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Synovus Announces Earnings for the Third Quarter 2019

October 22, 2019 6:30 AM

Diluted Earnings per Share of $0.83, down 1.6% vs. $0.84 in 3Q18

Adjusted Diluted Earnings per Share of $0.97, up 2.9% vs. $0.94 in 3Q18

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

Third Quarter 2019 Highlights

Third Quarter Summary

Reported

Adjusted

(dollars in thousands)

3Q19

2Q19

3Q18

3Q19

2Q19

3Q18

Net income available to common shareholders

$

127,435

$

153,034

$

99,330

$

149,732

$

158,892

$

111,504

Diluted earnings per share

0.83

0.96

0.84

0.97

1.00

0.94

Total loans

36,417,826

36,138,561

25,577,116

N/A

N/A

N/A

Total deposits

37,433,070

37,966,722

26,433,658

N/A

N/A

N/A

Total revenues

491,676

487,880

363,423

494,213

488,270

362,989

Return on avg assets

1.14

%

1.34

%

1.36

%

1.33

%

1.39

%

1.47

%

Return on avg common equity

11.36

13.90

13.95

13.35

14.43

15.66

Return on avg tangible common equity

13.19

16.09

14.33

15.46

16.70

16.08

Net interest margin

3.69

3.69

3.89

3.42

3.48

N/A

Efficiency ratio

56.20

54.14

60.62

51.71

52.08

55.55

Net charge-off ratio

0.22

0.13

0.24

N/A

N/A

N/A

NPA ratio

0.42

0.39

0.46

N/A

N/A

N/A

“Our team continues to execute on our strategic priorities, with core transaction deposit growth of $525.5 million, strong funded loan production of $2.6 billion, and solid fee income growth led by our mortgage, wealth, and capital markets teams,” said Kessel D. Stelling, Synovus chairman and CEO. “Credit quality remains strong, and we continue to focus on efficiency and expense management, the crisp execution of our FCB acquisition, talent and technology, and growth in our core business and specialty lines.”

Balance Sheet

Loans**

(dollars in millions)

3Q19

2Q19

Linked
Quarter
Change

Linked
Quarter %
Change*

3Q18

Year/Year
Change

Year/Year
% Change

Commercial & industrial

$

16,445.3

$

16,247.5

$

197.7

4.8

%

$

12,503.3

$

3,942.0

31.5

%

Commercial real estate

10,286.0

10,348.4

(62.4

)

(2.4

)

6,712.4

3,573.6

53.2

Consumer

9,709.2

9,566.1

143.1

5.9

6,385.2

3,324.0

52.1

Unearned income

(22.7

)

(23.6

)

0.9

(15.1

)

(23.8

)

1.1

(4.7

)

Total loans

$

36,417.8

$

36,138.6

$

279.3

3.1

%

$

25,577.1

$

10,840.7

42.4

%

* Annualized

** Amounts may not total due to rounding

Deposits**

(dollars in millions)

3Q19

2Q19

Linked
Quarter
Change

Linked
Quarter %
Change*

3Q18

Year/Year
Change

Year/Year
% Change

Non-interest-bearing DDA

$

8,970.2

$

8,577.6

$

392.6

18.2

%

$

6,936.7

$

2,033.5

29.3

%

Interest-bearing DDA

4,714.8

4,847.2

(132.4

)

(10.8

)

3,943.2

771.6

19.6

Money market

9,212.1

8,952.9

259.3

11.5

7,536.2

1,675.9

22.2

Savings

897.3

891.2

6.1

2.7

816.5

80.8

9.9

Public funds

3,795.3

4,351.3

(556.0

)

(50.7

)

2,024.7

1,770.6

87.5

Time deposits

6,647.8

7,343.0

(695.2

)

(37.6

)

3,492.5

3,155.3

90.3

Brokered deposits

3,195.5

3,003.5

192.0

25.4

1,683.8

1,511.7

89.8

Total deposits

$

37,433.1

$

37,966.7

$

(533.7

)

(5.6

)%

$

26,433.7

$

10,999.4

41.6

%

* Annualized

** Amounts may not total due to rounding

Income Statement Summary**

(in thousands, except per share data)

3Q19

2Q19

Linked
Quarter
Change

Linked
Quarter %
Change

3Q18

Year/Year
Change

Year/Year
% Change

Net interest income

$

402,097

$

397,262

$

4,835

1.2

%

$

291,619

$

110,478

37.9

%

Non-interest income

88,760

89,807

(1,047

)

