Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter ended December 31, 2012.

Fourth Quarter Results

  • Net income available to common shareholders was $712.8 million for the fourth quarter of 2012, compared to net income available to common shareholders of $16.0 million for the third quarter of 2012 and $12.8 million for the fourth quarter of 2011. Net income available to common shareholders was $775.0 million for the year ended December 31, 2012, compared to a net loss attributable to common shareholders of $118.7 million for the year ended December 31, 2011.
  • Diluted net income per common share for the fourth quarter of 2012 was $0.78, compared to diluted net income per common share of $0.02 for the third quarter of 2012 and $0.01 for the fourth quarter of 2011. Diluted net income per common share for the year ended December 31, 2012 was $0.85, compared to a net loss per common share of $0.15 for the year ended December 31, 2011.
  • The fourth quarter results include an income tax benefit of approximately $800 million from the recapture of substantially all of the deferred tax asset valuation allowance. The recapture of the deferred tax asset drove the $0.89 increase in tangible book value per share during the quarter to $2.96.
  • The fourth quarter results also reflect the successful completion of distressed asset sales of approximately $545 million, including the execution of a bulk sale effective December 10, 2012. The fourth quarter distressed asset dispositions resulted in a pre-tax charge of approximately $157 million.

"Our fourth quarter performance represents another huge step forward for our company," said Kessel D. Stelling, Chairman and CEO of Synovus. "The recapture of the deferred tax asset is a significant milestone that reflects years of progress and further demonstrates our company's return to a position of strength. Additionally, the successful execution of the bulk sale during the fourth quarter accelerates credit quality improvement and also enhances our future financial performance."

Core Performance

Pre-tax, pre-credit costs income was $108.0 million for the fourth quarter of 2012, down $3.5 million from $111.5 million for the third quarter of 2012.

  • Net interest income was $207.5 million for the fourth quarter of 2012, down $4.9 million from $212.3 million in the previous quarter.
  • The net interest margin was 3.45%, down six basis points from the third quarter of 2012, due to a decline in the yield on earning assets of ten basis points partially offset by the decline in the effective cost of funds of four basis points.
  • Total non-interest income was $80.1 million for the fourth quarter of 2012, up $6.9 million, compared to $73.2 million in the third quarter of 2012.
  • Non-interest income, excluding net investment securities gains, was up $5.3 million from the previous quarter.
    • Financial Management Services revenue, which includes fiduciary and asset management fees, brokerage revenue, and insurance revenue, was up $1.0 million from the third quarter of 2012.
    • Service charges on deposit accounts were up $0.5 million from the previous quarter.
  • Total reported non-interest expense was $213.3 million for the fourth quarter of 2012 compared to $191.5 million for the previous quarter.
  • Core expenses (excludes Visa indemnification charges, restructuring charges and other credit costs) were up $4.0 million from the third quarter of 2012.
    • Salaries and other personnel expenses increased $1.7 million from the previous quarter, due primarily to incentive compensation expenses.
    • Professional fees were $2.0 million higher than the previous quarter.

"We have made substantial progress in aligning our operating costs with the current size of our organization," said Stelling. "Core expenses decreased by $25.1 million and $95.3 million in 2012 and 2011, respectively, reflecting the impact of the efficiency initiatives implemented during those two years. We have identified new expense savings initiatives of approximately $30 million, with the implementation of these initiatives already underway and continuing throughout 2013. We remain keenly focused on improving efficiency while we also strategically invest in talent and infrastructure that drive growth and improve our customers' experience."

Balance Sheet Fundamentals

  • Total reported loans declined by $190.2 million during the fourth quarter driven by distressed loan sales of approximately $475 million.
  • On a sequential quarter basis, net loan growth was approximately $345 million for the fourth quarter, compared to approximately $240 million during the third quarter of 2012 and approximately $167 million during the fourth quarter of 2011. Net loan growth excludes the impact of loan sales, transfers to loans held-for-sale, charge-offs, and foreclosures.
  • Loans outstanding from the Corporate Banking Group were up approximately $205 million compared to the previous quarter and up approximately $583 million over the previous year.
  • Total deposits ended the quarter at $21.1 billion, up $210.2 million from the previous quarter due primarily to increases in NOW account balances and non-interest bearing demand deposits.
  • Core deposits ended the quarter at $20.0 billion, up $37.4 million compared to the third quarter of 2012. Core deposits, excluding time deposits, increased $225.2 million compared to the previous quarter.
  • The effective cost of core deposits (includes non-interest bearing deposits) continued to decline, with an effective cost of 30 basis points for the fourth quarter of 2012, down from 34 basis points for the previous quarter and 53 basis points for the fourth quarter of 2011.

