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Section 1: 8-K (FORM 8-K)

Document


SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934

October 23, 2018
Date of Report
(Date of Earliest Event Reported)

Synovus Financial Corp.
(Exact Name of Registrant as Specified in its Charter)

Georgia
(State of Incorporation)
1-10312
(Commission File Number)
58-1134883
(IRS Employer Identification No.)

1111 Bay Avenue, Suite 500, Columbus, Georgia 31901
(Address of principal executive offices) (Zip Code)

(706) 649-2311
(Registrant’s telephone number, including area code)

________________________________________________
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

□    Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

□    Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

□    Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

□    Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company □

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided
pursuant to Section 13(a) of the Exchange Act. □






Item 2.02
Results of Operations and Financial Condition
 
 
 
 
On October 23, 2018, Synovus Financial Corp. (the “Company”) issued a press release announcing the Company’s financial results for the three and nine month period ended September 30, 2018.
 
 
 
 
Pursuant to General Instruction F to Current Report on Form 8-K, the press release is attached to this Current Report as Exhibit 99.1 and only those portions of the press release related to the historical results of operations of the Company for the three and nine month period ended September 30, 2018 are incorporated into this Item 2.02 by reference. The information contained in this Item 2.02, including the information set forth in the press release filed as Exhibit 99.1 to, and incorporated in, this Current Report is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section. The information in Exhibit 99.1 furnished pursuant to this Item 2.02 shall not be incorporated by reference into any registration statement or other documents pursuant to the Securities Act of 1933, as amended (the “Securities Act”), or into any filing or other document pursuant to the Exchange Act except as otherwise expressly stated in any such filing.

Item 7.01
Regulation FD Disclosure
 
 
 
 
On October 23, 2018, the Company made available the supplemental information (the “Supplemental Information”) and slide presentation (“Slide Presentation”) prepared for use with the press release. The investor call and webcast will be held at 8:30 a.m., ET, on October 23, 2018.
 
 
 
 
The information contained in this Item 7.01 of this Current Report, including the information set forth in the Supplemental Information and the Slide Presentation filed as Exhibits 99.2 and Exhibit 99.3 to, and incorporated in, this Current Report, is being “furnished” and shall not be deemed “filed” for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section. The information in Exhibit 99.2 and Exhibit 99.3 furnished pursuant to this Item 7.01 shall not be incorporated by reference into any registration statement or other documents pursuant to the Securities Act or into any filing or other document pursuant to the Exchange Act except as otherwise expressly stated in any such filing.

Item 9.01
Financial Statements and Exhibits
 
 
 
 
(d)
Exhibits
 
 
 
 
Exhibit No.
Description
 
 
 
 
99.1
 
 
 
 
99.2
 
 
 
 
99.3






Signature


Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, Synovus has caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

SYNOVUS FINANCIAL CORP.
(“Synovus”)


Dated: October 23, 2018
By: /s/ Allan E. Kamensky            
Allan E. Kamensky    
Executive Vice President, General Counsel and Secretary



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Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1
395437435_synovus.jpg
Media Contact
 
Investor Contact
Lee Underwood
 
Steve Adams
Media Relations
 
Investor Relations
(706) 644-0528
 
(706) 641-6462

Synovus Announces Earnings for the Third Quarter 2018
Diluted Earnings per Share of $0.84 vs. $0.78 in 3Q17
Adjusted Diluted Earnings per Share of $0.95, up 46% vs. 3Q17

COLUMBUS, Ga., October 23, 2018 - Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter ended September 30, 2018.

Third Quarter Highlights

Net income available to common shareholders was $99.3 million or $0.84 per diluted share as compared to $108.6 million or $0.91 per diluted share for the second quarter 2018 and $95.4 million or $0.78 per diluted share for the third quarter 2017.
Adjusted diluted earnings per share were $0.95 as compared to $0.92 for the second quarter 2018 and $0.65 for the third quarter 2017.
Return on average assets was 1.36% and adjusted return on average assets was 1.47%.
Return on average common equity was 13.95%, adjusted return on average common equity was 15.69%, and adjusted return on average tangible common equity was 16.08%.
Total loans ended the quarter at $25.58 billion, up $443.1 million or 7.0% annualized from the previous quarter and up $1.09 billion or 4.5% as compared to the third quarter 2017.
Total average deposits grew $119.2 million or 1.8% annualized from the previous quarter and $1.10 billion or 4.4% as compared to the third quarter 2017.
Net interest margin was 3.89%, up 3 basis points from the previous quarter and up 26 basis points from the third quarter 2017.
Efficiency ratio was 60.62%, compared to 56.78% in the second quarter 2018 and 50.62% in the prior-year quarter. Adjusted efficiency ratio was 55.55%, versus 56.41% in the previous quarter and 58.59% in the third quarter 2017.
Credit quality metrics remained favorable, with a non-performing asset ratio of 46 basis points, down 4 basis points from the previous quarter and down 11 basis points from the third quarter 2017.
The effective year-to-date tax rate through the third quarter 2018 was 19.8% compared to 34.6% in the prior-year quarter.