(1.2

)%

71,668

17,092

23.8

Non-interest expense

276,310

264,126

12,184

4.6

220,297

56,013

25.4

Provision expense

27,562

12,119

15,443

127.4

14,982

12,580

84.0

Income before taxes

$

186,985

$

210,824

$

(23,839

)

(11.3

)%

$

128,008

$

58,977

46.1

%

Income tax expense

51,259

54,640

(3,381

)

(6.2

)

18,949

32,310

170.5

Preferred stock dividends

8,291

3,150

5,141

163.2

9,729

(1,438

)

(14.8

)

Net income available to common shareholders

$

127,435

$

153,034

$

(25,599

)

(16.7

)%

$

99,330

$

28,105

28.3

%

Weighted average common shares outstanding, diluted

154,043

159,077

(5,034

)

(3.2

)

118,095

35,948

30.4

%

Diluted earnings per share

$

0.83

$

0.96

$

(0.13

)

(14.0

)%

$

0.84

$

(0.01

)

(1.6

)

Adjusted diluted earnings per share

$

0.97

$

1.00

$

(0.03

)

(2.7

)%

$

0.94

$

0.03

2.9

** Amounts may not total due to rounding

nm - not meaningful

Core Performance

Capital Ratios

3Q19

2Q19

3Q18

Common equity Tier 1 capital (CET1) ratio

8.96

%

(1)

9.61

%

9.90

%

Tier 1 capital ratio

10.27

(1)

10.09

10.57

Total risk-based capital ratio

12.30

(1)

12.11

12.36

Tier 1 leverage ratio

9.02

(1)

8.89

9.58

Tangible common equity ratio(2)

8.04

8.56

8.68

(1) Ratios are preliminary

(2) Non-GAAP measure; see applicable reconciliation

Capital

Third Quarter Earnings Conference Call

Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on October 22, 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 $48 billion in assets. Synovus provides commercial and retail banking, investment, and mortgage services through 298 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 our future operating and financial performance, including our outlook for future growth; our expectations regarding net interest income and net interest margin; expectations on our growth strategy, strategic transactions, expense initiatives, capital management and future profitability; expectations on credit quality and performance; 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 gains on sales 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)

3Q19

2Q19

3Q18

Adjusted non-interest income

Total non-interest income

$

88,760

$

89,807

$

71,668

Add: Investment securities losses, net

3,731

1,845

—

Subtract: Gain on sale and fair value increase of private equity investments

(1,194

)

(1,455

)

(434

)

Adjusted non-interest income

$

91,297

$

90,197

$

71,234

Adjusted non-interest expense

Total non-interest expense

$

276,310

$

264,126

$

220,297

Subtract: Earnout liability adjustments

(10,457

)

—

(11,652

)

Subtract: Merger-related expense

(353

)

(7,401

)

(6,684

)

Add/subtract: Restructuring charges, net

66

(18

)

(21

)

Subtract: Valuation adjustment to Visa derivative

(2,500

)

—

—

Subtract: Loss on early extinguishment of debt, net

(4,592

)

—

—

Adjusted non-interest expense

$

258,474

$

256,707

$

201,940

Adjusted total revenues and adjusted tangible efficiency ratio

Adjusted non-interest expense

$

258,474

$

256,707

$

201,940

Subtract: Amortization of intangibles

(2,901

)

(2,410

)

(292

)

Adjusted tangible non-interest expense

$

255,573

$

254,297

$

201,648

Net interest income

$

402,097

$

397,262

$

291,619

Add: Tax equivalent adjustment

819

811

136

Add: Total non-interest income

88,760

89,807

71,668

Total FTE revenues

491,676

487,880

363,423

Add: Investment securities losses, net

3,731

1,845

—

Subtract: Gain on sale and fair value increase of private equity investments

(1,194

)

(1,455

)

(434

)

Adjusted total revenues

$

494,213

$

488,270

$

362,989

Efficiency ratio-FTE

56.20

%

54.14

%

60.62

%

Adjusted tangible efficiency ratio

51.71

52.08

55.55

Reconciliation of Non-GAAP Financial Measures, continued

(in thousands, except per share data)

3Q19

2Q19

3Q18

Adjusted Return on Average Assets

Net income

$

135,726

$

156,184

$

109,059

Add/subtract: Income tax expense (benefit), net related to State Tax Reform and SAB 118

4,402

—

(9,865

)

Add: Earnout liability adjustments

10,457

—

11,652

Add: Merger-related expense

353

7,401

6,684

Subtract/add: Restructuring charges, net

(66

)

18

21

Add: Valuation adjustment to Visa derivative

2,500

—

—

Add: Loss on early extinguishment of debt, net

4,592

—

—

Add: Investment securities losses, net

3,731

1,845

—

Subtract: Gain on sale and fair value increase of private equity investments

(1,194

)

