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Cost Containment Continues at Synovus

Zacks Equity Research

On Mar 28, 2014, we issued an updated research report on Synovus Financial Corporation (SNV). This Southeast bank has consistently exhibited efforts in reducing costs amid a competitive banking environment.

Since 2010, the company has taken a series of strategic initiatives to reduce expenses and streamline its processes. Notably, the expense reduction initiative has led to a decline in non-interest expenses of 10.5% in 2011, 9.7% in 2012 and 9.2% in 2013.

On Jan 21, Synovus came out with its fourth-quarter 2013 operating earnings of 5 cents per share, in line with the Zacks Consensus Estimate. While the company’s non-interest expenses declined 10.6% year over year, and loan and deposit balances witnessed an uptick, lower net interest income and non-interest income led to an 8.3% decline in total revenue to $1.09 billion.

The company is efficiently executing its strategy of aggressively shedding distressed assets, which it announced in 2009. As of Dec 2013, the company has disposed about $4.2 billion of distressed assets. We believe such initiatives will help achieve operational efficiency in the long run.

Apart from this, we remain encouraged about Synovus’ future prospects owing to its diverse portfolio of services and strong franchise in Southeast markets.  

Despite the positives, we remain cautious owing to several issues faced by Synovus. These include declining interest income owing to a still low interest rate environment, absence of significant improvement in asset quality and the prevailing stringent regulatory landscape.

Over the past 60 days, the Zacks Consensus Estimate for 2014 and 2015 remained stable at 20 cents per share and 22 cents per share, respectively.

Synovus currently carries a Zacks Rank #2 (Buy).

Stocks That Warrant a Look in the Sector

Capital City Bank Group Inc. (CCBG), Columbia Banking System Inc. (COLB) and Central Pacific Financial Corp. (CPF) are better-ranked stocks in the banking space. All these stocks hold a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on SNV
Read the Full Research Report on CPF
Read the Full Research Report on CCBG
Read the Full Research Report on COLB

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