Synovus Financial Corp. reported financial results for the quarter ended September 30, 2018.

Third Quarter Highlights

Net income available to common shareholders was $99.3 million or $0.84 per diluted share as compared to $108.6 million or $0.91 per diluted share for the second quarter 2018 and $95.4 million or $0.78 per diluted share for the third quarter 2017.

Adjusted diluted earnings per share were $0.95 as compared to $0.92 for the second quarter 2018 and $0.65 for the third quarter 2017.

Return on average assets was 1.36% and adjusted return on average assets was 1.47%.

Return on average common equity was 13.95%, adjusted return on average common equity was 15.69%, and adjusted return on average tangible common equity was 16.08%.

Total loans ended the quarter at $25.58 billion, up $443.1 million or 7.0% annualized from the previous quarter and up $1.09 billion or 4.5% as compared to the third quarter 2017.

Total average deposits grew $119.2 million or 1.8% annualized from the previous quarter and $1.10 billion or 4.4% as compared to the third quarter 2017.

Net interest margin was 3.89%, up 3 basis points from the previous quarter and up 26 basis points from the third quarter 2017.

Efficiency ratio was 60.62%, compared to 56.78% in the second quarter 2018 and 50.62% in the prior-year quarter. Adjusted efficiency ratio was 55.55%, versus 56.41% in the previous quarter and 58.59% in the third quarter 2017.

Credit quality metrics remained favorable, with a non-performing asset ratio of 46 basis points, down 4 basis points from the previous quarter and down 11 basis points from the third quarter 2017.

The effective year-to-date tax rate through the third quarter 2018 was 19.8% compared to 34.6% in the prior-year quarter.

“Our team again delivered solid performance during the third quarter, achieving broad-based loan growth, margin expansion, and sustained positive operating leverage,” said Kessel Stelling, Synovus chairman and CEO. “We also celebrated the recent recognition of our company as one of American Banker’s Best Places to Work, driven by our people-centered culture. We expect a strong finish in 2018 as our investments in talent, capabilities, and specialized lines of business drive meaningful growth, and we look forward to welcoming Florida Community Bank customers and team members to Synovus early next year.”

Balance Sheet

Total loans ended the quarter at $25.58 billion, up $443.1 million or 7.0% annualized from the previous quarter and up $1.09 billion or 4.5% as compared to the third quarter 2017.

Commercial and industrial loans grew by $227.8 million or 7.4% annualized from the previous quarter and $776.2 million or 6.6% as compared to the third quarter 2017.

Consumer loans grew by $148.1 million or 9.4% annualized from the previous quarter and $827.6 million or 14.9% as compared to the third quarter 2017.

Commercial real estate loans grew $68.2 million or 4.1% annualized from the previous quarter and declined $514.5 million or 7.1% as compared to the third quarter 2017.

Total average loans were $25.32 billion, up $376.3 million or 6.0% annualized from the previous quarter and up $822.7 million or 3.4% as compared to the third quarter 2017.

Total average deposits were $26.39 billion, up $119.2 million or 1.8% annualized from the previous quarter and up $1.10 billion or 4.4% as compared to the third quarter 2017.

Excluding brokered deposits, average deposits increased $269.2 million or 4.4% annualized from the previous quarter.

Core Performance

Total revenues were $363.3 million, up $4.0 million from the previous quarter and down $34.7 million or 8.7% from the third quarter 2017.

Adjusted total revenues were $363.0 million, up $3.6 million from the previous quarter and up $31.7 million or 9.6% from the third quarter 2017.

Net interest income was $291.6 million, up $7.0 million or 2.5% from the previous quarter and up 11.1% from the third quarter 2017.

Net interest margin was 3.89%, up 3 basis points from the previous quarter. Yield on earning assets was 4.58%, up 11 basis points from the previous quarter, and the effective cost of funds was 0.69%, up 8 basis points from the previous quarter.

