Synovus Reports Earnings for the Second Quarter of 2014

Diluted Earnings per Share of $0.32; $0.35 Excluding Restructuring Charges

Results driven by loan growth of 5.9%, increase in net interest income, and growth in fee income from core business

Business Wire

COLUMBUS, Ga.--(BUSINESS WIRE)--

Synovus Financial Corp. (SNV) today reported financial results for the quarter ended June 30, 2014.

Second Quarter Highlights

  • Net income available to common shareholders for the second quarter of 2014 was $44.3 million or $0.32 per diluted share.
  • Excluding restructuring charges of $7.7 million, net income available to common shareholders for the second quarter of 2014 was $49.0 million or $0.35 per diluted share, a 6.9% increase compared to $0.331 as reported for the first quarter of 2014.
  • Net income available to common shareholders for the first quarter of 2014 was $45.9 million, or $0.331 per diluted share. For the second quarter of 2013, net income available to common shareholders was $30.7 million, or $0.241 per diluted share.
    • The first quarter of 2014 results included restructuring charges of $8.6 million, a $5.8 million net gain from the Memphis transaction, and a $3.1 million gain on a branch property sale.
    • The second quarter of 2013 results included restructuring charges of $1.8 million.
  • Total revenues were $268.4 million for the second quarter of 2014. Excluding the impact of the first quarter of 2014 net gain from the Memphis transaction, the gain on the branch property sale, and investment securities gains, total revenues were up $8.0 million or 3.1% vs. the prior quarter.
  • Total loans grew $296.8 million sequentially or 5.9% annualized, driven by growth in C&I and retail loans.
  • Credit quality improved significantly with a 32.5% sequential quarter decline in non‐performing loans. The NPL ratio declined to 1.27% at June 30, 2014 from 1.91% at March 31, 2014 and 2.47% a year ago.
  • All Tier 1 capital ratios continued to expand with the Tier 1 common equity ratio ending the quarter at 10.41%, up 17 basis points from the prior quarter.

“We are pleased with our performance for the second quarter, which includes earnings per share of $0.35 excluding restructuring charges,” said Kessel D. Stelling, Synovus Chairman and CEO. “We reported solid loan growth of 5.9% annualized, with C&I and retail reporting 7.2% and 14.3% growth, respectively. The quarter also included increases in mortgage, bankcard, and brokerage fees; a 32% reduction in non‐performing loans; and a two basis point increase in the net interest margin.”

Balance Sheet Fundamentals

  • Total loans ended the quarter at $20.46 billion, an $847.5 million or 4.3% increase from the second quarter of 2013.
  • Total loans grew $296.8 million or 5.9% annualized compared to the first quarter of 2014.
    • C&I loans grew by $181.8 million from the first quarter of 2014, or 7.2% annualized.
    • Commercial real estate loans declined by $14.5 million from the first quarter of 2014.
    • Retail loans grew by $130.0 million from the first quarter of 2014, or 14.3% annualized.
  • Total average deposits for the quarter were $20.86 billion, up $138.4 million from the previous quarter.
  • Average core deposits ended the quarter at $19.46 billion, down $27.9 million compared to the first quarter of 2014.
  • Average core deposits, excluding average time deposits, grew by $163.9 million compared to the previous quarter.

Core Performance

Adjusted pre‐tax, pre‐credit costs income was $98.9 million for the second quarter of 2014, an increase of $2.4 million from $96.5 million for the first quarter of 2014.

  • Net interest income was $205.1 million for the second quarter of 2014, up $4.5 million from $200.5 million in the previous quarter.
  • The net interest margin improved two basis points to 3.41% compared to 3.39% in the first quarter of 2014. The yield on earning assets was 3.86%, unchanged from the first quarter of 2014, and the effective cost of funds declined two basis points to 0.45%.
  • Total non‐interest income was $63.4 million compared to $70.2 million for the first quarter of 2014.
    • The first quarter of 2014 non‐interest income included a $5.8 million net gain from the Memphis transaction, a $3.1 million gain on a branch property sale, and $1.3 million in investment securities gains.
    • Mortgage banking income increased $1.8 million or 50.5% from the previous quarter.
    • Core banking fees2 of $32.6 million were up $1.5 million or 4.7%, driven by higher bankcard fees.
    • Financial Management Services revenues, consisting primarily of fiduciary and asset management fees and brokerage revenue, increased $1.0 million or 5.3%.
  • Total non‐interest expense for the second quarter of 2014 was $182.2 million, down $2.0 million from the first quarter of 2014. Adjusted non‐interest expense for the second quarter of 2014 was $169.5 million, up $2.4 million compared to $167.1 million for the first quarter of 2014 primarily due to planned increases in advertising expense.
    • Restructuring charges of $7.7 million relate to the planned closing of 13 branches across the five‐state footprint during the fourth quarter of 2014.

Credit Quality

Broad‐based improvement in credit quality continued.

