SNV - Earnings call transcript Q2 2024 | Synovus Financial Corp.

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Operator

Good morning, and welcome to the Synovus Second Quarter 2024 Earnings Call. [Operator Instructions] Please note, this event is being recorded. I will now turn the call over to Jennifer Demba, Head of Investors Relations. Jennifer, please go ahead.

Jennifer Demba

Thank you, and good morning.

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

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

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

these the quarter. in presentation. And an see to our will of Kevin the overview of may appendix reconciliation now the Blair provide measures You

Kevin Blair

reported our from in as derived us risk-weighted Thank XXXX of included securities earnings asset you, result for XXXX, loss of announced you Jennifer. a Synovus optimization was that repositioning benefits joining exercise. recent loss a the thank which Good previously from everyone, $XXX quarter second second capital and quarter a million of the our for morning, call. executed the $X.XX

quarter nonperforming quarter adjusted remain second been prior strong from adjusted NIM X% capital our X%. non-interest our this jumped the while points to non-interest sequentially, years. in were basis net interest loans in while $XXX adjusted in and as revenue prior However, positions quarter, earnings Adjusted meaningfully inflected Moreover, XX% sequential and $X.XX Net quarter, of and adjusted higher the declined share they've Also, declined liquidity XX million. $X.XX as several on charge-offs and the expansion. income pre-provision rose expense the X% first per compared to from net earnings quarter. revenue increased revenue

our success talented direct and of work of result team a Our are members. the positive momentum

key initiatives our and our in proposition for making also are clients. value strengthening in progress We further

and wealth continue and We attract business. talent to of lines of our commercial the expansion

Our is in a leads revenue, insights and experience platform into increase the resulting XX% and retail from has translated new analytics generated. client better delivering

Our focus rate XX% on a qualified is conversion on strategy owner delivering referrals. business the wealth

current robust in treasury Our the solutions. growth pipelines in payment remain and

reduce operating Our and quarter. efforts have in credit year-to-date a to improvement lastly, fruitful down fraud we proven XX%. And with losses significant this cost expenses saw

In recovery fact, net line our business bank position. year-to-date ended community quarter in the of and a

a and So our effort. team is progress broad-based truly

associated while interest credit discussed recent our and uncertainty we performance the as reducing on addition, in with margin quarters, net execution In remains and focus firmly cost.

The second our towards goals. progress quarter reflect results these

to turn for let's the Now highlights. X Slide

million net $XXX X% of ] previously from points the the almost income a Despite sequential result first funded period-end this over XX quarter. $XXX loans were expansion. production first As quarter, from increased down just increasing of net noted, basis margin as interest [ quarter interest million

decline loan as We and in commercial drove lower the activity well continue specialty and and housing middle as C&I noninterest-bearing deposits broker drop CIB the fourth for by quarter. Core second deposits we deposits. declined the slightly for quarter. the driven by reduced a outstandings Furthermore, deposits, overall market, generate senior in healthy to in in in consecutive payoff national the quarter, time consistent units, in growth utilization offset accounts growth

quarter, in growth noninterest sales the revenue prior focused increased primarily team significant funding from capital through markets income. X% generation from highly expansion. activities core Our product and remains accelerating on Adjusted

healthy down also relatively on card as partnership expense from growth. Adjusted year-over-year basis, in sponsorship year-over-year Solutions basis. flat and contributed On year-over-year expansion Payment X% sponsorship commercial Treasury and non-interest Capital our of as growth the with a GreenSky. was well strong business a Markets was fees there to income sequentially and

operating core as standpoint in ongoing well a competitive long-term Synovus a modest a year a growth level from expense of value. order initiatives XXXX Our drive position investments while as well strategic have to that from to cost maintaining ago, diligence shareholder led

lower On nonperforming the basis by asset basis quality loans front, quarter points X than basis points points. declined while levels first the of charge-offs net XX XX were

Tier Tier Lastly, while we further our ratio completing of XX.XX% at the currently balance X XX% the million X set years and in earnings XX.X%. $XX are modestly stated share above about through range bolstered repurchases. levels to opportunistic solid in quarter sheet our Common common equity accretion management over highest second still of and equity X

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

Andrew Gregory

Kevin. you, Thank

Loan $XXX as were well million Slide down clients. specialty quarter. end rose from offset continued was as to larger by X. payoffs, significantly first quarter, and rationalization prior from utilization actually and lower but line corporate the Moving our production portfolio Period loans paydowns the from

utilization We and headwinds, CIB Commercial, on to pricing relative was growth $XXX during market prior elevated production, continue middle to quarter. million as annualized discipline maintain despite the relationships, by in Specialty loan client or with second evidenced remain spreads which our focus core new X% lines on the year. Consistent

produced we throughout of the of the remainder X% core should in commercial year. believe first these annualized business continue XXXX, we growth the During half lines, which

housing few stable Senior as has more from over throughout we the higher activity of balances quarters. That housing remainder refinancing by of the last senior transaction said, loans the anticipate quarter. $XXX been markets strength prior evidenced increased in and XXXX. million declined There levels the

national continue second non-relationship decline quarter. In for reduce positioning as total portfolio consumer balances this well XXXX balances per higher stable also half We further commercial the stable. were estimate account third-party and loans be the more our down half in continue We loans, accounts client to in with while our growth. segments. sheet consumer we second million as should of lending growth balance our to $XX our These estimated see quarter, to $XXX our core within should loans year, second key national continued the million strategically third-party of should in

shifts Non-interest bearing balances relatively deposit were down with more balances prior were core million $XXX flat quarter. within on Period-end stable quarter. basis linked-quarter X. Slide to from the the a deposit Turning mix somewhat

first average further continue the the stable in deposits, slowing suggest We However, to see of more pressure to notable trends relative quarter. bearing still the decline on quarter the though pace non-interest balances. in were some balances in those second

total quarter. or just quarter. unchanged from of costs declined broker quarter, was quarter in the cost $XXX first approximately to point the Deposit basis Finally, the This stable XX%, X% a million contraction. up which were which deposits the compared first the beta fourth from second consecutive quarter, of to equates was cycle-to-date deposit prior X

half deposit business growth we for seasonal relatively the into tailwinds should segments, be are broad-based across looking the year, supported and the As back expect which to remain at year. our we of the look of deposit stable by end costs

income interest in was increase million quarter, Moving of was to $XXX an the X% from the Slide which X. second first Net quarter.

