• Earnings Per Share (EPS): GAAP and adjusted EPS of $1.30; adjusted EPS increased 4% from the previous quarter and 65% year-over-year.
• Net Interest Income: $454 million, up 8% year-over-year and flat sequentially.
• Net Interest Margin: 3.35%, up 7 basis points from the previous quarter.
• Loan Growth: Loan balances increased by $40 million; funded loan production increased 16% quarter-over-quarter and 89% year-over-year.
• Core Deposits: Increased 3% year-over-year.
• Cost of Deposits: Average cost declined 20 basis points to 2.26%.
• Adjusted Non-Interest Revenue: $117 million, declined 6% sequentially and increased 1% year-over-year.
• Adjusted Non-Interest Expense: Flat sequentially and down 3% year-over-year.
• Net Charge-Offs: $21 million or 20 basis points, below the expected range of 25 to 35 basis points.
• Non-Performing Loans: Improved to 0.67% of total loans, down from 0.73% in the previous quarter.
• Allowance for Credit Losses: 1.24%, down from 1.27% at the end of 2024.
• Common Equity Tier 1 Ratio: 10.75%.
• Total Risk-Based Capital: 13.65%.

• Warning! GuruFocus has detected 7 Warning Sign with MMC.

Release Date: April 17, 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 strong first-quarter 2025 results with GAAP and adjusted earnings per share of $1.30, marking a 65% year-over-year increase.
• Net interest margin expanded to 3.35%, up 7 basis points from the previous quarter, driven by effective deposit repricing and stable fed funds environment.
• Loan production was the highest since the fourth quarter of 2022, with funded production increasing 16% quarter-over-quarter and 89% year-over-year.
• Core deposits increased 3% year-over-year, with positive trends in money market, interest-bearing demand, and savings accounts.
• The company maintained a strong capital position with a preliminary Common Equity Tier 1 ratio at 10.75% and completed $120 million of share repurchases in the first quarter.

Negative Points

• There was an increase in negative sentiment among commercial clients, with 17% expecting business activity to decline over the next 12 months, up from 10% last quarter.
• The company faces uncertainty due to recent tariff policy announcements, impacting client sentiment and potentially affecting economic growth.
• Adjusted non-interest revenue declined 6% sequentially, with lower commercial sponsorship income and softer capital market fees.
• The allowance for credit losses declined due to positive credit trends but was partially offset by a more adverse economic outlook.
• Loan growth was relatively muted, with only a $40 million increase in period-end loan balances, despite strong loan production trends.

Q & A Highlights

Q: Kevin, can you talk a little bit more about the lending environment and what might influence your loan growth guidance? A: Kevin Blair, CEO: The recent tariff policy announcements have introduced uncertainty into the business environment. However, 41% of our clients believe business activity will increase over the next 12 months. Our loan production was strong, with $1.5 billion in funded production, and our pipelines are higher than our production, indicating continued growth. Our fast-growing segments, including Middle Market and Structured Lending, are expected to grow 10% to 15% for the rest of the year. New talent additions will also contribute to growth.

Q: Jamie, the margin was better than expected. How do you feel about the margin going forward? A: Andrew Gregory, CFO: We expect the margin to be relatively stable in the second quarter, depending on Fed policy. Our guidance includes four rate cuts this year, which may temporarily pressure the margin. However, in a flat rate scenario, we would see margin expansion in the second half of the year.

Q: Was the strong loan production due to borrowers stockpiling inventories before tariffs? A: Kevin Blair, CEO: No, the production was broad-based across commercial real estate, C&I, CIB, and Specialty Lending. We did not see significant movement in line utilization that would indicate stockpiling.

Q: Are there any changes to the strategic growth objectives or hiring plans? A: Kevin Blair, CEO: There are no changes to our commercial RM hiring plans. We have added 20% of planned hires, and we remain committed to our strategic growth objectives. We may slow wealth expansion due to market volatility, but overall, our strategy remains unchanged.

Q: Regarding credit improvements, was the office charge-off related to a previously non-performing loan? A: Anne Fortner, Chief Credit Officer: Yes, it was related to a non-performing office relationship. While not fully resolved, it is a step in the right direction, and we hope to resolve it by the end of this quarter or the next.

Q: How should we think about capital and share buybacks given the focus on maintaining stable CET1 ratios? A: Kevin Blair, CEO: Our priority is loan growth, supported by strong earnings. We will balance share repurchases with loan growth prospects. If loan growth is strong, we may reduce buybacks, but if stable, we will continue repurchasing shares.

Q: Can you provide more details on the impact of policy changes on your customer base? A: Kevin Blair, CEO: We have limited exposure to industries heavily impacted by tariffs. About 15% of our top borrowers expect a meaningful impact, primarily through increased input costs. We are closely monitoring daily line utilization and maintaining strong client communication.

Q: What are your expectations for fixed asset repricing given the current rate environment? A: Kevin Blair, CEO: Our expectations for fixed asset repricing remain similar to previous guidance. In a flat rate scenario, we expect the margin to reach the low 3.40s by year-end, with continued benefits into next year.

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