Synovus Financial Corp. today reported financial results for the quarter ended December 31, 2014.

Net income available to common shareholders for the fourth quarter of 2014 was $50.6 million, or $0.37 per diluted share as compared to $44.2 million, or $0.32 per diluted share for the third quarter of 2014 and $35.8 million, or $0.26 per diluted share for the fourth quarter of 2013.  Adjusted earnings per diluted share for the fourth quarter of 2014 were $0.39, a 5.2% increase from the third quarter of 2014 adjusted earnings per diluted share of $0.37.  
 
“We are pleased with our fourth quarter performance, which contributed to an overall solid 2014,” said Kessel D. Stelling, Synovus Chairman and CEO.  “For the year, net income available to common shareholders was $185 million, a 56.1% increase over 2013.   Loans grew by 5.2%, and we saw continued broad-based improvement in credit quality, especially in the non-performing loan ratio which ended the year at 0.94%.  We continued to maintain strong capital levels throughout 2014, and announced in October our plan to return excess capital to shareholders through a $250 million stock repurchase plan and a 43% increase in the common stock dividend.  As we enter 2015, our focus remains on caring for customers and improving profitability through balance sheet and fee income growth, as well as a continued focus on efficiency.”

2014 Highlights

• Net income available to common shareholders for 2014 was $185.0 million, or $1.33 per diluted share as compared to $118.6 million, or $0.88 per diluted share for 2013. Diluted EPS grew 50.5% for 2014 compared to 2013.
• Total loans ended the year at $21.10 billion, a $1.04 billion or 5.2% increase from 2013.
• Low-cost core deposits1ended the year at $16.72 billion, a $589.0 million or 3.7% increase from 2013.
• Non-performing loans, excluding loans held for sale, of $197.8 million at December 31, 2014 declined 52.5% from December 31, 2013, and the non-performing loan ratio declined 114 basis points from December 31, 2013 to 0.94% at December 31, 2014.
• The net-charge off ratio for 2014 was 0.39%, down 30 basis points from 2013.
• The allowance for loan losses to non-performing loans ratio2 increased to 197.22% at December 31, 2014 compared to 95.43% at December 31, 2013.
• Tier 1 common equity ratio increased 35 basis points from December 31, 2013 to 10.28% at December 31, 2014.

Fourth Quarter 2014 Highlights

Income Statement

Adjusted pre-tax, pre-credit costs income was $99.6 million for the fourth quarter of 2014, a decrease of $3.9 million from $103.5 million for the third quarter of 2014.  The third quarter of 2014 included the benefit from a $3.6 million net insurance recovery for incurred legal fees related to litigation.

• Net interest income was $207.5 million for the fourth quarter of 2014, up $1.2 million from $206.3 million in the previous quarter.
• The net interest margin declined three basis points to 3.34% compared to 3.37% in the third quarter of 2014.  The yield on earning assets was 3.78%, three basis points lower than the third quarter of 2014, and the effective cost of funds remained unchanged at 0.44%.
• Total non-interest income was $64.5 million, up $564 thousand or 0.9% compared to $64.0 million for the third quarter of 2014.
  • Core banking fees3 were $33.0 million, up $208 thousand or 0.6%, driven by a $355 thousand or 4.3% increase in bankcard fees.
  • Financial Management Services revenues, consisting primarily of fiduciary and asset management fees and brokerage revenue, increased $205 thousand or 1.1%, driven by a $483 thousand increase in fiduciary and asset management fees.
  • Mortgage banking income increased $230 thousand or 4.9%.
• Total non-interest expense for the fourth quarter of 2014 was $184.9 million, down $8.9 million from the third quarter of 2014.
• Adjusted non-interest expense for the fourth quarter of 2014 was $172.4 million, up $5.7 million or 3.4% compared to the third quarter of 2014.
  • Professional fees were $8.0 million, up $5.5 million compared to the third quarter of 2014.
    • The fourth quarter of 2014 reflects elevated attorney fees related to the final resolution of one credit.
    • The third quarter of 2014 included the benefit from a $3.6 million net insurance recovery for incurred legal fees related to litigation.
  • Advertising expense was $8.1 million, an increase of $925 thousand compared to the third quarter of 2014.

Balance Sheet

• Total loans grew $509.1 million or 9.8% annualized compared to the third quarter of 2014.
  • Commercial and industrial loans grew by $275.9 million, or 10.9% annualized.
  • Commercial real estate loans grew by $155.9 million or 9.2% annualized.
  • Retail loans grew by $79.2 million, or 8.2% annualized.
• Total average deposits for the quarter were $21.34 billion, up $397.4 million or 7.5% annualized from the previous quarter.
• Average core deposits for the quarter were $19.73 billion, up $289.7 million or 5.9% annualized compared to the third quarter of 2014. 
• Average core deposits, excluding state, county, and municipal deposits, grew by $150.7 million or 3.4% annualized compared to the previous quarter.

Credit Quality

Broad-based improvement in credit quality continued.

• Total credit costs were $16.4 million in the fourth quarter of 2014 compared to $15.7 million in the third quarter of 2014.
• Non-performing loans, excluding loans held for sale, were $197.8 million at December 31, 2014, down $44.6 million or 18.4% from the previous quarter, and down $218.5 million or 52.5% from the fourth quarter of 2013. The non-performing loan ratio was 0.94% at December 31, 2014, down from 1.18% at the end of the previous quarter and 2.08% at December 31, 2013.
• Total non-performing assets were $286.8 million at December 31, 2014, down $37.5 million or 11.6% from the previous quarter, and down $252.8 million or 46.8% from the fourth quarter of 2013. The non-performing asset ratio was 1.35% at December 31, 2014, compared to 1.57% at the end of the previous quarter and 2.67% at December 31, 2013.
• Total delinquencies (consisting of loans 30 or more days past due and still accruing) declined to 0.24% at December 31, 2014 compared to 0.35% at September 30, 2014 and 0.36% at December 31, 2013. Total loans past due 90 days or more and still accruing were 0.02% at December, 31, 2014, unchanged from September 30, 2014 and December 31, 2013.
• Net charge-offs were $16.3 million in the fourth quarter of 2014, up $4.0 million or 32.7% from $12.3 million in the third quarter of 2014.  The annualized net charge-off ratio was 0.31% in the fourth quarter compared to 0.24% in the previous quarter.

Capital Ratios

Capital ratios remained strong and include the impact of common stock repurchases totaling $88.1 million completed during the fourth quarter of 2014.

• Tier 1 Common Equity ratio was 10.28% at December 31, 2014 compared to 10.60% at September 30, 2014.
• Tier 1 Capital ratio was 10.86% at December 31, 2014 compared to 11.19% at September 30, 2014.
• Total Risk Based Capital ratio was 12.75% at December 31, 2014 compared to 13.17% at September 30, 2014.
• Tier 1 Leverage ratio was 9.67% at December 31, 2014 compared to 9.85% at September 30, 2014.
• Tangible Common Equity ratio was 10.69% at December 31, 2014 compared to 11.04% at September 30, 2014.

Fourth Quarter Earnings Conference Call

Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on January 27, 2015.  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 www.synovus.com/webcasts. You may download RealPlayer or Windows Media Player (free download available) prior to accessing the actual call or the replay.  The replay will be archived for 12 months and will be available 30-45 minutes after the call.