Synovus Reports 16.1% Increase In Net Income For Second Quarter Of 2012

Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter ended June 30, 2012.

Second Quarter Results
  • Net income available to common shareholders was $24.8 million for the second quarter of 2012, a 16.1% increase compared to net income available to common shareholders of $21.4 million for the first quarter of 2012 and a net loss attributable to common shareholders of $53.5 million in the second quarter of 2011. Net income available to common shareholders was $46.2 million for the first six months of 2012, compared to a net loss attributable to common shareholders of $147.2 million for the first six months of 2011.
  • Diluted net income per common share for the second quarter of 2012 was $0.03, compared to diluted net income per common share of $0.02 for the first quarter of 2012, and a net loss per common share of $0.07 for the second quarter of 2011. Diluted net income per common share for the first six months of 2012 was $0.05, compared to a net loss per common share of $0.19 for the first six months of 2011.

“Continued credit improvement drove our fourth consecutive quarter of profitability,” said Kessel D. Stelling, Chairman and CEO of Synovus. “Declines in total credit costs, non-performing loan inflows, non-performing assets, and total delinquencies contributed significantly to the overall credit improvement. We were pleased to again see increases in loans outstanding from our Large Corporate Banking, Senior Housing, and Asset-Based Lending groups and continued pipeline growth throughout our footprint, reflecting the ongoing success of our commercial banking strategy.”

Credit Trends
  • Total credit costs were $70.3 million in the second quarter of 2012, down 22.6% from $90.9 million in the first quarter of 2012 and down 55.5% from $157.9 million in the second quarter of 2011.
  • Non-performing loan inflows were $124.3 million in the second quarter of 2012, down 10.9% from $139.6 million in the first quarter of 2012 and down 46.2% from $231.1 million in the second quarter of 2011.
  • Distressed asset sales were approximately $128 million during the second quarter, compared to approximately $135 million in the first quarter of 2012, and approximately $195 million in the second quarter of 2011.
  • Non-performing loans, excluding loans held for sale, were $755.2 million at June 30, 2012, down $80.9 from the previous quarter, and down $130.1 million from the second quarter of 2011. The non-performing loan ratio was 3.84% at June 30, 2012, down from 4.21% at the end of the previous quarter and 4.32% at June 30, 2011.
  • Total non-performing assets were $961.4 million at June 30, 2012, down $94.4 million from the previous quarter, and down $257.3 million or 21.1% from the second quarter of 2011. The non-performing asset ratio was 4.83% at June 30, 2012, compared to 5.26% at the end of the previous quarter and 5.85% at June 30, 2011.
  • Total delinquencies (consisting of loans 30 or more days past due and still accruing) were 0.47% of total loans at June 30, 2012, down from 0.73% at March 31, 2012, and 0.97% at June 30, 2011. Total loans past due 90 days or more and still accruing were 0.03% at June 30, 2012, down from 0.04% at March 31, 2012, and 0.11% at June 30, 2011.
  • Net charge-offs were $98.7 million in the quarter, up slightly from $94.7 million in the first quarter of 2012, and down 41.0% from $167.2 million in the second quarter of 2011. The annualized net charge-off ratio was 1.99% in the second quarter, up from 1.90% in the previous quarter, and down from 3.22% in the second quarter of 2011.

Balance Sheet Fundamentals
  • Net sequential quarter loan growth was approximately $29 million for the second quarter, compared to a decrease of approximately $25 million during the first quarter of 2012 and a decline of approximately $168 million during the second quarter of 2011. Net loan growth excludes the impact of loan sales, transfers to loans held-for-sale, charge-offs, and foreclosures.
  • Reported loans declined $163.6 million, compared to a $236.1 million decrease in the previous quarter, and a $492.6 million decrease in the second quarter of 2011.
  • Loans outstanding from the Large Corporate Banking, Senior Housing, and Asset Based Lending groups were up approximately $486 million over the previous year and up approximately $141 million compared to the previous quarter.
  • Total deposits ended the quarter at $21.6 billion, down $572.6 million from the previous quarter due primarily to the planned reductions in higher-cost brokered deposits and time deposits of $462.3 million.
  • Core deposits ended the quarter at $20.4 billion, down $314.8 million compared to the first quarter of 2012. Core deposits, excluding time deposits, declined $110.4 million compared to the previous quarter due to an expected seasonal decrease in state, county and municipal deposits. Core deposits increased $231.8 million compared to a year ago. Core deposits, excluding time deposits, increased $1.18 billion compared to June 30, 2011.
  • The effective cost of core deposits (includes non-interest bearing deposits) continued to decline, with an effective cost of 41 basis points for the second quarter of 2012, down from 47 basis points for the previous quarter and 67 basis points in the second quarter of 2011.

