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Synovus Financial Corp (NYSE:SNV)
Q2 2019 Earnings Call
Jul 16, 2019, 8:30 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the Synovus Financial Second Quarter 2019 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. (Operator Instruction) Please note this event is being recorded. I would now like to turn the conference over to Mr. Steve Adams, Senior Director of Investor Relations. Please go ahead.

Steve Adams -- Senior Director of Investor Relations

Thank you and good morning. During the call today, we will be referencing the slides and press release that are available within the Investor Relations section of our website, synovus.com. Kessel Stelling, Chairman and Chief Executive Officer, will be our primary presenter today, with our executive management team available to answer your questions.

Before we get started, I'll remind you that our comments may include forward-looking statements. These statements are subject to risks and uncertainties, and the actual results could vary materially. We list the factors that might cause results to differ materially in our press release and in our SEC filings, which are available on our website. We do not assume any obligation to update any forward-looking statements as a result of new information, early developments or otherwise, except as may be required by law.

During the call, we will reference non-GAAP financial measures related to the Company's performance. You may see the reconciliation of these measures in the appendix to our presentation. Due to the number of callers, we do ask that you initially limit your time to two questions. If we have more time available after everyone's initial questions, we'll reopen the queue for follow-up.

Thank you, and I'll now turn it over to Kessel Stelling.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Thank you, Steve, and good morning to everyone and welcome to the second quarter 2019 earnings call. I'm joined this morning by our Synovus senior leadership team, and as usual, I'll walk us through the earnings presentation, and then we'll open up the line for your questions.

But before I walk through the financial results, I'd like to take just a moment to assess where we are at the midpoint of 2019. This was yet another strong quarter for Synovus, highlighted by a number of significant accomplishments, including continued growth in earnings, the well executed operational integration of FCB on May 6, the announcement and pricing of a new Series E preferred equity offering, which will help us further optimize our capital stack, and solid credit metrics that validate the health of our portfolio and the overall discipline of our lending teams.

While we're always cognizant of an ever-changing interest rate environment, these achievements I just mentioned as well as additional initiatives planned for second half of the year all point to continued momentum for the combined Synovus team as we execute throughout 2019.

From an organizational and financial outlook perspective, I am pleased to share a few updates as well. As you know, we completed a major organizational realignment earlier this year, which pulled all of our key revenue, technology and product teams under one leader in Kevin Blair, who is now 100% focused on executing our strategic plan for growth and profitability as Chief Operating Officer.

We're also very excited to now have Jamie Gregory onboard as CFO. Jamie is with us this morning and although Kevin will take the majority of questions related to our results, let me assure you Jamie is already contributing and identifying ways we can elevate our financial performance even further.

As we think about our go-forward growth opportunity under this new operating model, we think it's helpful to view our targeted 5.5% to 7.5% loan growth as a diversified and balanced approach coming from areas such as middle-market banking, CRE and our specialty lending areas as well as community banking and mortgage. We expect to continue funding our growth organically with low-cost core deposits coming from our existing relationship banking model and our ability to enhance Synovus retail franchise throughout the footprint with an outsized opportunity in Florida specifically.

Of course, there will always be factors outside of our control, whether it'd be the interest rate environment, political uncertainty or the timing of the next recession. But as we consider the market opportunities in front of us, they help in diversification of our current portfolio and the growth trajectory of the Company. We feel confident that Synovus is well positioned to contain and generating favorable returns for our investors.

Now beginning on Slide 3, I'll cover our financial highlights. Diluted EPS was $0.96 for the quarter. On an adjusted basis, diluted EPS was $1.00, up $0.02 or 1.5% from the previous quarter and up $0.08 or 8.4% from the same period a year ago. Adjusted EPS excludes $7.4 million in merger-related expenses associated with the FCB acquisition, $1.8 million loss on the sale of investment securities and a gain on private equity investments of $1.5 million.

Loan growth continues to meet our expectations with period-end loan growth of $504 million or 5.7% sequentially. Period-end deposits declined slightly during the quarter due to our pricing strategy and remix effort, which resulted in run-off of both higher cost CDs and public funds. This quarter's results also reflect an increase in our effective tax rate at 25.9%, compared to 25.2% last quarter.

From a credit perspective, our key metrics continue to show improving trends as the NPA ratio declined 5 basis points to 39 basis points, while charge-offs for the quarter were a very modest 13 basis points. Benefits associated with the FCB merger have grown more apparent with each completed step in our integration. Not only our cost savings well ahead of original estimates, but we continue to be pleased with the quality of production and the overall momentum in our expanded Florida marketplace.

Our profitability metrics also remain very strong. The adjusted tangible efficiency ratio was 52.08% compared to 50.24% in the first quarter and 56.41% a year ago, an improvement of 433 basis points year-over-year.

The adjusted ROA was 1.40%, down 5 basis points from last quarter and 3 basis points year-over-year, while our adjusted ROATCE was 17.29%, down 23 basis points from the prior quarter and up 132 basis points from the same quarter a year ago.

Moving to Slide 4 and loans. Total loans increased $504 million or 5.7% sequentially and was broad-based across all categories. C&I loans continue to show steady growth, up $120 million this quarter, driven by continued strong contributions across a number of our markets and teams. We continue to see positive trends in the consumer segment, which increased $304 million in the quarter. Other consumer, which includes our lending partnerships, grew $212 million this quarter. Lending partnership balances currently represent 5.3% of our total loan portfolio.

We were also pleased to see growth across the rest of our primary product categories, including mortgage, HELOC and credit card. CRE loans increased $80 million in the second quarter, with the growth driven primarily by investment properties, including multi-family and hotel and shopping centers, which grew a combined $121 million, while office and warehouse loans declined a combined $38 million.

Our income producing properties continue to perform very well. A reflection of our underwriting standards, which include strong debt service coverage, loan-to-value requirements and guarantees. These properties are primarily positioned in southeastern urban markets, which have continued to outperform national trends in job growth, population growth and income growth.

Turning to Slide 5 and deposits. Total period end deposits decreased $108.5 million or 1.1% annualized compared to the first quarter. This quarterly decline resulted from a combination of growth in core transaction deposits, which actually increased $100.8 million during the quarter, while public funds and CDs both declined by $279 million and $225 million, respectively.

As we have indicated previously, having closed the FCB merger and with conversion behind us, we are keenly focused on managing our overall deposit cost and mix. Decline in these deposits was offset partially by growth in broker deposits of $295 million, which largely replaced maturing CDs at a shorter duration and lower rate.

