SYNOVUS FINANCIAL CORP SEC 10-K Report

Synovus Financial Corp, a financial services company and registered bank holding company headquartered in Columbus, Georgia, has released its 2024 10-K report. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges it faces in the competitive financial services industry.

Financial Highlights

• Total Revenue: $1,989.2 million, down 10% from 2023, primarily due to realized net losses from sales of AFS investment securities.
• Net Income: $482.5 million, down 11% from 2023, impacted by strategic repositioning of the investment securities portfolio.
• Net Income Available to Common Shareholders: $439.6 million, down 13% from 2023, reflecting lower non-interest expense and lower provision for credit losses.
• Net Income Per Common Share, Diluted: $3.03, down 12% from 2023, influenced by lower revenue and strategic repositioning.
• Net Interest Income: $1,749.6 million, down 4% from 2023, as increased funding costs more than offset the benefits of higher asset yields.
• Net Interest Margin: 3.19%, slightly down from 3.21% in 2023, due to increased funding costs.
• Non-interest Revenue: $239.6 million, down 41% from 2023, negatively impacted by losses from sales of AFS investment securities.
• Non-interest Expense: $1,247.5 million, a decrease of 7% from 2023, due to lower accrual related to the FDIC special assessment and restructuring charges.
• Provision for Credit Losses: $136.7 million, lower than 2023, driven by decreased net charge-offs and lower loan balances.

Business Highlights

• Business Overview: Synovus Financial Corp. operates through its wholly-owned subsidiary, Synovus Bank, offering a range of services including commercial and consumer banking, wealth services, treasury management, and mortgage services across Alabama, Florida, Georgia, South Carolina, and Tennessee.
• Banking Operations: Synovus Bank provides commercial and consumer banking services through 244 branches and 357 ATMs, offering services such as commercial, financial, and real estate lending, treasury management, asset management, and consumer banking services including deposit accounts, loans, and card services.
• Non-bank Subsidiaries: Synovus Securities specializes in portfolio management, investment banking, and financial planning, while Synovus Trust provides trust and asset management services.
• Strategic Focus: In 2024, Synovus focused on expanding and diversifying its franchise, enhancing profitability, deepening relationships, and investing in technology and digital capabilities. The strategic plan for 2025 emphasizes accelerated growth investments, particularly in middle market banking, specialty lending, and wealth services.
• Human Capital Resources: Synovus emphasizes relationship banking and aims to attract and retain a skilled workforce. As of December 31, 2024, Synovus employed 4,775 people, with a focus on talent acquisition, development, and retention, and maintaining a diverse and inclusive workforce.
• Regulatory Environment: Synovus is subject to extensive federal and state regulation, impacting its operations and strategic decisions. The company is a financial holding company under the Federal Reserve and must comply with various regulatory requirements, including capital adequacy standards and consumer protection laws.
• Future Outlook: For 2025, Synovus plans to focus on growth in middle market banking, specialty lending, and wealth services, with initiatives to enhance product development and client penetration in treasury and payment solutions. The company also aims to continue investing in infrastructure to improve client experience and operational efficiency.

Strategic Initiatives

• Strategic Repositioning: Synovus undertook a strategic repositioning of its investment securities portfolio in 2024, selling $1.62 billion of mortgage-backed securities and purchasing $1.48 billion in new securities, including U.S. Treasury and commercial mortgage-backed securities. This repositioning aimed to reduce exposure to AOCI volatility and optimize the portfolio's yield. Additionally, Synovus transferred $2.72 billion of securities from AFS to HTM to further stabilize its investment portfolio.
• Capital Management: In 2024, Synovus repurchased 6.4 million shares of common stock at an average price of $42.40 per share, as part of a $300 million share repurchase authorization. The company also issued $500 million of 6.168% Fixed Rate/Floating Rate Senior Notes maturing in 2030 to strengthen its capital position. Synovus maintained a CET1 ratio of 10.84%, exceeding regulatory requirements, and paid $450 million in dividends from Synovus Bank to the Parent Company. The Board approved a capital plan for 2025, including a quarterly dividend of $0.39 per share and authorized share repurchases of up to $400 million of common stock and $50 million of preferred stock.
• Future Outlook: For 2025, Synovus plans to maintain a stable CET1 ratio and leverage share repurchases to balance organic capital generation. The company anticipates end-of-period loan growth of 3% to 6% and core deposit growth of 3% to 6%, with adjusted revenue and non-interest expense growth of 3% to 7%. Synovus will continue to focus on strategic capital management to support its growth objectives and maintain robust liquidity across diverse sources.

Challenges and Risks

• Competitive Landscape: Synovus operates in a highly competitive financial services industry, facing challenges from both traditional banks and non-bank financial institutions, including fintech companies. The company is focused on expanding its digital capabilities and enhancing its product offerings to remain competitive. However, the rapid technological changes and the need for significant investments in technology pose operational challenges.
• Strategic Risks: Synovus faces several strategic risks, including intense competition in the financial services industry, which may impact future earnings and growth. The company must adapt to technological advancements and changing client expectations, which require substantial investments. There is also a risk of not realizing the expected benefits from strategic initiatives, which could negatively impact profitability.
• Operational Risks: Attracting and retaining qualified employees is critical for executing growth strategies. The company is also exposed to significant cyber and data security risks, which could result in reputational harm and financial liabilities.
• Regulatory Risks: Regulatory risks are heightened by potential changes in the regulatory landscape, which could increase compliance costs and impact business operations. Additionally, the use of artificial intelligence presents new challenges, including regulatory uncertainties and the risk of biased or incorrect outputs.
• Market Risks: Synovus is exposed to market risks, including interest rate fluctuations, which can affect net interest income and the value of financial assets. The company employs hedging and other risk mitigation strategies to manage these risks, but there is no guarantee of their effectiveness. The economic environment, including inflationary pressures and geopolitical tensions, adds to the uncertainty and potential volatility in financial markets, which could adversely affect the company's operations and financial condition.

SEC Filing: SYNOVUS FINANCIAL CORP [ SNV ] - 10-K - Feb. 21, 2025