Core Performance

Pre-tax, pre-credit costs income was $106.6 million for the second quarter of 2012, down $3.9 million from $110.6 million in the first quarter of 2012.
  • The net interest margin was 3.48%, down seven basis points from the first quarter of 2012, primarily due to the expected six basis point incremental impact from the debt issued in the first quarter of 2012.
  • Total non-interest income was $76.5 million for the second quarter of 2012, compared to $84.1 million in the first quarter of 2012.
  • Non-interest income, excluding net investment securities gains, was up $8.3 million from the previous quarter.
    • Mortgage revenue was up $2.0 million from the previous quarter
    • Bankcard fees were up $914 thousand compared to the previous quarter.
    • Service charges were up $454 thousand from the previous quarter.
    • Increase in fair value of private equity investments was $7.3 million for the quarter.
  • Total reported non-interest expense was $208.3 million for the second quarter of 2012 compared to $203.1 million for the previous quarter.
  • Core expenses (excludes Visa indemnification charges, restructuring charges and credit costs) were up $4.6 million from the first quarter of 2012.
    • Employment expenses increased $2.6 million from the previous quarter, primarily due to annual merit salary increases and employee incentives.
    • Other expenses were up $2.6 million compared to the previous quarter, largely due to higher attorney fees related to problem loans and litigation expenses.

Capital Ratios
  • Tier 1 Common Equity ratio was 8.81% at June 30, 2012 up from 8.67% at March 31, 2012.
  • Tier 1 Capital ratio was 13.36% at June 30, 2012 up from 13.19% at March 31, 2012.
  • Tier 1 Leverage ratio was 10.66% at June 30, 2012 up from 10.41% at March 31, 2012.
  • Total Risk Based Capital ratio was 16.32% at June 30, 2012 down from 16.57% at March 31, 2012.
  • Tangible Common Equity/Tangible Assets ratio was 7.12% at June 30, 2012 up from 6.81% at March 31, 2012.

Stelling concluded, “The second quarter was marked by the continued strengthening of our balance sheet as we disposed of non-performing loans and reduced levels of higher risk credits and asset classes, while generating high-quality commercial loans in all segments of our markets. These efforts, coupled with an intense focus on expense control and our customer-focused, relationship-based brand of banking, further position our company for sustained profitability and long-term success.”

Synovus will host an earnings highlights conference call at 8:30 a.m. EST on July 24, 2012. The earnings call will be accompanied by a slide presentation. Shareholders and other interested parties can access the slide presentation and listen to the conference call via simultaneous Internet broadcast at www.synovus.com by clicking on the “Live Webcast” icon. RealPlayer or Windows Media Player can be downloaded prior to accessing the actual call or the replay. The replay will be archived for 12 months and will be available 30-45 minutes after the call.

About Synovus

Synovus Financial Corp. is a financial services company with over $26 billion in assets based in Columbus, Georgia. Synovus Financial Corp. provides commercial and retail banking, investment and mortgage services to customers in Georgia, Alabama, South Carolina, Florida and Tennessee. See Synovus Financial Corp. on the web at www.synovus.com.

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 commercial banking industry and economy in general. These forward-looking statements include, among others, our expectations on credit trends, deposits, loan growth and our loan portfolio; expectations on growth and future profitability; 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 report. 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, 2011 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.

Use of Non-GAAP Financial Measures

The measures entitled core deposits, core deposits excluding time deposits, tangible common equity to tangible assets ratio, pre-tax, pre-credit costs income, core expenses, non-interest income excluding net investment securities gains, and net sequential quarter loan growth (decline) are not measures recognized under U.S. generally accepted accounting principles (GAAP) and therefore are considered non-GAAP financial measures. The most comparable GAAP measures are total deposits, total shareholders’ equity to total assets ratio, income (loss) before income taxes, total non-interest expense, total non-interest income, and sequential quarter total loan growth (decline), respectively.

Synovus believes that these non-GAAP financial measures provide meaningful additional information about Synovus to assist management and investors in evaluating Synovus’ capital strength and the performance of its core business. These non-GAAP financial measures should not be considered as substitutes for total deposits, total shareholders’ equity to total assets ratio, income (loss) before income taxes, total non-interest expense, total non-interest income, or sequential quarter total loan growth (decline) determined in accordance with GAAP and may not be comparable to other similarly titled measures at other companies.

