Synovus Announces Earnings for the First Quarter 2018

Diluted Earnings per Share of $0.84, up 49.7% vs. $0.56 in 1Q17

COLUMBUS, Ga.--()--Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter ended March 31, 2018.

“2018 is off to a good start, with 12 percent growth in revenues and a 50 percent increase in earnings per share year-over-year”

First Quarter Highlights

  • Net income available to common shareholders for the first quarter 2018 was $100.6 million or $0.84 per diluted share as compared to $27.0 million or $0.23 per diluted share for the fourth quarter 2017 and $69.3 million or $0.56 per diluted share for the first quarter 2017. The fourth quarter 2017 results included a $23.2 million loss on early extinguishment of debt and a $47.2 million charge related to Federal tax reform.
    • Adjusted earnings per diluted share for the first quarter 2018 were $0.86, a 19.8% increase from the fourth quarter 2017 and a 50.9% increase from the first quarter 2017.
  • As a result of Federal tax reform and other one-time and seasonal items, the effective tax rate for the first quarter was 22.6% compared to 32.0% in the first quarter 2017.
  • Return on average assets for the first quarter 2018 was 1.34%, compared to 0.37% the previous quarter and 0.96% in the first quarter 2017.
    • Adjusted return on average assets was 1.36%, up 24 basis points from the previous quarter and up 39 basis points from the first quarter 2017.
  • Return on average common equity was 14.62%, an increase of 465 basis points from the first quarter 2017.
    • Adjusted return on average common equity was 14.86%, an improvement of 480 basis points from the first quarter 2017.
    • Adjusted return on average tangible common equity was 15.23%, an increase of 490 basis points from the first quarter 2017.
  • Total average loans grew $240.8 million or 4.0% annualized from the previous quarter and $816.4 million or 3.4% as compared to the first quarter 2017.
  • Total average deposits decreased $497.9 million or 7.7% annualized from fourth quarter 2017 and increased $869.2 million or 3.5% as compared to the first quarter 2017.
  • Total ending deposits increased $105.6 million or 1.6% from fourth quarter 2017 and increased $1.15 billion or 4.6% as compared to the first quarter 2017.
  • Total revenues1 were $341.3 million, up $37.2 million or 12.2% from the first quarter 2017.
  • Net interest margin was 3.78%, up 13 basis points from the previous quarter and up 36 basis points from the first quarter 2017.
  • Efficiency ratio was 57.16%, compared to 66.77% the previous quarter and 64.84% in the first quarter 2017.
    • Adjusted efficiency ratio was 57.42%, an improvement of 483 basis points from the first quarter 2017.
  • Credit quality metrics remained favorable, with a net charge-off ratio of 7 basis points, down 8 basis points from the previous quarter and down 5 basis points from first quarter 2017. The non-performing asset ratio was 0.53%, unchanged from the previous quarter and down 24 basis points from first quarter 2017.

“2018 is off to a good start, with 12 percent growth in revenues and a 50 percent increase in earnings per share year-over-year,” said Kessel D. Stelling, Synovus chairman and CEO. “We delivered another quarter of strong operating leverage through disciplined execution of our growth strategies, including talent acquisition and expansion of our presence in high-potential markets. As we approach completion of the transition to a unified Synovus brand, we are already seeing the benefits of greater name recognition across our footprint. Our team is deeply committed to building on our reputation, improving the customer experience, and executing on core growth strategies to meet and exceed long-term targets."

Balance Sheet

  • Total average loans for the quarter were $24.85 billion, up $240.8 million or 4.0% annualized from the previous quarter and up $816.4 million or 3.4% as compared to the first quarter 2017.
  • Total loans ended the quarter at $24.88 billion, up $95.6 million or 1.6% annualized from the previous quarter and up $624.6 million or 2.6% as compared to the first quarter 2017.
    • Commercial and industrial loans grew by $78.3 million or 2.6% annualized from the previous quarter and $369.2 million or 3.1% as compared to the first quarter 2017.
    • Consumer loans grew by $115.5 million or 8.0% annualized from the previous quarter and $885.2 million or 17.4% as compared to the first quarter 2017.
    • Commercial real estate loans declined by $99.6 million or 5.8% annualized from the previous quarter and declined $631.6 million or 8.5% as compared to first quarter 2017.
  • Total average deposits for the quarter were $25.79 billion, down $497.9 million or 7.7% annualized from the previous quarter and up $869.2 million or 3.5% as compared to the first quarter 2017.
    • Average non-time core deposits decreased $120.4 million or 2.3% annualized from the previous quarter and increased $504.1 million or 2.5% as compared to the first quarter 2017.
  • Total deposits ended the quarter at $26.25 billion, up $105.6 million or 1.6% annualized from fourth quarter 2017 and up $1.15 billion or 4.6% as compared to the first quarter 2017.
  • The loan to deposit ratio remained stable at 95%.

