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Section 1: 8-K (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

January 15, 2019
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 January 15, 2019, Synovus Financial Corp. (the “Company”) issued a press release announcing the Company’s financial results for the three and twelve month periods ended December 31, 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 twelve month periods ended December 31, 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 January 15, 2019, 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 January 15, 2019.
 
 
 
 
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 Exhibit 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: Janaury 15, 2019
By: /s/ Allan E. Kamensky            
Allan E. Kamensky    
Executive Vice President, General Counsel and Secretary



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit


Exhibit 99.1
396361741_synovusa01.jpg
Media Contact
 
Investor Contact
Lee Underwood
 
Steve Adams
Media Relations
 
Investor Relations
(706) 644-0528
 
(706) 641-6462


Synovus Announces Earnings for the Fourth Quarter 2018 and a 20% Increase in Common Stock Dividend
2018 Diluted Earnings per Share up 59.5% from 2017

COLUMBUS, Ga., Jan. 15, 2019 - Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter and year ended December 31, 2018.

Net income available to common shareholders for the fourth quarter 2018 was $101.9 million or $0.87 per diluted share as compared to $99.3 million or $0.84 per diluted share for the third quarter 2018 and $27.0 million or $0.23 per diluted share for the fourth quarter 2017. Adjusted earnings per diluted share for the fourth quarter 2018 was $0.92, down 3.1% from the third quarter 2018 and up 28.1% from the fourth quarter 2017.

Additionally, the Company announced plans to return approximately $500 million to common shareholders this year through a 20% dividend increase and additional share repurchases.

Fourth quarter and full year results do not include financial results of FCB Financial Holdings, Inc. (FCB), which Synovus acquired on January 1, 2019.
2018 Highlights

Net income available to common shareholders for 2018 was $410.5 million or $3.47 per diluted share as compared to $265.2 million or $2.17 per diluted share for 2017. Diluted EPS grew 59.5% for 2018 compared to 2017.
Adjusted earnings per diluted share for 2018 was $3.64 as compared to $2.53 for 2017, an increase of 43.8%.
Return on average assets for 2018 was 1.35%, an increase of 46 basis points from 2017.
Adjusted return on average assets for 2018 was 1.41%, an increase of 37 basis points from 2017.
Return on average common equity for 2018 was 14.55%, an increase of 523 basis points from 2017.
Adjusted return on average common equity for 2018 was 15.29%, an increase of 443 basis points from 2017.
Total loans ended the year at $25.95 billion, an increase of $1.16 billion or 4.7% from 2017. Total average loans for the year grew $813.1 million or 3.3% as compared to 2017.
Total average deposits grew $969.7 million or 3.8% as compared to 2017.
Efficiency ratio of 57.99% improved 196 basis points from 2017.
Adjusted efficiency ratio of 56.33% improved 354 basis points from 2017.
The non-performing asset ratio was 0.44% at December 31, 2018, compared to 0.53% at year-end 2017.
Common Equity Tier 1 ratio was 10.04% at December 31, 20181, compared to 9.99% at December 31, 2017.

1 December 31, 2018 capital ratios are preliminary.





The Company returned $281 million to common shareholders during the year with repurchases of $175 million in common stock and $106 million in common dividends.
Synovus issued $200 million Series D preferred stock and redeemed $130 million Series C preferred stock.
The Company completed the transition to a single brand - Synovus - across all markets.
The acquisition of FCB was completed on January 1, 2019.

“Synovus became a stronger company in every respect in 2018,” said Kessel Stelling, Synovus chairman and CEO. “From completion of the single-brand transition, to the announcement and successful closing of the FCB acquisition, to surpassing all of our profitability and efficiency targets, we delivered outstanding operating and financial performance last year. These results will provide the opportunity to accelerate capital returns to shareholders in 2019 through a 20 percent increase in the common stock dividend and more than $300 million in additional share repurchases.

