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Synovus Announces Earnings for the Second Quarter 2019

July 16, 2019 6:30 AM

Diluted Earnings per Share of $0.96, up 5.5% vs. $0.91 in 2Q18

Adjusted Diluted Earnings per Share of $1.00, up 8.4% vs. $0.92 in 2Q18

COLUMBUS, Ga.--(BUSINESS WIRE)-- Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter ended June 30, 2019.

Second Quarter 2019 Highlights

Second Quarter Summary

Reported

Adjusted

(dollars in thousands)

2Q19

1Q19

2Q18

2Q19

1Q19

2Q18

Net income available to common shareholders

$

153,034

$

117,036

$

108,622

$158,892

$160,155

$109,824

Diluted earnings per share

0.96

0.72

0.91

1.00

0.98

0.92

Total loans

36,138,561

35,634,501

25,134,056

N/A

N/A

N/A

Total deposits

37,966,722

38,075,190

26,442,688

N/A

N/A

N/A

Total revenues

487,880

477,183

358,084

488,270

476,250

359,417

Return on avg assets

1.35

%

1.06

%

1.42

%

1.40

%

1.45

%

1.43

%

Return on avg common equity

14.32

10.98

15.39

14.87

15.03

15.56

Return on avg tangible common equity

16.66

12.88

15.80

17.29

17.52

15.97

Net interest margin

3.69

3.78

3.86

3.48

3.59

N/A

Efficiency ratio

54.14

61.28

56.99

52.08

50.24

56.41

Net charge-off ratio

0.13

0.19

0.29

N/A

N/A

N/A

NPA ratio

0.39

0.44

0.50

N/A

N/A

N/A

“Our results in the second quarter reflect the strength of our core business and our geography, with broad-based loan growth and solid credit and profitability metrics,” said Kessel D. Stelling, Synovus chairman and CEO. “We are pleased with the early wins in our expanded Florida footprint as we introduce our broader capabilities to new customers and prospects. We not only expect continued successes in that region, but across our entire footprint, as our core and specialty bankers work together to serve customers. The real and sustaining competitive differentiator for our company remains our talented team that is passionate about the important work they do and proud to represent our brand of relationship-centered banking and financial services in our markets.”

Balance Sheet

Loans**

(dollars in millions)

2Q19

1Q19

Linked

Quarter

Change

Linked

Quarter %

Change*

2Q18

Year/Year

Change

Year/Year

% Change

Commercial & industrial

$

16,247.5

$

16,127.6

$

119.9

3.0

%

$

12,275.5

$

3,972.1

32.4

Commercial real estate

10,348.4

10,268.4

80.0

3.1

6,644.2

3,704.3

55.8

Consumer

9,566.1

9,262.1

304.0

13.2

6,237.1

3,329.0

53.4

Unearned income

(23.6

)

(23.7

)

0.1

(1.7

)

(22.7

)

(0.9

)

3.8

Total loans

$

36,138.6

$

35,634.5

$

504.1

5.7

%

$

25,134.1

$

11,004.5

43.8

%

* Annualized

** Amounts may not total due to rounding

Deposits**

(dollars in millions)

2Q19

1Q19

Linked

Quarter

Change

Linked

Quarter %

Change*

2Q18

Year/Year

Change

Year/Year

% Change

Non-interest-bearing DDA

$

8,577.6

$

8,440.5

$

137.1

6.5

%

$

6,820.0

$

1,757.6

25.8

%

Interest-bearing DDA

4,847.2

4,911.2

(64.0

)

(5.2

)

4,060.3

786.9

19.4

Money market

8,952.9

8,912.5

40.3

1.8

7,388.2

1,564.7

21.2

Savings

891.2

903.8

(12.6

)

(5.6

)

822.6

68.6

8.3

Public funds

4,351.3

4,630.0

(278.7

)

(24.1

)

2,224.6

2,126.7

95.6

Time deposits

7,343.0

7,568.1

(225.1

)

(11.9

)

3,275.9

4,067.0

124.1

Brokered deposits

3,003.5

2,709.0

294.5

43.6

1,851.0

1,152.5

62.3

Total deposits

$

37,966.7

$

38,075.2

$

(108.5

)

(1.1

)%

$

26,442.7

$

11,524.0

43.6

%

* Annualized

** Amounts may not total due to rounding

Income Statement Summary**

(in thousands, except per share data)

2Q19

1Q19

Linked

Quarter

Change

Linked

Quarter %

Change

2Q18

Year/Year

Change

Year/Year

% Change

Net interest income

$

397,262

$

397,175

$

87

nm

$

284,577

$

112,685

39.6

%

Non-interest income

89,807

79,378

10,429

13.1

%

73,387

16,420

22.4

Non-interest expense

264,126

292,410

(28,284

)

(9.7

)

204,057

60,069

29.4

Provision expense

12,119

23,569

(11,450

)

(48.6

)

