Synovus Announces Earnings for the Fourth Quarter 2020

Rhea-AI Summary

Synovus Financial Corp. (SNV) reported its 2020 financial results, with net income of $340.5 million ($2.30 per diluted share), down from $540.9 million ($3.47 per share) in 2019. Adjusted earnings per share decreased by 38% to $2.41. The CET1 ratio increased to 9.67%, while the allowance for credit losses rose by $370.7 million. The fourth quarter saw net income of $142.1 million ($0.96 per share), a significant increase from $83.3 million in Q3 2020. Strong deposit growth of 5% sequentially and a reduction in non-interest expenses were highlighted. A CEO transition is set for April 2021.

Positive

• Net income for 2020 was $340.5 million, with a fourth quarter net income of $142.1 million, a 71% increase sequentially.
• Total deposits increased by $2.03 billion (5%) sequentially, reflecting strong growth in core transaction deposits.
• CET1 ratio improved to 9.67%, the highest since 2014, indicating strengthened capital position.
• Announced Synovus Forward plan expected to yield a $100 million pre-tax benefit.

Negative

• Net income and adjusted EPS decreased by 38% and 38% respectively compared to 2019.
• Loan balances declined by $1.30 billion (3%) sequentially, indicating reduced lending activity.
• Non-interest expenses increased by $36.4 million year-over-year despite a sequential decrease.

Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter and year ended December 31, 2020.

2020 Highlights

• Net income available to common shareholders for 2020 was $340.5 million or $2.30 per diluted share as compared to $540.9 million or $3.47 per diluted share for 2019.
  • Adjusted earnings per diluted share for 2020 were $2.41 as compared to $3.90 for 2019, a decrease of 38%.
• CET1 ratio increased 72 basis points to 9.67%; total risk-based capital ratio of 13.43% the highest since 2014.
• Allowance for Credit Losses (ACL) increased $370.7 million or 105 basis points (to loans) to 1.81% year-over-year, excluding Paycheck Protection Program (PPP) loans.
  • Includes increase of $110.4 million or 30 basis points from the adoption of Current Expected Credit Losses on January 1, 2020.
• Processed and approved nearly $2.9 billion in PPP loans, supporting approximately 19,000 customers.
• Announced Synovus Forward in January, a plan expected to add $100 million pre-tax benefit with a combination of revenue and expense initiatives.
• In December, a CEO transition plan was announced, and Kevin Blair was named to the Board. In April 2021, Chairman and CEO Kessel Stelling will move into the role of Executive Chairman and Kevin Blair will become CEO.

Fourth Quarter 2020 Highlights

• Net income available to common shareholders was $142.1 million or $0.96 per diluted share as compared to $83.3 million or $0.56 in the prior quarter.
  • Adjusted earnings per diluted share of $1.08, up 22% sequentially and 15% year-over-year.
• Period-end loan decline of $1.30 billion or 3% sequentially.
  • Loans declined by $700 million or 2% from the third quarter, excluding PPP forgiveness of $540 million or $516 million, net of unearned fees, and lending partnership balance reductions of $81 million.
• Period-end deposit growth of $2.03 billion or 5% from the third quarter.
  • Core transaction deposits (non-interest bearing, NOW/savings, and money market deposits excluding public and brokered funds) increased $1.77 billion or 6% sequentially.
  • Total deposit costs of 28 basis points declined 11 basis points from the third quarter.
• Net interest income of $385.9 million increased $8.9 million or 2% sequentially.
• Non-interest revenue of $114.8 million stable with the prior quarter and increased $16.8 million year-over-year.
• Non-interest expense of $302.5 million, a decrease of $14.2 million from the third quarter and an increase of $36.4 million from the prior-year quarter.
  • Adjusted non-interest expense of $275.1 million increased $6.4 million sequentially, primarily due to a $4.5 million increase in expenses related to Synovus Forward, PPP, and COVID.
• Credit quality metrics remained relatively stable, with a non-performing loan ratio of 0.39% and non-performing asset ratio of 0.50%; net charge-off ratio of 0.23%.

Fourth Quarter Summary

	Reported												Adjusted*
(dollars in thousands)	4Q20				3Q20				4Q19				4Q20				3Q20				4Q19
Net income available to common shareholders	$	142,118			$	83,283			$	143,393			$	160,618			$	131,364			$	140,069
Diluted earnings per share	0.96				0.56				0.97				1.08				0.89				0.94
Total loans	38,252,984				39,549,847				37,162,450				N/A				N/A				N/A
Total deposits	46,691,571				44,665,904				38,405,504				N/A				N/A				N/A
Total FTE revenues	501,514				492,357				497,992				499,114				493,647				492,049
Return on avg assets	1.11		%		0.69		%		1.27		%		1.25		%		1.05		%		1.24		%
Return on avg common equity	12.31				7.28				13.08				13.91				11.48				12.78
Return on avg tangible common equity	14.00				8.46				15.18				15.79				13.24				14.84
Net interest margin**	3.12				3.10				3.65				3.10				3.08				3.40
Efficiency ratio	60.32				64.31				53.44				54.60				53.91				53.20
Net charge-off ratio	0.23				0.29				0.10				N/A				N/A				N/A
NPA ratio	0.50				0.49				0.37				N/A				N/A				N/A
* Non-GAAP measures; see applicable reconciliation ** Adjusted net interest margin excludes purchase accounting adjustments primarily comprised of loan accretion and deposit premium amortization

“In a year marked by extraordinary volatility, we drew on the strength of our relationship-centered model to support our team members, customers, and communities,” said Kessel Stelling, Synovus chairman and CEO. “During 2020, we delivered approximately 19,000 PPP loans totaling $2.9 billion to small business customers throughout the Southeast and grew core transaction deposits $8.6 billion. We also accelerated investments in several technology initiatives that provided more convenience and a better digital experience as customers adapted to this highly virtual environment. And at year end, our higher capital levels, improved liquidity, and strong credit quality further demonstrated the strength and resiliency of our balance sheet in a challenging environment. In the year ahead, we expect our Synovus Forward initiatives to produce additional revenue opportunities, expense savings, and efficiencies that will further strengthen our bank. We continue to move forward with purpose, meeting the very real needs of individuals and businesses, and remain committed to being a source of stability, unity, and value creation for all we serve.”