“As we begin the new year, we are excited to welcome the FCB team members and loyal customers to the Synovus family,” Stelling continued. “We are pleased with the integration results to date, and confident in the ability of our combined company to create value for customers, communities, and shareholders.”
Fourth Quarter Financial Results

Balance Sheet
Total loans ended the quarter at $25.95 billion, up $369.5 million or 5.7% annualized from the previous quarter and up $1.16 billion or 4.7% as compared to the fourth quarter 2017.
Commercial and industrial loans grew by $277.9 million or 8.8% annualized from the previous quarter and $757.6 million or 6.3% as compared to the fourth quarter 2017.
Consumer loans grew by $239.8 million or 14.9% annualized from the previous quarter and $771.2 million or 13.2% as compared to the fourth quarter 2017.
Commercial real estate loans declined by $147.9 million or 8.7% annualized from the previous quarter and $370.8 million or 5.3% as compared to the fourth quarter 2017.
Total average loans were $25.63 billion, up $303.7 million or 4.8% annualized from the previous quarter and up $1.01 billion or 4.1% from the fourth quarter 2017.
Total average deposits for the quarter were $26.92 billion, up $532.8 million or 8.0% annualized from the previous quarter and up $634.1 million or 2.4% as compared to the fourth quarter 2017.
Excluding average brokered deposits, average deposits increased $681.0 million or 11.0% annualized from the previous quarter and $1.21 billion or 5.0% compared to the fourth quarter 2017.

Core Performance
Total revenues were $365.9 million, up $2.6 million from the previous quarter and up $26.9 million or 7.9% from the fourth quarter 2017.
Adjusted total revenues were $368.2 million, up $5.2 million or 1.4% from the previous quarter and up $29.0 million or 8.5% from the fourth quarter 2017.
Net interest income was $297.9 million, up $6.3 million or 2.2% from the previous quarter and up $28.2 million or 10.5% from the fourth quarter 2017.
Net interest margin was 3.92%, up 3 basis points from the previous quarter. Yield on earning assets was 4.69%, up 11 basis points from the previous quarter, and the cost of funds was 0.81%, up 8 basis points from the previous quarter.
Total non-interest income was $68.0 million, down $3.7 million from the previous quarter and down $1.4 million from the fourth quarter 2017.
Adjusted non-interest income was $70.1 million, a decrease of 1.6% from the previous quarter and an increase of 1.2% from the prior-year quarter.










Core banking fees2 were $36.8 million, an increase of $1.1 million or 3.1% from the previous quarter and up $1.2 million or 3.5% from the fourth quarter 2017.
Fiduciary and asset management fees, brokerage revenue, and insurance revenues were $24.6 million, an increase of $679 thousand or 2.8% from the prior quarter, and up $2.8 million or 13.0% as compared to the fourth quarter 2017.
Total non-interest expense was $209.9 million, down $10.4 million or 4.7% from the previous quarter, and down $16.6 million or 7.3% from the fourth quarter 2017. Third quarter 2018 included $11.7 million of earnout liability adjustments from the Global One acquisition and $6.7 million of FCB merger-related expense.
Adjusted non-interest expense was $206.1 million, up $4.5 million or 2.2% from the previous quarter and up $5.0 million or 2.5% as compared to the fourth quarter 2017. The sequential quarter increase includes a $3.0 million increase in consulting fees and a $3.1 million increase in advertising expense, partially offset by a $1.7 million decline in FDIC insurance expense.
Efficiency ratio for the fourth quarter 2018 was 57.34% as compared to 60.62% in the previous quarter and 66.77% in the fourth quarter 2017.
Adjusted efficiency ratio for the fourth quarter 2018 was 55.98% as compared to 55.55% in the previous quarter and 59.29% in the fourth quarter 2017.

Credit Quality
Non-performing loans were $106.7 million at December 31, 2018, down $1.7 million or 1.6% from the previous quarter and down $8.8 million or 7.6% from December 31, 2017. The non-performing loan ratio was 0.41% at December 31, 2018, as compared to 0.42% at the end of the previous quarter and 0.47% at December 31, 2017.
Total non-performing assets were $114.5 million at December 31, 2018, down $2.5 million or 2.2% from the previous quarter and down $16.1 million or 12.4% from December 31, 2017. The non-performing asset ratio was 0.44% at December 31, 2018, down 2 basis points from the previous quarter and down 9 basis points from December 31, 2017.
Net charge-offs were $13.0 million in the fourth quarter 2018, down $2.2 million or 14.5% from the previous quarter. The annualized net charge-off ratio was 0.20% in the fourth quarter as compared to 0.24% in the previous quarter.
Total delinquencies (consisting of loans 30 or more days past due and still accruing) were 0.22% of total loans at December 31, 2018, down 9 basis points from the previous quarter and up 1 basis point from December 31, 2017.

