SNV - Earnings call transcript Q3 2024 | Synovus Financial Corp.

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Operator

Good morning, and welcome to the Synovus Third Quarter 2024 Earnings Call. [Operator Instructions] Please note this event is being recorded. I'll now turn the call over to Jennifer Demba, Head of Investor Relations.

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

Our forward-looking comments statements. include

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

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

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

Kevin Blair

and Good our Thank morning, quarter call. you, welcome XXXX earnings to Jennifer. third

want the our Hurricane a our lives begin take moment to and I devastation businesses. The community. and acknowledge to mess, Helene been has call, affecting Before a countless of impact Milton I profound on

such face incredible However, resilience adversity, of we have in and the solidarity. witnessed

efforts we to committed communities At these overcome coming a ever. future. rebuild to build role brighter Synovus, the an playing Our stronger Together, are supporting than and recover we will active determined together, these in and process. are recovery challenges and

results. third quarter review Now let's

Visa valuation credit by adjusted coupled X% reported income, GAAP share increased and stronger provision included We Synovus $X.X of adjustment. expense. per lower for interest earnings million diluted which with net reported driven noninterest $X.XX, stable EPS $X.XX, adjusted primarily sequentially, which losses of an

with X%, quarter margin of adjusted year-over-year revenue of sequentially net coupled XX% adjusted an most higher over financial a a adjusted noninterest The decline included X%. by in expense revenue headlines jump the noninterest growth notable for driven interest

to in and positions demonstrate our quite strong. quarter, XX liquidity the continues charge-offs Finally, down Synovus remain key various again third initiatives. to capital and our net progress improved in basis points,

steadily and We in various roles. are client-facing talent attracting corporate services

and elevated pipelines production strong, revenue more lending and returning remained to are Noninterest growth levels.

the a extremely balance Lastly, well towards close with and in sheet XXXX XXXX. constructive pivot us environment are out growth pleased as delivering I'm strengthening more progress we continued which our and positions we

Now Slides more on the X X for and let's turn the specifics to highlights X, some quarter. for financial

X% quarter Net margin net second were expanded million. increased X.XX%. from basis period-end $XX loans to the as points rose interest interest income sequentially X% up X Funded loan the and production

the generate commercial middle to utilization units, specialty was continue line We healthy market, consistent growth in CIB loan while and stable. and

payoff deposit headwind and more money reduced quarter. market broker and of deposits paydown third consecutive stable million a the loan credit outstanding a $XX nonrelationship and However, Noninterest-bearing sequentially. the Furthermore, activity growth growth. quarter third for deposits Core to attributable increases rationalization was with in decline and quarter deposits. X% fifth of strategic were in operating to provided we

to from our payment while noninterest the funding solutions in markets markets growth. through team growth from card year-over-year also sharp a income very as On diminishment accelerating cycle. X% expansion adjusted up primarily revenue increased year-over-year Capital capital noninterest sponsorship business sponsorship treasury an Our lower focused and core Adjusted of there significantly, generation overall strong and to revenue income. prior commercial activities XX% sales remains manage expansion and the with was and fees partnership product contributed through GreenSky. declined basis, continuing quarter, from on a

down flat relatively was X% on a Adjusted quarter-over-quarter year-over-year noninterest basis. and expense

XXXX expense initiatives as Our well overall ongoing as growth year-over-year. diligence cost have contained

standpoint well in value. a drive strategic competitive of that Synovus from also investments long-term have We level to maintained order a position shareholder

while XX credit the basis expected, asset relatively to stable second quarter, basis points as front, in compared allowance net were losses at On X.XX%. for XX quality charge-offs were the the points

Tier still levels currently $XXX Tier Lastly, solid years range bolstered at ratio the third sit XX% XX.XX% common their highest repurchases. quarter just accretion earnings and our Common are in about at X through equity equity million stated completing X X to of in we our XX.X%. while further opportunistic share above of

this ratio Our return and our of XX.X%, their while anchored to tangible return XX%. adjusted strong average managing on common by on are assets and efficiency daily equity and team our passion basis. quarter delivering purpose posted a we an the where of execution an X.X% successes adjusted members for dedication Synovus tangible a of adjusted down on Financially, was

areas in by deliver concerns easing the wholesale risk the to deposit during funding cycle, betas of all reducing losses, surrounding broader elevated costs, maintaining continue delivering limiting we that capital. fraud have industry levels while presented Moreover, credit lowering and

We progress and will great are into beyond. momentum fourth that demonstrating and the continue quarter

cover turn results I'll now over detail. And in quarter third the it Jamie to to Jamie? greater

Andrew Gregory

you, Thank Kevin.

quarter. Moving $XX segments. was million X% started sequentially within year-over-year and show stable. Loan utilization Slide our production, Period-end C&I grew up a essentially which was and to signs prior CRE of to Line X. X% from the has rebound loans both

real However, and nonrelationship softness loan rationalization. continued payoffs, was increased production portfolio commercial offset estate by commercial consumer

CIB has We Strong essentially paydowns market, loan million and million nonrelationship year-to-date by generated CRE from institutional or loans market middle and verticals specialty lending senior rationalization. and $XXX middle million and decline $XXX X% was such $XXX portfolio year-to-date a and in growth commercial, specialty in in activity. Corporate market-related offset & growth housing strategic Banking lines This in lines. payoffs year-to-date growth offset Investment been and as by sequential

down quarter core our as These our our reduce were balances and million in We loans, the balance third-party for positioning further portfolio $XX client continue accounts sheet third national year-to-date. million to growth. within as well consumer strategically $XXX lending nonrelationship

growth senior offset in and loans estimate and commercial in we CRE the driven activity. continued fourth payoff our Overall, will key by segments, remain by housing stable paydown quarter,

value us well to return to a core that positioning into As growth we abate, to related expect strategic market we and posture XXXX, look the to proposition. our declines is

quarter core throughout the or experienced more X. fell operating Noninterest-bearing offset Period-end savings $XXX rose basis. headwinds million generally exhibiting Slide prior the million with partially balances There balances to on balances deposit linked last X% from deposits. a quarter Turning a growth was $XX stability and in year. and in by relative time accounts the noninterest-bearing quarter over money decline to market the deposit

prior of average broker costs noninterest-bearing quarter. or Meanwhile, mix was from quarter to X% which of basis million deposit fifth points $XXX rose impact the of primarily balances in contraction. the shift declined deposits as consecutive higher second quarter a the from result X.XX%, residual Deposit second the quarter X the and

saw rates begin decline, beta higher deposits. led quarter, as time we As in rates by to deposits reductions the deposit we ended as on well

