Synovus Announces Earnings for the Second Quarter 2021

Rhea-AI Summary

Synovus Financial Corp. (NYSE: SNV) reported its Q2 2021 financial results, with net income of $177.9 million ($1.19 per diluted share), up $0.62 YoY. Adjusted diluted EPS was $1.20, a minor drop from Q1. Total loans decreased by $569.1 million (1%) due to a decline in PPP loans. Total deposits were $47.17 billion, down slightly, yet core transaction deposits rose by 2%. Net interest income increased to $381.9 million, while non-interest revenue fell 3%. A provision reversal of $24.6 million reflects a positive credit outlook. The CET1 ratio improved to 9.75% amidst share repurchases.

Positive

• Net income of $177.9 million, up 110% YoY.
• Net interest income increased to $381.9 million, reflecting asset growth.
• Core transaction deposits rose by $702.4 million (2%) sequentially.
• CET1 ratio improved to 9.75%, indicating strong capital health.

Negative

• Total loans decreased by $569.1 million (1%) sequentially, primarily from PPP loans.
• Non-interest revenue decreased by $3.9 million (3%) sequentially.

Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter ended June 30, 2021.

Second Quarter 2021 Highlights

• Net income available to common shareholders of $177.9 million or $1.19 per diluted share, unchanged sequentially and up $0.62 compared to prior year.
  • Adjusted diluted EPS of $1.20, down $0.01 sequentially and up $0.97 compared to prior year.
• Period-end loans decreased $569.1 million or 1% sequentially.
  • Paycheck Protection Program (PPP) loans declined $763.4 million and third-party consumer loan balances increased $272.5 million sequentially.
• Core transaction deposits (non-interest bearing, NOW/savings, and money market deposits excluding public and brokered funds) increased $702.4 million or 2% sequentially.
• Total deposit costs of 0.16% down 6 bps sequentially due to ongoing repricing and product remixing.
• Net interest income of $381.9 million increased $8.0 million sequentially as asset growth, reduced deposit costs, and a higher day count more than offset the reduction in PPP fee income.
  • Net interest margin of 3.02%, down 2 bps sequentially.
• Non-interest revenue decreased $3.9 million sequentially as broad-based growth partially offset the normalization of net mortgage revenues.
  • Adjusted non-interest revenue decreased $6.2 million.
• Non-interest expense increased $3.4 million sequentially and decreased $13.6 million compared to prior year.
  • Adjusted non-interest expense increased $2.4 million sequentially as the benefits from various efficiency initiatives were offset by higher commissions, incentives, and expenses primarily related to additional PPP forgiveness and expenses associated with higher third-party consumer loan balances.
• Reversal of provision for credit losses of $24.6 million, primarily from a more favorable economic outlook.
  • Allowance for credit losses coverage ratio (to loans) of 1.47%, or 1.54% excluding PPP loans.
• Credit quality metrics remain relatively stable, near historical lows. The non-performing asset ratio fell 4 bps to 0.46% sequentially; criticized and classified loans declined 14% compared to prior quarter.
• Preliminary CET1 ratio increased 1 bp sequentially to 9.75%, with strong core earnings helping offset the decline from $92.5 million in share repurchases at an average price of $47.51, reducing average diluted outstanding shares from the prior quarter by 1.3%.

Second Quarter Summary

	Reported												Adjusted
(dollars in thousands)	2Q21				1Q21				2Q20				2Q21				1Q21				2Q20
Net income available to common shareholders	$	177,909			$	178,802			$	84,901			$	178,969			$	180,685			$	34,015
Diluted earnings per share	1.19				1.19				0.57				1.20				1.21				0.23
Total loans	38,236,018				38,805,101				39,914,297				N/A				N/A				N/A
Total deposits	47,171,962				47,368,951				44,194,580				N/A				N/A				N/A
Total FTE revenue	489,738				485,587				550,911				488,612				486,785				470,659
Return on avg assets	1.36		%		1.40		%		0.71		%		1.37		%		1.41		%		0.32		%
Return on avg common equity	15.40				15.77				7.48				15.50				15.93				3.00
Return on avg tangible common equity	17.41				17.85				8.69				17.52				18.04				3.60
Net interest margin	3.02				3.04				3.13				N/A				N/A				N/A
Efficiency ratio	55.24				55.01				51.58				54.41				54.12				57.71
NCO ratio	0.28				0.21				0.24				N/A				N/A				N/A
NPA ratio	0.46				0.50				0.44				N/A				N/A				N/A

“Our Synovus team delivered solid financial performance in the second quarter while continuing to position the company for long-term success,” said Kevin Blair, Synovus President and CEO. “Revenue growth in the quarter was largely driven by an $8 million increase in net interest income resulting from earning asset growth. The credit outlook continued to improve, with a 14% reduction in criticized and classified loans and another quarter of reserve release. And we remained focused on growth drivers in the quarter while maintaining discipline around expenses, which declined 5% from the second quarter of 2020.

