Market Overview

Synovus Announces Earnings for the Second Quarter 2018

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Diluted Earnings per Share of $0.91, up 52.7% vs. $0.60 in 2Q17

Synovus Financial Corp. (NYSE:SNV) today reported financial results for
the quarter ended June 30, 2018.

Second Quarter Highlights

  • Net income available to common shareholders was $108.6 million or
    $0.91 per diluted share as compared to $100.6 million or $0.84 per
    diluted share for the first quarter 2018 and $73.4 million or $0.60
    per diluted share for the second quarter 2017.
    • Adjusted earnings per diluted share for the second quarter 2018
      were $0.92, up 7.8% from the first quarter 2018 and a 52.6%
      increase from the second quarter 2017.
  • Return on average assets was 1.42%, up 8 basis points from the
    previous quarter and up 42 basis points from the second quarter 2017.
  • Return on average common equity was 15.39%, up 77 basis points from
    the previous quarter and up 505 basis points from the second quarter
    2017.
    • Adjusted return on average common equity was 15.59%, an
      improvement of 510 basis points from the second quarter 2017.
    • Adjusted return on average tangible common equity was 15.97%, an
      increase of 522 basis points from the second quarter 2017.
  • Total loans ended the quarter at $25.13 billion, up $251.0 million or
    4.0% annualized from the previous quarter and up $703.5 million or
    2.9% as compared to the second quarter 2017.
  • Total average deposits grew $480.0 million or 7.5% annualized from the
    previous quarter and $1.28 billion or 5.1% versus the second quarter
    2017.
  • Total ending deposits increased $189.2 million or 2.9% from the
    previous quarter and increased $1.22 billion or 4.9% from the second
    quarter 2017.
  • Total revenues1 were $359.3 million, an increase of 12.3%
    from the prior-year quarter.
  • Net interest margin was 3.86%, up 8 basis points from the previous
    quarter and up 35 basis points from the second quarter 2017.
  • Efficiency ratio was 56.78%, down 38 basis points from the previous
    quarter and down 312 basis points from the prior-year quarter.
  • Credit quality metrics remained favorable, with a non-performing asset
    ratio of 50 basis points, down 3 basis points from the previous
    quarter and down 23 basis points from the second quarter 2017.
  • The effective tax rate in the second quarter of 2018 was 21.8%
    compared to 35.5% in the prior-year quarter.
  • On June 21, Synovus completed a public offering of $200 million of
    Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock,
    Series D.

_______________

1

Total revenues consist of net interest income and non-interest
income excluding investment securities gains/(losses).
 

"This was another solid quarter of performance for Synovus, with strong
earnings and revenue growth," said Kessel Stelling, Synovus chairman and
CEO. "During the first half of the year, we successfully completed our
transition to a unified brand, completed a public offering of $200
million of Series D Preferred Stock, and were ranked among American
Banker's most reputable banks for the fourth consecutive year. We are
energized about the strong momentum going into the second half of the
year as we focus on growing relationships and strengthening our
communities."

Balance Sheet

  • Total average loans were $24.95 billion, up $93.9 million or 1.5%
    annualized from the previous quarter and $596.3 million or 2.4% as
    compared to the second quarter 2017.
  • Total loans ended the quarter at $25.13 billion, up $251.0 million or
    4.0% annualized from the previous quarter and up $703.5 million or
    2.9% as compared to the second quarter 2017.
    • Commercial and industrial loans grew by $173.6 million or 5.8%
      annualized from the previous quarter and $532.5 million or 4.5% as
      compared to the second quarter 2017.
    • Consumer loans grew by $267.8 million or 18.0% annualized from the
      previous quarter and $945.8 million or 17.9% as compared to the
      second quarter 2017.
    • Commercial real estate loans declined by $191.6 million or 11.2%
      annualized from the previous quarter and declined $778.1 million
      or 10.5% as compared to the second quarter 2017.
  • Total average deposits were $26.27 billion, up $480.0 million or 7.5%
    annualized from the previous quarter and $1.28 billion or 5.1% as
    compared to the second quarter 2017.