11,790

329

2.8

Income before taxes

$

210,824

$

160,574

$

50,250

31.3

%

$

142,117

$

68,707

48.3

%

Income tax expense

54,640

40,388

14,252

35.3

30,936

23,704

76.6

Preferred stock dividends

3,150

3,150

—

nm

2,559

591

23.1

Net income available to common shareholders

$

153,034

$

117,036

$

35,998

30.8

%

$

108,622

$

44,412

40.9

%

Weighted average common shares outstanding, diluted

159,077

162,760

(3,683

)

(2.3

)

119,139

39,938

33.5

Diluted earnings per share

$

0.96

$

0.72

$

0.24

33.8

%

$

0.91

$

0.05

5.5

%

Adjusted diluted earnings per share

$

1.00

$

0.98

$

0.02

1.5

%

$

0.92

$

0.08

8.4

%

** Amounts may not total due to rounding

nm - not meaningful

Core Performance

Capital Ratios

2Q19

1Q19

2Q18

Common equity Tier 1 capital (CET1) ratio

9.61

%

(1)

9.52

%

10.12

%

Tier 1 capital ratio

10.09

(1)

10.01

11.25

Total risk-based capital ratio

12.11

(1)

12.06

13.08

Tier 1 leverage ratio

8.92

(1)

8.81

10.03

Tangible common equity ratio(2)

8.56

8.30

8.77

(1) Ratios are preliminary

(2) Non-GAAP measure; see applicable reconciliation

Capital

Second Quarter Earnings Conference Call

Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on July 16, 2019. 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 approximately $47 billion in assets. Synovus provides commercial and retail banking, investment, and mortgage services through 297 branches in Georgia, Alabama, South Carolina, Florida, and Tennessee. Synovus Bank, a wholly owned subsidiary of Synovus, was named one of American Banker’s “Best Banks to Work For” in 2018 and has been recognized as one of the country's “Most Reputable Banks” by American Banker and the Reputation Institute. Synovus is on the web at synovus.com, and on Twitter, Facebook, LinkedIn, and Instagram.

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 deposit growth, loan growth and the net interest margin; expectations on our growth strategy, strategic transactions (including the FCB transaction), 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, 2018, 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 total revenues; adjusted tangible efficiency ratio; adjusted net income available to common shareholders; adjusted earnings per diluted share; adjusted return on average assets; adjusted return on average common equity; return on average tangible common equity; adjusted return on average tangible common equity; tangible common equity ratio; and common equity Tier 1 capital (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; total revenues; efficiency ratio-FTE; net income available to common shareholders; earnings per diluted common share; return on average assets; return on average common equity; the ratio of total shareholders' equity to total assets; and the CET1 capital 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 total revenues and adjusted non-interest income are measures used by management to evaluate total revenues and non-interest income exclusive of net investment securities gains (losses) and changes in the fair value of private equity investments, net. Adjusted non-interest expense and the adjusted tangible efficiency ratio are measures utilized by management to measure the success of expense management initiatives focused on reducing recurring controllable operating costs. Adjusted net income available to common shareholders, adjusted earnings per diluted share, adjusted return on average assets, and adjusted return on average common equity are measures used by management to evaluate operating results exclusive of items that are not indicative of ongoing operations and impact period-to-period comparisons. Return on average tangible common equity and adjusted return on average tangible common equity are measures 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 capital (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)

2Q19

1Q19

2Q18

Adjusted non-interest income

Total non-interest income

$

89,807

$

79,378

$

73,387

Add/subtract: Investment securities losses (gains), net

1,845

(75

)

1,296

Subtract/add: (Increase) decrease in fair value of private equity investments, net

(1,455

)

(858

)

37

Adjusted non-interest income

$

90,197

$

78,445

$

74,720

Adjusted non-interest expense

Total non-interest expense

$

264,126

$

292,410

$

204,057

Subtract: Merger-related expense

(7,401

)

(49,738

)

—

Add: Litigation settlement/contingency expense

—

—

1,400

Subtract: Restructuring charges, net

(18

)

(19

)

(103

)

Subtract: Fair value adjustment to Visa derivative

$

—

$

—

$

(2,328

)

Adjusted non-interest expense

$

256,707

$

242,653

$

203,026

Adjusted total revenues and adjusted tangible efficiency ratio

Adjusted non-interest expense

$

256,707

$

242,653

$

203,026

Subtract: Amortization of intangibles

(2,410

)

(3,392

)

(292

)

Adjusted tangible non-interest expense

$

254,297

$

239,261

$

202,734

Net interest income

$

397,262

$

397,175

$

284,577

Add: Tax equivalent adjustment

811

630

120

Add: Total non-interest income

89,807

79,378

73,387

Total FTE revenues

487,880

477,183

358,084

Add/subtract: Investment securities losses (gains), net

1,845

(75

)

1,296

Subtract/add: (Increase) decrease in fair value of private equity investments, net

(1,455

)

(858

)

