SYNOVUS FINANCIAL CORP 10-K Analysis & Summary – 2/21/2025

⚠️This is not investment advice.

⚠️ This is an experimental project and this report is for informational purposes only and should not be considered investment advice. Conduct your own thorough research and consult with a qualified financial advisor before making any investment decisions. ⚠️

Synovus Financial Corp.

10-K

Annual report

Filing date:

02/21/2025

TLDR:

Synovus Financial Corp.’s 10-K filing for 2024 reveals a decrease in net income due to strategic repositioning of investment securities. Loan growth was modest, deposit levels were stable, and credit quality remains strong, with a cautious outlook due to the economic environment.

ELI5:

Synovus, a bank, made less money this year because they changed their investments. They didn’t lend much more money, and people’s deposits stayed about the same. The bank is being careful because the economy is uncertain.

Accession #:

0000018349-25-000049

Published on

March 16, 2025

Analyst Summary

Net income available to common shareholders decreased from $507.8 million in 2023 to $439.6 million in 2024.
Net interest income decreased by 4% year-over-year.
Non-interest revenue decreased significantly, primarily due to losses from sales of AFS investment securities.
Non-interest expense decreased, driven by lower FDIC special assessment accruals and restructuring charges.
Net Interest Margin decreased from 3.21% to 3.19%.
Return on Average Assets decreased from 0.90% to 0.81%.
Return on Average Common Equity decreased from 12.17% to 9.50%.
Loans, net of deferred fees and costs, decreased by 2%.
Total deposits increased slightly, with a shift from non-interest-bearing to interest-bearing accounts.
NPA and NPL ratios both increased slightly to 0.73%.
ACL to loans coverage ratio increased slightly to 1.27%.
Operating Profit Margin decreased by 3.00% to 30.41%.
Net Profit Margin decreased by 0.94% to 24.25%.
ROA decreased by 10.99% to 0.81%.
ROE decreased by 21.94% to 9.50%.
Basic EPS decreased by 12.36% to $3.05.
Diluted EPS decreased by 12.43% to $3.03.
Current Ratio increased by 12.5% to 0.27.
Debt-to-Equity Ratio decreased by 1.87% to 10.48.
Debt-to-Assets Ratio remained constant at 0.91.
Interest Coverage Ratio decreased by 8.97% to 1.42.
Asset Turnover decreased by 10.81% to 3.3%.
P/E Ratio is 17.10.
P/B Ratio is 1.39.
P/S Ratio is 3.67.
EV/EBITDA is 2.87.
Revenue Growth is -10.43%.
Net Income Growth is -11.27%.
EPS Growth is -12.43%.
Adjusted Tangible Efficiency Ratio decreased by 1.11% to 54.33%.
Adjusted Return on Average Assets increased by 7.48% to 1.15%.
Net Charge-Off Ratio decreased by 11.43% to 0.31%.

Opportunities and Risks

Interest Rate Risk: Changes in interest rates could negatively impact net interest income and asset values.
Credit Risk: Deterioration in asset quality and potential inadequacy of the allowance for credit losses.
Competition: Increased competition from traditional and non-traditional financial institutions.
Cybersecurity Risk: Ongoing threat of cyberattacks and data breaches.
Regulatory Risk: Potential for increased regulatory scrutiny and compliance costs.
Strategic Initiatives: Successful execution of strategic initiatives to enhance profitability and growth.
Digital Transformation: Leveraging technology to improve client experience and operational efficiency.
Southeastern Market Growth: Benefiting from strong economic growth in the Southeastern U.S.

Potential Implications

Company Performance

Strategic initiatives, particularly in digital transformation and expansion of specialized services, offer potential for future growth.
Need for strategic adjustments to improve profitability and efficiency.

Stock Price

Investors should monitor the company’s progress in executing its strategic initiatives and managing credit risk in the coming quarters.
Synovus’ P/E ratio is slightly above the industry average.
Synovus’ P/B ratio is above the industry average.
Synovus’ P/S ratio is above the industry average.
Synovus’ EV/EBITDA ratio is below the industry average.

Synovus Financial Corp. (SNV) 10-K Filing Analysis – FY 2024

Executive Summary

This report analyzes Synovus Financial Corp.’s 10-K filing for the fiscal year ended December 31, 2024. Key findings include a decrease in net income compared to 2023, largely due to strategic repositioning of the investment securities portfolio. Loan growth was modest, and deposit levels remained relatively stable. Credit quality metrics remain strong. The company is focused on strategic initiatives to enhance profitability and growth. Overall, a cautious outlook is warranted given the current economic environment and the impact of strategic changes. A hold rating is suggested.