Core Performance

  • Total revenues1 were $359.3 million, up $17.9 million or
    5.3% from the previous quarter and $39.5 million or 12.3% from the
    second quarter 2017.
  • Net interest income was $284.6 million, up $10.3 million or 3.8% from
    the previous quarter and up 13.3% from the second quarter 2017.
  • Net interest margin was 3.86%, up 8 basis points from the previous
    quarter. Yield on earning assets was 4.46%, up 16 basis points from
    the previous quarter, and the effective cost of funds was 0.61%, up 8
    basis points from the previous quarter.
  • Total non-interest income was $73.4 million, up $6.3 million or 9.5%
    compared to the previous quarter and up $4.7 million or 6.8% from
    second quarter 2017.
    • Adjusted non-interest income was $74.7 million, up $4.6 million or
      6.6% from the previous quarter and up $4.7 million or 6.7% as
      compared to the second quarter 2017.
  • Core banking fees2 were $37.4 million, up $1.6 million or
    4.4% from the previous quarter and $757 thousand or 2.1%
    year-over-year.
  • Fiduciary and asset management fees, brokerage revenue, and insurance
    revenues were $24.8 million, up $1.5 million or 6.1% from the previous
    quarter and 19.1% from the prior-year quarter.
  • Mortgage banking income was $4.8 million, down 4.1% from the previous
    quarter and down 16.3% from the second quarter 2017.
  • Total non-interest expense was $204.1 million, up $8.9 million or 4.5%
    from the previous quarter and up 6.4% from the second quarter 2017.
    • Second quarter 2018 includes a $2.3 million expense for a
      valuation adjustment to the Visa derivative, partially offset by a
      $1.4 million benefit from recovery of litigation settlement
      expenses.
  • Adjusted non-interest expense was $202.7 million, up $4.9 million or
    2.5% from the previous quarter and $11.3 million or 5.9% from the
    second quarter 2017.
    • Employment expense of $111.9 million declined 1.6% from the
      previous quarter and increased 6.3% from the second quarter 2017.
    • Occupancy and equipment expense of $32.7 million increased 3.7%
      from the previous quarter and increased 9.1% from the prior-year
      quarter.
    • Other expenses of $25.2 million increased $4.8 million or 23.3%
      from the previous quarter and increased 27.7% from the second
      quarter 2017.
    • Efficiency ratio was 56.78%, compared to 57.16% the previous
      quarter and 59.90% in the second quarter 2017.
      • Adjusted efficiency ratio was 56.41%, an improvement of 101
        basis points from the first quarter 2018 and 315 basis points
        from the second quarter 2017.

_______________

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.
 

Credit Quality

  • Non-performing loans were $117.3 million at June 30, 2018, down $2.8
    million from March 31, 2018, and down $42.0 million or 26.4% from June
    30, 2017. The non-performing loan ratio was 0.47% at June 30, 2018,
    compared to 0.48% at March 31, 2018, and 0.65% at June 30, 2017.
  • Total non-performing assets were $126.3 million at June 30, 2018, down
    $4.8 million from March 31, 2018 and down $52.6 million or 29.4% from
    June 30, 2017. The non-performing asset ratio was 0.50% at June 30,
    2018, as compared to 0.53% at March 31, 2018, and 0.73% at June 30,
    2017.
  • Net charge-offs were $17.8 million in the second quarter 2018, up
    $13.6 million from $4.3 million in the previous quarter and up $2.2
    million from $15.7 million in the second quarter 2017. The annualized
    net charge-off ratio was 0.29% in the second quarter as compared to
    0.07% in the previous quarter and 0.26% in the second quarter 2017.
  • Total delinquencies (consisting of loans 30 or more days past due and
    still accruing) remained low at 0.22% of total loans at June 30, 2018,
    unchanged from the previous quarter and down 5 basis points from June
    30, 2017.

Capital

  • During the second quarter 2018, Synovus repurchased $50.0 million in
    common stock, as part of the previously announced share repurchase
    program of up to $150 million.
  • On June 21, Synovus completed a public offering of $200 million of
    Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock,
    Series D.
  • Common Equity Tier 1 ratio was 10.11% at June 30, 2018, compared to
    10.09% at March 31, 2018.
  • Tier 1 Capital ratio was 11.25% at June 30, 2018, compared to 10.53%
    at March 31, 2018.
  • Total Risk Based Capital ratio was 13.07% at June 30, 2018, compared
    to 12.40% at March 31, 2018.
  • Tier 1 Leverage ratio was 10.03% at June 30, 2018, compared to 9.37%
    at March 31, 2018.
  • Tangible Common Equity ratio was 8.77% at June 30, 2018, compared to
    8.79% at March 31, 2018.

