Diluted Earnings per Share of $0.84, up
49.7% vs. $0.56 in 1Q17
Synovus Financial Corp. (NYSE: SNV) today reported financial
results for the quarter ended March 31, 2018.
First Quarter Highlights
- Net income available to common
shareholders for the first quarter 2018 was $100.6 million or $0.84
per diluted share as compared to $27.0 million or $0.23 per diluted
share for the fourth quarter 2017 and $69.3 million or $0.56 per
diluted share for the first quarter 2017. The fourth quarter 2017
results included a $23.2 million loss on early extinguishment of
debt and a $47.2 million charge related to Federal tax reform.
- Adjusted earnings per diluted share for
the first quarter 2018 were $0.86, a 19.8% increase from the fourth
quarter 2017 and a 50.9% increase from the first quarter 2017.
- As a result of Federal tax reform and
other one-time and seasonal items, the effective tax rate for the
first quarter was 22.6% compared to 32.0% in the first quarter
2017.
- Return on average assets for the first
quarter 2018 was 1.34%, compared to 0.37% the previous quarter and
0.96% in the first quarter 2017.
- Adjusted return on average assets was
1.36%, up 24 basis points from the previous quarter and up 39 basis
points from the first quarter 2017.
- Return on average common equity was
14.62%, an increase of 465 basis points from the first quarter
2017.
- Adjusted return on average common
equity was 14.86%, an improvement of 480 basis points from the
first quarter 2017.
- Adjusted return on average tangible
common equity was 15.23%, an increase of 490 basis points from the
first quarter 2017.
- Total average loans grew $240.8 million
or 4.0% annualized from the previous quarter and $816.4 million or
3.4% as compared to the first quarter 2017.
- Total average deposits decreased $497.9
million or 7.7% annualized from fourth quarter 2017 and increased
$869.2 million or 3.5% as compared to the first quarter 2017.
- Total ending deposits increased $105.6
million or 1.6% from fourth quarter 2017 and increased $1.15
billion or 4.6% as compared to the first quarter 2017.
- Total revenues1 were $341.3 million, up
$37.2 million or 12.2% from the first quarter 2017.
- Net interest margin was 3.78%, up 13
basis points from the previous quarter and up 36 basis points from
the first quarter 2017.
- Efficiency ratio was 57.16%, compared
to 66.77% the previous quarter and 64.84% in the first quarter
2017.
- Adjusted efficiency ratio was 57.42%,
an improvement of 483 basis points from the first quarter
2017.
- Credit quality metrics remained
favorable, with a net charge-off ratio of 7 basis points, down 8
basis points from the previous quarter and down 5 basis points from
first quarter 2017. The non-performing asset ratio was 0.53%,
unchanged from the previous quarter and down 24 basis points from
first quarter 2017.
“2018 is off to a good start, with 12 percent growth in revenues
and a 50 percent increase in earnings per share year-over-year,”
said Kessel D. Stelling, Synovus chairman and CEO. “We delivered
another quarter of strong operating leverage through disciplined
execution of our growth strategies, including talent acquisition
and expansion of our presence in high-potential markets. As we
approach completion of the transition to a unified Synovus brand,
we are already seeing the benefits of greater name recognition
across our footprint. Our team is deeply committed to building on
our reputation, improving the customer experience, and executing on
core growth strategies to meet and exceed long-term targets."
Balance Sheet
- Total average loans for the quarter
were $24.85 billion, up $240.8 million or 4.0% annualized from the
previous quarter and up $816.4 million or 3.4% as compared to the
first quarter 2017.
- Total loans ended the quarter at $24.88
billion, up $95.6 million or 1.6% annualized from the previous
quarter and up $624.6 million or 2.6% as compared to the first
quarter 2017.
- Commercial and industrial loans grew by
$78.3 million or 2.6% annualized from the previous quarter and
$369.2 million or 3.1% as compared to the first quarter 2017.
- Consumer loans grew by $115.5 million
or 8.0% annualized from the previous quarter and $885.2 million or
17.4% as compared to the first quarter 2017.
- Commercial real estate loans declined
by $99.6 million or 5.8% annualized from the previous quarter and
declined $631.6 million or 8.5% as compared to first quarter
2017.
- Total average deposits for the quarter
were $25.79 billion, down $497.9 million or 7.7% annualized from
the previous quarter and up $869.2 million or 3.5% as compared to
the first quarter 2017.
- Average non-time core deposits
decreased $120.4 million or 2.3% annualized from the previous
quarter and increased $504.1 million or 2.5% as compared to the
first quarter 2017.
- Total deposits ended the quarter at
$26.25 billion, up $105.6 million or 1.6% annualized from fourth
quarter 2017 and up $1.15 billion or 4.6% as compared to the first
quarter 2017.
- The loan to deposit ratio remained
stable at 95%.
Core Performance
- Total revenues1 were $341.3 million in
the first quarter, up from $339.1 million in the previous quarter,
and up $37.2 million or 12.2% from $304.1 million in the first
quarter 2017.