37

Adjusted total revenues

$

488,270

$

476,250

$

359,417

Efficiency ratio-FTE

54.14

%

61.28

%

56.99

%

Adjusted tangible efficiency ratio

52.08

50.24

56.41

Reconciliation of Non-GAAP Financial Measures, continued

(in thousands, except per share data)

2Q19

1Q19

2Q18

Adjusted Return on Average Assets

Net income

$

156,184

$

120,186

$

111,181

Subtract: Income tax expense, net related to State Tax Reform

—

—

(608

)

Add: Merger-related expense

7,401

49,738

—

Subtract: Litigation settlement/contingency expense

—

—

(1,400

)

Add: Restructuring charges, net

18

19

103

Add: Fair value adjustment to Visa derivative

—

—

2,328

Add/subtract: Investment securities losses (gains), net

1,845

(75

)

1,296

Subtract/add: (Increase) decrease in fair value of private equity investments, net

(1,455

)

(858

)

37

Subtract: Tax effect of adjustments

(1,951

)

(5,705

)

(554

)

Adjusted net income

$

162,042

$

163,305

$

112,383

Net income annualized

$

626,452

$

487,421

$

445,946

Adjusted net income annualized

$

649,949

$

662,293

$

450,767

Total average assets

$

46,549,432

$

45,794,621

$

31,502,758

Return on average assets

1.35

%

1.06

%

1.42

%

Adjusted return on average assets

1.40

1.45

1.43

Adjusted net income available to common shareholders and adjusted net income per common share, diluted

Net income available to common shareholders

$

153,034

$

117,036

$

108,622

Subtract: Income tax expense, net related to State Tax Reform

—

—

(608

)

Add: Merger-related expense

7,401

49,738

—

Subtract: Litigation settlement/contingency expense

—

—

(1,400

)

Add: Restructuring charges, net

18

19

103

Add: Fair value adjustment to Visa derivative

—

—

2,328

Add/subtract: Investment securities losses (gains), net

1,845

(75

)

1,296

Subtract/add: (Increase) decrease in fair value of private equity investments, net

(1,455

)

(858

)

37

Subtract: Tax effect of adjustments

(1,951

)

(5,705

)

(554

)

Adjusted net income available to common shareholders

$

158,892

$

160,155

$

109,824

Weighted average common shares outstanding, diluted

159,077

162,760

119,139

Net income per common share, diluted

$

0.96

$

0.72

$

0.91

Adjusted net income per common share, diluted

1.00

0.98

0.92

Reconciliation of Non-GAAP Financial Measures, continued

(dollars in thousands)

2Q19

1Q19

2Q18

Adjusted return on average common equity, return on average tangible common equity, and adjusted return on average tangible common equity

Net income available to common shareholders

$

153,034

$

117,036

$

108,622

Subtract: Income tax expense, net related to State Tax Reform

—

—

(608

)

Add: Merger-related expense

7,401

49,738

—

Subtract: Litigation settlement/contingency expense

—

—

(1,400

)

Add: Restructuring charges, net

18

19

103

Add: Fair value adjustment to Visa derivative

—

—

2,328

Add/subtract: Investment securities losses (gains), net

1,845

(75

)

1,296

Subtract/add: (Increase) decrease in fair value of private equity investments, net

(1,455

)

(858

)

37

Subtract: Tax effect of adjustments

(1,951

)

(5,705

)

(554

)

Adjusted net income available to common shareholders

$

158,892

$

160,155

$

109,824

Adjusted net income available to common shareholders annualized

$

637,314

$

649,518

$

440,502

Add: Amortization of intangibles

7,250

10,317

896

Adjusted net income available to common shareholders excluding amortization of intangibles annualized

$

644,564

$

659,835

$

441,398

Net income available to common shareholders annualized

$

613,818

$

474,646

$

435,682

Add: Amortization of intangibles

7,250

10,317

896

Net income available to common shareholders excluding amortization of intangibles annualized

$

621,068

$

484,963

$

436,578

Total average shareholders' equity less preferred stock

$

4,286,369

$

4,321,561

$

2,831,368

Subtract: Goodwill

(487,601

)

(480,215

)

(57,315

)

Subtract: Other intangible assets, net

(69,853

)

(75,191

)

(10,555

)

Total average tangible shareholders' equity less preferred stock

$

3,728,915

$

3,766,155

$

2,763,498

Return on average common equity

14.32

%

10.98

%

15.39

%

Adjusted return on average common equity

14.87

15.03

15.56

Return on average tangible common equity

16.66

12.88

15.80

Adjusted return on average tangible common equity

17.29

17.52

15.97

Reconciliation of Non-GAAP Financial Measures, continued

June 30,

March 31,

June 30,

(dollars in thousands)

2019

2019

2018

Tangible Common Equity Ratio

Total assets

$

47,318,203

$

46,604,344

$

31,740,305

Subtract: Goodwill

(492,390

)

(480,215

)

(57,315

)