Second Quarter Earnings Conference Call

Synovus will host an earnings highlights conference call at 8:30 a.m.
EDT on July 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 approximately $32 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, has been recognized as one 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, 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 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; efficiency ratio;
earnings per diluted common share; 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 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 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)

2Q18

1Q18

2Q17

 
Adjusted non-interest income
Total non-interest income $ 73,387 $ 67,046 $ 68,701
Add: Investment securities losses, net 1,296 - 1
Add: Decrease in fair value of private equity investments, net   37     3,056     1,352  
 
Adjusted non-interest income $ 74,720   $ 70,102   $ 70,054  
 
Adjusted non-interest expense
Total non-interest expense $ 204,057 $ 195,179 $ 191,747
Add: Litigation settlement/contingency expense 1,400 2,626 -
Subtract/add: Restructuring charges, net (103 ) 315 (13 )
Subtract: Amortization of intangibles (292 ) (292 ) (292 )
Subtract: Valuation adjustment to Visa derivative   (2,328 )   -     -  
Adjusted non-interest expense $ 202,734   $ 197,828   $ 191,442  
 

Adjusted efficiency ratio

Adjusted non-interest expense $ 202,734 $ 197,828 $ 191,442
Net interest income 284,577 274,284 251,097
Add: Tax equivalent adjustment 120 116 298
Add: Total non-interest income 73,387 67,046 68,701
Add: Investment securities losses, net   1,296     -     1  
Total FTE revenues 359,380 341,446 320,097
Add: Decrease in fair value of private equity investments, net   37     3,056     1,352  
Adjusted total revenues $ 359,417 $ 344,502 $ 321,449
Efficiency ratio 56.78 % 57.16 % 59.90 %
Adjusted efficiency ratio   56.41 %   57.42 %   59.56 %
 
           

Reconciliation of Non-GAAP Financial Measures, continued

 

(in thousands, except per share data)

2Q18

1Q18

2Q17

 
Adjusted earnings per diluted share
Net income available to common shareholders $ 108,622 $ 100,607 $ 73,444
Subtract/add: Income tax expense related to effects of State Tax
Reform
(608 ) 1,325 -
Subtract: Litigation settlement/contingency expense (1,400 ) (2,626 ) -
Add/subtract: Restructuring charges, net 103 (315 ) 13
Add: Amortization of intangibles 292 292 292
Add: Valuation adjustment to Visa derivative 2,328 - -
Add: Investment securities losses, net 1,296 - 1
Add: Decrease in fair value of private equity investments, net 37 3,056 1,352
 
Subtract: Tax effect of adjustments   (624 )   (96 )   (613 )
Adjusted net income available to common shareholders $ 110,046 $ 102,243 $ 74,489
Weighted average common shares outstanding, diluted 119,139 119,321 123,027
 
Adjusted earnings per diluted share $ 0.92   $ 0.86   $ 0.61  
 
       
Reconciliation of Non-GAAP Financial Measures, continued
 

(dollars in thousands)

2Q18

1Q18

   

2Q17

 
Adjusted return on average common equity and adjusted return on
average tangible common equity
Net income available to common shareholders $ 108,622 $ 100,607 $ 73,444
Subtract/add: Income tax expense related to effects of State Tax
Reform
(608 ) 1,325 -
Subtract: Litigation settlement/contingency expense (1,400 ) (2,626 ) -
Add/subtract: Restructuring charges, net 103 (315 ) 13
Add: Amortization of intangibles 292 292 292
Add: Valuation adjustment to Visa derivative 2,328 - -
Add: Investment securities losses, net 1,296 - 1
Add: Decrease in fair value of private equity investments, net 37 3,056 1,352
Subtract: Tax effect of adjustments   (624 )   (96 )   (613 )
Adjusted net income available to common shareholders $ 110,046 $ 102,243 $ 74,489
 
Net income annualized $ 441,339 $ 414,652 $ 298,775
Total average shareholders' equity less preferred stock $ 2,831,368 $ 2,790,878 $ 2,849,069
 
Subtract: Goodwill (57,315 ) (57,315 ) (57,018 )
Subtract: Other intangibles assets, net   (10,555 )   (10,915 )   (11,966 )
Total average tangible shareholders' equity less preferred stock $ 2,763,498 $ 2,722,648 $ 2,780,085
Adjusted return on average common equity   15.59 %   14.86 %   10.49 %
Adjusted return on average tangible common equity   15.97 %   15.23 %   10.75 %
 
 

Reconciliation of Non-GAAP Financial Measures, continued

 

(dollars in thousands)

   

2Q18

   

1Q18

   

2Q17

 

Tangible common equity ratio

Total assets $ 31,740,305 $ 31,501,028 $ 30,687,966
Subtract: Goodwill (57,315 ) (57,315 ) (57,092 )
Subtract: Other intangible assets, net   (10,458 )   (10,750 )   (11,843 )
Tangible assets $ 31,672,532   $ 31,432,963   $ 30,619,031  
 
