Synovus announces earnings for the first quarter 2024
Diluted earnings per share of $0.78 vs. $1.32 in 1Q23
Adjusted diluted earnings per share of $0.79 vs. $1.33 in 1Q23
$12.8 million FDIC Special Assessment reduced 1Q24 reported and adjusted EPS by $0.07
COLUMBUS, Ga., April 17, 2024 - Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter ended March 31, 2024.
Our first quarter results demonstrate tangible progress on our strategic priorities, including key commercial category loan and core deposit growth, client non-interest revenue growth and excellent operating expense control. We remain focused on raising the bar on service and deepening client relationships, all while building a more risk-resilient bank, which was evidenced by our highest common equity tier 1 capital ratios in several years and an over 30% decline in wholesale funding versus last year,
said Synovus Chairman, CEO and President Kevin Blair.
First Quarter 2024 Highlights
- Net income available to common shareholders was $114.8 million, or $0.78 per diluted share, compared to $60.6 million or $0.41 in the fourth quarter 2023 and $193.9 million or $1.32 in first quarter 2023.
- An incremental $12.8 million FDIC Special Assessment reduced first quarter 2024 reported and adjusted EPS by $0.07. A $51.0 million FDIC Special Assessment impacted fourth quarter 2023 reported and adjusted EPS by $0.26.
- Pre-provision net revenue of $215.0 million increased $79.2 million, or 58%, sequentially and was down $77.0 million, or 26%, compared to first quarter 2023.
- Net interest income declined $18.4 million, or 4%, compared to the prior quarter and was down $61.9 million, or 13%, compared to first quarter 2023, primarily attributable to a decline in average earnings assets and higher funding costs. Net interest margin was 3.04% which compressed from the fourth quarter 2023 as higher deposit costs more than offset an increase in earning asset yields.
- Period-end loans declined $94.6 million from the fourth quarter 2023 as core commercial lending growth was more than offset by soft loan demand, higher loan paydowns and strategic declines in certain loan categories such as non-relationship syndicated lending and third-party consumer lending. Commercial and industrial loans increased $132.8 million or 1% from the prior quarter and $131.1 million or 1% from first quarter 2023.
- Period-end core deposits ended the quarter at $44.9 billion, an increase of $165.1 million sequentially primarily as a result of time deposit growth, partially offset by a decline in non-interest bearing deposits. Total deposit costs increased 17 basis points from the fourth quarter 2023 to 2.67%.
- Non-interest revenue of $118.9 million increased $67.4 million, or 131%, sequentially and declined $14.2 million, or 11%, compared to first quarter 2023. Adjusted non-interest revenue of $116.6 million fell $9.6 million, or 8%, sequentially and declined $1.0 million, or 1%, compared to the first quarter 2023. Year-over-year pressure was the result of the consumer checking program changes and GLOBALT divestiture in 2023. The company experienced year-over-year growth in core banking fees and commercial sponsorship income.
- On a sequential basis, non-interest expense of $322.7 million declined 9% while adjusted non-interest expense declined 10% to $318.9 million. Compared to the prior year, non-interest expense and adjusted non-interest expense was flat and increased 5%, respectively. All comparisons were significantly impacted by the FDIC Special Assessments in fourth quarter 2023 and first quarter 2024. Headcount declined 1% sequentially and 7% year over year. Excluding the first quarter 2024 FDIC Special Assessment, adjusted non-interest expense was relatively stable compared to first quarter 2023.
- Provision for credit losses of $54.0 million increased 19% sequentially and compares to $32.2 million in first quarter 2023. The allowance for credit losses ratio (to loans) of 1.26% was up 2 basis points from the fourth quarter 2023.
- The non-performing loan and asset ratios were slightly higher at 0.81% and 0.86%, respectively; the net charge-off ratio for the quarter was 0.41%, and total past dues were 0.13% of total loans outstanding. Approximately 0.17% of first quarter 2024 net charge-offs were attributable to an $18 million loss from a commercial and industrial loan relationship that is expected to be resolved later this month.
- The preliminary CET1 ratio rose sequentially to 10.38% as core earnings accretion more than offset the impact of $29.9 million in common stock repurchases during the first quarter 2024.
