When Kessel Stelling joined the Synovus corporate headquarters as president and chief operating officer nearly four years ago, the bank was under a full-fledged financial siege.
The Columbus-based bank, with branches scattered across five Southeastern states, had already written off more than $2 billion in bad real-estate loans. The profuse bleeding would continue, leading to three long years of glaringly negative earnings and a tumbling stock price.
In the fall of 2010, Stelling would replace an ailing Richard Anthony as chief executive officer, eventually adding chairman of the board to his responsibilities. More loan losses, restructuring and cost cuts eliminating about 2,500 individuals from the Synovus workforce would follow.
Finally, in the third quarter of last year, a penny-per-share profit broke the string of losses. The parent company of Columbus Bank and Trust also used an $800 million deferred tax asset -- offsetting its income tax bite -- to propel it forward.
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Then, in July, the final gargantuan hurdle of TARP was overcome. Synovus repaid the nearly $1 billion it had owed the Troubled Asset Relief Program, a federal bank bailout program it had used since December 2008 to shore up its finances.
Stelling at the time conceded that much more work remains before the regional bank is truly positioned for a forever-changed financial industry that faces rigorous regulation and a sphere of technology innovation in the form of mobile and Internet banking.
But the chairman and CEO of the bank that oversees roughly $27 billion in assets also knows you celebrate victories when you can.
Last Tuesday, Synovus posted its fifth-straight quarterly profit, earning $37.2 million, a number that most Wall Street analysts who follow the bank expect will grow in coming quarters, although not spectacularly.
The company also will pause this week to celebrate its 125th anniversary, recalling its birth inside a local textile mill company safe and the creation of the Synovus name in 1989 by then-Chairman and CEO Jim Blanchard.
Stelling, still meeting with board members and analysts last week, took time out to discuss the company's progress and its pursuit of even more stable financial footing. Sitting in his Synovus Centre office overlooking the Chattahoochee River, he said the bank is much more than a survivor for the Great Recession. It's poised to "win" business again.
Here are his thoughts on several topics and developments surrounding his company and the banking industry as a whole:
Turning the corner
"The day we turned profitable, there was no looking back. So, yeah, we've turned the corner. But it's a tough industry, and I think our team understands that the industry has changed, the economy is still somewhat fragile. Although there's growth, it's not robust growth.
"So everyday we have to focus on taking care of customers and making sure that we hold on to our market share and grow market share in those communities where we have the opportunity to do that."
Uncertainty and momentum
"From the economy standpoint, there's just still way too much uncertainty with our government, and I won't make a political statement. I think it can be attributed to both sides. There's uncertainty and when people are uncertain, whether it's about tax policy, about health care, about any kind of regulatory reform, they're hesitant to open up their wallets and their pocketbooks to invest.
"So the growth has just not been at the level that I think anybody would like to see. It means we have to be sharper. We have to be very nimble. We have to make sure that when there is the opportunity for new business, we seize it."
"The regulatory environment is still very tough, and that's not blaming regulators. They just enforce the laws that are passed by Congress. But the regulatory burden on the industry now is as great as it has ever been. And there's more to come with qualified mortgages, again designed to benefit the consumer. I think at the end of the day, those regulations will not benefit the consumer. It will make it actually tougher to get a home mortgage.
"So it's just the amount of regulation. But we can sit here and complain about it or we can just deal with it and move on. And we've got to deal with it and move on."
Bad reputation for bankers
"It's a sign of the times. I speak to it often. Historically, bankers were the good guys in the community. This crisis, I think, caused a change in perception of the industry ... in some cases unfairly so, in some cases it was deserved. But at the end of the day we can't feel sorry for ourselves.
"If you think back, historically banking is much more than about capital and loans and earnings growth. It's about human beings that make differences in communities -- in civic, political, social, business, organizations. It's about companies that help people send kids to college, buy a home, start a business, save for retirement.
"I talk to bankers. I talk about how we need to move back into that realm and make sure people see us that way. The excesses that you hear about on Wall Street didn't happen in Columbus, Phenix City and Montgomery and Atlanta and LaGrange.