“Our team again delivered solid performance during the third quarter, achieving broad-based loan growth, margin expansion, and sustained positive operating leverage,” said Kessel Stelling, Synovus chairman and CEO. “We also celebrated the recent recognition of our company as one of American Banker’s Best Places to Work, driven by our people-centered culture. We expect a strong finish in 2018 as our investments in talent, capabilities, and specialized lines of business drive meaningful growth, and we look forward to welcoming Florida Community Bank customers and team members to Synovus early next year.”  

Balance Sheet

Total loans ended the quarter at $25.58 billion, up $443.1 million or 7.0% annualized from the previous quarter and up $1.09 billion or 4.5% as compared to the third quarter 2017.
Commercial and industrial loans grew by $227.8 million or 7.4% annualized from the previous quarter and $776.2 million or 6.6% as compared to the third quarter 2017.
Consumer loans grew by $148.1 million or 9.4% annualized from the previous quarter and $827.6 million or 14.9% as compared to the third quarter 2017.
Commercial real estate loans grew $68.2 million or 4.1% annualized from the previous quarter and declined $514.5 million or 7.1% as compared to the third quarter 2017.
Total average loans were $25.32 billion, up $376.3 million or 6.0% annualized from the previous quarter and up $822.7 million or 3.4% as compared to the third quarter 2017.
Total average deposits were $26.39 billion, up $119.2 million or 1.8% annualized from the previous quarter and up $1.10 billion or 4.4% as compared to the third quarter 2017.
Excluding brokered deposits, average deposits increased $269.2 million or 4.4% annualized from the previous quarter.

Core Performance

Total revenues were $363.3 million, up $4.0 million from the previous quarter and down $34.7 million or 8.7% from the third quarter 2017.
Adjusted total revenues were $363.0 million, up $3.6 million from the previous quarter and up $31.7 million or 9.6% from the third quarter 2017.
Net interest income was $291.6 million, up $7.0 million or 2.5% from the previous quarter and up 11.1% from the third quarter 2017.
Net interest margin was 3.89%, up 3 basis points from the previous quarter. Yield on earning assets was 4.58%, up 11 basis points from the previous quarter, and the effective cost of funds was 0.69%, up 8 basis points from the previous quarter.
Total non-interest income was $71.7 million, down $1.7 million from the previous quarter and down $63.7 million from the third quarter 2017, which included the $75 million Cabela’s transaction fee, partially offset by $8.0 million in investment securities losses.





Adjusted non-interest income was $71.2 million, down $3.5 million or 4.7% from the previous quarter and up $2.8 million or 4.1% year-over-year.
Core banking fees1 were $35.7 million, down $1.7 million or 4.7% from the previous quarter and flat from third quarter 2017.
Fiduciary and asset management fees, brokerage revenue, and insurance revenues were $23.9 million, down $825 thousand from the previous quarter and up $2.8 million or 13.0% from the prior-year quarter.
Mortgage banking income was $5.3 million, up 9.3% from the previous quarter and down 5.6% from the third quarter 2017.
Total non-interest expense was $220.3 million, up $16.2 million or 8.0% from the previous quarter and up 7.1% year-over-year.
Adjusted non-interest expense was $201.6 million, a decline of $1.1 million from the previous quarter and an increase of $7.5 million or 3.9% from the third quarter 2017.
Employment expense of $114.3 million increased 2.2% from the previous quarter and increased 4.3% from the third quarter 2017.
Occupancy and equipment expense of $32.1 million declined 1.7% from the previous quarter and increased 5.0% from the prior-year quarter.
Adjusted other expenses of $55.2 million decreased $3.0 million or 5.1% from the previous quarter and increased 2.5% from the third quarter 2017.
Efficiency ratio was 60.62%, compared to 56.78% in the second quarter 2018 and 50.62% in the prior-year quarter.  
Adjusted efficiency ratio was 55.55%, versus 56.41% in the previous quarter and 58.59% in the third quarter 2017.

Credit Quality

Non-performing loans were $108.4 million at September 30, 2018, down $8.9 million or 7.6% from June 30, 2018, and up $10.6 million or 10.8% from September 30, 2017. The non-performing loan ratio was 0.42% at September 30, 2018, compared to 0.47% at June 30, 2018, and 0.40% at September 30, 2017.
Total non-performing assets were $117.0 million at September 30, 2018, down $9.4 million or 7.4% from June 30, 2018, and down $21.6 million or 15.6% from September 30, 2017. The non-performing asset ratio was 0.46% at September 30, 2018, as compared to 0.50% at June 30, 2018, and 0.57% at September 30, 2017.
Net charge-offs were $15.3 million in the third quarter 2018, down $2.5 million from the previous quarter and down $23.2 million from $38.1 million in the third quarter 2017. The annualized net charge-off ratio was 0.24% in the third quarter as compared to 0.29% in the previous quarter.

