Synovus Financial (SNV) - 2025 Q2 - Quarterly Results

Executive Summary Synovus delivered strong Q2 2025 results with significant EPS growth, improved operational efficiency, and strengthened capital, leading to raised full-year guidance Overall Performance and Strategic Highlights Synovus achieved strong Q2 2025 results with 28% adjusted EPS growth, 8% annualized loan growth, improved efficiency, and record CET1 ratio, leading to raised full-year guidance - Adjusted diluted earnings per share grew 28% year-over-year[4] - Funded loan production surged 60% year over year, driving 8% annualized loan growth[4] - Achieved positive operating leverage, strengthening top-quartile efficiency ratio and profitability[4] - Credit quality improved across all categories[4] - Common Equity Tier 1 capital ratio reached the highest level in company's history[4] - Full-year 2025 earnings guidance was confidently raised[4] Second Quarter 2025 Key Financial Highlights Synovus reported $206.3 million net income and $1.48 adjusted diluted EPS for Q2 2025, with sequential growth in loans, net interest income, and improved credit quality Key Financial Highlights (Reported vs. Adjusted) | Metric | 2Q25 Reported | 1Q25 Reported | 2Q24 Reported | 2Q25 Adjusted | 1Q25 Adjusted | 2Q24 Adjusted | | :--------------------------------- | :-------------- | :-------------- | :-------------- | :-------------- | :-------------- | :-------------- | | Net income (loss) available to common shareholders (in thousands) | $206,320 | $183,691 | $(23,741) | $206,375 | $184,380 | $169,617 | | Diluted earnings per share | $1.48 | $1.30 | $(0.16) | $1.48 | $1.30 | $1.16 | | Total revenue (in thousands) | $593,696 | $570,850 | $306,147 | $592,083 | $573,243 | $563,597 | | Net interest margin | 3.37% | 3.35% | 3.20% | NA | NA | NA | | Efficiency ratio-TE | 53.03% | 53.81% | 98.15% | 52.31% | 53.26% | 53.05% | | Common Equity Tier 1 capital (CET1) ratio | 10.91% | 10.77% | 10.60% | NA | NA | NA | - Pre-provision net revenue was $278.0 million, up 6% from 1Q25; Adjusted pre-provision net revenue of $279.7 million increased 5% on a linked quarter basis and rose 7% year over year[5] - Net interest income grew 1% from 1Q25 and 6% compared to 2Q24[5] - Net interest margin expanded by 2 basis points to 3.37% due to a decline in deposit costs, fixed-rate asset repricing, hedge maturities, lower cash balances, and a stable Fed Funds environment[5] - Period-end loans increased $888.0 million, or 2%, from 1Q25, fueled by specialty lending, corporate and investment banking lending, and commercial banking[5] - Period-end core deposits (excluding brokered deposits) were $45.2 billion, a decline of $788.4 million sequentially; average deposit costs fell 4 basis points sequentially to 2.22%[5] - Non-performing loan and asset ratios improved to 0.59% compared to 0.67% in 1Q25, while the net charge-off ratio for 2Q25 was 0.17%, down from 0.20% in the prior quarter[8] - Provision for credit losses of $3.2 million declined 70% sequentially and fell 88% compared to $26.4 million in 2Q24[8] - The preliminary Common Equity Tier 1 ratio ended 1Q25 at 10.91% as core earnings accretion offset the impact of approximately $21 million in common stock repurchases[8] Company Information Synovus Financial Corp. is a Georgia-based financial services company with approximately $61 billion in assets, offering diverse banking products across five Southeastern states Company Profile Synovus Financial Corp. is a Georgia-based financial services company with approximately $61 billion in assets, offering a comprehensive range of commercial and consumer banking products and specialized services across 244 branches in five Southeastern states - Synovus Financial Corp. is based in Columbus, Georgia, with approximately $61 billion in assets[13] - Provides commercial and consumer banking and a full suite of specialized products and services, including wealth services, treasury management, mortgage services, premium finance, asset-based lending, structured lending, capital markets, and international banking[13] - As of June 30, 2025, Synovus has 244 branches in Georgia, Alabama, Florida, South