Synovus Reports Earnings For Second Quarter Of 2013

Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter ended June 30, 2013.

Second Quarter Results
  • Pre-tax income increased to $72.9 million for the second quarter of 2013, up 56.6% from $46.6 million in the first quarter of 2013, and up 95.2% from $37.3 million in the second quarter of 2012.
  • Net income available to common shareholders increased to $30.7 million for the second quarter of 2013, compared to $14.8 million for the first quarter of 2013 and $24.8 million for the second quarter of 2012. Diluted net income per common share for the second quarter of 2013 was $0.03 compared to $0.02 for the first quarter of 2013 and $0.03 for the second quarter of 2012.
    • The second quarter of 2013 results included income tax expense of $27.4 million compared to $17.0 million in the first quarter of 2013 and a tax benefit of $2.1 million in the second quarter of 2012.
  • Credit costs declined substantially to $24.0 million for the second quarter of 2013, compared to $49.3 million for the first quarter of 2013 and $70.3 million for the second quarter of 2012.
  • Total loans grew $240.4 million sequentially or 5.0% annualized.

“Our second quarter results reflect continued, steady progress,” said Kessel D. Stelling, Chairman and CEO of Synovus. “During the quarter, net income available to common shareholders increased to $31 million, credit costs again declined significantly to $24 million – down 51% from the previous quarter – and net charge-offs declined by 48% compared to last quarter. While continuing to operate in a challenging environment, we grew loans $240 million sequentially, or 5% annualized.”

Core Performance

Pre-tax, pre-credit costs income was $98.0 million for the second quarter of 2013, down $2.7 million from $100.7 million for the first quarter of 2013.
  • Net interest income was $202.1 million for the second quarter of 2013, up $2.3 million from $199.8 million in the previous quarter.
  • The net interest margin was 3.39%, down four basis points from the first quarter of 2013, due to a decline in the yield on earning assets of seven basis points which was partially offset by a decline in the effective cost of funds of three basis points.
  • Total non-interest income was $65.1 million for the second quarter of 2013, up $0.4 million, compared to $64.7 million for the first quarter of 2013.
    • Bankcard fees increased $0.8 million.
    • Mortgage banking income increased $0.4 million.
    • Fiduciary and asset management fees increased $0.1 million.
    • Service charges on deposit accounts declined $0.3 million.
    • Brokerage revenue declined $0.6 million.
    • Securities gains were $1.4 million in the quarter.
  • Adjusted non-interest expense (excludes Visa indemnification charges, restructuring charges and other credit costs) was $167.8 million, up $4.0 million from $163.8 million for the first quarter of 2013, due primarily to higher professional fees.

Balance Sheet Fundamentals
  • Total reported loans ended the quarter at $19.61 billion, a $240.4 million increase from the first quarter of 2013.
    • Commercial and industrial loans grew by $184.6 million from the first quarter of 2013, or 8.2% annualized.
    • Retail loans grew by $78.5 million from the first quarter of 2013, or 7.9% annualized.
    • Commercial real estate loans declined by $20.4 million from the first quarter of 2013.
  • Total deposits ended the quarter at $20.71 billion, up $149.5 million from the previous quarter due primarily to increases in non-interest bearing demand deposits and NOW account balances.
  • Core deposits ended the quarter at $19.37 billion, up $144.1 million compared to the first quarter of 2013. Core deposits, excluding time deposits, increased $249.1 million compared to the previous quarter.