"But, again, we can't feel sorry for ourselves. We've just got to take pride in what we've done historically and make sure that we, in some cases, regain the trust of our customers."
Loyalty and market share
"I think one of the really true successes of this cycle for this company was the loyalty of our customer base. We just had FDIC data released a month or so ago that show that we still maintain top five market share in markets that represent about 80 percent of our core deposit franchise.
"That means customers through the cycle, when they read bad things about us, heard bad things, heard rumors, at the end of the day they stayed with us. The relationships that we maintained were really gratifying to me and we want to make sure that we build on that trust and use that trust to continue to grow the company."
Cringing from government shutdown
"We want a permanent solution. I've shared that with political friends of mine on both sides of the aisle. I've said that very directly to some. People wonder, well, how does it affect the bank? In a day or two does it affect the bank? No.
"But we've got customers who were missing paychecks. Everybody says, well, they got paid. That sounds great. But for a week or two or three they didn't get paid and people, when they don't have that paycheck, they've still got obligations.
"We told our bankers there's no way to do a blanket policy to cover that. What we said is, 'Every customer is unique and sit down with that customer to see what we can do to help them through that crisis.'
"So, yeah, it's bad on our local level. It's bad for our country to have that kind of uncertainty and political infighting."
Psychological wear and tear
"I was asked by a senior politician -- I won't name him -- how I manage the company given that uncertainty. I said, you know what, I've just come to accept the uncertainty, and I don't run the company based on what you guys and ladies might do. I can't make decisions based on that. I've got to do it based on what we think works for our company."
Concerns down the road?
"... The costs that this industry bears now, regulatory reform from laws that got passed. I talked to a Treasury official a year or two ago and he said to me that the Durbin Amendment was probably the only 60-day window in the history of Congress that something like that could have passed. But it was just so easy to beat up on the banks that a law gets passed that has taken $20 million, $30 million, $40 million of revenue just out of this company.
"I still remember like it was yesterday when we announced a $100 million cut in expenses and over 1,000 jobs. When you take $30 million of revenue out of one industry and put it in another, which is what the Durbin Amendment did, we have to adjust for it.
"So I worry about the external (things). But when I see our team and I see the way they stuck together, and I see the way they never quit and never gave up, I'm really optimistic about what we can do on a go-forward basis."
Expenses will always be scrutinized
"I don't know that you ever get at an optimal level. The industry's changing ... Customers don't go to branches like they used to. It's not a Synovus trend, it's an industry trend. We have less traffic in branches, so you need fewer of them. And you need smaller branches and not big buildings because people don't go to the bank for everyday banking.
"So we will always evaluate branches for optimization. In some cases we may decide to close two and build one because maybe there's one location that would serve our market better."
Cutting and investing
"Expense management is a way of life around here. We have to continue to look for ways to get expense out of those non-customer facing areas to allow us to reinvest in those areas that do affect the customer.
"I remind people that we have invested, even while we have cut expense -- $90 million in 2011 and another $25 million or $30 million in 2012. Even while we cut, we've invested heavily in new talent. We're hiring people everyday. It's just hiring people that can help us grow our customer base."
Who's being hired
"We're always looking for people in our technology group. We've hired people in our specialty lending areas. We just announced an equipment finance group that was all new hires. We've added to wealth teams in Tampa and Naples, Fort Meyers, Charleston. We added large corporate banking talent in Nashville and, really, around our system.
"So we're always looking to add. But we've got to be very smart about where we spend and making sure that we control the spending so that we have money to reinvest.
"We're (also) always looking for good bankers that like to serve communities. So if there are any bankers that read or hear this conversation, if they've got a lot of confidence in what they do, and they're with a competitor, I wish they would call us and let us talk to them about an opportunity here."
Selling Trust One Bank branches in Memphis
"Memphis was a geographic outlier for us, if you just look at a map. We had low market share there. And any transaction like that takes a willing buyer and seller.