Carolina, and Tennessee[13] Financial Results Overview Synovus reported a significant turnaround in Q2 2025 net income, driven by increased net interest income, substantial non-interest revenue growth, and sharply reduced credit loss provisions Consolidated Income Statement - Second Quarter Synovus reported a net income of $217.1 million for Q2 2025, a significant turnaround from a loss in 2Q24, driven by increased net interest income and a substantial rise in non-interest revenue, while provision for credit losses decreased sharply Income Statement Summary (2Q25 vs 1Q25 vs 2Q24) | Metric (in thousands) | 2Q25 | 1Q25 | 2Q24 | Linked Quarter % Change | Year/Year % Change | | :--------------------------------------- | :------- | :------- | :------- | :---------------------- | :------------------- | | Net interest income | $459,561 | $454,384 | $434,998 | 1% | 6% | | Non-interest revenue | $134,135 | $116,466 | $(128,851) | 15% | 204% | | Non-interest expense | $315,701 | $308,034 | $301,801 | 2% | 5% | | Provision for (reversal of) credit losses | $3,245 | $10,921 | $26,404 | (70)% | (88)% | | Income before taxes | $274,750 | $251,895 | $(22,058) | 9% | nm | | Net income (loss) | $217,119 | $194,872 | $(14,680) | 11% | nm | | Net income (loss) available to common shareholders | $206,320 | $183,691 | $(23,741) | 12% | nm | | Diluted earnings (loss) per share | $1.48 | $1.30 | $(0.16) | 14% | nm | Net Interest Income and Margin Synovus's net interest income grew 1% sequentially to $459.6 million in Q2 2025, with net interest margin expanding to 3.37% due to lower deposit costs and asset repricing - Net interest income was $459.6 million in 2Q25, increasing 1% sequentially and 6% year-over-year[5][11][17] - Net interest margin expanded by 2 basis points to 3.37% in 2Q25, up from 3.35% in 1Q25 and 3.20% in 2Q24[5][6][17] - The expansion in net interest margin was a result of a decline in deposit costs, fixed-rate asset repricing, hedge maturities, lower cash balances, and a stable Fed Funds environment[5] Non-Interest Revenue Non-interest revenue increased 15% sequentially to $134.1 million in Q2 2025, driven by higher core banking fees, wealth management, and capital markets income - Non-interest revenue was $134.1 million in 2Q25, an increase of $17.7 million (15%) sequentially[8][11][17] - Adjusted non-interest revenue of $130.9 million increased $13.6 million (12%) sequentially and $3.6 million (3%) from 2Q24[8] - The sequential increase in adjusted non-interest revenue was primarily attributable to higher core banking fees, wealth management income, capital markets income, commercial sponsorship fees, and a bank-owned life insurance gain[8] - Investment securities gains (losses), net was $0 in 2Q25 compared to $(256.7) million in 2Q24[11][17] Non-Interest Expense Non-interest expense rose 2% sequentially to $315.7 million in Q2 2025, primarily due to employment costs, while the efficiency ratio improved to 53.03% - Non-interest expense was $315.7 million in 2Q25, increasing $7.7 million (2%) sequentially and $13.9 million (5%) year-over-year[11][17] - Adjusted non-interest expense was $312.4 million, increasing 1% from 1Q25 and 3% from a year ago, primarily due to higher employment expense[8] - The efficiency ratio-TE improved to 53.03% in 2Q25 from 53.81% in 1Q25 and 98.15% in 2Q24[6][11] - The adjusted tangible efficiency ratio improved to 52.31% in 2Q25 from 53.26% in 1Q25[6][11] Provision for Credit Losses Provision for credit losses significantly decreased by 70% sequentially to $3.2 million in Q2 2025, reflecting improved credit quality - Provision for credit losses was $3.2 million in 2Q25, declining 70% sequentially from $10.9 million and 88% year-over-year from $26.4 million[8][11][17] Net Income and Earnings Per Share Net income available to common shareholders increased 12% sequentially to $206.3 million in Q2 2025, with diluted EPS rising to $1.48 - Net income available to common shareholders was $206.3 million in 2Q25, up 12% sequentially[5][11][17] - Diluted earnings per share was $1.48 in 2Q25, up 14% sequentially[5][11][17] - Adjusted diluted earnings per share was $1.48 in 2Q25, up 