maturities The including May. the quarter second of hedge repositioning drivers, yields, in from impact loan improving residual the quarter first benefited and securities various

we the in As first more mix stabilization deposit a modest witnessed and which to alluded in headwind in resulted much also to costs quarter, trends, we expense. relative interest

expanded impact primarily income served translate which X.X%. which reclassification As the we NIM along to same assets. net from that This XX reduce to points onetime with was sequentially interest basis by positive factors driven earning a securities supported to our the held-to-maturity margin,

expect to asset as quarter by margin repositioning, repricing full fixed forward completed and look basis of of net impact the on Kevin XX FOMC maturities which expansion, the impacted securities second is interest securities third detail which loss points well on securities hedge reported rate in of shows in was million continue total by a provide $XXX quarter. fourth based May. we will As rate related fourth an and non-interest to the driven we quarter further our quarters our repositioning cut was to X as XXXX, momentarily, December. Slide guidance the revenue in

up quarter. However, X% from revenue which revenue $XX XX% non-interest non-interest was year-over-year. adjusted is million, $XXX million or previous jump Adjusted the was a

majority growth decline by X% markets capital fees and quarter, capital surged attributable client of the half growth expected and banking and remain looking was elevated an sponsorship payments supported driven increased the the to ago management core XXX% markets from by wealth year. capital The X%, and debt while in expected was commercial the due income while to year second syndication repo income income. Also, quarter growth allocation increased the X%, at increased When sequential core commercial solutions, treasury increased finance fees fees fees, changes. arranger in are asset which payment outside XXX%. in to XX% markets fees of The first solutions analysis, jumped of and treasury income higher

deepen continue treasury non-interest fee and core such markets to and revenue management. client in payment wealth capital solutions, relationships provide invest We streams as areas healthy in further growth that and

seasonality, million. $XXX the the a and Reported year compared our highlights X% expense X Slide to adjusted to were and expense. from declined operating fell to flat X% impact ago non-interest non-interest and partially due increases first Employment quarter. incentives. discipline. both offset expense XXXX higher largely first cost merit the from by full expense of employee quarter was Moving the Adjusted quarter quarter,

investments assessment in the as other headcount. Occupancy the as quarter partial quarter reversal FDIC Employment increased previously by problem and million as a million $X prior to benefited primarily the year-over-year, expenses. in our first a Turning assessment due special loans. in from was X% decline of associated FDIC that a premiums well as of quarter. Legal increased X% expense increased declined and with $XX ongoing expense. expenses declined result expense to X% second technology expenses of resolved year-over-year result special accrued property the equipment

constrained with Importantly, environment. we expense proactive growth in remain will management this disciplined

for Moving $XX quarter to on XX% Provision from million. quality. Slides declined and first credit X losses XX credit the to

$XXX quarter. Nonperforming XX and are second credit at and from allowance basis declined which points or X.XX% of ended resolution unchanged manageable in were $XX The quarter. compared slightly quarter, X.XX% now the the criticized X.XX%, charge-offs slower previously from to remains points credit basis basis Our and declined relatively in XX points the credit Net down off quarter to in first first the the from a XX inflows. at charged losses levels. million fourth loans, classified in of the first and quarter or second X.X% the is ratio very primarily for quarter loans XX% and million

level We uncertain portfolio, of degree we with our a will and quality loan in the portfolio of have the heightened a manage this to continue and non-relationship macroeconomic and diligence credits our more confidence environment. in high strength reduce of

capital diligently over to seen reaching announced XX the equity continued and XX.XX% of basis the ratio As our to we found quarter. Against asset capital XX, completion executed the our near XX.XX%. still Tier to with anticipated at core our previously in now of capital These optimization A securities serve risk-based repositioning available-for-sale top the quarter exercise repositioning, helped the quarter coupled preliminary with on securities capital appendix of $XX repurchases. support on total while second of within million common More of completed in the details we share earnings, approximately build risk-weighted position be X points range. the CETX Slide can the quarter, our our strong that, deck. deploy ending accretion in end actions presentation the and targeted

the near the our top disciplined As to the maintain uncertain we balances CETX to which management, XX.X% with look the of end year, of approach a to we managing economic environment XX% capital range. will remainder prudently

client As on prioritizing our for and deployment core a reminder, of capital growth. focus remains our balance the position sheet

effectively we to complement Kevin capital management now repurchases to share with to that However, framework. I'll back our within it discuss expect XXXX our turn to guidance. manage

Kevin Blair

specialty remainder with our supported by and commercial expected Year-to-date the X% of half success in expected in Growth the market, should continue be investment housing updated banking but lending pipelines, syndicated are real half guidance and growth estate XXXX. I'll activity in with senior subside, Jamie. XXXX. should of national continued and period-end is second the middle loan broader Based lines. existing payoff first results headwinds accounts to corporate on and for increase be year. to X% you, our the to Thank

in now near levels a deposits and initiatives. seasonal as cycle costs funding new current core cost to deposit progresses tailwinds growth growth of within aided range, approximately peak for core for this should total forecast supports beta year deposit X% Stable by the Our XX%. result the X%

growth Our outlook to X% now negative in points adjusted to the X% revenue range.

