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Synovus Announces Earnings for Third Quarter 2014, $250 Million Stock Repurchase Program, and 43% Increase in Quarterly Common Stock Dividend

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Synovus Financial Corp. (NYSE:SNV) today reported financial results for the quarter ended September 30, 2014.

Third Quarter Highlights

  • Net income available to common shareholders for the third quarter of 2014 was $44.2 million or $0.32 per diluted share as compared to $44.3 million, or $0.32 per diluted share for the second quarter of 2014.
    • Net income available to common shareholders for the third quarter of 2014 was $51.3 million or $0.37 per diluted common share, excluding net litigation related expenses, restructuring charges, and Visa indemnification charges totaling $7.0 million after-tax.
  • Total loans grew $132.8 million sequentially.
  • Credit quality continued to improve as the NPL ratio declined to 1.18% at September 30, 2014 from 1.27% at June 30, 2014 and 2.29% a year ago, and the annualized net charge-off ratio for the third quarter declined to 0.24% and 0.41% year-to-date compared to 0.47% for the third quarter of 2013 and 0.75% for year-to-date 2013.
  • All Tier 1 capital ratios continued to expand with the Tier 1 common equity ratio ending the quarter at 10.60%, up 18 basis points from the prior quarter.

“The announced stock repurchase program and common dividend increase from $0.07 to $0.10 per share reflect our strong capital position, significantly improved risk profile, and earnings momentum,” said Kessel D. Stelling, Synovus Chairman and CEO. “These actions will provide increased returns to our broad shareholder base while still allowing us the flexibility needed to reinvest in the business and continue our pursuit of growth opportunities. These opportunities include the acquisition of specialized talent that enables us to reach untapped customer segments, expansion into new business lines, and significant investments in marketing and technology. Fundamentals such as expense management and credit quality remain high priorities as evidenced by our continued progress during the third quarter, but delivering exceptional customer service backed by comprehensive financial solutions is the primary focus of our team’s efforts and energy day-to-day.”

Balance Sheet Fundamentals

  • Total loans ended the quarter at $20.59 billion, an $877.0 million or 4.4% increase from the third quarter of 2013.
  • Total loans grew $132.8 million or 2.6% annualized compared to the second quarter of 2014.
    • Retail loans grew by $86.0 million, or 9.1% annualized.
    • Commercial real estate loans grew by $129.0 million or 7.7% annualized.
    • C&I loans declined by $82.4 million, or 3.2% annualized.
  • Total average deposits for the quarter were $20.94 billion, up $75.0 million or 1.4% annualized from the previous quarter.
  • Average core deposits for the quarter were $19.44 billion, down $18.6 million compared to the second quarter of 2014.
  • Average core deposits, excluding state, county, and municipal deposits, grew by $204.5 million or 4.7% annualized compared to the previous quarter.

Core Performance

Adjusted pre-tax, pre-credit costs income was $103.5 million for the third quarter of 2014, an increase of $4.6 million from $98.9 million for the second quarter of 2014.

  • Net interest income was $206.3 million for the third quarter of 2014, up $1.2 million from $205.1 million in the previous quarter.
  • The net interest margin declined four basis points to 3.37% compared to 3.41% in the second quarter of 2014. The yield on earning assets was 3.81%, five basis points lower than the second quarter of 2014, and the effective cost of funds declined one basis point to 0.44%.
  • Total non-interest income was $64.0 million, up $598 thousand compared to $63.4 million for the second quarter of 2014.
    • Core banking fees1 of $32.8 million were up $125 thousand, driven by a $921 thousand or 4.8% increase in service charges on deposits and a $513 thousand or 5.9% decline in bankcard fees.
    • Financial Management Services revenues, consisting primarily of fiduciary and asset management fees and brokerage revenue, increased $382 thousand, driven by brokerage revenue growth.
    • Mortgage banking income decreased $618 thousand or 11.7%.
      • Mortgage originations totaled $197 million, up from $188 million in the prior quarter.
      • Decline in revenue was driven by lower gains on mortgage loan sales.
  • Total non-interest expense for the third quarter of 2014 was $193.7 million, up $11.6 million from the second quarter of 2014, primarily due to net litigation related expenses. Adjusted non-interest expense for the third quarter of 2014 was $166.8 million, down $2.7 million or 1.6% compared to $169.5 million for the second quarter of 2014.
    • Employment expense was $93.9 million, up $1.3 million, primarily due to one more pay day in the quarter and merit increases.
    • Advertising expense was $7.2 million, an increase of $896 thousand.
    • Professional fees were $2.5 million, down $5.7 million, reflecting the benefit from a $3.6 million net insurance recovery for incurred legal fees related to litigation.