Credit Trends
  • Total credit costs were $24.0 million in the second quarter of 2013, down from $49.3 million in the first quarter of 2013 and $70.3 million in the second quarter of 2012.
  • Net charge-offs were $30.0 million in the second quarter of 2013, down from $57.3 million in the first quarter of 2013 and $98.7 million in the second quarter of 2012. The annualized net charge-off ratio was 0.61% in the second quarter, down from 1.18% in the previous quarter and 1.99% in the second quarter of 2012.
  • Non-performing loan inflows were $66.9 million in the second quarter of 2013, down from $83.9 million in the first quarter of 2013 and $124.3 million in the second quarter of 2012.
  • Non-performing loans, excluding loans held for sale, were $483.5 million at June 30, 2013, down $29.8 million from the previous quarter, and down $271.7 million or 36.0% from the second quarter of 2012. The non-performing loan ratio was 2.47% at June 30, 2013, down from 2.65% at the end of the previous quarter and 3.84% at June 30, 2012.
  • Total non-performing assets were $635.2 million at June 30, 2013, down $42.4 million from the previous quarter, and down $326.2 million or 33.9% from the second quarter of 2012. The non-performing asset ratio was 3.21% at June 30, 2013, compared to 3.47% at the end of the previous quarter and 4.83% at June 30, 2012.
  • Total delinquencies (consisting of loans 30 or more days past due and still accruing) declined to 0.41% of total loans at June 30, 2013, compared to 0.46% at March 31, 2013, and 0.47% at June 30, 2012. Total loans past due 90 days or more and still accruing declined to 0.02% at June 30, 2013, compared to 0.03% at March 31, 2013, and 0.03% at June 30, 2012.
  • Distressed asset sales were approximately $67 million during the second quarter, compared to approximately $61 million in the first quarter of 2013, and approximately $128 million in the second quarter of 2012.

Capital Ratios
  • Tier 1 Capital ratio was 13.49% at June 30, 2013, compared to 13.50% at March 31, 2013.
  • Tier 1 Common Equity ratio was 8.97% at June 30, 2013, compared to 8.93% at March 31, 2013.
  • Total Risk Based Capital ratio was 16.00% at June 30, 2013, compared to 16.45% at March 31, 2013.
  • Tier 1 Leverage ratio was 11.33% at June 30, 2013, compared to 11.27% at March 31, 2013.
  • Tangible Common Equity ratio was 9.71% at June 30, 2013, compared to 9.89% at March 31, 2013.

Stelling concluded, “We are pleased with the growth in loans and deposits, the strong improvement in credit trends, and the growth in profitability– all accomplishments that continue to signal our increasing strength. We have entered the second half of 2013 with even greater  confidence in our company's future. Our enhanced financial performance, attractive Southeastern footprint, and passion for service to customers and communities provide the right formula for long-term success in this competitive banking environment.”

Synovus will host an earnings highlights conference call at 5:00 p.m. EDT on July 18, 2013. 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 approximately $27 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 and key credit metrics; expectations regarding deposits, loan growth and our loan portfolio; expectations on growth, and future profitability; expectations regarding the impact of our ongoing efficiency initiatives and future cost savings; 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, 2012 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, Tier 1 common equity ratio, pre-tax, pre-credit costs income, and adjusted non-interest expense 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, Tier 1 capital to risk-weighted assets ratio, income (loss) before income taxes, and total non-interest expense, 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, Tier 1 capital to risk-weighted assets ratio, income (loss) before income taxes, or total non-interest expense 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, Tier 1 common equity ratio, pre-tax, pre-credit costs income, and adjusted non-interest expense, and the reconciliation of these measures to total deposits, total shareholders’ equity to total assets ratio, Tier 1 capital to risk-weighted assets ratio, income (loss) before income taxes, and total non-interest expense are set forth in the tables below.

Reconciliation of Non-GAAP Financial Measures            
(dollars in thousands) 2Q13   1Q13   4Q12   3Q12   2Q12
Core deposits
Core deposits excluding time deposits
Total deposits $ 20,710,703 20,561,193 21,057,044 20,846,830 21,565,065
Subtract: Brokered deposits   (1,338,064 ) (1,332,632 ) (1,092,749 ) (919,959 ) (1,148,892 )
Core deposits 19,372,639 19,228,561 19,964,295 19,926,871 20,416,173
Subtract: Time deposits   (3,377,215 ) (3,482,196 ) (3,583,304 ) (3,771,117 ) (4,097,834 )
Core deposits excluding time deposits $ 15,995,424   15,746,365   16,380,991   16,155,754   16,318,339  
 
Tangible common equity to tangible assets ratio
Total assets $ 26,563,174 26,212,879 26,760,012 25,764,644 26,294,110
Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net   (4,156 ) (4,583 ) (5,149 ) (5,895 ) (6,693 )
Tangible assets $ 26,534,587   26,183,865   26,730,432   25,734,318   26,262,986  
 