as pipeline XXX is compared our cut second half there stable realization as 'XX. December our in well of our the assumption rates point markets prior XXXX capital the robust Importantly, adjusted of now rate revenue of in guidance assumes to basis

half this and second range strong. now combined We interest forecasted cost as non-interest net benefit mid-single-digit versus in of year low The expect the or rate year remains with net more previously in capital mid-single-digit revenue income deposit fixed the of fee to improvement mentioned asset the pipeline our is impact the repricing margin. Adjusted of grow hedge this full repositioning markets to our securities interest percentage stability, maturities guidance previous growth.

in and focused continue fees. We disciplined commercial solutions, to and flow growth build payment to Forward treasury We on continues execute on core the remain program expense sponsorship GreenSky very control.

our the assessment, is and non-interest to X% X% This credits in anticipate costs we expense legal incentives. member adjusted spend special incremental Excluding team primarily modest investments, and expense expenses FDIC be higher to due and this resolved will guidance increase associated year. up with infrastructure

themes continue our closely industry to manage and loan any or We credit markets. across monitor systemic and for portfolio deterioration

year down individual XXXX, migration in of to credit economic the first stable in current we certain trends, assuming the half compared points XXXX net of to of relatively the this in and environment expect charge-offs Given basis considering to impact be early large a half and XXXX. second flat XX losses late

Moving rate. to tax the

points an XX% compared Our XX% approximately level XX% as to previously. to forecast current to

Finally, targeted overall range. end growth ensure our to of Therefore, our of Tier above of we balance liquid levels our a this the at remarks. the economic capital to this and XX.X%. near capital X we strong concludes needs repurchases common ratio or priority prepared now with sheet, range is which equity environment. And manage towards prioritized share regardless remain our top management opportunistic top operator, XX% remains clients. is Prudent the of to our have serving will

Let's for open the questions. call

Operator

line question America. Bank Poonawala of [Operator is with of Instructions] The the first from Ebrahim

Ebrahim Poonawala

net in back expansion the on interest I margin around comments half. the guess just

could cuts If Maybe book terms back potential September. in of repricing in the the book the full in expansion, bond you in of how quarter But margin and obviously, impact of help. unpack could terms of rate that, beyond there. should the if that start face on the NII remind for drivers you restructuring us evolves starting just

Andrew Gregory

are look moving of half different the Ebrahim. at year, Thanks, the a trajectory and When margin parts. you there the second the in few

First, mentioned, we'll and securities as benefit in third quarter, of we experience other quarter. in the repositioning, the that second you about experienced here the half the half

repricing know, a quarter. quarter. There as rate But to third And a balances. there's margin is, this headwind to a so positive. in little asset as due of the then average fixed That's tailwind bit a that's well you the DDA

where and period there balances end the balances, a we the in put decline quarter You be can that given see average appendix, that average balances just landed. and of will in second

And quarter. But a the so that the will third in to expansion headwind be the in margin third we expect margin quarter.

fourth the expansion a We with assumption -- expect and we in rate to cut margin given XXX the or in the expect December. margin at again year a quarter, end of approaching

Ebrahim Poonawala

at get incrementally, Jamie, term? just cuts, a rate is that least short we Understood. to And if series a the NIM drag of

Andrew Gregory

does. It does. It

be if margin our in October. rate there the Fed September would a dot to for months today, with we on pressure June. you the from September forward So of guidance, is pivot and to used the cut, But more consistent plot which curve were the

of up just little of unpack me question cycle. time this of as is ease. important kind minor to to is that because the which is into NIM easing expectation In the a let due pressure, bit an head in short period these, declining an rates so we an And there leading

be once the as loans benefit on loans and impact floating there's ease full that month hedged. And Then a of cost. are that immediately floating the will margin will pressured shorter, funding reduced X will so our And post are the then decline, start you're see will the to XX% repriced will you really ease rate through benefit rates by offsetting then of easing, loans of loans not further to yields of down. mitigated be the an partially majority rate cost. the when but asset the as floating flow almost The the rate happens, majority liability are of

will costs, funding reduce over And the in reduction asset will reduced the come months. deposit X have we X asset so of neutralize to And course but then believe the through. that, costs yields the you that repricing,

specific of around so to that. kind more be And

to scenarios, $X and $X which ease, million ease, -- margin million a Fed compare were there's curve a is December plot, the to third the If you I split the dot third X a is impact relative the those and I to forward September and just and mean, the quarter between between it's December about October the quarter and impact. NII mean, because second -- fourth a September

Ebrahim Poonawala

costs of sort had of only about stable we just you One, And on the mentioned yours extremely if up. picking deposit your intensity pricing the Jamie, half. you don't an peer markets, competition That's give helpful. follow-up, mind, a us in second talk update other

any love there. would color So

Andrew Gregory

pricing is playing deposit we in out said April. The like

increase from the of is in an with And appears seeing appropriate. at duration, a that X look in our we by the you lot it outliers that much mature that not it stable appears preparing lows. between we seeing concentration and good CDs higher. And seen year. competition, We more of everybody us, the the around were year where seen X%, you're were we the for well, in about around production volatility look we've highs to As less here, pipelines, good coalescing the deposit we feel promotional seen about at costs What the marketplace and feel of outlook then in the remainder as banking We earlier that not is rates positioning our X/X CDs, cycle here. rates -- industry, expect months. shortening you've easing us feels through will but is our if on the like And it necessarily around concentration and that that a we've which an have pricing.