Credit Quality

Broad-based improvement in credit quality continued.

  • Total credit costs were $15.7 million in the third quarter of 2014, down 7.2% from $16.9 million in the second quarter of 2014 and down 29.8% from $22.4 million in the third quarter of 2013.
  • Non-performing loans, excluding loans held for sale, were $242.4 million at September 30, 2014, down $17.2 million or 6.6% from the previous quarter, and down $208.5 million or 46.2% from the third quarter of 2013. The non-performing loan ratio was 1.18% at September 30, 2014, down from 1.27% at the end of the previous quarter and 2.29% at September 30, 2013.
  • Total non-performing assets were $324.4 million at September 30, 2014, down $38.8 million or 10.7% from the previous quarter, and down $262.5 million or 44.7% from the third quarter of 2013. The non-performing asset ratio was 1.57% at September 30, 2014, compared to 1.77% at the end of the previous quarter and 2.96% at September 30, 2013.
  • Net charge-offs were $12.3 million in the third quarter of 2014, down $23.1 million or 65.4% from $35.4 million in the second quarter of 2014. The annualized net charge-off ratio was 0.24% in the third quarter, down from 0.69% in the previous quarter and 0.47% in the third quarter of 2013.

Capital Ratios

Capital ratios remained strong.

  • Tier 1 Common Equity ratio was 10.60% at September 30, 2014, up from 10.42% at June 30, 2014.
  • Tier 1 Capital ratio was 11.19% at September 30, 2014, up from 11.01% at June 30, 2014.
  • Total Risk Based Capital ratio was 13.17% at September 30, 2014, up from 13.03% at June 30, 2014.
  • Tier 1 Leverage ratio was 9.85% at September 30, 2014, up from 9.69% at June 30, 2014.
  • Tangible Common Equity ratio was 11.04% at September 30, 2014, up from 10.91% at June 30, 2014.

Capital Management

  • The Board of Directors has authorized a share repurchase program of up to $250 million of the company’s common stock, to be executed over the next 12 months.
  • Additionally, the Board of Directors has approved an increase in the company’s quarterly common stock dividend from $0.07 to $0.10 per share, effective with the quarterly dividend payable in January 2015.

Third Quarter Earnings Conference Call

Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on October 21, 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 approximately $27 billion in assets. Synovus Financial Corp. provides commercial and retail banking, investment and mortgage services to customers through 28 locally branded divisions, 271 branches and 355 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, expense initiatives, and future profitability; expectations regarding our capital management, including our announced share repurchase program, 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, 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 average core deposits; average core deposits excluding average state, county, and municipal deposits; Tier 1 common equity ratio; tangible common equity to tangible assets ratio; adjusted net income per common share, diluted; adjusted 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 average deposits; Tier 1 capital to risk-weighted assets ratio; total shareholders’ equity to total assets ratio; net income per common share, diluted; 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 average deposits; Tier 1 capital to risk-weighted assets ratio; total shareholders’ equity to total assets ratio; net income per common share, diluted; income before income taxes; and 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 average core deposits; average core deposits excluding average state, county, and municipal deposits; Tier 1 common equity ratio; tangible common equity to tangible assets ratio; adjusted net income per common share, diluted; adjusted pre-tax, pre-credit cost income; and adjusted non-interest expense; and the reconciliation of these measures to total average deposits; Tier 1 capital to risk-weighted assets ratio; total shareholders’ equity to total assets ratio; net income per common share, diluted; income before income taxes; and total non-interest expense are set forth in the tables below.

1 Include service charges on deposit accounts, bankcard fees, letter of credit fees, ATM fee income, line of credit non-usage fees, and miscellaneous other service charges.

