Synovus Announces Earnings for the Fourth Quarter

Diluted Earnings per Share Increased 21.9% in 2015

COLUMBUS, Ga.--()--Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter ended December 31, 2015.

“Our team is excited about 2016 as we seek new ways to better serve our customers and prospects in this dynamic and highly-competitive environment. Our relationship-based approach, combined with our strategic initiatives and investments, creates an effective formula for driving continued growth, achieving greater efficiencies, and improving financial performance.”

Net income available to common shareholders for the fourth quarter of 2015 was $55.8 million or $0.43 per diluted share as compared to $55.4 million or $0.42 per diluted share for the third quarter of 2015 and $50.6 million or $0.37 per diluted share for the fourth quarter of 2014. Adjusted earnings per diluted share for the fourth quarter of 2015 were $0.44, a 4.2% increase from the third quarter of 2015 and a 13.5% increase from the fourth quarter of 2014.

2015 Highlights

  • Net income available to common shareholders for 2015 was $215.8 million or $1.62 per diluted share as compared to $185.0 million or $1.33 per diluted share for 2014. Diluted EPS grew 21.9% for 2015 compared to 2014.
  • Total loans ended the year at $22.43 billion, a $1.33 billion or 6.3% increase from 2014.
  • Average core deposits for the year were $21.13 billion, a $1.60 billion or 8.2% increase from 2014.
  • Non-performing assets of $215.4 million at December 31, 2015 declined 24.9% from December 31, 2014, and the non-performing asset ratio declined 39 basis points from December 31, 2014 to 0.96% at December 31, 2015.
  • The net-charge off ratio for 2015 was 0.13%, down 26 basis points from 2014.
  • We returned over $250 million in capital to common shareholders through common stock share repurchases and dividends.
    • Common Equity Tier 1 ratio was 10.37% at December 31, 2015 compared to 10.74% at December 31, 2014.

“We finished 2015 with strong performance in the fourth quarter, closing out another year of double digit growth in net income and balanced loan growth supported by strong core deposits,” said Kessel D. Stelling, Synovus Chairman and CEO. “Our team is excited about 2016 as we seek new ways to better serve our customers and prospects in this dynamic and highly-competitive environment. Our relationship-based approach, combined with our strategic initiatives and investments, creates an effective formula for driving continued growth, achieving greater efficiencies, and improving financial performance.”

Fourth Quarter 2015 Highlights

Balance Sheet

  • Total loans ended the quarter at $22.43 billion, up $565.3 million or 10.3% annualized from the previous quarter.
    • Commercial and industrial loans grew by $248.3 million or 9.3% annualized.
    • Commercial real estate loans grew by $185.2 million or 10.2% annualized.
    • Retail loans grew by $133.5 million or 12.7% annualized.
  • Total average deposits for the quarter were $23.24 billion, up $384.2 million or 6.7% annualized from the previous quarter.
  • Average core deposits grew $556.3 million or 10.3% annualized from the previous quarter.
  • Average core deposits, excluding state, county, and municipal deposits, grew by $377.8 million or 7.7% annualized compared to the previous quarter.

Income Statement

Adjusted pre-tax, pre-credit costs income was $105.3 million for the fourth quarter of 2015, an increase of $533 thousand from $104.7 million for the third quarter of 2015.

  • Net interest income was $212.6 million for the fourth quarter of 2015, up $4.8 million from $207.8 million in the previous quarter.
  • The net interest margin increased four basis points to 3.18% compared to 3.14% in the third quarter of 2015. The yield on earning assets was 3.63%, up three basis points from the third quarter of 2015, and the effective cost of funds was 0.45%, down one basis point from the third quarter of 2015.
  • Total non-interest income was $66.2 million, down $884 thousand or 1.3% compared to $67.1 million for the third quarter of 2015.
    • Core banking fees[1] were $33.6 million, down $271 thousand or 0.8% from the third quarter of 2015.
    • Financial Management Services revenues, consisting primarily of fiduciary and asset management fees and brokerage revenue, were $19.8 million, unchanged from the third quarter of 2015.
    • Mortgage banking income decreased $1.8 million or 30.7% compared to the third quarter of 2015, due to a decrease in production volume of 34.1%.
  • Total non-interest expense for the fourth quarter of 2015 was $183.0 million, up $5.1 million or 2.9% from the previous quarter and down $1.8 million or 1.0% as compared to the fourth quarter of 2014.
  • Adjusted non-interest expense for the fourth quarter of 2015 was $173.5 million, up $3.4 million or 2.0% from the previous quarter and up $1.1 million or 0.6% as compared to the fourth quarter of 2014.
    • Employment expense of $95.5 million increased $1.2 million or 1.3% from the previous quarter.
    • Occupancy and equipment expense increased $879 thousand or 3.3% from the prior quarter, driven by a $1.2 million charge related to lease exit costs.
    • Other expenses increased $1.3 million or 2.6% sequentially, driven by a $2.2 million increase in consulting fees.