deposits rates. market shortening for industry feel the around kind of like coalescing preparing is duration of is easing. The the And time so and I industry

but to competitive feels it us. stable So

Kevin Blair

And [ data Jamie's rates in put at Ebrahim, behind just comments, back the were rates our [ ]. achieved we of kind the X quarter of XX to point peak production a 'XX quarter and ], X for XX fourth

seen a year. quarter-on-quarter where reduction So last production actually and we've versus yields we ended stable

Operator

is from Steven Alexopoulos Please question next ahead. JPMorgan. Our go with

Steven Alexopoulos

growth I Kevin, of you in rationalization us And want payoffs help the CRE thought in better the left to that half headwind start of remaining back understand on the terms how can Maybe then, quantify said efforts? headwinds. I from the cumulative the And to the could loan of what's increase you would we're company we far other behind are growth? total really the headwinds what areas do think for growth that us. if Maybe are growth year. in that you becoming low these away seeing strategic start in you

Kevin Blair

of because components. Steven, think Yes, talked when mentioned, And on the predicated multiple lot great to But I ability the current to that our a growth point, grow assess outstandings, your a are loan the about couple it's there's outstanding in lower question environment. -- things as increasing a of driving you there's you production. we've

XX%. portfolios, First reduced rationalizing portfolios last total is and third-party accounts. been And we've either lower consumer, have $X.X when a of percentage housing, or lower those That foremost, months national funding from our at that returns we to And just profile. our about outstandings accomplished. their been -- think the senior in in is specifically those we've that some XX run off And have and that's of largely XX% you billion portfolios. look

look for of senior consumer, stay decline housing putting lot balances those And a those because are when to look will at we're we And flat. accounts, production. going on continue so you to new third-party forward, not just national as roughly

that's the headwinds recall, sale, did the last rationalization I loan say So you sales, as that which, office and around largely done. we medical sale year, any MOB the would

levels we XX% at actually into So back and we levels our in in production at as look future, almost you were the quarter-on-quarter, look are up this increasing. back alone, quarter That $X.X XXXX. billion production. funded you When the was to saw

picking So up. production is

up Our pipelines are quarter-on-quarter. X%

is mark payoff and the question activity. other the paydown then So

lower as the it was the payoffs we in million context, on could activity utilization side. that based about about as quarter, million this referenced, It to C&I. to activity just a that's we rather million. we put accounts expect payoff and up don't of we quarter the national really Jamie but this million the quarter. on housing, And $XXX and get payoff senior some the occurred perspective, $XXX fourth to quarter, And From This CRE more and C&I pick that $XXX in paydown number have. the on $XXX of as maturities of had high saw

million-ish the $XXX those And So payoff we're headwinds. about increase activity. talking in are

again, Now some of the predicated renewals. that's on

in pending underlying headwinds returned we look are As XXXX, those of a past, like. more economic what think shared we completely rate we normalized into to looks we've the as of the environment abated, a lot growth and

Steven Alexopoulos

just Maybe color. terrific question. That's follow-up Okay. for my

bearing bit non-interest a a quite deposits, March, there? quarter, seeing of they period Because terms bearing of the in was came maybe bit stability quarter, April. us it seeing last through down excitement about down. a guys In this again. up the ended non-interest walk bit you trended in And there right, when trough talked what a you then February, seems you Could like

Kevin Blair

-- really at It's commercial balances the we're when good progressed, average higher you about to quarter, average some and operating had it running look than relegated we there, And XX% the balance were our we Yes. as to accounts. the prior pandemic. saw start to the declines still the was what quarter and a

the to see achieve that. think as augmentation which closer kind and diminishment So still it rates in sitting see that continue we we will pre-pandemic to balance cash will that starting our suggests of we're commercial use that, maybe ultimately, commercial there's that to decline. And utilization, to some of we offset some excess reduction client levels, as cash the using correlated we're they're on decline continue sort to production it clients And getting our sheet. as

DDA in diminishing of some at year, it's which half expect the the but to pace still remixing the second So continues to see decline.

Andrew Gregory

clients we've on that the is, retail since beginning seen DDA to down, would And -- year. the down when to you Steven, slightly. point like smaller -- thing of Commercial commercial, stability down, it one commercial Kevin's we I that have add it's is but only in break

it's market the like And feel we through I as increasing, -- it's going but so up stability this. go is

so of And in helps will as the diminish it second And -- year we're believe thing what us well. the we one that's seeing. that that half

Operator

Capital. Our Barclays next question from Jared Shaw with

Jared David Shaw

just that And on going of Maybe have yield the quarter you margin quickly the of spot into up book mentioned the the we What's discussion. at following just third the the half the benefit repositioning. quarter? on end the securities securities

Andrew Gregory

don't X.XX% that handy. I quarter Jared, quarter I point yield ] have I mean about for the XX spot repositioning. basis we a were just It's the to don't [ impact the due at at end. But itself. have

Jared David Shaw

Okay.

a the at of there fine. model you credit, performance at that? driver the here level then and was macro broader should assumptions lower bigger And then to there could it's we're And seeing driving stable sort the that, is change little loan some at with? the the more That's we Okay. trends. ACL, confidence these broader that given just give of outlook? great Or if assume comfortable you of around sort When the economic discussion looking really look you're more feeling that levels that

Andrew Gregory

really change by ] the in X.XX% this macro there Jared, that, is the securities it quarter-on-quarter, was the was when The And yield. allowance the way, due for look you Jamie [ to at drivers. Yes. June again.

see the can in the appendix the waterfall You change. of

now. CRE loan in a life-of-loan very little are bit performance right in be quarter-on-quarter, quarter the we the look allowance in when we loss it for of ratio continues to you level And at Forward-looking, C&I. where was CRE, strong. the components the the the And allowance down, about asset feel up and was good

would shifts here little at economic into portfolio expect look year. the see to So portfolios. But within how continue the as given the second the a migrates of half from outlook we of altogether, you stability we bit going the

