Sunday Interview with Kessel Stelling: 'The story is how our customers hung in there with us'

The storm has long passed for Columbus-based regional banking company Synovus.

Recently, Chairman and Chief Executive Officer Kessel Stelling sat down with Ledger-Enquirer reporter Chuck Williams to talk about the company -- past and present.

He was relaxed and open about topics ranging from how Synovus survived the Great Recession, to what the company looks like today, to an erroneous report that the corporate headquarters was moving from Columbus.

Here are excerpts of the interview, with some of the questions edited for length and the order of some of the questions rearranged for clarity.

How are things going at Synovus?

They are going great. The industry has changed, certainly, and so it's different than it used to be. But relative to the five years I've been here -- and I have been here five years in February -- the company has come a long way, the team has come a long way, and things are going well.

You said the industry has changed. The world has changed tremendously in those five years, right?

The world has changed, but you know the industry has changed too, and I speak on this topic often and I talk to my peers about this. In pre-crisis, bankers in general were known as good guys and we've always done good things for the community, whether it's political, civic, social. During the crisis, our image took a hit and some of it was deserved, and I think some of it was not.

We have got to rehab that image because I think if you look across certainly our footprint -- the five-state footprint -- strong banks make strong communities. And you look at the impact banks can make in communities throughout the state, throughout this region -- it's huge. So we've got to get beyond the "who shot John," the crisis, and move on to historically what banks have done in communities.

You are a career banker. Do you remember the moment it hit you that this wasn't a normal crisis, that this was beyond anything you had seen in your career?

You know, I don't know, Chuck, because I was in Atlanta. And I do say this to those who are critical that we didn't see it coming: Early on in the crisis in Atlanta, we were asked to merge in several of Synovus' affiliates in the outlying area. I was in Alpharetta at the Bank of North Georgia, and we merged in banks on the east side of Atlanta and on the west side of Atlanta and on the south side of Atlanta.

And as we did and I saw these problems, I thought, "Wow, this is a suburban problem. I'm just glad it's not here." And then it hit like a tidal wave. What day, what year -- no. But when it hit we referred to it as tsunami. It was overwhelming and people and companies you thought were just bulletproof or invincible struggled and went under.

Some of them went under so quickly. An example was one of this bank's big customers, Bill Heard Chevrolet. Just that quickly, it was gone, right?

Yeah, and you know, I'm an old school banker, ... I was trained if they couldn't pay their debts they were just bad people so write them off. And this crisis really changed my whole view of the banking world because a lot of bad things happened to a lot of really good people.

If you look, two of the stronger regional banking companies in this part of the country were Synovus and Colonial. Why is Synovus still here and Colonial isn't?

I can't speak to Colonial. I can speak to Synovus. I was right in the middle of it, as were a lot of people up here, and there was a determination. No. 1, there was a united board that was absolutely committed to doing the right thing to make sure that our company survived. It was inspirational to me to see the way the team stuck together. As you know, every bad thing that could be written about a company got written about us.

Every rumor that could be circulated about a company got circulated about us. And my charge to the team here was "You know what? Let's just focus on what we can control. If we spend our lives defending all the rumors, we'll really lose sight of what's important." So, we executed some very successful capital raises, the team stuck together, and at the end of the day -- again, I can't speak to Colonial -- I think the story is how our customers hung in there with us because it was easy back in 2010-2011 to seek higher ground if you were a customer.

Or to seek a bank that had better ATMs.

Better ATMs, better reputation, no regulatory issues, nobody was whispering are they going to be here tomorrow. And yet, our team and our customers hung in there with us. We lost some, but for the most part -- and we saw it again this past year when FDIC deposits shared data showed that we retained top-five market share in markets that represent about 80 percent of our core franchise. ...

There were so many times I wanted to set the record straight, but instead it was "we've got to execute, we've got to plan to get back to profitability, we've got to plan to recapture our DTA (Deferred Tax Asset), we've got to plan to repay TARP." We can chase down the rumors or we can just execute and that's what the team did.

Leading that execution and leading Synovus out of this, did it help that you were at the core a community banker?

Yeah, I think so. Banking is really not a complicated business unless you make it that way. Now, with the new laws and regs it gets complicated. There are days I even can't figure out how you make a mortgage loan without violating some law.

But I think so, because it's a people business and so, at our core, it was keeping the trust with our team and with our customers. And those were the two constituencies. Now, did we have to build that with regulators? Yes, but at our core, we were and we really are a community bank.

When it became obvious that you were going to end up in the CEO's chair, was there any apprehension?