First Quarter Summary
|
|
Reported |
|
Adjusted |
||||||||
|
(dollars in thousands) |
1Q24 |
|
4Q23 |
|
1Q23 |
|
1Q24 |
|
4Q23 |
|
1Q23 |
|
Net income available to common shareholders |
$ 114,822 |
|
$ 60,645 |
|
$ 193,868 |
|
$ 115,973 |
|
$ 116,901 |
|
$ 195,276 |
|
Diluted earnings per share |
0.78 |
|
0.41 |
|
1.32 |
|
0.79 |
|
0.80 |
|
1.33 |
|
Total revenue |
537,734 |
|
488,682 |
|
613,877 |
|
536,745 |
|
564,593 |
|
599,469 |
|
Total loans |
43,309,877 |
|
43,404,490 |
|
44,044,939 |
|
N/A |
|
N/A |
|
N/A |
|
Total deposits |
50,580,242 |
|
50,739,185 |
|
49,953,936 |
|
N/A |
|
N/A |
|
N/A |
|
Return on avg assets |
0.85 % |
|
0.47 % |
|
1.36 % |
|
0.85 % |
|
0.84 % |
|
1.37 % |
|
Return on avg common equity |
10.2 |
|
5.9 |
|
19.2 |
|
10.3 |
|
11.3 |
|
19.4 |
|
Return on avg tangible common equity |
11.7 |
|
7.0 |
|
21.9 |
|
11.8 |
|
13.3 |
|
22.1 |
|
Net interest margin |
3.04 % |
|
3.11 % |
|
3.43 % |
|
N/A |
|
N/A |
|
N/A |
|
Efficiency ratio-TE(1)(2) |
59.87 |
|
72.03 |
|
52.33 |
|
58.88 |
|
61.97 |
|
50.48 |
|
NCO ratio-QTD |
0.41 |
|
0.38 |
|
0.17 |
|
N/A |
|
N/A |
|
N/A |
|
NPA ratio |
0.86 |
|
0.66 |
|
0.41 |
|
N/A |
|
N/A |
|
N/A |
(1) Taxable equivalent
(2) Adjusted tangible efficiency ratio
N/A - not applicable
Balance Sheet
|
Loans* |
|
|
|
|
|
|
|
|
|
|
|||
|
(dollars in millions) |
1Q24 |
|
4Q23 |
|
Linked Quarter Change |
|
Linked Quarter % Change |
|
1Q23 |
|
Year/Year Change |
|
Year/Year % Change |
|
Commercial & industrial |
$ 22,731.3 |
|
$ 22,598.5 |
|
$ 132.8 |
|
1 % |
|
$ 22,600.2 |
|
$ 131.1 |
|
1 % |
|
Commercial real estate |
12,194.0 |
|
12,316.8 |
|
(122.7) |
|
(1) |
|
12,996.8 |
|
(802.7) |
|
(6) |
|
Consumer |
8,384.6 |
|
8,489.2 |
|
(104.7) |
|
(1) |
|
8,448.0 |
|
(63.4) |
|
(1) |
|
Total loans |
$ 43,309.9 |
|
$ 43,404.5 |
|
$ (94.6) |
|
— % |
|
$ 44,044.9 |
|
$ (735.0) |
|
(2) % |
*Amounts may not total due to rounding
|
Deposits* |
|
|
|
|
|
|
|
|
|||||
|
(dollars in millions) |
1Q24 |
|
4Q23 |
|
Linked Quarter Change |
|
Linked Quarter % Change |
|
1Q23 |
|
Year/Year Change |
|
Year/Year % Change |
|
Non-interest-bearing DDA |
$ 11,515.4 |
|
$ 11,801.2 |
|
$ (285.8) |
|
(2) % |
|
$ 13,827.6 |
|
$ (2,312.2) |
|
(17) % |
|
Interest-bearing DDA |
6,478.8 |
|
6,541.0 |
|
(62.1) |
|
(1) |
|
5,837.0 |
|
641.8 |
|
11 |
|
Money market |
10,712.7 |
|
10,819.7 |
|
(107.0) |
|
(1) |
|
11,780.0 |
|
(1,067.2) |
|
(9) |
|
Savings |
1,045.1 |
|
1,062.6 |
|
(17.5) |
|
(2) |
|
1,312.7 |
|
(267.6) |
|
(20) |
|
Public funds |
7,270.4 |
|
7,349.5 |
|
(79.1) |
|
(1) |
|
6,888.2 |
|
382.2 |
|
6 |
|
Time deposits |
7,838.9 |
|
7,122.2 |
|
716.7 |
|
10 |
|
4,060.3 |
|
3,778.6 |
|
93 |
|
Brokered deposits |
5,718.9 |
|
6,043.0 |
|
(324.1) |
|
(5) |
|
6,248.3 |
|
(529.3) |
|
(8) |
|
Total deposits |
$ 50,580.2 |
|
$ 50,739.2 |
|
$ (158.9) |