Kevin Blair

XX I solid question NPLs points, basis on on was fronts. it your data, credit, think quarter I X points. look declined all the just When you net charge-offs think, to down at Jared, basis broader a

And a million. only of only $XX And FDMs ACL, declined to Our our had came but to in XXX%. about $XX was inflows. coverage increased of when talk down Jamie's million We NPLs $X NPL it the you CRE. that yet million point, back to bit,

In So we're think a deterioration. about, in been talking was some data the the metrics. to and as not improvement was some storyline in starting And I the see of all many all, we seeing that ways, we're broad-based. we've any as metrics, look underlying it at credit additional

And so as look feel couple about comfortable into next to that's why charge-offs. we flat the quarters, overall guiding very in of down we

Operator

Our next Gosalia Stanley. question from with Morgan Manan

Manan Gosalia

wanted expenses higher of a on bit so I a ask think, little in half. the front. expand to Can guide? $XXX you drivers million the I on the back expenses the or the expense about And quarter number implies, of

about as think you do how point So jumping a that off into XXXX?

Andrew Gregory

which the for are to quarter third Thanks And be I would expecting quarter, $XXX I the for excluding expenses, use FDIC we the the the baseline million, the adjusted say $XXX area. is question, million Manan. would just start second in and reversal.

not mentioned. you So million the $XXX

a just driven detection, some that fraud do that's personnel impacts. by costs, then pricing expect increased And largely to of project fraud analytics. be simply inflationary are there some infrastructure have day We some count that's issue. We spend, prevention, other and

X% a hold increase quarter from the fourth to quarter, $XXX we million about the it's second the area, so as in well. getting And expect to and that

Manan Gosalia

Got for that's XXXX? And rate a run it. good

Andrew Gregory

do rate XXXX, at As more will expense a normalized. we we that little think look be

give be an year. But XXXX. we in to expenses the the expect will XXXX of normalized update more do more We end at on

year. I improving a in lot reducing in second efficiency efforts we efficiency, the Synovus there a cost there from the in Forward. XXXX, In And could when did full in of successful of midpoint efforts up lot drivers headcount. year with benefited the XXXX talking that if half And expense FDIC. we you of some guide, are mean the large so about of were And excluding use XXXX, those you X% benefited year increases. XXXX had of the we're reducing this very about the think

that X% of a X% merit, of have from simply the -- impact half impact we're good. all of consolidation first higher We every the X% about that feels to X% a of to year. And with and about a a inflationary Qualpay, X% pretty the impact likely expenses guiding about expect other XXXX impact, credit-related we of number, than be do But to still -- of X% that.

Manan Gosalia

appreciate And on CETX I capital, target color. it. is your Got separately XX% then XX.X%. maybe to the

that. You're above slightly

higher to saying it below keeps XX.X% I higher that the think Is manage Is end. number? you lower that even move it want you credit? end in to or the uncertainty of XX% to to end the What target? at current the economy? XX% you're you drive to would What

Andrew Gregory

suggest In about to today. just isolation, drive there's when to to it's believe that is levels think we operate point the with the scenario. But capital are. at stress the quantitative peers prudent wouldn't today; one, again, where in deterioration a higher But you severe environment. and given, we would just where would actually to capital XX.X%, be to are would models adverse look even than in there the two, uncertainty likely we there capital that we we that nothing now analysis, below XX% would run or It's you you management, are where scenario levels testing, when to drive you

closer peer and years uncertainty, think and over peers market relative we higher and we it's can to to believe capital And if stay do that one so past -- thing times to to levels. prudent we we've economic few And ratios the uncertainty seen uncertain lead betas.

the not not to do run due levels prudent we income it's at statement, the to while environment. it's higher to balance not in current the sheet, in so And uncertainty it's think uncertainty these quantitative, due in it's

Operator

from next Our is King Brandon with Tourist question Securities.

Brandon King

pretty expect for Jamie, elevated to year. I guess, was the mentioned strong stay quarter. you forward, in And So you how the going rest of capital markets it the

that mean the in rate So still guess, to million half that I the run does we'll year? close $XX see, back of

Andrew Gregory

expect see do We continue. to that

just However, I would it how will qualify it it uncertain quarter-to-quarter. out with, play is

will because that So quarter-to-quarter of year the uncertainty the the confident second we the with wait our the total in more until economy, to able the being number base, are that believe election, of say do number stable it's with the quarter. with than a there fourth I uncertainty it's that the likely with in feel client deals half

the And so fee that revenue. could back capital end markets load

feel will how will just we through in in how the and QX QX. number. again, I'm come good not certain about through much come So total much

Kevin Blair

to the comfortable we Brandon, that. feel add to with And reason

fees, solutions our As Jamie market If some look back time. markets years, some I I a would several side. quarter fees. And a XX% came investing and X/X at if from the over mentioned, syndications I this basis, say XX% little from came SBA. XX% revenue capital as almost revenue of capital the from lead XX% derivatives, FX, had in almost of derivative We the from of stand-alone been XX% in look came we've and DCM for of the in only revenue, arranger

not the that's and gives it confidence us So is water this that be area, continue we're on rate. gives broad-based what that so opportunity that of we'll high particular us it to with one reliant over run new able kind

Brandon King

up of flow base was a And that actually to if was and you grow kind beyond? this is in XXXX thought Okay. question my follow-up --

Kevin Blair

Yes.

and to -- about I pick up think we derivative this, when with loan up see it. the again, will income pick production start think

only but there's run here, off could think lot a not there's rate of that I space. So growth come a this