Total shareholders' equity $ 3,167,694 $ 2,956,495 $ 2,997,947
Subtract: Goodwill (57,315 ) (57,315 ) (57,092 )
Subtract: Other intangible assets, net (10,458 ) (10,750 ) (11,843 )
Subtract: Preferred Stock   (321,118 )   (125,980 )   (125,980 )
Tangible common equity $ 2,778,803   $ 2,762,450   $ 2,803,032  
Total shareholders' equity to total assets ratio 9.98 % 9.39 % 9.77 %
Tangible common equity ratio 8.77 % 8.79 % 9.15 %
 
Common equity Tier 1 (CET1) ratio (fully phased-in)
Common Equity Tier 1 (CET1) $ 2,838,616
Subtract: Adjustment related to capital components   (3,599 )
CET1 (fully phased-in) $ 2,835,017  
Total risk-weighted assets $ 28,070,857
Total risk-weighted assets (fully phased-in) $ 28,197,301
Common equity Tier 1 (CET 1) ratio 10.11 %
Common Equity Tier 1 (CET1) ratio (fully phased-in) 10.05 %
 
         
Synovus
 
INCOME STATEMENT DATA Six Months Ended
(Unaudited)
(Dollars in thousands, except per share data) June 30,  
 
2018     2017     Change  
 
Interest income $ 642,968 557,911 15.2 %
Interest expense 84,107   66,887   25.7  
 
Net interest income 558,861 491,024 13.8
Provision for loan losses 24,566   18,934   29.7  
 
Net interest income after provision for loan losses 534,295   472,090   13.2  
 
Non-interest income:
Service charges on deposit accounts 39,938 40,370 (1.1 )
Fiduciary and asset management fees 27,419 24,676 11.1
Card fees 21,032 19,885 5.8
Brokerage revenue 17,596 14,436 21.9
Mortgage banking income 9,887 11,548 (14.4 )
Income from bank-owned life insurance 7,949 6,328 25.6
Investment securities (losses) gains, net (1,296 ) 7,667 nm
Decrease in fair value of private equity investments, net (3,093 ) (3,166 ) nm
Other fee income 9,877 11,033 (10.5 )
Other non-interest income 11,124   7,762   43.3  
 
Total non-interest income 140,433   140,539   (0.1 )
 
 
Non-interest expense:
Salaries and other personnel expense 225,583 212,404 6.2
Net occupancy and equipment expense 64,134 59,264 8.2
Third-party processing expense 29,012 26,223 10.6
FDIC insurance and other regulatory fees 13,335 13,645 (2.3 )
Professional fees 11,789 12,907 (8.7 )
Advertising expense 10,312 11,258 (8.4 )
Foreclosed real estate expense, net 749 3,582 (79.1 )
Earnout liability adjustments - 1,707 nm
Amortization of intangibles 583 475 22.7
Valuation adjustment to Visa derivative 2,328 - nm
Litigation settlement/contingency expense (4,026 ) - nm
Restructuring charges, net (212 ) 6,524 nm
Other operating expenses 45,647   41,144   10.9  
 
Total non-interest expense 399,234   389,133   2.6  
 
 
Income before income taxes 275,494 223,496 23.3
Income tax expense 61,146   75,635   (19.2 )
 
Net income 214,348 147,861 45.0
 
Dividends on preferred stock 5,119   5,119   -  
 
 
Net income available to common shareholders $ 209,229   142,742   46.6   %
 
 
Net income per common share, basic $ 1.77 1.17 51.2 %
 
Net income per common share, diluted 1.75 1.16 51.3
 
Cash dividends declared per common share 0.50 0.30 66.7
 
Return on average assets* 1.38 % 0.98 40 bps
Return on average common equity*

15.01

10.16

485

 
 
Weighted average common shares outstanding, basic 118,531 122,251 (3.0 ) %
Weighted average common shares outstanding, diluted 119,229 123,043 (3.1 )
 
nm - not meaningful
bps - basis points
* - ratios are annualized
 
           
Synovus
 
INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share data) 2018   2017   Second Quarter  
Second First Fourth Third Second '18 vs. '17
Quarter     Quarter   Quarter   Quarter   Quarter   Change  
 
Interest income $ 329,834 313,134 306,934 297,652 285,510 15.5 %
Interest expense 45,257   38,850   37,221   35,080   34,413   31.5  
 
 
Net interest income 284,577 274,284 269,713 262,572 251,097 13.3
Provision for loan losses 11,790   12,776   8,565   39,686   10,260   14.9  
 
 
Net interest income after provision for loan losses 272,787   261,508   261,148   222,886   240,837   13.3  
 
