Synovus Financial Corp. today reported financial results for the quarter and year ended December 31, 2021.

2021 Highlights

• Net income available to common shareholders for 2021 was $727.3 million or $4.90 per diluted share as compared to $340.5 million or $2.30 per diluted share for 2020.

  • Adjusted earnings per diluted share for 2021 were $4.95 as compared to $2.41 for 2020, an increase of 106%.

• Period-end loan growth of $2.9 billion or 8% excluding Paycheck Protection Program (PPP) loans.

  • Processed and approved $1.0 billion in Round 2 PPP loans, supporting approximately 11,000 customers.

• Period-end deposit growth of $2.7 billion or 6%.

  • Core transaction deposits (non-interest bearing, interest bearing demand, NOW/savings, and money market deposits excluding public and brokered funds) increased $5.1 billion or 16%.

  • Cost of deposits decreased 16 basis points to 0.12% in the fourth quarter of 2021 as compared to the fourth quarter of 2020.

• Non-interest revenue, excluding securities gains, increased $23.3 million or 5% year over year, reflecting strong growth in core banking fees and wealth revenue, offset by the normalization of net mortgage revenue.

• Well capitalized with preliminary year-end ratios of 9.49% for CET1 and 12.60% for total risk-based capital.

  • Completed share repurchases totaling $200 million, reducing outstanding shares by 4.4 million, or 3% from the prior year.

• Allowance for Credit Losses (ACL) decreased $184.0 million, and the ACL ratio decreased 52 basis points to 1.19%, or 1.21% excluding PPP loans, primarily due to a continued positive shift in the economic outlook.

• Achieved pre-tax run rate benefit of approximately $110 million from Synovus Forward initiatives, driving positive operating leverage, ahead of schedule; remain on track for expected cumulative $175 million pre-tax benefit by the end of 2022.

• Implemented executive succession plan with Kessel Stelling moving into the role of Executive Chairman and Kevin Blair becoming President and CEO in April 2021.

Fourth Quarter 2021 Highlights

• Net income available to common shareholders was $192.1 million or $1.31 per diluted share as compared to $178.5 million or $1.21 in the prior quarter.

  • Adjusted earnings per diluted share of $1.35, up 12% quarter over quarter and 25% year over year.

• Period-end loan growth of $1.4 billion or 4% quarter over quarter, excluding the reduction in PPP loans.

  • PPP loans declined $382.6 million quarter over quarter.

• Period-end deposit growth of $1.7 billion or 4% from the third quarter.

  • Core transaction deposits increased $1.3 billion or 4% quarter over quarter.

• Net interest income of $392.3 million an increase of 2% quarter over quarter.

  • Growth in core loans and securities portfolio offset reduction in PPP fee accretion of $8.6 million quarter over quarter.

• Non-interest revenue of 117.1 million, an increase of 2% from third quarter.

  • Continued growth in wealth revenue and a one-time $8 million BOLI benefit in the fourth quarter were offset by a reduction in net mortgage revenue.

• Non-interest expense of $295.2 million, an increase of $28.2 million from the third quarter.

  • Adjusted non-interest expense of $285.6 million increased $18.5 million quarter over quarter due to recurring expense increases such as investments in Synovus Forward initiatives as well as other expense increases not expected to recur including a seed gift into a newly established donor advised fund and environment-driven health care costs.

• Credit quality metrics experienced broad based improvement.

  • Key metrics include a quarter-end non-performing loan ratio of 0.33%, non-performing asset ratio of 0.40% and a quarterly net charge-off ratio of 0.11%.

Fourth Quarter Summary

“Our team closed out a strong 2021 as fourth quarter results showed sustained momentum headlined by broad-based loan growth during the quarter, and earnings per share of $1.31, which is up 37% from the fourth quarter 2020,” said Synovus President and CEO Kevin Blair. “2021 was another challenging year, but our teams were able to navigate the uncertain environment to support our clients, contribute to our communities and deliver for our shareholders. Driven by record levels of loan production, continued growth in our fee income businesses and disciplined expense management, we generated 6% growth in adjusted pre-provision net revenue in 2021. Momentum as we enter 2022 is strong; coupled with the strategic investments we are making in talent and technology, we are extremely well-positioned to deliver outsized growth this year and in years to come.”

Balance Sheet

• Total loans ended the quarter at $39.3 billion, up $1.0 billion or 3% quarter over quarter.

  • Loan growth, excluding PPP loans, was $1.4 billion or 4% quarter over quarter.

  • Second consecutive quarter of record commercial loan production.

• Commercial and industrial (C&I) loans increased $626.4 million or 3% from the prior quarter.

  • C&I line utilization increased approximately 340 basis points to 43%.

• Commercial real estate (CRE) loans increased by $441.2 million or 4% from the prior quarter as pay-off and pay-down activity normalized.

• Consumer loans decreased by $96.7 million or 1% sequentially.

• Total deposits ended the quarter at $49.4 billion, an increase of $1.7 billion or 4% sequentially.

  • Core transaction deposits increased $1.3 billion or 4% from the prior quarter.

  • Strong seasonal inflows supported a $493.0 million increase in public funds compared to the third quarter.

• Total deposit costs declined 1 basis point from the third quarter to 12 basis points.

Core Performance

• Total taxable equivalent revenue was $510.3 million in the fourth quarter, up $9.7 million sequentially.

• Net interest income increased $7.4 million or 2% compared to the prior quarter.

  • Growth in core loans and securities portfolio offset reduction in PPP fee accretion of $12.7 million, down $8.6 million from the third quarter.

• Net interest margin was 2.96%, down 5 basis points from the previous quarter.

  • The margin was negatively impacted by a reduction of PPP fees which contributed 7 basis points to the quarter over quarter decline. This impact was offset by a 2 basis point positive impact from non-PPP related earning assets.

• Non-interest revenue of $117.1 million increased $2.1 million or 2% compared to third quarter 2021.

  • Continued growth in wealth revenue and one-time $8 million BOLI benefit offset declines in mortgage revenue.

• Non-interest expense increased $28.2 million or 11% sequentially. Adjusted non-interest expense increased $18.5 million or 7% from the prior quarter.

  • The increase in adjusted non-interest expense was driven by a combination of recurring expense increases as well as other discrete fourth quarter expenses.

• Reversal of provision for credit losses of $55.2 million, a $47.3 million favorable change from the previous quarter.

  • Included in the provision was net charge-offs of $10.5 million offset by a reduction in the ACL ratio to 1.19% at quarter-end, or 1.21% excluding PPP loans.

• The effective tax rate was 25.6% for the quarter.

Capital

• Preliminary CET1 ratio decreased 9 basis points sequentially to 9.49%.

  • Capital generated from earnings was offset by strong asset growth as well as capital deployed through dividends and share repurchases.

• Preliminary total risk-based capital ratio of 12.60% decreased 32 basis points from the prior quarter, primarily from strong asset growth and reduction in the allowance for credit losses.