-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UL4xwAy5sVU2RvDlb4GhUAtmKlfGD6UD7/hXByJ1vf3piPdrvFeqAFIf2udAUKQm AyuDvEKEp+w7QvpbYH6fpg== 0000018349-99-000023.txt : 19990518 0000018349-99-000023.hdr.sgml : 19990518 ACCESSION NUMBER: 0000018349-99-000023 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990517 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYNOVUS FINANCIAL CORP CENTRAL INDEX KEY: 0000018349 STANDARD INDUSTRIAL CLASSIFICATION: NATIONAL COMMERCIAL BANKS [6021] IRS NUMBER: 581134883 STATE OF INCORPORATION: GA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10312 FILM NUMBER: 99624760 BUSINESS ADDRESS: STREET 1: 901 FRONT AVENUE STREET 2: STE 301 CITY: COLUMBUS STATE: GA ZIP: 31901 BUSINESS PHONE: 7066492267 MAIL ADDRESS: STREET 1: P.O.BOX 120 CITY: COLUMBUS STATE: GA ZIP: 31902 FORMER COMPANY: FORMER CONFORMED NAME: CB&T BANCSHARES INC DATE OF NAME CHANGE: 19890912 10-Q 1 1ST QUARTER 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended March 31, 1999 Commission File Number 1-10312 SYNOVUS FINANCIAL CORP. (Exact name of registrant as specified in its charter) Georgia 58-1134883 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 901 Front Avenue P. O. Box 120 Columbus, Georgia 31902 (Address of principal executive offices) (706) 649-2401 (Registrants' telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES X NO At April 30, 1999, 271,059,039 shares of the Registrant's Common Stock, $1.00 par value, were outstanding. SYNOVUS FINANCIAL CORP. INDEX Page Part I. Financial Information Number Item 1. Financial Statements Consolidated Balance Sheets (unaudited) March 31, 1999 and December 31, 1998 3 Consolidated Statements of Income (unaudited) Three Months Ended March 31, 1999 and 1998 4 Consolidated Statements of Cash Flows (unaudited) Three Months Ended March 31, 1999 and 1998 5 Notes to Consolidated Financial Statements (unaudited) 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operation 10 Item 3. Quantitative and Qualitative Disclosures About Market Risk 21 Part II Other Information Item 6 (a) Exhibits 22 (b) Reports on Form 8-K 22 Signature Page 23 Exhibit Index 24 (11) Statement re Computation of Per Share Earnings 25 (27) Financial Data Schedule (for SEC purposes only, not enclosed herewith) PART I. FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS SYNOVUS FINANCIAL CORP. CONSOLIDATED BALANCE SHEETS (Unaudited)
March 31, December 31, (In thousands, except share and per share data) 1999 1998 - ------------------------------------------------------------------------------------------------------- ASSETS Cash and due from banks $ 281,004 348,365 Interest earning deposits with banks 1,049 1,383 Federal funds sold 24,968 52,695 Mortgage loans held for sale 107,912 156,231 Investment securities available for sale 1,575,845 1,514,054 Investment securities held to maturity 294,555 303,613 Loans 7,638,152 7,420,529 Less unearned income (9,473) (8,537) Less reserve for loan losses (111,483) (110,822) - -------------------------------------------------------------------------------------------------------- Loans, net 7,517,196 7,301,170 - -------------------------------------------------------------------------------------------------------- Premises and equipment, net 385,432 375,395 Other assets 434,832 445,103 - -------------------------------------------------------------------------------------------------------- Total assets $ 10,622,793 10,498,009 ======================================================================================================== LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Deposits: Non-interest bearing $ 1,313,575 1,362,401 Interest bearing 7,150,913 7,180,397 - -------------------------------------------------------------------------------------------------------- Total deposits 8,464,488 8,542,798 Federal funds purchased and securities sold under agreement to repurchase 667,425 496,013 Long-term debt 136,406 127,015 Other liabilities 201,985 209,489 - -------------------------------------------------------------------------------------------------------- Total liabilities 9,470,304 9,375,315 - -------------------------------------------------------------------------------------------------------- Minority interest in consolidated subsidiary 54,715 52,093 Shareholders' equity: Common stock - $1.00 par value; Authorized 600,000,000 shares; issued 271,116,558 in 1999 and 270,393,657 in 1998; outstanding 270,941,295 in 1999 and 270,218,393 in 1998 271,117 270,394 Surplus 50,739 42,006 Less treasury stock - 175,264 shares in 1999 and 1998 (1,285) (1,285) Less unamortized restricted stock (2,106) (2,545) Accumulated other comprehensive income 3,345 10,216 Retained earnings 775,964 751,815 - -------------------------------------------------------------------------------------------------------- Total shareholders' equity 1,097,774 1,070,601 - -------------------------------------------------------------------------------------------------------- Total liabilities and shareholders' equity $ 10,622,793 10,498,009 ========================================================================================================
See accompanying notes to consolidated financial statements. - 3 - SYNOVUS FINANCIAL CORP. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended March 31, - -------------------------------------------------------------------------------- (In thousands, except per share data) 1999 1998 - -------------------------------------------------------------------------------- Interest income: Loans, including fees $ 170,801 158,642 Investment securities: U.S. Treasury and U.S. Government agencies 18,790 20,183 Mortgage-backed securities 6,003 4,002 State and municipal 2,101 1,687 Other investments 626 549 Mortgage loans held for sale 2,477 1,112 Federal funds sold 386 764 Interest earning deposits with banks 21 16 - -------------------------------------------------------------------------------- Total interest income 201,205 186,955 - -------------------------------------------------------------------------------- Interest expense: Deposits 75,228 75,912 Federal funds purchased and securities sold under agreement to repurchase 7,301 3,104 Long-term debt 1,946 1,877 - -------------------------------------------------------------------------------- Total interest expense 84,475 80,893 - -------------------------------------------------------------------------------- Net interest income 116,730 106,062 Provision for losses on loans 7,153 7,594 - -------------------------------------------------------------------------------- Net interest income after provision for losses on loans 109,577 98,468 - -------------------------------------------------------------------------------- Non-interest income: Data processing services 104,537 89,243 Service charges on deposit accounts 16,470 14,349 Fees for trust services 5,250 3,810 Credit card fees 3,152 2,515 Securities gains (losses), net 447 145 Other operating income 29,531 22,258 - -------------------------------------------------------------------------------- Total non-interest income 159,387 132,320 - -------------------------------------------------------------------------------- Non-interest expense: Salaries and other personnel expense 105,051 94,692 Net occupancy and equipment expense 45,386 35,916 Other operating expenses 41,432 34,033 Minority interest in subsidiary's net income 2,489 1,974 - -------------------------------------------------------------------------------- Total non-interest expense 194,358 166,615 - -------------------------------------------------------------------------------- Income before income taxes 74,606 64,173 Income tax expense 26,417 22,960 - -------------------------------------------------------------------------------- Net income $ 48,189 41,213 ================================================================================ Net income per share : Basic $ 0.18 0.16 ================================================================================ Diluted 0.18 0.15 ================================================================================ Weighted average shares outstanding: Basic 270,647 262,924 Diluted 275,079 267,479 ================================================================================ Dividends declared per share $ 0.09 0.07 ================================================================================
