Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter ended September 30, 2017.

Third Quarter Highlights
  • Net income available to common shareholders was $95.4 million or $0.78 per diluted share as compared to $73.4 million or $0.60 per diluted share for the second quarter 2017 and $62.7 million or $0.51 per diluted share for the third quarter 2016. The third quarter results reflect the Cabela's transaction fee and certain balance sheet restructuring actions.
    • Adjusted diluted earnings per share were $0.65 as compared to $0.61 for the second quarter 2017 and $0.52 for the third quarter 2016.
  • Return on average assets was 1.27%, up 27 basis points from the previous quarter and up 39 basis points from the third quarter 2016.
    • Adjusted return on average assets was 1.05% as compared to 1.01% for the second quarter 2017 and 0.90% for the third quarter 2016.
  • Total average loans grew $149.9 million or 2.4% annualized from the previous quarter and $1.36 billion or 5.9% as compared to the third quarter 2016.
  • Total average deposits grew $295.2 million or 4.7% annualized from the previous quarter and $1.26 billion or 5.2% as compared to the third quarter 2016.
  • Non-performing asset ratio was 57 basis points, down 16 basis points from the previous quarter and down 20 basis points from the third quarter 2016.
    • Results include the impact of certain balance sheet restructuring actions which included $77.8 million in loans transferred to held-for-sale.
  • Return on average common equity was 13.24%, up 290 basis points from the previous quarter and up 435 basis points from the third quarter 2016.
    • Adjusted return on average common equity was 10.92% as compared to 10.49% for the second quarter 2017 and 9.08% for the third quarter 2016.
    • Adjusted return on average tangible common equity was 11.19% as compared to 10.75% for the second quarter 2017 and 9.16% for the third quarter 2016.
  • Completed the acquisition of certain assets and assumption of certain liabilities of World's Foremost Bank (WFB), a wholly-owned subsidiary of Cabela's Incorporated, on September 25, 2017.
    • Simultaneously sold the credit card assets and related liabilities to Capital One Bank while retaining WFB's $1.1 billion brokered time deposit portfolio.
    • Non-interest income includes a $75.0 million transaction fee received from Cabela's and Capital One as part of the transaction.

"Our third quarter results reflect solid execution and steady progress toward achieving our strategic priorities," said Synovus Chairman and CEO Kessel Stelling. "Adjusted earnings per share increased 25% year-over-year, adjusted return on assets increased to 1.05%, and our efficiency ratio declined to below 59%. We strengthened our balance sheet with diversified year-over-year average loan growth of 6% funded by core deposit growth, and we saw the non-performing loan ratio decline 24 basis points to 0.40%. We were also pleased to close the Cabela's transaction, which provided additional liquidity to fund organic growth and enabled the acceleration of additional balance sheet restructuring actions with longer term financial benefit. Our team is highly energized as we prepare to finish strong in 2017 and fully transition to a unified Synovus brand in 2018, with all of our efforts aimed at improving the customer experience in the communities we serve throughout our footprint."

Balance Sheet

  • Total average loans were $24.50 billion, up $149.9 million or 2.4% annualized from the previous quarter and up $1.36 billion or 5.9% as compared to the third quarter 2016.
  • Total loans ended the quarter at $24.49 billion, up $56.8 million or 0.9% annualized from the previous quarter and up $1.22 billion or 5.3% as compared to the third quarter 2016.
    • Excluding transfers to held-for-sale, loans grew $134.6 million or 2.2% annualized from the previous quarter.
      • Consumer loans grew $286.4 million or 21.5% annualized from the previous quarter.
      • Commercial and industrial loans grew $24.8 million or 0.8% annualized from the previous quarter.
      • Commercial real estate loans declined $178.4 million or 9.5% annualized from the previous quarter.
  • Total average deposits were $25.29 billion, up $295.2 million or 4.7% annualized from the previous quarter and up $1.26 billion or 5.2% as compared to the third quarter 2016.
    • Average core transaction deposits 1 grew $194.0 million or 4.2% annualized from the previous quarter and $1.24 billion or 7.1% as compared to the third quarter 2016.

Core Performance
  • Total adjusted revenues were $331.3 million, up $9.8 million or 3.1% from the previous quarter and up 12.4% from the third quarter 2016.
  • Net interest income was $262.6 million, up $11.5 million or 4.6% from the previous quarter and up 16.2% from the third quarter 2016.
  • Net interest margin was 3.63%, up 12 basis points from the previous quarter. Yield on earning assets was 4.11%, up 12 basis points from the previous quarter, and the effective cost of funds was 0.48%, unchanged from the previous quarter.
  • Total non-interest income was $135.4 million, up $66.7 million compared to the previous quarter and up $67.3 million from third quarter 2016.
    • Includes the $75.0 million Cabela's transaction fee, partially offset by $8.0 million in investment securities losses.
  • Adjusted non-interest income was $68.4 million, down $1.6 million or 2.3% from the previous quarter and unchanged from the third quarter 2016.
  • Total non-interest expense was $205.6 million, up $13.9 million or 7.2% from the previous quarter and up 10.6% from the third quarter 2016.
    • Efficiency ratio 2 was 50.62% as compared to 59.90% in the previous quarter and 63.13% in the third quarter 2016.
  • Adjusted non-interest expense was $194.1 million, up $2.7 million or 1.4% from the previous quarter and up 5.5% from the third quarter 2016.
    • Adjusted efficiency ratio was 58.59% as compared to 59.56% in the previous quarter and 62.41% in the third quarter 2016.

