Synovus Financial Corp. (NYSE:SNV) today reported financial results for the quarter ended March 31, 2014.

First Quarter Results
  • Net income available to common shareholders was $45.9 million for the first quarter of 2014, an increase of 27.9% compared to $35.9 million for the fourth quarter of 2013, and up from $14.8 million for the first quarter of 2013. Diluted net income per common share for the first quarter of 2014 was $0.05 compared to $0.04 for the fourth quarter of 2013 and $0.02 for the first quarter of 2013.
  • Total loans grew $101.2 million sequentially or 2.0% annualized. Excluding the impact from the Memphis transaction, loans grew $190.8 million or 3.9% annualized.
  • Credit costs totaled $17.6 million for the first quarter of 2014, compared to $22.3 million for the fourth quarter of 2013 and $49.3 million for the first quarter of 2013.

"We were pleased to report a 28% increase in net income available to common shareholders for the quarter,” said Kessel D. Stelling, Synovus Chairman and CEO. “We also continue to be encouraged by growth in C&I, CRE, and retail loans, and in key markets like Atlanta, Tampa, Orlando, Jacksonville, and Charleston. Our steady progress over the past several quarters is a direct result of investments in additional talent in high-opportunity markets, effective partnerships between our core and specialty line bankers, and our team’s unwavering commitment to delivering exceptional customer service. The quarter also included continued reductions in credit costs, a slight increase in the net interest margin, and the implementation of new expense reduction initiatives.”

Core Performance

Pre-tax, pre-credit costs income was $96.5 million for the first quarter of 2014, an increase of $261 thousand from $96.3 million for the fourth quarter of 2013.
  • Net interest income was $200.5 million for the first quarter of 2014, down $3.8 million from $204.3 million in the previous quarter, due to two fewer calendar days.
  • The net interest margin was 3.39%, compared to 3.38% in the fourth quarter of 2013, with the yield on earning assets up one basis point and the effective cost of funds unchanged.
  • Total non-interest income was $70.2 million for the first quarter of 2014, up $10.0 million, compared to $60.2 million for the fourth quarter of 2013. Total non-interest income for the first quarter of 2014 includes a $5.8 million net gain on the Memphis transaction and a $3.1 million gain on a branch property sale.
    • Mortgage banking income increased $599 thousand over the previous quarter.
    • Service charges on deposit accounts and bankcard fees declined $434 thousand and $461 thousand, respectively, due to seasonality.
  • Non-interest expense for the first quarter of 2014 was $184.2 million, down $6.6 million, compared to $190.7 million for the fourth quarter of 2013.
    • The first quarter of 2014 non-interest expense includes $8.6 million in restructuring charges. The fourth quarter of 2013 non-interest expense includes $10.0 million in litigation loss contingency expense and $3.8 million in restructuring charges.
    • Adjusted non-interest expense (excludes Visa indemnification charges, restructuring charges, litigation loss contingency expense and other credit costs) was $167.1 million, down $824 thousand, compared to $167.9 million for the fourth quarter of 2013.

Balance Sheet Fundamentals
  • Total reported loans ended the quarter at $20.16 billion, a $101.2 million increase from the fourth quarter of 2013.
  • Total loans, excluding the impact from the Memphis transaction, grew $190.8 million or 3.9% annualized compared to the fourth quarter of 2013.
  • Excluding the impact from the Memphis transaction:
    • Commercial and industrial loans grew by $130.7 million from the fourth quarter of 2013, or 5.3% annualized.
    • Commercial real estate loans grew by $35.6 million from the fourth quarter of 2013, or 2.2% annualized.
    • Retail loans grew by $24.1 million from the fourth quarter of 2013, or 2.7% annualized.
  • Total deposits ended the quarter at $20.95 billion, up $74.1 million from the previous quarter.
  • Core deposits ended the quarter at $19.58 billion, down $197.8 million compared to the fourth quarter of 2013. Core deposits excluding the impact from the Memphis transaction were flat compared to the fourth quarter of 2013. Core deposits, excluding time deposits, increased $80.3 million compared to the previous quarter.