Core Performance

  • Total revenues1 were $341.3 million in the first quarter, up from $339.1 million in the previous quarter, and up $37.2 million or 12.2% from $304.1 million in the first quarter 2017.
  • Net interest income was $274.3 million, up $4.6 million or 1.7% from the previous quarter and up $34.4 million or 14.3% from the first quarter 2017.
  • Net interest margin was 3.78%, up 13 basis points from the previous quarter. Yield on earning assets was 4.31%, up 16 basis points from the previous quarter, and the effective cost of funds was 0.53%, up 3 basis points from the previous quarter.
  • Total non-interest income was $67.0 million, down $2.3 million from the previous quarter and down $4.8 million or 6.7% from first quarter 2017.
    • The first quarters of 2018 and 2017 include net decreases in fair value of private equity investments of $3.1 million and $1.8 million, respectively. First quarter 2017 also included net investment securities gains of $7.7 million.
  • Adjusted non-interest income was $70.1 million, up $849 thousand from the previous quarter and up $4.1 million or 6.2% as compared to the first quarter 2017.
    • Core banking fees2 were $35.6 million, up $303 thousand or 0.9% from the previous quarter and up $900 thousand or 2.6% from first quarter 2017.
    • Fiduciary and asset management fees, brokerage revenue, and insurance revenues were $23.3 million, up $1.6 million or 7.2% from the previous quarter and up $2.7 million or 12.9% from first quarter 2017.
  • Total non-interest expense was $195.2 million, down $31.4 million or 13.8% from the previous quarter and down 1.1% from the first quarter 2017.
    • The first quarter 2018 includes a $2.6 million reduction in litigation contingency accruals. The fourth quarter 2017 included a $23.2 million loss on early extinguishment of debt, and the first quarter 2017 included $6.5 million in restructuring charges.
  • Adjusted non-interest expense was $197.8 million, down $3.3 million or 1.6% from the previous quarter and up $7.2 million or 3.8% from the first quarter 2017.
    • Employment expense of $113.7 million increased $2.5 million or 2.2% from the previous quarter and 6.1% from the first quarter 2017.
    • Occupancy and equipment expense of $31.5 million increased $1.4 million or 4.5% from the previous quarter and 7.3% from the first quarter 2018.
    • Other expenses were $52.6 million in the quarter, down $7.1 million or 11.9% from the previous quarter and down $1.5 million or 2.7% from the first quarter 2017.
    • Efficiency ratio for the first quarter was 57.16% as compared to 66.77% in the previous quarter and 64.84% in the first quarter 2017.
      • Adjusted efficiency ratio for the first quarter was 57.42% as compared to 59.29% in the previous quarter and 62.25% in the first quarter 2017.

Credit Quality

  • Non-performing loans were $120.1 million at March 31, 2018, up $4.5 million or 3.9% from the previous quarter and down $38.3 million or 24.2% from March 31, 2017. The non-performing loan ratio was 0.48% at March 31, 2018, compared to 0.47% at the end of the previous quarter and 0.65% at March 31, 2017.
  • Total non-performing assets were $131.2 million at March 31, 2018, compared to $130.6 million in the previous quarter and down $56.1 million or 29.9% from March 31, 2017. The non-performing asset ratio was 0.53% at March 31, 2018, unchanged from the previous quarter and down from 0.77% at March 31, 2017.
  • Net charge-offs were $4.3 million in the first quarter 2017, down $4.7 million or 52.3% from $9.0 million in the previous quarter and down 38.1% from the first quarter 2017. The annualized net charge-off ratio was 0.07% in the first quarter as compared to 0.15% in the previous quarter and 0.12% in the first quarter 2017.
  • Total delinquencies (consisting of loans 30 or more days past due and still accruing) remain low at 0.22% of total loans at March 31, 2018, as compared to 0.21% in the previous quarter and 0.26% at March 31, 2017.

Capital

  • During the first quarter 2018, Synovus repurchased $26.7 million in common stock, as part of the previously announced share repurchase program of up to $150 million. Additionally, Synovus declared common dividends of $0.25 per share, a 67% increase from the previous quarter.
  • Common Equity Tier 1 ratio was 10.11% at March 31, 2018, up from 9.99% at December 31, 2017.
  • Tier 1 Capital ratio was 10.51% at March 31, 2018, up from 10.38% at December 31, 2017.
  • Total Risk Based Capital ratio was 12.37% at March 31, 2018, up from 12.23% at December 31, 2017.
  • Tier 1 Leverage ratio was 9.37% at March 31, 2018, up from 9.19% at December 31, 2017.
  • Tangible Common Equity ratio was 8.79% at March 31, 2018, compared to 8.88% at December 31, 2017.

First Quarter Earnings Conference Call

Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on April 24, 2018. 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. is a financial services company based in Columbus, Georgia, with more than $31 billion in assets. Synovus provides commercial and retail banking, investment, and mortgage services through 250 branches in Georgia, Alabama, South Carolina, Florida, and Tennessee. Synovus Bank, a wholly owned subsidiary of Synovus, was recognized as the “Most Reputable Bank” by American Banker and the Reputation Institute in 2017. Synovus is on the web at synovus.com, and on Twitter, Facebook, LinkedIn, and Instagram.