________________________________ 
1 Core banking fees include service charges on deposit accounts, card fees, letter of credit fees, ATM fee income, line of credit non-usage fees, gains from sales of government guaranteed loans, and miscellaneous other service charges.





Total delinquencies (consisting of loans 30 or more days past due and still accruing) remained low at 0.31% of total loans at September 30, 2018, up from 0.22% in the previous quarter and down 4 basis points from September 30, 2017.

Capital Ratios

Ratios reflect repurchase of $58 million in common stock during the third quarter.
We anticipate that the full share repurchase authorization of $150 million will be completed by October 26, 2018.
On August 1, 2018, Synovus redeemed all of its outstanding Series C Preferred Stock.
Common Equity Tier 1 ratio was 9.92% at September 30, 2018, compared to 10.06% at September 30, 2017.
Tier 1 Capital ratio was 10.59% at September 30, 2018, compared to 10.43% at September 30, 2017.
Total Risk Based Capital ratio was 12.37% at September 30, 2018, compared to 12.30% at September 30, 2017.
Tier 1 Leverage ratio was 9.58% at September 30, 2018, compared to 9.34% at September 30, 2017.
Tangible Common Equity ratio was 8.68% at September 30, 2018, compared to 8.88% at September 30, 2017.

Third Quarter Earnings Conference Call
Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on October 23, 2018. The earnings call will be accompanied by a slide presentation. Shareholders and other interested parties may listen to this conference call via simultaneous Internet broadcast. For a link to the webcast, go to investor.synovus.com/event. The replay will be archived for 12 months and will be available 30-45 minutes after the call.

Synovus Financial Corp. is a financial services company based in Columbus, Georgia, with approximately $32 billion in assets. Synovus provides commercial and retail banking, investment, and mortgage services through 249 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 10 “Most Reputable Banks” by American Banker and the Reputation Institute for four consecutive years. 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 deposits, loan growth and the net interest margin; expectations on our growth strategy, strategic transactions, expense initiatives, capital management and future profitability; expectations on credit trends and key credit metrics; and the assumptions underlying our expectations. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties which may cause the actual results, performance or achievements of Synovus to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on the information known to, and current beliefs and expectations of, Synovus’ management





and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. A number of factors could cause actual results to differ materially from those contemplated by the forward-looking statements in this press release. Many of these factors are beyond Synovus’ ability to control or predict.

These forward-looking statements are based upon information presently known to Synovus’ management and are inherently subjective, uncertain and subject to change due to any number of risks and uncertainties, including, without limitation, the risks and other factors set forth in Synovus’ filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2017, under the captions “Cautionary Notice Regarding Forward-Looking Statements” and “Risk Factors” and in Synovus’ quarterly reports on Form 10-Q and current reports on Form 8-K. We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations and speak only as of the date that they are made. We do not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise, except as otherwise may be required by law.

Non-GAAP Financial Measures

The measures entitled adjusted non-interest income; adjusted non-interest expense; adjusted other expenses; adjusted total revenues; adjusted efficiency ratio; adjusted earnings per diluted share; adjusted return on average assets; adjusted return on average common equity; adjusted return on average tangible common equity; tangible common equity ratio; and common equity Tier 1 (CET1) ratio (fully phased-in) are not measures recognized under GAAP and therefore are considered non-GAAP financial measures. The most comparable GAAP measures to these measures are total non-interest income; total non-interest expense; other expenses; total revenues; efficiency ratio; 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 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), changes in the fair value of private equity investments, net, and the Cabela’s Transaction Fee. Adjusted non-interest expense, adjusted other expenses, and the adjusted efficiency ratio are measures utilized by management to measure the success of expense management initiatives focused on reducing recurring controllable operating costs. Adjusted earnings per diluted share, adjusted return on average assets, and adjusted return on average common equity are measures used by management to evaluate operating results exclusive of items that are not indicative of ongoing operations and impact period-to-period comparisons. The adjusted return on average tangible common equity is a measure used by management to compare Synovus' performance with other financial institutions because it calculates the return available to common shareholders without the impact of intangible assets and their related amortization, thereby allowing management to evaluate the performance of the business consistently. The tangible common equity ratio and common equity Tier 1 (CET1) ratio (fully phased-in) are used by management and bank regulators to assess the strength of our capital position. The computations of these measures are set forth in the tables below.