See accompanying notes to consolidated financial statements. - 4 - SYNOVUS FINANCIAL CORP. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31, - -------------------------------------------------------------------------------- (In thousands) 1999 1998 - -------------------------------------------------------------------------------- Operating Activities Net Income $ 48,189 41,213 Adjustments to reconcile net income to net cash provided by operating activities: Provision for losses on loans 7,153 7,594 Depreciation, amortization, and accretion, net 16,274 13,076 Deferred income tax benefit (583) (1,922) Decrease (Increase) in interest receivable 96 (595) Increase in interest payable 4,382 4,955 Minority interest in subsidiary's net income 2,489 1,974 Decrease (Increase) in mortgage loans held for sale 48,319 (51,039) Other, net 13,100 14,414 - -------------------------------------------------------------------------------- Net cash provided by operating activities 139,419 29,670 - -------------------------------------------------------------------------------- Investing Activities Cash acquired from acquisition 1,842 --- Net decrease in interest earning deposits with banks 334 344 Net increase (decrease) in federal funds sold 27,727 (27,468) Proceeds from maturities and principal collections of investment securities available for sale 153,386 116,878 Proceeds from sales of investment securities available for sale 16,374 21,882 Purchases of investment securities available for sale (242,570) (179,507) Proceeds from maturities and principal collections of investment securities held to maturity 15,819 27,489 Purchases of investment securities held to maturity (6,876) (10,546) Net increase in loans (223,179) (50,314) Purchases of premises and equipment (26,051) (17,378) Disposals of premises and equipment 1,618 65 Proceeds from sales of other real estate 1,740 3,824 Additions to contract acquisition costs (1,903) (5,457) Additions to computer software (10,163) (7,149) - -------------------------------------------------------------------------------- Net cash used in investing activities (291,902) (127,337) - -------------------------------------------------------------------------------- Financing Activities Net (decrease) increase in demand and savings deposits (80,581) 110,296 Net increase in certificates of deposit 2,271 71,579 Net increase (decrease) in federal funds purchased and securities sold under agreement to repurchase 171,412 (91,057) Principal repayments on long-term debt (509) (8,314) Proceeds from issuance of long-term debt 9,900 --- Dividends paid to shareholders (19,807) (19,300) Proceeds from issuance of common stock 2,436 908 - -------------------------------------------------------------------------------- Net cash provided by financing activities 85,122 64,112 - -------------------------------------------------------------------------------- Increase (decrease) in cash and cash equivalents (67,361) (33,555) Cash and cash equivalents at beginning of period 348,365 388,134 - -------------------------------------------------------------------------------- Cash and cash equivalents at end of period $ 281,004 354,579 ================================================================================
See accompanying notes to consolidated financial statements. - 5 - SYNOVUS FINANCIAL CORP. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) Note A - Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, and cash flows in conformity with generally accepted accounting principles. All adjustments consisting of normally occurring accruals which, in the opinion of management, are necessary for a fair presentation of the financial position and results of operations for the periods covered by this report have been included. The accompanying unaudited consolidated financial statements should be read in conjunction with the Synovus Financial Corp. (Synovus) consolidated financial statements and related notes appearing in Synovus' 1998 annual report previously filed on Form 10-K. On April 23, 1998, Synovus declared a three-for-two stock split which was effected on May 21, 1998 in the form of a 50% stock dividend. All share, per share, and shareholders' equity amounts for all periods presented in the accompanying consolidated financial statements have been restated to reflect the stock split. Note B - Supplemental Cash Flow Information For the three months ended March 31,1999 and 1998, Synovus paid income taxes (received a net income tax refund) of ($2.2) million and $1.8 million, and interest of $80.1 million and $75.9 million, respectively. Noncash investing activities consisted of loans of approximately $1.7 million and $2.2 million, which were foreclosed and transferred to other real estate during the three months ended March 31, 1999 and 1998, respectively. Note C - Comprehensive Income Other comprehensive income (loss) for Synovus consists of unrealized gains (losses) on securities available for sale and foreign currency translation adjustments. Comprehensive income consists of net income plus other comprehensive income (loss). Comprehensive income for the three months ended March 31, 1999 and 1998 was $41,318,000 and $41,484,000, respectively. Note D - Business Combinations On January 31, 1999, Synovus completed the acquisition of the remaining 80% interest in Canterbury Trust Company, Inc., which provides trust, custody, investment and consulting services to large institutional clients. The acquisition was accounted for as a purchase resulting in goodwill of $5.5 million which will be amortized on a straight-line basis over fifteen years. On December 18, 1998, Synovus completed the acquisition of the $178 million asset Georgia Bank & Trust (GB&T), located in Calhoun, Georgia. Synovus issued 1,811,058 shares of common stock for all the issued and outstanding shares of GB&T. - 6 - On November 30, 1998, Synovus completed the acquisition of the $55 million asset Bank of Georgia, located in Watkinsville, Georgia. Synovus issued 850,269 shares of common stock for all the issued and outstanding shares of Bank of Georgia. On September 1, 1998, Synovus completed the acquisition of the $348 million asset Community Bank Capital Corporation (CBCC). CBCC is the parent company of the Bank of North Georgia, located in Alpharetta, Georgia. Synovus issued 3,774,531 shares of common stock for all the issued and outstanding shares of CBCC. The aforementioned three acquisitions have been accounted for as poolings of interests, except that the financial information preceding the dates of acquisition have not been restated to include the financial position and results of operations of these acquired entities since the effect was not material. The impact of these three acquisitions was an increase in net income of approximately $2.5 million for the three months ended March 31, 1999. Net income for the three months ended March 31, 1998 would have been increased by $1.9 million if the previous periods had been restated. Note E - Operating Segments Synovus has two reportable segments: banking operations and computerized data processing. The banking operations segment is predominately involved in commercial banking activities and also provides retail banking, trust, mortgage, and brokerage services. The data processing segment consists of TSYS' operations, which include credit, debit, commercial and private-label processing. All inter-segment services provided are charged at the same rates as those charged to unaffiliated customers. Such services are included in the revenues and net income of the respective segments and are eliminated to arrive at consolidated totals. Segment information as of and for the three months ended March 31, 1999 and 1998 is presented below:
Data (In thousands) Banking Processing Operations (c) Eliminations Consolidated Revenues 1999 $244,568 117,424 (1,400)(a) $360,592 1998 221,696 98,347 (768)(a) 319,275 Income before taxes 1999 57,764 19,331 (2,489)(b) 74,606 1998 50,807 15,340 (1,974)(b) 64,173 Income tax expense 1999 20,035 6,382 -- 26,417 1998 17,870 5,090 -- 22,960 Net income 1999 37,729 12,949 (2,489)(b) 48,189 1998 32,937 10,250 (1,974)(b) 41,213 Total assets 1999 10,272,571 368,286 (18,064)(d) 10,622,793 1998 9,124,274 305,843 (53,440)(d) 9,376,677
(a) Principally, computerized data processing service revenues provided to the banking segment. - 7 - (b) Minority interest in the computerized data processing segment. (c) Includes equity in income of joint ventures, which is included in other operating income. (d) Primarily TSYS' cash deposits with the banking operations segment. Note F - Legal Proceedings Synovus is subject to various legal proceedings and claims which arise in the ordinary course of its business. Any litigation is vigorously defended by Synovus and, in the opinion of management, based on consultation with external legal counsel, any outcome of such litigation would not materially affect Synovus' consolidated financial position or results of operations. Currently, multiple lawsuits seeking class action treatment, are pending against one of Synovus' Alabama banking subsidiaries that involve: (1) payment of service fees or interest rebates to automobile dealers in connection with the assignment of automobile credit sales contracts to that Synovus subsidiary; (2) the forced placement of insurance to protect that Synovus subsidiary's interest in collateral for which consumer credit customers have failed to obtain or maintain insurance; and (3) the receipt of commissions by that Synovus subsidiary in connection with the sale of credit life insurance to its consumer credit customers and the charging of an interest surcharge and a processing fee in connection with consumer loans made by that subsidiary. These lawsuits seek unspecified damages, including punitive damages. Synovus intends to vigorously contest these lawsuits and all other litigation to which Synovus and its subsidiaries are parties. Based upon information presently available, and in light of legal, equitable, and factual defenses available to Synovus and its subsidiaries, contingent liabilities arising from the threatened and pending litigation are not considered material. It should be noted; however, that large punitive damage awards, bearing little relation to the actual damages sustained by plaintiffs, have been awarded in Alabama. On November 10, 1998, a class action complaint was filed against NationsBank of Delaware, N.A., in the United States District Court for the Southern District of Mississippi. On March 23, 1999, the named plaintiff amended the complaint and named TSYS, and certain credit bureaus, as defendants in the case. The named plaintiff alleges, among other things, that the defendants failed to report properly the credit standing of each member of the putative class. The named plaintiff has defined the class as all persons and entities within the United States who obtained credit cards from NationsBank, and whose accounts were purchased by or transferred to U.S. BankCard, and whose accounts were improperly reported to credit bureaus or credit agencies incorrectly. The amended complaint alleges negligence, violation of the Fair Credit Reporting Act, breach of the duty of good faith and fair dealing, and seeks declaratory relief, injunctive relief, and the imposition of punitive damages. TSYS intends to vigorously contest this lawsuit, which seeks unspecified damages. This litigation has just commenced and discovery has not yet begun; thus, TSYS is not in a position to determine the possible exposure, if any, to TSYS. Note G - Recent Accounting Pronouncements In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133 standardizes the accounting for derivative instruments, including certain derivative instruments embedded in other contracts. Under the standard, entities are required to carry all derivative instruments on the balance sheet at fair value. The accounting for changes in the fair value (i.e., gains or losses) of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and, if so, on the reason for holding it. If certain conditions are met, entities may elect to designate a derivative instrument as a hedge of exposures to changes in fair values, cash flows, or foreign currencies. If - - 8 - the hedged exposure is a fair value exposure, the gain or loss on the derivative instrument is recognized in earnings in the period of change together with the offsetting loss or gain on the hedged item attributable to the risk being hedged. If the hedged exposure is a cash flow exposure, the effective portion of the gain or loss on the derivative instrument is reported initially as a component of other comprehensive income (outside earnings) and subsequently reclassified into earnings when the forecasted transaction affects earnings. Any amounts excluded from the assessment of hedge effectiveness as well as the ineffective portion of the gain or loss is reported in earnings immediately. If the derivative instrument is not designated as a hedge, the gain or loss is recognized in earnings in the period of change. For Synovus, SFAS No. 133 is effective January 1, 2000. On adoption, the provisions of SFAS No. 133 must be applied prospectively. Synovus is in the process of assessing the impact that SFAS No. 133 will have on its financial statements. Note H - Other Certain amounts in 1998 have been reclassified to conform to the presentation adopted in 1999. -9- ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Summary As revenues for the three months ended March 31, 1999 increased 15.8% over the first quarter of 1998, net income for the quarter was $48.2 million, up 16.9% from the same period a year ago. Diluted net income per share increased to $.18 for the first three months of 1999 as compared to $.15 for the same period in 1998. Return on average assets was 1.88% and return on average equity was 18.54% for the three months ended March 31, 1999. This compares to a return on average assets of 1.81% and a return on average equity of 18.16% for the first three months of 1998. During the third and fourth quarters of 1998, Synovus completed three bank acquisitions which were accounted for as poolings of interests; however, financial information preceding the dates of acquisition have not been restated since the effect was not material. Net income for the three months ended March 31, 1999 includes $2.5 million related to these acquisitions. Net income for these three banks during the three months ended March 31, 1998 was $1.9 million. On April 23, 1998, Synovus declared a three-for-two stock split which was effected on May 21, 1998 in the form of a 50% stock dividend. All share, per share, and shareholders' equity amounts for all periods presented have been restated to reflect the stock split. Acquisitions On January 31, 1999, Synovus completed the acquisition of the remaining 80% interest in Canterbury Trust Company, Inc., which provides trust, custody, investment and consulting services to large institutional clients. The acquisition was accounted for under the purchase method resulting in goodwill of $5.5 million which will be amortized on a straight-line basis over fifteen years. On March 19, 1999, Synovus announced a letter of intent to acquire the $306 million asset Merit Holding Corporation for stock. Merit Holding Corporation, a multi-bank holding company based in Tucker, Georgia, was formed in 1994 from the merger of two community banks, Mountain National Bank in Tucker, Georgia, and