Capital Ratios1 

Common Equity Tier 1 ratio was 10.04% at December 31, 2018, compared to 9.90% at September 30, 2018.
Tier 1 Capital ratio was 10.70% at December 31, 2018, compared to 10.57% at September 30, 2018.
Total Risk-Based Capital ratio was 12.47% at December 31, 2018, compared to 12.36% at September 30, 2018.
Tier 1 Leverage ratio was 9.60% at December 31, 2018, compared to 9.58% at September 30, 2018.
Tangible Common Equity to Tangible Assets ratio was 8.81% at December 31, 2018, compared to 8.68% at September 30, 2018.

Capital Management
During the fourth quarter, the Company repurchased $40 million in common stock as part of the $25 million repurchase program announced in December 2018 and the $150 million share repurchase program announced in January 2018. Share repurchases in 2018 totaled $175 million and resulted in a reduction of 3.7 million shares, a 3.1% share count reduction from December 31, 2017.


2 Include service charges on deposit accounts, bankcard 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.






Additionally, the Board of Directors authorized a new share repurchase program3 of up to $400 million of the Company’s common stock to be executed during 2019. The company currently expects to repurchase $300-$350 million under this authorization in 2019.
The Board of Directors also approved a 20% increase in the Company’s quarterly common stock dividend from $0.25 to $0.30 per share, effective with the quarterly dividend3 payable in April 2019.

FCB Fourth Quarter Information
FCB reported net income of $41.8 million for the fourth quarter of 2018 and diluted earnings per share of $0.87.
Net interest income was $94.9 million in the quarter and non-interest income was $9.6 million.
Non-interest expense in the quarter was $38.2 million.
Net interest margin in the fourth quarter of 2018 was 3.15% and the efficiency ratio was 36.22%.
Return on average assets was 1.32% in the quarter.
Tangible common equity ratio in the quarter was 10.14%.
Total assets at December 31, 2018, were $12.53 billion, total loans were $9.42 billion, and total deposits were $10.89 billion.

Fourth Quarter Earnings Conference Call
Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on January 15, 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 $45 billion in assets. Synovus provides commercial and retail banking, investment, and mortgage services through 300 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 deposit growth, 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.

3 Capital actions expected in 2019 are subject to customary regulatory approval pursuant to Regulation Q: 12 CFR Part 217.20.








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 total revenues; adjusted efficiency ratio; adjusted earnings per diluted share; adjusted return on average assets; adjusted return on average common equity; tangible common equity to tangible assets 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; 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 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 tangible common equity to tangible assets 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)
4Q18
 
3Q18
 
4Q17
 
2018
 
2017
Adjusted non-interest income
 
 
 
 
 
 
 
 
 
Total non-interest income
$
67,991

 
$
71,668

 
$
69,353

 
$
280,093

 
$
345,327

Subtract: Cabela's Transaction Fee

 

 

 

 
(75,000
)
Add: Investment securities losses, net

 

 

 
1,296

 
289

Add/subtract: Decrease (increase) in fair value of private equity investments, net
2,084

 
(434
)
 
(100
)
 
4,743

 
3,093

Adjusted non-interest income
$
70,075

 
$
71,234

 
$
69,253

 
$
286,132

 
$
273,709

 
 
 
 
 
 
 
 
 
 
Adjusted non-interest expense
 
 
 
 
 
 
 
 
 
Total non-interest expense
$
209,922

 
$
220,297

 
$
226,533

 
$
829,455

 
$
821,313

Subtract: Discounts to fair value for 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
)
 
(1,700
)
 
(11,652
)
 
(3,759
)
Subtract: Merger-related expense
(3,381
)
 
(6,684
)
 

 
(10,065
)
 
(110
)
Subtract/add: Litigation settlement/contingency expense

 

 
(300
)
 
4,026

 
(701
)
Subtract/add: Restructuring charges, net
(140
)
 
(21
)
 
29

 
51

 
(7,014
)
Subtract: Amortization of intangibles
(292
)
 
(292
)
 
(292
)
 
