Synovus Financial : Announces Earnings for the Second Quarter 2020

Diluted Earnings per Share of $0.57 vs. $0.96 in 2Q19 Adjusted Diluted Earnings per Share of $0.23 vs. $1.00 in 2Q19

Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter ended June 30, 2020.

Second Quarter 2020 Highlights

• Diluted EPS of $0.57; adjusted diluted EPS of $0.23.
• Period-end loan growth of $1.66 billion or 4.3% sequentially; funded approximately $2.9 billion in Paycheck Protection Program (PPP) loans, supporting more than 19,000 customers.
• Core transaction deposits (non-interest bearing, NOW/savings, and money market deposits excluding public and brokered funds) increased $4.63 billion or 18.7% sequentially.
• Interest-bearing deposit (NOW/savings, money market, and time deposit) costs down 45 bps from the first quarter.
• Net interest income growth of $3.3 million sequentially; net interest margin of 3.13% vs. 3.37% in 1Q20.
• Non-interest revenue increased $69.6 million sequentially and $83.7 million compared to prior year, largely due to investment gains of $78.1 million.
• Provision for credit losses of $141.9 million reflected significant economic stress due to the COVID-19 healthcare crisis; allowance for credit losses coverage ratio (to loans) of 1.63%, or 1.74% excluding PPP loans.
• Credit quality metrics remain stable, with the non-performing loan ratio and net charge-off ratio of 0.37% and 0.24%, respectively.
• CET1 ratio improved 20 bps to 8.90% and Total Risk Based Capital ratio increased 41 bps to 12.70%.

Second Quarter Summary

		Reported												Adjusted
(dollars in thousands)		2Q20				1Q20				2Q19				2Q20			1Q20				2Q19
Net income available to common shareholders		$	84,901			$	30,230			$	153,034			$34,015			$	30,708			$	158,892
Diluted earnings per share		0.57				0.20				0.96				0.23			0.21				1.00
Total loans		39,914,297				38,258,024				36,138,561				N/A			N/A				N/A
Total deposits		44,194,580				39,826,585				37,966,722				N/A			N/A				N/A
Total revenues		550,911				477,903				487,880				472,795			473,424				488,270
Return on avg assets		0.71		%		0.32		%		1.34		%		0.32	%		0.32		%		1.39		%
Return on avg common equity		7.48				2.75				13.90				3.00			2.79				14.43
Return on avg tangible common equity		8.69				3.34				16.09				3.60			3.39				16.70
Net interest margin		3.13				3.37				3.69				3.11			3.35				3.48
Efficiency ratio		51.58				57.81				54.14				57.91			56.72				52.08
NCO ratio		0.24				0.21				0.13				N/A			N/A				N/A
NPA ratio		0.44				0.50				0.39				N/A			N/A				N/A

“Our performance in the second quarter demonstrates the key role we play as a financial resource and community partner in the markets we serve,” said Kessel D. Stelling, Synovus Chairman and CEO. “We delivered approximately $3 billion in Paycheck Protection Program loans to more than 19,000 customers and originated a record $1.4 billion in consumer mortgages. Through strong operating performance and effective balance sheet management, we further improved both our capital and liquidity levels during the quarter. As we navigate an uncertain economic environment, we continue to invest in the future while accelerating many Synovus Forward initiatives focused on efficiencies, digital enhancements, and customer experience. And as our communities manage through the challenges of the pandemic and longstanding racial inequalities, we are fully committed to do our part to bring strength and positive change.”

Balance Sheet

Loans*
(dollars in millions)		2Q20					1Q20					Linked Quarter Change					Linked Quarter % Change			2Q19					Year/Year Change					Year/Year % Change
Commercial & industrial		$	19,938.3				$	17,661.4				$	2,276.8				12.9	%		$	16,228.7				$	3,709.5				22.9	%
Commercial real estate		10,827.5					10,671.2					156.3					1.5			10,367.2					460.3					4.4
Consumer		9,246.7					9,950.9					(704.2		)			(7.1	)		9,566.1					(319.5		)			(3.3	)
Unearned income		(98.2		)			(25.5		)			(72.7		)			nm			(23.6		)			(74.6		)			316.8
Total loans		$	39,914.3				$	38,258.0				$	1,656.3				4.3	%		$	36,138.6				$	3,775.7				10.4	%
*Amounts may not total due to rounding nm = not meaningful

• Total loans ended the quarter at $39.91 billion, up $1.66 billion or 4.3% sequentially.
• Commercial and industrial (C&I) loans sequential growth of $2.28 billion led by net growth of $2.71 billion in PPP loans, offsetting C&I line utilization of 41% compared to 50% in the prior quarter.
• Consumer loans decreased by $704.2 million sequentially, primarily as a result of transitioning lending partnership assets to held-for-sale, partially offset by record portfolio mortgage production of $800.5 million, up $510.5 million sequentially.