XX% the X matures XX% As have beta It within core fourth time look to next we is costs of highlighting that worth that the the we communicated deposit we to generally expect previously. deposit our months. approximately portfolio quarter, to follow X/X

In terms supported quarter, for public by of deposit our seasonal deposit business the balance funds broad-based we segments, fourth expect tailwind. expectations growth across

Slide higher income third X% quarter-over-quarter, was X. in quarter, points the margin interest net X X.XX%. Net Moving $XXX while basis an was interest at million to the increase of

more other offset and factors. lesser various impact of a drivers, third NIM which quarter than negative impact which May deposit securities the asset the full a yields the of in repositioning modest The shifts benefited improvement and aforementioned in included quarter from mix

balances the wider interest serving modest a income net from with during margin average the benefited lower slightly quarter, interest as Net loan headwind.

the forward of look interest in continued as will easing result fourth as repricing impacts largely have a headwind outlined quarter, to to isolation we net we a that lag we the As margin, FOMC previously. expect modest serve the lead

rate asset further momentarily. fixed the detail relatively will loan quarter including that, on hedges updated However, to repricing, million interest fourth margin. net in support a our expect provide opposite fourth maturing quarter we in Kevin guidance $XXX help stable

increased XX% Slide X noninterest fees and primarily year-over-year. reported previous declined elevated year shows which decline looking quarter from $XXX second sharply. X%, treasury fees the by XX% rose solutions The the noninterest at and income were a revenue decline ago of increased quarter, to million. while in banking in When markets X% sponsorship and the in commercial fees growth XX%, markets capital total core sequential Adjusted payment supported was attributable quarter. revenue increased capital

from core relatively fees rose banking flat. were management the while X% prior quarter, Wealth income

solutions treasury and as We continue momentum to by in capital relative investing such relationships peers solutions, revenue client deepen and areas and strong that noninterest to payment wealth demonstrate in growth markets healthy provide management.

other an mitigated and increase highlights adjustment. our Employment $X.X efforts, X% ongoing Moving year-over-year. Employment million relatively Slide in included costs merit a count. year-over-year from period. credit-related valuation by operating lower other associated decline offset to third stable expense our year had ago in was was million to $XXX cost quarter, and increased the expense Visa expense a expense. by expense a the from which which sequentially of attributable to X% quarter lower legal primarily benefit the head drop leading was X% increased and expense in noninterest X% X% noninterest programs were Adjusted The with second XX Reported efficiency discipline. modest costs.

Occupancy a drop than relative a items and were FDIC and the of result These by losses expense to infrastructure X% offset year. increased of more period investments. and as same lower in X% equipment expense other last expense result a as technology operational ongoing

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

from XX% second quality. XX on to the Slide $XX credit declined quarter losses Provision to Moving million. credit for

credit allowance from Our X.XX%, million offset is period. third quarter $XXX analyzed overall relatively by by which the performance, individually the unchanged ended loans. prior losses for improved at or Driven

of credit losses analysis for necessary specific preliminary that time. Helene Hurricane a this Our impact is the of indicates not provision at

both We Milton. the potential and will continue impact of analyze Helene loss to Hurricane

in XX quarter the Nonperforming X.X% to with in and slightly annualized environment. from XX credits a and We of reduce and X.XX% our quarter. the annualized of more basis nonrelationship of continue are from maintain in and increased rose strength The portfolio, manageable uncertain classified at degree high quarter. relationship. basis level. loan single diligence a Net $XX loans, office the heightened this loans portfolio million $XX quality compared to charge-offs to up criticized in or our the in will level a manage confidence and third points macroeconomic points ratio loan million remains a now of we very and the second Primarily X.XX% second were

position capital in XX, was seen Slide our the As quarter. third stable on

common total equity preliminary the and XX.XX%. Tier risk-based ratio reaching at X capital With now XX.XX%

relatively operating as position, tailwind continued stable common strong a shares a the while $XXX supported which alongside capital in within to us quarter, quarter ratios. Another our core capital for million serves stable approximately balance sheet, performance maintaining relatively purchasing

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

framework. have However, to complement amid used environment, effectively a current manage the management as repurchases our within we share capital

year, the disciplined growth. approach, current in will of environment remainder the client the to expected capital we maintain ensure look the we uncertainty As and which sufficient acknowledges this for

will share remaining approximately repurchase which expect by authorization Our million, is in be year-end. utilized fully $XX XXXX we

it to our guidance. turn Kevin I'll to now back XXXX fourth discuss quarter

Kevin Blair

with our to flat current fourth XXXX. you, continue the I'll the for to guidance full quarter Thank year our forecasted pipeline and of loans relatively activity, Jamie. for fourth results, and XXXX. Based period-end quarter be flat are now of year-to-date be payoff in X% the on updated expected down

market, in Growth Banking be driven middle continue and quarter Corporate lines. specialty fourth lending to & the Investment will by

core funds X% for remained X% public fourth within year, full quarter tailwinds for growth up the and expectations core range X% the by to Our and aided X% new the initiatives. seasonal to deposit funding in growth

Our adjusted for and negative million a $XXX the outlook range million to of quarter in full X.X% fourth points of X% $XXX the to year. negative to now revenue

our now previous revenue larger XX assumes adjusted rate occurring guidance cuts basis the cumulative guidance our cuts than amount quarter. of a in points Importantly, with fourth of rate

repricing should margin fixed quarter lower a the revenue percentage with growth be Adjusted is our deposit of in noninterest range interest the asset hedge costs, stable maturity. mid-single-digit in and as Net for result the forecasted combined fourth relatively rate year.

