stabilization moving higher On of a there. more think There's properties are the construction that just multifamily, a that's of balance much level

our those move permanent And reach the to and so leaving balance sheet. they're as maturity market,

multifamily. the are It's asset other to like in our But -- ebb going winning book. flow it's And we're that fair maturations based of we're producing our classes, all some share. on and just the on still

Steven Duong

just Got color. it it. your have CD us you're much that? on you remind what's for the And how expecting And book Appreciate the last Can just rate then to the one. quarter? in reprice

Kessel Stelling

year, the around first $XXX the The over CDs. somewhere would maturities current a right So of portfolio quarter is we million the in look in now, at little X%.

this and back all go at you X.XX%, we X.XX%. were and If look at repriced of quarter, the maturities at

So X%, I X.XXs. environment, we're you'd being high maturities rate in in on movement renewing think little where similar quarter flat with a the first and we're the based a booking the a over them where and see

Steven Duong

Appreciate Thank it. it. you. Got

Operator

that Thank the And does conclude question-and-answer you. session.

to floor So Kessel for closing I any would like Stelling to return the remarks.

Kessel Stelling

questions team as you weren't data to certainly appreciate Well, interest throughout right. might you, usual, participated available in we next the today require your you thank and All We first, thank today. operator. of and to Certainly, follow-up of you any day follow-up, who clear call our is And some all our give on company. the if points today. week the

to XXXX For additional in the investment I continued long-term already experience, revenue, on for really energy, a year, and you all are who strong. creating And they of Synovus customer to XXXX, by with on for into our to shareholder pouring great eye of the company. generate efficiency the for for shareholders so the really differentiated the find deliver ways year they're finish did thanks value. new our call, But those team your want conclude way thanking really the

the a So to team. thank you big

towards the transformation efforts, on more looks the we that more possible, color call. forward giving updates the forum, next But if at you of team executive The appropriate our later quarter as and would no end the well. public earnings to than do

So thank have your all great weekend, you you to attention a so I look much for with you talking forward soon. we hope today. and

Operator

conference attending presentation. Thank Thank today's you. The has for concluded. you now

lines. disconnect may You your now

Synovus Financial (SNV) 24 Jan 202019 Q4 Earnings call transcript