Press Release

Synovus Announces Earnings for the Third Quarter 2018

Company Release - 10/23/2018 6:30 AM ET

Diluted Earnings per Share of $0.84 vs. $0.78 in 3Q17

Adjusted Diluted Earnings per Share of $0.95, up 46% vs. 3Q17

COLUMBUS, Ga.--(BUSINESS WIRE)-- Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter ended September 30, 2018.

Third Quarter Highlights

  • Net income available to common shareholders was $99.3 million or $0.84 per diluted share as compared to $108.6 million or $0.91 per diluted share for the second quarter 2018 and $95.4 million or $0.78 per diluted share for the third quarter 2017.
    • Adjusted diluted earnings per share were $0.95 as compared to $0.92 for the second quarter 2018 and $0.65 for the third quarter 2017.
  • Return on average assets was 1.36% and adjusted return on average assets was 1.47%.
  • Return on average common equity was 13.95%, adjusted return on average common equity was 15.69%, and adjusted return on average tangible common equity was 16.08%.
  • Total loans ended the quarter at $25.58 billion, up $443.1 million or 7.0% annualized from the previous quarter and up $1.09 billion or 4.5% as compared to the third quarter 2017.
  • Total average deposits grew $119.2 million or 1.8% annualized from the previous quarter and $1.10 billion or 4.4% as compared to the third quarter 2017.
  • Net interest margin was 3.89%, up 3 basis points from the previous quarter and up 26 basis points from the third quarter 2017.
  • Efficiency ratio was 60.62%, compared to 56.78% in the second quarter 2018 and 50.62% in the prior-year quarter. Adjusted efficiency ratio was 55.55%, versus 56.41% in the previous quarter and 58.59% in the third quarter 2017.
  • Credit quality metrics remained favorable, with a non-performing asset ratio of 46 basis points, down 4 basis points from the previous quarter and down 11 basis points from the third quarter 2017.
  • The effective year-to-date tax rate through the third quarter 2018 was 19.8% compared to 34.6% in the prior-year quarter.

“Our team again delivered solid performance during the third quarter, achieving broad-based loan growth, margin expansion, and sustained positive operating leverage,” said Kessel Stelling, Synovus chairman and CEO. “We also celebrated the recent recognition of our company as one of American Banker’s Best Places to Work, driven by our people-centered culture. We expect a strong finish in 2018 as our investments in talent, capabilities, and specialized lines of business drive meaningful growth, and we look forward to welcoming Florida Community Bank customers and team members to Synovus early next year.”

Balance Sheet

  • Total loans ended the quarter at $25.58 billion, up $443.1 million or 7.0% annualized from the previous quarter and up $1.09 billion or 4.5% as compared to the third quarter 2017.
    • Commercial and industrial loans grew by $227.8 million or 7.4% annualized from the previous quarter and $776.2 million or 6.6% as compared to the third quarter 2017.
    • Consumer loans grew by $148.1 million or 9.4% annualized from the previous quarter and $827.6 million or 14.9% as compared to the third quarter 2017.
    • Commercial real estate loans grew $68.2 million or 4.1% annualized from the previous quarter and declined $514.5 million or 7.1% as compared to the third quarter 2017.
  • Total average loans were $25.32 billion, up $376.3 million or 6.0% annualized from the previous quarter and up $822.7 million or 3.4% as compared to the third quarter 2017.
  • Total average deposits were $26.39 billion, up $119.2 million or 1.8% annualized from the previous quarter and up $1.10 billion or 4.4% as compared to the third quarter 2017.
    • Excluding brokered deposits, average deposits increased $269.2 million or 4.4% annualized from the previous quarter.