fee continue treasury solutions. execute and core growth Our to capital in on payment pipeline is we and building, markets

will expense excluding very the focused We assessment, control. and fourth for noninterest quarter, full up our remain FDIC disciplined million We between year. the the anticipate $XXX $XXX be special million approximately in X% expense on adjusted

environment, the range point economic basis quarter stable current charge-offs points Given stable remain to XX in year-to-date. XX a expect XX, fairly trends credit relatively basis net migration and a compared fourth annualized assuming to within we

tax the to rate. Moving

quarter. fourth Our XX% forecast an points XX% the current approximately to to in level

levels. will authorization to overall We share is manage current quarter. of continue to repurchases utilize fully in share There approximately remaining, at we use $XX fourth expect million which to the repurchase capital

the serving liquid and strong a prioritized needs regardless growth of is support which economic to balance continue will sheet, the of We towards clients our environment.

prepared now our remarks. And concludes operator, this

call for questions. the open Let's

Operator

for today Our first Brandon Truist. King of Instructions] comes from question [Operator

Brandon King

expectations It expand with as that beyond your we you margin we less next fourth nature margin quarter, headwind, a on particularly could year. get seems expansion deposits, cycle? protracted with Jamie, like of lag we a the of easing some into could get being more if see the

So just your on get overall wanted that. to thoughts

Andrew Gregory

Thanks, Yes. Brandon.

As as to the year. said the margin, of continue we we we first the in guide, the expect the stable fourth as look be into the through to expect near we go quarter. continue early would as XXXX cycle easing in next that margin at And term, in relatively our we half

unlocked on exposures be due balance we the easing the time. asset when But margin cycle that significant expansion stops, sheet to of fixed rate over will hedge expect to amount and the see do

relatively And the we expand get easing in the exposures. the stable so in we hard that see And value once think past expect margin the unlock cycle, margin to those medium as for term. we you rate us, fixed it's to then

Brandon King

Okay. Got it.

order hold. that Is I expansion a So fair in you in to other guess, any remain need to see said on assumption? words,

Andrew Gregory

this depends cycle it how on Well, long is.

curve. we said that end front relatively before, the to the we've believe are neutral we of As

And so do outside to the neutral the impact, of of believe that we're lead curve. lag and front we that

the or fixed asset no of will point, some come easing at in so repricing easing. And tailwind rate regardless

to but as happen repricing so flow right, relatively the in I we start XXXX And rate stable the in term, on any fixed go asset the that but you're will in through will margin, think scenario. medium

Brandon King

Okay.

are for targets the in And can net charge-offs to confidence in for your me wanted Okay. credit, future? sort within as Got there lastly lower, trend this an that portfolio? out far foreseeable as overall remain And to there concerns on then of it. encouraging see range just of if get the net tail-risk any sense

Robert Derrick

pretty I with that. Brandon, really X.XX% this is we're we've in lower this individual range, confident loan to at guidance based at one. was that of on I'll X.XX% that Bob. take in happy range. that we cetera. on done certainly, the Yes, our of we're quarter terms analysis, are end mean, But guidance what and holding et

had this NPL increase there that well. that is as We baked an of spoke quarter in Jamie

certainly the guidance then think more conferences So we in yes, all short in term. is into 'XX, And get all, get the guidance I in we into think good as we'll as January. our certainly the about

Operator

question next Jared Shaw comes Our from Barclays. of

Jared David Shaw

maybe one, and guess I first the growth just production. looking at loan

sort consumer to there are about, go nonrelationship we sorry, credits, sort could that of CRE, level refresh into of of still on can And noncore the those that out As production a producing? memory noncore is loans good that, I'm shared third-party of talking of what aggregate the baseline terms what's in national balance use? 'XX, the -- you're sort headwind the that be is you this our of

Kevin Blair

reasons, balance many a it's optimization. renew up talk we on our sheet feel about so where a optimistic To production as year reasons. orientation way much, enter for growing. question. growth like about XXXX, great more to first consistently of prospects for And been a couple Jared, has your I point, our following I'm It's we and we're

the funded the in back was X%, put loan at now the production. XX% first we another in as first second and where look to increase it the higher watermark that would quarter than production relates trough low for third quarter you production, and kind us third quarter, were the our When again that seen of quarter. up in We've quarter

fairly are stable. pipelines Our

of would increase for levels reasons. to to we to continue expect see And couple production a so

one, associated think there's of Number a with election. amount tremendous the uncertainty that we

think election So once could behind think that, as stimulate continue we to us, that come we some get that the could side production rates we the And two, of also the drive equation. demand. lower,

We've exit around return our the billion. year last think To the we That frankly, strategic lending portfolio. down classes included $X.X We've well quite and lending profile taken sale, portfolio as that on exposure our third-party just your that, was which our the or our type strategic in had reduce of various office to didn't consumer run optimization. medical as point we wanted. syndicated asset runoff

not complete point. of our or but That's in runoff this was billion X% quarter, about million, We'll $X.X continue year-over-year outstandings. of a amount. see about consumer at some $XX runoff That's third-party largely to last so this around the substantial that

going played. forward, have largely has the been headwind same shouldn't that And impact. we So

Number three, line utilization.

