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Synovus' (SNV) Q3 Earnings Beat on Solid Mortgage Banking
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Riding on solid mortgage banking, Synovus Financial (SNV - Free Report) reported third-quarter 2020 adjusted earnings of 89 cents per share, handily beating the Zacks Consensus Estimate of 48 cents. However, the reported figure comes in 8.7% lower than the prior-year quarter tally.
Results were driven by rising fee income, raising investors’ optimism which resulted in a price rally of 3.86%, post release. Moreover, strong deposit balances stoked organic growth. However, uptrend in expenses and lower net interest income were undermining factors. Also, higher provisions remain a major drag.
Including certain non-recurring items, net income available to common shareholders came in at $83.3 million or 56 cents per share compared with the loss of $1.6 million or 1 cent per share recorded in the prior-year quarter.
Net Interest Income Falls, Non-Interest Income Up, Expenses Escalate
Total revenues (fully tax-equivalent) in the third quarter came in at $492.3 million, up marginally from the prior-year quarter. Also, the top-line figure outpaced the Zacks Consensus Estimate of $467.8 million.
Net interest income declined 6.2% year over year to $377.9 million. Additionally, net interest margin shrunk 34 basis points (bps) year over year to 3.08%.
Non-interest income climbed 28.8% on a year-over-year basis to $114.4 million. Substantial rise in mortgage banking and other income drove this upside.
Non-interest expenses came in at $316.7 million, up 15% year over year. These increases mainly resulted from higher salaries and other personnel expense, net occupancy and equipment expense, third-party processing and other services and professional fees, partly offset by lower FDIC insurance and other regulatory fees, amortization of intangibles and other expenses.
Adjusted efficiency ratio came in at 53.91% as compared with the 51.71% reported in the year-earlier quarter. A rise in ratio indicates a deterioration in profitability.
Total deposits came in at $44.7 billion, up 1.1% sequentially. Yet, total loans edged down 1% sequentially to $39.5 billion.
Credit Quality: A Concern
Credit metrics deteriorated for Synovus during the September-end quarter.
Non-performing loans surged 46% year over year to $168.8 million. The non-performing loan ratio came in at 0.43%, up 11 basis points (bps) year over year.
Total non-performing assets amounted to $192.1 million, underlining a rise of 27% year over year. The non-performing asset ratio expanded 7 bps year over year to 0.49%.
Net charge-offs climbed 43.2% on a year-over-year basis to $28.5 million. The annualized net charge-off ratio was 0.29%, up 7 bps from the year-earlier quarter. Provision for loan losses soared 57% from the prior-year quarter to $43.4 million.
Robust Capital Position
Tier 1 capital ratio and total risk based capital ratio were 10.58% and 13.16%, respectively, compared with 10.27% and 12.30% as of Sep 30, 2019.
Moreover, as of Sep 30, 2020, Common Equity Tier 1 Ratio (fully phased-in) was 9.30% compared with the 8.96% witnessed in the year-ago quarter. Tier 1 Leverage ratio was 8.49% compared with the 9.02% recorded in the year-earlier period.
Our Take
Synovus’ results were decent in the July-September quarter. We believe the company’s focus on both organic and inorganic growth, together with its cost-containment efforts, will pay off and aid bottom-line expansion in subsequent years. Though elevated fee income reflects optimism, lower net interest income and higher provisions raise concerns.
Synovus Financial Corp. Price, Consensus and EPS Surprise
Bank of New York Mellon Corporation’s (BK - Free Report) third-quarter 2020 earnings per share of 98 cents surpassed the Zacks Consensus Estimate of 96 cents. The reported figure, however, came in 8.4% lower than the prior-year quarter’s level. Results primarily benefited from growth in asset balance. Nonetheless, slightly lower revenues and rise in expenses were undermining factors.
First Republic Bank delivered a positive earnings surprise of 16.7% in the third quarter on solid top-line strength. Earnings per share of $1.61 outpaced the Zacks Consensus Estimate of $1.38. Additionally, the bottom line climbed 22.9% from the year-ago quarter. Results were supported by an increase in NII and fee income. Yet, higher expenses and elevated provisions were offsetting factors.
Regions Financial (RF - Free Report) reported third-quarter 2020 adjusted earnings of 49 cents per share, surpassing the Zacks Consensus Estimate of 34 cents. Also, results compared favorably with the prior-year period earnings of 39 cents. Results were driven by higher revenues on increases in both NII and fee income. Furthermore, rise in deposit balances provided some respite. Notably, mortgage income and capital markets income were on an upswing. Nevertheless, higher provisions for credit losses and rise in expenses were undermining factors.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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Synovus' (SNV) Q3 Earnings Beat on Solid Mortgage Banking
Riding on solid mortgage banking, Synovus Financial (SNV - Free Report) reported third-quarter 2020 adjusted earnings of 89 cents per share, handily beating the Zacks Consensus Estimate of 48 cents. However, the reported figure comes in 8.7% lower than the prior-year quarter tally.
