Synovus Hit Hard On Concerns Over Core Growth Drivers

Synovus (NYSE:SNV) had been making real progress in changing investors' minds that the company really had made changes for the better and that the bank was on much better footing for long-term growth. Between a more efficient cost structure, improved underwriting, and new growth drivers (both in and outside of core banking), there were solid reasons for a stronger growth outlook. Then came the Fed rate hike cycle and a third quarter report that included guidance suggesting that the good times aren't going to last.

Synovus shares are down about 25% since my last update, far worse than the average regional bank over that period. I believe that this is an overreaction, but I also believe that there is still significant uncertainty around how far the Fed will go, what the impact of these rate hikes will be on the economy, and how well Synovus will stave off intensifying competition in its core Southeastern markets. I do believe that Synovus is priced for attractive long-term returns now, but I also think investors may have to wait a bit for the clouds to clear over this sector.

 

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Synovus Hit Hard On Concerns Over Core Growth Drivers