- Net interest income was $274.3 million,
up $4.6 million or 1.7% from the previous quarter and up $34.4
million or 14.3% from the first quarter 2017.
- Net interest margin was 3.78%, up 13
basis points from the previous quarter. Yield on earning assets was
4.31%, up 16 basis points from the previous quarter, and the
effective cost of funds was 0.53%, up 3 basis points from the
previous quarter.
- Total non-interest income was $67.0
million, down $2.3 million from the previous quarter and down $4.8
million or 6.7% from first quarter 2017.
- The first quarters of 2018 and 2017
include net decreases in fair value of private equity investments
of $3.1 million and $1.8 million, respectively. First quarter 2017
also included net investment securities gains of $7.7 million.
- Adjusted non-interest income was $70.1
million, up $849 thousand from the previous quarter and up $4.1
million or 6.2% as compared to the first quarter 2017.
- Core banking fees2 were $35.6 million,
up $303 thousand or 0.9% from the previous quarter and up $900
thousand or 2.6% from first quarter 2017.
- Fiduciary and asset management fees,
brokerage revenue, and insurance revenues were $23.3 million, up
$1.6 million or 7.2% from the previous quarter and up $2.7 million
or 12.9% from first quarter 2017.
- Total non-interest expense was $195.2
million, down $31.4 million or 13.8% from the previous quarter and
down 1.1% from the first quarter 2017.
- The first quarter 2018 includes a $2.6
million reduction in litigation contingency accruals. The fourth
quarter 2017 included a $23.2 million loss on early extinguishment
of debt, and the first quarter 2017 included $6.5 million in
restructuring charges.
- Adjusted non-interest expense was
$197.8 million, down $3.3 million or 1.6% from the previous quarter
and up $7.2 million or 3.8% from the first quarter 2017.
- Employment expense of $113.7 million
increased $2.5 million or 2.2% from the previous quarter and 6.1%
from the first quarter 2017.
- Occupancy and equipment expense of
$31.5 million increased $1.4 million or 4.5% from the previous
quarter and 7.3% from the first quarter 2018.
- Other expenses were $52.6 million in
the quarter, down $7.1 million or 11.9% from the previous quarter
and down $1.5 million or 2.7% from the first quarter 2017.
- Efficiency ratio for the first quarter
was 57.16% as compared to 66.77% in the previous quarter and 64.84%
in the first quarter 2017.
- Adjusted efficiency ratio for the first
quarter was 57.42% as compared to 59.29% in the previous quarter
and 62.25% in the first quarter 2017.
Credit Quality
- Non-performing loans were $120.1
million at March 31, 2018, up $4.5 million or 3.9% from the
previous quarter and down $38.3 million or 24.2% from March 31,
2017. The non-performing loan ratio was 0.48% at March 31, 2018,
compared to 0.47% at the end of the previous quarter and 0.65% at
March 31, 2017.
- Total non-performing assets were $131.2
million at March 31, 2018, compared to $130.6 million in the
previous quarter and down $56.1 million or 29.9% from March 31,
2017. The non-performing asset ratio was 0.53% at March 31, 2018,
unchanged from the previous quarter and down from 0.77% at March
31, 2017.
- Net charge-offs were $4.3 million in
the first quarter 2017, down $4.7 million or 52.3% from $9.0
million in the previous quarter and down 38.1% from the first
quarter 2017. The annualized net charge-off ratio was 0.07% in the
first quarter as compared to 0.15% in the previous quarter and
0.12% in the first quarter 2017.
- Total delinquencies (consisting of
loans 30 or more days past due and still accruing) remain low at
0.22% of total loans at March 31, 2018, as compared to 0.21% in the
previous quarter and 0.26% at March 31, 2017.
Capital
- During the first quarter 2018, Synovus
repurchased $26.7 million in common stock, as part of the
previously announced share repurchase program of up to $150
million. Additionally, Synovus declared common dividends of $0.25
per share, a 67% increase from the previous quarter.
- Common Equity Tier 1 ratio was 10.11%
at March 31, 2018, up from 9.99% at December 31, 2017.
- Tier 1 Capital ratio was 10.51% at
March 31, 2018, up from 10.38% at December 31, 2017.
- Total Risk Based Capital ratio was
12.37% at March 31, 2018, up from 12.23% at December 31, 2017.
- Tier 1 Leverage ratio was 9.37% at
March 31, 2018, up from 9.19% at December 31, 2017.
- Tangible Common Equity ratio was 8.79%
at March 31, 2018, compared to 8.88% at December 31, 2017.
First Quarter Earnings Conference Call
Synovus will host an earnings highlights conference call at 8:30
a.m. EDT on April 24, 2018. 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. is a financial services company
based in Columbus, Georgia, with more than $31 billion in assets.
Synovus provides commercial and retail banking, investment, and
mortgage services through 250 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. Synovus is
on the web at synovus.com, and on Twitter, Facebook, LinkedIn, and
Instagram.
