Synovus Announces Earnings for the First Quarter 2017

Diluted Earnings per Share of $0.56, up 44.1% vs. 1Q16

Also Announces Definitive Agreement with World’s Foremost Bank and Capital One

COLUMBUS, Ga.--()--Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter ended March 31, 2017.

“This transaction will provide Synovus with additional liquidity to support organic growth, as well as incremental capital that can be utilized to accelerate progress toward achieving our stated long-term ROA and efficiency goals”

First Quarter Highlights

  • Net income available to common shareholders for the first quarter 2017 was $69.3 million or $0.56 per diluted share as compared to $66.0 million or $0.54 per diluted share for the fourth quarter 2016 and $50.0 million or $0.39 per diluted share for the first quarter 2016.
    • Adjusted earnings per diluted share for the first quarter 2017 were $0.57, a 5.4% increase from the fourth quarter 2016 and a 29.8% increase from the first quarter 2016.
  • Total average loans grew $313.0 million or 5.4% annualized from the previous quarter and $1.45 billion or 6.4% as compared to the first quarter 2016.
  • Total average deposits grew $257.6 million or 4.2% annualized from the previous quarter and $1.71 billion or 7.4% as compared to the first quarter 2016.
  • Total revenues1 of $304.1 million, up $2.4 million or 0.8% from the previous quarter and 8.1% from the first quarter 2016.
  • Net interest margin of 3.42%, up 13 basis points from the previous quarter and up 15 basis points from the first quarter 2016.
  • Efficiency ratio of 64.84% improved 201 basis points from the first quarter 2016.
    • Adjusted efficiency ratio2 of 62.25% improved 129 basis points from the first quarter 2016.
  • Credit quality metrics remained favorable with a net charge-off ratio of 12 basis points, down 2 basis points from the previous quarter and down 1 basis point from the first quarter 2016.
  • Return on average common equity of 9.97%, up 55 basis points from the previous quarter and up 289 basis points from the first quarter 2016.
    • Return on average tangible common equity of 10.26%, up 61 basis points from the previous quarter and up 311 basis points from the first quarter 2016.

“We are pleased with our strong first quarter performance, highlighted by an 8 percent year-over-year revenue increase driven by steady balance sheet growth and expanded net interest margin,” said Kessel D. Stelling, Synovus chairman and CEO. “We remain confident in our ability to deliver on our 2017 financial targets, and we are excited about the work underway to prepare for our 2018 transition to a single brand. Leveraging a common brand while maintaining our local, relationship-centered delivery model will further boost Synovus brand awareness and enhance our ability to promote our broader banking capabilities to prospects and existing customers.”

Balance Sheet

  • Total loans ended the quarter at $24.26 billion, up $402.1 million or 6.8% annualized from the previous quarter and up $1.50 billion or 6.6% as compared to the first quarter 2016.
    • Commercial and industrial loans grew by $188.8 million or 6.6% annualized from the previous quarter and $931.3 million or 8.6% as compared to the first quarter 2016.
    • Consumer loans grew by $119.7 million or 9.8% annualized from the previous quarter and $719.8 million or 16.5% as compared to the first quarter 2016.
    • Commercial real estate loans grew by $93.2 million or 5.1% annualized from the previous quarter and declined $154.4 million or 2.0% as compared to the first quarter 2016.
  • Total average loans grew $313.0 million or 5.4% annualized from the previous quarter and $1.45 billion or 6.4% as compared to the first quarter 2016.
  • Total average deposits for the quarter were $24.92 billion, up $257.6 million or 4.2% annualized from the previous quarter and $1.71 billion or 7.4% as compared to the first quarter 2016.
    • Average core transaction deposits3 grew $371.7 million or 8.5% annualized from the previous quarter and $1.61 billion or 9.7% as compared to the first quarter 2016.