1 Total revenues consist of net interest income and non-interest income excluding investment securities gains/(losses).
2 Core banking fees include service charges on deposit accounts, card 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; 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, 2017, 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.

Non-GAAP Financial Measures

The measures entitled adjusted non-interest income; adjusted non-interest expense; adjusted efficiency ratio; adjusted earnings per diluted share; adjusted return on average assets; adjusted return on average common equity; adjusted return on average tangible common equity; average non-time core deposits; tangible common equity ratio; and common equity Tier 1 (CET1) ratio (fully phased-in); are not measures recognized under GAAP and therefore are considered non-GAAP financial measures. The most comparable GAAP measures to these measures are total non-interest income; total non-interest expense; efficiency ratio; earnings per diluted common share; return on average assets; return on average common equity; total average deposits; the ratio of total shareholders' equity to total assets; and the CET1 ratio; respectively.

Management believes that these non-GAAP financial measures provide meaningful additional information about Synovus to assist management and investors in evaluating Synovus’ operating results, financial strength, the performance of its business, and the strength of its capital position. However, these non-GAAP financial 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. The 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. Adjusted non-interest income is a measure used by management to evaluate total revenue and 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. Adjusted earnings per diluted share, adjusted return on average assets, and adjusted return on average common equity are measurements used by management to evaluate operating results exclusive of items that are not indicative of ongoing operations and impact period-to-period comparisons. Average non-time core deposits is a measure used by management to evaluate organic growth of deposits and the quality of deposits as a funding source. The adjusted 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 common equity Tier 1 (CET1) ratio (fully phased-in) are used by management and bank regulators to assess the strength of our capital position. The computations of these measures are set forth in the tables below.

     
Reconciliation of Non-GAAP Financial Measures

(dollars in thousands)

1Q18

4Q17

1Q17

 

Adjusted non-interest income

Total non-interest income $ 67,046 $ 69,352 $ 71,839
Subtract: Investment securities gains, net - - (7,668 )
Add/subtract: Decrease/(increase) in fair value of private equity investments, net   3,056     (100 )   1,814  
 
Adjusted non-interest income $ 70,102   $ 69,252   $ 65,985  
 
Adjusted non-interest expense
Total non-interest expense $ 195,179 $ 226,534 $ 197,388
Subtract: Earnout liability adjustments - (1,700 ) -
Add/subtract: Restructuring charges, net 315 29 (6,511 )
Subtract: Loss on early extinguishment of debt - (23,160 ) -
Add/subtract: Litigation contingency expense 2,626 (300 ) -
Subtract: Merger-related expense - - (86 )
Subtract: Amortization of intangibles   (292 )   (292 )   (183 )
Adjusted non-interest expense $ 197,828   $ 201,111   $ 190,608  
 

Adjusted efficiency ratio

Adjusted non-interest expense $ 197,828 $ 201,111 $ 190,608
Net interest income 274,284 269,713 239,927
Add: Tax equivalent adjustment 116 234 309
Add: Total non-interest income 67,046 69,352 71,839
Subtract: Investment securities gains, net   -     -     (7,668 )
Total FTE revenues 341,446 339,299 304,407
Add/subtract: Decrease/(increase) in fair value of private equity investments, net   3,056     (100 )   1,814  
Adjusted total revenues $ 344,502 $ 339,199 $ 306,221
Efficiency ratio 57.16 % 66.77 % 64.84 %
Adjusted efficiency ratio   57.42 %   59.29 %   62.25 %
 
     

Reconciliation of Non-GAAP Financial Measures, continued

(in thousands, except per share data)

1Q18

4Q17

1Q17

 
Adjusted earnings per diluted share
Net income available to common shareholders $ 100,607 $ 27,046 $ 69,298
Add: Earnout liability adjustments - 1,700 -
Add: Income tax expense related to effects of Federal Tax Reform - 47,181 -
Add: Income tax expense related to effects of State DTA remeasurement 1,325 - -
Add: Merger-related expense - - 86
Subtract/add: Litigation contingency expense (2,626 ) 300 -
Subtract/add: Restructuring charges, net (315 ) (29 ) 6,511
Add: Amortization of intangibles 292 292 183
Add: Loss on early extinguishment of debt - 23,160 -
Subtract: Investment securities gains, net - - (7,668 )
Add/subtract: Decrease/(increase) in fair value of private equity investments, net 3,056 (100 ) 1,814
Subtract: Income tax benefit related to pre-2017 R&D credits and state taxes - (4,847 ) -
Subtract: Tax effect of adjustments   (96 )   (8,740 )   (333 )
Adjusted net income available to common shareholders $ 102,243 $ 85,963 $ 69,891
Weighted average common shares outstanding, diluted 119,321 120,182 123,059
 
Adjusted earnings per diluted share $ 0.86   $ 0.72   $ 0.57  
 
     

Reconciliation of Non-GAAP Financial Measures, continued

(dollars in thousands)