Core Performance

  • Total revenues were $363.3 million, up $4.0 million from the previous quarter and down $34.7 million or 8.7% from the third quarter 2017.
    • Adjusted total revenues were $363.0 million, up $3.6 million from the previous quarter and up $31.7 million or 9.6% from the third quarter 2017.
  • Net interest income was $291.6 million, up $7.0 million or 2.5% from the previous quarter and up 11.1% from the third quarter 2017.
  • Net interest margin was 3.89%, up 3 basis points from the previous quarter. Yield on earning assets was 4.58%, up 11 basis points from the previous quarter, and the effective cost of funds was 0.69%, up 8 basis points from the previous quarter.
  • Total non-interest income was $71.7 million, down $1.7 million from the previous quarter and down $63.7 million from the third quarter 2017, which included the $75 million Cabela’s transaction fee, partially offset by $8.0 million in investment securities losses.
    • Adjusted non-interest income was $71.2 million, down $3.5 million or 4.7% from the previous quarter and up $2.8 million or 4.1% year-over-year.
  • Core banking fees1 were $35.7 million, down $1.7 million or 4.7% from the previous quarter and flat from third quarter 2017.
  • Fiduciary and asset management fees, brokerage revenue, and insurance revenues were $23.9 million, down $825 thousand from the previous quarter and up $2.8 million or 13.0% from the prior-year quarter.
  • Mortgage banking income was $5.3 million, up 9.3% from the previous quarter and down 5.6% from the third quarter 2017.
  • Total non-interest expense was $220.3 million, up $16.2 million or 8.0% from the previous quarter and up 7.1% year-over-year.
    • Adjusted non-interest expense was $201.6 million, a decline of $1.1 million from the previous quarter and an increase of $7.5 million or 3.9% from the third quarter 2017.
      • Employment expense of $114.3 million increased 2.2% from the previous quarter and increased 4.3% from the third quarter 2017.
      • Occupancy and equipment expense of $32.1 million declined 1.7% from the previous quarter and increased 5.0% from the prior-year quarter.
      • Adjusted other expenses of $55.2 million decreased $3.0 million or 5.1% from the previous quarter and increased 2.5% from the third quarter 2017.
  • Efficiency ratio was 60.62%, compared to 56.78% in the second quarter 2018 and 50.62% in the prior-year quarter.
    • Adjusted efficiency ratio was 55.55%, versus 56.41% in the previous quarter and 58.59% in the third quarter 2017.
    _______________

1 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.

Credit Quality

  • Non-performing loans were $108.4 million at September 30, 2018, down $8.9 million or 7.6% from June 30, 2018, and up $10.6 million or 10.8% from September 30, 2017. The non-performing loan ratio was 0.42% at September 30, 2018, compared to 0.47% at June 30, 2018, and 0.40% at September 30, 2017.
  • Total non-performing assets were $117.0 million at September 30, 2018, down $9.4 million or 7.4% from June 30, 2018, and down $21.6 million or 15.6% from September 30, 2017. The non-performing asset ratio was 0.46% at September 30, 2018, as compared to 0.50% at June 30, 2018, and 0.57% at September 30, 2017.
  • Net charge-offs were $15.3 million in the third quarter 2018, down $2.5 million from the previous quarter and down $23.2 million from $38.1 million in the third quarter 2017. The annualized net charge-off ratio was 0.24% in the third quarter as compared to 0.29% in the previous quarter.
  • Total delinquencies (consisting of loans 30 or more days past due and still accruing) remained low at 0.31% of total loans at September 30, 2018, up from 0.22% in the previous quarter and down 4 basis points from September 30, 2017.

Capital Ratios

  • Ratios reflect repurchase of $58 million in common stock during the third quarter.
    • We anticipate that the full share repurchase authorization of $150 million will be completed by October 26, 2018.
  • On August 1, 2018, Synovus redeemed all of its outstanding Series C Preferred Stock.
  • Common Equity Tier 1 ratio was 9.92% at September 30, 2018, compared to 10.06% at September 30, 2017.
  • Tier 1 Capital ratio was 10.59% at September 30, 2018, compared to 10.43% at September 30, 2017.
  • Total Risk Based Capital ratio was 12.37% at September 30, 2018, compared to 12.30% at September 30, 2017.
  • Tier 1 Leverage ratio was 9.58% at September 30, 2018, compared to 9.34% at September 30, 2017.
  • Tangible Common Equity ratio was 8.68% at September 30, 2018, compared to 8.88% at September 30, 2017.

Third Quarter Earnings Conference Call

Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on October 23, 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 approximately $32 billion in assets. Synovus provides commercial and retail banking, investment, and mortgage services through 249 branches in Georgia, Alabama, South Carolina, Florida, and Tennessee. Synovus Bank, a wholly owned subsidiary of Synovus, was named one of American Banker’s “Best Banks to Work For” in 2018 and has been recognized as one of the country’s 10 “Most Reputable Banks” by American Banker and the Reputation Institute for four consecutive years. Synovus is on the web at synovus.com, and on Twitter, Facebook, LinkedIn, and Instagram.