“We are delivering on Synovus Forward, with $75 million in pre-tax benefits to date, and we continue to strengthen our competitive position by investing in specialized talent, technology and solutions, and by taking advantage of our economically vibrant Southeast footprint,” Blair said. “We expect our efforts to produce sustained profitable growth, positive operating leverage, and higher returns as we progress toward becoming a top quartile performing bank.”

Balance Sheet

Loans*
(dollars in millions)		2Q21				1Q21				Linked Quarter Change				Linked Quarter % Change			2Q20				Year/Year Change					Year/Year % Change
Commercial & industrial		$	19,150.1			$	19,693.8			$	(543.7	)		(3	)%		$	20,031.6			$	(881.5	)			(4	)%
Commercial real estate		10,361.1				10,533.9				(172.9		)		(2	)		10,614.2				(253.1		)			(2	)
Consumer		8,724.8				8,577.3				147.5				2			9,268.5				(543.6		)			(6	)
Total loans		$	38,236.0			$	38,805.1			$	(569.1	)		(1	)%		$	39,914.3			$	(1,678.2	)			(4	)%
*Amounts may not total due to rounding

• Total loans ended the quarter at $38.24 billion, down $569.1 million or 1% sequentially.
• Commercial and industrial (C&I) loans declined $543.7 million sequentially, led by a decline in PPP loan balances of $763.4 million.
  • PPP forgiveness of $927 million partially offset by additional fundings of $149 million.
  • C&I line utilization remains near historic lows at ~40%.
• CRE loans declined $172.9 million as the recovery in commercial real estate continues.
• Consumer loans increased $147.5 million sequentially, with growth of $273.5 million in third-party consumer lending offsetting declines in consumer mortgages and HELOCs of $98.4 million and $74.2 million, respectively.

Deposits*
(dollars in millions)	2Q21				1Q21				Linked Quarter Change				Linked Quarter % Change			2Q20				Year/Year Change				Year/Year % Change
Non-interest-bearing DDA	$	14,342.6			$	13,742.1			$	600.5			4	%		$	11,830.7			$	2,511.9			21	%
Interest-bearing DDA	5,839.8				5,841.7				(1.9		)		—			5,057.2				782.6				15
Money market	13,983.1				13,943.7				39.4				—			11,457.2				2,525.9				22
Savings	1,341.5				1,277.0				64.4				5			1,080.1				261.3				24
Public funds	5,804.9				6,154.9				(350.0		)		(6	)		5,347.4				457.6				9
Time deposits	2,891.1				3,214.8				(323.6		)		(10	)		5,131.7				(2,240.6		)		(44	)
Brokered deposits	2,969.0				3,194.7				(225.7		)		(7	)		4,290.3				(1,321.3		)		(31	)
Total deposits	$	47,172.0			$	47,369.0			$	(197.0	)		—	%		$	44,194.6			$	2,977.4			7	%
*Amounts may not total due to rounding

• Total deposits ended the quarter at $47.17 billion, down $197.0 million sequentially.
• Core transaction deposits increased $702.4 million or 2% sequentially.
• Total deposit costs declined 6 bps sequentially to 0.16%.

Income Statement Summary**
(in thousands, except per share data)	2Q21				1Q21				Linked Quarter Change				Linked Quarter % Change			2Q20				Year/Year Change				Year/Year % Change
Net interest income	$	381,860			$	373,857			$	8,003			2	%		$	376,566			$	5,294			1	%
Non-interest revenue	107,087				110,956				(3,869		)		(3	)		173,484				(66,397		)		(38	)
Non-interest expense	270,531				267,134				3,397				1			284,141				(13,610		)		(5	)
(Reversal of) provision for credit losses	(24,598		)		(18,575		)		(6,023		)		(32	)		141,851				(166,449		)		nm
Income before taxes	$	243,014			$	236,254			$	6,760			3	%		$	124,058			$	118,956			96	%
Income tax expense	56,814				49,161				7,653				16			30,866				25,948				84
Preferred stock dividends	8,291				8,291				—				—			8,291				—				—
Net income available to common shareholders	$	177,909			$	178,802			$	(893	)		—	%		$	84,901			$	93,008			110	%
Weighted average common shares outstanding, diluted	149,747				149,780				(33		)		—	%		147,733				2,014				1	%
Diluted earnings per share	$	1.19			$	1.19			$	—			—			$	0.57			$	0.62			109
Adjusted diluted earnings per share	1.20				1.21				(0.01		)		(1	)		0.23				0.97				421
** Amounts may not total due to rounding

Core Performance

• Net interest income of $381.9 million increased $8.0 million sequentially as asset growth, reduced deposit costs, and a higher day count more than offset the reduction in PPP fee income.
  • Net PPP fee accretion of $20.4 million, down $4.5 million sequentially.
  • Net interest margin was 3.02%, down 2 bps sequentially.
• Non-interest revenue decreased $3.9 million, or 3% sequentially. Adjusted non-interest revenue decreased $6.2 million, or 6% sequentially, and increased $12.7 million, or 14% compared to prior year.
  • Broad-based growth helped partially offset normalization of net mortgage revenue, which declined $8.5 million sequentially.
• Non-interest expense increased $3.4 million, or 1% sequentially. Adjusted non-interest expense increased $2.4 million, or 1% sequentially.
  • The benefits from various efficiency initiatives were offset by higher commissions, incentives, and expenses primarily related to additional PPP forgiveness and expenses associated with higher third-party consumer loan balances.
• Reversal of provision for credit losses of $24.6 million supported by a more positive economic outlook and 14% reduction in criticized and classified loans; allowance for credit losses coverage ratio (to loans) of 1.47%, or 1.54% excluding PPP loans.
• Tax expense was $56.8 million, an increase of $7.7 million driven by higher taxable income and unfavorable change in discrete items.
  • Year-to-date effective tax rate of 22.56% before discrete items.