1 Total revenues consist of net interest income and non-interest
income excluding investment securities gains/(losses).2 Core
banking fees include service charges on deposit accounts, card
fees, letter of credit fees, ATM fee income, line of credit
non-usage fees, gains from sales of government guaranteed loans,
and miscellaneous other service charges.
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, capital management 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, 2017, 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.
Non-GAAP Financial Measures
The measures entitled adjusted non-interest income; adjusted
non-interest expense; adjusted efficiency ratio; adjusted earnings
per diluted share; adjusted return on average assets; adjusted
return on average common equity; adjusted return on average
tangible common equity; average non-time core deposits; tangible
common equity ratio; and common equity Tier 1 (CET1) ratio (fully
phased-in); are not measures recognized under GAAP and therefore
are considered non-GAAP financial measures. The most comparable
GAAP measures to these measures are total non-interest income;
total non-interest expense; efficiency ratio; earnings per diluted
common share; return on average assets; return on average common
equity; total average deposits; the ratio of total shareholders'
equity to total assets; and the CET1 ratio; respectively.
Management believes that these non-GAAP financial measures
provide meaningful additional information about Synovus to assist
management and investors in evaluating Synovus’ operating results,
financial strength, the performance of its business, and the
strength of its capital position. However, these non-GAAP financial
measures have inherent limitations as analytical tools and should
not be considered in isolation or as a substitute for analyses of
operating results or capital position as reported under GAAP. The
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. Adjusted non-interest income is
a measure used by management to evaluate total revenue and
non-interest income exclusive of net investment securities
gains/losses and changes in fair value of private equity
investments, net. 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. Adjusted earnings per
diluted share, adjusted return on average assets, and adjusted
return on average 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 non-time core deposits is a measure used by
management to evaluate organic growth of deposits and the quality
of deposits as a funding source. The adjusted return on average
tangible common equity is a measure used by management to compare
Synovus' performance with other financial institutions because it
calculates the return available to common shareholders without the
impact of intangible assets and their related amortization, thereby
allowing management to evaluate the performance of the business
consistently. 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. The
computations of these measures are set forth in the tables
below.
Reconciliation of Non-GAAP Financial
Measures
(dollars in thousands)
1Q18
4Q17
1Q17
Adjusted non-interest income
Total non-interest income $ 67,046 $ 69,352 $ 71,839 Subtract:
Investment securities gains, net - - (7,668 ) Add/subtract:
Decrease/(increase) in fair value of private equity investments,
net
3,056 (100
) 1,814 Adjusted
non-interest income
$ 70,102
$ 69,252 $
65,985 Adjusted non-interest
expense Total non-interest expense $ 195,179 $ 226,534 $
197,388 Subtract: Earnout liability adjustments - (1,700 ) -
Add/subtract: Restructuring charges, net 315 29 (6,511 ) Subtract:
Loss on early extinguishment of debt - (23,160 ) - Add/subtract:
Litigation contingency expense 2,626 (300 ) - Subtract:
Merger-related expense - - (86 ) Subtract: Amortization of
intangibles
(292 )
(292 ) (183
) Adjusted non-interest expense
$
197,828 $ 201,111
$ 190,608
Adjusted efficiency ratio
Adjusted non-interest expense $ 197,828 $ 201,111 $ 190,608 Net
interest income 274,284 269,713 239,927 Add: Tax equivalent
adjustment 116 234 309 Add: Total non-interest income 67,046 69,352
71,839 Subtract: Investment securities gains, net
- -
(7,668 ) Total FTE revenues 341,446
339,299 304,407 Add/subtract: Decrease/(increase) in fair value of
private equity investments, net
3,056
(100 ) 1,814
Adjusted total revenues $ 344,502 $ 339,199 $ 306,221
Efficiency ratio 57.16 % 66.77 % 64.84 % Adjusted efficiency ratio