Subtract: Other intangible assets, net

(61,473

)

(74,683

)

(10,458

)

Tangible assets

$

46,764,340

$

46,049,446

$

31,672,532

Total shareholders’ equity

$

4,753,816

$

4,572,072

$

3,167,694

Subtract: Goodwill

(492,390

)

(480,215

)

(57,315

)

Subtract: Other intangible assets, net

(61,473

)

(74,683

)

(10,458

)

Subtract: Preferred Stock, no par value

(195,140

)

(195,140

)

(321,118

)

Tangible common equity

$

4,004,813

$

3,822,034

$

2,778,803

Total shareholders’ equity to total assets ratio

10.05

%

9.81

%

9.98

%

Tangible common equity ratio

8.56

8.30

8.77

Reconciliation of Non-GAAP Financial Measures, continued

June 30,

(dollars in thousands)

2019

CET1 capital ratio (fully phased-in)

CET1 capital

$

3,899,532

Total risk-weighted assets

$

40,564,781

Total risk-weighted assets (fully phased-in)

$

40,633,187

CET1 capital ratio

9.61

%

CET1 capital ratio (fully phased-in)

9.60

Synovus

INCOME STATEMENT DATA

(Unaudited)

Six Months Ended

(Dollars in thousands, except per share data)

June 30,

2019

2018

% Change

Interest income

$

1,020,970

$

642,968

58.8

%

Interest expense

226,532

84,107

169.3

Net interest income

794,438

558,861

42.2

Provision for loan losses

35,688

24,566

45.3

Net interest income after provision for loan losses

758,750

534,295

42.0

Non-interest income:

Service charges on deposit accounts

42,853

39,938

7.3

Fiduciary and asset management fees

28,057

27,419

2.3

Card fees

22,037

21,032

4.8

Brokerage revenue

19,431

17,085

13.7

Capital markets income

13,291

2,086

nm

Mortgage banking income

12,962

9,887

31.1

Income from bank-owned life insurance

10,466

7,949

31.7

Investment securities losses, net

(1,771

)

(1,296

)

nm

Increase/(decrease) in fair value of private equity investments, net

2,313

(3,093

)

nm

Other non-interest income

19,546

19,426

0.6

Total non-interest income

169,185

140,433

20.5

Non-interest expense:

Salaries and other personnel expense

282,436

225,583

25.2

Net occupancy and equipment expense

78,245

64,134

22.0

Third-party processing expense

36,875

29,012

27.1

Professional fees

15,660

11,789

32.8

FDIC insurance and other regulatory fees

14,629

13,335

9.7

Advertising expense

11,045

10,312

7.1

Merger-related expense

57,140

—

nm

Amortization of intangibles

5,802

583

nm

Other operating expenses

54,705

44,486

23.0

Total non-interest expense

556,537

399,234

39.4

Income before income taxes

371,398

275,494

34.8

Income tax expense

95,028

61,146

55.4

Net income

276,370

214,348

28.9

Less: Preferred stock dividends

6,300

5,119

23.1

Net income available to common shareholders

$

270,070

$

209,229

29.1

%

Net income per common share, basic

1.70

1.77

(3.9

)%

Net income per common share, diluted

1.68

1.75

(4.4

)

Cash dividends declared per common share

0.60

0.50

20.0

Return on average assets*

1.21

%

1.38

(17

)bps

Return on average common equity*

12.65

15.01

(236

)

Weighted average common shares outstanding, basic

159,148

118,531

34.3

%

Weighted average common shares outstanding, diluted

160,908

119,229

35.0

nm - not meaningful

bps - basis points

* - ratios are annualized

Synovus

INCOME STATEMENT DATA

(Unaudited)

(In thousands, except per share data)

2019

2018

Second
Quarter

Second
Quarter

First
Quarter

Fourth
Quarter

Third
Quarter

Second
Quarter

'19 vs '18

% Change

Interest income

$

516,131

504,839

357,394

343,942

329,834

56.5

%

Interest expense

118,869

107,664

59,461

52,323

45,257

162.7

Net interest income

397,262

397,175

297,933

291,619

284,577

39.6

Provision for loan losses

12,119

23,569

12,148

14,982

11,790

2.8

Net interest income after provision for loan losses

385,143

373,606

285,785

276,637

272,787

41.2

Non-interest income:

Service charges on deposit accounts

21,994

20,859

20,320

20,582

19,999

10.0

Fiduciary and asset management fees

14,478

13,578

13,805

13,462

13,983

3.5

Card fees

11,161

10,877

10,862

10,608

10,833

3.0

Brokerage revenue

10,052

9,379

9,241

9,041

8,709

15.4

Capital markets income

8,385

4,906

1,693

836

1,118

nm

Mortgage banking income

7,907

5,054

3,781

5,290

4,839

63.4

Income from bank-owned life insurance

5,176

5,290

3,682

3,771

3,733

38.7

Investment securities (losses)/gains, net

(1,845

)

