On Jun 19, 2014, we issued an updated research report on
Synovus Financial Corporation
). This Southeast bank has consistently exhibited efforts in
reducing costs amid a competitive banking environment.
Since 2010, the company has taken a series of strategic initiatives
to reduce expenses and streamline its processes. Notably, the
expense reduction initiative has led to a decline in non-interest
expenses of 10.5% in 2011, 9.7% in 2012 and 9.2% in 2013. Further,
in Jan 2014, Synovus announced the planned implementation of new
expense savings initiatives, which are expected to result in
annualized cost savings of $30 million.
On Apr 22, Synovus came out with its first-quarter 2014 net income
of 5 cents per share which more than doubled from 2 cents in the
prior-year quarter. However, results were in line with the Zacks
Consensus Estimate. While the company's non-interest expenses rose
slightly on a year-over-year basis, loan and deposit balances along
with the total revenue witnessed an uptick.
The company is efficiently executing its strategy of aggressively
shedding distressed assets, which it announced in 2009. Synovus
expects the disposition of distressed assets to continue in the
near future as well. We believe such initiatives will help achieve
operational efficiency in the long run.
Despite the positives, we remain cautious owing to several issues
faced by Synovus. These include declining interest income owing to
a still low interest rate environment, absence of significant
improvement in asset quality and the prevailing stringent
Over the past 60 days, the Zacks Consensus Estimate for 2014 rose
3.6% to $1.43 per share, while for 2015 it increased 3.9% to $1.61
per share. Synovus currently carries a Zacks Rank #3 (Hold).
Stocks That Warrant a Look in the Sector
Some South-east banks worth considering include
Capital City Bank Group Inc.
Middleburg Financial Corporation
Midsouth Bancorp Inc.
). All these stocks hold a Zacks Rank #1 (Strong Buy).
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SYNOVUS FINL CP (SNV): Free Stock Analysis
MIDDLEBURG FINL (MBRG): Free Stock Analysis
MIDSOUTH BANCRP (MSL): Free Stock Analysis
CAPITAL CITY BK (CCBG): Free Stock Analysis
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