57.42 % 59.29
% 62.25 %
Reconciliation of Non-GAAP Financial
Measures, continued
(in thousands, except per share data)
1Q18
4Q17
1Q17
Adjusted earnings per diluted share Net income
available to common shareholders $ 100,607 $ 27,046 $ 69,298 Add:
Earnout liability adjustments - 1,700 - Add: Income tax expense
related to effects of Federal Tax Reform - 47,181 - Add: Income tax
expense related to effects of State DTA remeasurement 1,325 - -
Add: Merger-related expense - - 86 Subtract/add: Litigation
contingency expense (2,626 ) 300 - Subtract/add: Restructuring
charges, net (315 ) (29 ) 6,511 Add: Amortization of intangibles
292 292 183 Add: Loss on early extinguishment of debt - 23,160 -
Subtract: Investment securities gains, net - - (7,668 )
Add/subtract: Decrease/(increase) in fair value of private equity
investments, net 3,056 (100 ) 1,814 Subtract: Income tax benefit
related to pre-2017 R&D credits and state taxes - (4,847 ) -
Subtract: Tax effect of adjustments
(96
) (8,740 )
(333 ) Adjusted net income available to
common shareholders $ 102,243 $ 85,963 $ 69,891 Weighted average
common shares outstanding, diluted 119,321 120,182 123,059
Adjusted earnings per diluted share
$
0.86 $ 0.72
$ 0.57
Reconciliation of Non-GAAP Financial
Measures, continued
(dollars in thousands)
1Q18
4Q17
1Q17
Adjusted return on average assets Net income $
103,166 $ 29,605 $ 71,857 Add: Earnout liability adjustments -
1,700 - Add: Income tax expense related to effects of Federal Tax
Reform - 47,181 - Add: Income tax expense related to effects of
State DTA remeasurement 1,325 - - Add: Merger-related expense - -
86 Subtract/add: Litigation contingency expense (2,626 ) 300 -
Subtract/add: Restructuring charges, net (315 ) (29 ) 6,511 Add:
Amortization of intangibles 292 292 183 Add: Loss on early
extinguishment of debt - 23,160 - Subtract: Investment securities
gains, net - - (7,668 ) Add/subtract: Decrease/(increase) in fair
value of private equity investments, net 3,056 (100 ) 1,814
Subtract: Income tax benefit related to pre-2017 R&D credits
and state taxes - (4,847 ) - Subtract: Tax effect of adjustments
(96 ) (8,740
) (333 ) Adjusted net
income $ 104,802 $ 88,522 $ 72,450 Net income annualized $ 425,030
$ 351,201 $ 293,825 Total average assets $ 31,245,708 $
31,388,724 $ 30,442,089 Adjusted return on average assets
1.36 % 1.12
% 0.97 %
Reconciliation of Non-GAAP Financial
Measures, continued
(dollars in thousands)
1Q18
4Q17
1Q17
Adjusted return on average common equity and adjusted
return on average tangible common equity Net income available
to common shareholders $ 100,607 $ 27,046 $ 69,298 Add: Earnout
liability adjustments - 1,700 - Add: Income tax expense related to
effects of Federal Tax Reform - 47,181 - Add: Income tax expense
related to effects of State DTA remeasurement 1,325 - - Add:
Merger-related expense - - 86 Subtract/add: Litigation contingency
expense (2,626 ) 300 - Subtract/add: Restructuring charges, net
(315 ) (29 ) 6,511 Add: Amortization of intangibles 292 292 183
Add: Loss on early extinguishment of debt - 23,160 - Subtract:
Investment securities gains, net - - (7,668 ) Add/subtract:
Decrease/(increase) in fair value of private equity investments,
net 3,056 (100 ) 1,814 Subtract: Income tax benefit related to
pre-2017 R&D credits and state taxes - (4,847 ) - Subtract: Tax
effect of adjustments
(96 )
(8,740 ) (333
) Adjusted net income available to common shareholders
$ 102,243 $ 85,963 $ 69,891 Net income annualized $ 414,652
$ 341,049 $ 283,447 Total average shareholders’ equity less
preferred stock $ 2,790,878 $ 2,851,523 $ 2,817,663
Subtract: Goodwill
(57,315 ) (57,315 ) (59,649 )
Subtract: Other intangibles assets,
net
(10,915 ) (11,353 ) (13,177 )
Total average tangible shareholders’
equity less preferred stock
$ 2,722,648 $ 2,782,855 $ 2,744,837 Adjusted return on average
common equity 14.86 % 11.96 % 10.06 % Adjusted
return on average tangible common equity 15.23 %
12.26 % 10.33 %
Reconciliation of Non-GAAP Financial Measures, continued
(dollars in thousands)
1Q18
4Q17
1Q17
Tangible common equity ratio
Total assets $ 31,501,028 $ 31,221,837 $ 30,679,589 Subtract:
Goodwill (57,315 ) (57,315 ) (57,010 ) Subtract: Other intangible
assets, net
(10,750 )
(11,254 ) (12,137
) Tangible assets
$
31,432,963 $
31,153,268 $
30,610,442 Total shareholders’ equity $
2,956,495 $ 2,961,566 $ 2,962,127 Subtract: Goodwill (57,315 )
(57,315 ) (57,010 ) Subtract: Other intangible assets, net (10,750