Credit Quality

Broad-based improvement in credit quality continued.

  • Total credit costs were $11.9 million in the fourth quarter of 2015 compared to $10.3 million in the third quarter of 2015.
  • Total non-performing assets were $215.4 million at December 31, 2015, a $6.6 million or 3.0% decline from the previous quarter, and a $71.4 million or 24.9% decline from the fourth quarter of 2014. The non-performing asset ratio was 0.96% at December 31, 2015, compared to 1.01% at the end of the previous quarter and 1.35% at December 31, 2014.
  • Non-performing loans, excluding loans held for sale, were $168.4 million at December 31, 2015, an increase of $10.7 million or 6.8% from the previous quarter, and a decrease of $29.4 million or 14.9% from the fourth quarter of 2014. The non-performing loan ratio was 0.75% at December 31, 2015, compared to 0.72% at the end of the previous quarter and 0.94% at December 31, 2014.
  • Total delinquencies (consisting of loans 30 or more days past due and still accruing) were 0.21% at December 31, 2015 compared to 0.18% at September 30, 2015 and 0.24% at December 31, 2014. Total loans past due 90 days or more and still accruing were 0.01% at December, 31, 2015, unchanged from September 30, 2015 and down from 0.02% at December 31, 2014.
  • Net charge-offs were $3.4 million in the fourth quarter of 2015, a decrease of $3.3 million from $6.8 million in the third quarter of 2015. The annualized net charge-off ratio was 0.06% in the fourth quarter compared to 0.12% in the previous quarter.

Capital Ratios

Capital ratios remained strong and include the impact of common stock repurchases totaling $37.1 million, the issuance of $250 million in subordinated debt with a ten year maturity, and the repurchase of $46.7 million of the outstanding subordinated notes that mature in 2017.

  • Common Equity Tier 1 ratio was 10.37% at December 31, 2015 compared to 10.60% at September 30, 2015.
  • Tier 1 Capital ratio was 10.37% at December 31, 2015 compared to 10.60% at September 30, 2015.
  • Total Risk Based Capital ratio was 12.70% at December 31, 2015 compared to 12.02% at September 30, 2015.
  • Tier 1 Leverage ratio was 9.43% at December 31, 2015 compared to 9.45% at September 30, 2015.
  • Tangible Common Equity ratio was 9.90% at December 31, 2015 compared to 10.18% at September 30, 2015.

Fourth Quarter Earnings Conference Call

Synovus will host an earnings highlights conference call at 8:30 a.m. Eastern on January 19, 2016. 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 $29 billion in assets. Synovus provides commercial and retail banking, investment, and mortgage services to customers through 28 locally-branded divisions, 257 branches, and 336 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 2015. Synovus is on the web at synovus.com, on Twitter @synovus, and on LinkedIn at http://linkedin.com/company/synovus.

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 deposit growth, loan growth and the net interest margin; expectations on our growth strategy, expense initiatives, and future profitability; expectations on credit trends and key credit metrics; expectations regarding our capital management plan; 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, 2014 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 state, county, and municipal deposits; estimated Common Equity Tier 1 (CET1) ratio under Basel III (as of December 31, 2014); Tangible Common Equity ratio; adjusted earnings per diluted share; adjusted pre-tax, pre-credit costs 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; total shareholders’ equity to total assets ratio; net income per common share, diluted; income before income taxes; 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 for total average deposits; total shareholders’ equity to total assets ratio; net income per common share, diluted; income before income taxes; 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 state, county, and municipal deposits; estimated Common Equity Tier 1 (CET1) ratio under Basel III (as of December 31, 2014); Tangible Common Equity ratio; adjusted earnings per diluted share; adjusted pre-tax, pre-credit costs income; and adjusted non-interest expense; and the reconciliation of these measures to total average deposits; total shareholders’ equity to total assets ratio; net income per common share, diluted; income before income taxes; and total non-interest expense are set forth in the tables below.