We were very pleased to see continued growth in non-interest bearing deposits this quarter. On an average basis, non-interest bearing DDA, excluding public bonds, was up $312 million or 15.1%, sequentially. Our retail, community and private wealth bankers continue to have great success building core relationships and growing households across our markets. In fact in the second quarter, we saw consumer checking account growth of 5.1% across the Company. Overall, we remain well positioned from a liquidity standpoint as evidenced by our loan-to-deposit ratio of 95%, which is well within our targeted range.

Moving to Slide 6. Net interest income was $397 million, essentially flat compared to the first quarter and up $112.7 million or 40% year-over-year, due largely to the FCB merger. The net interest margin for the quarter, including the impact of purchase accounting accretion, was 3.69%, down 9 basis points from the previous quarter. Net interest income and margin were favorably impacted by $9.8 million of loan accretion and $11 million of deposit premium amortization. Excluding the impact of purchase accounting adjustments, the core net interest margin was 3.48%, down 11 basis points from the first quarter.

The net interest margin decline for the quarter, excluding the impact of PAA, was driven by a 3 basis point decrease in both loan yields and total earning asset yields, and an 8 basis point increase and the effective cost of funds. The increase in funding costs included a 10 basis point increase in the cost of time deposits from the repricing of maturing CDs as well as a full core impact from our sub-debt issuance in the first quarter. These specific drivers on the liability side were largely in line with expectations, and consistent with what we communicated last quarter regarding our NIM outlook.

However, the market decline in treasuries and 30-day LIBOR during the quarter drove compression in both loan and security yields and led to a larger-than-expected overall decline in the core NIM this quarter. Kevin's going to provide further guidance regarding our expectations for the full year during our Q&A session.

Turning to Slide 7 and fee income. Total non-interest income was $89.8 million, up $10.4 million or 13.1% compared to the prior quarter and $16.4 million or 22.4% versus the same period a year ago. Non-interest income in the second quarter included a favorable fair value mark to private equity investments of $1.5 million, compared to $858,000 last quarter, as well as a $1.8 million securities loss. Adjusted non-interest income of $90.2 million, increased $11.8 million or 15% compared the first quarter, and $15.5 million or 20.7% year-over-year. Core banking fees of $38.2 million, increased $1.4 million or 3.9% sequentially. The increase resulted from higher service charges due to seasonality and three additional business days in the quarter.

Fiduciary/asset management, brokerage and insurance revenues of $25.8 million, increased $1.4 million or 5.7% sequentially, and $1.2 million or 5.1% over the same period last year. Total assets under management of $15.82 billion was up 10% year-over-year, reflecting the continued success in the client acquisition efforts of our financial advisory team.

As you can see, capital markets income of $8.4 million in the quarter, demonstrated substantial growth on both a sequential and year-over-year basis. This income is predominantly tied to customer derivative transactions, and was driven by significant contributions from our wholesale bankers in South Florida.

Second quarter also included very strong results from our mortgage company. Mortgage revenues of $7.9 million were up $2.8 million or 56% sequentially and $3.1 million or 63% year-over-year. Mortgage revenue during the quarter was driven by higher overall production, and while the favorable rate environment certainly helped our production numbers this quarter, we would also point to the extensive effort we placed on hiring talented, experienced producers in the last several years.

Turning to Slide 8, total non-interest expense was $264.1 million, and as I mentioned earlier, there were some continued merger-related expenses this quarter of $7.4 million, much lower than the $49.7 million reported last quarter. On an adjusted basis, non-interest expense of $256.7 million, increased $14 million or 5.8% versus the prior quarter. The increase in expenses in the second quarter resulted from a number of factors. Employment expenses were higher by $3.6 million, which in large part resulted from $2.9 million, an additional commission compensation expense due to higher levels of production, and higher salary expense due to one additional day this quarter.

Growth in these employment-related expense items was partially offset by seasonally lower employment taxes, which declined $3.3 million during the second quarter. We also had increases in third-party processing expense of $1.4 million, primarily from servicing fees on our lending partnership portfolio, as well as a $2.1 million increase in consulting fees associated with planned strategic and technology initiatives.

Turning to Slide 9. The graphs illustrate continued improvement in our credit metrics. The NPA and NPL ratios both improved, declining to 39 basis points and 34 basis points, respectively. Past dues greater than 30 days improved slightly to 22 basis points, while past dues greater than 90 days were 2 basis points. Net charge-offs ended the quarter at 13 basis points and year-to-date net charge-offs were 16 basis points.

Provision expense for the quarter was $12.1 million, down from $23.6 million in the first quarter. The allowance for loan losses increased $340,000 from the previous quarter, ending at $257.4 million, with a ratio declining 1 basis point to 0.71%. The coverage ratios of reserved NPLs, excluding acquired NPLs, remain strong at 219% or 283% excluding impaired loans for which the expected loss has been charged off.

Moving to capital on Slide 10. Our capital ratios remain strong and all increased slightly during the quarter, with the CET1 ratio increasing 9 basis points to 9.61%, and total risk-based capital ratio increasing 5 basis points to 12.1%. During the quarter, we completed an additional $25 million in share repurchases and we announced an increase in our authorization from $400 million to $725 million. Shortly thereafter, we announced and priced a new Series E preferred equity offering, which raised $350 million in Tier 1 qualifying capital at 5.875%, which we intend to use for general corporate purposes, including the potential for additional share repurchase under the new authorization. It's important to note that this transaction closed on July 1st, thus it is not included in our second quarter financial results.

The extent and timing of additional repurchase activity throughout 2019 will be a function of loan growth, the economic environment and general market conditions. That said, as it stands today, we do expect to largely utilize the current share repurchase authorization during 2019. Given our current risk profile, we're comfortable operating toward a lower end of our stated operating range of 9% to 10% for CET1.

Moving to Slide 11, as we reached the midpoint of 2019, it's appropriate that we review our progress toward the full year guidance and provide an update for the remainder of the year when considering the right environment and other macro economic factors.

From a balance sheet and credit standpoint, we continue to feel confident in the opportunity to reach our loan growth objectives for the year and as it stands today, the credit environment remains favorable. However, as we efficiently manage cost of funds and liquidity levels, it's likely that we'll see deposit growth in the range of 3% to 5%. We also expect that our cost savings associated with FCB will largely offset any incremental investments we choose to make in key talent or new markets. Thus our guidance regarding expense growth remains unchanged.

