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Synovus Announces Earnings for the Fourth Quarter

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

Net income available to common shareholders for the fourth quarter of 2014 was $50.6 million, or $0.37 per diluted share as compared to $44.2 million, or $0.32 per diluted share for the third quarter of 2014 and $35.8 million, or $0.26 per diluted share for the fourth quarter of 2013. Adjusted earnings per diluted share for the fourth quarter of 2014 were $0.39, a 5.2% increase from the third quarter of 2014 adjusted earnings per diluted share of $0.37.

“We are pleased with our fourth quarter performance, which contributed to an overall solid 2014,” said Kessel D. Stelling, Synovus Chairman and CEO. “For the year, net income available to common shareholders was $185 million, a 56.1% increase over 2013. Loans grew by 5.2%, and we saw continued broad-based improvement in credit quality, especially in the non-performing loan ratio which ended the year at 0.94%. We continued to maintain strong capital levels throughout 2014, and announced in October our plan to return excess capital to shareholders through a $250 million stock repurchase plan and a 43% increase in the common stock dividend. As we enter 2015, our focus remains on caring for customers and improving profitability through balance sheet and fee income growth, as well as a continued focus on efficiency.”

2014 Highlights

  • Net income available to common shareholders for 2014 was $185.0 million, or $1.33 per diluted share as compared to $118.6 million, or $0.88 per diluted share for 2013. Diluted EPS grew 50.5% for 2014 compared to 2013.
  • Total loans ended the year at $21.10 billion, a $1.04 billion or 5.2% increase from 2013.
  • Low-cost core deposits1 ended the year at $16.72 billion, a $589.0 million or 3.7% increase from 2013.
  • Non-performing loans, excluding loans held for sale, of $197.8 million at December 31, 2014 declined 52.5% from December 31, 2013, and the non-performing loan ratio declined 114 basis points from December 31, 2013 to 0.94% at December 31, 2014.
  • The net-charge off ratio for 2014 was 0.39%, down 30 basis points from 2013.
  • The allowance for loan losses to non-performing loans ratio2 increased to 197.22% at December 31, 2014 compared to 95.43% at December 31, 2013.
  • Tier 1 common equity ratio increased 35 basis points from December 31, 2013 to 10.28% at December 31, 2014.

Fourth Quarter 2014 Highlights

Income Statement

Adjusted pre-tax, pre-credit costs income was $99.6 million for the fourth quarter of 2014, a decrease of $3.9 million from $103.5 million for the third quarter of 2014. The third quarter of 2014 included the benefit from a $3.6 million net insurance recovery for incurred legal fees related to litigation.

  • Net interest income was $207.5 million for the fourth quarter of 2014, up $1.2 million from $206.3 million in the previous quarter.
  • The net interest margin declined three basis points to 3.34% compared to 3.37% in the third quarter of 2014. The yield on earning assets was 3.78%, three basis points lower than the third quarter of 2014, and the effective cost of funds remained unchanged at 0.44%.
  • Total non-interest income was $64.5 million, up $564 thousand or 0.9% compared to $64.0 million for the third quarter of 2014.
    • Core banking fees3 were $33.0 million, up $208 thousand or 0.6%, driven by a $355 thousand or 4.3% increase in bankcard fees.
    • Financial Management Services revenues, consisting primarily of fiduciary and asset management fees and brokerage revenue, increased $205 thousand or 1.1%, driven by a $483 thousand increase in fiduciary and asset management fees.
    • Mortgage banking income increased $230 thousand or 4.9%.
  • Total non-interest expense for the fourth quarter of 2014 was $184.9 million, down $8.9 million from the third quarter of 2014.
  • Adjusted non-interest expense for the fourth quarter of 2014 was $172.4 million, up $5.7 million or 3.4% compared to the third quarter of 2014.
    • Professional fees were $8.0 million, up $5.5 million compared to the third quarter of 2014.
      • The fourth quarter of 2014 reflects elevated attorney fees related to the final resolution of one credit.
      • The third quarter of 2014 included the benefit from a $3.6 million net insurance recovery for incurred legal fees related to litigation.
    • Advertising expense was $8.1 million, an increase of $925 thousand compared to the third quarter of 2014.