(1,455

)

(434

)

Subtract/add: Tax effect of adjustments

(2,478

)

(1,951

)

96

Adjusted net income

$

158,023

$

162,042

$

117,213

Net income annualized

$

538,478

$

626,452

$

432,680

Adjusted net income annualized

$

626,939

$

649,949

$

465,030

Total average assets

$

47,211,026

$

46,679,769

$

31,725,604

Return on average assets

1.14

%

1.34

%

1.36

%

Adjusted return on average assets

1.33

1.39

1.47

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

Net income available to common shareholders

$

127,435

$

153,034

$

99,330

Add/subtract: Income tax expense (benefit), net related to State Tax Reform and SAB 118

4,402

—

(9,865

)

Add: Earnout liability adjustments

10,457

—

11,652

Add: Preferred stock redemption charge

—

—

4,020

Add: Merger-related expense

353

7,401

6,684

Subtract/add: Restructuring charges, net

(66

)

18

21

Add: Valuation adjustment to Visa derivative

2,500

—

—

Add: Loss on early extinguishment of debt, net

4,592

—

—

Add: Investment securities losses, net

3,731

1,845

—

Subtract: Gain on sale and fair value increase of private equity investments

(1,194

)

(1,455

)

(434

)

Subtract/add: Tax effect of adjustments

(2,478

)

(1,951

)

96

Adjusted net income available to common shareholders

$

149,732

$

158,892

$

111,504

Weighted average common shares outstanding, diluted

154,043

159,077

118,095

Net income per common share, diluted

$

0.83

$

0.96

$

0.84

Adjusted net income per common share, diluted

0.97

1.00

0.94

Reconciliation of Non-GAAP Financial Measures, continued

(dollars in thousands)

3Q19

2Q19

3Q18

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

$

127,435

$

153,034

$

99,330

Add/subtract: Income tax expense (benefit), net related to State Tax Reform and SAB 118

4,402

—

(9,865

)

Add: Earnout liability adjustments

10,457

—

11,652

Add: Preferred stock redemption charge

—

—

4,020

Add: Merger-related expense

353

7,401

6,684

Subtract/add: Restructuring charges, net

(66

)

18

21

Add: Valuation adjustment to Visa derivative

2,500

—

—

Add: Loss on early extinguishment of debt, net

4,592

—

—

Add: Investment securities losses, net

3,731

1,845

—

Subtract: Gain on sale and fair value increase of private equity investments

(1,194

)

(1,455

)

(434

)

Subtract/add: Tax effect of adjustments

(2,478

)

(1,951

)

96

Adjusted net income available to common shareholders

$

149,732

$

158,892

$

111,504

Adjusted net income available to common shareholders annualized

$

594,045

$

637,314

$

442,379

Add: Amortization of intangibles

8,632

7,250

886

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

$

602,677

$

644,564

$

443,265

Net income available to common shareholders annualized

$

505,585

$

613,818

$

394,081

Add: Amortization of intangibles

8,632

7,250

886

Net income available to common shareholders excluding amortization of intangibles annualized

$

514,217

$

621,068

$

394,967

Total average shareholders' equity less preferred stock

$

4,450,301

$

4,416,705

$

2,824,707

Subtract: Goodwill

(492,320

)

(487,601

)

(57,315

)

Subtract: Other intangible assets, net

(60,278

)

(69,853

)

(10,265

)

Total average tangible shareholders' equity less preferred stock

$

3,897,703

$

3,859,251

$

2,757,127

Return on average common equity

11.36

%

13.90

%

13.95

%

Adjusted return on average common equity

13.35

14.43

15.66

Return on average tangible common equity

13.19

16.09

14.33

Adjusted return on average tangible common equity

15.46

16.70

16.08

Reconciliation of Non-GAAP Financial Measures, continued

September 30,

June 30,

September 30,

(dollars in thousands)

2019

2019

2018

Tangible Common Equity Ratio

Total assets

$

47,661,182

$

47,318,203

$

32,075,120

Subtract: Goodwill

(487,865

)

(492,390

)

(57,315

)

Subtract: Other intangible assets, net

(58,572

)

(61,473

)

(10,166

)

Tangible assets

$

47,114,745

$

46,764,340

$

32,007,639

Total shareholders’ equity

$

4,868,838

$

4,753,816

$

3,040,073

Subtract: Goodwill

(487,865

)

(492,390

)

(57,315

)

Subtract: Other intangible assets, net

(58,572

)

(61,473

)

(10,166

)