Capital Ratios
	2Q21			1Q21			2Q20
Common equity Tier 1 capital (CET1) ratio	9.75	%	*	9.74	%		8.90	%
Tier 1 capital ratio	10.99		*	10.99			10.15
Total risk-based capital ratio	13.25		*	13.34			12.70
Tier 1 leverage ratio	8.72		*	8.80			8.38
Tangible common equity ratio	7.73			7.55			7.41
* Ratios are preliminary.

Capital

• Preliminary CET1 ratio improved 1 bp during the quarter to 9.75% as strong core performance helped offset the impact of $92.5 million in share repurchases at an average price of $47.51, reducing average diluted outstanding shares from the prior quarter by 1.3%.
• Total risk-based capital ratio of 13.25% declined 9 bps from the prior quarter following a reduction in the ACL.

Second Quarter Earnings Conference Call

Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on July 20, 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 $55 billion in assets. Synovus provides commercial and retail banking, investment, and mortgage services through 285 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; expectations on our growth strategy, expense and revenue initiatives, capital management, balance sheet 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, 2020, 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; total adjusted revenue; adjusted tangible efficiency ratio; adjusted net income available to common shareholders; adjusted diluted earnings per 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 FTE revenue; efficiency ratio-FTE; net income available to common shareholders; diluted earnings per 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. Total adjusted revenue and adjusted non-interest revenue are measures used by management to evaluate total FTE revenue and non-interest revenue exclusive of net investment securities gains (losses), gain on sale and changes in the fair value of private equity investments, net, and fair value adjustment on non-qualified deferred compensation. 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 diluted earnings per 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)	2Q21				1Q21				2Q20
Adjusted non-interest revenue
Total non-interest revenue	$	107,087			$	110,956			$	173,484
Add/subtract: Investment securities losses (gains), net	—				1,990				(69,409		)
Subtract: Gain on sale and fair value increase of private equity investments	—				—				(8,707		)
Subtract: Fair value adjustment on non-qualified deferred compensation	(1,126		)		(792		)		(2,136		)
Adjusted non-interest revenue	$	105,961			$	112,154			$	93,232
Adjusted non-interest expense
Total non-interest expense	$	270,531			$	267,134			$	284,141
Subtract: Earnout liability adjustment	(750		)		—				(4,908		)
Subtract: Restructuring charges	(415		)		(531		)		(2,822		)
Subtract: Fair value adjustment on non-qualified deferred compensation	(1,126		)		(792		)		(2,136		)
Adjusted non-interest expense	$	268,240			$	265,811			$	274,275
Reconciliation of Non-GAAP Financial Measures, continued
(dollars in thousands)	2Q21				1Q21				2Q20
Total adjusted revenue and adjusted tangible efficiency ratio
Adjusted non-interest expense	$	268,240			$	265,811			$	274,275
Subtract: Amortization of intangibles	(2,379		)		(2,379		)		(2,640		)
Adjusted tangible non-interest expense	$	265,861			$	263,432			$	271,635
Net interest income	$	381,860			$	373,857			$	376,566
Add: Tax equivalent adjustment	791				774				861
Add: Total non-interest revenue	107,087				110,956				173,484
Total FTE revenue	489,738				485,587				550,911
Add/subtract: Investment securities losses (gains), net	—				1,990				(69,409		)
Subtract: Gain on sale and fair value increase of private equity investments	—				—				(8,707		)
Subtract: Fair value adjustment on non-qualified deferred compensation	(1,126		)		(792		)		(2,136		)
Total adjusted revenue	$	488,612			$	486,785			$	470,659
Efficiency ratio-FTE	55.24		%		55.01		%		51.58		%
Adjusted tangible efficiency ratio	54.41				54.12				57.71