Total shareholders’ equity $ 3,568,203 3,578,106 3,569,431 2,875,700 2,853,389
Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net (4,156 ) (4,583 ) (5,149 ) (5,895 ) (6,693 )
Subtract: Series A Preferred Stock, no par value   (962,725 ) (960,005 ) (957,327 ) (954,690 ) (952,093 )
Tangible common equity $ 2,576,891   2,589,087   2,582,524   1,890,684   1,870,172  
Total shareholders’ equity to total assets ratio 13.43 % 13.65 13.34 11.16 10.85
Tangible common equity to tangible assets ratio 9.71 % 9.89 9.66 7.35 7.12
 
Tier 1 Common Equity Ratio
Total shareholders’ equity $ 3,568,203 3,578,106 3,569,431 2,875,700 2,853,389
Add/Subtract: Accumulated othercomprehensive loss (income) 33,060 (2,787 ) (4,101 ) (16,156 ) (7,003 )
Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net (4,156 ) (4,583 ) (5,149 ) (5,895 ) (6,693 )
Subtract: Disallowed deferred tax asset (674,996 ) (687,007 ) (710,488 ) - -
Other items   7,305   7,191   6,982   6,732   7,225  
Tier 1 capital $ 2,904,985   2,866,489   2,832,244   2,835,950   2,822,487  
Subtract: Qualifying trust preferred securities (10,000 ) (10,000 ) (10,000 ) (10,000 ) (10,000 )
Subtract: Series A Preferred Stock   (962,725 ) (960,005 ) (957,327 ) (954,690 ) (952,093 )
Tier 1 common equity $ 1,932,260   1,896,484   1,864,917   1,871,260   1,860,394  
Risk-weighted assets

21,538,426

(1)
21,235,129 21,387,935 21,443,178 21,146,174
Tier 1 common equity ratio   8.97

%(1)
8.93   8.72   8.73   8.80  
 
Pre-tax, Pre-credit Costs Income
Income (loss) before income taxes $ 72,906 46,553 (72,299 ) 30,514 37,347
Add: Provision for losses on loans 13,077 35,696 146,526 63,572 44,222
Add: Other credit costs(2) 10,887 13,595 39,236 22,046 26,119
Add: Restructuring charges 1,758 4,850 1,969 1,192 1,393
Subtract: Investment securities gains, net. (1,403 ) (45 ) (8,233 ) (6,656 ) (4,170 )
Add: Visa indemnification charges   763   37   757   833   1,734  
Pre-tax, pre-credit costs income $ 97,988   100,686   107,956   111,501   106,645  

 
Adjusted Non-interest Expense
Total non-interest expense $ 181,186 182,286 213,346 191,492 208,264
Subtract: Other credit costs(2) (10,887 ) (13,595 ) (39,236 ) (22,046 ) (26,119 )
Subtract: Restructuring charges (1,758 ) (4,850 ) (1,969 ) (1,192 ) (1,393 )
Subtract: Visa indemnification charges   (763 ) (37 ) (757 ) (833 ) (1,734 )
Adjusted non-interest expense $ 167,778   163,804   171,384   167,421   179,018  
 

(1) Preliminary

(2) Other credit costs consist primarily of losses on ORE, provision for losses on unfunded commitments, and charges related to other loans held for sale
 

  Synovus
   
INCOME STATEMENT DATA Six Months Ended
(Unaudited)
(Dollars in thousands, except per share data) June 30,
             
 
2013 2012 Change
             
 
Interest income $ 461,903 516,464 (10.6 ) %
Interest expense 60,012 82,148 (26.9 )
       
 
Net interest income 401,891 434,316 (7.5 )
Provision for loan losses 48,773 110,271 (55.8 )
       
 
Net interest income after provision for loan losses 353,118 324,045 9.0
       
 
Non-interest income:
Service charges on deposit accounts 38,716 36,915 4.9
Fiduciary and asset management fees 22,083 21,627 2.1
Brokerage revenue 14,595 12,942 12.8
Mortgage banking income 14,255 13,986 1.9
Bankcard fees 14,902 16,072 (7.3 )
Investment securities gains, net 1,448 24,253 (94.0 )
Other fee income 11,262 9,651 16.7
(Decrease) increase in fair value of private equity investments, net (1,140 ) 7,372 nm
Other non-interest income 13,692 17,798 (23.1 )
       