Company Overview

Synovus Financial Corp. is a financial services company headquartered in Columbus, Georgia, providing commercial and consumer banking services across the Southeast. The company operates primarily through its subsidiary, Synovus Bank. Key business segments include Wholesale Banking, Community Banking, Consumer Banking, and Financial Management Services.

Detailed Analysis

Management’s Discussion and Analysis (MD&A)

Management acknowledges a year of economic and political uncertainty, persistent inflationary pressures, and enhanced regulatory scrutiny. The focus was on expanding and diversifying the franchise while maintaining a relationship-based approach. The MD&A highlights strategic initiatives centered on enhancing profitability, deepening relationships, accelerating growth, and cultivating talent. A key area of focus is the acceleration of technology and adoption of digital and data capabilities. The tone is cautiously optimistic, emphasizing proactive management of risks and strategic investments for future growth.

Financial Statement Analysis

Income Statement

Net income available to common shareholders decreased from $507.8 million in 2023 to $439.6 million in 2024.
Net interest income decreased by 4% year-over-year.
Non-interest revenue decreased significantly, primarily due to losses from sales of AFS investment securities.
Non-interest expense decreased, driven by lower FDIC special assessment accruals and restructuring charges.

Key Ratios (2024 vs. 2023)

Ratio	2024	2023
Net Interest Margin	3.19%	3.21%
Net Charge-off Ratio	0.31%	0.35%
Return on Average Assets	0.81%	0.90%
Return on Average Common Equity	9.50%	12.17%
Efficiency Ratio (TE)	62.54%	60.01%

Balance Sheet

Total assets decreased slightly.
Loans, net of deferred fees and costs, decreased by 2%.
Total deposits increased slightly, with a shift from non-interest-bearing to interest-bearing accounts.

Cash Flow Statement

Cash from operations decreased.
Cash used in financing activities increased, reflecting share repurchases and debt repayments.

Uncommon Metrics

Strategic Repositioning Impact: The $256.7 million loss from the sale of AFS investment securities significantly impacted non-interest revenue and net income.
Deposit Mix Shift: The movement of deposits from non-interest-bearing to interest-bearing accounts reflects a changing interest rate environment and client behavior.

Credit Quality

NPA and NPL ratios both increased slightly to 0.73%.
ACL to loans coverage ratio increased slightly to 1.27%.

Risk and Opportunity Assessment

Risks

Interest Rate Risk: Changes in interest rates could negatively impact net interest income and asset values.
Credit Risk: Deterioration in asset quality and potential inadequacy of the allowance for credit losses.
Competition: Increased competition from traditional and non-traditional financial institutions.
Cybersecurity Risk: Ongoing threat of cyberattacks and data breaches.
Regulatory Risk: Potential for increased regulatory scrutiny and compliance costs.

Opportunities

Strategic Initiatives: Successful execution of strategic initiatives to enhance profitability and growth.
Digital Transformation: Leveraging technology to improve client experience and operational efficiency.
Southeastern Market Growth: Benefiting from strong economic growth in the Southeastern U.S.

Conclusion and Actionable Insights

Synovus Financial Corp. faces a challenging environment with economic uncertainty and increased competition. While the company is taking proactive steps to manage risks and pursue growth opportunities, the decrease in net income and the impact of strategic repositioning warrant a cautious outlook. Credit quality metrics remain strong, but should be monitored closely. The company’s strategic initiatives, particularly in digital transformation and expansion of specialized services, offer potential for future growth. Given these factors, a hold rating is suggested. Investors should monitor the company’s progress in executing its strategic initiatives and managing credit risk in the coming quarters.

Synovus Financial Analysis – 2024

Financial Ratio and Metric Analysis

Profitability

Gross Profit Margin

Ratio/Metric: Not applicable for a financial institution.

Operating Profit Margin

Ratio/Metric: (Income Before Income Taxes) / (Total Revenue) = $604,953 / $1,989,181 = 30.41%
Trend: Previous year Operating Profit Margin = $696,162 / $2,220,665 = 31.35%. Percentage change = (30.41 – 31.35) / 31.35 = -3.00%
Industry: Industry average for banks is around 35%. Synovus is slightly below the industry average.

Net Profit Margin

Ratio/Metric: (Net Income Attributable to Synovus Financial Corp.) / (Total Revenue) = $482,460 / $1,989,181 = 24.25%
Trend: Previous year Net Profit Margin = $543,705 / $2,220,665 = 24.48%. Percentage change = (24.25 – 24.48) / 24.48 = -0.94%
Industry: Industry average for banks is around 25%. Synovus is slightly below the industry average.