Adjusted return on average assets
Net income	$	186,200			$	187,093				$	93,192
Add: Earnout liability adjustment	750				—					4,908
Add: Restructuring charges	415				531					2,822
Add/subtract: Investment securities losses (gains), net	—				1,990					(69,409		)
Subtract: Gain on sale and fair value increase of private equity investments	—				—					(8,707		)
Subtract/add: Tax effect of adjustments (1)	(105		)		(638		)			19,500
Adjusted net income	$	187,260			$	188,976				$	42,306
Net income annualized	$	746,846			$	758,766				$	374,816
Adjusted net income annualized	$	751,098			$	766,403				$	170,154
Total average assets	$	55,017,771			$	54,188,504				$	52,853,685
Return on average assets	1.36		%		1.40		%			0.71		%
Adjusted return on average assets	1.37				1.41					0.32
Adjusted net income available to common shareholders and adjusted diluted earnings per share
Net income available to common shareholders	$	177,909			$	178,802				$	84,901
Add: Earnout liability adjustment	750				—					4,908
Add: Restructuring charges	415				531					2,822
Add/subtract: Investment securities losses (gains), net	—				1,990					(69,409		)
Subtract: Gain on sale and fair value increase of private equity investments	—				—					(8,707		)
Subtract/add: Tax effect of adjustments (1)	(105		)		(638		)			19,500
Adjusted net income available to common shareholders	$	178,969			$	180,685				$	34,015
Weighted average common shares outstanding, diluted	149,747				149,780					147,733
Diluted earnings per share	$	1.19			$	1.19				$	0.57
Adjusted diluted earnings per share	1.20				1.21					0.23

Reconciliation of Non-GAAP Financial Measures, continued
(dollars in thousands)	2Q21				1Q21				2Q20
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	$	177,909			$	178,802			$	84,901
Add: Earnout liability adjustment	750				—				4,908
Add: Restructuring charges	415				531				2,822
Add/subtract: Investment securities losses (gains), net	—				1,990				(69,409		)
Subtract: Gain on sale and fair value increase of private equity investments	—				—				(8,707		)
Subtract/add: Tax effect of adjustments (1)	(105		)		(638		)		19,500
Adjusted net income available to common shareholders	$	178,969			$	180,685			$	34,015
Adjusted net income available to common shareholders annualized	$	717,843			$	732,778			$	136,808
Add: Amortization of intangibles, annualized net of tax	7,128				7,207				7,868
Adjusted net income available to common shareholders excluding amortization of intangibles annualized	$	724,971			$	739,985			$	144,676
Net income available to common shareholders annualized	$	713,591			$	725,141			$	341,470
Add: Amortization of intangibles, annualized net of tax	7,128				7,207				7,868
Net income available to common shareholders excluding amortization of intangibles annualized	$	720,719			$	732,348			$	349,338
Total average shareholders' equity less preferred stock	$	4,632,568			$	4,599,076			$	4,567,254
Subtract: Goodwill	(452,390		)		(452,390		)		(497,267		)
Subtract: Other intangible assets, net	(41,399		)		(44,005		)		(51,667		)
Total average tangible shareholders' equity less preferred stock	$	4,138,779			$	4,102,681			$	4,018,320
Return on average common equity	15.40		%		15.77		%		7.48		%
Adjusted return on average common equity	15.50				15.93				3.00
Return on average tangible common equity	17.41				17.85				8.69
Adjusted return on average tangible common equity	17.52				18.04				3.60

Reconciliation of Non-GAAP Financial Measures, continued
(dollars in thousands)	June 30, 2021				March 31, 2021				June 30, 2020
Tangible common equity ratio
Total assets	$	54,938,659			$	55,159,011			$	54,121,989
Subtract: Goodwill	(452,390		)		(452,390		)		(497,267		)
Subtract: Other intangible assets, net	(40,354		)		(42,733		)		(50,392		)
Tangible assets	$	54,445,915			$	54,663,888			$	53,574,330
Total shareholders’ equity	$	5,237,714			$	5,161,717			$	5,052,968
Subtract: Goodwill	(452,390		)		(452,390		)		(497,267		)
Subtract: Other intangible assets, net	(40,354		)		(42,733		)		(50,392		)
Subtract: Preferred Stock, no par value	(537,145		)		(537,145		)		(537,145		)
Tangible common equity	$	4,207,825			$	4,129,449			$	3,968,164
Total shareholders’ equity to total assets ratio	9.53		%		9.36		%		9.34		%
Tangible common equity ratio	7.73				7.55				7.41
(1) An assumed marginal tax rate of 25.3% for 2021 and 25.9% for 2020 was applied.