Balance Sheet

Loans*
(dollars in millions)	4Q20				3Q20				Linked Quarter Change				Linked Quarter % Change			4Q19				Year/Year Change				Year/Year % Change
Commercial & industrial	$	19,373.7			$	20,014.2			$	(640.5)			(3)	%		$	16,769.4			$	2,604.3			16	%
Commercial real estate	10,570.4				10,965.9				(395.4)				(4)			10,493.8				76.7				1
Consumer	8,386.5				8,668.8				(282.3)				(3)			9,924.7				(1,538.1)				(15)
Unearned income	(77.7)				(99.0)				21.3				(22)			(25.4)				(52.3)				206
Total loans	$	38,253.0			$	39,549.8			$	(1,296.9)			(3)	%		$	37,162.5			$	1,090.5			3	%
* Amounts may not total due to rounding

• Total loans ended the quarter at $38.25 billion, down $1.30 billion or 3% sequentially.
• Commercial and industrial (C&I) loans decreased $640.5 million or 3% from the prior quarter.
  • PPP forgiveness of $540 million, or $516 million, net of unearned fees, in the fourth quarter.
  • C&I line utilization remains near historic lows at 40%, down 6% year-over-year.
• Consumer loans decreased by $282.3 million or 3% sequentially.
  • Strategic declines in lending partnership balances of $81 million.
• Commercial real estate loans declined by $395.4 million or 4% from the prior quarter as pay-off and pay-down activity increased during the quarter.

Deposits*
(dollars in millions)	4Q20				3Q20				Linked Quarter Change				Linked Quarter % Change			4Q19				Year/Year Change				Year/Year % Change
Non-interest-bearing DDA	$	12,382.7			$	12,129.8			$	252.9			2	%		$	8,661.2			$	3,721.5			43	%
Interest-bearing DDA	5,674.4				5,291.1				383.3				7			4,769.5				904.9				19
Money market	13,541.2				12,441.3				1,099.9				9			9,827.4				3,713.9				38
Savings	1,156.2				1,126.0				30.3				3			909.5				246.7				27
Public funds	6,760.6				5,791.9				968.7				17			4,622.3				2,138.3				46
Time deposits	3,605.9				3,976.5				(370.5)				(9)			6,185.6				(2,579.7)				(42)
Brokered deposits	3,570.4				3,909.3				(338.9)				(9)			3,430.0				140.4				4
Total deposits	$	46,691.6			$	44,665.9			$	2,025.7			5	%		$	38,405.5			$	8,286.1			22	%
* Amounts may not total due to rounding

• Total deposits ended the quarter at $46.69 billion up $2.03 billion or 5% sequentially.
  • Core transaction deposits increased $1.77 billion or 6% from the prior quarter.
  • Strong seasonal inflows supported a $968.7 million increase in public funds compared to the third quarter.
• Total deposit costs declined 11 basis points from the third quarter to 28 basis points.

Income Statement Summary*
(in thousands, except per share data)	4Q20				3Q20				Linked Quarter Change				Linked Quarter % Change			4Q19				Year/Year Change				Year/Year % Change
Net interest income	$	385,932			$	376,990			$	8,942			2	%		$	399,268			$	(13,336)			(3)	%
Non-interest revenue	114,761				114,411				350				—			97,955				16,806				17
Non-interest expense	302,498				316,655				(14,157)				(4)			266,121				36,377				14
Provision for credit losses	11,066				43,383				(32,317)				(74)			24,470				(13,404)				(55)
Income before taxes	$	187,129			$	131,363			$	55,766			42			$	206,632			$	(19,503)			(9)
Income tax expense	36,720				39,789				(3,069)				(8)			54,948				(18,228)				(33)
Preferred stock dividends	8,291				8,291				—				—			8,291				—				—
Net income available to common shareholders	$	142,118			$	83,283			$	58,835			71	%		$	143,393			$	(1,275)			(1)	%
Weighted average common shares outstanding, diluted	148,725				147,976				749				1	%		148,529				196				—
Diluted earnings per share	$	0.96			$	0.56			$	0.39			70			$	0.97			$	(0.01)			(1)
Adjusted diluted earnings per share**	$	1.08			$	0.89			$	0.19			22			$	0.94			$	0.14			15
* Amounts may not total due to rounding ** Non-GAAP measure; see applicable reconciliation

Core Performance

• Total FTE revenues were $501.5 million in the fourth quarter up $9.2 million sequentially.
• Net interest income increased $8.9 million or 2% compared to the prior quarter, primarily due to PPP fee accretion of $24.8 million up $12.9 million from the third quarter.
• Net interest margin was 3.12% up 2 basis points from the previous quarter.
• Non-interest revenue of $114.8 million was stable with the third quarter and increased $16.8 million or 17% compared to fourth quarter 2019.
  • The fourth quarter included broad-based growth with increases in service charges, fiduciary and asset management, card fees, and brokerage offset by declines in capital markets and mortgage revenues.
• Non-interest expense decreased $14.2 million or 4% sequentially. Adjusted non-interest expense increased $6.4 million or 2% from the prior quarter.
  • Adjusted non-interest expense includes a $4.5 million increase in fees related to Synovus Forward, PPP, and COVID.
• Provision for credit losses was $11.1 million a $32.3 million decrease from the previous quarter.
  • The decrease includes net charge-offs of $22.1 million. Provision for credit losses other than net charge-offs reflects lower loan balances and a more favorable economic outlook.
• The effective tax rate was 19.6% for the quarter.