    Balance Sheet

  • Total loans grew $509.1 million or 9.8% annualized compared to the third quarter of 2014.
    • Commercial and industrial loans grew by $275.9 million, or 10.9% annualized.
    • Commercial real estate loans grew by $155.9 million or 9.2% annualized.
    • Retail loans grew by $79.2 million, or 8.2% annualized.
  • Total average deposits for the quarter were $21.34 billion, up $397.4 million or 7.5% annualized from the previous quarter.
  • Average core deposits for the quarter were $19.73 billion, up $289.7 million or 5.9% annualized compared to the third quarter of 2014.
  • Average core deposits, excluding state, county, and municipal deposits, grew by $150.7 million or 3.4% annualized compared to the previous quarter.

Credit Quality

Broad-based improvement in credit quality continued.

  • Total credit costs were $16.4 million in the fourth quarter of 2014 compared to $15.7 million in the third quarter of 2014.
  • Non-performing loans, excluding loans held for sale, were $197.8 million at December 31, 2014, down $44.6 million or 18.4% from the previous quarter, and down $218.5 million or 52.5% from the fourth quarter of 2013. The non-performing loan ratio was 0.94% at December 31, 2014, down from 1.18% at the end of the previous quarter and 2.08% at December 31, 2013.
  • Total non-performing assets were $286.8 million at December 31, 2014, down $37.5 million or 11.6% from the previous quarter, and down $252.8 million or 46.8% from the fourth quarter of 2013. The non-performing asset ratio was 1.35% at December 31, 2014, compared to 1.57% at the end of the previous quarter and 2.67% at December 31, 2013.
  • Total delinquencies (consisting of loans 30 or more days past due and still accruing) declined to 0.24% at December 31, 2014 compared to 0.35% at September 30, 2014 and 0.36% at December 31, 2013. Total loans past due 90 days or more and still accruing were 0.02% at December, 31, 2014, unchanged from September 30, 2014 and December 31, 2013.
  • Net charge-offs were $16.3 million in the fourth quarter of 2014, up $4.0 million or 32.7% from $12.3 million in the third quarter of 2014. The annualized net charge-off ratio was 0.31% in the fourth quarter compared to 0.24% in the previous quarter.

Capital Ratios

Capital ratios remained strong and include the impact of common stock repurchases totaling $88.1 million completed during the fourth quarter of 2014.

  • Tier 1 Common Equity ratio was 10.28% at December 31, 2014 compared to 10.60% at September 30, 2014.
  • Tier 1 Capital ratio was 10.86% at December 31, 2014 compared to 11.19% at September 30, 2014.
  • Total Risk Based Capital ratio was 12.75% at December 31, 2014 compared to 13.17% at September 30, 2014.
  • Tier 1 Leverage ratio was 9.67% at December 31, 2014 compared to 9.85% at September 30, 2014.
  • Tangible Common Equity ratio was 10.69% at December 31, 2014 compared to 11.04% at September 30, 2014.

1 Excludes the impact from the sale of deposits of the Memphis, Tennessee branches in January 2014.

2 Excludes impaired loans with no reserve.

3 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.

Fourth Quarter Earnings Conference Call

Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on January 27, 2015. 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, 258 branches and 341 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; low-cost core deposits excluding the impact from the sale of deposits of the Memphis, Tennessee branches in January 2014; Tier 1 common equity ratio; tangible common equity to tangible assets ratio; adjusted earnings per diluted share; adjusted pre-tax, pre-credit costs income; and adjusted non-interest expense are not measures recognized under U.S. generally accepted accounting principles (GAAP) and therefore are considered non-GAAP financial measures. The most comparable GAAP measures are total average deposits; total 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; total 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; low-cost core deposits excluding the impact from the sale of deposits of the Memphis, Tennessee branches in January 2014; Tier 1 common equity ratio; tangible common equity to tangible assets ratio; adjusted earnings per diluted share; adjusted pre-tax, pre-credit costs income; and adjusted non-interest expense; and the reconciliation of these measures to total average deposits; total 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.