Core Performance

  • Total revenues1 were $304.1 million, up $2.4 million or 0.8% from the previous quarter and 8.1% from the first quarter 2016.
  • Net interest income was $239.9 million, up $6.4 million or 2.7% from the previous quarter and 10.0% from the first quarter 2016.
  • Net interest margin was 3.42%, up 13 basis points from the previous quarter. Yield on earning assets was 3.88%, up 15 basis points from the previous quarter, and the effective cost of funds was 0.46%, up 2 basis points from the previous quarter.
  • Total non-interest income was $71.8 million, down $2.2 million or 2.9% compared to the previous quarter and up 13.8% from first quarter 2016.
  • Adjusted non-interest income was $66.0 million, down $2.6 million or 3.8% from the previous quarter and up 4.0% as compared to the first quarter 2016.
    • Core banking fees4 were $32.7 million, down $2.8 million or 7.8% from the previous quarter and 1.8% from the first quarter 2016.
      • Gains from sale of GGL/SBA loans were $730 thousand, down $1.4 million or 66.4% from the previous quarter and up 2.7% from the first quarter 2016.
    • Fiduciary and asset management fees, brokerage revenue, and insurance revenues were $20.7 million, up $334 thousand or 1.6% from the previous quarter and 10.3% from the first quarter 2016.
    • Mortgage banking income was $5.8 million, up $262 thousand or 4.8% from the previous quarter and 5.1% from the first quarter 2016.
  • Total non-interest expense was $197.4 million, up $4.2 million or 2.2% from the previous quarter and 4.9% from the first quarter 2016.
    • First quarter 2017 total non-interest expense includes $6.5 million in restructuring charges consisting primarily of termination benefits incurred in conjunction with a voluntary early retirement program offered during the quarter.
  • Adjusted non-interest expense was $190.6 million, up $3.6 million or 1.9% from the previous quarter and 6.4% from the first quarter 2016.
    • Employment expense of $107.2 million increased $5.5 million or 5.4% from the previous quarter and 5.8% from the first quarter 2016.
    • Occupancy and equipment expense of $29.3 million increased $1.5 million or 5.3% from the previous quarter and 10.4% from the first quarter 2016.
    • Other operating expenses of $54.1 million decreased $3.4 million or 5.8% from the previous quarter and increased 5.5% from the first quarter 2016.
    • Efficiency ratio for the first quarter was 64.84% as compared to 63.98% in the previous quarter and 66.85% in the first quarter 2016.
    • Adjusted efficiency ratio2 for the first quarter was 62.25% as compared to 61.81% in the previous quarter and 63.54% in the first quarter 2016.

Credit Quality

  • Non-performing loans were $158.4 million at March 31, 2017, up $5.0 million or 3.3% from the previous quarter and down $19.8 million or 11.1% from March 31, 2016. The non-performing loan ratio was 0.65% at March 31, 2017, as compared to 0.64% at the end of the previous quarter and 0.78% at March 31, 2016.
  • Total non-performing assets were $187.2 million at March 31, 2017, down $11.5 million or 6.6% from the previous quarter and down $29.4 million or 13.6% from March 31, 2016. The non-performing asset ratio was 0.77% at March 31, 2017, as compared to 0.74% at the end of the previous quarter and 0.95% at March 31, 2016.
  • Net charge-offs were $6.9 million in the first quarter 2017, down $1.4 million or 16.8% from $8.3 million in the previous quarter and 6.0% from the first quarter 2016. The annualized net charge-off ratio was 0.12% in the first quarter as compared to 0.14% in the previous quarter and 0.13% in the first quarter 2016.
  • Total delinquencies (consisting of loans 30 or more days past due and still accruing) remain low at 0.26% of total loans at March 31, 2017 as compared to 0.27% the previous quarter and 0.28% at March 31, 2016.

Capital Ratios

  • Ratios reflect repurchase of $15.1 million in common stock during the first quarter 2017.
  • Common Equity Tier 1 ratio was 9.86% at March 31, 2017 compared to 9.96% at December 31, 2016.
  • Tier 1 Capital ratio was 10.18% at March 31, 2017 compared to 10.07% at December 31, 2016.
  • Total Risk Based Capital ratio was 12.09% at March 31, 2017 compared to 12.01% at December 31, 2016.
  • Tier 1 Leverage ratio was 9.13% at March 31, 2017 compared to 8.99% at December 31, 2016.
  • Tangible Common Equity ratio was 9.04% at March 31, 2017 compared to 9.09% at December 31, 2016.

Definitive Agreement with World’s Foremost Bank and Capital One

On April 17, 2017, Synovus Bank entered into a definitive agreement to acquire certain assets and assume certain liabilities of World’s Foremost Bank (“WFB”), a wholly-owned subsidiary of Cabela’s Incorporated (NYSE: CAB) (“Cabela’s”). Immediately following the closing of this transaction, Synovus will sell the credit card assets and related liabilities to Capital One Bank (USA), National Association, a bank subsidiary of Capital One Financial Corporation (NYSE: COF) (“Capital One”), while retaining the approximately $1.2 billion brokered time deposit portfolio. Pursuant to the terms of the agreement, Synovus will receive $75 million in consideration from Cabela’s and Capital One. The transaction is expected to close in the third quarter of 2017 and is subject to customary regulatory approvals as well as completion of the Cabela’s and Bass Pro Shops merger announced in October 2016.

“This transaction will provide Synovus with additional liquidity to support organic growth, as well as incremental capital that can be utilized to accelerate progress toward achieving our stated long-term ROA and efficiency goals,” said Stelling.

First Quarter Earnings Conference Call

Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on April 18, 2017. 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 investor.synovus.com/event. The replay will be archived for 12 months and will be available 30-45 minutes after the call.

Synovus Financial Corp.