  • Total credit costs were $16.9 million in the second quarter of 2014, down 4.1% from $17.6 million in the first quarter of 2014 and down 29.4% from $24.0 million in the second quarter of 2013.
  • Non‐performing loan inflows were $34.3 million in the second quarter of 2014, down from $35.5 million in the first quarter of 2014 and $66.9 million in the second quarter of 2013.
  • Non‐performing loans, excluding loans held for sale, were $259.5 million at June 30, 2014, down $124.8 million or 32.5% from the previous quarter, and down $223.9 million or 46.3% from the second quarter of 2013. The non‐performing loan ratio was 1.27% at June 30, 2014, down from 1.91% at the end of the previous quarter and 2.47% at June 30, 2013.
  • Net charge‐offs were $35.4 million in the second quarter of 2014, up $20.2 million from $15.2 million in the first quarter of 2014 due to the significant reduction in NPLs which had existing reserves. The annualized net charge‐off ratio was 0.69% in the second quarter, up from 0.30% in the previous quarter and up from 0.61% in the second quarter of 2013.

Capital Ratios

Capital ratios remained strong.

  • Tier 1 Common Equity ratio was 10.41% at June 30, 2014, compared to 10.24% at March 31, 2014.
  • Tier 1 Capital ratio was 11.01% at June 30, 2014, compared to 10.85% at March 31, 2014.
  • Total Risk Based Capital ratio was 13.03% at June 30, 2014, compared to 13.31% at March 31, 2014.
  • Tier 1 Leverage ratio was 9.69% at June 30, 2014, compared to 9.46% at March 31, 2014.
  • Tangible Common Equity ratio was 10.91% at June 30, 2014, compared to 10.78% at March 31, 2014.

Stelling concluded, “We continue to successfully execute our plan for improving financial performance as evidenced by another quarter of solid operating results. Our activities are centered on enhancing the customer experience, emphasizing strong, local leadership as a key differentiator and a driver of our future success. We are better aligning our retail and commercial banking talent with customer needs and targeted market opportunities, and implementing new and enhanced technology that offers the added convenience customers now demand. Similar to our focus on growth in the large corporate, senior housing, and equipment financing space, we are positioning talent to serve the specific needs of middle market customers to increase our penetration in this high‐opportunity segment. Additionally, we are expanding our team of retail brokerage financial consultants, mortgage originators, and trust professionals in markets with high‐growth potential, and leveraging our existing Retail and Private Wealth Management teams to continue to increase market share and drive fee income growth throughout our banking franchise. We are energized about the opportunities ahead as we position Synovus as a banking leader for customers and communities across the Southeast.”

Second Quarter Earnings Conference Call

Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on July 22, 2014. The earnings call will be accompanied by a slide presentation. Shareholders and other interested parties may listen to this conference call via simultaneous Internet broadcast. For a link to the webcast, go to www.synovus.com/webcasts. You may download RealPlayer or Windows Media Player (free download available) prior to accessing the actual call or the replay. The replay will be archived for 12 months and will be available 30‐45 minutes after the call.

About Synovus

Synovus Financial Corp. is a financial services company based in Columbus, Georgia, with approximately $27 billion in assets. Synovus Financial Corp. provides commercial and retail banking, investment and mortgage services to customers through 28 locally branded divisions, 271 branches and 355 ATMs in Georgia, Alabama, South Carolina, Florida and Tennessee. See Synovus Financial Corp. on the web at www.synovus.com.

Forward‐Looking Statements

This press release and certain of our other filings with the Securities and Exchange Commission contain statements that constitute “forward‐looking statements” within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward‐looking statements. You can identify these forward‐looking statements through Synovus’ use of words such as “believes,” “anticipates,” “expects,” “may,” “will,” “assumes,” “should,” “predicts,” “could,” “would,” “intends,” “targets,” “estimates,” “projects,” “plans,” “potential” and other similar words and expressions of the future or otherwise regarding the outlook for Synovus’ future business and financial performance and/or the performance of the banking industry and economy in general. These forward‐looking statements include, among others, our expectations on credit trends and key credit metrics; expectations regarding deposits, loan growth and the net interest margin; expectations on our growth strategy, expense initiatives, and future profitability; and the assumptions underlying our expectations. Prospective investors are cautioned that any such forward‐looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties which may cause the actual results, performance or achievements of Synovus to be materially different from the future results, performance or achievements expressed or implied by such forward‐looking statements. Forward‐looking statements are based on the information known to, and current beliefs and expectations of, Synovus’ management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward‐looking statements. A number of factors could cause actual results to differ materially from those contemplated by the forward‐looking statements in this report. Many of these factors are beyond Synovus’ ability to control or predict.

These forward‐looking statements are based upon information presently known to Synovus’ management and are inherently subjective, uncertain and subject to change due to any number of risks and uncertainties, including, without limitation, the risks and other factors set forth in Synovus’ filings with the Securities and Exchange Commission, including its Annual Report on Form 10‐K for the year ended December 31, 2013 under the captions “Cautionary Notice Regarding Forward‐Looking Statements” and “Risk Factors” and in Synovus’ quarterly reports on Form 10‐Q and current reports on Form 8‐K. We believe these forward‐looking statements are reasonable; however, undue reliance should not be placed on any forward‐looking statements, which are based on current expectations and speak only as of the date that they are made. We do not assume any obligation to update any forward‐looking statements as a result of new information, future developments or otherwise, except as otherwise may be required by law.

