Synovus Financial (SNV -2.80%), a regional bank focused on relationship-based banking in the U.S. Southeast, released its second quarter 2025 results on July 16, 2025. The company reported adjusted diluted earnings per share (EPS) of $1.48, beating the $1.26 analyst estimate, and revenue of $593.7 million, surpassing expectations of $586.7 million. Both earnings and revenue demonstrated robust year-over-year growth. Management raised its full-year 2025 earnings outlook, citing strong business performance, disciplined expense control, and higher capital levels, but also acknowledged ongoing risks from deposit attrition and a competitive lending environment. The quarter highlighted notable progress across loan growth, profitability, and efficiency metrics, helping offset pressures from deposit outflows and industry competition.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (Adjusted, Non-GAAP) | $1.48 | $1.26 | $1.16 | 28.0% |
| Revenue | $593.7 million | $586.7 million | $306.1 million | 94.0% |
| Adjusted Revenue (Non-GAAP) | $592.1 million | $563.6 million | 5.1% | |
| Net Interest Income | $459.6 million | $435.0 million | 5.7% | |
| Loans (Period End) | $43.54 billion | $43.09 billion | 1.0% | |
| Deposits (Period End) | $49.93 billion | $50.20 billion | (0.5%) |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview and Strategic Focus
Synovus Financial is a regional bank serving five southeastern states, offering commercial, consumer, and wealth management services. It differentiates itself through a focus on relationship-based banking, deepening client ties and maintaining a hands-on service model. This local, client-first approach helps the bank retain customers, generate cross-selling opportunities, and stabilize its deposit base.
The company has recently emphasized upgrading technology and digital platforms. Investments in analytics, client-facing tools, and automation aim to improve operational efficiency and client service quality. Regulatory compliance and capital management remain core priorities, ensuring financial health and growth flexibility. Human capital development and competitive positioning against both traditional banks and fintechs have also been ongoing focus areas.
Quarterly Financial and Operational Review
During the period, Synovus delivered adjusted diluted EPS of $1.48, up 28% year-over-year and ahead of the $1.26 analyst forecast. Total reported revenue reached $593.7 million, nearly double the prior-year result, reflecting robust gains in net interest income, fee-based revenue, and disciplined cost management. Net interest income rose to $459.6 million, supported by improved loan yields and lower deposit costs. The net interest margin, which measures the difference between interest earned on loans and interest paid on funding, expanded to 3.37% from 3.20% a year earlier. Management pointed to ongoing declines in deposit costs and improved asset repricing as key drivers.
Non-interest revenue climbed 15% sequentially, helped by growth in core banking fees, wealth management, and capital markets. Adjusted non-interest revenue reached $130.9 million, up 12% from the prior quarter. Fee-driven growth was partially offset by lighter capital market activity, especially in loan syndications and interest rate swaps. The adjusted tangible efficiency ratio, which tracks expenses relative to operating revenue, improved to 52.31%, placing Synovus in the top tier among peers.
Loan balances at period end reached $43.54 billion, rising 2% from the prior quarter and 1% year-over-year. Commercial and industrial lending led the way, up 4% sequentially and 2% against the prior year, reflecting the company’s strength in corporate, specialty, and investment banking relationships. Funded loan production surged 60% year-over-year, translating into 8% annualized loan growth. The commercial real estate portfolio saw only a slight increase sequentially and declined by 1% over the year, while consumer lending remained relatively flat.
Deposits ended the quarter at $49.93 billion, down half a percent from the prior-year period. Outflows were driven by declines in core deposits, especially public funds and time deposits. However, non-interest-bearing deposits increased slightly quarter-over-quarter, and brokered deposits declined 13% from last year. Average deposit costs decreased by 4 basis points, a sign of effective pricing discipline. The company’s allowance for credit losses (provision set aside for potential loan defaults) stood at 1.18% of loans, and non-performing loans dropped to 0.59% of the portfolio.
Credit quality improved as the non-performing loan ratio declined and net charge-offs (actual loan losses) fell to 0.17% of average loans, from 0.32% in the second quarter last year. The bank’s reserve coverage for non-performing loans increased to 200%. Management noted particularly strong performance in the seniors housing and multifamily real estate loan portfolios. The Common Equity Tier 1 (CET1) ratio, a measure of capital adequacy, reached a record 10.91%, supporting both lending growth and share repurchases. Synovus repurchased $21 million of shares at an average price of $49.41 in the quarter.
Strategic Initiatives and Segment Highlights
Synovus continued to prioritize its relationship-based banking model, growing its commercial banking engines, especially in middle-market, structured lending, and corporate and investment banking. Management reported that its "fast growth" commercial segment achieved 8% growth in the prior quarter and is targeting 10% to 15% growth for 2025. This momentum is supported by talent investments, including new relationship managers, and targeted hiring from competitors.
Non-interest revenue, such as wealth management income and banking fees, increased sequentially and on a year-over-year basis. Growth was led by client activity in the bank's core operations, with strong performances in wealth management products and banking fees, even as capital markets activity moderated due to changes in client borrowing and refinancing behavior. The capital markets segment's revenue dip reflected lower demand for loan syndications and interest rate swaps, as client expectations for lower interest rates reduced hedging activity. Other areas such as foreign exchange and government-guaranteed loan sales performed well.
The firm underscored its investments in technology and risk management systems, citing their value in tracking daily cash flows, loan utilization, and portfolio risk exposure. These digital tools enabled Synovus to monitor emerging risks, including those resulting from policy changes or economic uncertainty, and to maintain strong credit outcomes across loan portfolios. Management noted that 20% of its planned 2025 hiring for relationship managers was completed by mid-April, with a continued focus on talent acquisition and retention. The company's low voluntary turnover was highlighted as a competitive strength.
Dividend payments continued, with management maintaining its trajectory but making no new changes to the quarterly dividend payout during the period. In addition to the dividend, share repurchases highlighted management's confidence in the bank's capital position. Capital and liquidity metrics improved, with the tangible common equity ratio rising to 7.55%, up from 6.76% a year earlier. Equity-to-asset levels closed at 9.2% for the quarter, providing ample financial flexibility.
Outlook and Investor Considerations
Looking ahead, management raised its full-year 2025 earnings outlook but did not provide a specific EPS or revenue target. Guidance calls for 3% to 5% loan and core deposit growth, continued stability in net interest margin near 3.30%, and adjusted non-interest revenue between $485 million and $505 million for the full year. Expense growth for 2025 is targeted to remain disciplined at 2% to 4%. Net charge-offs are expected to stay below previously guided ranges, while capital ratios should remain around current levels. The company expects its tax rate to be stable at roughly 22%.
For future quarters, investors should monitor deposit trends, competitive shifts in loan and deposit pricing, and credit risk, particularly within commercial real estate segments. Management acknowledged ongoing pressures on deposit balances, with core deposits showing some outflows, especially from time deposits and public funds. Any material deterioration in deposit mix or pricing could impact margins. Industry-wide competitive dynamics, new federal policies, and interest rate volatility remain variables that could affect growth and profitability.
The quarterly dividend was maintained with no change declared during the quarter.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