Deposits*
(dollars in millions)		2Q20				1Q20				Linked Quarter Change					Linked Quarter % Change			2Q19				Year/Year Change					Year/Year % Change
Non-interest-bearing DDA		$	11,830.7			$	8,968.8			$	2,861.9				31.9	%		$	8,577.6			$	3,253.1				37.9	%
Interest-bearing DDA		5,057.2				4,617.4				439.9					9.5			4,847.2				210.0					4.3
Money market		11,457.2				10,255.0				1,202.2					11.7			8,952.9				2,504.3					28.0
Savings		1,080.1				949.5				130.6					13.8			891.2				188.9					21.2
Public funds		5,347.4				5,261.4				86.0					1.6			4,351.3				996.0					22.9
Time deposits		5,131.7				5,786.6				(655.0		)			(11.3	)		7,343.0				(2,211.3		)			(30.1	)
Brokered deposits		4,290.3				3,987.9				302.4					7.6			3,003.5				1,286.8					42.8
Total deposits		$	44,194.6			$	39,826.6			$	4,368.0				11.0	%		$	37,966.7			$	6,227.9				16.4	%
*Amounts may not total due to rounding

• Total deposits ended the quarter at $44.19 billion, up $4.37 billion or 11.0% sequentially.
• Core transaction deposits increased $4.63 billion or 18.7% sequentially, led by non-interest-bearing DDA growth of $2.86 billion.
• Broad-based growth in NOW, MMA, and savings deposits more than offset a $655.0 million decline in time deposits.
• 2Q20 interest-bearing deposit costs declined 45 bps from 1Q20.

Income Statement Summary**
(in thousands, except per share data)		2Q20				1Q20				Linked Quarter Change					Linked Quarter % Change			2Q19				Year/Year Change					Year/Year % Change
Net interest income		$	376,566			$	373,260			$	3,306				0.9	%		$	397,262			$	(20,696	)			(5.2	)%
Non-interest revenue		173,484				103,857				69,627					67.0			89,807				83,677					93.2
Non-interest expense		284,141				276,279				7,862					2.8			264,126				20,015					7.6
Provision for credit losses		141,851				158,722				(16,871		)			(10.6	)		12,119				129,732					nm
Income before taxes		$	124,058			$	42,116			$	81,942				194.6	%		$	210,824			$	(86,766	)			(41.2	)%
Income tax expense		30,866				3,595				27,271					nm			54,640				(23,774		)			(43.5	)
Preferred stock dividends		8,291				8,291				—					—			3,150				5,141					163.2
Net income available to common shareholders		$	84,901			$	30,230			$	54,671				180.9	%		$	153,034			$	(68,133	)			(44.5	)%
Weighted average common shares outstanding, diluted		147,733				148,401				(668		)			(0.5	)%		159,077				(11,344		)			(7.1	)%
Diluted earnings per share		$	0.57			$	0.20			$	0.37				182.1			$	0.96			$	(0.39	)			(40.3	)
Adjusted diluted earnings per share		0.23				0.21				0.02					11.3			1.00				(0.77		)			(77.0	)
** Amounts may not total due to rounding nm - not meaningful

Core Performance

• Total revenues were $550.9 million in the second quarter, up $73.0 million sequentially.
• Net interest income increased $3.3 million, or 0.9% sequentially, benefiting from prudent deposit pricing, growth in PPP loan balances, and $9.2 million of PPP fees recognized in the quarter.
• Net interest margin was 3.13%, down 24 bps from the prior quarter.
• Non-interest revenue increased $69.6 million, or 67.0% sequentially, and increased $83.7 million, or 93.2% year-over-year. The sequential increase was largely attributable to $69.4 million of securities gains as a result of repositioning the investment portfolio.
• Adjusted non-interest revenue decreased $4.0 million, or 4.0% sequentially, and increased $5.2 million, or 5.7% year-over-year. Mortgage revenue increased $11.3 million compared to the prior quarter on record production.
• Non-interest expense increased $7.9 million, or 2.8% sequentially. Adjusted non-interest expense increased $5.3 million, or 1.9% sequentially.
  • The increase in expenses reflected a $7.1 million increase in mortgage commissions. Additionally, the second quarter included $6.7 million of professional fees associated with the implementation of Synovus Forward initiatives and $6.6 million of COVID-19 related expenses, partially offset by a $6.9 million reduction in benefits and payroll tax expense.
• Provision for credit losses of $141.9 million reflected significant economic stress due to the COVID-19 healthcare crisis; allowance for credit losses coverage ratio (to loans) of 1.63%, or 1.74% excluding PPP loans.
• Tax expense was $30.9 million, an increase of $27.3 million driven by higher pre-tax income and favorable discrete items in the first quarter; year-to-date effective tax rate of 20.74%.

Capital Ratios
		2Q20				1Q20			2Q19
Common equity Tier 1 capital (CET1) ratio		8.90	%	*		8.70	%		9.61	%
Tier 1 capital ratio		10.15		*		9.95			10.09
Total risk-based capital ratio		12.70		*		12.29			12.11
Tier 1 leverage ratio		8.38		*		8.92			8.89
Tangible common equity ratio		7.41				7.94			8.56
* Ratios are preliminary.

Capital

• CET1 ratio increased 20 bps during the quarter to 8.90%, benefiting from higher net income and a reduction of $68.9 million in risk-weighted assets sequentially.
• Total risk-based capital of 12.70% is the highest since 2Q18 and reflects continued allowance build.

Second Quarter Earnings Conference Call

Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on July 21, 2020. 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 $54 billion in assets. Synovus provides commercial and retail banking, investment, and mortgage services through 294 branches in Alabama, Florida, Georgia, South Carolina, and Tennessee. Synovus Bank, a wholly owned subsidiary of Synovus, has been recognized as one of the country's “Most Reputable Banks” by American Banker and the Reputation Institute. Synovus is on the web at synovus.com, and on Twitter, Facebook, LinkedIn, and Instagram.