(1,167
)
 
(1,059
)
Subtract: Fair value adjustment to Visa derivative

 

 

 
(2,328
)
 

Subtract: Loss on early extinguishment of debt

 

 
(23,160
)
 

 
(23,160
)
Adjusted non-interest expense
$
206,109

 
$
201,648

 
$
201,110

 
$
808,320

 
$
777,260

 
 
 
 
 
 
 
 
 
 
Adjusted total revenues and adjusted efficiency ratio
 
 
 
 
 
 
 
 
 
Adjusted non-interest expense
$
206,109

 
$
201,648

 
$
201,110

 
$
808,320

 
$
777,260

Net interest income
297,933

 
291,619

 
269,712

 
1,148,413

 
1,023,309

Add: Tax equivalent adjustment
181

 
136

 
234

 
553

 
1,124

Add: Total non-interest income
67,991

 
71,668

 
69,353

 
280,093

 
345,327

Add: Investment securities losses, net

 

 

 
1,296

 
289

Total FTE revenues
366,105

 
363,423

 
339,299

 
1,430,355

 
1,370,049

Subtract: Cabela's Transaction Fee

 

 

 

 
(75,000
)
Add/subtract: Decrease (increase) in fair value of private equity investments, net
2,084

 
(434
)
 
(100
)
 
4,743

 
3,093

Adjusted total revenues
$
368,189

 
$
362,989

 
$
339,199

 
$
1,435,098

 
$
1,298,142

Efficiency ratio
57.34
%
 
60.62
%
 
66.77
%
 
57.99
%
 
59.95
%
Adjusted efficiency ratio
55.98

 
55.55

 
59.29

 
56.33

 
59.87

 
 
 
 
 
 
 
 
 
 














Reconciliation of Non-GAAP Financial Measures, continued
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands, except per share data)
4Q18
 
3Q18
 
4Q17
 
2018
 
2017
Adjusted Return on Average Assets
 
 
 
 
 
 
 
 
 
Net income
$
105,070

 
$
109,059

 
$
29,606

 
$
428,476

 
$
275,474

Subtract: Cabela's Transaction Fee

 

 

 

 
(75,000
)
Add: Provision expense on loans transferred to held-for-sale

 

 

 

 
27,710

Add: Discounts to fair value for ORE accelerated dispositions

 

 

 

 
7,082

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

 

 

 

 
1,168

Subtract/add: Income tax (benefit) expense, net related to Federal Tax Reform, SAB 118, State Tax Reform, and adjusted portion of other discrete items

 
(9,865
)
 
42,334

 
(9,148
)
 
42,334

Add: Earnout liability adjustments

 
11,652

 
1,700

 
11,652

 
3,759

Add: Merger-related expense
3,381

 
6,684

 

 
10,065

 
110

Add/subtract: Litigation settlement/contingency expense

 

 
300

 
(4,026
)
 
701

Add/subtract: Restructuring charges, net
140

 
21

 
(29
)
 
(51
)
 
7,014

Add: Amortization of intangibles
292

 
292

 
292

 
1,167

 
1,059

Add: Fair value adjustment to Visa derivative

 

 

 
2,328

 

Add: Loss on early extinguishment of debt

 

 
23,160

 

 
23,160

Add: Investment securities losses, net

 

 

 
1,296

 
289

Add/subtract: Decrease (increase) in fair value of private equity investments, net
2,084

 
(434
)
 
(100
)
 
4,743

 
3,093

Subtract/add: Tax effect of adjustments
(591
)
 
27

 
(8,740
)
 
(1,283
)
 
1,337

Adjusted net income
$
110,376

 
$
117,436

 
$
88,523

 
$
445,219

 
$
319,290

Net income annualized
$
416,854

 
$
432,680

 
$
117,459

 
$

 
$

Adjusted net income annualized
$
437,905

 
$
465,915

 
$
351,205

 
$

 
$

Total average assets
$
32,190,303

 
$
31,725,604

 
$
31,388,724

 
$
31,668,847

 
$
30,787,288

Return on average assets
1.29
%
 
1.36
%
 
0.37
%
 
1.35
%
 
0.89
%
Adjusted return on average assets
1.36

 
1.47

 
1.12

 
1.41

 
1.04

 
 
