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

Third Quarter Highlights

• Net income available to common shareholders was $95.4 million or $0.78 per diluted share as compared to $73.4 million or $0.60 per diluted share for the second quarter 2017 and $62.7 million or $0.51 per diluted share for the third quarter 2016. The third quarter results reflect the Cabela’s transaction fee and certain balance sheet restructuring actions.
  • Adjusted diluted earnings per share were $0.65 as compared to $0.61 for the second quarter 2017 and $0.52 for the third quarter 2016.
• Return on average assets was 1.27%, up 27 basis points from the previous quarter and up 39 basis points from the third quarter 2016.
  • Adjusted return on average assets was 1.05% as compared to 1.01% for the second quarter 2017 and 0.90% for the third quarter 2016.
• Total average loans grew $149.9 million or 2.4% annualized from the previous quarter and $1.36 billion or 5.9% as compared to the third quarter 2016.
• Total average deposits grew $295.2 million or 4.7% annualized from the previous quarter and $1.26 billion or 5.2% as compared to the third quarter 2016.
• Non-performing asset ratio was 57 basis points, down 16 basis points from the previous quarter and down 20 basis points from the third quarter 2016.
  • Results include the impact of certain balance sheet restructuring actions which included $77.8 million in loans transferred to held-for-sale.
• Return on average common equity was 13.24%, up 290 basis points from the previous quarter and up 435 basis points from the third quarter 2016.
  • Adjusted return on average common equity was 10.92% as compared to 10.49% for the second quarter 2017 and 9.08% for the third quarter 2016.
  • Adjusted return on average tangible common equity was 11.19% as compared to 10.75% for the second quarter 2017 and 9.16% for the third quarter 2016.
• Completed the acquisition of certain assets and assumption of certain liabilities of World’s Foremost Bank (WFB), a wholly-owned subsidiary of Cabela’s Incorporated, on September 25, 2017.
  • Simultaneously sold the credit card assets and related liabilities to Capital One Bank while retaining WFB’s $1.1 billion brokered time deposit portfolio.
  • Non-interest income includes a $75.0 million transaction fee received from Cabela’s and Capital One as part of the transaction.

“Our third quarter results reflect solid execution and steady progress toward achieving our strategic priorities,” said Synovus Chairman and CEO Kessel Stelling. “Adjusted earnings per share increased 25% year-over-year, adjusted return on assets increased to 1.05%, and our efficiency ratio declined to below 59%. We strengthened our balance sheet with diversified year-over-year average loan growth of 6% funded by core deposit growth, and we saw the non-performing loan ratio decline 24 basis points to 0.40%. We were also pleased to close the Cabela’s transaction, which provided additional liquidity to fund organic growth and enabled the acceleration of additional balance sheet restructuring actions with longer term financial benefit. Our team is highly energized as we prepare to finish strong in 2017 and fully transition to a unified Synovus brand in 2018, with all of our efforts aimed at improving the customer experience in the communities we serve throughout our footprint.”

Balance Sheet

• Total average loans were $24.50 billion, up $149.9 million or 2.4% annualized from the previous quarter and up $1.36 billion or 5.9% as compared to the third quarter 2016.
• Total loans ended the quarter at $24.49 billion, up $56.8 million or 0.9% annualized from the previous quarter and up $1.22 billion or 5.3% as compared to the third quarter 2016.
  • Excluding transfers to held-for-sale, loans grew $134.6 million or 2.2% annualized from the previous quarter.
    • Consumer loans grew $286.4 million or 21.5% annualized from the previous quarter.
    • Commercial and industrial loans grew $24.8 million or 0.8% annualized from the previous quarter.
    • Commercial real estate loans declined $178.4 million or 9.5% annualized from the previous quarter.
• Total average deposits were $25.29 billion, up $295.2 million or 4.7% annualized from the previous quarter and up $1.26 billion or 5.2% as compared to the third quarter 2016.
  • Average core transaction deposits¹ grew $194.0 million or 4.2% annualized from the previous quarter and $1.24 billion or 7.1% as compared to the third quarter 2016.

Core Performance

• Total adjusted revenues were $331.3 million, up $9.8 million or 3.1% from the previous quarter and up 12.4% from the third quarter 2016.
• Net interest income was $262.6 million, up $11.5 million or 4.6% from the previous quarter and up 16.2% from the third quarter 2016.
• Net interest margin was 3.63%, up 12 basis points from the previous quarter. Yield on earning assets was 4.11%, up 12 basis points from the previous quarter, and the effective cost of funds was 0.48%, unchanged from the previous quarter.
• Total non-interest income was $135.4 million, up $66.7 million compared to the previous quarter and up $67.3 million from third quarter 2016.
  • Includes the $75.0 million Cabela’s transaction fee, partially offset by $8.0 million in investment securities losses.
• Adjusted non-interest income was $68.4 million, down $1.6 million or 2.3% from the previous quarter and unchanged from the third quarter 2016.
• Total non-interest expense was $205.6 million, up $13.9 million or 7.2% from the previous quarter and up 10.6% from the third quarter 2016.
  • Efficiency ratio² was 50.62% as compared to 59.90% in the previous quarter and 63.13% in the third quarter 2016.
• Adjusted non-interest expense was $194.1 million, up $2.7 million or 1.4% from the previous quarter and up 5.5% from the third quarter 2016.
  • Adjusted efficiency ratio was 58.59% as compared to 59.56% in the previous quarter and 62.41% in the third quarter 2016.

Credit Quality

• During the third quarter, Synovus completed certain balance sheet restructuring actions which included $77.8 million in loans transferred to held-for-sale (consisting primarily of NPLs) that resulted in provision expense of $27.7 million. Additionally, foreclosed real estate expenses for the quarter include $7.1 million of charges related to discounts to fair value for completed or planned accelerated dispositions.
• Non-performing loans were $97.8 million at September 30, 2017, down $61.5 million from June 30, 2017, and down $50.3 million from September 30, 2016. The non-performing loan ratio was 0.40% at September 30, 2017, as compared to 0.65% at June 30, 2017, and 0.64% at September 30, 2016.
• Total non-performing assets were $138.6 million at September 30, 2017, down $40.3 million from June 30, 2017, and down $40.5 million from September 30, 2016. The non-performing asset ratio was 0.57% at September 30, 2017, as compared to 0.73% at June 30, 2017, and 0.77% at September 30, 2016.
• Net charge-offs were $38.1 million in the third quarter 2017, up $22.4 million from the previous quarter and up $31.2 million from the third quarter 2016. The annualized net charge-off ratio was 0.62% in the third quarter as compared to 0.26% in the previous quarter and 0.12% in the third quarter 2016.
• Total delinquencies (consisting of loans 30 or more days past due and still accruing) were 0.35% of total loans at September 30, 2017, as compared to 0.27% at June 30, 2017, and 0.27% at September 30, 2016.

Capital Ratios

• Ratios reflect repurchase of $90.6 million in common stock during the third quarter 2017.
• Common Equity Tier 1 ratio was 10.04% at September 30, 2017, compared to 10.02% at June 30, 2017.
• Tier 1 Capital ratio was 10.41% at September 30, 2017, compared to 10.37% at June 30, 2017.
• Total Risk Based Capital ratio was 12.28% at September 30, 2017, compared to 12.24% at June 30, 2017.
• Tier 1 Leverage ratio was 9.34% at September 30, 2017, compared to 9.30% at June 30, 2017.
• Tangible Common Equity ratio was 8.88% at September 30, 2017, compared to 9.15% at June 30, 2017.

Third Quarter Earnings Conference Call

Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on October 17, 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.