Forward-Looking Statements

This press release and certain of our other filings with the Securities and Exchange Commission contain statements that constitute “forward-looking statements” within the meaning of, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. You can identify these forward-looking statements through Synovus’ use of words such as “believes,” “anticipates,” “expects,” “may,” “will,” “assumes,” “should,” “predicts,” “could,” “would,” “intends,” “targets,” “estimates,” “projects,” “plans,” “potential” and other similar words and expressions of the future or otherwise regarding the outlook for Synovus’ future business and financial performance and/or the performance of the banking industry and economy in general. These forward-looking statements include, among others, our expectations regarding our future operating and financial performance, our expectations regarding net interest income and net interest margin; expectations on our growth strategy, expense and revenue initiatives, capital management, liquidity and funding, and future profitability; expectations on credit quality and performance; and the assumptions underlying our expectations. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties which may cause the actual results, performance or achievements of Synovus to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on the information known to, and current beliefs and expectations of, Synovus’ management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. A number of factors could cause actual results to differ materially from those contemplated by the forward-looking statements in this press release. Many of these factors are beyond Synovus’ ability to control or predict.

These forward-looking statements are based upon information presently known to Synovus’ management and are inherently subjective, uncertain and subject to change due to any number of risks and uncertainties, including, without limitation, the risks and uncertainties related to the impact of the COVID-19 pandemic on Synovus' assets, business, liquidity, financial condition, prospects and results of operations, and 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, 2019, 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 revenue; adjusted non-interest expense; adjusted total revenues; adjusted tangible efficiency ratio; adjusted net income available to common shareholders; adjusted earnings per diluted share; adjusted return on average assets; adjusted return on average common equity; return on average tangible common equity; adjusted return on average tangible common equity; and tangible common equity ratio 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 revenue; total non-interest expense; total revenues; efficiency ratio-FTE; net income available to common shareholders; earnings per diluted common share; return on average assets; return on average common equity; and the ratio of total shareholders' equity to total assets, 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 revenue are measures used by management to evaluate total revenues and non-interest revenue exclusive of net investment securities gains (losses) and gains on sales and changes in the fair value of private equity investments, net. Adjusted non-interest expense and the adjusted tangible efficiency ratio are measures utilized by management to measure the success of expense management initiatives focused on reducing recurring controllable operating costs. Adjusted net income available to common shareholders, adjusted earnings per diluted share, adjusted return on average assets, and adjusted return on average common equity are measures used by management to evaluate operating results exclusive of items that are not indicative of ongoing operations and impact period-to-period comparisons. Return on average tangible common equity and adjusted return on average tangible common equity are measures used by management to compare Synovus’ performance with other financial institutions because it calculates the return available to common shareholders without the impact of intangible assets and their related amortization, thereby allowing management to evaluate the performance of the business consistently. The tangible common equity ratio is used by management 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)		2Q20				1Q20				2Q19
Adjusted non-interest revenue
Total non-interest revenue		$	173,484			$	103,857			$	89,807
Subtract/add: Investment securities (gains) losses, net		(69,409		)		(8,734		)		1,845
Subtract/add: Gain on sale and fair value (increase) decrease of private equity investments		(8,707		)		4,255				(1,455		)
Adjusted non-interest revenue		$	95,368			$	99,378			$	90,197
Adjusted non-interest expense
Total non-interest expense		$	284,141			$	276,279			$	264,126
Subtract: Earnout liability adjustments		(4,908		)		—				—
Subtract: Merger-related expense		—				—				(7,401		)
Subtract: Restructuring charges, net		(2,822		)		(3,220		)		(18		)
Subtract: Loss on early extinguishment of debt, net		—				(1,904		)		—
Adjusted non-interest expense		$	276,411			$	271,155			$	256,707
Reconciliation of Non-GAAP Financial Measures, continued
(dollars in thousands)		2Q20				1Q20				2Q19
Adjusted total revenues and adjusted tangible efficiency ratio
Adjusted non-interest expense		$	276,411			$	271,155			$	256,707
Subtract: Amortization of intangibles		(2,640		)		(2,640		)		(2,410		)
Adjusted tangible non-interest expense		$	273,771			$	268,515			$	254,297
Net interest income		$	376,566			$	373,260			$	397,262
Add: Tax equivalent adjustment		861				786				811
Add: Total non-interest revenue		173,484				103,857				89,807
Total FTE revenues		550,911				477,903				487,880
Subtract/add: Investment securities (gains)/losses, net		(69,409		)		(8,734		)		1,845
Subtract/add: Gain on sale and fair value (increase) decrease of private equity investments		(8,707		)		4,255				(1,455		)
Adjusted total revenues		$	472,795			$	473,424			$	488,270
Efficiency ratio-FTE		51.58		%		57.81		%		54.14		%
Adjusted tangible efficiency ratio		57.91				56.72				52.08

