Synovus Financial Corp. (



Q4 2011 Earnings Call Transcript

January 24, 2012, 8:30 a.m. ET


Pat Reynolds - IR

Kessel Stelling - Chairman and CEO

Tommy Prescott - CFO

Kevin Howard - Chief Credit Officer

D. Copeland - EVP and Chief Banking Officer


John Pancari - Evercore Partners Inc.

Jefferson Harralson - KBW

Craig Siegenthaler - Credit Suisse

Ken Zerbe - Morgan Stanley

Jennifer Demba - SunTrust Robinson Humphrey

Kevin Fitzsimmons - Sandler O'Neill

Nancy Bush - NAB Research

Christopher Marinac - FIG Partners

Michael Rose - Raymond James



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Good morning, ladies and gentlemen and welcome to Synovus' Fourth Quarter 2011 Earnings Conference Call. [Operator Instructions]. It is now my pleasure to turn the floor over to your host, Pat Reynolds, Director of Investor Relations. Sir, the floor is yours.

Pat Reynolds

I thank all of you for joining us today on the call. During this call, we will be referencing the slides and the press release that are available within the Investor Relations section of our website at Our presenters today will be Kessel Stelling, Chairman and Chief Executive Officer; Tommy Prescott, Chief Financial Officer; and Kevin Howard, Chief Credit Officer.

Before we begin, I need to remind you that our comments may include forward-looking statements. These statements are subject to risk and uncertainties, and the actual results could vary materially. We list these factors that might cause results to differ materially in our press release and in our SEC filings, which are available on the website. Further, we do not intend to update any forward-looking statements to reflect circumstances or events that occur after the date these statements are made. We disclaim any responsibility to do so.

During the call, we will discuss non-GAAP financial measures in reference to the company's performance, and you can find a reconciliation of these measures to GAAP financial measures in the appendix through the presentation. Finally, Synovus is not responsible for and does not edit or guarantee the accuracy of earnings, teleconference transcripts provided by third parties. The only authorized webcast is located on our website.

We respect the time available this morning and desire to answer everyone's questions. We ask you to initially limit your time to two questions. If we have more time available after everyone's initial two questions, we will reopen the queue for follow-up questions. And now I'll turn it over to Kessel.

Kessel Stelling

I want to thank all of you for joining us on our call this morning. As always, I will go through a high level of performance and then it over to Tommy Prescott and Kevin Howard, who will get more detail in to both financial and credit performance.

So I will begin on page four of our deck. And again, you will see from our press release and deck and headlined, that we again reported profitability for the quarter; our second consecutive quarter of profitability. We are delighted to do that.

Highlights of the quarter; net income available to common share holders was 12.8 million, compared to net income of 15.7 million in the third quarter, and a net loss of a $180 million in the fourth quarter of 2010. Our net income for diluted common share was $0.014, compared to $0.017 in the third quarter, and a net loss of $0.229 in the fourth quarter of 2010.

Credit, a big of the story in this quarter; total credit cost were $90.5 million, down 52 million or 36.5% from the third quarter of 2011, and down a 191 million or almost 68% from the fourth quarter of 2010.

We are also pleased to report expansion in our margin this quarter. The fourth quarter net interest margin was 3.52%, up 5 basis points from the third quarter of 2011, and up 15 basis points from the fourth quarter of 2010.

As I said earlier, Tommy will go in to more detail. But I want to point in our fourth quarter numbers, included in that were net investment securities gains of $10.3 million, compared to approximately $63 million in the third quarter, as well as a $5.9 million charge related to our company’s indemnification obligation, as a member of the Visa USA network.

If you’ll follow it to page five in the deck. Again graphically illustrating what we talked about on the page before the story of the quarter is, credit cost. Credit cost decline for the 10th

consecutive quarter.

Call your attention to the graph on the left there, where you will see the 36.5% decline from the third quarter, and again almost 68% decline from the fourth quarter of 2010. A very nice trend line continuing to develop in terms of overall credit cost there.

Our net charge-offs; again you will see graphically illustrated decline from a 138 million to a 113.5 million. The 113.5 million in charge-offs represents 2.26% annualized, compared to a 138 million or 2.72% annualized in the third quarter of 2011. And 385 million or almost 7% annualized in the fourth quarter of 2010. Again you will see fairly a dramatic improvement there, and I think in line with guidance previously provided by Kevin Howard.

On page 6, a little color on the inflows. Again, you saw a fairly substantial decline in inflows in the back half of last year, and again pleased to see in the fourth quarter further decline from 222 million in the third quarter to a $189.2 million in the fourth quarter. That’s a 15% decrease from the third quarter and almost 36% decrease from the fourth quarter of 2010.

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