Capital Ratios
	4Q20			3Q20			4Q19
Common equity Tier 1 capital (CET1) ratio	9.67	%	(1)	9.30	%		8.95	%
Tier 1 capital ratio	10.95		(1)	10.57			10.23
Total risk-based capital ratio	13.43		(1)	13.16			12.25
Tier 1 leverage ratio	8.50		(1)	8.48			9.16
Tangible common equity ratio(2)	7.66			7.67			8.08
(1) Ratios are preliminary (2) Non-GAAP measure; see applicable reconciliation

Capital

• CET1 ratio increased 37 basis points sequentially to 9.67%, above the higher end of the 9.0-9.5% operating range.
• Total risk-based capital ratio of 13.43% increased 27 basis points from the prior quarter and includes subordinated debt optimization efforts completed in the fourth quarter.
• The Board of Directors has authorized share repurchases of up to $200 million in 2021.

Fourth Quarter Earnings Conference Call

Synovus will host an earnings highlights conference call at 8:30 a.m. ET on January 26, 2021. 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 289 branches in Georgia, Alabama, South Carolina, Florida, 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, including our outlook and long-term goals for future growth; our expectations regarding net interest margin; expectations on our growth strategy, expense management, capital management and future profitability; expectations on credit quality and performance; and the assumptions underlying our expectations. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties which may cause the actual results, performance or achievements of Synovus to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on the information known to, and current beliefs and expectations of, Synovus’ management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. A number of factors could cause actual results to differ materially from those contemplated by the forward-looking statements in this press release. Many of these factors are beyond Synovus’ ability to control or predict.

These forward-looking statements are based upon information presently known to Synovus’ management and are inherently subjective, uncertain and subject to change due to any number of risks and uncertainties, including, without limitation, the risks and other factors set forth in Synovus’ filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 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 exclusive of investment securities gains (losses), net and gain on sale and fair value increase, net of private equity investments. 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)	4Q20				3Q20				4Q19				2020				2019
Adjusted non-interest revenue
Total non-interest revenue	$	114,761			$	114,411			$	97,955			$	506,513			$	355,900
Subtract/add: Investment securities (gains) losses, net	(2,337)				1,550				2,157				(78,931)				7,659
Subtract: Gain on sale and fair value increase, net of private equity investments	(63)				(260)				(8,100)				(4,775)				(11,607)
Adjusted non-interest revenue	$	112,361			$	115,701			$	92,012			$	422,807			$	351,952
Adjusted non-interest expense
Total non-interest expense	$	302,498			$	316,655			$	266,121			$	1,179,574			$	1,098,968
Subtract: Earnout liability adjustments	—				—				—				(4,908)				(10,457)
Subtract: Goodwill impairment	—				(44,877)				—				(44,877)				—
Add/subtract: Merger-related expense	—				—				913				—				(56,580)
Subtract: Restructuring charges	(18,068)				(2,882)				(1,259)				(26,991)				(1,230)
Subtract: Valuation adjustment to Visa derivative	(890)				—				(1,111)				(890)				(3,611)
Subtract: Loss on early extinguishment of debt	(8,409)				(154)				—				(10,466)				(4,592)
Adjusted non-interest expense	$	275,131			$	268,742			$	264,664			$	1,091,442			$	1,022,498
Adjusted total revenues and adjusted tangible efficiency ratio
Adjusted non-interest expense	$	275,131			$	268,742			$	264,664			$	1,091,442			$	1,022,498
Subtract: Amortization of intangibles	(2,640)				(2,640)				(2,901)				(10,560)				(11,603)
Adjusted tangible non-interest expense	$	272,491			$	266,102			$	261,763			$	1,080,882			$	1,010,895
Net interest income	$	385,932			$	376,990			$	399,268			$	1,512,748			$	1,595,803
Add: Tax equivalent adjustment	821				956				769				3,424				3,025
Add: Total non-interest revenue	114,761				114,411				97,955				506,513				355,900
Total FTE revenues	501,514				492,357				497,992				2,022,685				1,954,728
Subtract/add: Investment securities (gains) losses, net	(2,337)				1,550				2,157				(78,931)				7,659
Subtract: Gain on sale and fair value increase, net of private equity investments	(63)				(260)				(8,100)				(4,775)				(11,607)
Adjusted total revenues	$	499,114			$	493,647			$	492,049			$	1,938,979			$	1,950,780
Efficiency ratio-FTE	60.32		%		64.31		%		53.44		%		58.32		%		56.22		%
Adjusted tangible efficiency ratio	54.60				53.91				53.20				55.74				51.82