 
 
 
 
 
 
 
 





Reconciliation of Non-GAAP Financial Measures, continued
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in thousands, except per share data)
4Q18
 
3Q18
 
4Q17
 
2018
 
2017
Adjusted net income per common share, diluted and adjusted return on average common equity
 
 
 
 
 
 
 
 
 
Net income available to common shareholders
$
101,919

 
$
99,330

 
$
27,046

 
$
410,478

 
$
265,236

Subtract: Cabela's Transaction Fee

 

 

 

 
(75,000
)
Add: Provision expense on loans transferred to held-for-sale

 

 

 

 
27,710

Add: Discounts to fair value for ORE accelerated dispositions

 

 

 

 
7,082

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

 

 

 

 
1,168

Subtract/add: Income tax (benefit) expense, net related to Federal Tax Reform, SAB 118, State Tax Reform, and adjusted portion of other discrete items

 
(9,865
)
 
42,334

 
(9,148
)
 
42,334

Add: Preferred stock redemption charge

 
4,020

 

 
4,020

 

Add: Earnout liability adjustments

 
11,652

 
1,700

 
11,652

 
3,759

Add: Merger-related expense
3,381

 
6,684

 

 
10,065

 
110

Add/subtract: Litigation settlement/contingency expense

 

 
300

 
(4,026
)
 
701

Add/subtract: Restructuring charges, net
140

 
21

 
(29
)
 
(51
)
 
7,014

Add: Amortization of intangibles
292

 
292

 
292

 
1,167

 
1,059

Add: Fair value adjustment to Visa derivative

 

 

 
2,328

 

Add: Loss on early extinguishment of debt

 

 
23,160

 

 
23,160

Add: Investment securities losses, net

 

 

 
1,296

 
289

Add/subtract: Decrease (increase) in fair value of private equity investments, net
2,084

 
(434
)
 
(100
)
 
4,743

 
3,093

Subtract/add: Tax effect of adjustments
(591
)
 
27

 
(8,740
)
 
(1,283
)
 
1,337

Adjusted net income available to common shareholders
$
107,225

 
$
111,727

 
$
85,963

 
$
431,241

 
$
309,052

Weighted average common shares outstanding, diluted
116,986

 
118,095

 
120,182

 
118,378

 
122,012

Net income per common share, diluted
$
0.87


$
0.84


$
0.23


$
3.47


$
2.17

Adjusted net income per common share, diluted
0.92

 
0.95

 
0.72

 
3.64

 
2.53

 
 
 
 
 
 
 
 
 
 
Net income available to common shareholders' annualized
$
404,353

 
$
394,081

 
$
107,302

 
$

 
$

Adjusted net income available to common shareholders' annualized
$
425,404

 
$
443,265

 
$
341,049

 
$

 
$

Total average shareholders' equity less preferred stock
$
2,837,740

 
$
2,824,707

 
$
2,851,523

 
$
2,821,311

 
$
2,844,570

Return on average common equity
14.25
%
 
13.95
%
 
3.76
%
 
14.55
%
 
9.32
%
Adjusted return on average common equity
14.99

 
15.69

 
11.96

 
15.29

 
10.86

 
 
 
 
 
 
 
 
 
 





Reconciliation of Non-GAAP Financial Measures, continued
 
 
 
 
 
 
December 31,
 
September 30,
 
December 31,
(dollars in thousands)
2018
 
2018
 
2017
Tangible Common Equity to Tangible Assets Ratio
 
 
 
 
 
 
 
 
 
 
 
Total assets
$
32,669,192

 
$
32,075,120

 
$
31,221,837

Subtract: Goodwill
(57,315
)
 
(57,315
)
 
(57,315
)
Subtract: Other intangible assets, net
(9,875
)
 
(10,166
)
 
(11,254
)
Tangible assets
$
32,602,002

 
$
32,007,639

 
$
31,153,268

 
 
 
 
 
 
Total shareholders’ equity
$
3,133,602

 
$
3,040,073

 
$
2,961,566

Subtract: Goodwill
(57,315
)
 
(57,315
)
 
(57,315
)
Subtract: Other intangible assets, net
(9,875
)
 
(10,166
)
 
(11,254
)
Subtract: Preferred Stock, no par value
(195,140
)
 
