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Synovus' (SNV) Stock Up on Q2 Earnings Beat, Higher NII
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Synovus Financial Corp. (SNV - Free Report) reported second-quarter 2022 adjusted earnings per share of $1.17, beating the Zacks Consensus Estimate of $1.10. However, the bottom line declined 2.5% from the prior-year quarter’s reported number.
Results were affected by escalating expenses and a fall in fee income. Nonetheless, it recorded a rise in net interest income (NII), net interest margin (NIM), total loans and a significant decline in non-performing loans and assets. Likely in response to this, shares of the company gained 1.5% following the earnings release.
Net income available to common shareholders came in at $169.8 million or $1.16 per share, down from $177.9 million or $1.19 per share recorded in the prior-year quarter.
Revenues & Expenses Rise
Total revenues in the second quarter came in at $522.7 million, up 7% from the prior-year quarter. The top line surpassed the Zacks Consensus Estimate of $521.5 million.
NII improved 11% year over year to $425.4 million. NIM rose 20 basis points (bps) to 3.22%.
Non-interest revenues decreased 9% on a year-over-year basis to $97.3 million. The main reasons behind the fall in non-interest revenues were lower mortgage banking income and other non-interest income.
Non-interest expenses were $282.1 million, up 4% year on year. This rise mainly resulted from increases in professional fees, FDIC insurance and other regulatory fees, net occupancy, equipment and software expenses, and salaries.
Adjusted tangible efficiency ratio came in at 53.43% compared with the 54.41% reported in the year-earlier quarter. A decrease in this ratio indicates a rise in profitability.
Total loans of $41.2 billion showed a 3% improvement sequentially. Total deposits were $49.03 billion, a marginal increase from the previous quarter.
Credit Quality Improves
Non-performing loans fell 32% year over year to $109 million. Net charge-offs decreased 38% to $16.5 million. Net charge-offs ratio was 0.16% compared with the previous-year quarter’s 0.28%.
Total non-performing assets amounted to $135.8 million, underlining a 24% year-over-year fall. Non-performing asset ratio came in at 0.33%, down 13 bps from the prior-year quarter.
However, provision for credit losses of $12.7 million was recorded in the second quarter against the benefit of $24.6 million in the prior-year quarter.
Capital Ratios Down & Profitability Ratios Mixed
Tier 1 capital ratio and total risk-based capital ratio were 10.56% and 12.43%, respectively, down from 11% and 13.25% as of Jun 30, 2021. Moreover, as of Jun 30, 2022, Common Equity Tier 1 capital ratio was 9.46%, declining from 9.75% witnessed in the year-ago quarter.
Tier 1 leverage ratio was 9.03%, improving from 8.72% recorded in the year-earlier period.
Return on average assets was 1.26%, down from the prior-year quarter’s 1.36%. Return on average common equity was 16.48%, up from 15.40%.
Our Take
Synovus Financial’s performance in the second quarter of 2022 appeared decent in terms of earnings and revenues. Furthermore, its improved credit quality is expected to continue aiding its financials. In addition, a decreased adjusted efficiency ratio leads to a rise in profitability. However, in the second quarter, the provision for credit losses was an undermining factor.
Synovus Financial Corp. Price, Consensus and EPS Surprise
U.S. Bancorp (USB - Free Report) reported second-quarter 2022 earnings per share of $1.09 (excluding merger and integration-related charges of 10 cents), which beat the Zacks Consensus Estimate of 1.07 per share. However, the results do not compare favorably with the prior-year quarter’s figure of $1.28.
Results were supported by an increase in revenues, average loan growth and lower non-performing assets. The U.S. Bancorp’s credit quality was decent in the quarter. However, higher expenses and elevated provision for credit losses were the offsetting factors.
First Republic Bank’s second-quarter 2022 earnings per share of $2.16 surpassed the Zacks Consensus Estimate of $2.05. Additionally, the bottom line improved 10.8% from the year-ago quarter.
Results have been supported by an increase in NII and non-interest income. The First Republic Bank’s capital position was strong in the quarter. Yet, higher expenses and elevated provision for credit losses were the offsetting factors.