Credit Quality

Broad-based improvement in credit quality continued.
  • Total credit costs were $17.6 million in the first quarter of 2014, down $4.7 million from $22.3 million in the fourth quarter of 2013 and down from $49.3 million in the first quarter of 2013.
  • Net charge-offs were $15.2 million in the first quarter of 2014, down $9.9 million from $25.1 million in the fourth quarter of 2013 and down from $42.1 million in the first quarter of 2013. The annualized net charge-off ratio was 0.30% in the first quarter, down from 0.51% in the previous quarter and down from 1.18% in the first quarter of 2013.
  • Non-performing loan inflows were $35.0 million in the first quarter of 2014, down from $41.2 million in the fourth quarter of 2013 and $83.9 million in the first quarter of 2013.
  • Non-performing loans, excluding loans held for sale, were $384.9 million at March 31, 2014, down $31.4 million from the previous quarter, and down $128.4 million or 25.0% from the first quarter of 2013. The non-performing loan ratio was 1.91% at March 31, 2014, down from 2.08% at the end of the previous quarter and 2.65% at March 31, 2013.
  • Total non-performing assets were $498.2 million at March 31, 2014, down $41.4 million from the previous quarter, and down $179.4 million or 26.5% from the first quarter of 2013. The non-performing asset ratio was 2.46% at March 31, 2014, compared to 2.67% at the end of the previous quarter and 3.47% at March 31, 2013.
  • Total delinquencies (consisting of loans 30 or more days past due and still accruing) were 0.37% of total loans at March 31, 2014, compared to 0.36% at December 31, 2013, and 0.46% at March 31, 2013. Total loans past due 90 days or more and still accruing remained low at 0.03% at March 31, 2014, compared to 0.02% at December 31, 2013, and 0.03% at March 31, 2013.

Capital Ratios

All capital ratios increased in the first quarter.
  • Tier 1 Common Equity ratio was 10.24% at March 31, 2014, compared to 9.93% at December 31, 2013.
  • Tier 1 Capital ratio was 10.85% at March 31, 2014, compared to 10.54% at December 31, 2013.
  • Total Risk Based Capital ratio was 13.31% at March 31, 2014, compared to 13.00% at December 31, 2013.
  • Tier 1 Leverage ratio was 9.46% at March 31, 2014, compared to 9.13% at December 31, 2013.
  • Tangible Common Equity ratio was 10.78% at March 31, 2014, compared to 10.68% at December 31, 2013.

Stelling concluded, “During the remainder of 2014, we expect continued loan growth, further improvement in credit quality, and a continued push on expense reductions. We are making strategic investments to improve our customers’ experience and more effectively reach potential customers. We will conclude this summer the rollout of our 200 new full-service ATMs and, later this year, enhanced commercial and mobile banking channels. We also recently launched a brand campaign that includes television, print, and online advertising designed to build greater awareness of the full capabilities and resources of Synovus. All of these activities, along with our strong capital position, provide a solid foundation for long-term growth and success.”

Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on April 22, 2014. 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 www.synovus.com/webcasts. You may download RealPlayer or Windows Media Player (free download available) 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 based in Columbus, Georgia, with over $26 billion in assets. Synovus Financial Corp. provides commercial and retail banking, investment and mortgage services to customers through 28 locally branded divisions, 274 branches and 358 ATMs 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 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 the net interest margin; expectations on our growth strategy, strategic investments, expense initiatives, 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, 2013, 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 1Q14 loan growth excluding the impact from the Memphis transaction, core deposits, core deposits excluding time deposits, core deposits excluding the impact from the Memphis transaction, tangible common equity to tangible assets ratio, Tier 1 common equity ratio, pre-tax, pre-credit cost 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 loans, total deposits, total shareholders’ equity to total assets ratio, Tier 1 capital to risk-weighted assets ratio, income 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 loans, total deposits, total shareholders’ equity to total assets ratio, Tier 1 capital to risk-weighted assets ratio, income 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 1Q14 loan growth excluding the impact from the Memphis transaction, core deposits, core deposits excluding time deposits, core deposits excluding the impact from the Memphis transaction, 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 loans, total deposits, total shareholders’ equity to total assets ratio, Tier 1 capital to risk-weighted assets ratio, income before income taxes, and total non-interest expense are set forth in the tables below.