) (11,254 ) (12,137 ) Subtract: Series C Preferred Stock
(125,980 ) (125,980
) (125,980 ) Tangible
common equity
$ 2,762,450
$ 2,767,017 $
2,767,000 Total shareholders’ equity to total
assets ratio 9.39 % 9.49 % 9.66 % Tangible common equity ratio 8.79
% 8.88 % 9.04 %
Average non-time core deposits
Total average deposits $ 25,788,073 $ 26,286,009 $ 24,918,855
Subtract: Average brokered deposits
(1,951,910
) (2,198,333 )
(1,380,787 ) Subtract: Average
non-brokered time deposits
(3,039,325
) (3,170,444 )
(3,245,306 ) Average non-time core
deposits
$ 20,796,838
$ 20,917,232 $
20,292,762 Common equity Tier
1 (CET1) ratio (fully phased-in) Common Equity Tier 1
(CET1) $ 2,814,669 Subtract: Adjustment related to capital
components
(16,365 ) CET1 (fully
phased-in)
$ 2,798,304 Total
risk-weighted assets $ 27,831,733 Total risk-weighted assets (fully
phased-in) $ 27,957,172 Common equity Tier 1 (CET 1) ratio 10.11 %
Common Equity Tier 1 (CET1) ratio (fully phased-in) 10.01 %
Synovus INCOME STATEMENT DATA
(Unaudited) (In thousands, except per share data)
2018 2017 First Quarter
First Fourth Third Second First
'18 vs. '17
Quarter Quarter Quarter
Quarter Quarter Change Interest
income $
313,134 306,934 297,652 285,510 272,401 15.0 %
Interest expense
38,850 37,221 35,080
34,413 32,474 19.6 Net interest
income
274,284 269,713 262,572 251,097 239,927 14.3
Provision for loan losses
12,776 8,565 39,686
10,260 8,674 47.3 Net
interest income after provision for loan losses
261,508
261,148 222,886 240,837 231,253
13.1 Non-interest income: Service
charges on deposit accounts
19,940 20,372 20,678 20,252
20,118 (0.9 ) Fiduciary and asset management fees
13,435
13,195 12,615 12,524 12,151 10.6 Card fees (1)
10,199 9,762
9,729 10,041 9,844 3.6 Brokerage revenue
8,695 7,758 7,511
7,210 7,226 20.3 Mortgage banking income
5,047 5,645 5,603
5,784 5,766 (12.5 ) Income from bank-owned life insurance
3,681 3,900 3,232 3,272 3,031 21.4 Cabela's transaction fee
- - 75,000 - - nm Investment securities (losses) gains, net
- - (7,956 ) (1 ) 7,668 nm (Decrease)/increase in fair value
of private equity investments, net
(3,056 ) 100 (27 )
(1,352 ) (1,814 ) nm Other fee income
4,618 4,042 5,094
6,164 4,868 (5.1 ) Other non-interest income (1)
4,487
4,578 3,956 4,807 2,981 50.5
Total non-interest income
67,046
69,352 135,435 68,701 71,839
(6.7 ) Non-interest expense: Salaries and
other personnel expense
113,720 111,243 109,675 105,213
107,191 6.1 Net occupancy and equipment expense
31,480
30,126 30,573 29,933 29,331 7.3 Third-party processing expense
13,945 14,827 13,659 13,620 12,603 10.6 FDIC insurance and
other regulatory fees
6,793 6,288 7,078 6,875 6,770 0.3
Professional fees
5,505 6,183 7,141 7,551 5,355 2.8
Advertising expense
5,092 8,081 3,610 5,346 5,912 (13.9 )
Foreclosed real estate expense, net
856 1,693 7,265 1,448
2,134 (59.9 ) Earnout liability adjustments
- 1,700 2,059
1,707 - nm Amortization of intangibles
292 292 292 292 183
59.6 Loss on early extinguishment of debt
- 23,160 - - - nm
Litigation contingency expense
(2,626 ) 300 401 - -
nm Restructuring charges, net
(315 ) (29 ) 519 13
6,511 nm Other operating expenses
20,437 22,670
23,374 19,749 21,398 (4.5 )
Total non-interest expense
195,179 226,534
205,646 191,747 197,388 (1.1 )
Income before income taxes
133,375 103,966
152,675 117,791 105,704 26.2 Income tax expense
30,209
74,361 54,668 41,788 33,847
(10.7 ) Net income
103,166 29,605 98,007
76,003 71,857 43.6 Dividends on preferred stock
2,559
2,559 2,559 2,559 2,559 -
Net income available to common shareholders $
100,607
27,046 95,448 73,444 69,298 45.2
% Net income per common share, basic $
0.85 0.23 0.79
0.60 0.57 49.6 % Net income per common share, diluted
0.84 0.23 0.78 0.60 0.56 49.7 Cash dividends declared
per common share
0.25 0.15 0.15 0.15 0.15 66.7 Return
on average assets *
1.34 % 0.37 1.27 1.00 0.96
38
bps
Return on average common equity *
14.62 3.76 13.24 10.34
9.97 465 Weighted average common shares outstanding, basic
118,666 119,282 120,900 122,203 122,300 (3.0 )% Weighted
average common shares outstanding, diluted
119,321 120,182
121,814 123,027 123,059 (3.0 ) nm - not meaningful bps -
basis points * - ratios are annualized
(1) Beginning January 1, 2018, Synovus
began including merchant fees and other card-related fees in Card
fees. For periods prior to January 1, 2018, these amounts were
previously presented in Other non-interest income and have been
reclassified for comparability.