	INCOME STATEMENT DATA
	(Unaudited)
	(Dollars in thousands, except per share data)	Six Months Ended
		2021					2020				21 vs '20
											% Change
	Interest income	$	822,560				$	935,466			(12	)%
	Interest expense	66,844					185,640				(64	)
	Net interest income	755,716					749,826				1
	(Reversal of) provision for credit losses	(43,173		)			300,573				nm
	Net interest income after provision for credit losses	798,889					449,253				78
	Non-interest revenue:
	Service charges on deposit accounts	41,448					36,255				14
	Fiduciary and asset management fees	36,759					30,124				22
	Card fees	25,300					20,136				26
	Brokerage revenue	26,899					22,383				20
	Mortgage banking income	36,157					35,757				1
	Capital markets income	10,840					17,294				(37	)
	Income from bank-owned life insurance	16,031					13,794				16
	Investment securities (losses) gains, net	(1,990		)			78,144				nm
	Other non-interest revenue	26,599					23,454				13
	Total non-interest revenue	218,043					277,341				(21	)
	Non-interest expense:
	Salaries and other personnel expense	322,044					309,274				4
	Net occupancy, equipment, and software expense	82,959					83,921				(1	)
	Third-party processing and other services	44,451					45,366				(2	)
	Professional fees	17,031					25,980				(34	)
	FDIC insurance and other regulatory fees	11,127					12,129				(8	)
	Other operating expenses	60,053					83,751				(28	)
	Total non-interest expense	537,665					560,421				(4	)
	Income before income taxes	479,267					166,173				188
	Income tax expense	105,975					34,461				208
	Net income	373,292					131,712				183
	Less: Preferred stock dividends	16,581					16,581				—
	Net income available to common shareholders	$	356,711				$	115,131			210	%
	Net income per common share, basic	$	2.41				$	0.78			208	%
	Net income per common share, diluted	2.38					0.78				206
	Cash dividends declared per common share	0.66					0.66				—
	Return on average assets *	1.38		%			0.52		%		86	bps
	Return on average common equity *	15.58					5.15				1,043
	Weighted average common shares outstanding, basic	148,289					147,300				1	%
	Weighted average common shares outstanding, diluted	149,764					148,067				1
	nm - not meaningful
	bps - basis points
	* - ratios are annualized

Synovus
	INCOME STATEMENT DATA
	(Unaudited)
	(Dollars in thousands, except per share data)	2021							2020									Second Quarter
		Second Quarter				First Quarter			Fourth Quarter			Third Quarter			Second Quarter			'21 vs '20
																		% Change
	Interest income	$	412,743			409,817			433,479			435,550			451,569			(9	)%
	Interest expense	30,883				35,960			47,547			58,560			75,003			(59	)
	Net interest income	381,860				373,857			385,932			376,990			376,566			1
	(Reversal of) provision for credit losses	(24,598		)		(18,575	)		11,066			43,383			141,851			nm
	Net interest income after provision for credit losses	406,458				392,432			374,866			333,607			234,715			73
	Non-interest revenue:
	Service charges on deposit accounts	21,414				20,033			19,063			17,813			15,567			38
	Fiduciary and asset management fees	18,805				17,954			17,242			15,885			14,950			26
	Card fees	13,304				11,996			11,743			10,823			9,186			45
	Brokerage revenue	13,926				12,974			11,794			10,604			9,984			39
	Mortgage banking income	13,842				22,315			24,426			31,229			23,530			(41	)
	Capital markets income	3,335				7,505			4,352			5,690			6,050			(45	)
	Income from bank-owned life insurance	7,188				8,843			9,725			7,778			7,756			(7	)
	Investment securities (losses)/gains, net	—				(1,990	)		2,337			(1,550	)		69,409			nm
	Other non-interest revenue	15,273				11,326			14,079			16,139			17,052			(10	)
	Total non-interest revenue	107,087				110,956			114,761			114,411			173,484			(38	)
	Non-interest expense:
	Salaries and other personnel expense	160,567				161,477			153,946			154,994			159,597			1
	Net occupancy, equipment, and software expense	41,825				41,134			44,183			41,554			41,727			—
	Third-party processing and other services	24,419				20,032			20,799			21,827			22,666			8
	Professional fees	7,947				9,084			17,541			13,377			15,305			(48	)
	FDIC insurance and other regulatory fees	5,547				5,579			6,288			6,793			6,851			(19	)
	Other operating expenses	30,226				29,828			59,741			78,110			37,995			(20	)
	Total non-interest expense	270,531				267,134			302,498			316,655			284,141			(5	)
	Income before income taxes	243,014				236,254			187,129			131,363			124,058			96
	Income tax expense	56,814				49,161			36,720			39,789			30,866			84
	Net income	186,200				187,093			150,409			91,574			93,192			100
	Less: Preferred stock dividends	8,291				8,291			8,291			8,291			8,291			—
	Net income available to common shareholders	$	177,909			178,802			142,118			83,283			84,901			110	%
	Net income per common share, basic	$	1.20			1.20			0.96			0.57			0.58			107	%
	Net income per common share, diluted	1.19				1.19			0.96			0.56			0.57			109
	Cash dividends declared per common share	0.33				0.33			0.33			0.33			0.33			—
	Return on average assets *	1.36		%		1.40			1.11			0.69			0.71			65	bps
	Return on average common equity *	15.40				15.77			12.31			7.28			7.48			792
	Weighted average common shares outstanding, basic	148,113				148,467			147,744			147,314			147,288			1	%
	Weighted average common shares outstanding, diluted	149,747				149,780			148,725			147,976			147,733			1
	nm - not meaningful
	bps - basis points
	* - ratios are annualized