Synovus Financial Corp. is a financial services company based in Columbus, Georgia, with over $30 billion in assets. Synovus provides commercial and retail banking, investment, and mortgage services to customers through 28 locally-branded divisions, 248 branches, and 327 ATMs in Georgia, Alabama, South Carolina, Florida, and Tennessee. Synovus Bank, a wholly owned subsidiary of Synovus, was recognized as one of America’s Most Reputable Banks by American Banker and the Reputation Institute in 2016 and 2015, and was named “Best Regional Bank, Southeast” by MONEY Magazine for 2016-2017. Synovus is on the web at synovus.com, on Twitter @synovus, and on LinkedIn at http://linkedin.com/company/synovus.

____________________

1 Consist of net interest income and non-interest income excluding investment securities gains, net.
2 Adjusted efficiency ratio: 2016 ratios reflect changes to conform to current year presentation. Foreclosed real estate expense, net and other credit costs are now included in the calculation of the adjusted efficiency ratio, and (decrease) increase in fair value of private equity investments, net is excluded from the calculation.
3 Consist of non-interest bearing, NOW/Savings, and money market deposits excluding SCMs.
4 Include service charges on deposit accounts, bankcard fees, letter of credit fees, ATM fee income, line of credit non-usage fees, gains from sales of government guaranteed loans, and miscellaneous other service charges.

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 regarding deposits, loan growth and the net interest margin; expectations on our growth strategy, expense initiatives, capital management and future profitability; expectations on credit trends and key credit metrics; expectations on the impact of certain transactions on our financial performance, expectations on opportunities and alternatives to deploy additional capital as a result of such transactions and expectations regarding the closing or benefits of such transactions; 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 press release. 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, 2016 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 adjusted diluted earnings per share; average core transaction deposits; adjusted non-interest income; adjusted non-interest expense; adjusted efficiency ratio; return on average tangible common equity; tangible common equity ratio; and common equity Tier 1 (CET1) ratio (fully phased-in) 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 diluted earnings per share; total average deposits; total non-interest income; total non-interest expense; efficiency ratio; return on average common equity; total shareholders’ equity to total assets ratio; and the CET1 ratio, respectively.

Management believes that these non-GAAP financial measures provide meaningful additional information about Synovus to assist management, investors, and bank regulators in evaluating Synovus’ operating results, financial strength, the performance of its business and the strength of its capital position. However, these non-GAAP measures have inherent limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of operating results or capital position as reported under GAAP. Adjusted diluted earnings per share is a measure used by management to evaluate operating results exclusive of items that are not indicative of ongoing operations and impact period-to- period comparisons. Average core transaction deposits is a measure used by management to evaluate organic growth of deposits and the quality of deposits as a funding source. Adjusted non-interest income is a measure utilized by management to measure non-interest income exclusive of net investment securities gains/losses and changes in fair value of private equity investments, net. Adjusted non-interest expense and the adjusted efficiency ratio are measures utilized by management to measure the success of expense management initiatives focused on reducing recurring controllable operating costs. Return on average tangible common equity is a measure used by management to compare Synovus’ performance with other financial institutions because it calculates the return available to common shareholders without the impact of intangible assets and their related amortization, thereby allowing management to evaluate the performance of the business consistently. The tangible common equity ratio and the common equity Tier 1 (CET1) ratio (fully phased-in) are used by management and bank regulators to assess the strength of our capital position. These non-GAAP financial measures should be considered as additional views of the way our financial measures are affected by significant items and other factors, and since they are not required to be uniformly applied, they may not be comparable to other similarly titled measures at other companies and should not be considered as substitutes for diluted earnings per share; total average deposits; total non-interest income; total non-interest expense; efficiency ratio; return on average common equity; total shareholders’ equity to total assets ratio, and the CET1 ratio determined in accordance with GAAP, and may not be comparable to other similarly titled measures at other companies.

The computations of adjusted diluted earnings per share; average core transaction deposits; adjusted non-interest income; adjusted non-interest expense; adjusted efficiency ratio; return on average tangible common equity; tangible common equity ratio; and common equity Tier 1 (CET1) ratio (fully phased-in) and the reconciliation of these measures to diluted earnings per share; total average deposits; total non-interest income; total non-interest expense; efficiency ratio; return on average common equity; total shareholders’ equity to total assets ratio, and the CET1 ratio are set forth in the tables below.