Use of Non‐GAAP Financial Measures

The measures entitled average core deposits; average core deposits excluding average time deposits; Tier 1 common equity ratio; tangible common equity to tangible assets ratio; adjusted net income per common share, diluted; adjusted pre‐tax, pre‐credit cost income; adjusted revenues; adjusted non‐interest income; and adjusted non‐interest expense are not measures recognized under U.S. generally accepted accounting principles (GAAP) and therefore are considered non‐GAAP financial measures. The most comparable GAAP measures are total average deposits; Tier 1 capital to risk‐weighted assets ratio; total shareholders’ equity to total assets ratio; net income per common share, diluted; income before income taxes; total revenues; total non‐interest income; and total non‐ interest expense, respectively.

Synovus believes that these non‐GAAP financial measures provide meaningful additional information about Synovus to assist management and investors in evaluating Synovus’ capital strength and the performance of its core business. These non‐GAAP financial measures should not be considered as substitutes total average deposits; Tier 1 capital to risk‐weighted assets ratio; total shareholders’ equity to total assets ratio; net income per common share, diluted; income before income taxes; total revenues; total non‐interest income; and total non‐interest expense determined in accordance with GAAP and may not be comparable to other similarly titled measures at other companies.

The computations of average core deposits; average core deposits excluding average time deposits; Tier 1 common equity ratio; tangible common equity to tangible assets ratio; adjusted net income per common share, diluted; adjusted pre‐tax, pre‐credit cost income; adjusted revenues; adjusted non‐interest income; and adjusted non‐interest expense; and the reconciliation of these measures to substitutes total average deposits; Tier 1 capital to risk‐weighted assets ratio; total shareholders’ equity to total assets ratio; net income per common share, diluted; income before income taxes; total revenues; total non‐interest income; and total non‐interest expense are set forth in the tables below.

1 Per share data for prior periods has been restated to reflect the 1‐for‐7 reverse stock split which was effective on May 16, 2014.

2 Include service charges on deposit accounts, bankcard fees, letter of credit fees, ATM fee income, line of credit non-usage fees, and miscellaneous other service charges.

         

Reconciliation of Non‐GAAP Financial Measures

(dollars in thousands)

2Q14

 

1Q14

 

4Q13

 

3Q13

 

2Q13

 

Average Core Deposits

Average Core Deposits excluding Average Time Deposits

Average total deposits $ 20,863,706 20,725,259 21,150,068 20,878,768 20,668,696
Subtract: Average brokered deposits   (1,401,167 ) (1,234,848 ) (1,194,426 ) (1,333,293 ) (1,333,976 )
Average core deposits   19,462,539   19,490,411   19,955,642   19,545,475   19,334,720  
Subtract: Average time deposits   (3,188,671 ) (3,380,412 ) (3,540,767 ) (3,549,693 ) (3,429,263 )
Average core deposits excluding average time deposits   16,273,868   16,109,999   16,414,875   15,995,782   15,905,457  
Tier 1 Common Equity Ratio
Total shareholders' equity $ 3,053,051 2,998,496 2,948,985 2,931,860 3,568,204
Add: Accumulated other comprehensive loss 13,716 30,463 41,258 29,514 33,060
Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net (1,678 ) (1,883 ) (3,415 ) (3,783 ) (4,156 )
Subtract: Disallowed deferred tax asset (547,786 ) (579,537 ) (618,516 ) (647,828 ) (674,996 )
Other items  

7,619

  7,682   7,612   7,426   7,304  
Tier 1 capital   2,500,491   2,430,790   2,351,493   2,292,758   2,904,985  
Subtract: Qualifying trust preferred securities (10,000 ) (10,000 ) (10,000 ) (10,000 ) (10,000 )
Subtract: Series C Preferred Stock, no par value (125,980 ) (125,980 ) (125,862 ) (125,400 )
Subtract: Series A Preferred Stock, no par value (962,725 )
Tier 1 common equity   2,364,511   2,294,810   2,215,631   2,157,358   1,932,260  

Risk‐weighted assets

22,705,988 (1

)

22,404,099

22,312,655

21,735,363

21,542,287

Tier 1 common equity ratio   10.41

%(1)

10.24   9.93   9.93   8.97  
Tangible Common Equity to Tangible Assets Ratio
Total assets $ 26,627,290 26,435,426 26,201,604 26,218,360 26,563,174
Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net   (1,678 ) (1,883 ) (3,415 ) (3,783 ) (4,156 )
Tangible assets   26,601,181   26,409,112   26,173,758   26,190,146   26,534,587  

Total shareholders’ equity

3,053,051

2,998,496

2,948,985

2,931,860

3,568,204

Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net (1,678 ) (1,883 ) (3,415 ) (3,783 ) (4,156 )
Subtract: Series C Preferred Stock, no par value (125,980 ) (125,980 ) (125,862 ) (125,400 )
Subtract: Series A Preferred Stock, no par value (962,725 )
Tangible common equity   2,900,962   2,846,202   2,795,277   2,778,246   2,576,892  
Total shareholders’ equity to total assets ratio 11.47 % 11.34 11.25 11.18 13.43
Tangible common equity to tangible assets ratio 10.91 % 10.78 10.68 10.61 9.71
 
 

Reconciliation of Non‐GAAP Financial Measures, continued

 

(dollars in thousands)

2Q14

 

1Q14

 

4Q13

 

3Q13

 

2Q13

 
 

Adjusted net income per common share, diluted

 

Net income available to common shareholders

$ 44,313

Add: Restructuring charges (after‐tax)  