(195,138
)
 
(125,980
)
Tangible common equity
$
2,871,272

 
$
2,777,454

 
$
2,767,017

Total shareholders’ equity to total assets ratio
9.59
%
 
9.48
%
 
9.49
%
Tangible common equity to tangible assets ratio
8.81

 
8.68

 
8.88

 
 
 
 
 
 

 
 
 
 
 
 
 
December 31,
 
September 30,
 
December 31,
(dollars in thousands)
2018
 
2018
 
2017
Common equity Tier 1 (CET1) ratio (fully phased-in)
 
 
 
 
 
Common equity Tier 1 (CET1)
$
2,897,998

 
$
2,846,416

 
$
2,763,168

Subtract: Adjustment related to capital components
(2,720
)
 
(2,784
)
 
(17,147
)
CET1 (fully phased-in)
$
2,895,278


$
2,843,632


$
2,746,021

Total risk-weighted assets
$
28,871,478

 
$
28,738,381

 
$
27,667,906

Total risk-weighted assets (fully phased-in)
$
28,948,308

 
$
28,844,942

 
$
27,791,929

Common equity Tier 1 (CET1) ratio
10.04
%

9.90
%

9.99
%
Common equity Tier 1 (CET1) ratio (fully phased-in)
10.00


9.86


9.88

 
 
 
 
 
 






(Back To Top)

Section 3: EX-99.2 (EXHIBIT 99.2)

Exhibit


Synovus
 
 
 
 
 
Exhibit 99.2

 
 
 
 
 
 
 
 
 
INCOME STATEMENT DATA
 
 
 
(Unaudited)
 
Twelve Months Ended
 
(Dollars in thousands, except per share data)
 
December 31,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
2017
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
$
1,344,305

 
1,162,497

 
15.6
 %
 
Interest expense
 
195,892

 
139,188

 
40.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
1,148,413

 
1,023,309

 
12.2

 
Provision for loan losses
 
51,697

 
67,185

 
(23.1
)
 
 
 
 
 
 
 
 
 
Net interest income after provision for loan losses
 
1,096,716

 
956,124

 
14.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest income:
 
 
 
 
 
 
 
Service charges on deposit accounts
 
80,840

 
81,419

 
(0.7
)
 
Fiduciary and asset management fees
 
54,685

 
50,485

 
8.3

 
Card fees
 
42,503

 
39,376

 
7.9

 
Brokerage revenue
 
36,567

 
29,705

 
23.1

 
Mortgage banking income
 
18,958

 
22,798

 
(16.8
)
 
Income from bank-owned life insurance
 
15,403

 
13,460

 
14.4

 
Cabela's Transaction Fee
 

 
75,000

 
 nm

 
Decrease in fair value of private equity investments, net
 
(4,743
)
 
(3,093
)
 
nm

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

 
Other fee income
 
19,974

 
20,168

 
(1.0
)
 
Other non-interest income
 
17,202

 
16,298

 
5.5

 
 
 
 
 
 
 
 
 
Total non-interest income
 
280,093

 
345,327

 
(18.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest expense:
 
 
 
 
 
 
 
Salaries and other personnel expense
 
453,420

 
433,321

 
4.6

 
Net occupancy and equipment expense
 
130,482

 
119,964

 
8.8

 
Third-party processing expense
 
58,625

 
54,708

 
7.2

 
FDIC insurance and other regulatory fees
 
24,494

 
27,011

 
(9.3
)
 
Professional fees
 
26,737

 
26,232

 
1.9

 
Advertising expense
 
20,881

 
22,948

 
(9.0
)
 
Foreclosed real estate expense, net
 
2,204

 
12,540

 
(82.4
)
 
Loss on early extinguishment of debt
 

 
23,160

 
 nm

 
Earnout liability adjustments
 
11,652

 
5,466

 
113.2

 
Merger-related expense
 
10,065

 
110

 
 nm

 
   Amortization of intangibles
 
1,167

 
1,059

 
10.2

 
   Fair value adjustment to Visa derivative
 
2,328

 

 
 nm

 
   Litigation settlement/contingency expense
 
(4,026
)
 
701

 
 nm

 
Restructuring charges, net
 
(51
)
 
