Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter ended June 30, 2017.

Second Quarter Highlights

• Net income available to common shareholders was $73.4 million or $0.60 per diluted share as compared to $69.3 million or $0.56 per diluted share for the first quarter 2017 and $57.9 million or $0.46 per diluted share for the second quarter 2016.
• Return on average assets was 1.00%, up 4 basis points from the previous quarter and up 17 basis points from the second quarter 2016.
• Return on average common equity was 10.34%, up 37 basis points from the previous quarter and up 208 basis points from the second quarter 2016.
• Total average loans grew $314.0 million or 5.2% annualized from the previous quarter and $1.42 billion or 6.2% as compared to the second quarter 2016.
• Total average deposits grew $72.9 million or 1.2% annualized from the previous quarter and $1.38 billion or 5.9% as compared to the second quarter 2016.
• Credit quality metrics remained favorable with a non-performing asset ratio of 73 basis points, down 4 basis points from the previous quarter and down 8 basis points from the second quarter 2016.
• Total revenues¹ were $319.8 million, up $15.7 million or 5.2% from the previous quarter and 10.5% from the second quarter 2016.
• Net interest margin was 3.51%, up 9 basis points from the previous quarter and up 24 basis points from the second quarter 2016.
• Efficiency ratio² of 59.90% improved from 64.84% the previous quarter and 65.11% in the second quarter 2016.

“We are pleased with our second quarter performance, highlighted by a 30 percent year-over-year increase in earnings per share,” said Kessel Stelling, Synovus chairman and CEO. “Profitability continued to improve as we delivered a 1 percent return on assets and an efficiency ratio below 60 percent for the quarter. We also celebrated being named ‘Most Reputable Bank’ by American Banker magazine and the Reputation Institute. Our team is honored by this recognition from both customers and non-customers, and further energized about our transition to a unified Synovus brand in 2018.”

Balance Sheet

• Total loans ended the quarter at $24.43 billion, up $172.0 million or 2.8% annualized from the previous quarter and up $1.37 billion or 5.9% as compared to the second quarter 2016.
  • Commercial and industrial loans grew by $10.1 million or 0.3% annualized from the previous quarter and $795.5 million or 7.3% as compared to the second quarter 2016.
  • Consumer loans grew by $207.2 million or 16.3% annualized from the previous quarter and $666.0 million or 14.4% as compared to the second quarter 2016.
  • Commercial real estate loans declined by $45.0 million or 2.4% annualized from the previous quarter and declined $93.4 million or 1.2% as compared to the second quarter 2016.
• Total average loans were $24.35 billion, up $314.0 million or 5.2% annualized from the previous quarter and $1.42 billion or 6.2% as compared to the second quarter 2016.
• Total average deposits were $24.99 billion, up $72.9 million or 1.2% annualized from the previous quarter and $1.38 billion or 5.9% as compared to the second quarter 2016.
  • Average core transaction deposits³ grew $261.3 million or 5.8% annualized from the previous quarter and $1.56 billion or 9.3% as compared to the second quarter 2016.

Core Performance

• Total revenues¹ were $319.8 million, up $15.7 million or 5.2% from the previous quarter and 10.5% from the second quarter 2016.
• Net interest income was $251.1 million, up $11.2 million or 4.7% from the previous quarter and 13.4% from the second quarter 2016.
• Net interest margin was 3.51%, up 9 basis points from the previous quarter. Yield on earning assets was 3.99%, up 11 basis points from the previous quarter, and the effective cost of funds was 0.48%, up 2 basis points from the previous quarter.
• Total non-interest income was $68.7 million, down $3.2 million or 4.4% compared to the previous quarter and up 1.2% from second quarter 2016.
• Adjusted non-interest income was $70.1 million, up $4.1 million or 6.2% from the previous quarter and up 3.4% as compared to the second quarter 2016.
  • Core banking fees⁴ were $34.2 million, up $1.5 million or 4.6% from the previous quarter and 1.3% from the second quarter 2016.
  • Fiduciary and asset management fees, brokerage revenue, and insurance revenues were $20.8 million, up $114 thousand or 0.5% from the previous quarter and 5.0% from the second quarter 2016.
  • Mortgage banking income was $5.8 million, unchanged from the previous quarter and down 2.6% from the second quarter 2016.
• Total non-interest expense was $191.7 million, down $5.6 million or 2.9% from the previous quarter and up 1.7% from the second quarter 2016.
  • First quarter 2017 and second quarter 2016 included restructuring charges of $6.5 million and $5.8 million, respectively.
• Adjusted non-interest expense was $191.4 million, up $837 thousand or 0.4% from the previous quarter and 5.0% from the second quarter 2016.
  • Employment expense of $105.2 million decreased $2.0 million or 1.8% from the previous quarter and increased 8.4% from the second quarter 2016.
  • Occupancy and equipment expense of $29.9 million increased $602 thousand or 2.1% from the previous quarter and 11.8% from the second quarter 2016.
  • Other expenses of $56.6 million decreased $4.3 million or 7.0% from the previous quarter and decreased 12.6% from the second quarter 2016.
  • Efficiency ratio² was 59.90% as compared to 64.84% in the previous quarter and 65.11% in the second quarter 2016.
  • Adjusted efficiency ratio was 59.56% as compared to 62.25% in the previous quarter and 63.00% in the second quarter 2016.

Credit Quality

• Non-performing loans were $159.3 million at June 30, 2017, up $951 thousand from March 31, 2017 and up $5.2 million from June 30, 2016. The non-performing loan ratio was 0.65% at June 30, 2017, unchanged compared to March 31, 2017 and down from 0.67% at June 30, 2016.
• Total non-performing assets were $178.9 million at June 30, 2017, down $8.3 million from March 31, 2017 and down $8.4 million from June 30, 2016. The non-performing asset ratio was 0.73% at June 30, 2017, as compared to 0.77% at March 31, 2017 and 0.81% at June 30, 2016.
• Net charge-offs were $15.7 million in the second quarter 2017, up $8.8 million from $6.9 million in the previous quarter and up $9.5 million from $6.1 million in the second quarter 2016. The annualized net charge-off ratio was 0.26% in the second quarter as compared to 0.12% in the previous quarter and 0.11% in the second quarter 2016.
• Total delinquencies (consisting of loans 30 or more days past due and still accruing) remained low at 0.27% of total loans at June 30, 2017 as compared to 0.26% at March 31, 2017 and 0.24% at June 30, 2016.

Capital Ratios

• Ratios reflect repurchase of $30.2 million in common stock during the second quarter 2017.
• Common Equity Tier 1 ratio was 10.02% at June 30, 2017 compared to 9.86% at March 31, 2017.
• Tier 1 Capital ratio was 10.36% at June 30, 2017 compared to 10.18% at March 31, 2017.
• Total Risk Based Capital ratio was 12.24% at June 30, 2017 compared to 12.09% at March 31, 2017.
• Tier 1 Leverage ratio was 9.29% at June 30, 2017 compared to 9.13% at March 31, 2017.
• Tangible Common Equity ratio was 9.15% at June 30, 2017 compared to 9.04% at March 31, 2017.

Second Quarter Earnings Conference Call

Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on July 18, 2017. 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.