1Q18

4Q17

1Q17

 
Adjusted return on average assets
Net income $ 103,166 $ 29,605 $ 71,857
Add: Earnout liability adjustments - 1,700 -
Add: Income tax expense related to effects of Federal Tax Reform - 47,181 -
Add: Income tax expense related to effects of State DTA remeasurement 1,325 - -
Add: Merger-related expense - - 86
Subtract/add: Litigation contingency expense (2,626 ) 300 -
Subtract/add: Restructuring charges, net (315 ) (29 ) 6,511
Add: Amortization of intangibles 292 292 183
Add: Loss on early extinguishment of debt - 23,160 -
Subtract: Investment securities gains, net - - (7,668 )
Add/subtract: Decrease/(increase) in fair value of private equity investments, net 3,056 (100 ) 1,814
Subtract: Income tax benefit related to pre-2017 R&D credits and state taxes - (4,847 ) -
Subtract: Tax effect of adjustments   (96 )   (8,740 )   (333 )
Adjusted net income $ 104,802 $ 88,522 $ 72,450
Net income annualized $ 425,030 $ 351,201 $ 293,825
 
Total average assets $ 31,245,708 $ 31,388,724 $ 30,442,089
Adjusted return on average assets   1.36 %   1.12 %   0.97 %
 
     
Reconciliation of Non-GAAP Financial Measures, continued

(dollars in thousands)

1Q18

4Q17

1Q17

 
Adjusted return on average common equity and adjusted return on average tangible common equity
Net income available to common shareholders $ 100,607 $ 27,046 $ 69,298
Add: Earnout liability adjustments - 1,700 -
Add: Income tax expense related to effects of Federal Tax Reform - 47,181 -
Add: Income tax expense related to effects of State DTA remeasurement 1,325 - -
Add: Merger-related expense - - 86
Subtract/add: Litigation contingency expense (2,626 ) 300 -
Subtract/add: Restructuring charges, net (315 ) (29 ) 6,511
Add: Amortization of intangibles 292 292 183
Add: Loss on early extinguishment of debt - 23,160 -
Subtract: Investment securities gains, net - - (7,668 )
Add/subtract: Decrease/(increase) in fair value of private equity investments, net 3,056 (100 ) 1,814
Subtract: Income tax benefit related to pre-2017 R&D credits and state taxes - (4,847 ) -
Subtract: Tax effect of adjustments   (96 )   (8,740 )   (333 )
Adjusted net income available to common shareholders $ 102,243 $ 85,963 $ 69,891
 
Net income annualized $ 414,652 $ 341,049 $ 283,447
Total average shareholders’ equity less preferred stock $ 2,790,878 $ 2,851,523 $ 2,817,663

 

Subtract: Goodwill

(57,315 ) (57,315 ) (59,649 )

Subtract: Other intangibles assets, net

  (10,915 )   (11,353 )   (13,177 )

Total average tangible shareholders’ equity less preferred stock

$ 2,722,648 $ 2,782,855 $ 2,744,837
Adjusted return on average common equity   14.86 %   11.96 %   10.06 %
Adjusted return on average tangible common equity   15.23 %   12.26 %   10.33 %
 
     
Reconciliation of Non-GAAP Financial Measures, continued

(dollars in thousands)

1Q18

4Q17

1Q17

 

Tangible common equity ratio

Total assets $ 31,501,028 $ 31,221,837 $ 30,679,589
Subtract: Goodwill (57,315 ) (57,315 ) (57,010 )
Subtract: Other intangible assets, net   (10,750 )   (11,254 )   (12,137 )
Tangible assets $ 31,432,963   $ 31,153,268   $ 30,610,442  
 
Total shareholders’ equity $ 2,956,495 $ 2,961,566 $ 2,962,127
Subtract: Goodwill (57,315 ) (57,315 ) (57,010 )
Subtract: Other intangible assets, net (10,750 ) (11,254 ) (12,137 )
Subtract: Series C Preferred Stock   (125,980 )   (125,980 )   (125,980 )
Tangible common equity $ 2,762,450   $ 2,767,017   $ 2,767,000  
Total shareholders’ equity to total assets ratio 9.39 % 9.49 % 9.66 %
Tangible common equity ratio 8.79 % 8.88 % 9.04 %
 
 

Average non-time core deposits

Total average deposits $ 25,788,073 $ 26,286,009 $ 24,918,855
Subtract: Average brokered deposits (1,951,910 ) (2,198,333 ) (1,380,787 )
Subtract: Average non-brokered time deposits   (3,039,325 )   (3,170,444 )   (3,245,306 )
Average non-time core deposits $ 20,796,838   $ 20,917,232   $ 20,292,762  
 
 
Common equity Tier 1 (CET1) ratio (fully phased-in)
 
Common Equity Tier 1 (CET1) $ 2,814,669
Subtract: Adjustment related to capital components   (16,365 )
CET1 (fully phased-in) $ 2,798,304  
Total risk-weighted assets $ 27,831,733
Total risk-weighted assets (fully phased-in) $ 27,957,172
Common equity Tier 1 (CET 1) ratio 10.11 %
Common Equity Tier 1 (CET1) ratio (fully phased-in) 10.01 %
 
 
 
Synovus
 
INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share data)     2018   2017   First Quarter  
First   Fourth   Third   Second   First   '18 vs. '17
Quarter   Quarter   Quarter   Quarter   Quarter   Change  
 
