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EX-99.3 - EX-99.3 - SYNOVUS FINANCIAL CORPsynovus3q20earningsdeck_.htm
EX-99.2 - EX-99.2 - SYNOVUS FINANCIAL CORPsnv093020208kex992fili.htm
8-K - 8-K - SYNOVUS FINANCIAL CORPsyn-20201020.htm

Exhibit 99.1
synovusa041.jpg
Media Contact
Investor Contact
Lee Underwood
Kevin Brown
Media Relations
Investor Relations
(706) 644-0528(706) 644-0948
Synovus Announces Earnings for the Third Quarter 2020
Diluted Earnings per Share of $0.56 vs. $0.83 in 3Q19
Adjusted Diluted Earnings per Share of $0.89 vs. $0.97 in 3Q19

COLUMBUS, Ga., October 20, 2020 - Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter ended September 30, 2020.

Third Quarter 2020 Highlights
Diluted EPS of $0.56; adjusted diluted EPS of $0.89.
Non-cash goodwill impairment charge of $44.9 million, or $0.30 per share, driven by lower rate forecast impact to mortgage reporting unit.
Period-end loan decline of $364.5 million or 1% sequentially; net increase of approximately $245 million excluding the impact of Paycheck Protection Program (PPP) loan payoffs and asset dispositions.
As of September 30, slightly less than 1% of loans were receiving a principal and interest deferral, down from 15% in May.
Core transaction deposits (non-interest bearing, NOW/savings, and money market deposits excluding public and brokered funds) increased $1.56 billion or 5% sequentially.
Total deposit costs of 0.39% down 14 bps from the second quarter due to pricing diligence and product remixing.
Net interest income of $377.0 million was stable with the second quarter; net interest margin of 3.10% vs. 3.13% in 2Q20.
Non-interest revenue declined $59.1 million sequentially and increased $25.7 million compared to prior year; investment losses of $1.3 million compared to gains of $78.1 million in the second quarter.
Adjusted non-interest revenue increased $20.3 million sequentially due primarily to higher net mortgage revenue and core banking fees.
Non-interest expense increased $32.5 million sequentially and $40.3 million compared to prior year.
Adjusted non-interest expense declined $7.7 million sequentially due primarily to lower employment expense.
Provision for credit losses of $43.4 million; allowance for credit losses coverage ratio (to loans) of 1.68%, or 1.80% excluding PPP loans.
Credit quality metrics remain relatively stable, with the non-performing loan ratio and net charge-off ratio of 0.43% and 0.29%, respectively.
Preliminary CET1 and Total Risk Based Capital ratios improved to 9.30% and 13.16%, respectively.







Third Quarter Summary
ReportedAdjusted
(dollars in thousands)3Q202Q203Q193Q202Q203Q19
Net income available to common shareholders$83,283 $84,901 $127,435 $131,364 $34,015 $149,732 
Diluted earnings per share0.56 0.57 0.83 0.89 0.23 0.97 
Total loans39,549,847 39,914,297 36,417,826 N/AN/AN/A
Total deposits44,665,904 44,194,580 37,433,070 N/AN/AN/A
Total revenues 492,357 550,911 491,676 493,647 472,795 494,213 
Return on avg assets0.69 %0.71 %1.14 %1.05 %0.32 %1.33 %
Return on avg common equity7.28 7.48 11.36 11.48 3.00 13.35 
Return on avg tangible common equity8.46 8.69 13.19 13.24 3.60 15.46 
Net interest margin3.10 3.13 3.69 3.08 3.11 3.42 
Efficiency ratio64.31 51.58 56.20 53.91 57.91 51.71 
NCO ratio0.29 0.24 0.22 N/AN/AN/A
NPA ratio0.49 0.44 0.42 N/AN/AN/A

“The third quarter reflected strong operating performance, highlighted by growth in core transaction deposits of $1.6 billion and adjusted fee income growth of $20 million, as well as disciplined expense management, all contributing to improved profitability,” said Kessel D. Stelling, Synovus Chairman and CEO. “We continued to strengthen our balance sheet, growing total risk-based capital by 46 basis points to 13.16 percent, the highest level since 2014. The responsiveness of team members and their unwavering support of customers — especially those managing through this challenging credit cycle — demonstrates the effectiveness of our local relationship delivery model and our ability to execute even in the face of uncertainty. These strengths, along with an improving economy, contributed to a solid third quarter and position us well for the fourth quarter and coming year.”