Credit Quality
  • During the third quarter, Synovus completed certain balance sheet restructuring actions which included $77.8 million in loans transferred to held-for-sale (consisting primarily of NPLs) that resulted in provision expense of $27.7 million. Additionally, foreclosed real estate expenses for the quarter include $7.1 million of charges related to discounts to fair value for completed or planned accelerated dispositions.
  • Non-performing loans were $97.8 million at September 30, 2017, down $61.5 million from June 30, 2017, and down $50.3 million from September 30, 2016. The non-performing loan ratio was 0.40% at September 30, 2017, as compared to 0.65% at June 30, 2017, and 0.64% at September 30, 2016.
  • Total non-performing assets were $138.6 million at September 30, 2017, down $40.3 million from June 30, 2017, and down $40.5 million from September 30, 2016. The non-performing asset ratio was 0.57% at September 30, 2017, as compared to 0.73% at June 30, 2017, and 0.77% at September 30, 2016.
  • Net charge-offs were $38.1 million in the third quarter 2017, up $22.4 million from the previous quarter and up $31.2 million from the third quarter 2016. The annualized net charge-off ratio was 0.62% in the third quarter as compared to 0.26% in the previous quarter and 0.12% in the third quarter 2016.
  • Total delinquencies (consisting of loans 30 or more days past due and still accruing) were 0.35% of total loans at September 30, 2017, as compared to 0.27% at June 30, 2017, and 0.27% at September 30, 2016.

Capital Ratios
  • Ratios reflect repurchase of $90.6 million in common stock during the third quarter 2017.
  • Common Equity Tier 1 ratio was 10.04% at September 30, 2017, compared to 10.02% at June 30, 2017.
  • Tier 1 Capital ratio was 10.41% at September 30, 2017, compared to 10.37% at June 30, 2017.
  • Total Risk Based Capital ratio was 12.28% at September 30, 2017, compared to 12.24% at June 30, 2017.
  • Tier 1 Leverage ratio was 9.34% at September 30, 2017, compared to 9.30% at June 30, 2017.
  • Tangible Common Equity ratio was 8.88% at September 30, 2017, compared to 9.15% at June 30, 2017.

Third Quarter Earnings Conference Call

Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on October 17, 2017. 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 investor.synovus.com/event. The replay will be archived for 12 months and will be available 30-45 minutes after the call.

Synovus Financial Corp.

Synovus Financial Corp. is a financial services company based in Columbus, Georgia, with approximately $32 billion in assets. Synovus provides commercial and retail banking, investment, and mortgage services through 248 branches in Georgia, Alabama, South Carolina, Florida, and Tennessee. Synovus Bank, a wholly owned subsidiary of Synovus, was recognized as the "Most Reputable Bank" by American Banker and the Reputation Institute in 2017, and was named " Best Regional Bank, Southeast" by MONEY Magazine for 2016-17. Synovus is on the web at synovus.com, on Twitter @synovus, and on LinkedIn at http://linkedin.com/company/synovus.

___________________

1 Consist of non-interest bearing, NOW/Savings, and money market deposits excluding SCMs.

2 Non-interest expense as a percentage of the sum of net interest income (fully taxable equivalent basis) and non-interest income excluding net investment securities gains/losses.

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 regarding deposits, loan growth and the net interest margin; expectations on our growth strategy, expense initiatives, strategic transactions, capital management, our brand initiative, and future profitability; expectations on credit trends and key credit metrics; 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 press release. 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, 2016 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 adjusted diluted earnings per share; adjusted return on average assets; adjusted return on average common equity; adjusted return on average tangible common equity; loan growth excluding transfers to held-for-sale; average core transaction deposits; total adjusted revenues; adjusted non-interest income; adjusted non-interest expense; adjusted efficiency ratio; tangible common equity ratio; and common equity Tier 1 (CET1) ratio (fully phased-in) 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 net income per common share, diluted; return on average assets; return on average common equity; total loan growth; total average deposits; total revenue; total non-interest income; total non-interest expense; efficiency ratio; return on average common equity and total shareholders' equity to total assets ratio, respectively.

Synovus believes that these non-GAAP financial measures provide meaningful additional information about Synovus to assist management, investors, and bank regulators in evaluating Synovus' operating results, financial strength and capitalization, and the performance of its business and the strength of its capital position, but they have inherent limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of results as reported under GAAP. Adjusted diluted earnings per share, adjusted return on average assets, adjusted return on average common equity, and adjusted return on average tangible common equity are measurements used by management to evaluate operating results exclusive of items that are not indicative of ongoing operations and impact period-to-period comparisons. Average core transaction deposits is a measure used by management to evaluate organic growth of deposits and the quality of deposits as a funding source. Loan growth excluding transfers to held-for-sale is a measure used by management to evaluate organic loan growth exclusive of loans transferred to held-for-sale. Total adjusted revenues and adjusted non-interest income are measures utilized by management to measure non-interest income exclusive of net investment securities gains/losses, decrease in fair value of private equity investments, net, and the Cabela's transaction fee. Adjusted non-interest expense and the adjusted efficiency ratio are measures utilized by management to measure the success of expense management initiatives focused on reducing recurring controllable operating costs. The tangible common equity ratio and common equity Tier 1 (CET1) ratio (fully phased-in) are used by management and bank regulators to assess the strength of our capital position. These non-GAAP financial measures should be considered as additional views of the way our financial measures are affected by significant items and other factors, and since they are not required to be uniformly applied, they may not be comparable to other similarly titled measures at other companies and should not be considered as substitutes for net income per common share, diluted; return on average assets; return on average common equity; total loan growth; total average deposits; total revenue; total non-interest income; total non-interest expense; efficiency ratio; return on average common equity and total shareholders' equity to total assets ratio, determined in accordance with GAAP and may not be comparable to other similarly titled measures at other companies.