Reconciliation of Non-GAAP Financial Measures
(dollars in thousands) 3Q14 2Q14 1Q14 4Q13 3Q13

Average Core Deposits
Average Core Deposits Excluding State, County, and Municipal Deposits
Average total deposits $ 20,938,587 $ 20,863,706 $ 20,725,259 $ 21,150,068 $ 20,878,768
Subtract: Average brokered deposits (1,494,620 ) (1,401,167 ) (1,234,847 ) (1,194,427 ) (1,333,293 )
Average core deposits 19,443,967 19,462,539 19,490,412 19,955,641 19,545,475
Subtract: Average state, county, and municipal deposits (2,045,817 ) (2,268,852 ) (2,365,096 ) (2,354,731 ) (2,233,281 )
Average core deposits excluding state, county, and municipal deposits 17,398,150 17,193,687 17,125,316 17,600,910 17,312,194

Reconciliation of Non-GAAP Financial Measures (continued)

(dollars and shares in thousands) 3Q14 2Q14 1Q14 4Q13 3Q13
Tier 1 Common Equity Ratio
Total shareholders’ equity $ 3,076,545 $ 3,053,051 $ 2,998,496 $ 2,948,985 $ 2,931,860
Add: Accumulated other comprehensive loss 24,827 13,716 30,463 41,258 29,514
Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net (1,471 ) (1,678 ) (1,883 ) (3,415 ) (3,783 )
Subtract: Disallowed deferred tax asset (529,342 ) (547,786 ) (579,537 ) (618,516 ) (647,828 )
Other items 7,637 7,619 7,682 7,612 7,426
Tier 1 capital 2,553,765 2,500,491 2,430,790 2,351,493 2,292,758
Subtract: Qualifying trust preferred securities (10,000 ) (10,000 ) (10,000 ) (10,000 ) (10,000 )
Subtract: Series C Preferred Stock, no par value (125,980 ) (125,980 ) (125,980 ) (125,862 ) (125,400 )
Tier 1 common equity 2,417,785 2,364,511 2,294,810 2,215,631 2,157,358
Risk-weighted assets 22,811,614((1 )) 22,702,108 22,404,099 22,316,091 21,735,363
Tier 1 common equity ratio 10.60 %(1) 10.42 10.24 9.93 9.93
Tangible Common Equity to Tangible Assets Ratio
Total assets $ 26,519,110 $ 26,627,290 $ 26,435,426 $ 26,201,604 $ 26,218,360
Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net (1,471 ) (1,678 ) (1,883 ) (3,415 ) (3,783 )
Tangible assets 26,493,208 26,601,181 26,409,112 26,173,758 26,190,146
Total shareholders’ equity 3,076,545 3,053,051 2,998,496 2,948,985 2,931,860
Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net (1,471 ) (1,678 ) (1,883 ) (3,415 ) (3,783 )
Subtract: Series C Preferred Stock, no par value (125,980 ) (125,980 ) (125,980 ) (125,862 ) (125,400 )
Tangible common equity 2,924,663 2,900,962 2,846,202 2,795,277 2,778,246
Total shareholders’ equity to total assets ratio 11.60 % 11.47 11.34 11.25 11.18
Tangible common equity to tangible assets ratio 11.04 % 10.91 10.78 10.68 10.61
Adjusted net income per common share, diluted
Net income available to common shareholders $ 44,229
Add: Litigation settlement expenses (after-tax) 7,545
Deduct: Recovery of previously incurred legal costs related to certain legal matters, net of legal costs incurred in 3Q14 related to those same legal matters (after-tax)(2) (2,211 )
Add: Restructuring charges (after-tax) 494
Add: Visa indemnification charges (after-tax) 1,209
Adjusted net income available to common shareholders $ 51,266
Weighted average common shares outstanding – diluted 139,726
Adjusted net income per common share, diluted $ 0.37
Reconciliation of Non-GAAP Financial Measures, continued
(dollars in thousands) 3Q14 2Q14 1Q14 4Q13 3Q13

Adjusted Pre-tax, Pre-credit Costs Income

Income before income taxes $ 72,656 $ 73,950 $ 77,024 59,710 73,459
Add: Provision for losses on loans 3,843 12,284 9,511 14,064 6,761
Add: Other credit costs(3) 11,858 4,635 8,128 8,285 15,603
Add: Restructuring charges 809 7,716 8,577 3,770 687
Add: Litigation settlement expenses(4) 12,349 10,000
Subtract: Investment securities gains, net – – (1,331 ) (373 ) (1,124 )
Add: Visa indemnification charges 1,979 356 396 799
Subtract: Gain on sale of Memphis branches, net(5) - - (5,789 ) - -
Adjusted pre-tax, pre-credit costs income 103,494 98,941 96,516 96,255 95,386
Adjusted Non-interest Expense
Total non-interest expense $ 193,749 $ 182,205 $ 184,161 190,738 187,328
Subtract: Other credit costs(3) (11,858 ) (4,635 ) (8,128 ) (8,285 ) (15,603 )
Subtract: Restructuring charges (809 ) (7,716 ) (8,577 ) (3,770 ) (687 )
Subtract: Visa indemnification charges (1,979 ) (356 ) (396 ) (799 )
Subtract: Litigation settlement expenses(4) (12,349 ) - - (10,000 ) -
Adjusted non-interest expense 166,754 169,498 167,060 167,884 171,038

(1)

Preliminary

(2)

Recovery of previously incurred legal costs represents a reimbursement from an insurance carrier for attorney fees incurred in previous periods in connection with certain litigation. This amount, net of attorney fees incurred in 3Q14 relating to the same legal matters, is recorded as a component of professional fees in the consolidated income statement. These items are also a component of adjusted pre-tax, pre-credit costs income.