There was a lot of apprehension. I had never served in a leadership role for a public company, so that part of it was going to be brand new.

What's the most number of employees you've ever managed?

It would have been several hundred.

So, 10 times, right?

Yeah. The bank in North Georgia probably had 500-600, so yeah, 10 times. When I came here it was 7,500, so at least 10 times. That part, by the way, wasn't the concern. It was the public market's piece. It was the depth of the crisis and the need to raise capital. It was really the worry that there are a lot of things I can't control.

Whereas in my former career, I was used to pushing a button and the next day I could see results, or at least the next week I could see results. This was different, both from the size of the organization and from the complexity from the overall crisis.

As you worked through it and paid off TARP, obviously that was the signal that you had turned the battleship around in the Chattahoochee. But the end result of that was this was a very different company coming out than it was going in. Is this still a Columbus company?

It is still a Columbus company. This is the largest number of employees here. Now, I'll tell you what's changed -- and I don't have the exact numbers -- but pre-crisis, I used to laugh that you could probably get a quorum of the shareholders within about a three-block radius. And we issued 600 million shares during the crisis, and those shares were certainly supported by members of the Columbus community, but they were bought by funds in New York, Philadelphia, Boston, Hong Kong and all over the world.

There are far more institutional investors, right?

We are over 70 percent institution-owned, so that was certainly a big, big change. But it is still a Columbus company. We still have investors come here to see us, and I actually did a call yesterday to one. Just so you'll know, when people talk about Columbus -- he said I've been coming there for a long time and the feel now is so different and so much better than it used to be.

I'm not criticizing how it used to be, but he was talking about the life you see out on the river and just the activity downtown. But certainly the nature of the shareholder base has changed.

Is that a good thing or a bad thing?

Well, it's both. We wouldn't be here. We had a $600 million capital raise, we had a $1.1 billion capital raise, we had a $300 million debt raise, and then to exit TARP another $300 million. So, it's a good thing that we had institutional support, but it's also a good thing that our core shareholder base stayed very loyal to us -- and they did.

I won't name names, but you know who they are. And it's a good thing that our former board members who are significant shareholders stayed loyal to us because institutions look at who's buying and they look at who's selling. The fact that people who knew our company well were staying invested in us was a good thing.

About a month ago the Atlanta Business Chronicle incorrectly reported that Synovus headquarters was moving to Atlanta. How far off base was that report?

Way off base. They incorrectly reported it for two hours, but as you know, an electronic headline left up for two hours can be pretty damaging. And it was harmful; it was hurtful; it was just irresponsible. And by the way, those are words I've shared with them.

... I talked to them. Normally, Greg (Hudgison) and Allison (Dowe) will do that. I had a very direct conversation. What's ironic is that it started with a release that we prepared last October. Because as we began this Atlanta consolidation -- Atlanta is a big market and is very important to us -- and we had excess office space because Atlanta is a rollup of nine banks that we bought over time.

So, the goal was how do we bring those together, create some mass, get more efficient, cut cost -- and yeah, by the way, get some branding. So, we don't want to have rumors out there, let's just put in a press release what we're doing. So, we did it last October. They didn't find it that interesting last October, and somehow -- and I know how part of it happened -- they got that confused with some interest in a particular area of Atlanta. And as I told them, they weren't far off base about where some of our interest was. They just got off base as to what it was about. And it was about this Atlanta space consolidation, not anything about our headquarters.

So, there are no plans to move?

No plans at all. The reporters, I understand, were in the room with the other side and there was no basis or fact in what was reported. I think it was just a mistake.

A pretty big one.

It was a pretty big one. And quite frankly, I still see people who saw that headline and never saw the retraction. It's just a distraction to us. Some of the publicity since then in the Business Chronicle has been good about what we're doing in Atlanta. Just keep writing about me even if you don't spell my name right -- write about me, write about the bank. It was distracting. We are used to dealing with rumors. But it caused an uproar in Columbus.

It didn't take us long to get Greg on the phone.

No. I talked to the mayor that day and reassured her that the story was absolutely false. I talked to team members that day. I talked to directors that day.

So, your afternoon changed.

My afternoon changed dramatically. I was sitting right here with a group of our management associates when someone came in and said, "You need to see this story." That's another thing that is tough about this job: I came back in and talked to them while we were attempting to get some people on the line. But yeah, it changed the afternoon for sure.

Do you think that one of the things that fuels that speculation is the fact that you have remained an Atlanta guy? You still live in Atlanta. You're here running this company obviously on a day-to-day basis, but you've remained an Atlanta guy.