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, strategic transactions, 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 other expenses; adjusted total revenues; 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; 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; other expenses; total revenues; efficiency ratio; earnings per diluted common share; return on average assets; return on average common equity; 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 total revenues and adjusted non-interest income are measures used by management to evaluate total revenues and non-interest income exclusive of net investment securities gains (losses), changes in the fair value of private equity investments, net, and the Cabela’s transaction fee. Adjusted non-interest expense, adjusted other expenses, 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 measures used by management to evaluate operating results exclusive of items that are not indicative of ongoing operations and impact period-to-period comparisons. 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)

3Q18

2Q18

3Q17

Adjusted non-interest income
Total non-interest income $ 71,668 $ 73,387 $ 135,435
Add: Investment securities losses, net - 1,296 7,956
Subtract/add: (Increase) decrease in fair value of private equity investments, net (434 ) 37 27
Subtract: Cabela’s Transaction Fee   -     -     (75,000 )
Adjusted non-interest income $ 71,234   $ 74,720   $ 68,418  
 
Adjusted non-interest expense and adjusted other expenses
Total non-interest expense $ 220,297 $ 204,057 $ 205,646
Add/subtract: Litigation settlement/contingency expense - 1,400 (401 )
Subtract: Discounts to fair value for completed or planned ORE accelerated dispositions - - (7,082 )
Subtract: Asset impairment charges related to accelerated disposition of corporate real estate and other properties - - (1,168 )
Subtract: Earnout liability adjustments (11,652 ) - (2,059 )
Subtract: Restructuring charges, net (21 ) (103 ) (519 )
Subtract: Amortization of intangibles (292 ) (292 ) (292 )
Subtract: Merger-related expense (6,684 ) - (23 )
Subtract: Valuation adjustment to Visa derivative   -     (2,328 )   -  
Adjusted non-interest expense $ 201,648 $ 202,734 $ 194,102
Subtract: Salaries and other personnel expense (114,341 ) (111,863 ) (109,675 )
Subtract: Net occupancy and equipment expense   (32,088 )   (32,654 )   (30,573 )
Adjusted other expenses $ 55,219 $ 58,217 $ 53,854
 
Adjusted total revenues and adjusted efficiency ratio
Adjusted non-interest expense $ 201,648 $ 202,734 $ 194,102
Net interest income 291,619 284,577 262,572
Add: Tax equivalent adjustment 136 120 283
Add: Total non-interest income 71,668 73,387 135,435
Add: Investment securities losses, net   -     1,296     7,956  
Total FTE revenues 363,423 359,380 406,246
Subtract/add: (Increase) decrease in fair value of private equity investments, net (434 ) 37 27
Subtract: Cabela’s Transaction Fee   -     -     (75,000 )
Adjusted total revenues $ 362,989 $ 359,417 $ 331,273
Efficiency ratio 60.62 % 56.78 % 50.62 %
Adjusted efficiency ratio   55.55 %   56.41 %   58.59 %
                   
Reconciliation of Non-GAAP Financial Measures,

continued

 

(in thousands, except per share data)

3Q18

2Q18

3Q17

Adjusted earnings per diluted share
Net income available to common shareholders $ 99,330 $ 108,622 $ 95,448
Subtract: Income tax benefit related to effects of State Tax Reform - (608 ) -
Add: Earnout liability adjustments 11,652 - 2,059
Subtract: Income taxes (9,865 ) - -
Add: Preferred stock redemption 4,020 - -
Add: Merger-related expense 6,684 - 23
Subtract/add: Litigation settlement/contingency expense - (1,400 ) 401
Add: Provision expense on loans transferred to held-for-sale - - 27,710
Add: Discounts to fair value for completed or planned ORE accelerated dispositions - - 7,082
Add: Asset impairment charges related to accelerated disposition of corporate real estate and other properties - - 1,168
Add: Restructuring charges, net 21 103 519
Add: Amortization of intangibles 292 292 292
Add: Valuation adjustment to Visa derivative - 2,328 -
Add: Investment securities losses, net - 1,296 7,956
Subtract/add: (Increase) decrease in fair value of private equity investments, net (434 ) 37 27
Subtract: Cabela’s Transaction Fee - - (75,000 )
Add/subtract: Tax effect of adjustments   27     (624 )   11,034  
Adjusted net income available to common shareholders $ 111,727 $ 110,046 $ 78,719
Weighted average common shares outstanding, diluted 118,095 119,139 121,814
Adjusted earnings per diluted share $ 0.95   $ 0.92   $ 0.65  
       

Reconciliation of Non-GAAP Financial Measures, continued

(dollars in thousands)

3Q18

2Q18

   