           
Reconciliation of Non-GAAP Financial Measures
 

(dollars in thousands)

1Q17

4Q16

1Q16

 
Adjusted Diluted Earnings per Share
Net income available to common shareholders $ 69,298 65,990 49,972
Add: Litigation settlement expense - - 2,700
Add: Restructuring charges 6,511 42 1,140
Add: Merger-related expense 86 1,086 -
Add: Fair value adjustment to Visa derivative - 4,716 360
Add: Loss on early extinguishment of debt - - 4,735
Add: Decrease in fair value of private equity investments, net 1,814 499 391
Subtract: Investment securities gains, net (7,668 ) (5,885 ) (67 )
Tax effect of adjustments   (267 )   (167 ) (3,389 )
Adjusted net income available to common shareholders $ 69,774     66,281   55,842  
Weighted average common shares outstanding, diluted 123,059 123,187 127,857
Adjusted diluted earnings per share $ 0.57     0.54   0.44  
 
Average Core Transaction Deposits
Total average deposits $ 24,918,855 24,661,265 23,210,263
Subtract: Average brokered deposits (1,380,786 ) (1,380,931 ) (1,095,239 )
Subtract: Average time deposits excluding average SCM time deposits (3,151,888 ) (3,147,620 ) (3,137,378 )
Subtract: Average state, county, and municipal (SCM) deposits   (2,238,324 )   (2,356,567 ) (2,440,749 )
Average core transaction deposits $ 18,147,857     17,776,147   16,536,897  
 
Adjusted Non-interest Income
Total non-interest income $ 71,839 74,006 63,147
Subtract: Investment securities gains, net (7,668 ) (5,885 ) (67 )
Add: Decrease in fair value of private equity investments, net   1,814     499   391  
Adjusted non-interest income $ 65,985     68,620   63,471  
 
Adjusted Non-interest Expense
Total non-interest expense $ 197,388 193,209 188,233
Subtract: Restructuring charges (6,511 ) (42 ) (1,140 )
Subtract: Fair value adjustment to Visa derivative - (4,716 ) (360 )
Subtract: Litigation settlement expense - - (2,700 )
Subtract: Loss on early extinguishment of debt - - (4,735 )
Subtract: Merger-related expense (86 ) (1,086 ) -
Subtract: Amortization of intangibles   (183 )   (400 ) (121 )
 
Adjusted non-interest expense $ 190,608     186,965   179,177  

 

 
 
Reconciliation of Non-GAAP Financial Measures, continued
 

(dollars in thousands)

1Q17

4Q16

1Q16

Adjusted Efficiency Ratio
Adjusted non-interest expense $ 190,608 $ 186,965 179,177
Net interest income 239,927 233,530 218,193
Add: Tax equivalent adjustment 309 322 305
Add: Total non-interest income 71,839 74,006 63,147
Add: Decrease in fair value of private equity investments, net 1,814 499 391

391

Subtract: Investment securities gains, net   (7,668 )   (5,885 ) (67 )
Total revenues $ 306,221 $ 302,472 281,969
Adjusted efficiency ratio   62.25 %   61.81   63.54  
 
Return on average tangible common equity
Total average shareholders’ equity $ 2,943,643 2,912,687 2,966,497
Average Series C Preferred Stock   (125,980 )   (125,980 ) (125,980 )
Total average common equity 2,817,663 2,786,707 2,840,517
Average goodwill (59,649 ) (55,144 ) (24,431 )
Average other intangible assets, net   (13,177 )   (233 ) (367 )
Average tangible common equity $ 2,744,837 2,731,330 2,815,719
Net income available to common shareholders, annualized 281,043 262,526 200,983
Amortization of intangibles, annualized and after-tax   469     1,022   307  
Adjusted net income available to common shareholders, annualized $ 281,512 263,528 201,290
Return on average tangible common equity 10.26 % 9.65 7.15
 
Tangible common equity ratio
Total assets $ 30,679,589 30,104,002 29,171,257
Subtract: Goodwill (57,010 ) (59,678 ) (24,431 )
Subtract: Other intangible assets, net   (12,137 )   (13,223 ) (277 )
Tangible assets $ 30,610,442     30,031,101   29,146,549  
 
Total shareholders’ equity $ 2,962,127 2,927,924 2,953,268
Subtract: Goodwill (57,010 ) (59,678 ) (24,431 )
Subtract: Other intangible assets, net (12,137 ) (13,223 ) (277 )
Subtract: Series C Preferred Stock, no par value   (125,980 )   (125,980 ) (125,980 )
Tangible common equity $ 2,767,000     2,729,043   2,802,580  
Tangible common equity ratio 9.04 % 9.09 9.62
 
Common Equity Tier 1 (CET1) ratio (fully phased-in)
Common Equity Tier 1 (CET1) $ 2,672,649 2,654,287 2,609,191
Adjustment related to capital components   (39,834 )   (94,387 ) (125,980 )
CET1 (fully phased-in) $ 2,632,815     2,559,900   2,483,211  
Total risk-weighted assets (fully phased-in) $ 27,332,093 26,909,755 26,231,764
Common Equity Tier 1 (CET1) ratio (fully phased-in) 9.63 % 9.51 9.47
 
                       
Synovus
 
INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share data) 2017     2016     1st Quarter
First Fourth Third Second First '17 vs. '16
Quarter     Quarter     Quarter     Quarter     Quarter     Change
 
Interest income $ 272,401 264,534 256,554 252,393 249,323 9.3 %
Interest expense   32,474   31,004   30,547   30,944 31,130   4.3  
 
