Synovus Financial Corp. (SNV) has a rich history spanning over a century, having been founded in 1888 as the Columbus Savings Bank in Columbus, Georgia. Today, the company has grown to become a leading regional bank, serving customers across Alabama, Florida, Georgia, South Carolina, and Tennessee. With a focus on relationship-based banking, Synovus has navigated the ever-changing financial landscape, cementing its position as a trusted partner for individuals and businesses alike.
Financial Strength and Resilience Synovus' financial performance has been consistently strong, with the company reporting solid results in recent years. In 2024, the bank reported net income of $482.5 million, or $3.03 per diluted share, compared to $543.7 million, or $3.46 per diluted share, in 2023. While the 2024 results reflected a slight dip in net income, the company's strong profitability metrics, including an adjusted return on average assets of 1.15% and an adjusted return on tangible common equity of 15.84%, underscored its ability to generate sustainable earnings.
The bank's balance sheet remains sturdy, with a common equity Tier 1 (CET1) capital ratio of 10.84% as of December 31, 2024, well above the regulatory minimum. This robust capital position enables Synovus to withstand potential economic headwinds and provides the flexibility to pursue strategic growth initiatives. Moreover, the company's solid liquidity profile, with a loan-to-deposit ratio of 83.3% as of the same date, positions it well to navigate changing funding conditions.
Diversified Business Model and Strategic Initiatives Synovus Financial Corp. was founded in 1972 and is headquartered in Columbus, Georgia. The company provides a wide range of financial services through its wholly-owned subsidiary, Synovus Bank. These services include commercial and consumer banking, as well as specialized offerings such as wealth management, treasury management, mortgage services, and capital markets.
In its early years, Synovus focused on expanding its presence within Georgia, opening new branches and enhancing its commercial and retail banking services. The company successfully navigated the challenging economic conditions of the 1980s, maintaining a strong capital position and credit quality. This resilience allowed Synovus to take advantage of acquisition opportunities in the 1990s, expanding into neighboring states like Alabama, Florida, and South Carolina to establish a regional presence.
The 2000s brought new challenges for Synovus, as the company faced the subprime mortgage crisis and the subsequent financial crisis. During this period, Synovus experienced increased levels of non-performing assets and charge-offs, prompting the company to strengthen its credit risk management practices and reposition its balance sheet. In response to these challenges, Synovus implemented operational streamlining measures, including branch closures and workforce reductions, to improve efficiency and profitability.
Despite these obstacles, Synovus remained committed to its core community banking model, emphasizing strong relationships with commercial and retail clients. The company also continued to diversify its revenue streams by expanding its wealth management, treasury management, and capital markets capabilities. These strategic initiatives played a crucial role in helping Synovus weather the crisis and emerge as a stronger, more resilient institution.
Navigating a Challenging Lending Environment The lending environment in 2024 was impacted by a combination of factors, including elevated payoff activity, lower commercial line utilization, and the bank's continued focus on reducing non-relationship credits. These headwinds resulted in a 2% year-over-year decline in total loans, net of deferred fees and costs, as of December 31, 2024.
However, Synovus remains confident in its ability to navigate this challenging landscape. The bank's pipeline of committed loan production was the highest in eight quarters as of the end of 2024, and it expects loan growth to rebound in 2025, with a targeted range of 3% to 6% for the full year. The company's strategic investments in its commercial banking teams and specialized lending verticals are expected to support this growth.
Maintaining Disciplined Cost Management Synovus has demonstrated a strong track record of disciplined cost management, with adjusted noninterest expense declining 3% year-over-year in 2024. The bank's efficiency ratio, on a taxable-equivalent basis, improved to 54.33% in 2024, compared to 54.94% in the prior year.
This focus on operational efficiency has enabled Synovus to reinvest in strategic initiatives, such as expanding its middle market commercial and wealth management teams, while maintaining a competitive cost structure. Going forward, the company expects adjusted noninterest expense to grow 3% to 7% in 2025, as it continues to make targeted investments to drive long-term shareholder value.
Prudent Risk Management and Credit Quality Synovus has maintained a strong focus on credit quality, with net charge-offs of 0.31% of average loans in 2024, a slight improvement from 0.35% in the prior year. The bank's nonperforming asset ratio stood at 0.73% as of December 31, 2024, up from 0.66% a year earlier, but still within the company's risk appetite.
The bank's allowance for credit losses (ACL) increased to 1.27% of total loans as of the end of 2024, up from 1.24% a year earlier. This increase was primarily driven by the impact of loan production and elevated payoffs on the expected life of the loan portfolio, as well as the uncertain economic outlook.
Looking ahead, Synovus anticipates net charge-offs to remain in the 25 to 35 basis point range in the first half of 2025, reflecting its continued focus on prudent risk management and its confidence in the credit quality of its loan portfolio.
