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Synovus Financial's CEO Discusses Q2 2012 Results - Earnings Call Transcript

So let’s start on page 4 of your slide presentation where we do are pleased to report our fourth consecutive quarter of profitability. I think three takeaways for the quarter will be that certainly credit improvement drove profitability. We will talk about – lot about the continued stabilizing and improving of our balance sheet and our ongoing focus on core performance.

Again, but let’s start with earnings, we reported earnings of $24.8 million for the quarter compared to $21.4 million a quarter ago and compared to a net loss of $53.5 million in the second quarter of 2011. Again, quite pleased with that turn. On earnings per share basis, diluted earnings per share for the second quarter $0.03 a share compared to $0.02 a share at last quarter and a net loss of $0.07 a share in the second quarter of 2011.

Turning to slide 5, again as I said, credit costs drove the improvement. Our credit costs declined 23% sequentially. If you look at our graph at the bottom you will see fairly significant decline in credit cost from $91 million last quarter to $70 million this quarter. The same number the second quarter a year-ago was a $158 million. So, again steady significant declines in credit costs, primary drivers of performance.

The main factors in our credit costs decline, we had positive results in our semi-annual update to expected loss factors, driven by continued improvement in credit quality trends. We had lower inflow costs due to lower volume of NPL inflows and our negative migration costs improved as well. So very pleased with the decline in overall credit costs.

On slide 6, we will talk a little bit about inflows, NPL inflows decline for the fifth consecutive quarter inline with guidance as Kevin Howard had previously suggested directionally down, but certainly some quarters might have a little bump to them. But you will see again a decline, we had a $124 million of inflows in the second quarter compared to a $140 million in the first quarter of 2012 and compared to $231 million in the second quarter of 2011. Again, an 11% improvement from the first quarter, a 46% improvement from the second quarter of ’11.

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