Interest income $ 313,134 306,934 297,652 285,510 272,401 15.0 %
Interest expense 38,850   37,221   35,080   34,413   32,474   19.6  
 
 
Net interest income 274,284 269,713 262,572 251,097 239,927 14.3
Provision for loan losses 12,776   8,565   39,686   10,260   8,674   47.3  
 
 
Net interest income after provision for loan losses 261,508   261,148   222,886   240,837     231,253   13.1  
 
 
Non-interest income:
Service charges on deposit accounts 19,940 20,372 20,678 20,252 20,118 (0.9 )
Fiduciary and asset management fees 13,435 13,195 12,615 12,524 12,151 10.6
Card fees (1) 10,199 9,762 9,729 10,041 9,844 3.6
Brokerage revenue 8,695 7,758 7,511 7,210 7,226 20.3
Mortgage banking income 5,047 5,645 5,603 5,784 5,766 (12.5 )
Income from bank-owned life insurance 3,681 3,900 3,232 3,272 3,031 21.4
Cabela's transaction fee - - 75,000 - - nm
Investment securities (losses) gains, net - - (7,956 ) (1 ) 7,668 nm
(Decrease)/increase in fair value of private equity investments, net (3,056 ) 100 (27 ) (1,352 ) (1,814 ) nm
Other fee income 4,618 4,042 5,094 6,164 4,868 (5.1 )
Other non-interest income (1) 4,487   4,578   3,956   4,807   2,981   50.5  
 
 
Total non-interest income 67,046   69,352   135,435   68,701     71,839   (6.7 )
 
 
 
Non-interest expense:
Salaries and other personnel expense 113,720 111,243 109,675 105,213 107,191 6.1
Net occupancy and equipment expense 31,480 30,126 30,573 29,933 29,331 7.3
Third-party processing expense 13,945 14,827 13,659 13,620 12,603 10.6
FDIC insurance and other regulatory fees 6,793 6,288 7,078 6,875 6,770 0.3
Professional fees 5,505 6,183 7,141 7,551 5,355 2.8
Advertising expense 5,092 8,081 3,610 5,346 5,912 (13.9 )
Foreclosed real estate expense, net 856 1,693 7,265 1,448 2,134 (59.9 )
Earnout liability adjustments - 1,700 2,059 1,707 - nm
Amortization of intangibles 292 292 292 292 183 59.6
Loss on early extinguishment of debt - 23,160 - - - nm
Litigation contingency expense (2,626 ) 300 401 - - nm
Restructuring charges, net (315 ) (29 ) 519 13 6,511 nm
Other operating expenses 20,437   22,670   23,374   19,749   21,398   (4.5 )
 
Total non-interest expense 195,179   226,534   205,646   191,747     197,388   (1.1 )
 
 
 
Income before income taxes 133,375 103,966 152,675 117,791 105,704 26.2
Income tax expense 30,209   74,361   54,668   41,788   33,847   (10.7 )
 
 
Net income 103,166 29,605 98,007 76,003 71,857 43.6
 
Dividends on preferred stock 2,559   2,559   2,559   2,559   2,559   -  
 
Net income available to common shareholders $ 100,607   27,046   95,448   73,444   69,298   45.2 %
 
Net income per common share, basic $ 0.85 0.23 0.79 0.60 0.57 49.6 %
 
Net income per common share, diluted 0.84 0.23 0.78 0.60 0.56 49.7
 
Cash dividends declared per common share 0.25 0.15 0.15 0.15 0.15 66.7
 
Return on average assets * 1.34 % 0.37 1.27 1.00 0.96

38

bps

Return on average common equity * 14.62 3.76 13.24 10.34 9.97 465
 
Weighted average common shares outstanding, basic 118,666 119,282 120,900 122,203 122,300 (3.0 )%
Weighted average common shares outstanding, diluted 119,321 120,182 121,814 123,027 123,059 (3.0 )
 
nm - not meaningful
bps - basis points
* - ratios are annualized
 

(1) Beginning January 1, 2018, Synovus began including merchant fees and other card-related fees in Card fees. For periods prior to January 1, 2018, these amounts were previously presented in Other non-interest income and have been reclassified for comparability.

 
 
 
Synovus
               
BALANCE SHEET DATA March 31, 2018 December 31, 2017 March 31, 2017
(Unaudited)
 
(In thousands, except share data)
 
ASSETS
Cash and due from banks $ 348,027 397,848 380,493
Interest bearing funds with Federal Reserve Bank 636,947 460,928 622,460
Interest earning deposits with banks 16,851 26,311 24,259

Federal funds sold and securities purchased under resale agreements

57,192   47,846   50,003  
Cash and cash equivalents (1) 1,059,017 932,933 1,077,215
 
Mortgage loans held for sale, at fair value 50,439 48,024 57,686
Investment securities available for sale, at fair value 3,990,978 3,987,069 3,782,942
 
Loans, net of deferred fees and costs 24,883,037 24,787,464 24,258,468
Allowance for loan losses (257,764 ) (249,268 ) (253,514 )
Loans, net 24,625,273   24,538,196   24,004,954  
 