Reconciliation of Non-GAAP Financial Measures
(dollars in thousands) 4Q14 3Q14 2Q14 1Q14 4Q13
Average core deposits
Average core deposits excluding state, county, and municipal deposits
Average total deposits $ 21,336,007 20,938,587 20,863,706 20,725,259 21,150,068
Subtract: Average brokered deposits (1,602,354 ) (1,494,620 ) (1,401,167 ) (1,234,847 ) (1,194,427 )
Average core deposits 19,733,653 19,443,967 19,462,539 19,490,412 19,955,641
Subtract: Average state, county, and municipal deposits (2,184,757 ) (2,045,817 ) (2,268,852 ) (2,365,096 ) (2,354,731 )

Average core deposits excluding state, county, and municipal deposits

$ 17,548,896 17,398,150 17,193,687 17,125,316 17,600,910
Low-cost core deposits excluding the impact from the sale of deposits of the Memphis, Tennessee branches in January 2014 4Q14 4Q13
Total deposits $ 21,531,699 20,876,790
Brokered deposits (1,642,398 ) (1,094,002 )
Core deposits 19,889,301 19,782,788
Time deposits (3,167,950 ) (3,498,200 )
Low-cost core deposits 16,721,351 16,284,588
Impact from the sale of deposits of the Memphis, Tennessee branches in January 2014 - (152,222 )

Low-cost core deposits excluding the impact from the sale of deposits of the Memphis, Tennessee branches in January 2014

$ 16,721,351 $ 16,132,366
Tier 1 Common Equity Ratio
Total shareholders’ equity $ 3,041,271 3,076,545 3,053,051 2,998,496 2,948,985
Add/subtract: Accumulated other comprehensive loss (income) 12,605 24,827 13,716 30,463 41,258
Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net (1,265 ) (1,471 ) (1,678 ) (1,883 ) (3,415 )
Subtract: Disallowed deferred tax asset (492,199 ) (529,342 ) (547,786 ) (579,537 ) (618,516 )
Other items 7,644 7,637 7,619 7,682 7,612
Tier 1 capital 2,543,625 2,553,765 2,500,491 2,430,790 2,351,493
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 ) (125,980 ) (125,862 )
Tier 1 common equity $ 2,407,645 2,417,785 2,364,511 2,294,810 2,215,631
Risk-weighted assets $ 23,431,497

(1)

22,817,378 22,702,108 22,404,099 22,316,091
Tier 1 common equity ratio 10.28 %

(1)

10.60 10.42 10.24 9.93

Reconciliation of Non-GAAP Financial Measures
(dollars in thousands)

4Q14

3Q14

2Q14

1Q14

4Q13

Tangible common equity to tangible assets ratio
Total assets $ 27,051,231 26,519,110 26,627,290 26,435,426 26,201,604
Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net (1,265 ) (1,471 ) (1,678 ) (1,883 ) (3,415 )
Tangible assets 27,025,535 26,493,208 26,601,181 26,409,112 26,173,758
Total shareholders’ equity 3,041,271 3,076,545 3,053,051 2,998,496 2,948,985
Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net (1,265 ) (1,471 ) (1,678 ) (1,883 ) (3,415 )
Subtract: Series C Preferred Stock, no par value (125,980 ) (125,980 ) (125,980 ) (125,980 ) (125,862 )
Tangible common equity $ 2,889,595 2,924,663 2,900,962 2,846,202 2,795,277
Total shareholders’ equity to total assets ratio 11.24 % 11.60 11.47 11.34 11.25
Tangible common equity to tangible assets ratio 10.69 % 11.04 10.91 10.78 10.68
Adjusted earnings per diluted share
Net income available to common shareholders $ 50,612 $ 44,229
Add: Litigation settlement expenses (after-tax) 283 7,545
Add: Recovery of previously incurred legal costs related to certain legal matters, net of legal cost incurred in 3Q14 related to those same legal matters (after-tax) (2) (2,211 )
Add: Restructuring charges (after-tax) 2,129 494
Add: Visa indemnification charges (after-tax) 189 1,209
Adjusted net income available to common shareholders $ 53,213 51,266
Weighted average common shares outstanding – diluted 137,831 139,726
Adjusted earnings per diluted share $ 0.39 0.37

Reconciliation of Non-GAAP Financial Measures, continued

(dollars in thousands) 4Q14 3Q14 2Q14 1Q14 4Q13
Adjusted Pre-tax, Pre-credit Costs Income
Income before income taxes $ 78,928 72,656 73,950 77,024 59,710
Add: Provision for losses on loans 8,193 3,843 12,284 9,511 14,064
Add: Other credit costs(3) 8,213 11,858 4,635 8,128 8,285
Add: Restructuring charges 3,484 809 7,716 8,577 3,770