                     
Reconciliation of Non-GAAP Financial Measures
(dollars in thousands) 4Q15     3Q15     4Q14     YTD 2015     YTD 2014
 
Average core deposits

Average core deposits excluding state, county, and municipal deposits

 
Average total deposits $ 23,244,256 22,860,019 21,336,007 22,551,679 20,967,488
Subtract: Average brokered deposits   (1,185,093 ) (1,357,163 ) (1,602,354 ) (1,421,949 )   (1,434,422 )
Average core deposits   22,059,163   21,502,856   19,733,653   21,129,730     19,533,066  

Subtract: Average state, county, and municipal deposits

  (2,303,278 ) (2,124,812 ) (2,184,757 ) (2,232,438 )   (2,215,170 )

Average core deposits excluding state, county, and municipal deposits

$ 19,755,885     19,378,044   17,548,896   18,897,292     17,317,896  
 
4Q15     3Q15     2Q15     1Q15     4Q14
Tangible Common Equity ratio
Total assets $ 28,792,653 28,167,135 28,205,078 27,632,890 27,050,237
Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net   (471 ) (667 ) (863 ) (1,061 )   (1,265 )
Tangible assets   28,767,751   28,142,037   28,179,784   27,607,398     27,024,541  
 
Total shareholders’ equity 3,000,196 3,017,116 3,006,157 3,030,635 3,041,270

Subtract: Goodwill

(24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )

Subtract: Other intangible assets, net

(471 ) (667 ) (863 ) (1,061 ) (1,265 )

Subtract: Series C Preferred Stock, no par value

  (125,980 ) (125,980 ) (125,980 ) (125,980 )   (125,980 )
Tangible common equity $ 2,849,314   2,866,038   2,854,883   2,879,163     2,889,594  

Total shareholders’ equity to total assets ratio

10.42 % 10.71 % 10.66 10.97 11.24
Tangible Common Equity ratio 9.90 % 10.18 % 10.13 10.43 10.69
 

Estimated Common Equity Tier 1 (CET1) ratio under Basel III (as of December 31, 2014)

Tier 1 common equity (Basel I) $ 2,407,645
Add: Adjustment to capital components   157,765  

Estimated common equity Tier 1 (CET1) under Basel III

2,565,410
Estimated risk-weighted assets under Basel III $ 23,891,728
Estimated Common Equity Tier 1 (CET1) ratio under Basel III 10.74 %
 
 
Reconciliation of Non-GAAP Financial Measures, continued      
 
(dollars in thousands) 4Q15     3Q15     2Q15     1Q15     4Q14
               
Adjusted net income per common share, diluted
Net income available to common shareholders $ 55,839 55,369 53,233 51,404 50,612
Add: Litigation settlement expenses (after-tax) 434 - 2,688 - 283
Add: Restructuring charges (after-tax) 42 42 3 (65 ) 2,129
Add: Loss on extinguishment of debt (after-tax) 937 - - - -
Add: Visa indemnification charges (after-tax)   227   222   216   229   189  

Adjusted net income available to common shareholders

$ 57,479 55,633 56,140 51,568 53,213

Weighted average common shares outstanding - diluted

131,197 132,297 133,625 135,744 137,831
Adjusted net income per common share, diluted $ 0.44   0.42   0.42   0.38   0.39  
 
Adjusted Pre-tax, Pre-credit Costs Income
Income before income taxes $ 90,741 93,986 88,034 85,812 78,928
Add: Provision for losses on loans 5,021 2,956 6,636 4,397 8,193
Add: Other credit costs(1) 6,864 7,344 6,175 11,273 8,213
Add: Restructuring charges 69 69 5 (107 ) 3,484
Add: Litigation contingency/settlement expenses 710 - 4,400 - 463
Add: Loss on extinguishment of debt 1,533 - - - -
Add: Visa indemnification charges 371 363 354 375 310
Subtract: Investment securities gains, net   (58 ) -   (1,985 ) (725 ) -  
Pre-tax, pre-credit costs income $ 105,251   104,718   103,619   101,025   99,591  
 
Adjusted Non-interest Expense
Total non-interest expense $ 183,033 177,907 177,806 178,908 184,883
Subtract: Other credit costs(1) (6,864 ) (7,344 ) (6,175 ) (11,273 ) (8,213 )
Subtract: Restructuring charges (69 ) (69 ) (5 ) 107 (3,484 )
Subtract: Visa indemnification charges (371 ) (363 ) (354 ) (375 ) (310 )
Subtract: Loss on extinguishment of debt (1,533 ) - - - -

Subtract: Litigation contingency/settlement expenses

  (710 ) -   (4,400 ) -   (463 )
Adjusted non-interest expense $ 173,486   170,131   166,872   167,367   172,413  
                                 
(1) Other credit costs consist primarily of foreclosed real estate expense, net.
 