Return on Assets (ROA)

Ratio/Metric: (Net Income Attributable to Synovus Financial Corp.) / (Total Average Assets) = $482,460 / $59,408,317 = 0.81%
Trend: Previous year ROA = $543,705 / $59,921,868 = 0.91%. Percentage change = (0.81 – 0.91) / 0.91 = -10.99%
Industry: Industry average for banks is around 1%. Synovus is below the industry average.

Return on Equity (ROE)

Ratio/Metric: (Net Income Available to Common Shareholders) / (Total Average Synovus Financial Corp. shareholders’ equity less preferred stock) = $439,557 / $4,629,343 = 9.50%
Trend: Previous year ROE = $507,755 / $4,173,417 = 12.17%. Percentage change = (9.50 – 12.17) / 12.17 = -21.94%
Industry: Industry average for banks is around 10-12%. Synovus is below the industry average.

Earnings Per Share (EPS) – Basic and Diluted

Ratio/Metric: Basic EPS = $439,557 / 144,164 = $3.05. Diluted EPS = $439,557 / 144,998 = $3.03
Trend: Previous year Basic EPS = $3.48. Diluted EPS = $3.46. Percentage change Basic EPS = (3.05 – 3.48) / 3.48 = -12.36%. Diluted EPS = (3.03 – 3.46) / 3.46 = -12.43%
Industry: Compared to other regional banks, Synovus’ EPS is within a reasonable range, but the decline is concerning.

Liquidity

Current Ratio

Ratio/Metric: Current Assets / Current Liabilities = $14,871,525 / $54,967,393 = 0.27
Trend: Previous year Current Ratio = $13,092,989 / $54,665,386 = 0.24. Percentage change = (0.27 – 0.24) / 0.24 = 12.5%
Industry: A current ratio of less than 1 is typical for banks.

Quick Ratio (Acid-Test Ratio)

Ratio/Metric: (Current Assets – Inventory) / Current Liabilities = ($14,871,525 – 0) / $54,967,393 = 0.27 (same as current ratio since inventory is zero)
Trend: Previous year Quick Ratio = ($13,092,989 – 0) / $54,665,386 = 0.24. Percentage change = (0.27 – 0.24) / 0.24 = 12.5%
Industry: A quick ratio of less than 1 is typical for banks.

Cash Ratio

Ratio/Metric: (Cash and Cash Equivalents) / Current Liabilities = $2,993,987 / $54,967,393 = 0.05
Trend: Previous year Cash Ratio = $2,451,426 / $54,665,386 = 0.04. Percentage change = (0.05 – 0.04) / 0.04 = 25%
Industry: A very low cash ratio is typical for banks.

Solvency/Leverage

Debt-to-Equity Ratio

Ratio/Metric: (Total Liabilities) / (Total Synovus Financial Corp. shareholders’ equity) = $54,967,393 / $5,244,557 = 10.48
Trend: Previous year Debt-to-Equity Ratio = $54,665,386 / $5,119,993 = 10.68. Percentage change = (10.48 – 10.68) / 10.68 = -1.87%
Industry: A high debt-to-equity ratio is typical for banks.

Debt-to-Assets Ratio

Ratio/Metric: (Total Liabilities) / (Total Assets) = $54,967,393 / $60,233,644 = 0.91
Trend: Previous year Debt-to-Assets Ratio = $54,665,386 / $59,809,534 = 0.91. Percentage change = (0.91 – 0.91) / 0.91 = 0%
Industry: A high debt-to-assets ratio is typical for banks.

Interest Coverage Ratio (Times Interest Earned)

Ratio/Metric: (Income Before Income Taxes + Interest Expense) / Interest Expense = ($604,953 + $1,444,012) / $1,444,012 = 1.42
Trend: Previous year Interest Coverage Ratio = ($696,162 + $1,233,703) / $1,233,703 = 1.56. Percentage change = (1.42 – 1.56) / 1.56 = -8.97%
Industry: A ratio above 1 is generally considered safe, but the low value and the decreasing trend is concerning.

Activity/Efficiency

Inventory Turnover

Ratio/Metric: Not applicable for a financial institution.

Days Sales Outstanding (DSO)

Ratio/Metric: Not directly applicable to a bank.

Days Payable Outstanding (DPO)

Ratio/Metric: Not directly applicable to a bank.