(3)

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

(4)

3Q14 and 4Q13 amounts consist of litigation settlement expenses, including loss contingency accruals, with respect to certain legal matters. Amounts for other periods presented herein are not reported separately as amounts are not material.

(5)

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

Synovus
INCOME STATEMENT DATA Nine Months Ended
(Unaudited)
(Dollars in thousands, except per share data) September 30,
2014 2013 Change
Interest income $ 693,989 695,755 (0.3 ) %
Interest expense 82,160 89,894 (8.6 )
Net interest income 611,829 605,861 1.0
Provision for loan losses 25,638 55,534 (53.8 )
Net interest income after provision for loan losses 586,191 550,327 6.5
Non-interest income:
Service charges on deposit accounts 58,610 58,142 0.8
Fiduciary and asset management fees 33,536 32,471 3.3
Brokerage revenue 20,201 21,231 (4.9 )
Mortgage banking income 13,459 19,569 (31.2 )
Bankcard fees 24,394 22,662 7.6
Investment securities gains, net 1,331 2,571 (48.2 )
Other fee income 14,495 16,461 (11.9 )
Decrease in fair value of private equity investments, net (513 ) (856 ) 40.1
Gain on sale of Memphis branches, net (1) 5,789 nm
Other non-interest income 26,253 21,139 24.2
Total non-interest income 197,555 193,390 2.2
Non-interest expense:
Salaries and other personnel expense 279,855 276,190 1.3
Net occupancy and equipment expense 79,436 77,025 3.1
Third-party services 29,604 30,446 (2.8 )
FDIC insurance and other regulatory fees 25,781 24,059 7.2
Professional fees 18,427 28,922 (36.3 )
Advertising expense 15,935 6,513 144.7
Foreclosed real estate expense, net 18,818 28,800 (34.7 )
Losses on other loans held for sale, net 2,050 487 320.9
Visa indemnification charges 2,731 801 240.9
Litigation settlement expenses (2) 12,349 nm
Restructuring charges 17,101 7,295 134.4
Other operating expenses 58,028 70,261 (17.4 )
Total non-interest expense 560,115 550,799 1.7
Income before income taxes 223,631 192,918 15.9
Income tax expense 81,554 72,114 13.1
Net income 142,077 120,804 17.6
Dividends and accretion of discount on preferred stock 7,678 38,100 (79.8 )
Net income available to common shareholders $ 134,399 82,704 62.5
Net income per common share, basic (3) 0.97 0.67 44.6
Net income per common share, diluted (3) 0.96 0.62 54.2
Cash dividends declared per common share (3) 0.21 0.21
Return on average assets 0.72 % 0.61 18.0
Return on average common equity 6.21 4.16 49.3
Weighted average common shares outstanding, basic (3) 138,989 123,652 12.4 %
Weighted average common shares outstanding, diluted (3) 139,600 132,476 5.4
nm – not meaningful

(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 branches of Trust One Bank, a division of Synovus Bank.

(2)3Q14 and 4Q13 amounts consist of litigation settlement expenses, including loss contingency accruals, with respect to certain legal matters. Amounts for other periods presented herein are not reported separately as amounts are not material.