Synovus

 
INCOME STATEMENT DATA       Twelve Months Ended
(Unaudited)
(Dollars in thousands, except per share data) December 31,
 
2015   2014     Change
 
 
Interest income $ 945,962 928,692

1.9

%

Interest expense 118,644 109,408 8.4  
 
 
Net interest income 827,318 819,284 1.0
Provision for loan losses 19,010 33,831 (43.8 )
 
 
Net interest income after provision for loan losses 808,308 785,453 2.9  
 
 
Non-interest income:
Service charges on deposit accounts 80,142 78,897 1.6
Fiduciary and asset management fees 45,928 45,226 1.6
Brokerage revenue 27,855 27,088 2.8
Mortgage banking income 24,096 18,354 31.3
Bankcard fees 33,172 32,931 0.7
Investment securities gains, net 2,769 1,331 108.0
Other fee income 21,170 19,130 10.7
Gain on sale of Memphis branches, net (1) - 5,789 nm
Other non-interest income 32,788 33,358 (1.7 )
 
 
Total non-interest income 267,920 262,104 2.2  
 
 
Non-interest expense:
Salaries and other personnel expense 380,918 371,904 2.4
Net occupancy and equipment expense 107,466 105,806 1.6
Third-party processing expense 42,851 40,042 7.0
FDIC insurance and other regulatory fees 27,091 33,485 (19.1 )
Professional fees 26,646 26,440 0.8
Advertising expense 15,477 24,037 (35.6 )
Foreclosed real estate expense, net 22,803 25,321 (9.9 )
Visa indemnification charges 1,464 3,041 (51.9 )
Loss on extinguishment of debt 1,533 - nm
Litigation contingency/settlement expenses 5,110 12,812 (60.1 )
Restructuring charges, net 36 20,585 (99.8 )
Other operating expenses 86,260 81,525 5.8  
 
 
Total non-interest expense 717,655 744,998 (3.7 )
 
 
Income before income taxes 358,573 302,559 18.5
Income tax expense 132,491 107,310 23.5  
 
Net income 226,082 195,249 15.8
 
Dividends on preferred stock 10,238 10,238 -  
 
 
Net income available to common shareholders $ 215,844 185,011

16.7

%

 
 
Net income per common share, basic $ 1.63 1.34

22.0

%

 
Net income per common share, diluted 1.62 1.33 21.9
 
Cash dividends declared per common share 0.42 0.31 35.5
 
Return on average assets 0.80 % 0.74

6 bps

Return on average common equity 7.46 6.38 108
 
 
Weighted average common shares outstanding, basic 132,423 138,495

(4.4

)%

Weighted average common shares outstanding, diluted 133,201 139,154 (4.3 )
 

nm - not meaningful

bps - basis points

 

(1) Consists of gain, net of associated costs, from the 1Q14 sale of certain loans, premises, deposits, and other assets and liabilities of the Memphis, Tennessee branches of Trust One Bank, a division of Synovus Bank.

 
 
Synovus
 
INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share data)       2015     2014     4th Quarter
Fourth   Third     Second     First     Fourth     '15 vs. '14
Quarter     Quarter     Quarter     Quarter     Quarter     Change
 
Interest income $ 242,814 238,093 233,654 231,401 234,703

3.5

%

Interest expense 30,194 30,303 30,010 28,138   27,248 10.8  
 
 
Net interest income 212,620 207,790 203,644 203,263 207,455 2.5
Provision for loan losses 5,021 2,956 6,636 4,397   8,193 (38.7 )
 
 
Net interest income after provision for loan losses 207,599 204,834 197,008 198,866   199,262 4.2  
 
 
Non-interest income:
Service charges on deposit accounts 20,522 20,692 19,795 19,133 20,287 1.2
Fiduciary and asset management fees 11,206 11,308 11,843 11,571 11,690 (4.1 )
Brokerage revenue 6,877 6,946 6,782 7,251 6,887 (0.1 )
Mortgage banking income 4,136 5,965 7,511 6,484 4,895 (15.5 )
Bankcard fees 8,262 8,334 8,499 8,077 8,536 (3.2 )
Investment securities gains, net 58 - 1,985 725 - nm
Other fee income 5,798 5,521 4,605 5,246 4,635 25.1
Other non-interest income 9,316 8,293 7,812 7,367   7,619 22.3  
 