14% sequentially and 28% year-over-year[5][11][17] Consolidated Income Statement - Year-to-Date For the six months ended June 30, 2025, Synovus reported a net income available to common shareholders of $390.0 million, a 328% increase from the prior year, with diluted EPS of $2.77 Income Statement Data (Six Months Ended June 30, 2025 vs 2024) | Metric (in thousands) | 2025 | 2024 | % Change | | :--------------------------------------- | :------- | :------- | :------- | | Net interest income | $913,945 | $853,844 | 7% | | Provision for (reversal of) credit losses | $14,166 | $80,384 | (82)% | | Total non-interest revenue | $250,601 | $(9,963) | nm | | Total non-interest expense | $623,735 | $624,542 | —% | | Income before income taxes | $526,645 | $138,955 | 279% | | Net income | $411,991 | $109,390 | 277% | | Net income available to common shareholders | $390,011 | $91,081 | 328% | | Diluted earnings per share | $2.77 | $0.62 | 347% | | Cash dividends declared per common share | $0.78 | $0.76 | 3% | | Return on average assets | 1.39% | 0.37% | 102 bps | | Return on average common equity | 16.11% | 4.07% | nm | Balance Sheet Overview Synovus's balance sheet at June 30, 2025, shows total assets of $61.06 billion, with sequential growth in loans and investment securities, while deposits experienced a slight decline Loans Outstanding Total loans increased by $888.0 million, or 2%, sequentially to $43.5 billion at June 30, 2025, primarily driven by growth in commercial & industrial loans and other investment properties Loans Outstanding by Type (2Q25 vs 1Q25 vs 2Q24) | Loan Type (in millions) | June 30, 2025 | March 31, 2025 | Linked Quarter % Change | June 30, 2024 | Year/Year % Change | | :-------------------------------- | :-------------- | :--------------- | :---------------------- | :-------------- | :------------------- | | Commercial & industrial | $23,098.3 | $22,313.3 | 4% | $22,536.6 | 2% | | Commercial real estate | $12,139.7 | $12,071.6 | 1% | $12,215.5 | (1)% | | Consumer | $8,298.7 | $8,263.8 | —% | $8,341.3 | (1)% | | Total loans | $43,536.7 | $42,648.7 | 2% | $43,093.4 | 1% | - Commercial & industrial loans increased by 4% sequentially and 2% year-over-year[9][21] - Other Investment Property loans increased 2% sequentially and 13% year-over-year[21] - 1-4 Family Construction loans increased 11% sequentially and 22% year-over-year[21] Deposits Total deposits decreased by $918.1 million, or 2%, sequentially to $49.9 billion at June 30, 2025, primarily due to declines in public funds, time deposits, and interest-bearing DDA, partially offset by an increase in non-interest-bearing DDA Deposits by Type (2Q25 vs 1Q25 vs 2Q24) | Deposit Type (in millions) | 2Q25 | 1Q25 | Linked Quarter Change | Linked Quarter % Change | 2Q24 | Year/Year Change | Year/Year % Change | | :------------------------- | :------- | :------- | :-------------------- | :---------------------- | :------- | :--------------- | :----------------- | | Non-interest-bearing DDA | $11,219.8 | $11,095.8 | $124.0 | 1% | $11,177.7 | $42.1 | —% | | Interest-bearing DDA | $7,124.8 | $7,272.0 | $(147.2) | (2)% | $6,621.2 | $503.6 | 8% | | Money market | $11,441.1 | $11,424.7 | $16.4 | —% | $10,747.9 | $693.1 | 6% | | Savings | $971.9 | $1,000.4 | $(28.5) | (3)% | $1,009.8 | $(38.0) | (4)% | | Public funds | $7,719.9 | $8,125.0 | $(405.0) | (5)% | $7,111.9 | $608.0 | 9% | | Time deposits | $6,730.4 | $7,078.5 | $(348.1) | (5)% | $8,125.2 | $(1,394.8) | (17)% | | Brokered deposits | $4,717.1 | $4,846.7 | $(129.6) | (3)% | $5,402.0 | $(685.0) | (13)% | | Total deposits | $49,925.0 | $50,843.1 | $(918.1) | (2)% | $50,195.8 | $(270.8) | (1)% | - Average deposit costs fell 4 basis points sequentially to 2.22%[5] Consolidated Balance Sheet Total assets for Synovus increased to $61.06 billion at June 30, 2025, up from $60.23 billion at December 31, 2024, primarily driven by an increase in loans and investment securities Consolidated Balance Sheet (June 30, 2025 vs Dec 31, 2024 vs June 30, 2024) | Metric (in thousands) | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :--------------------------------------- | :-------------- | :---------------- | :-------------- | | Total