 
Non-interest income:
Service charges on deposit accounts 19,999 19,940 20,372 20,678 20,252 (1.2 )
Fiduciary and asset management fees 13,983 13,435 13,195 12,615 12,524 11.6
Card fees 10,833 10,199 9,762 9,729 10,041 7.9
Brokerage revenue 8,900 8,695 7,758 7,511 7,210 23.4
Mortgage banking income 4,839 5,047 5,645 5,603 5,784 (16.3 )
Income from bank-owned life insurance 3,733 4,217 3,900 3,232 3,272 14.1
Cabela's transaction fee - - - 75,000 - nm
Investment securities (losses) gains, net (1,296 ) - - (7,956 ) (1 ) nm
(Decrease)/increase in fair value of private equity investments, net (37 ) (3,056 ) 100 (27 ) (1,352 ) nm
Other fee income 5,259 4,618 4,042 5,094 6,164 (14.7 )
Other non-interest income 7,174   3,951   4,578   3,956   4,807   49.2  
 
 
Total non-interest income 73,387   67,046   69,352   135,435   68,701   6.8  
 
 
 
Non-interest expense:
Salaries and other personnel expense 111,863 113,720 111,243 109,675 105,213 6.3
Net occupancy and equipment expense 32,654 31,480 30,126 30,573 29,933 9.1
Third-party processing expense 15,067 13,945 14,827 13,659 13,620 10.6
FDIC insurance and other regulatory fees 6,543 6,793 6,288 7,078 6,875 (4.8 )
Professional fees 6,284 5,505 6,183 7,141 7,551 (16.8 )
Advertising expense 5,220 5,092 8,081 3,610 5,346 (2.4 )
Foreclosed real estate expense, net (107 ) 856 1,693 7,265 1,448 nm
Earnout liability adjustments - - 1,700 2,059 1,707 nm
Amortization of intangibles 292 292 292 292 292 -
Valuation adjustment to Visa derivative 2,328 - - - - nm
Loss on early extinguishment of debt - - 23,160 - - nm
Litigation settlement/contingency expense (1,400 ) (2,626 ) 300 401 - nm
Restructuring charges, net 103 (315 ) (29 ) 519 13 nm
Other operating expenses 25,210   20,437   22,670   23,374   19,749   27.7  
 
Total non-interest expense 204,057   195,179   226,534   205,646   191,747   6.4  
 
 
 
Income before income taxes 142,117 133,375 103,966 152,675 117,791 20.7
Income tax expense 30,936   30,209   74,361   54,668   41,788   (26.0 )
 
 
Net income 111,181 103,166 29,605 98,007 76,003 46.3
 
Dividends on preferred stock 2,559   2,559   2,559   2,559   2,559   -  
 
Net income available to common shareholders $ 108,622   100,607   27,046   95,448   73,444   47.9   %
 
Net income per common share, basic $ 0.92 0.85 0.23 0.79 0.60 52.7 %
 
Net income per common share, diluted 0.91 0.84 0.23 0.78 0.60 52.7
 
Cash dividends declared per common share 0.25 0.25 0.15 0.15 0.15 66.7
 
Return on average assets * 1.42 % 1.34 0.37 1.27 1.00 42 bps
Return on average common equity * 15.39 14.62 3.76 13.24 10.34 505
 
Weighted average common shares outstanding, basic 118,397 118,666 119,282 120,900 122,203 (3.1 ) %
Weighted average common shares outstanding, diluted 119,139 119,321 120,182 121,814 123,027 (3.2 )
 
nm - not meaningful
bps - basis points
* - ratios are annualized
 
           

Synovus

       
BALANCE SHEET DATA June 30, 2018 December 31, 2017 June 30, 2017
(Unaudited)
 
(In thousands, except share data)
 
ASSETS
Cash and due from banks $ 404,080 397,848 377,213
Interest bearing funds with Federal Reserve Bank 613,082 460,928 468,148
Interest earning deposits with banks 33,754 26,311 6,012

Federal funds sold and securities purchased under resale agreements

40,872   47,846   46,847  
Cash and cash equivalents 1,091,788 932,933 898,220
 
Mortgage loans held for sale, at fair value 53,673 48,024 61,893
Investment securities available for sale, at fair value 3,929,962 3,987,069 3,827,058
 
Loans, net of deferred fees and costs 25,134,056 24,787,464 24,430,512
Allowance for loan losses (251,725 ) (249,268 ) (248,095 )
Loans, net 24,882,331   24,538,196   24,182,417  
 
Cash surrender value of bank-owned life insurance 547,261 540,958 458,753
Premises and equipment, net 428,633 426,813 416,364
Goodwill 57,315 57,315 57,092
Other intangible assets 10,458 11,254 11,843
Deferred tax asset, net 182,983 165,788 320,403
Other assets 555,901   513,487   453,923  
 
Total assets $ 31,740,305   31,221,837   30,687,966  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing deposits $ 7,630,491 7,686,339 7,363,476
Interest bearing deposits, excluding brokered deposits 16,961,187 16,500,436 16,387,032
Brokered deposits 1,851,010   1,961,125   1,468,308  
 