The computations of core deposits, core deposits excluding time deposits, tangible common equity to tangible assets ratio, pre-tax, pre-credit costs income, core expenses, non-interest income excluding net investment gains, and net sequential quarter loan growth (decline) and the reconciliation of these measures to total deposits, total shareholders’ equity to total assets ratio, income (loss) before income taxes, total non-interest expense, total non-interest income, and sequential quarter total loan growth (decline) are set forth in the tables below.

 

Reconciliation of Non-GAAP Financial Measures
(dollars in thousands)     2Q12     1Q12     4Q11     3Q11     2Q11
Core Deposits
Total deposits $ 21,565,065 22,137,702 22,411,752 23,109,427 22,875,017
Subtract: Brokered deposits   (1,148,892 ) (1,406,709 ) (1,783,174 ) (2,157,631 ) (2,690,598 )
Core deposits 20,416,173 20,730,993 20,628,578 20,951,796 20,184,419
Subtract: Time deposits   (4,097,834 ) (4,302,292 ) (4,591,164 ) (4,952,144 ) (5,049,901 )
Core deposits excluding time deposits $ 16,318,339   16,428,701   16,037,414   15,999,652   15,134,518  
 
Tangible Common Equity To Tangible Assets Ratio
Total assets $ 26,294,110 27,064,792 27,162,845 28,253,923 28,313,910
Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net   (6,693 ) (7,589 ) (8,525 ) (9,482 ) (10,449 )
Tangible assets $ 26,262,986   27,032,772   27,129,889   28,220,010   28,279,030  
 
Total shareholders’ equity $ 2,853,389 2,821,763 2,827,452 2,829,447 2,850,937
Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net (6,693 ) (7,589 ) (8,525 ) (9,482 ) (10,449 )
Subtract: Cumulative perpetual preferred stock   (952,093 ) (949,536 ) (947,017 ) (944,538 ) (942,096 )
Tangible common equity $ 1,870,172   1,840,207   1,847,479   1,850,996   1,873,961  
 
Total shareholders’ equity to total assets ratio 10.85 % 10.43 10.41 10.01 10.07
Tangible common equity to tangible assets ratio 7.12 % 6.81 6.81 6.56 6.63
 
Pre-tax, Pre-credit Costs Income
Income (loss) before income taxes $ 37,347 35,916 26,979 37,118 (43,764 )
Add: Provision for losses on loans 44,222 66,049 54,565 102,325 120,159
Add: Other credit costs (1) 26,119 24,849 35,962 40,211 37,772
Add: Restructuring charges 1,393 858 639 2,587 3,106
Subtract/Add: Net (gain) loss on investment

securities
(4,170 ) (20,083 ) (10,337 ) (62,873 ) (377 )
Add: Visa indemnification charge   1,734   2,979   5,942   --   92  
Pre-tax, pre-credit costs income $ 106,645   110,568   113,750   119,368   116,988  
 
Core Expenses
Total non-interest expense $ 208,264 203,133 219,082 222,552 222,415
Subtract: Other credit costs (1) (26,119 ) (24,849 ) (35,962 ) (40,211 ) (37,772 )
Subtract: Restructuring charges (1,393 ) (858 ) (639 ) (2,587 ) (3,106 )
Subtract: Visa indemnification charge   (1,734 ) (2,979 ) (5,942 ) --   (92 )
Core expenses $ 179,018   174,447   176,539   179,754   181,445  
 
(1) Other credit costs consist primarily of losses on ORE, provision for losses on unfunded commitments, and charges related to other loans held for sale.
 

Reconciliation of Non-GAAP Financial Measures (continued)
(dollars in thousands)     2Q12     1Q12     4Q11     3Q11     2Q11
 

Non-interest income excluding investment securities gains (losses), net
Total non-interest income $ 76,477 84,139 73,470 133,392 67,849
Subtract/Add: Net investment securities (gains) losses   (4,170 ) (20,083 ) (10,337 ) (62,873 ) (377 )
Non-interest income excluding investment securities gains (losses), net $ 72,307   64,056   63,133   70,519   67,472  
 
 
Net sequential quarter loan growth (decline)
 