It's interesting. So, my friends in Atlanta say I live in Columbus because I'm here most of the time. I typically travel down on Sundays -- my wife and I came down Sunday afternoon. Now, I'm speaking to a group tomorrow morning at 7 a.m. so I'll go back tonight, but I'm typically here five days a week unless I'm traveling.

I live next door in Eagle & Phenix. So, my friends in Atlanta consider me a Columbus guy. That's what they say now. I don't know if it fueled it or not. We've had a home in Atlanta since 1982. My wife has been part of the same Bible study group, we've been a member of the church, we've got deep roots there.

What part of Atlanta?

East Cobb. We've always been in Cobb County. But we also have great friends here and we are involved here and we try to support, whether it's United Way or SPLOST or a fund raiser next week. We try and be very active here, and really the only issue is where I sometimes eat breakfast on Saturdays.

I actually, from the Board of Regents' perspective, had an elected official a couple of years ago say, "Since you are no longer in Atlanta and you're in Columbus, you are really not representing the district we appointed you to." Look, I spend a lot of time in Columbus. I travel a lot and probably most Saturday nights I spend the night in Marietta.

You talk about being on the Board of Regents. You've been on the Board of Regents for how long?

This will begin my eighth year. I was just reappointed in January to a second term -- seven-year terms.

In eight years, the Columbus State University campus has grown up around you, hasn't it?

It is a shining star in the University System. I'm excited personally about what's going to happen downtown. I know you've probably got mixed emotions about the Ledger-Enquirer building, but as a resident of Eagle & Phenix and just thinking of the vibrancy that's going to follow, I think it's great. So, I'm on the Regent's search committee for the CSU presidency.

We actually (met) April 1 to interview the finalists that were selected by the campus committee, and I'm excited about that. It was said in one of our meetings recently by a University System's senior official that this will be an attractive job because there is no community in our system that supports its university more than the Columbus community does. And I believe that. It's not to insult any other community, but there is no community I think in the state that supports its university more so than Columbus.

What is the biggest challenge facing the University System?

It's money, and that goes to a lot of other areas. But we've got to keep college affordable. We've got to get students out without mountains of debt -- and it's tough.

It's competition for resources and for professors. And a lot of people think the Board of Regents print money -- we don't. We allocate money appropriated by the legislature, so we have to work very closely with the governor and the legislature to do what we think is best for the system. But there's probably no college or university who thinks they got their fair share. It helps to have a governor who is so pro-education, and he gets it. And his priorities are always to the benefit of the education system.

You touched on this a second ago. I'll ask it a little differently. What does Columbus State mean to Columbus?

It's huge. I just look at it even downtown even though the bulk of the campus is not downtown. I think even reputationally it's big. When I walked home last night, there was a guy giving a tour to about 20 people. I couldn't tell what the group was.

He was talking about the school of music and how people come from all over the globe. I'm assuming he was an university employee, but I don't really know who he was. I think the stature of the university also raises the stature of the community. It's not just the jobs, but how many people attend and stay. You try and go downtown any given night -- for us here, we don't move our car because we know we're not going to park any closer, we walk. I think it brings vibrancy, it brings money into the community. I think the school is such a part of this community.

As a major employer in this region, it's also the feeder system for a lot of your employees.

Absolutely. On this floor, Tommy Prescott, our CFO, is a CSU graduate. We probably have data, but we have hundreds if not in the thousands of CSU graduates here. We have board members who have been so involved: Jimmy Yancey, Jim Blanchard, Steve Butler, and on and on and on. Phil Tomlinson, our board member, is chairing this capital campaign, so our company, Synovus, our former sister company TSYS -- still our good friends -- are very involved. Obviously, the W.C. Bradley Co. has been so involved in that school. The Chairman of the Board of Regents -- I sat with him last week at the kickoff -- he asked, "How involved are y'all with this campaign?" I said we've been involved as a company in probably everything CSU has done. There has been a very, very deep history there.

You talked about Mr. Yancey and Mr. Blanchard. Obviously, neither one of them is affiliated with the company any more. What is the legacy that Mr. Blanchard and Mr. Yancey left at Synovus?

A fabulous legacy. No. 1, when we said not affiliated, they are both very supportive shareholders. They are both very supportive customers, and they are both great friends to me personally and to the company.

Jim Blanchard is probably still my closest -- I have to draw a line as adviser -- but I am so close to him and I still talk to him about people issues and business issues because I've never seen a person who could really break things down so quickly. He's a great friend.

And Jimmy Yancey is as well. He retired last spring after 53 1/2 years of service. I had him address the Tuesday morning leadership group. It's called the Tuesday morning meeting but sometimes occurs on Wednesdays and Thursdays, but it's still the Tuesday morning meeting. He addressed the group right before he went off the board and he had the audience just spellbound for 45 minutes talking about the value of the customer, taking it back to his early days.

