Earnings call transcript Q2 2023

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Operator

Good morning. And welcome to the Synovus Second Quarter 2023 Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions]

is event this note being recorded. Please now Head of will turn the Evans, Cal to over Investor call I Relations. Please go ahead.

Cal Evans

Thank you and good morning.

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

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

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

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

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

Kevin Blair

second thank Thank us our joining everyone. call. quarter you, XXXX And you for earnings Cal. morning, Good for

Cal our like results, we last Before into get tremendous to for sincerely contributions years in I’d his role. thank serving his two the over Investor Relations

and credit. you market strengthen greater and you through for. highs to us the and economic build analytics even all guided lows worked the Cal strong stand all been trust navigated we his background as investors of and has in have instrumental us cover relationships with with hard He’s well,

we knowledge vast services our strategy into shareholder our Her on as setting sell-side be as to We move financial the are Demba perspective through welcome the thrilled cycle, team, and execute well will current valuable plan. extensive as bringing strategic activities. incredibly and her background to industry Jennifer

of the you better for roles in be officially our Jennifer. So, We your company. two and with thank you, hands couldn’t new in welcome, Cal,

PPNR economic What year-over-year equity liquidity environment performance an in see slowing quarter return another contraction financial interest adjusted with X% up to today strong common quite margin. net you and led will tangible despite of is and tighter our of XX%, which market, a that remains on

our We see to as as model serves continue to as evidence attract that strong relationship-based clients. retain platform a well talent, and

lowest Our key it’s in and services years, the been levels many corporate in team revenue engagement turnover member are continue in is areas. to add producing we high talent

XXX% same remained a deposit perspective, period over compared to second levels From client last the production year. quarter higher strong with

last year, versus While fee loan XX% is second remains production up the adjusted and year. last versus muted X% versus previous income commitment increased quarter levels quarter

result intentional further approach experience revenue. our of the believe investments while solutions our seeing our strongly path-forward of our externally, wallet. share we you will and expectations while our for the innovative the enhance in in to-date, increasing of client business, our well internally sources see and base is gain diversify And to to are adjust success our trends client and shifts the All to still also to we as of year some expand as

quickly the to emerging and changing headwinds environment better We have industry manage to also responded recent risk. economic the the

points, uninsured, the excluding $XX and we approximately year, reduced course impact the have to deposits billion X sources contingent percentage Over points, transaction. Qualpay the basis of CETX expense our for percentage the the increased of the year midpoint by the reduce of of are our ratio XX by funding guidance increased that

long-term Our goals. financial towards paving bank made path-forward has years, strides significant a in our recent achieving

remain profitability our this environment, maximizing While committed pursuing optimizing we growth profile. to overall in and opportunities risk

of aim practices, risk robust to operations. our regulatory we adapting and and changes, market resilience trends management to stability monitoring closely implementing ensure By the

success. strive dedicated innovation and a growth that of a strike us sets between sustainable to risk on Our fostering trajectory culture management, teams prudence of and balance a

for Now strong high previous rates contraction. let’s linked-quarter PPNR PPNR margin cost three move revenue result slide operating NIB at grew the financial period year, by same single-digit headwinds the a leading to and metrics, supported revenue of quarterly increased highlights. at looking which as and saw in and the to When deposit remixing

or Loans X% increased $XXX million quarter-over-quarter.

client first As rate emphasis our returns increased to we levels growth lower production lending. continue prior due saw this we in as on relationship-based year quarter, and to declined from demand loan the experience and

quarter. the flat their in After reducing from roughly further like as deposits we outflows tax-related deposit their account. of the non-interest-bearing the operating funds, to per ended first Much rest increased average of balance quarter pressures remixing continue the clients with industry, seasonal April, use thereby core and have increased modestly see

Our our meaningful of our underlying underlying change environment, the or the of stress industry current performance as in seen have solid class. focused credit particular and trends metrics expected performance credit experiencing healthy borrowing are some in asset remains we and any although result a not are increases base credit or overall

continue navigate exceeding CETX environment by stated and the the CETX with achieving to strong the maintaining the capital position ending through well on end side of XX% I of a our X.XX%, focus objective position quarter are year. uncertain previously, we on as we the Lastly, have of at as we

to Jamie detail. results Now greater to second in over will Jamie? turn cover quarter it the I

Jamie Gregory

you, ended as million. reflecting $XXX Thank begin at I Kevin. billion, of four. quarter seen with $XX on the Total second growth balances might loan growth slide loan

production relationships. payoffs. previous to overall of multifamily draws low slowed have and commitments function growth related more CRE As of level growth Kevin mentioned, a was new on existing to fundings a focused new as quarters, broad-based are with and Similar customers

by loan-only overall credit utilization the utilization side, slight health in was of signal, exit certain lower positive decline of C&I base. C&I the our the balances driven reflective On Lower syndicated is a borrowing an of relationships.

of strategic an to meet objectives. quarter a transaction that a expected environment, pristine CRE the in not negative to portfolio. and $X.X July, signed office reflects quality, income don’t This that current areas strategic medical result note, the rationalizing third On our net profile billion our in maintained In approximately relationship are is onetime return exit criteria. a credit sell $XX lower of business despite agreement meeting in impact a or that the we in growth have long-term million we