The computations of adjusted diluted earnings per share; adjusted return on average assets; adjusted return on average common equity; adjusted return on average tangible common equity; loan growth excluding transfers to held-for-sale; average core transaction deposits; total adjusted revenues; adjusted non-interest income; adjusted non-interest expense; adjusted efficiency ratio; tangible common equity ratio; and common equity Tier 1 (CET1) ratio (fully phased-in) and the reconciliation of these measures to net income per common share, diluted; return on average assets; return on average common equity; total loan growth; total average deposits; total revenue; total non-interest income; total non-interest expense; efficiency ratio; return on average common equity; and total shareholders' equity to total assets ratio are set forth in the tables below.

 

Reconciliation of Non-GAAP Financial Measures
           

(dollars in thousands)

3Q17

2Q17

3Q16
 
Adjusted Net Income Per Common Share, Diluted
Net income available to common shareholders $ 95,448 73,444 62,686
Add: Earnout liability adjustments 2,059 - -
Add: Merger-related expense 23 - 550
Add: Fair value adjustment to VISA derivative - - 360
Add/subtract: Litigation contingency/(recovery) 401 - (189 )
Add: Restructuring charges 519 13 1,243
Add: Amortization of intangibles 292 292 -
Add: 3Q17 balance sheet restructuring actions 35,960 - -
Add/subtract: Investment securities losses ( gains), net 7,956 1 (59 )
Add: Decrease in fair value of private equity investments, net 27 1,352 249
Subtract: Cabela's transaction fee (75,000 ) - -
Add/subtract: Tax effect of adjustments   11,034   (613 ) (797 )
Adjusted net income $ 78,719 74,489 64,043
Weighted average common shares outstanding- diluted 121,814 123,027 123,604
 
Adjusted diluted earnings per share $ 0.65   0.61   0.52  
 
           

Reconciliation of Non-GAAP Financial Measures, continued
 

(dollars in thousands)

3Q17

2Q17

3Q16
 
Adjusted Return on Average Assets
Net income $ 98,008 76,003 65,245
Add: Earnout liability adjustments 2,059 - -
Add: Merger-related expense 23 - 550
Add: Fair value adjustment to VISA derivative - - 360
Subtract/add: Litigation contingency 401 - (189 )
Add: Restructuring charges 519 13 1,243
Add: Amortization of intangibles 292 292 -
Add: 3Q17 balance sheet restructuring actions 35,960 - -
Subtract/add: Investment securities (losses) gains, net 7,956 1 (59 )
Add: Decrease in fair value of private equity investments, net 27 1,352 249
Subtract: Cabela's transaction fee (75,000 ) - -
Subtract/add: Tax effect of adjustments   11,034   (613 ) (797 )
Adjusted net income $ 81,279 77,048 66,602
Net income annualized $ 322,466 309,039 264,960
 
Total average assets $ 30,678,388 30,630,748 29,528,435
Adjusted return on average assets   1.05 % 1.01   0.90  
 
           

Reconciliation of Non-GAAP Financial Measures, continued
 

(dollars in thousands)

3Q17

2Q17

3Q16
 
Adjusted Return on Common Equity
Net income available to common shareholders $ 95,448 73,444 62,686
Add: Earnout liability adjustments 2,059 - -
Add: Merger-related expense 23 - 550
Add: Fair value adjustment to VISA derivative - - 360
Subtract/add: Litigation contingency 401 - (189 )
Add: Restructuring charges 519 13 1,243
Add: Amortization of intangibles 292 292 -
Add: 3Q17 balance sheet restructuring actions 35,960 - -
Subtract/add: Investment securities (losses) gains, net 7,956 1 (59 )
Add: Decrease in fair value of private equity investments, net 27 1,352 249
Subtract: Cabela's transaction fee (75,000 ) - -
Add/subtract: Tax effect of adjustments   11,034   (613 ) (797 )
Adjusted net income $ 78,719 74,489 64,043
Net income annualized $ 312,309 298,775 254,780
 
Total average shareholders' equity less preferred stock $ 2,859,491 2,849,069 2,806,533
Subtract: Goodwill (57,167 ) (57,017 ) (24,431 )
Subtract: Other intangibles assets, net   (11,648 ) (11,966 ) (226 )

Total average tangible shareholders' equity
$ 2,790,676 2,780,086 2,781,876
Adjusted return on average common equity   10.92 % 10.49   9.08  

Adjusted return on average tangible common equity
  11.19 %

10.75
  9.16  
 
 

Average Core Transaction Deposits
Total average deposits $ 25,286,919 24,991,708 24,030,291
Subtract: Average brokered deposits (1,530,889 ) (1,379,559 ) (1,409,739 )
Subtract: Average time deposits excluding average SCM time deposits (3,160,915 ) (3,151,333 ) (3,153,366 )
Subtract: Average state, county, and municipal (SCM) deposits   (1,991,954 ) (2,051,646 ) (2,105,126 )
Average core transaction deposits $ 18,603,161   18,409,170   17,362,060  
 
