On January 17, 2024, Synovus Financial Corp (SNV, Financial) released its 8-K filing, disclosing its financial results for the fourth quarter and full year of 2023. The company, which provides a comprehensive range of banking and financial services through its subsidiary Synovus Bank and various offices across the Southeastern United States, faced a challenging economic environment throughout the year.
Synovus' financial performance in 2023 reflected the resilience of its business model amidst economic headwinds. The company reported a net income available to common shareholders of $507.8 million for the year, translating to $3.46 per diluted share, a decrease from $724.7 million, or $4.95 per diluted share in 2022. Adjusted EPS for 2023 was $4.12 per diluted share, compared to $4.93 per diluted share in the previous year.
The fourth quarter was particularly impacted by a $51 million FDIC special assessment, which reduced both reported and adjusted EPS by $0.26. Despite this, Synovus continued to focus on client relationship expansion, business diversification, and balance sheet optimization.
Financial Performance and Strategic Actions
Throughout 2023, Synovus achieved a net interest income of $1.82 billion, a slight increase from the previous year, driven by average loan growth and higher earning asset yields. The company also undertook strategic actions such as selling $422 million in third-party consumer loans and $1.2 billion in medical office building loans, using the proceeds to reduce wholesale borrowings.
However, period-end loans saw a marginal decline due to reductions in commercial real estate and consumer loans, which overshadowed growth in commercial and industrial loans. On the positive side, period-end deposits saw a 4% increase, primarily due to growth in time deposits and interest-bearing demand deposits.
Non-interest revenue slightly declined by 1% from 2022, while adjusted non-interest revenue grew by 11%, thanks to fee income from various services. Non-interest expense rose by 15%, with the FDIC special assessment significantly contributing to this increase.
Balance Sheet and Income Statement Highlights
As for the balance sheet, Synovus reported a slight decrease in total loans, while deposits showed a healthy increase. The company's credit quality remained robust, with net charge-offs at 0.35% of average loans. The provision for credit losses was $189.1 million in 2023, up from $84.6 million in the previous year, reflecting a cautious approach in an uncertain economic climate.
The income statement summary for the fourth quarter showed a decrease in net interest income and non-interest revenue compared to the same period in the previous year. Non-interest expense was relatively flat sequentially but increased year over year, again influenced by the FDIC assessment.
Despite the challenges faced in the fourth quarter, Synovus' capital ratios remained strong, with the CET1 ratio increasing to 10.22%, indicating a solid capital position within the target operating range.
Looking Ahead
Kevin Blair, Synovus Chairman, CEO, and President, remains confident in the company's trajectory, stating,
As we execute our plan, we're confident momentum will build throughout 2024 and beyond for Synovus."The company's focus on core deposit generation, lending diversification, expense efficiency, and client service is expected to drive growth in the coming year.
Synovus will host an earnings highlights conference call to further discuss these results and provide additional insights into its strategies and outlook.
For value investors and potential GuruFocus.com members, Synovus' earnings report offers a comprehensive view of the company's financial health and strategic direction. Despite the dip in earnings, the company's proactive measures and strong capital ratios suggest a resilient foundation for future growth.
Explore the complete 8-K earnings release (here) from Synovus Financial Corp for further details.