Balance Sheet
Loans*
(dollars in millions)3Q202Q20Linked Quarter ChangeLinked Quarter % Change3Q19Year/Year ChangeYear/Year % Change
Commercial & industrial$20,014.2 $19,938.3 $75.9 — %$16,418.3 $3,595.8 22 %
Commercial real estate10,965.9 10,827.5 138.3 10,313.0 652.9 
Consumer8,668.8 9,246.7 (577.9)(6)9,709.2 (1,040.4)(11)
Unearned income(99.0)(98.2)(0.8)1(22.7)(76.3)337 
Total loans$39,549.8 $39,914.3 $(364.5)(1)%$36,417.8 $3,132.0 %


*Amounts may not total due to rounding

Total loans ended the quarter at $39.55 billion, down $364.5 million or 1% sequentially.
Commercial and industrial (C&I) loans sequential growth of $75.9 million.
PPP loan payoffs of approximately $77 million in the third quarter.
C&I line utilization of 40% compared to 41% in the prior quarter.
Consumer loans decreased by $577.9 million sequentially, primarily as a result of approximately $467 million in strategic dispositions of out-of-footprint mortgages, student loans, and GreenSky loans.





Deposits*
(dollars in millions)3Q202Q20Linked Quarter ChangeLinked Quarter % Change3Q19Year/Year ChangeYear/Year % Change
Non-interest-bearing DDA$12,129.8 $11,830.7 $299.1 %$8,970.2 $3,159.6 35 %
Interest-bearing DDA5,291.1 5,057.2 233.9 4,714.8 576.3 12 
Money market12,441.3 11,457.2 984.1 9,212.1 3,229.2 35 
Savings1,126.0 1,080.1 45.9 897.3 228.7 25 
Public funds5,791.9 5,347.4 444.6 3,795.3 1,996.6 53 
Time deposits3,976.5 5,131.7 (1,155.2)(23)6,647.8 (2,671.3)(40)
Brokered deposits3,909.3 4,290.3 (381.0)(9)3,195.5 713.8 22 
Total deposits$44,665.9 $44,194.6 $471.3 %$37,433.1 $7,232.8 19 %


*Amounts may not total due to rounding

Total deposits ended the quarter at $44.67 billion, up $471.3 million or 1% sequentially.
Core transaction deposits increased $1.56 billion or 5% sequentially.
Broad-based growth in all categories including MMA, DDA, NOW, and savings deposits offset the $1.16 billion strategic decline in time deposits and $381.0 million decline in brokered deposits.
3Q20 total deposit costs of 39 bps declined by 14 bps from 2Q20.

Income Statement Summary**
(in thousands, except per share data)3Q202Q20Linked Quarter ChangeLinked Quarter % Change3Q19Year/Year ChangeYear/Year % Change
Net interest income$376,990 $376,566 $424 — %$402,097 $(25,107)(6)%
Non-interest revenue114,411 173,484 (59,073)(34)88,760 25,651 29 
Non-interest expense316,655 284,141 32,514 11 276,310 40,345 15 
Provision for credit losses43,383 141,851 (98,468)(69)27,562 15,821 57
Income before taxes$131,363 $124,058 $7,305 %$186,985 $(55,622)(30)%
Income tax expense39,789 30,866 8,923 29 51,259 (11,470)(22)
Preferred stock dividends8,291 8,291 — — 8,291 — — 
Net income available to common shareholders$83,283 $84,901 $(1,618)(2)%$127,435 $(44,152)(35)%
Weighted average common shares outstanding, diluted147,976 147,733 243 — %154,043 (6,067)(4)%
Diluted earnings per share$0.56 $0.57 $(0.01)(2)$0.83 $(0.26)(32)
Adjusted diluted earnings per share0.89 0.23 0.66 286 0.97 (0.08)(8.7)
**    Amounts may not total due to rounding

Core Performance

Total revenues were $492.4 million in the third quarter, down $58.6 million sequentially.
Net interest income of $377.0 million was stable from the second quarter, benefiting from favorable trends in deposit pricing and remixing.
PPP fee accretion of $11.9 million, up $2.7 million from the second quarter.
Net interest margin was 3.10%, down 3 bps from the prior quarter.