Financials Synovus' financial performance in 2024 demonstrated resilience in the face of challenging market conditions. The bank reported net income of $482.5 million, or $3.03 per diluted share, compared to $543.7 million, or $3.46 per diluted share, in 2023. Despite the slight decrease in net income, the company maintained strong profitability metrics, with an adjusted return on average assets of 1.15% and an adjusted return on tangible common equity of 15.84%.
The bank's efficiency ratio improved to 54.33% in 2024, down from 54.94% in the prior year, reflecting its continued focus on cost management. Synovus also maintained a robust capital position, with a common equity Tier 1 (CET1) capital ratio of 10.84% as of December 31, 2024, providing a solid foundation for future growth and shareholder returns.
In the most recent quarter (Q4 2024), Synovus reported revenue of $580.6 million and net income of $190.4 million. While specific growth rates were not provided, the company indicated that the quarter saw year-over-year growth.
Synovus operates through four major reportable business segments: Wholesale Banking, Community Banking, Consumer Banking, and Financial Management Services. In 2024, the Wholesale Banking segment reported net interest income of $736.3 million and income before income taxes of $537.3 million. The Community Banking segment generated net interest income of $398.4 million and income before income taxes of $271.1 million. The Consumer Banking segment reported net interest income of $544.3 million and income before income taxes of $397.3 million. Lastly, the Financial Management Services segment recorded net interest income of $101.1 million and income before income taxes of $118.1 million.
Liquidity Synovus' liquidity position remained strong throughout 2024, with a loan-to-deposit ratio of 83.3% as of December 31, 2024. This favorable ratio indicates that the bank has ample liquidity to meet its lending obligations while maintaining a healthy buffer for potential economic uncertainties.
The company's diverse funding sources, including a stable core deposit base and access to wholesale funding markets, further enhance its liquidity profile. This strong liquidity position enables Synovus to navigate changing market conditions and pursue strategic growth opportunities while maintaining a prudent risk management approach.
Solid Capital Position and Shareholder-Friendly Actions Synovus' strong capital position has enabled the company to return capital to shareholders while also supporting organic growth initiatives. In 2024, the bank repurchased $270 million of common stock, while also increasing its common equity Tier 1 capital ratio by 62 basis points to 10.84%.
Building on this momentum, the company's board of directors recently approved a quarterly common stock dividend of $0.39 per share, starting in April 2025, and authorized a $400 million common stock repurchase program for the current year. These shareholder-friendly actions underscore Synovus' commitment to efficiently allocating capital and enhancing long-term shareholder value.
Business Segments and Strategic Focus Synovus' diversified business model across commercial, consumer, and wealth management services has allowed the company to generate relatively stable financial performance. The Wholesale Banking segment serves larger corporate and governmental clients, providing commercial lending, deposit, and capital markets services through specialized teams. This segment focuses on tailored financial solutions for larger commercial clients across various verticals, including middle market, commercial real estate, senior housing, premium finance, and structured lending.
The Community Banking segment primarily serves small and medium-sized commercial clients and individual private wealth clients using a relationship-based approach. This segment provides a comprehensive set of banking products, including lending, payments, and depository services, as well as financial planning services to its local commercial and individual clients.
The Consumer Banking segment caters to individual and small business clients through its branch and ATM network, as well as digital and telephone channels. It offers a full suite of consumer and small business banking services, including depository accounts, credit and debit cards, payment solutions, and various lending products.
The Financial Management Services segment leverages Synovus' wealth management capabilities to provide a diverse set of financial services, including mortgage, trust services, professional portfolio management, securities underwriting and distribution, asset management, and financial planning.
Outlook and Guidance for 2025 As Synovus looks ahead to 2025, the company has provided guidance that reflects its confidence in its strategic initiatives and the broader economic environment. The bank expects period-end loan growth of 3% to 6%, core deposit growth of 3% to 6%, and adjusted revenue growth of 3% to 7% for the full year.
The net interest margin is anticipated to be in the "mid-320s" range in early 2025, with potential for further expansion in the second half of the year. Adjusted noninterest revenue is expected to be $500 million to $520 million, while adjusted noninterest expense is projected to grow 3% to 7% in 2025.
Synovus anticipates net charge-offs to remain in the 25 to 35 basis point range in the first half of 2025, reflecting its continued focus on prudent risk management. The common equity Tier 1 ratio is expected to remain relatively stable, and the tax rate is projected to be around 22% in 2025.
Conclusion Synovus' strong financial performance, diversified business model, and prudent risk management have positioned the company well to navigate the evolving industry landscape. With a focus on deepening client relationships, expanding its specialized lending verticals, and investing in digital capabilities, Synovus is poised to build on its legacy as a premier regional bank and deliver sustainable long-term value for its shareholders. The company's guidance for 2025 reflects confidence in its strategic initiatives and ability to capitalize on market opportunities while maintaining a disciplined approach to growth and risk management.