Turning deposit including the to seasonal a year. to outlook, slide hires growth deposit, vertical five. continue and Deposit balances deposits Supporting increase tempered seasonal April saw flat and modest this of specialist declines, initiatives. more remained relatively growth the deposit we efforts, with targeted tailwinds industry the Core expect through remainder focused quarter. along after are despite a for

quarterly continued billion $X Non-interest-bearing deposits were of from environment. balances. a from down higher rate the of byproduct cash of seasonality composition the payments, change excess at the the and pressures tax in deployment funds quarter-over-quarter, Looking aforementioned

customer first CDs the in the consumer within products, our in particular other in As MMA decline was quarter, to to impacted shift largely a base. by

we cost which As our cycle to rates, through to-date look total the deposit deposit a XX% of at quarter of XX to beta increased deposits X.XX%, average in basis equates second points QX.

and anticipated as as cost betas well impacted deposits, in lags core deposits. decline on interest-bearing pricing deposit Our the by non-interest-bearing the were

at in expect a those the of with deposit QX, with some albeit to dynamics decline betas, is through-the-cycle end We as continuing, in tightening pace total pressure on lags deposits. out our context non-interest-bearing we slower expectations further which result for a play the and deposits percent further deposit slower XX%. approximate to of in FOMC’s XX% total same the pace given pricing will year now The of

the and insured our deposits Last updated that detailed contingent our to liquidity appendix level on quarter, we available of presentation. position figures in been have are this liquidity included sources. These statistics and

to and X% increase six. in the X% previously a expectations. $XXX decline one of million Now from income first quarter, versus second quarter, ago Net of like with the the slide year quarter was line interest our in disclosed an

and side both asset to and NIM our balance quarter, Though in in of from first pricing compression. those the balances continued higher offset The deposit within rates. as overall NIB benefit gains resulting deposit remixing sheet portfolio our higher

benefit, we some forward, thereafter compounding relative which and pricing to rate QX QX, slow. look this expect deposit continue stabilization from similar those in assuming at as through which contract rate support margin NIB the diminishing NIM remains. accrues fixed time, would higher to a should followed environment repricing, be the we and to that gradual by headwinds a has As Against effect the pace remixing to lags margin

the Slide total up $X and revenue million, shows normalized down $XX million first $XXX Markets, to variance which as for strong in seven non-interest quarter primary extremely previous adjusted the income of expected. due million was quarter The quarter-on-quarter fee Capital year-over-year. from

despite banking overall level benefit That volume, and our capital CIB of of strategic in market investments current income the the platforms. markets lower transaction middle said, reflects industry-wide

fee client and of As to at and look and bear the franchise income, mortgage, across continue levels back core our investments the products durable excluding overall services we fruit. step

nearly income as we solutions, last four treasury the Over at streams payment invest capital to a fee have double-digit core years, wealth pace as markets we management. valuable compounded such revenue in and continue and client

of in reflected The consolidated impact investment, which quarter closing is and guidance to the second last in income note net for our immaterial have our go-forward the to announced year. Qualpay of expected is year. Also we the is an full impact

non-interest up million Moving $X to year-over-year, representing $XXX $XX the highlights and expenses, expense slide million prior adjusted of increase. quarter X% total eight down from million, a

we challenging for management Where team operating the discretionary a volumes expense production declined, reduction organization. has of proud have the implemented very reduced across headcount are been We our and strategies prudent spend have environment. in

pressure. our we in have are under times incentive plan expense when addition, for allows before, revenues as flexibility said In alignment

our will near-term maintain overall a We expense the in and expense operate adapt efficiency heightened continue to base with ratio. discipline competitive to

performance expectations nine allowance in Overall, expectations, the the credit as stable perform with slide relatively credit life-of-loan by on evidenced to loss to quality. Moving calculation. line in continues

outlook. of of was originations and portfolio. X strong last in loan in the of downgrades of credit quality few As improvements were saw performance the the by remains allowance basis quarter, modest forecasted the a the result impact the The a offset increase aggregate in economic points deterioration we our

the year XXXX, with to points, reflecting XX As XX second to remain points charge-off credit basis points second manageable, basis charge-offs XX of points. half to range full we of XX expect half a basis costs of we to basis look expected

We our continue portfolio. continue and see in and management. specific to any do quality not both conservative portfolio and new underwriting within book sector to and advanced apply to stress will our strength market or originations we monitoring confidence We loan practices have analytics our loan of and industry the

quarter, slide based to second grow Tier XX, position X.XX% reaching our risk and equity continued in on now total capital seen As at XX.XX%. the with the with common capital ratio X

earnings marginal offset investment. headwinds than to somewhat in in of growth, loan along sufficient consolidation Our supported which our more profile pace QX, capital the with Qualpay slower a accretion organic of was

At threshold. consider CETX we time to if of As XX% macroeconomic prudent which remain position we eclipsing look any, environment focused on the broader what our and interest capital diligently all the we stakeholders. as ahead, we actions, to be intend the reassess manage may

back it turn now to Kevin will our to I guidance. discuss

Kevin Blair

Thank you, Jamie.

continue Now the our for quarter. I will updated guidance with

noting do to not provided Before assessment we impact review loan growth, reflect the FDIC sale the the details, the the of medical impending yet nor ranges CRE worth special that office is it’s of be of settled. the the as outside transaction impact

our of see is can impacted reflected Loan days CRE changes on be growth the to have in operating the impact office you lower over the environment revised anticipated volume, the as This slide industry reduced last the the for As now X% due in XX that to XX, as are guidance guidance. expected expected medical well is sale. production year. X% the to

expect lower middle higher strong as such we produce second business, new a half to market oriented and have continue Despite for of lines and CIB, rate growth we hurdle which business demand growth. to