 
Net interest income 239,927 233,530 226,007 221,449 218,193 10.0
Provision for loan losses   8,674   6,259   5,671   6,693 9,377   (7.5 )
 
 
Net interest income after provision for loan losses   231,253   227,271   220,336   214,756 208,816   10.7  
 
Non-interest income:
Service charges on deposit accounts 19,774 20,653 20,822 20,240 19,710 0.3
Fiduciary and asset management fees 12,151 11,903 11,837 11,580 11,274 7.8
Brokerage revenue 7,226 7,009 6,199 7,338 6,483 11.5
Mortgage banking income 5,766 5,504 7,329 5,941 5,484 5.1
Bankcard fees 8,185 8,330 8,269 8,346 8,372 (2.2 )
Investment securities gains, net 7,668 5,885 59 - 67 nm
(Decrease) increase in fair value of private equity investments, net (1,814 ) (499 ) (249 ) 113 (391 ) nm
Other fee income 4,868 4,965 5,171 5,280 4,804 1.3
Other non-interest income   8,015   10,256   8,718   9,048 7,344   9.1  
 
Total non-interest income   71,839   74,006   68,155   67,886 63,147   13.8  
 
Non-interest expense:
Salaries and other personnel expense 107,191 101,662 101,945 97,061 101,358 5.8
Net occupancy and equipment expense 29,331 27,867 28,120 26,783 26,577 10.4
Third-party processing expense 12,603 12,287 11,219 11,698 11,116 13.4
FDIC insurance and other regulatory fees 6,770 6,614 6,756 6,625 6,719 0.8
Professional fees 5,355 6,904 6,486 6,938 6,369 (15.9 )
Advertising expense 5,912 4,905 5,597 7,351 2,410 145.3
Foreclosed real estate expense, net 2,134 2,840 2,725 4,588 2,684 (20.5 )
Merger-related expense 86 1,086 550 - - nm
Amortization of intangibles 183 400 - - 121 51.2
Fair value adjustment to Visa derivative - 4,716 360 360 360 nm
Loss on early extinguishment of debt - - - - 4,735 nm
Litigation settlement (recovery) expense - - (189 ) - 2,700 nm
Restructuring charges, net 6,511 42 1,243 5,841 1,140 nm
Other operating expenses   21,312   23,886   21,059   21,366 21,944   (2.9 )
 
Total non-interest expense   197,388   193,209   185,871   188,611 188,233   4.9  
 
Income before income taxes 105,704 108,068 102,620 94,031 83,730 26.2
Income tax expense   33,847   39,519   37,375   33,574 31,199   8.5  
 
 
Net income 71,857 68,549 65,245 60,457 52,531 36.8
 
Dividends on preferred stock   2,559   2,559   2,559   2,559 2,559   -  
 
Net income available to common shareholders $ 69,298   65,990   62,686   57,898 49,972   38.7 %
 
Net income per common share, basic $ 0.57 0.54 0.51 0.46 0.39 44.3 %
 
Net income per common share, diluted 0.56 0.54 0.51 0.46 0.39 44.1
 
Cash dividends declared per common share 0.15 0.12 0.12 0.12 0.12 25.0
 
Return on average assets * 0.96 % 0.90 0.88 0.83 0.73

23

bps

Return on average common equity * 9.97 9.42 8.89 8.26 7.08 289
 
Weighted average common shares outstanding, basic 122,300 122,341 122,924 125,100 127,227 (3.9 )%
Weighted average common shares outstanding, diluted 123,059 123,187 123,604 125,699 127,857 (3.8 )
 
nm - not meaningful
bps - basis points
* - ratios are annualized
 
           
Synovus
       
BALANCE SHEET DATA March 31, 2017 December 31, 2016 March 31, 2016
(Unaudited)
 
(In thousands, except share data)
 
ASSETS
Cash and cash equivalents $ 380,493 395,175 352,060
Interest bearing funds with Federal Reserve Bank 622,460 527,090 908,527
Interest earning deposits with banks 24,259 18,720 21,686

Federal funds sold and securities purchased under resale agreements

50,003 58,060 76,300
Trading account assets, at fair value 1,778 9,314 4,801
Mortgage loans held for sale, at fair value 57,686 51,545 62,867
Investment securities available for sale, at fair value 3,782,942 3,718,195 3,582,244
 
Loans, net of deferred fees and costs 24,258,468 23,856,391 22,758,203
Allowance for loan losses   (253,514 ) (251,758 ) (254,516 )
Loans, net   24,004,954   23,604,633   22,503,687  
 
Premises and equipment, net 412,725 417,485 439,122
Goodwill 57,010 59,678 24,431
Other intangible assets 12,137 13,223 277
Other real estate 20,425 22,308 38,462
Deferred tax asset, net 359,121 395,356 464,242
Other assets   893,596   813,220   692,551  
 
