Synovus Financial Corp. today reported financial results for the quarter and year ended December 31, 2018.

Net income available to common shareholders for the fourth quarter 2018 was $101.9 million or $0.87 per diluted share as compared to $99.3 million or $0.84 per diluted share for the third quarter 2018 and $27.0 million or $0.23 per diluted share for the fourth quarter 2017. Adjusted earnings per diluted share for the fourth quarter 2018 was $0.92, down 3.1% from the third quarter 2018 and up 28.1% from the fourth quarter 2017.

Additionally, the Company announced plans to return approximately $500 million to common shareholders this year through a 20% dividend increase and additional share repurchases.

Fourth quarter and full year results do not include financial results of FCB Financial Holdings, Inc. (FCB), which Synovus acquired on January 1, 2019.

2018 Highlights

• Net income available to common shareholders for 2018 was $410.5 million or $3.47 per diluted share as compared to $265.2 million or $2.17 per diluted share for 2017. Diluted EPS grew 59.5% for 2018 compared to 2017.

  • Adjusted earnings per diluted share for 2018 was $3.64 as compared to $2.53 for 2017, an increase of 43.8%.

• Return on average assets for 2018 was 1.35%, an increase of 46 basis points from 2017.

  • Adjusted return on average assets for 2018 was 1.41%, an increase of 37 basis points from 2017.

• Return on average common equity for 2018 was 14.55%, an increase of 523 basis points from 2017.

  • Adjusted return on average common equity for 2018 was 15.29%, an increase of 443 basis points from 2017.

• Total loans ended the year at $25.95 billion, an increase of $1.16 billion or 4.7% from 2017. Total average loans for the year grew $813.1 million or 3.3% as compared to 2017.

• Total average deposits grew $969.7 million or 3.8% as compared to 2017.

• Efficiency ratio of 57.99% improved 196 basis points from 2017.

  • Adjusted efficiency ratio of 56.33% improved 354 basis points from 2017.

• The non-performing asset ratio was 0.44% at December 31, 2018, compared to 0.53% at year-end 2017.

• Common Equity Tier 1 ratio was 10.04% at December 31, 2018¹, compared to 9.99% at December 31, 2017.

• The Company returned $281 million to common shareholders during the year with repurchases of $175 million in common stock and $106 million in common dividends.

• Synovus issued $200 million Series D preferred stock and redeemed $130 million Series C preferred stock.

• The Company completed the transition to a single brand — Synovus — across all markets.

• The acquisition of FCB was completed on January 1, 2019.

“Synovus became a stronger company in every respect in 2018,” said Kessel Stelling, Synovus chairman and CEO. “From completion of the single-brand transition, to the announcement and successful closing of the FCB acquisition, to surpassing all of our profitability and efficiency targets, we delivered outstanding operating and financial performance last year. These results will provide the opportunity to accelerate capital returns to shareholders in 2019 through a 20 percent increase in the common stock dividend and more than $300 million in additional share repurchases.

“As we begin the new year, we are excited to welcome the FCB team members and loyal customers to the Synovus family,” Stelling continued. “We are pleased with the integration results to date, and confident in the ability of our combined company to create value for customers, communities, and shareholders.”

Fourth Quarter Financial Results

Balance Sheet

• Total loans ended the quarter at $25.95 billion, up $369.5 million or 5.7% annualized from the previous quarter and up $1.16 billion or 4.7% as compared to the fourth quarter 2017.

  • Commercial and industrial loans grew by $277.9 million or 8.8% annualized from the previous quarter and $757.6 million or 6.3% as compared to the fourth quarter 2017.

  • Consumer loans grew by $239.8 million or 14.9% annualized from the previous quarter and $771.2 million or 13.2% as compared to the fourth quarter 2017.

  • Commercial real estate loans declined by $147.9 million or 8.7% annualized from the previous quarter and $370.8 million or 5.3% as compared to the fourth quarter 2017.

• Total average loans were $25.63 billion, up $303.7 million or 4.8% annualized from the previous quarter and up $1.01 billion or 4.1% from the fourth quarter 2017.

• Total average deposits for the quarter were $26.92 billion, up $532.8 million or 8.0% annualized from the previous quarter and up $634.1 million or 2.4% as compared to the fourth quarter 2017.

  • Excluding average brokered deposits, average deposits increased $681.0 million or 11.0% annualized from the previous quarter and $1.21 billion or 5.0% compared to the fourth quarter 2017.

Core Performance

• Total revenues were $365.9 million, up $2.6 million from the previous quarter and up $26.9 million or 7.9% from the fourth quarter 2017.

  • Adjusted total revenues were $368.2 million, up $5.2 million or 1.4% from the previous quarter and up $29.0 million or 8.5% from the fourth quarter 2017.

• Net interest income was $297.9 million, up $6.3 million or 2.2% from the previous quarter and up $28.2 million or 10.5% from the fourth quarter 2017.