Non-interest revenue decreased $59.1 million, or 34% sequentially, and increased $25.7 million, or 29% year-over-year. The sequential decrease was largely attributable to $69.4 million of securities gains as a result of repositioning the investment portfolio in the second quarter.
Adjusted non-interest revenue increased $20.3 million, or 21% sequentially, and $24.4 million, or 27% year-over-year. Net mortgage revenue increased $7.7 million and core banking fees increased $4.9 million sequentially.
Non-interest expense increased $32.5 million, or 11% sequentially. Adjusted non-interest expense decreased $7.7 million, or 3% sequentially.
Non-cash goodwill impairment charge of $44.9 million driven by lower rate forecast impact to mortgage reporting unit.
Employment expense decreased $4.6 million primarily as a result of lower commissions, lower headcount, and reduced COVID-related staffing expenses.
Provision for credit losses of $43.4 million; allowance for credit losses coverage ratio (to loans) of 1.68%, or 1.80% excluding PPP loans.
Tax expense was $39.8 million, an increase of $8.9 million driven by higher taxable pre-tax income.
Year-to-date effective tax rate of 24.95% (impacted by non-deductible goodwill impairment).

Capital Ratios
3Q202Q203Q19
Common equity Tier 1 capital (CET1) ratio9.30 %
*
8.90 %8.96 %
Tier 1 capital ratio10.58 
*
10.15 10.27 
Total risk-based capital ratio13.16 
*
12.70 12.30 
Tier 1 leverage ratio8.49 
*
8.38 9.02 
Tangible common equity ratio7.67 7.41 8.04 
* Ratios are preliminary.

Capital

CET1 ratio improved 40 bps during the quarter to 9.30% primarily due to earnings and settlement of balance sheet activities completed in the second quarter.
Total risk-based capital of 13.16% is the highest since 2014.

Third Quarter Earnings Conference Call
Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on October 20, 2020. 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.

Synovus Financial Corp. is a financial services company based in Columbus, Georgia, with approximately $53 billion in assets. Synovus provides commercial and retail banking, investment, and mortgage services through 288 branches in Alabama, Florida, Georgia, South Carolina, and Tennessee. Synovus Bank, a wholly owned subsidiary of Synovus, has been recognized as one of the country's “Most Reputable Banks” by American Banker and the Reputation Institute. Synovus is on the web at synovus.com, and on Twitter, Facebook, LinkedIn, and Instagram.



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, and subject to the protections of, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements other than statements of historical fact are forward-looking statements. You can identify these forward-looking statements through Synovus’ use of words such as “believes,” “anticipates,” “expects,” “may,” “will,” “assumes,” “should,” “predicts,” “could,” “would,” “intends,” “targets,” “estimates,” “projects,” “plans,” “potential” and other similar words and expressions of the future or otherwise regarding the outlook for Synovus’ future business and financial performance and/or the performance of the banking industry and economy in general. These forward-looking statements include, among others, our expectations regarding our future operating and financial performance; our expectations regarding net interest income and net interest margin; expectations on our growth strategy, expense and revenue initiatives, capital management, balance sheet management, and future profitability; expectations on credit quality and performance; and the assumptions underlying our expectations. Prospective investors are cautioned that any such forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties which may cause the actual results, performance or achievements of Synovus to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are based on the information known to, and current beliefs and expectations of, Synovus’ management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. A number of factors could cause actual results to differ materially from those contemplated by the forward-looking statements in this press release. Many of these factors are beyond Synovus’ ability to control or predict.

These forward-looking statements are based upon information presently known to Synovus’ management and are inherently subjective, uncertain and subject to change due to any number of risks and uncertainties, including, without limitation, the risks and uncertainties related to the impact of the COVID-19 pandemic on Synovus' assets, business, liquidity, financial condition, prospects and results of operations, and the risks and other factors set forth in Synovus’ filings with the Securities and Exchange Commission, including its Annual Report on Form 10-K for the year ended December 31, 2019, under the captions “Cautionary Notice Regarding Forward-Looking Statements” and “Risk Factors” and in Synovus’ 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 and speak only as of the date that they are made. We do not assume any obligation to update any forward-looking statements as a result of new information, future developments or otherwise, except as otherwise may be required by law.





Non-GAAP Financial Measures

The measures entitled adjusted non-interest revenue; adjusted non-interest expense; adjusted total revenues; adjusted tangible efficiency ratio; adjusted net income available to common shareholders; adjusted earnings per diluted share; adjusted return on average assets; adjusted return on average common equity; return on average tangible common equity; adjusted return on average tangible common equity; and tangible common equity ratio are not measures recognized under GAAP and therefore are considered non-GAAP financial measures. The most comparable GAAP measures to these measures are total non-interest revenue; total non-interest expense; total revenues; efficiency ratio-FTE; net income available to common shareholders; earnings per diluted common share; return on average assets; return on average common equity; and the ratio of total shareholders' equity to total assets, respectively.