Total deposits 26,442,688 26,147,900 25,218,816
 

Federal funds purchased and securities sold under repurchase
agreements

207,580 161,190 150,379
Long-term debt 1,656,647 1,706,138 2,107,245
Other liabilities 265,696   245,043   213,579  
 
Total liabilities 28,572,611   28,260,271   27,690,019  
 
 
Shareholders' equity:
Series D Preferred Stock - no par value, 8,000,000 shares
outstanding at June 30, 2018
195,138 - -
 
Series C Preferred Stock - no par value, 5,200,000 shares
outstanding at June 30, 2018, December 31, 2017, and June 30, 2017
125,980 125,980 125,980
 
Common stock - $1.00 par value. 117,841,369 shares outstanding at
June 30, 2018, 118,897,295 shares outstanding at December 31, 2017,
and 121,661,092 shares outstanding at June 30, 2017
143,078 142,678 142,499
Additional paid-in capital 3,045,014 3,043,129 3,029,754
Treasury stock, at cost - 25,236,604 shares at June 30, 2018,
23,780,154 shares at December 31, 2017, and 20,837,814 shares at
June 30, 2017
(916,484 ) (839,674 ) (709,944 )
 
Accumulated other comprehensive loss (125,720 ) (54,754 ) (47,865 )
Retained earnings 700,688   544,207   457,523  
Total shareholders' equity 3,167,694   2,961,566   2,997,947  
 
Total liabilities and shareholders' equity $ 31,740,305   31,221,837   30,687,966  
 
         
Synovus
 
AVERAGE BALANCES AND YIELDS/RATES (1)
(Unaudited)
(Dollars in thousands)
  2018   2017
Second First Fourth Third Second
  Quarter     Quarter   Quarter   Quarter   Quarter
Interest Earning Assets
Taxable investment securities (2) $ 4,077,564 4,097,162 3,937,278 3,786,436 3,844,688
Yield 2.34 % 2.34 2.29 2.11 2.11
 
Tax-exempt investment securities (2) (4) $ 115 140 180 259 340
Yield (taxable equivalent) 6.87 % 6.57 7.97 7.86 6.87
 
Trading account assets (5) $ 23,772 8,167 7,360 7,823 3,667
Yield 2.79 % 2.66 2.78 2.09 2.28
 
Commercial loans (3) (4) $ 18,857,271 18,963,515 18,935,774 19,059,936 19,137,733
Yield 4.85 % 4.64 4.49 4.41 4.27
 
Consumer loans (3) $ 6,092,899 5,899,015 5,704,629 5,440,765 5,215,258
Yield 4.76 % 4.71 4.54 4.55 4.49
 
Allowance for loan losses $ (257,966)     (251,635)   (252,319)   (249,248)   (251,219)
 
Loans, net (3) $ 24,692,204 24,610,895 24,388,084 24,251,453 24,101,772
Yield 4.88 % 4.70 4.55 4.49 4.36
 
Mortgage loans held for sale $ 50,366 38,360 45,353 52,177 52,224
Yield 4.42 % 3.95 3.96 3.88 3.87
 

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

$ 724,537 516,575 922,296 543,556 561,503
Yield 1.77 % 1.48 1.31 1.23 1.00
 
Federal Home Loan Bank and Federal Reserve Bank stock (5) $ 165,845 177,381 159,455 175,263 177,323
Yield 4.63 % 3.39 4.03 3.50 2.99
                           
Total interest earning assets $ 29,734,403 29,448,680 29,460,006 28,816,967 28,741,517
  Yield     4.46 %   4.31   4.15   4.11   3.99
 
Interest Bearing Liabilities
 
Interest bearing demand deposits $ 5,001,826 5,032,000 4,976,239 4,868,372 4,837,053
Rate 0.35 % 0.31 0.28 0.27 0.23
 
Money market accounts $ 7,791,107 7,561,554 7,514,992 7,528,036 7,427,562
Rate 0.55 % 0.43 0.36 0.34 0.32
 
Savings deposits $ 829,800 811,587 804,853 803,184 805,019
Rate 0.03 % 0.03 0.03 0.03 0.04
 
Time deposits under $100,000 $ 1,161,890 1,143,780 1,166,413 1,183,582 1,202,746
Rate 0.82 % 0.71 0.70 0.68 0.67
 
Time deposits over $100,000 $ 2,021,084 1,895,545 2,004,031 2,067,347 2,040,924
Rate 1.22 % 1.02 0.99 0.97 0.94
 