Reconciliation of Non-GAAP Financial Measures
 
 
(dollars in thousands)
 
 3Q18
 
2Q18
 
3Q17
Adjusted non-interest income
 
 
 
 
 
 
Total non-interest income
 
$
71,668

 
$
73,387

 
$
135,435

Add: Investment securities losses, net
 

 
1,296

 
7,956

Subtract/add: (Increase) decrease in fair value of private equity investments, net
 
(434
)
 
37

 
27

Subtract: Cabela's Transaction Fee
 

 

 
(75,000
)
    Adjusted non-interest income
 
$
71,234

 
$
74,720

 
$
68,418

 
 
 
 
 
 
 
Adjusted non-interest expense and adjusted other expenses
 
 
 
 
 
 
Total non-interest expense
 
$
220,297

 
$
204,057

 
$
205,646

Add/subtract: Litigation settlement/contingency expense
 

 
1,400

 
(401
)
Subtract: Discounts to fair value for completed or planned ORE accelerated dispositions
 

 

 
(7,082
)
Subtract: Asset impairment charges related to accelerated disposition of corporate real estate and other properties
 

 

 
(1,168
)
Subtract: Earnout liability adjustments
 
(11,652
)
 

 
(2,059
)
Subtract: Restructuring charges, net
 
(21
)
 
(103
)
 
(519
)
Subtract: Amortization of intangibles
 
(292
)
 
(292
)
 
(292
)
Subtract: Merger-related expense
 
(6,684
)
 

 
(23
)
Subtract: Valuation adjustment to Visa derivative
 

 
(2,328
)
 

Adjusted non-interest expense
 
$
201,648

 
$
202,734

 
$
194,102

Subtract: Salaries and other personnel expense
 
(114,341
)
 
(111,863
)
 
(109,675
)
Subtract: Net occupancy and equipment expense
 
(32,088
)
 
(32,654
)
 
(30,573
)
Adjusted other expenses
 
$
55,219

 
$
58,217

 
$
53,854

 
 
 
 
 
 
 
Adjusted total revenues and adjusted efficiency ratio
 
 
 
 
 
 
Adjusted non-interest expense
 
$
201,648

 
$
202,734

 
$
194,102

 
 
 
 
 
 
 
Net interest income
 
291,619

 
284,577

 
262,572

Add: Tax equivalent adjustment
 
136

 
120

 
283

Add: Total non-interest income
 
71,668

 
73,387

 
135,435

Add: Investment securities losses, net
 

 
1,296

 
7,956

Total FTE revenues
 
$
363,423

 
$
359,380

 
$
406,246

Subtract/add: (Increase) decrease in fair value or private equity investments, net
 
(434
)
 
37

 
27

Subtract: Cabela's Transaction Fee
 

 

 
(75,000
)
Adjusted total revenues
 
$
362,989

 
$
359,417

 
$
331,273

Efficiency ratio
 
60.62
%
 
56.78
%
 
50.62
%
Adjusted efficiency ratio
 
55.55
%
 
56.41
%
 
58.59
%
 
 
 
 
 
 
 





Reconciliation of Non-GAAP Financial Measures, continued
 
 
(in thousands, except per share data)
 
3Q18
 
2Q18
 
3Q17
 
 
 
 
 
 
 
Adjusted earnings per diluted share
 
 
 
 
 
 
Net income available to common shareholders
 
$
99,330

 
$
108,622

 
$
95,448

Subtract: Income tax benefit related to effects of State Tax Reform
 

 
(608
)
 

Add: Earnout liability adjustments
 
11,652

 

 
2,059

Subtract: Income taxes
 
(9,865
)
 

 

Add: Preferred stock redemption
 
4,020

 

 

Add: Merger-related expense
 
6,684

 

 
23

Subtract/add: Litigation settlement/contingency expense
 

 
(1,400
)
 
401

Add: Provision expense on loans transferred to held-for-sale
 

 

 
27,710

Add: Discounts to fair value for completed or planned ORE accelerated dispositions
 

 

 
7,082

Add: Asset impairment charges related to accelerated disposition of corporate real estate and other properties
 

 

 
1,168

Add: Restructuring charges, net
 
21

 
103

 
519

Add: Amortization of intangibles
 
292

 
292

 
292

Add: Valuation adjustment to Visa derivative
 

 
2,328

 

Add: Investment securities losses, net
 

 
1,296

 
7,956

Subtract/add: (Increase) decrease in fair value of private equity investments, net
 
(434
)
 
37

 
27

Subtract: Cabela's Transaction Fee
 

 

 
(75,000
)
Add/subtract: Tax effect of adjustments
 
27

 
(624
)
 
11,034

Adjusted net income available to common shareholders
 
$
111,727

 
$
110,046

 
$
78,719

Weighted average common shares outstanding, diluted
 
118,095

 
119,139

 
121,814

Adjusted earnings per common share, diluted
 
$
0.95

 
$
0.92

 
$
0.65

 
 
 
 
 
 
 
 
 
 
 
 
 
 







Reconciliation of Non-GAAP Financial Measures, continued
 
 
(dollars in thousands)
 
3Q18
 
2Q18
 
3Q17
Adjusted return on average assets
 
 
 
 
 
 
Net income
 
$
109,059

 
$
111,181

 
$
98,007

Subtract: Income tax benefit related to effects of State Tax Reform
 

 
(608
)
 

Add: Earnout liability adjustments
 
11,652

 

 
2,059

Subtract: Income taxes
 
(9,865
)
 

 

Add: Merger-related expense
 
6,684

 