           

Reconciliation of Non-GAAP Financial Measures, continued
 

(dollars in thousands)

3Q17

2Q17

3Q16
 
Adjusted Non-interest Income
Total non-interest income $135,435 68,701 68,155
Subtract: Cabela's transaction fee (75,000) - -
Add/subtract: Investment securities (losses) gains, net 7,956 1 (59)
Add: Decrease in fair value of private equity investments, net 27 1,352 249
 
Adjusted non-interest income $68,418 70,054 68,345
 
Adjusted Non-interest Expense
Total non-interest expense $ 205,646 191,747 185,871
Subtract: 3Q17 balance sheet restructuring actions (8,250) - -
Subtract: Earnout liability adjustments (2,059) - -
Subtract: Restructuring charges (519) (13) (1,243)
Subtract: Fair value adjustment to Visa derivative - - (360)
Subtract: Litigation contingency/ recovery (401) - 189
Subtract: Merger-related expense (23) - (550)
Subtract: Amortization of intangibles (292) (292) -
Adjusted non-interest expense $ 194,102 191,442 183,907
 

Adjusted Efficiency Ratio
Adjusted non-interest expense $ 194,102 191,442 183,907
Net interest income 262,572 251,097 226,007
Add: Tax equivalent adjustment 283 298 330
Add: Total non-interest income 135,435 68,701 68,155
Subtract: Cabela's transaction fee (75,000)
Add: Decrease in fair value of private equity investments, net 27 1,352 249
Add/subtract: Investment securities (losses) gains, net 7,956 1 (59)
Total adjusted revenues $ 331,273 321,449 294,682
Adjusted efficiency ratio 58.59% 59.56 62.41
 

Reconciliation of Non-GAAP Financial Measures, continued
           
 

(dollars in thousands)

3Q17

2Q17

3Q16
 
Tangible common equity ratio
Total assets $ 31,642,123 30,687,966 29,727,096
Subtract: Goodwill (57,315 ) (57,092 ) (24,431 )
Subtract: Other intangible assets, net   (11,548 ) (11,843 ) (225 )
Tangible assets $ 31,573,260   30,619,031   29,702,440  
 
Total shareholders' equity $ 2,997,079 2,997,947 2,906,659
Subtract: Goodwill (57,315 ) (57,092 ) (24,431 )
Subtract: Other intangible assets, net (11,548 ) (11,843 ) (225 )
Subtract: Series C Preferred Stock, no par value   (125,980 ) (125,980 ) (125,980 )
Tangible common equity $ 2,802,236   2,803,032   2,756,023  
Tangible common equity ratio 8.88 % 9.15 9.28
 
Common Equity Tier 1 (CET1) ratio (fully phased-in)
Common Equity Tier 1 (CET1) $ 2,749,303 2,734,983 2,596,233
Adjustment related to capital components   (25,704 ) (31,623 ) (101,843 )
CET1 (fully phased-in) $ 2,723,599   2,703,360   2,494,390  
Total risk-weighted assets (fully phased-in) $ 27,600,027 27,528,587 26,323,936
Common Equity Tier 1 (CET1) ratio (fully phased-in) 9.87 % 9.82 9.48
 
 

Sequential quarter loan growth excluding transfers to held-for-sale
 
3Q17 Sequential quarter loan growth, as reported $ 56,848
Add: transfers to held-for-sale
Consumer 20,213
C&I 41,821

Commercial
  15,740  
Total loans transferred to held-for-sale $ 77,774
3Q17 Sequential quarter loan growth excluding transfers to held-for sale

$

134,622
Ending loan balance at June 30, 2017 $ 24,430,512
Sequential quarter % change, as reported, annualized

0.9

%
Sequential quarter % change, adjusted, annualized 2.2 %
 
             

Synovus
 
INCOME STATEMENT DATA Nine Months Ended
(Unaudited)
(Dollars in thousands, except per share data) September 30,
               
 
2017 2016 Change
               
 
Interest income

$

855,563
758,270

12.8

%
Interest expense 101,966 92,620 10.1
       
 
Net interest income 753,597 665,650 13.2
Provision for loan losses 58,620 21,741 169.6
       
 
Net interest income after provision for loan losses 694,977 643,909 7.9
       
 
Non-interest income:
Service charges on deposit accounts 59,848 60,772 (1.5 )
Fiduciary and asset management fees 37,290 34,691 7.5
Brokerage revenue 21,947 20,019 9.6
Mortgage banking income 17,151 18,755 (8.6 )
Bankcard fees 24,339 24,988 (2.6 )
Cabela's transaction fee 75,000 - nm
Investment securities (losses) gains, net (289 ) 126 nm
Decrease in fair value of private equity investments, net (3,193 ) (527 ) nm
Other fee income 16,127 15,255 5.7
Other non-interest income 27,754 25,109 10.5
       
 
Total non-interest income 275,974 199,188 38.5
       
 
 
