Earnings call transcript Q4 2022

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Operator

Good morning, and welcome to the Synovus Fourth Quarter 2022 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask a question. [Operator Instructions] Please note, this event this event is being recorded.

I would now like to turn the call over to our host, Cal Evans, Head of Investor Relations.

Cal Evans

morning. good and you, Thank

Chief During at Chief today's release section slides press be answer followed President reference our call. to begin He available will end Officer, we are available and of will be the and Blair, that Kevin Relations Jamie site, the Officer, within call. will Web the the Gregory, and by synovus.com. call, questions Executive Financial the of will your Investor they

to These statements and press statements. to subject to could Our materially. uncertainties, early forward-looking comments in on these release by of results are filings, our are update risks and might the Web vary developments SEC our include in differ forward-looking obligation materially available cause results our actual and new except factors statements We required or list that because be We as may do otherwise, information, site. which any law. not any assume

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

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

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

Kevin Blair

many and XXXX forward become Thank affirmed In bank. high-performing investor a the innovative, which for we year with regards began path Cal. was an day year a to who resilient, and market Synovus. detailed you, our We are banner last more to

As the year progressed, we faced an increasingly volatile operating environment.

the out in laid plan February. team our execute challenge, to rose to However, continuing the

and the ability resulting efficiency business asset, performance compared Given our to our and growth, return deliver strong XXXX, footprint, and our profitable peers. as quartile levels in on of rates to the we've to rising execute demonstrated, ability ratio units, top monetize average throughout our

Greenwich small and our credit in potential. a Associates like in geography. to from we scores, liquidity, the address client exceptional add changing people investments full and goes and showing where to on our to J.D. team purpose achieved pivoting scalable market and satisfaction success service client and Feedback want future again, partners in awards We through enabling the to to strong, their Power I kind our for XXXX, record and Credit delivering for recognition solutions base while our growing reach thank investing for of middle economic, this legacy also prove ongoing landscape. and clients needed trusted team XX to this business capabilities loyal in that this excellence remain across value. resources,

our report by Today's is growth clients ability deepen core and shaped wallet of and the in given banking relationships. stability new attracting continued our existing share franchise, to consistently

and from technology, as credit, benefiting well improvement, also common approach sense as in management. investments innovation, process and a are expense, We capital to

tremendous For performance. a stronger of these with financial a execute deliver reasons, we our sustainable, roadmap to exit top XXXX continue quartile which as will amount company, to us allow we momentum on

We quarter fourth income and four. interest given and XXXX fueled review fee on let's robust Now, slides was growth expansion environment pressured loan revenue XXXX our challenging sensitivity income. highlights overall realized growth and in mortgage asset A rates. rising double-digit three net as by

signaling basis, collectively excluding single our client digits breadth core However, increased relationships. fee full-year a depth the client high income mortgage, and on of

spreads, double to growth, segment growth client standards. of conservative $X billion generated lines credit on down efforts Our at our in as the is commercial producing all outsized business higher our adhering commercial loan to while

or a year management, ratio at and applied capital to with over same disciplined levels. NPL, metrics ending credit improved the point, the capital and in NCO near NPA, historically that X.XX%. We CETX low of the year, the To currently stand growing quarter approach

new on identify is And generate expense is engrained culture. opportunities our our the Our we the regularly revenue incremental more emphasis complete, although the efficient two-year surpassed $XXX and Forward deeply in Synovus on rate initiative financial value And run control its growth in quarter. to performance. goal initiative million to and fourth act

from our deposit and business. Despite throughout for the pressures deposit side, deposit the from costs benefiting lines year, was the XXXX. growth pricing sales well remains for retention efforts was rose deposit $XXX sourced in multiple on The with year, resulting quarter an managed strategy our and remaining new growth in I focuses million repricing. the especially extended of of teams' XX% production Overall, prudent with pleased we increased production in increasing lag on activity new and operating sales fourth the balances environment in quarter-over-quarter. as primary client overall in deposits of production competitive,

development execute in key during and team January. future. the reaching also of quarter, continue the were CIB milestone their deliver While delivering revenue revenue to month capital that great sources with and have booking relationships. continues market well the financial members new as allow performance first year, progress of and and and the the will of grow prudently fees to reached key and also to in make initiatives they we with their into rollout first XXXX, XX the during fourth client, booked Maast a depository live us

completed with exchange & migrations platform. Gateway new we portal, into our the our Treasury and foreign fully the side, On Payment client went live

client associated to the traction are managers the our continue to underlying the client our capacity as to relationship onboarding revenue and our with peer new streamline order reengineering continues & experience. commercial see Solutions investments to experience, we continue while the investing In the growth production we're in Treasury in the underwriting We and and also and markets improving processes of to in making increase Payment technology benchmarks. the outpace

while during ensure by efficiently and entire digital team Simply, continue capabilities and organization. was as closing to side, the year a to base. positioning extremely locations of our the accomplishments, I branch effectively and our consumer XXXX. serve our On we we of targeted across our progress further XXXX by encouraged analytics streamlined year, investing in client network we their our enter am proud XX and

results financial key Jamie for and greater detail the quarter. share activities fourth will now Jamie? the on

