Release Date: April 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Kevin, can you discuss the main factors that impacted the margin this quarter and your expectations moving forward?
A: Kevin S. Blair - Synovus Financial Corp. - CEO, President & Chairman: The margin was primarily impacted by deposit costs, which were higher than modeled, affecting both noninterest-bearing and interest-bearing deposits. Despite these challenges, we anticipate these trends to improve, expecting the margin to stabilize and potentially expand by 10 to 15 basis points by year-end, assuming flat rates.
Q: Jamie, can you elaborate on the risk-weighted asset optimization and its potential impact on capital?
A: Andrew Jamie Gregory - Synovus Financial Corp. - Executive VP & CFO: We are reviewing loans that could qualify for reduced risk weightings, such as mortgage and government lending. This could potentially reduce our risk-weighted assets by $1 billion or more, improving our capital ratios by over 20 basis points. This optimization will allow us to maintain our capital ratios within our target range and deploy excess capital efficiently.
Q: Ebrahim, regarding the NII and NIM outlook, how does the current pricing competition in your markets affect your forecasts?
A: Kevin S. Blair - Synovus Financial Corp. - CEO, President & Chairman: The pricing competition remains intense as all banks are vying for liquidity. However, our rates have remained competitive without significant increases, and we've seen a positive trend in deposit production. We expect the pressure from noninterest-bearing deposits to moderate, which should help stabilize our NIM going forward.
Q: Can you provide insights into the credit quality, particularly the reserve build and any changes in the macro view?
A: Andrew Jamie Gregory - Synovus Financial Corp. - Executive VP & CFO: Our macro view has generally improved, which has led to a reduction in allowance for some portfolios. However, we've increased reserves in commercial real estate as a prudent measure against potential valuation changes. Overall, our credit quality remains stable with no significant changes in our outlook.
Q: Steven, regarding the large C&I credit mentioned, can you clarify what 'resolved' means in this context?
A: Robert Warren Derrick - Synovus Financial Corp. - Executive VP & Chief Credit Officer: The term 'resolved' refers to the completion of a bankruptcy process for the credit in question, leading to a refinancing and sale of the associated assets. This resolution will remove the nonperforming loan from our books in the subsequent quarter.
Q: Jared, could you discuss your success in attracting new customers and how you're competing with larger banks?
A: Kevin S. Blair - Synovus Financial Corp. - CEO, President & Chairman: We have been successful in attracting new customers, primarily through hiring talented bankers who bring their clientele with them. This strategy has allowed us to grow in key areas like middle market and CIB. Despite the competitive landscape, we continue to gain market share and capitalize on opportunities arising from market disruptions and mergers among larger banks.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