Reconciliation of Non-GAAP Financial Measures, continued
(in thousands, except per share data)	4Q20				3Q20				4Q19				2020				2019
Adjusted return on average assets
Net income	$	150,409			$	91,574			$	151,684			$	373,695			$	563,780
Add: Income tax expense, net related to State Tax Reform	—				—				—				—				4,402
Add: Earnout liability adjustments	—				—				—				4,908				10,457
Add: Goodwill impairment	—				44,877				—				44,877				—
Subtract/add: Merger-related expense	—				—				(913)				—				56,580
Add: Restructuring charges	18,068				2,882				1,259				26,991				1,230
Add: Valuation adjustment to Visa derivative	890				—				1,111				890				3,611
Add: Loss on early extinguishment of debt	8,409				154				—				10,466				4,592
Subtract/add: Investment securities (gains) losses, net	(2,337)				1,550				2,157				(78,931)				7,659
Subtract: Gain on sale and fair value increase, net of private equity investments	(63)				(260)				(8,100)				(4,775)				(11,607)
Subtract/add: Tax effect of adjustments	(6,467)				(1,122)				1,162				11,748				(9,343)
Adjusted net income	$	168,909			$	139,655			$	148,360			$	389,869			$	631,361
Net income annualized	$	598,366			$	364,305			$	601,790			$	373,695			$	563,780
Adjusted net income annualized	$	671,964			$	555,584			$	588,602			$	389,869			$	631,361
Total average assets	$	53,833,909			$	53,138,334			$	47,459,405			$	52,138,038			$	46,791,930
Return on average assets	1.11		%		0.69		%		1.27		%		0.72		%		1.20		%
Adjusted return on average assets	1.25				1.05				1.24				0.75				1.35
Adjusted net income available to common shareholders and adjusted net income per common share, diluted
Net income available to common shareholders	$	142,118			$	83,283			$	143,393			$	340,532			$	540,899
Add: Income tax expense, net related to State Tax Reform	—				—				—				—				4,402
Add: Earnout liability adjustments	—				—				—				4,908				10,457
Add: Goodwill impairment	—				44,877				—				44,877				—
Subtract/add: Merger-related expense	—				—				(913)				—				56,580
Add: Restructuring charges	18,068				2,882				1,259				26,991				1,230
Add: Valuation adjustment to Visa derivative	890				—				1,111				890				3,611
Add: Loss on early extinguishment of debt	8,409				154				—				10,466				4,592
Subtract/add: Investment securities (gains) losses, net	(2,337)				1,550				2,157				(78,931)				7,659
Subtract: Gain on sale and fair value increase, net of private equity investments	(63)				(260)				(8,100)				(4,775)				(11,607)
Subtract/add: Tax effect of adjustments	(6,467)				(1,122)				1,162				11,748				(9,343)
Adjusted net income available to common shareholders	$	160,618			$	131,364			$	140,069			$	356,706			$	608,480
Weighted average common shares outstanding, diluted	148,725				147,976				148,529				148,210				156,058
Net income per common share, diluted	$	0.96			$	0.56			$	0.97			$	2.30			$	3.47
Adjusted net income per common share, diluted	1.08				0.89				0.94				2.41				3.90

Reconciliation of Non-GAAP Financial Measures, continued
(dollars in thousands)	4Q20				3Q20				4Q19				2020				2019
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	$	142,118			$	83,283			$	143,393			$	340,532			$	540,899
Add: Income tax expense, net related to State Tax Reform	—				—				—				—				4,402
Add: Earnout liability adjustments	—				—				—				4,908				10,457
Add: Goodwill impairment	—				44,877				—				44,877				—
Subtract/add: Merger-related expense	—				—				(913)				—				56,580
Add: Restructuring charges	18,068				2,882				1,259				26,991				1,230
Add: Valuation adjustment to Visa derivative	890				—				1,111				890				3,611
Add: Loss on early extinguishment of debt	8,409				154				—				10,466				4,592
Subtract/add: Investment securities (gains) losses, net	(2,337)				1,550				2,157				(78,931)				7,659
Subtract: Gain on sale and fair value increase, net of private equity investments	(63)				(260)				(8,100)				(4,775)				(11,607)
Subtract/add: Tax effect of adjustments	(6,467)				(1,122)				1,162				11,748				(9,343)
Adjusted net income available to common shareholders	$	160,618			$	131,364			$	140,069			$	356,706			$	608,480
Adjusted net income available to common shareholders annualized	$	638,980			$	522,600			$	555,709			$	356,706			$	608,480
Add: Amortization of intangibles	7,782				7,782				8,528				7,825				8,598
Adjusted net income available to common shareholders excluding amortization of intangibles annualized	$	646,762			$	530,382			$	564,237			$	364,531			$	617,078
Net income available to common shareholders annualized	$	565,382			$	331,322			$	568,896			$	340,532			$	540,899
Add: Amortization of intangibles	7,782				7,782				8,528				7,825				8,598
Net income available to common shareholders excluding amortization of intangibles annualized	$	573,164			$	339,104			$	577,424			$	348,357			$	549,497
Total average shareholders' equity less preferred stock	$	4,594,199			$	4,553,159			$	4,348,250			$	4,534,935			$	4,384,458
Subtract: Goodwill	(452,390)				(497,267)				(488,223)				(485,987)				(487,126)
Subtract: Other intangible assets, net	(46,511)				(49,075)				(57,149)				(50,427)				(65,553)
Total average tangible shareholders' equity less preferred stock	$	4,095,298			$	4,006,817			$	3,802,878			$	3,998,521			$	3,831,779
Return on average common equity	12.31		%		7.28		%		13.08		%		7.51		%		12.34		%
Adjusted return on average common equity	13.91				11.48				12.78				7.87				13.88
Return on average tangible common equity	14.00				8.46				15.18				8.71				14.34
Adjusted return on average tangible common equity	15.79				13.24				14.84				9.12				16.10