Non-interest expense:
Salaries and other personnel expense 322,079 300,364 7.2
Net occupancy and equipment expense 89,837 81,480 10.3
Third-party processing expense 39,882 34,033 17.2
FDIC insurance and other regulatory fees 20,723 20,100 3.1
Professional fees 20,048 19,794 1.3
Advertising expense 14,868 15,358 (3.2 )
Foreclosed real estate expense, net 10,847 9,998 8.5
Earnout liability adjustments 3,766 - nm
Merger-related expense 110 550 nm
Amortization of intangibles 767 121 nm
Fair value adjustment to Visa derivative - 1,079 nm
Loss on early extinguishment of debt - 4,735 nm
Litigation contingency/settlement expense 401 2,511 nm
Restructuring charges, net 7,043 8,225 (14.4 )
Other operating expenses   64,409   64,368   0.1  
 
Total non-interest expense 594,780 562,716 5.7
       
 
 
Income before income taxes 376,171 280,381 34.2
Income tax expense 130,303 102,148 27.6
 
       
Net income 245,868 178,233 37.9
 
Dividends on preferred stock   7,678   7,678   -  
 
 
Net income available to common shareholders

$

238,190
  170,555  

39.7

%
 
 
Net income per common share, basic

$

1.96
1.36

43.4

%
 
Net income per common share, diluted 1.94 1.36 43.2
 
Cash dividends declared per common share 0.45 0.36 25.0
 
Return on average assets

1.07

%
0.81

26

bp
Return on average common equity 11.20 8.07 313
 
 
Weighted average common shares outstanding, basic 121,796 125,076

(2.6

)%
Weighted average common shares outstanding, diluted 122,628 125,712 (2.5 )
 

nm - not meaningful

bps - basis points
 
                         

Synovus
 
INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share data) 2017 2016 3rd Quarter
             
Third Second First Fourth Third '17 vs. '16
Quarter Quarter Quarter Quarter Quarter Change
 
Interest income

$

297,652
285,510 272,401 264,534 256,554

16.0

%
Interest expense   35,080   34,413   32,474   31,004   30,547   14.8  
 
 
Net interest income 262,572 251,097 239,927 233,530 226,007 16.2
Provision for loan losses   39,686   10,260   8,674   6,259   5,671   nm  
 
 
Net interest income after provision for loan losses   222,886   240,837   231,253   227,271   220,336   1.2  
 
 
Non-interest income:
Service charges on deposit accounts 20,255 19,820 19,774 20,653 20,822 (2.7 )
Fiduciary and asset management fees 12,615 12,524 12,151 11,903 11,837 6.6
Brokerage revenue 7,511 7,210 7,226 7,009 6,199 21.2
Mortgage banking income 5,603 5,784 5,766 5,504 7,329 (23.6 )
Bankcard fees 7,901 8,253 8,185 8,330 8,269 (4.5 )
Cabela's transaction fee 75,000 - - - - nm
Investment securities (losses) gains, net (7,956 ) (1 ) 7,668 5,885 59 nm
Decrease in fair value of private equity investments, net (27 ) (1,352 ) (1,814 ) (499 ) (249 ) nm
Other fee income 5,094 6,164 4,868 4,965 5,171 (1.5 )
Other non-interest income   9,439   10,299   8,015   10,256   8,718   8.3  
 
 
Total non-interest income   135,435   68,701   71,839   74,006   68,155   98.7  
 
 
 
Non-interest expense:
Salaries and other personnel expense 109,675 105,213 107,191 101,662 101,945 7.6
Net occupancy and equipment expense 30,573 29,933 29,331 27,867 28,120 8.7
Third-party processing expense 13,659 13,620 12,603 12,287 11,219 21.7
FDIC insurance and other regulatory fees 7,078 6,875 6,770 6,614 6,756 4.8
Professional fees 7,141 7,551 5,355 6,904 6,486 10.1
Advertising expense 3,610 5,346 5,912 4,905 5,597 (35.5 )
Foreclosed real estate expense, net 7,265 1,448 2,134 2,840 2,725 166.6
Earnout liability adjustments 2,059 1,707 - - - nm
Merger-related expense 23 - 86 1,086 550 nm
Amortization of intangibles 292 292 183 400 - nm
Fair value adjustment to Visa derivative - - - 4,716 360 nm
Litigation contingency (recovery) expense 401 - - - (189 ) nm
Restructuring charges, net 519 13 6,511 42 1,243 nm
Other operating expenses   23,351   19,749   21,312   23,886   21,059   10.9  
 
Total non-interest expense   205,646   191,747   197,388   193,209   185,871   10.6  
 
 
 
Income before income taxes 152,675 117,791 105,704 108,068 102,620 48.8
Income tax expense   54,668   41,788   33,847   39,519   37,375   46.3  
 
 
Net income 98,007 76,003 71,857 68,549 65,245 50.2
 
Dividends on preferred stock   2,559   2,559   2,559   2,559   2,559   -  
 
Net income available to common shareholders

$

95,448
  73,444   69,298   65,990   62,686  

52.3

%
 
Net income per common share, basic

$

0.79
0.60 0.57 0.54 0.51

54.8

%
 
Net income per common share, diluted 0.78 0.60 0.56 0.54 0.51 54.5
 
Cash dividends declared per common share 0.15 0.15 0.15 0.12 0.12 25.0
 
Return on average assets *

1.27

%
1.00 0.96 0.90 0.88

39

bps
Return on average common equity * 13.24 10.34 9.97 9.42 8.89 435
 
Weighted average common shares outstanding, basic 120,900 122,203 122,300 122,341 122,924