 
23

Subtract/add: Litigation settlement/contingency expense
 

 
(1,400
)
 
401

Add: Provision expense on loans transferred to held-for-sale
 

 

 
27,710

Add: Discounts to fair value for completed or planned ORE accelerated dispositions
 

 

 
7,082

Add: Asset impairment charges related to accelerated disposition of corporate real estate and other properties
 

 

 
1,168

Add: Restructuring charges, net
 
21

 
103

 
519

Add: Amortization of intangibles
 
292

 
292

 
292

Add: Valuation adjustment to Visa derivative
 

 
2,328

 

Add: Investment securities losses, net
 

 
1,296

 
7,956

Subtract/add: (Increase) decrease in fair value of private equity investments, net
 
(434
)
 
37

 
27

Subtract: Cabela's Transaction Fee
 

 

 
(75,000
)
Add/subtract: Tax effect of adjustments
 
27

 
(624
)
 
11,034

Adjusted net income
 
$
117,436

 
$
112,605

 
$
81,278

 
 
 
 
 
 
 
Adjusted net income annualized
 
$
465,915

 
$
451,657

 
$
322,462

Total average assets
 
$
31,725,604

 
$
31,502,758

 
$
30,678,388

Adjusted return on average assets
 
1.47
%
 
1.43
%
 
1.05
%






Reconciliation of Non-GAAP Financial Measures, continued
 
 
(dollars in thousands)
 
3Q18
 
2Q18
 
3Q17
Adjusted return on average common equity and adjusted return on average tangible common equity
 
 
 
 
 
 
Net income available to common shareholders
 
$
99,330

 
$
108,622

 
$
95,448

Subtract: Income tax benefit related to effects of State Tax Reform
 

 
(608
)
 

Add: Earnout liability adjustments
 
11,652

 

 
2,059

Subtract: Income taxes
 
(9,865
)
 

 

Add: Preferred stock redemption
 
4,020

 

 

Add: Merger-related expense
 
6,684

 

 
23

Subtract/add: Litigation settlement/contingency expense
 

 
(1,400
)
 
401

Add: Provision expense on loans transferred to held-for-sale
 

 

 
27,710

Add: Discounts to fair value for completed or planned ORE accelerated dispositions
 

 

 
7,082

Add: Asset impairment charges related to accelerated disposition of corporate real estate and other properties
 

 

 
1,168

Add: Restructuring charges, net
 
21

 
103

 
519

Add: Amortization of intangibles
 
292

 
292

 
292

Add: Valuation adjustment to Visa derivative
 

 
2,328

 

Add: Investment securities losses, net
 

 
1,296

 
7,956

Subtract/add: (Increase) decrease in fair value of private equity investments, net
 
(434
)
 
37

 
27

Subtract: Cabela's Transaction Fee
 

 

 
(75,000
)
Add/subtract: Tax effect of adjustments
 
27

 
(624
)
 
11,034

Adjusted net income available to common shareholders
 
$
111,727

 
$
110,046

 
$
78,719

 
 
 
 
 
 
 
Adjusted net income annualized
 
$
443,265

 
$
441,393

 
$
312,309

 
 
 
 
 
 
 
Total average shareholders' equity less preferred stock
 
$
2,824,707

 
$
2,831,368

 
$
2,859,491

Subtract: Goodwill
 
(57,315
)
 
(57,315
)
 
(57,167
)
Subtract: Other intangible assets, net
 
(10,265
)
 
(10,555
)
 
(11,648
)
Total average tangible shareholders' equity less preferred stock
 
$
2,757,127

 
$
2,763,498

 
$
2,790,676

Adjusted return on average common equity
 
15.69
%
 
15.59
%
 
10.92
%
Adjusted return on average tangible common equity
 
16.08
%
 
15.97
%
 
11.19
%
 
 
 
 
 
 
 






Reconciliation of Non-GAAP Financial Measures, continued

 
 
 
 
 
 
(dollars in thousands)
 
3Q18
 
2Q18
 
3Q17
 
 
 
 
 
 
 
Tangible common equity ratio
 
 
 
 
 
 
Total assets
 
$
32,075,120

 
$
31,740,305

 
$
31,642,123

Subtract: Goodwill
 
(57,315
)
 
(57,315
)
 
(57,315
)
Subtract: Other intangible assets, net
 
(10,166
)
 
(10,458
)
 
(11,548
)
Tangible assets
 
$
32,007,639

 
$
31,672,532

 
$
31,573,260

Total shareholders' equity
 
$
3,040,073

 
$
3,167,694

 
$
2,997,078

Subtract: Goodwill
 
(57,315
)
 
(57,315
)
 
(57,315
)
Subtract: Other intangible assets, net
 
(10,166
)
 
(10,458
)
 
(11,548
)
Subtract: Preferred Stock
 
(195,138
)
 
(321,118
)
 