 
Total non-interest income 66,175 67,059 68,832 65,854   64,549 2.5  
 
Non-interest expense:
Salaries and other personnel expense 95,524 94,341 94,565 96,488 92,049 3.8
Net occupancy and equipment expense 27,816 26,937 26,541 26,172 26,370 5.5
Third-party processing expense 10,993 10,844 10,672 10,343 10,437 5.3
FDIC insurance and other regulatory fees 6,776 6,591 6,767 6,957 8,115 (16.5 )
Professional fees 8,265 6,371 6,417 5,594 8,013 3.1
Advertising expense 3,680 5,488 2,865 3,443 8,102 (54.6 )
Foreclosed real estate expense, net 4,454 4,503 4,351 9,496 6,502 (31.5 )
Visa indemnification charges 371 363 354 375 310 19.7
Loss on extinguishment of debt 1,533 - - - - nm
Litigation contingency/settlement expenses 710 - 4,400 - 463 53.3
Restructuring charges, net 69 69 5 (107 ) 3,484 (98.0 )
Other operating expenses 22,842 22,400 20,869 20,147   21,038 8.6  
 
Total non-interest expense 183,033 177,907 177,806 178,908   184,883 (1.0 )
 
 
 
Income before income taxes 90,741 93,986 88,034 85,812 78,928 15.0
Income tax expense 32,343 36,058 32,242 31,849   25,757 25.6  
 
 
Net income 58,398 57,928 55,792 53,963 53,171 9.8
 
Dividends on preferred stock 2,559 2,559 2,559 2,559   2,559 -  
 
Net income available to common shareholders $ 55,839 55,369 53,233 51,404   50,612

10.3

%

 
Net income per common share, basic $ 0.43 0.42 0.40 0.38 0.37

16.0

%

 
Net income per common share, diluted 0.43 0.42 0.40 0.38 0.37 15.9
 
Cash dividends declared per common share 0.12 0.10 0.10 0.10 0.10 20.0
 
Return on average assets * 0.81 % 0.81 0.80 0.80 0.79

2 bps

Return on average common equity * 7.67 7.64 7.39 7.16 6.89 78
 
Weighted average common shares outstanding, basic 130,354 131,516 132,947 134,933 137,031

(4.9

)%

Weighted average common shares outstanding, diluted 131,197 132,297 133,625 135,744 137,831 (4.8 )
 
nm - not meaningful
bps - basis points
* - ratios are annualized
 
             
Synovus
     
BALANCE SHEET DATA December 31, 2015 September 30, 2015 December 31, 2014
(Unaudited)
 
(In thousands, except share data)
 
ASSETS
Cash and cash equivalents

$

367,092

329,396 485,489
Interest bearing funds with Federal Reserve Bank 829,887 837,641 721,362
Interest earning deposits with banks 17,387 21,170 11,810

Federal funds sold and securities purchased under resale agreements

69,819

69,732 73,111
Trading account assets, at fair value 5,097 5,844 13,863
Mortgage loans held for sale, at fair value 59,275 73,623 63,328
Investment securities available for sale, at fair value 3,587,818 3,487,332 3,041,406
 
Loans, net of deferred fees and costs 22,429,565 21,864,309 21,097,699
Allowance for loan losses   (252,496 ) (250,900 ) (261,317 )
Loans, net   22,177,069   21,613,409   20,836,382  
 
Premises and equipment, net 445,155 449,078 455,235
Goodwill 24,431 24,431 24,431
Other real estate 47,030 64,346 85,472
Deferred tax asset, net 511,948 526,492 622,464
Other assets   650,645   664,641   615,884  
 
Total assets

$

28,792,653

  28,167,135   27,050,237  
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing deposits

$

6,732,970

6,570,227 6,228,472
Interest bearing deposits, excluding brokered deposits 15,434,171 14,961,388 13,660,830
Brokered deposits   1,075,520   1,245,798   1,642,398  
 
Total deposits 23,242,661 22,777,413 21,531,700
 
Federal funds purchased and securities sold under repurchase agreements 177,025 135,475 126,916
Long-term debt 2,186,893 2,038,028 2,139,325
Other liabilities   185,878   199,103   211,026  
 
Total liabilities   25,792,457   25,150,019   24,008,967  
 
 
 