(1.6

)%
Weighted average common shares outstanding, diluted 121,814 123,027 123,059 123,187 123,604 (1.4 )
 

nm - not meaningful

bps - basis points

* - ratios are annualized
 
           
Synovus
     
BALANCE SHEET DATA September 30, 2017 December 31, 2016 September 30, 2016
(Unaudited)
 
(In thousands, except share data)
 
ASSETS
Cash and cash equivalents

$

386,459
395,175 367,342
Interest bearing funds with Federal Reserve Bank 1,297,581 527,090 985,776
Interest earning deposits with banks 6,047 18,720 18,375

Federal funds sold and securities purchased under resale agreements
48,820 58,060 71,753
Trading account assets, at fair value 12,329 9,314 7,309
Mortgage loans held for sale, at fair value 54,072 51,545 95,769
Other loans held for sale 31,253 127 2,474
Investment securities available for sale, at fair value 3,825,443 3,718,195 3,603,153
 
Loans, net of deferred fees and costs 24,487,360 23,856,391 23,262,887
Allowance for loan losses   (249,683 ) (251,758 ) (253,817 )
Loans, net   24,237,677   23,604,633   23,009,070  
 
Premises and equipment, net 423,245 417,485 418,091
Goodwill 57,315 59,678 24,431
Other intangible assets 11,548 13,223 225
Other real estate 10,551 22,308 28,438
Deferred tax asset, net 272,052 395,356 395,795
Other assets   967,731   813,093   699,095  
 
Total assets

$

31,642,123
  30,104,002   29,727,096  
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing deposits

$

7,302,682
7,085,804 7,059,059
Interest bearing deposits, excluding brokered deposits 16,420,319 16,183,273 15,817,596
Brokered deposits   2,463,227   1,378,983   1,315,348  
 
Total deposits 26,186,228 24,648,060 24,192,003
 
Federal funds purchased and securities sold under repurchase agreements 141,539 159,699 195,025
Long-term debt 1,882,607 2,160,881 2,160,985
Other liabilities   434,671   207,438   272,424  
 
Total liabilities   28,645,045   27,176,078   26,820,437  
 
 
Shareholders' equity:
Series C Preferred Stock - no par value, 5,200,000 shares outstanding at September 30, 2017, December 31, 2016, and September 30, 2016 125,980 125,980 125,980
 
Common stock - $1.00 par value. 119,566,625 shares outstanding at September 30, 2017, 122,266,106 shares outstanding at December 31, 2016, and 121,453,772 shares outstanding at September 30, 2016 142,525 142,026 141,066
Additional paid-in capital 3,033,681 3,028,405 2,987,760
Treasury stock, at cost - 22,958,514 shares at September 30, 2017, 19,759,614 shares at December 31, 2016, and 19,612,435 shares at September 30, 2016 (800,509 ) (664,595 ) (654,014 )
 
Accumulated other comprehensive income (loss) (39,596 ) (55,659 ) 5,165
Retained earnings   534,997   351,767   300,702  
Total shareholders' equity   2,997,078   2,927,924   2,906,659  
 
Total liabilities and shareholders' equity

$

31,642,123
  30,104,002   29,727,096  
 
                     
Synovus
 
AVERAGE BALANCES AND YIELDS/RATES (1)
(Unaudited)
(Dollars in thousands)
2017     2016
Third Second First Fourth Third
Quarter     Quarter     Quarter     Quarter     Quarter
Interest Earning Assets
Taxable investment securities (2) $ 3,786,436 3,844,688 3,841,556 3,643,510 3,544,933
Yield 2.11 % 2.11 2.06 1.92 1.83
 
Tax-exempt investment securities (2) (4) $ 259 340 2,730 2,824 2,943
Yield (taxable equivalent) 7.86 % 6.87 5.81 5.82 5.96
 
Trading account assets $ 7,823 3,667 6,443 6,799 5,493
Yield 2.09 % 2.28 1.72 2.63 0.93
 
Commercial loans (3) (4) $ 19,059,936 19,137,733 19,043,384 18,812,659 18,419,484
Yield 4.41 % 4.27 4.16 4.05 4.03
 
Consumer loans (3) $ 5,440,765 5,215,258 4,992,683 4,911,149 4,720,082
Yield 4.55 % 4.49 4.40 4.27 4.30
 
Allowance for loan losses $ (249,248 )     (251,219 )     (253,927 )     (253,713 )     (255,675 )
 
Loans, net (3) $ 24,251,453 24,101,772 23,782,140 23,470,095 22,883,891
Yield 4.49 % 4.36 4.25 4.14 4.14
 
Mortgage loans held for sale $ 52,177 52,224 46,554 77,652 87,524
Yield 3.88 % 3.87 4.01 3.51 3.32
 

Federal funds sold, due from Federal Reserve Bank, and other short-term investments
$ 543,556 561,503 654,322 982,355 998,565
Yield 1.23 % 1.00 0.77 0.49 0.48
 
Federal Home Loan Bank and Federal Reserve Bank stock (5) $ 175,263 177,323 170,844 121,079 70,570
Yield 3.50 % 2.99 3.42 3.75 4.99
                               
Total interest earning assets $ 28,816,967 28,741,517 28,504,589 28,304,314 27,593,919
Yield       4.11 %     3.99       3.88       3.73       3.71  
 
Interest Bearing Liabilities
 
Interest bearing demand deposits $ 4,868,372 4,837,053 4,784,329 4,488,135 4,274,117
Rate 0.27 % 0.23 0.19 0.16 0.16
 
