Saturday, January 22, 2011

Synovus Financial Corp. (NYSE: SNV): Q4 Earnings Preview 2010

Synovus Financial Corp. (NYSE: SNV) is scheduled to release its fourth-quarter earnings before the opening bell on Friday, January 28, 2011. Analysts, on average, expect the company to post a loss of 20 cents per share on revenue of $318.57 million. In the year ago period, the company posted a loss of 54 cents cents per share on revenue of $340.78 million.

Synovus Financial Corp., a diversified financial services and bank holding company, provides commercial and retail banking, financial management, insurance, and mortgage services in Georgia, Alabama, South Carolina, Florida, and Tennessee.

In the preceding third quarter, the Columbus, Georgia-based company posted a loss of $195.8 million, or 25 cents per share, compared to a loss of $453.8 million, or $1.32 per share, in the year-ago period. Pre-tax, pre-credit costs income was $123 million for the third quarter of 2010, up from $119 million for the second quarter of 2010. Non-interest income increased by $7.8 million. The net interest margin was 3.33% in the third quarter of 2010, compared to 3.34% in the second quarter of 2010. Analysts, on average, expected the company to post a loss of 22 cents per share on revenue of $322.04 million. 

The company, which has lost more than $2 billion in the past two years, continues to grapple with souring real estate loans, and is expected to post yet another loss when it reports fourth quarter earnings later this month.

Early in January, the bank announced efficiency and growth initiatives intended to streamline operations, boost productivity, reduce expenses and increase revenue. The efficiency initiatives are expected to generate an estimated $100 million in annual expense savings by the end of 2012, with approximately $75 million of these savings to be realized in 2011. Additionally, Synovus expects to recognize in 2011 approximately $28 million in restructuring charges associated with these initiatives, including approximately $24 million during the first quarter of the year. The $100 million in annual expense savings will be achieved primarily through the reduction of approximately 850 positions during 2011 over Synovus five-state footprint. Of these 850 positions, approximately 470 will be eliminated within 30 days and the substantial majority of the remaining positions will be eliminated during the second quarter of 2011. Synovus has already reduced its workforce by more than 300 positions during 2010. The total workforce reduction over the 18-month period ending December 31, 2011 will be approximately 1,150. The Company will also realize expense savings through the expected closing of 39 bank branches across Synovus five-state footprint during the first half of 2011. As of December 31, 2010, total loans outstanding and deposits from the branches to be closed represented 1 percent and less than 4 percent of Synovus total loans and deposits, respectively. Synovus has identified opportunities to consolidate service coverage within the remaining 283 branches, while continuing to provide customers with alternative banking locations within reasonable proximity of their current branch. The total revenue impact associated with the branch closures is expected to be minimal. “While we have already taken many significant steps forward, our leadership team is determined to return Synovus to sustained profitability as soon as possible,” said Kessel D. Stelling, President and CEO of Synovus. 

Regional Banks have begun to post improving credit quality. More thorough and cautious credit checks have led to fewer delinquent loans and greater financial stability. As such, banks are setting aside less money to cover bad loans, and some are seeing loan losses recede.  Improved employment numbers will hopefully, in time, lead to a boost in loan growth across the banking sector.

In terms of stock performance, AK Steel shares have lost nearly 18 percent over the past year.

Full Disclosure: None.
Related Posts with Thumbnails

Wikinvest Wire