Reconciliation of Non-GAAP Financial Measures, continued
	December 31,				September 30,				December 31,
(dollars in thousands)	2020				2020				2019
Tangible common equity ratio
Total assets	$	54,366,086			$	53,040,538			$	48,203,282
Subtract: Goodwill	(452,390)				(452,390)				(497,267)
Subtract: Other intangible assets, net	(45,112)				(47,752)				(55,671)
Tangible assets	$	53,868,584			$	52,540,396			$	47,650,344
Total shareholders’ equity	$	5,161,334			$	5,064,542			$	4,941,690
Subtract: Goodwill	(452,390)				(452,390)				(497,267)
Subtract: Other intangible assets, net	(45,112)				(47,752)				(55,671)
Subtract: Preferred stock, no par value	(537,145)				(537,145)				(537,145)
Tangible common equity	$	4,126,687			$	4,027,255			$	3,851,607
Total shareholders’ equity to total assets ratio	9.49		%		9.55		%		10.25		%
Tangible common equity ratio	7.66				7.67				8.08

Synovus
INCOME STATEMENT DATA
(Unaudited)		Years Ended
(Dollars in thousands, except per share data)		December 31,
		2020				2019				% Change
Interest income		$	1,804,495			$	2,050,638			(12)	%
Interest expense		291,747				454,835				(36)
Net interest income		1,512,748				1,595,803				(5)
Provision for credit losses		355,022				87,720				305
Net interest income after provision for credit losses		1,157,726				1,508,083				(23)
Non-interest revenue:
Service charges on deposit accounts		73,132				88,190				(17)
Fiduciary and asset management fees		63,251				58,388				8
Card fees		42,702				45,659				(6)
Brokerage revenue		44,781				41,608				8
Mortgage banking income		91,413				32,599				180
Capital markets income		27,336				30,529				(10)
Income from bank-owned life insurance		31,297				21,226				47
Investment securities gains (losses), net		78,931				(7,659)				nm
Gain on sale and fair value increase, net of private equity investments		4,775				11,607				nm
Other non-interest revenue		48,895				33,753				45
Total non-interest revenue		506,513				355,900				42
Non-interest expense:
Salaries and other personnel expense		618,214				570,036				8
Net occupancy, equipment, and software expense		169,658				161,906				5
Third-party processing and other services		83,034				75,696				10
Professional fees		56,899				35,300				61
FDIC insurance and other regulatory fees		25,210				31,696				(20)
Amortization of intangibles		10,560				11,603				(9)
Goodwill impairment		44,877				—				nm
Restructuring charges		26,991				1,230				nm
Loss on early extinguishment of debt		10,466				4,592				nm
Earnout liability adjustments		4,908				10,457				nm
Merger-related expense		—				56,580				nm
Other operating expenses		128,757				139,872				(8)
Total non-interest expense		1,179,574				1,098,968				7
Income before income taxes		484,665				765,015				(37)
Income tax expense		110,970				201,235				(45)
Net income		373,695				563,780				(34)
Less: Preferred stock dividends		33,163				22,881				45
Net income available to common shareholders		$	340,532			$	540,899			(37)	%
Net income per common share, basic		2.31				3.50				(34)	%
Net income per common share, diluted		2.30				3.47				(34)
Cash dividends declared per common share		1.32				1.20				10
Return on average assets*		0.72		%		1.20		%		(48)	bps
Return on average common equity*		7.51				12.34				(483)
Weighted average common shares outstanding, basic		147,415				154,331				(4)	%
Weighted average common shares outstanding, diluted		148,210				156,058				(5)
nm - not meaningful
bps - basis points
* - ratios are annualized

Synovus
INCOME STATEMENT DATA
(Unaudited)
(Dollars in thousands, except per share data)	2020													2019			Fourth Quarter
	Fourth Quarter				Third Quarter			Second Quarter			First Quarter			Fourth Quarter			20 vs '19
																	% Change
Interest income	$	433,479			435,550			451,569			483,897			506,253			(14)	%
Interest expense	47,547				58,560			75,003			110,637			106,985			(56)
Net interest income	385,932				376,990			376,566			373,260			399,268			(3)
Provision for credit losses	11,066				43,383			141,851			158,722			24,470			(55)
Net interest income after provision for credit losses	374,866				333,607			234,715			214,538			374,798			—
Non-interest revenue:
Service charges on deposit accounts	19,063				17,813			15,567			20,689			22,385			(15)
Fiduciary and asset management fees	17,242				15,885			14,950			15,174			15,645			10
Card fees	11,743				10,823			9,186			10,950			11,325			4
Brokerage revenue	11,794				10,604			9,984			12,398			11,106			6
Mortgage banking income	24,426				31,229			23,530			12,227			9,287			163
Capital markets income	4,352				5,690			6,050			11,243			8,972			(51)
Income from bank-owned life insurance	9,725				7,778			7,756			6,038			5,620			73
Investment securities gains (losses), net	2,337				(1,550)			69,409			8,734			(2,157)			nm
Gain on sale and fair value increase/(decrease) of private equity investments	63				260			8,707			(4,255)			8,100			nm
Other non-interest revenue	14,016				15,879			8,345			10,659			7,672			83
Total non-interest revenue	114,761				114,411			173,484			103,857			97,955			17
Non-interest expense:
Salaries and other personnel expense	153,946				154,994			159,597			149,678			145,084			6
Net occupancy, equipment, and software expense	44,183				41,554			41,727			42,194			42,644			4
Third-party processing and other services	19,569				20,620			21,366			21,480			20,293			(4)
Professional Fees	17,541				13,377			15,305			10,675			9,921			77
FDIC insurance and other regulatory fees	6,288				6,793			6,851			5,278			9,825			(36)
Amortization of intangibles	2,640				2,640			2,640			2,640			2,901			(9)
Goodwill impairment	—				44,877			—			—			—			nm
Restructuring charges	18,068				2,882			2,822			3,220			1,259			nm
Loss on early extinguishment of debt	8,409				154			—			1,904			—			nm
Earnout liability adjustments	—				—			4,908			—			—			nm
Other operating expenses	31,854				28,764			28,925			39,210			34,194			(7)
Total non-interest expense	302,498				316,655			284,141			276,279			266,121			14
Income before income taxes	187,129				131,363			124,058			42,116			206,632			(9)
Income tax expense	36,720				39,789			30,866			3,595			54,948			(33)
Net income	150,409				91,574			93,192			38,521			151,684			(1)
Less: Preferred stock dividends	8,291				8,291			8,291			8,291			8,291			—
Net income available to common shareholders	$	142,118			83,283			84,901			30,230			143,393			(1)
Net income per common share, basic	$	0.96			0.57			0.58			0.21			0.98			(1)	%
Net income per common share, diluted	0.96				0.56			0.57			0.20			0.97			(1)
Cash dividends declared per common share	0.33				0.33			0.33			0.33			0.30			10
Return on average assets *	1.11		%		0.69			0.71			0.32			1.27			(16)	bps
Return on average common equity *	12.31				7.28			7.48			2.75			13.08			(77)
Weighted average common shares outstanding, basic	147,744				147,314			147,288			147,311			146,948			1	%
Weighted average common shares outstanding, diluted	148,725				147,976			147,733			148,401			148,529			—
nm - not meaningful
bps - basis points
* - ratios are annualized