Sequential quarter decline in total loans $ (163,571 ) (236,115 ) (22,273 ) (402,724 ) (492,612 )
Add: Transfers to other loans held for sale 38,999 578 3,457 16,004 11,275
Add: Foreclosures 30,087 48,127 36,331 57,859 60,426
Add: Charge-offs excluding transfers to other loans held for sale and loan sales 53,075 65,498 78,443 87,660 126,821
Add: Loan sales   70,590   96,621   70,808   109,140   126,462  
Net sequential quarter loan growth (decline) $ 29,180   (25,291 ) 166,766   (132,061 ) (167,628 )
       

Synovus
 
INCOME STATEMENT DATA Six Months Ended
(Unaudited)
(Dollars in thousands, except per share data) June 30,
 
2012     2011     Change
 
Interest income $ 516,464 586,484 (11.9) %
Interest expense   82,148 118,089 (30.4)  
 
Net interest income 434,316 468,395 (7.3)
Provision for losses on loans   110,271 261,905 (57.9)  
 
Net interest income after provision for losses on loans   324,045 206,490 56.9  
 
Non-interest income:
Service charges on deposit accounts 36,915 39,556 (6.7)
Fiduciary and asset management fees 21,627 23,416 (7.6)
Brokerage revenue 12,942 12,511 3.4
Mortgage revenue 13,986 8,042 73.9
Bankcard fees 16,072 22,782 (29.5)
Investment securities gains (losses), net 24,253 1,797 nm
Other fee income 9,651 10,220 (5.6)
Increase (decrease) in fair value of private equity investments, net 7,372 (169) nm
Other non-interest income   17,798 13,858 28.4  
 
Total non-interest income   160,616 132,013 21.7  
 
Non-interest expense:
Salaries and other personnel expense 187,795 184,849 1.6
Net occupancy and equipment expense 52,865 58,717 (10.0)
FDIC insurance and other regulatory fees 27,966 30,362 (7.9)
Foreclosed real estate expense 43,680 64,609 (32.4)
Gains on other loans held for sale, net (99) (1,746) nm
Professional fees 19,196 20,129 (4.6)
Data processing expense 16,735 18,201 (8.1)
Visa indemnification charges 4,713 96 nm
Restructuring charges 2,252 27,439 nm
Loss on curtailment of post-retirement defined benefit plan - 398 nm
Other operating expenses   56,296 59,077 (4.7)  
 
Total non-interest expense   411,399 462,131 (11.0)  
 
Income (loss) from continuing operations before income taxes 73,262 (123,628) nm
Income tax benefit   (2,182) (5,220) 58.2  
 
Net income (loss) 75,444 (118,408) nm
 
Net loss attributable to non-controlling interest - (220) nm
 
Net income (loss) attributable to controlling interest 75,444 (118,188) nm
 
Dividends and accretion of discount on preferred stock 29,272 28,970 1.0
 
 
Net income (loss) attributable to common shareholders $ 46,172 (147,158) nm
 
 
Basic EPS
Net income (loss) attributable to common shareholders 0.06 (0.19) nm
 
Diluted EPS
Net income (loss) attributable to common shareholders 0.05 (0.19) nm
 
Cash dividends declared per common share 0.02 0.02 -
 
Return on average assets 0.56 % (0.82) nm
Return on average common equity 4.86 (15.55) nm
 
 
Average common shares outstanding - basic 786,355 785,260 0.1 %
Average common shares outstanding - diluted 909,542 785,260 15.8
 
nm - not meaningful
                 

Synovus
 
INCOME STATEMENT DATA
(Unaudited)
(Dollars in thousands, except per share data) 2012   2011     2nd Quarter
Second First Fourth Third Second '12 vs. '11
Quarter     Quarter     Quarter     Quarter     Quarter     Change
 
Interest income $ 253,809 262,654 273,303 281,970 288,052 (11.9 ) %
Interest expense 40,453   41,695   46,147   53,367   57,091   (29.1 )
 
 
Net interest income 213,356 220,959 227,156 228,603 230,961 (7.6 )
Provision for losses on loans 44,222   66,049   54,565   102,325   120,159   (63.2 )
 
 
Net interest income after provision for losses on loans 169,134   154,910   172,591   126,278   110,802   52.6  
 
 
Non-interest income:
Service charges on deposit accounts 18,684 18,231 19,175 20,039 19,238 (2.9 )
Fiduciary and asset management fees 10,792 10,835 10,763 11,631 11,879 (9.2 )
Brokerage revenue 6,295 6,647 6,939 6,556 6,291 0.1
Mortgage revenue 7,983 6,003 4,847 7,427 5,547 43.9
Bankcard fees 8,493 7,579 7,150 11,562 12,125 (30.0 )
Investment securities gains (losses), net 4,170 20,083 10,337 62,873 377 nm
Other fee income 4,951 4,700 4,310 5,423 5,289 (6.4 )
Increase (decrease) in fair value of private equity investments, net 7,279 93 (177 ) (771 ) (301 ) nm
Other non-interest income 7,830   9,968   10,126   8,652   7,404   5.8  
 