Brandon King

had runoff, And around decline Okay. helpful. the you a expectations -- deposit quarter. then in deposit broker That's lastly,

how trend you the are half this back in expecting to of year? Just that

Andrew Gregory

look expect half decent how it's We say the declining. down. to back would out. of growth really play we of stable would to see stable to I in probably declines we the year. to how But second year, we -- to think see half year half we'll the deposits the the see loan saw in will broker look first progresses But that As the at some of

Operator

Timur Fargo. with Wells question is from next Our Braziler

Timur Braziler

surprised side. that the the second a at bit or year just and was that is some be -- guide negative to greater have for little flat I the maybe half some quarter you guide on kind low X% us the of still net revenue that dynamics the that or NII the guess year. results less for could maybe that seeing more and of maybe strong guided expectations of momentum the end a given the top I you're the revenue confidence the going us little end the revenue to guess bit of following I was through of talk down fee

Andrew Gregory

of to loan the half would drivers be second growth. the at year, look upside we As largely the our guidance

X% continued about on rate revenue it possibility; three, guide we end to took two, that that growth. revenue growth. But our the increased we've scenario, top -- which high be, at And we lead end reduction on would the and you guidance, growth would a revenue think it that one, -- outpaces it off the is be top year, the be in the digits loan where mid-single accretive; helped which look be would of of so fee we could when be loan would strength of rest given flat a the

assumptions that quarter. It's CRE something to expect declines necessarily in the guide in Kevin we've we As the our not that that seen and is mentioned, not that year-to-date. see third in include something

a that so be And as well. tailwind could

the being I second drivers the so I'd in bigger NII one of half for guess of And high the to balances end point of the loan the range to year.

that's a easing we which had than ease, NII you there, September of end fee even to range, don't if the into only that say in there's million just be for -- of in about pushed it a that out if impact and could revenue, lower be, pushed the what year. it XXXX, as half be fee it aggressive If getting would would in million we think ease, earlier, though would but expect $X revenue. more have the I the is second the But to also in December I mentioned $X deals we you think

Timur Braziler

rate your were to through talk a -- rationale talk as reclassifying moved -- quarter, you point longer And that of maybe the this that bonds maturity that maybe bonds duration available-for-sale you through AOCI. at Great. change and follow-up, Can cycle? HTM locking the in just of kind just especially the being in us to during can held Okay. into the the strategy

Andrew Gregory

was, that because they're underwater. these rationale securities first, duration, sold longer are The were they Understood. Yes. were unlikely to deeper ever be

there large was marks ever the so it these we would were be enough a where And sell unlikely would securities. scenario that

of the but use tangible AOCI common people for, common tangible that, volatility far ratios. to that. We Second, we to use bit to banks, that off the to there million maturity, things at -- risk not frequently use they're management And use table. When take it in associated $XXX little equity tangible them equity prudent regulatory volatility get and capital thought that have approximately of unrealized we We a as was common we different to held rate seen to a moved impact securities we the as is kind like the tool. that with maturity tangible the XXX XX ratio ratios basis point points NII of equity portfolio, XX AOCI what equity of from common moving of a down look of held volatility reduced and the points. basis to when around portion move do and comparing losses volatility, in to Street press basis

we're AOCI, said we And not CETX, including volatility for prudent that reduce held just same standard. so though ratio, to be even that in the to think can thing it's

were very volatility that we ever the would as likely CETX, as trade was costs. to TCE well little just the so AOCI. was reduce it that were including These And not thought securities that in and opportunity general there

Operator

So our next Catherine question KBW. with Mealor is from

Catherine Mealor

of just broadly broadly, in follow back capital fee the I not but just And on of just you're discussion. wanted half income can you run think up fees rate that us year. -- to the just maybe the back the expecting about help just kind in markets,

core kind we big quarter a rate trying it to pullback is which run going this -- back your would imply around range, is past fee of kind quarter. to that saw the If around of we're what mid-single-digit look we're growth then your level, first from

is you about, there? we to growth trying single-digit see just to conservative made so a Or case there high closer be to are And actually that here? being think could

Andrew Gregory

you growth, Catherine, again, you're the little as markets but the right, it's than at uncertainty. see the saw the piece close expect quarter fee second to third what But the as a the half look what kind bit in expect we we fee capital of quarter, revenue first second of similar we timing of would range, mid-single-digit the or to in seen at -- higher year, the is the quarter. you've revenue

Catherine Mealor

Okay.

So case, your make be that that much will guidance, is growth income higher -- is the fee that great. a than which does

you're seeing you next as what year, of Okay. kind -- do think expect given of in momentum markets? and fees you capital just would longer-term And some then about you growth rate the

Kevin Blair

product that the million no was core from million. were solution. a a using capital that is some We've giving was $X management. saying we growth. We of not We fee And big sustainable this categories to of was when and think different into solutions sources revenue income a that I growth And this GLOBALT, a about you, fee a going a up cards income. Remind that in of up it obviously, money We've these -- past about million were XX% markets payment was and strong other at areas, earlier, just our what around year-over-year longer we're a been and function our back providing mean, point, look selling we some trying that it's had to But was fee year also quarter wealth down, a build revenue total 'XX municipality and get -- not and to we've growing guidance. foundation had fee what there's headwind that analyzed at quarter, fees, fee generate credit $X.X of income our I largely in treasury year-over-year, a like income. for you large XX% repo function just divested that's been was both that that Catherine, area. X%. core And and in growth. about of had although of headwind $X other will capital your many markets, in to management

insufficient So those structure in have today, to change also a headwind. you that add look going underlying in with 'XX, think results our those. our to account which consumer out When has you're not you a funds, when headwinds about minimizes along you