Total non-interest income was $71.7 million, down $1.7 million from the previous quarter and down $63.7 million from the third quarter 2017, which included the $75 million Cabela’s transaction fee, partially offset by $8.0 million in investment securities losses.

Adjusted non-interest income was $71.2 million, down $3.5 million or 4.7% from the previous quarter and up $2.8 million or 4.1% year-over-year.

Core banking fees1 were $35.7 million, down $1.7 million or 4.7% from the previous quarter and flat from third quarter 2017.

Fiduciary and asset management fees, brokerage revenue, and insurance revenues were $23.9 million, down $825 thousand from the previous quarter and up $2.8 million or 13.0% from the prior-year quarter.

Mortgage banking income was $5.3 million, up 9.3% from the previous quarter and down 5.6% from the third quarter 2017.

Total non-interest expense was $220.3 million, up $16.2 million or 8.0% from the previous quarter and up 7.1% year-over-year.

Adjusted non-interest expense was $201.6 million, a decline of $1.1 million from the previous quarter and an increase of $7.5 million or 3.9% from the third quarter 2017.

Employment expense of $114.3 million increased 2.2% from the previous quarter and increased 4.3% from the third quarter 2017.

Occupancy and equipment expense of $32.1 million declined 1.7% from the previous quarter and increased 5.0% from the prior-year quarter.

Adjusted other expenses of $55.2 million decreased $3.0 million or 5.1% from the previous quarter and increased 2.5% from the third quarter 2017.

Efficiency ratio was 60.62%, compared to 56.78% in the second quarter 2018 and 50.62% in the prior-year quarter.

Adjusted efficiency ratio was 55.55%, versus 56.41% in the previous quarter and 58.59% in the third quarter 2017.
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1 Core banking fees include service charges on deposit accounts, card fees, letter of credit fees, ATM fee income, line of credit non-usage fees, gains from sales of government guaranteed loans, and miscellaneous other service charges.

Credit Quality

Non-performing loans were $108.4 million at September 30, 2018, down $8.9 million or 7.6% from June 30, 2018, and up $10.6 million or 10.8% from September 30, 2017. The non-performing loan ratio was 0.42% at September 30, 2018, compared to 0.47% at June 30, 2018, and 0.40% at September 30, 2017.

Total non-performing assets were $117.0 million at September 30, 2018, down $9.4 million or 7.4% from June 30, 2018, and down $21.6 million or 15.6% from September 30, 2017. The non-performing asset ratio was 0.46% at September 30, 2018, as compared to 0.50% at June 30, 2018, and 0.57% at September 30, 2017.

Net charge-offs were $15.3 million in the third quarter 2018, down $2.5 million from the previous quarter and down $23.2 million from $38.1 million in the third quarter 2017. The annualized net charge-off ratio was 0.24% in the third quarter as compared to 0.29% in the previous quarter.

Total delinquencies (consisting of loans 30 or more days past due and still accruing) remained low at 0.31% of total loans at September 30, 2018, up from 0.22% in the previous quarter and down 4 basis points from September 30, 2017.

Capital Ratios

Ratios reflect repurchase of $58 million in common stock during the third quarter.

We anticipate that the full share repurchase authorization of $150 million will be completed by October 26, 2018.

On August 1, 2018, Synovus redeemed all of its outstanding Series C Preferred Stock.
Common Equity Tier 1 ratio was 9.92% at September 30, 2018, compared to 10.06% at September 30, 2017.

Tier 1 Capital ratio was 10.59% at September 30, 2018, compared to 10.43% at September 30, 2017.
Total Risk Based Capital ratio was 12.37% at September 30, 2018, compared to 12.30% at September 30, 2017.

Tier 1 Leverage ratio was 9.58% at September 30, 2018, compared to 9.34% at September 30, 2017.
Tangible Common Equity ratio was 8.68% at September 30, 2018, compared to 8.88% at September 30, 2017.