 
Total non-interest income 76,477   84,139   73,470   133,392   67,849   12.7  
 
 
 
Non-interest expense:
Salaries and other personnel expense 95,173 92,622 93,115 93,184 91,749 3.7
Net occupancy and equipment expense 26,159 26,706 27,338 27,981 28,883 (9.4 )
FDIC insurance and other regulatory fees 13,302 14,663 13,238 15,463 15,956 (16.6 )
Foreclosed real estate expense 20,708 22,972 31,853 37,108 39,872 (48.1 )
(Gains) losses on other loans held for sale, net (1,058 ) 959 (145 ) (846 ) 480 nm
Professional fees 9,929 9,267 10,321 10,135 10,893 (8.8 )
Data processing expense 8,712 8,024 8,532 9,024 9,251 (5.8 )
Visa indemnification charges 1,734 2,979 5,942 - 92 nm
Restructuring charges 1,393 858 639 2,587 3,106 (55.2 )
Other operating expenses 32,212   24,083   28,249   27,916   22,133   45.5  
 
 
Total non-interest expense 208,264   203,133   219,082   222,552   222,415   (6.4 )
 
 
 
Income (loss) before income taxes 37,347 35,916 26,979 37,118 (43,764 ) nm
Income tax (benefit) expense (2,105 ) (77 ) (378 ) 6,910   (4,764 ) (55.8 )
 
 
Net income (loss) 39,452 35,993 27,357 30,208 (39,000 ) nm
 
Dividends and accretion of discount on preferred stock 14,649   14,624   14,578   14,541   14,504   1.0  
 
 
 
Net income (loss) available to common shareholders $ 24,803   21,369   12,779   15,667   (53,504 ) nm
 
 
Basic EPS
Net income (loss) available to common shareholders 0.03 0.03 0.02 0.02 (0.07 ) nm
 
Diluted EPS
Net income (loss) available to common shareholders 0.03 0.02 0.01 0.02 (0.07 ) nm
 
Cash dividends declared per common share 0.01 0.01 0.01 0.01 0.01 -
 
Return on average assets * 0.59 % 0.53 % 0.39 0.42 (0.55 ) nm
Return on average common equity * 5.23 4.49 2.66 3.20 (10.95 ) nm
 
 
Average common shares outstanding - basic 786,576 786,135 785,289 785,280 785,277 0.1 %
Average common shares outstanding - diluted 909,761 908,986 911,253 911,247 785,277 15.9
 

nm - not meaningful

* - ratios are annualized
           
Synovus
       
BALANCE SHEET DATA June 30, 2012 December 31, 2011 June 30, 2011
(Unaudited)
 
(In thousands, except share data)
 
ASSETS
Cash and due from banks $ 523,302 510,423 409,302
Interest bearing funds with Federal Reserve Bank 1,301,244 1,567,006 2,845,277
Interest earning deposits with banks 16,003 13,590 24,133

Federal funds sold and securities purchased under resale agreements
118,098 158,916 127,580
Trading account assets, at fair value 12,331 16,866 16,130
Mortgage loans held for sale, at fair value 120,007 161,509 78,752
Other loans held for sale 32,601 30,156 89,139
Investment securities available for sale, at fair value 3,570,346 3,690,125 3,259,254
 
Loans, net of unearned income 19,680,127 20,079,813 20,504,810
Allowance for loan losses (453,325) (536,494) (631,401)
Loans, net 19,226,802 19,543,319 19,873,409
 
Premises and equipment, net 475,944 486,923 493,638
Goodwill 24,431 24,431 24,431
Other intangible assets, net 6,693 8,525 10,449
Other real estate 174,941 204,232 244,313
Other assets 691,367 746,824 818,103
 
Total assets $ 26,294,110 27,162,845 28,313,910
 
 
LIABILITIES AND EQUITY
Liabilities:
Deposits:
Non-interest bearing deposits $ 5,607,680 5,366,868 4,877,267
Interest bearing deposits, excluding brokered deposits 14,808,493 15,261,710 15,307,152
Brokered deposits 1,148,892 1,783,174 2,690,598
 