Credit Trends

  • Distressed asset sales were approximately $545 million during the fourth quarter, compared to approximately $110 million in the third quarter of 2012, and approximately $147 million in the fourth quarter of 2011.
  • Non-performing loan inflows were $262.7 million in the fourth quarter of 2012, up from $114.8 million in the third quarter of 2012 and $189.2 million in the fourth quarter of 2011. Inflows increased during the fourth quarter of 2012 due to the addition of one larger credit relationship to non-performing status. Substantially all of this relationship was previously classified as substandard accruing, and therefore had minimal impact on classified assets during the quarter.
  • Non-performing loans, excluding loans held for sale, were $543.3 million at December 31, 2012, down $156.9 million from the previous quarter, and down $339.7 million or 38.5% from the fourth quarter of 2011. The non-performing loan ratio was 2.78% at December 31, 2012, down from 3.55% at the end of the previous quarter and 4.40% at December 31, 2011.
  • Total non-performing assets were $703.1 million at December 31, 2012, down $196.3 million from the previous quarter, and down $414.3 million or 37.1% from the fourth quarter of 2011. The non-performing asset ratio was 3.57% at December 31, 2012, compared to 4.51% at the end of the previous quarter and 5.50% at December 31, 2011.
  • Synovus Bank's classified assets, as a percentage of Tier 1 capital and the allowance for loan losses, declined to 38.0% at December 31, 2012, down from 50.7% at September 30, 2012 and 62.5% at December 31, 2011. Synovus Financial Corp.'s classified asset ratio was 44.8% at December 31, 2012.
  • Total delinquencies (consisting of loans 30 or more days past due and still accruing) were 0.54% of total loans at December 31, 2012, compared to 0.55% at September 30, 2012, and 0.74% at December 31, 2011. Total loans past due 90 days or more and still accruing were 0.03% at December 31, 2012, compared to 0.05% at September 30, 2012, and 0.07% at December 31, 2011.
  • Total credit costs were $185.8 million in the fourth quarter of 2012, up from $85.6 million in the third quarter of 2012 and $90.5 million in the fourth quarter of 2011, primarily due to the distressed asset sales in the fourth quarter of 2012.
  • Net charge-offs were $193.5 million in the fourth quarter of 2012, up from $96.5 million in the third quarter of 2012 and $113.5 million in the fourth quarter of 2011, due to the higher level of distressed asset sales during the fourth quarter. The annualized net charge-off ratio was 3.94% in the fourth quarter, up from 1.97% in the previous quarter and 2.26% in the fourth quarter of 2011.

Capital Ratios

  • Tangible Common Equity/Tangible Assets ratio was 9.67% at December 31, 2012 compared to 7.35% at September 30, 2012.
  • Tier 1 Common Equity ratio was 8.72% at December 31, 2012 compared to 8.73% at September 30, 2012.
  • Tier 1 Capital ratio was 13.24% at December 31, 2012 compared to 13.23% at September 30, 2012.
  • Tier 1 Leverage ratio was 11.00% at December 31, 2012 compared to 10.97% at September 30, 2012.
  • Total Risk Based Capital ratio was 16.18% at December 31, 2012 compared to 16.16% at September 30, 2012.

Stelling concluded, "While we are certainly mindful of the continued headwinds facing our entire industry, including slow growth as well as economic and political uncertainty, we are encouraged by our momentum heading into 2013. Our deferred tax asset recapture and a successful bulk sale are behind us, and we expect to repay TARP by the end of this year. Our customers remain our primary focus, and the efforts of our dedicated bankers, along with our relationship style of banking, continue to drive improved performance across our footprint, as evidenced by net loan growth of $345.4 million for the fourth quarter and $588.8 million for the year. We also saw positive growth trends in mortgage and investment services during 2012, and our Family Asset Management team was recently recognized by Bloomberg Markets Magazine as one of the 'Top 50 Family Offices' in the world. This has been a transformational year for our company, and I want to thank all of our team members for their loyalty, perseverance, and intense passion for serving our customers and communities. I also want to thank our customers for their continued trust and confidence in us. We look forward to earning the right to be their bank for many years to come."

Synovus will host an earnings highlights conference call at 8:30 a.m. EST on January 22, 2013. The earnings call will be accompanied by a slide presentation. Shareholders and other interested parties can access the slide presentation and listen to the conference call via simultaneous Internet broadcast at www.synovus.com by clicking on the "Live Webcast" icon. RealPlayer or Windows Media Player can be downloaded prior to accessing the actual call or the replay. The replay will be archived for 12 months and will be available 30-45 minutes after the call.

About Synovus

Synovus Financial Corp. is a financial services company with approximately $27 billion in assets based in Columbus, Georgia. Synovus Financial Corp. provides commercial and retail banking, investment and mortgage services to customers in Georgia, Alabama, South Carolina, Florida and Tennessee. See Synovus Financial Corp. on the web at www.synovus.com.

Forward-Looking Statements

This press release and certain of our other filings with the Securities and Exchange Commission contain statements that constitute "forward-looking statements" within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. You can identify these forward-looking statements through Synovus' use of words such as "believes," "anticipates," "expects," "may," "will," "assumes," "should," "predicts," "could," "would," "intends," "targets," "estimates," "projects," "plans," "potential" and other similar words and expressions of the future or otherwise regarding the outlook for Synovus' future business and financial performance and/or the performance of the commercial banking industry and economy in general. These forward-looking statements include, among others, our expectations on credit trends and key credit metrics (including classified assets and NPL inflows), deposits, loan growth and our loan portfolio; expectations on growth and future profitability; expectations regarding the deferred tax asset, including realization of the net deferred tax asset and on our ability to include all of the deferred tax asset in future regulatory capital; our expectations regarding repayment of our obligations under TARP; expectations regarding the impact of our ongoing efficiency initiatives and future cost savings; 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 report. 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, 2011 under the captions "Cautionary Notice Regarding Forward-Looking Statements" and "Risk Factors" and in Synovus' quarterly reports on Form 10-Q and current reports on Form 8-K. We believe these forward-looking statements are reasonable; however, undue reliance should not be placed on any forward-looking statements, which are based on current expectations and speak only as of the date that they are made. We do not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise, except as otherwise may be required by law.