Reconciliation of Non-GAAP Financial Measures
(dollars in thousands)
         
1Q14 loan growth excluding the impact from the Memphis transaction CRE   C&I   Retail  

UnearnedIncome
  Total
Growth in total loans $ 20,600 89,507 (9,328 ) 426 101,205
Add: Impact from the Memphis transaction   15,004   41,175   33,403   -   89,582  
 
1Q14 loan growth excluding the impact from the Memphis transaction $ 35,604   130,682   24,075   426   190,787  
 
 
1Q14   4Q13   3Q13   2Q13   1Q13
Core deposits
Core deposits excluding time deposits
Core deposits excluding the impact from the Memphis transaction
Total deposits $ 20,950,891 20,876,790 20,973,856 20,710,703 20,561,193
Subtract: Brokered deposits   (1,365,939 ) (1,094,002 ) (1,275,200 ) (1,338,064 ) (1,332,632 )
Core deposits $ 19,584,952   19,782,788   19,698,656   19,372,639   19,228,561  
Subtract: Time deposits   (3,220,073 ) (3,498,200 ) (3,569,752 ) (3,377,215 ) (3,482,196 )
Core deposits excluding time deposits $ 16,364,879   16,284,588   16,128,904   15,995,424   15,746,365  
 
Core deposits $ 19,584,952
Add: Impact from the Memphis transaction   191,301  
Core deposits excluding the impact from the Memphis transaction $ 19,776,253  

 
Reconciliation of Non-GAAP Financial Measures (continued) 1Q14   4Q13   3Q13   2Q13   1Q13
(dollars in thousands)
Tier 1 Common Equity Ratio
Total shareholders' equity $ 2,998,496 2,948,985 2,931,860 3,568,204 3,578,106
Add/subtract: Accumulated other comprehensive loss (income) 30,463 41,258 29,514 33,060 (2,787 )
Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net (1,883 ) (3,415 ) (3,783 ) (4,156 ) (4,583 )
Subtract: Disallowed deferred tax asset (579,537 ) (618,516 ) (647,828 ) (674,996 ) (687,007 )
Other items   7,681   7,612   7,426   7,304   7,191  
Tier 1 capital $ 2,430,789   2,351,493   2,292,758   2,904,985   2,866,489  
Subtract: Qualifying trust preferred securities (10,000 ) (10,000 ) (10,000 ) (10,000 ) (10,000 )
Subtract: Series A Preferred Stock, no par value - - - (962,725 ) (960,005 )
Subtract: Series C Preferred Stock, no par value   (125,980 ) (125,862 ) (125,400 ) -   -  
Tier 1 common equity $ 2,294,809   2,215,631   2,157,358   1,932,260   1,896,484  
Risk-weighted assets $ 22,404,054((1 )) 22,312,655 21,735,363 21,542,287 21,235,129
Tier 1 common equity ratio   10.24 %(1) 9.93   9.93   8.97   8.93  
 
Tangible common equity to tangible assets ratio
Total assets $ 26,435,426 26,201,604 26,218,360 26,563,174 26,212,879
Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net   (1,883 ) (3,415 ) (3,783 ) (4,156 ) (4,583 )
Tangible assets $ 26,409,112   26,173,758   26,190,146   26,534,587   26,183,865  
 
Total shareholders’ equity $ 2,998,496 2,948,985 2,931,860 3,568,204 3,578,106
Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net (1,883 ) (3,415 ) (3,783 ) (4,156 ) (4,583 )
Subtract: Series A Preferred Stock, no par value - - - (962,725 ) (960,005 )
Subtract: Series C Preferred Stock, no par value   (125,980 ) (125,862 ) (125,400 ) -   -  
Tangible common equity $ 2,846,202   2,795,277   2,778,246   2,576,892   2,589,087  
 