We over several This decline and quarter, a XX%, last seen at we're the stabilized. that quarters. roughly had

FTEs we the back normal growth same just of our middle so year, starting almost year, XX our rate $X to a And now at add sales lastly, opportunity then we're about to were go you incremental higher specialty utilization to many community lending. back would billion and XX% our talent last new We're provide up we period getting market. and in If continue expand across roughly of markets. bank this to resources

reasons, of for XXXX a will all normal loan growth. those look confidence greater like for more So that year I have

Jared David Shaw

what's That's that? sort of million a called hedges hedge should on great we focused 'XX, costs? fourth You me. What's those of maybe look half I then $XXX maturing the out there first Okay. we the on the And as be the on anything maturities quarter. And Jamie, as the in the What's follow-up on? appreciate the -- for just hedge color. is really cost impact at that. details the of for

Andrew Gregory

October portfolio, you'll remixing but on X X. $XXX hedges the what rate things of then hedge XXXX, couple that stability balances, quarter. that of -- forward of maturities The matured there's starting a that. that December is million are little and on is When fourth the on hedges into and XX in have points bit is matures There a basis see come through, already heading of couple million average you the Those Yes. that you a $XXX some in look start. then

So about that's XXXX, the X% we you'll effective increase the early area the as go hedges general through second see on to rate getting trend. the up And in the quarter.

portfolio those through from from when half we get really XXXX. dissimilar too XXXX into second as the So of not And headwind rates. out go the the rates market are hedge you diminishes

we as headwind really so is XXXX. through there the And abate to expected go

Operator

from comes question Please of next Our from ahead. Ebrahim go Poonawala Bank America.

Kevin Blair

go caller. let's to next Alex, the

Operator

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

Christopher Marinac

Difficulty] [Technical

Unknown Executive

hear Chris, we can't you.

Operator

Sorry, to us. Apologies. microphone to Chris, are on audio any we'll for still you able closer for move receiving come just not the now. We're

Our next go Please question Fargo. Wells comes is Timur from ahead. line open. The from now Braziler

Timur Braziler

First coming capital the chunkiness to still Or of see we in love in the and is sounded year. still latest of good. did more the rest of remainder expectation around materialize question just then some pessimistic on bit get markets came pretty through? expectation income the quarter. guess anything It that's Would numbers the in there the for I little is should year, an the the a XQ? update for chunky what that there in of

Andrew Gregory

from Yes, of second Timur, pleased right, a don't business. great say, capital number you volume. at $XX are to stand build down, million that we that's to a low believe you're are quarter, off would performance we with the is now. forget transaction is markets just it's quarter-on-quarter where is We quarter use an this our a environment pleased look it I really and the of. good And that in is kind right And watermark of really of point. we but high And with

we to stability positive. clients we're revenue, there relative the the to in as revenue. capital $XX our that's real quarter, expecting at for this be solutions that's look driving markets so fourth in And a out And team delivering million

will clearly but But lumpy in projects that the see working positives, that not expect guidance You embedded the are are and any we're in are between teams that mixes stability including we today. line items our of business. they but on

Kevin Blair

from arranger add, capital and Timur, I'd from about fees million, this just you sales. XX% think markets, at FX $XX.X when XX% I XX% quarter debt from from at loan came XX% syndications derivatives, about lead the about on from and last XX% look government And guaranteed

the shows kind that baseline it and you Jamie's forward. for point, going categories serves to the amongst So the as growth granularity of

Timur Braziler

month results the a maybe then it's drove bigger question. was And guess pretty provided, what results. that relative surprise of to the I year Okay. meaningfully The now, to ago biggest stronger. in the to back update result picture guide? Again, last the the close the the were I relative a guess, end

Andrew Gregory

Yes.

positives happened PPNR as wound were the the there As really in board down in at across we and we what credit. look here quarter,

to expectation, quarter. of And for margin at NII, outperformance strength nondeposit so that look the if we loan and yields the costs expansion really outperformed board liability full just we that have versus NII across you in saw led

Within kind decline of we We fee came business various And then it in that wealth of the NIE was on our guys in quarter. million just that the in couple happened had expectations. other of a our month the good And drove each they have September, things were $X outperformance that revenue, last through a expenses, our there. positive. FDIC timing-related expense, impacted and then on

a end of September, lot tailwind the the of And year. heading nice news good so into in the a giving of month us

Timur Braziler

squeeze kind at in trend top of just by here? the of the to in nonperforming any loss categories, how the I top if loans the guess, more internal looking topping we that criticized one just And Again, are criticized out? as classified could Okay. were content. on out, loans classified encouraged are close your and classified for credit. criticized, I in what can the X% kind is expectations especially But color

Robert Derrick

think we're up mean, quarter, last X.X% criticized were looked quarter I this we bit back from rated tick trend if X.X%. you at would X.X% the I little close. certainly, trend, again. to the say Yes, to Timur, it's a Bob I down

little So we kind bouncing here. of bit a

downgrades. we're slightly still still we've some negative, upgrades is some bias and the think having certainly, but I had

process that strong we're of as most our the increase because is of little a a grading velocity lag certainly as quarterly the for have does grading it a think looking not bit basis, on was I back overall, But part.

you're rates to So still even to effect. lag us, of going are little help a have though bit beginning

you your in X%. increase. But I see could comments So close a think around slight you're

number think I that's for fair us. a

led. a process great have well risk review strong loan very internally. We We very rating team,

the feel pretty good we're really course, good pretty I about occasionally, get accuracy. accuracy. your get point good, is beginning the but downgrade We think to So around a probably and of I marks on really peak we And overall, close.

Operator

Our next question comes from Ebrahim Poonawala of Bank of America.

Ebrahim Poonawala

to deposit I terms thinking up follow just going how growth just wanted in deposit of about pricing you're and forward.

what's could new here? How the environment? mix about before So deposit few if deposit able acquisition, from? is year, evolving then from cut you the assuming betas do one, to see comment us pricing are on coming the NIB in times you do And talk end a to the just how where you and expect they to of Fed behave, the shift

Andrew Gregory

the see deck. dive in and let's into we slide has the forward. or let what happened show our added think there on middle the far side to quarter of indicative I a what earnings -- update table of the going the we since was it's right And in included intent actually easing highly to just Ebrahim, September. the will We the deposit me So third

beta see on an time. deposits going the working basis implying lower is and than see And time of focused rate And there actively XX% you out clients cost that and will on with what reducing points June, our is you deposits. come over through XX the team

about However, deposit time points looked if XX the decline. of realized at you end basis only costs, of we've September

brokered, what So while we low then the XX% and is beta, on the beta beta realized have date we XX% new the on have XX% production XX%. higher would around actual beta, of imply repricing, kind to a XX% an beta we've the stuff,

a you deposit that the to time, get you if lower realized beta, to total just of what deposits, we XX% number, cumulative date about on beta and use what XX. of realized with So through the you see percent use the XX% kind September is

we've is what XX% Now expect XX%. it to said we be to

flow realize up that that deposits time number XX%. brings beta, as so you And and about through to that XX%

believe believe XXX% don't end there's high And We We further for from go the low there. beta we that, have end room we brokered could that story. the that up that's beta being believe repricing that improvement. and of about believe to beta easily the the

that's so side Clearly, uncertain how what we're will in deposit on for easing betas looking it's the at deposit the this And go. cycle.