Use of Non-GAAP Financial Measures

The measures entitled core deposits, core deposits excluding time deposits, Tier 1 common equity ratio, tangible common equity to tangible assets ratio, tangible book value per common share, pre-tax, pre-credit costs income, core expenses, non-interest income excluding investment securities gains, net and net sequential quarter loan growth (decline) are not measures recognized under U.S. generally accepted accounting principles (GAAP) and therefore are considered non-GAAP financial measures. The most comparable GAAP measures are total deposits, total shareholders' equity to total assets ratio, book value per common share, income (loss) before income taxes, total non-interest expense, total non-interest income, and sequential quarter total loan growth (decline), respectively.

Synovus believes that these non-GAAP financial measures provide meaningful additional information about Synovus to assist management and investors in evaluating Synovus' capital strength and the performance of its core business. These non-GAAP financial measures should not be considered as substitutes for total deposits, total shareholders' equity to total assets ratio, book value per common share, (loss) income before income taxes, total non-interest expense, total non-interest income, or sequential quarter total loan growth (decline) determined in accordance with GAAP and may not be comparable to other similarly titled measures at other companies.

The computations of core deposits, core deposits excluding time deposits, Tier 1 common equity ratio, tangible common equity to tangible assets ratio, tangible book value per common share, pre-tax, pre-credit costs income, core expenses, non-interest income excluding investment gains, net and net sequential quarter loan growth (decline) and the reconciliation of these measures to total deposits, total shareholders' equity to total assets ratio, book value per common share, (loss) income before income taxes, total non-interest expense, total non-interest income, and sequential quarter total loan growth (decline) are set forth in the tables below.

 

Reconciliation of Non-GAAP Financial Measures

(dollars in thousands)   4Q12   3Q12   2Q12   1Q12   4Q11
Core deposits

Core deposits excluding time deposits

Total deposits $ 21,057,044   20,846,830   21,565,065   22,137,702   22,411,752
Subtract: Brokered deposits   (1,092,749 ) (919,959 ) (1,148,892 ) (1,406,709 ) (1,783,174 )
Core deposits 19,964,295 19,926,871 20,416,173 20,730,993 20,628,578
Subtract: Time deposits   (3,583,305 ) (3,771,117 ) (4,097,834 ) (4,302,292 ) (4,591,164 )
Core deposits excluding time deposits $ 16,380,990   16,155,754   16,318,339   16,428,701   16,037,414  
 
Tangible common equity to tangible assets ratio
Tangible book value per common share
Total assets $ 26,763,468 25,764,644 26,294,110 27,064,792 27,162,845
Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net   (5,149 ) (5,895 ) (6,693 ) (7,589 ) (8,525 )
Tangible assets $ 26,733,888   25,734,318   26,262,986   27,032,772   27,129,889  
 
Total shareholders' equity $ 3,572,887 2,875,700 2,853,389 2,821,763 2,827,452
Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net (5,149 ) (5,895 ) (6,693 ) (7,589 ) (8,525 )
Subtract: Series A Preferred Stock, no par value   (957,327 ) (954,690 ) (952,093 ) (949,536 ) (947,017 )
Tangible common equity $ 2,585,980   1,890,684   1,870,172   1,840,207   1,847,479  
Subtract: tMeds   (260,083 ) (260,083 ) (260,083 ) (260,083 ) (260,083 )
Tangible common equity excluding tMeds $ 2,325,897   1,630,601   1,610,089   1,580,124   1,587,396  
Shares outstanding $ 786,579   786,576   786,576   786,575   785,295  
Total shareholders' equity to total assets ratio 13.35 % 11.16 10.85 10.43 10.41
Tangible common equity to tangible assets ratio 9.67 % 7.35 7.12 6.81 6.81
 
Book value per common share $ 2.99 2.11 2.09 2.05 2.06
Tangible book value per common share $ 2.96 2.07 2.05 2.01 2.02
 
Tier 1 Common Equity Ratio
Total shareholders' equity $ 3,572,887 2,875,700 2,853,389 2,821,763 2,827,452

Subtract/Add: Accumulated other comprehensive (income) loss

(4,101 ) (16,156 ) (7,003 ) 2,195 (21,093 )
Subtract: Goodwill (24,431 ) (24,431 ) (24,431 ) (24,431 ) (24,431 )
Subtract: Other intangible assets, net (5,149 ) (5,895 ) (6,693 ) (7,589 ) (8,525 )
Subtract: Disallowed deferred tax assets(1) (714,226 ) - - - -
Other items   6,981   6,730   7,225   7,856   7,371  