assets | $61,056,785 | $60,233,644 | $59,606,343 | | Total deposits | $49,925,007 | $51,095,359 | $50,195,778 | | Long-term debt | $3,909,478 | $1,733,109 | $2,283,767 | | Total liabilities | $55,418,143 | $54,967,393 | $54,529,671 | | Total Synovus Financial Corp. shareholders' equity | $5,617,686 | $5,244,557 | $5,053,606 | - Loans, net increased to $43.07 billion at June 30, 2025, from $42.12 billion at December 31, 2024[18] - Investment securities available for sale increased to $7.80 billion at June 30, 2025, from $7.55 billion at December 31, 2024[18] Average Balances, Interest, and Yields/Rates For Q2 2025, average interest-earning assets were $54.96 billion with a yield of 5.64%, while average interest-bearing liabilities were $40.99 billion with a cost of 3.05%, resulting in a net interest margin of 3.37% Average Balances, Interest, and Yields/Rates (2Q25 vs 1Q25 vs 2Q24) | Metric | 2Q25 Average Balance (in thousands) | 2Q25 Yield/Rate | 1Q25 Average Balance (in thousands) | 1Q25 Yield/Rate | 2Q24 Average Balance (in thousands) | 2Q24 Yield/Rate | | :--------------------------------------- | :-------------------------------- | :-------------- | :-------------------------------- | :-------------- | :-------------------------------- | :-------------- | | Total interest earning assets | $54,963,110 | 5.64% | $55,131,990 | 5.65% | $54,849,986 | 5.89% | | Total interest-bearing liabilities | $40,990,827 | 3.05% | $41,040,686 | 3.09% | $40,199,073 | 3.66% | | Net interest income and net interest margin, taxable equivalent | NA | 3.37% | NA | 3.35% | NA | 3.20% | - Commercial loans yield decreased to 6.39% in 2Q25 from 6.43% in 1Q25 and 6.82% in 2Q24[19] - Time deposits rate decreased to 3.45% in 2Q25 from 3.71% in 1Q25 and 4.48% in 2Q24[19] Asset Quality Synovus demonstrated improved asset quality in Q2 2025, with non-performing loans and assets decreasing, a lower net charge-off ratio, and enhanced reserve coverage Non-Performing Loans and Assets Non-performing loans (NPLs) decreased by 10% sequentially to $257.4 million at June 30, 2025, while non-performing assets (NPAs) also saw a similar decline, with the NPL ratio remaining stable at 0.59% year-over-year Non-Performing Loans Composition (2Q25 vs 1Q25 vs 2Q24) | Loan Type (in thousands) | June 30, 2025 | March 31, 2025 | Linked Quarter % Change | June 30, 2024 | Year/Year % Change | | :-------------------------------- | :-------------- | :--------------- | :---------------------- | :-------------- | :------------------- | | Commercial & Industrial | $129,309 | $143,796 | (10)% | $171,084 | (24)% | | Commercial Real Estate | $61,263 | $70,064 | (13)% | $15,537 | 294% | | Consumer | $66,843 | $72,769 | (8)% | $69,485 | (4)% | | Total Non-performing Loans | $257,415 | $286,629 | (10)% | $256,106 | 1% | - Non-performing assets (NPAs) were $258.6 million in 2Q25, down from $287.2 million in 1Q25[24] - The NPLs / Loans ratio was 0.59% in 2Q25, down from 0.67% in 1Q25, and stable compared to 0.59% in 2Q24[24] - The NPAs / Loans, ORE and specific other assets ratio was 0.59% in 2Q25, down from 0.67% in 1Q25, and stable compared to 0.60% in 2Q24[24] Credit Loss Allowance and Net Charge-Offs The allowance for credit losses (ACL) decreased to $513.8 million, with the ACL to loans ratio at 1.18%, while net charge-offs (NCOs) declined significantly to 0.17% of average loans for the quarter, and reserve coverage of non-performing loans improved to 200% - Allowance for Credit Losses (ACL) was $513.8 million in 2Q25, down from $528.9 million in 1Q25[24] - Allowance for Loan Losses (ALL) was $464.8 million in 2Q25, down from $478.2 million in 1Q25[24] - Net Charge-Offs / Average Loans - Quarter was 0.17% in 2Q25, down from 0.20% in 1Q25 and 0.32% in 2Q24[24] - The ACL / Loans ratio was 1.18% in 2Q25, down from 1.24% in 1Q25[24] - Reserve coverage of non-performing loans (ACL/NPLs) improved to 199.60% in 2Q25 from 184.51% in 1Q25[8][24] Capital Adequacy Synovus achieved a record-high preliminary Common Equity Tier 1 capital ratio of 10.91% at June 30, 2025, reflecting strong core earnings accretion and improved tangible common