Jamie Gregory

XX%, annualized this on like at was growth PPP, business, balance multiple On Total loan our as consecutive of led Thank of rate the double-digit loan an to five. the growth slide Kevin. diversified billion, segments. reflecting end $XX quarter, I'd at of you, $X.X of begin fourth seen annualized a excluding growth, with growth. billion. and industries quarter of and again lines represents was basis, commercial by across Both our loan sixth quarterly

of Particularly environment. For corporate pipelines CRE CRE a [Ph] activity paydowns payoffs. remain as asset function transaction-driven and M&A, a of such as growth both [C&I] sites, and was and the low and production sectors levels current muted and for of result moderated

fourth for exercise to greater certain able spreads extending production new on as drive reflected have to pricing been standards in quarter. by we floating In account sectors. margins we are underwriting in power addition, higher risk current commercial And credit, increasing rate the where

the we million diminishment. deployment industry-wide other to deposit core quarter-on-quarter. Despite fixed, aside as pressures, drove growth headwinds growth in hikes, fourth remained these balances quarter liquidity the continued interest by account Moving were for spending, and seasonal deposit rate able $XXX increased which

focus was seasonal from This new growth bank-wide public and production of funds. combination benefits deposit on a a

As increased evidence excluding production, of public deposit fourth deposit new from momentum XX% the we have funds quarter, QX. at when over around production looking

that while generate encouraging. remaining deposit tightening positive And environment. balance FOMC end, to both have a been we and maintaining through focus have continue deposits, on To cycle. deposit is our ensure efforts, between challenging remains prudently costs retain competitive that will that managing a to momentum this resent within what we Our

Our in deposit which average quarter, increased equates fourth QX. cost the to to XX total deposits XX% of of basis through points a X.XX%, beta

this total XX% beta the to to XX% As lag, this cycle had funds a remain approach betas, in range appears lower deposit we pricing as the that pricing With deposit result than matures. case rate rate XXXX, as pressures reach this and of for a still X% pricing continues recent discipline previously communicated we and base believe we'll cycle. likely fed continued that range to our

increases year the ago. and deposit loan deposit to or pace loan and growth loan continue I income same The consistent versus to in the for seven; Now at cost higher quarter-on-quarter which supported the an came interest X% is million, NII growth in net rate increase quarter. to quarter in earlier. disciplined of in to NII yields outpace by one slide XX% fourth spoke both which growth QX led growth, pricing, $XXX interest of

margin pace the of recent X.XX% XX the asset basis in quarter-on-quarter. quarter, hikes higher fourth alongside increase rate portfolio. NIM continued increase rate was of Supporting an are The our the are widening to FOMC in points supported and net yields, spread interest floating and loan which continue by growth

has through pace increase significant be assets of it costs deposit measured rates tailwind as somewhat and progressed increased, in of we the While than more have a margin served to that XXXX. time are. consistent remained This the the to funding also

heavily the likely NIM forward later expected tightening of to impacted delayed is coming the be of we to effects approach look and by the repricing. quarters deposit is what more the Fed cycle, phase As

levels, stable And we growth current by be will hedge turnover medium relatively pricing expected and rate enter supported maturity. term asset fixed remain NII be from supported loan over XXXX, the continue rates as Assuming the to will and by discipline. margin

revenue. XXXX. adjusted totaled two the when period tax of income recorded these approximately and compared adjustment adjustments, totaled down QX in Negatively valuation tax million another recognized and benefits of revenue the $X $XXX were tax shows from to Outside $XX related down in quarter by million valuation $X which of offset strong combination non-interest million, eight we Slide non-interest same the partially were in quarter million, provision. previous related impacting fee

investments revenue side, industry in deposit positive client's offset generated pressures. short-term wealth has movement from the to a the On provided

privacy continues on challenging made progress can a with basis side, On a We increase up be point despite strategic fees in full-year the a this environment. a focus. key markets commercial capital client year to XX% syndication

spend on pipeline noteworthy gaining into in contributing On fee. momentum full-year with proceeds billion commercial card heading XX% XXXX. threshold all increase crossed exceeded strong as we card side, Commercial card the $X to are a a also

to business cost, new XX% highlights total When spend, growth highlights year-over-year million, in disclosed quarter-over-quarter, ratio in quartile year-over-year up $XX and up the factors And attributable initiatives, increases top and our efficiency previously are year $XX the an the to between drove the non-interest of adjusted Moving X% infrastructure growth. XXXX, for from expense Similar investments period expense performance as alignment in slide performance and $XXX expense same majority planned from million QX. quarter million representing the all on related of increases. increase. expense of looking was prior expenses, nine our

slide the levels. charge-off on our fourth to $XXX quality NPL are and quarter quarter, million at performance $X.XX% The was credit ratio X.XX% low the The our stable levels. and overall of strong. remain or originations net recent with NPA ratios was historically credit remain In XX ACL the line and in credit for of near our Next quality, or loans.

ACL the ratio ratio loan the in relatively continued detailed positive As increased stable. portfolio, influencing and economic the $XX a growth million This remained while loan for performance XXXX scenario bias appendix, the offset in ACL given XXXX. by the negative quarter-on-quarter metrics reflects

portfolio. the and in of confident strength composition, are We our diversification, loan

discussed and approach to provide we that lending economic more sensitive looking exposures we As our at protection and that targeted pressures, selective from recessionary downturn. are recently conferences, industry our further when remain at an convinced to will industry sector

We such through tool to also client feel we to flow and commercial cash that shift detect respond performance originally the pandemic. specific well-positioned as introduced in in our analytic, are loan

the X.XX%, organic As maintaining growth commitment levels. loan to increased strong earnings ratio capital to strong our client seen slide also common our XX, core equity reflecting X on support while Tier retain to

while earnings our towards growth, we the our capital XX% For we organic with common our Investor core supporting over both the year, consistent our through returning dividend, to XXXX detailed client deployed priorities management of during shareholders also Day. XX% roughly

we'll will remain capital to the we prioritize we within XXXX, growth. evolving target as mindful continue manage And deployment ratios. towards into our economic Looking of CET-X environment client

dividend Additionally, stable our reflects to our quarterly our approval $X.XX to share, profile. confidence a increases planned board in subject XX% earnings

to back our Kevin guidance. XXXX it cover turn to now I'll

Kevin Blair

Jamie. you, Thank

Given economic detail have shared we the ranges estimates. have more estimates utilized on on these uncertain more environment, the and wider supporting assumption