7,014

 
 nm

 
Other operating expenses
 
91,477

 
87,079

 
5.1

 
 
 
 
 
 
 
 
 
Total non-interest expense
 
829,455

 
821,313

 
1.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
 
547,354

 
480,138

 
14.0

 
Income tax expense
 
118,878

 
204,664

 
(41.9
)
 
 
 
 
 
 
 
 
 
Net income
 
428,476

 
275,474

 
55.5

 
 
 
 
 
 
 
 
 
Less: Preferred stock dividends and redemption charge
 
17,998

 
10,238

 
75.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income available to common shareholders
 
$
410,478

 
265,236

 
54.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per common share, basic
 
$
3.49

 
2.19

 
59.4
 %
 
 
 
 
 
 
 
 
 
Net income per common share, diluted
 
3.47

 
2.17

 
59.5

 
 
 
 
 
 
 
 
 
Cash dividends declared per common share
 
1.00

 
0.60

 
66.7

 
 
 
 
 
 
 
 
 
Return on average assets*
 
1.35
%
 
0.89

 
46
 bps
 
Return on average common equity*
 
14.55

 
9.32

 
523

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding, basic
 
117,644

 
121,162

 
(2.9
)%
 
Weighted average common shares outstanding, diluted
 
118,378

 
122,012

 
(3.0
)
 
 
 
 
 
 
 
 
 
 nm - not meaningful
 
 
 
 
 
 
 
 bps - basis points
 
 
 
 
 
 
 
* - ratios are annualized
 
 
 
 
 
 






Synovus
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
INCOME STATEMENT DATA
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except per share data)
 
 
2018
 
 
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fourth
 
Third
 
Second
 
First
 
 
Fourth
 
 
Year/Year
 
 
 
 
Quarter
 
Quarter
 
Quarter
 
Quarter
 
 
Quarter
 
 
% Change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest income
 
 
$
357,394

 
343,942

 
329,834

 
313,134

 
 
306,934

 
 
16.4
 %
 
Interest expense
 
 
59,461

 
52,323

 
45,257

 
38,850

 
 
37,222

 
 
59.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income
 
 
297,933

 
291,619

 
284,577

 
274,284

 
 
269,712

 
 
10.5

 
Provision for loan losses
 
 
12,148

 
14,982

 
11,790

 
12,776

 
 
8,565

 
 
41.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net interest income after provision for loan losses
 
 
285,785

 
276,637

 
272,787

 
261,508

 
 
261,147

 
 
9.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest income:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service charges on deposit accounts
 
 
20,320

 
20,582

 
19,999

 
19,940

 
 
20,371

 
 
(0.3
)
 
Fiduciary and asset management fees
 
 
13,805

 
13,462

 
13,983

 
13,435

 
 
13,195

 
 
4.6

 
Card fees
 
 
10,862

 
10,608

 
10,833

 
10,199

 
 
9,762

 
 
11.3

 
Brokerage revenue
 
 
9,643

 
9,329

 
8,900

 
8,695

 
 
7,758

 
 
24.3

 
Mortgage banking income
 
 
3,781

 
5,290

 
4,839

 
5,047

 
 
5,647

 
 
(33.0
)
 
Income from bank-owned life insurance
 
 
3,682

 
3,771

 
3,733

 
4,217

 
 
3,900

 
 
(5.6
)
 
(Decrease)/increase in fair value of private equity investments, net
 
 
(2,084
)
 
434

 
(37
)
 
(3,056
)
 
 
100

 
 
nm

 
Investment securities losses, net
 
 

 

 
(1,296
)
 

 
 

 
 

 
Other fee income
 
 
5,587

 
4,510

 
5,259

 
4,618

 
 
4,041

 
 
38.3

 
Other non-interest income
 
 
2,395

 
3,682

 
7,174

 
3,951

 
 
4,579

 
 
(47.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total non-interest income
 
 
67,991

 
71,668

 
73,387

 
67,046

 
 
69,353

 
 
(2.0
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-interest expense:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Salaries and other personnel expense
 
 
113,496

 
114,341

 
111,863

 
113,720

 
 
111,242

 
 
2.0

 
Net occupancy and equipment expense
 
 
34,260

 
32,088

 
32,654

 
31,480

 
 
30,127

 
 