Synovus
	BALANCE SHEET DATA		June 30, 2021				December 31, 2020				June 30, 2020
	(Unaudited)
	(In thousands, except share data)
	ASSETS
	Cash and due from banks		$	560,396			$	531,579			$	572,169
	Interest-bearing funds with Federal Reserve Bank		2,598,213				3,586,565				860,289
	Interest earning deposits with banks		21,513				20,944				20,719
	Federal funds sold and securities purchased under resale agreements		82,554				113,829				118,048
	Cash, cash equivalents, and restricted cash		3,262,676				4,252,917				1,571,225
	Investment securities available for sale, at fair value		9,442,170				7,962,438				7,197,493
	Loans held for sale ($202,216, $216,647, and $266,306 measured at fair value, respectively)		750,916				760,123				900,936
	Loans, net of deferred fees and costs		38,236,018				38,252,984				39,914,297
	Allowance for loan losses		(516,708		)		(605,736		)		(588,648		)
	Loans, net		37,719,310				37,647,248				39,325,649
	Cash surrender value of bank-owned life insurance		1,059,235				1,049,373				1,038,049
	Premises, equipment, and software, net		446,447				463,959				481,716
	Goodwill		452,390				452,390				497,267
	Other intangible assets, net		40,354				45,112				50,392
	Receivable on unsettled securities sales		—				—				1,289,116
	Other assets		1,765,161				1,760,599				1,770,146
	Total assets		$	54,938,659			$	54,394,159			$	54,121,989
	LIABILITIES AND SHAREHOLDERS' EQUITY
	Liabilities:
	Deposits:
	Non-interest-bearing deposits		$	15,345,629			$	13,477,854			$	12,555,714
	Interest-bearing deposits		31,826,333				33,213,717				31,638,866
	Total deposits		47,171,962				46,691,571				44,194,580
	Federal funds purchased and securities sold under repurchase agreements		194,786				227,922				225,576
	Other short-term borrowings		—				7,717				300,000
	Long-term debt		1,203,293				1,202,494				2,327,921
	Due on unsettled securities purchases		48,795				—				922,952
	Other liabilities		1,082,109				1,103,121				1,097,992
	Total liabilities		49,700,945				49,232,825				49,069,021
	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 169,107,609, 168,132,522, and 167,405,730; outstanding 147,071,532, 148,039,495, and 147,312,703		169,108				168,133				167,406
	Additional paid-in capital		3,872,949				3,851,208				3,826,726
	Treasury stock, at cost – 22,036,077, 20,093,027, and 20,093,027 shares		(824,197		)		(731,806		)		(731,806		)
	Accumulated other comprehensive income, net		45,726				158,635				202,970
	Retained earnings		1,436,983				1,178,019				1,050,527
	Total shareholders’ equity		5,237,714				5,161,334				5,052,968
	Total liabilities and shareholders' equity		$	54,938,659			$	54,394,159			$	54,121,989

Synovus
	AVERAGE BALANCES AND YIELDS/RATES (1)
	(Unaudited)
	(Dollars in thousands)		2021						2020
			Second			First			Fourth			Third			Second
			Quarter			Quarter			Quarter			Quarter			Quarter
	Interest Earning Assets
	Investment securities (2) (4)		$	9,184,691		8,437,563			7,493,822			7,227,400			6,618,533
	Yield		1.45		%	1.40			2.07			2.39			2.72
	Trading account assets (5)		$	2,831		3,063			8,496			5,391			6,173
	Yield		1.15		%	2.81			1.03			1.69			2.19
	Commercial loans (3) (4)		$	29,849,029		29,844,491			30,363,102			30,730,135			30,236,919
	Yield		3.86		%	3.95			3.96			3.80			3.95
	Consumer loans (3)		$	8,647,448		8,367,776			8,521,449			9,032,437			9,899,172
	Yield		3.94		%	3.98			4.00			4.08			4.34
	Allowance for loan losses		$	(561,242	)	(599,872	)		(595,547	)		(591,098	)		(498,545	)
	Loans, net (3)		$	37,935,235		37,612,395			38,289,004			39,171,474			39,637,546
	Yield		3.93		%	4.02			4.03			3.92			4.08
	Mortgage loans held for sale		$	242,940		246,962			309,278			244,952			221,157
	Yield		3.06		%	2.68			2.74			2.92			3.09
	Other loans held for sale		$	615,301		660,753			544,301			493,940			19,246
	Yield		3.05		%	2.91			2.81			3.61			4.19
	Federal funds sold, due from Federal Reserve Bank, and other short-term investments		$	2,705,819		2,838,063			2,716,645			1,265,880			1,709,086
	Yield		0.11		%	0.10			0.10			0.11			0.11
	Federal Home Loan Bank and Federal Reserve Bank Stock (5)		$	159,340		157,657			162,537			200,923			247,801
	Yield		2.01		%	1.69			2.64			2.73			3.60
	Total interest earning assets		$	50,846,157		49,956,456			49,524,083			48,609,960			48,459,542
	Yield		3.26		%	3.32			3.49			3.58			3.75
	Interest-Bearing Liabilities
	Interest-bearing demand deposits		$	8,601,262		8,570,753			8,531,415			7,789,095			7,260,940
	Rate		0.11		%	0.14			0.16			0.19			0.21
	Money Market accounts		$	15,476,262		15,348,916			14,411,860			13,272,972			12,238,479
	Rate		0.19		%	0.23			0.26			0.36			0.46
	Savings deposits		$	1,333,297		1,219,288			1,147,667			1,114,956			1,036,024
	Rate		0.02		%	0.02			0.01			0.02			0.02
	Time deposits under $100,000		$	1,077,931		1,161,306			1,239,592			1,379,923			1,621,943
	Rate		0.41		%	0.56			0.74			1.03			1.43
	Time deposits over $100,000		$	2,714,451		2,993,996			3,302,959			3,863,821			4,772,555
	Rate		0.56		%	0.74			1.03			1.44			1.80
	Other brokered deposits		$	1,901,097		1,950,582			1,978,393			1,912,114			1,998,571
	Rate		0.19		%	0.20			0.23			0.23			0.25
	Brokered time deposits		$	1,156,510		1,418,751			1,795,982			2,232,940			2,244,429
	Rate		1.35		%	1.50			1.60			1.59			1.86
	Total interest-bearing deposits		$	32,260,810		32,663,592			32,407,868			31,565,821			31,172,941
	Rate		0.24		%	0.31			0.39			0.54			0.73
	Federal funds purchased and securities sold under repurchase agreements		$	204,053		209,448			174,316			180,342			250,232
	Rate		0.07		%	0.07			0.07			0.09			0.12
	Other short-term borrowings		$	—		—			—			46,739			550,000
	Rate		—		%	—			—			1.12			1.23
	Long-term debt		$	1,203,038		1,202,613			1,552,791			2,234,665			2,834,188
	Rate		3.82		%	3.63			3.96			2.71			2.36
	Total interest-bearing liabilities		$	33,667,901		34,075,653			34,134,975			34,027,567			34,807,361
	Rate		0.36		%	0.42			0.55			0.68			0.86
	Non-interest-bearing demand deposits		$	15,088,836		13,791,286			13,566,112			12,773,676			11,923,534
	Cost of funds		0.25		%	0.30			0.40			0.50			0.65
	Effective cost of funds(6)		0.24		%	0.28			0.37			0.48			0.62
	Net interest margin		3.02		%	3.04			3.12			3.10			3.13
	Taxable equivalent adjustment (4)		$	791		774			821			956			861
	(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.
	(6) Includes the impact of non-interest-bearing capital funding sources.