Tier 1 capital

$ 2,831,961   2,835,948   2,822,487   2,799,794   2,780,774  
Subtract: Qualifying trust preferred securities (10,000 ) (10,000 ) (10,000 ) (10,000 ) (10,000 )
Subtract: Series A Preferred Stock   (957,327 ) (954,690 ) (952,093 ) (949,536 ) (947,017 )
Tier 1 common equity $ 1,864,634   1,871,258   1,860,394   1,840,258   1,823,757  
 
Risk weighted assets

21,387,614

(2)

 21,439,000 21,146,000 21,230,000 21,487,000
Tier 1 common equity ratio   8.72 % 8.73   8.80   8.67   8.49  
 
Pre-tax, Pre-credit Costs Income
(Loss) income before income taxes $ (72,299 ) 30,514 37,347 35,916 26,979
Add: Provision for losses on loans 146,526 63,572 44,222 66,049 54,565
Add: Other credit costs(3) 39,236 22,046 26,119 24,849 35,962
Add: Restructuring charges 1,969 1,192 1,393 858 639
Subtract: Investment securities gains, net. (8,233 ) (6,656 ) (4,170 ) (20,083 ) (10,337 )
Add: Visa indemnification charges   757   833   1,734   2,979   5,942  
Pre-tax, pre-credit costs income $ 107,956   111,501   106,645   110,568   113,750  
 
Non-interest income excluding investment securities gains, net
Total non-interest income $ 80,117 73,233 76,477 84,139 73,470
Subtract: Investment securities gains, net (8,233 ) (6,656 ) (4,170 ) (20,083 ) (10,337 )
Non-interest income excluding investment securities gains, net $ 71,884   66,577   72,307   64,056   63,133  
 
 

Reconciliation of Non-GAAP Financial Measures (continued)

(in thousands)

4Q12

   3Q12   2Q12   1Q12   4Q11
Net sequential quarter loan growth (decline)

Sequential quarter growth (decline) in total loans

$ (190,175 ) 51,739 (163,571 ) (236,115 ) (22,273 )
Add: Transfers to other loans held for sale 479,016 70,464 109,589 97,199 74,265
Add: Foreclosures 33,572 42,961 30,087 48,127 36,331
Add: Charge-offs excluding transfers to other loans held for sale 22,940 74,400 53,075 65,498 78,443
Net sequential quarter loan growth (decline) $ 345,354   239,564   29,180   (25,291 ) 166,766  
 
Core Expenses
Total non-interest expense $ 213,346 191,492 208,264 203,133 219,082
Subtract: Other credit costs(3) (39,236 ) (22,046 ) (26,119 ) (24,849 ) (35,962 )
Subtract: Restructuring charges (1,969 ) (1,192 ) (1,393 ) (858 ) (639 )
Subtract: Visa indemnification charges   (757 ) (833 ) (1,734 ) (2,979 ) (5,942 )
Core expenses $ 171,384   167,421   179,018   174,447   176,539  
 
(dollars in thousands) 2012   2011   2010
Core Expenses
Total non-interest expense $ 816,237 903,765

1,009,576

Subtract: Other credit costs(3) (112,250 ) (149,292 ) (198,425 )
Subtract: Restructuring charges (5,412 ) (30,665 ) (5,538 )

Subtract: Visa indemnification charges

(6,304 ) (6,038 ) -

Subtract: Curtailment gain (loss)

-

(398

)

7,092

Core expenses $ 692,271   717,372   812,705  
                     

(1) Only one year of projected future taxable income may be applied in calculating deferred tax assets for regulatory capital purposes.

(2) Preliminary

(3) Other credit costs consist primarily of losses on ORE, provision for losses on unfunded commitments, and charges related to other loans held for sale

 
Synovus    
 
INCOME STATEMENT DATA

 

Twelve Months Ended

(Unaudited)
(Dollars in thousands, except per share data)

 

December 31,

 
2012   2011   Change  
 
Interest income $ 1,004,140 1,141,756 (12.1 ) %
Interest expense 150,023   217,602   (31.1 )
 
Net interest income 854,117 924,154 (7.6 )
Provision for loan losses 320,369   418,795   (23.5 )
 
Net interest income after provision for loan losses 533,748   505,359   5.6  
 
Non-interest income:
Service charges on deposit accounts 78,203 78,770 (0.7 )
Fiduciary and asset management fees 42,503 45,809 (7.2 )
Brokerage revenue 26,913 26,006 3.5
Mortgage banking income 32,272 20,316 58.9
Bankcard fees 34,075 41,493 (17.9 )
Investment securities gains, net 39,142 75,007 (47.8 )
Other fee income 21,138 19,953 5.9
Increase (decrease) in fair value of private equity investments, net 8,233 (1,118 ) nm
Other non-interest income 31,487   32,638   (3.5 )
 
Total non-interest income 313,966   338,874   (7.4 )
 
Non-interest expense:
Salaries and other personnel expense 375,872 371,546 1.2
Net occupancy and equipment expense 105,575 114,037 (7.4 )
FDIC insurance and other regulatory fees 45,408 59,063 (23.1 )
Foreclosed real estate expense, net 90,655 133,570 (32.1 )
Losses (gains) on other loans held for sale, net 4,681 (2,737 ) nm
Professional fees 41,307 40,585 1.8
Data processing expense 33,440 35,757 (6.5 )
Visa indemnification charges 6,304 6,038 4.4
Restructuring charges 5,412 30,665 (82.4 )
Other operating expenses 107,583   115,241   (6.6 )
 