He spoke to our trust group just week before last on the value of the customer. So, they may not be legally affiliated, but they are still very close to this company.

So, they are still very good friends of the company.

Absolutely, and again, I wish I saw them more, but I talk to both of them very often. Again, I was with Jimmy Yancey last week at Columbus State, and I was with Jimmy Blanchard last week in that chair right there. And I still seek their advice and counsel. ...

Is this still the culture of the heart?

Absolutely, I believe it is. You (asked) why did we survive? Not to the "why did others not," but there was a feeling here that we are a family and we're going to hang together. October 2011, we announced the return of profitability. I knew we were going to announce it a month in advance, six weeks in advance. That's just how public companies work, but you don't release earnings until the third week of the quarter.

And on earning days I usually come in here 5-5:30 a.m. because we are going to release at 8:30 a.m. I study and reflect on what I'm going to say. Well, that day we were announcing the return of profitability and it was old news to me because I had known it for six weeks. So, when it hit the wires at 6:30 or 7, it just wasn't that big a deal to me until I started getting pinged on my iPad from employees, some I didn't even know. One I'll never forget just said: "Mr. Stelling, I just burst into tears when I read this because so many people said our company would not make it."

And it just gave people just kind of a new life. We said this would happen, and it did -- now let's move on to DTA and all the other things. But it was very, very emotional. In fact, I felt bad that I had not realized how big of a deal it was to 6,000 employees when we did that.

There were people here who prepared for the absolute worse -- which was a shutdown. They prepared for a sell, for some type of merger that would have taken it out of here. People inside of this company were prepared for the worst at one point, right?

They were, and our leadership group here did a great job of staying focused on what we could control because everybody is writing something about us. I spoke one day to a Synovus retiree group -- this may have been 2011 -- it was a luncheon and I met some great people and we talked about what we were trying to do. Somebody said, "Can you at least say that nobody will ever acquire (the company)?" "I can't say that, but here's what we're doing." I remember getting back that day feeling pretty good and literally 1:30-2 p.m., somebody on the first floor said that someone down here says the fifth floor was "crawling with Canadians."

That had to be the Toronto Dominion rumor, right?

It was. And I said, "First of all, what does a Canadian look like?" Just to make fun, I stuck my head out the door and I said, "I don't see anybody." The story broke about the plane going to Canada and I think the day before I may have gone to Tuscaloosa or Phenix City or Montgomery. I joked, if the plane had gone to Canada it had to be a TSYS. I knew it was but they don't disclose their travel either. So, it was just another one we had to say keep on doing what we're doing.

You talked about your leadership. You inherited some people and you brought some in. When you brought in (Chief Operating Officer) Al Gula, that fueled rumors because of Al's background. What role did Al play in this turnaround?

I think Al is a very interesting person. He played a huge role. You know in any kind of financial crisis a lot of times your systems or your investment technology might go neglected; and I felt like we had some catching up to do there as well. And I embarked upon a search and when I met Al -- and if Al were sitting here I'd say the same thing -- I had to meet him two or three times to warm up to him. I thought, you know what, this guy is what we need. We need a no-nonsense guy with a rich history in technology and operations, and by the way, doing it in a larger company, because in the past we were just 30 community banks all doing it their own way.

So, nobody up here had ever done it one way, and I brought Al in June or July of 2011. He's done a great job for us. And as you know, Al will tell you what's on his mind in a very direct way.

You and Al didn't have the emotional or long-term connections to the employees or to the community. You were able to look at it and make the decisions you thought you needed to make for survival. Was that helpful?

Maybe. I'm not contrasting us. Al is probably less emotional than I am. I had a deep respect and appreciation for the history of this company. So, some of the things we had to do were very tough to me.

In my 41 years, most of those years have been building things and recruiting people and hiring. So, to dismantle or sell off or cut jobs -- and these were friends, in some cases we had family members of executives -- I mean, it was tough. It was emotional.

I didn't enjoy it. But again, do you want to save the company that has been around for a hundred-plus years, or do you just want to put blinders on and think this crisis is going to fix itself? It wasn't. I think about the $100 million of cost that we took out -- $25 million a quarter. I went to Georgia but I can do that math, and I can remember in '13, saying to any of you who were doubting if that was the right thing to do, "Guess what, if we hadn't done it we still wouldn't be profitable and we wouldn't be here."

