With mergers heating up, Kessel D. Stelling says "every bank has to earn their independence every day."

His company, Synovus Financial Corp., paid a steep price toward that end Monday: 850 employees and 39 branches — or about 14% of both the Columbus, Ga., company's work force and branch network.

The president and chief executive officer of Synovus described those cuts and their anticipated $100 million of annual savings as "the right thing for our company." They tell investors and clients that it is taking the "right steps" to end nine straight quarterly losses on bad loans to land developers and homebuilders, he said.

"It demonstrates a long-term commitment" to going it alone, Stelling said. He described perennial market speculation of an imminent sale of the $31 billion-asset company as flattering, but premature.

Its toehold in Georgia, Florida and three other Southeastern states is attractive to any institutions eager for a bigger slice of a region that has short-term problems but great long-term growth prospects, experts say.

"I would feel bad if people said the Synovus franchise didn't have as much value," Stelling said.

However, there are "no vultures circling at all," he said. "We're moving through the cycle."

It remains unclear how far Synovus has to go in its turnaround, analysts say. Its problem loans — and losses — narrowed in the first three months of 2010. Monday's news clarifies how it plans to implement previously announced plans to reduce expenses and increase efficiency: By becoming smaller.

That is neither bad, nor surprising, analysts said.

"It makes complete business sense." said Jeff Davis, an analyst with Guggenheim Securities LLC, adding that its commercial-real-estate-centric "business model has been blown apart by the sea change in the Southeast lending market."

In the early 2000s, Synovus heavily catered to commercial real estate borrowers that went bust in the downturn and won't recover any time soon, Davis said. It simply doesn't need as many branches or people as it shifts focus from CRE to commercial and industrial lending, wealth management and corporate banking.

The big question will be whether Synovus will be able to have a second-life as a top provider of C&I loans and advisory services to businesses and wealthy people — products and services on the minds of almost every "growth-conscience bank" in the country, analysts say. It still has big challenges to overcome to compete on those fronts, from ending its losing streak to repaying its $967 million of federal aid.

Synovus had said in October that it planned to cut $100 million more of expenses by 2012. It has already laid off 1,000 employees since 2008. Its portfolio of outstanding loans, which is heavily reliant on one-to-four-family properties and buyers and developers of land, shrank 14% from the year earlier in the third quarter.

"The banking world is changed," Stelling said. "We needed to make this company more efficient and the staffing levels more appropriate for a banking organization of our size."

The cutbacks will cost $28 million and touch every corner of its five-state territory. The bulk of the layoffs involve staff at 39 of its 322 branches slated for closure; it is also letting go of support staff at the corporate level and managers across the company. About 470 cuts will be made over the next 30 days and the remainder in the second quarter. The impact on customer service and revenues should be minimal because traffic at branches is already in decline and customers will still be able to bank at other branches in their area, he said.