Charter Bank & Trust Co. in Marietta, Georgia. Mountain National Bank operates three full-service offices in Tucker, Stone Mountain, and Norcross, Georgia, in addition to Merit Leasing Corporation, a wholly owned, full-service equipment leasing company. Charter Bank & Trust Co. operates three full-service offices, two in Cobb County and one in North Fulton County. On March 31, 1999, Synovus announced a letter of intent to acquire Ready Bank of Fort Walton Beach Holding Company, the parent company of the $73 million asset Ready Bank of West Florida. Ready Bank has two banking centers in Fort Walton Beach and Crestview, Florida. Ready Bank will be merged into Vanguard Bank & Trust, Valparaiso, Florida, an existing affiliate of Synovus. The two above mentioned acquisitions are expected to be completed during the third quarter of 1999 and will be accounted for under the pooling of interests method. - 10 - Balance Sheet During the first three months of 1999, total assets increased $124.8 million, resulting from net loan growth of $216 million. Providing the necessary funding for the balance sheet growth during the first three months of 1999, Synovus' federal funds purchased and securities sold under agreement to repurchase grew $171.4 million and shareholders' equity increased $27.2 million. Asset Quality As measured by its asset quality indicators, Synovus' asset quality remains strong. During the first three months of 1999, non-performing assets, consisting of nonaccrual loans, restructured loans, and other real estate, decreased $384,000, while net loans increased $216 million. Synovus' nonperforming assets ratio was .39% as of March 31, 1999, which decreased two basis points from December 31, 1998. Annualized net charge-offs to average loans for the three months ended March 31, 1999 were .35% compared to .30% during the first three months of 1998 and .37% for the entire year in 1998. The lower net charge-offs during the first quarter of 1998 were in part due to a slightly higher volume of recoveries. Net credit card charge-offs represented 49% of total net charge-offs for the first quarter of 1999, compared to 50% for the entire year in 1998. Synovus' overall credit risk profile has continued to improve with credit card loans representing only 3% of total outstandings at March 31, 1999 compared to 3.5% and 4.4% at December 31, 1998 and March 31, 1998, respectively. Loans 90 days past due and still accruing were $25.2 million, or .33% of total loans, compared to $24.6 million, or .33% of total loans, at March 31, 1999 and December 31, 1998, respectively. Management believes that the value of the underlying collateral securing commercial and consumer loans is generally sufficient to cover the principal and interest on these loans and management does not expect a material increase in nonperforming assets in future periods as a result of the resolution of these delinquencies. The reserve for loan losses was $111.5 million, or 1.46% of net loans, at March 31, 1999, compared to $110.8 million, or 1.50% of net loans, at December 31, 1998. The provision for loan losses for the three months ended March 31, 1999 was $7.2 million, compared to $7.6 million for the same period in 1998. The lower provision expense is due to the positive trends in Synovus' overall credit risk profile.
March 31, December 31, 1999 1998 --------- ------------ (In thousands) Nonperforming loans $ 20,652 20,985 Other real estate 9,297 9,348 - -------------------------------------------------------------------------------- Non-performing assets $ 29,949 30,333 ================================================================================ Loans 90 days past due and still accruing $ 25,164 24,628 ================================================================================ Reserve for loan losses $ 111,483 110,822 ================================================================================ Reserve for loan losses as a % of loans 1.46% 1.50 ================================================================================ As a % of loans and other real estate: Nonperforming loans 0.27% 0.28 Other real estate 0.12 0.13 - -------------------------------------------------------------------------------- Non-performing assets 0.39% 0.41 ================================================================================ Reserve to nonperforming loans 539.81% 528.12 ================================================================================
- 11 - Capital Resources and Liquidity Synovus continues to maintain its capital at levels that exceed the minimum regulatory guidelines. Additionally, based on internal calculations and previous regulatory exams, each of Synovus' subsidiary banks is currently in compliance with regulatory capital guidelines. Synovus' total risk-based capital was $1.223 billion at March 31, 1999, compared to $1.187 billion at December 31, 1998. The ratio of total risk-based capital to risk-weighted assets was 13.62% at March 31, 1999 compared to 13.75% at December 31, 1998. Synovus' leverage ratio at the end of the first quarter of 1999 was 10.71% compared to 10.76% at the end of 1998. Synovus' equity-to-assets ratio increased thirteen basis points to 10.33% at March 31, 1999, when compared to year-end 1998. Internal capital generation continues to support asset growth, as reflected in the first quarter 1999 equity-to-asset ratio exclusive of net unrealized gains on investment securities available for sale of 10.29%, compared to 10.09% at year-end 1998. Synovus' liquidity position and sources of funds have not changed significantly since December 31, 1998. Synovus' liquidity ratio at March 31, 1999 was 33.75% compared to 40.18% at December 31, 1998, with the decrease being primarily due to strong loan growth. Additionally, the maturity mix of investment securities and loans has not changed significantly during the first three months of 1999. Synovus' management monitors liquidity in coordination with the appropriate committees at each subsidiary bank. Management must ensure that adequate liquidity, at a reasonable cost, is available to meet the cash flow needs of depositors, borrowers, and creditors. Management constantly monitors and maintains appropriate levels of assets and liabilities so as to provide adequate funding sources to meet estimated customer withdrawals and future loan requests. Additionally, Synovus subsidiary banks have access to overnight federal funds lines with various financial institutions, which total approximately $1.5 billion, that can be drawn upon for short-term liquidity needs. Synovus also holds a $25 million line of credit. In 1997, Total System Services, Inc. (TSYS), Synovus' 80.8% owned subsidiary, began construction of a campus-type facility which will serve as TSYS' corporate headquarters. TSYS entered into an operating lease agreement relating to the new corporate campus. Under the agreement, the lessor has purchased the land, is paying for construction and development costs, and has leased the property to TSYS commencing upon its completion. The lease provides for a substantial residual value guarantee, up to $87 million, and includes purchase options at the original cost of the property. Real estate taxes, insurance, maintenance, and operating expenses applicable to the leased property are obligations of TSYS. TSYS began moving personnel into the new campus facility in December 1998, and should complete the move of a substantial number of its personnel into the new facility by the end of the third quarter of 1999. With the move to the campus, TSYS will not renew leases on certain facilities. TSYS expects the increase in occupancy and equipment expense related to occupying the campus to be approximately $5.3 million in 1999, net of the relinquished lease obligations. The consolidated statements of cash flows detail Synovus' cash flows from operating, investing, and financing activities. Operating activities provided net cash of $138.7 million during the first three months of 1999, while $85.8 million was provided by financing activities. Investing activities utilized $291.9 million of this amount, resulting in a decrease in cash and cash - 12- equivalents of $67.4 million. Earning Assets, Sources of Funds, and Net Interest Income Average total assets for the first three months of 1999 were $10.4 billion, up 12.9% over the first three months average of 1998, which was $9.2 billion. The 1998 non-restated bank acquisitions accounted for $640.3 million of the total increase in average assets. Average earning assets were up 13.3% in the first three months of 1999 over the same period a year ago and represented 91.2% of average total assets. When compared to the same period last year, average deposits increased $653.8 million, average shareholders' equity increased $133.8 million, and average federal funds purchased and securities sold under agreement to repurchase increased $382.7 million. This growth provided the funding for the $879.1 million growth in average net loans, the $175 million increase in average investment securities, partially offset by the $13.9 million decrease in average federal funds sold. Net interest income was $116.7 million for the three months ended March 31, 1999, up $10.6 million, or 10.1%, over the $106.1 million reported in the three months ended March 31, 1998. Net interest income, on a tax-equivalent basis, for the first three months of 1999 increased $10.8 million, or 10.1%, over the same period in 1998. The year-to-date net interest margin was 5.08%, down fifteen basis points from the same period last year. This decrease resulted from a forty-nine basis point decrease in the yield on earning assets, which was partially offset by a thirty-one basis point decrease in the effective cost of funds. The decreased yield on earning assets was due to lower yields on investment securities and loans. The decreased loan yields were primarily due to a seventy-five basis point decrease in the prime rate from the first quarter of 1998 to the first quarter of 1999. The decreased effective cost of funds was due to lower average rates paid on interest-bearing funding. The tax-equivalent adjustment that is required in making yields on tax-exempt loans and investment securities comparable to taxable loans and investment securities is shown in the following table for the three months ended March 31, 1999 and 1998. The taxable-equivalent adjustment is based on a 35% federal income tax rate.
(In thousands) 1999 1998 - -------------------------------------------------------------------------------- Interest income $201,205 186,955 Taxable-equivalent adjustment 1,361 1,197 - -------------------------------------------------------------------------------- Interest income, taxable-equivalent 202,566 188,152 Interest expense 84,475 80,893 - -------------------------------------------------------------------------------- Net interest income, taxable-equivalent $118,091 107,259 ================================================================================
Non-Interest Income Total non-interest income during the first three months of 1999 increased $27.1 million, or 20.5%, over the same period in 1998. This increase in non-interest income resulted primarily from higher data processing revenues, which increased $15.3 million, or 17.1%, during the three months ended March 31, 1999, over the same period in 1998. Synovus started building The New Bank in 1996; a strategy based on the belief that our customers' expectations and financial needs were changing rapidly and dramatically. One of The New Bank components is modernized, more responsive financial products like annuities, trust services, mortgage, and brokerage. Synovus banks are offering these services now. During the first quarter of 1999, the banking - 13 - operations segment experienced significant increases in mortgage revenues (up $1.5 million or 33.9%), fees for trust services (up $1.4 million or 38%), credit card fees (up $.6 million or 25.3%), and brokerage revenues (up $.8 million or 27.6%). Additionally, other operating income for the first quarter of 1999 included a $2 million gain from the sale of a corporate investment. Data processing services revenue is derived principally from the servicing of individual bankcard accounts for the card-issuing customers of TSYS. TSYS' revenues from bankcard data processing services increased $15.3 million, or 17.1%, for the three months ended March 31, 1999, compared to the same period in 1998. Increased revenues from bankcard data processing services are attributable to the growth in the card portfolios of existing customers, as well as cardholder accounts of new customers. Increases in the volumes of authorizations and transactions associated with the additional cardholder accounts also contributed to the increased revenues. Processing contracts with large customers, representing a significant portion of TSYS' total revenues, generally provide for discounts on certain services based on increases in the level of cardholder accounts processed. As a result, bankcard data processing revenues and the related margins are influenced by the customer mix relative to the size of customer bankcard portfolios, as well as the number of individual cardholder accounts processed for each customer. In May 1998, TSYS signed a long-term processing agreement with Sears, Roebuck and Co. to convert and process its private-label credit card portfolio. In April 1999, the conversion of the Sears portfolio was completed. The accounts converted in 1999, combined with the 7.5 million converted in the fourth quarter of 1998, bring the total accounts for Sears to 64 million. A significant amount of TSYS' revenues is derived from long-term contracts with large customers, including certain major customers. For the three months ended March 31, 1999, two major customers accounted for approximately 33% of total revenues, compared to 29% for the three months ended March 31, 1998. The loss of either one of TSYS' major customers, or other major or significant customers, could have a material adverse effect on TSYS' financial condition and results of operations. Near the end of the first quarter of 1998, AT&T, a major customer of TSYS, completed the sale of its Universal Card Services (UCS) to CITIBANK, now a part of Citigroup after CITIBANK's merger with Travelers Group, Inc. On February 26,1999, CITIBANK notified TSYS of its decision to terminate UCS' processing agreement with TSYS for consumer credit card accounts at the end of its original term on August 1, 2000. TSYS' management believes that CITIBANK will continue to be a major customer in 1999, but will not be a major customer in 2000, and that the loss of revenues from UCS for the months of August through December 2000 should not have a material adverse effect on TSYS' financial condition or results of operations for the year ending December 31, 2000. Effective September 30, 1998, NationsBank and Bank of America merged. TSYS has long-term processing contracts with each of these customers, with NationsBanks' ending in 2005 and Bank of America's ending in 2007, and is in the process of assessing implications of the merger on the existing contracts with each customer. The combination of NationsBank and Bank of America under a single processing agreement with TSYS will reduce TSYS' revenues in 1999 and future years because together NationsBank and Bank of America will be entitled to receive greater discounts than either would have been entitled to receive standing alone. - 14 - Non-Interest Expense Total non-interest expense (excluding the minority interest in TSYS' net income) for the three months ended March 31, 1999, increased $27.2 million, or 16.5%, over the same period in 1998. Management analyzes non-interest expense in two separate components: banking operations and TSYS. The following table summarizes this data for the first three months of 1999 and 1998.