X% in to X% XXXX. We expect growth loan of

headwinds. some in a in and levels run lower activity business portfolio down third-party will act of our pipeline as While units

of as existing in will key those overall that that and is spreads of as lines prepayment well the pricing It's continues such economy. pricing power consistent that activity current number strong a a businesses are assuming also persist therefore CIB of business where We're general with XXXX. the utilization have exceeding that XXXX. levels We as normalization pipelines and we in expect newer a improve of growth with discipline to in noting worth environment, also wider to focus support experienced

accounts The in adjusted of less rate for outlook approximately revenue deposit to an environment. aligns X% reaches XXXX. revenue wide growth X% range that The the certainty FOMC XX% with in

to income, income checking in core in growth to the account million revenues negatively is fee by fee $XX by year impacting estimated first-half income, side, mid-single-digit expansion $X implemented of million. continued approximately enhancements client the charge plan On service annual we fee expect that our driven be to the impact

year-over-year On the drivers. primary to X%, adjusted growth of X% expense is three a the outlook of function

First, in is approximately core XXXX XX% of the expenses. with associated growth operating

have outlook. rise the Health FDIC we growth. our the annual account in expense sizable factors affecting collectively Secondly, and costs are assessment two the environmental for XX% of overall rate forecasted to care

XX% we Lastly, comprise CIB investments and based growth. in and with which remain approximately investments our as our projects will combination revenue to new such committed Maast, and expense other initiatives XXXX of

allow full-year will of of found us have drive XX%. to forward prudently we and and overall PPNR are trim saves operating a positive benefiting to expense we cost ways headwinds, that from leverage Synovus to growth XX% expense these despite However,

capital, philosophy prioritizing Jamie plan relationship and competitive maintain to management a with with providing a shareholders all dividend. in shared, capital as maintaining capital growth our a to position, while core focus XXXX, we same Moving on strong

for as the our any year, was overarching $XXX the growth loan be and million share factors. dependent upon the approved XXXX, will for repurchases economic While Board a authorization case

our we from successful guide XX% while of communities negative solar credits. initiatives These on affordable implemented about tax focus consistently initiatives dual Lastly, with often rate our XX% of that benefiting actions while driving forecasts XXXX to don't housing number rate have associated in our our for tax accounts a also in offset we years and given ESG objectives. talk our recent reducing that headwinds purpose a tax it to of serve

and the in the we our Our first through XXXX and strategic strong weeks performance area progress transformational momentum New confident in few volatile has outlined and ability accomplishments meaningful solid so financial in even of as the nearly our we growth targets every today, to carried plan key of resulted financial well that are proud our the economic Year, terrain. us hit We're plan. of XXXX navigate

sources CIB, Solutions. within us XXXX is first, productivity emphasize three team to base & Growth enhance growth, deepen us client energy new invest pour a including of Treasury successful core our to into in and our year gains performance. of our and execution businesses our relationships, grow Maast, advancing enables and for financial we and new focused and core key allowing future as execution Payment in areas; investments businesses,

presence Secondly, key then continuing vigilance. initiatives capital contributions and management, credit across through risk cautious from new deposit to our resilient markets profile benefit generated a growth expand lastly, and overall businesses by and profitability. And adding all our generation lines, in maintaining to and and talent

and in commitment base pay, experiences again, and segment, As to and parental leadership best program, want we like head our benefits leave. increased enhanced progressed incredibly I into thank team the passionate Q&A our and development we talented and affirm new incentive In workplace XXXX, enriched career launched to our our the providing plans DE&I, possible.

named and Synovus place committed the was place on to and to the great again needs exceed investing in top Atlanta, laurels. meet designated we XXXX, rest our workforce. fourth a and to in cannot But our the We're even of a expectations As work. result, more, listening

want our I the XXXX. mention business achievements of of delivered success to and a in lines examples also few

the loan company; for representing $XX results, deposits production, income team year. record the Banking largest fee and Wholesale of billion million $X.X acquired, the of Our highlighted in funded delivered growth billion engine $X.X

focusing on to wealth future with our a years. continue portal many returned in leaders, growth entry We units XX local loan as to serve a new Moreover, in portfolios also over XXXX, commercial support members banking Community geographic empowering orientation referral and business. time a our first growth. and private lines source, the both onboarded team our with By other of primary to to for X,XXX of made growing Bank referrals

year, X% lower with management million and in securities or from equity trusts, a markets. wealth Our units, grew $XX fee income significant headwinds including

overcome the expansion acquisition existing However, strong to given the relationships. were new client this able and teams of

driven As network in which in a significantly consumer our cash our of And as Solutions Payment success commercial scalable production well resulted branch optimized services. expanding card referenced more as and increased facilities, by while our closing XX% line our management XXXX earlier, core and Treasury in international of by digital efficient and fees analytical and & solutions business capabilities organization.

results With support single-digit none our be certainly, disciplined and loan dedication expanded these line of high by business digits. double lines their services and deposit without growth, of consumer PPNR team. corporate hard the And pricing the possible of business would of work

communities. build $X Lastly, mid-XXXX, volunteer-hours We component with meaningful launched to Achievement and our in of Junior our partnership XXXX XX,XXX one in I million efforts than the strengthen am pleased Southeast. communities our more invested a across with and

that, for now line the With open let's questions. operator,

Operator

will comes session. Steven of Morgan. Alexopoulos [Operator Okay, begin We from so Q&A now line question from our Instructions] our J.P. first the

open. Your Please go line is ahead.