Add: Litigation settlement expenses (4)

463 12,349 10,000
Subtract: Investment securities gains, net (1,331 ) (373 )
Add: Visa indemnification charges 310 1,979 356 396 799
Subtract: Gain on sale of Memphis branches, net (5) - - - (5,789 ) -
Pre-tax, pre-credit costs income $ 99,591 103,494 98,941 96,516 96,255
Adjusted Non-interest Expense
Total non-interest expense $ 184,883 193,749 182,205 184,161 190,738
Subtract: Other credit costs(3) (8,213 ) (11,858 ) (4,635 ) (8,128 ) (8,285 )
Subtract: Restructuring charges (3,484 ) (809 ) (7,716 ) (8,577 ) (3,770 )
Subtract: Visa indemnification charges (310 ) (1,979 ) (356 ) (396 ) (799 )
Subtract: Litigation settlement expenses (4) (463 ) (12,349 ) - - (10,000 )
Adjusted non-interest expense $ 172,413 166,754 169,498 167,060 167,884

(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) 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 Twelve Months Ended
(Unaudited)
(Dollars in thousands, except per share data) December 31,
2014 2013 Change
Interest income $ 928,692 929,014 (0.0) %
Interest expense 109,408 118,822 (7.9)
Net interest income 819,284 810,192 1.1
Provision for loan losses 33,831 69,598 (51.4)
Net interest income after provision for loan losses 785,453 740,594 6.1
Non-interest income:
Service charges on deposit accounts 78,897 77,789 1.4
Fiduciary and asset management fees 45,226 43,450 4.1
Brokerage revenue 27,088 27,538 (1.6)
Mortgage banking income 18,354 22,482 (18.4)
Bankcard fees 32,931 30,641 7.5
Investment securities gains, net 1,331 2,945 (54.8)
Other fee income 19,130 22,567 (15.2)
Decrease in fair value of private equity investments, net (378) (2,963) 87.2
Gain on sale of Memphis branches, net (1) 5,789 nm
Other non-interest income 33,736 29,122 15.8
Total non-interest income 262,104 253,571 3.4
Non-interest expense:
Salaries and other personnel expense 371,904 368,152 1.0
Net occupancy and equipment expense 105,806 103,339 2.4
Third-party processing expense 40,042 40,135 (0.2)
FDIC insurance and other regulatory fees 34,043 32,758 3.9
Professional fees 26,440 38,776 (31.8)
Advertising expense 24,037 8,971 167.9
Foreclosed real estate expense, net 25,321 33,864 (25.2)
Losses on other loans held for sale, net 1,567 329 376.3
Visa indemnification charges 3,041 1,600 90.1
Litigation settlement expenses (2) 12,812 10,000 28.1
Restructuring charges 20,585 11,064 86.1
Other operating expenses 79,400 92,549 (14.2)
Total non-interest expense 744,998 741,537 0.5
Income before income taxes 302,559 252,628 19.8
Income tax expense 107,310 93,245 15.1
Net income 195,249 159,383 22.5
Dividends and accretion of discount on preferred stock 10,238 40,830 (74.9)
Net income available to common shareholders $ 185,011 118,553 56.1
Net income per common share, basic (3) 1.34 0.93 43.7
Net income per common share, diluted (3) 1.33 0.88 50.5
Cash dividends declared per common share (3) 0.31 0.28 10.7
Return on average assets 0.74 % 0.61 21.3
Return on average common equity 6.38 4.39 45.3
Weighted average common shares outstanding, basic (3) 138,495 127,495 8.6 %
Weighted average common shares outstanding, diluted (3) 139,154 134,226 3.7
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)

Amounts consist of litigation settlement expenses, including loss contingency accruals, with respect to certain legal matters.

