Synovus Q2 Earnings Beat Estimates, Revenues Fall Y/Y

Synovus Financial Corp. SNV reported second-quarter 2024 adjusted earnings per share of $1.16, which surpassed the Zacks Consensus Estimate of 96 cents. Adjusted earnings were the same as that reported in the year-ago quarter.

Results benefited from a fall in expenses and provisions for credit losses, along with strong capital ratios. However, a decline in net interest income (NII) and lower loan and deposit balances were major headwinds.

Net loss available to common shareholders was $23.7 million against net income available to common shareholders of $165.8 million in the prior-year quarter.

Revenues & Expenses Decline

Total revenues in the second quarter were $306.1 million, plunging 46.1% from the prior-year quarter. Also, the top line missed the Zacks Consensus Estimate of $496.6 million.

NII fell 4.5% year over year to $435 million, while the net interest margin remained flat at 3.2% year over year.

Non-interest revenues were a negative $128.9 million. The figure includes a loss of $256.7 million from investment securities. Excluding this loss, adjusted non-interest revenues were $127.8 million, up 15% year over year. The increase was primarily due to a rise in treasury and payment solutions and capital markets fees as well as greater commercial sponsorship income.

Non-interest expenses were $301.8 million, down 1.8% year over year. The fall was mainly due to the company's expense control and a headcount reduction.

The adjusted tangible efficiency ratio was 98.15%, up from 53.99% reported in the year-earlier quarter. A rise in the efficiency ratio indicates a decrease in profitability.

As of Jun 30, 2024, total loans of $43.1 billion decreased slightly from the previous quarter. Total deposits were $50.2 billion, which decreased nearly 1% from the previous quarter.

Credit Quality: Mixed Bag

Non-performing loans were $256.1 million, down 2.1% from the year-ago quarter. Total non-performing assets amounted to $256.9 million, which declined 1.8% year over year.

Provision for credit losses was $26.4 million, which decreased 32.1% year over year.

The non-performing assets ratio was 0.6%, up from 0.59% in the year-ago period.

Net charge-offs increased 30.6% to $34.5 million from the prior-year quarter. The net charge-off ratio was 0.32%, up from 0.24% in the prior-year quarter.

Capital Ratios & Profitability Ratios Improve

As of Jun 30, 2024, the Tier 1 capital ratio and total risk-based capital ratio were 11.74% and 13.59%, respectively, compared with 10.89% and 12.80% in the year-ago quarter. As of the same date, the Common Equity Tier 1 capital ratio was 10.62%, up from 9.86% in the year-ago quarter.

Adjusted return on average assets was 1.21%, up from 1.18% in the prior-year quarter. Adjusted return on average common equity was 15.3%, down from 15.8% in the year-earlier quarter.

Our Take

The company's solid capital position will aid capital distribution activities in the upcoming period, boosting investors' confidence in the stock. Also, lower expenses and provisions will support SNV's financials. Yet, declining loan and deposit balances remain a major concern.

Earnings Dates & Expectations of Finance Stocks

BOK Financial Corporation BOKF is slated to report second-quarter 2024 results on Jul 22. It carries a Zacks Rank #3 at present.

Over the past month, the Zacks Consensus Estimate for BOKF's quarterly earnings per share has moved 2.7% north to $1.89.

Webster Financial Corporation WBS is scheduled to release second-quarter 2024 earnings on Jul 23. The company carries a Zacks Rank #3 at present.

The consensus estimate for WBS' quarterly earnings has moved 1.5% south to $1.34 per share over the past 30 days.

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