X% seasonal expect the increase X% We mentioned tailwinds deposit and growth core to previously growth new to initiatives. driven by

year that rate which revenue of the the now the target guidance end. deposit are X% to X% X.X% XX% through holds XX% expected loan of to overall year. growth FOMC are to expectations with adjusted betas, and The an and revenue lower to Changes outlook end the by aligns result of reach growth a reaches of

additional growth some in environment XXXX, the remain levels including discipline and of shifts strategic expense We Maast across to better in our but CIB, X% expect while and we strategies, entire X% in confident growth applied has resulted base manage have expense the growth. to priorities,

healthcare, have growth our as well the our new for of costs year, guidance and and significantly be is to course we to when as range expense reduced environmental flat base adjusting initiatives, expected uncontrollable such as the up year-over-year. X% core FDIC Over

build continue organic levels XX%. to time, to larger year we a sheet slowing build end capital generation believe to communicated, prudent and we CETX as the intend continue through we targeting Moving through capital, it is retention we capital are of balance to a to ratio and previously capital At growth. this above buffer

year of Lastly, we midpoint of the tax new second full by to our XX% investments, of in previous the federal rate half go XX%, expect will to be which our near tax supported into guidance range the year. effect

to and responsiveness in be evolving the landscape. Our agility commitment ever instrumental navigating will

As value, also our recognize to sheet focus we we opportunity profitable growing for to right-size tangible growth. continue balance book on sustainable an

transaction announced pursue office an diligent management up higher expandable medical relationships. optimization sheet to Our quarter where capital more we example returning, balance this efforts, is of and free liquidity

growth confident other the sustainable expenses communities our As shareholders, customers remain to current we to dedication we perform By value and we our to forward, adaptable are and ability measures managing leveraging environment. steadfast and achieve staying to move our in optimally and deliver alike. in in strategic to resilient,

And open call for now, up the let’s Q&A. Operator,

Operator

Instructions] with Please of ahead. Thank question is line Steven Morgan. the J.P. first you. from The [Operator go Alexopoulos

open. line is Your

Steven Alexopoulos

Hey. Good morning, everybody.

Kevin Blair

morning. Good

Jamie Gregory

Steve. morning, Good

Steven Alexopoulos

Start guide on revenue the -- updated hi.

So moving is I really the drive that outlook X% the changed X% revenue to don’t it environment down ago. tougher than thought know we to to much was if What’s quarter range? a tough. the it’s

Jamie Gregory

this the Steven, Jamie. is question. Yeah. Thanks for

the at what look April. It’s components. really compared different for we we As in revenue XXXX outlook two to said

you a composites. On have the side, asset couple

some remain We part economy the to that that the these medical to growth expect levels. have to it office and remain of of spread do going environmental the revenue of is we on But lower to is due spreads loan portfolio. due CRE and elevated and impact at high sale that of

of liability really the expectations. side non-interest-bearing the that’s the you deposit of due the decline On balance that’s have and further above sheet, in mix impact to deposits headwinds prior

Steven Alexopoulos

Got it.

Jamie, Okay. on to follow-up that. And then,

of then the the indicating amount out. quarter but leveling So NIM basically same down about third

are third the non-interest-bearing, should in third the for mix and really shift should past that is once bottom this So we Thanks. you then also? up think we that NIM past be what quarter to about maybe the quarter flat done basically assuming get

Jamie Gregory

the a of less We that third the quarter with and second do deposit declines include than here in NIB to deposits. base what we expect, in in to remixing you decline further little said, saw as quarter the the margin total does continued

our to of kind model multiple everything We ways. It’s have hard tried control. on it at that’s a to going in look given that’s thing outside of

sheet history You in so exogenous and GDP of go. factors look we trillions try of about determine in to the Fed tightening rate balance think dollars the and at where it’s a stimulus and going and growth environment, to

Unfortunately, us like is now. right the imply mid-XXXXs best, insight. but wouldn’t don’t we still give a prior what declines The of tightening it seeing are lot cycles probably

I think do a of that to lot with has diminishment.

flows we spoken growth clients at the analysis diminishment clients are as look about flows that and we think past of our we and the slow expect do that being same it this using our and go some is credit, our we When to managing we that year. through have cash see the the see declining, of spend and so is we in their about client that cash

to percent expect a we see do another rates X% decline, NIB total we declines, deposits, little about into and in expect heading But another in maybe high, to perhaps, decline stay if XXXX. more year-end,

that one probably uncertain forward. of to look of sure we trying is we are clear how are it, look but model we gave in pieces that guide as the we be at thinking pretty the how about mix, the conservative we it’s that’s regard. just that But more in make But

Steven Alexopoulos

it. Got

a be saying stable remixing, relatively is are XQ pricing assets you even So that a the what not should from benefit coming in NIM fixed sustained right? there’s with

Jamie Gregory

That’s Yeah. right.

Steven Alexopoulos

Okay.

Jamie Gregory

That’s right.

XXXX, through, increase the the quarter, me of fixed offset that this deposit it of and talk the start here will end rate in benefit so and will or come But for are we in tail And you repricing and as get at in let a about likely relative be third XXXX. do then you we decline exposure then will right, second, look benefit kind expect to the you asset cost by see margin, stability. of the the

about approximately just to or numbers rate when year, mortgages looking you fixed to given loans. of that, forward, go plus and you million fixed from in due forward a loans expect to XX-basis-point about loans the there’s repricing year at impact an that paydown. margin And any $XXX that’s a commercial now, on as put off to But month, the just impact paid we the look rate of

benefit $X that slower that the tailwind and excluding bit in another as we we quarter paydown have that’s hedges of mature little have and So a well. of hedges first which the securities, and billion have

So, that, is in we start that, that’s going to the out as point platform going you will forward. we a that’s XXXX are growth tailwind right at see we look that to to what believe and revenue and be for

Steven Alexopoulos

Got for the it. all color. Thanks

Jamie Gregory

Yeah.

