Synovus Financial Corp. (SYU1.DU) Earnings Call Transcript & Summary

All right. We're going to get started here. Joining us once again today, we are very pleased to have Synovus. Synovus has continued to execute on its -- has begun to execute on a strategy laid out in its February 2022 Investor Day of deepening relationships as well as building out a handful of new businesses, such as its corporate and investment bank, managed incredibly well through the current backdrop by leveraging its Synovus Forward initiative, and [indiscernible] to seeing benefits from rising rates, both of which should benefit the bank to be a top-quartile performer over time. Here to tell us about the road ahead is CEO, Kevin Blair. I'm going to pass it over to Kevin for our presentation, and it's going to be followed by Q&A, and there's also several members of the management team here in the audience, Jamie Gregory and Bob Derrick. Kevin?

I'll stand up, if that's okay? It's great to be with you today. I'm glad our crisis was averted, and we have the slides. Hopefully, everyone has these as well. We put out an 8-K last night with this information. And I'll quickly go through our slides, maybe pinpointing some of the changes that we made with this update. Really want to get to some questions that you'll have. But look, when you think, first and foremost, about Synovus, I want to make sure everyone understands the long-term investment thesis of what we bring to the table. If you start on this flywheel, one of the things that we believe we have a lot of key roots and foundational elements that will allow us to succeed, whether in good times or in bad, and it starts with our positioning for long-term growth. First, we've been in existence for over 134 years, a strong heritage. And when you think about the markets that we serve, 55 markets, we're in the fast-growing Southeast. Not only do we have a great footprint that's population is growing 60% faster than national average, when you look at some of the core tenets of what we've been able to do for our clients, looking at client satisfaction from a J.D. Power perspective, top quartile; and from the business side, looking at the Greenwich survey, we're also in the top 5% of the awards we received every year. So not only do we think we're pretty good at what we do, our clients are telling us that we're doing it very well. One thing that I'm very clear on in our leadership team is a bank our size at $60 billion, we can't be everything to all, but we can be everything to some. And so as we move forward in our journey, our strategic plan, you're going to see us become more surgically focused on certain segments, primarily the commercial segment. And then tangentially, we'll work around that where we have a right to win and, ultimately, where we think we can continue to gain market share. Now we're going to create this elevated growth profile all while continuing to derisk our balance sheet and improving our overall risk profile. That means that, from a credit standpoint, which I'll talk about later, over the last 12 years, we've done a great deal of work to diversify the balance sheet and position us very well going into both good times and economic downturns. But we also are focused on preserving capital where we need to, growing it if we have to and ultimately improving our overall liquidity profile. We'll do that because our core businesses are performing and allow us to improve our risk profile, but we're also investing in the future. So you'll see today that part of our investments in '22 and into '23 will continue because we believe these investments will be critical in delivering about 10% of our top line revenue in 2025. And then lastly, this is not a story about what's to come because, today, we're already performing. So when you look at our ROA, ROTCE or efficiency ratio, we're already in the top quartile amongst those peers in our peer comparison. When you take a step back and as we look to close out 2022, I think we have a lot of things that we can be proud of. I mentioned earlier the top-quartile performance in some of our key operating metrics. But when you look at the growth trajectory, we're up 25% year-over-year in PPNR. And as you'll see here in a second, that number could grow as high as 30%. We've been able to deliver double-digit loan growth at 13% on an annual basis. And the really impressive thing in delivering 13% is we've done it in commercial, we've done it in consumer and we've done it across many sub-lines of business. So as we look to the future and making that growth more sustainable, we believe that we'll be able to maintain higher levels of loan growth. When you think about productivity, and it comes down to our RMs producing more loans per resource, we're up 9% on the deposit side. As of this printout, we were up 7%. That number has grown through November at almost 20%. So we are producing more per resource, and that's what allows us to become more efficient and more effective and allows us to invest in some of these new initiatives. Our deposit costs, our beta to date, we'll talk about this more through November, is about 20%, which was a little better than we had anticipated. We still think we're in line with a mid-30% beta through the cycle. But we've been -- to this point, been able to manage the deposit cost with a disciplined approach. And I'll talk a little bit about our pristine credit quality at this point. From a strategic project standpoint, we've been able to add resources in '22. We've become a platform of choice. We've added 20% new FTEs in our middle market space. We've added 3 new verticals in CIB. And when you look at our -- things like treasury, where product features and functionality are becoming more important, we've been able to add functionality on the accounts receivable side as well as FX, and we're in the process of adding new functionality for accounts payable. And lastly, we have some side businesses that we've been able to expand. Our payments partnership, whether that's our sponsorship of third-party ISOs or our merchant processing area, we're actually up about 30% year-over-year in income there. We've also launched our mass data product. We're still expecting to roll out the full product in the first half of '23. We continue to receive good feedback from our pilot ISV. We also are starting to have discussions with additional B2B clients, where we can test the functionality and features that we're building, and that will allow us to continue to add new functionality in '23 once we roll out the product. On the consumer front, we invest in consumer but we're being smart. We're investing more in analytics so it will empower our bankers to be more advisory in nature, more proactive at providing solutions to our clients. But at the same time, we've been able to rightsize our bricks and mortar. We've cut about 13% of our branch network this year. And ultimately, we think that there's an opportunity to continue to consolidate as we continue to invest in digital