 
Total non-interest income 129,813 160,616 (19.2 )
       
 
Non-interest expense:
Salaries and other personnel expense 183,396 187,795 (2.3 )
Net occupancy and equipment expense 50,550 52,865 (4.4 )
FDIC insurance and other regulatory fees 16,420 27,966 (41.3 )
Foreclosed real estate expense, net 18,441 43,680 (57.8 )
Losses (gains) on other loans held for sale, net 79 (99 ) nm
Professional fees 17,511 19,196 (8.8 )
Third-party services 20,295 16,735 21.3
Visa indemnification charges 801 4,713 (83.0 )
Restructuring charges 6,607 2,252 193.4
Other operating expenses 49,372 56,296 (12.3 )
       
 
 
Total non-interest expense 363,472 411,399 (11.6 )
       
 
Income before income taxes 119,459 73,262 63.1
Income tax expense (benefit) 44,350 (2,182 ) nm
       
 
Net income 75,109 75,444 (0.4 )
 
Dividends and accretion of discount on Series A Preferred Stock 29,594   29,272   1.1  
 
 
Net income available to common shareholders $ 45,515   46,172   (1.4 )
 
 
Basic EPS
Net income available to common shareholders 0.06 0.06 (5.4 )
 
Diluted EPS
Net income available to common shareholders 0.05 0.05 (1.6 )
 
Cash dividends declared per common share 0.02 0.02 -
 
Return on average assets 0.58 % 0.57 1.8
Return on average common equity 3.51 4.87 (27.9 )
 
 
Average common shares outstanding - basic 819,245 786,355 4.2 %
Average common shares outstanding - diluted 910,886 909,542 0.1
 
nm - not meaningful
 
  Synovus
   
INCOME STATEMENT DATA
(Unaudited)
(Dollars in thousands, except per share data) 2013  

 
   

2012
      2nd Quarter
Second First Fourth Third Second

'13 vs. '12
Quarter   Quarter   Quarter   Quarter   Quarter   Change
 
Interest income $ 231,512 230,391 240,000 247,676 253,809 (8.8 ) %
Interest expense 29,435   30,577   32,544   35,331   40,453   (27.2 )
 
Net interest income 202,077 199,814 207,456 212,345 213,356 (5.3 )
Provision for loan losses 13,077   35,696   146,526   63,572   44,222   (70.4 )
 
Net interest income after provision for loan losses 189,000   164,118   60,930   148,773   169,134   11.7  
 
Non-interest income:
Service charges on deposit accounts 19,195 19,521 20,883 20,404 18,684 2.7
Fiduciary and asset management fees 11,111 10,971 10,537 10,340 10,792 3.0
Brokerage revenue 7,002 7,594 7,127 6,844 6,295 11.2
Mortgage banking income 7,338 6,917 9,025 9,261 7,983 (8.1 )
Bankcard fees 7,838 7,064 10,137 7,866 8,493 (7.7 )
Investment securities gains, net 1,403 45 8,233 6,656 4,170 (66.4 )
Other fee income 5,775 5,487 6,211 5,276 4,951 16.6
(Decrease) increase in fair value of private equity investments, net (883 ) (257 ) 1,805 (944 ) 7,279 nm
Other non-interest income 6,313   7,379   6,159   7,530   7,830   (19.4 )
 
Total non-interest income 65,092   64,721   80,117   73,233   76,477   (14.9 )
 
Non-interest expense:
Salaries and other personnel expense 89,479 93,917 94,901 93,177 95,173 (6.0 )
Net occupancy and equipment expense 26,383 24,167 26,063 26,647 26,159 0.9
FDIC insurance and other regulatory fees 7,941 8,480 8,237 9,205 13,302 (40.3 )
Foreclosed real estate expense, net 7,502 10,940 34,978 11,997 20,708 (63.8 )
(Gains) losses on other loans held for sale, net (86 ) 165 675 4,104 (1,058 ) nm
Professional fees 10,416 7,095 12,037 10,074 9,929 4.9
Third-party services 10,366 9,929 9,540 9,429 9,900 4.7
Visa indemnification charges 764 37 757 833 1,734 (55.9 )
Restructuring charges 1,758 4,850 1,969 1,192 1,393 26.2
Other operating expenses 26,663   22,706   24,189   24,834   31,024   (14.1 )
 