Synovus
LOANS OUTSTANDING BY TYPE
(Unaudited)		Total Loans				Total Loans				Linked Quarter			Total Loans				Year/Year
(Dollars in thousands)
Loan Type		June 30, 2021				March 31, 2021				% Change			June 30, 2020				% Change
Commercial, Financial, and Agricultural		$	12,085,534			$	12,662,329			(5	)%		$	12,947,164			(7	)%
Owner-Occupied		7,064,599				7,031,505				—			7,084,481				—
Total Commercial & Industrial		19,150,133				19,693,834				(3	)		20,031,645				(4	)
Multi-Family		2,086,641				2,220,939				(6	)		2,247,959				(7	)
Hotels		1,411,443				1,462,370				(3	)		1,362,183				4
Office Buildings		2,340,378				2,280,053				3			2,244,366				4
Shopping Centers		1,645,275				1,662,158				(1	)		1,775,638				(7	)
Warehouses		657,699				692,267				(5	)		779,109				(16	)
Other Investment Property		1,076,577				1,017,938				6			826,302				30
Total Investment Properties		9,218,013				9,335,725				(1	)		9,235,557				—
1-4 Family Construction		174,009				189,626				(8	)		229,806				(24	)
1-4 Family Investment Mortgage		462,335				449,328				3			466,577				(1	)
Total 1-4 Family Properties		636,344				638,954				—			696,383				(9	)
Commercial Development		120,683				142,380				(15	)		112,426				7
Residential Development		164,950				196,653				(16	)		270,145				(39	)
Land Acquisition		221,061				220,216				—			299,659				(26	)
Land and Development		506,694				559,249				(9	)		682,230				(26	)
Total Commercial Real Estate		10,361,051				10,533,928				(2	)		10,614,170				(2	)
Consumer Mortgages		5,200,762				5,299,175				(2	)		5,817,525				(11	)
Home Equity Lines		1,358,211				1,432,367				(5	)		1,724,973				(21	)
Credit Cards		285,508				267,371				7			250,448				14
Other Consumer Loans		1,880,353				1,578,426				19			1,475,536				27
Total Consumer		8,724,834				8,577,339				2			9,268,482				(6	)
Total		$	38,236,018			$	38,805,101			(1	)%		$	39,914,297			(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, 2021				March 31, 2021				% Change			June 30, 2020				% Change
Commercial, Financial, and Agricultural		$	70,943			$	76,460			(7	)%		$	83,000			(15	)%
Owner-Occupied		13,155				17,192				(23	)		19,605				(33	)
Total Commercial & Industrial		84,098				93,652				(10	)		102,605				(18	)
Multi-Family		2,407				2,698				(11	)		—				nm
Office Buildings		1,618				1,645				(2	)		836				94
Shopping Centers		124				20,138				(99	)		409				(70	)
Warehouses		218				221				(1	)		—				nm
Other Investment Property		407				887				(54	)		393				4
Total Investment Properties		4,774				25,589				(81	)		1,638				191
1-4 Family Construction		548				1,291				(58	)		2,593				(79	)
1-4 Family Investment Mortgage		1,927				2,760				(30	)		1,844				5
Total 1-4 Family Properties		2,475				4,051				(39	)		4,437				(44	)
Commercial Development		560				567				(1	)		840				(33	)
Residential Development		451				452				—			685				(34	)
Land Acquisition		1,029				782				32			1,042				(1	)
Land and Development		2,040				1,801				13			2,567				(21	)
Total Commercial Real Estate		9,289				31,441				(70	)		8,642				7
Consumer Mortgages		51,376				11,201				359			17,438				195
Home Equity Lines		8,938				12,191				(27	)		14,200				(37	)
Other Consumer Loans		7,327				6,684				10			4,552				61
Total Consumer		67,641				30,076				125			36,190				87
Total		$	161,028			$	155,169			4	%		$	147,437			9	%