Adjusted return on average assets
Net income		$	93,192			$	38,521			$	156,184
Add: Earnout liability adjustments		4,908				—				—
Add: Merger-related expense		—				—				7,401
Add: Restructuring charges, net		2,822				3,220				18
Add: Loss on early extinguishment of debt, net		—				1,904				—
Subtract/add: Investment securities (gains) losses, net		(69,409		)		(8,734		)		1,845
Subtract/add: Gain on sale and fair value (increase) decrease of private equity investments		(8,707		)		4,255				(1,455		)
Add/subtract: Tax effect of adjustments		19,500				(167		)		(1,951		)
Adjusted net income		$	42,306			$	38,999			$	162,042
Net income annualized		$	374,816			$	154,931			$	626,452
Adjusted net income annualized		$	170,154			$	156,853			$	649,949
Total average assets		$	52,853,685			$	48,696,595			$	46,679,769
Return on average assets		0.71		%		0.32		%		1.34		%
Adjusted return on average assets		0.32				0.32				1.39
Adjusted net income available to common shareholders and adjusted net income per common share, diluted
Net income available to common shareholders		$	84,901			$	30,230			$	153,034
Add: Earnout liability adjustments		4,908				—				—
Add: Merger-related expense		—				—				7,401
Add: Restructuring charges, net		2,822				3,220				18
Add: Loss on early extinguishment of debt, net		—				1,904				—
Subtract/add: Investment securities (gains) losses, net		(69,409		)		(8,734		)		1,845
Subtract/add: Gain on sale and fair value (increase) decrease of private equity investments		(8,707		)		4,255				(1,455		)
Add/subtract: Tax effect of adjustments		19,500				(167		)		(1,951		)
Adjusted net income available to common shareholders		$	34,015			$	30,708			$	158,892
Weighted average common shares outstanding, diluted		147,733				148,401				159,077
Net income per common share, diluted		$	0.57			$	0.20			$	0.96
Adjusted net income per common share, diluted		0.23				0.21				1.00

Reconciliation of Non-GAAP Financial Measures, continued
(dollars in thousands)		2Q20				1Q20				2Q19
Adjusted return on average common equity, return on average tangible common equity, and adjusted return on average tangible common equity
Net income available to common shareholders		$	84,901			$	30,230			$	153,034
Add: Earnout liability adjustments		4,908				—				—
Add: Merger-related expense		—				—				7,401
Add: Restructuring charges, net		2,822				3,220				18
Add: Loss on early extinguishment of debt, net		—				1,904				—
Subtract/add: Investment securities (gains) losses, net		(69,409		)		(8,734		)		1,845
Subtract/add: Gain on sale and fair value (increase) decrease of private equity investments		(8,707		)		4,255				(1,455		)
Add/subtract: Tax effect of adjustments		19,500				(167		)		(1,951		)
Adjusted net income available to common shareholders		$	34,015			$	30,708			$	158,892
Adjusted net income available to common shareholders annualized		$	136,808			$	123,507			$	637,314
Add: Amortization of intangibles		7,868				7,868				7,250
Adjusted net income available to common shareholders excluding amortization of intangibles annualized		$	144,676			$	131,375			$	644,564
Net income available to common shareholders annualized		$	341,470			$	121,584			$	613,818
Add: Amortization of intangibles		7,868				7,868				7,250
Net income available to common shareholders excluding amortization of intangibles annualized		$	349,338			$	129,452			$	621,068
Total average shareholders' equity less preferred stock		$	4,567,254			$	4,424,278			$	4,416,705
Subtract: Goodwill		(497,267		)		(497,267		)		(487,601		)
Subtract: Other intangible assets, net		(51,667		)		(54,514		)		(69,853		)
Total average tangible shareholders' equity less preferred stock		$	4,018,320			$	3,872,497			$	3,859,251
Return on average common equity		7.48		%		2.75		%		13.90		%
Adjusted return on average common equity		3.00				2.79				14.43
Return on average tangible common equity		8.69				3.34				16.09
Adjusted return on average tangible common equity		3.60				3.39				16.70

		June 30, 2020				March 31, 2020				June 30, 2019
Tangible common equity ratio
Total assets		$	54,121,989			$	50,619,585			$	47,318,203
Subtract: Goodwill		(497,267		)		(497,267		)		(492,390		)
Subtract: Other intangible assets, net		(50,392		)		(53,032		)		(61,473		)
Tangible assets		$	53,574,330			$	50,069,286			$	46,764,340
Total shareholders’ equity		$	5,052,968			$	5,065,205			$	4,753,816
Subtract: Goodwill		(497,267		)		(497,267		)		(492,390		)
Subtract: Other intangible assets, net		(50,392		)		(53,032		)		(61,473		)
Subtract: Preferred Stock, no par value		(537,145		)		(537,145		)		(195,140		)
Tangible common equity		$	3,968,164			$	3,977,761			$	4,004,813
Total shareholders’ equity to total assets ratio		9.34		%		10.01		%		10.05		%
Tangible common equity ratio		7.41				7.94				8.56