Subtract: Preferred Stock, no par value

(536,550

)

(195,140

)

(195,138

)

Tangible common equity

$

3,785,851

$

4,004,813

$

2,777,454

Total shareholders’ equity to total assets ratio

10.22

%

10.05

%

9.48

%

Tangible common equity ratio

8.04

8.56

8.68

Reconciliation of Non-GAAP Financial Measures, continued

September 30,

(dollars in thousands)

2019

CET1 capital ratio (fully phased-in)

CET1 capital

$

3,660,078

Total risk-weighted assets

$

40,844,402

Total risk-weighted assets (fully phased-in)

$

40,912,808

CET1 capital ratio

8.96

%

CET1 capital ratio (fully phased-in)

8.95

Synovus

INCOME STATEMENT DATA

(Unaudited)

Nine Months Ended

(Dollars in thousands, except per share data)

September 30,

2019

2018

% Change

Interest income

$

1,544,385

$

986,911

56.5

%

Interest expense

347,850

136,431

155.0

Net interest income

1,196,535

850,480

40.7

Provision for loan losses

63,250

39,548

59.9

Net interest income after provision for loan losses

1,133,285

810,932

39.8

Non-interest income:

Service charges on deposit accounts

65,805

60,521

8.7

Fiduciary and asset management fees

42,743

40,881

4.6

Card fees

34,334

31,640

8.5

Brokerage revenue

30,502

26,125

16.8

Mortgage banking income

23,313

15,177

53.6

Capital markets income

21,557

3,826

463.4

Income from bank-owned life insurance

15,605

11,720

33.1

Investment securities losses, net

(5,502

)

(1,296

)

nm

Gain on sale and fair value increase/(decrease) of private equity

investments

3,507

(2,659

)

nm

Other non-interest income

26,081

26,166

(0.3

)

Total non-interest income

257,945

212,101

21.6

Non-interest expense:

Salaries and other personnel expense

424,952

339,924

25.0

Net occupancy and equipment expense

119,262

96,222

23.9

Third-party processing expense

55,403

43,822

26.4

Professional fees

25,379

18,087

40.3

FDIC insurance and other regulatory fees

21,872

19,765

10.7

Advertising expense

16,996

14,046

21.0

Amortization of intangibles

8,702

875

nm

Merger-related expense

57,493

6,684

nm

Earnout liability adjustments

10,457

11,652

(10.3

)

Loss on early extinguishment of debt, net

4,592

—

nm

Valuation adjustment to Visa derivative

2,500

2,328

7.4

Other operating expenses

85,239

66,126

28.9

Total non-interest expense

832,847

619,531

34.4

Income before income taxes

558,383

403,502

38.4

Income tax expense

146,287

80,095

82.6

Net income

412,096

323,407

27.4

Less: Preferred stock dividends and redemption charge

14,591

14,848

(1.7

)

Net income available to common shareholders

$

397,505

$

308,559

28.8

%

Net income per common share, basic

2.53

2.61

(3.0

)%

Net income per common share, diluted

2.51

2.60

(3.5

)

Cash dividends declared per common share

0.90

0.75

20.0

Return on average assets*

1.18

%

1.37

(19

)bps

Return on average common equity*

12.09

14.65

(256

)

Weighted average common shares outstanding, basic

156,819

118,096

32.8

%

Weighted average common shares outstanding, diluted

158,595

118,847

33.4

nm - not meaningful

bps - basis points

* - ratios are annualized

Synovus

INCOME STATEMENT DATA

(Unaudited)

(Dollars in thousands, except per share data)

2019

2018

Third
Quarter

Third
Quarter

Second
Quarter

First
Quarter

Fourth
Quarter

Third
Quarter

'19 vs '18

% Change

Interest income

$

523,415

516,131

504,839

357,394

343,942

52.2

%

Interest expense

121,318

118,869

107,664

59,461

52,323

131.9

Net interest income

402,097

397,262

397,175

297,933

291,619

37.9

Provision for loan losses

27,562

12,119

23,569

12,148

14,982

84.0

Net interest income after provision for loan losses

374,535

385,143

373,606

285,785

276,637

35.4

Non-interest income:

Service charges on deposit accounts

22,952

21,994

20,859

20,320

20,582

11.5

Fiduciary and asset management fees

14,686

14,478

13,578

13,805

13,462

9.1

Card fees

12,297

11,161

10,877

10,862

10,608

15.9

Brokerage revenue

11,071

10,052

9,379

9,241

9,041

22.5

Mortgage banking income

10,351

7,907

5,054

3,781

5,290

95.7

Capital markets income

7,396

8,916

5,245

1,977

1,155

540.3

Income from bank-owned life insurance

5,139

5,176

5,290

3,682

3,771

36.3

Investment securities (losses)/gains, net

(3,731

)