|
— % |
|
$ 49,953.9 |
|
$ 626.3 |
|
1 % |
*Amounts may not total due to rounding
|
Income Statement Summary** |
|
|
|
|
|
|
|
|
|||||
|
(in thousands, except per share data) |
1Q24 |
|
4Q23 |
|
Linked Quarter Change |
|
Linked Quarter % Change |
|
1Q23 |
|
Year/Year Change |
|
Year/Year % Change |
|
Net interest income |
$ 418,846 |
|
$ 437,214 |
|
$ (18,368) |
|
(4) % |
|
$ 480,751 |
|
$ (61,905) |
|
(13) % |
|
Non-interest revenue |
118,888 |
|
51,468 |
|
67,420 |
|
131 |
|
133,126 |
|
(14,238) |
|
(11) |
|
Non-interest expense |
322,741 |
|
352,858 |
|
(30,117) |
|
(9) |
|
321,852 |
|
889 |
|
— |
|
Provision for (reversal of) credit losses |
53,980 |
|
45,472 |
|
8,508 |
|
19 |
|
32,154 |
|
21,826 |
|
68 |
|
Income before taxes |
$ 161,013 |
|
$ 90,352 |
|
$ 70,661 |
|
78 % |
|
$ 259,871 |
|
$ (98,858) |
|
(38) % |
|
Income tax expense |
36,943 |
|
20,779 |
|
16,164 |
|
78 |
|
57,712 |
|
(20,769) |
|
(36) |
|
Net income |
124,070 |
|
69,573 |
|
54,497 |
|
78 |
|
202,159 |
|
(78,089) |
|
(39) |
|
Less: Net income (loss) attributable to noncontrolling interest |
(437) |
|
(768) |
|
331 |
|
(43) |
|
— |
|
(437) |
|
NM |
|
Net income attributable to Synovus Financial Corp. |
124,507 |
|
70,341 |
|
54,166 |
|
77 |
|
202,159 |
|
(77,652) |
|
(38) |
|
Less: Preferred stock dividends |
9,685 |
|
9,696 |
|
(11) |
|
— |
|
8,291 |
|
1,394 |
|
17 |
|
Net income available to common shareholders |
$ 114,822 |
|
$ 60,645 |
|
$ 54,177 |
|
89 % |
|
$ 193,868 |
|
$ (79,046) |
|
(41) % |
|
Weighted average common shares outstanding, diluted |
147,122 |
|
146,877 |
|
245 |
|
— % |
|
146,727 |
|
395 |
|
— % |
|
Diluted earnings per share |
$ 0.78 |
|
$ 0.41 |
|
$ 0.37 |
|
90 |
|
$ 1.32 |
|
$ (0.54) |
|
(41) |
|
Adjusted diluted earnings per share |
0.79 |
|
0.80 |
|
(0.01) |
|
(1) |
|
1.33 |
|
(0.54) |
|
(41) |
|
Effective tax rate |
22.94 % |
|
23.00 % |
|
|
|
|
|
22.21 % |
|
|
|
|
**Amounts may not total due to rounding
NM - not meaningful
|
Capital Ratios |
|
||||
|
|
1Q24 |
|
4Q23 |
|
1Q23 |
|
Common equity Tier 1 capital (CET1) ratio |
10.38 %* |
|
10.22 % |
|
9.77 % |
|
Tier 1 capital ratio |
11.44* |
|
11.28 |
|
10.81 |
|
Total risk-based capital ratio |
13.31* |
|
13.07 |
|
12.72 |
|
Tier 1 leverage ratio |
9.62* |
|
9.49 |
|
9.14 |
|
Tangible common equity ratio |
6.67 |
|
6.84 |
|
6.12 |
*Ratios are preliminary.
First Quarter Earnings Conference Call
Synovus will host an earnings highlights conference call at 8:30 a.m. ET on April 18, 2024. The earnings call will be accompanied by a slide presentation. Shareholders and other interested parties may listen to this conference call via simultaneous internet broadcast. For a link to the webcast, go to investor.synovus.com/event. The replay will be archived for 12 months and will be available 30-45 minutes after the call.