Total shareholders’ equity to total assets ratio 11.34 % 11.25 11.18 13.43 13.65
 
Tangible common equity to tangible assets ratio 10.78 % 10.68 10.61 9.71 9.89
 
Pre-tax, Pre-credit Costs Income
Income before income taxes $ 77,024 59,710 73,459 72,906 46,553
Add: Provision for losses on loans 9,511 14,064 6,761 13,077 35,696
Add: Other credit costs(2) 8,128 8,285 15,603 10,887 13,595
Add: Restructuring charges 8,577 3,770 687 1,758 4,850
Add: Litigation loss contingency expense(3) - 10,000 - - -
Add: Visa indemnification charges 396 799 - 764 37
Subtract: Investment securities gains, net (1,331 ) (373 ) (1,124 ) (1,403 ) (45 )
Subtract: Gain from Memphis transaction, net   (5,789 ) -   -   -   -  
Pre-tax, pre-credit costs income $ 96,516   96,255   95,386   97,989   100,686  
 
Adjusted Non-interest Expense
Total non-interest expense $ 184,161 190,738 187,328 181,186 182,286
Subtract: Other credit costs(2) (8,128 ) (8,285 ) (15,603 ) (10,887 ) (13,595 )
Subtract: Restructuring charges (8,577 ) (3,770 ) (687 ) (1,758 ) (4,850 )
Subtract: Visa indemnification charges (396 ) (799 ) - (764 ) (37 )
Subtract: Litigation loss contingency expense(3)   -   (10,000 ) -   -   -  
Adjusted non-interest expense $ 167,060   167,884   171,038   167,777   163,804  
 

(1) Preliminary

(2) Other credit costs consist primarily of foreclosed real estate expense, net

(3) Consists of loss contingency accruals with respect to outstanding legal matters. Amounts for other quarters are not disclosed separately as amounts are not material.
 
         
INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share data)

2014
  2013  

1st Quarter

FirstQuarter
 

FourthQuarter
 

ThirdQuarter
 

SecondQuarter
 

FirstQuarter
 

'14 vs. '13Change
Interest income

 

$

228,382
233,258 233,852 231,513 230,391 (0.9

)%
Interest expense   27,868   28,927   29,882 29,436   30,577   (8.9 )
 
Net interest income 200,514 204,331 203,970 202,077 199,814 0.4
Provision for loan losses   9,511   14,064   6,761 13,077   35,696   (73.4 )
 
Net interest income after provision for loan losses   191,003   190,267   197,209 189,000   164,118   16.4  
 
Non-interest income:
Service charges on deposit accounts 19,214 19,647 19,426 19,195 19,521 (1.6 )
Fiduciary and asset management fees 11,033 10,978 10,389 11,111 10,971 0.6
Brokerage revenue 6,213 6,307 6,636 7,002 7,594 (18.2 )
Mortgage banking income 3,511 2,913 5,314 7,338 6,917 (49.2 )
Bankcard fees 7,518 7,979 7,760 7,838 7,064 6.4
Investment securities gains, net 1,331 373 1,124 1,403 45 nm
Other fee income 4,863 6,106 5,199 5,775 5,487 (11.4 )
(Decrease) increase in fair value of private equity investments, net (250 ) (2,108 ) 284 (883 ) (257 ) 2.7
Gain from Memphis transaction, net (1) 5,789 - - - - nm
Other non-interest income   10,960   7,986   7,446 6,313   7,379   48.5  
 
Total non-interest income   70,182   60,181   63,578 65,092   64,721   8.4  
 
Non-interest expense:
Salaries and other personnel expense 93,445 91,962 92,794 89,479 93,917 (0.5 )
Net occupancy and equipment expense 26,056 26,314 26,475 26,383 24,167 7.8
FDIC insurance and other regulatory fees 9,719 8,699 7,639 7,941 8,480 14.6
Foreclosed real estate expense, net 5,681 5,064 10,359 7,502 10,940 (48.1 )
Losses (gains) on other loans held for sale, net 2,266 (159 ) 408 (86 ) 165 nm
Professional fees 7,677 9,855 11,410 10,416 7,095 8.2
Third-party services 10,097 9,689 10,151 10,366 9,929 1.7
Visa indemnification charges 396 799 - 764 37 nm
Litigation loss contingency expense (2) - 10,000 - - - nm
Restructuring charges 8,577 3,770 687 1,758 4,850 76.8
Other operating expenses   20,247   24,745   27,405 26,663   22,706   (10.8 )
 