 
Total deposits 21,565,065 22,411,752 22,875,017
 
 
Federal funds purchased and other short-term borrowings 351,173 313,757 452,466
Long-term debt 1,301,616 1,364,727 1,894,901
Other liabilities 222,867 245,157 240,588
 
Total liabilities 23,440,721 24,335,393 25,462,972
 
 
Equity:
Shareholders' equity:
Series A Preferred Stock, no par value (1) 952,093 947,017 942,096
Common stock, par value $1.00 (2) 792,269 790,989 790,973
Additional paid-in capital 2,215,201 2,241,171 2,353,854
Treasury stock, at cost (3) (114,176) (114,176) (114,176)
Accumulated other comprehensive income 7,003 21,093 65,905
Accumulated deficit (999,001) (1,058,642) (1,187,714)
Total shareholders' equity 2,853,389 2,827,452 2,850,938
 
Total liabilities and equity $ 26,294,110 27,162,845 28,313,910
 
 
 
(1) Preferred shares outstanding: 967,870, at all periods presented

(2) Common shares outstanding: 786,575,535; 785,295,428; and 785,279,194 at June 30, 2012, December 31, 2011, and June 30, 2011, respectively.
(3) Treasury shares: 5,693,452, at all periods presented
 
Synovus
                 
AVERAGE BALANCES AND YIELDS/RATES (1)
(Unaudited)
(Dollars in thousands)
2012

2011
                           
Second First Fourth Third Second
  Quarter     Quarter     Quarter     Quarter     Quarter
Interest Earning Assets
Taxable investment securities (2) $ 3,539,376 3,577,026 3,647,459 3,152,589 3,172,818
Yield 2.11 % 2.34 2.59 3.28 3.46
 
Tax-exempt investment securities (2) (4) $ 21,408 23,559 25,566 27,903 31,264
Yield (taxable equivalent) 6.40 % 6.36 6.57 6.66 6.73
 
Trading account assets $ 13,647 14,975 19,107 14,601 16,881
Yield 6.93 % 7.45 4.87 5.76 5.27
 
Commercial loans (3) (4) $ 15,941,719 16,144,615 16,276,207 16,535,371 16,983,912
Yield 4.67 % 4.76 4.82 4.88 4.92
 
Consumer loans (3) $ 3,896,941 3,866,084 3,871,393 3,869,698 3,879,042
Yield 4.87 % 4.94 4.95 5.06 5.10
 
Allowance for loan losses $ (498,419)     (529,669)     (587,956)     (632,082)     (678,851)
 
Loans, net (3) $ 19,340,241 19,481,030 19,559,644 19,772,987 20,184,103
Yield 4.85 % 4.94 5.01 5.09 5.14
 
Mortgage loans held for sale $ 90,499 112,040 161,632 91,257 79,340
Yield 4.99 % 4.88 4.58 5.74 6.16
 
Federal funds sold, due from Federal Reserve Bank,
and other short-term investments $ 1,668,814 1,830,295 2,221,728 3,075,470 2,929,515
Yield 0.24 % 0.24 0.24 0.24 0.25
 
Federal Home Loan Bank and Federal Reserve Bank stock (5) $ 63,665 78,100 84,171 96,442 104,727
Yield 1.85 % 1.43 0.93 0.90 0.87
                                   
Total interest earning assets $ 24,737,650 25,117,025 25,719,307 26,231,249 26,518,648
Yield 4.14 % 4.22 4.23 4.28 4.37
                                   
 

Interest Bearing Liabilities
 
Interest bearing demand deposits $ 3,404,540 3,540,327 3,457,677 3,302,439 3,379,243
Rate 0.22 % 0.25 0.26 0.30 0.32
 
Money market accounts $ 6,769,037 6,755,769 6,697,334 6,636,751 6,306,399
Rate 0.42 % 0.49 0.57 0.73 0.77
 
Savings deposits $ 557,149 534,118 516,520 521,604 520,518
Rate 0.11 % 0.12 0.12 0.13 0.14
 
Time deposits under $100,000 $ 1,868,348 1,967,084 2,062,171 2,131,453 2,124,525
Rate 0.97 % 1.08 1.17 1.27 1.38
 
Time deposits over $100,000 $ 2,336,496 2,480,044 2,710,893 2,912,476 2,978,929
Rate 1.23 % 1.33 1.40 1.49 1.57
 
Brokered money market accounts $ 222,916 223,113 236,973 325,002 390,048
Rate 0.33 % 0.28 0.27 0.39 0.47
 