Results were driven by rising fee income, raising investors’ optimism which resulted in a price rally of 3.86%, post release. Moreover, strong deposit balances stoked organic growth. However, uptrend in expenses and lower net interest income were undermining factors. Also, higher provisions remain a major drag.
Including certain non-recurring items, net income available to common shareholders came in at $83.3 million or 56 cents per share compared with the loss of $1.6 million or 1 cent per share recorded in the prior-year quarter.
Net Interest Income Falls, Non-Interest Income Up, Expenses Escalate
Total revenues (fully tax-equivalent) in the third quarter came in at $492.3 million, up marginally from the prior-year quarter. Also, the top-line figure outpaced the Zacks Consensus Estimate of $467.8 million.
Net interest income declined 6.2% year over year to $377.9 million. Additionally, net interest margin shrunk 34 basis points (bps) year over year to 3.08%.
Non-interest income climbed 28.8% on a year-over-year basis to $114.4 million. Substantial rise in mortgage banking and other income drove this upside.
Non-interest expenses came in at $316.7 million, up 15% year over year. These increases mainly resulted from higher salaries and other personnel expense, net occupancy and equipment expense, third-party processing and other services and professional fees, partly offset by lower FDIC insurance and other regulatory fees, amortization of intangibles and other expenses.
Adjusted efficiency ratio came in at 53.91% as compared with the 51.71% reported in the year-earlier quarter. A rise in ratio indicates a deterioration in profitability.
Total deposits came in at $44.7 billion, up 1.1% sequentially. Yet, total loans edged down 1% sequentially to $39.5 billion.
Credit Quality: A Concern
Credit metrics deteriorated for Synovus during the September-end quarter.
Non-performing loans surged 46% year over year to $168.8 million. The non-performing loan ratio came in at 0.43%, up 11 basis points (bps) year over year.
Total non-performing assets amounted to $192.1 million, underlining a rise of 27% year over year. The non-performing asset ratio expanded 7 bps year over year to 0.49%.
Net charge-offs climbed 43.2% on a year-over-year basis to $28.5 million. The annualized net charge-off ratio was 0.29%, up 7 bps from the year-earlier quarter. Provision for loan losses soared 57% from the prior-year quarter to $43.4 million.
Robust Capital Position
Tier 1 capital ratio and total risk based capital ratio were 10.58% and 13.16%, respectively, compared with 10.27% and 12.30% as of Sep 30, 2019.
Moreover, as of Sep 30, 2020, Common Equity Tier 1 Ratio (fully phased-in) was 9.30% compared with the 8.96% witnessed in the year-ago quarter. Tier 1 Leverage ratio was 8.49% compared with the 9.02% recorded in the year-earlier period.
Our Take
Synovus’ results were decent in the July-September quarter. We believe the company’s focus on both organic and inorganic growth, together with its cost-containment efforts, will pay off and aid bottom-line expansion in subsequent years. Though elevated fee income reflects optimism, lower net interest income and higher provisions raise concerns.
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
Bank of New York Mellon Corporation’s (BK - Free Report) third-quarter 2020 earnings per share of 98 cents surpassed the Zacks Consensus Estimate of 96 cents. The reported figure, however, came in 8.4% lower than the prior-year quarter’s level. Results primarily benefited from growth in asset balance. Nonetheless, slightly lower revenues and rise in expenses were undermining factors.
First Republic Bank delivered a positive earnings surprise of 16.7% in the third quarter on solid top-line strength. Earnings per share of $1.61 outpaced the Zacks Consensus Estimate of $1.38. Additionally, the bottom line climbed 22.9% from the year-ago quarter. Results were supported by an increase in NII and fee income. Yet, higher expenses and elevated provisions were offsetting factors.
Regions Financial (RF - Free Report) reported third-quarter 2020 adjusted earnings of 49 cents per share, surpassing the Zacks Consensus Estimate of 34 cents. Also, results compared favorably with the prior-year period earnings of 39 cents. Results were driven by higher revenues on increases in both NII and fee income. Furthermore, rise in deposit balances provided some respite. Notably, mortgage income and capital markets income were on an upswing. Nevertheless, higher provisions for credit losses and rise in expenses were undermining factors.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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