Operator

Our with next ahead. comes please from KBW. go Brady, line Brady of Gailey question the

now is open. line Your

Brady Gailey

you. Good morning, Thank guys.

Kevin Blair

Brady. morning, Good

Brady Gailey

So maybe move? you color medical heard just business. why color little a all on return that Maybe for little a I on the low business office you a low on why on and a comments little exiting and return more color call what about more just made are how you more the that space the made guys a it’s

Kevin Blair

Yeah. the Brady, thanks for question.

built the First, process the was pristine of throughout that portfolio this performance The transaction office have this we extremely the nature business. pleased we CRE in with of led are on to that team diligence pricing portfolio, this and it really strong credit evident the this and the medical the portfolio.

and the rates interest environment in where asset a with higher. ROE it designed portfolio zero interest was your single-digit for point, accretive. much higher requirements performed high and a lot our to environment this return as was are a But bank a exactly rate But this great

And one as this pristine but ROE. it’s was it sheet credit of of was broad not our efforts, as relationship has that a part single-digit that value, more given though optimization core high fit, even determined all balance that of a portfolio very we low a

so helped it few And us our objectives. a of achieve strategic key

First, it forward. us timing that we our believe really for capital to growth the well going objectives accelerates position

Second, it increase and it percentages. deposit helps profile funding improves our core our liquidity

exposure. liquidity and platform reduces growth capital for and us the will CRE these really Third, also give forward going it office benefits our

it’s this, it in offset is of mentioned ROE, we lost will and X% term, near-term. headwind cost go and single-digit The think a deep that are can NII high relationships that be to and that from this clients, way I about about convicted to the really longer spread the But the a us build exceed portfolio. grow core and we

Brady Gailey

the you only think, look like point I And $XX pre-tax of the view, Okay. X.X% a burden, million of being if on that sold. it’s loans then at

was So that reserve there. the overall was I that’s loss reserve a loans? wondering was that minimal pretty wiped those probably what out. I am loss selling on wondering, gets But just the portfolio, on what

Jamie Gregory

we net all a there that’s mentioned, will is little to Brady, economics will out the all a net number less a are the think closing. of put you closing. number that -- and will we right out details we it’s you that X.X% at put the Yeah. good do but at feel But it that and about than so

Brady Gailey

on close. with remind just change know that the that, finally, Maast to I business Maast outlook that closed, all? and see Can great then to your Maast. beneficial And now Qualpay at as is for us Okay. that you it’s has just benefit

Kevin Blair

process payments payment front-end facilitation we that Qualpay can through the so for is platform. Brady, Maast the platform our

clear have us a provided we allows priority. platform Qualpay the one that that is very ownership number that’s having to been their to ensure our so in majority And capital interest

have is it it closed. great So to

with a but a we and pilot we said functionalities our we little big we Maast. continue XXXX software get has When minimal P&L, It a impact to a expand year and would a it’s we is impact this start as would to into vendors. ago, program couple to capabilities over what of of the started

we and three that Well, are on have we today signed on. that are five up board also others to partners have

have a phase software will today. in eight that will be the on of additional we total with five So the contract vendors platform,

So signing many software XX that could the that are to take on us vendors platform. as to as

interest think So is we I hypothesis that on a and have this would be the individuals that Maast highly up point. the vendors, that our have desirable software signed just confirmed product initial to by based the

are that all about But vendors and to it’s of NVP software up. talk I to be this still those the from that end think we the rolled what software to revenue be premature going out of those eight at is vendors, the quarter broad-based more will signed finalizing because have product

the user stage, will And revenue the be end determine how then which grows fast the will final adoption.

that and platform, they So they will will using lending the the money for up those the sign deposits capabilities clients capabilities. movement the are eventually software, leave on

a the Qualpay on what’s having that development within ultimate But finalized we big only the have control platform, component advancement of and that ensures the platform. there but today, capabilities over not

Brady Gailey

Okay. Got for the it. color. Thanks

Kevin Blair

Brady. Thanks,

Operator

with Our Piper of Stephen Scouten the next line go ahead. please question Stephen, comes Sandler. from

Your now open. line is

Stephen Scouten

morning. Good note to know you kind trends earlier the wanted I about non-interest to in I the guys. follow-up average hard balance on that bearing. of but Thanks this conversation balances around did environment, curious you like now really predict potential around that’s and sheet there? can if what that, maybe those a normalization detail declined of how kind am I we for to room little about some the more have balances just bit. think look pre-COVID have average

Kevin Blair

point, non-interest-bearing. go going variables Jamie’s many to what it’s level so there’s is great to Stephen, determining the point a with into terminal that be

you quarter-on-quarter it was operating declined look where that and about consumer our accounts, average COVID. back higher at the prior puts XX% it X% If to at than about balance

basis, you adjusted largely we believe that would we where to are back inflation an pre-COVID. to were on balances those it about think you if And lead

in are balance, a On they XX% pre-COVID. were decline still they about higher average but than X% the about commercial side, we quarter-on-quarter saw

size believe just market CIB do middle look in increasing of can you strategy. based two So that on our have commercial our one, at that in and been Number average deposits we the ways. I different

we have larger that COVID on production had since has the deposits. brought So

average expect would that increase. to So I the deposit

carrying as I so will Two, in cash, our think, enter this uncertainty clients stick. are of especially we that some extra environment, economic