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Synovus' (SNV) Stock Up on Q2 Earnings Beat, Higher NII
Synovus Financial Corp. (SNV - Free Report) reported second-quarter 2022 adjusted earnings per share of $1.17, beating the Zacks Consensus Estimate of $1.10. However, the bottom line declined 2.5% from the prior-year quarter’s reported number.
Results were affected by escalating expenses and a fall in fee income. Nonetheless, it recorded a rise in net interest income (NII), net interest margin (NIM), total loans and a significant decline in non-performing loans and assets. Likely in response to this, shares of the company gained 1.5% following the earnings release.
Net income available to common shareholders came in at $169.8 million or $1.16 per share, down from $177.9 million or $1.19 per share recorded in the prior-year quarter.
Revenues & Expenses Rise
Total revenues in the second quarter came in at $522.7 million, up 7% from the prior-year quarter. The top line surpassed the Zacks Consensus Estimate of $521.5 million.
NII improved 11% year over year to $425.4 million. NIM rose 20 basis points (bps) to 3.22%.
Non-interest revenues decreased 9% on a year-over-year basis to $97.3 million. The main reasons behind the fall in non-interest revenues were lower mortgage banking income and other non-interest income.
Non-interest expenses were $282.1 million, up 4% year on year. This rise mainly resulted from increases in professional fees, FDIC insurance and other regulatory fees, net occupancy, equipment and software expenses, and salaries.
Adjusted tangible efficiency ratio came in at 53.43% compared with the 54.41% reported in the year-earlier quarter. A decrease in this ratio indicates a rise in profitability.
Total loans of $41.2 billion showed a 3% improvement sequentially. Total deposits were $49.03 billion, a marginal increase from the previous quarter.
Credit Quality Improves
Non-performing loans fell 32% year over year to $109 million. Net charge-offs decreased 38% to $16.5 million. Net charge-offs ratio was 0.16% compared with the previous-year quarter’s 0.28%.
Total non-performing assets amounted to $135.8 million, underlining a 24% year-over-year fall. Non-performing asset ratio came in at 0.33%, down 13 bps from the prior-year quarter.
However, provision for credit losses of $12.7 million was recorded in the second quarter against the benefit of $24.6 million in the prior-year quarter.
Capital Ratios Down & Profitability Ratios Mixed
Tier 1 capital ratio and total risk-based capital ratio were 10.56% and 12.43%, respectively, down from 11% and 13.25% as of Jun 30, 2021. Moreover, as of Jun 30, 2022, Common Equity Tier 1 capital ratio was 9.46%, declining from 9.75% witnessed in the year-ago quarter.
Tier 1 leverage ratio was 9.03%, improving from 8.72% recorded in the year-earlier period.
Return on average assets was 1.26%, down from the prior-year quarter’s 1.36%. Return on average common equity was 16.48%, up from 15.40%.
Our Take
Synovus Financial’s performance in the second quarter of 2022 appeared decent in terms of earnings and revenues. Furthermore, its improved credit quality is expected to continue aiding its financials. In addition, a decreased adjusted efficiency ratio leads to a rise in profitability. However, in the second quarter, the provision for credit losses was an undermining factor.
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
U.S. Bancorp (USB - Free Report) reported second-quarter 2022 earnings per share of $1.09 (excluding merger and integration-related charges of 10 cents), which beat the Zacks Consensus Estimate of 1.07 per share. However, the results do not compare favorably with the prior-year quarter’s figure of $1.28.
Results were supported by an increase in revenues, average loan growth and lower non-performing assets. The U.S. Bancorp’s credit quality was decent in the quarter. However, higher expenses and elevated provision for credit losses were the offsetting factors.
First Republic Bank’s second-quarter 2022 earnings per share of $2.16 surpassed the Zacks Consensus Estimate of $2.05. Additionally, the bottom line improved 10.8% from the year-ago quarter.
Results have been supported by an increase in NII and non-interest income. The First Republic Bank’s capital position was strong in the quarter. Yet, higher expenses and elevated provision for credit losses were the offsetting factors.