• Fourth Quarter EPS: $1.25, up 6% from the previous quarter.
• Adjusted Fourth Quarter EPS: Increased 18% year-over-year.
• 2024 EPS: $3.03.
• Adjusted 2024 EPS: $4.43.
• Loan Balances: Decreased $512 million or 1% sequentially in Q4.
• Core Deposit Growth: Increased $1.1 billion or 3% sequentially in Q4.
• Net Interest Income: $455 million in Q4, a 3% increase from the prior quarter.
• Net Interest Margin: 3.28% for Q4, a 6 basis point increase.
• Adjusted Noninterest Revenue: $125 million, up 2% quarter-over-quarter.
• Adjusted Noninterest Expense: $309 million in Q4, down 12% year-over-year.
• Net Charge-Offs: 26 basis points in Q4.
• Common Equity Tier 1 Ratio: Increased 62 basis points to 10.84% in 2024.
• Share Repurchases: $50 million executed in Q4.

• Warning! GuruFocus has detected 7 Warning Signs with SNV.

Release Date: January 16, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Synovus Financial Corp (NYSE:SNV) reported a strong fourth quarter EPS of $1.25, up 6% from the previous quarter.
• Core deposits grew by 3% in the fourth quarter, supported by public fund seasonality and growth in money market and operating deposits.
• The company achieved a 3% quarter-over-quarter growth in net interest income, driven by lower deposit and funding costs.
• Synovus Financial Corp (NYSE:SNV) maintained strong profitability metrics with an adjusted return on average assets of 1.15% and adjusted return on tangible common equity of 15.84%.
• The company successfully reduced brokered deposits by $230 million, improving its wholesale funding ratio to 11% from 13.5% a year ago.

Negative Points

• Period-end loan balances declined by $512 million or 1% sequentially and 2% year-over-year, impacted by lower commercial line utilization and elevated loan payoffs.
• The lending environment in 2024 was challenging, with significant market headwinds affecting loan growth.
• Adjusted noninterest expense increased by 2% from the prior quarter, driven by higher personnel costs, FDIC premiums, and technology initiatives.
• The allowance for credit losses rose by approximately $4 million, reflecting strong loan production but also elevated payoffs.
• The company anticipates continued margin pressure in the first half of 2025 due to the timing lag between loan and deposit repricing during an easing cycle.

Q & A Highlights

Q: Kevin, can you talk a little bit more about the loan growth expectations? You flagged some of the headwinds, but it looks like you've seen better production as well. Curious what you're hearing from the borrowers? And then what could keep you at the lower end or the higher end or put you at the higher end of the range? A: I appreciate your optimism, Jon. I'm very optimistic about our prospects for returning to a more normalized growth environment in '25. It starts with client sentiment, which has improved post-election. We expect production to increase roughly 15% in 2025, with committed production at the highest level in eight quarters. We've added new resources, including 11 middle-market bankers, and optimized our balance sheet by reducing exposure to certain asset classes. Line utilization has bottomed out, and we expect payoff activity to normalize, supporting strong loan growth in '25.

Q: Jamie, just one for you. You're indicating very slight margin pressure in the first quarter, and that gives us a good starting point. But how do you expect the margin to trend after the first quarter? A: As you look at the margin in the first half of the year, we expect to be in the mid-320s. We had about a 4 basis points impact in the fourth quarter from nonrecurring interest. Once normalized, we expect stability in the first half and margin expansion in the second half as fixed rate asset repricing starts to flow in. We believe the margin could end the year in the mid-330s with a tailwind heading into '26.

Q: Maybe just on the buyback and capital return. I know you guys are talking about keeping the CET1 relatively stable. But if we do go into this kind of deregulatory environment, is there more leverage there as we think about kind of the intermediate term for the CET1 ratio? A: Our capital plan for 2025 gives us a lot of flexibility. With a $400 million share repurchase authorization, we can maintain stable capital ratios even with loan growth as high as 10%. We use industry trends to influence our capital ratio objectives. While our CET1 is high, severe adverse stress testing shows we are adequately capitalized. We'll monitor industry changes and adjust our CET1 targets accordingly.

Q: On your 2025 outlook slide, you reiterated pretty much all parts of it, but you still expect the FOMC easing cycle to continue in the first half. I guess if we don't get a rate cut in the first half, can you just talk about the impact to your 3% to 7% revenue growth guidance you expect? A: We've discussed the lead lag impact extensively. In the second half of 2024, we efficiently repriced deposits lower, reducing the impact to $2 million to $4 million per 25 basis point ease, about half of what we initially expected. If the easing cycle doesn't occur as anticipated, we believe the reduced impact will be incremental to our revenue growth guidance.

Q: Looking at the capital markets, any color you can give in terms of trajectory there as we look through the year, anything specific coming up at the beginning that could drive either upside or downside there? A: Capital markets can be lumpy due to large transactions, but we're up about 13% over the last year. The increased diversification in our offerings, such as derivatives, syndication, and FX, gives us confidence in achieving another year of double-digit growth. As loan growth normalizes, these fees, correlated with higher production, should continue to grow.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.