From a revenue perspective, our original guidance was based on the assumption of a flat interest rate environment throughout 2019. Given our full year growth expectations, along with the current forward curve, we would estimate revenue growth to be at the lower end of our 5.5% to 7.5% range.

We previously estimated that our effective tax rate would be 23% to 24% for the full year, assuming completion of certain tax credit related initiatives. We intend to complete these initiatives in the second half of the year, but the resulting benefits in 2019 will likely be at a lesser magnitude than originally projected. We're updating our tax rate guidance accordingly to 24% to 25% for the year. And as we just highlighted on the capital slide, in light of our increased authorization for share repurchase, in 2019, we have updated our guidance accordingly.

I want to share a few closing thoughts before we open the line for questions. When we announced the FCB transaction this time last year, we said the acquisition would elevate our growth profile through a larger and stronger Florida presence, and the addition of complementary products and capabilities. We said it would enhance profitability and returns, reduce our risk profile by diversifying our geographic footprint, and have a neutral impact on our capital position and future capital distribution plans.

We're making steady progress in achieving those key objectives and we're excited about the early wins that provide more evidence of the growth potential as we extend our broad capabilities to customers and prospects in that region. This past quarter, the FCB wholesale banking team generated most of what was a substantial increase in customer derivative income and they led our wholesale banking group and non-interest bearing deposit growth. And within a little under two months since conversion, nine of our top 25 branches for credit card production were legacy FCB branches, generating over 400 new accounts in that period alone. But our optimism extends beyond our Florida footprint. Our newly aligned wholesale banking team continues to build momentum and is on track for significant loan growth in the second half of 2019, diversified across middle market, CRE, senior housing and specialty finance teams.

We also continue to further solidify our community and retail banking presence in the Southeast and over the next year, we expect to open six to eight new branches in high opportunity markets like Atlanta and Orlando. Since relaunching our consumer and small business credit card products in October of 2017, we've seen almost a 300% increase in the rate of new account openings, which will support continued growth in card fee income going forward.

We have renewed energy and focus in our treasury and payment solution team as we've installed new leadership to drive growth in this high potential line of business. We're also poised to launch our new mass-affluent offering by year end, better promoting our wealth capabilities to clients with varying financial needs, and we're adding new fee income producers across our mortgage, brokerage, trust and advisory businesses at an accelerated pace. The results were evident in our fee income this quarter and we expect that trend to continue through the rest of the year.

I could go on and on, but the most important driver of optimism around our ability to win in the second half of 2019 and beyond is the strength of our entire team, made up of truly incredible talent that is deeply committed to our customers, our communities and each other, and proud to bring our brand of relationship centered into banking solutions and financial advice to our customers.

With that operator, we'll now open the floor for questions.

Questions and Answers:

Operator

Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first question today comes from Ebrahim Poonawala of Bank of America Merrill Lynch. Please go ahead.

Ebrahim Poonawala -- Bank of America Merrill Lynch -- Analyst

Good morning guys.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Good morning.

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

Morning.

Ebrahim Poonawala -- Bank of America Merrill Lynch -- Analyst

I guess just first wanted to focus on the revenue growth outlook. So I heard you Kessel talking about it being at the lower end. I'm surprised you didn't lower the guidance given what's happened to the rate environment. So would love your thoughts, one around when we look at NII in terms of what your outlook is for the core margin going forward for the back half of the year. And secondarily, the sustainability of the fee revenue that we saw in the second quarter and what we should expect in the back half?

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Yeah. Ebrahim, thanks for the great question and why don't Kevin and I tag team that. So, no, we didn't lower our guidance. We again guided to the lower end, which again we were pleased to stay in that band of 5.5% to 7.5%. I think a lot of it has to do with both our confidence and the growth on the loan side, and the performance of our fee areas, and you'll see it throughout our results not just legacy Synovus fee production, but great fee production from some of the legacy FCB teams. We highlighted derivatives, but I could give you a lot more examples of performance in fee areas that we do believe are sustainable.

In fact, I just met with Bart Singleton this morning about the quality and depth of the talent that he has added so far this year and that you see the results again this quarter. And he and I are both confident that you will see more of the same in the back half. Kevin, why don't you go a little deeper in NII and thoughts there?

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

See Ebrahim as we look out at the forward curve, which we noted in the presentation, we do expect two rate cuts, and one in the third quarter, one in the fourth quarter. And that could contribute to continued margin compression of 5 basis points to 8 basis points. And the way to think about that is, when you think about our asset betas, we currently are or we historically run is right around 50% to 51% on the earning assets side, where interest-bearing deposits typically are in the 45% range in a down rate environment.

So what that could create with two rate cuts is pressure on earning assets of roughly 15 basis points. And then, we would see a corresponding decline in interest-bearing deposits of 7 basis points to 10 basis points, and what would determine where we end up in that range obviously is a function of the pricing competition, for both promotional standard rates.

Two, the continued remixing of our deposit portfolio, Kessel mentioned that in his prepared remarks, but we're taking the opportunity as you've seen to reduce our guidance for the year on deposit by strategic. It's not a function of where we are not producing, we continue to have very good production on the non-interest bearing side. We're up 100 -- up $312 million on average balances for the quarter there. And we continue to expect to see that, where we're not going to grow or in some of these categories that are currently high cost categories such as public funds and some of the CD book where we'll let that run off.

So net, net we think 5 basis points to 8 basis points on the margin and then to just follow up on Kessel's point on fee income, we feel very comfortable with that $87 million to $90 million run rate for fee income. The reason I give you the range is, we did have $2 million benefit this quarter associated with the deferred compensation plan that is not recurring. But outside of that, we feel that the revenue that Kessel mentioned with the new hires is very sustainable.

Ebrahim Poonawala -- Bank of America Merrill Lynch -- Analyst

Understood. And just to be sensitive of time, moving to expense growth. Is it fair to assume that if revenues trending toward a lower end, expenses should low -- trend toward the lower end of that guide, maybe closer to 2%. And if you can talk about incremental expense levers, if we get a July rate cut and the revenue pressure turns out to be worse than expected?

Andrew Jamie Gregory -- Executive Vice President and Chief Financial Officer

Ebrahim, hi, this is Jamie. Let me jump in on this one. As Kessel mentioned on the call, adjusted NII was $257 million for the quarter. When we look at tangible NII, it was $254 million. So that's a little bit higher than the guidance we gave you; in the first quarter, we guided to $247 million to $250 million. The variance to that guidance is largely driven by expenses associated with growth initiatives. We had commissions largely in the mortgage area of $3 million quarter-on-quarter, other loan expenses of a little under $1 million associated with growth in the home equity product.