 
Total non-interest expense 181,186   182,286   213,346   191,492   208,264   (13.0 )
 
Income before income taxes 72,906 46,553 (72,299 ) 30,514 37,347 95.2
Income tax expense (benefit) 27,371   16,979   (796,339 ) (211 ) (2,105 ) nm  
 
 
Net income 45,535 29,574 724,040 30,725 39,452 15.4
 
Dividends and accretion of discount on Series A Preferred Stock 14,818   14,776   14,736   14,695   14,649   1.2  
 
Net income available to common shareholders $ 30,717   14,798   709,304   16,030   24,803   23.8  
 
Basic EPS
Net income available to common shareholders 0.04 0.02 0.90 0.02 0.03 14.5
 
Diluted EPS
Net income available to common shareholders 0.03 0.02 0.78 0.02 0.03 23.7
 
Cash dividends declared per common share 0.01 0.01 0.01 0.01 0.01 -
 
Return on average assets * 0.69 % 0.46 % 11.13 % 0.47 % 0.60 15.0
Return on average common equity * 4.70 2.30 149.46 3.30 5.24 (10.3 )
 
 
Average common shares outstanding - basic 851,093 787,043 786,576 786,576 786,576 8.2 %
Average common shares outstanding - diluted 910,937 910,835 911,251 910,396 909,761 0.1
 
nm - not meaningful
* - ratios are annualized
 
  Synovus
           
BALANCE SHEET DATA June 30, 2013 December 31, 2012 June 30, 2012
(Unaudited)
 
(In thousands, except share data)
 
ASSETS
Cash and cash equivalents $ 428,487 614,630 523,302
Interest bearing funds with Federal Reserve Bank 1,459,251 1,498,390 1,301,244
Interest earning deposits with banks 22,065 23,442 16,003
Federal funds sold and securities purchased
under resale agreements 88,636 113,517 118,098
Trading account assets, at fair value 23,069 11,102 12,331
Mortgage loans held for sale, at fair value 112,761 212,663 120,007
Other loans held for sale 12,083 10,690 32,601
Investment securities available for sale, at fair value 3,077,706 2,981,112 3,570,346
 
Loans, net of deferred fees and costs 19,608,283 19,541,690 19,680,127
Allowance for loan losses (334,880 ) (373,405 ) (453,325 )
Loans, net 19,273,403   19,168,285   19,226,802  
 
Premises and equipment, net 477,948 479,546 475,944
Goodwill 24,431 24,431 24,431
Other intangible assets, net 4,156 5,149 6,693
Other real estate 139,653 150,271 174,941
Net deferred tax asset 789,525 806,406 1,985
Other assets 630,000   660,378   689,382  
 
Total assets $ 26,563,174   26,760,012   26,294,110  
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing deposits $ 5,203,437 5,665,527 5,607,680
Interest bearing deposits, excluding brokered deposits 14,169,203 14,298,768 14,808,493
Brokered deposits 1,338,063   1,092,749   1,148,892  
 
 
Total deposits 20,710,703 21,057,044 21,565,065
 
 
Federal funds purchased and securities sold under repurchase agreements 222,933 201,243 351,173
Long-term debt 1,885,689 1,726,455 1,301,616
Other liabilities 175,645   205,839   222,867  
 
Total liabilities 22,994,970   23,190,581   23,440,721  
 
 
 
Shareholders' equity:
Series A Preferred Stock, no par value (1) 962,725 957,327 952,093
Common stock, par value $1.00 (2) 916,208 792,273 792,269
Additional paid-in capital 2,038,483 2,189,874 2,215,201
Treasury stock, at cost (3) (114,176 ) (114,176 ) (114,176 )
Accumulated other comprehensive (loss) income (33,060 ) 4,101 7,003
Accumulated deficit (201,976 ) (259,968 ) (999,001 )
Total shareholders' equity 3,568,204 3,569,431 2,853,389
 