current XX at Our we expectation it But in meetings. regards to all has seasonal. with do basis the on is grow as that that to will see depends play sequential how cuts lot fourth it that to will we deposit we believe, quarter, here through With out. to growth, go how point as said, of a deposits

deposits. throughout expect as to We lower cost see growth our wholesale predominantly bank you land the within

as would total increase then and money percent in with for reduction time and weightings deposits deposits, as with we accounts the broker percentage so see markets. high far expect a now of of to quarter, And deposits the cost fourth

the deposit for priority XXXX, we It we're are us. say what clear expecting into continuation look to we a that's as core grown for so deposits would that see faster of growth. a core And in And near here quarters. to consecutive then I than just see expecting We've is X loans term.

And of stop. we've we will monetary that, function We diminishment see We We headwind believe to that environmental, be see policy. client that this believe go that years for you'll growth. multiple from headwinds XXXX, a see we that expect seen believe less we through XXXX, believe since we'll and general slow continue and tailwinds. as will

which seen have see heading client headwinds XXXX. what we'll through the client acquisition, we've leading slowing been deposit core growth that think we so growth abate that core deposit strong And the to is and core will growth in past,

Ebrahim Poonawala

of embedded of business And comprehensive. lot a to we a couple payments very time wanted on the as, on up Investor Day That's just on our follow ago spent years this.

embedded Just a there things banking. top-down push of JPMorgan It like the with when you does towards partnering look at stand. likes is lot remind feel us Oracle from where of

that was Synovus started. think has I differentiated something that

gone. this relative first I'm to just initiative? as you when Are how you wondering bullish less launched bullish that's

Kevin Blair

think Ebrahim, rolling out as said to I point, things I think products. that speaking are where your And similar is there I the competitors solution that have marketplace are stands embedded one quarter, have in of order and the marketplace, last an differentiate that in to you've we've capabilities solutions products that the got is out recognized and yourself. finance that to

built an MVP that beta product. so the we And version had

is And some the provide that we propositions improve on that well platform. trying relates facilitation today as depository we're the the you the of to some and had at offering As on set that what platform. value we we're instruments doing recall, various as payment it clients looking as to the of

we've to increase we and revenue that received the the anything the on we solution now working our sponsoring much to creating else, Mastercard we like We stronger the some business, merchant and set same of now, a additional but taken out, pilot that -- commercial we're saw amount and right feedback, Visa today acquiring rails. of that sponsorship on in So, companies a has resources of with earn we're where we'll and proposition, that focus future as we off value and looking access bells whistles went out it. we roll

business to software revenue we can that have use we not ISOs working That's that's enhancing million And those working about population Maast to the there. group Maast And that just then $XX the million, offer on vendors. we also a today. of that, the clients $XX us for once solution is same on

what we're the working that and future So in talk a quarter we'll on about are. the and out come product, enhancements know

Ebrahim Poonawala

relative center scale regionals or you're money the to a to think what big don't you is trying the disadvantage relative to do? banks And larger

Kevin Blair

in space the I able you're one that software long -- that scale win there. about we've to and ownership. said we create scale less of those felt vendors relationships in back in for been right No. TSYS dating time, had the think independent It's payments to we ISOs. reasons this partnerships matters or to a a what past, with is business our And the that we've

finance applying the right you're stream software that right if being I add the And or partnership independent revenue is, that what you me, product, that so mean able about client. and that's ISO vendor. embedded it's creating new to -- much to a value really have is for to it's more

going to So got but don't that as think client. partnerships scale a I much product for generate having to you matters that's revenue have as

Operator

Montgomery comes next Our from Janney from Chris Marinac ahead. question go Scott. Please

Christopher Marinac

play Bob the the for out multifamily had Or on book would us look question quarters? you. of on in I sort an a detail credit the slides. Thank anticipate in you next for that? give you Can criticized how the the few those how you update ratios for

Robert Derrick

if Yes. loans. at Chris, little, we multifamily, X look very for substandard don't overall, multifamily in there's nonaccruals I it Yes, the if any, certainly question. -- and thanks you have think

multifamily some So mention special most the of as a with construction migration oversupply we classify that projects is that due in in what markets in online primarily of oversupply. we see would to some coming issues various face and

It's we've book. space sponsors like multifamily good been really feel on we really However, our good. bullish for loss content very from about that in it. a We're our that certainly business good are, we where been We at years. a perspective,

overall, from see perspective, So a migration there. negative it. yes, But content just don't little loss of we bit a

of kind in to markets. once bit we the and issues little through of time oversupply And some get of a various abate begin

about in the housing environment feel I think aware. multifamily, particularly light as we're really of you're still good long term,

Christopher Marinac

so Great. And nonperforming, a and kind pipeline? on of question moving those migration already the quarters, The overall. it's in in criticized then we just general typically credit are just saw prior through

Robert Derrick

Short office in moved that relationship to is an nonaccrual. we we And yes. case, credit particular answer had this office

if slightly. back out, would our it's for nonaccruals that have actually that. back that to know you you But decreased I do out, easy me If

one story process working of time. it's as a we there for been that So we've through credit obviously our reserve some have gone through period And well.

work good we there and that credit. feel through continuing about We just are where to

yes, from Just was an couldn't hold it perspective. accrual But it rated before.