Brokered time deposits $ 1,036,521 1,346,868 1,689,538 2,053,811 2,471,620
Rate 1.94 %   1.89     1.87     1.88     1.87
 
Total interest bearing deposits $ 16,195,007 16,847,323 17,371,106 17,883,536 18,171,282
Rate 0.64 % 0.73 0.82 0.95 1.01
 
Federal funds purchased and other
short-term liabilities $ 368,984 296,018 329,343 368,311 449,815
Rate 0.18 % 0.24 0.26 0.28 0.26
 
Long-term debt $ 1,326,239 1,386,324 1,443,825 1,693,673 1,901,130
Rate 4.34 % 3.19 2.78 2.45 2.30
                                   
 
Total interest bearing liabilities $ 17,890,230 18,529,665 19,144,274 19,945,520 20,522,227
Rate 0.91 % 0.90 0.96 1.06 1.11
                                   
 
Non-interest bearing demand deposits $ 5,606,352 5,397,964 5,413,322 5,175,521 4,911,044
                                   
 
Net interest margin       3.48 %   3.55     3.52     3.47     3.51
 
Taxable equivalent adjustment $ 780 798 844 880 893
 
(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 of 35%, 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 balance sheet
 
Synovus
           
 
LOANS OUTSTANDING AND NON-PERFORMING LOANS COMPOSITION
(Unaudited)
(Dollars in thousands)
 
 
June 30, 2012
 
Loans as a % Total Non-performing Loans
of Total Loans Non-performing as a % of Total
Loan Type Total Loans     Outstanding     Loans     Nonperforming Loans
 
 
Multi-Family $ 785,726 4.0 % $ 5,997 0.8 %
Hotels 706,782 3.6 11,619 1.5
Office Buildings 766,263 3.9 7,412 1.0
Shopping Centers 931,036 4.7 10,196 1.4
Commercial Development 283,115 1.4 37,044 4.9
Warehouses 486,055 2.5 6,354 0.8
Other Investment Property 457,633 2.3 8,586 1.1
 
Total Investment Properties 4,416,610 22.4 87,208 11.5
 
1-4 Family Construction 163,537 0.8 11,856 1.6
1-4 Family Investment Mortgage 919,009 4.7 50,849 6.7
Residential Development 401,278 2.0 89,993 11.9
 
Total 1-4 Family Properties 1,483,824 7.5 152,698 20.2
 
Land Acquisition 983,843 5.0 213,521 28.3
 
Total Commercial Real Estate 6,884,277 35.0 453,427 60.0
 
Commercial , Financial, and Agricultural 5,045,144 25.6 140,545 18.6
Owner-Occupied Real Estate 3,839,489 19.5 77,792 10.3
 
Total Commercial & Industrial 8,884,633 45.1 218,337 28.9
 
Home Equity Lines 1,603,905 8.1 24,177 3.2
Consumer Mortgages 1,383,915 7.0 51,783 6.9
Small Business 383,520 1.9 5,188 0.7
Credit Cards 262,402 1.3 - -
Other Retail Loans 290,793 1.5 2,249 0.3
 
 
Total Retail 3,924,535 19.8 83,397 11.1
 
Unearned Income (13,318) nm - nm
 
Total $ 19,680,127 100.0 % $ 755,161 100.0 %
 
 
LOANS OUTSTANDING BY TYPE COMPARISON
(Unaudited)
(Dollars in thousands)
                     
Total Loans 2Q12 vs. 1Q12 2Q12 vs. 4Q11 2Q12 vs. 2Q11
Loan Type June 30, 2012 % change (1) % change (1) % change
                       
 
 
Multi-Family $ 785,726 13.1 % 0.0 (3.9)
Hotels 706,782 (32.5) (21.5) (13.0)
Office Buildings 766,263 4.3 (2.4) (4.0)
Shopping Centers 931,036 (2.3) (9.9) (10.1)
Commercial Development 283,115 10.1 (2.7) (10.3)
Warehouses 486,055 2.7 (1.2) (6.8)
Other Investment Property 457,633 (4.9) 3.8 (1.5)
 
Total Investment Properties 4,416,610 (2.7) (6.2) (7.3)
 
1-4 Family Construction 163,537 (30.8) (35.9) (34.6)
1-4 Family Investment Mortgage 919,009 (15.5) (11.8) (14.0)
Residential Development 401,278 (19.0) (18.9) (24.6)
 
 
Total 1-4 Family Properties 1,483,824 (18.2) (16.7) (19.8)
 
