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Synovus (SNV) Q4 Earnings & Revenue Beat, Stock Down 3.8%

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Synovus Financial SNV reported fourth-quarter 2021 adjusted earnings of $1.35 per share, which beat the Zacks Consensus Estimate of $1.1. Also, the bottom line compares favorably with the earnings of $1.08 per share recorded in the year-ago quarter. Despite better-than-expected results, shares of SNV were down 3.8% on the announcement of earnings.

Results were driven by rising net interest and fee income, lower expenses, as well as reversal of provisions. Solid loan and deposit balances stoked organic growth. However, shrinking net interest margin and deteriorating capital position were the undermining factors.

Net income available to common shareholders came in at $192.1 million or $1.31 per share compared with $142.1 million or 96 cents per share recorded in the prior-year quarter.

In 2021, adjusted earnings per share of $4.95 surpassed the consensus estimate of $4.70 and were significantly up. Also, net income of $727.3 million increased substantially.

Revenues Rise, Expenses Down, Loans and Deposits Up

Total revenues in the fourth quarter came in at $509.4 million, up 1.7% from the prior-year quarter. Also, the top line outpaced the Zacks Consensus Estimate of $495.5 million.

In 2021, total revenues decreased 1.9% to $1.98 billion. Nonetheless, the top line beat the consensus estimate of $1.97 billion.

Net interest income improved 2% year over year to $392.3 million. However, net interest margin shrunk 16 basis points (bps) to 2.96%.

Non-interest income increased 2% on a year-over-year basis to $117.1 million. Rise in all components except mortgage banking income and investment securities gains led to this upside.

Non-interest expenses were $295.2 million, down 2% year on year. This downside mainly resulted from all components other than a rise in salaries and personnel expenses, and third-party processing and other services.

Adjusted tangible efficiency ratio came in at 55.64% compared with 54.43% reported in the year-earlier quarter. A rise in this ratio indicates a decrease in profitability.

Total deposits came in at $49.43 billion, up 4% sequentially. Moreover, total loans showed a 3% improvement sequentially, coming in at $39.31 billion.

Strong Credit Quality

Synovus’ credit metrics witnessed robust performance during the December-end quarter.

Non-performing loans fell 13% year over year to $131 million. Net charge-offs decreased 52.6% to $10.5 million. The annualized net charge-off ratio was 0.11% compared with the year-ago quarter’s 0.23%.

Further, reversal of provision for credit losses of $55.2 million was recorded in the fourth quarter against provision expenses of $11.1 million in the prior-year quarter.

Total non-performing assets amounted to $158.2 million, underlining 18% year-over-year fall. Non-performing asset ratio came in at 0.4%, shrinking 10 bps from the prior-year quarter.

Weak Capital Position, Profitability Ratios Strong

Tier 1 capital ratio and total risk-based capital ratio were 10.65% and 12.60%, respectively, down from 10.95% and 13.42% as of Dec 31, 2020.

Moreover, as of Dec 31, 2021, Common Equity Tier 1 ratio (fully phased-in) was 9.49%, declining from 9.66% witnessed in the year-ago quarter. Nonetheless, Tier 1 leverage ratio was 8.72%, improving from 8.50% recorded in the year-earlier period.

Return on average assets was 1.40%, up from the prior-year quarter’s 1.11%. Return on average common equity was 16.11%, up from the prior-year quarter’s 12.31%.

Our Take

Synovus has grown organically with increased revenues and reversal of provision. Improving credit quality will bode well for the company. Though there has been a reduction in net interest margin, lower expenses will alleviate bottom-line pressure.

Synovus Financial Corp. Price, Consensus and EPS Surprise

Synovus Financial Corp. Price, Consensus and EPS Surprise
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

Zions Bancorporation ZION is scheduled to release fourth-quarter and full-year 2021 results on Jan 24.

Over the past 30 days, the Zacks Consensus Estimate for Zions Bancorporation’s quarterly earnings has remained unchanged at $1.33. This implies a 19.9% decrease from the prior-year quarter.

Prosperity Bancshares PB is scheduled to release fourth-quarter and full-year 2021 results on Jan 26.

Over the past 30 days, the Zacks Consensus Estimate for Prosperity Bancshares’ quarterly earnings has remained unchanged at $1.37. This suggests a 7.4% decrease from the prior-year quarter.

East West Bancorp, Inc. EWBC is slated to report fourth-quarter and full-year 2021 results on Jan 27.

Over the past 30 days, the Zacks Consensus Estimate for East West Bancorp’s quarterly earnings has remained unchanged at $1.55. This indicates a 34.8% increase from the prior-year quarter.


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Synovus Financial Corp. (SNV) : Free Stock Analysis Report

Zions Bancorporation, N.A. (ZION) : Free Stock Analysis Report

Prosperity Bancshares, Inc. (PB) : Free Stock Analysis Report

East West Bancorp, Inc. (EWBC) : Free Stock Analysis Report

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