1999 1998 --------------------- -------------------- (In thousands) Banking TSYS Banking TSYS ----------- --------- ---------- -------- Salaries and other personnel expenses $56,583 48,468 51,481 43,210 Net occupancy and equipment expense 12,665 32,721 11,549 24,367 Other operating expenses 24,439 16,993 17,845 16,189 - --------------------------------------------------------------------------------------------- Total non-interest expense $93,687 98,182 80,875 83,766 =============================================================================================
Banking operations' non-interest expense increased $12.8 million or 15.8% for the three months ended March 31, 1999, compared to the same period in 1998. Salaries and other personnel expenses, the largest component of non-interest expense, increased $5.1 million or 9.9%. This increase is due to annual salary adjustments as well as growth in the number of employees. Other operating expenses increased $6.6 million or 37%. The growth in other operating expenses is due primarily to expenses associated with our new information technology processing system, "TIPS" (Technology Improving Personal Service), which is provided by Marshall & Illsley Data Services (M&I). Synovus completed the conversion to the TIPS system during March of 1999, and for the first time, the computers in all of our autonomous banks speak the same electronic language. The TIPS system is also enabling us to meet the challenges of The New Bank's successor, Service Beyond Banking. Providing premium service for our customers is our constant goal. Service Beyond Banking means that there is one source for our customers' financial needs. Today, with our TIPS system, we are preparing our banks to provide comprehensive financial services to every Synovus customer through the Internet and through a data warehouse that will show us the way to offer even better, more efficient services to our customers. Non-interest expense related to TSYS increased 17.2% for the three months ended March 31, 1999, compared to the same period in 1998. Employment expenses increased 12.2% for the three months ended March 31, 1999, compared to the same period in 1998. The change in employment expenses consists of an increase of $9.8 million associated with growth in the number of employees, normal salary increases and related benefits, offset by $4.5 million invested in software development costs and contract acquisition costs. The majority of the software development costs were related to the development of a commercial card system for TS2 which began in May 1998 and is expected to be substantially completed by the end of the fourth quarter of 1999. The average number of employees in the first quarter of 1999 increased to 3,915, a 22.7% increase over the 3,190 in the same period of 1998. Net occupancy and equipment expense at TSYS increased 34.3% for the three months ended March 31, 1999, over the same period in 1998. Computer equipment and software rentals, which represent the largest component of net occupancy and equipment expense, increased $4.2 million, or 33.8%, in the first quarter of 1999, compared to the same period in 1998. Due to rapidly changing technology in computer equipment, TSYS' equipment needs are achieved primarily through operating leases. During 1998 and the first quarter of 1999, TSYS made significant investments in computer software licenses related to the new East Center data center and to accommodate increased volumes due to the expected growth in the number of accounts associated with new customers. - 15 - Year 2000 Readiness Disclosure Many computer programs were written with a two digit date field, and, if these programs are not made Year 2000 compliant, they will be unable to correctly process date information for the year 2000 and after. Through separate task forces, Synovus is continuing its ongoing projects to assure its processing systems will be Year 2000 compliant for its banking activities and at TSYS. The task forces are composed of dedicated resources as well as members from other areas within the banks and TSYS. Each Board of Directors has reviewed the overall project plans for the banks and TSYS with progress toward completion monitored regularly. The primary components of the plans include: awareness- assuring a common understanding of the issues throughout Synovus; assessment- identification of non-compliant hardware, equipment, and software as well as suppliers and vendors; renovation-renovation, replacement or retirement of programs; validation-testing modifications of programs including coordination of testing with third parties and vendors; and implementation-moving validated code to production. Banking Operations: For the banks, the conversion of the core processing systems to M&I should provide for Year 2000 compliance for those applications, including loans, deposits, and sales platforms. M&I has completed the Year 2000 renovation for its banking systems and is currently utilizing this renovated code for all processing. During the first quarter of 1999, M&I completed the testing phase. Since March 31, 1999, all Synovus banks are being processed using the M&I Year 2000 renovated code. The remaining personal computer hardware platforms and software programs as well as other ancillary systems such as ATM's, fax machines, copiers, and phone systems have been reviewed and all significant applications or infrastructure which need to be modified have been identified and their renovation and testing is expected to be completed by June 30, 1999. In August 1998, M&I received ITAA*2000 certification from the Information Technology Association of America. The program examines processes and methods used by companies to perform their year 2000 software conversions. In addition, M&I's progress and plans are subject to periodic review and evaluation by banking regulatory agencies. In August, 1998, M&I adopted a "Year 2000 Contingency Strategy" plan which follows all the Federal Financial Institutions Examination Council's (FFIEC) guidelines. This plan includes an analysis of "most reasonably likely year 2000 worst case scenarios" and M&I's planned solutions to those scenarios. Examples of these scenarios and planned solutions are, a power interruption at a data processing facility mitigated by an onsite generator, and simultaneous disasters at all data processing locations mitigated by use of a prearranged third party facility. Business resumption contingency planning is underway at Synovus in accordance with the FFIEC guidelines and progressing on schedule. This planning effort addresses specific issues related to Year 2000 service interruptions. Operational plans are being developed, and will be completed by June 30, 1999, which will allow Synovus to operate in the event of the disruption of services from mission critical service providers, including M&I. Included in the Synovus business resumption contingency planning are measures that address liquidity and the ready availability of cash. Based on currently available information while management anticipates there could be isolated and short-term disruptions of various services and interfaces at its business sites, there is no - 16 - expectation of extensive or protracted systemic failures that would have a material adverse effect on the financial condition or results of operations of Synovus. TSYS: At TSYS, the core system of TS2 was designed to be Year 2000 compliant, and TSYS is continuing its ongoing project to ensure that all of TSYS' processing systems are Year 2000 compliant. As of December 31, 1998, TSYS had completed the awareness, assessment, renovation, and validation phases of its Year 2000 project. During 1998, two major milestones were met. The first milestone, 100% of all critical code converted, was achieved in April 1998. The second, 100% of all noncritical code renovated, was completed in July 1998. As