(125,980
)
Tangible common equity
 
$
2,777,454

 
$
2,778,803

 
$
2,802,235

Total shareholders' equity to total assets ratio
 
9.48
%
 
9.98
%
 
9.47
%
Tangible common equity ratio
 
8.68
%
 
8.77
%
 
8.88
%
 
 
 
 
 
 
 
Common equity Tier 1 (CET1) ratio (fully phased-in)
 
 
 
 
 
 
Common equity Tier 1 (CET1)
 
$
2,846,417

 
 
 
 
Subtract: Adjustment related to capital components
 
(2,785
)
 
 
 
 
CET1 (fully phased-in)
 
$
2,843,632

 
 
 
 
Total risk-weighted assets
 
$
28,701,637

 
 
 
 
Total risk-weighted assets (fully phased-in)
 
$
28,808,199

 
 
 
 
Common equity Tier 1 (CET1) ratio
 
9.92
%
 
 
 
 
     Common equity Tier 1 (CET1) ratio (fully phased-in)
 
9.87
%
 
 
 
 
 
 
 
 
 
 
 



(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit


Synovus
 
 
 
 
 
Exhibit 99.2

 
 
 
 
 
 
 
 
 
INCOME STATEMENT DATA
 
 
 
(Unaudited)
 
Nine Months Ended
 
(Dollars in thousands, except per share data)
 
September 30,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
2017
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
$
986,911

 
$
855,563

 
15.4
 %
 
Interest expense
 
136,431

 
101,966

 
33.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
850,480

 
753,597

 
12.9

 
Provision for loan losses
 
39,548

 
58,620

 
(32.5
)
 
 
 
 
 
 
 
 
 
Net interest income after provision for loan losses
 
810,932

 
694,977

 
16.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest income:
 
 
 
 
 
 
 
    Service charges on deposit accounts
 
60,521

 
61,048

 
(0.9
)
 
    Fiduciary and asset management fees
 
40,881

 
37,290

 
9.6

 
    Card fees
 
31,640

 
29,614

 
6.8

 
    Brokerage revenue
 
26,924

 
21,947

 
22.7

 
    Mortgage banking income
 
15,177

 
17,151

 
(11.5
)
 
    Income from bank-owned life insurance
 
11,720

 
9,560

 
22.6

 
    Cabela's Transaction Fee
 

 
75,000

 
 nm

 
    Investment securities losses, net
 
(1,296
)
 
(289
)
 
 nm

 
    Decrease in fair value of private equity investments, net
 
(2,659
)
 
(3,193
)
 
 nm

 
    Other fee income
 
14,387

 
16,127

 
(10.8
)
 
    Other non-interest income
 
14,806

 
11,719

 
26.3

 
 
 
 
 
 
 
 
 
Total non-interest income
 
212,101

 
275,974

 
(23.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest expense:
 
 
 
 
 
 
 
   Salaries and other personnel expense
 
339,924

 
322,079

 
5.5

 
   Net occupancy and equipment expense
 
96,222

 
89,837

 
7.1

 
   Third-party processing expense
 
43,822

 
39,882

 
9.9

 
   FDIC insurance and other regulatory fees
 
19,765

 
20,723

 
(4.6
)
 
   Professional fees
 
18,087

 
20,048

 
(9.8
)
 
   Advertising expense
 
14,046

 
14,868

 
(5.5
)
 
   Foreclosed real estate expense, net
 
1,110

 
10,847

 
(89.8
)
 
   Earnout liability adjustments
 
11,652

 
3,766

 
 nm

 
   Merger-related expense
 
6,684

 
110

 
 nm

 
   Amortization of intangibles
 
875

 
767

 
14.1

 
   Valuation adjustment to Visa derivative
 
2,328

 

 
 nm

 
   Litigation settlement/contingency expense
 
(4,026
)
 
401

 
 nm

 
   Restructuring charges, net
 
(191
)
 
7,043

 
 nm

 
   Other operating expenses
 
69,233

 
64,409

 
7.5

 
 
 
 
 
 
 
 
 
Total non-interest expense
 
619,531

 
594,780

 
4.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
 
403,502

 
376,171

 
7.3

 
Income tax expense
 
80,095

 
130,303

 
(38.5
)
 
 
 
 
 
 
 
 
 
Net income
 
323,407

 
245,868

 
31.5

 
 
 
 
 
 
 
 
 
Preferred stock dividends and redemption
 
14,848

 
7,678

 
93.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income available to common shareholders
 
$
308,559

 
238,190

 
29.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per common share, basic
 
$
2.61

 
1.96

 
33.6
 %
 
 
 
 
 
 
 
 
 
Net income per common share, diluted
 
2.60

 
1.94

 
33.7

 
 
 
 
 
 
 
 
 
Cash dividends declared per common share
 
0.75

 
0.45

 
66.7

 
 
 
 
 
 
 
 
 
Return on average assets*
 
1.37
%
 
1.07

 
30
 bps
 
Return on average common equity*
 
14.65

 
11.20

 
345

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding, basic
 
118,096

 
121,796

 
(3.0
)%
 
Weighted average common shares outstanding, diluted
 
118,847

 
122,628

 
(3.1
)
 