(3)Share and per share data for prior periods has been restated to reflect the 1-for-7 reverse stock split which was effective on May 16, 2014.
Synovus
INCOME STATEMENT DATA
(Unaudited)
(In thousands, except per share data) 2014 2013 3rd Quarter
Third Second First Fourth Third ’14 vs. ’13
Quarter Quarter Quarter Quarter Quarter Change
Interest income $ 233,394 232,213 228,382 233,258 233,852 (0.2) %
Interest expense 27,131 27,162 27,868 28,927 29,882 (9.2)
Net interest income 206,263 205,051 200,514 204,331 203,970 1.1
Provision for loan losses 3,843 12,284 9,511 14,064 6,761 (43.2)
Net interest income after provision for loan losses 202,420 192,767 191,003 190,267 197,209 2.6
Non-interest income:
Service charges on deposit accounts 20,159 19,238 19,214 19,647 19,426 3.8
Fiduciary and asset management fees 11,207 11,296 11,033 10,978 10,389 7.9
Brokerage revenue 7,281 6,707 6,213 6,307 6,636 9.7
Mortgage banking income 4,665 5,283 3,511 2,913 5,314 (12.2)
Bankcard fees 8,182 8,695 7,518 7,979 7,760 5.4
Investment securities gains, net - 1,331 373 1,124 nm
Other fee income 4,704 4,928 4,863 6,106 5,199 (9.5)
(Decrease) increase in fair value of private equity investments, net (144) (119) (250) (2,108) 284 nm
Gain on sale of Memphis branches, net (1) - 5,789 nm
Other non-interest income 7,931 7,360 10,960 7,986 7,446 6.5
Total non-interest income 63,985 63,388 70,182 60,181 63,578 0.6
Non-interest expense:
Salaries and other personnel expense 93,870 92,540 93,445 91,962 92,794 1.2
Net occupancy and equipment expense 26,956 26,425 26,056 26,314 26,475 1.8
Third-party services 10,044 9,464 10,097 9,689 10,151 (1.1)
FDIC insurance and other regulatory fees 8,013 8,049 9,719 8,699 7,639 4.9
Professional fees 2,526 8,224 7,677 9,855 11,410 (77.9)
Advertising expense 7,177 6,281 2,477 2,458 3,114 130.5
Foreclosed real estate expense, net 9,074 4,063 5,681 5,064 10,359 (12.4)
(Gains) losses on other loans held for sale, net (176) (40) 2,266 (159) 408 nm
Visa indemnification charges 1,979 356 396 799 nm
Litigation settlement expenses (2) 12,349 10,000 - nm
Restructuring charges 809 7,716 8,577 3,770 687 17.8
Other operating expenses 21,128 19,127 17,770 22,287 24,291 (13.0)
Total non-interest expense 193,749 182,205 184,161 190,738 187,328 3.4
Income before income taxes 72,656 73,950 77,024 59,710 73,459 (1.1)
Income tax expense 25,868 27,078 28,608 21,130 27,765 (6.8)
Net income 46,788 46,872 48,416 38,580 45,694 2.4
Dividends and accretion of discount on preferred stock 2,559 2,559 2,559 2,730 8,506 (69.9)
Net income available to common shareholders $ 44,229 44,313 45,857 35,850 37,188 18.9 %
Net income per common share, basic (3) $ 0.32 0.32 0.33 0.26 0.27 16.9 %
Net income per common share, diluted (3) 0.32 0.32 0.33 0.26 0.27 16.7
Cash dividends declared per common share (3) 0.07 0.07 0.07 0.07 0.07
Return on average assets 0.70 % 0.71 0.75 0.58 0.69 1.4
Return on average common equity 5.97 6.14 6.52 5.04 5.40 10.6
Weighted average common shares outstanding, basic (3) 139,043 138,991 138,932 138,897 136,671 1.7
Weighted average common shares outstanding, diluted (3) 139,726 139,567 139,504 139,419 137,097 1.9
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 branches of Trust One Bank, a division of Synovus Bank.

(2)3Q14 and 4Q13 amounts consist of litigation settlement expenses, including loss contingency accruals, with respect to certain legal matters. Amounts for other periods presented herein are not reported separately as amounts are not material.

(3)Share and per share data for prior periods has been restated to reflect the 1-for-7 reverse stock split which was effective on May 16, 2014.
Synovus
BALANCE SHEET DATA September 30, 2014 December 31, 2013 September 30, 2013
(Unaudited)
(In thousands, except share data)
ASSETS
Cash and cash equivalents $ 386,402 469,630 514,694
Interest bearing funds with Federal Reserve Bank 750,446 644,528 966,435
Interest earning deposits with banks 13,612 24,325 14,060