INCOME STATEMENT DATA
(Unaudited)
(Dollars in thousands, except per share data)											Second Quarter
		2020				2019					20 vs '19
											% Change
Interest income		$	935,466			$	1,020,970				(8.4	)%
Interest expense		185,640				226,532					(18.1	)
Net interest income		749,826				794,438					(5.6	)
Provision for credit losses		300,573				35,688					742.2
Net interest income after provision for credit losses		449,253				758,750					(40.8	)
Non-interest revenue:
Service charges on deposit accounts		36,255				42,853					(15.4	)
Fiduciary and asset management fees		30,124				28,057					7.4
Card fees		20,136				22,037					(8.6	)
Brokerage revenue		22,383				19,431					15.2
Mortgage banking income		35,757				12,962					175.9
Capital markets income		17,294				14,161					22.1
Income from bank-owned life insurance		13,794				10,466					31.8
Investment securities gains/(losses), net		78,144				(1,771		)			nm
Gain on sale and fair value increase, net, of private equity investments		4,452				2,313					nm
Other non-interest revenue		19,002				18,676					1.7
Total non-interest revenue		277,341				169,185					63.9
Non-interest expense:
Salaries and other personnel expense		309,274				282,436					9.5
Net occupancy, equipment, and software expense		83,921				78,245					7.3
Third-party processing and other services		42,846				36,875					16.2
Professional fees		25,980				15,660					65.9
FDIC insurance and other regulatory fees		12,129				14,629					(17.1	)
Amortization of intangibles		5,280				5,802					(9.0	)
Merger-related expense		—				57,140					nm
Earnout liability adjustments		4,908				—					nm
Loss on early extinguishment of debt, net		1,904				—					nm
Restructuring charges		6,042				37					nm
Other operating expenses		68,137				65,713					3.7
Total non-interest expense		560,421				556,537					0.7
Income before income taxes		166,173				371,398					(55.3	)
Income tax expense		34,461				95,028					(63.7	)
Net income		131,712				276,370					(52.3	)
Less: Preferred stock dividends		16,581				6,300					163.2
Net income available to common shareholders		$	115,131			$	270,070				(57.4	)%
Net income per common share, basic		$	0.78			$	1.70				(53.9	)%
Net income per common share, diluted		0.78				1.68					(53.7	)
Cash dividends declared per common share		0.66				0.60					10.0
Return on average assets *		0.52		%		1.21		%			(69	)bps
Return on average common equity *		5.15				12.46					(731	)
Weighted average common shares outstanding, basic		147,300				159,148					(7.4	)%
Weighted average common shares outstanding, diluted		148,067				160,908					(8.0	)
nm - not meaningful
bps - basis points
* - ratios are annualized

Synovus
	INCOME STATEMENT DATA
	(Unaudited)
	(Dollars in thousands, except per share data)		2020							2019									Second Quarter
			Second Quarter				First Quarter			Fourth Quarter			Third Quarter			Second Quarter			20 vs '19
																			% Change
	Interest income		$	451,569			483,897			506,253			523,415			516,131			(12.5	)%
	Interest expense		75,003				110,637			106,985			121,318			118,869			(36.9	)
	Net interest income		376,566				373,260			399,268			402,097			397,262			(5.2	)
	Provision for credit losses		141,851				158,722			24,470			27,562			12,119			nm
	Net interest income after provision for credit losses		234,715				214,538			374,798			374,535			385,143			(39.1	)
	Non-interest revenue:
	Service charges on deposit accounts		15,567				20,689			22,385			22,952			21,994			(29.2	)
	Fiduciary and asset management fees		14,950				15,174			15,645			14,686			14,478			3.3
	Card fees		9,186				10,950			11,325			12,297			11,161			(17.7	)
	Brokerage revenue		9,984				12,398			11,106			11,071			10,052			(0.7	)
	Mortgage banking income		23,530				12,227			9,287			10,351			7,907			197.6
	Capital markets income		6,050				11,243			8,972			7,396			8,916			(32.1	)
	Income from bank-owned life insurance		7,756				6,038			5,620			5,139			5,176			49.8
	Investment securities gains/(losses), net		69,409				8,734			(2,157	)		(3,731	)		(1,845	)		nm
	Gain on sale and fair value increase/(decrease) of private equity investments		8,707				(4,255	)		8,100			1,194			1,455			nm
	Other non-interest revenue		8,345				10,659			7,672			7,405			10,513			(20.6	)
	Total non-interest revenue		173,484				103,857			97,955			88,760			89,807			93.2
	Non-interest expense:
	Salaries and other personnel expense		159,597				149,678			145,084			142,516			143,009			11.6
	Net occupancy, equipment, and software expense		41,727				42,194			42,644			41,017			39,851			4.7
	Third-party processing and other services		21,366				21,480			20,293			18,528			19,118			11.8
	Professional fees		15,305				10,675			9,921			9,719			9,312			64.4
	FDIC insurance and other regulatory fees		6,851				5,278			9,825			7,242			7,867			(12.9	)
	Amortization of intangibles		2,640				2,640			2,901			2,901			2,410			9.5
	Merger-related expense		—				—			(913	)		353			7,401			nm
	Earnout liability adjustments		4,908				—			—			10,457			—			nm
	Loss on early extinguishment of debt, net		—				1,904			—			4,592			—			nm
	Valuation adjustment to Visa derivative		—				—			1,111			2,500			—			nm
	Restructuring charges		2,822				3,220			1,259			(66	)		18			nm
	Other operating expenses		28,925				39,210			33,996			36,551			35,140			(17.7	)
	Total non-interest expense		284,141				276,279			266,121			276,310			264,126			7.6
	Income before income taxes		124,058				42,116			206,632			186,985			210,824			(41.2	)
	Income tax expense		30,866				3,595			54,948			51,259			54,640			(43.5	)
	Net income		93,192				38,521			151,684			135,726			156,184			(40.3	)
	Less: Preferred stock dividends		8,291				8,291			8,291			8,291			3,150			163.2
	Net income available to common shareholders		$	84,901			30,230			143,393			127,435			153,034			(44.5	)%
	Net income per common share, basic		$	0.58			0.21			0.98			0.84			0.97			(40.7	)%
	Net income per common share, diluted		0.57				0.20			0.97			0.83			0.96			(40.3	)
	Cash dividends declared per common share		0.33				0.33			0.30			0.30			0.30			10.0
	Return on average assets *		0.71		%		0.32			1.27			1.14			1.34			(63	)bps
	Return on average common equity *		7.48				2.75			13.08			11.36			13.90			(642	)
	Weighted average common shares outstanding, basic		147,288				147,311			146,948			152,238			157,389			(6.4	)%
	Weighted average common shares outstanding, diluted		147,733				148,401			148,529			154,043			159,077			(7.1	)
	nm - not meaningful
	bps - basis points
	* - ratios are annualized