 
Total non-interest expense 816,237   903,765   (9.7 )
 
 
Income (loss) before income taxes 31,477 (59,532 ) nm
Income tax (benefit) expense (802,188 ) 1,312   nm
 
 
Net income (loss) 833,665 (60,844 ) nm
 
Net loss attributable to non-controlling interest -   (220 ) nm
 
Net income (loss) available to controlling interest 833,665   (60,624 ) nm
 
Dividends and accretion of discount on preferred stock 58,703   58,088   1.1  
 
 
Net income (loss) available to common shareholders $ 774,962   (118,712 ) nm
 
 
Basic EPS
Net income (loss) available to common shareholders 0.99 (0.15 ) nm
 
Diluted EPS
Net income (loss) available to common shareholders 0.85 (0.15 ) nm
 
Cash dividends declared per common share 0.04 0.04 -
 
Return on average assets 3.16 % (0.21 ) nm
Return on average common equity 40.65 (6.04 ) nm
 
 
Average common shares outstanding - basic 786,466 785,272 0.2 %
Average common shares outstanding - diluted 910,102 785,272 nm
 
nm - not meaningful
 
Synovus  
 
INCOME STATEMENT DATA
(Unaudited)
(Dollars in thousands, except per share data) 2012   2011   4th Quarter
Fourth Third Second First Fourth '12 vs. '11
Quarter   Quarter   Quarter   Quarter   Quarter   Change
 
Interest income $ 240,000 247,676 253,809 262,654 273,303 (12.2 ) %
Interest expense 32,544   35,331   40,453   41,695   46,147   (29.5 )
 
 
Net interest income 207,456 212,345 213,356 220,959 227,156 (8.7 )
Provision for loan losses 146,526   63,572   44,222   66,049   54,565   168.5  
 
 
Net interest income after provision for loan losses 60,930   148,773   169,134   154,910   172,591   (64.7 )
 
 
Non-interest income:
Service charges on deposit accounts 20,883 20,404 18,684 18,231 19,175 8.9
Fiduciary and asset management fees 10,537 10,340 10,792 10,835 10,763 (2.1 )
Brokerage revenue 7,127 6,844 6,295 6,647 6,939 2.7
Mortgage banking income 9,025 9,261 7,983 6,003 4,847 86.2
Bankcard fees 10,137 7,866 8,493 7,579 7,150 41.8
Investment securities gains, net 8,233 6,656 4,170 20,083 10,337 (20.4 )
Other fee income 6,211 5,276 4,951 4,700 4,310 44.1
Increase (decrease) in fair value of private equity investments, net 1,805 (944 ) 7,279 93 (177 ) nm
Other non-interest income 6,159   7,530   7,830   9,968   10,126   (39.2 )
 
 
Total non-interest income 80,117   73,233   76,477   84,139   73,470   9.0  
 
 
 
Non-interest expense:
Salaries and other personnel expense 94,901 93,177 95,173 92,622 93,115 1.9
Net occupancy and equipment expense 26,063 26,647 26,159 26,706 27,338 (4.7 )
FDIC insurance and other regulatory fees 8,237 9,205 13,302 14,663 13,238 (37.8 )
Foreclosed real estate expense, net 34,978 11,997 20,708 22,972 31,853 9.8
Losses (gains) on other loans held for sale, net 675 4,104 (1,058 ) 959 (145 ) nm
Professional fees 12,037 10,074 9,929 9,267 10,321 16.6
Data processing expense 8,420 8,284 8,712 8,024 8,532 (1.3 )
Visa indemnification charges 757 833 1,734 2,979 5,942 (87.3 )
Restructuring charges 1,969 1,192 1,393 858 639 208.1
Other operating expenses 25,309   25,979   32,212   24,083   28,249   (10.4 )
 
 
Total non-interest expense 213,346   191,492   208,264   203,133   219,082   (2.6 )
 
 
 
(Loss) income before income taxes (72,299 ) 30,514 37,347 35,916 26,979 nm
Income tax benefit (799,795 ) (211 ) (2,105 ) (77 ) (378 ) nm
 
 
Net income 727,496 30,725 39,452 35,993 27,357 nm
 
Dividends and accretion of discount on preferred stock 14,736   14,695   14,649   14,624   14,578   1.1  
 
 
 
Net income available to common shareholders $ 712,760   16,030   24,803   21,369   12,779   nm
 
 
Basic EPS
Net income available to common shareholders 0.91 0.02 0.03 0.03 0.02 nm
 
Diluted EPS
Net income available to common shareholders 0.78 0.02 0.03 0.02 0.01 nm
 
Cash dividends declared per common share 0.01 0.01 0.01 0.01 0.01 -
 
Return on average assets * 11.19 % 0.47 % 0.59 % 0.53 % 0.39 nm
Return on average common equity * 150.19 3.30 5.23 4.49 2.66 nm
 
 
Average common shares outstanding - basic 786,576 786,576 786,576 786,135 785,289 0.2 %
Average common shares outstanding - diluted 911,251 910,396 909,761 908,986 911,253 (0.0 )
 
nm - not meaningful
* - ratios are annualized
   
Synovus
       
BALANCE SHEET DATA December 31, 2012 September 30, 2012 December 31, 2011
(Unaudited)
 