And then outside of that $4 million, we had increased expenses resulting from mark-to-market on deferred compensation plan, that was a $2 million increase and that's directly offset in NII, so that's a net neutral. However, when you take that $6 million of unexpected expense increases and you back it off the $254 million, you get to the lower end of our guidance that we gave last quarter, the $247 million to $250 million.

And so we feel pretty good about that. When you look forward in 2019, we expect tangible NII to decline sequentially in the third quarter and fourth quarter and average approximately $250 million like we discussed last quarter. And I just want be clear that included in that is the July merit increase, but it also includes over 100 hires of revenue producers. So we feel good about where our expenses -- our expense forecast is and our ability to toggle as we need to depending on how revenue moves.

Ebrahim Poonawala -- Bank of America Merrill Lynch -- Analyst

Thanks for taking my questions.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Thank you.

Operator

Our next question comes from Brad Milsaps with Sandler O'Neill. Please go ahead.

Brad Milsaps -- Sandler O'Neill & Partners, LP -- Analyst

Hey, good morning guys.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Good morning, Brad.

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

Good morning, Brad.

Brad Milsaps -- Sandler O'Neill & Partners, LP -- Analyst

Just to follow-up on those questions. As you look out maybe into '20 Kevin, if the fed continues to cut rates, what's -- any other lever that you guys are thinking about, any other real estate piece of it is something you're always looking at, just kind of curious, can you generate positive operating leverage in the face of maybe what's an even tougher interest rate environment as you look out over the next 12 months?

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

Yeah, Brad, it's something we talk about for years of maintaining positive operating leverage. If you exclude the benefit that we've had from PAA, we believe that we'll continue to generate positive operating leverage into 2020. And that comes from many different areas. It's an ongoing expense discipline. It won't come from a one-time initiative, but its rationalization of our FTEs, its continued focus on vendor and third-party expenses, and quite frankly, looking at our facilities to make sure that we continue to rightsize our physical presence through the reduction in branch transactions and our continued development of digital technology. So, we're going to be very keenly focused on managing the expenses and we think that we'll be able to generate positive operating leverage, excluding the PAA.

Brad Milsaps -- Sandler O'Neill & Partners, LP -- Analyst

Great. And that's kind of a good entree to my next question. Any change in depth to the guidance around how the PAAs will flow through in '19 versus '20 as you talked about on the last call. And then, there was a big swing in AOCI, was all that related to rates or is anything else in there that drove that increase in capital? Thank you.

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

Yeah. So Brad on the PAA, no changes for 2020. You'll note for the quarter, we were up about $2.5 million. We picked up 2 basis points on the loan accretion. And that's just the positive migration of the FCB portfolio, which when we do the reestimation every quarter produce better cash flows, which I think speaks to the quality of that book. But it will not affect the 2020 numbers and we'll still see a decline predominantly because of the seasonal impact, but also because of the 12-month amortization of the liabilities.

And then the second question was on...

Brad Milsaps -- Sandler O'Neill & Partners, LP -- Analyst

You just had a big swing in AOCI, obviously rates were down.

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

Oh, AOCI...

Brad Milsaps -- Sandler O'Neill & Partners, LP -- Analyst

Yeah, is that all from rate?

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

It's all rate driven.

Brad Milsaps -- Sandler O'Neill & Partners, LP -- Analyst

Okay great. Thank you very much.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Thanks, Brad.

Operator

Our next question comes from Michael Rose with Raymond James. Please go ahead.

Michael Rose -- Raymond James & Associates, Inc. -- Analyst

Hey, good morning guys.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Good morning, Michael.

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

Good morning.

Michael Rose -- Raymond James & Associates, Inc. -- Analyst

Just wanted to get some color on the GreenSky and SoFi loan growth this quarter, I think you guys are kind of backing away from that or at least feeling kind of full. Can you just give an update or outlook for how you view that products going into CECL? Thanks.

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

Yeah. So Michael, if you look for the quarter, loan growth was primarily -- and the third-party was out of the SoFi portfolio. We had about $212 million worth of growth. And if you think about what we said back in fourth quarters, we would leverage the first and second quarter to increase our participation in both SoFi and GreenSky to make the new pro forma balance sheet of the combined Synovus and FCB portfolio, right back in that 5% of total outstanding. So as we said here today, at roughly $1.9 billion, we're right at that 5%.

So going forward, you would see us grow that portfolio at a similar rate to the overall loan growth. So, no change in future perspective and quite frankly this quarter the perforator [Phonetic] we brought on was yielding right around 5.50%, which was accretive to our overarching yield to the portfolio.

As we look at CECL going forward, it does impact our thinking a little bit on GreenSky because we will have to start reserving some for the -- for that portfolio, but it does not materially change our viewpoint on the asset class, and we continue to expect to have a partnership with those SoFi and GreenSky into the future.

Michael Rose -- Raymond James & Associates, Inc. -- Analyst

Okay. That's helpful. And then as a follow-up, just switching gears a little bit. Can you talk about now the conversion of FCB is done, kind of the trajectory of your deposit pricing at both legacy Synovus and FCB. It does seem, if I recall from the merger announcement that there's some opportunities to kind of rightsize their funding costs, which could help out the NIM given the rate backdrop? Thanks.

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

Yeah, so look Michael, as we said, that would be a revenue synergy that would be achieved over time. We wouldn't be able to do it right away, but there's two notable areas, one was on the public funds portfolio. Excuse me about $2 billion in the legacy FCB portfolio that yields or has a rate about 2.40%. So as we look into the future rate environment and think about alternative sources of funding, that's an area where we can opportunistically run off certain high cost, public funds deposits that are also collateralized and replace it with a lower funding source, whether that be other FCM [Phonetic] deposits or whether that be alternative liabilities.

Conversely, we also have a CD portfolio, if you recall that in the South Florida marketplace. The promotional rate there typically run 20 basis points to 25 basis points higher than where they run through the rest of our footprint. So going forward, we will look at our production and make sure that our promotional rates are there to attract the overall lowest cost of new CD.

And we'll also, as we did this quarter, make decisions not to renew certain high cost CDs and we can replace it as we did this quarter with actually lower wholesale funding that is of shorter duration and also a lower rate.