and self-service channels. And then lastly, I know this year, when you look at the equity markets and you see the S&P [ off ] 18%, 19%, you would think that our wealth income would be down a commensurate amount. But because of the good work that our wealth teams have been able to deliver new account growth, we're actually up about 7% in wealth fee income this year despite the challenges of the market. Now this is a slide that's new and, hopefully, I'll provide a little context to our updated guidance. I'll go back to the third quarter. As we were closing out the third quarter, in September, we saw a fairly sizable amount of deposit diminishment, accounts balances leaving our balance sheet, going off-balance sheet, being applied into the business. And as we looked at the fourth quarter, originally, we would have anticipated having to use more wholesale funding to help fund our growth that we had projected in the fourth quarter. Number two, we were seeing our deposit betas continue to increase. And so as we look out in the fourth quarter, we put a fairly conservative view of what we thought deposit betas would look like. And so when we were asked the question in the third quarter, what do you expect your NII to be in the fourth quarter? We said largely flat, flat with third quarter. I think that created some concern around margin compression. And as we said, we try to provide everyone with the assumptions. Let's fast forward to where we are today. Quarter-to-date, we've grown our core deposits about $1.8 billion. A lot of that growth has been in our public funds area, but we've also seen about $0.5 billion in noninterest-bearing DDA or 3% growth. And that's a function of asking our team members to go back out into the marketplace and ensure that we're getting our fair share of existing client deposits, but also accelerating our efforts through promotions and through calling activity to make sure that we're getting even more core deposit growth as we think about the importance of funding going forward. That ability to generate $1.8 billion in core deposits to date has reduced our reliance on wholesale funding, which reduces our overall cost of funding. Couple that with the fact that deposit betas have come in about a click below what we thought they would be, and then you add the asset side, where, when we look at our new production on the lending side, our going-on spreads over indices are 36 basis points higher these last 3 months than they were the first 8 months of the year. And then lastly, we've had a little stronger loan growth than we had anticipated. When you add all that up, instead of having a flat NII number, we're actually projecting NII to be up 3.5% to 5.5%. Now as the month closes out, we'll see where core deposits end up in some of those betas, but it's a fairly sizable increase in our expectations. NIR is coming in strong this quarter as well. Nothing really to note here, other than just broad-based good activity across most of our core field -- or core categories. And then you'll note, on the NIE side, we're constraining our number to the lower half of the range. Expenses are coming in pretty good this quarter as well. All that translates into a PPNR number of between $290 million and $305 million, which translates into 1% to 6% growth for the quarter, which we feel really reflects the core operating environment that we're executing in. The delivery of core deposit growth continuing to drive good prudent loan growth, expanding our NIR and keeping expenses under control. Now when you look at loans on a quarter-to-date basis, we're up $800 million. Originally, we expect it to be $600 million. Some of the reasons for this, even though our production continues to decline from the elevated levels of earlier this year, we're continuing to see payoff activity stay fairly low, which is allowing us to grow loans much -- a little quicker than what we had originally projected. And we're doing it all at the same time that we're taking the opportunity to run down our HFS and HFI third-party consumer portfolio. So really strong quarter and we think the numbers will reflect that once we're able to close it out. The last footnote on this slide is the smallest piece. We believe at the end of this month of November, we were able to achieve our run rate benefits for our $175 million Synovus Forward initiative that we really started, quite frankly, quite right before the pandemic. So a big success for our team. And now as we close out that program, we really make it more of a mindset going forward that we have to manage expenses and find revenue expansion opportunities every day. If we go back to the thesis, I mentioned our footprint, and you guys know all the statistics, but I mentioned 60% faster growth in population. Unemployment is 30% lower than the national average. But maybe what you don't know about Synovus is, over the last several years, we've been known for our history as being more of a rural-based bank. And you'll note here that, more recently, we've been able to put more of our loan growth and deposit growth in these fast-growing metro markets. Today, loans are 66% of these fast-growing metro markets; and deposits, 55%. And you can see those numbers are going to continue to expand. And then we also look at the opportunity, not just because the demographics, the population, the business starts, but there's a tremendous amount of disruption that continues to exist in the Southeast, with about $400 billion of assets at play through various mergers. One of the things that we want to be very clear about is as we create this elevated growth profile, we are not taking on incremental risk to do that, and we'll talk more about credit in a second. But when you look at capital and liquidity, we feel the same way. If you look back from 2019 prior to the pandemic to today, we've been able to increase our CET1 ratios by roughly 60 basis points. And I would submit to you, that's not because our internal stress testing would suggest we need more capital. One of the things that we wanted to do is be able to showcase that we can continue to accrete capital in times where the economic future is a little more uncertain. And so that's just prudent to have a little extra capital on the balance sheet in case there is an economic downturn. And when you think about liquidity, and we'll continue to have this discussion in years to come, we've already made a great deal of progress of changing our both funding mix, but also, if you look at securities, our highly liquid securities from 13% to 19%, a much higher percentage in noninterest-bearing deposits. And we've really been able to bring down our reliance on hot money CDs from 20% now down to 5%. So we believe, as we continue to grow, not only will we improve our overall returns, but we'll be able to continue to derisk the balance sheet and improve our overall risk profile. Speaking of risk and credit, maybe a topic that we're going to talk about in the quarters and years to come, but the reality