Synovus Delivering On Growth And Leverage

 There have long been vocal doubters on Synovus (NYSE:SNV), and the company’s share price performance over the last couple of years has lagged its peer group, but with above-average fourth quarter results and guidance for 2023, Synovus is getting a little more positive attention lately. While I do think some of management’s growth targets for 2023 could prove challenging (if not ambitious), 3% to 4% core growth can drive a respective target price and anticipated return from here.

 Read the full article here: 

Synovus Delivering On Growth And Leverage

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.

 

Click to continue: 

Synovus Hit Hard On Concerns Over Core Growth Drivers

Synovus Offers An Attractive Mix Of Organic And Macro Growth

 

I continue to like the new Synovus (NYSE:SNV) that is emerging. Not only does this bank offer good exposure to the above-average growth potential of the Southeast U.S., as well as slightly above-average rate sensitivity, but management has clear plans in place to drive above-average growth through an ongoing focus on growing the commercial business (loans and fees). I do have a few hesitations about the rate assumptions, expense growth, and competition, but this is a good plan at a bank that is already doing a lot right.

Valuation is okay on a longer-term basis relative to some other regional and super-regional banks, but a 12x multiple to my '23 EPS estimate can still support an attractive fair value at this level. At this point, I think Synovus is a bank well worth considering.

 

Click the link to continue: 

Synovus Offers An Attractive Mix Of Organic And Macro Growth

Synovus Setting The Table, But The Street Wants To Eat Now

 

This has been a more challenging quarter for Southeastern banks, with First Horizon (FHN), Synovus (SNV), and Truist (TFC) all coming up a little short where growth is concerned. I don’t believe there’s anything fundamentally wrong with any of these companies, but growth expectations were probably established at too high of a level and the readjustment of expectations has been painful.

Synovus shares are more or less flat since I last wrote about the stock. At that time, I said I liked the stock up into the mid-$40s and the shares exceeded that for a time (approaching $50) before concerns about spreads and near-term loan growth started weighing more heavily. While I am a little concerned about the lack of near-term growth/momentum, I still believe that management is making good decisions for the longer-term performance of the bank, and I think the shares are more attractive now.

Read the full article at Seeking Alpha: 

Synovus Setting The Table, But The Street Wants To Eat Now

Synovus Has Answered Its Skeptics, But The Story Isn't Over

It’s gratifying to see Synovus (SNV) working as a stock. I’ve been bullish on this one for a while now, and it has taken a while for the stock to work (and the 5-year return is still below average), but the shares are up more than 60% from the time of my last update, making it one of the best performers of the “normal” banks I follow (banks like SVB Financial (SIVB) are a different story).

Synovus has done a lot to quiet the critics where credit quality is concerned, and that drives some meaningful upward revisions for my model. Now the question is whether the company can strike that always-tricky balance of growing revenue and achieving better profitability – while banking is a business that rewards scale (so, revenue growth will help), being too miserly with costs risks compromising long-term growth at the cost of better near-term margins.

I think Synovus has near-term upside to the mid-$40s, and I see the stock priced to generate an annualized long-term total return in the high single-digits – still good, but not as exceptional as before.

 

Click here for more: 

Synovus Has Answered Its Skeptics, But The Story Isn't Over

Synovus Shares Finally Performing As Worst-Case Scenarios Roll Off

Having expressed some frustration in my last article at consistently recommending Synovus (SNV) only to see the shares underperform, the recent run of outperformance is a welcome change. Bank sector valuations are still low, but investors seem willing to do a little “risk on” investing in the sector, particularly where there have been outsized concerns about credit quality, reserves, and capital/dividends. It’s still much too early to declare an “all clear”, particularly as charge-offs usually peak about five to nine quarters after a recession starts, but with the economy recovering and the stimulus efforts seen to date, the worst-case credit scenarios are rolling out of models and valuations.

Synovus still has some things to prove to the Street, but I like management’s blended prioritization of operating efficiency and targeted loan growth across its Southern footprint. Low single-digit core earnings growth can still support a fair value near $30, and while there are some better return prospects elsewhere (including Citizens (CFG), First Horizon (FHN), and Zions (ZION)), the return potential here is still good enough to consider seriously.