Synovus
BALANCE SHEET DATA		December 31, 2020				September 30, 2020				December 31, 2019
(Unaudited)
(In thousands, except share data)
ASSETS
Cash and due from banks		$	531,625			$	578,026			$	535,846
Interest-bearing funds with Federal Reserve Bank		3,586,565				1,266,313				553,390
Interest earning deposits with banks		20,944				20,929				20,635
Federal funds sold and securities purchased under resale agreements		113,783				120,095				77,047
Cash and cash equivalents		4,252,917				1,985,363				1,186,918
Investment securities available for sale, at fair value		7,962,438				7,566,525				6,778,670
Loans held for sale ($216,647, $285,899, and $115,173 measured at fair value, respectively)		760,123				745,160				115,173
Loans, net of deferred fees and costs		38,252,984				39,549,847				37,162,450
Allowance for loan losses		(605,736)				(603,800)				(281,402)
Loans, net		37,647,248				38,946,047				36,881,048
Cash surrender value of bank-owned life insurance		1,049,373				1,044,046				775,665
Premises and equipment, net		463,959				471,208				493,940
Goodwill		452,390				452,390				497,267
Other intangible assets, net		45,112				47,752				55,671
Other assets		1,732,526				1,782,047				1,418,930
Total assets		$	54,366,086			$	53,040,538			$	48,203,282
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest-bearing deposits		$	13,477,854			$	13,075,081			$	9,439,485
Interest-bearing deposits		33,213,717				31,590,823				28,966,019
Total deposits		46,691,571				44,665,904				38,405,504
Federal funds purchased and securities sold under repurchase agreements		227,922				202,344				165,690
Other short-term borrowings		7,717				400,000				1,753,560
Long-term debt		1,202,494				1,628,385				2,153,897
Other liabilities		1,075,048				1,079,363				782,941
Total liabilities		49,204,752				47,975,996				43,261,592
Shareholders' equity:
Preferred Stock – no par value. Authorized 100,000,000 shares; issued 22,000,000		537,145				537,145				537,145
Common stock – $1.00 par value. Authorized 342,857,143 shares; issued 168,132,522, 167,410,950, and 166,800,623; outstanding 148,039,495, 147,317,923, and 147,157,596		168,133				167,411				166,801
Additional paid-in capital		3,851,208				3,832,142				3,819,336
Treasury stock, at cost – 20,093,027, 20,093,027, and 19,643,027 shares		(731,806)				(731,806)				(715,560)
Accumulated other comprehensive income, net		158,635				174,914				65,641
Retained earnings		1,178,019				1,084,736				1,068,327
Total shareholders’ equity		5,161,334				5,064,542				4,941,690
Total liabilities and shareholders' equity		$	54,366,086			$	53,040,538			$	48,203,282