Synovus
	BALANCE SHEET DATA		June 30, 2020				December 31, 2019				June 30, 2019
	(Unaudited)
	(In thousands, except share data)
	ASSETS
	Cash and due from banks		$	572,169			$	535,846			$	549,616
	Interest-bearing funds with Federal Reserve Bank		860,289				553,390				531,488
	Interest earning deposits with banks		20,719				20,635				20,271
	Federal funds sold and securities purchased under resale agreements		118,048				77,047				49,946
	Cash and cash equivalents		1,571,225				1,186,918				1,151,321
	Investment securities available for sale, at fair value		7,197,493				6,778,670				7,007,012
	Loans held for sale ($266,306, $115,173, $81,855 measured at fair value, respectively)		900,936				115,173				86,716
	Loans, net of deferred fees and costs		39,914,297				37,162,450				36,138,561
	Allowance for loan losses		(588,648		)		(281,402		)		(257,376		)
	Loans, net		39,325,649				36,881,048				35,881,185
	Cash surrender value of bank-owned life insurance		1,038,049				775,665				766,287
	Premises and equipment, net		481,716				493,940				490,644
	Goodwill		497,267				497,267				492,390
	Other intangible assets, net		50,392				55,671				61,473
	Receivable on unsettled securities sales		1,289,116				—				—
	Other assets		1,770,146				1,418,930				1,381,175
	Total assets		$	54,121,989			$	48,203,282			$	47,318,203
	LIABILITIES AND SHAREHOLDERS' EQUITY
	Liabilities:
	Deposits:
	Non-interest-bearing deposits		$	12,555,714			$	9,439,485			$	9,205,066
	Interest-bearing deposits		31,638,866				28,966,019				28,761,656
	Total deposits		44,194,580				38,405,504				37,966,722
	Federal funds purchased and securities sold under repurchase agreements		225,576				165,690				273,481
	Other short-term borrowings		300,000				1,753,560				1,330,000
	Long-term debt		2,327,921				2,153,897				2,306,072
	Due on unsettled securities purchases		922,952				—				—
	Other liabilities		1,097,992				782,941				688,112
	Total liabilities		49,069,021				43,261,592				42,564,387
	Shareholders' equity:
	Preferred stock - no par value. Authorized 100,000,000 shares; issued 22,000,000, 22,000,000, and 8,000,000		537,145				537,145				195,140
	Common stock - $1.00 par value. Authorized 342,857,143 shares; issued 167,405,730, 166,800,623, and 166,079,543; outstanding 147,312,703, 147,157,596, and 156,872,026		167,406				166,801				166,080
	Additional paid-in capital		3,826,726				3,819,336				3,801,748
	Treasury stock, at cost – 20,093,027, 19,643,027, and 9,207,517 shares		(731,806		)		(715,560		)		(344,901		)
	Accumulated other comprehensive income, net		202,970				65,641				49,289
	Retained earnings		1,050,527				1,068,327				886,460
	Total shareholders’ equity		5,052,968				4,941,690				4,753,816
	Total liabilities and shareholders' equity		$	54,121,989			$	48,203,282			$	47,318,203