Cash surrender value of bank-owned life insurance 543,684 540,958 455,474
Premises and equipment, net 424,342 426,813 412,725
Goodwill 57,315 57,315 57,010
Other intangible assets 10,750 11,254 12,137
Deferred tax asset, net 179,343 165,788 359,121
Other assets 559,887   513,487   460,325  
 
Total assets $ 31,501,028   31,221,837   30,679,589  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing deposits $ 7,381,070 7,686,339 7,264,856
Interest bearing deposits, excluding brokered deposits 16,865,859 16,500,436 16,452,703
Brokered deposits 2,006,578   1,961,125   1,388,153  
 
Total deposits 26,253,507 26,147,900 25,105,712
 

Federal funds purchased and securities sold under repurchase agreements

185,531 161,190 146,480
Long-term debt 1,856,392 1,706,138 2,160,867
Other liabilities 249,103   245,043   304,403  
 
Total liabilities 28,544,533   28,260,271   27,717,462  
 
 
Shareholders' equity:
Series C Preferred Stock - no par value, 5,200,000 shares outstanding at March 31, 2018, December 31, 2017, and March 31, 2017 125,980 125,980 125,980
 
Common stock - $1.00 par value. 118,702,497 shares outstanding at March 31, 2018, 118,897,295 shares outstanding at December 31, 2017, and 122,321,804 shares outstanding at March 31, 2017 143,017 142,678 142,441
Additional paid-in capital 3,039,757 3,043,129 3,025,775
Treasury stock, at cost - 24,314,804 shares at March 31, 2018, 23,780,154 shares at December 31, 2017, and 20,119,614 shares at March 31, 2017 (866,407 ) (839,674 ) (679,746 )
 
Accumulated other comprehensive loss (107,952 ) (54,754 ) (54,751 )
Retained earnings 622,100   544,207   402,428  
Total shareholders' equity 2,956,495   2,961,566   2,962,127  
 
Total liabilities and shareholders' equity $ 31,501,028   31,221,837   30,679,589  
 
 

(1) In connection with the adoption of ASU 2016-18, Statement of Cash Flows-Restricted Cash, Synovus changed its presentation of cash and cash equivalents to include cash and due from banks as well as interest bearing funds with the Federal Reserve Bank, interest earning deposits with banks, and federal funds sold and securities purchased under resale agreements, which are inclusive of any restricted cash.

 
 
 
Synovus
               
AVERAGE BALANCES AND YIELDS/RATES (1)
(Unaudited)
(Dollars in thousands)
2018   2017
First Fourth Third Second First
Quarter   Quarter   Quarter   Quarter   Quarter
Interest Earning Assets
   
Taxable investment securities (2) $ 4,097,162 3,937,278 3,786,436 3,844,688 3,841,556
Yield 2.34 % 2.29 2.11 2.11 2.06
 
Tax-exempt investment securities (2) (4) $ 140 180 259 340 2,730
Yield (taxable equivalent) 6.57 % 7.97 7.86 6.87 5.81
 
Trading account assets (5) $ 8,167 7,360 7,823 3,667 6,443
Yield 2.66 % 2.78 2.09 2.28 1.72
 
Commercial loans (3) (4) $ 18,963,515 18,935,774 19,059,936 19,137,733 19,043,384
Yield 4.64 % 4.49 4.41 4.27 4.16
 
Consumer loans (3) $ 5,899,015 5,704,629 5,440,765 5,215,258 4,992,683
Yield 4.71 % 4.54 4.55 4.49 4.40
 
Allowance for loan losses $ (251,635 )   (252,319 )   (249,248 )   (251,219 )   (253,927 )
 
Loans, net (3) $ 24,610,895 24,388,084 24,251,453 24,101,772 23,782,140
Yield 4.70 % 4.55 4.49 4.36 4.25
 
Mortgage loans held for sale $ 38,360 45,353 52,177 52,224 46,554
Yield 3.95 % 3.96 3.88 3.87 4.01
 

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

$ 516,575 922,296 543,556 561,503 654,322
Yield 1.48 % 1.31 1.23 1.00 0.77
 
Federal Home Loan Bank and Federal Reserve Bank stock (5) $ 177,381 159,455 175,263 177,323 170,844
Yield 3.39 % 4.03 3.50 2.99 3.42
                           
Total interest earning assets $ 29,448,680 29,460,006 28,816,967 28,741,517 28,504,589
Yield 4.31 % 4.15 4.11 3.99 3.88
                           
 
Interest Bearing Liabilities
   
 
Interest bearing demand deposits $ 5,032,000 4,976,239 4,868,372 4,837,053 4,784,329
Rate 0.31 % 0.28 0.27 0.23 0.19
 
Money market accounts $ 7,561,554 7,514,992 7,528,036 7,427,562 7,424,627
Rate 0.43 % 0.36 0.34 0.32 0.31
 
Savings deposits $ 811,587 804,853 803,184 805,019 909,660
Rate 0.03 % 0.03 0.03 0.04 0.11
 