units were renovated they were returned to production, and, as of December 31, 1998, TSYS was fully operating in Year 2000 compliant systems. The validation phase at TSYS included setting up a test environment, testing core system functionality and providing test results to clients. It was during this phase that Turn of The Century, Monthly Cycling, Leap Year and Millennium Year, and Month and Quarter-end dates were tested. This phase concluded during October, 1998 and results were sent to customers in November and December 1998. The implementation phase, which allows clients the opportunity to test their specific code within a Year 2000 environment, began in 1998 and all aspects of such phase are expected to be completed by June 30, 1999. Completion of all third party interface testing is dependent upon those third parties completing their own internal remediation. TSYS could be adversely affected to the extent third parties with which it interfaces have not properly addressed their Year 2000 issues. Another significant aspect of the Year 2000 project is contingency planning, which is a process to ensure that TSYS can continue operations in the event that information technology systems, noninformation technology systems, or vendors are not Year 2000 compliant. In January 1999, TSYS refined its Business Resumption Contingency Plan, or Y2K Day Plan, which is based on the TSYS Disaster Recovery Plan. This plan sets forth processes and procedures to follow in case TSYS experiences a problem with processing Year 2000 data or if mission-critical service providers suffer disruption. The plan includes the following: TSYS programming staff will be on site to immediately remediate any coding issues encountered. The Year 2000 Communication Center will act as the nerve center during the century changeover, monitoring processing status, conveying management decisions, and deploying resources where required. If a power loss is experienced for any reason at TSYS Data Centers which house mainframe and associated hardware, all of TSYS' critical systems would be powered through battery backup and diesel generators without experiencing any downtime. This process, referred to as TSYS' Uninterrupted Power Supply system, has enough fuel for 72 hours. TSYS has contracts with two separate fuel distributors to ensure that its operations could continue indefinitely. The fuel companies have backup generators in case of a power failure to keep their fuel pumps operational. TSYS has service agreements with IBM's Global Services to provide, through its business unit, Business Recovery Services, hot-site assistance and equipment for data center and network recovery in case of a natural or man-made disaster. Also, TSYS has contracts with other companies to receive immediate service and/or top priority in an emergency situation. Additionally, vendor technicians for key equipment will be on site for the period of December 31, 1999 through January 3, 2000. - 17 - TSYS management believes that the most likely Year 2000 risks relate to third parties with which it has material relationships. A failure or disruption of (i) TSYS' mission-critical computer systems caused by third-party hardware/software, (ii) third-party service/network/gateway providers, or (iii) significant clients for an extended period, could adversely affect the financial condition and results of operations of TSYS. Management believes its internal review indicates that TSYS' mission-critical systems are Year 2000 ready; however, failure of a mission critical third-party provider could have a material adverse effect on TSYS' business, operations and financial results. However, based on currently available information, while management anticipates there could be isolated and intermittent disruptions of various services and interfaces at its business sites related to third parties with which it has material relationships, there is no expectation of extensive or protracted systemic failures that would have a material adverse effect on the financial condition or results of operations of TSYS. The majority of Synovus' costs in becoming Year 2000 compliant are related to TSYS. Such costs are being expensed as incurred and are not expected to have a material effect on Synovus' financial condition or results of operations for 1999. TSYS currently estimates the total cost for the Year 2000 project will amount to approximately $18 million of direct costs. This amount consists primarily of the costs associated with personnel dedicated to the Year 2000 project. During the first quarter of 1999, TSYS incurred $1.9 million of direct costs associated with the Year 2000 project and has incurred $10.9 million since project inception. The banking operations' Year 2000 remediation costs, other than those related to the conversion to M&I, are not material. Synovus estimates that the total cost for its banking operations Year 2000 project will be approximately $2.5 million (approximately $1.4 million incurred in 1998, $300 thousand incurred in the first quarter of 1999 and $800 thousand to be incurred during the remainder of 1999). These costs are exclusive of the costs associated with the conversion to the M&I system and consist primarily of direct personnel costs. The failure of Synovus or TSYS to be Year 2000 compliant would have a material adverse effect on Synovus' financial condition and results of operations. The costs of the projects and the dates on which Synovus and TSYS believe they will complete the Year 2000 modifications are based on managements best estimates, which were derived utilizing numerous assumptions about future events, including the continued availability of necessary technical resources and the cooperation of customers and vendors. However, there are no guarantees that these estimates will be achieved and actual results could differ materially from those anticipated. All forward-looking statements regarding Year 2000 readiness, including estimates, forecasts and expectations, are inherently uncertain as they are based on various expectations and assumptions concerning future events and are subject to numerous risks and uncertainties which could cause actual events or results to differ materially from those projected. Important factors upon which Synovus' Year 2000 forward-looking statements are premised include: (a) retention of employees and contractors working on Year 2000 projects; (b) TSYS customers' remediation of their internal systems to be Year 2000 ready and their cooperation in timely testing; (c) no material disruption of telecommunication, data transmission networks, payment networks, government services utilities or other infrastructure services and no unexpected failure of third-party products; (d) no unexpected failures by third-parties providing services to Synovus; (e) no undiscovered subversion of systems or program code affecting Synovus' systems; and (f) no undiscovered material flaws in Synovus' test processes. - 18 - Income Tax Expense Income tax expense for the three months ended March 31, 1999, was $26.4 million compared to $23.0 million for the same period a year ago. The effective tax rate for the first three months of 1999 and 1998 was 35.4% and 35.8%, respectively. The enactment of favorable state tax legislation during the first quarter contributed to the decline in the effective tax rate. Legal Proceedings On November 10, 1998, a class action complaint was filed against NationsBank of Delaware, N.A., in the United States District Court for the Southern District of Mississippi. On March 23, 1999, the named plaintiff amended the complaint and named TSYS, and certain credit bureaus, as defendants in the case. The named plaintiff alleges, among other things, that the defendants failed to report properly the credit standing of each member of the putative class. The named plaintiff has defined the class as all persons and