Management believes that these non-GAAP financial measures provide meaningful additional information about Synovus to assist management and investors in evaluating Synovus’ operating results, financial strength, the performance of its business, and the strength of its capital position. However, these non-GAAP financial measures have inherent limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of operating results or capital position as reported under GAAP. The non-GAAP financial measures should be considered as additional views of the way our financial measures are affected by significant items and other factors, and since they are not required to be uniformly applied, they may not be comparable to other similarly titled measures at other companies. Adjusted total revenues and adjusted non-interest revenue are measures used by management to evaluate total revenues and non-interest revenue exclusive of net investment securities gains (losses) and gains on sales and changes in the fair value of private equity investments, net. Adjusted non-interest expense and the adjusted tangible efficiency ratio are measures utilized by management to measure the success of expense management initiatives focused on reducing recurring controllable operating costs. Adjusted net income available to common shareholders, adjusted earnings per diluted share, adjusted return on average assets, and adjusted return on average common equity are measures used by management to evaluate operating results exclusive of items that are not indicative of ongoing operations and impact period-to-period comparisons. Return on average tangible common equity and adjusted return on average tangible common equity are measures used by management to compare Synovus’ performance with other financial institutions because it calculates the return available to common shareholders without the impact of intangible assets and their related amortization, thereby allowing management to evaluate the performance of the business consistently. The tangible common equity ratio is used by management to assess the strength of our capital position. The computations of these measures are set forth in the tables below.

Reconciliation of Non-GAAP Financial Measures
(dollars in thousands)3Q202Q203Q19
Adjusted non-interest revenue
Total non-interest revenue$114,411 $173,484 $88,760 
Add/subtract: Investment securities losses (gains), net1,550 (69,409)3,731 
Subtract: Gain on sale and fair value increase of private equity investments(260)(8,707)(1,194)
Adjusted non-interest revenue$115,701 $95,368 $91,297 
Adjusted non-interest expense
Total non-interest expense$316,655 $284,141 $276,310 
Subtract: Earnout liability adjustments— (4,908)(10,457)
Subtract: Goodwill impairment(44,877)— — 
Subtract: Merger-related expense— — (353)
Subtract/add: Restructuring charges, net(2,882)(2,822)66 
Subtract: Valuation adjustment to Visa derivative— — (2,500)
Subtract: Loss on early extinguishment of debt, net
(154)— (4,592)
Adjusted non-interest expense
$268,742 $276,411 $258,474 



Reconciliation of Non-GAAP Financial Measures, continued
(dollars in thousands)3Q202Q203Q19
Adjusted total revenues and adjusted tangible efficiency ratio
Adjusted non-interest expense
$268,742 $276,411 $258,474 
Subtract: Amortization of intangibles(2,640)(2,640)(2,901)
Adjusted tangible non-interest expense
$266,102 $273,771 $255,573 
Net interest income
$376,990 $376,566 $402,097 
Add: Tax equivalent adjustment
956 861 819 
Add: Total non-interest revenue
114,411 173,484 88,760 
Total FTE revenues
492,357 550,911 491,676 
Add/subtract: Investment securities losses (gains), net1,550 (69,409)3,731 
Subtract: Gain on sale and fair value increase of private equity investments(260)(8,707)(1,194)
Adjusted total revenues
$493,647 $472,795 $494,213 
Efficiency ratio-FTE
64.31 %51.58 %56.20 %
Adjusted tangible efficiency ratio
53.91 57.91 51.71 

Adjusted return on average assets
Net income$91,574 $93,192 $135,726 
Add: Income tax expense, net related to State Tax Reform— — 4,402 
Add: Earnout liability adjustments— 4,908 10,457 
Add: Goodwill impairment 44,877 — — 
Add: Merger-related expense— — 353 
Add/subtract: Restructuring charges, net2,882 2,822 (66)
Add: Valuation adjustment to Visa derivative— — 2,500 
Add: Loss on early extinguishment of debt, net
154 — 4,592 
Add/subtract: Investment securities losses (gains), net
1,550 (69,409)3,731 
Subtract: Gain on sale and fair value increase of private equity investments(260)(8,707)(1,194)
Subtract/add: Tax effect of adjustments(1,122)19,500 (2,478)
Adjusted net income$139,655 $42,306 $158,023 
Net income annualized$364,305 $374,816 $538,478 
Adjusted net income annualized$555,584 $170,154 $626,939 
Total average assets$53,138,334 $52,853,685 $47,211,026 
Return on average assets0.69 %0.71 %1.14 %
Adjusted return on average assets1.05 0.32 1.33 



