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SNV NYSE· Synovus Financial Corp
Earnings report Q3 2023

Synovus Financial Corp. Reports Strong Revenue Growth in Q3 2023

Segments of revenue

Synovus Financial Corp. reported a total non-interest revenue of $107.1 million for the third quarter of 2023, representing a 3% increase compared to the same period in 2022. Year-to-date non-interest revenue was $352.5 million, showing a significant 15% increase compared to the previous year. The primary drivers of the increase in the quarter-to-date comparative periods were higher card fees and increased brokerage revenue, partially offset by lower service charges on deposit accounts. The year-to-date increase was primarily attributed to higher wealth revenue, a $13.1 million recovery of a non-performing asset related to Qualpay, a $7.0 million write-down on a minority Fintech investment, and higher card fees.

Strengths

Synovus Financial Corp. demonstrated strong revenue growth in the third quarter of 2023, with non-interest revenue increasing by $2.8 million or 3% compared to the same period in 2022. The company's management attributed this growth to higher card fees and increased brokerage revenue. Additionally, the year-to-date increase in non-interest revenue of $45.6 million or 15% was driven by higher wealth revenue, recovery of a non-performing asset, and higher card fees. These positive results indicate the company's ability to generate revenue from various sources and capitalize on market opportunities.

Challenges

Despite the overall revenue growth, Synovus Financial Corp. faced challenges related to margin compression. The asset side of the company's balance sheet benefited from higher rates, but the associated lagged impact from higher deposit pricing, combined with remixing within non-interest-bearing deposits, resulted in margin compression. This challenge may impact the company's profitability and require strategic adjustments to mitigate the margin compression effect.

Noteworthy

It is noteworthy that Synovus Financial Corp. experienced a recovery of $13.1 million from a non-performing asset related to Qualpay during the year-to-date period. This recovery significantly contributed to the increase in non-interest revenue. Additionally, the company incurred a $7.0 million write-down on a minority Fintech investment, which impacted earnings on equity method investments in the second quarter of 2022. These extraordinary events should be taken into account when analyzing the company's financial performance.

Summary

Synovus Financial Corp. delivered strong revenue growth in the third quarter of 2023, with non-interest revenue increasing by 3% compared to the same period in 2022. The company's ability to generate revenue from various sources, such as higher card fees and increased brokerage revenue, contributed to this positive performance. However, the company faced challenges related to margin compression, which may impact profitability. The recovery of a non-performing asset and the write-down on a minority Fintech investment were noteworthy events that influenced the company's financial performance. Overall, Synovus Financial Corp. demonstrated resilience and the ability to navigate market challenges while capitalizing on revenue opportunities.

Source documents

Form 10-Q  filed on Nov 03, 2023
91 pages scanned

Reference data

Company financials Q3 revenue 443M
Analyst estimates Q3 EPS missed by -15.30%
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