When it came time for entertaining questions from the audience at Wednesday’s Synovus annual meeting, Julie Werner looked around and, seeing no one else moving, stepped to the microphone.
The Warner Robins, Ga., resident, a shareholder since the late 1990s and also a customer of the bank, asked Synovus Chairman and Chief Executive Officer Kessel Stelling a pointed question: Does the bank plan to dilute the value of investors’ shares with another stock sale at some point to repay TARP money?
Stelling responded with the gist of earlier comments, saying Synovus is working with regulators and studying what other banks have done to pay back funds received under the Troubled Asset Relief Program. The Columbus-based bank owes $968 million.
“The answer is we are well capitalized today. But we just don’t know what will be the regulatory requirement at that time,” said Stelling, who has said TARP repayment must come after the financial institution becomes profitable again.
The brief exchange between CEO and shareholder came a day after the Southeast regional bank reported a first-quarter loss of $93.7 million, a dire figure for sure, but much lower than the $180 million loss posted in the previous quarter.
Before less than a packed house at the RiverCenter for the Performing Arts, Stelling laid out the difficult year 2010 had been and what potentially lies ahead.
“It has been described as a tough, if not the toughest, year in our company’s history,” he said during the event that was webcast on the company’s website. “We’re not proud of the financial results. But I do think that we have laid a foundation for the future that gives me great hope and optimism, and I hope it does you as well.”
That newly laid foundation comes following two restructurings since 2008, the latest of which is now wrapping up with 39 branch closures and 850 job cuts companywide. That will bring the firm’s headcount down from a peak of 7,385 in late 2007 — just as the Great Recession was beginning — to 5,275 at some point within the next month.
“We have many team members here today who were either impacted by that, former team members, friends of former team members, or people who are still worried about their future with Synovus,” said the CEO, remarking he took no pleasure in the downsizing, but calling it a “necessary and painful step” to make the company stronger.
Synovus, which dates to the late 1880s and is the parent firm of Columbus Bank and Trust Co., has been working feverishly to purge itself of toxic residential real-estate and commercial loans made during the U.S. housing bubble that eventually popped in 2007.
That’s one of the reasons Werner has become a more vocal shareholder, making her public appearance Wednesday.
“We went through very tough times, and I guess my biggest frustration was that it appeared that Synovus — and a lot of other banks — got sucked into the bubble times when they were making loans that they probably shouldn’t have made because everybody else was doing that,” said Werner, who sits on the board of directors of the National Association of Investors Corp., an investor education group.
Stelling has consistently said that he expects the banking firm to report a quarterly profit before this year is over. He reaffirmed that projection in a brief interview following the annual meeting.
Werner apparently has faith in Stelling, who took the day-to-day reins of the bank last year after CEO Richard Anthony became ill, but retained the chairman’s role.
“He’s had to make some decisions in the company that were not easy to make,” she said of the company and it’s stock. “I’ve watched it go up and down, and I’ve been very critical of some of the decisions made in the past, yet stuck in there and unloaded shares when I thought the stock price was a little high. But I have added some since Mr. Stelling came on board, based on some of his decisions.”