• Net interest margin was 3.92%, up 3 basis points from the previous quarter. Yield on earning assets was 4.69%, up 11 basis points from the previous quarter, and the cost of funds was 0.81%, up 8 basis points from the previous quarter.

• Total non-interest income was $68.0 million, down $3.7 million from the previous quarter and down $1.4 million from the fourth quarter 2017.

  • Adjusted non-interest income was $70.1 million, a decrease of 1.6% from the previous quarter and an increase of 1.2% from the prior-year quarter.

• Core banking fees² were $36.8 million, an increase of $1.1 million or 3.1% from the previous quarter and up $1.2 million or 3.5% from the fourth quarter 2017.

• Fiduciary and asset management fees, brokerage revenue, and insurance revenues were $24.6 million, an increase of $679 thousand or 2.8% from the prior quarter, and up $2.8 million or 13.0% as compared to the fourth quarter 2017.

• Total non-interest expense was $209.9 million, down $10.4 million or 4.7% from the previous quarter, and down $16.6 million or 7.3% from the fourth quarter 2017. Third quarter 2018 included $11.7 million of earnout liability adjustments from the Global One acquisition and $6.7 million of FCB merger-related expense.

  • Adjusted non-interest expense was $206.1 million, up $4.5 million or 2.2% from the previous quarter and up $5.0 million or 2.5% as compared to the fourth quarter 2017. The sequential quarter increase includes a $3.0 million increase in consulting fees and a $3.1 million increase in advertising expense, partially offset by a $1.7 million decline in FDIC insurance expense.

• Efficiency ratio for the fourth quarter 2018 was 57.34% as compared to 60.62% in the previous quarter and 66.77% in the fourth quarter 2017.

  • Adjusted efficiency ratio for the fourth quarter 2018 was 55.98% as compared to 55.55% in the previous quarter and 59.29% in the fourth quarter 2017.

Credit Quality

• Non-performing loans were $106.7 million at December 31, 2018, down $1.7 million or 1.6% from the previous quarter and down $8.8 million or 7.6% from December 31, 2017. The non-performing loan ratio was 0.41% at December 31, 2018, as compared to 0.42% at the end of the previous quarter and 0.47% at December 31, 2017.

• Total non-performing assets were $114.5 million at December 31, 2018, down $2.5 million or 2.2% from the previous quarter and down $16.1 million or 12.4% from December 31, 2017. The non-performing asset ratio was 0.44% at December 31, 2018, down 2 basis points from the previous quarter and down 9 basis points from December 31, 2017.

• Net charge-offs were $13.0 million in the fourth quarter 2018, down $2.2 million or 14.5% from the previous quarter. The annualized net charge-off ratio was 0.20% in the fourth quarter as compared to 0.24% in the previous quarter.

• Total delinquencies (consisting of loans 30 or more days past due and still accruing) were 0.22% of total loans at December 31, 2018, down 9 basis points from the previous quarter and up 1 basis point from December 31, 2017.

Capital Ratios¹

• Common Equity Tier 1 ratio was 10.04% at December 31, 2018, compared to 9.90% at September 30, 2018.

• Tier 1 Capital ratio was 10.70% at December 31, 2018, compared to 10.57% at September 30, 2018.

• Total Risk-Based Capital ratio was 12.47% at December 31, 2018, compared to 12.36% at September 30, 2018.

• Tier 1 Leverage ratio was 9.60% at December 31, 2018, compared to 9.58% at September 30, 2018.

• Tangible Common Equity to Tangible Assets ratio was 8.81% at December 31, 2018, compared to 8.68% at September 30, 2018.

Capital Management

• During the fourth quarter, the Company repurchased $40 million in common stock as part of the $25 million repurchase program announced in December 2018 and the $150 million share repurchase program announced in January 2018. Share repurchases in 2018 totaled $175 million and resulted in a reduction of 3.7 million shares, a 3.1% share count reduction from December 31, 2017.

• Additionally, the Board of Directors authorized a new share repurchase program³ of up to $400 million of the Company’s common stock to be executed during 2019. The company currently expects to repurchase $300-$350 million under this authorization in 2019.

• The Board of Directors also approved a 20% increase in the Company’s quarterly common stock dividend from $0.25 to $0.30 per share, effective with the quarterly dividend³ payable in April 2019.

FCB Fourth Quarter Information

• FCB reported net income of $41.8 million for the fourth quarter of 2018 and diluted earnings per share of $0.87.

• Net interest income was $94.9 million in the quarter and non-interest income was $9.6 million.

• Non-interest expense in the quarter was $38.2 million.

• Net interest margin in the fourth quarter of 2018 was 3.15% and the efficiency ratio was 36.22%.

• Return on average assets was 1.32% in the quarter.

• Tangible common equity ratio in the quarter was 10.14%.

• Total assets at December 31, 2018, were $12.53 billion, total loans were $9.42 billion, and total deposits were $10.89 billion.