Steven Alexopoulos

good Hi, everyone. morning,

Kevin Blair

morning, Good Steven.

Steven Alexopoulos

start to Most the at growth strong but very in period-end strong. strong loans. XXXX, guiding banks outlook, outlook, the for it's growth first if Wanted are loans in look loan I loan on not to average

So, what's you deliver underlies And mid-to-high confidence your gives for single-digit you this economy forecast? point so I'm growth what curious, the assumption could loans? period-end the in much at that that

Kevin Blair

portfolio several you the the the latter a parts that be able To from comes we economy. some at a in look economic think our banking, from we first and pipelines, to this C&I believe, to like investment where corporate of it total, of good to that That when the pipeline, see that front. it's but combination your foremost, we'll look could to we in on continue are factors. point, But initiated, growth forecast, you that generate point just see show when the half would the new Steven, growth we the continue don't businesses really newer year, also that the of we've and forecast, C&I we of but will from at there have in comes contraction production.

we given good decline as area the that volume is Secondly, we've continue seeing decline a on on well there. that to really see is CRE side, home continue down. the when Obviously, productive the side to rates, pipelines for seen environment XX% rising a on environment equity you see a as equity portfolio mortgages. we're home interest need constructive at product But we XX%. to look The

And will be be 'XX, compared for a about will in CRE, C&I for single-digit in so, difference single-digit. double-digit that CRE. to to C&I, consumer it's to instead the going think low fashion, you that single-digit this be then, -- real double-digit lower double-digit year And low CRE for when of being continue for the grow in will or

is really Part fact but pipeline see pick is the to due of that start to activities that start and just the is part in 'XX. up payoff the paydown to we'll down, other

certain pipelines at others rate you the So, class growth kind year. when that we've are it all day, of business of contract. had single-digit kind expand; of asset and look end continuing that look unit, by of mid to at we and But, the by units see we you'll have a those next

Steven Alexopoulos

that's color. good Okay,

Jamie Gregory

to non-core I just The Yes. third-party is thing would only our that add portfolio.

attrite to expect as should through XXXX. that we see go You

Steven Alexopoulos

deposit non-interest-bearing, you see in of ended quarter, we with if Thank at expansion XXXX, And Jamie, that's question, seeing XXXX? do about a basically look But quarter. month, but expectations on you this NIM at helpful, right for further about at given the look I remix margin, my the NIM where right, think now, this side, you. a could talking I what in net you follow-up then Jamie. the terms change in interest it line recognize stage, Okay, how how in the when for you're fourth trending do

Jamie Gregory

great question. Yes, kind question, it's and of a it's the million-dollar

ended we will XXXX, that at we of first-half of we basically the look into quarter. that in fourth down to in play what is, be the we margin do deposit As pressure expect the from marginally the see will year believe we And the lags. where

just cost increase the experienced, with like and largest quarter, the that talking quarters to expect today, We fourth the we're about deposit be that quarter. first the we

first-half depend increase the of how how headwinds margin margin we'll long will so, cost through and this year And the see it. the as we the on how impacts deposit lags. is with But go the associated lag those

be As shorter and cost with margin longer is and true you opposite know, lags the and higher tailwinds, would cost. lags outperformance

see rate quarter. quarter current fourth is in bit the first-half Our year, we outlook. interest increase we than saw of this headwinds that repricing. a of contingent a first tailwinds slower the the And back-half do expectation see cost with at all that for expect little in deposit rate as our the turn of the on we'll fixed is NIM see to But in we a exposures the become to tailwind the rate

today And Fed consistent includes and approximately with X% guidance so, going there, to our their the holding outlook.

into forecast. embedded And so, that's this

Steven Alexopoulos

Great, Got for taking thanks it. my questions.

Jamie Gregory

Thanks.

Kevin Blair

Thank you, Steven.

Operator

Thank you.

Our Brady from next KBW. Gailey question comes of

go Your now Please is ahead. line open.

Brady Gailey

you. guys. Good morning, thank Hey,

Kevin Blair

Morning, Brady.

Brady Gailey

about the last the ask growth little question we to with quarter, basically the dollars NII way to on dollars? income interest just bit, right that XXXX. in Is about talked loan sync Maybe spread still net think in margin a growing your

Jamie Gregory

at uneven progress NII, XXXX, the looking year. just As would call look it through as the full-year I we through of we

NII for quarter, of case experienced in it impact is similar first outside day be quarter to for the of just the in what the base count. Our we fourth to

about of And policy, timing uncertainty pricing, the on us are so, with there lot But year, and pressures million. a we the for as $XX competitive just for that, that's through progress monetary lags. deposit

year, to the lower look our changed -- of And question, hasn't we I the through our of pressures guidance scenarios going timing to the could really like are highest that, through the that deposit to the as response we beta, loan and in in at full-year compared faster And you increasing. But total there be the from repricing, at a higher XX% deposit true end do is in cycle where that'll the cost deposit would NII the but the have just be betas lags, in guidance. we that to year. the would of again first-half those growth Steven's QX think mentioned tailwinds driven have the betas flow but on obviously annualized, then by XX% headwind. be converse second-half So, are

Kevin Blair

I in 'XX And revenue you it guidance, the growth of Brady, see obvious, exceeding just the but of to I'll mean -- growth. I'll XX% X% obviously loan state that

the but full-year, about XX to margin is for will quarter, to So, Jamie talking XX. relative fourth expand the full-year,

be NII pace So, actually what growing a than at faster would loans would be growing.