 

Read the full article here: 

Synovus Shares Finally Performing As Worst-Case Scenarios Roll Off

Synovus's Performance Has Not Been Good Enough To Shift Sentiment

The line between “patient, long-term investor” and “wrong” can be fuzzy in the best of times and is sometimes only visible in hindsight. That’s something to keep in mind with Synovus (SNV), as these shares are down about 30% from the time of the announcement of the FCB deal and have just not worked as a long call. Although I had said back at the time of the deal that, “Synovus is likely to be sitting in the doghouse for a while now”, and “the overhang from the deal announcement will likely last a while”, this is rather more than I had in mind.

I do believe there is a good bank here with better-than-average growth potential, but management’s decision to increase spending in 2020 to take advantage of disruptions and opportunities in its operating footprint (particularly, but not exclusively, the Truist Financial Corp. (TFC) deal) is not what investors wanted to hear. I believe the shares are undervalued on a mid-single digit long-term core growth rate, but this is a stock that really needs some beat-and-raise quarters to boost sentiment.

Continue here for more:
Synovus's Performance Has Not Been Good Enough To Shift Sentiment

Synovus Still Meaningfully Undervalued, But Also Lacking Quick Fixes To Sentiment

It’s a little lonely being bullish on Synovus (SNV), particularly when you realize the sector-wide issue with near-term earnings headwinds means that the apparent undervaluation at Synovus is largely moot for the time being. And the last quarter certainly didn’t help matters, with a higher provisioning expense and uptick in non-performing loans spooking investors who were already nervous about the credit quality of the FCB business Synovus acquired.

Synovus still looks undervalued to me, but I freely admit that just waiting for the Street to see the value here is not a particularly compelling bullish thesis. There’s still a solid value argument for holding these shares, but it’s going to take patience for the stock to work, and management is a little short on options now for driving much positive news in the near term.

Read more here:
Synovus Still Meaningfully Undervalued, But Also Lacking Quick Fixes To Sentiment

Yield Curve Concerns Are Yet Another Worry For Synovus

Georgia-based Synovus (SNV) continues to confound me. I realize that it’s not the best-run bank in the region, and I realize there are outsized risks in buying an aggressive, fast-growing Florida bank like FCB with large exposure to Florida real estate at or near the peak of the cycle, but the bank’s operating performance since the deal has been pretty steady and it seems to me that the Street continues to price in an ugly scenario of curve-based spread compression and elevated credit losses.

Credit quality is one of those “you don’t know until you know … you know?” risks with any bank, and I do think there is downside risk for Synovus here as the rate cycle reverses course and the Fed starts an easing cycle. It would seem to take a pretty grim set of assumptions to backwards-calculate today’s price and I don’t that’s the most likely path for Synovus. That said, the shares have lagged the bank sector since my last update, so clearly my bullishness is out of step with the Street’s sentiment.

Read the full article here:
Yield Curve Concerns Are Yet Another Worry For Synovus

A Recent Rally Has Soaked Up South State Bank's Undervaluation As It Repositions

I was a little surprised to see South State Bank (SSB) outperform so well since my last article – up more than 25%, beating regional banks by about 5% overall and a more direct set of peers by about 10%. While I thought the shares were undervalued on a longer-term basis, the Street isn’t famous for taking a longer-term perspective, particularly when near-term earnings growth potential is more limited by the bank’s ongoing restructuring efforts. Still, with many large regional banks announcing plans to expand into the U.S. Southeast, and the bank close to the end of that repositioning process, I suspect this outperformance could be due in part to expectations that a regional bank may look to M&A to accelerate its expansion plans.

I do think South State could make an attractive buyout candidate; while the loan-to-deposit rate isn’t perfect, the bank has an attractive core deposit franchise in attractive growth markets like Charleston, SC, and Charlotte and Raleigh, NC. While a bank like U.S. Bancorp (USB) could offer as much as a 20% premium in a cash deal and still see some accretion, South State’s valuation isn’t exactly cheap on a stand-alone basis. Much as I like the long-term story at South State, with a lot of smaller banks offering 10%-20%-plus discounts to fair value today, it’s hard to call this a must-buy at this price.

Continue here:
A Recent Rally Has Soaked Up South State Bank's Undervaluation As It Repositions

SunTrust Offering A Strong Story Going Into 2019

Both SunTrust (STI) and BB&T Corp. (BBT) seem to have a lot working for them going into 2019, including improving cost leverage from digital investments, stronger-than-average loan growth in relatively attractive regional markets, and strong deposit franchises anchored by long-term leadership in those same markets. And probably not so surprisingly, they’re both priced for things going relatively well.