"We just felt like that was a good time to do a transaction that would allow us to take that capital and invest and reinvest in areas where we had the ability to move the needle and affect our results a lot more quickly than we could in Memphis.
"Memphis is a great city. We have some great board members and team members there. But at the end of the day we felt like we could better deploy the resources that we were devoting to Memphis in markets where we had greater market share and greater opportunity to grow."
Exiting any other markets?
"No. We want to grow markets. We are in some great markets in the Southeast. I get asked about Tennessee often. Nashville's a great market, a great town. We've got a good bank there. We're very small in Chattanooga. We think those are opportunities.
"Alabama is such a core part of our franchise. South Carolina is not only core, but has great growth opportunities. And Georgia has long been the biggest part of our footprint.
"In Florida, our Tampa market is doing well. We've just announced the expansion into Orlando with some seasoned banking veterans. Our panhandle affiliates have recovered and are doing well. And over in Jacksonville, the same thing. We've got a great team on the ground there and we think we can grow there."
No more problems in Florida?
"I'll never say never. Certainly the dramatic pain and suffering there is behind us. The markets have stabilized and are moving in the other direction. Our bankers are energized. That part of the footprint -- not just for Synovus, but for all banks -- was a really hard-hit area.
"We're managing the problems in large part through centralized groups now. The bankers that are on the ground in Florida are trying to serve their customers and grow that customer base."
Thoughts on the Atlanta market
"Atlanta's doing well. The cranes there are moving again. I was in Atlanta last Friday with (corporate attorney) Sam Hatcher and he made a comment that they've got cranes moving.
"I joked a couple of years ago -- it probably wasn't a good joke -- that when I was in Nashville their skyline reminded me of Atlanta. The only difference was the cranes in Nashville were moving and the ones in Atlanta were rusting.
"Atlanta's doing well (now). I stay somewhat plugged in there. I'm involved with the metro chamber of commerce, with the health care system in Atlanta, the university system in Atlanta, the overall inflow of population and jobs. I think Atlanta will always be a big part of our franchise. It's our largest bank division, and we feel good there."
Attractive acquisition attributes
"I think it's what makes Synovus an attractive investment. I think it's what makes Synovus a great place to work. We're in great markets in the Southeast. We have a history, as you know -- 125 years we'll celebrate later this month.
"We have a history of treating customers the right way. We have a history of treating our team members the right way, even when we have to cut back. We want to make sure that's done with fairness, with transparency, with dignity.
"We have a very loyal customer base. We just have a very vibrant company.
"I'm flattered when people say we're an attractive takeover candidate. I had much rather people say that than 'who would want to be associated with Synovus?'
"I think the legacy that was created long before I got here was one of a company that takes a lot of pride in what they do and they do it well, which again makes people want to talk about us."
Navigating the rumor mill
"We had 7,400 employees at our peak, if you take TSYS out, and now we have 4,900. A lot of people talk about the 2,500 jobs that got cut, and I like to think about it as maybe the 5,000 that got saved.
"We need to focus on this company and not worry too much about what others say about us. If I, and our entire executive team, had responded to every rumor, to every analyst comment during the cycle about who we were talking to -- I was in Canada, I was in wherever -- we wouldn't have recovered. We would have not executed our plan. We would not have recovered the (deferred tax asset). We wouldn't have become profitable. We wouldn't have paid back TARP ahead of a lot of expectations.
"I read that stuff. Yesterday, I read all of the analyst reports ... Some of them I thought were on target, some of them were off. But I don't respond to them."
"We met here for 2½ hours yesterday after the earnings call. We didn't leave the room until we were talking about the go-forward strategy, the focus, how we had to make sure the team was totally energized and focused about growing this company, controlling expenses, and delivering results that make people want to remain an investor in our company."
A wave of bank consolidation?
"Maybe. The industry's stronger, and I think that's a good thing for everybody -- the industry, the state of Georgia, the Southeast and the country. The industry is stronger, capital levels are higher. So, yeah, there's probably some consolidation due. Every banker, including me, says it just ought to be somebody else.