75

—

—

(1,296

)

nm

Increase/(decrease) in fair value of private equity investments, net

1,455

858

(2,084

)

434

(37

)

nm

Other non-interest income

11,044

8,502

6,691

7,644

11,506

(4.0

)

Total non-interest income

89,807

79,378

67,991

71,668

73,387

22.4

Non-interest expense:

Salaries and other personnel expense

143,009

139,427

113,496

114,341

111,863

27.8

Net occupancy and equipment expense

39,851

38,394

34,260

32,088

32,654

22.0

Third-party processing expense

19,118

17,758

14,803

14,810

15,067

26.9

Professional Fees

9,312

6,348

8,650

6,298

6,284

48.2

FDIC insurance and other regulatory fees

7,867

6,761

4,728

6,430

6,543

20.2

Advertising expense

5,923

5,123

6,834

3,735

5,220

13.5

Earnout liability adjustments

—

—

—

11,652

—

nm

Merger-related expense

7,401

49,738

3,381

6,684

—

nm

Amortization of intangibles

2,410

3,392

292

292

292

nm

Other operating expenses

29,235

25,469

23,478

23,967

26,134

11.9

Total non-interest expense

264,126

292,410

209,922

220,297

204,057

29.4

Income before income taxes

210,824

160,574

143,854

128,008

142,117

48.3

Income tax expense

54,640

40,388

38,784

18,949

30,936

76.6

Net income

156,184

120,186

105,070

109,059

111,181

40.5

Less: Preferred stock dividends and redemption charge

3,150

3,150

3,151

9,729

2,559

23.1

Net income available to common shareholders

$

153,034

117,036

101,919

99,330

108,622

40.9

Net income per common share, basic

$

0.97

0.73

0.88

0.85

0.92

6.0

%

Net income per common share, diluted

0.96

0.72

0.87

0.84

0.91

5.5

Cash dividends declared per common share

0.30

0.30

0.25

0.25

0.25

20.0

Return on average assets *

1.35

%

1.06

1.29

1.36

1.42

(7

)bps

Return on average common equity *

14.32

10.98

14.25

13.95

15.39

(107

)

Weighted average common shares outstanding, basic

157,389

160,927

116,303

117,241

118,397

32.9

%

Weighted average common shares outstanding, diluted

159,077

162,760

116,986

118,095

119,139

33.5

nm - not meaningful

bps - basis points

* - ratios are annualized

Synovus

BALANCE SHEET DATA

June 30, 2019

December 31, 2018

June 30, 2018

(Unaudited)

(In thousands, except share data)

ASSETS

Cash and due from banks

$

549,616

$

468,426

$

404,080

Interest-bearing funds with Federal Reserve Bank

531,488

641,476

613,082

Interest earning deposits with banks

20,271

19,841

33,754

Federal funds sold and securities purchased under resale agreements

49,946

13,821

40,872

Cash and cash equivalents

1,151,321

1,143,564

1,091,788

Investment securities available for sale, at fair value

7,007,012

3,991,632

3,929,962

Mortgage loans held for sale, at fair value

81,855

37,129

53,673

Loans

36,138,561

25,946,573

25,134,056

Allowance for loan losses

(257,376

)

(250,555

)

(251,725

Loans, net

35,881,185

25,696,018

24,882,331

Cash surrender value of bank-owned life insurance

766,287

554,134

547,261

Premises and equipment, net

490,644

434,307

428,633

Goodwill

492,390

57,315

57,315

Other intangible assets

61,473

9,875

10,458

Other assets

1,386,036

745,218

738,884

Total assets

$

47,318,203

$

32,669,192

$

31,740,305

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:

Deposits:

Non-interest-bearing deposits

$

9,205,066

$

7,650,967

$

7,630,491

Interest-bearing deposits

28,761,656

19,069,355

18,812,197

Total deposits

37,966,722

26,720,322

26,442,688

Federal funds purchased and securities sold under repurchase agreements

273,481

237,692

207,580

Other short-term borrowings

1,330,000

650,000

—

Long-term debt

2,306,072

1,657,157

1,656,647

Other liabilities

688,112

270,419

265,696

Total liabilities

42,564,387

29,535,590

28,572,611

Shareholders' equity:

Series C Preferred Stock - no par value; 5,200,000 outstanding at June 30, 2018

—

—

125,980

Series D Preferred Stock - no par value. Authorized 100,000,000 shares; 8,000,000 shares issued and outstanding at June 30, 2019, December 31, 2018, and June 30, 2018

195,140

195,140

195,138

Common stock - $1.00 par value. Authorized 342,857,143 shares; 166,079,543 issued at June 30, 2019, 143,300,449 issued at December 31, 2018, and 143,077,973 issued at June 30, 2018; 156,872,026 outstanding at June 30, 2019, 115,865,510 outstanding at December 31, 2018, and 117,841,369 outstanding at June 30, 2018