Synovus
	AVERAGE BALANCES AND YIELDS/RATES (1)
	(Unaudited)
	(Dollars in thousands)
			2020										2019
			Fourth			Third		Second		First			Fourth
			Quarter			Quarter		Quarter		Quarter			Quarter
	Interest Earning Assets
	Investment securities (2) (4)		$	7,493,822		7,227,400		6,618,533		6,680,047			6,696,768
	Yield		2.07		%	2.39		2.72		3.09			3.12
	Trading account assets (5)		$	8,496		5,391		6,173		6,306			7,986
	Yield		1.03		%	1.69		2.19		2.70			2.69
	Commercial loans (3) (4)		$	30,363,102		30,730,135		30,236,919		27,607,343			26,698,202
	Yield		3.96		%	3.80		3.95		4.57			4.82
	Consumer loans (3)		$	8,521,449		9,032,437		9,899,172		9,985,702			9,809,832
	Yield		4.00		%	4.08		4.34		4.60			5.07
	Allowance for loan losses		$	(595,547)		(591,098)		(498,545)		(368,033)			(269,052)
	Loans, net (3)		$	38,289,004		39,171,474		39,637,546		37,225,012			36,238,982
	Yield		4.03		%	3.92		4.08		4.62			4.93
	Mortgage loans held for sale		$	309,278		244,952		221,157		86,415			117,909
	Yield		2.74		%	2.92		3.09		3.67			3.77
	Other loans held for sale		$	544,301		493,940		19,246		—			—
	Yield			2.81	%	3.61		4.19		—			—
	Federal funds sold, due from Federal Reserve Bank, and other short-term investments		$	2,716,645		1,265,880		1,709,086		652,130			514,635
	Yield		0.10		%	0.11		0.11		1.02			1.71
	Federal Home Loan Bank and Federal Reserve Bank Stock (5)		$	162,537		200,923		247,801		284,082			278,586
	Yield		2.64		%	2.73		3.60		3.38			2.85
	Total interest earning assets		$	49,524,083		48,609,960		48,459,542		44,933,992			43,854,866
	Yield		3.49		%	3.58		3.75		4.33			4.60
	Interest-Bearing Liabilities
	Interest-bearing demand deposits		$	8,531,415		7,789,095		7,260,940		6,445,986			6,381,282
	Rate		0.16		%	0.19		0.21		0.51			0.60
	Money Market accounts		$	14,411,860		13,272,972		12,238,479		11,548,014			10,526,296
	Rate		0.26		%	0.36		0.46		1.00			1.13
	Savings deposits		$	1,147,667		1,114,956		1,036,024		926,822			915,640
	Rate		0.01		%	0.02		0.02		0.05			0.05
	Time deposits under $100,000		$	1,239,592		1,379,923		1,621,943		1,761,741			1,873,350
	Rate		0.74		%	1.03		1.43		1.64			1.27
	Time deposits over $100,000		$	3,302,959		3,863,821		4,772,555		5,051,705			5,198,266
	Rate		1.03		%	1.44		1.80		2.04			1.51
	Other brokered deposits		$	1,978,393		1,912,114		1,998,571		1,376,669			1,156,131
	Rate		0.23		%	0.23		0.25		1.42			1.84
	Brokered time deposits		$	1,795,982		2,232,940		2,244,429		2,166,496			2,121,069
	Rate		1.60		%	1.59		1.86		2.11			2.16
	Total interest-bearing deposits		$	32,407,868		31,565,821		31,172,941		29,277,433			28,172,034
	Rate		0.39		%	0.54		0.73		1.18			1.16
	Federal funds purchased and securities sold under repurchase agreements		$	174,316		180,342		250,232		167,324			192,731
	Rate		0.07		%	0.09		0.12		0.30			0.24
	Other short-term borrowings		$	—		46,739		550,000		1,384,362			1,565,507
	Rate		—		%	1.12		1.23		1.66			1.87
	Long-term debt		$	1,552,791		2,234,665		2,834,188		2,678,651			2,153,983
	Rate		3.96		%	2.71		2.36		2.78			3.07
	Total interest-bearing liabilities		$	34,134,975		34,027,567		34,807,361		33,507,770			32,084,255
	Rate		0.55		%	0.68		0.86		1.30			1.30
	Non-interest-bearing demand deposits		$	13,566,112		12,773,676		11,923,534		9,409,774			9,706,784
	Cost of funds		0.40		%	0.50		0.65		1.04			1.02
	Net interest margin		3.12		%	3.10		3.13		3.37			3.65
	Taxable equivalent adjustment		$	821		956		861		786			769
	(1) Yields and rates are annualized.
	(2) Excludes net unrealized gains and losses.
	(3) Average loans are shown net of unearned income. Non-performing loans are included.
	(4) Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 21%, in adjusting interest on tax-exempt loans and investment securities to a taxable equivalent basis.
	(5) Included as a component of other assets on the consolidated balance sheet.

Synovus
LOANS OUTSTANDING BY TYPE
(Unaudited)
(Dollars in thousands)
		Total Loans				Total Loans				Linked Quarter			Total Loans				Year/Year
Loan Type		December 31, 2020				September 30, 2020				% Change			December 31, 2019				% Change
Commercial, Financial, and Agricultural		$	12,574,899			$	13,120,038			(4)	%		$	10,239,559			23	%
Owner-Occupied		6,798,780				6,894,113				(1)			6,529,811				4
Total Commercial & Industrial		19,373,679				20,014,151				(3)			16,769,370				16
Multi-Family		2,197,942				2,365,118				(7)			1,989,096				10
Hotels		1,444,264				1,409,424				2			1,284,291				12
Office Buildings		2,261,253				2,313,346				(2)			2,255,308				—
Shopping Centers		1,607,223				1,698,993				(5)			1,785,616				(10)
Warehouses		702,020				730,253				(4)			703,705				—
Other Investment Property		1,133,828				1,145,313				(1)			986,311				15
Total Investment Properties		9,346,530				9,662,447				(3)			9,004,327				4
1-4 Family Construction		183,373				180,406				2			284,594				(36)
1-4 Family Investment Mortgage		445,795				474,632				(6)			495,421				(10)
Total 1-4 Family Properties		629,168				655,038				(4)			780,015				(19)
Commercial Development		130,802				111,493				17			103,643				26
Residential Development		245,776				260,313				(6)			282,677				(13)
Land Acquisition		218,158				276,584				(21)			323,122				(32)
Land and Development		594,736				648,390				(8)			709,442				(16)
Total Commercial Real Estate		10,570,434				10,965,875				(4)			10,493,784				1
Consumer Mortgages		5,507,700				5,658,525				(3)			5,546,368				(1)
Home Equity Lines		1,523,836				1,615,207				(6)			1,713,157				(11)
Credit Cards		281,018				264,829				6			268,841				5
Other Consumer Loans		1,073,989				1,130,237				(5)			2,396,294				(55)
Total Consumer		8,386,543				8,668,798				(3)			9,924,660				(15)
Unearned Income		(77,672)				(98,977)				(22)			(25,364)				206
Total		$	38,252,984			$	39,549,847			(3)	%		$	37,162,450			3	%
NON-PERFORMING LOANS COMPOSITION (1)
(Unaudited)
(Dollars in thousands)		Total Non-performing Loans				Total Non-performing Loans				Linked Quarter			Total Non-performing Loans				Year/Year
Loan Type		December 31, 2020				September 30, 2020				% Change			December 31, 2019				% Change
Commercial, Financial, and Agricultural		$	77,386			$	95,365			(19)	%		$	56,186			38	%
Owner-Occupied		20,019				20,261				(1)			9,780				105
Total Commercial & Industrial		97,405				115,626				(16)			65,966				48
Multi-Family		168				157				7			385				(56)
Office Buildings		1,134				27,608				(96)			600				89
Shopping Centers		21,082				257				nm			718				nm
Warehouses		217				—				nm			—				nm
Other Investment Property		2,030				238				753			321				532
Total Investment Properties		24,631				28,260				(13)			2,024				nm
1-4 Family Construction		1,236				1,556				(21)			698				77
1-4 Family Investment Mortgage		2,383				1,815				31			1,555				53
Total 1-4 Family Properties		3,619				3,371				7			2,253				61
Commercial Development		582				833				(30)			87				569
Residential Development		533				648				(18)			395				35
Land Acquisition		1,048				910				15			628				67
Land and Development		2,163				2,391				(10)			1,110				95
Total Commercial Real Estate		30,413				34,022				(11)			5,387				465
Consumer Mortgages		8,740				7,433				18			12,545				(30)
Home Equity Lines		12,145				10,297				18			12,034				1
Other Consumer Loans		2,376				1,459				63			5,704				(58)
Total Consumer		23,261				19,189				21			30,283				(23)
Total		$	151,079			$	168,837			(11)	%		$	101,636			49	%