Total non-interest expense   184,161   190,738   187,328 181,186   182,286   1.0  
 
 
Income before income taxes 77,024 59,710 73,459 72,906 46,553 65.5
Income tax expense   28,608   21,130   27,765 27,371   16,979   68.5  
 
 
Net income 48,416 38,580 45,694 45,535 29,574 63.7
 
Dividends and accretion of discount on preferred stock   2,559   2,730   8,506 14,818   14,776   (82.7 )
 
 
Net income available to common shareholders

 

$

45,857
  35,850   37,188 30,717   14,798   209.9

%
 
 
Net income per common share, basic

 

$

0.05
0.04 0.04 0.04 0.02 150.8

%
 
Net income per common share, diluted 0.05 0.04 0.04 0.03 0.02 189.0
 
Cash dividends declared per common share 0.01 0.01 0.01 0.01 0.01 -
 
Return on average assets * 0.75 % 0.58 0.69 0.69 0.46 63.0
Return on average common equity * 6.52 5.04 5.40 4.70 2.30 183.5
 
 
Weighted average common shares outstanding, basic 972,522 972,279 956,694 851,093 787,043 23.6
Weighted average common shares outstanding, diluted 976,527 975,933 959,680 910,937 910,835 7.2
 
nm - not meaningful
* - ratios are annualized
 

(1) Consists of gain, net of associated costs, from the sale of certain loans, premises, deposits, and other assets and liabilities of the Memphis, Tennessee, operations of Trust One Bank, a division of Synovus Bank.
 

(2) Consists of loss contingency accruals with respect to outstanding legal matters. Amounts for other quarters are not disclosed separately as amounts are not material.
 
BALANCE SHEET DATA   March 31, 2014   December 31, 2013   March 31, 2013
(Unaudited)
 
(In thousands, except share data)
 
ASSETS
Cash and cash equivalents

 

$

460,618
469,630 412,305
Interest bearing funds with Federal Reserve Bank 884,743 644,528 1,332,512
Interest earning deposits with banks 9,139 24,325 21,890

Federal funds sold and securities purchased under resale agreements
76,097 80,975 122,878
Trading account assets, at fair value 17,808 6,113 9,040
Mortgage loans held for sale, at fair value 50,390 45,384 144,232
Other loans held for sale 3,120 10,685 9,129
Investment securities available for sale, at fair value 3,132,402 3,199,358 3,049,353
 
Loans, net of deferred fees and costs 20,159,004 20,057,798 19,367,887
Allowance for loan losses   (300,871 ) (307,560 ) (351,772 )
Loans, net   19,858,133   19,750,238   19,016,115  
 
Premises and equipment, net 467,375 468,871 477,132
Goodwill 24,431 24,431 24,431
Other intangible assets, net 1,883 3,415 4,583
Other real estate 110,757 112,629 155,237
Deferred tax asset, net 712,130 744,646 792,736
Other assets   626,400   616,376   641,306  
 
Total assets

 

$

26,435,426
  26,201,604   26,212,879  
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing deposits

 

$

5,870,570
5,642,751 5,152,276
Interest bearing deposits, excluding brokered deposits 13,714,382 14,140,037 14,076,285
Brokered deposits   1,365,939   1,094,002   1,332,632  
 
Total deposits 20,950,891 20,876,790 20,561,193
 
Federal funds purchased and securities sold under repurchase agreements 164,946 148,132 238,223
Long-term debt 2,106,980 2,033,141 1,653,230
Other liabilities   214,113   194,556   182,127  
 
Total liabilities   23,436,930   23,252,619   22,634,773  
 
 
Shareholders' equity:
Series A Preferred Stock - no par value, 967,870 shares outstanding at March 31, 2013 - - 960,005
Series C Preferred Stock - no par value, 5,200,000 shares outstanding at March 31, 2014 and December 31, 2013 125,980 125,862 -
Common stock - $1.00 par value. 972,806,269 shares outstanding at March 31, 2014, 972,351,457 shares outstanding at December 31, 2013, and 787,625,592 shares outstanding at March 31, 2013 978,500 978,045 793,319
Additional paid-in capital 2,137,479 2,138,024 2,174,577
Treasury stock, at cost - 5,693,452 shares (114,176 ) (114,176 ) (114,176 )
Accumulated other comprehensive (loss) income (30,463 ) (41,258 ) 2,787
Accumulated deficit   (98,824 ) (137,512 ) (238,406 )
Total shareholders' equity 2,998,496 2,948,985 3,578,106
 