Total assets $ 30,679,589   30,104,002   29,171,257  
 

LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities:
Deposits:
Non-interest bearing deposits $ 7,264,856 7,085,804 6,896,547
Interest bearing deposits, excluding brokered deposits 16,452,703 16,183,273 15,348,863
Brokered deposits   1,388,153   1,378,983   1,204,518  
 
Total deposits 25,105,712 24,648,060 23,449,928
 

Federal funds purchased and securities sold under repurchase agreements

146,480

159,699 203,979
Long-term debt 2,160,867 2,160,881 2,360,865
Other liabilities   304,403   207,438   203,217  
 
Total liabilities   27,717,462   27,176,078   26,217,989  
 
 

Shareholders’ equity:

Series C Preferred Stock - no par value, 5,200,000 shares outstanding at March 31, 2017, December 31, 2016, and March 31, 2016

125,980

125,980 125,980
 

Common stock - $1.00 par value. 122,321,804 shares outstanding at March 31, 2017, 122,266,106 shares outstanding at December 31, 2016, and 125,849,939 shares outstanding at March 31, 2016

142,441

142,026 140,794
Additional paid-in capital 3,025,775 3,028,405 2,989,854

Treasury stock, at cost - 20,119,614 shares at March 31, 2017, 19,759,614 shares at December 31, 2016, and 14,943,977 shares at March 31, 2016

(679,746

)

(664,595 ) (512,496 )
 
Accumulated other comprehensive loss (54,751 ) (55,659 ) (740 )
Retained earnings   402,428   351,767   209,876  

Total shareholders’ equity

  2,962,127   2,927,924   2,953,268  
 

Total liabilities and shareholders’ equity

$ 30,679,589   30,104,002   29,171,257  
 
                   

Synovus

 
AVERAGE BALANCES AND YIELDS/RATES (1)
(Unaudited)
(Dollars in thousands)

 

 

2017

   

2016

First Fourth Third Second First
Quarter     Quarter     Quarter     Quarter     Quarter
Interest Earning Assets
Taxable investment securities (2) $ 3,841,556 3,643,510 3,544,933 3,529,030 3,537,131
Yield 2.06 % 1.92 1.83 1.89 1.91
 
Tax-exempt investment securities (2) (4) $ 2,730 2,824 2,943 3,491 4,091
Yield (taxable equivalent) 5.81 % 5.82 5.96 6.08 6.37
 
Trading account assets $ 6,443 6,799 5,493 3,803 5,216
Yield 1.72 % 2.63 0.93 1.27 1.65
 
Commercial loans (3) (4) $ 19,043,384 18,812,659 18,419,484 18,433,638 18,253,169
Yield 4.16 % 4.05 4.03 4.04 4.03
 
Consumer loans (3) $ 4,992,682 4,911,149 4,720,082 4,497,147 4,334,817
Yield 4.40 % 4.27 4.30 4.32 4.37
 
Allowance for loan losses $ (253,927 )     (253,713 )     (255,675 )     (251,101 )     (258,097 )
 
Loans, net (3) $ 23,782,139 23,470,095 22,883,891 22,679,684 22,329,889
Yield 4.25 % 4.14 4.14 4.15 4.15
 
Mortgage loans held for sale $ 46,554 77,652 87,524 72,477 63,339
Yield 4.01 % 3.51 3.32 3.59 3.72
 

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

$ 654,322 982,355 998,565 907,614 885,938
Yield 0.77 % 0.49 0.48 0.47 0.47
 
Federal Home Loan Bank and Federal Reserve Bank stock (5) $ 170,844 121,079 70,570 77,571 80,679
Yield 3.42 % 3.75 4.99 5.15 3.82
                           
Total interest earning assets $ 28,504,589 28,304,314 27,593,919 27,273,670 26,906,283
Yield   3.88 %     3.73       3.71       3.73       3.73  
 
Interest Bearing Liabilities
Interest bearing demand deposits $ 4,784,329 4,488,135 4,274,117 4,233,310 4,198,738
Rate 0.19 % 0.16 0.16 0.18 0.17
 
Money market accounts $ 7,424,627 7,359,067 7,227,030 7,082,759 7,095,778
Rate 0.31 % 0.29 0.29 0.31 0.32
 
Savings deposits $ 909,660 908,725 797,961 746,225 722,172
Rate 0.11 % 0.12 0.07 0.06 0.07
 
Time deposits under $100,000 $ 1,215,593 1,229,809 1,248,294 1,262,280 1,279,811
Rate 0.64 % 0.64 0.64 0.64 0.65
 
Time deposits over $100,000 $ 2,029,713 2,014,564 2,030,242 2,016,116 2,006,302
Rate 0.92 % 0.90 0.88 0.89 0.89
 
Non maturing brokered deposits $ 619,627 638,779 634,596 451,398 315,006
Rate 0.41 % 0.31 0.29 0.39 0.48
 