(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 4th Quarter
Fourth Third Second First Fourth ’14 vs. ’13
Quarter Quarter Quarter Quarter Quarter Change
Interest income $ 234,703 233,394 232,213 228,382 233,258 0.6 %
Interest expense 27,248 27,131 27,162 27,868 28,927 (5.8)
Net interest income 207,455 206,263 205,051 200,514 204,331 1.5
Provision for loan losses 8,193 3,843 12,284 9,511 14,064 (41.7)
Net interest income after provision for loan losses 199,262 202,420 192,767 191,003 190,267 4.7
Non-interest income:
Service charges on deposit accounts 20,287 20,159 19,238 19,214 19,647 3.3
Fiduciary and asset management fees 11,690 11,207 11,296 11,033 10,978 6.5
Brokerage revenue 6,887 7,281 6,707 6,213 6,307 9.2
Mortgage banking income 4,895 4,665 5,283 3,511 2,913 68.0
Bankcard fees 8,536 8,182 8,695 7,518 7,979 7.0
Investment securities gains, net - 1,331 373 nm
Other fee income 4,635 4,704 4,928 4,863 6,106 (24.1)
Increase (decrease) in fair value of private equity investments, net 136 (144) (119) (250) (2,108) nm
Gain on sale of Memphis branches, net (1) - 5,789 nm
Other non-interest income 7,483 7,931 7,360 10,960 7,986 (6.3)
Total non-interest income 64,549 63,985 63,388 70,182 60,181 7.3
Non-interest expense:
Salaries and other personnel expense 92,049 93,870 92,540 93,445 91,962 0.1
Net occupancy and equipment expense 26,370 26,956 26,425 26,056 26,314 0.2
Third-party processing expense 10,437 10,044 9,464 10,097 9,689 7.7
FDIC insurance and other regulatory fees 8,262 8,013 8,049 9,719 8,699 (5.0)
Professional fees 8,013 2,526 8,224 7,677 9,855 (18.7)
Advertising expense 8,102 7,177 6,281 2,477 2,458 229.6
Foreclosed real estate expense, net 6,502 9,074 4,063 5,681 5,064 28.4
(Gains) losses on other loans held for sale, net (482) (176) (40) 2,266 (159) nm
Visa indemnification charges 310 1,979 356 396 799 (61.2)
Litigation settlement expenses (2) 463 12,349 10,000 (95.4)
Restructuring charges 3,484 809 7,716 8,577 3,770 (7.6)
Other operating expenses 21,373 21,128 19,127 17,770 22,287 (4.1)
Total non-interest expense 184,883 193,749 182,205 184,161 190,738 (3.1)
Income before income taxes 78,928 72,656 73,950 77,024 59,710 32.2
Income tax expense 25,757 25,868 27,078 28,608 21,130 21.9
Net income 53,171 46,788 46,872 48,416 38,580 37.8
Dividends on preferred stock 2,559 2,559 2,559 2,559 2,730 (6.3)
Net income available to common shareholders $ 50,612 44,229 44,313 45,857 35,850 41.2 %
Net income per common share, basic (3) $ 0.37 0.32 0.32 0.33 0.26 43.1 %
Net income per common share, diluted (3) 0.37 0.32 0.32 0.33 0.26 42.8
Cash dividends declared per common share (3) 0.10 0.07 0.07 0.07 0.07 42.9
Return on average assets 0.79 % 0.70 % 0.71 0.75 0.58 36.2
Return on average common equity 6.89 5.97 6.14 6.52 5.04 36.7
Weighted average common shares outstanding, basic (3) 137,031 139,043 138,991 138,932 138,897 (1.3)
Weighted average common shares outstanding, diluted (3) 137,831 139,726 139,567 139,504 139,419 (1.1)
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)

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 December 31, 2014 September 30, 2014 December 31, 2013
(Unaudited)
(In thousands, except share data)
ASSETS
Cash and cash equivalents $ 485,489 386,402 469,630
Interest bearing funds with Federal Reserve Bank 721,362 750,446 644,528
Interest earning deposits with banks 11,810 13,612 24,325

