Wrapping up a quarter in which Synovus Financial Corp. will likely post its 11th straight three-month loss, the company’s president and CEO says a turnaround, not a takeover, is foremost on his mind.
“You always, as management and as a board, know you have a fiduciary responsibility to do what’s best for your shareholders. A lot of them are here in Columbus,” Kessel Stelling said in an interview Thursday. “And the way we believe we can best do that is to focus on the earnings side of things. And if we do all of those things, then the rumors and the speculation will die down. If we get too distracted by that, then we’ll just lose our primary focus.”
The speculation of which the chief executive officer speaks includes a possible merger or acquisition by any number of financial institutions. Canadian bank Toronto Dominion, which uses the brand TD Bank, is one of the names that keeps popping up, as does Winston-Salem, N.C.-based BB&T Corp.
Stelling said the company has publicly stated it expects to record a profitable quarter before this year ends, but he refused to comment on any notion of a buyout.
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“I try to meet it head-on,” the CEO said. “But I can tell you, when I’m talking to our teams in the field, we’re not talking about takeover and merger. We’re talking about driving this company back to profitability with just a relentless focus. Sometimes people call it an obsession.
“It is, because that is what will allow us to get through this cycle, so that we can do even more for our team members and do more for our communities and the nonprofits that make up our communities.”
Columbus-based Synovus has been battling through financial despair for nearly three years. Loans that went bad in the residential development market heading into the Great Recession was its primary problem, putting the bank on its heels.
Since 2008, the company has cut expenses and payroll in two separate downsizings, lopping 2,000 jobs from its payroll and leaving it with just under 6,000 workers companywide, about 1,400 of those in Columbus.
Mark Vitner, an economist with San Francisco-based Wells Fargo, can relate to what the Columbus firm is going through. He was with Charlotte, N.C.-based Wachovia when that beleaguered bank was forced by federal regulators into a sale, which was completed at the end of 2008.
“In Charlotte, I think the demise of Wachovia had a greater negative impact than the acquisition by Wells Fargo, because a lot of the job losses and a lot of the cutbacks in (charitable) giving actually occurred when the company was in trouble,” Vitner said of the impact on the community and employees there.
Wells Fargo had weathered the U.S. financial crisis, housing meltdown and Great Recession better than most. And after its buyout of Wachovia, there weren’t that many layoffs, Vitner said. The acquirer also kept its headquarters for the eastern U.S. there, along with a dozen other operations.
It was the nerve-wracking period before the takeover that was the hardest thing to endure for the Wachovia staffers and the residents of Charlotte who relied on its steady payroll, Vitner said. And he expects that’s the case for those at Synovus.
Said the economist: “How many layoffs have they had? And how many people that are working there are nervous and not buying homes, not buying cars, not going on vacations, have pulled their kids out of private school or are not sending them to the camp, and not giving to the arts. Just clearing up all that uncertainty would be a huge relief.”
That’s provided the acquiring company is a strong one, Vitner said. And each situation is different. When the Wells Fargo/Wachovia deal was announced, most employees cheered because it meant the worst was likely over, he said.
If Synovus were to be gobbled up, but there are no overlapping operations, then there may not be a lot of job cuts, Vitner said, because it doesn’t make sense to build infrastructure elsewhere if it’s already in place.
“And Columbus is a relatively inexpensive place to operate in, and you’ve got a lot of expertise,” he said. “So it’s hard to say. Until it happens, until you see what kind of deal transpires, it’s hard to say what it’s going to mean. But it does not necessarily have to be this horrible thing. The horrible thing’s already happened. It was a financial crisis which severely weakened Synovus.”
Stelling, in Thursday’s interview, said he does think the Columbus community appreciates his bank and its historic lineage, dating to the late 1800s.
He also said he is “inspired” by the employees remaining with the banking firm and the “spirit” they have shown through some very tough times. The CEO mentioned as well that there will be more excitement surrounding the company and its workforce “once we get back to profitability and when people quit doubting our resolve.”
He chuckled when someone joked about a TD Bank logo replacing that of CB&T locally.
“I don’t either,” said Stelling, pointing out he doesn’t take his firm’s banking dominance in Columbus lightly.
“I think this community has been so supportive of our company and we’ve got large market share here,” he said. “We want to earn even more of that marketshare. It’s a great partnership between this company and the Columbus community. We want to make it even stronger.”