Brady Gailey

All I And you the follow-up, had then right, last you and also -- Day, helpful. service that's up there my Investor corporate investment as the you we new look initiatives the But lot like you new more Maast, will continue had from to at this ramped to and be XXXX, have, and forward, bank, it's execute?" was or announced. new things time "We a, is a announcing Synovus at some what of have look as initiatives

Jamie Gregory

revenue. have always to future an eye I looking for sources you the on of in Brady, look, have new think, So,

can production. getting we'll in I'm So, production I that loan $X.X $X.X the back of we're to tremendous focusing quarter that wallet. It's we've and see, of was you core the ideas and deposit was execution. document, that develop year some first prepared fourth new sure begin focused on this on the pleased in really productivity to and about really as in that progress on, quarter, we initiate I We ensuring remember billion. is the will total that believe have of in We had look the our share made production billion loan said production. but had only a deposit and remarks, full deposit outpaced businesses gains production things I at when

to is opportunities our we're profitability. delivering clients getting and that on so, continue to focus core relationships the highest ensure to and of to level value that businesses And there our we're fulsome

amount, that The a of XX% our initiatives have of second current with we is of that deliver. there that's we prudent the 'XX, Obviously, top 'XX, major for we Day growth these produced to Investor initiatives. that making up we given and about expense than invest going expense offset And part be sure kicked continue during even off considerable believe of as those that guide some tied to amount at the and more by be a 'XX, that's and will to 'XX, in line the driver initiatives look revenue growth. in that,

economic to embed sandbox, Forward sure culture a really just up new think that make X.X. do we have want both that's are with new to better Synovus volatility going Forward. the But a on items what we'll efficiencies. growth what revenue we and So, opportunities face. define drive something have challenges is try what that about that We're our idea to in given the we we And and do the deliver of of ideas generate we coming sources do not and or to need we we we and to going those. forward But efficiencies, Synovus as about talk to new to uncover that's

Brady Gailey

Okay, Thanks, got guys. it.

Operator

you. Thank

James. next is of Rose Michael the Our question Raymond of from line

now open. Please line is Your go ahead.

Michael Rose

you're Hope Hey, good guys. doing morning, well.

Kevin Blair

well. Doing

Michael Rose

increase, Just little the thanks, you've that saw dividend repurchase I approved a I -- probably bit would And okay, program. was have million wanted on wanted touch think the just -- yes, than to a thought. to that you I larger looks touch $XXX like on share

move Just you're how CETX active some get as you the we your range? plan through to details year, around that given Thanks. just wanted be within to and that

Jamie Gregory

Yes.

growth. really think a But earnings sure good we place think of we dividend, and want that make we And to that earnings as [technical XX% world the we gives is is economy As to to us you generated that's where policy, know, to we're scenarios and rates what continue core we to the client our as XX% where try that changes, scenarios out decline for as grow that through scenarios, much about strong. we dividend pay flexibility, capital and the believe we remain shareholders. in retaining be, think to difficulty] right well for that

think we how that's So, about.

And XXXX. ratio, that growth in our approval as repurchased to that's be million the to slower higher With same And $XX expectation year know, the range. but shares, the share starting a regards is end we're you CETX XXXX, the program, in will of high in as in loan had only at closer we repurchase we XXXX. the

progress we this our capital monitor are as going we through So, year, to ratios.

we are the we are. strategy, see a get our our share And to repurchase us we of may out XXX, market to we the as range, going -- in where We point buying revisit top where as comfortable and end to that's you shares. are

Michael Rose

for that's year, just a Okay. million? be the program And just right, $XXX this clear, to

Jamie Gregory

right. That's

Michael Rose

then, All right. journal a as going concerns. lot some resets in the an think about just hear for renewal. article often that commercial as question, some estate and news is is today. there is investors up there it separate I follow-up come real about And the from in properties There a I

have third-party You some got loans.

where another made And comfort get the all can you You got have there the years of got Obviously, the over changes credit cycle? pretty as investors -- the decent are real credit some potentially around you Maybe Thanks. estate. commercial how more and philosophy amount provide pulling giving portfolio? your back? are through can just you issues just that we going GFC, of through context kind around overall

Robert Derrick

out. as but go we spread balance Bob. just for out I'll that it's Michael, or said of us. Building quickly risk Investor was credit me intent think let to focus key sheet Day and of the business maybe with was Kevin our our Jamie follow, it at certainly what can corporate sort to that Obviously, specialty I management. start relates just lines Hey, to -- back

those concentration our was build stay Secondly to limits within to diversified out. and

built first that's sure probably with defense lines cetera. the most credit importantly finally think in within accomplished. our robust to make I a shops line we've then OEMs was of our of And business been and et

So, deeply business credit we've in got resources our allocated units.