Synovus
BALANCE SHEET DATA March 31,
2018 December 31, 2017 March 31, 2017
(Unaudited)
(In thousands, except share data) ASSETS Cash and due from
banks $
348,027 397,848 380,493 Interest bearing funds with
Federal Reserve Bank
636,947 460,928 622,460 Interest
earning deposits with banks
16,851 26,311 24,259
Federal funds sold and securities
purchased under resale agreements
57,192 47,846 50,003 Cash and cash
equivalents (1)
1,059,017 932,933 1,077,215 Mortgage
loans held for sale, at fair value
50,439 48,024 57,686
Investment securities available for sale, at fair value
3,990,978 3,987,069 3,782,942 Loans, net of deferred
fees and costs
24,883,037 24,787,464 24,258,468 Allowance
for loan losses
(257,764 ) (249,268 ) (253,514 )
Loans, net
24,625,273 24,538,196 24,004,954
Cash surrender value of bank-owned life insurance
543,684 540,958 455,474 Premises and equipment, net
424,342 426,813 412,725 Goodwill
57,315 57,315 57,010
Other intangible assets
10,750 11,254 12,137 Deferred tax
asset, net
179,343 165,788 359,121 Other assets
559,887 513,487 460,325 Total
assets $
31,501,028 31,221,837 30,679,589
LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities:
Deposits: Non-interest bearing deposits $
7,381,070
7,686,339 7,264,856 Interest bearing deposits, excluding brokered
deposits
16,865,859 16,500,436 16,452,703 Brokered deposits
2,006,578 1,961,125 1,388,153
Total deposits
26,253,507 26,147,900 25,105,712
Federal funds purchased and securities
sold under repurchase agreements
185,531 161,190 146,480 Long-term debt
1,856,392
1,706,138 2,160,867 Other liabilities
249,103 245,043
304,403 Total liabilities
28,544,533
28,260,271 27,717,462
Shareholders' equity: Series C Preferred Stock - no par value,
5,200,000 shares outstanding at March 31, 2018, December 31, 2017,
and March 31, 2017
125,980 125,980 125,980 Common
stock - $1.00 par value. 118,702,497 shares outstanding at March
31, 2018, 118,897,295 shares outstanding at December 31, 2017, and
122,321,804 shares outstanding at March 31, 2017
143,017
142,678 142,441 Additional paid-in capital
3,039,757
3,043,129 3,025,775 Treasury stock, at cost - 24,314,804 shares at
March 31, 2018, 23,780,154 shares at December 31, 2017, and
20,119,614 shares at March 31, 2017
(866,407 )
(839,674 ) (679,746 ) Accumulated other comprehensive loss
(107,952 ) (54,754 ) (54,751 ) Retained earnings
622,100 544,207 402,428 Total
shareholders' equity
2,956,495 2,961,566
2,962,127 Total liabilities and shareholders' equity
$
31,501,028 31,221,837 30,679,589
(1) In connection with the adoption of ASU
2016-18, Statement of Cash Flows-Restricted Cash, Synovus changed
its presentation of cash and cash equivalents to include cash and
due from banks as well as interest bearing funds with the Federal
Reserve Bank, interest earning deposits with banks, and federal
funds sold and securities purchased under resale agreements, which
are inclusive of any restricted cash.
Synovus
AVERAGE BALANCES AND YIELDS/RATES
(1) (Unaudited) (Dollars in thousands)
2018
2017
First Fourth Third Second First
Quarter
Quarter Quarter Quarter Quarter
Interest Earning Assets Taxable investment securities
(2) $
4,097,162 3,937,278 3,786,436 3,844,688 3,841,556
Yield
2.34 % 2.29 2.11 2.11 2.06 Tax-exempt
investment securities (2) (4) $
140 180 259 340 2,730 Yield
(taxable equivalent)
6.57 % 7.97 7.86 6.87 5.81
Trading account assets (5) $
8,167 7,360 7,823 3,667 6,443
Yield
2.66 % 2.78 2.09 2.28 1.72 Commercial loans (3)
(4) $
18,963,515 18,935,774 19,059,936 19,137,733 19,043,384
Yield
4.64 % 4.49 4.41 4.27 4.16 Consumer loans (3) $
5,899,015 5,704,629 5,440,765 5,215,258 4,992,683 Yield
4.71 % 4.54 4.55 4.49 4.40 Allowance for loan losses
$
(251,635 ) (252,319 ) (249,248 )
(251,219 ) (253,927 ) Loans, net (3) $
24,610,895 24,388,084 24,251,453 24,101,772 23,782,140 Yield
4.70 % 4.55 4.49 4.36 4.25 Mortgage loans held for