Total liabilities and shareholders' equity $ 26,563,174   26,760,012   26,294,110  
 
 
 
(1) Preferred shares outstanding: 967,870, at all periods presented
(2) Common shares outstanding: 910,514,396; 786,579,240; and 786,575,516 at June 30, 2013, December 31, 2012, and

June 30, 2012, respectively.
(3) Treasury shares: 5,693,452, at all periods presented

 
  Synovus
 
AVERAGE BALANCES AND YIELDS/RATES (1)
(Unaudited)
(Dollars in thousands)
  2013

 
 

2012
 
Second First Fourth Third Second
  Quarter   Quarter Quarter Quarter Quarter
Interest Earning Assets
   
Taxable investment securities (2) $ 3,034,152 2,984,129 3,069,000 3,495,838 3,539,376
Yield 1.72 % 1.44 1.62 1.67 2.11
 
Tax-exempt investment securities (2) (4) $ 11,435 14,362 17,377 19,503 21,408
Yield (taxable equivalent) 6.47 % 6.34 6.59 6.47 6.40
 
Trading account assets $ 7,847 8,629 9,600 12,343 13,647
Yield 6.34 % 7.12 8.15 8.27 6.93
 
Commercial loans (3) (4) $ 15,515,117 15,464,065 15,692,588 15,691,881 15,941,719
Yield 4.36 % 4.46 4.48 4.63 4.67
 
Consumer loans (3) $ 4,015,589 3,997,557 3,992,986 3,940,000 3,896,941
Yield 4.68 % 4.73 4.75 4.80 4.87
 
Allowance for loan losses $ (351,075 )   (372,239 ) (405,237 ) (446,495 ) (498,419 )
 
Loans, net (3) $ 19,179,631 19,089,383 19,280,337 19,185,386 19,340,241
Yield 4.52 % 4.61 4.65 4.79 4.85
 
Mortgage loans held for sale $ 129,742 179,507 208,839 175,199 90,499
Yield 4.35 % 3.80 3.72 4.03 4.99
 
Federal funds sold, due from Federal Reserve Bank,
and other short-term investments $ 1,550,113 1,343,652 1,366,422 1,215,743 1,668,814
Yield 0.24 % 0.24 0.24 0.24 0.24
 
Federal Home Loan Bank and Federal Reserve Bank stock (5) $ 65,014 65,330 66,630 53,239 63,665
Yield 2.35 % 2.36 2.03 1.87 1.85
                 
Total interest earning assets $ 23,977,934 23,684,992 24,018,205 24,157,251 24,737,650
Yield 3.88 % 3.95 3.99 4.09 4.14
                 
 
Interest Bearing Liabilities
   
 
Interest bearing demand deposits $ 3,895,675 3,839,707 3,872,025 3,344,561 3,404,540
Rate 0.18 % 0.18 0.18 0.19 0.22
 
Money market accounts $ 6,072,155 6,135,649 6,251,374 6,751,607 6,769,037
Rate 0.33 % 0.33 0.33 0.33 0.42
 
Savings deposits $ 609,832 581,792 558,726 557,086 557,149
Rate 0.11 % 0.11 0.10 0.10 0.11
 
Time deposits under $100,000 $ 1,537,639 1,581,092 1,648,554 1,763,864 1,868,348
Rate 0.64 % 0.69 0.74 0.85 0.97
 
Time deposits over $100,000 $ 1,891,624 1,958,870 2,015,582 2,176,488 2,336,496
Rate 0.88 % 0.93 0.99 1.11 1.23
 
Brokered money market accounts $ 202,532 202,734 180,216 186,336 222,916
Rate 0.31 % 0.32 0.34 0.33 0.33
 
Brokered time deposits $ 1,131,444 1,013,461 800,434 820,908 1,036,521
Rate 0.77   % 0.99   1.42   1.83   1.94  
 
Total interest bearing deposits $ 15,340,901 15,313,305 15,326,911 15,600,850 16,195,007
Rate 0.42 % 0.44 0.47 0.54 0.64
 
Federal funds purchased and other
short-term liabilities $ 206,046 214,661 266,431 350,183 368,984
Rate 0.15 % 0.17 0.17 0.17 0.18
 