3Q17

Adjusted return on average assets
Net income $ 109,059 $ 111,181 $ 98,007
Subtract: Income tax benefit related to effects of State Tax Reform - (608 ) -
Add: Earnout liability adjustments 11,652 - 2,059
Subtract: Income taxes (9,865 ) - -
Add: Merger-related expense 6,684 - 23
Subtract/add: Litigation settlement/contingency expense - (1,400 ) 401
Add: Provision expense on loans transferred to held-for-sale - - 27,710
Add: Discounts to fair value for completed or planned ORE accelerated dispositions - - 7,082
Add: Asset impairment charges related to accelerated disposition of corporate real estate and other properties - - 1,168
Add: Restructuring charges, net 21 103 519
Add: Amortization of intangibles 292 292 292
Add: Valuation adjustment to Visa derivative - 2,328 -
Add: Investment securities losses, net - 1,296 7,956
Subtract/add: (Increase) decrease in fair value of private equity investments, net (434 ) 37 27
Subtract: Cabela’s Transaction Fee - - (75,000 )
Add/subtract: Tax effect of adjustments   27     (624 )   11,034  
Adjusted net income $ 117,436 $ 112,605 $ 81,278
 
Adjusted net income annualized $ 465,915 $ 451,657 $ 322,462
Total average assets $ 31,725,604 $ 31,502,758 $ 30,678,388
Adjusted return on average assets 1.47 % 1.43 % 1.05 %
             

Reconciliation of Non-GAAP Financial Measures, continued

(dollars in thousands)

3Q18

2Q18

     

3Q17

Adjusted return on average common equity and adjusted return on average tangible common equity
Net income available to common shareholders $ 99,330 $ 108,622 $ 95,448
Subtract: Income tax benefit related to effects of State Tax Reform - (608 ) -
Add: Earnout liability adjustments 11,652 - 2,059
Subtract: Income taxes (9,865 ) - -
Add: Preferred stock redemption 4,020 - -
Add: Merger-related expense 6,684 - 23
Subtract/add: Litigation settlement/contingency expense - (1,400 ) 401
Add: Provision expense on loans transferred to held-for-sale - - 27,710
Add: Discounts to fair value for completed or planned ORE accelerated dispositions - - 7,082
Add: Asset impairment charges related to accelerated disposition of corporate real estate and other properties - - 1,168
Add: Restructuring charges, net 21 103 519
Add: Amortization of intangibles 292 292 292
Add: Valuation adjustment to Visa derivative - 2,328 -
Add: Investment securities losses, net - 1,296 7,956
Subtract/add: (Increase) decrease in fair value of private equity investments, net (434 ) 37 27
Subtract: Cabela’s Transaction Fee - - (75,000 )
Add/subtract: Tax effect of adjustments   27     (624 )   11,034  
Adjusted net income available to common shareholders $ 111,727 $ 110,046 $ 78,719
 
Adjusted net income annualized $ 443,265 $ 441,393 $ 312,309
Total average shareholders’ equity less preferred stock $ 2,824,707 $ 2,831,368 $ 2,859,491
Subtract: Goodwill (57,315 ) (57,315 ) (57,167 )
Subtract: Other intangibles assets, net   (10,265 )   (10,555 )   (11,648 )
Total average tangible shareholders’ equity less preferred stock $ 2,757,127 $ 2,763,498 $ 2,790,676

 

Adjusted return on average common equity

  15.69 %   15.59 %   10.92 %

Adjusted return on average tangible common equity

  16.08 %   15.97 %   11.19 %
                   

 

Reconciliation of Non-GAAP Financial Measures,

continued

(dollars in thousands)

3Q18

2Q18

3Q17

Tangible common equity ratio
Total assets $ 32,075,120 $ 31,740,305 $ 31,642,123
Subtract: Goodwill (57,315 ) (57,315 ) (57,315 )
Subtract: Other intangible assets, net   (10,166 )   (10,458 )   (11,548 )
Tangible assets $ 32,007,639   $ 31,672,532   $ 31,573,260  
 
Total shareholders’ equity $ 3,040,073 $ 3,167,694 $ 2,997,078
Subtract: Goodwill (57,315 ) (57,315 ) (57,315 )
Subtract: Other intangible assets, net (10,166 ) (10,458 ) (11,548 )
Subtract: Preferred Stock   (195,138 )   (321,118 )   (125,980 )
Tangible common equity $ 2,777,454   $ 2,778,803   $ 2,802,235  
Total shareholders’ equity to total assets ratio 9.48 % 9.98 % 9.47 %
Tangible common equity ratio 8.68 % 8.77 % 8.88 %
 