Synovus
	AVERAGE BALANCES AND YIELDS/RATES (1)
	(Unaudited)									2019
	(Dollars in thousands)
			2020
			Second			First				Fourth			Third			Second
			Quarter			Quarter				Quarter			Quarter			Quarter
	Interest Earning Assets
	Investment securities (2) (4)		$	6,618,533		6,680,047				6,696,768			6,831,036			6,955,386
	Yield		2.72		%	3.09				3.12			3.14			3.03
	Trading account assets (5)		$	6,173		6,306				7,986			5,519			4,853
	Yield		2.19		%	2.70				2.69			4.01			1.83
	Commercial loans (3) (4)		$	30,236,919		27,607,343				26,698,202			26,567,719			26,353,701
	Yield		3.95		%	4.57				4.82			5.09			5.13
	Consumer loans (3)		$	9,899,172		9,985,702				9,809,832			9,633,603			9,423,427
	Yield		4.34		%	4.60				5.07			5.08			5.17
	Allowance for loan losses		$	(498,545	)	(368,033	)			(269,052	)		(258,024	)		(259,284	)
	Loans, net (3)		$	39,637,546		37,225,012				36,238,982			35,943,298			35,517,844
	Yield		4.08		%	4.62				4.93			5.13			5.17
	Mortgage loans held for sale		$	221,157		86,415				117,909			99,556			70,497
	Yield		3.09		%	3.67				3.77			3.93			4.27
	Other loans held for sale		$	19,246		—				—			475			272
	Yield		4.19		%	—				—			—			—
	Federal funds sold, due from Federal Reserve Bank, and other short-term investments		$	1,709,086		652,130				514,635			513,160			511,488
	Yield		0.11		%	1.02				1.71			2.08			2.37
	Federal Home Loan Bank and Federal Reserve Bank Stock (5)		$	247,801		284,082				278,586			254,994			234,949
	Yield		3.60		%	3.38				2.85			3.85			3.29
	Total interest earning assets		$	48,459,542		44,933,992				43,854,866			43,648,038			43,295,289
	Yield		3.75		%	4.33				4.60			4.78			4.79
	Interest-Bearing Liabilities
	Interest-bearing demand deposits		$	7,260,940		6,445,986				6,381,282			6,138,810			6,335,953
	Rate		0.21		%	0.51				0.60			0.69			0.71
	Money Market accounts		$	12,238,479		11,548,014				10,526,296			10,138,783			10,024,836
	Rate		0.46		%	1.00				1.13			1.26			1.23
	Savings deposits		$	1,036,024		926,822				915,640			900,366			904,183
	Rate		0.02		%	0.05				0.05			0.05			0.05
	Time deposits under $100,000		$	1,621,943		1,761,741				1,873,350			2,100,492			2,245,878
	Rate		1.43		%	1.64				1.27			1.39			1.39
	Time deposits over $100,000		$	4,772,555		5,051,705				5,198,266			5,957,691			6,331,665
	Rate		1.80		%	2.04				1.51			1.69			1.70
	Other brokered deposits		$	1,998,571		1,376,669				1,156,131			993,078			766,718
	Rate		0.25		%	1.42				1.84			2.47			2.46
	Brokered time deposits		$	2,244,429		2,166,496				2,121,069			2,119,149			1,985,589
	Rate		1.86		%	2.11				2.16			2.27			2.28
	Total interest-bearing deposits		$	31,172,941		29,277,433				28,172,034			28,348,369			28,594,822
	Rate		0.73		%	1.18				1.16			1.32			1.30
	Federal funds purchased and securities sold under repurchase agreements		$	250,232		167,324				192,731			221,045			300,168
	Rate		0.12		%	0.30				0.24			0.22			0.20
	Other short-term borrowings		$	550,000		1,384,362				1,565,507			1,307,370			1,090,581
	Rate		1.23		%	1.66				1.87			2.31			2.59
	Long-term debt		$	2,834,188		2,678,651				2,153,983			2,286,221			2,114,819
	Rate		2.36		%	2.78				3.07			3.32			3.53
	Total interest-bearing liabilities		$	34,807,361		33,507,770				32,084,255			32,163,005			32,100,390
	Rate		0.86		%	1.30				1.30			1.47			1.48
	Non-interest-bearing demand deposits		$	11,923,534		9,409,774				9,706,784			9,365,776			9,304,839
	Cost of funds		0.65		%	1.04				1.02			1.16			1.15
	Net interest margin		3.13		%	3.37				3.65			3.69			3.69
	Taxable equivalent adjustment (4)		$	861		786				769			819			811
	(1) Yields and rates are annualized.
	(2) Excludes net unrealized gains and losses.
	(3) Average loans are shown net of unearned income. Non-performing loans are included.
	(4) Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 21%, in adjusting interest on tax-exempt loans and investment securities to a taxable-equivalent basis.
	(5) Included as a component of other assets on the consolidated balance sheet.

Synovus
LOANS OUTSTANDING BY TYPE
(Unaudited)
(Dollars in thousands)										Linked
		Total Loans				Total Loans				Quarter			Total Loans				Year/Year
Loan Type		June 30, 2020				March 31, 2020				% Change			June 30, 2019				% Change
Commercial, Financial, and Agricultural		$	13,136,696			$	11,018,155			19.2	%		$	9,716,939			35.2	%
Owner-Occupied		6,801,580				6,643,287				2.4			6,511,805				4.4
Total Commercial & Industrial		19,938,276				17,661,442				12.9			16,228,744				22.9
Multi-Family		2,252,820				2,108,360				6.9			2,023,061				11.4
Hotels		1,364,511				1,314,053				3.8			1,244,519				9.6
Office Buildings		2,297,721				2,264,844				1.5			2,297,515				—
Shopping Centers		1,738,504				1,741,557				(0.2	)		1,682,283				3.3
Warehouses		781,252				761,863				2.5			686,827				13.7
Other Investment Property		1,012,392				1,027,757				(1.5	)		980,787				3.2
Total Investment Properties		9,447,200				9,218,434				2.5			8,914,992				6.0
1-4 Family Construction		229,999				255,005				(9.8	)		276,068				(16.7	)
1-4 Family Investment Mortgage		466,809				482,773				(3.3	)		528,358				(11.6	)
Total 1-4 Family Properties		696,808				737,778				(5.6	)		804,426				(13.4	)
Commercial Development		112,539				107,351				4.8			138,840				(18.9	)
Residential Development		270,952				303,459				(10.7	)		213,823				26.7
Land Acquisition		300,036				304,179				(1.4	)		295,165				1.7
Land and Development		683,527				714,989				(4.4	)		647,828				5.5
Total Commercial Real Estate		10,827,535				10,671,201				1.5			10,367,246				4.4
Consumer Mortgages		5,811,376				5,608,121				3.6			5,407,762				7.5
Home Equity Lines		1,710,264				1,778,862				(3.9	)		1,650,745				3.6
Credit Cards		250,448				261,581				(4.3	)		258,283				(3.0	)
Other Consumer Loans		1,474,583				2,302,349				(36.0	)		2,249,337				(34.4	)
Total Consumer		9,246,671				9,950,913				(7.1	)		9,566,127				(3.3	)
Unearned Income		(98,185		)		(25,532		)		284.6			(23,556		)		316.8
Total		$	39,914,297			$	38,258,024			4.3	%		$	36,138,561			10.4	%
NON-PERFORMING LOANS COMPOSITION
(Unaudited)		Total Non-performing Loans				Total Non-performing Loans				Linked Quarter			Total Non-performing Loans				Year/Year
(Dollars in thousands)
Loan Type		June 30, 2020				March 31, 2020				% Change			June 30, 2019				% Change
Commercial, Financial, and Agricultural		$	83,000			$	99,287			(16.4	)%		$	72,934			13.8	%
Owner-Occupied		19,605				17,357				13.0			13,465				45.6
Total Commercial & Industrial		102,605				116,644				(12.0	)		86,399				18.8
Multi-Family		—				356				(100.0	)		—				nm
Hotels		—				—				nm			—				nm
Office Buildings		836				836				—			300				178.7
Shopping Centers		409				712				(42.6	)		671				(39.0	)
Other Investment Property		393				308				27.6			7				nm
Total Investment Properties		1,638				2,212				(25.9	)		978				67.5
1-4 Family Construction		2,593				278				832.7			208				nm
1-4 Family Investment Mortgage		1,844				2,047				(9.9	)		1,637				12.6
Total 1-4 Family Properties		4,437				2,325				90.8			1,845				140.5
Commercial Development		840				596				40.9			—				nm
Residential Development		685				561				22.1			1,253				(45.3	)
Land Acquisition		1,042				1,043				(0.1	)		1,482				(29.7	)
Land and Development		2,567				2,200				16.7			2,735				(6.1	)
Total Commercial Real Estate		8,642				6,737				28.3			5,558				55.5
Consumer Mortgages		17,438				13,571				28.5			13,628				28.0
Home Equity Lines		14,200				12,475				13.8			13,830				2.7
Other Consumer Loans		4,552				6,860				(33.6	)		4,667				(2.5	)
Total Consumer		36,190				32,906				10.0			32,125				12.7
Total		$	147,437			$	156,287			(5.7	)%		$	124,082			18.8	%