Shareholders' equity:
Series C Preferred Stock - no par value, 5,200,000 shares outstanding at December 31, 2015, September 30, 2015, and December 31, 2014 125,980 125,980 125,980
Common stock - $1.00 par value. 129,547,032 shares outstanding at December 31, 2015, 130,632,731 shares outstanding at September 30, 2015, and 136,122,843 shares outstanding at December 31, 2014 140,592 140,526 139,950
Additional paid-in capital 2,989,981 2,986,333 2,960,825
Treasury stock, at cost - 11,045,377 shares at December 31, 2015, 9,892,877 shares at September 30, 2015, and 3,827,579 shares at December 31, 2014 (401,511 ) (364,428 ) (187,774 )
Accumulated other comprehensive loss, net (29,819 ) (6,092 ) (12,605 )
Retained earnings   174,973   134,797   14,894  
Total shareholders' equity   3,000,196   3,017,116   3,041,270  
 
Total liabilities and shareholders' equity

$

28,792,653

  28,167,135   27,050,237  
 
 
Synovus
 
AVERAGE BALANCES AND YIELDS/RATES (1)
(Unaudited)
(Dollars in thousands)
      2015     2014
Fourth     Third     Second     First     Fourth
Quarter       Quarter     Quarter     Quarter     Quarter
 
Interest Earning Assets
Taxable investment securities (2) $ 3,481,184 3,380,543 3,165,513 2,998,597 3,027,769
Yield 1.85 % 1.76 1.79 1.85 1.85
 
Tax-exempt investment securities (2) (4) $ 4,352 4,509 4,595 4,967 5,030
Yield (taxable equivalent) 6.16 % 6.21 6.15 6.21 6.19
 
Trading account assets $ 8,067 7,278 12,564 14,188 12,879
Yield 2.24 % 1.84 3.72 3.02 3.08
 
Commercial loans (3) (4) $ 17,884,661 17,522,735 17,297,130 17,176,641 16,956,294
Yield 3.97 % 3.99 4.01 4.06 4.09
 
Consumer loans (3) $ 4,233,061 4,105,639 3,986,151 3,929,188 3,895,397
Yield 4.27 % 4.31 4.37 4.45 4.42
 
Allowance for loan losses $ (252,049 )       (256,102 )     (254,177 )     (257,167 )     (268,659 )
 
Loans, net (3) $ 21,865,673 21,372,272 21,029,104 20,848,662 20,583,032
Yield 4.08 % 4.10 4.14 4.19 4.22
 
Mortgage loans held for sale $ 50,668 69,438 90,419 64,507 60,892
Yield 3.84 % 3.82 3.39 3.92 3.84
 

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

$ 1,081,604 1,380,686 1,590,114 1,123,250 898,871
Yield 0.27 % 0.24 0.24 0.24 0.23
 
Federal Home Loan Bank and Federal Reserve Bank stock (5) $ 66,790 71,852 76,091 80,813 75,547
Yield 5.08 % 4.71 4.57 3.90 4.53
                                     
Total interest earning assets $ 26,558,338 26,286,578 25,968,400 25,134,984 24,664,020
Yield         3.63       % 3.60       3.61       3.73       3.78  
 
Interest Bearing Liabilities
 
Interest bearing demand deposits $ 4,117,116 3,955,803 3,919,401 3,800,476 3,781,389
Rate 0.17 % 0.18 0.18 0.19 0.19
 
Money market accounts $ 7,062,517 6,893,563 6,466,610 6,210,704 6,009,897
Rate 0.35 % 0.36 0.35 0.32 0.29
 
Savings deposits $ 692,536 685,813 675,260 649,597 638,813
Rate 0.06 % 0.06 0.06 0.05 0.07
 
Time deposits under $100,000 $ 1,307,601 1,338,994 1,351,299 1,324,513 1,315,905
Rate 0.65 % 0.66 0.68 0.61 0.57
 
Time deposits over $100,000 $ 2,033,193 2,086,851 2,061,434 1,926,380 1,877,602
Rate 0.88 % 0.88 0.88 0.80 0.76
 
Brokered money market accounts $ 297,925 221,817 185,909 181,754 191,103
Rate 0.31 % 0.31 0.31 0.30 0.28
 
Brokered time deposits $ 887,168 1,135,346 1,370,022 1,413,068 1,411,252
Rate 0.76       % 0.71       0.67       0.63       0.58  
 
Total interest bearing deposits $ 16,398,056 16,318,187 16,029,935 15,506,492 15,225,961
Rate 0.40 % 0.42 0.42 0.39 0.36
 