sale $
38,360 45,353 52,177 52,224 46,554 Yield
3.95
% 3.96 3.88 3.87 4.01
Federal funds sold, due from Federal
Reserve Bank, and other short-term investments
$
516,575 922,296 543,556 561,503 654,322 Yield
1.48
% 1.31 1.23 1.00 0.77 Federal Home Loan Bank and Federal
Reserve Bank stock (5) $
177,381 159,455 175,263 177,323
170,844 Yield
3.39 % 4.03 3.50 2.99 3.42
Total interest earning assets $
29,448,680 29,460,006 28,816,967 28,741,517 28,504,589 Yield
4.31 % 4.15 4.11 3.99 3.88
Interest Bearing Liabilities
Interest bearing demand deposits $
5,032,000 4,976,239
4,868,372 4,837,053 4,784,329 Rate
0.31 % 0.28 0.27 0.23
0.19 Money market accounts $
7,561,554 7,514,992
7,528,036 7,427,562 7,424,627 Rate
0.43 % 0.36 0.34 0.32
0.31 Savings deposits $
811,587 804,853 803,184
805,019 909,660 Rate
0.03 % 0.03 0.03 0.04 0.11 Time
deposits under $100,000 $
1,143,780 1,166,413 1,183,582
1,202,746 1,215,593 Rate
0.71 % 0.70 0.68 0.67 0.64
Time deposits over $100,000 $
1,895,545 2,004,031 2,067,347
2,040,924 2,029,713 Rate
1.02 % 0.99 0.97 0.94 0.92
Non-maturing brokered deposits $
424,118 546,413 547,466
564,043 619,627 Rate
1.14 % 0.81 0.73 0.54 0.41
Brokered time deposits $
1,527,793 1,651,920 983,423 815,515
761,159 Rate
1.75 % 1.63 1.16
0.94 0.92 Total interest bearing
deposits $
18,396,377 18,664,861 17,981,410 17,692,862
17,744,708 Rate
0.58 % 0.54 0.46 0.41 0.39
Federal funds purchased and securities
sold under repurchase agreements
$
202,226 184,369 191,585 183,400 176,854 Rate
0.21 %
0.15 0.08 0.10 0.09 Long-term debt $
2,127,994
1,713,982 1,985,175 2,270,452 2,184,072 Rate
2.32 % 2.67
2.81 2.83 2.83
Total
interest bearing liabilities $
20,726,597 20,563,212
20,158,170 20,146,714 20,105,634 Rate
0.76 % 0.72 0.69 0.68
0.65
Non-interest bearing
demand deposits $
7,391,695 7,621,147 7,305,508 7,298,845
7,174,146 Effective cost of funds
0.53 % 0.50 0.48
0.48 0.46
Net interest
margin
3.78 % 3.65
3.63 3.51 3.42 Taxable
equivalent adjustment $
116 234 283 298 309
(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 (21% in
2018 and 35% in 2017), 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
LOANS OUTSTANDING BY TYPE (Unaudited)
(Dollars in thousands)
Total Loans
Total Loans 1Q18 vs. 4Q17 Total
Loans 1Q18 vs. 1Q17 Loan Type
March 31, 2018
December 31, 2017 % change (1) March 31, 2017 % change
Commercial, Financial, and Agricultural $
7,191,531
7,179,487 0.7 % $ 7,049,193 2.0 % Owner-Occupied
4,910,386
4,844,163 5.5 4,683,508 4.8
Total Commercial & Industrial 12,101,917
12,023,650 2.6 11,732,701 3.1 Multi-Family
1,479,573
1,492,159 (3.4 ) 1,638,250 (9.7 ) Hotels
751,232 741,703 5.2
794,685 (5.5 ) Office Buildings
1,464,473 1,499,834 (9.6 )
1,552,817 (5.7 ) Shopping Centers
782,580 791,311 (4.5 )
902,954 (13.3 ) Warehouses
583,645 581,410 1.6 533,262 9.4
Other Investment Property
557,547 563,648 (4.4
) 594,084 (6.2 )
Total Investment Properties
5,619,050 5,670,065 (3.6 ) 6,016,052 (6.6 ) 1-4
Family Construction
188,939 198,200 (18.9 ) 203,151 (7.0 )
1-4 Family Investment Mortgage
569,965 583,419
(9.4 ) 659,346 (13.6 )
Total 1-4 Family Properties
758,904 781,619 (11.8 ) 862,497 (12.0 ) Commercial
Development
65,371 70,062 (27.2 ) 65,376 (0.0 ) Residential
Development
104,137 114,079 (35.3 ) 130,653 (20.3 ) Land
Acquisition
288,265 299,463 (15.2 ) 392,710
(26.6 )
Land and Development 457,773
483,604 (21.7 ) 588,739 (22.2 )
Total
Commercial Real Estate 6,835,727 6,935,288
(5.8 ) 7,467,288 (8.5 ) Consumer Mortgages
2,663,371 2,633,503 4.6 2,350,730 13.3 Home Equity Lines
1,472,471 1,514,227 (11.2 ) 1,587,102 (7.2 ) Credit Cards
226,713 232,676 (10.4 ) 224,349 1.1 Other Consumer Loans
1,606,799 1,473,451 36.7 922,018
74.3
Total Consumer 5,969,354 5,853,857
8.0 5,084,199 17.4
Unearned
Income (23,961 ) (25,331 ) (21.9 ) (25,720 ) (6.8
)
Total $
24,883,037 24,787,464
1.6 % $ 24,258,468 2.6 % (1) Percentage change
is annualized.
