Synovus aims to hold expenses in check after 4Q jump

Synovus Financial’s expenses climbed in the fourth quarter, driven in part by technology investments, but costs for 2021 overall were down and are expected to hold flat through 2022, company executives said Thursday.

Expense control has been a priority for the Columbus, Georgia, company, which in 2021 launched an initiative to generate $175 million over two years via a combination of expense cuts and revenue enhancements. The program remains on track and will get a boost this year from branch closures, executives said during a fourth-quarter earnings call, though the late jump in expenses shows that the path forward may be uneven.

The goal now is to keep expenses in check this year as the bank invests in talent, new digital banking services and other infrastructure to drive growth. Synovus, with $57 billion of assets, said it has recently invested in upgrades to its digital commercial banking platform and expanded its treasury and payments teams.

“As of year-end, we have achieved $110 million in pretax run-rate benefit ahead of our original projections” of $175 million, President and CEO Kevin Blair said on the call. Efforts included reducing real estate expenses, lowering headcount and cutting its vendor costs.

Synovus said its noninterest expenses rose 11% from the third quarter to $295.2 million but were down slightly from a year earlier. Stripping out one-time costs, the company said 2021 adjusted expenses were flat at just under $1.1 billion.

One significant efficiency initiative underway early this year is an effort to close about 40 more branches, or 15% of the bank’s total, a move expected to generate roughly $12 million in annual savings.

In 2021, it operated more than 280 branches, down from nearly 300 in 2019, when it acquired the $12.4 billion-asset FCB Financial Holdings in Weston, Florida. Banks have been steadily closing branches in recent years as customers have opted increasingly to online and mobile channels for everyday banking needs.

Synovus reported fourth-quarter net income of $200.4 million, up 33% from the same quarter in 2020. Earnings per share were $1.31, up from 96 cents a year earlier.

Adjusted earnings were $1.35 per share, above the $1.08 per share that analysts polled by FactSet had expected.

The company said loan growth and higher net interest income helped bolster the bottom line. Fourth-quarter interest income rose nearly 2% to $392.3 million.