Time deposits under $100,000 $ 1,143,780 1,166,413 1,183,582 1,202,746 1,215,593
Rate 0.71 % 0.70 0.68 0.67 0.64
 
Time deposits over $100,000 $ 1,895,545 2,004,031 2,067,347 2,040,924 2,029,713
Rate 1.02 % 0.99 0.97 0.94 0.92
 
Non-maturing brokered deposits $ 424,118 546,413 547,466 564,043 619,627
Rate 1.14 % 0.81 0.73 0.54 0.41
 
Brokered time deposits $ 1,527,793 1,651,920 983,423 815,515 761,159
Rate 1.75 %   1.63     1.16     0.94     0.92  
 
Total interest bearing deposits $ 18,396,377 18,664,861 17,981,410 17,692,862 17,744,708
Rate 0.58 % 0.54 0.46 0.41 0.39
 

Federal funds purchased and securities sold under repurchase agreements

$ 202,226 184,369 191,585 183,400 176,854
Rate 0.21 % 0.15 0.08 0.10 0.09
 
Long-term debt $ 2,127,994 1,713,982 1,985,175 2,270,452 2,184,072
Rate 2.32 % 2.67 2.81 2.83 2.83
                           
 
Total interest bearing liabilities $ 20,726,597 20,563,212 20,158,170 20,146,714 20,105,634
Rate 0.76 % 0.72 0.69 0.68 0.65
                           
 
Non-interest bearing demand deposits $ 7,391,695 7,621,147 7,305,508 7,298,845 7,174,146
 
Effective cost of funds 0.53 % 0.50 0.48 0.48 0.46
                           
 
Net interest margin       3.78 %   3.65     3.63     3.51     3.42  
 
Taxable equivalent adjustment $ 116 234 283 298 309
 

(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 (21% in 2018 and 35% in 2017), 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 BY TYPE
(Unaudited)
(Dollars in thousands)
    Total Loans     Total Loans     1Q18 vs. 4Q17     Total Loans     1Q18 vs. 1Q17
Loan Type March 31, 2018 December 31, 2017 % change (1) March 31, 2017 % change
 
Commercial, Financial, and Agricultural $ 7,191,531 7,179,487 0.7 % $ 7,049,193 2.0 %
Owner-Occupied 4,910,386   4,844,163   5.5   4,683,508   4.8  
Total Commercial & Industrial 12,101,917 12,023,650 2.6 11,732,701 3.1
 
Multi-Family 1,479,573 1,492,159 (3.4 ) 1,638,250 (9.7 )
Hotels 751,232 741,703 5.2 794,685 (5.5 )
Office Buildings 1,464,473 1,499,834 (9.6 ) 1,552,817 (5.7 )
Shopping Centers 782,580 791,311 (4.5 ) 902,954 (13.3 )
Warehouses 583,645 581,410 1.6 533,262 9.4
Other Investment Property 557,547   563,648   (4.4 ) 594,084   (6.2 )
Total Investment Properties 5,619,050 5,670,065 (3.6 ) 6,016,052 (6.6 )
 
1-4 Family Construction 188,939 198,200 (18.9 ) 203,151 (7.0 )
1-4 Family Investment Mortgage 569,965   583,419   (9.4 ) 659,346   (13.6 )
Total 1-4 Family Properties 758,904 781,619 (11.8 ) 862,497 (12.0 )
 
Commercial Development 65,371 70,062 (27.2 ) 65,376 (0.0 )
Residential Development 104,137 114,079 (35.3 ) 130,653 (20.3 )
Land Acquisition 288,265   299,463   (15.2 ) 392,710   (26.6 )
Land and Development 457,773   483,604   (21.7 ) 588,739   (22.2 )
 
Total Commercial Real Estate 6,835,727   6,935,288   (5.8 ) 7,467,288   (8.5 )
 
 
Consumer Mortgages 2,663,371 2,633,503 4.6 2,350,730 13.3
Home Equity Lines 1,472,471 1,514,227 (11.2 ) 1,587,102 (7.2 )
Credit Cards 226,713 232,676 (10.4 ) 224,349 1.1
Other Consumer Loans 1,606,799   1,473,451   36.7   922,018   74.3  
Total Consumer 5,969,354   5,853,857   8.0   5,084,199   17.4  
Unearned Income (23,961 ) (25,331 ) (21.9 ) (25,720 ) (6.8 )
 
Total $ 24,883,037   24,787,464   1.6 % $ 24,258,468   2.6 %
 
 
(1) Percentage change is annualized.
 