Land Acquisition 983,843 (25.2) (20.4) (16.6)
 
Total Commercial Real Estate 6,884,277 (9.5) (10.7) (11.7)
 
Commercial , Financial, and Agricultural 5,045,144 (6.0) (1.7) 1.8
Owner-Occupied Real Estate 3,839,489 2.7 (0.7) (1.3)
 
Total Commercial & Industrial 8,884,633 (2.3) (1.3) 0.4
 
 
Home Equity Lines 1,603,905 2.1 (1.9) (0.5)
Consumer Mortgages 1,383,915 (1.8) (4.0) (4.6)
Small Business 383,520 67.3 55.7 51.5
Credit Cards 262,402 (3.1) (7.9) (3.4)
Other Retail Loans 290,793 1.2 11.4 2.5
Total Retail 3,924,535 5.8 2.3 1.4
 
Unearned Income (13,318) 71.7 22.3 51.6
 
Total $ 19,680,127 (3.3) % (4.0) (4.0)

(1) Percentage change is annualized.
 
Synovus
                   
CREDIT QUALITY DATA
(Unaudited)
(Dollars in thousands) 2012 2011 2nd Quarter
Second First Fourth Third Second '12 vs. '11
Quarter     Quarter     Quarter     Quarter     Quarter Change
 
Non-performing Loans $ 755,161 836,039 883,021 872,074 885,236 (14.7) %
Other Loans Held for Sale (1) 31,306 18,317 30,156 53,074 89,139 (64.9)
Other Real Estate 174,941 201,429 204,232 239,255 244,313 (28.4)
Non-performing Assets 961,408 1,055,785 1,117,409 1,164,403 1,218,688 (21.1)
 
Allowance for Loan Losses 453,325 507,794 536,494 595,383 631,401 (28.2)
 
Net Charge-Offs - Quarter 98,692 94,749 113,454 138,344 167,184 (41.0)
Net Charge-Offs / Average Loans - Quarter (2) 1.99 % 1.90 2.26 2.72 3.22
 
Non-performing Loans / Loans 3.84 4.21 4.40 4.34 4.32
Non-performing Assets / Loans, Other Loans Held for Sale & ORE 4.83 5.26 5.50 5.71 5.85
Allowance / Loans 2.30 2.56 2.67 2.96 3.08
 
Allowance / Non-performing Loans 60.03 60.74 60.76 68.27 71.33
Allowance / Non-performing Loans (3) 136.94 128.32 124.04 145.12 161.55
 
Past Due Loans over 90 days and Still Accruing $ 5,863 8,388 14,521 26,860 23,235 (74.8) %
As a Percentage of Loans Outstanding 0.03 % 0.04 0.07 0.13 0.11
 
Total Past Dues Loans and Still Accruing $ 91,962 144,794 149,441 199,561 199,804 (54.0)
As a Percentage of Loans Outstanding 0.47 % 0.73 0.74 0.99 0.97
 
Accruing troubled debt restructurings (TDRs) $ 687,396 651,239 668,472 640,324 551,603 24.6
 
(1) Represent impaired loans that are intended to be sold. Held for sale loans are carried at the lower of cost or fair value, less costs to sell.
(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, 2012 December 31, 2011 June 30, 2011
 
Tier 1 Capital $ 2,822,487 2,780,774 2,758,282
Total Risk-Based Capital 3,449,042 3,544,089 3,522,660
Tier 1 Capital Ratio 13.36 % 12.94 12.84
Tier 1 Common Equity Ratio 8.81 8.49 8.41
Total Risk-Based Capital Ratio 16.32 16.49 16.40
Tier 1 Leverage Ratio 10.66 10.08 9.70
Common Equity as a Percentage of Total Assets (2) 7.23 6.92 6.74
Tangible Common Equity as a Percentage of Tangible Assets (3) 7.12 6.81 6.63
Tangible Common Equity as a Percentage of Risk Weighted Assets (3) 8.85 8.60 8.73
Book Value Per Common Share (4) (5) 2.09 2.06 2.10
Tangible Book Value Per Common Share (3) (5) 2.05 2.02 2.06
 
 
(1) Current quarter regulatory capital information is preliminary.

(2) Common equity consists of Total Shareholders' Equity less Cumulative Perpetual 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 Cumulative Perpetual Preferred Stock divided by total common shares outstanding.
(5) Equity and common shares exclude impact of unexercised tangible equity units (tMEDS).

Copyright Business Wire 2010

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