Michael Rose -- Raymond James & Associates, Inc. -- Analyst

Okay. That's great color. Thanks for taking my questions.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Thanks, Michael.

Operator

Our next question comes from John Pancari with Evercore. Please go ahead.

John Pancari -- Evercore ISI -- Analyst

Good morning, guys.

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

Good morning, John.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Good morning, John.

John Pancari -- Evercore ISI -- Analyst

On the expense front, I mean it's good to hear that you do expect that you could see positive operating leverage going into 2020, ex the purchase accounting. Can you give us a little bit more color on -- around that, possibly the magnitude of positive operating leverage that you could see and maybe put another way the -- where do you think you can operate on a longer-term basis on the efficiency ratio basis? Thanks.

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

John, the interest rate environment is so fluid that it's changing every day. So to give you an actual ratio, it's probably a little premature. But we do believe it can be positive. And we've said in the past that a rising rate environment we felt like two times was the right number. In a declining rate environment, we felt like it was 1.25 to 1.50 in terms of the operating leverage ratio. So we'll have to monitor that. It really comes down to the interest rate environment. We do think that there are lots of initiatives, as you've heard Kessel talk about the growth that we have on the fee income side obviously provides us with a tailwind there, and then our ability to remix the liabilities will help us on the revenue side.

As it relates to the overall efficiency ratio, we still believe somewhere around 50% is a long-term goal for us and we look at that over a long period of time. We were there in the first quarter. A little bit of an uptick this quarter, but over the long haul, we think a 50% efficiency ratio is the right level for our business mix.

John Pancari -- Evercore ISI -- Analyst

Got it. All right, Kevin, thanks. Then on the balance sheet side, just given the downward revision to your deposit growth expectations, can you talk about plans for the securities book, are you planning to reinvest some of the cash flows coming off the book into the loan portfolio? Thanks.

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

Yeah. So we have about $200 million to $250 million worth of cash flow every quarter. Today, the reinvestment rate there is somewhere between 2.85% and 2.95% [Phonetic] depending on duration. So we'll continue to reinvest in the securities portfolio given that the yield on the MBS book today is right around 2.85% [Phonetic]. So we'll get a little bit of accretion with the cash flows. But to your point John, we will manage the size of the overall book as it relates to the cost of wholesale funding relative to the yield that we're able to bring on with cash flow. But our loan growth is going to continue to be as Kessel mentioned in that 5.5% to 7.5% and we feel like the investment securities portfolio would grow at a slightly slower pace than that.

John Pancari -- Evercore ISI -- Analyst

Got it. All right thanks, Kevin.

Operator

Our next question comes from Ken Zerbe with Morgan Stanley. Please go ahead.

Ken Zerbe -- Morgan Stanley -- Analyst

Good morning.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Good morning, Ken.

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

Good morning, Ken.

Ken Zerbe -- Morgan Stanley -- Analyst

Just had a question on the buyback. If say obviously have the $325 million outstanding are remaining by year end, I know you said you wanted to do that by year end. If I put that into my model, I actually get your CET1 ratio falling below 9%. I just want to make sure is that the right way to think about it? Are you comfortable being below 9% or are there other equity adjustments that I'm not thinking about? Thanks.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

I think you're thinking about it the right way, Ken. I mean it -- we've said it could push us to the lower end of our range and for some time period it could dip slightly below that long term. We think that 9% to 10% range is a good one, but given our current risk profile, we're comfortable pushing that lower end. So, yeah, I think you're -- it sounds like you're modeling it correctly.

Ken Zerbe -- Morgan Stanley -- Analyst

All right. Thank you very much.

Operator

The next question comes from Jennifer Demba with SunTrust. Please go ahead.

Jennifer Demba -- SunTrust Robinson Humphreys, Inc. -- Analyst

Thank you. Good morning.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Good morning.

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

Good morning, Jennifer.

Jennifer Demba -- SunTrust Robinson Humphreys, Inc. -- Analyst

Two questions. First on expenses, your consulting fees were higher. Could you give us some details on what you're doing in terms of strategic and technology initiatives right now? And are those consulting fees expected to continue to be at that rate? And secondly, can you give us an idea of when you'll be giving CECL guidance? Thanks.

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

Yeah, so Jennifer, I'll take those. So we were slightly elevated in consulting this quarter associated with continued investment in our My Synovus digital platform as well as our conversion to our new credit card platform. As well as a lot of little projects that are continuing with our infrastructure spend and just general strategic investments in various technology initiatives. So it will go down a little bit in the second half of the year. So it was elevated. But there's no big one line item there that's driving that expense.

As it relates to CECL, we thought -- we believe that we'll give a range of where it could impact us at the third quarter earnings call in the fourth quarter. So that'll give the Street a little bit of transparency into where we're seeing the numbers play out. And that's because we're running parallel runs today, but as you know we're still in the early stages, so numbers are moving around.

Jennifer Demba -- SunTrust Robinson Humphreys, Inc. -- Analyst

Are the parallel ones giving you results that were in line with your expectations, Kevin?

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

They are, Jennifer.

Jennifer Demba -- SunTrust Robinson Humphreys, Inc. -- Analyst

Okay. Thanks.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Thank you.

Operator

The next question comes from Jared Shaw with Wells Fargo Securities. Please go ahead.

Jared Shaw -- Wells Fargo Securities -- Analyst

Hi. Good morning.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Good morning, Jared.

Jared Shaw -- Wells Fargo Securities -- Analyst

Just looking at the -- on the funding side, the broker deposits that you added this quarter, what were the duration of those, and then is that becoming a more attractive alternative for you, I guess, in light of that pricing differential down in Florida?

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

Yeah. Some of that was money market, so obviously that's short duration, but on the CD side, nothing more than six months. And to your point, the rate on brokered funds dropped precipitously during the quarter. It started above 2.50%, and by the end of the quarter it was closer to 2%. So our growth would have been closer to 2.50% as we added it earlier in the quarter. But at this point, some of the brokered deposits are still providing a favorable pricing relative to some of the core deposits that you would have to price from a promotional standpoint. So we look at that trade off every day. We have over $1 billion of brokered capacity. So we'll continue to leverage that as a funding vehicle where it makes sense from a cost perspective.

Jared Shaw -- Wells Fargo Securities -- Analyst

Okay, thanks. And then you had mentioned that the branches that you're looking to expand in Atlanta and Orlando, outside of Orlando, and are there still opportunities for growth in Florida or is it more developing the footprint that you do have?