Non-maturing brokered deposits $ 262,976 424,118 546,413 547,466 564,043
Rate 1.94 % 1.14 0.81 0.73 0.54
 
Brokered time deposits $ 1,659,941 1,527,793 1,651,920 983,423 815,515
Rate 1.85 % 1.75 1.63 1.16 0.94
 
Total interest bearing deposits $ 18,728,624 18,396,377 18,664,861 17,981,410 17,692,862
Rate 0.70 % 0.58 0.54 0.46 0.41
 

Federal funds purchased and securities sold under repurchase
agreements

$ 210,679 202,226 184,369 191,585 183,400
Rate 0.38 % 0.21 0.15 0.08 0.10
 
Long-term debt $ 1,852,094 2,127,994 1,713,982 1,985,175 2,270,452
Rate 2.66 % 2.32 2.67 2.81 2.83
                           
Total interest bearing liabilities $ 20,791,397 20,726,597 20,563,212 20,158,170 20,146,714
  Rate     0.87 %   0.76   0.72   0.69   0.68
 
Non-interest bearing demand deposits $ 7,539,451 7,391,695 7,621,147 7,305,508 7,298,845
 
Effective cost of funds 0.61 % 0.53 0.50 0.48 0.48
                           
Net interest margin     3.86 %   3.78   3.65   3.63   3.51
 
Taxable equivalent adjustment $ 120 116 234 283 298
 

(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 2Q18 vs. 1Q18 Total Loans 2Q18 vs. 2Q17
Loan Type June 30, 2018 March 31, 2018 % change (1) June 30, 2017 % change  
 
Commercial, Financial, and Agricultural $ 7,271,080 7,191,531 4.4 % $ 6,993,817 4.0 %
Owner-Occupied 5,004,392   4,910,386   7.7   4,749,128   5.4  
Total Commercial & Industrial 12,275,472 12,101,917 5.8 11,742,945 4.5
 
Multi-Family 1,358,211 1,479,573 (32.9 ) 1,724,917 (21.3 )
Hotels 755,125 751,232 2.1 835,110 (9.6 )
Office Buildings 1,429,166 1,464,473 (9.7 ) 1,539,494 (7.2 )
Shopping Centers 811,186 782,580 14.7 864,868 (6.2 )
Warehouses 602,707 583,645 13.1 495,860 21.5
Other Investment Property 553,201   557,547   (3.1 ) 575,415   (3.9 )
Total Investment Properties 5,509,596 5,619,050 (7.8 ) 6,035,664 (8.7 )
 
1-4 Family Construction 177,140 188,939 (25.0 ) 198,419 (10.7 )
1-4 Family Investment Mortgage 543,570   569,965   (18.6 ) 638,407   (14.9 )
Total 1-4 Family Properties 720,710 758,904 (20.2 ) 836,826 (13.9 )
 
Commercial Development 61,375 65,371 (24.5 ) 66,055 (7.1 )
Residential Development 100,246 104,137 (15.0 ) 118,032 (15.1 )
Land Acquisition 252,244   288,265   (50.1 ) 365,657   (31.0 )
Land and Development 413,865   457,773   (38.5 ) 549,744   (24.7 )
 
Total Commercial Real Estate 6,644,171   6,835,727   (11.2 ) 7,422,234   (10.5 )
 
 
Consumer Mortgages 2,750,935 2,663,371 13.2 2,470,665 11.3
Home Equity Lines 1,453,855 1,472,471 (5.1 ) 1,563,167 (7.0 )
Credit Cards 238,424 226,713 20.7 225,900 5.5
Other Consumer Loans 1,793,916   1,606,799   46.7   1,031,639   73.9  
Total Consumer 6,237,130   5,969,354   18.0   5,291,371   17.9  
Unearned Income (22,717 ) (23,961 ) (20.8 ) (26,038 ) (12.8 )
 
Total $ 25,134,056   24,883,037   4.0   % $ 24,430,512   2.9   %
 
 
(1) Percentage change is annualized.
 
                             
 
NON-PERFORMING LOANS COMPOSITION
(Unaudited)
(Dollars in thousands)
           
Total Total Total
Non-performing Non-performing 2Q18 vs. 1Q18 Non-performing 2Q18 vs. 2Q17
Loan Type Loans Loans % change Loans % change
  June 30, 2018 March 31, 2018     June 30, 2017  
 
 
Commercial, Financial, and Agricultural $ 81,231 81,606 (0.5 ) % $ 69,550 16.8 %
Owner-Occupied 6,076   4,067   49.4   24,918   (75.6 )
 
Total Commercial & Industrial 87,307 85,673 1.9 94,468 (7.6 )
 
