8-K: Synovus Reports Strong Fourth Quarter and Full Year 2024 Earnings, Driven by Relationship-Building Strategies

Synovus Financial Corp. announces increased earnings per share and strategic growth in core commercial lending and deposits for the fourth quarter and full year 2024.

Summary

• Synovus Financial Corp. reported diluted earnings per share of $1.25 for the fourth quarter of 2024, compared to $0.41 in 4Q23.
• Adjusted diluted earnings per share were also $1.25, up from $0.80 in the same quarter last year.
• Net income available to common shareholders for 2024 was $439.6 million, or $3.03 per diluted share, down from $507.8 million, or $3.46 per diluted share in 2023.
• Adjusted EPS for the year was $4.43 per diluted share, compared to $4.12 per diluted share in 2023.
• Net interest income was $1.75 billion in 2024, a decrease from $1.82 billion in the prior year.
• Period-end loans declined by $795.5 million, or 2%, in 2024.
• Period-end deposits increased by $356.2 million, or 1%, in 2024.
• Non-interest revenue was $239.6 million, down 41% from 2023, but adjusted non-interest revenue grew 6% to $490.4 million.
• Non-interest expense was $1.25 billion, down 7%, and adjusted non-interest expense declined 3% to $1.23 billion.
• The CET1 ratio increased to 10.84% at year-end.
• Pre-provision net revenue was $741.6 million in 2024 compared to $885.2 million in 2023.

Sentiment

Score: 7

Explanation: The sentiment is positive due to the increase in earnings per share and the strong CET1 ratio, but tempered by the decrease in net income and net interest income.

Positives

• The CET1 ratio increased to 10.84%, the highest level in over 10 years.
• Core deposits increased $1.13 billion, or 3%, sequentially in 4Q24.
• Total deposit costs declined 26 basis points from the third quarter 2024 to 2.46%.
• Adjusted non-interest revenue grew 6% in 2024, driven by Treasury Management fees, Capital Markets income, and Wealth revenue.
• Credit quality remains healthy with net charge-offs at 0.31% of average loans, compared to 0.35% in 2023.
• Non-interest expense was down 7% year over year in 2024.

Negatives

• Net income available to common shareholders for 2024 decreased to $439.6 million from $507.8 million in 2023.
• Net interest income decreased to $1.75 billion in 2024 from $1.82 billion in the prior year.
• Period-end loans declined by $795.5 million, or 2%, in 2024.
• Non-interest revenue was down 41% from 2023, primarily due to a $257 million securities loss in the second quarter 2024.

Risks

• Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially.
• Decline in loan balances due to lower line utilization, increased payoffs, and rationalization of non-relationship credits.
• Potential impact of economic conditions on credit quality and performance.

Future Outlook

Synovus expects loan and core deposit growth of 3-6% and 3-7% respectively for 2025, with a relatively stable CET1 ratio and net charge-offs between 0.25-0.35% in the first half of the year. They also anticipate adjusted non-interest revenue of $500 million $520 million.

Management Comments

• Over the past year, Synovus has successfully implemented our relationship-building strategies, resulting in strong growth across core commercial lending, deposits and key fee-producing businesses.
• We maintained strict control over operating expenses, saw improvements in loan losses and increased our Common Equity Tier 1 ratio to the highest level in over 10 years.
• This momentum, as well as our financial position and accelerated growth orientation, positions us well for continued success in 2025 and beyond, said Synovus Chairman, CEO and President Kevin Blair.

Industry Context

The report reflects Synovus' performance in the banking sector, where relationship-building and expense management are key strategies. The results are influenced by broader economic trends and regulatory factors, such as FDIC special assessments.

Comparison to Industry Standards

• The document does not provide specific comparisons to industry standards or competitors.
• However, it highlights Synovus' focus on achieving a top quartile efficiency ratio, suggesting a benchmark against peer performance.
• The document mentions a CET1 ratio of 10.84%, which is a key metric for assessing a bank's capital adequacy compared to regulatory requirements and industry averages.

Stakeholder Impact

• Shareholders will be impacted by the increased earnings per share and the potential for increased dividends and share repurchases.
• Employees may be impacted by the company's expense management initiatives and strategic growth plans.
• Customers may benefit from the company's focus on relationship-building and specialized products and services.

Next Steps

• Synovus will host an earnings highlights conference call on January 16, 2025.
• Planned increase of quarterly dividend to $0.39/share (effective April 2025).
• Recently approved $400 million common share repurchase authorization.

Key Dates