Diluted earnings per share of $0.41 vs. $1.35 in 4Q22

Adjusted diluted earnings per share of $0.80 vs. $1.35 in 4Q22

$51 million FDIC special assessment reduced 4Q23 reported and adjusted EPS by $0.26

Synovus Financial Corp. (NYSE:SNV) today reported financial results for the quarter and year ended Dec. 31, 2023. "Synovus' 2023 financial performance is a testament to our resilience and the strength of our business model," said Synovus Chairman, CEO and President Kevin Blair. "Amid a challenging economic landscape in 2023, we broadened client relationships, further diversified our business mix, streamlined expenses and took strategic actions to optimize the balance sheet. Our strong banking footprint and ongoing investments in talent, capabilities, functionalities and new revenue sources fuel the bank's path to solid growth. We persist in bolstering our core deposit generation, enriching lending diversification, enhancing expense efficiency and delivering world-class client service. As we execute our plan, we're confident momentum will build throughout 2024 and beyond for Synovus."

2023 Highlights

Net income available to common shareholders for 2023 was $507.8 million, or $3.46 per diluted share, compared to $724.7 million, or $4.95 per diluted share in 2022. Adjusted EPS for 2023 was $4.12 per diluted share compared to $4.93 per diluted share in 2022.
The $51 million FDIC special assessment incurred during the fourth quarter 2023 reduced reported and adjusted EPS by $0.26.
Pre-provision net revenue was $885.2 million in 2023 compared to $1.05 billion in 2022.
Net interest income was $1.82 billion in 2023, up from $1.80 billion in the prior year, largely attributable to average loan growth and higher earning asset yields, which combined to more than offset rising funding costs.
During 2023, Synovus sold $422 million in third-party consumer loans and $1.2 billion in medical office building loans with the proceeds used to pay down wholesale borrowings.
Period-end loans declined $311.9 million, or 1%, in 2023 as commercial and industrial growth was more than offset by declines in commercial real estate and consumer loans.
Period-end deposits increased $1.87 billion, or 4%, primarily driven by growth in time deposits and interest-bearing demand deposits, partially offset by a decline in non-interest-bearing deposits. Brokered deposits increased $744.0 million, or 14%, in 2023.
During the fourth quarter 2023, Synovus repositioned its securities portfolio by selling $1.3 billion of bonds, which resulted in securities losses of $78 million. The proceeds have been reinvested in other high-quality liquid assets with better yields, which should augment 2024 net interest income by an estimated $28 million.
Non-interest revenue was $404.0 million, down 1% from 2022. Adjusted non-interest revenue of $460.7 million grew 11% in 2023, primarily attributable to fee income related to treasury and payment solutions, capital markets and wealth management, as well as fees from banking as a service.
Non-interest expense was $1.34 billion, up 15%, and adjusted non-interest expense increased 9% year over year in 2023 to $1.26 billion, but was significantly impacted by the $51 million FDIC special assessment.
Credit quality remains healthy. Net charge-offs were 0.35% of average loans or 0.28%, excluding the loan sales in the third quarter, compared to 0.13% in 2022. The provision for credit losses was $189.1 million in 2023 compared to a provision of $84.6 million for the prior year. The allowance for credit losses ended the year at 1.24% compared to 1.15% at the end of 2022.
The preliminary year-end CET1 ratio increased 59 basis points year over year to 10.22%, which is within our target operating range of 10.00% to 10.50%.

Fourth Quarter 2023 Highlights

Net income available to common shareholders was $60.6 million, or $0.41 per diluted share, down $0.19 sequentially and down $0.94 compared to the fourth quarter 2022.
The $51 million FDIC special assessment impacted fourth quarter 2023 reported and adjusted EPS by $0.26.
Pre-provision net revenue of $135.8 million declined $60.9 million, or 31%, sequentially and was down $159.0 million, or 54%, compared to the fourth quarter 2022.
Net interest income declined $5.9 million, or 1%, compared to the prior quarter and was down $64.1 million, or 13%, compared to the fourth quarter 2022, primarily attributable to a decline in average earnings assets and higher funding costs. Net interest margin was 3.11%, which was stable from the third quarter supported by rising asset yields, lower than expected core interest-bearing deposit cost and a decline in borrowings.
Period-end loans declined $275.4 million, or 1%, from the third quarter as core commercial lending growth was more than offset by softer overall loan production, higher loan paydowns and strategic declines in certain loan categories such as non-relationship syndicated lending and third-party consumer lending.
Core deposits increased $714.1 million, or 2%, sequentially. Total deposits ended the quarter at $50.74 billion, an increase of $535.3 million, or 1%, sequentially as a result of the focus on deposit production and seasonally higher commercial deposits and public funds.
Total deposit costs increased 19 basis points from the third quarter 2023 to 2.50%. The bank's total deposit beta cycle to date through the fourth quarter 2023 has been 45%.
Non-interest revenue of $51.5 million declined $55.7 million, or 52.0%, sequentially and decreased $51.0 million, or 50%, compared to the fourth quarter 2022. Non-interest revenue was impacted by $78 million in securities losses. Adjusted non-interest revenue of $126.2 million rose $19.9 million, or 19%, sequentially and increased $25.3 million, or 25%, compared to the fourth quarter 2022. The growth was primarily attributable to higher GreenSky income as well as stronger treasury and payment solutions and non-GLOBALT wealth management fees.
On a sequential quarter basis, non-interest expense of $352.9 million was flat while adjusted non-interest expense increased 15% to $353.1 million, and compared to the prior year, non-interest expense and adjusted non-interest expense were up 14% and 15%, respectively. All comparisons were significantly impacted by the $51 million FDIC special assessment. Headcount declined 2% sequentially and 5% year over year.
Credit quality ratios remain healthy. The non-performing loan and asset ratios were slightly higher at 0.66% and 0.66%, respectively; the net charge-off ratio for the quarter was 0.38%, and total past dues were 0.14% of total loans outstanding.
Provision for credit losses of $45.5 million declined $27.1 million sequentially and compares to $72.6 million in the third quarter of 2023.
The allowance for credit losses ratio (to loans) of 1.24% was up 2 basis points sequentially and up 9 basis points compared to the prior year. The quarter over quarter increase primarily reflects loan performance during the fourth quarter.
The preliminary CET1 ratio rose sequentially to 10.22% as core earnings accretion more than offset the impact of the $51 million FDIC special assessment and $78 million in securities losses during the fourth quarter.