Synovus
	CREDIT QUALITY DATA
	(Unaudited)
	(Dollars in thousands)		2020						2019							Second Quarter
			Second				First		Fourth		Third		Second			20 vs '19
			Quarter				Quarter		Quarter		Quarter		Quarter			% Change
	Non-performing Loans (NPLs)		$	147,437			156,287		101,636		115,915		124,083			18.8	%
	Other Real Estate and Other Assets		30,242				33,679		35,810		35,400		15,479			95.4
	Non-performing Assets (NPAs)		177,679				189,966		137,446		151,315		139,562			27.3
	Allowance for Loan Losses (ALL)		588,648				493,452		281,402		265,013		257,376			128.7
	Reserve for Unfunded Commitments		61,029				38,420		1,375		1,496		995			nm
	Allowance for Credit Losses (ACL)		649,677				531,872		282,777		266,509		258,371			151.5
	Net Charge-Offs - Quarter		24,045				20,061		8,821		19,925		11,779
	Net Charge-Offs - YTD		44,106				20,061		57,612		48,791		28,867
	Net Charge-Offs / Average Loans - Quarter (1)		0.24		%		0.21		0.10		0.22		0.13
	Net Charge-Offs / Average Loans - YTD (1)		0.23				0.21		0.16		0.18		0.16
	NPLs / Loans		0.37				0.41		0.27		0.32		0.34
	NPAs / Loans, ORE and specific other assets		0.44				0.50		0.37		0.42		0.39
	ACL/Loans		1.63				1.39		0.76		0.73		0.71
	ALL/Loans		1.47				1.29		0.76		0.73		0.71
	ACL/NPLs		440.65				340.32		278.23		229.92		208.22
	ALL/NPLs		399.25				315.74		276.87		228.63		207.42
	Past Due Loans over 90 days and Still Accruing		$	8,391			6,398		15,943		15,660		5,851			43.4
	As a Percentage of Loans Outstanding		0.02		%		0.02		0.04		0.04		0.02
	Total Past Due Loans and Still Accruing		$	46,390			83,235		123,793		88,219		80,792			(42.6	)
	As a Percentage of Loans Outstanding		0.12		%		0.22		0.33		0.24		0.22
	Accruing Troubled Debt Restructurings (TDRs)		$	166,461			160,128		133,145		130,019		126,369			31.7
	(1) Ratio is annualized.
	SELECTED CAPITAL INFORMATION (1)
	(Unaudited)
	(Dollars in thousands)
			June 30, 2020				December 31, 2019		June 30, 2019
	Tier 1 Capital		$	4,364,077			4,280,604		4,094,672
	Total Risk-Based Capital		5,459,271				5,123,381		4,913,043
	Common Equity Tier 1 Capital Ratio		8.90		%		8.95		9.61
	Tier 1 Capital Ratio		10.15				10.23		10.09
	Total Risk-Based Capital Ratio		12.70				12.25		12.11
	Tier 1 Leverage Ratio		8.38				9.16		8.89
	Common Equity as a Percentage of Total Assets (2)		8.34				9.14		9.63
	Tangible Common Equity Ratio (3) (5)		7.41				8.08		8.56
	Book Value Per Common Share (4)		$	30.65			29.93		29.06
	Tangible Book Value Per Common Share (3)		26.94				26.17		25.53
	(1) Current quarter regulatory capital information is preliminary.
	(2) Common equity consists of Total Shareholders' Equity less Preferred Stock.
	(3) Excludes the carrying value of goodwill and other intangible assets from common equity and total assets.
	(4) Book Value Per Common Share consists of Total Shareholders' Equity less Preferred Stock divided by total common shares outstanding.
	(5) See "Non-GAAP Financial Measures" of this report for applicable reconciliation.

 

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