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

There are definitely opportunities in Florida and the branch expansion process is ongoing. We're continually looking at ways to build smaller, more efficient, more technology-driven locations and make sure we're retiring some of the larger legacy offices. But Florida is certainly an opportunity. We'll continue to look at markets throughout that state for additional efficient locations.

Jared Shaw -- Wells Fargo Securities -- Analyst

Okay. Thanks a lot.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Thank you.

Operator

The next question comes from Steven Duong with RBC Capital Markets. Please go ahead.

Steven Duong -- RBC Capital Markets -- Analyst

Hey, good morning guys.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Good morning.

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

Good morning, Steve.

Steven Duong -- RBC Capital Markets -- Analyst

Hey, just want to get -- just confirmation I heard it right. Is it 5 basis points to 8 basis points on the core NIM compression for two rate cuts, is that right?

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

That's correct, Steven.

Steven Duong -- RBC Capital Markets -- Analyst

Okay, great. So just digging a little further, so LIBOR has gone down considerably since the beginning of the year and it looks like your rates climbed up to 1.3% from 1.24% in the prior quarter. Should we take this to be the peak in deposit rates or do you think it'll still circle up in the next quarter?

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

I think we've achieved the peak in deposit rates. I think we're obviously estimating a rate cut in July. So we think that will put some betas as I mentioned earlier about a 45 beta over a 90-day period on those deposits. So we'll see deposit rates start to come down and that's what I mentioned on the 5 basis points to 8 basis points that includes two rate hikes this year. It would mean -- I'm sorry, two rate cuts this year and that would mean that we would see roughly 15 basis points of erosion on the earning asset side, but we would see a corresponding reduction on funding of 7 basis points to 10 basis points, which is as you noted it's kind of coming off the peak in second quarter.

Steven Duong -- RBC Capital Markets -- Analyst

Got it. Appreciate it. Thank you. And then just a follow-up on your share repurchase this quarter. It was $25 million. It was considerably lower in the last quarter. Can you just give us a sense of what was the thought process in this quarter? And also in 2020, how should we think about repurchases? Shall we -- Is there any reason why we wouldn't think that you guys would do a repurchase that would keep your CET1 around the 9% level?

Andrew Jamie Gregory -- Executive Vice President and Chief Financial Officer

Hey, this is Jamie. I'll jump in. We received our authorization for the further share repurchases late in the second quarter. And since then, you know we've been thinking about our strategy around the next wave of repurchases. We look to complete those. Now we're constantly monitoring the risk profile, the environment. We look to have complete a lot of those or the majority of those in the third quarter.

When you look forward longer term and we think about capital deployment, we would like to think about deploying 60% to 80% of our earnings net income into dividends and share repurchases, and then have the rest go to growth. Obviously, our priority is organic growth, and that's where we want our capital to go. But we will toggle the share repurchases accordingly.

Steven Duong -- RBC Capital Markets -- Analyst

Great. Appreciate it. Thanks guys.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Thank you.

Operator

The next question comes from Brady Gailey with KBW. Please go ahead.

Brady Gailey -- Keefe, Bruyette & Woods -- Analyst

Good morning, guys.

Andrew Jamie Gregory -- Executive Vice President and Chief Financial Officer

Good morning, Brady.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Good morning, Brady.

Brady Gailey -- Keefe, Bruyette & Woods -- Analyst

So just to close the loop on the expense side. I heard your guidance of roughly $250 million a quarter of expenses, excluding intangible amortization. What's the update on expected intangible amortization for the rest of this year and into 2020?

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

About $3 million a quarter.

Brady Gailey -- Keefe, Bruyette & Woods -- Analyst

Okay. All right.

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

What you saw these past quarters, we had a slightly lower numbers that we revised our estimate for the year. So, it should come down to be right around $2.9 million in the next few quarters.

Brady Gailey -- Keefe, Bruyette & Woods -- Analyst

Okay. And then the increase in the tax rate guidance sounds like it's mostly timing related. As we look forward to 2020, is it safe to assume that once all these initiatives are done, you could potentially see a modestly lower tax rate in 2020 versus 2019?

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

That's correct, Brady.

Brady Gailey -- Keefe, Bruyette & Woods -- Analyst

Okay, Great. Thanks, guys.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Thanks, Brady.

Operator

The next question comes from Christopher Marinac with Janney Montgomery Scott. Please go ahead.

Christopher Marinac -- Janney Montgomery Scott -- Analyst

Hey, good morning everyone. Just want to follow-up on loan pay downs. Kevin or Kessel, do these accelerate with the lower rate environment or would the pace be kind of similar to what you just saw in Q2?

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

I mean obviously the CPR has picked up a little bit with rates declining. If you think about our portfolio, it's primarily on the fixed rate mortgage side, where you'll see some pickups in CPRs. But in general, at this level of rate, we really never got to a high level of rate, where the reductions will cause a major pickup in CPRs until we get the fed funds rate back down into the low 1% range. So, yes it will pick up a little bit, but we don't anticipate anything that is of a large magnitude in the coming quarters or year.

Christopher Marinac -- Janney Montgomery Scott -- Analyst

Okay, that's helpful. And then just a quick follow-up on capacity to do additional sub-debt, if you wanted to kind of looking out into 2020?

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

We have some capacity, but at this point we feel like we've optimized the capital stack with the first quarter sub debt issuance and now with the closing of the preferred issuance in July -- on July 1st. So I think at this point we feel like we've optimized the capital stack pretty well. As we continue to grow our assets, we would look to optimize, but at this point we feel like we've done what we need to do.

Christopher Marinac -- Janney Montgomery Scott -- Analyst

Very well. Thanks guys, appreciate it.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Thanks Chris.

Operator

The next question comes from Nancy Bush with NAB Research. Please go ahead.

Nancy Bush -- NAB Research -- Analyst

Good morning, gentlemen. Kessel, I have a question for you, and one of the concerns about the FCB deal was that, yes, you were diversifying into a new geography, but that new geography has historically been a riskier one than the one you were coming out of. So would you just speak to sort of structural changes that you've seen in Florida that maybe makes [Phonetic] that not as true as it used to be?

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Well, yeah, let me speak to the FCB book, which has got a lot of attention on these calls and as we were very clear, our diligence effort over that book was very extensive. And this quarter even though we really haven't talked about it, the reason we haven't talked about it is, it performed exactly as we expected as measured by NPAs, NPLs, past dues, charge-offs, risk rate migration and even some dispositions that Bob Derrick can give some color on maybe in a minute.