Federal funds sold and securities purchased under resale agreements

70,918 80,975 80,177
Trading account assets, at fair value 12,705 6,113 17,363
Mortgage loans held for sale, at fair value 72,333 45,384 61,232
Other loans held for sale 338 10,685 9,351
Investment securities available for sale, at fair value 3,050,257 3,199,358 3,151,344
Loans, net of deferred fees and costs 20,588,566 20,057,798 19,711,610
Allowance for loan losses (269,376) (307,560) (318,612)
Loans, net 20,319,190 19,750,238 19,392,998
Premises and equipment, net 456,633 468,871 476,088
Goodwill 24,431 24,431 24,431
Other intangible assets, net 1,471 3,415 3,783
Other real estate 81,636 112,629 126,640
Deferred tax asset, net 656,151 744,646 763,050
Other assets 622,587 616,376 616,714
Total assets $ 26,519,110 26,201,604 26,218,360
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest bearing deposits $ 5,813,809 5,642,751 5,358,659
Interest bearing deposits, excluding brokered deposits 13,609,038 14,140,037 14,339,997
Brokered deposits 1,566,934 1,094,002 1,275,200
Total deposits 20,989,781 20,876,790 20,973,856
Federal funds purchased and securities sold under repurchase agreements 107,160 148,132 194,613
Long-term debt 2,130,934 2,033,141 1,885,057
Other liabilities 214,690 194,556 232,974
Total liabilities 23,442,565 23,252,619 23,286,500
Shareholders’ equity:
Series C Preferred Stock – no par value, 5,200,000 shares outstanding at September 30, 2014, December 31, 2013, and September 30, 2013 125,980 125,862 125,400
Common stock – $1.00 par value. 139,064,621 shares outstanding at September 30, 2014, 138,907,351 shares outstanding at December 31, 2013, and 138,890,034 shares outstanding at September 30, 2013 (1) 139,878 139,721 139,704
Additional paid-in capital 2,974,319 2,976,348 2,976,813
Treasury stock, at cost – 813,350 shares (1) (114,176) (114,176) (114,176)
Accumulated other comprehensive loss, net (24,827) (41,258) (29,514)
Accumulated deficit (24,629) (137,512) (166,367)
Total shareholders’ equity 3,076,545 2,948,985 2,931,860
Total liabilities and shareholders’ equity $ 26,519,110 26,201,604 26,218,360
(1)Share and per share data for prior periods has been restated to reflect the 1-for-7 reverse stock split which was effective on May 16, 2014.
Synovus
AVERAGE BALANCES AND YIELDS/RATES (1)
(Unaudited)
(Dollars in thousands)
2014 2013
Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
Interest Earning Assets
Taxable investment securities (2) $ 3,035,940 3,091,537 3,181,678 3,196,561 3,062,976
Yield 1.84 % 1.87 1.91 1.90 1.76
Tax-exempt investment securities (2) (4) $ 5,168 5,781 6,421 7,758 9,835
Yield (taxable equivalent) 6.21 % 6.23 6.24 6.14 6.26
Trading account assets $ 16,818 16,011 20,346 10,021 13,806
Yield 2.52 % 2.25 3.16 4.60 4.50
Commercial loans (3) (4) $ 16,603,287 16,673,930 16,451,594 16,217,373 16,067,424
Yield 4.17 % 4.19 4.21 4.28 4.37
Consumer loans (3) $ 3,814,160 3,695,010 3,628,347 3,615,836 3,528,057
Yield 4.44 % 4.51 4.53 4.50 4.61
Allowance for loan losses $ (274,698 ) (293,320 ) (307,078 ) (316,001 ) (328,084 )
Loans, net (3) $ 20,142,749 20,075,620 19,772,863 19,517,208 19,267,397
Yield 4.29 % 4.32 4.34 4.40 4.50
Mortgage loans held for sale $ 70,766 59,678 38,699 46,036 85,493
Yield 3.96 % 4.13 4.15 3.94 4.07
Federal funds sold, due from Federal Reserve Bank,