166,080

143,300

143,078

Additional paid-in capital

3,801,748

3,060,561

3,045,014

Treasury stock, at cost – 9,207,517 shares at June 30, 2019, 27,434,939 shares at December 31, 2018, and 25,236,604 shares at June 30, 2018

(344,901

)

(1,014,746

)

(916,484

Accumulated other comprehensive income (loss), net

49,289

(94,420

)

(125,720

Retained earnings

886,460

843,767

700,688

Total shareholders’ equity

4,753,816

3,133,602

3,167,694

Total liabilities and shareholders' equity

$

47,318,203

$

32,669,192

$

31,740,305

Synovus

AVERAGE BALANCES AND YIELDS/RATES (1)

(Unaudited)

(Dollars in thousands)

2019

2018

Second

First

Fourth

Third

Second

Quarter

Quarter

Quarter

Quarter

Quarter

Interest Earning Assets

Taxable investment securities (2)

$

6,953,278

6,515,561

4,073,685

4,061,239

4,077,564

Yield

3.04

%

3.05

2.45

2.38

2.34

Tax-exempt investment securities(2)(4)

$

2,108

20,638

—

89

115

Yield (taxable equivalent)

4.91

%

4.45

—

5.91

6.87

Trading account assets(5)

$

4,853

2,049

7,493

16,646

23,772

Yield

1.83

%

1.30

1.90

2.52

2.79

Commercial loans(3)(4)

$

26,353,973

26,140,672

19,150,252

19,025,830

18,857,271

Yield

5.13

%

5.16

5.13

4.98

4.85

Consumer loans(3)

$

9,423,427

9,180,679

6,476,026

6,298,643

6,092,899

Yield

5.17

%

5.10

4.85

4.80

4.76

Allowance for loan losses

$

(259,284

)

(252,815

)

(251,098

)

(251,684

)

(257,966

)

Loans, net(3)

$

35,518,116

35,068,536

25,375,180

25,072,789

24,692,204

Yield

5.17

%

5.17

5.11

4.99

4.88

Mortgage loans held for sale

$

70,497

34,913

36,477

49,030

50,366

Yield

4.27

%

4.48

4.79

4.71

4.42

Federal funds sold, due from Federal Reserve Bank, and other short-term investments

$

511,488

679,477

641,832

544,704

724,537

Yield

2.37

%

2.45

2.20

1.90

1.77

Federal Home Loan Bank and Federal Reserve Bank Stock(5)

$

234,949

211,408

162,369

163,568

165,845

Yield

3.29

%

4.82

4.31

4.41

4.63

Total interest earning assets

$

43,295,289

42,532,582

30,297,036

29,908,065

29,734,403

Yield

4.79

%

4.80

4.69

4.58

4.47

Interest-Bearing Liabilities

Interest-bearing demand deposits

$

6,335,953

6,393,304

4,692,804

4,701,204

5,001,826

Rate

0.71

%

0.68

0.41

0.38

0.35

Money Market accounts

$

10,024,836

10,244,556

8,050,732

7,936,621

7,791,107

Rate

1.23

%

1.18

0.89

0.72

0.55

Savings deposits

$

904,183

901,059

815,588

824,935

829,800

Rate

0.05

%

0.06

0.04

0.03

0.03

Time deposits under $100,000

$

2,245,878

2,238,568

1,242,811

1,205,987

1,161,890

Rate

1.39

%

1.24

1.16

0.99

0.82

Time deposits over $100,000

$

6,331,665

6,211,067

2,478,649

2,273,582

2,021,084

Rate

1.70

%

1.60

1.67

1.46

1.22

Non-maturing brokered deposits

$

766,718

937,629

349,480

358,277

262,976

Rate

2.46

%

2.60

2.46

2.10

1.94

Brokered time deposits

$

1,985,589

1,845,819

1,275,276

1,414,700

1,659,941

Rate

2.28

%

2.13

2.03

1.94

1.85

Total interest-bearing deposits

$

28,594,822

28,772,002

18,905,340

18,715,306

18,728,624

Rate

1.30

%

1.24

0.96

0.83

0.70

Federal funds purchased and securities sold under repurchase agreements

$

300,168

233,076

194,370

230,504

207,655

Rate

0.20

%

0.22

0.18

0.25

0.35

Other short-term borrowings

$

1,090,581

517,456

112,228

146,794

3,024

Rate

2.59

%

2.58

2.51

2.12

2.84

Long-term debt

$

2,114,819

1,983,910

1,657,022

1,656,743

1,852,094

Rate

3.53

%

3.33

3.06

2.87

2.66

Total interest-bearing liabilities

$

32,100,390

31,506,444

20,868,960

20,749,347

20,791,397

Rate

1.48

%

1.38

1.12

0.99

0.87

Non-interest-bearing demand deposits

$

9,304,839

9,054,949

8,014,761

7,672,006

7,539,451

Cost of funds

1.15

%

1.07

0.81

0.73

0.64

Net interest margin

3.69

%

3.78

3.92

3.89

3.86

Taxable equivalent adjustment

$

811

630

181

136

120

(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 21%, 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 Originated
Loans