Synovus Financial Corp. is a financial services company based in Columbus, Georgia, with approximately $60 billion in assets. Synovus provides commercial and consumer banking and a full suite of specialized products and services, including private banking, treasury management, wealth management, mortgage services, premium finance, asset-based lending, structured lending, capital markets and international banking. Synovus has 246 branches in Georgia, Alabama, South Carolina, Florida and Tennessee. Synovus is a Great Place to Work-Certified Company and is on the web at synovus.com and on X, formerly known as Twitter, Facebook, LinkedIn and Instagram.
Forward-Looking Statements
This press release and certain of our other filings with the Securities and Exchange Commission contain statements that constitute “forward-looking statements” within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. You can identify these forward-looking statements through Synovus’ use of words such as “believes,” “anticipates,” “expects,” “may,” “will,” “assumes,” “should,” “predicts,” “could,” “would,” “intends,” “targets,” “estimates,” “projects,” “plans,” “potential” and other similar words and expressions of the future or otherwise regarding the outlook for Synovus’ future business and financial performance and/or the performance of the banking industry and economy in general. These forward-looking statements include, among others, our expectations regarding our future operating and financial performance; expectations on our growth strategy, expense and revenue initiatives, capital management, balance sheet management, and future profitability; expectations on credit quality and performance; and the assumptions underlying our expectations. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties which may cause the actual results, performance or achievements of Synovus to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on the information known to, and current beliefs and expectations of, Synovus’ management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. A number of factors could cause actual results to differ materially from those contemplated by the forward-looking statements in this press release. Many of these factors are beyond Synovus’ ability to control or predict.
These forward-looking statements are based upon information presently known to Synovus’ management and are inherently subjective, uncertain and subject to change due to any number of risks and uncertainties, including, without limitation, the risks and other factors set forth in Synovus’ filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2023, under the captions “Cautionary Notice Regarding Forward-Looking Statements” and “Risk Factors” and in Synovus’ quarterly reports on Form 10-Q and current reports on Form 8-K. We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations and speak only as of the date that they are made. We do not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise, except as otherwise may be required by law.
Non-GAAP Financial Measures
The measures entitled adjusted non-interest revenue, non-interest expense; adjusted revenue; adjusted tangible efficiency ratio; adjusted net income available to common shareholders; adjusted diluted earnings per share; adjusted return on average assets; adjusted return on average common equity; return on average tangible common equity; adjusted return on average tangible common equity; and tangible common equity ratio are not measures recognized under GAAP and therefore are considered non-GAAP financial measures. The most comparable GAAP measures to these measures are total non-interest revenue; total non-interest expense; total revenue; efficiency ratio-TE; net income available to common shareholders; diluted earnings per share; return on average assets; return on average common equity; and the ratio of total Synovus Financial Corp. shareholders' equity to total assets, respectively.
Management believes that these non-GAAP financial measures provide meaningful additional information about Synovus to assist management and investors in evaluating Synovus’ operating results, financial strength, the performance of its business, and the strength of its capital position. However, these non-GAAP financial measures have inherent limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of operating results or capital position as reported under GAAP. The non-GAAP financial measures should be considered as additional views of the way our financial measures are affected by significant items and other factors, and since they are not required to be uniformly applied, they may not be comparable to other similarly titled measures at other companies. Adjusted non-interest revenue and adjusted revenue are measures used by management to evaluate non-interest revenue and total revenue exclusive of fair value adjustment on non-qualified deferred compensation and other items not indicative of ongoing operations that could impact period-to-period comparisons. Adjusted non-interest expense and the adjusted tangible efficiency ratio are measures utilized by management to measure the success of expense management initiatives focused on reducing recurring controllable operating costs. Adjusted net income available to common shareholders, adjusted diluted earnings per share, adjusted return on average assets, and adjusted return on average common equity are measures used by management to evaluate operating results exclusive of items that are not indicative of ongoing operations and impact period-to-period comparisons. Return on average tangible common equity and adjusted return on average tangible common equity are measures used by management to compare Synovus’ performance with other financial institutions because it calculates the return available to common shareholders without the impact of intangible assets and their related amortization, thereby allowing management to evaluate the performance of the business consistently. The tangible common equity ratio is used by management to assess the strength of our capital position. The computations of these measures are set forth in the attached tables.