Christopher Marinac

going is it to to rate flexible more passes. speaking, easier and that now make lower work it. Got And the credits generally environment as time through you for have we

Robert Derrick

hurt. Well, it certainly doesn't

good a Chris, little mentioned on looking typically a you're the I as lag we point. quarter. earlier, a -- previous ratings, the that's bit at So do where effect there's of

than time upgrading point on other will take some would just little grading make I And so bit and it's the slower that a is it downgrading.

some But get as start the see benefit little So speaking, I further, rates think you'll help. you there. generally into bit lower 'XX would to a certainly

Kevin Blair

is going this loans at nonaccruing conferences, that talked look X of And we're XX% some but even that we've those about represent are Chris, balance. mentioned, and the quarters that loans as of to status, Bob in and gives we thing classified prior some the volatility, the when to largely are there us have in the on XX confidence criticizing NPL

out we're the point point, individual material give the with So content. we we've largely what in which same to loan loss to And that understand hope we're not Bob's is guidance, year-to-date XX expecting get loss in that confidence experienced to any lower some these increase you that would the migrations, I get content we when be. analysis doing than XX what even basis of earlier

some end -- see think but day, story. And the that's there, line I the the at that's of movement the of bottom you'll

Christopher Marinac

Kevin. you appreciate both. information point, the Great morning. this I Thank

Operator

comes next Tony Elian question JPMorgan. from from Our

Anthony Elian

On it I Slide to getting the noted there. that but relatively election? growth was cuts what saw I stable. take quarter, thoughts your utilization Is guess balances you in rate see more during past you will X, utilization C&I why it increase? rate the good the appreciate

Kevin Blair

off election. a says or a concerns above. survey was I -- what clients. the concern it commercial And wins think just whether one takes the table. some It our of uncertainty ways, all Republican obviously, with The many you do the it's you. number Democrat in We

another can consumer entire this off And the the fairly that the that cycle. think economy of consumer be the November our through that I in strength really concern has around gets are think I underlying behind Number the continues, have if the that strength been us concern So I of will continue two, think And to helpful. will spend. to clients resilient consumer. And table. getting that the take the

is The inflation client. third to is having and on just just declining that's margins can of to what And our the come clients, match and availability. labor I they think residual pass that has down fourth inflation, the to impact of the do with

work support that to things or that to the So holding their the of the capital the it's to day, people back amazing finding at one end growth. of be line new business requests me are able

to billion talked but And be down we one I levels just already earlier, is take seeing $X So increase. it's election normalized about think the the growth getting going as could haven't of much thing level I just as a production back payoff pay behind we're us. activities. said to Line utilization, as and

We've a we're billion for year. quarter, this had that's we portfolio, about payoff quarters, year, pay to This not normal of closer said also to year has return XXXX look as $X.X payoffs and going averaging downs. you to more normalized commercial levels. When more each was at but remain billion. And will CRE some elevated especially $X.X more that several activities, our

to loan So normalized away, when return fact start that growth added add slows, in payoff production I more the you talent and activity the you'll levels. to goes see We uncertainty new think increases.

Anthony Elian

the relatively growing balances of some stable at faster into cuts And projected on number pace at those year, then do in forward a follow-up, noninterest-bearing you declined the on basis, my curve rate average next balances XXXX? period-end given see by but a point were

Andrew Gregory

expect we to we're a acquisition there, XXXX. would mean, be in and can change see that's in that highly a but optimistic uncertain. growth some trend. determined. balances get core business that be But those tailwind in we would I to we it's client do Tony, can That

Operator

comes question UBS. next of Samuel from Varga Our

Samuel Varga

middle just the are a -- the growth to Jamie, about in the this Like lending. your these sense naturally of yields? for you those commercial loan to where particular is I book specialty of wanted yields? commercial give benefiting Can loan growth CIB and of mix ask are the us part market, yields relative terms

Andrew Gregory

you end, When to those middle those and we tighter seeing tailwinds specialty. production. the of the market look our other be overall in the in businesses, businesses spreads kind CIB actually be tighter on those and spreads would some businesses on are But would at due and than

then in and the especially add it's you strong originations, about can They the CIB, in credits think changed, and but specialty others, a they flow, generally spread. larger lower more little spread get general,

Kevin Blair

Jamie, quarter, look add, this [ the you our portfolio XXX, and production, in at we're is I'd last And ]. X.XX% XXX, about yields total about on when

that basis points although quarter the We're the we're seeing in accretive everything on be rate than lower to putting second higher. about yield XXX basis that's points it's given what the today, going-on will overall XX So was still cut. it portfolio, a

Samuel Varga

and the core XX% the you've time to very you I'm That's if need? alluded growth next volumes the production. it. beta there that of Or the just deposit still side? on on you And point whether the on base the need capped the deposits that is Got slide on curious beta new that the helpful. beta realized the can give this support color on at the and to then loan supporting TD is sort any for bring because volume just other like gets you almost where any to you've

Andrew Gregory

production rates the much higher at quarter-on-quarter production. production look you with if lower of was time levels, Well, actually

But appropriate. that side. we on say for And we're it funding we're liquidity is that individual just doing looking so we any what sufficient product the what I believe will not We to would beholden that believe are be purposes. for for

to easy funding, If because down. continue to have our use or that increased we anything home deposit idea offset we reduce time think bank and draw brokered that to wholesale do or funding, of rates it's a capacity better we which loan like to that's

it's right And ] we fairly through the because we think of the different easing cycle. now, between reduction in aggressive we where a go prudent in to so strong [ can choose that liquidity. spot rates, we're promo especially really sources be of as our all is the funding CD rates And story the

Operator

Sandler. Our next question Scouten Piper comes of from Stephen

Stephen Scouten

repricing around it see is think the you Or catalyst rate that? plausible in that operating you leverage in 'XX. fixed to to be of potential do ability Or loan for you plausible? Do if target? the to create is need drive the inflection what might NIM point kind maybe a curious the really I'm think that