Multi-Family 176 1,028 (82.9 ) 1,621 (89.1 )
Hotels - - - 376 nm
Office Buildings 670 1,272 (47.3 ) 326 nm
Shopping Centers 412 89 362.9 161 nm
Warehouses 21 - nm 41 (48.8 )
Other Investment Property 459   540   (15.0 ) 1,187   (61.3 )
 
Total Investment Properties 1,738 2,929 (40.7 ) 3,712 (53.2 )
 
 
1-4 Family Investment Mortgage 3,247   2,634   23.3   8,535   (62.0 )
 
Total 1-4 Family Properties 3,247 2,634 23.3 8,535 (62.0 )
 
Commercial Development 42 44 (4.5 ) 269 (84.4 )
Residential Development 3,184 3,220 (1.1 ) 5,585 (43.0 )
Land Acquisition 1,398   1,311   6.6   5,077   (72.5 )
 
Land and Development 4,624   4,575   1.1   10,931   (57.7 )
 
Total Commercial Real Estate 9,609   10,138   (5.2 ) 23,178   (58.5 )
 
Consumer Mortgages 4,822 7,708 (37.4 ) 18,035 (73.3 )
Home Equity Lines 14,265 14,868 (4.1 ) 20,648 (30.9 )
Other Consumer Loans 1,325   1,694   (21.8 ) 2,988   (55.7 )
 
Total Consumer 20,412   24,270   (15.9 ) 41,671   (51.0 )
 
 
Total $ 117,328   120,081   (2.3 ) % $ 159,317   (26.4 ) %
 
           
Synovus
 
CREDIT QUALITY DATA
(Unaudited)
(Dollars in thousands) 2018   2017   2nd Quarter
Second First Fourth Third Second '18 vs. '17
Quarter     Quarter   Quarter   Quarter   Quarter   Change  
 
Non-performing Loans $ 117,328 120,081 115,561 97,838 159,317 (26.4 ) %
Impaired Loans Held for Sale (1) 2,733 6,591 11,278 30,197 127 nm
Other Real Estate 6,288 4,496 3,758 10,551 19,476 (67.7 )  
Non-performing Assets 126,349 131,168 130,597 138,586 178,920 (29.4 )
 
Allowance for loan losses 251,725 257,764 249,268 249,683 248,095 1.5
 
Net Charge-Offs - Quarter 17,829 4,280 8,979 38,099 15,678
Net Charge-Offs - YTD 22,109 4,280 69,675 60,695 22,597
Net Charge-Offs / Average Loans - Quarter (2) 0.29 % 0.07 0.15 0.62 0.26
Net Charge-Offs / Average Loans - YTD (2) 0.18 0.07 0.29 0.33 0.19
 
Non-performing Loans / Loans 0.47 0.48 0.47 0.40 0.65
Non-performing Assets / Loans, Impaired Loans Held for Sale, & ORE 0.50 0.53 0.53 0.57 0.73
Allowance / Loans 1.00 1.04 1.01 1.02 1.02
 
Allowance / Non-performing Loans 214.55 214.66 215.70 255.20 155.72
Allowance / Non-performing Loans (3) 262.99 241.49 238.44 336.35 217.07
 
Past Due Loans over 90 days and Still Accruing $ 3,222 5,416 4,414 5,685 4,550 (29.2 )
As a Percentage of Loans Outstanding 0.01 % 0.02 0.02 0.02 0.02
 
Total Past Due Loans and Still Accruing $ 55,614 54,150 52,032 84,853 66,788 (16.7 )
As a Percentage of Loans Outstanding 0.22 % 0.22 0.21 0.35 0.27
 
Accruing Troubled Debt Restructurings (TDRs) $ 125,310 129,394 151,271 166,918 167,395 (25.1 )
 
 

(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)      
June 30, 2018 December 31, 2017 June 30, 2017
 
 
Tier 1 Capital $ 3,156,805 2,872,001 2,829,340
Total Risk-Based Capital 3,668,904 3,383,081 3,340,155
Common Equity Tier 1 Ratio (transitional) 10.11 % 9.99 10.02
Common Equity Tier 1 Ratio (fully phased-in) (5) 10.05 9.88 9.82
Tier 1 Capital Ratio 11.25 10.38 10.37
Total Risk-Based Capital Ratio 13.07 12.23 12.24
Tier 1 Leverage Ratio 10.03 9.19 9.30
Common Equity as a Percentage of Total Assets (2) 8.97 9.08 9.36
Tangible Common Equity as a Percentage of Tangible Assets (3)
(5)
8.77 8.88 9.15
Book Value Per Common Share (4) $ 24.16 23.85 23.61
Tangible Book Value Per Common Share (3) 23.58 23.27 23.04
 
 

(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.

 

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