is, when we look at our portfolio today, we spent the last 12 years diversifying our balance sheet, moving from being a predominant CRE bank into being highly diversified, where you can see, today, CRE only represents about 26% of the balance sheet, and I'll talk later, at a very low LTV, which we believe, despite what could happen in the economy, is going to continue to provide cushions of protection for our borrowers but also for the bank. When you look at our consumer portfolio, it's largely a function of mortgage and home equity backed by real estate, very high LTVs. And then from a C&I perspective, where we've really invested over the last several years, we're very well-diversified, over 20-plus NAICS codes. And ultimately, this is an area where we continue to invest with specialty lending and middle market banking. When you look at the right, I'm telling you something you already know, but our credit metrics are at the lowest levels they've been in many cases in history. But you can see it over this time frame, they've continued to tick down. And so as we sit here today, there's nothing from a delinquency, NPA, NPL or a risk-rating perspective that would give us any concerns around the underlying credit quality of the book. But one of the questions we receive quite a bit is everything is great today, but where are the storm clouds? Where are you going to see problems going forward? And I won't walk through every industry classification here or asset class. But what we felt is, as we sit here and think about where there could be some stress on the portfolio, we've tried to evaluate certain recession-sensitive industries to say where could we see problems. And within each of these segments, we believe there are mitigants that will help to protect the bank and allow the portfolio to continue to perform at a very high level. You'll see on the CRE, all of these asset classes, very low LTV, and that's very important. But let me point to office for a second because we get the question with work from home becoming a more prevalent component of every company and every industry. What's going to happen as occupancy in these buildings continues to decline? Well, for Synovus, 50% of our office portfolio is actually medical offices. And those are not offices that doctors are leaving and patients are not going to, they continue to thrive. More importantly, when you look at the traditional office space, our average year of collateral is 2014. From what we've seen in terms of occupancy and some of the distress, where we're seeing distress in the industry is in older buildings in Class B and C space. We have very little exposure there. And you can go across the board here, whether it's hotels, where our hotels are more upper mid-scale, where we haven't seen a lot of RevPAR issues; or retail, where they're largely necessity-anchored or credit tenants; or senior housing, where it's predominantly private pay, where you can pass on the increased cost that exists in that industry today for labor and other expenses. But then you get over to the C&I category for small business, and we've all said, Bob's been asked this question, where would you see the first signs of stress? And we've all, in our thought process, believe that small business is probably the most vulnerable because as consumer spending retracts, it's built, first, in these small businesses because they don't have huge balance sheets and they don't have cushions of protection. For us, we feel very good that 73% of our small business portfolio is backed by real estate, which gives us solid collateral that will allow us to perform better through the cycle. And more importantly, Cal Evans and our Market Intelligence Group runs quarterly surveys with all of our commercial borrowers to understand their sentiment. You can see in the third quarter, 71% of our small business clients actually felt like their business was as good or better in the quarters to come in terms of adding resources and growing their business. So today, the small business portfolio is performing well. It's well-collateralized and, we'll continue to watch it. So I'm going to wrap up here in a second. As we think about the future, and those of you that were in our Investor Day or watched our Investor Day back in February, we rolled out our 4 pillars of our 3-year strategic plan. So as we close out this year, I'm not here to present a new set of strategies or a new 3-year plan. We're here to reinforce that we believe our plan that we rolled out in February is the right plan. We believe it was recession-proof. It's extremely flexible and agile. If you think about our growth, our growth were in lower-risk categories. We are adding new businesses that will generate fee income. We're continuing to invest in businesses that will reduce our overall efficiency. And so whether we're in good times or bad times, we believe that this is the right path forward. And the real key is execution. So when you look at the top, the 4 principles here that we'll focus on in '23. Number one is we have to continue to focus on our core businesses. This is our lifeblood. It's what allows us to invest in these new businesses. That means in our commercial, private wealth and consumer space, we need to improve our productivity, deepen the wallet share of our clients, ensure that we continue to have great client service that drives that client loyalty. And that will allow us to continue to grow those businesses. From that piece, we'll continue to invest in things like money-as-a-service technology, our banking-as-a-service platform, corporate and investment banking and various analytical tools that will allow us to generate new sources of revenue. As I've said multiple times, we believe those 3 areas, along with our syndicated finance function, will be -- will contribute about 10% of our income in 2025. And I've always said that when those around you are fearful, it's time to be greedy. Oh no, that was Warren Buffett that said that, but I agree with it. And so as we look at uncertain times, we want to make sure that we continue to add talent. Synovus has been a platform that has attracted talent on the middle market, the specialty banking side, obviously, on corporate and investment banking. And so we're going to continue to lean in, in 2023 because we think that, that's an opportunity for us to be able to bring over some top talent. Now we also recognize that there's a positive operating leverage goal there. And so we'll be able to continue to invest while our revenue will support the ability to have positive operating leverage. And then lastly, as I said before, we'll do all this, creating this sustainable elevated growth profile while continuing to improve our liquidity position, carrying a level of capital that is more than sufficient to weather any storm and, ultimately, continuing to perform very well from a credit standpoint. So I really appreciate the opportunity to give you a few thoughts around this. And then I'll stop and, Ryan, we can go to Q&A.