4,714

 
Adjusted net income available to common shareholders 49,027
Weighted average common shares outstanding, diluted 139,567
Adjusted net income per common share, diluted $ 0.35
Adjusted Pre‐tax, Pre‐credit Costs Income
Income before income taxes $ 73,950 77,024 59,710 73,459 72,906
Add: Provision for losses on loans 12,284 9,511 14,064 6,761 13,077
Add: Other credit costs(2) 4,635 8,128 8,285 15,603 10,887
Add: Restructuring charges 7,716 8,577 3,770 687 1,758
Add: Litigation loss contingency expense

10,000

(3)

Subtract: Investment securities gains, net (1,331 ) (373 ) (1,124 ) (1,403 )
Add: Visa indemnification charges 356 396 799 764
Subtract: Gain on sale of Memphis branches, net(4)     (5,789 )      
Adjusted pre‐tax, pre‐credit costs income   98,941     96,516     96,255     95,386     97,989  
Adjusted Revenues
Total net interest income $ 205,051 200,514 204,331 203,970 202,077
Total non‐interest income 63,388 70,182 60,181 63,578 65,092
Subtract: Investment securities gains, net (1,331 ) (373 ) (1,124 ) (1,403 )
Subtract: Gain on branch property sale (3,116 )
Subtract: Gain on sale of Memphis branches, net(4)     (5,789 )      
Adjusted revenues   268,439     260,460     264,139     266,424     265,766  
Adjusted Non‐interest Income
Total non‐interest income $ 63,388 $ 70,182 $ 60,181 $ 63,578 $ 65,092
Subtract: Investment securities gains, net (1,331 ) (373 ) (1,124 ) (1,403 )
Subtract: Gain on sale of Memphis branches, net(4)     (5,789 )      
Adjusted non‐interest income   63,388     63,062     59,808     62,454     63,689  
Adjusted Non‐interest Expense
Total non‐interest expense $ 182,205 $ 184,161 $ 190,738 $ 187,328 $ 181,186
Subtract: Other credit costs(2) (4,635 ) (8,128 ) (8,285 ) (15,603 ) (10,887 )
Subtract: Restructuring charges (7,716 ) (8,577 ) (3,770 ) (687 ) (1,758 )
Subtract: Visa indemnification charges (356 ) (396 ) (799 ) (764 )
Subtract: Litigation loss contingency expense     (10,000 )(3)    
Adjusted non‐interest expense   169,498     167,060     167,884     171,038     167,777  
 

(1) Preliminary

(2) Other credit costs consist primarily of foreclosed real estate expense, net.

(3) Consists of loss contingency accruals with respect to outstanding legal matters. Amounts for other quarters are not disclosed separately as amounts are not material.

(4) Consists of gain, net of associated costs, from the sale of certain loans, premises, deposits, and other assets and liabilities of the Memphis, Tennessee operations of Trust One Bank, a division of Synovus Bank.

 
 

Synovus

INCOME STATEMENT DATA Six Months Ended
(Unaudited)
(Dollars in thousands, except per share data) June 30,
           
 
2014 2013 Change
           
 
Interest income $ 460,595 461,903 (0.3) %
Interest expense 55,029 60,012 (8.3)
     
 
Net interest income 405,566 401,891 0.9
Provision for loan losses 21,795 48,773 (55.3)
     
 
Net interest income after provision for loan losses 383,771 353,118 8.7
     
 
Non-interest income:
Service charges on deposit accounts 38,451 38,716 (0.7)
Fiduciary and asset management fees 22,329 22,083 1.1
Brokerage revenue 12,920 14,595 (11.5)
Mortgage banking income 8,794 14,255 (38.3)
Bankcard fees 16,212 14,902 8.8
Investment securities gains, net 1,331 1,448 (8.1)
Other fee income 9,791 11,262 (13.1)
Decrease in fair value of private equity investments, net (369) (1,140) 67.6
Gain on sale of Memphis branches, net (1) 5,789 - nm
Other non-interest income 18,321 13,692 33.8
     
 
Total non-interest income 133,569 129,813 2.9
     
 
Non-interest expense:
Salaries and other personnel expense 185,985 183,396 1.4
Net occupancy and equipment expense 52,480 50,550 3.8
Third-party services 19,561 20,295 (3.6)
FDIC insurance and other regulatory fees 17,768 16,420 8.2
Professional fees 15,901 17,511 (9.2)
Advertising expense 8,757 3,399 157.6
Foreclosed real estate expense, net 9,745 18,441 (47.2)
Losses on other loans held for sale, net 2,226 79 nm
Visa indemnification charges 752 801 (6.1)
Restructuring charges 16,293 6,607 146.6
Other operating expenses 36,897 45,973 (19.7)
     
 
Total non-interest expense 366,365 363,472 0.8
     
 
Income before income taxes 150,975 119,459 26.4
Income tax expense 55,686 44,350 25.6
     
Net income 95,289 75,109 26.9
 
Dividends and accretion of discount on preferred stock 5,119 29,594 (82.7)
 
 
Net income available to common shareholders $ 90,170 45,515 98.1
 
 
Net income per common share, basic (2) 0.65 0.39 66.9
 
Net income per common share, diluted (2) 0.65 0.35 84.8
 
Cash dividends declared per common share (2) 0.14 0.14 -
 
Return on average assets 0.73 % 0.58 25.9
Return on average common equity 6.33 3.51 80.3
 
 
Weighted average common shares outstanding, basic (2) 138,961 117,035 18.7 %
Weighted average common shares outstanding, diluted (2) 139,535 130,127 7.2
 

1 Consists of gain, net of associated costs, from the sale of certain loans, premises, deposits, and other assets and liabilities of the Memphis, Tennessee operations of Trust One Bank, a division of Synovus Bank.