Total Acquired
Loans (1)

Total Loans (1)

Linked
Quarter

Total Loans

Year/Year

Loan Type

June 30, 2019

June 30, 2019

June 30, 2019

March 31, 2019

% Change(2)

June 30, 2018

% Change

Commercial, Financial, and Agricultural

$

9,717,746

7,800,635

1,917,111

9,566,935

6.3

%

$

7,271,080

33.6

%

Owner-Occupied

6,529,797

5,366,404

1,163,393

6,560,681

(1.9

)

5,004,392

30.5

Total Commercial & Industrial

16,247,543

13,167,039

3,080,504

16,127,616

3.0

12,275,472

32.4

Multi-Family

2,113,938

1,342,157

771,781

2,077,666

7.0

1,358,211

55.6

Hotels

1,244,512

761,387

483,125

1,179,395

22.1

755,125

64.8

Office Buildings

2,291,617

1,495,989

795,628

2,300,671

(1.6

)

1,429,166

60.3

Shopping Centers

1,677,555

919,244

758,311

1,657,789

4.8

811,186

106.8

Warehouses

696,692

581,980

114,712

725,862

(16.1

)

602,707

15.6

Other Investment Property

980,786

826,949

153,837

979,579

0.5

553,201

77.3

Total Investment Properties

9,005,100

5,927,706

3,077,394

8,920,962

3.8

5,509,596

63.4

1-4 Family Construction

219,032

174,242

44,790

215,881

5.9

177,140

23.6

1-4 Family Investment Mortgage

528,358

469,206

59,152

549,120

(15.2

)

543,570

(2.8

)

Total 1-4 Family Properties

747,390

643,448

103,942

765,001

(9.2

)

720,710

3.7

Commercial Development

138,840

65,111

73,729

147,516

(23.6

)

61,375

126.2

Residential Development

218,850

126,827

92,023

215,814

5.6

100,246

118.3

Land Acquisition

238,267

172,750

65,517

219,146

35.0

252,244

(5.5

)

Land and Development

595,957

364,688

231,269

582,476

9.3

413,865

44.0

Total Commercial Real Estate

10,348,447

6,935,842

3,412,605

10,268,439

3.1

6,644,171

55.8

Consumer Mortgages

5,407,762

3,194,027

2,213,735

5,365,635

3.1

2,750,935

96.6

Home Equity Lines

1,650,745

1,587,854

62,891

1,606,227

11.1

1,453,855

13.5

Credit Cards

258,283

258,283

—

252,762

8.8

238,424

8.3

Other Consumer Loans

2,249,337

2,237,406

11,931

2,037,477

41.7

1,793,916

25.4

Total Consumer

9,566,127

7,277,570

2,288,557

9,262,101

13.2

6,237,130

53.4

Unearned Income

(23,556

)

(23,556

)

—

(23,655

)

(1.7

)

(22,717

)

3.7

Total

$

36,138,561

27,356,895

8,781,666

35,634,501

5.7

%

$

25,134,056

43.8

%

(1)On 1/1/19 $9.29 B of loans (at fair value) were acquired from FCB. The amounts presented in these columns are net of paydowns and payoffs since acquisition date.

(2) Percentage change is annualized.

NON-PERFORMING LOANS COMPOSITION(1)

(Unaudited)

(Dollars in thousands)

Total

Non-performing
Loans

Total Originated
Non-performing
Loans

Total Acquired
Non-performing
Loans(2)

Total
Non-performing
Loans(3)

Linked
Quarter

Total
Non-performing
Loans

Year/Year

Loan Type

June 30, 2019

June 30, 2019

June 30, 2019

March 31, 2019

% Change

June 30, 2018

% Change

Commercial, Financial, and Agricultural

$

72,934

68,573

4,361

85,917

(15.1

)%

$

81,231

(10.2

)%

Owner-Occupied

13,465

11,557

1,908

13,813

(2.5

)

6,076

121.6

Total Commercial & Industrial

86,399

80,130

6,269

99,730

(13.4

)

87,307

(1.0

)

Multi-Family

—

—

—

1,503

nm

176

nm

Hotels

—

—

—

7,346

nm

—

nm

Office Buildings

300

186

114

221

35.7

670

(55.2

)

Shopping Centers

671

613

58

676

(0.7

)

412

62.9

Warehouses

—

—

—

—

nm

21

nm

Other Investment Property

7

—

7

—

nm

459

nm

Total Investment Properties

978

799

179

9,746

(90.0

)

1,738

(43.7

)

1-4 Family Construction

208

208

—

445

(53.3

)

—

nm

1-4 Family Investment Mortgage

1,637

1,410

227

1,522

7.6

3,247

(49.6

)

