Synovus Financial (SNV) Q2 2024 earnings summary

Executive summary

• Reported a Q2 2024 net loss of $23.7 million ($0.16 per share) due to a $257M securities repositioning loss, but adjusted EPS was $1.16, up from $0.79 in Q1 and flat year-over-year; adjusted pre-provision net revenue rose 20% sequentially.

• Net interest income increased 4% sequentially to $435M, with NIM expanding 16 bps to 3.20%; non-interest revenue was $(128.9)M due to the securities loss, but adjusted non-interest revenue grew 9% sequentially and 15% year-over-year.

• Non-interest expense declined 6% sequentially and 2% year-over-year, aided by a 7% headcount reduction.

• Asset quality improved: net charge-offs fell to $34M (0.32%), non-performing loans declined to 0.59%, and capital/liquidity positions are at multi-year highs.

• Strategic initiatives in commercial, wealth, and retail analytics are driving revenue and client growth.

Financial highlights

• Net income available to common shareholders was $(23.7)M reported, $169.6M adjusted; return on average assets was (0.10)% reported, 1.21% adjusted.

• Return on average tangible common equity: (2.2)% reported, 17.6% adjusted; efficiency ratio-TE: 98.1% reported, 53.1% adjusted.

• Loans and core deposits remained stable QoQ at $43.1B and $50.2B, respectively; period-end core deposits were $44.8B, down slightly from the prior quarter.

• Provision for credit losses was $26.4M for Q2 2024, down from $38.9M in Q2 2023; net charge-offs were $34.5M (0.32%).

• CET1 capital ratio improved to 10.62%, the highest since 2015.

Outlook and guidance

• 2024 guidance: end-of-period loan growth of 0–2%, core deposit growth of 2–4%, adjusted revenue change of (3)% to 0%, and adjusted non-interest expense growth of 1–3% (excluding FDIC special assessment).

• Net charge-offs expected flat to down in H2 2024 versus 36 bps in H1; CET1 ratio to be managed at or near the top end of the 10.0–10.5% range, with opportunistic share repurchases.

• Guidance assumes a single 25 bps rate cut in December 2024 and stable deposit costs; effective tax rate expected at ~21%.