EX-99.1 2 snv_06302021xex991xfilingx.htm EX-99.1 Document

Exhibit 99.1
synovusa04a.jpg
Media Contact
Investor Contact
Lee Underwood
Kevin Brown
Media Relations
Investor Relations
(706) 644-0528(706) 641-6500
Synovus Announces Earnings for the Second Quarter 2021
Diluted Earnings per Share of $1.19 vs. $0.57 in 2Q20
Adjusted Diluted Earnings per Share of $1.20 vs. $0.23 in 2Q20

COLUMBUS, Ga., July 20, 2021 - 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
ReportedAdjusted
(dollars in thousands)2Q211Q212Q202Q211Q212Q20
Net income available to common shareholders$177,909 $178,802 $84,901 $178,969 $180,685 $34,015 
Diluted earnings per share1.19 1.19 0.57 1.20 1.21 0.23 
Total loans38,236,018 38,805,101 39,914,297 N/AN/AN/A
Total deposits47,171,962 47,368,951 44,194,580 N/AN/AN/A
Total FTE revenue489,738 485,587 550,911 488,612 486,785 470,659 
Return on avg assets1.36 %1.40 %0.71 %1.37 %1.41 %0.32 %
Return on avg common equity15.40 15.77 7.48 15.50 15.93 3.00 
Return on avg tangible common equity17.41 17.85 8.69 17.52 18.04 3.60 
Net interest margin3.02 3.04 3.13 N/AN/AN/A
Efficiency ratio55.24 55.01 51.58 54.41 54.12 57.71 
NCO ratio0.28 0.21 0.24 N/AN/AN/A
NPA ratio0.46 0.50 0.44 N/AN/AN/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)2Q211Q21Linked Quarter ChangeLinked Quarter % Change2Q20Year/Year ChangeYear/Year % Change
Commercial & industrial$19,150.1 $19,693.8 $(543.7)(3)%$20,031.6 $(881.5)(4)%
Commercial real estate10,361.1 10,533.9 (172.9)(2)10,614.2 (253.1)(2)
Consumer8,724.8 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)2Q211Q21Linked Quarter ChangeLinked Quarter % Change2Q20Year/Year ChangeYear/Year % Change
Non-interest-bearing DDA$14,342.6 $13,742.1 $600.5 4 %$11,830.7 $2,511.9 21 %
Interest-bearing DDA5,839.8 5,841.7 (1.9)— 5,057.2 782.6 15 
Money market13,983.1 13,943.7 39.4 — 11,457.2 2,525.9 22 
Savings1,341.5 1,277.0 64.4 5 1,080.1 261.3 24 
Public funds5,804.9 6,154.9 (350.0)(6)5,347.4 457.6 9 
Time deposits2,891.1 3,214.8 (323.6)(10)5,131.7 (2,240.6)(44)
Brokered deposits2,969.0 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)2Q211Q21Linked Quarter ChangeLinked Quarter % Change2Q20Year/Year ChangeYear/Year % Change
Net interest income$381,860 $373,857 $8,003 2 %$376,566 $5,294 1 %
Non-interest revenue107,087 110,956 (3,869)(3)173,484 (66,397)(38)
Non-interest expense270,531 267,134 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 expense56,814 49,161 7,653 16 30,866 25,948 84 
Preferred stock dividends8,291 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, diluted149,747 149,780 (33)— %147,733 2,014 1 %
Diluted earnings per share$1.19 $1.19 $— — $0.57 $0.62 109 
Adjusted diluted earnings per share1.20 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
2Q211Q212Q20
Common equity Tier 1 capital (CET1) ratio9.75 %
*
9.74 %8.90 %
Tier 1 capital ratio10.99 
*
10.99 10.15 
Total risk-based capital ratio13.25 
*
13.34 12.70 
Tier 1 leverage ratio8.72 
*
8.80 8.38 
Tangible common equity ratio7.73 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)2Q211Q212Q20
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)2Q211Q212Q20
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 adjustment750 — 4,908 
Add: Restructuring charges415 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 assets1.36 %1.40 %0.71 %
Adjusted return on average assets1.37 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 adjustment750 — 4,908 
Add: Restructuring charges415 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, diluted149,747 149,780 147,733 
Diluted earnings per share$1.19 $1.19 $0.57 
Adjusted diluted earnings per share1.20 1.21 0.23 


Reconciliation of Non-GAAP Financial Measures, continued
(dollars in thousands)
2Q211Q212Q20
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 charges415 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 tax7,128 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 equity15.40 %15.77 %7.48 %
Adjusted return on average common equity15.50 15.93 3.00 
Return on average tangible common equity17.41 17.85 8.69 
Adjusted return on average tangible common equity17.52 18.04 3.60 
Reconciliation of Non-GAAP Financial Measures, continued
(dollars in thousands)June 30, 2021March 31, 2021June 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.