NON-PERFORMING LOANS
COMPOSITION (Unaudited) (Dollars in thousands)
Total Total Total
Non-performing Non-performing 1Q18 vs. 4Q17 Non-performing
1Q18 vs. 1Q17 Loan Type
Loans Loans % change Loans % change
March 31, 2018 December 31, 2017 March 31,
2017 Commercial, Financial, and Agricultural $
81,606 70,130 16.4 % $ 60,381 35.2 % Owner-Occupied
4,067 6,654 (38.9 ) 26,564 (84.7 )
Total Commercial & Industrial 85,673
76,784 11.6 86,945 (1.5 ) Multi-Family
1,028 1,241
(17.2 ) 1,556 (33.9 ) Hotels
- - - 323 nm Office Buildings
1,272 1,532 (17.0 ) 185 nm Shopping Centers
89 165
(46.1 ) - nm Warehouses
- 226 (100.0 ) 226 (100.0 ) Other
Investment Property
540 640 (15.6 ) 750
(28.0 )
Total Investment Properties 2,929
3,804 (23.0 ) 3,040 (3.7 ) 1-4 Family Construction
- - - 306 nm 1-4 Family Investment Mortgage
2,634
2,849 (7.5 ) 8,497 (69.0 )
Total 1-4
Family Properties 2,634 2,849 (7.5 ) 8,803 (70.1 )
Commercial Development
44 45 (2.2 ) 205 (78.5 )
Residential Development
3,220 3,257 (1.1 ) 9,033 (64.4 )
Land Acquisition
1,311 2,495 (47.5 ) 5,114
(74.4 )
Land and Development 4,575
5,797 (21.1 ) 14,352 (68.1 )
Total
Commercial Real Estate 10,138 12,450 (18.6 ) 26,195
(61.3 ) Consumer Mortgages
7,708
7,203 7.0 19,874 (61.2 ) Home Equity Lines
14,868 17,455
(14.8 ) 22,918 (35.1 ) Other Consumer Loans
1,694
1,669 1.5 2,434 (30.4 )
Total
Consumer 24,270 26,327 (7.8 ) 45,226
(46.3 )
Total $
120,081
115,561 3.9 % $ 158,366 (24.2 )%
Synovus
CREDIT QUALITY DATA
(Unaudited) (Dollars in thousands)
2018
2017
1st Quarter
First Fourth Third Second First '18 vs. '17
Quarter
Quarter Quarter Quarter Quarter Change
Non-performing Loans $
120,081 115,561 97,838 159,317
158,366 (24.2 )% Impaired Loans Held for Sale (1)
6,591
11,278 30,197 127 8,442 (21.9 ) Other Real Estate
4,496
3,758 10,551 19,476 20,425 (78.0 ) Non-performing Assets
131,168 130,597 138,586 178,920 187,233 (29.9 )
Allowance for loan losses
257,764 249,268 249,683 248,095
253,514 1.7 Net Charge-Offs - Quarter
4,280 8,979
38,099 15,678 6,919 Net Charge-Offs / Average Loans - Quarter (2)
0.07 % 0.15 0.62 0.26 0.12 Non-performing Loans /
Loans
0.48 0.47 0.40 0.65 0.65 Non-performing Assets /
Loans, Impaired Loans Held for Sale, & ORE
0.53 0.53
0.57 0.73 0.77 Allowance / Loans
1.04 1.01 1.02 1.02 1.05
Allowance / Non-performing Loans
214.66 215.70 255.20
155.72 160.08 Allowance / Non-performing Loans (3)
241.49
238.44 336.35 217.07 204.94 Past Due Loans over 90 days and
Still Accruing $
5,416 4,414 5,685 4,550 2,777 95.0 As a
Percentage of Loans Outstanding
0.02 % 0.02 0.02 0.02 0.01
Total Past Due Loans and Still Accruing $
54,150
52,032 84,853 66,788 62,137 (12.9 ) As a Percentage of Loans
Outstanding
0.22 % 0.21 0.35 0.27 0.26 Accruing
Troubled Debt Restructurings (TDRs) $
129,394 151,271
166,918 167,395 172,421 (25.0 )
(1) Represent 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)
March 31,
2018
December 31,
2017
March 31,
2017
Tier 1 Capital $
2,924,284 2,872,001 2,758,794
Total Risk-Based Capital
3,443,096 3,383,081 3,274,612
Common Equity Tier 1 Ratio (transitional)
10.11 % 9.99 9.86
Common Equity Tier 1 Ratio (fully phased-in) (5)
10.01 9.88
9.63 Tier 1 Capital Ratio
10.51 10.38 10.18 Total Risk-Based
Capital Ratio
12.37 12.23 12.08 Tier 1 Leverage Ratio
9.37 9.19 9.13
Common Equity as a Percentage of Total
Assets (2)
8.99 9.08 9.24 Tangible Common Equity as a Percentage of
Tangible Assets (3) (5)
8.79 8.88 9.04 Book Value Per Common
Share (4) $
23.85 23.85 23.19
Tangible Book Value Per Common Share
(3)
23.27 23.27 22.62 (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. (5) See "Non-GAAP
Financial Measures" of this report for applicable reconciliation of
GAAP measures.
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Synovus Financial Corp.Media
Contact:Lee Underwood, 706-644-0528Media
RelationsorInvestor
Contact:Steve Adams, 706-641-6462Investor Relations
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