(1,845

)

75

—

—

nm

Gain on sale and fair value increase/(decrease) of private equity investments

1,194

1,455

858

(2,084

)

434

nm

Other non-interest income

7,405

10,513

8,163

6,407

7,325

1.1

Total non-interest income

88,760

89,807

79,378

67,991

71,668

23.8

Non-interest expense:

Salaries and other personnel expense

142,516

143,009

139,427

113,496

114,341

24.6

Net occupancy and equipment expense

41,017

39,851

38,394

34,260

32,088

27.8

Third-party processing expense

18,528

19,118

17,758

14,803

14,810

25.1

Professional Fees

9,719

9,312

6,348

8,650

6,298

54.3

FDIC insurance and other regulatory fees

7,242

7,867

6,761

4,728

6,430

12.6

Advertising expense

5,950

5,923

5,123

6,834

3,735

59.3

Amortization of intangibles

2,901

2,410

3,392

292

292

nm

Merger-related expense

353

7,401

49,738

3,381

6,684

nm

Earnout liability adjustments

10,457

—

—

—

11,652

(10.3

)

Loss on early extinguishment of debt, net

4,592

—

—

—

—

nm

Valuation adjustment to Visa derivative

2,500

—

—

—

—

nm

Other operating expenses

30,535

29,235

25,469

23,478

23,967

27.4

Total non-interest expense

276,310

264,126

292,410

209,922

220,297

25.4

Income before income taxes

186,985

210,824

160,574

143,854

128,008

46.1

Income tax expense

51,259

54,640

40,388

38,784

18,949

170.5

Net income

135,726

156,184

120,186

105,070

109,059

24.5

Less: Preferred stock dividends and redemption charge

8,291

3,150

3,150

3,151

9,729

(14.8

)

Net income available to common shareholders

$

127,435

153,034

117,036

101,919

99,330

28.3

Net income per common share, basic

$

0.84

0.97

0.73

0.88

0.85

(1.2

)%

Net income per common share, diluted

0.83

0.96

0.72

0.87

0.84

(1.6

)

Cash dividends declared per common share

0.30

0.30

0.30

0.25

0.25

20.0

Return on average assets *

1.14

%

1.34

1.06

1.29

1.36

(22

)bps

Return on average common equity *

11.36

13.90

10.98

14.25

13.95

(259

)

Weighted average common shares outstanding, basic

152,238

157,389

160,927

116,303

117,241

29.9

%

Weighted average common shares outstanding, diluted

154,043

159,077

162,760

116,986

118,095

30.4

nm - not meaningful

bps - basis points

* - ratios are annualized

Synovus

BALANCE SHEET DATA

September 30, 2019

December 31, 2018

September 30, 2018

(Unaudited)

(In thousands, except share data)

ASSETS

Cash and due from banks

$

611,496

$

468,426

$

436,540

Interest-bearing funds with Federal Reserve Bank

480,913

641,476

515,493

Interest earning deposits with banks

20,086

19,841

34,470

Federal funds sold and securities purchased under resale agreements

69,975

13,821

25,430

Cash and cash equivalents

1,182,470

1,143,564

1,011,933

Investment securities available for sale, at fair value

6,892,162

3,991,632

3,883,574

Mortgage loans held for sale, at fair value

129,415

37,129

37,276

Loans

36,417,826

25,946,573

25,577,116

Allowance for loan losses

(265,013

)

(250,555

)

(251,450

)

Loans, net

36,152,813

25,696,018

25,325,666

Cash surrender value of bank-owned life insurance

771,458

554,134

551,061

Premises and equipment, net

487,053

434,307

431,012

Goodwill

487,865

57,315

57,315

Other intangible assets

58,572

9,875

10,166

Other assets

1,499,374

745,218

767,117

Total assets

$

47,661,182

$

32,669,192

$

32,075,120

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:

Deposits:

Non-interest-bearing deposits

$

9,586,148

$

7,650,967

$

7,628,736

Interest-bearing deposits

27,846,922

19,069,355

18,804,922

Total deposits

37,433,070

26,720,322

26,433,658

Federal funds purchased and securities sold under repurchase agreements

197,419

237,692

191,145

Other short-term borrowings

2,233,593

650,000

478,540

Long-term debt

2,153,600

1,657,157

1,656,909

Other liabilities

774,662

270,419

274,795

Total liabilities

42,792,344

29,535,590

29,035,047

Shareholders' equity:

Preferred stock - no par value. Authorized 100,000,000 shares;

22,000,000 shares issued and outstanding at September 30, 2019, 8,000,000 shares issued and outstanding at December 31, 2018 and September 30, 2018

536,550

195,140

195,138

Common stock - $1.00 par value. Authorized 342,857,143 shares; 166,201,048 issued at September 30, 2019, 143,300,449 issued at December 31, 2018, and 143,093,317 issued at September 30, 2018; 147,594,000 outstanding at September 30, 2019, 115,865,510 outstanding at December 31, 2018, and 116,714,463 outstanding at September 30, 2018

166,201

143,300

143,093

Additional paid-in capital

3,801,158

3,060,561

3,049,233

Treasury stock, at cost – 18,607,048 shares at September 30, 2019, 27,434,939 shares at December 31, 2018, and 26,378,854 shares at September 30, 2018

(680,081

)

(1,014,746

)

(974,478

)

Accumulated other comprehensive income (loss), net

75,933

(94,420

)

(143,720

)

Retained earnings

969,077

843,767

770,807

Total shareholders’ equity

4,868,838

3,133,602

3,040,073

Total liabilities and shareholders' equity

$

47,661,182

$

32,669,192

$

32,075,120

Synovus

AVERAGE BALANCES AND YIELDS/RATES (1)

(Unaudited)

(Dollars in thousands)

2019

2018

Third

Second

First

Fourth

Third

Quarter

Quarter

Quarter

Quarter

Quarter

Interest Earning Assets

Investment securities (2) (4)

$

6,831,036

6,955,386

6,536,199

4,073,685

4,061,328

Yield

3.14

%

3.03

3.06

2.45

2.39

Trading account assets (5)

$

5,519

4,853

2,049

7,493

16,646

Yield

4.01

%

1.83

1.30

1.90

2.52

Commercial loans (3) (4)

$

26,568,194

26,353,973

26,140,672

19,150,252

19,025,830

Yield

5.09

%

5.13

5.16

5.13

4.98

Consumer loans (3)

$

9,633,603

9,423,427

9,180,679

6,476,026

6,298,643

Yield

5.08

%

5.17

5.10

4.85

4.80

Allowance for loan losses

$

(258,024

)

(259,284

)

(252,815

)

(251,098

)

(251,684

)

Loans, net (3)