So that book is strong and underwritten the way we believe it was and performing the way we thought it was. And again, Nancy, as you know, you follow us. We've been in Florida for over 30 years. And I think every market hopefully gets a little better and bankers understand a little better what went wrong the last time. So, if you look at the mix of our Synovus book franchise wide or even the FCB book, you'll just see this not in those higher risk categories that in a typical downturn give you the biggest loss. Very little company wide or in Florida in the land less than 2% of our book. Any of the speculative high rise stuff, Coastal Florida, we don't have any of that.

So again, I think one of our lessons learned is, what asset class to stay away from and then from an underlying standpoint make sure that we're doing it with good hard equity and good sponsorship and good guarantees. And I think again what -- one of the many things I like about our Florida team is, they're all experienced Florida bankers. They've been through a downturn or two. And know who to bank, know who not to bank and again know what asset classes and how to structure those classes to survive a downturn.

So I've set off. I don't know when it's going to come. We were actually looking last night and today just at the make-up of our entire real estate book, relative to the last crisis when we peaked at give or take 45% or 46% commercial real estate going into the crisis, 25% of that our whole book was in the land category. And today, we're 28%-ish and less than 2% in that high risk category. So I think that you take that across the state of Florida that you could say the same thing, and I think we're well positioned there and again evidenced by really now a full year of watching that portfolio perform.

Nancy Bush -- NAB Research -- Analyst

Just as an addendum to that question, can you just give us some additional color on the sort of product diversification that you've done in Florida and sort of exporting the Synovus mix, I guess to the Florida operation?

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Yeah, be happy to. We highlighted in the call some of the early win from that team, the derivatives of credit card, the non-interest bearing deposit growth from the wholesale team. But that said and again Bart Singleton has done a great job in building out those teams that we believe would be very complementary.

So there were existing mortgage producers there, but we've added producers in Orlando, in Fort Myers and in Fort Lauderdale and seeing great results there as we try and transition those branches from more of a CD-generating capability to a full service. We mentioned the credit card in the branches. We've added -- we've opened five brokerage offices in Southwest Florida. We've added several trust operations people. So from a trust sales teams -- so from a results and the branches, just don't forget we converted them to May 6.

Nancy Bush -- NAB Research -- Analyst

All right.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

But there's lot of energy, there's lot of enthusiasm, there have been a lot of training and early results are good. And again the investment on the fee side that we've made, the mortgage, the brokerage, the trust, those are already paying dividends and we think that will only get better.

Nancy Bush -- NAB Research -- Analyst

Could you just speak just one additional thing, could you speak to deposit growth in the Florida franchise as opposed to sort of deposit growth in the legacy franchise?

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Well, we think it's an outsized opportunity and I probably left out. One of the things we're most excited about, which is our treasury sales team. We have new energetic leadership. We've hired great treasury professionals across our footprint, including Florida and we'll make that more of an offensive tool. We opened a retail treasury desk just yesterday and saw the result from the first day, I think 14 referrals, 12 closed pieces of business.

So we certainly think that opportunity is here. That's why we're excited about some of the branch locations. We're having customer and market celebrations that all of us are very involved in. Kevin Howard just returned from a week there where he's been very involved with the team. I did an update with Ken over the weekend about getting more of our leadership be included into Florida to see some of their greater customers.

So we think it's a great opportunity. We think the branch effort is going well. The overlaying the treasury piece on top of that with our treasury product, treasury services and treasury team. And the retail desk we think gives us again an outsized opportunity in Florida.

Nancy Bush -- NAB Research -- Analyst

All right. Thank you.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Thanks, Nancy.

Operator

The next question comes from Garrett Holland with Baird. Please go ahead.

Garrett Holland -- Robert W. Baird & Co. -- Analyst

Good morning and thanks for taking the questions. Business confidence has clearly taken some hits in recent months. I just want to get your latest thoughts on the commercial pipelines and your outlook for commercial loan growth across the footprint?

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Yeah, maybe we should tag team that again. This is Kessel. I would just say because I know I'm very close to our markets, our bankers, our leaders in those markets. And I think in general, confidence is pretty good. That's muted on a daily basis but, I hate to say it, the tweet of the day or whatever other macroeconomic or political events that might be causing people to pause, running in general we'd say across the board our pipelines are strong. Competition is strong for that business, but -- so I would just say cautiously optimistic about pipelines and we're very rigorously looking at asset classes and markets and sub markets for any signs of overheating what we might want to pull back. But to date, again I think our business owners are, I think, quietly confident is the right word and pipelines seem to be in good shape.

Garrett Holland -- Robert W. Baird & Co. -- Analyst

No, it's great. I just -- switching gears quickly, I appreciate the color on the solid FCB execution and sorry if I missed this, but you formally expect to update the FCB cost savings target or could you size the offsetting franchise investments you're making this year?

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

What we've said Garrett is that, we expected to get $35 million plus in savings this year and then the long-term goal of getting to $40 million would be achieved. And quite frankly, we would get more than $40 million, but the incremental expense savings that we would achieve would be reinvested back into the South Florida model in terms of as Kessel mentioned adding our private wealth or community banking organization.

And Jamie mentioned it earlier, but in the second half of this year, we plan to add 100 revenue producing FTEs and we're able to do that and keep our run rate at that $250 million number. So a lot of the savings that we're achieving, we're reinvesting in revenue-producing positions, which will obviously provide a bit of a tailwind in revenue this year, but more importantly into 2020.

Garrett Holland -- Robert W. Baird & Co. -- Analyst

Thank you. And then last one just quickly. A lot of moving parts with the industry outlook, but are you still confident you can reach or sustain that 1.45% ROA or reach the 17% ROTCE target over this intermediate term, if we have a break lower in fed funds?

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

We -- as we said, we do our long-term targets and since we submit those back in first quarter, obviously there's been a tremendous change in the underlying environment, especially the interest rate environment. So what we're committed to doing is every year, we'll update our long-term targets. So you should expect to see those again in 2020.

But what I want to say and say clearly is that the things that we were going to do under those long-term targets, we're continuing to execute on those strategies and those initiatives. So organic loan growth is something that we'll continue to focus on, improvements in profitability and deployment of capital as well as maintaining positive operating leverage.