Common equity Tier 1 (CET1) ratio (fully phased-in)
Common equity Tier 1 (CET1) $ 2,846,417
Subtract: Adjustment related to capital components   (2,785 )
CET1 (fully phased-in) $ 2,843,632  
Total risk-weighted assets $ 28,701,637
Total risk-weighted assets (fully phased-in) $ 28,808,199
Common equity Tier 1 (CET 1) ratio 9.92 %
Common equity Tier 1 (CET1) ratio (fully phased-in) 9.87 %
     
Synovus
 
INCOME STATEMENT DATA Nine Months Ended
(Unaudited)
(Dollars in thousands, except per share data) September 30,
             
2018 2017 % Change
             
 
Interest income $ 986,911 855,563 15.4 %
Interest expense 136,431 101,966 33.8

 

 
Net interest income 850,480 753,597 12.9
Provision for loan losses 39,548 58,620 (32.5)
 
 
Net interest income after provision for loan losses 810,932 694,977 16.7
 
 
Non-interest income:
Service charges on deposit accounts 60,521 61,048 (0.9)
Fiduciary and asset management fees 40,881 37,290 9.6
Card fees 31,640 29,614 6.8
Brokerage revenue 26,924 21,947 22.7
Mortgage banking income 15,177 17,151 (11.5)
Income from bank-owned life insurance 11,720 9,560 22.6
Cabela's Transaction Fee - 75,000 nm
Investment securities losses, net (1,296) (289) nm
Decrease in fair value of private equity investments, net (2,659) (3,193) nm
Other fee income 14,387 16,127 (10.8)
Other non-interest income 14,806 11,719 26.3
 
 
Total non-interest income 212,101 275,974 (23.1)
 
 
 
Non-interest expense:
Salaries and other personnel expense 339,924 322,079 5.5
Net occupancy and equipment expense 96,222 89,837 7.1
Third-party processing expense 43,822 39,882 9.9
FDIC insurance and other regulatory fees 19,765 20,723 (4.6)
Professional fees 18,087 20,048 (9.8)
Advertising expense 14,046 14,868 (5.5)
Foreclosed real estate expense, net 1,110 10,847 (89.8)
Earnout liability adjustments 11,652 3,766 nm
Merger-related expense 6,684 110 nm
Amortization of intangibles 875 767 14.1
Valuation adjustment to Visa derivative 2,328 - nm
Litigation settlement/contingency expense (4,026) 401 nm
Restructuring charges, net (191) 7,043 nm
Other operating expenses 69,233 64,409 7.5
 
Total non-interest expense 619,531 594,780 4.2
 
 
 
Income before income taxes 403,502 376,171 7.3
Income tax expense 80,095 130,303 (38.5)
 
 
Net income 323,407 245,868 31.5
 
Preferred stock dividends and redemption 14,848 7,678 93.4
 
 
Net income available to common shareholders $ 308,559 238,190 29.5 %
 
 
Net income per common share, basic $ 2.61 1.96 33.6 %
 
Net income per common share, diluted 2.60 1.94 33.7
 
Cash dividends declared per common share 0.75 0.45 66.7
 
Return on average assets* 1.37 % 1.07 30 bps
Return on average common equity* 14.65 11.20 345
 
 
Weighted average common shares outstanding, basic 118,096 121,796 (3.0) %
Weighted average common shares outstanding, diluted 118,847 122,628 (3.1)
 
nm - not meaningful
bps - basis points
* - ratios are annualized
                   
Synovus
 
INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share data) 2018 2017
                       
Third Second First Fourth Third Year/Year
Quarter     Quarter     Quarter   Quarter     Quarter   % Change  
 
Interest income $ 343,942 329,834 313,134 306,934 297,652 15.6 %
Interest expense 52,323 45,257 38,850 37,221 35,080 49.2
 
 
Net interest income 291,619 284,577 274,284 269,713 262,572 11.1
Provision for loan losses 14,982 11,790 12,776 8,565 39,686 (62.2)
 
 
Net interest income after provision for loan losses 276,637 272,787 261,508 261,148 222,886 24.1
 
 
Non-interest income:
Service charges on deposit accounts 20,582 19,999 19,940 20,372 20,678 (0.5)
Fiduciary and asset management fees 13,462 13,983 13,435 13,195 12,615 6.7
Card fees 10,608 10,833 10,199 9,762 9,729 9.0
Brokerage revenue 9,329 8,900 8,695 7,758 7,511 24.2
Mortgage banking income 5,290 4,839 5,047 5,645 5,603 (5.6)
Income from bank-owned life insurance 3,771 3,733 4,217 3,900 3,232 16.7
Cabela's Transaction Fee - - - - 75,000 nm
Investment securities losses, net - (1,296) - - (7,956) nm
Increase/(decrease) in fair value of private equity investments, net 434 (37) (3,056) 100 (27) nm
Other fee income 4,510 5,259 4,618 4,042 5,094 (11.5)
Other non-interest income 3,682 7,174 3,951 4,578 3,956 (6.9)
 