Jamie, three, continue that’s lead account operating probably to some believe you excess of for went there think, diminishment year, on little in would cash But see the our I it through decline balances he total would rest you and seen a to in the our little analysis that’s deposits when And commercial to why, more we still there’s percentage there. expect a the NIB. of could be

Stephen Scouten

Got it. you That’s things really you level think two as things good maybe color, high Kevin. one we maybe there’s Appreciate could your that. mean, if February? how funding true a on all at you clients highlight And that’s just changed guys, but about has obviously, since know regional for color there’s business, these then, changed money. or you I high of The guess, question give some different, kind won’t have I level, get pressure whole Can be what or we not able about in to is of why hasn’t? tons make model sustaining any what kind and questions us is banks your dead. of a business

Kevin Blair

Southeast will is what one to to Stephen, I we for the in when being Power changed client value number service hasn’t you quarter when as and the clients, trust. talk being back recognized last look, you our bank by J.D. tell proposition and go Well, about our

bring we are think that. want to we provide service, choose and going advice want to heart the and why they folks of that to back table. I They primacy the gets great continue the banks that provide to it clients and

a cost get can’t we I increased what’s cost is clients, of we margin, gets just the like think When on our that already contraction in to balance pass unfortunately, of sheet. just manufacturing. a lost we are goods, what the not all in are is an our happening and our business, on for loans today of this in lot

So contraction It’s that’s margin years. really been bit not over something is this new a happening little XX industry. having of the last to

any to margin banks big it so don’t funding. a scale regional advantage I have out And as experiencing of of are the contraction, don’t little greater anything and the think there’s bit I obviously, ordinary, an relates banks think

as are they who’s about to win But and this providing are share. market we grow, right I back the are those providing just through where best get level think going we the Jamie to is margins to who’s next talked winning it’s when we experience service, which stabilize, share, market are started, client quarter, banks going that and

we were before. that think doing I

I it side and think other that’s we history. on be do contraction kind one the story of will will again the of one

other think The I that credit. is mark, question out there is

regional hear we have banks geography credit cycle, get we from be and environment the there. negativity lot one what and lot whatever of based winners portfolio a carrying the this classes and out cycle sets, and So when in that side what of is in, your other rhetoric we prove of where are a and are asset the to that I of the you are said side, I there to day going on like a losers that when CRE lot you and so get this through feel

other out, one like it between and So of to is it be just out feels story, and margin story and to client it to that has primacy. the back get I playing credit we side, play contraction and think, growth the will

Stephen Scouten

That’s great. appreciate it. for will will Great that CNBC answer, Kevin. we too, They lay time. today, for the later Thanks out all

Kevin Blair

that. do I will

Operator

comes question go Kevin ahead. line Fitzsimmons from D.A. next the Kevin, Davidson. of please Our with

line open. Your is

Kevin Fitzsimmons

Hey. Good morning, everyone.

Kevin Blair

Kevin. Good morning,

Kevin Fitzsimmons

the have you down in did this addressed slide. because slide with I revenue or growth thing you was in and of it’s your guidance Is that? hoping was want you sort noticed don’t that’s guidance prior address I just simply PPNR that going that to one implied that,

Jamie Gregory

we different happen mean right. implied also that the was guide, line what and it’s -- as That’s it didn’t items as those revenue many think it right. two expense it’s quarter. of iterations I are was so just, guide, there giving That’s useful by the between last we can

look But we year to is speak I when for expense there, that are started tea think forward talking at the expenses, kind progress higher a the I about was a do want the guide to you that was because and a this where environment about in about we to as is X% the want how the -- through while X% than us. leaves, growth read very expenses, started on now, to important lot our are second with guide the and year we look of PPNR, we we to And see year, deteriorating. of right we beginning

to I you started initiatives, spend And and last back quarter led when looks last we our the to this our the the on guide on not it see quarter. million so this then back in guide quarter expense that like the the same, including the say was cutting reduction approximate in the we line and reduction Qualpay it’s And cutting but also the $XX of impact guide quarter. are that in reduction,

component account and good healthcare initiatives take into costs you about feel we So, growth that the that of about when our year then of from comes this and X% environmental increase costs. FDIC expense guide, growth especially like other

about the inefficient of on we part that’s something that a spend And our of expense on and think when I you working that’s story think year-over-year. be PPNR important time lot so base an

Kevin Fitzsimmons

guide, core expenses over staying saying it’s but X%, is that… new costs, assumption the are initiatives, the so healthcare this these prior right finding point this and offset Jamie, other So, X% that necessarily you over but not are you the to it, operating were and the -- when you bullet same, in ways FDIC -- to to of

Jamie Gregory

the that in what am the No. X% prior No. was impact No. I not of is guide Qualpay. saying

guide the trim guidance have in through other I initiatives been in as this initiatives and down is bit initiatives ways would those The well as various as a what were little in But in growth on January, we individually the say progress growth the April. environment.

on and Qualpay spend in just change the those really we so little And but than the to is CIB both bit addition. April less from in spends a guided Maast what the was January, only

Kevin Fitzsimmons

Understood.

at and/or what with that’s upfront so proceeds paydown are guys I one bond get put talking that something you debt. near-term And potential are or is the suspect but something I take are kind Okay. Thanks. they point, and would you about not some to work getting those would that goal of follow-on, would banks but -- think, be it able evaluating over CETX, quick evaluating some rates where your then maybe we to you loss, to timeframe? transactions higher XX% to that’s that, that of

Jamie Gregory

It’s question. a great

first can we the that. and look at MOB transaction transaction. like through duration long and payback you consider is off, portfolio, our see our right this are As And too bond in you to aggregate, the

of to the a highest the We our yield the realizing that with It’s remain interested to really us mark growth in opportunity we in and loss the the are at the so accrete that’s Southeast excited of drive market best in to intent that’s and front in capital at securities moment. capital to not our client portfolio about use and moment.