Synovus
	CREDIT QUALITY DATA
	(Unaudited)
	(Dollars in thousands)		2021							2020									Second Quarter
			Second				First			Fourth			Third			Second			'21 vs '20
			Quarter				Quarter			Quarter			Quarter			Quarter			% Change
	Non-performing Loans (NPLs)		$	161,028			155,169			151,079			168,837			147,437			9	%
	Impaired Loans Held for Sale		—				23,590			23,590			—			—			nm
	Other Real Estate and Other Assets		16,806				16,849			17,394			23,280			30,242			(44	)
	Non-performing Assets (NPAs)		177,834				195,608			192,063			192,117			177,679			—
	Allowance for Loan Losses (ALL)		516,708				563,214			605,736			603,800			588,648			(12	)
	Reserve for Unfunded Commitments		46,890				51,528			47,785			60,794			61,029			(23	)
	Allowance for Credit Losses (ACL)		563,598				614,742			653,521			664,594			649,677			(13	)
	Net Charge-Offs - Quarter		26,547				20,204			22,139			28,466			24,046
	Net Charge-Offs - YTD		46,750				20,204			94,712			72,573			44,107
	Net Charge-Offs / Average Loans - Quarter (1)		0.28		%		0.21			0.23			0.29			0.24
	Net Charge-Offs / Average Loans - YTD (1)		0.24				0.21			0.24			0.25			0.23
	NPLs / Loans		0.42				0.40			0.39			0.43			0.37
	NPAs / Loans, ORE and specific other assets		0.46				0.50			0.50			0.49			0.44
	ACL/Loans		1.47				1.58			1.71			1.68			1.63
	ALL/Loans		1.35				1.45			1.58			1.53			1.47
	ACL/NPLs		350.00				396.18			432.57			393.63			440.65
	ALL/NPLs		320.88				362.97			400.94			357.62			399.25
	Past Due Loans over 90 days and Still Accruing		$	4,415			3,804			4,117			7,512			8,391			(47	)
	As a Percentage of Loans Outstanding		0.01		%		0.01			0.01			0.02			0.02
	Total Past Due Loans and Still Accruing		$	49,321			45,693			47,349			57,316			46,390			6
	As a Percentage of Loans Outstanding		0.13		%		0.12			0.12			0.14			0.12
	Accruing Troubled Debt Restructurings (TDRs)		$	124,528			129,776			134,972			163,511			166,461			(25	)
	(1) Ratio is annualized.
	SELECTED CAPITAL INFORMATION (1)
	(Unaudited)
	(Dollars in thousands)
			June 30, 2021				December 31, 2020			June 30, 2020
	Tier 1 Capital		$	4,751,865			4,572,010			4,364,374
	Total Risk-Based Capital		5,725,176				5,604,230			5,459,568
	Common Equity Tier 1 Capital Ratio		9.75		%		9.66			8.90
	Tier 1 Capital Ratio		10.99				10.95			10.15
	Total Risk-Based Capital Ratio		13.25				13.42			12.70
	Tier 1 Leverage Ratio		8.72				8.50			8.38
	Common Equity as a Percentage of Total Assets (2)		8.56				8.51			8.34
	Tangible Common Equity Ratio (3) (5)		7.73				7.66			7.41
	Book Value Per Common Share (4)		$	31.96			31.24			30.65
	Tangible Book Value Per Common Share (3)		28.61				27.88			26.94
	(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 Q2 2021 earnings results?

Synovus reported a net income of $177.9 million, or $1.19 per diluted share, for Q2 2021.

How did total loans perform in Q2 2021 for SNV?

Total loans decreased by $569.1 million, or 1%, sequentially in Q2 2021.

What drove the revenue growth in Synovus's Q2 2021 results?

Revenue growth was largely driven by an $8 million increase in net interest income due to earning asset growth.

What is the outlook for Synovus's credit quality?

The credit outlook improved with a 14% reduction in criticized and classified loans.

What was the CET1 ratio for Synovus at the end of Q2 2021?

The CET1 ratio increased to 9.75% at the end of Q2 2021.