Is Synovus Bank In Financial Trouble?

Is Synovus Bank In Financial Trouble?

That is the thought on many a depositor’s mind today! How safe is the bank? How secure are my funds?

However, as we all know, if we keep less than $250,000 in one account, we have the backing of the FDIC! See for details: FDIC insurance.

Yet, depositors do not want to worry about the FDIC. They want great service. No headaches.

In fact with this federal backstop, even famous short seller and market cynic thins the crisis might be over. See our piece: What is Michael Burry holding?

Lately all we can read about these days are banks failing everywhere! Are we in a financial crisis? Now some worry will Bank of America collapse? And many others worry whether or not will Wells Fargo fail? 

And of course, many others worry about whether the more local establishments can keep breathing. Will First Republic Bank fail? Or is my money Safe in Schwab?

So let’s start by digging into the broader banking sector!

Below we have a chart showing unrealized depreciation on Hold to Maturity Securities (HTM) for top 100 banks versus equity. 

These unrealized losses are NOT reflected in profits or a deduct to equity via Other Comprehensive Income (OCI) – only in the footnotes! Moreover, we don’t find these losses reflected in stress tests or measures of capital adequacy. 

Furthermore a 25 bp (1/4 of 1 percent) increase in rates for a 10-year security causes approximately 2 points in losses (100 par to 98 to reflect yield discount). 

Synovus did NOT Make the above list. So their balance sheet is in better “relative” shape than JPMorgan or Bank of America!

Of course, nothing stops the stampede of a real bank run!

Their CEO said at their last earnings release two months ago:

“Our 2022 financial results validated the resiliency of our business model and our team’s ability to successfully execute on key strategic growth initiatives while delivering top quartile returns and efficiency,” said Kevin Blair, Synovus chairman, CEO and president. “With pre-provision net revenue up 19%, the year was shaped by broad-based growth and stability in our core banking franchise that enabled investments in new sources of growth and enhancements to the client experience. Our commonsense approach to expense, credit, and capital management positions us for continued growth while remaining flexible as economic volatility persists. 2023 is a year of focused execution that will continue to drive profitable growth, enhanced service quality, and deeper client relationships. And as we also navigate uncertain economic terrain, risk profile resiliency, broad-based deposit generation, and strong credit vigilance remain top priorities. We’re confident in the strength of our footprint, talent, and ability to execute, which will translate into achieving our stated near-term and long-term financial targets.”Synovus Announces Earnings for the Fourth Quarter 2022 – Synovus

However some bad news from the earnings release:

“Provision for credit losses of $84.6 million in 2022 compared to a reversal of credit losses of $106.3 million for the prior year. 2022 results reflect a deterioration in the economic outlook for 2023 and 2024 and strong loan growth, while prior year results benefited from an improvement in the economic outlook as the effects of the COVID-19 pandemic began to subside.”

However, here we have some great news:

“Provision for credit losses of $84.6 million in 2022 compared to a reversal of credit losses of $106.3 million for the prior year. 2022 results reflect a deterioration in the economic outlook for 2023 and 2024 and strong loan growth, while prior year results benefited from an improvement in the economic outlook as the effects of the COVID-19 pandemic began to subside.”

Synovus Bank is a regional financial institution headquartered in Columbus, Georgia.

With a history dating back over 130 years. The bank has grown from a small, local bank to a major player in the banking industry, with a network of more than 250 branches in Georgia, Alabama, South Carolina, Florida, and Tennessee.

Synovus Bank was founded in 1888 as the Columbus Savings Bank. In its early years, the bank focused on serving the local community. Offering savings and checking accounts, loans, and other financial services. Over time, the bank grew in size and scope, expanding its offerings and expanding its reach beyond Columbus.

In the 1970s, the bank underwent a major transformation.

Changing its name to Synovus Financial Corporation and adopting a new corporate structure that allowed for greater growth and expansion. Under the leadership of CEO James Blanchard, Synovus became known for its innovative approach to banking, emphasizing customer service, technology, and community involvement.

Throughout the 1980s and 1990s, Synovus continued to grow, acquiring several other banks and expanding its presence throughout the Southeast. In 1998, the bank acquired the Florida-based Riverside National Bank. Moreover, a move that significantly expanded its footprint in the state and positioned it for further growth.

In the early 2000s, Synovus faced some challenges!

Moreover, including a downturn in the economy and some regulatory issues. However, under the leadership of CEO Richard Anthony, the bank weathered these challenges. And continued to grow, expanding its offerings and its reach.

Furthermore, today, Synovus Bank is a major financial institution. Additionally, with a reputation for innovation, customer service, and community involvement. The bank offers a wide range of financial products and services. Including personal and business banking, wealth management, and mortgage services. In addition, it is also committed to supporting the communities it serves. With a strong focus on philanthropy and community involvement.

Lastly, Synovus Bank’s history reflects its commitment to growth and innovation. While remaining true to its roots as a community-focused financial institution.

Is Synovus Bank In Financial Trouble?