Kevin Fitzsimmons

Okay. Thanks very much.

Operator

question next Jared, of from Jared with line ahead. go Our comes please Fargo. the Shaw Wells

is now line open. Your

Jared Shaw

Hey. Thanks. Good morning.

Kevin Blair

Jared. Hi,

Jared Shaw

sales that or at that following end the the up the loan FHLB of down the has proceeds office. and the loan paid are use sales what there? wholesale what’s Just of on just fund participations of uses point the from this there? Should that the medical we assume the Is in that

Jamie Gregory

not let and one FHLB pay at is performing environment office. and return with of price high the business right, a get let or more a a the loans would was will a have you for likely whether funds, one move that’s best it Truthfully, was deposits, a are normal just very was like may business a That those just to the the what use the we that course pristine that’s that to regards portfolio. that would able paydown will are -- the expensive for that pre-up of anticipate exit traditional that to be action two. of of quality broker course this, be fair off not sheet and of business course to Typically, in medical targeting way something of the third-party you would unique that’s on loan to way that it funding, are were portfolio. And believe balance go we so normal especially what credit in par just in outside lower that it we a like and business We anticipating further sales. the be an than trite

Jared Shaw

million And there? that just that’s losing fund $XX from offset hit $XX the million called then on loans or that an see that’s the out, paydowns you the net the we and of can

Kevin Blair

Mark.

Jamie Gregory

effectively That’s That’s mark price the the mark. sale. on the loan

Jared Shaw

Got it. Got it.

loss And driving levels of as on higher into of that the XXXX. what’s going that as trend, and end sort expect we into going expected the year, credit, net next trend that increase then charge-offs calendar do the the Okay. flip expectation into continue a for you we the look at to and with of trends Is higher year?

Bob Derrick

Jared. This Hey, Bob. Yeah. is

in as anything feel some feeling are our a in within, mentioned, that. would it with I in Just them pressure are again, than credit mean, just expect clients see that slight drivers the The to systemic. continue up charge-offs Jamie of more general, not we drift and leverage others. certainly metrics and to going are and It’s you more

this But general charge-offs in up. a We that any it specific that same quarter. or see any We fall see we That to was push slightly quarter. do class, industry but increased of coming asset credits specific non-accrual from the will certainly just credit don’t happened pressure. couple and just

fourth like saw up I we and we certainly term don’t the and normalization, in total to what environment what the that’s expect see quarter ease that’s and credit in, to in should the relates quarter. third of expect cost credit kind the it are but to we in we as

of high done our to of still back guide points coming of low half XXs off -- a XX% lot good really sort base have very that feel pretty deep in XX% sort for We the dives of basis lands the low points, in half, year. about first of the us portfolios these XX in a so the into and or year, basis

January XXXX of is, more I will general feel mean, we specific as as that on But near-term. is in overall, talk more kind least is guidance. far get we concerned, at the about the our in As of same the

Jared Shaw

you at sort broader maybe stable Still margin economic expectations Okay. going All that still up -- a the of today when tied that is in, a -- And this expectation basis points given Thanks. higher or of couple look that level? ratio allowance the that’s quarter. right.

Jamie Gregory

forward, We we clearly, we Yeah. feel We are this would have we the is reserved -- look think which the point adequately today. good I as out do about to XX% quarter, scenario, pretty allowance. stagflation weighting we that that a onerous. embedded in allowance

at of XXXX starts rate approach economic unemployment end allowance embedded that but show for forecast, quarter. that’s is that pretty in X% to forecast, don’t this and which data the number We high so our

be the think slightly? But As forward, to fair. and could it remain performance. that, current levels it at we continue on outlook portfolio look could just and the I that’s we see also it dependent increase economic will

Jared Shaw

Thank Great. you.

Operator

Morgan question ahead, Our Manan. next comes Manan from Please go Stanley. Gosalia with

line Your now is open.

Manan Gosalia

through Hi. longer and you bigger rates business of sheets do Good to based small absorb more question -- clients. has high think appetite morning. percentage XXXX? middle on higher on what I costs with credit your conversations a stay balance on rates had these of X if more is and for picture had impact What and just their interest have market points

Bob Derrick

Bob, Manan. points. will again. quarters for Yeah. the first. good survey And is, we gives survey I a have us now question, do that client that for we to and commercial Overall, that and several data point been of Thanks doing This lot

starting about is that not materially. future feel of expectations our are generally telling it’s what to the business us And their marginally worse but clients

this team So and our keeping certainly potential input outflow we that. being the that are analysis cash so rate his with higher with higher are their cost inflation what tracking But Cal and That it’s being costs inflows on pressure and up with and line. algorithm. longer and matches and with revenue keeping in some doing

lot have on We of we larger smaller a businesses is a generally pressure, have data would. as to they some credit speaking. the points, don’t there access just got particularly think that So capital