Money market accounts $ 7,528,036 7,427,562 7,424,627 7,359,067 7,227,030
Rate 0.34 % 0.32 0.31 0.29 0.29
 
Savings deposits $ 803,184 805,019 909,660 908,725 797,961
Rate 0.03 % 0.04 0.11 0.12 0.07
 
Time deposits under $100,000 $ 1,183,582 1,202,746 1,215,593 1,229,809 1,248,294
Rate 0.68 % 0.67 0.64 0.64 0.64
 
Time deposits over $100,000 $ 2,067,347 2,040,924 2,029,713 2,014,564 2,030,242
Rate 0.97 % 0.94 0.92 0.90 0.88
 
Non maturing brokered deposits $ 547,466 564,043 619,627 638,779 634,596
Rate 0.73 % 0.54 0.41 0.31 0.29
 
Brokered time deposits $ 983,423 815,515 761,159 742,153 775,143
Rate   1.16 %     0.94       0.92       0.90       0.88  
 
Total interest bearing deposits $ 17,981,410 17,692,862 17,744,708 17,381,232 16,987,383
Rate 0.46 % 0.41 0.39 0.37 0.37
 

Federal funds purchased and securities sold under repurchase agreements
$ 191,585 183,400 176,854 219,429 247,378
Rate 0.08 % 0.10 0.09 0.08 0.09
 
Long-term debt $ 1,985,175 2,270,452 2,184,072 2,190,716 2,114,193
Rate       2.81 %     2.83       2.83       2.65       2.71  
 
Total interest bearing liabilities $ 20,158,170 20,146,714 20,105,634 19,791,377 19,348,954
Rate       0.69 %     0.68       0.65       0.62       0.63  
 
Non-interest bearing demand deposits $ 7,305,508 7,298,845 7,174,146 7,280,033 7,042,908
 
Effective cost of funds       0.48 %     0.48       0.46       0.44       0.44  
 
Net interest margin       3.63 %     3.51       3.42       3.29       3.27  
 
Taxable equivalent adjustment $ 283 298 309 322 330
 

(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 consolidated balance sheet.
 
                   
Synovus
 
NON-PERFORMING LOANS COMPOSITION
(Unaudited)
(Dollars in thousands)
           
Total Total Total
Non-performing Non-performing 3Q17 vs. 2Q17 Non-performing 3Q17 vs. 3Q16
Loan Type Loans Loans % change (1) Loans % change
  September 30, 2017 June 30, 2017   September 30, 2016    
 
 
Multi-Family $ 1,096 1,621 (128.5 )% $ 3,912 (72.0 )
Hotels - 376 (396.7 ) 346

nm

%
Office Buildings 234 326 (112.0 ) 931 (74.9 )
Shopping Centers 327 161 409.1 354 (7.6 )
Warehouses 38 41 (29.0 ) 1,108 (96.6 )
Other Investment Property   367   1,187   (274.1 )   1,833   (80.0 )
Total Investment Properties 2,062 3,712 (176.4 ) 8,484 (75.7 )
 
 
1-4 Family Construction - - - 304 nm
1-4 Family Investment Mortgage   2,712   8,535   (270.7 )   7,658   (64.6 )
 
Total 1-4 Family Properties 2,712 8,535 (270.7 ) 7,962 (65.9 )
 
Commercial Development 47 269 (327.4 ) 400 (88.3 )
Residential Development 4,720 5,585 (61.4 ) 9,190 (48.6 )
Land Acquisition   2,161   5,077   (227.9 )   6,672   (67.6 )
 
Land and Development   6,928   10,931   (145.3 )   16,262   (57.4 )
 
Total Commercial Real Estate   11,702   23,178   (196.4 )   32,708   (64.2 )
 
Commercial, Financial, and Agricultural 58,139 69,550 (65.1 ) 49,874 16.6
Owner-Occupied   3,960   24,918   (333.7 )   21,443   (81.5 )
Total Commercial & Industrial   62,099   94,468   (135.9 )   71,317   (12.9 )
 
Home Equity Lines 15,638 20,648 (96.3 ) 19,815 (21.1 )
Consumer Mortgages 6,332 18,035 (257.4 ) 21,284 (70.2 )
Other Consumer Loans   2,067   2,988   (122.3 )   3,031   (31.8 )
Total Consumer   24,037   41,671   (167.9 )   44,130   (45.5 )
 
 
Total $ 97,838   159,317   (153.1 )% $ 148,155   (34.0 )%
 
(1) Percentage change is annualized.
 
