We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Why Is Synovus (SNV) Up 4.6% Since Last Earnings Report?
Read MoreHide Full Article
It has been about a month since the last earnings report for Synovus Financial (SNV - Free Report) . Shares have added about 4.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Synovus due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Synovus reported second-quarter 2020 adjusted earnings of 23 cents per share beat the Zacks Consensus Estimate of 15 cents. Also, the reported figure was 77% lower than the prior-year quarter number.
Results reflected higher fee income on strength in mortgage banking in the quarter. Moreover, strong loan and deposit balances stoked organic growth. However, lower net interest income and higher provisions on the coronavirus scare were key concerns.
Including certain non-recurring items, net income available to common shareholders was $84.9 million or 57 cents per share compared with $153 million or 96 cents per share recorded in the prior-year quarter.
Net Interest Income Falls, Fee Income Grows, Expenses Rise
Total revenues in the second quarter were $550.9 million, up 12.9% from the prior-year quarter. Also, the top-line figure outpaced the Zacks Consensus Estimate of $441.1 million.
Net interest income declined 6% year over year to $376.6 million. Also, net interest margin shrunk 56 basis points (bps) year over year to 3.13%.
Non-interest income climbed 93.2% on a year-over-year basis to $173.5 million. A substantial rise in mortgage banking revenues drove the upside.
Non-interest expenses were $284.1 million, up 7.6% year over year. The increase mainly resulted from higher salaries and other personnel expenses, net occupancy and equipment expenses, third-party processing, and other services and professional fees.
Adjusted efficiency ratio came in at 57.91% as compared with 52.08% reported in the year-earlier quarter. A rise in ratio indicates deterioration in profitability.
Total deposits were $44.2 billion, up 11% sequentially. Total loans climbed 4.3% sequentially to $39.9 billion.
Credit Quality: A Concern
Credit metrics deteriorated for Synovus in the June-end quarter.
Non-performing loans were up 18.8% year over year to $147.4 million. The non-performing loan ratio came in at 0.37%, up 3 bps year over year.
Total non-performing assets amounted to $177.7 million, underlining a rise of 27.3% year over year. The non-performing asset ratio expanded 5 bps year over year to 0.44%.
Net charge-offs climbed significantly on a year-over-year basis to $24 million. The annualized net charge-off ratio was 0.24%, up 11 bps from the year-earlier quarter. Provision for loan losses was $141.9 million compared with $12.1 million in the prior-year quarter. The substantial rise resulted from the coronavirus concerns.
Capital Position Strong
Tier 1 capital ratio and total risk-based capital ratio were 10.15% and 12.7%, respectively, compared with 10.09% and 12.11% as of Jun 30, 2019.
Also, as of Jun 30, 2020, Common Equity Tier 1 ratio (fully phased-in) was 8.9% compared with the 9.61% witnessed in the year-ago quarter. Tier 1 Leverage ratio was 8.38% compared with 8.89% recorded in the year-earlier period.
2020 Outlook
Management expects NII to be higher in remaining 2020. Also, net interest margin is anticipated to remain relatively stable in the second half of 2020.
The company expects loan growth to be flat for the remainder of 2020, excluding the impact of loans forgone under Paycheck Protection Program.
The company expects deposits to decline in the second half of 2020 as excess liquidity is deployed. Also, rate paid on deposits might decline further, led by strategic turnover within its core and broker time deposit portfolios.
Fee revenue is expected to be down, due to slowdown in mortgage.
Management expects expenses to decline in the second half of the year, mainly led by lower personnel expense.
Some pressure on credit metrics is expected over the next few quarters, which aligns with the reserve builds in the first half of the year under the pro-cyclical nature of CECL.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 6.98% due to these changes.
VGM Scores
At this time, Synovus has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Synovus has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Why Is Synovus (SNV) Up 4.6% Since Last Earnings Report?
It has been about a month since the last earnings report for Synovus Financial (SNV - Free Report) . Shares have added about 4.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Synovus due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Synovus Q2 Earnings Beat Estimates, Provisions Rise
Synovus reported second-quarter 2020 adjusted earnings of 23 cents per share beat the Zacks Consensus Estimate of 15 cents. Also, the reported figure was 77% lower than the prior-year quarter number.
Results reflected higher fee income on strength in mortgage banking in the quarter. Moreover, strong loan and deposit balances stoked organic growth. However, lower net interest income and higher provisions on the coronavirus scare were key concerns.
Including certain non-recurring items, net income available to common shareholders was $84.9 million or 57 cents per share compared with $153 million or 96 cents per share recorded in the prior-year quarter.
Net Interest Income Falls, Fee Income Grows, Expenses Rise
Total revenues in the second quarter were $550.9 million, up 12.9% from the prior-year quarter. Also, the top-line figure outpaced the Zacks Consensus Estimate of $441.1 million.
Net interest income declined 6% year over year to $376.6 million. Also, net interest margin shrunk 56 basis points (bps) year over year to 3.13%.
Non-interest income climbed 93.2% on a year-over-year basis to $173.5 million. A substantial rise in mortgage banking revenues drove the upside.
Non-interest expenses were $284.1 million, up 7.6% year over year. The increase mainly resulted from higher salaries and other personnel expenses, net occupancy and equipment expenses, third-party processing, and other services and professional fees.
Adjusted efficiency ratio came in at 57.91% as compared with 52.08% reported in the year-earlier quarter. A rise in ratio indicates deterioration in profitability.
Total deposits were $44.2 billion, up 11% sequentially. Total loans climbed 4.3% sequentially to $39.9 billion.
Credit Quality: A Concern
Credit metrics deteriorated for Synovus in the June-end quarter.
Non-performing loans were up 18.8% year over year to $147.4 million. The non-performing loan ratio came in at 0.37%, up 3 bps year over year.
Total non-performing assets amounted to $177.7 million, underlining a rise of 27.3% year over year. The non-performing asset ratio expanded 5 bps year over year to 0.44%.
Net charge-offs climbed significantly on a year-over-year basis to $24 million. The annualized net charge-off ratio was 0.24%, up 11 bps from the year-earlier quarter. Provision for loan losses was $141.9 million compared with $12.1 million in the prior-year quarter. The substantial rise resulted from the coronavirus concerns.
Capital Position Strong
Tier 1 capital ratio and total risk-based capital ratio were 10.15% and 12.7%, respectively, compared with 10.09% and 12.11% as of Jun 30, 2019.
Also, as of Jun 30, 2020, Common Equity Tier 1 ratio (fully phased-in) was 8.9% compared with the 9.61% witnessed in the year-ago quarter. Tier 1 Leverage ratio was 8.38% compared with 8.89% recorded in the year-earlier period.
2020 Outlook
Management expects NII to be higher in remaining 2020. Also, net interest margin is anticipated to remain relatively stable in the second half of 2020.
The company expects loan growth to be flat for the remainder of 2020, excluding the impact of loans forgone under Paycheck Protection Program.
The company expects deposits to decline in the second half of 2020 as excess liquidity is deployed. Also, rate paid on deposits might decline further, led by strategic turnover within its core and broker time deposit portfolios.
Fee revenue is expected to be down, due to slowdown in mortgage.
Management expects expenses to decline in the second half of the year, mainly led by lower personnel expense.
Some pressure on credit metrics is expected over the next few quarters, which aligns with the reserve builds in the first half of the year under the pro-cyclical nature of CECL.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 6.98% due to these changes.
VGM Scores
At this time, Synovus has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Synovus has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.