With what appears to be somewhat limited capacity to fund attractively priced loan growth and the likelihood of higher provisioning expense in the coming years, SunTrust’s earnings growth potential looks lackluster (in the low single digits), but the company pays a good dividend, could have some upside/outperformance potential in the numbers, and the shares are still undervalued, even if not so much so as other Southeast banks like Regions Financial Corp. (RF), First Horizon National Corp. (FHN), or Synovus Financial Corp. (SNV).

Click here for more:
SunTrust Offering A Strong Story Going Into 2019

Synovus Now Firmly In The 'Show Me' Camp

It's no secret that bank stocks have sold off significantly over the past six months, even with a nice bounce after Christmas, as investors have increasingly priced in a recessionary environment and abandoned the sector for greener pastures. In the case of Synovus (SNV), not only has the market priced in a harsher near-term environment (which may or may not be reasonable given its exposure to higher investment property exposure in the Southeast US), but it has also levied a penalty for the company's decision to acquire Florida's FCB.

I had warned that Synovus shares would probably linger under a cloud for a while after the deal, but I didn't think that would mean a roughly 15% underperformance to regional bank benchmarks in just six months. Synovus isn't going to be a torrid organic grower, it faces plenty of incoming competition in the Southeast, and management still has work to do with its funding mix, but I think the discount today is too wide. I can't say that this is my favorite bank from an operational perspective, but the embedded expectations seem too low to me today.

Read more here:
Synovus Now Firmly In The 'Show Me' Camp

Playing M&A Bingo With BB&T

When an historically acquisitive bank signals that they’re reading to start considering M&A again, I don’t think it’s much of a stretch to start speculating on the sort of target(s) the company might have in mind. In the case of BB&T (BBT), while management has certainly laid out a case for worthwhile organic growth by focusing on its core strengths in business and consumer lending, the company has also laid out a clear set of criteria for future M&A, and I believe management would like to make a significant deal (or two) to vault the company over the $250 billion asset level.

Deal or not, I believe BB&T shares are modestly undervalued today. While there are certainly other options in BB&T’s size range worth considering (including PNC (PNC)), I believe mid-single-digit growth can support an attractive return at today’s price.

Read more here:
Playing M&A Bingo With BB&T

Synovus Reaches For Growth, And Gets Its Hand Slapped

Institutional investors can be a curious bunch at times, and trying to please them can be a little like dealing with Veruca Salt. Bank stocks have fallen out of favor recently as investors have grown more concerned about growth in the sector, but companies that choose to put surplus capital to work in growth-oriented M&A are getting punished even worse. Georgia-based mid-cap bank Synovus (SNV) is seeing that first-hand, as the shares are down about 10% since the company has announced both second-quarter earnings and its all-stock deal for Florida-based FCB Financial (FCB).

Although I don't think FCB is necessarily the best target for Synovus, the deal significantly raises Synovus's status in the Southeast region of the country and gives it a fast-growing loan franchise in a state with above-average population growth trends. I also didn't think that Synovus was particularly cheap prior to this announcement, but I do believe this deal will add value provided the credit quality of FCB's rapidly-built loan book holds out.

Read the full article here:
Synovus Reaches For Growth, And Gets Its Hand Slapped

Synovus Facing Some Tough Decisions

Credit where due - Synovus Financial (NYSE:SNV) management has done a great job over the last three or four years. One of the weakest mid-cap banks in the depths of the credit crisis, Synovus has done a very good job of cleaning up its credit, reinvesting in the business, and building up its capital position. With that, the return on tangible equity has improved about four points, tangible book value has improved about 10%, and the shares have solidly outperformed many regional peers.

But there is what I believe to be a very relevant "now what?" question with Synovus. Management has been returning capital to shareholders (which the market has certainly appreciated), but I think there's a choice to be made now whether to continue with the "slow and steady" approach of improving profitability through cost efficiency, continue a shift toward more C&I and retail lending, and maintaining solid buybacks, or whether to deploy capital more aggressively with M&A.

On its own, I don't think Synovus is particularly cheap right now. I do think the bank will return to low double-digit ROEs in time and I think the interest sensitivity here is appropriate, but the valuation seems right for all of that. Given the bank's footprint, though, ongoing M&A remains a real possibility - whether as a buyer or a seller.