 
Total non-interest income 71,668 73,387 67,046 69,352 135,435 (47.1)
 
 
 
Non-interest expense:
Salaries and other personnel expense 114,341 111,863 113,720 111,243 109,675 4.3
Net occupancy and equipment expense 32,088 32,654 31,480 30,126 30,573 5.0
Third-party processing expense 14,810 15,067 13,945 14,827 13,659 8.4
FDIC insurance and other regulatory fees 6,430 6,543 6,793 6,288 7,078 (9.2)
Professional fees 6,298 6,284 5,505 6,183 7,141 (11.8)
Advertising expense 3,735 5,220 5,092 8,081 3,610 3.5
Foreclosed real estate expense, net 360 (107) 856 1,693 7,265 (95.0)
Earnout liability adjustments 11,652 - - 1,700 2,059 nm
Merger-related expense 6,684 - - - 23 nm
Amortization of intangibles 292 292 292 292 292 -
Valuation adjustment to Visa derivative - 2,328 - - - -
Loss on early extinguishment of debt - - - 23,160 - -
Litigation settlement/contingency expense - (1,400) (2,626) 300 401 nm
Restructuring charges, net 21 103 (315) (29) 519 (96.0)
Other operating expenses 23,586 25,210 20,437 22,670 23,351 1.0
 
Total non-interest expense 220,297 204,057 195,179 226,534 205,646 7.1
 
 
 
Income before income taxes 128,008 142,117 133,375 103,966 152,675 (16.2)
Income tax expense 18,949 30,936 30,209 74,361 54,668 (65.3)
 
 
Net income 109,059 111,181 103,166 29,605 98,007 11.3
 
Preferred stock dividends and redemption 9,729 2,559 2,559 2,559 2,559 nm
 
Net income available to common shareholders $ 99,330 108,622 100,607 27,046 95,448 4.1 %
 
Net income per common share, basic $ 0.85 0.92 0.85 0.23 0.79 7.3 %
 
Net income per common share, diluted 0.84 0.91 0.84 0.23 0.78 7.3
 
Cash dividends declared per common share 0.25 0.25 0.25 0.15 0.15 66.7
 
Return on average assets * 1.36 % 1.42

 

1.34 0.37 1.27 9 bps
Return on average common equity * 13.95 15.39 14.62 3.76 13.24 71
 
Weighted average common shares outstanding, basic 117,241 118,397 118,666 119,282 120,900 (3.0) %
Weighted average common shares outstanding, diluted 118,095 119,139 119,321 120,182 121,814 (3.1)
 
nm - not meaningful
bps - basis points
* - ratios are annualized
             
Synovus
       
BALANCE SHEET DATA September 30, 2018 December 31, 2017 September 30, 2017
(Unaudited)
 
(In thousands, except share data)
 
ASSETS
Cash and due from banks $ 436,540 397,848 386,459
Interest bearing funds with Federal Reserve Bank 515,493 460,928 1,297,581
Interest earning deposits with banks 34,470 26,311 6,047

Federal funds sold and securities purchased under resale agreements

25,430 47,846 48,820
Cash and cash equivalents 1,011,933 932,933 1,738,907
 
Mortgage loans held for sale, at fair value 37,276 48,024 54,072
Investment securities available for sale, at fair value 3,883,574 3,987,069 3,825,443
 
Loans, net of deferred fees and costs 25,577,116 24,787,464 24,487,360
Allowance for loan losses (251,450) (249,268) (249,683)
Loans, net 25,325,666 24,538,196 24,237,677
 
Cash surrender value of bank-owned life insurance 551,061 540,958 536,985
Premises and equipment, net 431,012 426,813 423,245
Goodwill 57,315 57,315 57,315
Other intangible assets 10,166 11,254 11,548
Deferred tax asset, net 185,116 165,788 272,052
Other assets 582,001 513,487 484,879
 
Total assets $ 32,075,120 31,221,837 31,642,123
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing deposits $ 7,628,736 7,686,339 7,302,682
Interest-bearing deposits 18,804,922 18,461,561 18,883,546
 