Great. Thanks for the in-depth prepared remarks, Kevin. So maybe just to start off, thinking a little bit about the environment. You're obviously out talking to clients, spending, I'm sure, a decent amount of time on the road. What does sentiment feel like for your clients? And how are they feeling about the economy as we look into 2023?

Yes. I just referenced a second ago the 71% of small business clients that feel as good or better third quarter than they did second quarter. Generally, there's a constructive attitude with our clients. There's a level of prudence. I mean, I think people recognize that there is a potential for an economic slowdown and challenges. What we think is going on, when you look at overall sentiment, people are coming off very difficult times with supply chain issues and with labor shortages. And so they're euphoric that they're able to overcome those, and now they're going to start [indiscernible] 25%, 30%. And I think that's a function of just, again, a level of prudence. But we're not seeing any red flags or any concerns broadly or systemically that gives us any concerns as to '23 demand or our ability to grow next year. So I also would tell you that I think, partially, when we look at our average balance per account on the consumer side and the commercial side, we see that the folks are still carrying a tremendous amount of liquidity. And that gives them dry powder. It also gives them some extra confidence if they were to have to weather a storm or see some declining margins in their business. The third thing, and we talked about this earlier today, in the manufacturing sector in the Southeast, with this demand or the desire to want to control your supply chain, we're seeing more manufacturing starts in the Southeast where people are trying to on-source or domestically source some of these things, which are creating a lot of opportunity, not only for those people starting those manufacturing facilities, but also the suppliers around them. So generally, I would tell you that we're still very cautiously optimistic in the short run. I think everybody acknowledges that the economy is going to slow at some pace. But ultimately, we're not seeing any concerns of anything more than potentially a mild recession.