   
 
NON-PERFORMING LOANS COMPOSITION
(Unaudited)
(Dollars in thousands)
         
Total Total Total
Non-performing Non-performing 1Q18 vs. 4Q17 Non-performing 1Q18 vs. 1Q17
Loan Type Loans Loans % change Loans % change
  March 31, 2018 December 31, 2017   March 31, 2017  
 
 
Commercial, Financial, and Agricultural $ 81,606 70,130 16.4 % $ 60,381 35.2 %
Owner-Occupied 4,067   6,654   (38.9 ) 26,564   (84.7 )
 
Total Commercial & Industrial 85,673 76,784 11.6 86,945 (1.5 )
 
Multi-Family 1,028 1,241 (17.2 ) 1,556 (33.9 )
Hotels - - - 323 nm
Office Buildings 1,272 1,532 (17.0 ) 185 nm
Shopping Centers 89 165 (46.1 ) - nm
Warehouses - 226 (100.0 ) 226 (100.0 )
Other Investment Property 540   640   (15.6 ) 750   (28.0 )
 
Total Investment Properties 2,929 3,804 (23.0 ) 3,040 (3.7 )
 
 
1-4 Family Construction - - - 306 nm
1-4 Family Investment Mortgage 2,634   2,849   (7.5 ) 8,497   (69.0 )
 
Total 1-4 Family Properties 2,634 2,849 (7.5 ) 8,803 (70.1 )
 
Commercial Development 44 45 (2.2 ) 205 (78.5 )
Residential Development 3,220 3,257 (1.1 ) 9,033 (64.4 )
Land Acquisition 1,311   2,495   (47.5 ) 5,114   (74.4 )
 
Land and Development 4,575   5,797   (21.1 ) 14,352   (68.1 )
 
Total Commercial Real Estate 10,138 12,450 (18.6 ) 26,195 (61.3 )
     
 
Consumer Mortgages 7,708 7,203 7.0 19,874 (61.2 )
Home Equity Lines 14,868 17,455 (14.8 ) 22,918 (35.1 )
Other Consumer Loans 1,694   1,669   1.5   2,434   (30.4 )
 
Total Consumer 24,270   26,327   (7.8 ) 45,226   (46.3 )
 
 
Total $ 120,081   115,561   3.9 % $ 158,366   (24.2 )%
 
 
 

Synovus

                         
CREDIT QUALITY DATA
(Unaudited)
(Dollars in thousands)

2018

2017

1st Quarter

First Fourth Third Second First '18 vs. '17
Quarter Quarter   Quarter   Quarter   Quarter Change
 
Non-performing Loans $ 120,081 115,561 97,838 159,317 158,366 (24.2 )%
Impaired Loans Held for Sale (1) 6,591 11,278 30,197 127 8,442 (21.9 )
Other Real Estate 4,496   3,758 10,551 19,476 20,425 (78.0 )
Non-performing Assets 131,168 130,597 138,586 178,920 187,233 (29.9 )
 
Allowance for loan losses 257,764 249,268 249,683 248,095 253,514 1.7
 
Net Charge-Offs - Quarter 4,280 8,979 38,099 15,678 6,919
Net Charge-Offs / Average Loans - Quarter (2) 0.07 % 0.15 0.62 0.26 0.12
 
Non-performing Loans / Loans 0.48 0.47 0.40 0.65 0.65
Non-performing Assets / Loans, Impaired Loans Held for Sale, & ORE 0.53 0.53 0.57 0.73 0.77
Allowance / Loans 1.04 1.01 1.02 1.02 1.05
 
Allowance / Non-performing Loans 214.66 215.70 255.20 155.72 160.08
Allowance / Non-performing Loans (3) 241.49 238.44 336.35 217.07 204.94
 
Past Due Loans over 90 days and Still Accruing $ 5,416 4,414 5,685 4,550 2,777 95.0
As a Percentage of Loans Outstanding 0.02 % 0.02 0.02 0.02 0.01
 
Total Past Due Loans and Still Accruing $ 54,150 52,032 84,853 66,788 62,137 (12.9 )
As a Percentage of Loans Outstanding 0.22 % 0.21 0.35 0.27 0.26
 
Accruing Troubled Debt Restructurings (TDRs) $ 129,394 151,271 166,918 167,395 172,421 (25.0 )
 
 

(1) Represent 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,

2018

December 31,

2017

March 31,

2017

 
 
Tier 1 Capital $ 2,924,284 2,872,001 2,758,794
Total Risk-Based Capital 3,443,096 3,383,081 3,274,612
Common Equity Tier 1 Ratio (transitional) 10.11 % 9.99 9.86
Common Equity Tier 1 Ratio (fully phased-in) (5) 10.01 9.88 9.63
Tier 1 Capital Ratio 10.51 10.38 10.18
Total Risk-Based Capital Ratio 12.37 12.23 12.08
Tier 1 Leverage Ratio 9.37 9.19 9.13

Common Equity as a Percentage of Total Assets (2)

8.99 9.08 9.24
Tangible Common Equity as a Percentage of Tangible Assets (3) (5) 8.79 8.88 9.04
Book Value Per Common Share (4) $ 23.85 23.85 23.19

Tangible Book Value Per Common Share (3)

23.27 23.27 22.62
 
 
(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) See "Non-GAAP Financial Measures" of this report for applicable reconciliation of GAAP measures.
 
 
 

Contacts

Synovus Financial Corp.
Media Contact:
Lee Underwood, 706-644-0528
Media Relations
or
Investor Contact:
Steve Adams, 706-641-6462
Investor Relations

Recent Stories

RSS feed for Synovus Financial Corp.

Synovus Financial Corp.