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Synovus (SNV) Beats Q4 Earnings Estimates, Expenses Flare Up
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Buoyed by top-line strength, Synovus Financial Corporation (SNV - Free Report) recorded a positive earnings surprise of 5.9% in fourth-quarter 2017. Adjusted earnings of 72 cents per share beat the Zacks Consensus Estimate of 68 cents. Also, the reported figure came in 33.3% higher than the prior-year quarter tally.
Higher revenues, backed by strong loan balances, drove organic growth. Notably, lower efficiency ratio was a tailwind. Moreover, a positive impact of rising rates was witnessed. However, escalating expenses and provisions remain a concern for investors.
Including the loss on early extinguishment of debt and charges, relating to Federal tax reform, net income available to common shareholders came in at $27 million or 23 cents per share, compared with $66 million or 54 cents per share recorded in the prior-year quarter.
For full-year 2017, adjusted earnings per share came in at $2.53 per share surpassing the Zacks Consensus Estimate of $2.50. Also, earnings compared favorably with the prior-year figure of $1.98. For full-year 2017, net income of $265.2 million was reported, up 12.1% year over year.
Top-Line Strength Reflected, Expenses Flare Up
For full-year 2017, the company reported revenues of $1.37 billion, up 16.7% on a year-over-year basis. Results also surpassed the Zacks Consensus Estimate of $1.32 billion.
Total revenues for the quarter came in at $339.1 million, rising 10.3% from the prior-year quarter. The reported figure surpassed the Zacks Consensus Estimate of $338.7 million.
Net interest income increased 15.5% from the year-ago quarter to $269.7 million. Further, net interest margin expanded 36 basis points (bps) year over year to 3.65%.
Non-interest income decreased on a year-over-year basis to $69.4 million, primarily due to a decrease in other fee income and bank card fees. However, it got offset by an increase in fiduciary and asset management fees, and brokerage revenues. Adjusted non-interest income was $69.3 million, up 0.9% year over year.
On the other hand, total non-interest expenses were $226.5 million, while adjusted non-interest expenses came in at $201.1 million, up 17.2% and 7.6% respectively, from the prior-year quarter. Notably, increase in advertising, third???party processing, and salaries and other personnel expenses led to the rise, partially offset by lower foreclosed real estate expenses and amortization of intangibles.
Adjusted efficiency ratio came in at 59.29%, as compared with 61.81% in the year-earlier quarter. A decline in ratio indicates improvement in profitability.
Total deposits came in at $26.1 billion, almost stable from the prior quarter figure. Total net loans climbed 1.2% sequentially to $24.8 billion.
Credit Quality: A Mixed Bag
Credit quality metrics for Synovus was a mixed bag in the quarter.
Net charge-offs climbed 7.9% year over year to $9 million. The annualized net charge-off ratio was 0.15%, up 1 bps from the year-earlier quarter. Provision for loan losses jumped 36.8% from the year-ago quarter to $8.6 million.
Non-performing loans were down 24.7% year over year to $115.6 million. The non-performing loan ratio came in at 0.47%, contracting 17 bps from the prior-year quarter.
Additionally, total non-performing assets amounted to $130.6 million, underlining a decline of 25.7%, whereas, the non-performing asset ratio contracted 21 bps to 0.53%., year over year.
Capital Position Improves
Tier 1 capital ratio and total risk based capital ratio were 10.38% and 12.23% respectively, compared with 10.07% and 12.01% as of Dec 31, 2016.
Also, as of Dec 31, 2017, Common Equity Tier 1 Ratio (fully phased-in) was 9.88% compared with 9.51% in the year-ago quarter. Tier 1 Leverage ratio was 9.19% compared with 8.99% in the comparable period last year.
Capital Deployment Update
During 2017, Synovus returned over $175.1 million to shareholders, through common share repurchases, resulting in the repurchase of 4 million shares. Notably, during the fourth quarter, the company completed the $39.2 million common stock buy-back program.
Additionally, the board of directors authorized a share repurchase program of up to $150 million of the company’s common stock, to be executed during 2018.
The board also announced a 67% increase in the quarterly common stock dividend from 15 cents to 25 cents per share. The new dividend will be paid in Apr 2018.
Our Take
Synovus’ results have been quite decent in the quarter. We believe that the company’s focus on both organic and inorganic growth, together with cost containment efforts, will pay off and aid bottom-line expansion in subsequent years. Though escalating expenses and provisions raise concerns, a lower efficiency ratio indicates optimism.
Synovus Financial Corp. Price, Consensus and EPS Surprise
Amid an expected trading weakness, strong investment banking results and higher rates drove JPMorgan Chase & Co.’s (JPM - Free Report) fourth-quarter 2017 earnings of $1.76 per share, which handily surpassed the Zacks Consensus Estimate of $1.69. Results exclude one-time tax related charge of $2.4 billion or 69 cents per share.
Wells Fargo & Company’s (WFC - Free Report) fourth-quarter 2017 adjusted earnings of 97 cents per share improved from the prior-year quarter earnings of 96 cents. The Zacks Consensus Estimate came in at $1.04.
Riding on higher revenues, The PNC Financial Services Group, Inc. (PNC - Free Report) reported a positive earnings surprise of 4.1% in fourth-quarter 2017. Adjusted earnings per share of $2.29 beat the Zacks Consensus Estimate of $2.20. Moreover, the bottom line reflected a 16.2% increase from the prior-year quarter.