Fourth Quarter 2023 Summary

	Reported									Adjusted
(dollars in thousands)		4Q23			3Q23			4Q22			4Q23			3Q23			4Q22
Net income available to common shareholders	$	60,645		$	87,423		$	197,479		$	116,901		$	122,770		$	197,576
Diluted earnings per share		0.41			0.60			1.35			0.80			0.84			1.35
Total revenue		488,682			550,298			603,785			564,593			550,552			603,359
Total loans		43,404,490			43,679,910			43,716,353			N/A			N/A			N/A
Total deposits		50,739,185			50,203,890			48,871,559			N/A			N/A			N/A
Return on avg assets		0.47	%		0.64	%		1.38	%		0.84	%		0.87	%		1.39	%
Return on avg common equity		5.9			8.2			20.9			11.3			11.5			20.9
Return on avg tangible common equity		7.0			9.7			24.2			13.3			13.5			24.2
Net interest margin		3.11	%		3.11	%		3.56	%		N/A			N/A			N/A
Efficiency ratio-TE⁽¹⁾⁽²⁾		72.03			64.11			51.08			61.97			55.01			50.58
NCO ratio-QTD		0.38			0.61			0.12			N/A			N/A			N/A
NPA ratio		0.66			0.64			0.33			N/A			N/A			N/A
⁽¹⁾Taxable equivalent ⁽²⁾Adjusted tangible efficiency ratio

Balance Sheet

Loans^*

(dollars in millions)		4Q23		3Q23	Linked Quarter Change			Linked Quarter % Change			4Q22	Year/Year Change			Year/Year % Change
Commercial & industrial	$	22,598.5	$	22,781.0	$	(182.5	)	(1	)%	$	22,066.7	$	531.8		2	%
Commercial real estate		12,316.8		12,394.9		(78.1	)	(1	)		12,650.3		(333.6	)	(3	)
Consumer		8,489.2		8,504.1		(14.9	)	—			8,999.4		(510.1	)	(6	)
Total loans	$	43,404.5	$	43,679.9	$	(275.4	)	(1	)%	$	43,716.4	$	(311.9	)	(1	)%
^*Amounts may not total due to rounding

Deposits^*

(dollars in millions)		4Q23		3Q23	Linked Quarter Change			Linked Quarter % Change			4Q22	Year/Year Change			Year/Year % Change
Non-interest-bearing DDA	$	11,801.2	$	12,395.1	$	(593.9	)	(5)%		$	14,574.5	$	(2,773.3	)	(19	)%
Interest-bearing DDA		6,541.0		6,276.1		264.9		4			5,761.4		779.6		14
Money market		10,819.7		10,786.3		33.5		—			12,480.7		(1,661.0	)	(13	)
Savings		1,062.6		1,132.5		(69.9	)	(6	)		1,396.4		(333.8	)	(24	)
Public funds		7,349.5		6,885.7		463.8		7			6,635.6		714.0		11
Time deposits		7,122.2		6,506.4		615.8		9			2,724.1		4,398.1		161
Brokered deposits		6,043.0		6,221.8		(178.8	)	(3	)		5,299.0		744.0		14
Total deposits	$	50,739.2	$	50,203.9	$	535.3		1	%	$	48,871.6	$	1,867.6		4	%
^*Amounts may not total due to rounding

Income Statement Summary^*

(in thousands, except per share data)		4Q23			3Q23		Linked Quarter Change			Linked Quarter % Change			4Q22	Year/Year Change			Year/Year % Change
Net interest income	$	437,214		$	443,159		$	(5,945	)	(1	)%	$	501,346	$	(64,132	)	(13	)%
Non-interest revenue		51,468			107,139			(55,671	)	(52	)		102,439		(50,971	)	(50	)
Non-interest expense		352,858			353,532			(674	)	—			308,996		43,862		14
Provision for (reversal of) credit losses		45,472			72,572			(27,100	)	(37	)		34,884		10,588		30
Income before taxes	$	90,352		$	124,194		$	(33,842	)	(27	)%	$	259,905	$	(169,553	)	(65	)%
Income tax expense		20,779			27,729			(6,950	)	(25	)		54,135		(33,356	)	(62	)
Net income		69,573			96,465			(26,892	)	(28	)		205,770		(136,197	)	(66	)
Less: Net income (loss) attributable to noncontrolling interest		(768	)		(630	)		(138	)	22			—		(768	)	nm
Net income attributable to Synovus Financial Corp.		70,341			97,095			(26,754	)	(28	)		205,770		(135,429	)	(66	)
Less: Preferred stock dividends		9,696			9,672			24		—			<

Synovus announces earnings for the fourth quarter 2023