"There might need to be some over time. But I can just speak for Synovus. I think we're a great size. We've got the capital. We've got the technology. We've got the capital markets, the specialty products that all big banks have. But at the local level, we can deliver it like the community bank. I think it creates a niche for Synovus that's hard for others to occupy. I've got some great friends in the community banking world. They're limited by capital, by loan size, by resources that quite frankly we have here."
Mobile and Internet banking
"We're upgrading our ATM fleet -- 200 new ATMs to make those ATMs a virtual branch bank -- where you can cram cash and checks into that slot and it will read it for you, it will add it for you, it will credit your account just like if you took all of that stuff to the teller line.
"The same thing with mobile banking -- those apps, the online banking products, the bill pay. That's the future.
People said 30 years ago there wouldn't be checks in five or 10 years, and they were wrong. So I think there will be checks ... People my age still enjoy going into a branch and seeing your deposit credited. But we've got to serve both. We have customers that want that personal touch, and we have customers like my son who want to know when our newest mobile banking app is going to be out."
Fewer and smaller bank branches
"You need to have smarter, more efficient branches, whether that's fewer or just a different model. You don't need 10,000-, you don't need 5,000-, you don't need 3,000-square-foot branches in a lot of places. You need smaller, more efficient ones.
"You (also) need to make sure employees in those branches are totally cross-trained so that whoever walks in, anybody that's in there can serve those customers, whether it's opening an account, check cashing or opening a brokerage account."
A bittersweet 125th anniversary?
"At the Jim Blanchard Forum here a couple of months ago, one of the speakers the first morning spoke about celebrating victories, and not always wanting to talk about the bad things.
"I think that day (Oct. 31), we need to celebrate 125 years and think about all of the employees, board members, customers and investors that helped us through that 125 years.
"When I ring the (New York Stock Exchange closing) bell (Nov. 13), I'm going to be ringing it for every chairman before me. I've had the pleasure of serving with Jim Blanchard, Jimmy Yancey, Richard Anthony and Mr. Bill Turner. I wasn't here for 125 years, but I feel very connected to the great work of those men and women that came before me. So we'll celebrate that day.
"But, yeah, I think a lot about the people that aren't here with us anymore. The night of our board dinner after we paid off TARP, I proposed a toast, and not just to our employees that were here, but to the employees that weren't anymore, but who shared in the sacrifice to help us get where we are. I'll never forget about the pain and the suffering that people went through.
"But that day we're going to celebrate 125 years and -- as we say on billboards around town -- 125 years of service to our communities. That's exciting to us."
Ringing the stock exchange bell
"I agreed to do it because of what I think it symbolized for our company and our employees here. I think a lot of others are more excited about it than I am.
"But if it helps rally the team and helps people maybe bring closure to what we've been through, and celebrate 125 years ... three years ago people didn't think we would be here, and now we're ringing the bell on the New York Stock Exchange.
"I think what that symbolizes for our company is very important."
125 years from now
"I told our team yesterday that I'm not planning to be here for another 125 years. But the decisions that we make today will affect those that are here 125 years from now. I want people to think about Synovus as a company that not just survived, but a company that can and will win long term. That's where our efforts are."
Life of an optimistic CEO
"There were some times during this crisis when I was in the office by myself late at night thinking: Where do we go from here? The path wasn't as clear. You had to stay optimistic.
"I shared a quote that I got from an investment banker friend recently, and he picked it up from somebody else. But it was a comment that said: 'Doubt kills a lot more dreams than failure ever will. I want to hang around people with hope.'
"When you're losing hundreds of millions of dollars and talking about a long time from now I'll be able to get profitable and I'll get this $800 million DTA back, and I'll repay TARP, internally there were times I might have doubted myself. But you had to be optimistic. You had to believe in it. You had to make sure your team believed in it."
A glass half full
"It was the resilience of the team and the board and the customers that kept this company strong and allowed us to come through. I'm a glass half-full kind of guy. I think you had to be through this crisis. If employees had seen me get my head down during the crisis, I think that would have been pretty tough.
"So I was upbeat and still am, and just excited about the days and years ahead."