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Synovus (SNV) Beats Q4 Earnings Estimates, Expenses Flare Up
Buoyed by top-line strength, Synovus Financial Corporation (SNV - Free Report) recorded a positive earnings surprise of 5.9% in fourth-quarter 2017. Adjusted earnings of 72 cents per share beat the Zacks Consensus Estimate of 68 cents. Also, the reported figure came in 33.3% higher than the prior-year quarter tally.
Higher revenues, backed by strong loan balances, drove organic growth. Notably, lower efficiency ratio was a tailwind. Moreover, a positive impact of rising rates was witnessed. However, escalating expenses and provisions remain a concern for investors.
Including the loss on early extinguishment of debt and charges, relating to Federal tax reform, net income available to common shareholders came in at $27 million or 23 cents per share, compared with $66 million or 54 cents per share recorded in the prior-year quarter.
For full-year 2017, adjusted earnings per share came in at $2.53 per share surpassing the Zacks Consensus Estimate of $2.50. Also, earnings compared favorably with the prior-year figure of $1.98. For full-year 2017, net income of $265.2 million was reported, up 12.1% year over year.
Top-Line Strength Reflected, Expenses Flare Up
For full-year 2017, the company reported revenues of $1.37 billion, up 16.7% on a year-over-year basis. Results also surpassed the Zacks Consensus Estimate of $1.32 billion.
Total revenues for the quarter came in at $339.1 million, rising 10.3% from the prior-year quarter. The reported figure surpassed the Zacks Consensus Estimate of $338.7 million.
Net interest income increased 15.5% from the year-ago quarter to $269.7 million. Further, net interest margin expanded 36 basis points (bps) year over year to 3.65%.
Non-interest income decreased on a year-over-year basis to $69.4 million, primarily due to a decrease in other fee income and bank card fees. However, it got offset by an increase in fiduciary and asset management fees, and brokerage revenues. Adjusted non-interest income was $69.3 million, up 0.9% year over year.
On the other hand, total non-interest expenses were $226.5 million, while adjusted non-interest expenses came in at $201.1 million, up 17.2% and 7.6% respectively, from the prior-year quarter. Notably, increase in advertising, third???party processing, and salaries and other personnel expenses led to the rise, partially offset by lower foreclosed real estate expenses and amortization of intangibles.
Adjusted efficiency ratio came in at 59.29%, as compared with 61.81% in the year-earlier quarter. A decline in ratio indicates improvement in profitability.
Total deposits came in at $26.1 billion, almost stable from the prior quarter figure. Total net loans climbed 1.2% sequentially to $24.8 billion.
Credit Quality: A Mixed Bag
Credit quality metrics for Synovus was a mixed bag in the quarter.
Net charge-offs climbed 7.9% year over year to $9 million. The annualized net charge-off ratio was 0.15%, up 1 bps from the year-earlier quarter. Provision for loan losses jumped 36.8% from the year-ago quarter to $8.6 million.
Non-performing loans were down 24.7% year over year to $115.6 million. The non-performing loan ratio came in at 0.47%, contracting 17 bps from the prior-year quarter.
Additionally, total non-performing assets amounted to $130.6 million, underlining a decline of 25.7%, whereas, the non-performing asset ratio contracted 21 bps to 0.53%., year over year.
Capital Position Improves
Tier 1 capital ratio and total risk based capital ratio were 10.38% and 12.23% respectively, compared with 10.07% and 12.01% as of Dec 31, 2016.
Also, as of Dec 31, 2017, Common Equity Tier 1 Ratio (fully phased-in) was 9.88% compared with 9.51% in the year-ago quarter. Tier 1 Leverage ratio was 9.19% compared with 8.99% in the comparable period last year.
Capital Deployment Update
During 2017, Synovus returned over $175.1 million to shareholders, through common share repurchases, resulting in the repurchase of 4 million shares. Notably, during the fourth quarter, the company completed the $39.2 million common stock buy-back program.
Additionally, the board of directors authorized a share repurchase program of up to $150 million of the company’s common stock, to be executed during 2018.
The board also announced a 67% increase in the quarterly common stock dividend from 15 cents to 25 cents per share. The new dividend will be paid in Apr 2018.
Our Take
Synovus’ results have been quite decent in the quarter. We believe that the company’s focus on both organic and inorganic growth, together with cost containment efforts, will pay off and aid bottom-line expansion in subsequent years. Though escalating expenses and provisions raise concerns, a lower efficiency ratio indicates optimism.
Synovus Financial Corp. Price, Consensus and EPS Surprise
Synovus Financial Corp. Price, Consensus and EPS Surprise | Synovus Financial Corp. Quote
Currently, Synovus carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Amid an expected trading weakness, strong investment banking results and higher rates drove JPMorgan Chase & Co.’s (JPM - Free Report) fourth-quarter 2017 earnings of $1.76 per share, which handily surpassed the Zacks Consensus Estimate of $1.69. Results exclude one-time tax related charge of $2.4 billion or 69 cents per share.
Wells Fargo & Company’s (WFC - Free Report) fourth-quarter 2017 adjusted earnings of 97 cents per share improved from the prior-year quarter earnings of 96 cents. The Zacks Consensus Estimate came in at $1.04.
Riding on higher revenues, The PNC Financial Services Group, Inc. (PNC - Free Report) reported a positive earnings surprise of 4.1% in fourth-quarter 2017. Adjusted earnings per share of $2.29 beat the Zacks Consensus Estimate of $2.20. Moreover, the bottom line reflected a 16.2% increase from the prior-year quarter.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>