Synovus Financial (US:SNV)2025-08-05 14:15Part I. Financial Information Financial Statements (Unaudited) This section presents Synovus Financial Corp.'s unaudited interim consolidated financial statements, showing increased total assets and net income, primarily due to loan growth and the absence of prior-year investment securities losses Consolidated Financial Statements Consolidated financial statements reveal total assets grew to $61.06 billion, driven by a $949.7 million increase in net loans, while deposits decreased by $1.17 billion, and net income significantly rose to $412.0 million Consolidated Balance Sheet Highlights (as of June 30, 2025 vs. Dec 31, 2024) | Account | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total Assets | $61,056,785 | $60,233,644 | +$823,141 | | Loans, net | $43,071,885 | $42,122,183 | +$949,702 | | Total Deposits | $49,925,007 | $51,095,359 | -$1,170,352 | | Long-term Debt | $3,909,478 | $1,733,109 | +$2,176,369 | | Total Equity | $5,638,642 | $5,266,251 | +$372,391 | Consolidated Income Statement Highlights | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $459.6M | $435.0M | $913.9M | $853.8M | | Net Income (Loss) | $217.1M | $(14.7)M | $412.0M | $109.4M | | Diluted EPS | $1.48 | $(0.16) | $2.77 | $0.62 | - Net cash provided by operating activities was $235.1 million, net cash used in investing activities was $1.01 billion primarily due to increased loans, and net cash provided by financing activities was $633.6 million, driven by $2.15 billion in long-term debt proceeds offsetting deposit decreases and share repurchases29 Notes to Unaudited Interim Consolidated Financial Statements This section details financial statement figures, covering investment and loan portfolio composition, credit quality, ACL, fair value, derivatives, segment performance, and the significant merger agreement with Pinnacle Financial Partners - On July 24, 2025, Synovus entered into a merger agreement with Pinnacle Financial Partners, Inc., which upon completion will result in Synovus shareholders owning approximately 48.5% of the combined company155156 Loan Portfolio Composition (June 30, 2025) | Loan Category | Amount (in thousands) | % of Total | | :--- | :--- | :--- | | Commercial and Industrial | $23,098,344 | 53.0% | | Commercial Real Estate | $12,139,690 | 27.9% | | Consumer | $8,298,682 | 19.1% | | Total Loans | $43,536,716 | 100.0% | Allowance for Credit Losses (ACL) Summary | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Allowance for Loan Losses (ALL) | $464.8M | $486.8M | | Reserve for Unfunded Commitments | $49.0M | $52.5M | | Total ACL | $513.8M | $539.3M | | ACL to Loans Ratio | 1.18% | 1.27% | - During the first six months of 2025, Synovus repurchased 2.9 million shares of common stock at an average price of $48.62 per share85 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses Q2 and H1 2025 financial performance, covering net interest income, credit quality, loan and deposit trends, non-interest items, capital, liquidity, and updated 2025 guidance, including the announced merger with Pinnacle Discussion of Results of Operations Q2 2025 net income reached $206.3 million, a significant recovery from prior-year losses, driven by a 7% increase in net interest income to $913.9 million and 2% loan growth, despite a 2% decline in total deposits - The significant year-over-year increase in net income was primarily impacted by the absence of a $256.7 million loss from the sale of AFS investment securities that occurred in Q2 2024171 - Updated 2025 guidance includes expectations for 4% to 6% loan growth, 1% to 3% core deposit growth, and 5% to 7% adjusted revenue growth187 Loan Portfolio Growth (June 30, 2025 vs. Dec 31, 2024) | Loan Category | Change ($) | Change (%) | | :--- | :--- | :--- | | Commercial and Industrial | +$767.2M | +3% | | Commercial Real Estate | +$125.1M | +1% | | Consumer | +$35.4M | 0% | | Total Loans | +$927.7M | +2% | - Total period-end deposits decreased by $1.17 billion since December 31, 2024, primarily due to a $1.01 billion decline in core deposits, attributed to a reduction in time deposits and seasonal factors204 Credit Quality, Capital Resources and Liquidity Credit quality improved with NPL ratio at 0.59% and net charge-off ratio at 0.17%, supported by robust capital with a 10.96% CET1 ratio and $23.5 billion in contingent liquidity Key Credit and Capital Ratios | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Non-performing loans as a % of total loans | 0.59% | 0.73% | | Net charge-offs/average loans (Q2 annualized) | 0.17% | 0.26% (Q4) | | ACL to loans coverage ratio | 1.18% | 1.27% | | CET1 capital ratio | 10.96% | 10.84% | - Criticized and classified loans decreased by $117.0 million to $1.57 billion (3.6% of total loans) compared to December 31, 2024, mainly due to the upward migration and paydowns of several commercial credits239240241 - The company maintains a strong liquidity position with approximately $23.5 billion in contingent liquidity sources, including $5.66 billion in available FHLB funding capacity256 Quantitative and Qualitative Disclosures About Market Risk The company manages interest rate risk, its primary market risk, through simulation, projecting moderate asset sensitivity with a +100 bps rate shift increasing net interest income by 2.1% and a -100 bps shift decreasing it by 2.1% Twelve Month Net Interest Income Sensitivity (as of June 30, 2025) | Change in Interest Rates (bps) | Estimated % Change in Net Interest Income | | :--- | :--- | | +200 | 4.3% | | +100 | 2.1% | | -100 | (2.1)% | | -200 | (4.1)% | - Synovus uses interest rate swaps to manage interest rate risk, holding $4.35 billion in notional cash flow hedges and $2.25 billion in notional fair value hedges as of June 30, 2025279280 Controls and Procedures Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The CEO and CFO concluded that as of June 30, 2025, the company's disclosure controls and procedures were effective291 - No material changes to internal control over financial reporting occurred during the quarter ended June 30, 2025292 Part II. Other Information Legal Proceedings The company faces ordinary course legal proceedings, with reserves established for probable losses and an estimated aggregate reasonably possible loss range of zero to $10 million beyond accrued amounts - For legal matters where a loss is reasonably possible, management estimates the aggregate range of loss is from zero to $10 million in excess of amounts already accrued137 Risk Factors This section outlines new risks from the pending merger with Pinnacle Financial Partners, including integration challenges, synergy realization, business disruption, and heightened regulatory scrutiny as a Category IV institution with assets exceeding $100 billion - The consummation of the merger with Pinnacle is contingent on shareholder and regulatory approvals, which may be delayed, denied, or result in the imposition of adverse conditions299300 - The company expects to incur substantial, and potentially underestimated, expenses related to the merger and integration process304305 - Following the merger, the combined company will have assets exceeding $100 billion, subjecting it to heightened supervision and more stringent regulatory requirements as a Category IV institution310 Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's Q2 2025 share repurchase activity, where 476,000 shares of common stock were repurchased at an average price of $44.64 per share Share Repurchases - Q2 2025 | Period | Total Shares Repurchased (thousands) | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 273 | $43.99 | | May 2025 | 203 | $45.52 | | June 2025 | — | — | | Total | 476 | $44.64 |