So, from context is a operating under. what Bob we framework that are

universities. necessarily. is balanced. As that's in about if But those apply. not Within a attention. same back it CRE, out We gets $X outsized overarching of half. or hospitals, category, That office. that sort relates do large the frameworks to specifically at We of component, a medical billion percentage you We're have lot near stay

like our office. we So,

balanced. asset going certainly front, either where the immune comfortable continues. with are what classes We office, that are to we balance are not Other C&I are. on in our but is we And relatively

to our that's are about policy that. managing and policy. will within continue certainly credit relates as to And so. guidance be it from vigilant exceptions We So, our

the So, February more and we the but just I as at out to out think laid of it forward. in continuing building same, it's execute on we frontline, what go Michael,

Kevin Blair

as own tranche you And here. fairly look that's an see their of I'll the bit the the of in to in XX, on the a very a our have us we the details uncertain we jump conservative where little assessment are Anything And we I appendix using LTVs. environment. just in into they at higher is give looking slide portfolio. history a that's XX% attention in are getting we need -- our quality we book but as also today. CRE. which why make with deck on because Mike, the is very can a to what of see give comfortable lot mean to And feel average long a And you are investors LTVs trying and

portfolio analysts part And the with we were and to that It's have to about who investors that, to a future. their going lot our in of who conclusions, in the we we one And strategy. good it's So, can part given the of history be feel in. we but to it's insights be into we a comfortable the of feel all but headlines. are And try get we going can past. come we as

Jamie Gregory

as whole we results are et we way but -- CRE that And feel of to a under that work host we credit cetera. adverse comfortable like do And some but stress the the book follow-up that asset severe absorb is stress way our that. that constantly on we it internal And challenges, not really being test about to feel We the by of quick test. conditions good results are running category. stress that a Again, Michael, those can We we immune say suffice the portfolio done. of to variables, stress.

Michael Rose

appreciate the my questions. I Thanks color. taking all for

Operator

you. Thank

Securities. Shaw the of Wells Our next line comes from of question Jared Fargo

go now open. Please Your line ahead. is

Jared Shaw

everybody. Hey, good morning,

Jamie Gregory

morning. Good

Kevin Blair

Good morning.

Jared Shaw

the beta has back performance far. circling guess The on pretty good I been so deposits.

beta, and thinking should DDA will those the growth assume accelerated under growth loan be we expectation, the And of where as we at that's As we we're deposit level look bring maybe seeing how that just in that well? that? should match about that environment

Jamie Gregory

the it's our in stronger very growth our XXXX, really XXXX, core a clear be just achieving high range and Yes, want look growth. end loan balance that as important sheet of about to question requires think growth as to we we deposit forward

is we've teams production, the and past of And initiatives strong uncertain, quarters. the uncertain deposit on hand, teams, our couple precisely so, seen deposit, hand pretty environment in full-year focused, in the the go to we've those incentive core plans, increased we continue but we see too it's to the changed flight. have do we've to estimate, are expect deposit growth, do but focus And

materialize think And organic in so, that deposit we will client XXXX. growth

do to as we go reduced through deposit sheet a of will more we believe and stability Fed quarter, this for quarter the believe on that and allow fourth diminishment, third XXXX, we've stable side, environment. policy, reduce balance similar and trend environment the we the rate On seen diminishment both will in

continue year at growth that our to all, to current expectation we pressures which the again, albeit be uncertain in core we XXXX. beginning So, the of low is little in experienced we the XXXX deposit in for all that mid-single-digits expect smaller and XXXX and to last a in expect

the of weighted So, likely half the back to going growth is year. to be

Kevin Blair

to about mentioned, we on that balances important we a quarter, And so, XX% Jared, diminishment abate production we're equation, is a the two up in deposit Jamie as front so with bit, on existing sides side, that the when starting the at relationships. business note we look that it's to lose ramping are there, balances of lose the of

cash, losing money fourth off a closure. in the record not that or not using are had security of on quarter many folks moving treasuries deposits. we it's It's in It's into quarter situations the side. that their So, balance again sheet

lot increases to think the movement will And slow help talked continue about. drive there's that's will production of in money a Jamie seeking growth that we production and combined that to yield. that So, with

we've the be said, that, of our side equation deploy loan our to clear capital as is and out growth, and other clients. I The job to is go want for is,

going classes, to our we at to existing we're come to so, may And certain look up that's be loans But can is continue on decide other that X% the similar or it of And our guidance. funding, we're open wholesale decision make we we renew with X% thing we given if may to asset originate we renewals we've do why profitability what level with third-party of cost funding. to the right given of classes, or profitability the not not done we may alone, downsize, to asset the getting underlying particular loans.

FHLB. to on and it. So, of core through I think the serve at contingent you billion we growth side through deposit focused securities $X sides look about are our both continuing liquidity of But we But have generating to and faster obviously on clients. have

can comes to problem, a we as don't have that we challenge as a make it. So, on have we get cheaply funding that really funding sure

Jamie Gregory

outlook, the would there's a in back the mentioned, uncertainty increases. but as argue circle I to products, I of lot that the And NIB uncertainty within to question,

a see mix that to betas. beta and embedded growth seen But we're out our switching continued It's of through I continue significant embedded we've offset we in to strong in clients expect our assumptions outlook. DDA, industry, XXXX. of that DDA advantage serve just rates described. trend cycle in an shift, As that expecting in the of that's taking client also will to And

out play current XXXX uncertain. our estimate they is So, well how is and will those other. puts pretty each offset takes in But fare

Jared Shaw

it's able you cost looking are then, expenses And expense there, guess the moderate wide backdrop that flexible And to isn't some and I in be the can and care are I at fixed if there? thanks. what like with see guide, increases about there growth being guess, talked FDIC, follow-up, you pretty we health Okay, a where said, just for range. expenses, with my those living the of growth overall levers

Jamie Gregory

it, to components at give of want core of operating kind you When increases. to our and back look kind have first expense outlook we of expense step

about you you larger Maast, inflationary think like normal ones that's about NIE growth things of in So, NIE can XX% look to year-over-year, increase XX% those That's pressures like initiatives, XX% just our are to of CIB about our year-over-year. spend, merit, at XX% things and third-party that. our when increase and

environmental increase, like the are year-over-year. the FDIC the XX% increase have we costs, that about of then, And

first your point compensation. you the of a that gives place to the around, expense variable where's from. are increases on is would where So, kind coming the But breakdown flexibility, I question on

about are lower, that's be a that likely revenues it expense also where in XX% base. So, automatic, variable of our scenario and it will compensation lower, happens and is naturally, that's

have largest the have slower in on growth Second, we third, our a to slower categories. environment, spend a expense initiatives. we pace at And ability the then, some of

personnel, third-party so, that's and that's real that's spend, estate. And

can as always initiatives, reduce expenses. to go And the seen the we areas through with you've Forward opportunities those Synovus so, in back us past, and in assess

Jared Shaw

Great, thanks.