2 Share and per share data for prior periods has been restated to reflect the 1-for-7 reverse stock split which was effective on May 16, 2014.

 
   

Synovus

INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share data) 2014 2013 2nd Quarter
                       
Second First Fourth Third Second '14 vs. '13
Quarter   Quarter   Quarter   Quarter   Quarter   Change  
 
Interest income $ 232,213 228,382 233,258 233,852 231,513 0.3 %
Interest expense 27,162   27,868   28,927   29,882 29,436   (7.7 )
 
 
Net interest income 205,051 200,514 204,331 203,970 202,077 1.5
Provision for loan losses 12,284   9,511   14,064   6,761 13,077   (6.1 )
 
 
Net interest income after provision for loan losses 192,767   191,003   190,267   197,209 189,000   2.0  
 
 
Non-interest income:
Service charges on deposit accounts 19,238 19,214 19,647 19,426 19,195 0.2
Fiduciary and asset management fees 11,296 11,033 10,978 10,389 11,111 1.7
Brokerage revenue 6,707 6,213 6,307 6,636 7,002 (4.2 )
Mortgage banking income 5,283 3,511 2,913 5,314 7,338 (28.0 )
Bankcard fees 8,695 7,518 7,979 7,760 7,838 10.9
Investment securities gains, net - 1,331 373 1,124 1,403 nm
Other fee income 4,928 4,863 6,106 5,199 5,775 (14.7 )
(Decrease) increase in fair value of private equity investments, net (119 ) (250 ) (2,108 ) 284 (883 ) 86.5
Gain on sale of Memphis branches, net (1) - 5,789 - - - nm
Other non-interest income 7,360   10,960   7,986   7,446 6,313   16.6  
 
 
Total non-interest income 63,388   70,182   60,181   63,578 65,092   (2.6 )
 
Non-interest expense:
Salaries and other personnel expense 92,540 93,445 91,962 92,794 89,479 3.4
Net occupancy and equipment expense 26,425 26,056 26,314 26,475 26,383 0.2
Third-party services 9,464 10,097 9,689 10,151 10,366 (8.7 )
FDIC insurance and other regulatory fees 8,049 9,719 8,699 7,639 7,941 1.4
Professional fees 8,224 7,677 9,855 11,410 10,416 (21.0 )
Advertising expense 6,281 2,477 2,458 3,114 1,821 244.9
Foreclosed real estate expense, net 4,063 5,681 5,064 10,359 7,502 (45.8 )
(Gains) losses on other loans held for sale, net (40 ) 2,266 (159 ) 408 (86 ) 53.5
Visa indemnification charges 356 396 799 - 764 (53.4 )
Litigation loss contingency expense (2) - - 10,000 - - nm
Restructuring charges 7,716 8,577 3,770 687 1,758 338.9
Other operating expenses 19,127   17,770   22,287   24,291 24,842   (23.0 )
 
Total non-interest expense 182,205   184,161   190,738   187,328 181,186   0.6  
 
 
 
Income before income taxes 73,950 77,024 59,710 73,459 72,906 1.4
Income tax expense 27,078   28,608   21,130   27,765 27,371   (1.1 )
 
 
Net income 46,872 48,416 38,580 45,694 45,535 2.9
 
Dividends and accretion of discount on preferred stock 2,559   2,559   2,730   8,506 14,818   (82.7 )
 
Net income available to common shareholders $ 44,313   45,857   35,850   37,188 30,717   44.3   %
 
Net income per common share, basic (3) $ 0.32 0.33 0.26 0.27 0.25 26.2 %
 
Net income per common share, diluted (3) 0.32 0.33 0.26 0.27 0.24 34.5
 
Cash dividends declared per common share (3) 0.07 0.07 0.07 0.07 0.07 -
 
Return on average assets 0.71 % 0.75 0.58 0.69 0.69 2.9
Return on average common equity 6.14 6.52 5.04 5.40 4.70 30.6
 
Weighted average common shares outstanding, basic (3) 138,991 138,932 138,897 136,671 121,585 14.3
Weighted average common shares outstanding, diluted (3) 139,567 139,504 139,419 137,097 130,134 7.2
 

1 Consists of gain, net of associated costs, from the sale of certain loans, premises, deposits, and other assets and liabilities of the Memphis, Tennessee operations of Trust One Bank, a division of Synovus Bank.

2 Consists of loss contingency accruals with respect to outstanding legal matters. Amounts for other quarters are not disclosed separately as amounts are not material.

3 Share and per share data for prior periods has been restated to reflect the 1-for-7 reverse stock split which was effective on May 16, 2014.

