Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter ended June 30, 2023. “Our second quarter financial performance reflects the strength and resiliency of our team, with pre-provision net revenue growing 8% year over year and adjusted return on tangible common equity at 18%,” said Synovus Chairman, CEO and President Kevin Blair. “Strong deposit production, increased capital levels and stability in credit metrics, as we saw during the second quarter, all serve as mitigants to the risks of an environment with heightened levels of volatility and uncertainty. And as we position the company for sustainable, long-term growth, we’re proactively optimizing the balance sheet, we’ve adjusted revenue expectations in response to slower economic growth trends and deposit remixing, and we’ve significantly reduced expense growth. Even as we execute amid lingering challenging market conditions, we remain fully dedicated to providing reliable and innovative financial solutions to our clients. Their trust and confidence in our institution have been paramount to our growth and sustained performance.”
Second Quarter 2023 Highlights
- Total revenue of $567.8 million increased $45.2 million, or 9%, compared to the second quarter 2022, driven by net interest income growth of 7%, in addition to growth in core client fee income, excluding mortgage, of 7% year-over-year.
- Pre-provision net revenue of $260.6 million increased $20.0 million, or 8%, compared to the second quarter 2022.
- Period-end loans increased $308.6 million sequentially, primarily driven by fundings of existing CRE commitments and growth in consumer loans, somewhat offset by lower utilization from C&I commitments.
- Total deposits increased $126.5 million sequentially and included remixing due to the rate environment.
- Credit quality metrics at solid levels with a net charge-off ratio of 0.24%, a modest increase in the ACL ratio to 1.19%, and broader stable performance across the loan portfolio, asset types, and industries.
- Preliminary CET1 ratio of 9.85% increased 8 bps sequentially as capital generation continued to support client loan growth while also buffering capital levels given economic uncertainty.
Second Quarter Summary
Reported | Adjusted | ||||||||||||||||||||||
(dollars in thousands) | 2Q23 | 1Q23 | 2Q22 | 2Q23 | 1Q23 | 2Q22 | |||||||||||||||||
Net income available to common shareholders | $ | 165,819 | $ | 193,868 | $ | 169,761 | $ | 169,526 | $ | 195,276 | $ | 171,018 | |||||||||||
Diluted earnings per share | 1.13 | 1.32 | 1.16 | 1.16 | 1.33 | 1.17 | |||||||||||||||||
Total revenue | 567,807 | 613,877 | 522,654 | 567,347 | 599,469 | 526,854 | |||||||||||||||||
Total loans | 44,353,537 | 44,044,939 | 41,204,780 | N/A | N/A | N/A | |||||||||||||||||
Total deposits | 50,080,392 | 49,953,936 | 49,034,700 | N/A | N/A | N/A | |||||||||||||||||
Return on avg assets | 1.15 | % | 1.36 | % | 1.26 | % | 1.18 | % | 1.37 | % | 1.27 | % | |||||||||||
Return on avg common equity | 15.5 | 19.2 | 16.5 | 15.8 | 19.4 | 16.6 | |||||||||||||||||
Return on avg tangible common equity | 17.7 | 21.9 | 18.8 | 18.1 | 22.1 | 19.0 | |||||||||||||||||
Net interest margin | 3.20 | 3.43 | 3.22 | N/A | N/A | N/A | |||||||||||||||||
Efficiency ratio-TE(1)(2) | 53.99 | 52.33 | 53.87 | 52.57 | 50.48 | 53.43 | |||||||||||||||||
NCO ratio-QTD | 0.24 | 0.17 | 0.16 | N/A | N/A | N/A | |||||||||||||||||
NPA ratio | 0.59 | 0.41 | 0.33 | N/A | N/A | N/A | |||||||||||||||||
(1) | Taxable equivalent |
(2) | Adjusted tangible efficiency ratio |
Balance Sheet
Loans* | ||||||||||||||||||||||
(dollars in millions) | 2Q23 | 1Q23 | Linked Quarter Change | Linked Quarter % Change | 2Q22 | Year/Year Change | Year/Year % Change | |||||||||||||||
Commercial & industrial | $ | 22,531.2 | $ | 22,600.2 | $ | (68.9 | ) | — | % | $ | 20,778.3 | $ | 1,752.9 | 8 | % | |||||||
Commercial real estate | 13,293.9 | 12,996.8 | 297.1 | 2 | 11,503.4 | 1,790.5 | 16 | |||||||||||||||
Consumer | 8,528.4 | 8,448.0 | 80.4 | 1 | 8,923.0 | (394.6 | ) | (4 | ) | |||||||||||||
Total loans | $ | 44,353.5 | $ | 44,044.9 | $ | 308.6 | 1 | % | $ | 41,204.8 | $ | 3,148.8 | 8 | % | ||||||||
*Amounts may not total due to rounding | ||||||||||||||||||||||
- Total loans ended the quarter at $44.35 billion, up $308.6 million sequentially.
- Commercial and industrial (C&I) loans decreased $68.9 million sequentially, primarily driven by lower utilization from existing commitments and a strategic decline in syndicated loans.
- CRE loans increased $297.1 million sequentially, mostly due to draws on existing multi-family commitments and continued low levels of pay-offs.
- Consumer loans increased $80.4 million sequentially, largely a result of growth in portfolio mortgages somewhat offset by continued third-party decline from runoff.
Deposits* | ||||||||||||||||||||||
(dollars in millions) | 2Q23 | 1Q23 | Linked Quarter Change | Linked Quarter % Change | 2Q22 | Year/Year Change | Year/Year % Change | |||||||||||||||
Non-interest-bearing DDA | $ | 12,945.5 | $ | 13,827.6 | $ | (882.0 | ) | (6 | )% | $ | 15,781.1 | $ | (2,835.6 | ) | (18 | )% | ||||||
Interest-bearing DDA | 6,255.3 | 5,841.0 | 414.3 | 7 | 6,327.1 | (71.7 | ) | (1 | ) | |||||||||||||
Money market | 10,803.7 | 11,776.0 | (972.3 | ) | (8 | ) | 13,793.0 | (2,989.3 | ) | (22 | ) | |||||||||||
Savings | 1,222.9 | 1,312.7 | (89.8 | ) | (7 | ) | 1,498.7 | (275.9 | ) | (18 | ) | |||||||||||
Public funds | 7,031.4 | 6,888.2 | 143.2 | 2 | 5,863.9 | 1,167.5 | 20 | |||||||||||||||
Time deposits | 5,291.8 | 4,060.3 | 1,231.5 | 30 | 2,147.8 | 3,144.1 | 146 | |||||||||||||||
Brokered deposits | 6,529.8 | 6,248.3 | 281.5 | 5 | 3,623.1 | 2,906.7 | 80 | |||||||||||||||
Total deposits | $ | 50,080.4 | $ | 49,953.9 | $ | 126.5 | — | % | $ | 49,034.7 | $ | 1,045.7 | 2 | % | ||||||||
*Amounts may not total due to rounding | ||||||||||||||||||||||
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Total deposits ended the quarter at $50.08 billion, up $126.5 million sequentially
- Money market deposits were primarily impacted by the continued shifting to time deposits.
- Non-interest-bearing DDAs were impacted by pressures from seasonal cash deployment of excess funds and continued pressures from the higher rate environment.
- Total deposit costs increased 51 bps sequentially to 1.95% and were impacted by the anticipated pricing lags on core interest-bearing deposits (excludes brokered deposits) as well as the decline in non-interest-bearing DDAs.
Income Statement Summary** | |||||||||||||||||||||||||