and other short-term investments $ 974,363 843,018 935,300 1,235,144 1,375,921
Yield 0.23 % 0.23 0.23 0.24 0.24
Federal Home Loan Bank and Federal Reserve Bank stock (5) $ 78,131 76,172 82,585 70,815 70,741
Yield 3.57 % 4.15 3.21 2.85 2.30
Total interest earning assets $ 24,323,935 24,167,817 24,037,892 24,083,543 23,886,169
Yield 3.81 % 3.86 3.86 3.85 3.89
Interest Bearing Liabilities
Interest bearing demand deposits $ 3,722,599 3,830,956 3,878,590 4,102,398 3,933,902
Rate 0.19 % 0.19 0.19 0.19 0.23
Money market accounts $ 6,044,138 6,033,523 6,077,357 6,161,893 6,148,289
Rate 0.29 % 0.31 0.32 0.33 0.33
Savings deposits $ 645,654 644,103 616,962 605,054 607,144
Rate 0.07 % 0.09 0.10 0.10 0.11
Time deposits under $100,000 $ 1,335,848 1,364,322 1,423,487 1,491,673 1,526,974
Rate 0.56 % 0.57 0.59 0.61 0.62
Time deposits over $100,000 $ 1,871,136 1,824,349 1,956,925 2,049,094 2,022,719
Rate 0.75 % 0.74 0.76 0.80 0.84
Brokered money market accounts $ 174,538 184,233 207,681 210,380 202,802
Rate 0.27 % 0.27 0.26 0.27 0.27
Brokered time deposits $ 1,320,082 1,216,934 1,027,167 984,047 1,130,491
Rate 0.52 % 0.51 0.62 0.65 0.70
Total interest bearing deposits $ 15,113,995 15,098,420 15,188,169 15,604,539 15,572,321
Rate 0.35 % 0.36 0.38 0.39 0.42
Federal funds purchased and securities sold under
repurchase agreements $ 171,429 219,490 215,027 216,757 195,717
Rate 0.08 % 0.13 0.14 0.15 0.14
Long-term debt $ 2,142,705 2,099,578 2,156,836 1,886,223 1,885,385
Rate 2.54 % 2.58 2.52 2.85 2.85
Total interest bearing liabilities $ 17,428,129 17,417,488 17,560,032 17,707,519 17,653,423
Rate 0.62 % 0.62 0.64 0.65 0.67
Non-interest bearing demand deposits $ 5,824,592 5,765,287 5,537,090 5,545,529 5,306,447
Effective cost of funds 0.44 % 0.45 0.47 0.47 0.49
Net interest margin 3.37 % 3.41 3.39 3.38 3.40
Taxable equivalent adjustment $ 408 443 455 481 529
(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
LOANS OUTSTANDING AND NON-PERFORMING LOANS COMPOSITION
(Unaudited)
(Dollars in thousands)
September 30, 2014
Loans as a % Total Non-performing Loans
of Total Loans Non-performing as a % of Total
Loan Type Total Loans Outstanding Loans Nonperforming Loans
Multi-Family $ 1,152,728 5.6 % $ 223 0.1 %
Hotels 668,603 3.2 431 0.2
Office Buildings 1,107,012 5.4 2,759 1.0
Shopping Centers 856,399 4.2 10,414 4.3
Commercial Development 131,011 0.6 20,759 8.6
Warehouses 565,011 2.7 790 0.3
Other Investment Property 538,282 2.6 3,603 1.5
Total Investment Properties 5,019,046 24.4 38,979 16.0
1-4 Family Construction 143,888 0.7 324 0.1
1-4 Family Investment Mortgage 813,867 4.0 14,432 6.0
Residential Development 179,799 0.9 14,362 5.9
Total 1-4 Family Properties 1,137,554 5.5 29,118 12.0
Land Acquisition 588,779 2.9 40,128 16.6
Total Commercial Real Estate 6,745,379 32.8 108,225 44.6
Commercial, Financial, and Agricultural 6,003,409 29.2 53,360 22.0
Owner-Occupied 4,013,666 19.5 26,810 11.1
Total Commercial & Industrial 10,017,075 48.7 80,170 33.1
Home Equity Lines 1,685,972 8.2 16,875 7.0
Consumer Mortgages 1,621,904 7.9 34,759 14.4
Credit Cards 253,853 1.3
Other Retail Loans 293,232 1.4 2,353 1.0
Total Retail 3,854,961 18.7 53,987 22.3
Unearned Income (28,849) (0.1) nm
Total $ 20,588,566 100.0 % $ 242,382 100.0 %
LOANS OUTSTANDING BY TYPE COMPARISON
(Unaudited)
(Dollars in thousands)