 
   

Synovus

BALANCE SHEET DATA June 30, 2014 December 31, 2013 June 30, 2013
(Unaudited)
 
(In thousands, except share data)
 
ASSETS
Cash and cash equivalents $ 596,425 469,630 428,487
Interest bearing funds with Federal Reserve Bank 689,284 644,528 1,459,251
Interest earning deposits with banks 7,661 24,325 22,065
Federal funds sold and securities purchased
under resale agreements 79,553 80,975 88,636
Trading account assets, at fair value 20,318 6,113 23,069
Mortgage loans held for sale, at fair value 75,957 45,384 112,761
Other loans held for sale 2,764 10,685 12,083
Investment securities available for sale, at fair value 3,080,185 3,199,358 3,077,706
 
Loans, net of deferred fees and costs 20,455,763 20,057,798 19,608,283
Allowance for loan losses (277,783) (307,560) (334,880)
Loans, net 20,177,980 19,750,238 19,273,403
 
Premises and equipment, net 461,610 468,871 477,948
Goodwill 24,431 24,431 24,431
Other intangible assets, net 1,678 3,415 4,156
Other real estate 101,533 112,629 139,653
Deferred tax asset, net 677,513 744,646 789,525
Other assets 630,398 616,376 630,000
 
Total assets $ 26,627,290 26,201,604 26,563,174
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing deposits $ 5,875,301 5,642,751 5,203,437
Interest bearing deposits, excluding brokered deposits 13,668,746 14,140,037 14,169,203
Brokered deposits 1,449,420 1,094,002 1,338,063
 
 
Total deposits 20,993,467 20,876,790 20,710,703
 
Federal funds purchased and securities sold under repurchase agreements 127,840 148,132 222,933
Long-term debt 2,256,418 2,033,141 1,885,689
Other liabilities 196,514 194,556 175,645
 
Total liabilities 23,574,239 23,252,619 22,994,970
 
 
 
Shareholders' equity:
Series A Preferred Stock - no par value, 967,870 shares outstanding at June 30, 2013 - - 962,725
Series C Preferred Stock - no par value, 5,200,000 shares outstanding at June 30, 2014 and December 31, 2013 125,980 125,862 -
Common stock - $1.00 par value. 139,021,760 shares outstanding at June 30, 2014, 138,907,351 shares outstanding at December 31, 2013, and 130,073,485 shares outstanding at June 30, 2013 (1) 139,835 139,721 130,887
Additional paid-in capital 2,976,811 2,976,348 2,823,804
Treasury stock, at cost - 813,350 shares (1) (114,176) (114,176) (114,176)
Accumulated other comprehensive loss (13,716) (41,258) (33,060)
Accumulated deficit (61,683) (137,512) (201,976)
Total shareholders' equity 3,053,051 2,948,985 3,568,204
 
Total liabilities and shareholders' equity $ 26,627,290 26,201,604 26,563,174
 

1 Share and per share data for prior periods has been restated to reflect the 1-for-7 reverse stock split which was effective on May 16, 2014.

 
 

Synovus

AVERAGE BALANCES AND YIELDS/RATES 1

(Unaudited)
(Dollars in thousands)
  2014 2013
             
Second First Fourth Third Second
Quarter Quarter Quarter Quarter Quarter
             
Interest Earning Assets
   
Taxable investment securities (2) $ 3,091,537 3,181,678 3,196,561 3,062,976 3,034,152
Yield 1.87 % 1.91 1.90 1.76 1.70
 
Tax-exempt investment securities (2) (4) $ 5,781 6,421 7,758 9,835 11,435
Yield (taxable equivalent) 6.23 % 6.24 6.14 6.26 6.47
 
Trading account assets $ 16,011 20,346 10,021 13,806 7,847
Yield 2.25 % 3.16 4.60 4.50 6.34
 
Commercial loans (3) (4) $ 16,673,930 16,451,594 16,217,373 16,067,424 16,075,832
Yield 4.19 % 4.21 4.28 4.37 4.39
 
Consumer loans (3) $ 3,695,010 3,628,347 3,615,836 3,528,057 3,454,874
Yield 4.51 % 4.53 4.50 4.61 4.62
 
Allowance for loan losses $ (293,320)   (307,078) (316,001) (328,084) (351,075)
 
Loans, net (3) $ 20,075,620 19,772,863 19,517,208 19,267,397 19,179,631
Yield 4.32 % 4.34 4.40 4.50 4.52
 
Mortgage loans held for sale $ 59,678 38,699 46,036 85,493 129,742
Yield 4.13 % 4.15 3.94 4.07 4.35
 

Federal funds sold, due from Federal Reserve Bank, and other short-term investments

$ 843,018 935,300 1,235,144 1,375,921 1,550,113
Yield 0.23 % 0.23 0.24 0.24 0.24
 
Federal Home Loan Bank and Federal Reserve Bank stock (5) $ 76,172 82,585 70,815 70,741 65,014
Yield 4.15 % 3.21 2.85 2.30 2.35
                 
Total interest earning assets $ 24,167,817 24,037,892 24,083,543 23,886,169 23,977,934
Yield 3.86 % 3.86 3.85 3.89 3.88
                 
 
Interest Bearing Liabilities
   
 
Interest bearing demand deposits $ 3,830,956 3,878,590 4,102,398 3,933,902 3,895,675
Rate 0.19 % 0.19 0.19 0.23 0.18
 
Money market accounts $ 6,033,523 6,077,357 6,161,893 6,148,289 6,072,155
Rate 0.31 % 0.32 0.33 0.33 0.33
 
Savings deposits $ 644,103 616,962 605,054 607,144 609,832
Rate 0.09 % 0.10 0.10 0.11 0.11
 