equity Regulatory Capital Ratios and Equity Synovus's Common Equity Tier 1 (CET1) capital ratio reached a preliminary 10.91% at June 30, 2025, the highest in the company's history, reflecting strong core earnings accretion, with the tangible common equity ratio also improving to 7.55% Selected Capital Information (June 30, 2025 vs Dec 31, 2024 vs June 30, 2024) | Metric | June 30, 2025 | December 31, 2024 | June 30, 2024 | | :--------------------------------------- | :------------ | :------------------ | :------------ | | Common Equity Tier 1 Capital Ratio | 10.91% | 10.84% | 10.60% | | Tier 1 Capital Ratio | 12.01% | 11.96% | 11.72% | | Total Risk-Based Capital Ratio | 13.74% | 13.81% | 13.56% | | Tier 1 Leverage Ratio | 9.86% | 9.55% | 9.44% | | Total Synovus Financial Corp. shareholders' equity as a Percentage of Total Assets | 9.20% | 8.71% | 8.48% | | Tangible Common Equity Ratio | 7.55% | 7.02% | 6.76% | | Book Value Per Common Share | $36.61 | $33.35 | $31.33 | | Tangible Book Value Per Common Share | $32.94 | $29.70 | $27.72 | - The preliminary Common Equity Tier 1 ratio ended 1Q25 at 10.91%, the highest level in the company's history, as core earnings accretion offset the impact of common stock repurchases[4][8][25] Non-GAAP Financial Measures Synovus utilizes non-GAAP financial measures to provide additional insights into its operating results and financial strength, with comprehensive reconciliations to GAAP Non-GAAP Measures and Reconciliations Synovus provides non-GAAP financial measures, including adjusted non-interest revenue, adjusted non-interest expense, and adjusted tangible efficiency ratio, to offer additional insights into its operating results and financial strength, with detailed reconciliations to GAAP measures - Non-GAAP financial measures provide meaningful additional information to evaluate operating results, financial strength, business performance, and capital position, by excluding items not indicative of ongoing operations[27] - Reconciliations are provided for adjusted non-interest revenue, adjusted non-interest expense, adjusted revenue (TE), adjusted tangible efficiency ratio, adjusted pre-provision net revenue, adjusted return on average assets, adjusted net income available to common shareholders, adjusted diluted earnings per share, adjusted return on average common equity, return on average tangible common equity, adjusted return on average tangible common equity, and tangible common equity ratio[28][29][30][31] Additional Information This section provides details on the upcoming earnings conference call and important disclosures regarding forward-looking statements and associated risks Earnings Conference Call Details Synovus will host an earnings conference call with a slide presentation on July 17, 2025, at 8:30 a.m. ET, with access details for dial-in or webcast and replay information provided - Earnings highlights conference call with accompanying slide presentation scheduled for July 17, 2025, at 8:30 a.m. ET[12] - Access via listen-only dial-in phone number: 833-470-1428 (code: 937395) or simultaneous internet broadcast at investor.synovus.com/event[12] - Replay will be archived for at least 12 months and available approximately one hour after the call[12] Forward-Looking Statements The report contains forward-looking statements regarding future performance and strategy, which are subject to known and unknown risks and uncertainties detailed in SEC filings, with no obligation to update - Statements constitute 'forward-looking statements' regarding future operating and financial performance, growth strategy, expense and revenue initiatives, capital management, balance sheet management, future profitability, and credit quality[14] - Forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties which may cause actual results to be materially different[14] - Risks and other factors are set forth in Synovus's filings with the SEC, including its Annual Report on Form 10-K and quarterly reports on Form 10-Q and current reports on Form 8-K[15] - The company does not assume any obligation to update any forward-looking statements, except as may be required by law[15]