Brokered time deposits $ 761,159 742,153 775,143 885,603 780,233
Rate   0.92 %     0.90       0.88       0.85       0.83  
 
Total interest bearing deposits $ 17,744,708 17,381,232 16,987,383 16,677,691 16,398,040
Rate 0.39 % 0.37 0.37 0.39 0.39
 

Federal funds purchased and securities sold under repurchase agreements

$ 176,854 219,429 247,378 221,276 177,921
Rate 0.09 % 0.08 0.09 0.09 0.10
 
Long-term debt $ 2,184,072 2,190,716 2,114,193 2,279,043 2,361,973
Rate 2.83 % 2.65 2.71 2.55 2.55
                           
Total interest bearing liabilities $ 20,105,634 19,791,377 19,348,954 19,178,010 18,937,934
Rate   0.65 %     0.62       0.63       0.65       0.66  
 
Non-interest bearing demand deposits $ 7,174,146 7,280,033 7,042,908 6,930,336 6,812,223
 
Effective cost of funds 0.46 % 0.44 0.44 0.46 0.46
                           
Net interest margin   3.42 %     3.29       3.27       3.27       3.27  
 
Taxable equivalent adjustment $ 309 322 330 329 305
 
(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 consolidated balance sheet
 
                   

Synovus

 
NON-PERFORMING LOANS COMPOSITION
(Unaudited)
(Dollars in thousands)
             
Total Total Total
Non-performing Non-performing 1Q17 vs. 4Q16 Non-performing 1Q17 vs. 1Q16
Loan Type Loans Loans

% change (1)

Loans % change
  March 31, 2017 December 31, 2016     March 31, 2016    
 
 
Multi-Family $ 1,556 1,853 (65.0 )% $ 223 nm
Hotels 323 335 (14.5 ) 369 (12.5 )%
Office Buildings 185 1,380 (351.2 ) 2,590 (92.9 )
Shopping Centers - 354 (405.6 ) - nm
Warehouses 226 592 (250.7 ) 1,150 (80.3 )
Other Investment Property   750   754   (2.2 )   11,498   (93.5 )

 

 

Total Investment Properties 3,040 5,268 (171.5 ) 15,830 (80.8 )
 
 
1-4 Family Construction 306 305 1.3 430 (28.8 )
1-4 Family Investment Mortgage   8,497   8,809   (14.4 )   7,255   17.1  
 
Total 1-4 Family Properties 8,803 9,114 (13.8 ) 7,685 14.5
 
Commercial Development 205 168 89.3 7,919 (97.4 )
Residential Development 9,033 8,994 1.8 9,673 (6.6 )
Land Acquisition   5,114   7,071   (112.2 )   14,416   (64.5 )
 
Land and Development   14,352   16,233   (47.0 )   32,008   (55.2 )
 
Total Commercial Real Estate 26,195 30,615 (58.6 ) 55,523 (52.8 )
             
 
Commercial, Financial, and Agricultural 60,381 59,074 9.0 63,312 (4.6 )
Owner-Occupied   26,564   16,503   247.2     18,582   43.0  

 

Total Commercial & Industrial   86,945   75,577   61.0     81,894   6.2  
 
Home Equity Lines 22,918 21,551 25.7 16,432 39.5
Consumer Mortgages 19,874 22,681 (50.2 ) 21,756 (8.7 )
Credit Cards - - nm - nm
Other Consumer Loans   2,434   2,954   (71.4 )   2,562   (5.0 )

 

Total Consumer   45,226   47,186   (16.8 )   40,750   11.0  
 
Total $ 158,366   153,378   13.2 % $ 178,167   (11.1 )%
 
(1) Percentage change is annualized.
 
                                   
 
LOANS OUTSTANDING BY TYPE COMPARISON
(Unaudited)
(Dollars in thousands)
Total Loans Total Loans 1Q17 vs. 4Q16 Total Loans 1Q17 vs. 1Q16
Loan Type March 31, 2017 December 31, 2016 % change (1) March 31, 2016 % change
               
 
Multi-Family $ 1,638,250 1,568,234 18.1 % $ 1,524,850 7.4 %
Hotels 794,685 748,951 24.8 718,640 10.6
Office Buildings 1,581,460 1,568,328 3.4 1,557,608 1.5
Shopping Centers 902,954 964,325 (25.8 ) 963,520 (6.3 )
Warehouses 504,619 486,300 15.3 568,662 (11.3 )
Other Investment Property   594,084   533,123   46.4     561,614   5.8  
Total Investment Properties 6,016,052 5,869,261 10.1 5,894,894 2.1
 
1-4 Family Construction 203,151 190,477 27.0 211,312 (3.9 )
1-4 Family Investment Mortgage   658,120   696,830   (22.5 )   787,354   (16.4 )
Total 1-4 Family Properties 861,271 887,307 (11.9 ) 998,666 (13.8 )
 