Long-term debt $ 1,762,173 1,688,580 1,740,588 1,372,741 1,326,239
Rate 3.06 % 3.26 3.31 4.09 4.34
                 
 
Total interest bearing liabilities $ 17,309,120 17,216,546 17,333,930 17,323,774 17,890,230
Rate 0.68 % 0.72 0.75 0.81 0.91
                 
 
Non-interest bearing demand deposits $ 5,327,795 5,232,587 5,466,312 5,560,827 5,606,352
 
Effective cost of funds 0.49 % 0.52 0.54 0.58 0.66
                 
 
Net interest margin   3.39   % 3.43   3.45   3.51   3.48  
 
Taxable equivalent adjustment $ 557 618 766 761 780
 
(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, 2013
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 $ 898,472 4.6 % $ 3,632 0.8 %
Hotels 656,471 3.3 6,252 1.3
Office Buildings 782,196 4.0 11,158 2.3
Shopping Centers 844,309 4.3 10,510 2.2
Commercial Development 177,511 0.9 49,960 10.3
Warehouses 538,274 2.7 2,186 0.5
Other Investment Property 495,290 2.6 10,670 2.2
           
 
Total Investment Properties 4,392,523 22.4 94,368 19.6
           
 
1-4 Family Construction 120,417 0.6 3,090 0.6
1-4 Family Investment Mortgage 857,063 4.4 27,614 5.7
Residential Development 220,007 1.1 23,484 4.9
           
 
Total 1-4 Family Properties 1,197,487 6.1 54,188 11.2
           
 
Land Acquisition 752,319 3.8 156,202 32.3
           
 
Total Commercial Real Estate 6,342,329 32.3 304,758 63.0
           
 
Commercial, Financial, and Agricultural 5,397,786 27.5 69,250 14.3
Owner-Occupied Real Estate 3,833,713 19.6 45,531 9.4
           
 
Total Commercial & Industrial 9,231,499 47.1 114,781 23.7
 
Home Equity Lines 1,507,738 7.7 18,580 3.8
Consumer Mortgages 1,451,212 7.4 38,438 8.0
Small Business 568,881 2.8 5,042 1.0
Credit Cards 251,788 1.3 - -
Other Retail Loans 278,603 1.4 1,865 0.4
           
 
Total Retail 4,058,222 20.6 63,925 13.2
 
 
Unearned Income (23,767 ) nm - nm
           
 
Total $ 19,608,283   100.0   % $ 483,464 100.0   %
 
 
LOANS OUTSTANDING BY TYPE COMPARISON
(Unaudited)
(Dollars in thousands)
           
Total Loans 2Q13 vs. 1Q13 2Q13 vs. 2Q12
Loan Type June 30, 2013

March 31, 2013
% change (1)   June 30, 2012 % change
 
 
Multi-Family $ 898,472 857,239

19.3
785,726 14.3 %
Hotels 656,471 657,462

(0.6

)
706,782 (7.1 )
Office Buildings 782,196 766,965

8.0
766,263 2.1
Shopping Centers 844,309 845,846

(0.7

)
931,036 (9.3 )
Commercial Development 177,511 206,075

(55.6

)
283,115 (37.3 )
Warehouses 538,274 531,015

5.5
486,055 10.7
Other Investment Property 495,290 498,213

(2.4

)
457,633 8.2
               
 
Total Investment Properties 4,392,523 4,362,815

2.7
4,416,610 (0.5 )
               
 
1-4 Family Construction 120,417 122,071

(5.4

)
163,537 (26.4 )
1-4 Family Investment Mortgage 857,063 866,921

(4.6

)
919,009 (6.7 )
Residential Development 220,007 248,403

(45.9

)
401,278 (45.2 )
               
 
Total 1-4 Family Properties 1,197,487   1,237,395  

(12.9

)
1,483,824   (19.3 )
 
Land Acquisition 752,319 762,566

(5.4

)
983,843 (23.5 )
               
 
Total Commercial Real Estate 6,342,329 6,362,776

(1.3

)
6,884,277 (7.9 )
               
 
Commercial, Financial, and Agricultural 5,397,786 5,221,535

13.5
5,045,144 7.0
Owner-Occupied Real Estate 3,833,713 3,825,409

0.9
3,839,489 (0.2 )
               