Federal funds purchased and securities sold under repurchase agreements

$ 158,810 207,894 232,531 222,658 186,993
Rate 0.08 % 0.09 0.08 0.08 0.07
 
Long-term debt $ 2,007,924 2,073,185 2,173,595 2,207,215 2,084,636
Rate 2.63 % 2.46 2.39 2.41 2.55
                                     
Total interest bearing liabilities $ 18,564,790 18,599,266 18,436,061 17,936,365 17,497,590
Rate         0.65       % 0.65       0.65       0.63       0.62  
 
Non-interest bearing demand deposits $ 6,846,200 6,541,832 6,436,167 6,108,558 6,110,047
 
Effective cost of funds 0.45 % 0.46 0.46 0.45 0.44
                                     
Net interest margin         3.18       % 3.14       3.15       3.28       3.34  
 
Taxable equivalent adjustment $ 311 315 330 349 372
 
(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

 
 
LOANS OUTSTANDING AND NON-PERFORMING LOANS COMPOSITION
(Unaudited)
(Dollars in thousands)
 
 
     

December 31, 2015

           
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

$

1,391,453

6.2

%

$

223

$

0.1

%

Hotels 703,825 3.1 381 0.2
Office Buildings 1,495,247 6.7 1,170 0.7
Shopping Centers 956,394 4.3 907 0.5
Commercial Development 92,809 0.4 8,941 5.3
Warehouses 563,217 2.5 208 0.1
Other Investment Property   548,686   2.4     11,210   6.7  
 
Total Investment Properties 5,751,631 25.6 23,040 13.7
 
 
1-4 Family Construction 168,243 0.8 - 0.0
1-4 Family Investment Mortgage 786,797 3.5 7,708 4.6
Residential Development   154,814   0.7     9,130   5.4  
 
Total 1-4 Family Properties 1,109,854 4.9 16,838 10.0
 
 
Land Acquisition   513,981   2.2     17,768   10.6  
 
Total Commercial Real Estate   7,375,466   32.9     57,646   34.3  
 

Commercial, Financial, and Agricultural

6,472,482 28.8 49,137 29.1
Owner-Occupied   4,318,950   19.3     20,294   12.1  
 
Total Commercial & Industrial   10,791,432   48.1     69,431   41.2  
 
Home Equity Lines 1,689,914 7.5 16,480 9.8
Consumer Mortgages 1,938,683 8.6 22,248 13.2
Credit Cards 240,851 1.2 - -
Other Retail Loans   423,318   1.9     2,565   1.5  
 
Total Retail   4,292,766   19.1     41,293   24.5  
 
Unearned Income   (30,099 ) (0.1 )   - nm
 
Total

$

22,429,565

 

100.0

%

$

168,370

 

100.0

%

 
LOANS OUTSTANDING BY TYPE COMPARISON
(Unaudited)
(Dollars in thousands)
                               
Total Loans 4Q15 vs. 3Q15 4Q15 vs. 4Q14
Loan Type December 31, 2015     September 30, 2015     % change (1)     December 31, 2014     % change
 
 
Multi-Family

$

1,391,453

1,345,688

13.5

%

$

1,205,095

15.5

%

Hotels 703,825 684,106 11.4 697,987 0.8
Office Buildings 1,495,247 1,388,965 30.4 1,196,537 25.0
Shopping Centers 956,394 944,690 4.9 881,821 8.5
Commercial Development 92,809 101,946 (35.6 ) 121,990 (23.9 )
Warehouses 563,217 545,346 13.0 559,320 0.7
Other Investment Property   548,686   546,835   1.3     543,925   0.9  
 
Total Investment Properties 5,751,631 5,557,576 13.9 5,206,675 10.5
 
 
1-4 Family Construction 168,243 159,237 22.4 143,619 17.1
1-4 Family Investment Mortgage 786,797 777,196 4.9 813,047 (3.2 )
Residential Development   154,814   158,120   (8.3 )   177,217   (12.6 )
 
Total 1-4 Family Properties 1,109,854 1,094,553 5.5 1,133,883 (2.1 )
 
Land Acquisition   513,981   538,127   (17.8 )   586,045   (12.3 )
 
Total Commercial Real Estate   7,375,466   7,190,256   10.2     6,926,603   6.5  
 
Commercial, Financial, and Agricultural 6,472,482 6,277,768 12.3 6,182,311 4.7
Owner-Occupied   4,318,950   4,265,409   5.0     4,085,407   5.7  
 