If by 2013, if we were not profitable, we wouldn't be here. So, I think they realized OK, these were the right things. But it was emotional and there were nights we were here till 3 and 4 in the morning, and you just scratch your head and say, "Where is this going to end up?" But nobody quit, but it was tough.

Was there ever a time sitting in that chair you thought it was over?

I never thought it was over. There were times I was like, "If I have to write the last chapter, I'm not sure what that's going to look like." I never believed this company was at risk of failure, and I told (someone), "Don't let anyone in this company ever doubt our resolve." And I made it clear: "They're watching our body language, they're watching everything about us.

I don't care how tired you are, don't show it." There were some long nights where you just wonder where does this end, whether it was a regulatory challenge. How much can one organization take? I was very worried about the stress of the organization and the stress on its people -- health issues.

What's the future of Synovus look like?

The future is as bright as we want it to be. Our industry has changed -- it's not going to be like it used to be. I was talking to Jimmy Blanchard about this last week. He was agreeing with me. But we came through it I think better, stronger, competent -- and got strong capital levels, a great dedicated team, we are in great markets in the Southeast.

If you look at where we are, ... you know, people talk about Atlanta, Nashville, Birmingham, Tampa, but markets like Columbus where we're No. 1 in market shares, or Athens, Ga., or Rome, Ga., or Jasper, Ala., or Charleston, S.C., where our company has such deep roots and there's just a great appreciation in those communities -- Statesboro, Ga., where we are 110 plus years old, where we're No. 1 market share -- this company can build on that. That's what I tell people all of the time. If five years of a crisis and we're still this strong, just think what we can do now. So, now we are returning capital. Three years ago, everybody said you'll never make it, there's no way you exit TARP without a capital raise that dilutes you so much you have to sell the company. Well, guess what? We exited TARP July 26th-ish a couple of years ago, did a capital raise that night. It was over-subscribed by 5 o'clock. When we announced at 4 o'clock that we had gotten approval to exit TARP, I think the whole world said, "They did it." And we had that stock offering, divert offering, was over-subscribed. ... More people wanted it than we had.

What does the future look like for you? You are 58. You've just led a remarkable turnaround. What do you do now?

First of all, I can't say enough about the team. The team lead the turnaround, and I was a participant. I'll tell you, sometimes at 3 in the morning, you didn't know who was the CEO or who was what. It was just a team effort. I'll tell you what I told the team this morning -- we had our senior team meeting -- I said, "I'm going to work longer than anyone in this room."

And you've got some young guys in there.

We've got some young guys. We were talking about succession plans and I said, "Well, I'm going to work longer than any of you guys; I'm 58." And I was joking. But I love what I do, I really do. I love what I do. I've been doing this since I was 17 years old. I love what banks can do. I want to block out the bad things that happened, but banks help build communities, they help send people to college, they help people buy homes, they help people plan for retirement.

I love what banks can do, and I love what I do. So, for my 41 years, I tell people 36 of the 41 have been pretty fun; maybe the last five wasn't as fun. I'm about to put the fun back into banking.

Not so we can just joke around here all day, but to see people use that energy in a positive way. My future is I serve at the will of the board, but I tell people until the board throws me out or until my wife tells me it's time, and she'll never say it's time. And she knows, she laughs about it, "you'd be miserable if you didn't do what yo do." So, I love what I do and I don't have any plans.

There were a lot of sacrifices your family had to make over the past five years when you were up until midnight. Is the world returning to normal now, or is there a new normal?

It's more normal. It won't return to the normal we were used to. We can Monday-morning-quarterback this thing -- had I been in a different stage of my life with family, I'm not sure I could have or would have done what I did. And I admire and respect what some of these people here had to do because I left.

When (former CEO) Richard (Anthony) called, I left. My wife joined me, but I left. My kids were already out of the home. If I had had young children at home, I'm not sure I could have done it because I can count on one hand the number of ballgames that my kids had growing up that I missed. I just didn't miss them.

I might have gone back to work at night, but I didn't miss them. It would have been tough, but I also had a very supportive wife who basically said, "You were born to do this." So, she would come down -- if I'm traveling, she may stay in Atlanta, if I'm here, she comes here. I could not have done it without her 100 percent support.


Name: Kessel Stelling

Age: 58

Job: Chairman and Chief Executive Officer Synovus, since 2010. He has been in the banking business for 41 years.

Education: Richmond Academy, Augusta, Ga., 1974; University of Georgia, 1978, undergraduate degree in banking and finance; Graduate School of Banking of the South at LSU, 1987

Family: Wife, Carol, married 34 years; two sons: Chris, 30, and wife Kyle, and Drew, 26; one grandson.