entities within the United States who obtained credit cards from NationsBank, and whose accounts were purchased by or transferred to U.S. BankCard, and whose accounts were improperly reported to credit bureaus or credit agencies incorrectly. The amended complaint alleges negligence, violation of the Fair Credit Reporting Act, breach of the duty of good faith and fair dealing, and seeks declaratory relief, injunctive relief, and the imposition of punitive damages. TSYS intends to vigorously contest this lawsuit, which seeks unspecified damages. This litigation has just commenced and discovery has not yet begun; thus, TSYS is not in a position to determine the possible exposure, if any, to TSYS. Forward-Looking Statements Certain statements contained in this filing which are not statements of historical fact constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act (the "Act"). In addition, certain statements in future filings by Synovus with the Securities and Exchange Commission, in press releases, and in oral and written statements made by or with the approval of Synovus which are not statements of historical fact constitute forward-looking statements within the meaning of the Act. Examples of forward-looking statements include, but are not limited to: (i) projections of revenues, income or loss, earnings or loss per share, the payment or non-payment of dividends, capital structure and other financial terms; (ii) statements of plans and objectives of Synovus or its management or Board of Directors, including those relating to products or services; (iii) statements of future economic performance; and (iv) statements of assumptions underlying such statements. Words such as "believes," "anticipates," "expects," "intends," "targeted," and similar expressions are intended to identify forward-looking statements but are not the exclusive means of identifying such statements. Forward-looking statements involve risks and uncertainties, which may cause actual results to differ materially from those in such statements. Factors that could cause actual results to differ from those discussed in the forward-looking statements include, but are not limited to: (i) the strength of the U.S. economy in general and the strength of the local economies in which operations are conducted; (ii) the effects of and changes in trade, monetary and fiscal policies, and laws, including interest rate policies of the Federal Reserve Board; (iii) inflation, interest rate, market and monetary fluctuations; (iv) the timely development of and acceptance of new products and services and perceived overall value of these products and services by users; (v) changes in consumer spending, borrowing, and saving habits; (vi) technological changes - 19 - (including "Year 2000" data systems compliance issues) are more difficult or expensive than anticipated; (vii) acquisitions; (viii) the ability to increase market share and control expenses; (ix) the effect of changes in laws and regulations (including laws and regulations concerning taxes, banking, securities, and insurance) with which Synovus and its subsidiaries must comply; (x) the effect of changes in accounting policies and practices, as may be adopted by the regulatory agencies, the Financial Accounting Standards Board, or other authoritative bodies; (xi) changes in Synovus' organization, compensation, and benefit plans; (xii) the costs and effects of litigation and of unexpected or adverse outcomes in such litigation; and (xiii) the success of Synovus at managing the risks involved in the foregoing. Such forward-looking statements speak only as of the date on which such statements are made, and Synovus undertakes no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made to reflect the occurrence of unanticipated events. - 20 - ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Quantitative and qualitative disclosures about market risk were included in the annual report which was incorporated by reference in Synovus' 1998 10-K. There have been no significant changes in the contractual balances and the estimated fair value of Synovus' on-balance sheet financial instruments, the notional amount and estimated fair value of the company's off-balance sheet derivative financial instruments, or weighted-average interest rates. - 21 - PART II - OTHER INFORMATION ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits (11) Statement re Computation of Per Share Earnings (27) Financial Data Schedule (for SEC purposes only, not enclosed herewith) (b) Reports on Form 8-K The following reports on Form 8-K were filed during or subsequent to the first quarter of 1999. (1) The report filed on March 1, 1999, included the following event: On February 26, 1999, TSYS, Synovus' 80.8% owned processing subsidiary, announced that it received notice from Universal Card Services Corp. ("UCS"), a unit of CITIBANK, of its decision not to renew its processing contract for consumer cards beyond the original term ending August 1, 2000. (2) The report filed on March 17, 1999, included the following event: On March 15, 1999, Synovus announced a 22.8% increase in the quarterly cash dividend of common stock. (3) The report filed on April 28, 1999, included the following event: On April 27, 1999, the Synovus Board of Directors renewed its Shareholder Rights Plan to take effect when the existing plan expires on May 4, 1999. Under the new plan, Rights will be distributed as a dividend at the rate of one Right for each share of common stock of Synovus held by shareholders of record at the close of business on May 4, 1999. Each Right will entitle shareholders to buy, upon occurrence of certain events, one share of common stock for $225. - 22 - SIGNATURES Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SYNOVUS FINANCIAL CORP. Date: May 14, 1999 BY: /s/ Thomas J. Prescott Executive Vice President and Chief Financial Officer - 23 - INDEX TO EXHIBITS Sequentially Exhibit Number Description Numbered Page - -------------- ---------------- --------------------- 11 Statement re Computation of 25 Per Share Earnings 27 Financial Data Schedule (for SEC purposes only, not enclosed herewith) - 24 - EX-11 2 COMPUTATION OF NET INCOME PER COMMON SHARE EXHIBIT 11 SYNOVUS FINANCIAL CORP. COMPUTATION OF NET INCOME PER COMMON SHARE (In thousands, except per share data) (Unaudited)
Three Months Ended March 31, 1999 Three Months Ended March 31, 1998 --------------------------------------------- --------------------------------------------- Net Average Net Income Net Average Net Income Income Shares per Share Income Shares Per Share --------------------------------------------- --------------------------------------------- Basic EPS $48,189 270,647 $ 0.18 $41,213 262,924 $ 0.16 Effect of dilutive options --- 4,432 --- 4,555 - ------------------------------------------------------------------------ ------------------------- EPS - assuming dilution $48,189 275,079 $ 0.18 41,21 267,479 $ 0.15 ====================================================================================================================================
All information presented in Exhibit 11 reflects the three-for-two stock split declared by the Synovus Board of Directors on April 23, 1998, effective May 21, 1998, to shareholders of record on May 7, 1998. EX-27 3 FINANCIAL DATA SCHEDULE
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF SYNOVUS FINANCIAL CORP. AS OF AND FOR THE THREE MONTHS ENDED MARCH 31, 1999, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS DEC-31-1999 JAN-01-1999 MAR-31-1999 281,004 1,049 24,968 0 1,575,845 294,555 300,710 7,736,591 111,483 10,622,793 8,464,488 667,425 201,985 136,406 0 0 271,117 826,657 10,622,793 173,278 27,520 407 201,205 75,228 84,475 116,730 7,153 447 194,358 74,606 48,189 0 0 48,189 .18 .18 5.08 20,652 25,164 378 0 110,822 8,204 1,712 111,483 111,483 0 25,870
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