13.7

 
Third-party processing expense
 
 
14,803

 
14,810

 
15,067

 
13,945

 
 
14,826

 
 
(0.2
)
 
FDIC insurance and other regulatory fees
 
 
4,728

 
6,430

 
6,543

 
6,793

 
 
6,288

 
 
(24.8
)
 
Professional fees
 
 
8,650

 
6,298

 
6,284

 
5,505

 
 
6,184

 
 
39.9

 
Advertising expense
 
 
6,834

 
3,735

 
5,220

 
5,092

 
 
8,080

 
 
(15.4
)
 
Foreclosed real estate expense, net
 
 
1,095

 
360

 
(107
)
 
856

 
 
1,693

 
 
(35.3
)
 
Loss on early extinguishment of debt
 
 

 

 

 

 
 
23,160

 
 
 nm

 
Earnout liability adjustments
 
 

 
11,652

 

 

 
 
1,700

 
 
 nm

 
Merger-related expense
 
 
3,381

 
6,684

 

 

 
 

 
 
 nm

 
   Amortization of intangibles
 
 
292

 
292

 
292

 
292

 
 
292

 
 

 
   Fair value adjustment to Visa derivative
 
 

 

 
2,328

 

 
 

 
 

 
   Litigation settlement/contingency expense
 
 

 

 
(1,400
)
 
(2,626
)
 
 
300

 
 
 nm

 
Restructuring charges, net
 
 
140

 
21

 
103

 
(315
)
 
 
(29
)
 
 
 nm

 
Other operating expenses
 
 
22,243

 
23,586

 
25,210

 
20,437

 
 
22,670

 
 
(1.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total non-interest expense
 
 
209,922

 
220,297

 
204,057

 
195,179

 
 
226,533

 
 
(7.3
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income before income taxes
 
 
143,854

 
128,008

 
142,117

 
133,375

 
 
103,967

 
 
38.4

 
Income tax expense
 
 
38,784

 
18,949

 
30,936

 
30,209

 
 
74,361

 
 
(47.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
 
 
105,070

 
109,059

 
111,181

 
103,166

 
 
29,606

 
 
254.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


 
Less: Preferred stock dividends and redemption charge
 
 
3,151

 
9,729

 
2,559

 
2,559

 
 
2,560

 
 
23.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income available to common shareholders
 
 
$
101,919

 
99,330

 
108,622

 
100,607

 
 
27,046

 
 
276.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per common share, basic
 
 
$
0.88

 
0.85

 
0.92

 
0.85

 
 
0.23

 
 
286.5
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income per common share, diluted
 
 
0.87

 
0.84

 
0.91

 
0.84

 
 
0.23

 
 
287.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash dividends declared per common share
 
 
0.25

 
0.25

 
0.25

 
0.25

 
 
0.15

 
 
66.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Return on average assets *
 
 
1.29
%
 
1.36

 
1.42

 
1.34

 
 
0.37

 
 
92
 bps
 
Return on average common equity *
 
 
14.25

 
13.95

 
15.39

 
14.62

 
 
3.76

 
 
1,049

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding, basic
 
 
116,303

 
117,241

 
118,397

 
118,666

 
 
119,282

 
 
(2.5
)%
 
Weighted average common shares outstanding, diluted
 
 
116,986

 
118,095

 
119,139

 
119,321

 
 
120,182

 
 
(2.7
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 nm - not meaningful
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 bps - basis points
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* - ratios are annualized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





Synovus
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BALANCE SHEET DATA
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(In thousands, except share data)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ASSETS
 
 
 
 
 
 
 
Cash and due from banks
 
$
468,426

 
436,540

 
397,848

 
Interest-bearing funds with Federal Reserve Bank
 
641,476

 
515,493

 
460,928

 
Interest earning deposits with banks
 
19,841

 
34,470

 
26,311

 
Federal funds sold and securities purchased under resale agreements
 
13,821

 
25,430

 
47,846

 
Cash and cash equivalents
 
1,143,564

 
1,011,933

 
932,933

 
 
 
 
 
 
 
 
 
Mortgage loans held for sale, at fair value
 
37,129

 
37,276

 
48,024

 
Investment securities available for sale, at fair value
 
3,991,632

 
3,883,574

 
3,987,069