Got it. And you gave an update on the fourth quarter. You talked about loan growth coming a little bit better. If my memory serves correct, you talked on the earnings release that maybe somewhere in the $7 billion. You're already at $800 million, which means things are progressing well. Sort of a multi-part question. I think part of it you noted slower paydowns. Is there anything to look into why we're seeing slower paydowns and dislocations in markets, lack of appetite from areas where it could have been refinanced to? And then second, just broadly speaking, how are you feeling about loan growth into 2023?

Well, look, I think you've probably -- on the -- capital markets have not been very constructive, and we've seen a lot of nonbank lending dry up. And the way we think about payoff and paydown activities, eventually, they're going to pay off and pay down, it's just a timing issue. And so it's just slowing things down. We've also seen -- [ to get ] a CEO on a construction project that's taking longer than normally would, so just that duration from when the loan was financed and when it goes to permanent finance is taking a little longer. But we don't think of it as being something that creates an issue. It's more of a timing issue. As it relates to overall loan growth as we look into '23, what I would tell you, while we feel really, really good about where we are is -- what we're not trying to do to generate loan growth is we're not changing the credit box. The credit box is actually being contained a bit and as we look at certain things, I'll come back to that in a second. What gives us our loan growth next year, number one, is a fast-growing footprint that, relatively speaking, will be as fast, if not faster, than any other marketplace. Number two, we have a lot of initiatives that are still coming online, whether it's corporate and investment banking, which, today, has about $110 billion of funded loans on the balance sheet. That will continue to grow. We have some of our specialty areas that are still fairly new, and they're going to continue to grow. So it's not about us going out and looking at those same asset classes, same markets and trying to generate faster growth. For us, some of those markets will slow. We actually think that we're not going to have double-digit loan growth in '23 as we've had here in '22, but we still think it's going to be very robust, exceed that of GDP, and it will be a function of our operating model but also some of these new businesses that are coming on track. All of the growth that we're focused today is predominantly on the commercial side. And the $800 million that we've grown quarter-to-date is all commercial. We've taken this opportunity, as I mentioned earlier, to run off some of our third-party consumer book. As we've always said, that was placed as a surrogate for our securities portfolio. And as we had excess liquidity, we would invest there. But as liquidity becomes more constrained, we would run off some of that book and use our capital for our clients.