Federal funds sold and securities purchased under resale agreements

73,111 70,918 80,975
Trading account assets, at fair value 13,863 12,705 6,113
Mortgage loans held for sale, at fair value 63,328 72,333 45,384
Other loans held for sale 3,606 338 10,685
Investment securities available for sale, at fair value 3,041,406 3,050,257 3,199,358
Loans, net of deferred fees and costs 21,097,699 20,588,566 20,057,798
Allowance for loan losses (261,317) (269,376) (307,560)
Loans, net 20,836,382 20,319,190 19,750,238
Premises and equipment, net 455,235 456,633 468,871
Goodwill 24,431 24,431 24,431
Other intangible assets, net 1,265 1,471 3,415
Other real estate 85,472 81,636 112,629
Deferred tax asset, net 622,464 656,151 744,646
Other assets 612,007 622,587 616,376
Total assets $ 27,051,231 26,519,110 26,201,604
LIABILITIES AND SHAREHOLDERS’ EQUITY
Liabilities:
Deposits:
Non-interest bearing deposits $ 6,228,472 5,813,809 5,642,751
Interest bearing deposits, excluding brokered deposits 13,660,830 13,609,038 14,140,037
Brokered deposits 1,642,398 1,566,934 1,094,002
Total deposits 21,531,700 20,989,781 20,876,790
Federal funds purchased and securities sold under repurchase agreements 126,916 107,160 148,132
Long-term debt 2,140,319 2,130,934 2,033,141
Other liabilities 211,026 214,690 194,556
Total liabilities 24,009,961 23,442,565 23,252,619
Shareholders’ equity:
Series C Preferred Stock – no par value, 5,200,000 shares outstanding at December 31, 2014, September 30, 2014, and December 31, 2013 125,980 125,980 125,862
Common stock – $1.00 par value. 136,122,843 shares outstanding at December 31, 2014, 139,064,621 shares outstanding at September 30, 2014, and 138,907,351 shares outstanding at December 31, 2013 (1) 139,950 139,878 139,721
Additional paid-in capital 2,960,825 2,974,319 2,976,348
Treasury stock, at cost – 3,827,579 shares at December 31, 2014, 813,350 shares at September 30, 2014 and December 31, 2013 (1) (187,774) (114,176) (114,176)
Accumulated other comprehensive loss, net (12,605) (24,827) (41,258)
Retained earnings (deficit) 14,894 (24,629) (137,512)
Total shareholders’ equity 3,041,270 3,076,545 2,948,985
Total liabilities and shareholders’ equity $ 27,051,231 26,519,110 26,201,604

