Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Fitch has upgraded its rating outlook on Synovus Financial Corporation (SNV - Analyst Report) and its subsidiaries from ‘Negative’ to ‘Positive.’ Moreover, the rating agency has affirmed the Issuer Default Ratings (IDRs) – long-term as well as short-term – for the company.

The rating agency reviewed Synovus under a peer review that included 16 mid-tier regional banks including Associated Banc-Corp (ASBC - Analyst Report), BOK Financial Corporation (BOKF - Analyst Report) and  TCF Financial Corporation(TCB - Analyst Report). 
 
Rationale Behind Upgrade
 
The rating revision came on the back of constantly improving asset quality metrics of the company. Fitch stated that the credit risk of the company has stabilized and the company is persistently looking to trim down the high levels of problem credits in the near term. Further, Fitch believes that the company’s strong capital base is adequate to absorb credit losses in the future.
 
Further, the affirmation of ratings reflected the company's elevated levels of non-performing assets (inclusive of accruing TDRs) as well as a future outlook of weak earnings.
 
Fitch commented that the company’s initiatives to lower the high risk profile and stabilize its balance sheet by loan sales, loan workouts and raising of equity have made modest progress. These are anticipated to lead to improved operating results in the upcoming quarters. Further, deferred tax asset (DTA) reversal of $800 million considerably enhanced core capital levels at the end of 2012.
 
However, Fitch warned that compared with other higher credit rated banks in the peer group, Synovus’ credit quality was distinctly inferior. Therefore, core earnings will be substandard compared with peer companies due to higher credit costs pressurizing the bottom line.
 
Conclusion
 
This rating outlook revision depicts creditworthiness of the company and will instill investors’ confidence. Further, lower non-performing assets and improving operating efficiencies will help the stock sustain investors’ interest.
 
However, we are concerned about the impacts of the prevailing low interest rate environment, sluggish economic growth and stringent regulatory landscape on the company’s financials in the subsequent quarters.
 
Synovus carries a Zacks Rank #3 (Hold).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GRP IN DXYN 15.84 +7.90%
BOFI HLDG IN BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%