NSF have with You're a going fees. headwind not to

off fully no will GLOBALT to and going headwinds. be there'll books, repo the not comparability. have be You're

growth this year, we you when and growth underlying could economic wealth have that to some think on depending performance in the in the continue see is fees, get capital the we banking So higher core I again, rate markets, than even environment. of a

Catherine Mealor

Great. follow-up. more just for helpful. And That's super [indiscernible] one then I

good $XX that's kind other of couple the rate for line see the you quarters. about been also the Is back past there in half run year? of Or think anything million that a you of do in that? that's Just the onetime

Kevin Blair

OREO from properties income benefits onetime we from fee were where There some some that. took some

elevated this little a bit past So quarter. was that

other other may I bit and come some So little up in will made be categories. a think down

Operator

Our next with Rose is Raymond from James. question Michael

Michael Rose

Okay, guys now? me hear can you

Kevin Blair

Yes.

Michael Rose

earlier and actually Catherine know increased that's one maybe of I minor, C&I-type in of you if number my there? Perfect. bankruptcies just into right. talk seeing maybe I on Are migration broadening category? about sort about the broadly we're you and a Can by migration, see past, or inflection question. shifting criticized But office, the it's migration of any classified. what of just All I have asked assume I you the composed you an like And you're but -- think in of did starting just an more know versus seeing that. credits things and transportation some where talked to

Robert Derrick

But first that Michael, the resolved just have on was past past a the the settled had it's inflection comments a and off that. our and ratio. came due list July. due on week We Bob. of I'll really couple credit of

that cleared. So

the dues. that's in So a spike bulk past of

In criticized overall, classified, stable relatively and terms were X.X%. of we around

in little out of and watch think a of about in moving moving out of loans target So that's again, list, as a criticized category. your bit you and

being terms would that, negative signs us general is maybe point, but us that So that then was that gives the no just come that, Kevin's the high frankly, to and -- seen of And for quite corporate list general portfolio challenges some CRE, within that the stress it again, perhaps continues question get From that smaller. lot credits. on leveraged function slightly a showing our inflation migration is a news is my C&I perspective, is these rates which through, come of here you still your that that C&I comfort and I stress by say to held pressures -- accurately rated. your this from haven't stability we but good through couple our to of volatility our we've CRE, expectations, fairly the -- longer had point defaults we expect date, there. X X of earlier. to well there, to C&I to around up in can with frankly, and there's or perspective is be The as -- We [ or time. guidance. And the it's seen point there the thought ], have negative but quite the in of certainly over some relates But

in And macro then have better, scratches is are finally, on, our some industry rents to us and labor costs improve. to stabilized earlier better, Occupancy dings senior continue housing that gave those as well. some figures which degree portfolio,

stay rates for higher that we all and come confident down charge-offs to good pretty it good like and but the if risk to in feel So flat the the that about are unknowns of pretty to table risk stay kind portfolio. The well. may -- come longer, C&I. is and calculus feel of off looks in And we position the where in guiding pretty feel about up and potentially slightly we do be as we beginning

a getting we're So little more optimistic.

Michael Rose

leads case, criticized to of call you few do economy rate would just would we definitely that would cuts, maybe And couple early -- could Is have right, like that, the that NPAs, cuts not barring really but things a fair? peak with think, classified in the a I getting worse. any make If probably a kind follow up get I we Bob. of of color, rate and your kind it. great to into assume last that then too point That's peaked

Robert Derrick

Yes.

move -- to a I think a of little billion, right? classified, I bit it that's that there amount fair generally be of would caution $X.X So takes kind would -- number. that's fair, criticized Michael.

at we're and credits There's chunky in basis in some there. points sitting get NPLs today. XX You

on down. Obviously, quarter, had we NPL it quarter So that spoke where moves have this could a you big up about a or we last moves call.

good those I frankly, levels as chunks, look down feel don't that about. as we we, And we're pretty quite mentioned, and being So big. back see to quite ahead

that come there, So gives us have particularly be line But comfort. the general us. as should rates think, your could point, some but for we to some still down, positive movement you trend

Operator

Scott. with next Our question Marinac is Janney from Christopher Montgomery

Christopher Marinac

a ways is about Bob, for CRE possible you solutions? just question. other I'm as progress little continue just further early answer on those? see restructurings to it criticized curious from Do see a and last your to number. Or the

Robert Derrick

we for to it to agreeable coming as towards thanks -- I our with said then to do. question. work needs mean, on I I our want we've is the solutions intention up Yes, Chris, Yes, work certainly if before, a mutually we certainly mean, structure. with restructured, be clients

done think that hear a in little solution." I common not come with prediction your our a that's relates up I you whatever office. are. the early perspective, it's the to -- we probably toolbox, to on broad an specifically it in point, "let's We've sense, of the to will that. phrases as tools it's make that. pretend So From kind one of certainly It's right think any do the to and extend

office have we X have nonaccrual loan Chris, today. -- We on

credits, dealing but et chunkiness and I modifications And give good some do X through got about a for mean So dollars early us little challenged through think being to say certain in that and a for we we've a certainly think feel with categories, X on. most equals that part, that it's a I again, us. But we're our And you're rated that are play will working them. I few of to are -- or of work able that cetera. handful that's the amount FDM a and

Christopher Marinac

has Great. a next just I'm as see been charge-off to quarters, curious few you very consistent then the the that next risk while. year, And for into cetera? head we if quite Okay. guidance any et

Robert Derrick

lot forecasting. I we of spend time our a forecast. feel Chris, good about

-- to I be think being of down. to not tell that think we're we lot there's slightly flat will calculus into comfortable you charge-offs a that goes

the continues spoke but Senior we list although get through, macros to are as about why good there. smaller. again, the working credits or that. And about good continues housing feel we we're of before, corporate to we've So the got still improve, reasons X X

-- well out and In to longer up earlier your over a commercial real probably estate, period to hold continues of comes time. point,

all think You isolated. kind we're why of know The of that what to don't we'll particular equals all risk -- they're we surprise comfortable that the any math, good stay now. a you if continue that be and higher that I don't of to add we general for certainly think right is know. And guidance. do or could stress, see of longer in type it could you are I think but with feel stress you about being rates C&I, we just and higher pockets could up, rates where where particularly some industry, you pretty give longer, they're in but don't two, up

Operator

with UBS. Our is next question Samuel from Varga

Samuel Varga

now? me hear to able you Are

Kevin Blair

you. hear can I Yes.