Commercial Development 58,537 63,358 (30.9 ) 88,251 (33.7 )
Residential Development 130,653 136,514 (17.4 ) 161,942 (19.3 )
Land Acquisition   392,710   409,534   (16.7 )   469,882   (16.4 )
Land and Development   581,900   609,406   (18.3 )   720,075   (19.2 )
 
Total Commercial Real Estate   7,459,223   7,365,974   5.1     7,613,635   (2.0 )
 
 
Commercial, Financial, and Agricultural 7,056,032 6,915,927 8.2 6,537,253 7.9
Owner-Occupied   4,684,734   4,636,016   4.3     4,272,219   9.7  
Total Commercial & Industrial   11,740,766   11,551,943   6.6     10,809,472   8.6  
 
Home Equity Lines 1,587,102 1,617,265 (7.6 ) 1,669,406 (4.9 )
Consumer Mortgages 2,350,730 2,296,604 9.6 1,970,193 19.3
Credit Cards 224,349 232,413 (14.1 ) 232,554 (3.5 )
Other Consumer Loans   922,018   818,183   51.5     492,274   87.3  
Total Consumer   5,084,199   4,964,465   9.8     4,364,427   16.5  
Unearned Income   (25,720 ) (25,991 ) (4.2 )   (29,331 ) (12.3 )
 
Total $ 24,258,468   23,856,391   6.8 % $ 22,758,203   6.6 %
 
 
(1) Percentage change is annualized.
 
                       
Synovus
 
CREDIT QUALITY DATA
(Unaudited)
(Dollars in thousands)

 

 

 

2017

2016

1st Quarter

First Fourth Third Second First '17 vs. '16
Quarter Quarter Quarter Quarter Quarter Change
 
Non-performing Loans $ 158,366 153,378 148,155 154,072 178,167 (11.1 )%
Impaired Loans Held for Sale (1) 8,442 - 2,473 - - nm
Other Real Estate   20,425   22,308 28,438 33,289 38,462 (46.9 )
Non-performing Assets 187,233 175,686 179,066 187,361 216,629 (13.6 )
 
Allowance for loan losses 253,514 251,758 253,817 255,076 254,516 (0.4 )
 
Net Charge-Offs - Quarter 6,919 8,319 6,930 6,133 7,357 (6.0 )
Net Charge-Offs / Average Loans - Quarter (2) 0.12 % 0.14 0.12 0.11 0.13
 
Non-performing Loans / Loans 0.65 0.64 0.64 0.67 0.78
Non-performing Assets / Loans, Other Loans Held for Sale & ORE 0.77 0.74 0.77 0.81 0.95
Allowance / Loans 1.05 1.06 1.09 1.11 1.12
 
Allowance / Non-performing Loans 160.08 164.14 171.32 165.56 142.85
Allowance / Non-performing Loans (3) 204.94 202.01 198.94 195.25 173.64
 
Past Due Loans over 90 days and Still Accruing $ 2,777 3,135 5,358 5,964 3,214 (13.6 )
As a Percentage of Loans Outstanding 0.01 % 0.01 0.02 0.03 0.01
 
Total Past Due Loans and Still Accruing $ 62,137 65,106 61,781 55,716 63,852 (2.7 )
As a Percentage of Loans Outstanding 0.26 % 0.27 0.27 0.24 0.28
 
Accruing Troubled Debt Restructurings (TDRs) $ 172,421 195,776 201,896 205,165 209,159 (17.6 )
 

(1) Represent only impaired loans that have been specifically identified to be sold. Impaired loans held for sale are carried at the lower of cost or fair value, less costs to sell, based primarily on estimated sales proceeds net of selling costs.

(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)      

March 31,
2017

December 31,
2016

March 31,
2016

 
 
Tier 1 Capital $ 2,758,795 2,685,880 2,609,191
Total Risk-Based Capital 3,274,612 3,201,268 3,183,901
Common Equity Tier 1 Ratio (transitional) 9.86 % 9.96 10.04
Common Equity Tier 1 Ratio (fully phased-in) 9.63 9.51 9.47
Tier 1 Capital Ratio 10.18 10.07 10.04
Total Risk-Based Capital Ratio 12.09 12.01 12.25
Tier 1 Leverage Ratio 9.13 8.99 9.15
Common Equity as a Percentage of Total Assets (2) 9.24 9.31 9.69
Tangible Common Equity as a Percentage of Tangible Assets (3) 9.04 9.09 9.62
Tangible Common Equity as a Percentage of Risk Weighted Assets (3) 10.21 10.24 10.79
Book Value Per Common Share (4) $ 23.19 22.92 22.47
Tangible Book Value Per Common Share (3) 22.62 22.32 22.27
 
(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.

 

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Synovus Financial Corp.
Media Contact:
Lee Underwood, 706-644-0528
Media Relations
or
Investor Contact:
Bob May, 706-649-3555
Investor Relations

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