Total deposits 26,433,658 26,147,900 26,186,228
 

Federal funds purchased and securities sold under repurchase agreements

191,145 161,190 141,539
Other short-term borrowings 478,540 100,000 -
Long-term debt 1,656,909 1,606,138 1,882,607
Other liabilities 274,795 245,043 434,671
 
Total liabilities 29,035,047 28,260,271 28,645,045
 
 
Shareholders' equity:
Series D Preferred Stock - no par value. 8,000,000 shares outstanding at September 30, 2018 195,138 - -
 
Series C Preferred Stock - no par value. 5,200,000 shares outstanding at December 31, 2017 and September 30, 2017 - 125,980 125,980
 
Common stock - $1.00 par value. 116,714,463 shares outstanding at September 30, 2018, 118,897,295 shares outstanding at December 31, 2017, and 119,566,625 shares outstanding at September 30, 2017 143,093 142,678 142,525
 
Additional paid-in capital 3,049,233 3,043,129 3,033,682
 
Treasury stock, at cost - 26,378,854 shares at September 30, 2018, 23,780,154 shares at December 31, 2017, and 22,958,514 shares at September 30, 2017 (974,478) (839,674) (800,509)
 
Accumulated other comprehensive loss (143,720) (54,754) (39,596)
 
Retained earnings 770,807 544,207 534,996
Total shareholders' equity 3,040,073 2,961,566 2,997,078
 
Total liabilities and shareholders' equity $ 32,075,120 31,221,837 31,642,123
                 
Synovus
   
AVERAGE BALANCES AND YIELDS/RATES (1)
(Unaudited)
(Dollars in thousands)
2018 2017
                       
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
                       
Interest Earning Assets
   
Taxable investment securities (2) $ 4,061,239 4,077,564 4,097,162 3,937,278 3,786,436
Yield 2.38 % 2.34 2.34 2.29 2.11
 
Tax-exempt investment securities (2) (4) $ 89 115 140 180 259
Yield (taxable equivalent) 5.91 % 6.87 6.57 7.97 7.86
 
Trading account assets (5) $ 16,646 23,772 8,167 7,360 7,823
Yield 2.52 % 2.79 2.66 2.78 2.09
 
Commercial loans (3) (4) $ 19,025,830 18,857,271 18,963,515 18,935,774 19,059,936
Yield 4.98 % 4.85 4.64 4.49 4.41
 
Consumer loans (3) $ 6,298,643 6,092,899 5,899,015 5,704,629 5,440,765
Yield 4.80 % 4.76 4.71 4.54 4.55
 
Allowance for loan losses $ (251,684)     (257,966)     (251,635) (252,319)     (249,248)
 
Loans, net (3) $ 25,072,789 24,692,204 24,610,895 24,388,084 24,251,453
Yield 4.99 % 4.88 4.70 4.55 4.49
 
Mortgage loans held for sale $ 49,030 50,366 38,360 45,353 52,177
Yield 4.71 % 4.42 3.95 3.96 3.88
 

Federal funds sold, due from Federal Reserve Bank,

and other short-term investments $ 544,704 724,537 516,575 922,296 543,556
Yield 1.90 % 1.77 1.48 1.31 1.23
 
Federal Home Loan Bank and Federal Reserve Bank stock (5) $ 163,568 165,845 177,381 159,455 175,263
Yield 4.41 % 4.63 3.39 4.03 3.50
                               
Total interest earning assets $ 29,908,065 29,734,403 29,448,680 29,460,006 28,816,967
Yield 4.58 % 4.47 4.31 4.15 4.11
           
 
Interest Bearing Liabilities
   
 
Interest bearing demand deposits $ 4,701,204 5,001,826 5,032,000 4,976,239 4,868,372
Rate 0.38 % 0.35 0.31 0.28 0.27
 
Money market accounts $ 7,936,621 7,791,107 7,561,554 7,514,992 7,528,036
Rate 0.72 % 0.55 0.43 0.36 0.34
 
Savings deposits $ 824,935 829,800 811,587 804,853 803,184
Rate 0.03 % 0.03 0.03 0.03 0.03
 
Time deposits under $100,000 $ 1,205,987 1,161,890 1,143,780 1,166,413 1,183,582
Rate 0.99 % 0.82 0.71 0.70 0.68
 
Time deposits over $100,000 $ 2,273,582 2,021,084 1,895,545 2,004,031 2,067,347
Rate 1.46 % 1.22 1.02 0.99 0.97
 
Non-maturing brokered deposits $ 358,277 262,976 424,118 546,413 547,466
Rate 2.10 % 1.94 1.14 0.81 0.73
 