(In thousands, except share data)
 
ASSETS
Cash and cash equivalents $ 614,630 454,028 510,423
Interest bearing funds with Federal Reserve Bank 1,498,390 815,156 1,567,006
Interest earning deposits with banks 23,442 27,215 13,590

Federal funds sold and securities purchased under resale agreements

113,517 116,318 158,916
Trading account assets, at fair value 11,102 5,953 16,866
Mortgage loans held for sale, at fair value 212,663 246,224 161,509
Other loans held for sale 10,690 11,254 30,156
Investment securities available for sale, at fair value 2,981,112 3,229,440 3,690,125
 
Loans, net of deferred fees and costs 19,541,690 19,731,865 20,079,813
Allowance for loan losses (373,405 ) (420,404 ) (536,494 )
Loans, net 19,168,285   19,311,461   19,543,319  
 
Premises and equipment, net 479,546 475,222 486,923
Goodwill 24,431 24,431 24,431
Other intangible assets, net 5,149 5,895 8,525
Other real estate 150,271 189,182 204,232
Net deferred income tax asset 810,144 1,985 2,138
Other assets 660,096   850,880   744,686  
 
Total assets $ 26,763,468   25,764,644   27,162,845  
 
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing deposits $ 5,665,527 5,503,288 5,366,868
Interest bearing deposits, excluding brokered deposits 14,298,768 14,423,583 15,261,710
Brokered deposits 1,092,749   919,959   1,783,174  
 
 
Total deposits 21,057,044 20,846,830 22,411,752
 
 
Federal funds purchased and securities sold under repurchase agreements 201,243 165,865 313,757
Long-term debt 1,726,455 1,654,183 1,364,727
Other liabilities 205,839   222,066   245,157  
 
Total liabilities 23,190,581   22,888,944   24,335,393  
 
 
Equity:
Shareholders' equity:
Series A Preferred Stock, no par value (1) 957,327 954,690 947,017
Common stock, par value $1.00 (2) 792,273 792,269 790,989
Additional paid-in capital 2,189,874 2,202,903 2,241,171
Treasury stock, at cost (3) (114,176 ) (114,176 ) (114,176 )
Accumulated other comprehensive income 4,101 16,156 21,093
Accumulated deficit (256,512 ) (976,142 ) (1,058,642 )
Total shareholders' equity 3,572,887 2,875,700 2,827,452
 
Total liabilities and shareholders' equity $ 26,763,468   25,764,644   27,162,845  
 
 
 
(1) Preferred shares outstanding: 967,870, at all periods presented

(2) Common shares outstanding: 786,579,240; 786,575,516; and 785,295,428 at December 31, 2012, September 30, 2012, and December 31, 2011, respectively.

(3) Treasury shares: 5,693,452, at all periods presented
 
Synovus
         
AVERAGE BALANCES AND YIELDS/RATES (1)
(Unaudited)
(Dollars in thousands)

 

 

2012

 

2011

Fourth Third Second First Fourth
  Quarter   Quarter   Quarter   Quarter   Quarter

Interest Earning Assets

Taxable investment securities (2) $ 3,069,000 3,495,838 3,539,376 3,577,026 3,647,459
Yield 1.62 % 1.67 2.11 2.35 2.59
 
Tax-exempt investment securities (2) (4) $ 17,377 19,503 21,408 23,559 25,566
Yield (taxable equivalent) 6.59 % 6.47 6.40 6.36 6.57
 
Trading account assets $ 9,600 12,343 13,647 14,975 19,107
Yield 8.04 % 8.27 6.93 7.47 4.87
 
Commercial loans (3) (4) $ 15,692,588 15,691,881 15,941,719 16,144,615 16,276,207
Yield 4.48 % 4.63 4.67 4.76 4.82
 
Consumer loans (3) $ 3,992,986 3,940,000 3,896,941 3,866,084 3,871,393
Yield 4.77 % 4.80 4.87 4.95 4.95
 
Allowance for loan losses $ (405,237 )     (446,495 )   (498,419 )   (529,669 )   (587,956 )
 
Loans, net (3) $ 19,280,337 19,185,386 19,340,241 19,481,030 19,559,644
Yield 4.65 % 4.79 4.85 4.94 5.01
 
Mortgage loans held for sale $ 208,839 175,199 90,499 112,040 161,632
Yield 3.72 % 4.03 4.99 4.88 4.58
 

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

$ 1,366,422 1,215,743 1,668,814 1,830,295 2,221,728
Yield 0.24 % 0.24 0.24 0.24 0.24
 
Federal Home Loan Bank and Federal Reserve Bank stock (5) $ 66,630 53,239 63,665 78,100 84,171
Yield 2.03 % 1.87 1.85 1.43 0.93
                         
Total interest earning assets $ 24,018,205 24,157,251 24,737,650 25,117,025 25,719,307
  Yield   3.99   %   4.09     4.14     4.22     4.23  
 

Interest Bearing Liabilities

 
Interest bearing demand deposits $ 3,872,025 3,344,561 3,404,540 3,540,327 3,457,677
Rate 0.18 % 0.19 0.22 0.25 0.26
 
