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8-K - FORM 8-K - SYNOVUS FINANCIAL CORP | g21370e8vk.htm |
Exhibit 99.1
For Immediate Release
Contact: | Patrick A. Reynolds Director of Investor Relations (706) 649-4973 |
Synovus Reiterates Capital Adequacy Under SCAP Stress Testing
November 20, 2009 Synovus Financial Corp. (NYSE: SNV) issued a statement today in response to
inquiries regarding the companys capital position and ability to absorb additional losses and
still meet applicable regulatory minimum capital requirements. As stated in its recently filed
quarterly report on Form 10-Q for the quarter ended September 30, 2009, Synovus would have been
unable to demonstrate that it would meet the minimum Tier 1 threshold of common equity under the
More Adverse scenario under the Supervisory Capital Assessment Program (SCAP) as of June 30,
2009. The Tier 1 common equity capital threshold is 4% of risk weighted assets under the SCAP
framework. The attached SCAP analysis gives effect to Synovus $600 million public offering of
common stock completed on September 22, 2009. This analysis illustrates that, under the SCAP
methodology, Synovus exceeds the capital threshold, with a Tier 1 common equity ratio of 6.4% at
December 31, 2010.
Synovus reaffirmed its capital position through a media release on November 13 and, today, further
reiterates its belief in its capital adequacy under the guidelines of the SCAP stress testing.
Richard Anthony, Synovus Chairman and CEO stated, While we do not believe our credit losses will
reach the SCAP More Adverse scenario levels, which would imply credit losses of almost $3.3
billion between January 1, 2009 and December 31, 2010, we believe that we have the capital and
earnings capacity that would be needed under that scenario. We are pleased with our current core
deposit trends as we continue to increase the core deposit funding percentage of our loan
portfolio. Also, we continue to have improvements in the mix of core deposits as we focus on the
growth of transaction accounts rather than higher cost time deposits.
About Synovus
Synovus is a financial services holding company with approximately $35 billion in assets based in
Columbus, Georgia. Synovus provides commercial and retail banking, as well as investment services,
to customers through 30 banks, 328 offices, and 463 ATMs in Georgia, Alabama, South Carolina,
Florida and Tennessee. The company focuses on its unique decentralized customer delivery model,
position in high-growth Southeast markets and commitment to being a great place to work to ensure
unparalleled customer experiences. See Synovus on the Web at www.synovus.com.
Forward Looking Statements
This press release and certain of our other filings with the Securities and Exchange Commission
contain statements that constitute forward-looking statements within the meaning of the
Securities Act of 1933 and the Securities Exchange Act of 1934 as amended by the Private Securities
Litigation Reform Act of 1995. These forward-looking statements include, among others, our
statements regarding our belief in the adequacy of our capital and earnings capacity under the SCAP
stress testing methodology; our expectations that credit losses will not reach the levels implied
under the SCAP More Adverse scenario levels; our current expectations regarding core deposit
trends and improvement in the mix of core deposits; and the assumptions underlying our
expectations. Prospective investors are cautioned that any such forward-looking statements are not
guarantees of future performance and involve risks and uncertainties, and that actual results may
differ materially from those contemplated by such forward-looking statements. A number of important
factors could cause actual results to differ materially from those contemplated by the forward-
looking statements in this press release and our filings with the Securities and Exchange
Commission. Many of these factors are beyond Synovus ability to control or predict. Factors that
could cause actual results to differ materially from those contemplated in this press release and
our filings with the Securities and Exchange Commission include the risk that our actual losses are
higher than expected and exceed the SCAP More Adverse scenario; the risk that we are unable to
reverse our total deferred tax valuation allowance on or prior to December 31, 2010; and the
factors set forth in Synovus filings with the Securities and Exchange Commission, including its
Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. We
believe these forward-looking statements are reasonable; however, undue reliance should not be
placed on any forward-looking statements, which are based on current expectations. We do not assume
any obligation to update any forward-looking statements as a result of new information, future
developments or otherwise.
SCAP More Adverse Scenario
Hypothetical year-end 2010 Capital Position
(dollars in millions)
Hypothetical year-end 2010 Capital Position
(dollars in millions)
Beginning Tier I capital 9/30/2009 |
$ | 2,974 | 10.5 | % | ||||||||
Cumulative credit losses 2009 2010(1) |
(3,252 | ) | ||||||||||
Plus: Credit losses 1Q09-3Q09(2) |
1,438 | |||||||||||
Plus: Excess loan loss reserve above 1.5% |
568 | |||||||||||
Residual credit costs until 2010 |
(1,246 | ) | ||||||||||
Plus: Pre-tax, pre-credit costs income (4Q09 4Q10) |
706 | |||||||||||
Plus: Gain on sale of Visa shares |
52 | |||||||||||
Plus: Sub debt exchange |
22 | |||||||||||
Plus: Adjustment for taxes(3) |
485 | |||||||||||
Less: Preferred and common dividends |
(84 | ) | ||||||||||
Less: Disallowed DTA (10% regulatory capital limitation) |
(188 | ) | ||||||||||
Total capital burn |
(253 | ) | ||||||||||
Ending Tier I capital |
$ | 2,721 | 9.9 | % | ||||||||
Tier I common |
1,773 | 6.4 | % | |||||||||
Total risk based capital |
3,598 | 13.1 | % | |||||||||
TCE/TA (4) |
2,088 | 6.5 | % | |||||||||
Capital surplus 4% Tier 1 common ratio |
$ | 670 | (5) |
(1) | Losses using high end of the range from the more adverse scenario of SCAP applied to Synovus loan portfolio as of 12/31/08 | |
(2) | Consists of net charge-offs of $1,098 million and $340 million of other credit costs | |
(3) | Amount assumes reversal of total deferred tax asset valuation allowance on or prior to December 31, 2010. | |
Reversal of the valuation allowance is subject to considerable judgment. If the total valuation allowance is reversed after December 31, 2010, the Capital Surplus at December 31, 2010 as shown above would be approximately $400 million. | ||
(4) | Non-GAAP financial measure; see Appendix | |
(5) | A 1% increase in capital standards (as a percentage of risk weighted assets) represents a $275 million decrease in the capital surplus. |
Appendix
Use of Non-GAAP Financial Measure
Use of Non-GAAP Financial Measure
This release contains a non-GAAP financial measure determined by methods other than in
accordance with generally accepted accounting principles (GAAP). The non-GAAP financial
measure is the computation of the tangible common equity to tangible assets ratio. The most
comparable GAAP measure to this measure is the ratio of total equity to total assets.
Synovus management uses this non-GAAP financial measure to assess the strength of the
Companys capital position. Synovus believes that this non-GAAP financial measure provides
additional meaningful information about Synovus to assist investors in evaluating Synovus capital
position. This non-GAAP measure should not be considered a substitute for operating results
determined in accordance with GAAP and may not be comparable to other similarly titled measures
at other companies. The following illustrates the method of calculating the non-GAAP financial
measure used in this release:
Hypothetical | ||||
(dollars in millions) | Year-End 2010 | |||
Total assets |
$ | 32,328 | ||
Goodwill |
(39 | ) | ||
Other intangible assets |
(18 | ) | ||
Tangible assets |
$ | 32,271 | ||
Total shareholders equity |
$ | 3,082 | ||
Goodwill |
(39 | ) | ||
Other intangible assets |
(18 | ) | ||
Cumulative perpetual preferred stock |
(937 | ) | ||
Tangible common equity |
$ | 2,088 | ||
Tangible common equity to tangible assets ratio |
6.5 | % |