Time deposits under $100,000 $ 1,364,322 1,423,487 1,491,673 1,526,974 1,537,639
Rate 0.57 % 0.59 0.61 0.62 0.64
 
Time deposits over $100,000 $ 1,824,349 1,956,925 2,049,094 2,022,719 1,891,624
Rate 0.74 % 0.76 0.80 0.84 0.88
 
Brokered money market accounts $ 184,233 207,681 210,380 202,802 202,532
Rate 0.27 % 0.26 0.27 0.27 0.31
 
Brokered time deposits $ 1,216,934 1,027,167 984,047 1,130,491 1,131,444
Rate 0.51 % 0.62 0.65 0.70 0.77
 
Total interest bearing deposits $ 15,098,420 15,188,169 15,604,539 15,572,321 15,340,901
Rate 0.36 % 0.38 0.39 0.42 0.42
 

Federal funds purchased and securities sold under repurchase agreements

$ 219,490 215,027 216,757 195,717 206,046
Rate 0.13 % 0.14 0.15 0.14 0.15
 
Long-term debt $ 2,099,578 2,156,836 1,886,223 1,885,385 1,762,173
Rate 2.58 % 2.52 2.85 2.85 3.06
                 
 
Total interest bearing liabilities $ 17,417,488 17,560,032 17,707,519 17,653,423 17,309,120
Rate 0.62 % 0.64 0.65 0.67 0.68
                 
 
Non-interest bearing demand deposits $ 5,765,287 5,537,090 5,545,529 5,306,447 5,327,795
 
Effective cost of funds 0.45 % 0.47 0.47 0.49 0.49
                 
 
Net interest margin   3.41 % 3.39 3.38 3.40 3.39
 
Taxable equivalent adjustment $ 443 455 481 529 557
 
(1) Yields and rates are annualized.
(2) Excludes net unrealized gains and losses.
(3) Average loans are shown net of unearned income. Non-performing loans are included.

(4) Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 35%, in adjusting interest on tax-exempt loans and investment securities to a taxable-equivalent basis.

(5) Included as a component of Other Assets on the balance sheet
 
 

Synovus

LOANS OUTSTANDING AND NON-PERFORMING LOANS COMPOSITION
(Unaudited)  
(Dollars in thousands)
 
 
June 30, 2014
               
 
Loans as a % Total Non-performing Loans
of Total Loans Non-performing as a % of Total
Loan Type Total Loans Outstanding Loans Nonperforming Loans
                 
 
 
Multi-Family $ 1,103,608 5.4 % $ 225 0.1 %
Hotels 712,350 3.5 439 0.2
Office Buildings 973,201 4.8 3,284 1.2
Shopping Centers 828,390 4.0 8,896 3.4
Commercial Development 139,615 0.7 22,412 8.6
Warehouses 563,451 2.7 1,997 0.8
Other Investment Property 489,734 2.4 3,674 1.4
       
 
Total Investment Properties 4,810,349 23.5 40,927 15.7
 
 
1-4 Family Construction 135,596 0.7 986 0.4
1-4 Family Investment Mortgage 744,700 3.6 13,295 5.1
Residential Development 178,793 0.9 12,430 4.8
       
 
Total 1-4 Family Properties 1,059,089 5.2 26,711 10.3
 
 
Land Acquisition 598,555 2.9 42,564 16.4
       
 
Total Commercial Real Estate 6,467,993 31.6 110,202 42.4
       
 
Commercial, Financial, and Agricultural 5,574,941 27.3 57,903 22.3
Owner-Occupied 3,786,279 18.5 29,005 11.2
Small Business 886,570 4.3 7,210 2.8
       
 
Total Commercial & Industrial 10,247,790 50.1 94,118 36.3
       
 
Home Equity Lines 1,664,520 8.1 16,396 6.3
Consumer Mortgages 1,561,111 7.6 36,433 14.1
Credit Cards 255,369 1.3 - -
Other Retail Loans 287,935 1.4 2,398 0.9
       
 
Total Retail 3,768,935 18.4 55,227 21.3
       
 
Unearned Income (28,955) (0.1) - nm
       
 
Total $ 20,455,763 100.0 % $ 259,547 100.0 %
 
 
LOANS OUTSTANDING BY TYPE COMPARISON
(Unaudited)
(Dollars in thousands)
         
Total Loans 2Q14 vs. 1Q14 2Q14 vs. 2Q13
Loan Type June 30, 2014 March 31, 2014 % change (1) June 30, 2013 % change
           
 
 
Multi-Family $ 1,103,608 984,658 48.5 % 898,472 22.8 %
Hotels 712,350 696,083 9.4 694,107 2.6
Office Buildings 973,201 950,635 9.5 784,413 24.1
Shopping Centers 828,390 844,205 (7.5) 845,883 (2.1)
Commercial Development 139,615 148,683 (24.5) 178,478 (21.8)
Warehouses 563,451 570,492 (5.0) 541,250 4.1
Other Investment Property 489,734 500,087 (8.3) 504,386 (2.9)
         
 
Total Investment Properties 4,810,349 4,694,843 9.9 4,446,989 8.2
 
 
1-4 Family Construction 135,596 141,060 (15.5) 132,943 2.0
1-4 Family Investment Mortgage 744,700 784,712 (20.5) 857,063 (13.1)
Residential Development 178,793 187,240 (18.1) 223,553 (20.0)
         