Samuel Varga

what I'm happened sorry, I'm not sure Awesome. there. Perfect.

forward? So it back revenue for revenue just frame the still a thinking that's wanted you of circle about as story to how I been we tool direction. just be It's Or driver? and strategic become the from specifically we go Should and get a is a -- I -- meaningful And sort about that to client on road the update income a to long MAAST fee project. moving it wanted MAAST. has should for the acquisition an

Kevin Blair

Yes, Samuel.

we've had step had really, active revenue last, us months products class a pipeline. are And platform. continue product. what our done a very What over is, still scalable offering users the is we've of back, meaningful opportunity. solution We will we the that tried we a the have it's we're X to a think I the taken expand to and allow that evaluate through to on

within underlying capabilities And a so the step took rebuilding some back, we're we and kind MAAST. and of of functionality

We as many also it clients are and prospects. not positioning

but So and also XX and the on fewer the try not We're segment. focus clients segment, going to names ISO just we had ISV focus far in on to the larger pipeline. onboard

coming to the hear is, relaunch but still income think be it's you'll in going product allow but solution only more surgical viable so who we view more maybe to we fee of us a generate core generate the will with quarters And that audience a as target will also not deposits. the

later out working in talk products we're of more the on the and it, basement, solutions, be and we'll back about this the So but market in back year. kind we'll

Andrew Gregory

in revenue. I It's to And about the the for asked And quarter. I half of the flat rate half let mean, the second to the me And second to jump you of Catherine, the the back the year. on quarter. the first year. said question fee run flat second flat

Samuel Varga

Great. are firmly And they quick more buybacks buybacks trade-off on the this process you doing past Could another around the you a on follow-up then just capital. bond that, mentioned as smaller share the thought just perhaps on I portfolio? guess your versus obviously, table were between restructure quarter.

Andrew Gregory

and one payback just the second about We look and was restructuring was a did Well, further the did we bond portfolio, gets at longer first of the when a you about -- one X-year longer. capital efforts. payback The the because us generated from we get attractive And the risk-weighted there. asset to payback. just was that when at X-year not just it's that of did attracted you optimization one just duration the beyond

the be to use it's the excess you we're And in share we the what the repurchases out. us XX% unlikely of capital, balance end They're doing growth sitting another growth, the will XX.X% securities expect we've see here near for it we're of continue so should which of do ready capital range where prioritize of past, comes they are. very confident with that done to it us is should target client our And when and sheet. portfolio. but ratios if with balance see in you client grow repositioning And to high

Operator

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

Kevin Blair

you. Thank

thank we recognize like members close and and are in also team listening call, today's I'd thank you all our who I'd continued all for interest in to Synovus. attendance As of your your out like to today.

and morning that financial to what our Our are from do competitors. clients result of daily differentiate we us presented direct a results this serve you our

second the national did receive our and we continue environment quarter, for During service recognition excellence. work to

a row. are Certification for Place We Work Great year in fourth to in a the

office Report. from family Our Wealth the X won Family awards

help awards potential. full team several purpose has our delivering Our customer proud achieve I were on Best to of impact the care our their Contact their it the and Week. center by am Best efforts of recognition people and the members Customer teams on awarded and of

in forward look confident performance. will is This we XXXX, I and the in sustain and confidence our by facts. approach As we XXXX we financial momentum driven am key that see following our improvement

the Our fully and quarter, margin troughed net net income interest deposit interest first supported expansion future peaking NIM our actions. in by and with our prices

outlook and improved. credit Our have cost our credit

well new XX% our has outperform broad-based with income watermark a flat to high contained execution. due adjusted efficiency of peers. we the success an hit year-over-year and to fee been Expenses growth ratio Our continue and have with this quarter,

benefits us optimization in to us efforts The is points. growth roughly restructure better second the sheet largely optimize balance risk-weighted XX bond which for by derived to allowed our basis yields from efforts addition, position quarter complete. increased In to portfolio, the the

medical optimization categories housing national portfolio billion reduction resulted syndications and reducing XX XX% from of in senior of to $X.X loan in outstandings these the percentage XX%. office, the third-party efforts a Our around have over loans last in months,

Our is Fed the for the have future, further future for the well a footprint. released economic titled the remain great relative economy we growth. And Atlanta research in these capital Poised outperforming than recently U.S. Southeastern strong and no Growth, look outperformance, fuel additional foreseeable for More opportunity the the levels flexibility we provide is forecast lastly, are for for X-year levels highs, and situated Whatever

forward drive profitability. about growth and optimistic our meetings investors many of future seeing earnings I'm our look and in and scheduled forward conferences. improve yes, and So we to provide future ability updates And calls to our our sustainable I the on progress. In look to meaningful to meantime, upcoming

second So concludes for now, call. Ezra, that our earnings XXXX quarter

Operator

call. very everyone, today's This joining. concludes for you much, Thank

your disconnect now may lines. You

Synovus Financial (SNV) 18 Jul 242024 Q2 Earnings call transcript