Total Loans

3Q14 vs. 2Q14 3Q14 vs. 3Q13
Loan Type September 30, 2014 June 30, 2014 % change (1) September 30, 2013 % change
Multi-Family $ 1,152,728 1,109,340 15.5 % 960,136 20.1 %
Hotels 668,603 724,659 (30.7) 656,514 1.8
Office Buildings 1,107,012 988,382 47.6 822,131 34.7
Shopping Centers 856,399 837,799 8.8 868,007 (1.3)
Commercial Development 131,011 139,966 (25.4) 168,402 (22.2)
Warehouses 565,011 566,890 (1.3) 557,409 1.4
Other Investment Property 538,282 498,153 32.0 508,646 5.8
Total Investment Properties 5,019,046 4,865,189 12.5 4,541,245 10.5
1-4 Family Construction 143,888 135,596 24.3 138,719 3.7
1-4 Family Investment Mortgage 813,867 837,648 (11.3) 850,024 (4.3)
Residential Development 179,799 178,793 2.2 199,435 (9.8)
Total 1-4 Family Properties 1,137,554 1,152,037 (5.0) 1,188,178 (4.3)
Land Acquisition 588,779 599,117 (6.8) 729,095 (19.2)
Total Commercial Real Estate 6,745,379 6,616,343 7.7 6,458,518 4.4
Commercial, Financial, and Agricultural 6,003,409 6,085,948 (5.4) 5,728,357 4.8
Owner-Occupied 4,013,666 4,013,492 0.0 3,977,068 0.9
Total Commercial & Industrial 10,017,075 10,099,440 (3.2) 9,705,425 3.2
Home Equity Lines 1,685,972 1,664,520 5.1 1,549,582 8.8
Consumer Mortgages 1,621,904 1,561,111 15.4 1,482,861 9.4
Credit Cards 253,853 255,369 (2.4) 253,805 0.0
Other Retail Loans 293,232 287,935 7.3 286,421 2.4
Total Retail 3,854,961 3,768,935 9.1 3,572,669 7.9
Unearned Income (28,849) (28,955) (1.5) (25,002) 15.4
Total $ 20,588,566 20,455,763 2.6 % 19,711,610 4.4 %
(1) Percentage change is annualized.
Synovus
CREDIT QUALITY DATA
(Unaudited)
(Dollars in thousands) 2014 2013 3rd Quarter
Third Second First Fourth Third ’14 vs. ’13
Quarter Quarter Quarter Quarter Quarter Change
Non-performing Loans $ 242,382 259,547 384,324 416,300 450,879 (46.2) %
Other Loans Held for Sale (1) 338 2,045 3,120 10,685 9,351 (96.4)
Other Real Estate 81,636 101,533 110,757 112,629 126,640 (35.5)
Non-performing Assets 324,356 363,125 498,201 539,614 586,870 (44.7)
Allowance for Loan Losses 269,376 277,783 300,871 307,560 318,612 (15.5)
Net Charge-Offs – Quarter 12,250 35,371 15,181 25,116 23,030 (46.8)
Net Charge-Offs – YTD 62,802 50,552 15,181 135,443 110,327 (43.1)
Net Charge-Offs / Average Loans – Quarter (2) 0.24 % 0.69 0.30 0.51 0.47
Non-performing Loans / Loans 1.18 1.27 1.91 2.08 2.29
Non-performing Assets / Loans, Other Loans Held for Sale & ORE 1.57 1.77 2.46 2.67 2.96
Allowance / Loans 1.31 1.36 1.49 1.53 1.62
Allowance / Non-performing Loans 111.14 107.03 78.29 73.88 70.66
Allowance / Non-performing Loans (3) 176.47 177.62 100.16 95.43 91.84
Past Due Loans over 90 days and Still Accruing $ 4,067 4,798 6,563 4,489 4,738 (14.2) %
As a Percentage of Loans Outstanding 0.02 % 0.02 0.03 0.02 0.02
Total Past Dues Loans and Still Accruing $ 72,712 60,428 75,038 72,600 78,906 (7.8)
As a Percentage of Loans Outstanding 0.35 % 0.30 0.37 0.36 0.40
Accruing Troubled Debt Restructurings (TDRs) $ 408,737 444,108 495,390 556,410 574,236 (28.8)
(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)
September 30, 2014 December 31, 2013 September 30, 2013
Tier 1 Capital $ 2,553,765 2,351,493 2,292,758
Total Risk-Based Capital 3,005,346 2,900,865 2,835,108
Tier 1 Capital Ratio 11.19 % 10.54 10.55
Tier 1 Common Equity Ratio 10.60 9.93 9.93
Total Risk-Based Capital Ratio 13.17 13.00 13.04
Tier 1 Leverage Ratio 9.85 9.13 8.96
Common Equity as a Percentage of Total Assets (2) 11.13 10.77 10.70
Tangible Common Equity as a Percentage of Tangible Assets (3) 11.04 10.68 10.61
Tangible Common Equity as a Percentage of Risk Weighted Assets (3) 12.82 12.53 12.78
Book Value Per Common Share (4)(5) 21.22 20.32 20.21
Tangible Book Value Per Common Share (3)(5) 21.03 20.12 20.00
(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) Per share data for prior periods has been restated to reflect the 1-for-7 reverse stock split which was effective on May 16, 2014.

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