Total Commercial & Industrial   10,791,432   10,543,177   9.3     10,267,718   5.1  
 
Home Equity Lines 1,689,914 1,684,046 1.4 1,683,998 0.4
Consumer Mortgages 1,938,683 1,888,456 10.6 1,694,061 14.4
Credit Cards 240,851 241,315 (0.8 ) 253,649 (5.0 )
Other Retail Loans   423,318   345,426   89.5     302,460   40.0  
 
Total Retail   4,292,766   4,159,243   12.7         3,934,168   9.1  
 
Unearned Income   (30,099 ) (28,367 ) 24.2     (30,790 ) (2.2 )
 
Total

$

22,429,565

  21,864,309  

10.3

%

$

21,097,699

 

6.3

%

 

(1) Percentage change is annualized.

 
Synovus                          
 
CREDIT QUALITY DATA
(Unaudited)
(Dollars in thousands) 2015     2014 4th Quarter
Fourth Third Second First Fourth '15 vs. '14
Quarter     Quarter     Quarter     Quarter     Quarter Change
 
Non-performing Loans

$

168,370

157,640 173,638 194,232 197,757

(14.9

)%

Other Loans Held for Sale (1) - - - 1,082 3,606 (100.0 )
Other Real Estate   47,030   64,346 66,449 74,791 85,472 (45.0 )
Non-performing Assets 215,400 221,986 240,087 270,105 286,835 (24.9 )
 
Allowance for loan losses 252,496 250,900 254,702 253,371 261,317 (3.4 )
 
Net Charge-Offs - Quarter 3,425 6,758 5,306 12,343 16,253 (78.9 )
Net Charge-Offs - YTD 27,831 24,407 17,649 12,343 79,055 (64.8 )
Net Charge-Offs / Average Loans - Quarter (2)

0.06

%

0.12 0.10 0.23 0.31
Net Charge-Offs / Average Loans - YTD (2) 0.13 0.15 0.17 0.23 0.39
 
Non-performing Loans / Loans 0.75 0.72 0.81 0.92 0.94
Non-performing Assets / Loans, Other Loans Held for Sale & ORE 0.96 1.01 1.11 1.28 1.35
Allowance / Loans 1.13 1.15 1.18 1.20 1.24
 
Allowance / Non-performing Loans 149.96 159.16 146.69 130.45 132.14
Allowance / Non-performing Loans (3) 189.47 205.90 202.08 197.55 197.22
 

Past Due Loans over 90 days and Still Accruing

$

2,621

2,998 4,832 5,025 4,637

(43.5

)%

As a Percentage of Loans Outstanding

0.01

%

0.01 0.02 0.02 0.02
 
Total Past Due Loans and Still Accruing

$

47,912

39,350 50,860 57,443 51,251 (6.5 )
As a Percentage of Loans Outstanding

0.21

%

0.18 0.24 0.27 0.24
 
Accruing Troubled Debt Restructurings (TDRs)

$

223,873

240,370 268,542 313,362 348,427 (35.7 )
 
(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)      

December 31, 2015

September 30, 2015 December 31, 2014
 
Capital Rules in effect: Basel III Basel III Basel I
 
Tier 1 Capital

$

2,660,015

2,637,462 2,543,625
Total Risk-Based Capital 3,255,757 2,990,099 2,987,406
Common Equity Tier 1 Ratio (transitional)

10.37

%

10.60 na
Common Equity Tier 1 Ratio (fully phased-in) 9.77 9.98 na
Tier 1 Common Equity Ratio na na 10.28
Tier 1 Capital Ratio 10.37 10.60 10.86
Total Risk-Based Capital Ratio 12.70 12.02 12.75
Tier 1 Leverage Ratio 9.43 9.45 9.67
Common Equity as a Percentage of Total Assets (2) 9.98 10.26 10.78

Tangible Common Equity as a Percentage of Tangible Assets (3)

9.90 10.18 10.69

Tangible Common Equity as a Percentage of Risk Weighted Assets (3)

11.11 11.54 12.33
Book Value Per Common Share (4) 22.19 22.13 21.42
Tangible Book Value Per Common Share (3) 21.99 21.94 21.23
 
 

(1) Current quarter regulatory capital information is preliminary. 2015 regulatory capital ratios determined under Basel III capital rules. 2014 ratios were determined under Basel I capital rules.

(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.
 

[1] 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.

Contacts

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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