All of those are key tenants into how we execute. How the interest rate environment affects our overarching numbers is something that we can't control. But we'll give you an update for those on an annual basis, but just know that we're still executing on the original premise.

Garrett Holland -- Robert W. Baird & Co. -- Analyst

Much appreciated. Thanks for taking the questions.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Thank you.

Operator

[Operator Instructions] Our next question comes from Tyler Stafford with Stephens. Please go ahead.

Tyler Stafford -- Stephens Inc. -- Analyst

Hey, good morning guys.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Good morning, Tyler.

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

Good morning, Tyler.

Tyler Stafford -- Stephens Inc. -- Analyst

Kevin, I appreciate that the margin components around the earning asset yield expectation and then the funding offset expectation. I'm just trying to square to the 7 bps to 10 bps improvement in the cost funds you expect to see over the next two quarters. Can you just -- I guess, help me think about what's going to drive that deposit growth, because when I look at the brokered on an end of period basis, those were up call it $300 million and you gave the cost of those that you put on around $250 million, and then the other short-term borrowings were also up around $300 million on end of period basis, so that's a headwind. What's going to drive the offset from a repricing lower and kind of where do you see the core, I guess, deposit growth coming from that's going to help get that 7 bp to 10 bp decline?

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

So look on the deposit growth, we're going to see it across the board. When you look at all of our lines of business, the second half of the year, we'll get growth in non-interest bearing deposits. We'll get growth in money markets. We'll get a little bit of growth in interest-bearing checking, some of that comes from public funds, some of it's non-public funds. So we'll get it across the border, across our lines of business. Where we see the opportunities for repricing of the two that I mentioned earlier, if you look at our wholesale public funds portfolio, it's yielding today at 240. And so as we look to the next two quarters, especially around public funds CDs, we would look to allow some of those to mature, and hopefully reprice them at a much lower rate or actually replace them with a different deposit class.

Similarly on the CD book, your portfolio today is 211. And if you look at what we what the new and renewed rate for this past quarter was we were at 195. So going forward, as we expect to see some of the maturities come into place, the maturities for third quarter average right around 210. So as those mature, we can -- if we can replace those with the 195 that we had this quarter and I think we would expect to see that rate continue to normalize over time, it would bring the CD portfolio rate down as well. So we'll look at the high-cost categories like public funds and CDs and then we'll continue to get good growth in our relationship-based deposit categories, which are typically lower cost.

Tyler Stafford -- Stephens Inc. -- Analyst

Got it. Okay. Thanks for that. And then just lastly for me just around provisioning expectations. You've obviously got the 15 to 20 basis points charge off outlook for remainder unchanged. Just how we should think about the provisioning going forward from here?

Robert Warren Derrick -- Executive Vice President and Chief Credit Officer

Yeah. Hey, Tyler. This is Bob, and I know provision was down significantly from the previous quarter. Sort of on average it's still in the high teens and I think that guidance that we've given earlier of around $20 million or so per quarter is still the right number. Obviously can move back up, but we'll stay around charge-offs, plus some provision for growth and then depending on what happens in terms of portfolio factors quantitative and qualitative that could move it a little bit, but depending on pay-offs, so what category your payoffs are coming from versus your growth. But we're still comfortable in that $20 million per quarter range on provision.

Tyler Stafford -- Stephens Inc. -- Analyst

Could that carry into 2020?

Robert Warren Derrick -- Executive Vice President and Chief Credit Officer

I would say looking forward that number begins to increase obviously as we...

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

[Speech Overlap]

Robert Warren Derrick -- Executive Vice President and Chief Credit Officer

As we begin to move in a CECL environment, but again we're modeling that now.

Tyler Stafford -- Stephens Inc. -- Analyst

I thought I tried at least. Thanks, guys.

Robert Warren Derrick -- Executive Vice President and Chief Credit Officer

Thanks. Thanks, Tyler.

Operator

This concludes our question-and-answer session. I would now like to turn the call -- conference back over to Kessel Stelling for any closing remarks.

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Well, thank you very much, and really thanks to all of you who dialed-in today to follow our call and as always, please call us if you have further questions. I do want to thank, and I think really might be lost in all of the numbers this quarter is the magnitude of just what our May 6 conversion really meant to our teams. And to see these types of -- this kind of financial performance in the face of a massive conversion, which again go back to January 1 legal close May 6 conversion.

And you saw our -- first to our Florida teams again, there were lots of training, lots of time in Atlanta, Columbus, lots of product, sales training, lots of everything that would distract from their everyday work, yet they delivered day in and day out on the fee side, on the production side. And so my hats off to our new Synovus team members from Florida, but also and I often say banking is a team sport to the entire five state footprint, teammates who both assisted with that conversion, and who also on their own produce results that I think we're all very proud of, and most importantly took care of our customers throughout our footprint. So a big thanks to our team.

I think we've got the best talent of any bank out there, I am admittedly a little prejudiced, but very proud of what our team did in the second quarter and confident that those efforts will continue into the third and fourth quarter. So stay tuned. Look forward to be with all of you on the next call and in the meantime please let us know, if we can provide any more clarity. So thanks to all of you and have a great day.

Operator

[Operator Closing Remarks]

Duration: 66 minutes

Call participants:

Steve Adams -- Senior Director of Investor Relations

Kessel D. Stelling -- Chairman, Chief Executive Officer and President

Kevin Blair -- Senior Executive Vice President and Chief Operating Officer

Andrew Jamie Gregory -- Executive Vice President and Chief Financial Officer

Robert Warren Derrick -- Executive Vice President and Chief Credit Officer

Ebrahim Poonawala -- Bank of America Merrill Lynch -- Analyst

Brad Milsaps -- Sandler O'Neill & Partners, LP -- Analyst

Michael Rose -- Raymond James & Associates, Inc. -- Analyst

John Pancari -- Evercore ISI -- Analyst

Ken Zerbe -- Morgan Stanley -- Analyst

Jennifer Demba -- SunTrust Robinson Humphreys, Inc. -- Analyst

Jared Shaw -- Wells Fargo Securities -- Analyst

Steven Duong -- RBC Capital Markets -- Analyst

Brady Gailey -- Keefe, Bruyette & Woods -- Analyst

Christopher Marinac -- Janney Montgomery Scott -- Analyst

Nancy Bush -- NAB Research -- Analyst

Garrett Holland -- Robert W. Baird & Co. -- Analyst

Tyler Stafford -- Stephens Inc. -- Analyst

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