Synovus Financial (SNV)

Regional banking company Synovus Financial (NYSE:SNV) reported Q3 CY2025 results topping the market’s revenue expectations, with sales up 9% year on year to $615.4 million. Its non-GAAP profit of $1.46 per share was 7.8% above analysts’ consensus estimates.

Company Overview

Tracing its roots back to 1888 when a worker accidentally dropped a textile mill payroll into the dust, prompting the need for better banking, Synovus Financial (NYSE:SNV) is a regional financial services company that provides commercial and consumer banking, wealth management, and specialized lending services across five southeastern states.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Synovus Financial competes with other regional banks operating in the Southeast including Regions Financial (NYSE:RF), Truist Financial (NYSE:TFC), First Horizon (NYSE:FHN), and SouthState Corporation (NASDAQ:SSB), as well as national banks with significant presence in its markets.

In general, banks make money from two primary sources. The first is net interest income, which is interest earned on loans, mortgages, and investments in securities minus interest paid out on deposits. The second source is non-interest income, which can come from bank account, credit card, wealth management, investing banking, and trading fees. Over the last five years, Synovus Financial grew its revenue at a mediocre 3.2% compounded annual growth rate. This fell short of our benchmark for the banking sector and is a tough starting point for our analysis.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Synovus Financial’s recent performance shows its demand has slowed as its revenue was flat over the last two years. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Synovus Financial reported year-on-year revenue growth of 9%, and its $615.4 million of revenue exceeded Wall Street’s estimates by 2%.

Net interest income made up 82.5% of the company’s total revenue during the last five years, meaning Synovus Financial barely relies on non-interest income to drive its overall growth.

Our experience and research show the market cares primarily about a bank’s net interest income growth as non-interest income is considered a lower-quality and non-recurring revenue source.

Topline growth is certainly important, but the overall profitability of this growth matters for the bottom line. For banks, we look at efficiency ratio, which is non-interest expense (salaries, rent, IT, marketing, excluding interest paid out to depositors) as a percentage of total revenue.

Markets understand that a bank’s expense base depends on its revenue mix and what mostly drives share price performance is the change in this ratio, rather than its absolute value. It’s somewhat counterintuitive, but a lower efficiency ratio is better.

Over the last five years, Synovus Financial’s efficiency ratio has swelled by 2.1 percentage points, going from 54.1% to 54%. Said differently, the company’s expenses have grown at a slower rate than revenue, which typically signals prudent management.

In Q3, Synovus Financial’s efficiency ratio was 56.5%, falling short of analysts’ expectations by 337.8 basis points (100 basis points = 1 percentage point). This result was 3.5 percentage points worse than the same quarter last year.

For the next 12 months, Wall Street expects Synovus Financial to maintain its trailing one-year ratio with a projection of 53.6%.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Synovus Financial’s EPS grew at an astounding 19.3% compounded annual growth rate over the last five years, higher than its 3.2% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its efficiency ratio didn’t improve.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Synovus Financial, its two-year annual EPS growth of 8.3% was lower than its five-year trend. We still think its growth was good and hope it can accelerate in the future.

In Q3, Synovus Financial reported adjusted EPS of $1.46, up from $1.23 in the same quarter last year. This print beat analysts’ estimates by 7.8%. Over the next 12 months, Wall Street expects Synovus Financial’s full-year EPS of $5.49 to shrink by 1.2%.

The balance sheet drives banking profitability since earnings flow from the spread between borrowing and lending rates. As such, valuations for these companies concentrate on capital strength and sustainable equity accumulation potential.

When analyzing banks, tangible book value per share (TBVPS) takes precedence over many other metrics. This measure isolates genuine per-share value by removing intangible assets of debatable liquidation worth. On the other hand, EPS is often distorted by mergers and flexible loan loss accounting. TBVPS provides clearer performance insights.

Synovus Financial’s TBVPS grew at a mediocre 4.7% annual clip over the last five years. However, TBVPS growth has accelerated recently, growing by 20.4% annually over the last two years from $23.74 to $34.40 per share.

Over the next 12 months, Consensus estimates call for Synovus Financial’s TBVPS to grow by 10.7% to $38.09, solid growth rate.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Synovus Financial has averaged a Tier 1 capital ratio of 10.7%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity, or ROE, tells us how much profit a company generates for each dollar of shareholder equity, a key funding source for banks. Over a long period, banks with high ROE tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, Synovus Financial has averaged an ROE of 13.2%, excellent for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This is a bright spot for Synovus Financial.

It was encouraging to see Synovus Financial beat analysts’ revenue expectations this quarter. We were also happy its tangible book value per share narrowly outperformed Wall Street’s estimates. Overall, this print had some key positives. The stock remained flat at $47.01 immediately following the results.

Updated: December 4, 2025 at 11:26 PM EST

The latest quarterly earnings matters, sure, but we actually think longer-term fundamentals and valuation matter more. Investors should consider all these pieces before deciding whether or not to invest in Synovus Financial.

Synovus Financial’s business quality ultimately falls short of our standards. To kick things off, its revenue growth was weak over the last five years. And while its astounding EPS growth over the last five years shows its profits are trickling down to shareholders, the downside is its net interest income growth was weak over the last five years. On top of that, its projected EPS for the next year is lacking.

Synovus Financial’s P/B ratio based on the next 12 months is 1.3x. This valuation multiple is fair, but we don’t have much faith in the company. We're pretty confident there are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $56.29 on the company (compared to the current share price of $50.19).