Synovus effort to cut $30 million in expenses under way

The budget ax is falling again at Synovus Financial Corp., the Columbus-based bank that has weathered two major restructurings since 2008 and downsized its five-state workforce by nearly 33 percent.

“As part of our fourth quarter earnings announcement, we stated that we have identified new expense savings initiatives of approximately $30 million, with the implementation of these initiatives beginning late 2012 and continuing throughout 2013,” Synovus said Tuesday evening in a statement issued through spokesman Greg Hudgison.

Synovus, the parent company of Columbus Bank and Trust, the city’s largest financial institution, would not break down what those savings entail, although past efforts have led to job cuts and branch closures.

Georgia Department of Labor communications director Sam Hall said Wednesday his office and the Columbus Career Center have not received any notices or fielded any queries from Synovus or CB&T or their employees.

Since peaking at 7,385 employees in 2007, just before the Great Recession, the bank has slashed its workforce to 4,963. That number, reported in the January earnings report, is a cut of 32.7 percent.

The job cutting is apparently continuing, with a worker, who wished not to be identified, saying layoff notices had been given Tuesday to at least 20 people on one floor alone at the bank’s downtown offices.

“I did hear that it was companywide,” said the worker, who acknowledged Synovus is offering to let those displaced apply for other job openings within the bank, which has divisions in Georgia, Alabama, Florida, South Carolina and Tennessee. “I don’t know if we’ll all be able to find jobs in finance or not.”

Synovus launched its first restructuring and downsizing in 2008 under then Chairman and Chief Executive Officer Richard Anthony. Called “Project Optimus, there were 650 jobs eliminated in that round, about 230 in Columbus, with annual cost savings of about $50 million.

A series of cuts — some through attrition — have occurred since then, with the company slicing 300 positions in 2010, followed by 850 in 2011 under Kessel Stelling, who replaced Anthony as the bank’s top executive. The company signaled in 2011 that it needed an additional savings of $100 million per year.

It was in 2011 that the company also began shuttering branch offices that it considered underperforming, with more than three dozen of its 320-plus branches closed that year. Two of those were in Columbus and another in Phenix City.

The downsizing hasn’t been cheap, with the company reporting restructuring charges — or costs — of more than $60 million since 2008. There were roughly $22 million in the first major round in 2008 and 2009, and more than $30 million in 2011.

The company’s efforts, aimed at cutting expenses and generating new revenue, came amid the dire U.S. economic slump that included housing market meltdown and a national banking crisis. Loan losses, including those made by Synovus to Georgia coastal resort operator, Sea Island Co., soared and led to a string of negative quarterly earnings for the firm.

Working those toxic loans off its books, Synovus has managed to post six straight quarterly profits, all while under the supervision of federal and state banking regulators.

Its next goal is to repay the $968 million it borrowed through the federal Troubled Asset Relief Program (TARP), which Stelling has said could come before the end of this year.

Thus the current push to shore up the bank’s financial position by $30 million heading into this critical period in its recovery. In its last financial report, the company reported just under $95 million in salaries and personnel expense in the fourth quarter of 2012. That’s nearly 2 percent higher than the $93.1 million in the same quarter of 2011.

“We have made substantial progress in aligning our operating costs with the current size of our organization,” Stelling said in the report issued in January. “We remain keenly focused on improving efficiency while we also strategically invest in talent and infrastructure that drive growth and improve our customers’ experience.”

Still, Chris Marinac, managing principal and director of research of Atlanta-based FIG Partners, believes more expense cutting is required at Synovus for an investor base that is “very impatient” to see the bank attain “sufficient profitability.”

“The company has done a nice job at reducing expenses, but I think there may be more progress there,” he said via email. “I think the company could reduce its size further as a means of freeing up capital and perhaps driving a higher return on assets and tangible common equity, which would make investors happier than they are today.”

FIG Partners currently rates Synovus stock shares “market perform,” with a 52-week price target of $2.90. Shares closed at $2.52 apiece Wednesday in trading on the New York Stock Exchange.

Fitch Ratings, meanwhile, recently upgraded the company’s outlook from “negative” to “positive” because of its improving credit position and persistence in writing off problematic loans.