Andrew Gregory

couple the we're Obviously, more than at give expense will lot things. of will But it and we We've conference. growing this not industry XXXX, expenses. look look later higher to we performance. on that believe an to that drive we growth XXXX, guidance a right we be As believe as We now. to quarter is a in done

the that we we in higher opportunities growth Southeast expense really, do we've believe strong, believe the in will and recently, growth seen right have what here than the But win. XXXX believe be we Southeast. we that into the lean that in opportunities the We are to as

here XXXX. so and this that the at as of And we we lean into year head will end into

growth we go be higher that higher so that, but alongside revenue growth. believe will will expense And

with components, is we that. to walked why we strong on just along we what utilization And all through transaction increases see activity, so that see do the Kevin revenue those along to business detail with revenue increased different with side combine see expect line in expect pure goes loan expect to growth growth growth,

see the we is to into moment. as uncertainties look the paths Obviously, important. that environment And forward XXXX so is very economic operating The very far possible. we But leverage that A in XXXX. at look is environment of as we lot important. rate do

Stephen Scouten

a helpful. pace it I this looked glimpses well. end-of-period you the remain know ramp a didn't could actually And are basis, deposits the that of on that kind decline? decline also quarter. like create noninterest-bearing that even an said shift of Because of as But in of path uncertain of you seeing Extremely pace any bit terms Okay. of up things

you're deposits? So there of on anything noninterest-bearing I'm just give those if you there's hope wondering that some would near-term seeing stability

Kevin Blair

we're I where think of segments DDA at Jamie various looking team his diminishment. and the been have seeing

seen on decline. average kind the I depending $XX,XXX, consumer is and level of account watermark consumer, below happens greatly with of a per the side, on fall what the low could think which balance diminishment we've positive

Commercial third business quarter versus largely dried has diminishment in We up in commercial. saw banking a more past little this quarter. the

So about I to point, think to of Jamie's to DDA earlier way new the production. produce some think we're level going

now interest-bearing is into its finding way that of checking. Some

get going diminishment driver per the account. to noninterest-bearing. is balance to biggest your So question the of the you're But average not

getting based that are And that each it we trough, actually but its predict can't that we to quarter, seeing decline. it hits appears closer on trajectory that. When continue to we're that,

Operator

Our comes Raymond of next from question James. Rose Michael

Michael Rose

process answered, just month, and think been of consolidate Last if kind term. update got to the intermediate M&A. review about around the wondering DOJ back FDIC, the we longer have asked OCC, I the their on thought updates step merger Most I you could sort saw of over as and but the process. any and And way industry

and where bit Southeast perspective, Southeast you the the that you your a about have come couple banks into more think I or aggressively. markets are As little guys a an from at size have asset least in

You intermediate what's doing think, have not? do targets role happen industry Just every term, the as to relates or it one markets. longer the financial longer-term something versus some something mean for branches in of does to of with doing of kind over over not on of think the term, wanted seemingly that banks longer intermediate building what to there see every risk as going you mega corner and your to we consolidation the about to Synovus? if Is more

Kevin Blair

is We're a more the from changes have place you of and does calls administration M&A what Southeast around question. hearing other earnings do others great great a if the discussions it's Michael, happens activity? some can recognized business. And to Yes, more hear more and drive that that the pretty

can our capabilities is we today continue drive share greatest and answer ways, But wallet Synovus clients to make deeper opportunity new the greater in actually in solutions talent, create attract adding of of that investment believe or that technology, to conversion in in is impact sense unchanged. to many add any with would many sort continuing existing short new the take or with to new and acquisition clients medium the We us that ways, would associated migration share. and for and be term, greater opportunities our

is to teams how that LPOs a branches we're no adding secret to doing has we're buy having Southeast share. adding So I business. market a without don't for great bank. we point, on us. people place And anything and your continuing It's win are do the and focus to think And that changed and putting to

We're technology. and talent new new adding new and teams adding

the So to got a changed. hasn't I what acquisition and EPS competition. Synovus rather most space, take awards and proposition. really part And you've second We're that win continue can story than synergies these to organic win, revenue value to relies an look reductions of really of for that generate that's of that us do Greenwich level think, why advantage it's important on a to trying in important this that's, some to And it's J.D. do that none, whether growth. real to advice we the just Power, cost to the And that at focused service beats provide it have we when means and our that opportunities. to on we is

Michael Rose

it -- self normal Okay. you a about in things year of to that headwinds maybe And but organic care, early it's as health opportunity. abating know maybe next do year, terms imposed relates it's growth, third-party, just are some that. of I have loan follow-up just one talked talked like of the you I but for know more about and you

a What GDP to other is year reasons. that of in of recent kind Line up down percentage mean for, once mentioned, of pick could I think begin the correlation Historically, here get a years Synovus? broken through is you kind you utilization, obvious for I things. some been few and think, growth above points these election normal as kind it's of

just year, But next not Synovus, does mean think couple next maybe we for about the for but of that kind of what as years.

Kevin Blair

past, So What Michael, on give would range, in be given an economy. growth someone to absolute said the your you by to underlying we've the said it. hard point, the based what it's

we've XXX of show in underlying share fact on to the basis points competition. share that market above fair just that And XXX provide So our growth. growth to the to we excess want taking that's always something said predicated plus we're from

around things growth, X% normal to loan be X% somewhere growth normal that to expect lot your And situation. those so and specialty are continuing new would errors for we've to last to of to noted largely it reasons point, a GDP been to areas, that turn as going quiver return several finance and you utilization to relates production of doing and at headwinds the line talked the a X% I of abating, And new over the the towards under to if that's and to earlier, you add we kind and businesses, to were teams. X% are a years one new about it's new our

We're expanding, adding talent We're our to high-growth bank earlier, said of starting expand markets. community as in I again. some our we're

for like outpace reasons, we with the feel that the of those still all growth So exceeding GDP. market we can loan underlying of

Operator

comes question next of D.A. Gary Our Tenner from Davidson.

