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Synovus Financial Corp. (SNV - Free Report) reported first-quarter 2024 adjusted earnings per share of 79 cents, which lagged the Zacks Consensus Estimate of 99 cents. Also, adjusted earnings compared unfavorably with $1.33 earned in the year-ago quarter.
Results were affected by declines in net interest income (NII) and non-interest revenues. A slight reduction in loan balances, and increased expenses and provisions were other undermining factors.
Net income available to common shareholders was $114.8 million, plunging 41% from the prior-year quarter.
Revenues Fall & Expenses Rise
Total revenues in the first quarter were $537.7 million, down 12.4% from the prior-year quarter. The top line lagged the Zacks Consensus Estimate of $548.9 million.
NII fell 13% year over year to $418.8 million. This was primarily due to a dip in average earnings assets and higher funding costs. The net interest margin declined 39 basis points (bps) to 3.04%.
Non-interest revenues decreased 11% to $118.8 million. The main reasons behind the decline were lower capital market income and mortgage banking income.
Non-interest expenses were $322.7 million, up marginally year over year. The rise was mainly due to the FDIC special assessment charge.
The adjusted tangible efficiency ratio was 59.87%, up from 52.33% in the year-earlier quarter. A rise in the efficiency ratio indicates a decrease in profitability.
As of Mar 31, 2024, total loans of $43.3 billion decreased 0.2% from the previous quarter. Total deposits were $50.58 billion, which decreased 0.3% from the previous quarter.
Credit Quality Worsens
Non-performing loans were $350.4 million, increasing 92% from the year-ago quarter. Total non-performing assets amounted to $371.6 million, which rose substantially from $182.4 million in the year-ago period. The non-performing assets ratio was 0.86%, up from 0.41% in the year-ago period.
Net charge-offs increased significantly to $44.3 million from $18.5 million in the prior-year quarter. The net charge-off ratio was 0.41%, up from 0.17% in the prior-year quarter. Provision for credit losses was $53.9 million, which increased 68% year over year.
Capital Ratios Solid, Profitability Ratios Deteriorate
As of Dec 31, 2024, the Tier 1 capital ratio and total risk-based capital ratio were 11.44% and 13.31%, respectively, compared with 10.81% and 12.72% in the year-ago quarter. As of the same date, the Common Equity Tier 1 capital ratio was 10.38%, up from 9.77% in the year-ago quarter.
Return on average assets was 0.85%, down from 1.36% in the prior-year quarter. Return on average common equity was 10.2%, down from 19.2% in the year-earlier quarter.
Our Take
Elevated expense levels and rising provisions, along with reduced loan balances, are the major concerns for Synovus Financial. However, a solid capital position will aid capital distribution activities in the upcoming period.
Synovus Financial Corp. Price, Consensus and EPS Surprise
State Street’s (STT - Free Report) first-quarter 2024 adjusted earnings of $1.69 per share surpassed the Zacks Consensus Estimate of $1.48. The bottom line increased 11.2% from the prior-year quarter.
STT’s results were primarily aided by growth in fee revenues and lower provisions. Also, the company witnessed improvements in the total assets under custody and AUM balances. However, lower NIR and higher expenses were major headwinds.
Hancock Whitney Corp.’s (HWC - Free Report) first-quarter 2024 adjusted earnings per share of $1.28 beat the Zacks Consensus Estimate of $1.18. However, the bottom line compared unfavorably with the $1.45 registered in the year-ago quarter.
HWC’s results were aided by an increase in non-interest income. Also, marginally higher loan balances were tailwinds. However, a decline in NII, and higher expenses and provisions were the undermining factors.
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Synovus (SNV) Q1 Earnings & Revenues Miss, Expenses Rise Y/Y
Synovus Financial Corp. (SNV - Free Report) reported first-quarter 2024 adjusted earnings per share of 79 cents, which lagged the Zacks Consensus Estimate of 99 cents. Also, adjusted earnings compared unfavorably with $1.33 earned in the year-ago quarter.
Results were affected by declines in net interest income (NII) and non-interest revenues. A slight reduction in loan balances, and increased expenses and provisions were other undermining factors.
Net income available to common shareholders was $114.8 million, plunging 41% from the prior-year quarter.
Revenues Fall & Expenses Rise
Total revenues in the first quarter were $537.7 million, down 12.4% from the prior-year quarter. The top line lagged the Zacks Consensus Estimate of $548.9 million.
NII fell 13% year over year to $418.8 million. This was primarily due to a dip in average earnings assets and higher funding costs. The net interest margin declined 39 basis points (bps) to 3.04%.
Non-interest revenues decreased 11% to $118.8 million. The main reasons behind the decline were lower capital market income and mortgage banking income.
Non-interest expenses were $322.7 million, up marginally year over year. The rise was mainly due to the FDIC special assessment charge.
The adjusted tangible efficiency ratio was 59.87%, up from 52.33% in the year-earlier quarter. A rise in the efficiency ratio indicates a decrease in profitability.
As of Mar 31, 2024, total loans of $43.3 billion decreased 0.2% from the previous quarter. Total deposits were $50.58 billion, which decreased 0.3% from the previous quarter.
Credit Quality Worsens
Non-performing loans were $350.4 million, increasing 92% from the year-ago quarter. Total non-performing assets amounted to $371.6 million, which rose substantially from $182.4 million in the year-ago period. The non-performing assets ratio was 0.86%, up from 0.41% in the year-ago period.
Net charge-offs increased significantly to $44.3 million from $18.5 million in the prior-year quarter. The net charge-off ratio was 0.41%, up from 0.17% in the prior-year quarter. Provision for credit losses was $53.9 million, which increased 68% year over year.
Capital Ratios Solid, Profitability Ratios Deteriorate
As of Dec 31, 2024, the Tier 1 capital ratio and total risk-based capital ratio were 11.44% and 13.31%, respectively, compared with 10.81% and 12.72% in the year-ago quarter. As of the same date, the Common Equity Tier 1 capital ratio was 10.38%, up from 9.77% in the year-ago quarter.
Return on average assets was 0.85%, down from 1.36% in the prior-year quarter. Return on average common equity was 10.2%, down from 19.2% in the year-earlier quarter.
Our Take
Elevated expense levels and rising provisions, along with reduced loan balances, are the major concerns for Synovus Financial. However, a solid capital position will aid capital distribution activities in the upcoming period.
Synovus Financial Corp. Price, Consensus and EPS Surprise
Synovus Financial Corp. price-consensus-eps-surprise-chart | Synovus Financial Corp. Quote
Currently, Synovus carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
State Street’s (STT - Free Report) first-quarter 2024 adjusted earnings of $1.69 per share surpassed the Zacks Consensus Estimate of $1.48. The bottom line increased 11.2% from the prior-year quarter.
STT’s results were primarily aided by growth in fee revenues and lower provisions. Also, the company witnessed improvements in the total assets under custody and AUM balances. However, lower NIR and higher expenses were major headwinds.
Hancock Whitney Corp.’s (HWC - Free Report) first-quarter 2024 adjusted earnings per share of $1.28 beat the Zacks Consensus Estimate of $1.18. However, the bottom line compared unfavorably with the $1.45 registered in the year-ago quarter.
HWC’s results were aided by an increase in non-interest income. Also, marginally higher loan balances were tailwinds. However, a decline in NII, and higher expenses and provisions were the undermining factors.