Money market accounts $ 6,251,374 6,751,607 6,769,037 6,755,769 6,697,334
Rate 0.33 % 0.33 0.42 0.49 0.57
 
Savings deposits $ 558,726 557,086 557,149 534,118 516,520
Rate 0.10 % 0.10 0.11 0.12 0.12
 
Time deposits under $100,000 $ 1,648,554 1,763,864 1,868,348 1,967,084 2,062,171
Rate 0.74 % 0.85 0.97 1.08 1.17
 
Time deposits over $100,000 $ 2,015,582 2,176,488 2,336,496 2,480,044 2,710,893
Rate 0.99 % 1.11 1.23 1.33 1.40
 
Brokered money market accounts $ 180,216 186,336 222,916 223,113 236,973
Rate 0.34 % 0.33 0.33 0.28 0.27
 
Brokered time deposits $ 800,434 820,908 1,036,521 1,346,868 1,689,538
Rate 1.42   %   1.83     1.94     1.89     1.87  
 
Total interest bearing deposits $ 15,326,911 15,600,850 16,195,007 16,847,323 17,371,106
Rate 0.47 % 0.54 0.64 0.73 0.82
 

Federal funds purchased and other short-term liabilities

$ 266,431 350,183 368,984 296,018 329,343
Rate 0.16 % 0.17 0.18 0.24 0.26
 
Long-term debt $ 1,740,588 1,372,741 1,326,239 1,386,324 1,443,825
Rate 3.27 % 4.09 4.34 3.19 2.78
                         
Total interest bearing liabilities $ 17,333,930 17,323,774 17,890,230 18,529,665 19,144,274
  Rate   0.75   %   0.81     0.91     0.90     0.96  
 
Non-interest bearing demand deposits $ 5,466,312 5,560,827 5,606,352 5,397,964 5,413,322
                         
Net interest margin   3.45   %   3.51     3.48     3.55     3.52  
 
Taxable equivalent adjustment $ 766 761 780 798 844
 
(1) Yields and rates are annualized.
(2) Excludes net unrealized gains and (losses).
(3) Average loans are shown net of unearned income. Non-performing loans are included.

(4) Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 35%, in adjusting interest on tax-exempt loans and investment securities to a taxable-equivalent basis.

(5) Included as a component of Other Assets on the balance sheet
 
Synovus          
 
 
LOANS OUTSTANDING AND NON-PERFORMING LOANS COMPOSITION
(Unaudited)
(Dollars in thousands)
 
 
December 31, 2012
Loans as a % Total Non-performing Loans
of Total Loans Non-performing as a % of Total
Loan Type Total Loans     Outstanding       Loans       Nonperforming Loans  
 
 
Multi-Family $ 796,110 4.1 % $ 8,129 1.5 %
Hotels 655,263 3.3 4,902 0.9
Office Buildings 773,881 4.0 4,855

0.9

Shopping Centers 896,869 4.6 9,373 1.7
Commercial Development 226,513 1.2 51,462 9.5
Warehouses 538,157 2.7 2,898 0.5
Other Investment Property 489,325   2.5   10,248   1.9  
 
Total Investment Properties 4,376,118   22.4   91,867   16.9  
 
1-4 Family Construction 130,841 0.7 7,633 1.4
1-4 Family Investment Mortgage 865,801 4.4 26,985 5.0
Residential Development 282,463   1.4   37,960   7.0  
 
Total 1-4 Family Properties 1,279,105   6.5   72,578   13.4  
 
Land Acquisition 794,229   4.1   191,475   35.2  
 
Total Commercial Real Estate 6,449,452   33.0   355,920   65.5  
 
Commercial , Financial, and Agricultural 5,301,134 27.1 79,575 14.6
Owner-Occupied Real Estate 3,800,380   19.4   43,386   8.0  
 
Total Commercial & Industrial 9,101,514 46.5 122,961 22.6
 
Home Equity Lines 1,542,397 7.9 16,741 3.1
Consumer Mortgages 1,394,248 7.1 38,630 7.1
Credit Cards 263,561 1.3 - -
Other Retail Loans 810,891   4.2   9,081   1.7  
 
Total Retail 4,011,097 20.5 64,452 11.9
 
Unearned Income (20,373 ) nm -   nm
 
Total $ 19,541,690   100.0   % $ 543,333   100.0   %
 
 
LOANS OUTSTANDING BY TYPE COMPARISON
(Unaudited)
(Dollars in thousands)
                         
Total Loans 4Q12 vs. 3Q12 4Q12 vs. 4Q11
Loan Type December 31, 2012     September 30, 2012       % change (1)       December 31, 2011   % change
 
 
Multi-Family $ 796,110 759,500 19.2 % $ 785,672 1.3 %
Hotels 655,263 689,196 (19.6 ) 791,444 (17.2 )
Office Buildings 773,881 772,961 0.5 775,671 (0.2 )
Shopping Centers 896,869 918,224 (9.3 ) 979,288 (8.4 )
Commercial Development 226,513 279,585 (75.5 ) 286,954 (21.1 )
Warehouses 538,157 508,770 23.0 489,086 10.0
Other Investment Property 489,325   474,228   12.7   449,198   8.9  
 
Total Investment Properties 4,376,118   4,402,464   (2.4 ) 4,557,313   (4.0 )
 