Total liabilities and shareholders' equity

 

$

26,435,426
  26,201,604   26,212,879  
 
         
AVERAGE BALANCES AND YIELDS/RATES (1)
(Unaudited)
(Dollars in thousands)
 
2014   2013
FirstQuarter   FourthQuarter   ThirdQuarter   SecondQuarter   FirstQuarter
Interest Earning Assets
Taxable investment securities (2) $ 3,181,678 3,196,561 3,062,976 3,034,152 2,984,129
Yield 1.89 % 1.88 1.73 1.67 1.39
 
Tax-exempt investment securities (2) (4) $ 6,421 7,758 9,835 11,435 14,362
Yield (taxable equivalent) 6.24 % 6.14 6.26 6.47 6.34
 
Trading account assets $ 20,346 10,021 13,806 7,847 8,629
Yield 3.16 % 4.60 4.50 6.34 7.12
 
Commercial loans (3) (4) $ 16,451,594 16,217,373 16,067,424 16,075,832 16,000,000
Yield 4.21 % 4.28 4.37 4.39 4.48
 
Consumer loans (3) $ 3,628,347 3,615,836 3,528,057 3,454,874 3,461,622
Yield 4.53 % 4.50 4.61 4.62 4.68
 
Allowance for loan losses $ (307,078 )   (316,001 )   (328,084 )   (351,075 )   (372,239 )
 
Loans, net (3) $ 19,772,863 19,517,208 19,267,397 19,179,631 19,089,383
Yield 4.34 % 4.40 4.50 4.52 4.54
 
Mortgage loans held for sale $ 38,699 46,036 85,493 129,742 179,507
Yield 4.15 % 3.94 4.07 4.35 3.80
 

Federal funds sold, due from Federal Reserve Bank, and other short-term investments
$ 935,300 1,235,144 1,375,921 1,550,113 1,343,652
Yield 0.23 % 0.24 0.24 0.24 0.24
 
Federal Home Loan Bank and Federal Reserve Bank stock (5) $ 82,585 70,815 70,741 65,014 65,330
Yield 3.21 % 2.85 2.30 2.35 2.36
                                 
Total interest earning assets $ 24,037,892 24,083,543 23,886,169 23,977,934 23,684,992
Yield     3.86 %   3.85     3.89     3.88     3.95  
 
Interest Bearing Liabilities
 
Interest bearing demand deposits $ 3,878,590 4,102,398 3,933,902 3,895,675 3,839,707
Rate 0.19 % 0.19 0.23 0.18 0.18
 
Money market accounts $ 6,077,357 6,161,893 6,148,289 6,072,155 6,135,649
Rate 0.32 % 0.33 0.33 0.33 0.33
 
Savings deposits $ 616,962 605,054 607,144 609,832 581,792
Rate 0.10 % 0.10 0.11 0.11 0.11
 
Time deposits under $100,000 $ 1,423,487 1,491,673 1,526,974 1,537,639 1,581,092
Rate 0.59 % 0.61 0.62 0.64 0.69
 
Time deposits over $100,000 $ 1,956,925 2,049,094 2,022,719 1,891,624 1,958,870
Rate 0.76 % 0.80 0.84 0.88 0.93
 
Brokered money market accounts $ 207,681 210,380 202,802 202,532 202,734
Rate 0.26 % 0.27 0.27 0.31 0.32
 
Brokered time deposits $ 1,027,167 984,047 1,130,491 1,131,444 1,013,461
Rate   0.62 %   0.65     0.70     0.77     0.99  
 
Total interest bearing deposits $ 15,188,169 15,604,539 15,572,321 15,340,901 15,313,305
Rate 0.38 % 0.39 0.42 0.42 0.44
 

Federal funds purchased and securities sold under repurchase agreements
$ 215,027 216,757 195,717 206,046 214,661
Rate 0.14 % 0.15 0.14 0.15 0.17
 