$

35,943,773

35,518,116

35,068,536

25,375,180

25,072,789

Yield

5.13

%

5.17

5.17

5.11

4.99

Mortgage loans held for sale

$

99,556

70,497

34,913

36,477

49,030

Yield

3.93

%

4.27

4.48

4.79

4.71

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

$

513,160

511,488

679,477

641,832

544,704

Yield

2.08

%

2.37

2.45

2.20

1.90

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

$

254,994

234,949

211,408

162,369

163,568

Yield

3.85

%

3.29

4.82

4.31

4.41

Total interest earning assets

$

43,648,038

43,295,289

42,532,582

30,297,036

29,908,065

Yield

4.78

%

4.79

4.80

4.69

4.58

Interest-Bearing Liabilities

Interest-bearing demand deposits

$

6,138,810

6,335,953

6,393,304

4,692,804

4,701,204

Rate

0.69

%

0.71

0.68

0.41

0.38

Money Market accounts

$

10,138,783

10,024,836

10,244,556

8,050,732

7,936,621

Rate

1.26

%

1.23

1.18

0.89

0.72

Savings deposits

$

900,366

904,183

901,059

815,588

824,935

Rate

0.05

%

0.05

0.06

0.04

0.03

Time deposits under $100,000

$

2,100,492

2,245,878

2,238,568

1,242,811

1,205,987

Rate

1.39

%

1.39

1.24

1.16

0.99

Time deposits over $100,000

$

5,957,691

6,331,665

6,211,067

2,478,649

2,273,582

Rate

1.69

%

1.70

1.60

1.67

1.46

Non-maturing brokered deposits

$

993,078

766,718

937,629

349,480

358,277

Rate

2.47

%

2.46

2.60

2.46

2.10

Brokered time deposits

$

2,119,149

1,985,589

1,845,819

1,275,276

1,414,700

Rate

2.27

%

2.28

2.13

2.03

1.94

Total interest-bearing deposits

$

28,348,369

28,594,822

28,772,002

18,905,340

18,715,306

Rate

1.32

%

1.30

1.24

0.96

0.83

Federal funds purchased and securities sold under repurchase agreements

$

221,045

300,168

233,076

194,370

230,504

Rate

0.22

%

0.20

0.22

0.18

0.25

Other short-term borrowings

$

1,307,370

1,090,581

517,456

112,228

146,794

Rate

2.31

%

2.59

2.58

2.51

2.12

Long-term debt

$

2,286,221

2,114,819

1,983,910

1,657,022

1,656,743

Rate

3.32

%

3.53

3.33

3.06

2.87

Total interest-bearing liabilities

$

32,163,005

32,100,390

31,506,444

20,868,960

20,749,347

Rate

1.47

%

1.48

1.38

1.12

0.99

Non-interest-bearing demand deposits

$

9,365,776

9,304,839

9,054,949

8,014,761

7,672,006

Cost of funds

1.16

%

1.15

1.07

0.81

0.73

Net interest margin

3.69

%

3.69

3.78

3.92

3.89

Taxable equivalent adjustment

$

819

811

630

181

136

(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

September 30,
2019

September 30,
2019

September 30,
2019

June 30, 2019

% Change (2)

September 30,
2018

% Change

Commercial, Financial, and Agricultural

$

9,855,881

$

8,085,060

$

1,770,821

$

9,717,746

5.6

%

$

7,281,466

35.4

%

Owner-Occupied

6,589,391

5,588,970

1,000,421

6,529,797

3.6

5,221,828

26.2

Total Commercial & Industrial

16,445,272

13,674,030

2,771,242

16,247,543

4.8

12,503,294

31.5

Multi-Family

2,164,629

1,446,034

718,595

2,113,938

9.5

1,330,006

62.8

Hotels

1,267,790

778,882

488,908

1,244,512

7.4

760,885

66.6

Office Buildings

2,157,186

1,420,951

736,235

2,291,617

(23.3

)

1,368,608

57.6

Shopping Centers

1,683,848

939,346

744,502

1,677,555

1.5

815,696

106.4

Warehouses

676,202

580,015

96,187

696,692

(11.7

)

679,184

(0.4

)

Other Investment Property

985,108

893,131

91,977

980,786

1.7

711,311

38.5

Total Investment Properties

8,934,763

6,058,359

2,876,404

9,005,100

(3.1

)

5,665,690

57.7

1-4 Family Construction

221,905

168,918

52,987

219,032

5.2

183,044

21.2

1-4 Family Investment Mortgage

516,859

471,206

45,653

528,358

(8.6

)

524,152

(1.4

)

Total 1-4 Family Properties

738,764

640,124

98,640

747,390

(4.6

)

707,196

4.5

Commercial Development

124,213

61,209

63,004

138,840

(41.8

)

61,608

101.6

Residential Development

224,662

138,704

85,958

218,850

10.5

91,578

145.3

Land Acquisition

263,631

207,921

55,710

238,267

42.2

186,334

41.5

Land and Development

612,506

407,834

204,672

595,957

11.0

339,520

80.4

Total Commercial Real Estate

10,286,033

7,106,317

3,179,716

10,348,447

(2.4

)

6,712,406

53.2

Consumer Mortgages

5,470,730

3,398,720

2,072,010

5,407,762

4.6

2,843,244

92.4

Home Equity Lines

1,675,092

1,616,063

59,029

1,650,745

5.9

1,465,419

14.3

Credit Cards

267,874

267,874

—

258,283

14.7

245,149

9.3

Other Consumer Loans

2,295,486

2,285,319

10,167

2,249,337

8.1

1,831,385

25.3

Total Consumer

9,709,182

7,567,976

2,141,206

9,566,127

5.9

6,385,197

52.1

Unearned Income

(22,661

)

(22,661

)

—

(23,556

)

(15.1

)

(23,781

)

(4.7

)

Total

$

36,417,826

$

28,325,662

$

8,092,164

$

36,138,561

3.1

%

$

25,577,116

42.4

%

(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

September 30,
2019

September 30,
2019

September 30,
2019

June 30, 2019

% Change

September 30,
2018

% Change

Commercial, Financial, and Agricultural

$

73,672

$

64,912

$

8,760

$

72,934

1.0

%

$

69,010

6.8

%

Owner-Occupied

9,222

9,222

—

13,465

(31.5

)

5,708

61.6

Total Commercial & Industrial

82,894

74,134

8,760

86,399

(4.1

)

74,718

10.9

Multi-Family

—

—

—

—

—

234

nm

Hotels

—

—

—

—

—

—

—

Office Buildings

290

238

52

300

(3.3

)

166

74.7

Shopping Centers

140

140

—

671

(79.1

)

89

57.3

Warehouses

—

—

—

—

—

—

—

Other Investment Property

—

—

—

7

nm

1,666

nm

Total Investment Properties

430

378

52

978

(56.0

)

2,155

(80.0

)