Total 1-4 Family Properties

1,845

1,618

227

1,967

(6.2

)

3,247

(43.2

)

Commercial Development

—

—

—

46

nm

42

nm

Residential Development

1,253

1,253

—

1,569

(20.1

)

3,184

(60.6

)

Land Acquisition

1,482

1,482

—

1,035

43.2

1,398

6.0

Land and Development

2,735

2,735

—

2,650

3.2

4,624

(40.9

)

Total Commercial Real Estate

5,558

5,152

406

14,363

(61.3

)

9,609

(42.2

)

Consumer Mortgages

13,628

13,628

—

11,556

17.9

4,822

182.6

Home Equity Lines

13,830

13,494

336

14,078

(1.8

)

14,265

(3.0

)

Other Consumer Loans

4,667

4,667

—

4,249

9.8

1,325

252.2

Total Consumer

32,125

31,789

336

29,883

7.5

20,412

57.4

Total

$

124,082

117,071

7,011

143,976

(13.8

)%

$

117,328

5.8

%

(1) For purposes of this table, 2019 non-performing loans exclude acquired loans accounted for under ASC 310-30 that are currently accruing income.

(2) Represents loans acquired from FCB and designated as non-accrual, net of payments and dispositions since acquisition date.

(3) March 31, 2019 total non-performing loans included $23.5 million of acquired non-performing loans, net of payments since acquisition date.

Synovus

CREDIT QUALITY DATA

(Unaudited)

(Dollars in thousands)

2019

2018

Second
Quarter

Second

First

Fourth

Third

Second

'19 vs '18

Quarter

Quarter

Quarter

Quarter

Quarter

% Change

Non-performing Loans (1)

124,083

143,976

106,733

108,425

117,328

5.8

%

Impaired Loans Held for Sale (2)

631

12

1,506

12

2,733

(76.9

)

Other Real Estate

14,848

11,329

6,220

8,542

6,288

136.1

Non-performing Assets (1)

139,562

155,317

114,459

116,979

126,349

10.5

Allowance for loan losses

257,376

257,036

250,555

251,450

251,725

2.2

Net Charge-Offs - Quarter

11,778

17,088

13,044

15,257

17,829

Net Charge-Offs - YTD

28,867

17,088

50,410

37,366

22,109

Net Charge-Offs / Average Loans - Quarter (3)

0.13

%

0.19

0.20

0.24

0.29

Net Charge-Offs / Average Loans - YTD (3)

0.16

0.19

0.20

0.20

0.18

Non-performing Loans / Loans (1)

0.34

0.40

0.41

0.42

0.47

Non-performing Assets / Loans, Impaired Loans Held for Sale, & ORE (1)

0.39

0.44

0.44

0.46

0.50

Allowance / Loans

0.71

0.72

0.97

0.98

1.00

Allowance / Non-performing Loans (1)

207.42

178.53

234.75

231.91

214.55

Allowance / Non-performing Loans excluding impaired and acquired loans with no reserve

(1)

282.51

291.62

297.68

288.21

262.99

Past Due Loans over 90 days and Still Accruing (1)

$

5,851

4,486

3,798

4,856

3,222

81.6

As a Percentage of Loans Outstanding

0.02

%

0.01

0.01

0.02

0.01

Total Past Due Loans and Still Accruing (1)

$

80,792

88,135

56,927

78,323

55,614

45.3

As a Percentage of Loans Outstanding

0.22

%

0.25

0.22

0.31

0.22

Accruing Troubled Debt Restructurings (TDRs)

$

126,369

112,205

115,588

114,740

125,310

0.8

(1) For purposes of this table, 2019 non-performing loans and past due loans over 90 days exclude acquired loans accounted for under ASC 310-30 that are currently accruing income.

(2) 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.

(3) Ratio is annualized.

SELECTED CAPITAL INFORMATION (1)

(Unaudited)

(Dollars in thousands)

June 30, 2019

December 31, 2018

June 30, 2018

Tier 1 Capital

$

4,094,672

3,090,416

3,156,805

Total Risk-Based Capital

4,913,043

3,601,376

3,668,904

Common Equity Tier 1 Capital Ratio

9.61

%

9.95

10.12

Common Equity Tier 1 Ratio (fully phased-in) (5)

9.60

9.92

10.06

Tier 1 Capital Ratio

10.09

10.61

11.25

Total Risk-Based Capital Ratio

12.11

12.37

13.08

Tier 1 Leverage Ratio

8.92

9.60

10.03

Common Equity as a Percentage of Total Assets (2)

9.63

8.99

8.97

Tangible Common Equity Ratio (3) (5)

8.56

8.81

8.77

Book Value Per Common Share (4)

$

29.06

25.36

24.16

Tangible Book Value Per Common Share (3)

25.53

24.78

23.58

(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.

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Media Relations

(706) 644-0528



Investor Contact

Steve Adams

Investor Relations

(706) 641-6462

Source: Synovus Financial Corp.

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