As the of the it depends on and certainly, relates the have it industry to longer middle COVID certainly or may those term effects industries. on of effects mean, what market, I COVID

we we it’s overall, environment, anecdotally, to worsening continue as see discussions what us. expect margin that stay a telling long these clients analytics that’s with what that’s are and our us, telling are pressure telling that we us, in as our That’s at levels. our But, are general continue surveys just our what to kind of slightly

Kevin Blair

we -- have in an that, when you that quarter to with pipeline, talk just impact had going this were But seen stabilization add demand like the so has reduction obviously fourth feels it a on into saw clients, Bob year we And to pipelines the of in I first stabilized. mean, it down.

and becomes the some can where you think, their health increased that’s price seen the our harder where and consumer, have clients to to we what to and a higher been of cost your increase to longer the that on. consumer the inflation is it of pass has and getting and think have we clients it no through to when you who been you point able I on are given Bob’s to point pass given harder that on that about of And comes clients have cycle. The and costs on input much challenge pass

kind lower these it cycle, of margins. in as said, I at commercial leads think and many you demand, returns. the relates And of healthy general, it small if that so to historical Bob But but still look the to leads as ultimately, it look lower clients their businesses very through

Manan Gosalia

that Got don’t guided in asset regulation. it. I for banks get will But sizes. And am focused for that the are then all supervision category you know separately, process on fall of assuming I of regulators most new the

overall comments near-term. loan terms environment? and for your are this want to doing that anything prepare tighter But, regulatory noted else sheet balance your you in the capital least capital of you the and the keep accreting quarter liquidity, and for I So at sale to

Jamie Gregory

liquidity. on be are when think mean working that see will our you we liquidity strategic plan, capital else at I and look nothing what capital There’s now from building I positioning. will we and right you is, improving a our

very feel our comfortable liquidity right we Now it now. with where is

our will you $XX something couple the see so over plan. positioning as funding reduce contingent part believe see our to strategy, the liquidity. we our we of and improve strategic years, that’s well and of billion that But just also overall part and the be of cost You of that’s next going of can

leadership at what the it what’s especially there’s large history about here, you higher a team, billion built team has down corporate to know in people of we look think their pipeline the banks, have and that it here breathed -- lived that, and you the coming If the Kevin $XXX and leadership takes. services, it’s lot bank most

bank we management. And so of how our We It’s part we manage It’s when at look already part the risk look day-to-day. it’s we analysis. how manage of at nature. our scenario

not not big -- officially change we is operate in a So the how day-to-day. that’s us, of change regardless for

us I would see it is for the The that and will doesn’t a out. be interesting banks $XXX plays capital of the for debate say over to only is impact us that billion. how thing impact AOCI on that potential It

designation, maturity do But something maturity leverage the excluded that if we indeed, not how consider have we today. that that, we will that’s is it’s use the something how to from held is, then to because

Manan Gosalia

Great. Thank you.

Operator

with next question Our go from comes Truist Securities. King ahead. Brandon, please Brandon

open. is line Your

Brandon King

morning. Hi, there. Good

Kevin Blair

morning, Brandon. Good

Brandon King

guide your you just expectations deposit to get what initiatives? from I of expect contribution kind the wanted wanted deposit about want as the to seasonal and percentage new benefits to talk So versus as far I core

Kevin Blair

well specifically, quarter Well, on commercial fourth there’s the funds that generally public side, side. when look, at as it’s as true, both seasonal the Brandon, inflows, you the usually look

in We of really come our lines continue, across up alike, promotions it’s that it’s all will been XXXX. on think said we year-to-date over has it is point and that production, business. that, a of What our have in this we yes, basis XXX% believe I production focusing of is to XX-XX. CD was but deposit up where and So new some on our

to and wallet. we have relationships a two, using are tackling, full blocking out analytics that Number on and of we equity to to the which means just to we existing focus ensure [ph] share what continue that reach

into align and We will quarter. also fourth changing pays interest to talked and and dividends think bank’s the managers relationship earlier third plans this about continue that our quarter incentive year the we with

the our there and large that middle specialist We kind in have new have opportunities in a deposit continue product today. liquidity corporate, larger of we promotions with market we will who of on-boarded focus out some will bringing and space

story something that of the second not counting is will the the are really only we are production half seasonality that on, we half So around other We growing. the is the of that reason continue year. it’s but into the that think

Brandon King

far historically? give Got particularly view us what that it. how And deposit into Got higher deposit a as it’s initiatives, next you think it. could as with big picture growth, than play the of able kind just new of will strategically been year to you maybe maybe drive

Kevin Blair

will can about Because than it earlier. be all was had definitely Look, higher with that it you that. have tell diminishment Jamie we I year. talked the this that last

Our excess in it’s the story average overcome is not balance sitting been on with all one of production, it’s sheet, balances. the balances to story these the reduction and hard a of diminishment

terms about that have obviously the as talked we think I much abating production deposits. of And in impactful more growing be will

mirrors loan we to is be the able of see the of story what diminishment out so, that love would a production of other that to coming closely production. side level And

to continue we story quarters So good we not ultimately, deposit fund which feel growth the feel and and coming we growth, impact to only reduce good about wholesale growth XXXX. can believe our our about is we our but with loan-to-deposit And Jamie’s our if very today, that funding look to point, that, we in the margin ratio our very loan of we forward, match XXXX XXX%. into as ability going our

Brandon King

questions. it. all taking Thanks I my for That’s Got had.

Kevin Blair

Thank you.