Operator

you. Thank

of comes the from Sandler. Piper Our of Brad Milsaps next question line

open. is line go Please ahead. Your

Brad Milsaps

Hey, good morning.

Jamie Gregory

Good morning, Brad.

Kevin Blair

Brad. morning, Good

Brad Milsaps

to to questions. out I'm do like taking my curious growth of you deposit conversation, what of kind case, sort plan to might on your does whether funding Jamie, in the fall the loan of bond of growth that outlook the shrink short how just for much kind targets, you'd be? that can you about, think the book kind extend Thanks want of to just or help to extent

Jamie Gregory

securities available the us, and the Our is outlook $X right book we relative securities stability. But have securities portfolio. billion liquidity contingent in the now to includes for over in unencumbered that that for mentioned Kevin

get portfolio by if I I to it, cash that if was and the could million the XXX million from So, shrinking get securities $XXX I the or XXX%, to were shrink at repo way.

quality the the it's that liquidity-neutral securities we just of in. given invest So, a portfolio,

asset when as and so get it to we because is, It's those the So, our fairly for that think management receiving a is liquidity spread. a liquidity you also nominal play, of investing similar securities fixed is except in sensitivity there book play. about an is that,

said, I as expect 'XX. about how relative in think go as And that's stability that we we through philosophically we And it. portfolio so,

Brad Milsaps

rate kind Got kind fixed pick might pieces that any that would larger there of get is deck, of this up just of of thank sense what offset it, extent have opportunities fixed. fixed give the mentioned of, repricing follow-up, fixed this coming sense XX% repricing and what wanted you think of rate kind loan to my to And up there of a in kind book year reprice, you you. books terms think the repricing of us a opportunities the swap in in the Are asset that comments, year? any asset your asset the you as you I can around

Jamie Gregory

look maybe just $XX when the fixed billion assets have portfolio, you X% a on on portfolio, at we over $XX around securities are rate that slow, million that book Yes, yield, the value month. at prepayments

we that, wouldn't bit that'll be expect mean, fourth increases of was kind material. as quarter tailwind, fourth, strong, the like go not we so, to the a little I of in a but the and And forward. pretty jump as see

fees. portfolio, mid billion yield residential a securities in at Our and duration similar mortgage around as our the that $X look you portfolio

just the is other and a we those hedge are you in are remaining points the the can going kind a we as can approaching second will maturities, are opportunities other material the and The those basis for are a quarter about that increases can hedge be put we as in the seven see of rate billion. or And see forward, in at second you -- quarter, to second as $XX increases the And there. portfolio billion. Those accretive rate after right mortgages. So, quarter meaningful that'll the that assets the have margin there there, tailwind, not maturities and pays as fixed assets definitely maturing. off, so then far those as fixed accretive hedge have that yield be the as a appendix billion jump in see up when you maturities them

rates, and we we not beyond, will downs. have maturities second and happen but in that's a itself, go third so, see and from material and we quarter pay we quarter and that, those pay opportunity the the fixed pretty how do that through will in And benefit is think as the about offs that tailwind believe

Brad Milsaps

thank you. Great,

Operator

Thank you.

question of next Fitzsimmons of line D.A. comes Our Kevin Davidson. the from

now Your go line open. Please is ahead.

Kevin Fitzsimmons

Okay, good morning, guys.

Kevin Blair

morning. Good

Kevin Fitzsimmons

while believe the was you I seems it of expected adjusting kind the check in you've a I mentioned the that's don't Just baseline early separate grow pace. revenues. you at the at growth to outlook, have touch believe, a seems mid-single-digit that what in like then But and to it outlook, lower on the off, to just I that you been then item expected. just the valuation of like to And in section hoping range, I were probably that end as correct. and that's recognize core adjustments the fee not December. revenue, and communicated wanted

a were how a were was they there were? low or wondering, just to So, that other items mortgage surprise

Kevin Blair

guidance. fee start income the Kevin, with So, I'll

the million. mid-single-digits see side, in year-over-year know, the see whether forecasts although where standpoint, you obviously, don't embedded are card base And actually treasury from that's XXXX. solutions on we've and see continue that to growth, what mortgage core expect rebounding in production payment continued that we've investing. And that's on areas where wealth, you been yes, The we whether see on you on 'XX. a headwinds So, we is, saw private to in the side, of mortgage, grow, the as is $XXX those we growth that saw a the won't it's drag to roughly it's client whether revenue fees off

mid-single-digit fee second I'll to then, income in Jamie So, the And for over overall, turn that it that. of growth part level. comfortable very we feel