 
 
 
 
 
 
 
 
 nm - not meaningful
 
 
 
 
 
 
 
 bps - basis points
 
 
 
 
 
 
 
* - ratios are annualized
 
 
 
 
 
 






Synovus
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INCOME STATEMENT DATA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except per share data)
 
 
2018
 
 
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Third
 
Second
 
First
 
 
Fourth
 
Third
 
Year/Year
 
 
 
 
Quarter
 
Quarter
 
Quarter
 
 
Quarter
 
Quarter
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
 
$
343,942

 
329,834

 
313,134

 
 
306,934

 
297,652

 
15.6
 %
 
Interest expense
 
 
52,323

 
45,257

 
38,850

 
 
37,221

 
35,080

 
49.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
291,619

 
284,577

 
274,284

 
 
269,713

 
262,572

 
11.1

 
Provision for loan losses
 
 
14,982

 
11,790

 
12,776

 
 
8,565

 
39,686

 
(62.2
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income after provision for loan losses
 
 
276,637

 
272,787

 
261,508

 
 
261,148

 
222,886

 
24.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
    Service charges on deposit accounts
 
 
20,582

 
19,999

 
19,940

 
 
20,372

 
20,678

 
(0.5
)
 
    Fiduciary and asset management fees
 
 
13,462

 
13,983

 
13,435

 
 
13,195

 
12,615

 
6.7

 
    Card fees
 
 
10,608

 
10,833

 
10,199

 
 
9,762

 
9,729

 
9.0

 
    Brokerage revenue
 
 
9,329

 
8,900

 
8,695

 
 
7,758

 
7,511

 
24.2

 
    Mortgage banking income
 
 
5,290

 
4,839

 
5,047

 
 
5,645

 
5,603

 
(5.6
)
 
    Income from bank-owned life insurance
 
 
3,771

 
3,733

 
4,217

 
 
3,900

 
3,232

 
16.7

 
    Cabela's Transaction Fee
 
 

 

 

 
 

 
75,000

 
 nm

 
    Investment securities losses, net
 
 

 
(1,296
)
 

 
 

 
(7,956
)
 
 nm

 
    Increase/(decrease) in fair value of private equity investments, net
434

 
(37
)
 
(3,056
)
 
 
100

 
(27
)
 
 nm

 
    Other fee income
 
 
4,510

 
5,259

 
4,618

 
 
4,042

 
5,094

 
(11.5
)
 
    Other non-interest income
 
 
3,682

 
7,174

 
3,951

 
 
4,578

 
3,956

 
(6.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total non-interest income
 
 
71,668

 
73,387

 
67,046

 
 
69,352

 
135,435

 
(47.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Salaries and other personnel expense
 
 
114,341

 
111,863

 
113,720

 
 
111,243

 
109,675

 
4.3

 
   Net occupancy and equipment expense
 
 
32,088

 
32,654

 
31,480

 
 
30,126

 
30,573

 
5.0

 
   Third-party processing expense
 
 
14,810

 
15,067

 
13,945

 
 
14,827

 
13,659

 
8.4

 
   FDIC insurance and other regulatory fees
 
 
6,430

 
6,543

 
6,793

 
 
6,288

 
7,078

 
(9.2
)
 
   Professional fees
 
 
6,298

 
6,284

 
5,505

 
 
6,183

 
7,141

 
(11.8
)
 
   Advertising expense
 
 
3,735

 
5,220

 
5,092

 
 
8,081

 
3,610

 
3.5

 
   Foreclosed real estate expense, net
 
 
360

 
(107
)
 
856

 
 
1,693

 
7,265

 
(95.0
)
 
   Earnout liability adjustments
 
 
11,652

 

 

 
 
1,700

 
2,059

 
 nm

 
   Merger-related expense
 
 
6,684

 

 

 
 

 
23

 
 nm

 
   Amortization of intangibles
 
 
292

 
292

 
292

 
 
292

 
292

 

 
   Valuation adjustment to Visa derivative
 
 

 
2,328

 

 
 

 

 

 
   Loss on early extinguishment of debt
 
 

 

 

 
 
23,160

 

 

 
   Litigation settlement/contingency expense
 
 

 
(1,400
)
 
(2,626
)
 
 
300

 
401

 
 nm

 
   Restructuring charges, net
 
 
21

 
103

 
(315
)
 
 
(29
)
 
519

 
(96.0
)
 
   Other operating expenses
 
 
23,586

 
25,210

 
20,437

 
 
22,670

 
23,351

 
1.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total non-interest expense
 
 
220,297

 
204,057

 
195,179

 
 
226,534

 
205,646

 
7.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
 
 
128,008

 
142,117

 
133,375

 
 
103,966

 
152,675

 
(16.2
)
 
Income tax expense
 
 
18,949

 
30,936

 
30,209

 
 
74,361

 
54,668

 
(65.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
 
109,059

 
111,181

 
103,166

 
 