Operator

question next ahead. Preston UBS. with of Brody please from go the Brody, comes line Our

Your line is now open.

Brody Preston

everyone. morning, Good Hey.

Kevin Blair

morning. Good

Brody Preston

can wanted are ask been you you The rate help that help -- of -- Jamie, could net the that on floating X.XX% paying for me there? and fixed you rate? is me on the hedge I portfolio. quarters. net understand just that’s receiving I a the moving guess, the what parts on better or last pretty the the just several to the just derivative Is on consistent

Jamie Gregory

then the will the and fixed That side. -- on fixed received X.XX% is receiving versus at so index we the be other rate we on pay

So, historically, that…

Brody Preston

it. Got

Jamie Gregory

…more on LIBOR rate on the those. floating

Brody Preston

it. Got

Okay.

this at guess, I SOFR, probably that’s So point.

Okay. slide I six I -- it slide, just was Cool. appreciated on so. And think, the then or

cadence fixed even use perspective of the repricing that in or you rate a fixed is -- there? wanted -- repricing terms chunky periods just dynamics duration, good from loan focus of rate loan rate portfolio. I that think in the repricing I that within on X.X-year tucked the That to kind of any the to like on there is is had portion. non-mortgage is in fixed

Jamie Gregory

It’s no fix of real that. there steady. There’s portions fairly is -- no actually real chunky

Brody Preston

Okay.

I forward. that to just wanted deposit just So in be going should one, last All the And sneak on outlook. repricing Cool. right. just consistent one then

So that the a XX% XX% I it of think calls range that I to total was bit expected, back on of I one of half. evolving you for said slides, the deposit competing XXXX? kind was through a beta think, in December back just everyone? competition the you is is markets, Southeast step-up wondering FHN especially in that for how now fully deposits with

Kevin Blair

take let betas. will me Brody, So, talk about competition, I Jamie the the let

second that the are. did interesting time we been the and it cost multiple were the have CD this, promotional the of rates won’t in higher promotions mention I brokered drive than production. know saw tracking that you quarter, that CD was we had go that o first banks back that names, we they had up and who was So the look competitive when for at data what our we

on for second standard in on about consumer money XX-basis-point two, to the the at the change quarter. a standard Number market, and rates on increase the look we XX-basis-point you in saw side, just average when in both commercial the rates

that rate XX was the where more If about points. up compare saw first basis to it hikes, quarter, you we actually only

in landscape the forecast, second discussion, but piece and a remix. will deposit what’s in saw competitive a the let NIB about we big standard that Xx what lot think quarter Jamie I the of of movement driving our the that’s a rates beta So talk was on is I

Jamie Gregory

expect the right. a to fairly movements the of of year, That’s deposit see total we just you of down do increase right. about That’s costs. mean month think steady step presentation monthly rate our the cost in I to the deposit in as see of that we end from June

zero how And to and think approach will so end that’s decline start play the it will just of we that out year. steadily the you at see

to the -- this million that maturing Brody, your loans. I to month earlier the or And on I That’s back gave rate answer is point paying the prior an will $XXX each have repricing. that fixed down about question, we

Brody Preston

I Got Thank you very it. guys. much, appreciate really it.

Kevin Blair

Yeah.

Operator

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

Kevin Blair

Thank you.

our As I liquidity company. we higher close obviously, interest am despite for and call, economic very today’s and remains and attendance, strong the our it challenges the of thank the bank’s posed cost by your let with environment, market. me slowing performance everyone funding tighter their pleased in

we headwinds resilience think and I the have navigate are adjusting demonstrated these activities proactively in we of our evolving adaptability to and fine-tuning and face the landscape.

levels, will capital of all us growth, undertaken growth our to which optimization sheet long measures, the run. sustained short-term story our have we have ensure strong balance our expenses over To grown we enable and return some reduced to

in belief show continue view the that of as my strong strength into our and our prudent base diversification, our cycle. us our our reinforces underwriting our and We to-date also will and to health performance future the differentiate borrower footprint credit the

growth we story offers and institution this in While we the that to changed. to subsequent our in bank the of our not our and not acknowledge firmly our but to only We marketing the current contraction has and long-term emphasize customers, want that underlying clients potential margin, value conditions believe the also our shareholders.

driving are success our to are delivering and team behind our to our service exceptional crucial and that dedication understand clients. enthusiasm members our We force their

of engagement which Member the week, Voice us survey of top we the a of this was team ranks proud revealed received I just of such, the As extremely favorability that member in and the results Team our industry. that X%

fostering their a remain best-in-class retains to commitment with quarter, talent. like as awards. shared our that I J.D. our workplace with and client much recent attracts affirming Power top as service services And Greenwich and reaffirms last statistic levels That

translate the referral as attract we share to sources that experiences growth resulted are and our into of client as new trusting the clients it deepen existing and source serves of a created The ones. relationships wallet

pressures on As navigate will that our our through the we commitment focused maintaining the we taking our on returns, to mitigate while shareholders and employees. current customers, remain actions environment, our

to operational management, prudent prioritize excellence to risk continue and future drive investments strategic will We growth.

future in of support and ability also long-term remain and Thank to value I ourselves all with to confident in potential for look delivering growth to stakeholders. bank continue of to landscape, the competitive am we confidence. you our but the your the differentiate the continued to again our forward in committed

And Operator, will with close call. today’s that, we

Operator

Thank you. concludes now earnings the call. second This Synovus XXXX quarter

You may now disconnect.

Synovus Financial (SNV) 20 Jul 232023 Q2 Earnings call transcript