I keep making the joke when people say GDP are like growth. I say, hopefully, that means normal GDP, not negative that we might have next year. But you talked in the presentation about some of the initiatives that you have in place, capital markets, mass and a handful of others. Obviously, we talked already about the rising risk of recession. Why is it the right decision to continue to invest in these initiatives? And are there any factors that could cause you to sort of pivot in the short to intermediate term?

Look, we think we can, even though we're investing in these initiatives, continue to carry positive operating leverage in '23. So number one, we feel like we have the capacity to do it. Number two, we're convicted that, in those situations, each of these initiatives have a very strong NPV and are going to be critical for us, as I mentioned, in creating long-term revenue for the shareholder, 10% of total top line in '25. And in some situations, like mass, timing is of the essence. Being first to market with a product like this is very important because you get embedded within the software vendors and providers, and it becomes hard to displace. So we want to make sure that we're continuing to invest to be in the market much more quickly. On the CIB side, there's a tremendous amount of talent that we've already acquired, but we think there'll be more talent at play with the capital market space being a little more rocky. And so now is an opportunistic time to continue to add talent. And then on some of the other investments, again, we believe that if you're not investing in the future and you take too much of a short-term approach, then you're really destroying shareholder value. Now all that said, one of the things that we committed to back in Investor Day is that each year, we try to find 1% to 2% efficiencies from just our core operations. And so whether that's continuing to rightsize real estate, looking at demand management on the discretionary side or looking at specific businesses or personnel where we can optimize the workforce, that's just part of doing business going forward because that creates capacity to be able to do some of these other things.

You touched in the presentation on a handful of things, trajectory of net interest income coming a little bit better, betas coming in a little bit better, although it sounds like you're not expecting the long-term outcome to look that different than they call the mid-30s total beta. But can you maybe just talk a little bit about what you're seeing, what is driving the slower-than-expected beta? And inevitably, could we still see the margin expand? Do you see upside to that?

So on the beta side, Jamie and I talk a lot about trying to figure out what that is -- equation because it's not just what we want to do, it's what the competitive landscape is doing. And so we all have pretty good pricing intelligence of where people are moving rates, and we want to move our rates to be fair to our clients, but also to be within the spectrum of what the competitive landscape looks like. So I think what's going on today that's allowed us to keep our rates a little lower than what our projected betas have been forecasted is just the pricing rigors of our team and, quite frankly, of the industry, predominantly on the consumer side when you look at standard rates. What's starting to drive up the betas predominantly on the commercial side is that, as rates get higher, commercial clients are looking for higher rates, and it's meaningful for them because they have larger average balances. And so I credit our team for being very analytical at how we think about pricing our deposits. But ultimately, we have the tools in place that will allow our bankers to exception price a deposit or we have products in place that will compete with all-balance sheet products. So the NIM on a cycle-to-date basis for November is 20%. On interest-bearing deposits, it's 31%, both a little lighter than what we projected, but we still think we're going to get back to that mid-35%. As you see additional banks starting to have higher loan-to-deposit ratios, that competitive pricing tension will increase. As it relates to NIM, we believe that we'll have NIM expansion this quarter. And as we look into next year, it's a wildcard because, for the same reasons that we entered the fourth quarter with a level of conservatism, what's core deposit growth going to be? What are the deposit, the latent deposit betas going to look like once the Fed stops tightening? All of those things are assumptions that we would make. But we have the ability to, if we continue to grow core deposits and we can manage the deposit betas, yes, we can continue to expand the margin. The longer-term benefit there is we have over $30 billion of fixed rate assets on the balance sheet, fixed rate loans, hedges and securities that will reprice over time. And that tailwind will allow us, even after the Fed stops tightening, to continue to expand the margins. So we don't believe that we'll reach a terminal level in short order. We think that it may have a pause, or as betas catch up, there may be a quarter or 2 where there's some pressure. But thereafter, we're going to actually have a tailwind on the margin side.

Yes. When you were going through your prepared remarks, I did a double take when you said $1.8 billion of quarter-to-date deposit growth. I think it's about the best that we've heard at the conference. Can you maybe just talk about some of the strategies in place that are helping you grow deposits? And how are you thinking about growth into 2023? I know you had been talking about your need to expand into wholesale funding. It sounds like you took some out last quarter. It sounds like you're doing a lot less of that now. How are you thinking about the overall funding strategy for Synovus going forward?