                                 
 
LOANS OUTSTANDING BY TYPE COMPARISON
(Unaudited)
(Dollars in thousands)
Total Loans Total Loans 3Q17 vs. 2Q17 Total Loans 3Q17 vs. 3Q16
Loan Type September 30, 2017 June 30, 2017 % change (1) September 30, 2016 % change
                               
 
Multi-Family $ 1,636,449 1,724,917 (20.3 )% $ 1,553,275 5.4 %
Hotels 832,990 835,110 (1.0 ) 774,873 7.5
Office Buildings 1,576,672 1,567,984 2.2 1,575,190 0.1
Shopping Centers 840,367 864,868 (11.2 ) 917,284 (8.4 )
Warehouses 494,570 467,369 23.1 522,170 (5.3 )
Other Investment Property   544,048   575,415   (21.6 )   555,839   (2.1 )
Total Investment Properties 5,925,096 6,035,663 (7.3 ) 5,898,631 0.4
 
1-4 Family Construction 195,273 198,419 (6.3 ) 193,791 0.8
1-4 Family Investment Mortgage   599,342   637,201   (23.6 )   727,897   (17.7 )
Total 1-4 Family Properties 794,615 835,620 (19.5 ) 921,688 (13.8 )
 
Commercial Development 66,521 66,055 2.8 77,807 (14.5 )
Residential Development 117,878 118,032 (0.5 ) 149,366 (21.1 )
Land Acquisition   322,814   365,657   (46.5 )   425,058   (24.1 )
Land and Development   507,213   549,744   (30.7 )   652,231   (22.2 )
 
Total Commercial Real Estate   7,226,924   7,421,027   (10.4 )   7,472,550   (3.3 )
 
 
Commercial, Financial, and Agricultural 6,961,709 6,993,817 (1.8 ) 6,537,657 6.5
Owner-Occupied   4,765,433   4,750,335   1.3     4,471,365   6.6  
Total Commercial & Industrial   11,727,142   11,744,152   (0.6 )   11,009,022   6.5  
 
Home Equity Lines 1,528,889 1,563,167 (8.7 ) 1,638,844 (6.7 )
Consumer Mortgages 2,557,680 2,470,665 14.0 2,243,154 14.0
Credit Cards 225,726 225,900 (0.3 ) 232,309 (2.8 )
Other Consumer Loans   1,245,277   1,031,639   82.2     693,204   79.6  
Total Consumer   5,557,572   5,291,371   20.0     4,807,511   15.6  
Unearned Income   (24,278 ) (26,038 ) (26.8 )   (26,196 ) (7.3 )
 
Total $ 24,487,360   24,430,512   0.9 % $ 23,262,887   5.3 %
 
 
(1) Percentage change is annualized.
 
                         
Synovus
 
CREDIT QUALITY DATA
(Unaudited)
(Dollars in thousands)

 

 

 

2017

2016

3rd Quarter
Third Second First Fourth Third '17 vs. '16
Quarter     Quarter     Quarter Quarter     Quarter Change
 
Non-performing Loans $ 97,838 159,317 158,366 153,378 148,155 (34.0 )%
Impaired Loans Held for Sale (1) 30,197 127 8,442 - 2,473 nm
Other Real Estate   10,551   19,476 20,425 22,308 28,438 (62.9 )
Non-performing Assets 138,586 178,920 187,233 175,686 179,066 (22.6 )
 
Allowance for loan losses 249,683 248,095 253,514 251,758 253,817 (1.6 )
 
Net Charge-Offs - Quarter 38,099 15,678 6,919 8,319 6,930
Net Charge-Offs - YTD 60,695 22,597 6,919 28,739 20,420
Net Charge-Offs / Average Loans - Quarter (2) 0.62 % 0.26 0.12 0.14 0.12
Net Charge-Offs / Average Loans - YTD (2) 0.33 0.19 0.12 0.12 0.12
 
Non-performing Loans / Loans 0.40 0.65 0.65 0.64 0.64
Non-performing Assets / Loans, Other Loans Held for Sale & ORE 0.57 0.73 0.77 0.74 0.77
Allowance / Loans 1.02 1.02 1.05 1.06 1.09
 
Allowance / Non-performing Loans 255.20 155.72 160.08 164.14 171.32
Allowance / Non-performing Loans (3) 336.35 217.07 204.94 202.01 198.94
 
Past Due Loans over 90 days and Still Accruing $ 5,685 4,550 2,777 3,135 5,358 6.1
As a Percentage of Loans Outstanding 0.02 % 0.02 0.01 0.01 0.02
 
Total Past Due Loans and Still Accruing $ 84,853 66,788 62,137 65,106 61,781 37.3
As a Percentage of Loans Outstanding 0.35 % 0.27 0.26 0.27 0.27
 
Accruing Troubled Debt Restructurings (TDRs) $ 166,918 167,395 172,421 195,776 201,896 (17.3 )
 
 

(1)

Represent only impaired loans that have been specifically identified to be sold. Impaired loans held for sale are carried at the lower of cost or fair value, less costs to sell, based primarily on estimated sales proceeds net of selling costs.

(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)      

September 30, 2017

December 31,2016

September 30,2016
 
 
Tier 1 Capital $ 2,849,579 2,685,880 2,620,379
Total Risk-Based Capital 3,362,126 3,201,268 3,139,465
Common Equity Tier 1 Ratio (transitional) 10.04 % 9.96 9.96
Common Equity Tier 1 Ratio (fully phased-in) 9.87 9.51 9.48
Tier 1 Capital Ratio 10.41 10.07 10.05
Total Risk-Based Capital Ratio 12.28 12.01 12.04
Tier 1 Leverage Ratio 9.34 8.99 8.98
Common Equity as a Percentage of Total Assets (2) 9.07 9.31 9.35
Tangible Common Equity as a Percentage of Tangible Assets (3) 8.88 9.09 9.28
Tangible Common Equity as a Percentage of Risk Weighted Assets (3) 10.24 10.24 10.57
Book Value Per Common Share (4) $ 24.01 22.92 22.89
Tangible Book Value Per Common Share (3) 23.44 22.32 22.69
 
 

(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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