Asset Turnover

Ratio/Metric: (Total Revenue) / (Total Assets) = $1,989,181 / $60,233,644 = 0.033 or 3.3%
Trend: Previous year Asset Turnover = $2,220,665 / $59,809,534 = 0.037 or 3.7%. Percentage change = (3.3 – 3.7) / 3.7 = -10.81%
Industry: This ratio is relatively low, indicating Synovus is not generating a lot of revenue for each dollar of assets.

Valuation

Price-to-Earnings Ratio (P/E)

Ratio/Metric: Stock Price / EPS = $51.81 / $3.03 = 17.10
Trend: To determine the trend, we would need the P/E ratio from the previous comparable period, which is not provided in the filing.
Industry: The average P/E ratio for banks is around 10-15. Synovus’ P/E ratio is slightly above the industry average.

Price-to-Book Ratio (P/B)

Ratio/Metric: Market Cap / Book Value of Equity = (141,166 * $51.81) / $5,244,557 = 1.39
Trend: To determine the trend, we would need the P/B ratio from the previous comparable period, which is not provided in the filing.
Industry: The average P/B ratio for banks is around 1. Synovus’ P/B ratio is above the industry average.

Price-to-Sales Ratio (P/S)

Ratio/Metric: Market Cap / Total Revenue = (141,166 * $51.81) / $1,989,181 = 3.67
Trend: To determine the trend, we would need the P/S ratio from the previous comparable period, which is not provided in the filing.
Industry: The average P/S ratio for banks is around 2-3. Synovus’ P/S ratio is above the industry average.

Enterprise Value to EBITDA (EV/EBITDA)

Ratio/Metric: EV = Market Cap + Total Debt – Cash and Cash Equivalents = (141,166 * $51.81) + $1,733,109 – $2,993,987 = $6,044,888.46. EBITDA = Net Income + Interest + Taxes + Depreciation and Amortization = $479,451 + $1,444,012 + $125,502 + $60,408 = $2,109,373. EV/EBITDA = $6,044,888.46 / $2,109,373 = 2.87
Trend: To determine the trend, we would need the EV/EBITDA ratio from the previous comparable period, which is not provided in the filing.
Industry: The average EV/EBITDA ratio for banks is around 6-8. Synovus’ EV/EBITDA ratio is below the industry average.

Growth Rates

Revenue Growth

Ratio/Metric: (Current Revenue – Previous Revenue) / Previous Revenue = ($1,989,181 – $2,220,665) / $2,220,665 = -10.43%

Net Income Growth

Ratio/Metric: (Current Net Income – Previous Net Income) / Previous Net Income = ($482,460 – $543,705) / $543,705 = -11.27%

EPS Growth

Ratio/Metric: (Current EPS – Previous EPS) / Previous EPS = ($3.03 – $3.46) / $3.46 = -12.43%

Other Relevant Metrics

Adjusted Tangible Efficiency Ratio

Ratio/Metric: Adjusted Tangible Non-Interest Expense / Adjusted Revenue TE = $1,219,954 / $2,245,448 = 54.33%
Trend: Previous year Adjusted Tangible Efficiency Ratio = $1,253,652 / $2,281,962 = 54.94%. Percentage change = (54.33 – 54.94) / 54.94 = -1.11%
Significance: A lower efficiency ratio is better. This metric shows how well the company is controlling its expenses relative to its revenue.

Adjusted Return on Average Assets

Ratio/Metric: Adjusted Net Income / Total Average Assets = $681,790 / $59,408,317 = 1.15%
Trend: Previous year Adjusted ROA = $638,790 / $59,921,868 = 1.07%. Percentage change = (1.15 – 1.07) / 1.07 = 7.48%
Significance: This metric shows how efficiently the company is using its assets to generate profit, excluding certain non-recurring items.

Net Charge-Off Ratio

Ratio/Metric: Net Charge-offs / Average Loans = $133,994 / $43,045,203 = 0.31%
Trend: Previous year Net Charge-Off Ratio = $153,342 / $43,746,328 = 0.35%. Percentage change = (0.31 – 0.35) / 0.35 = -11.43%
Significance: This metric indicates the percentage of loans that the company does not expect to recover.

Commentary

Synovus Financial Corp. experienced a challenging year in 2024, with declines in key profitability metrics such as ROA, ROE, and EPS. Revenue and net income also decreased, indicating headwinds in their core business operations. While the company maintains adequate capital ratios, the decreasing interest coverage ratio raises concerns about its ability to service its debt. The adjusted tangible efficiency ratio remains relatively stable, suggesting some success in expense management, but overall, the financial performance indicates a need for strategic adjustments to improve profitability and efficiency.