Synovus Financial Corp. today reported financial results for the quarter ended December 31, 2013. 

Fourth Quarter Results 

• Net income available to common shareholders was $35.8 million for the fourth quarter of 2013, compared to $37.2 million for the third quarter of 2013, and $709.3 million for the fourth quarter of 2012. Diluted net income per common share for the fourth quarter of 2013 was $0.04 compared to $0.04 for the third quarter of 2013 and $0.78 for the fourth quarter of 2012. Excluding litigation loss contingency expense and restructuring charges (net of tax), the fourth quarter of 2013 net income available to common shareholders was $44.3 million or $0.05 per diluted common share.
• The fourth quarter of 2013 results included litigation loss contingency expense of $10 million or $0.01 per share.
• The fourth quarter of 2012 results included an $800 million tax benefit related to the deferred tax asset recapture.
• Total loans grew $346.2 million sequentially or 7.0% annualized.
• Credit costs totaled $22.3 million for the fourth quarter of 2013, compared to $22.4 million for the third quarter of 2013 and $185.8 million for the fourth quarter of 2012.

"We were pleased to report 7% annualized sequential quarter loan growth, driven primarily by C&I and retail lending,” said Kessel D. Stelling, Chairman and CEO of Synovus.  “Partnerships between our local bank divisions and large corporate banking teams across our five-state footprint produced meaningful results, and we saw growth in key markets such as Atlanta, Tampa, Charleston, Nashville, Savannah, and Columbus.  HELOC and private client mortgages drove the growth in retail loans during the quarter. Credit quality continued to improve, and our net interest margin remained stable.  Additionally, our focus on cost savings continued as we completed implementation of initiatives necessary to achieve the $30 million in expense reductions announced at the beginning of the year.” 

Core Performance

Pre-tax, pre-credit costs income was $96.3 million for the fourth quarter of 2013, an increase of $868 thousand from $95.4 million for the third quarter of 2013. 

• Net interest income was $204.3 million for the fourth quarter of 2013, up $360 thousand from $204.0 million in the previous quarter.
• The net interest margin was 3.38%, compared to 3.40% in the third quarter of 2013, with the yield on earning assets down four basis points and the effective cost of funds down two basis points.
• Total non-interest income was $60.2 million for the fourth quarter of 2013, down $3.4 million, compared to $63.6 million for the third quarter of 2013, due primarily to a decline in mortgage banking income of $2.4 million and private equity investment losses of $2.1 million.
• Financial Management Services revenues were $19.5 million, up $1.6 million compared to the third quarter, dTARriven by increases in fees from customer interest rate swaps and trust services.
• Non-interest expense for the fourth quarter of 2013 was $190.7 million, up $3.4 million from the third quarter of 2013.
• The fourth quarter of 2013 non-interest expense includes $10.0 million in litigation loss contingency expense and $3.8 million in restructuring charges.
• Adjusted non-interest expense (excludes Visa indemnification charges, restructuring charges, litigation loss contingency expense and other credit costs) was $167.9 million, down $3.2 million from $171.0 million for the third quarter of 2013, driven by declines in almost every category.
• The $30 million expense reduction initiative announced in January 2013 was fully implemented during the year.

Balance Sheet Fundamentals

• Total reported loans ended the quarter at $20.06 billion, a $346.2 million increase from the third quarter of 2013.
• Commercial and industrial loans grew by $272.5 million from the third quarter of 2013, or 11.1% annualized.
• Retail loans grew by $75.6 million from the third quarter of 2013, or 8.4% annualized.
• Commercial real estate loans grew by $2.0 million from the third quarter of 2013.
• Total deposits ended the quarter at $20.88 billion, down $97.1 million from the previous quarter due primarily to a decline in brokered time deposits.
• Core deposits ended the quarter at $19.78 billion, up $84.1 million compared to the third quarter of 2013. Core deposits, excluding time deposits, increased $155.7 million compared to the previous quarter. 

Credit Quality

Broad based improvement in credit quality continued.

• Total credit costs were $22.3 million in the fourth quarter of 2013, down from $22.4 million in the third quarter of 2013 and $185.8 million in the fourth quarter of 2012.
• Net charge-offs were $25.1 million in the fourth quarter of 2013, up from $23.0 million in the third quarter of 2013 and down from $193.5 million in the fourth quarter of 2012. The annualized net charge-off ratio was 0.51% in the fourth quarter, up from 0.47% in the previous quarter and down from 3.94% in the fourth quarter of 2012.
• Non-performing loan inflows were $41.2 million in the fourth quarter of 2013, down from $47.4 million in the third quarter of 2013 and $262.7 million in the fourth quarter of 2012. 
• Non-performing loans, excluding loans held for sale, were $416.3 million at December 31, 2013, down $34.6 million from the previous quarter, and down $127.0 million or 23.4% from the fourth quarter of 2012. The non-performing loan ratio was 2.08% at December 31, 2013, down from 2.29% at the end of the previous quarter and 2.78% at December 31, 2012.
• Total non-performing assets were $539.6 million at December 31, 2013, down $47.3 million from the previous quarter, and down $163.4 million or 23.2% from the fourth quarter of 2012. The non-performing asset ratio was 2.67% at December 31, 2013, compared to 2.96% at the end of the previous quarter and 3.57% at December 31, 2012.
• Total delinquencies (consisting of loans 30 or more days past due and still accruing) declined to 0.36% of total loans at December 31, 2013, compared to 0.40% at September 30, 2013, and 0.54% at December 31, 2012. Total loans past due 90 days or more and still accruing remained low at 0.02% at December 31, 2013, compared to 0.02% at September 30, 2013, and 0.03% at December 31, 2012.
• Distressed asset sales were approximately $68 million during the fourth quarter, compared to approximately $56 million in the third quarter of 2013, and approximately $545 million in the fourth quarter of 2012, which included the completion of a bulk asset sale in December of 2012. 

Capital Ratios

• Tier 1 Common Equity ratio was 9.93% at December 31, 2013, unchanged from September 30, 2013.
• Tier 1 Capital ratio was 10.54% at December 31, 2013, compared to 10.55% at September 30, 2013.
• Total Risk Based Capital ratio was 13.00% at December 31, 2013, compared to 13.04% at September 30, 2013.
• Tier 1 Leverage ratio was 9.13% at December 31, 2013, compared to 8.96% at September 30, 2013.
• Tangible Common Equity ratio was 10.68% at December 31, 2013, compared to 10.61% at September 30, 2013.

Stelling concluded, "Our team’s 125^th anniversary celebration during the fourth quarter was an appropriate way to close out a successful year defined by several important achievements, including upgrades from three rating agencies, two successful capital raises, and the redemption of our TARP obligation.  Entering 2014, our capital position is strong, our customers remain our central focus, and our lending engine is gaining good traction. While expense management continues to be a major focus for our company, with additional reductions of approximately $30 million planned for 2014, we are also making strategic investments in talent, technology, and marketing that will improve our customers’ experience and support future growth. ”