Long-term debt $ 2,156,836 1,886,223 1,885,385 1,762,173 1,688,580
Rate 2.52 % 2.85 2.85 3.06 3.26
                                 
Total interest bearing liabilities $ 17,560,032 17,707,519 17,653,423 17,309,120 17,216,546
Rate     0.64 %   0.65     0.67     0.68     0.72  
 
Non-interest bearing demand deposits $ 5,537,090 5,545,529 5,306,447 5,327,795 5,232,587
 
Effective cost of funds 0.47 % 0.47 0.49 0.49 0.52
                                 
Net interest margin     3.39 %   3.38     3.40     3.39     3.43  
 
Taxable equivalent adjustment $ 455 481 529 557 618
 
(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
 
         
LOANS OUTSTANDING AND NON-PERFORMING LOANS COMPOSITION
(Unaudited)
(Dollars in thousands)
 
 
March 31, 2014

Loan Type

Total Loans
 

Loans as a % of Total Loans Outstanding
 

Total Non-performing Loans
 

Non-performing Loans as a % of Total Nonperforming Loans
 
Multi-Family $ 984,658 4.9 % $ 226 0.1 %
Hotels 696,083 3.5 1,114 0.3
Office Buildings 950,635 4.7 4,243 1.1
Shopping Centers 844,205 4.2 9,305 2.4
Commercial Development 152,309 0.8 28,559 7.4
Warehouses 570,492 2.8 3,029 0.8
Other Investment Property   500,087   2.5     4,107   1.1  
Total Investment Properties 4,698,469 23.3 50,583 13.3
 
1-4 Family Construction 141,060 0.7 815 0.2
1-4 Family Investment Mortgage 784,712 3.9 13,950 3.6
Residential Development   187,240   0.9     14,486   3.8  
Total 1-4 Family Properties 1,113,012 5.5 29,251 7.6
 
Land Acquisition   674,678   3.3     151,332   39.4  
Total Commercial Real Estate   6,486,159   32.2     231,166   60.1  
Commercial, Financial, and Agricultural 5,505,577 27.3 54,938 14.3
Owner-Occupied 3,773,656 18.7 33,238 8.6
Small Business   783,143   3.9     6,325   1.6  
Total Commercial & Industrial   10,062,376   49.9     94,501   24.6  
Home Equity Lines 1,601,757 7.9 18,003 4.7
Consumer Mortgages 1,504,213 7.5 38,227 9.9
Credit Cards 253,149 1.3 - -
Other Retail Loans   279,786   1.4     2,427   0.6  
Total Retail   3,638,905   18.0     58,657   15.3  
Unearned Income   (28,436 ) nm     -   nm  
Total $ 20,159,004   100.0 % $ 384,324   100.0 %
 
 
LOANS OUTSTANDING BY TYPE COMPARISON
(Unaudited)
(Dollars in thousands)
         
Total Loans 1Q14 vs. 4Q13 1Q14 vs. 1Q13
Loan Type March 31, 2014 December 31, 2013 % change (1) March 31, 2013 % change
 
Multi-Family $ 984,658 954,295 12.9 % 857,239 14.9 %
Hotels 696,083 687,177 5.3 691,453 0.7
Office Buildings 950,635 884,638 30.3 768,806 23.7
Shopping Centers 844,205 852,409 (3.9 ) 847,460 (0.4 )
Commercial Development 152,309 156,344 (10.5 ) 207,043 (26.4 )
Warehouses 570,492 561,637 6.4 534,051 6.8
Other Investment Property   500,087   507,255     (5.7 ) 500,643   (0.1 )
Total Investment Properties 4,698,469 4,603,755 8.3 4,406,695 6.6
 
1-4 Family Construction 141,060 138,973 6.1 132,377 6.6
1-4 Family Investment Mortgage 784,712 828,967 (21.7 ) 866,921 (9.5 )
Residential Development   187,240   188,531     (2.8 ) 252,204   (25.8 )
Total 1-4 Family Properties 1,113,012 1,156,471 (15.2 ) 1,251,502 (11.1 )
 