Read more here:
Synovus Facing Some Tough Decisions

Seeking Alpha: Facing Up To A Bad Call On Synovus

Admitting mistakes is never fun, but if you're going to write about stocks in public fora it is a part of the job description. Four months ago, I thought Synovus (SNV) shares had gone far enough, as I saw the probable lack of revenue and operating profit growth, coupled with a potentially slower credit recovery and the need to pay back TARP as limiting factors. Since then, the shares are up 19%. Now, in fairness to myself, the stocks I liked better at the time - including BB&T (BBT) and Bank of America (BAC) - haven't exactly been embarrassments (up 14% and 21%, respectively), but Synovus' 19% gain is definitely more than I thought was likely to come.

Please read more here:
Facing Up To A Bad Call On Synovus

Seeking Alpha: Bank Of The Ozarks Growing Gangbusters, But Not At All Cheap

For as long as I've followed Arkansas's Bank of the Ozarks (OZRK) (which is quite a few years now), I've been very impressed with this company's aggressive but extremely focused strategy. While it's true that having a loan book tilted heavily towards commercial real estate (CRE) and construction lending is risky, it's sort of like walking a high-wire - it's risky, but the risk doesn't matter if you don't fall off, and Bank of the Ozarks has a system in place that has kept the falls to a minimum.

As much as I like this bank, it rarely gets very cheap and this is not one of those times. I had hoped that investors might misread this second quarter earnings report and sell the shares, but it appears that that's not happening. In any case, while I wouldn't sell these shares if I owned them, I need at least a 10% pullback before I could be enticed to think about buying.

Please follow this link for more:
Bank Of The Ozarks Growing Gangbusters, But Not At All Cheap

Seeking Alpha: High Quality And Ample Dry Powder Make Prosperity Bancshares One To Watch

While Texas-based Prosperity Bancshares (PB) has gone along with the year-to-date mid-cap bank stock rally, the overall performance over the past year hasn't been all that special. A lot of that has to do with the valuation; investors have generally been happy to assign robust multiples to this bank due to its uncommon growth and quality, but those same multiples seem to have left these shares a relative also-ran in performance.

And so it is today - while Prosperity is a very well-run bank and has substantial long-term growth potential (not to mention ample dry powder on the balance sheet), the valuation today is not what I'd call "can't miss." With mid-cap banks in general looking a little pricey, Prosperity isn't a bad relative call today, but more nimble investors may want to focus their time and attention today on small-cap banks while waiting for a pullback in names like Prosperity.

Please continue reading here:
High Quality And Ample Dry Powder Make Prosperity Bancshares One To Watch

Seeking Alpha: Going It Alone Could Be A Tough Road For Synovus Investors

If I'm brutally honest, following bank stocks on a week to week basis is a challenging (and not particularly exciting) pursuit. While we all got a vivid lesson in just how badly wrong these business models can go, even on a quarter to quarter basis we're pretty much talking about submarine races - there's a lot going on below the surface, but you'll never see it.

That is relevant to Synovus (SNV) as these shares have enjoyed quite a run - up 35% over the past year, about 66% from the summer 2012 lows, and near a 52-week high on optimism about the prospects for improved performance, a TARP repayment, and a possible acquisition. That long-held expectation of a deal could actually be the biggest risk factor for these shares today. While the company could indeed hold value for an acquirer, it's much harder to find an attractive target price on its own operating credentials and a failure to see a bid materialize after the TARP repayment could set shareholders up for some depressing performance.

Continue reading here:
Going It Alone Could Be A Tough Road For Synovus Investors

Investopedia: A Look Back At The Year In Banking

There were at least a couple reasons why this should not have been an especially good year for banks in the United States. Low interest rates have made it very difficult for banks to thrive on their core spread businesses, and new banking regulations have certainly crimped their ability to generate the same fee-based income as before. And yet, lending has gradually improved and many banks have seen investors increasingly become willing to assign more reasonable valuations to their shares.

All in all, the regional banking industry has seen better than an approximate 30% appreciation this year, well ahead of the 13% gain in the S&P 500.

Continue reading here:
http://www.investopedia.com/stock-analysis/2012/A-Look-Back-At-The-Year-In-Banking-BAC-SNV-USB-WFC1227.aspx