1-4 Family Construction

698

698

—

208

235.6

—

nm

1-4 Family Investment Mortgage

1,520

1,520

—

1,637

(7.1

)

3,139

(51.6

)

Total 1-4 Family Properties

2,218

2,218

—

1,845

20.2

3,139

(29.3

)

Commercial Development

87

87

—

—

—

42

107.1

Residential Development

1,526

1,526

—

1,253

21.8

3,184

(52.1

)

Land Acquisition

1,419

1,419

—

1,482

(4.3

)

1,603

(11.5

)

Land and Development

3,032

3,032

—

2,735

10.9

4,829

(37.2

)

Total Commercial Real Estate

5,680

5,628

52

5,558

2.2

10,123

(43.9

)

Consumer Mortgages

10,015

10,015

—

13,628

(26.5

)

5,313

88.5

Home Equity Lines

12,590

12,590

—

13,830

(9.0

)

14,498

(13.2

)

Other Consumer Loans

4,736

4,736

—

4,668

1.5

3,773

25.5

Total Consumer

27,341

27,341

—

32,126

(14.9

)

23,584

15.9

Total

$

115,915

$

107,103

$

8,812

$

124,083

(6.6

)%

$

108,425

6.9

%

(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) June 30, 2019 total non-performing loans included $7.0 million of acquired non-performing loans, net of payments and dispositions since acquisition date.

Synovus

CREDIT QUALITY DATA

(Unaudited)

(Dollars in thousands)

2019

2018

Third
Quarter

Third

Second

First

Fourth

Third

'19 vs '18

Quarter

Quarter

Quarter

Quarter

Quarter

% Change

Non-performing Loans (1)

$

115,915

124,083

143,976

106,733

108,425

6.9

%

Other Real Estate and Other Assets

35,400

15,479

11,341

7,726

8,554

313.8

%

Non-performing Assets (1)

151,315

139,562

155,317

114,459

116,979

29.4

Allowance for Loan Losses

265,013

257,376

257,036

250,555

251,450

5.4

Net Charge-Offs - Quarter

19,924

11,778

17,088

13,044

15,257

Net Charge-Offs - YTD

48,791

28,867

17,088

50,410

37,366

Net Charge-Offs / Average Loans - Quarter (2)

0.22

%

0.13

0.19

0.20

0.24

Net Charge-Offs / Average Loans - YTD (2)

0.18

0.16

0.19

0.20

0.20

Non-performing Loans / Loans (1)

0.32

0.34

0.40

0.41

0.42

Non-performing Assets / Loans, ORE and specific other assets (1)

0.42

0.39

0.44

0.44

0.46

Allowance / Loans

0.73

0.71

0.72

0.97

0.98

Allowance / Non-performing Loans (1)

228.63

207.42

178.53

234.75

231.91

Allowance / Non-performing Loans excluding impaired and acquired loans with no reserve (1)

363.63

282.51

291.62

297.68

288.21

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

$

15,660

5,851

4,486

3,798

4,856

222.5

As a Percentage of Loans Outstanding

0.04

%

0.02

0.01

0.01

0.02

Total Past Due Loans and Still Accruing (1)

$

88,219

80,792

88,135

56,927

78,323

12.6

As a Percentage of Loans Outstanding

0.24

%

0.22

0.25

0.22

0.31

Accruing Troubled Debt Restructurings (TDRs)

$

130,019

126,369

112,205

115,588

114,740

13.3

(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) Ratio is annualized.

SELECTED CAPITAL INFORMATION (1)

(Unaudited)

(Dollars in thousands)

September 30,
2019

December 31,
2018

September 30,
2018

Tier 1 Capital

$

4,196,628

3,090,416

3,038,768

Total Risk-Based Capital

5,023,138

3,601,376

3,550,686

Common Equity Tier 1 Capital Ratio

8.96

%

9.95

9.90

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

8.95

9.92

9.86

Tier 1 Capital Ratio

10.27

10.61

10.57

Total Risk-Based Capital Ratio

12.30

12.37

12.36

Tier 1 Leverage Ratio

9.02

9.60

9.58

Common Equity as a Percentage of Total Assets (2)

9.09

8.99

8.87

Tangible Common Equity Ratio (3) (5)

8.04

8.81

8.68

Book Value Per Common Share (4)

$

29.35

25.36

24.38

Tangible Book Value Per Common Share (3)

25.65

24.78

23.80

(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.

Media Contact

Lee Underwood

Media Relations

(706) 644-0528

Investor Contact

Steve Adams

Investor Relations

(706) 641-6462

Source: Synovus Financial Corp.

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