Gary Tenner

appreciate core about on side, I follow-up Jamie, X/X book in the TD months. had maturing of I commentary X the a next deposit the the

and deposits of customer of As pretty slug kind able that you'll down posted short them and of the again, about to at your be you to to is think be strategy back rates next able and that year recent second, expectation quarter again? reprice least keep third come behavior,

Andrew Gregory

clients the ensuring what right But possible, our case spreads truly That's for. and forward about at as quickly looking reprices base for the Yes. as our will we but shorter our and look between longer-term curve are focus TDs expectation. think term. continually now, that is that, And solves also as book

because count They on they some their be want go of multiple deposits to stability to into they and flat want that on. rates able months

do. we're months. X balanced leaning to we we now, so right And have be But in what into that

Gary Tenner

I office that. fact any product And geography, But a question just background on NPLs appreciate in terms excluding loan just color? quick the that. type, down, been for office the of I kind some appreciate relationship. Okay. color then of would have there that the

Robert Derrick

different suburban in Yes, is not. to credit, X different sure, not but get the it's on X X is the too southeast cities, specific X offices,

do So the again, that's working that those look loan, take about plans dollar if to frankly, point, out you And of quite amounts, NPL the your outline overall. resolution with reduction kind of office you I at but think loans. equal separate

if have is if the look specifically one in than way you so of is that rate the our very really nonaccrual this portfolio, less much don't office ratio nonaccrual. you XX%. Obviously, out, But at criticized back you

on continue is that to a going some to resolution. So on in We office. you're good got realize to office there over through one-offs we've but book, this the have time, stability we think one plan I actually think work

Operator

from comes next of Our KBW. question Mealor Catherine

Catherine Mealor

way a to think little follow margin into wanted dig and book. just I up we And we the just fixed any And start amount to yield is impacting fixed loan quantify first rate in repricing XXXX? the bit. that's with of rate about on that the Can margins. may there see

Andrew Gregory

our When we the of used our look of impact the outlook but say rate points, changed when outside basis as has Currently, to at as XXXX, XXXX, repricing XX not that repricing rate we fact fixed far materially points about in was XXXX. it for number that impact to be before securities XX of is margin due would and the basis repositioning. the fixed same expectation

that accelerated year. except really said the we fact consistent So this for we've earlier with repositioned that what before, the process that's with securities

Christopher Marinac

today? book fixed have current just Okay. as Great. that where where the rate rate do -- And is a follow-up, portfolio you then

Andrew Gregory

The a I fixed rate there that are book to. would couple -- point well, different components of we do --

So I I if would impact, fixed you're it what break would working how down. the rate repricing -- here's on

XX% a origination than below rate little about rates. XX% is fixed about on assets. current It's assets. less commercial Our X% rates books of loan Those the book are

what So book, consider below were originated. market of due you X% when XX% they rates I have would today's the to

the portfolio, XX% book assets. And about that of the that's On X%. yield around on is mortgage

below X% or say the portfolio. that's rates could mortgage so you on so And market residential

Christopher Marinac

Okay.

the the kind Okay. little you quarter? you seen the good last bit a of that slide portfolio. that on then of we really cut had cadence loan Can variable as what what some rate broke your XX And Great. yields loan piece, of components in kind your deck and fourth of talk rate just down point variable repricing, the so means go the far with quickly how maybe a you've maybe that's into about basis for a

Andrew Gregory

a starts mean I high loan rate of hedges. the back Yes. the and floating step XX% are level, the beta, Yes, with out that when it absolutely. then from back loans you you

low And XXs beta -- cycle. easing assume it cleanly. you this And through pretty so that's on flow will pretty loans, should through

kind the in asset beta, sheet. balance securities add total portfolio, the asset mid-XXs of get you For when you on low to of beta to the

the through side the of what sheet. asset at you'll And high cycle easing a the on balance so see that's level,

components you the When as look loans, you would their individual of at rate with progressing floating expect contractual they're resets.

So we loans $XX of month X are SOFR. that about have billion

than X-year that We billion a less billion are have treasury $X are the resets. $X that little

the really only are unique sheet. we the those structures on Now balance have

X-year floating Those loans are treasury that reset monthly. rate

months bit those from year And ever been little so go margin one of started a ago. to pressure we've few since down seeing a

And already been there here. go it on so in will where and depending that's from treasuries continue X-year

point just received when And will portfolio, moves. have the $X I overnight And overnight then the Fed we we have reiterate all actually that hedges SOFR. those the those SOFR loans that $X.X and billion loans, billion, of hedge prime pay will reset are fixed around on

those well. so Fed moves as actually And reset when the

around a our the cycle. through floating lot how reset that's of will as we exposure rate So go detail

Operator

comes from of Gunther question next Stephens. Our Russell

Russell Elliott Gunther

You guys the just myself tackled will remove my question. I from to remaining Apologies try queue.

Kevin Blair

day. Thank you, great Russell. Have a

Operator

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

Kevin Blair

Alex. you, Thank

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

out commitment banking Our a landscape. financial crowded dedication, Synovus and direct making are stand in your results reflection our of this and successes

members our Hurricanes traveling special thanks by affected went to to above and team A team keeping impacted prayers. are our our Milton and We to the necessary and and beyond members areas thoughts corporate Helene who services supplies. provide in generators

lives. Your difference a you. significant in people's Thank efforts made

in receive XXXX and In Datos our we Insights Award its Banker Synovus the innovation recognition Cash Accelerate continue reputation, won top on American named our national Management banks in Payments and to for we corporate client Pay XX third from service. payment #X quarter, and Impact for the culture, outstanding suite.

our proud team across of to of businesses. competitive our create incredibly accolades, ability our I'm these advantage highlight all which and a to continue

and achieve and our quarter will higher even Looking growth XXXX, the ahead continued of enable levels execution into also sustainable profitability. to of next I'm confident that us plan our

our investors, Our has for in results conferences in resilience future team's efforts progress success. passion interest. The commitments forward your our confidence of To you to support continued made We look even seeing and upcoming you and me and and meetings more consistently and thank many ahead. along better financial with driven an overall we've this gives our profile. risk collective quarter

that Thank you earnings Alex, call. quarter all. concludes now, XXXX And our third

Operator

for all today. you Thank joining

now disconnect may your You lines.

Synovus Financial (SNV) 17 Oct 242024 Q3 Earnings call transcript