Synovus
	CREDIT QUALITY DATA
	(Unaudited)
	(Dollars in thousands)		2020													2019			Fourth Quarter
			Fourth				Third			Second			First			Fourth			20 vs '19
			Quarter				Quarter			Quarter			Quarter			Quarter			% Change
	Non-performing Loans (NPL)		$	151,079			168,837			147,437			156,287			101,636			49
	Impaired Loans Held for Sale		23,590				—			—			—			—			nm
	Other Real Estate and Other Assets		17,394				23,280			30,242			33,679			35,810			(51)
	Non-performing Assets (NPAs)		192,063				192,117			177,679			189,966			137,446			40
	Allowance for Loan Losses (ALL)		605,736				603,800			588,648			493,452			281,402			115
	Reserve for Unfunded Commitments		47,785				60,794			61,029			38,420			1,375			nm
	Allowance for Credit Losses (ACL)		653,521				664,594			649,677			531,872			282,777			131
	Net Charge-Offs - Quarter		22,139				28,466			24,046			20,061			8,821
	Net Charge-Offs - YTD		94,712				72,573			44,107			20,061			57,612
	Net Charge-Offs / Average Loans - Quarter (1)		0.23		%		0.29			0.24			0.21			0.10
	Net Charge-Offs / Average Loans - YTD (1)		0.24				0.25			0.23			0.21			0.16
	NPLs / Loans		0.39				0.43			0.37			0.41			0.27
	NPAs / Loans, ORE and specific other assets		0.50				0.49			0.44			0.50			0.37
	ACL/Loans		1.71				1.68			1.63			1.39			0.76
	ALL/Loans		1.58				1.53			1.47			1.29			0.76
	ACL/NPLs		432.57				393.63			440.65			340.32			278.23
	ALL/NPLs		400.94				357.62			399.25			315.74			276.87
	Past Due Loans over 90 days and Still Accruing		$	4,117			7,512			8,391			6,398			15,943			(74)
	As a Percentage of Loans Outstanding		0.01		%		0.02			0.02			0.02			0.04
	Total Past Due Loans and Still Accruing		$	47,349			57,316			46,390			83,235			123,793			(62)
	As a Percentage of Loans Outstanding		0.12		%		0.14			0.12			0.22			0.33
	Accruing Troubled Debt Restructurings (TDRs)		$	134,972			163,511			166,461			160,128			133,145			1
	(1) Ratio is annualized.
	SELECTED CAPITAL INFORMATION (1)
	(Unaudited)
	(Dollars in thousands)
			December 31, 2020				September 30, 2020			December 31, 2019
	Tier 1 Capital		$	4,572,173			4,450,547			4,280,604
	Total Risk-Based Capital		5,604,043				5,536,918			5,123,381
	Common Equity Tier 1 Capital Ratio		9.67		%		9.30			8.95
	Tier 1 Capital Ratio		10.95				10.57			10.23
	Total Risk-Based Capital Ratio		13.43				13.16			12.25
	Tier 1 Leverage Ratio		8.50				8.48			9.16
	Common Equity as a Percentage of Total Assets (2)		8.51				8.54			9.14
	Tangible Common Equity Ratio (3) (5)		7.66				7.67			8.08
	Book Value Per Common Share (4)		$	31.24			30.73			29.93
	Tangible Book Value Per Common Share (3)		27.88				27.34			26.17
	(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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FAQ

What were Synovus Financial's earnings results for Q4 2020?

Synovus reported a net income of $142.1 million, or $0.96 per diluted share, for Q4 2020.

How did Synovus's net income for 2020 compare to 2019?

Net income for 2020 was $340.5 million, down from $540.9 million in 2019.

What is the CET1 ratio for Synovus as of Q4 2020?

The CET1 ratio for Synovus increased to 9.67% as of Q4 2020.

What is Synovus Forward and its expected impact?

Synovus Forward is a plan aimed at generating a $100 million pre-tax benefit through revenue and expense initiatives.

What changes are happening in Synovus's leadership?

Kevin Blair is set to become CEO in April 2021, succeeding Kessel Stelling who will transition to Executive Chairman.