Brokered time deposits $ 1,414,700 1,659,941 1,527,793 1,651,920 983,423
Rate 1.94 %   1.85     1.75 1.63     1.16
 
Total interest-bearing deposits $ 18,715,306 18,728,624 18,396,377 18,664,861 17,981,410
Rate 0.83 % 0.70 0.58 0.54 0.46
 

Federal funds purchased and securities sold under

repurchase agreements $ 230,504 207,655 202,226 184,369 191,585
Rate 0.25 % 0.35 0.21 0.15 0.08
 
Other short-term borrowings $ 146,794 3,024 394,056 3,261 102,717
Rate 2.12 % 2.84 1.52 1.42 1.16
 
Long-term debt $ 1,656,743 1,852,094 1,733,938 1,710,721 1,882,458
Rate 2.87 % 2.66 2.51 2.67 2.90
                               
 
Total interest-bearing liabilities $ 20,749,347 20,791,397 20,726,597 20,563,212 20,158,170
Rate 0.99 % 0.87 0.76 0.72 0.69
                               
 
Non-interest bearing demand deposits $ 7,672,006 7,539,451 7,391,695 7,621,147 7,305,508
 
Effective cost of funds 0.69 % 0.61 0.53 0.50 0.48
                               
 
Net interest margin       3.89 %   3.86     3.78 3.65     3.63
 
Taxable equivalent adjustment $ 136 120 116 234 283
 
(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 Linked Quarter Total Loans Year/Year
Loan Type September 30, 2018 June 30, 2018 % Change (1) September 30, 2017 % Change
           
 
Commercial, Financial, and Agricultural $ 7,281,466 7,271,080 0.6 % $ 6,961,709 4.6 %
Owner-Occupied 5,221,828 5,004,392 17.2 4,765,433 9.6
Total Commercial & Industrial 12,503,294 12,275,472 7.4 11,727,142 6.6
 
Multi-Family 1,330,006 1,358,211 (8.2) 1,636,449 (18.7)
Hotels 760,885 755,125 3.0 832,990 (8.7)
Office Buildings 1,368,608 1,429,166 (16.8) 1,576,672 (13.2)
Shopping Centers 815,696 811,186 2.2 840,367 (2.9)
Warehouses 679,184 602,707 50.3 494,570 37.3
Other Investment Property 711,311 553,201 113.4 544,048 30.7
Total Investment Properties 5,665,690 5,509,596 11.2 5,925,096 (4.4)
 
1-4 Family Construction 183,044 177,140 13.2 195,273 (6.3)
1-4 Family Investment Mortgage 524,152 543,570 (14.2) 599,342 (12.5)
Total 1-4 Family Properties 707,196 720,710 (7.4) 794,615 (11.0)
 
Commercial Development 61,608 61,375 1.5 66,521 (7.4)
Residential Development 91,578 100,246 (34.3) 117,878 (22.3)
Land Acquisition 186,334 252,244 (103.7) 322,814 (42.3)
Land and Development 339,520 413,865 (71.3) 507,213 (33.1)
 
Total Commercial Real Estate 6,712,406 6,644,171 4.1 7,226,924 (7.1)
 
 
Consumer Mortgages 2,843,244 2,750,935 13.3 2,557,680 11.2
Home Equity Lines 1,465,419 1,453,855 3.2 1,528,889 (4.2)
Credit Cards 245,149 238,424 11.2 225,726 8.6
Other Consumer Loans 1,831,385 1,793,916 8.3 1,245,277 47.1
Total Consumer 6,385,197 6,237,130 9.4 5,557,572 14.9
Unearned Income (23,781) (22,717) 18.6 (24,278) (2.0)
 
Total $ 25,577,116 25,134,056 7.0 % $ 24,487,360 4.5 %
 
 
(1) Percentage change is annualized.
             
NON-PERFORMING LOANS COMPOSITION
(Unaudited)  
(Dollars in thousands)
         
Total Total Total
Non-performing Non-performing Linked Quarter Non-performing Year/Year
Loan Type Loans Loans % Change Loans % Change
  September 30, 2018 June 30, 2018   September 30, 2017  
 
 
Commercial, Financial, and Agricultural $ 69,010 81,231 (15.0) % $ 58,139 18.7 %
Owner-Occupied 5,708 6,076 (6.1) 3,960 44.1
 
Total Commercial & Industrial 74,718 87,307 (14.4) 62,099 20.3
 
Multi-Family 234 176 33.0 1,096 (78.6)
Hotels - - - - -
Office Buildings 166 670 (75.2) 234 (29.1)
Shopping Centers