Well, short run, I wish I could tell you that it was [indiscernible], but it's really just blocking and tackling. I give all the credit to our frontline team members, that, when Jamie and I and the leadership team sat down in October when we saw the diminishment, we tried to send a message out and put a core focus of our bankers to ensure that we're heavily focused on generating core deposits. As a result, production has ramped up considerably across the board. We've seen good growth in municipal and public funds deposits, and that's an area for us that, although they're higher beta deposits, they're larger and they give us the ability to grow. We've seen, as I mentioned, about $500 million or 3% growth in noninterest-bearing deposits. That's come from our commercial areas in community and wholesale, but also from our sponsorship and payment partnerships where we're processing payments for those guys. And on the retail side, we've started CD promotions again. We haven't done that for some time. We've seen $200 million of growth in CDs. And so the great news is we're seeing it across multiple areas. And the sustainability of that, I mean, obviously, it's a very competitive marketplace. We'll have to continue to monitor that. So going forward, in '23, we're doing some things that will help to amplify the efforts we've taken in the fourth quarter. We're adjusting incentive plans to further incent our bankers to focus on quality deposit growth. We're investigating expansion into industry verticals that are more deposit-rich. We've already talked publicly about our MSB strategy. We've now onboarded our second MSB, and we think that's an opportunity to continue to grow low-cost deposits. And we'll look for other industry verticals that are deposit-rich. We believe that it's going to take a lot of actions and a lot of people to be able to create sustainable deposit growth that's able to match that on the loan side.

A couple of more questions I want to get through in the last few minutes here. So you gave some new disclosures on credit during the presentation. Maybe just talk about what you're actually seeing across those portfolios. And you mentioned further derisking. Where could we see that across the portfolio?

So when we look at the portfolio today that you guys saw the statistics, everything today from an NPL, NPA delinquency looks very, very strong. The things that we want to make sure that we're monitoring, we have a tool that we brought out during the pandemic that looks at cash inflows and outflows. So we have an early warning mechanism, where certain industries may be seeing the decline in cash coming in, which could give us an ability to act more quickly on the credit side. Quite frankly, it's still a fairly benign market, but there are pockets where you see like realtors today, given their volume of homes have gone down, we've seen cash inflows decline precipitously. I mentioned senior housing earlier. People have been concerned that will senior housing, as labor costs go up and as labor shortages exist, will they be able to pass the prices on to their clients? We've seen cash inflows increase in senior housing. So across the board, we're seeing a very strong, stable credit environment. Where we're looking to derisk going forward is we're continuing to move upmarket. So when you think about corporate and investment banking, these are larger loans. They're usually rated. They're bonded, and they present a better opportunity for lower yield but also lower risk. So you look at our portfolio growth, we're declining in consumer, which typically carries a higher loss rate. So the growth itself that we're putting on today carries a lower risk rating than what the portfolio as a whole is. So that's how we'll continue to derisk, focusing on commercial, focusing on quality-specialized industries and moving upmarket where the credit is very good.

So in the last minute, so I just wanted to end with this one, with how I end a lot of the presentations. You laid out your 3-year goals at Investor Day, you've begun to execute, invested in key initiatives, solid operating leverage, talking about operating leverage for next year, yet the stock continues to trade at a discount. Anything you wanted to stress to investors that you think warrants clarification or things that you think investors might be missing about the story?

Look, we try to put it out in every deck. I think we have a very strong footprint, one of the best. I think we have a strategy that's delivering elevated growth. We can generate growth and not take on incremental risk. We can actually, as I mentioned, derisk. And all of that with a valuation that we believe that's below where it should be. So for us, it's about execution. We think we have the strategy. We're able to add talent. We have the new initiatives in place and now we just have to execute.

Got it. Well, unfortunately, we're out of time, but please join me in thanking the Synovus team.