29,605

 
98,007

 
11.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock dividends and redemption
 
 
9,729

 
2,559

 
2,559

 
 
2,559

 
2,559

 
 nm

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income available to common shareholders
 
 
$
99,330

 
108,622

 
100,607

 
 
27,046

 
95,448

 
4.1
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per common share, basic
 
 
$
0.85

 
0.92

 
0.85

 
 
0.23

 
0.79

 
7.3
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per common share, diluted
 
 
0.84

 
0.91

 
0.84

 
 
0.23

 
0.78

 
7.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash dividends declared per common share
 
 
0.25

 
0.25

 
0.25

 
 
0.15

 
0.15

 
66.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets *
 
 
1.36
%
 
1.42

 
1.34

 
 
0.37

 
1.27

 
9
 bps
 
Return on average common equity *
 
 
13.95

 
15.39

 
14.62

 
 
3.76

 
13.24

 
71

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding, basic
 
 
117,241

 
118,397

 
118,666

 
 
119,282

 
120,900

 
(3.0
)%
 
Weighted average common shares outstanding, diluted
 
 
118,095

 
119,139

 
119,321

 
 
120,182

 
121,814

 
(3.1
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 nm - not meaningful
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 bps - basis points
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* - ratios are annualized
 
 
 
 
 
 
 
 
 
 
 
 
 
 





Synovus
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BALANCE SHEET DATA
 
September 30, 2018
 
December 31, 2017
 
September 30, 2017
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
 
Cash and due from banks
 
$
436,540

 
397,848

 
386,459

 
Interest bearing funds with Federal Reserve Bank
 
515,493

 
460,928

 
1,297,581

 
Interest earning deposits with banks
 
34,470

 
26,311

 
6,047

 
Federal funds sold and securities purchased
 
 
 
 
 
 
 
under resale agreements
 
25,430

 
47,846

 
48,820

 
Cash and cash equivalents
 
1,011,933

 
932,933

 
1,738,907

 
 
 
 
 
 
 
 
 
Mortgage loans held for sale, at fair value
 
37,276

 
48,024

 
54,072

 
Investment securities available for sale, at fair value
 
3,883,574

 
3,987,069

 
3,825,443

 
 
 
 
 
 
 
 
 
Loans, net of deferred fees and costs
 
25,577,116

 
24,787,464

 
24,487,360

 
Allowance for loan losses
 
(251,450
)
 
(249,268
)
 
(249,683
)
 
Loans, net
 
25,325,666

 
24,538,196

 
24,237,677

 
 
 
 
 
 
 
 
 
Cash surrender value of bank-owned life insurance
 
551,061

 
540,958

 
536,985

 
Premises and equipment, net
 
431,012

 
426,813

 
423,245

 
Goodwill
 
57,315

 
57,315

 
57,315

 
Other intangible assets
 
10,166

 
11,254

 
11,548

 
Deferred tax asset, net
 
185,116

 
165,788

 
272,052

 
Other assets
 
582,001

 
513,487

 
484,879

 
 
 
 
 
 
 
 
 
Total assets
 
$
32,075,120

 
31,221,837

 
31,642,123

 
 
 
 
 
 
 
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
 
 
 
 
Liabilities:
 
 
 
 
 
 
 
Deposits:
 
 
 
 
 
 
 
Non-interest bearing deposits
 
$
7,628,736

 
7,686,339

 
7,302,682

 
Interest-bearing deposits
 
18,804,922

 
18,461,561

 
18,883,546

 
 
 
 
 
 
 
 
 
Total deposits
 
26,433,658

 
26,147,900

 
26,186,228

 
 
 
 
 
 
 
 
 
Federal funds purchased and securities sold under repurchase
 
191,145

 
161,190

 
141,539

 
 agreements
 
 
 
 
 
 
 
Other short-term borrowings
 
478,540

 
100,000

 

 
Long-term debt
 
1,656,909

 
1,606,138

 
1,882,607

 
Other liabilities
 
274,795

 
245,043

 
434,671

 
 
 
 
 
 
 
 
 
Total liabilities
 
29,035,047

 
28,260,271

 
28,645,045

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shareholders' equity:
 
 
 
 
 
 
 
Series D Preferred Stock - no par value. 8,000,000 shares outstanding at September 30, 2018
 
195,138

 

 

 
 
 
 
 
 
 
 
 
Series C Preferred Stock - no par value. 5,200,000 shares outstanding at December 31, 2017 and September 30, 2017
 

 
125,980

 
125,980

 
 
 
 
 
 
 
 
 
Common stock - $1.00 par value. 116,714,463 shares outstanding at September 30, 2018, 118,897,295 shares outstanding at December 31, 2017, and 119,566,625 shares outstanding at September 30, 2017
 
143,093

 
142,678

 
142,525

 
 
 
 
 
 
 
 
 
Additional paid-in capital
 
3,049,233

 
3,043,129

 
3,033,682