 
Total Commercial & Industrial 9,231,499 9,046,944

8.2
8,884,633 3.9
 
 
Home Equity Lines 1,507,738 1,508,507

(0.2

)
1,603,905 (6.0 )
Consumer Mortgages 1,451,212 1,378,055

21.3
1,383,915 4.9
Small Business 568,881 553,056

11.5
383,520 48.3
Credit Cards 251,788 251,618

0.3
262,402 (4.0 )
Other Retail Loans 278,603 288,483

(13.7

)
290,793 (4.2 )
               
Total Retail 4,058,222 3,979,719

7.9
3,924,535 3.4
 
 
Unearned Income (23,767 ) (21,552 ) nm (13,318 ) nm
               
 
Total $ 19,608,283   19,367,887  

5.0
  % 19,680,127   (0.4 ) %
 
(1) Percentage change is annualized.
 
  Synovus
                   
CREDIT QUALITY DATA
(Unaudited)
(Dollars in thousands) 2013  

 
     

2012
        2nd Quarter
Second First Fourth Third Second '13 vs. '12
Quarter   Quarter   Quarter       Quarter       Quarter Change
 
Non-performing Loans $ 483,464 513,227 543,333 700,204 755,161 (36.0 ) %
Other Loans Held for Sale (1) 12,083 9,129 9,455 10,019 31,306 (61.4 )
Other Real Estate 139,653 155,237 150,271 189,182 174,941 (20.2 )  
Non-performing Assets 635,200 677,592 703,059 899,405 961,408 (33.9 )
 
Allowance for Loan Losses 334,800 351,772 373,405 420,404 453,325 (26.1 )

 
 
Net Charge-Offs - Quarter 29,969 57,328 193,525 96,493 98,692 (69.6 )
Net Charge-Offs / Average Loans - Quarter (2) 0.61 % 1.18 3.94 1.97 1.99
 
Non-performing Loans / Loans 2.47 2.65 2.78 3.55 3.84
Non-performing Assets / Loans, Other Loans Held for Sale & ORE 3.21 3.47 3.57 4.51 4.83
Allowance / Loans 1.71 1.82 1.91 2.13 2.30
 
Allowance / Non-performing Loans 69.27 68.54 68.72 60.04 60.03
Allowance / Non-performing Loans (3) 91.76 97.75 93.49 131.56 136.94
 
Past Due Loans over 90 days and Still Accruing $ 4,596 5,799 6,811 8,972 5,863 (21.6 ) %
As a Percentage of Loans Outstanding 0.02 % 0.03 0.03 0.05 0.03
 
Total Past Dues Loans and Still Accruing $ 80,678 88,330 104,825 108,633 91,962 (12.3 )
As a Percentage of Loans Outstanding 0.41 % 0.46 0.54 0.55 0.47
 
Accruing troubled debt restructurings (TDRs) $ 635,125 623,900 673,383 698,847 687,396 (7.6 )
 
(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, 2013 December 31, 2012 June 30, 2012
 
Tier 1 Capital $ 2,904,985 2,832,244 2,822,487
Total Risk-Based Capital 3,445,113 3,460,998 3,449,214
Tier 1 Capital Ratio 13.49 % 13.24 13.35
Tier 1 Common Equity Ratio 8.97 8.72 8.80
Total Risk-Based Capital Ratio 16.00 16.18 16.31
Tier 1 Leverage Ratio 11.33 11.00 10.66
Common Equity as a Percentage of Total Assets (2) 9.81 9.76 7.23
Tangible Common Equity as a Percentage of Tangible Assets (3) 9.71 9.66 7.12
Tangible Common Equity as a Percentage of Risk Weighted Assets (3) 11.96 12.07 8.84
Book Value Per Common Share (4) (5) 2.86 2.99 2.09
Tangible Book Value Per Common Share (3) (5) 2.83 2.95 2.05
 
 
(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) June 30, 2013 includes addition to common shares from the final settlement of tangible equity units (tMEDS) of 122.8 million shares. Equity and common shares for prior periods exclude impact of unexercised tangible equity units (tMEDs).

 

Copyright Business Wire 2010

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