 
Total 1-4 Family Properties 1,059,089 1,113,012 (19.4) 1,213,559 (12.7)
 
Land Acquisition 598,555 674,678 (45.3) 754,202 (20.6)
         
 
Total Commercial Real Estate 6,467,993 6,482,533 (0.9) 6,414,750 0.8
         
 
Commercial, Financial, and Agricultural 5,574,941 5,505,577 5.1 5,374,141 3.7
Owner-Occupied 3,786,279 3,777,282 1.0 3,784,937 0.0
Small Business 886,570 783,143 53.0 568,881 55.8
         
 
Total Commercial & Industrial 10,247,790 10,066,002 7.2 9,727,959 5.3
         
 
Home Equity Lines 1,664,520 1,601,757 15.7 1,507,738 10.4
Consumer Mortgages 1,561,111 1,504,213 15.2 1,451,212 7.6
Credit Cards 255,369 253,149 3.5 251,788 1.4
Other Retail Loans 287,935 279,785 11.7 278,603 3.3
         
 
Total Retail 3,768,935 3,638,905 14.3 3,489,341 8.0
         
 
Unearned Income (28,955) (28,436) 7.3 (23,767) 21.8
         
 
Total $ 20,455,763 20,159,004 5.9 % 19,608,283 4.3 %

1 Percentage change is annualized.

 
       

Synovus

CREDIT QUALITY DATA
(Unaudited)
(Dollars in thousands) 2014 2013 2nd Quarter
                     
Second First Fourth Third Second '14 vs. '13
Quarter   Quarter   Quarter   Quarter   Quarter Change
 
Non-performing Loans $ 259,547 384,324 416,300 450,879 483,464 (46.3) %
Other Loans Held for Sale (1) 2,045 3,120 10,685 9,351 12,083 (83.1)
Other Real Estate 101,533 110,757 112,629 126,640 139,653 (27.3)  
Non-performing Assets 363,125 498,201 539,614 586,870 635,200 (42.8)
 
Allowance for Loan Losses 277,783 300,871 307,560 318,612 334,880 (17.0)
 
Net Charge-Offs - Quarter 35,371 15,181 25,116 23,030 29,969 18.0
Net Charge-Offs - YTD 91,877 91,877 91,877 91,877 91,877 0.0
Net Charge-Offs / Average Loans - Quarter (2) 0.69 % 0.30 0.51 0.47 0.61
 
Non-performing Loans / Loans 1.27 1.91 2.08 2.29 2.47
Non-performing Assets / Loans, Other Loans Held for Sale & ORE 1.77 2.46 2.67 2.96 3.21
Allowance / Loans 1.36 1.49 1.53 1.62 1.71
 
Allowance / Non-performing Loans 107.03 78.29 73.88 70.66 69.27
Allowance / Non-performing Loans (3) 177.62 100.16 95.43 91.84 91.76
 
Past Due Loans over 90 days and Still Accruing $ 4,798 6,563 4,489 4,738 4,596 4.4 %
As a Percentage of Loans Outstanding 0.02 % 0.03 0.02 0.02 0.02
 
Total Past Dues Loans and Still Accruing $ 60,428 75,038 72,600 78,906 80,678 (25.1)
As a Percentage of Loans Outstanding 0.30 % 0.37 0.36 0.40 0.41
 
Accruing Troubled Debt Restructurings (TDRs) $ 444,108 495,390 556,410 574,236 635,125 (30.1)
 
(1) Represent impaired loans that are intended to be sold. Held for sale loans are carried at the lower of cost or fair value, less costs to sell.
(2) Ratio is annualized.
(3) Excludes non-performing loans for which the expected loss has been charged off.
 
                           
 
 
SELECTED CAPITAL INFORMATION (1)
(Unaudited)
(Dollars in thousands)      
June 30, 2014 December 31, 2013 June 30, 2013
 
Tier 1 Capital $ 2,500,491 2,351,493 2,904,985
Total Risk-Based Capital 2,958,274 2,900,865 3,445,161
Tier 1 Capital Ratio 11.01 % 10.54 13.49
Tier 1 Common Equity Ratio 10.41 9.93 8.97
Total Risk-Based Capital Ratio 13.03 13.00 15.99
Tier 1 Leverage Ratio 9.69 9.13 11.33
Common Equity as a Percentage of Total Assets (2) 10.99 10.77 9.81
Tangible Common Equity as a Percentage of Tangible Assets (3) 10.91 10.68 9.71
Tangible Common Equity as a Percentage of Risk Weighted Assets (3) 12.78 12.53 11.96
Book Value Per Common Share (4)(5) 21.05 20.32 20.03
Tangible Book Value Per Common Share (3)(5) 20.87 20.12 19.81
 
 
(1) Current quarter regulatory capital information is preliminary.
(2) Common equity consists of Total Shareholders' Equity less Preferred Stock.
(3) Excludes the carrying value of goodwill and other intangible assets from common equity and total assets.
(4) Book Value Per Common Share consists of Total Shareholders' Equity less Preferred Stock divided by total common shares outstanding.
(5) Per share data for prior periods has been restated to reflect the 1-for-7 reverse stock split which was effective on May 16, 2014.
 

Contact:
Synovus Financial Corp.
Media Relations
Greg Hudgison, 706-644‐0528
or
Investor Relations
Bob May, 706-649‐3555

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