(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
Fourth Third Second First Fourth
Quarter Quarter Quarter Quarter Quarter
Interest Earning Assets
Taxable investment securities (2) $ 3,027,769 3,035,940 3,091,537 3,181,678 3,196,561
Yield 1.85 % 1.84 1.87 1.91 1.90
Tax-exempt investment securities (2) (4) $ 5,030 5,168 5,781 6,421 7,758
Yield (taxable equivalent) 6.19 % 6.21 6.23 6.24 6.14
Trading account assets $ 12,879 16,818 16,011 20,346 10,021
Yield 3.08 % 2.52 2.25 3.16 4.60
Commercial loans (3) (4) $ 16,956,294 16,603,287 16,673,930 16,451,594 16,217,373
Yield 4.09 % 4.17 4.19 4.21 4.28
Consumer loans (3) $ 3,895,397 3,814,160 3,695,010 3,628,347 3,615,836
Yield 4.42 % 4.44 4.51 4.53 4.50
Allowance for loan losses $ (268,659) (274,698) (293,320) (307,078) (316,001)
Loans, net (3) $ 20,583,032 20,142,749 20,075,620 19,772,863 19,517,208
Yield 4.22 % 4.29 4.32 4.34 4.40
Mortgage loans held for sale $ 60,892 70,766 59,678 38,699 46,036
Yield 3.84 % 3.96 4.13 4.15 3.94
Federal funds sold, due from Federal Reserve Bank,
and other short-term investments $ 898,871 974,363 843,018 935,300 1,235,144
Yield 0.23 % 0.23 0.23 0.23 0.24
Federal Home Loan Bank and Federal Reserve Bank stock (5) $ 75,547 78,131 76,172 82,585 70,815
Yield 4.53 % 3.57 4.15 3.21 2.85
Total interest earning assets $ 24,664,020 24,323,935 24,167,817 24,037,892 24,083,543
Yield 3.78 % 3.81 3.86 3.86 3.85
Interest Bearing Liabilities
Interest bearing demand deposits $ 3,781,389 3,722,599 3,830,956 3,878,590 4,102,398
Rate 0.19 % 0.19 0.19 0.19 0.19
Money market accounts $ 6,009,897 6,044,138 6,033,523 6,077,357 6,161,893
Rate 0.29 % 0.29 0.31 0.32 0.33
Savings deposits $ 638,813 645,654 644,103 616,962 605,054
Rate 0.07 % 0.07 0.09 0.10 0.10
Time deposits under $100,000 $ 1,315,905 1,335,848 1,364,322 1,423,487 1,491,673
Rate 0.57 % 0.56 0.57 0.59 0.61
Time deposits over $100,000 $ 1,877,602 1,871,136 1,824,349 1,956,925 2,049,094
Rate 0.76 % 0.75 0.74 0.76 0.80
Brokered money market accounts $ 191,103 174,538 184,233 207,681 210,380
Rate 0.28 % 0.27 0.27 0.26 0.27
Brokered time deposits $ 1,411,252 1,320,082 1,216,934 1,027,167 984,047
Rate 0.58 % 0.52 0.51 0.62 0.65
Total interest bearing deposits $ 15,225,961 15,113,995 15,098,420 15,188,169 15,604,539
Rate 0.36 % 0.35 0.36 0.38 0.39
Federal funds purchased and securities sold under
repurchase agreements $ 186,993 171,429 219,490 215,027 216,757
Rate 0.07 % 0.08 0.13 0.14 0.15
Long-term debt $ 2,084,636 2,142,705 2,099,578 2,156,836 1,886,223
Rate 2.55 % 2.54 2.58 2.52 2.85
Total interest bearing liabilities $ 17,497,590 17,428,129 17,417,488 17,560,032 17,707,519
Rate 0.62 % 0.62 0.62 0.64 0.65
Non-interest bearing demand deposits $ 6,110,047 5,824,592 5,765,287 5,537,090 5,545,529
Effective cost of funds 0.44 % 0.44 0.45 0.47 0.47
Net interest margin 3.34 % 3.37 3.41 3.39 3.38
Taxable equivalent adjustment $ 372 408 443 455 481
(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)
December 31, 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 $ 1,205,095 5.7 % $ 224 0.1 %
Hotels 692,018 3.3 427 0.2
Office Buildings 1,188,389 5.6 488 0.1
Shopping Centers 881,396 4.2 5,726 2.9
Commercial Development 121,990 0.6 12,303 6.2
Warehouses 558,594 2.6 184 0.1
Other Investment Property 540,840 2.6 1,368 0.7
Total Investment Properties 5,188,322 24.6 20,720 10.4
1-4 Family Construction 148,821 0.7 309 0.2
1-4 Family Investment Mortgage 808,893 3.8 9,973 5.0
Residential Development 177,848 0.8 13,915 7.0
Total 1-4 Family Properties 1,135,562 5.4 24,197 12.2
Land Acquisition 577,424 2.7 34,120 17.3
Total Commercial Real Estate 6,901,308 32.7 79,037 39.9
Commercial, Financial, and Agricultural 6,226,034 29.5 40,614 20.5
Owner-Occupied 4,066,979 19.3 26,099 13.2
Total Commercial & Industrial 10,293,013 48.8 66,713 33.7
Home Equity Lines 1,683,998 8.0 16,434 8.3
Consumer Mortgages 1,694,061 8.0 33,278 16.9
Credit Cards 253,649 1.3
Other Retail Loans 302,460 1.4 2,295 1.2