1-4 Family Construction 130,841 152,598 (56.7 ) 199,088 (34.3 )
1-4 Family Investment Mortgage 865,801 906,744 (18.0 ) 976,552 (11.3 )
Residential Development 282,463   367,908   (92.4 ) 442,844   (36.2 )
 
Total 1-4 Family Properties 1,279,105   1,427,250   (41.3 ) 1,618,484   (21.0 )
 
Land Acquisition 794,229   909,420   (50.4 ) 1,094,821   (27.5 )
 
Total Commercial Real Estate 6,449,452   6,739,134   (17.1 ) 7,270,618   (11.3 )
 
Commercial , Financial, and Agricultural 5,301,134 5,163,546 10.6 5,088,420 4.2
Owner-Occupied Real Estate 3,800,380   3,877,578   (7.9 ) 3,852,854   (1.4 )
 
Total Commercial & Industrial 9,101,514 9,041,124 2.7 8,941,274 1.8
 
 
Home Equity Lines 1,542,397 1,572,986 (7.7 ) 1,619,585 (4.8 )
Consumer Mortgages 1,394,248 1,399,432 (1.5 ) 1,411,749 (1.2 )
Credit Cards 263,561 257,922 8.7 273,098 (3.5 )
Other Retail Loans 810,891   738,320   39.1   575,475   40.9  
Total Retail 4,011,097 3,968,660 4.3 3,879,907 3.4
 
Unearned Income (20,373 ) (17,053 ) 77.5   (11,986 ) 70.0  
 
Total $ 19,541,690   19,731,865   (3.8 ) % $ 20,079,813   (2.7 ) %
 
(1) Percentage change is annualized.
 
Synovus
                   
CREDIT QUALITY DATA
(Unaudited)
(Dollars in thousands) 2012     2011 4th Quarter
Fourth Third Second First Fourth '12 vs. '11
Quarter   Quarter     Quarter     Quarter     Quarter Change
 
Non-performing Loans $ 543,333 700,204 755,161 836,039 883,021 (38.5 ) %
Other Loans Held for Sale (1) 9,455 10,019 31,306 18,317 30,156 (68.6 )
Other Real Estate 150,271 189,182 174,941 201,429 204,232 (26.4 )
Non-performing Assets 703,059 899,405 961,408 1,055,785 1,117,409 (37.1 )
 
Allowance for Loan Losses 373,405 420,404 453,325 507,794 536,494 (30.4 )
 
Net Charge-Offs - Quarter 193,525 96,493 98,691 94,749 113,454 70.6
Net Charge-Offs / Average Loans - Quarter (2) 3.94 % 1.97 1.99 1.90 2.26
 
Non-performing Loans / Loans 2.78 3.55 3.84 4.21 4.40
Non-performing Assets / Loans, Other Loans Held for Sale & ORE 3.57 4.51 4.83 5.26 5.50
Allowance / Loans 1.91 2.13 2.30 2.56 2.67
 
Allowance / Non-performing Loans 68.72 60.04 60.03 60.74 60.76
Allowance / Non-performing Loans (3) 93.58 131.56 136.94 128.32 124.04
 
Past Due Loans over 90 days and Still Accruing $ 6,811 8,972 5,863 8,388 14,521 (53.1 ) %
As a Percentage of Loans Outstanding 0.03 % 0.05 0.03 0.04 0.07
 
Total Past Dues Loans and Still Accruing $ 104,825 108,633 91,962 144,794 149,442 (29.9 )
As a Percentage of Loans Outstanding 0.54 % 0.55 0.47 0.73 0.74
 
Accruing troubled debt restructurings (TDRs) $ 674,527 698,847 687,396 651,239 668,472 0.9
 
(1) Represent impaired loans that are intended to be sold. Held for sale loans are carried at the lower of cost or fair value, less costs to sell.
(2) Ratio is annualized.
(3) Excludes non-performing loans for which the expected loss has been charged off.
 
                                     
 
 
SELECTED CAPITAL INFORMATION (1)
(Unaudited)
(Dollars in thousands)    
December 31, 2012 December 31, 2011
 
Tier 1 Capital $ 2,831,960 2,780,774
Total Risk-Based Capital 3,460,710 3,544,089
Tier 1 Capital Ratio 13.24 % 12.94
Tier 1 Common Equity Ratio 8.72 8.49
Total Risk-Based Capital Ratio 16.18 16.49
Tier 1 Leverage Ratio 11.00 10.08
Common Equity as a Percentage of Total Assets (2) 9.77 6.92
Tangible Common Equity as a Percentage of Tangible Assets (3) 9.67 6.81
Tangible Common Equity as a Percentage of Risk Weighted Assets (3) 12.09 8.60
Book Value Per Common Share (4) (5) 2.99 2.06
Tangible Book Value Per Common Share (3) (5) 2.96 2.02
 
 
(1) Current quarter regulatory capital information is preliminary.
(2) Common equity consists of Total Shareholders' Equity less Series A 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 Series A Preferred Stock divided by total common shares outstanding.
(5) Equity and common shares exclude impact of unexercised tangible equity units (tMEDS).

Synovus Financial Corp.
Patrick A. Reynolds, 706-649-4973
Director of Investor Relations