Land Acquisition   674,678   705,333     (17.6 ) 764,438   (11.7 )
Total Commercial Real Estate   6,486,159   6,465,559     1.3   6,422,635   1.0  
 
Commercial, Financial, and Agricultural 5,505,577 5,490,214 1.1 5,206,956 5.7
Owner-Occupied 3,773,656 3,795,439 (2.3 ) 3,780,129 (0.2 )
Small Business   783,143   687,216     56.6   553,056   41.6  
Total Commercial & Industrial   10,062,376   9,972,869     3.6   9,540,141   5.5  
 
Home Equity Lines 1,601,757 1,587,541 3.6 1,508,507 6.2
Consumer Mortgages 1,504,213 1,519,068 (4.0 ) 1,394,853 7.8
Credit Cards 253,149 256,846 (5.8 ) 251,618 0.6
Other Retail Loans   279,786   284,778     (7.1 ) 271,685   3.0  
Total Retail   3,638,905   3,648,233     (1.0 ) 3,426,663   6.2  
Unearned Income   (28,436 ) (28,862 )   (6.0 ) (21,552 ) 31.9  
Total $ 20,159,004   20,057,799     2.0 % 19,367,887   4.1 %
 
(1) Percentage change is annualized.
 
 
CREDIT QUALITY DATA
(Unaudited)

(Dollars in thousands)
           

 
2014   2013 1st Quarter
First Fourth Third Second First '14 vs. '13
Quarter   Quarter   Quarter   Quarter   Quarter Change
 
Non-performing Loans $ 384,324 416,300 450,879 483,464 513,227 (25.1 )%
Other Loans Held for Sale (1) 3,120 10,685 9,351 12,083 9,129 (65.8 )
Other Real Estate   110,757   112,629 126,640 139,653 155,237 (28.7 )
Non-performing Assets 498,201 539,614 586,870 635,200 677,592 (26.5 )
 
Allowance for Loan Losses 300,871 307,560 318,612 334,880 351,772 (14.5 )
 
Net Charge-Offs - Quarter 15,181 25,116 23,030 29,969 57,328 (73.5 )
Net Charge-Offs / Average Loans - Quarter (2) 0.30 % 0.51 0.47 0.61 1.18
 
Non-performing Loans / Loans 1.91 2.08 2.29 2.47 2.65
Non-performing Assets / Loans, Other Loans Held for Sale & ORE 2.46 2.67 2.96 3.21 3.47
Allowance / Loans 1.49 1.53 1.62 1.71 1.82
 
Allowance / Non-performing Loans 78.29 73.88 70.66 69.27 68.54
Allowance / Non-performing Loans (3) 100.16 95.43 91.84 91.76 97.75
 
Past Due Loans over 90 days and Still Accruing $ 6,563 4,489 4,738 4,596 5,799 13.2 %
As a Percentage of Loans Outstanding 0.03 % 0.02 0.02 0.02 0.03
 
Total Past Dues Loans and Still Accruing $ 75,038 72,600 78,906 80,678 88,330 (15.0 )
As a Percentage of Loans Outstanding 0.37 % 0.36 0.40 0.41 0.46
 
Accruing Troubled Debt Restructurings (TDRs) $ 495,390 556,410 574,236 635,125 623,900 (20.6 )
 
(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)

 
     
March 31, 2014 December 31, 2013 March 31, 2013
 
Tier 1 Capital $ 2,430,789 2,351,493 2,866,489
Total Risk-Based Capital 2,981,128 2,900,865 3,493,090
Tier 1 Capital Ratio 10.85 % 10.54 13.50
Tier 1 Common Equity Ratio 10.24 9.93 8.93
Total Risk-Based Capital Ratio 13.31 13.00 16.45
Tier 1 Leverage Ratio 9.46 9.13 11.27
Common Equity as a Percentage of Total Assets (2) 10.87 10.77 9.99
Tangible Common Equity as a Percentage of Tangible Assets (3) 10.78 10.68 9.89
Tangible Common Equity as a Percentage of Risk Weighted Assets (3) 12.70 12.53 12.19
Book Value Per Common Share (4) 2.95 2.90 2.99
Tangible Book Value Per Common Share (3) 2.93 2.87 2.96
 
(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.
 

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