Total Retail 3,934,168 18.6 52,007 26.3
Unearned Income (30,790) (0.1) nm
Total $ 21,097,699 100.0 % $ 197,757 100.0 %
LOANS OUTSTANDING BY TYPE COMPARISON
(Unaudited)
(Dollars in thousands)
Total Loans 4Q14 vs. 3Q14 4Q14 vs. 4Q13
Loan Type December 31, 2014 September 30, 2014 % change (1) December 31, 2013 % change
Multi-Family $ 1,205,095 1,152,728 18.0 % 957,002 25.9 %
Hotels 692,018 668,603 13.9 687,177 0.7
Office Buildings 1,188,389 1,107,012 29.2 889,499 33.6
Shopping Centers 881,396 856,399 11.6 854,607 3.1
Commercial Development 121,990 131,011 (27.3) 156,344 (22.0)
Warehouses 558,594 565,011 (4.5) 564,448 (1.0)
Other Investment Property 540,840 538,282 1.9 507,409 6.6
Total Investment Properties 5,188,322 5,019,046 13.4 4,616,486 12.4
1-4 Family Construction 148,821 143,888 13.6 138,973 7.1
1-4 Family Investment Mortgage 808,893 813,867 (2.4) 857,556 (5.7)
Residential Development 177,848 179,799 (4.3) 188,531 (5.7)
Total 1-4 Family Properties 1,135,562 1,137,554 (0.7) 1,185,060 (4.2)
Land Acquisition 577,424 588,779 (7.7) 705,431 (18.1)
Total Commercial Real Estate 6,901,308 6,745,379 9.2 6,506,977 6.1
Commercial, Financial, and Agricultural 6,226,034 6,003,409 14.7 5,895,265 5.6
Owner-Occupied 4,066,979 4,013,666 5.3 4,036,186 0.8
Total Commercial & Industrial 10,293,013 10,017,075 10.9 9,931,451 3.6
Home Equity Lines 1,683,998 1,685,972 (0.5) 1,587,541 6.1
Consumer Mortgages 1,694,061 1,621,904 17.7 1,519,068 11.5
Credit Cards 253,649 253,853 (0.3) 256,846 (1.2)
Other Retail Loans 302,460 293,232 12.5 284,777 6.2
Total Retail 3,934,168 3,854,961 8.2 3,648,232 7.8
Unearned Income (30,790) (28,849) 26.7 (28,862) 6.7
Total $ 21,097,699 20,588,566 9.8 % 20,057,798 5.2 %
(1) Percentage change is annualized.
Synovus
CREDIT QUALITY DATA
(Unaudited)
(Dollars in thousands) 2014 2013 4th Quarter
Fourth Third Second First Fourth ’14 vs. ’13
Quarter Quarter Quarter Quarter Quarter Change
Non-performing Loans $ 197,757 242,382 259,547 384,324 416,300 (52.5) %
Other Loans Held for Sale (1) 3,606 338 2,045 3,120 10,685 (66.3)
Other Real Estate 85,472 81,636 101,533 110,757 112,629 (24.1)
Non-performing Assets 286,835 324,356 363,125 498,201 539,614 (46.8)
Allowance for Loan Losses 261,317 269,376 277,783 300,871 307,560 (15.0)
Net Charge-Offs – Quarter 16,253 12,250 35,371 15,181 25,116 (35.3)
Net Charge-Offs – YTD 79,055 62,802 50,552 15,181 135,443 (41.6)
Net Charge-Offs / Average Loans – Quarter (2) 0.31 % 0.24 0.69 0.30 0.51
Non-performing Loans / Loans 0.94 1.18 1.27 1.91 2.08
Non-performing Assets / Loans, Other Loans Held for Sale & ORE 1.35 1.57 1.77 2.46 2.67
Allowance / Loans 1.24 1.31 1.36 1.49 1.53
Allowance / Non-performing Loans 132.14 111.14 107.03 78.29 73.88
Allowance / Non-performing Loans (3) 197.22 176.47 177.62 100.16 95.43
Past Due Loans over 90 days and Still Accruing $ 4,637 4,067 4,798 6,563 4,489 3.3 %
As a Percentage of Loans Outstanding 0.02 % 0.02 0.02 0.03 0.02
Total Past Dues Loans and Still Accruing $ 51,251 72,712 60,428 75,038 72,600 (29.4)
As a Percentage of Loans Outstanding 0.24 % 0.35 0.30 0.37 0.36
Accruing Troubled Debt Restructurings (TDRs) $ 348,427 408,737 444,108 495,390 556,410 (37.4)
(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)
December 31, 2014 December 31, 2013
Tier 1 Capital $ 2,543,625 2,351,493
Total Risk-Based Capital 2,987,406 2,900,865
Tier 1 Capital Ratio 10.86 % 10.54
Tier 1 Common Equity Ratio 10.28 9.93
Total Risk-Based Capital Ratio 12.75 13.00
Tier 1 Leverage Ratio 9.67 9.13
Common Equity as a Percentage of Total Assets (2) 10.78 10.77
Tangible Common Equity as a Percentage of Tangible Assets (3) 10.69 10.68
Tangible Common Equity as a Percentage of Risk Weighted Assets (3) 12.33 12.53
Book Value Per Common Share (4)(5) 21.42 20.32
Tangible Book Value Per Common Share (3)(5) 21.23 20.12
(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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