Synovus Financial (SNV) remains a show-me story despite comments by its management team to the contrary.

The Columbus, Ga., company returned to profitability in 2011. But Synovus, like a number of banks, is struggling to regain momentum after suffering years of losses. It is also the biggest bank remaining in the Treasury Department's Troubled Asset Relief Program.

Still, Kessell Stelling, the company's president and chief executive, tried to position Synovus as an aspiring acquirer during a conference call Tuesday to discuss quarterly results.

"I think there are a lot of banks in our footprint that, for whatever reason, will be looking for exit strategies . . . over the next year or so," Stelling said. Synovus could be a position to discuss acquisitions in "a couple more quarters."

Those comments were derided by one analyst during the call. "At the end of the day, you still have a real earnings power problem," Rick Kraemer at Weiss Multi-Strategy Advisers, said.

"Before we jump that far ahead, can you lay out a clearer plan of how you dramatically improve the earnings outlook?" Kraemer added. "At what point do you think shareholders may be better served by you exploring other options such as a sale of the company?"

"We understand the issue of earnings," Stelling shot back, adding that he was "not prepared" to specifically discuss what must be done to get Synovus back on track. "We will just have to prove you wrong."

The $26 billion-asset company's first-quarter results provided further evidence of ongoing struggles. Profit decreased 31% from a year earlier, to $14.8 million. Revenue fell; results were propped up by lower credit costs and other expenses. The loan portfolio shrank and the margin compressed 12 basis points from a year earlier, to 3.43%.

The first quarter also included $4.9 million in restructuring charges and higher income tax expense because the company recouped roughly $800 million in deferred tax assets in the fourth quarter.

"They made money and we're all happy to see that they stayed in the black," says Christopher Marinac, an analyst at FIG Partners. "Obviously there's some pressure on top-line earnings. That has been a multi-quarter trend."

The thought of Synovus completing an acquisition this year is "unrealistic" and is "a maybe with a capital 'M'" in 2014, Marinac says.

The larger narrative from Stelling involved a management team that had made drastic changes in recent years — and was now in need of just a few more quarters to show off the results. "We have said throughout the cycle that all of the actions we were taking were to just make this company stronger," he said during the conference call.

"That, I think, makes all of your options better longer-term, whether you ... are an acquirer or whether you are" a seller, Stelling said, adding that Synovus would gain more "earnings power through continued reductions in credit cost."

Like many other banks that have reported first-quarter results, Synovus has aggressively cut costs to make more money. The company cut another 169 positions in the first quarter; overall employment is down 7% from a year earlier.

Noninterest expense fell 10% from the first quarter of 2012, to $182.3 million. Credit-related costs, including the loan-loss provision fell 46% from a year earlier, to $49.3 million, Synovus' lowest level in more than five years. Still, nonperforming assets make up 2.58% of total assets, at $678 million.

The company still owes roughly $968 million from the Tarp, and its bank remains under a memorandum of understanding with the Federal Deposit Insurance Corp. Regulators did lift an MOU against the holding company this month.

"While Synovus is in a better position than they were a year ago, there are still a lot of moving parts," Marinac says. "The regulatory piece still has to play itself out. It's a complex chess game."

Stelling said during Tuesday's conference call that management expected to exit Tarp during the third quarter. Marinac, however, says he would be "very surprised" if that happens.

The recent disclosure that M&T Bank (MTB) must delay its purchase of Hudson City Bancorp (HCBK) to address regulatory concerns over the Buffalo, N.Y., company's Bank Secrecy Act and anti-money laundering practices highlights the uncertainty Synovus could face as it seeks to repay its Tarp funds, Marinac says.

"You just have to be realistic," Marinac says. "Regulators have a different timetable."

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