Jamie Gregory

we scenarios these On that valuation, deals. from and things are on those analyze the run time-to-time

that us fourth there're two so, quarter. the different And deals impacted in

asset, the reduced The when math, assets. the through, the tax tax is the you there market what And credit and value as valuation came basically reduced of first credits, and the was deal. we you basically the new credits tax that ran take a the happened we something that's of

lower offset. well fourth you why the an ATR as in as that's quarter, So, see a

a helps that that positive it objectives. benefits us of were the IRR. deal reduced, achieve solar But ESG still IRR, our there's was other The still is as they Forward deal, reduced we it and at looked

there's that. valuation adjustment And a why so, that's on

Kevin Fitzsimmons

talked great, I balance helpful. about sheet to very And Okay, I we just the understand. but make just sure want already,

just ratios, below loan-to-deposit here. XX% the So, a little

comfort the XXXX is utilize with up your but over that like you loan to wholesale -- only part, most growth fund necessarily not that bonds growth to So, to modestly that deposit what's ratio? much, migrate level intent given with taking would for the ratio

Jamie Gregory

we where through we of again, for where to to more use it core an times the moderately. is output, And on loan other times gave but That These loan-to-deposit in to deposits tandem. but to may all there use growth. Kevin we're where are. very the as we comfortable choose broker And is of yes, to year fund philosophy context fund be do it the to And growth growth the but growth. Bank in moderately. we loan expect may is increase be choose base ratio XXXX loan with that increase in management think There the sources to or move case, for growth we Loan us proceed assumption we'll monitoring our is I Home answer around liquidity similar our be to deposit

Kevin Fitzsimmons

Great, thanks very much.

Jamie Gregory

you. Thank

Operator

you. Thank

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

open. now is ahead. Your go line Please

Christopher Marinac

morning. Okay, thanks. Good

of on better earlier. have question quick CRE revenue to mentioned upside? year? you you the testing Does about And that some contribute lead pricing Bob, this a about turning -- that stress does new to that loans Just

Robert Derrick

for is got and we think the have Yes, market. thanks remarks in Chris question. we his discipline answer Jamie would in some Yes, say as I mentioned the pricing

opportunity account. in got spread when have capital enhancement for the loan We do deploy we

So, I that. feel pretty about good

of have exercise spread stress we capital, a the of - that -- credit little have got was we in a increase On CRE pricing to particularly slightly. a more we do bit deploy exercise. as ability quality got the But nonetheless test, we versus

Kevin Blair

put explanation Bob's point And Chris, point. on to a I'll that --

yield be so like your And point. evidence much index construction, profitability what the to to a profitability some things not behind do generate discussion. first-half, able compare risk at look when CRE from as at is increasing XXXX of spread to to it And a we our a it's you not commercial loans. But of it's XX to our incremental saw we It's an basis we are put of As decision. organization of requirements incremental all for those. and are over more about doing ability look we standpoint second-half to minimum points the

And you credit of a do for funding level, for given higher we think the forward. -- wider so, when that's going we cost a something better at production I risk are rating look much continue And will getting that to spreads.

Christopher Marinac

Great. you, operating about a the that. Blair And follow-up it leverage That's and positive. just quick helpful. for has guide Thank

perhaps Beyond expense easier and that just growth have to year 'XX, maybe in positive into flexibility to the expense of create this years operating in some have you ongoing time less get does growth, forward then leverage?

Kevin Blair

jumped one. -- on Jamie, Yes, And in absolutely, this Chris. I'll let quick I

to talked time about the XX% to Jamie look are expense probably revenue. incremental will for new initiatives starting of XX% answers at we who So, fight When over just increase year new you off those over it. initiatives, put this

than the out You'll things exponential MAS, will what new solution, CIB be Analytics, see you'll greater revenue expense growth in much see and growth in treasury revenue like payment in 'XX for year. in

increase So, those you these of same S level curve some from year-over-year of of you that will And won't initiatives. see new many sort new with of see initiatives. the

those we on could based be lever even believe just 'XX So, new standpoint 'XX better an operating that initiatives. and from

Christopher Marinac

you very Thank Kevin. Great, much.

Operator

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

Kevin Blair

continued to call those are in And of thank today's Thank on you, for I Candice. want all Synovus. you and who listening interest

on XXXX our our on earnings of out our executing and chapter As today's are we to remain members that focus 'XX, in and objectives to many close personally stakeholders. in full our confident all know I call. we goals who we team ability relates I on have as the it attention on listening deliver

you I our do of our just truly our members to It's passion us want our say team delivering am purpose. what past XXXX amongst very to we that on also of and you differentiate year. this for what and were to and with achieved clients proud Enhanced your so I growth, proud in And I all what so, we competitors. profitability delivered build. continue during and efficiency, am

streams of a XXXX the our way am the and will continue to allow to of company classes, lastly, produced business that I pace and us the proud we we the into as Equally, of change adapt importantly, segments. and that are more it plan. well to agility more environment mitigate in carry which developing us this matter proud enable face it for that asset beyond. and as and changes. am strategic quickly and our of XXXX as to broad-based But change in And as revenue growth overall momentum will risk we execute our the I diversification challenges on will we And

I we leadership well. you personally working heard very our many work afoot. things senior to As today, hard dedication. and your many also we for have team are that have thank exciting have And initiatives new want

You daily commitment make inspires me on all this possible, drive your a basis. your change and and

today. progress. continued And regularly and appreciate of we each to, our the call As we're always, reporting forward and transparently the on you look to committed with partnerships

And for well Synovus, grateful next many investment officially over Board then close and the advisory remains of and on to who years. his friendship, today's without his our an out he am Company our as finally, I his retired Kessel can't in our couple contributions as thanking success continued call from in December as earnings XX. I capacity mentorship, Stelling,

we'll today's Candice, conclude with call. that, you. Thank And

Operator

you day a may Ladies Wishing and you ahead, Gentlemen, this your disconnect now fantastic concludes today's lines. call.

Synovus Financial (SNV) 19 Jan 232022 Q4 Earnings call transcript