Reconciliation of Non-GAAP Financial Measures, continued
(dollars in thousands)3Q202Q203Q19
Adjusted net income available to common shareholders and adjusted net income per common share, diluted
Net income available to common shareholders$83,283 $84,901 $127,435 
Add: Income tax expense, net related to State Tax Reform— — 4,402 
Add: Earnout liability adjustments— 4,908 10,457 
Add: Goodwill impairment 44,877 — — 
Add: Merger-related expense— — 353 
Add/subtract: Restructuring charges, net2,882 2,822 (66)
Add: Valuation adjustment to Visa derivative — 2,500 
Add: Loss on early extinguishment of debt, net154 — 4,592 
Add/subtract: Investment securities losses (gains), net1,550 (69,409)3,731 
Subtract: Gain on sale and fair value increase of private equity investments(260)(8,707)(1,194)
Subtract/add: Tax effect of adjustments(1,122)19,500 (2,478)
Adjusted net income available to common shareholders$131,364 $34,015 $149,732 
Weighted average common shares outstanding, diluted147,976 147,733 154,043 
Net income per common share, diluted$0.56 $0.57 $0.83 
Adjusted net income per common share, diluted0.89 0.23 0.97 




Reconciliation of Non-GAAP Financial Measures, continued
(dollars in thousands)
3Q202Q203Q19
Adjusted return on average common equity, return on average tangible common equity, and adjusted return on average tangible common equity
Net income available to common shareholders$83,283 $84,901 $127,435 
Add: Income tax expense, net related to State Tax Reform— — 4,402 
Add: Earnout liability adjustments— 4,908 10,457 
Add: Goodwill impairment44,877 — — 
Add: Merger-related expense— — 353 
Add/subtract: Restructuring charges, net2,882 2,822 (66)
Add: Valuation adjustment to Visa derivative— — 2,500 
Add: Loss on early extinguishment of debt, net154 — 4,592 
Add/subtract: Investment securities losses (gains), net1,550 (69,409)3,731 
Subtract: Gain on sale and fair value increase of private equity investments(260)(8,707)(1,194)
Subtract/add: Tax effect of adjustments
(1,122)19,500 (2,478)
Adjusted net income available to common shareholders
$131,364 $34,015 $149,732 
Adjusted net income available to common shareholders annualized
$522,600 $136,808 $594,045 
Add: Amortization of intangibles
7,782 7,868 8,632 
Adjusted net income available to common shareholders excluding amortization of intangibles annualized
$530,382 $144,676 $602,677 
Net income available to common shareholders annualized
$331,322 $341,470 $505,585 
Add: Amortization of intangibles7,782 7,868 8,632 
Net income available to common shareholders excluding amortization of intangibles annualized$339,104 $349,338 $514,217 
Total average shareholders' equity less preferred stock$4,553,159 $4,567,254 $4,450,301 
Subtract: Goodwill(497,267)(497,267)(492,320)
Subtract: Other intangible assets, net(49,075)(51,667)(60,278)
Total average tangible shareholders' equity less preferred stock$4,006,817 $4,018,320 $3,897,703 
Return on average common equity7.28 %7.48 %11.36 %
Adjusted return on average common equity11.48 3.00 13.35 
Return on average tangible common equity8.46 8.69 13.19 
Adjusted return on average tangible common equity13.24 3.60 15.46 




Reconciliation of Non-GAAP Financial Measures, continued
(dollars in thousands)September 30, 2020June 30,
2020
September 30, 2019
Tangible common equity ratio
Total assets
$53,040,538 $54,121,989 $47,661,182 
Subtract: Goodwill
(452,390)(497,267)(487,865)
Subtract: Other intangible assets, net
(47,752)(50,392)(58,572)
Tangible assets
$52,540,396 $53,574,330 $47,114,745 
Total shareholders’ equity
$5,064,542 $5,052,968 $4,868,838 
Subtract: Goodwill
(452,390)(497,267)(487,865)
Subtract: Other intangible assets, net
(47,752)(50,392)(58,572)
Subtract: Preferred Stock, no par value
(537,145)(537,145)(536,550)
Tangible common equity
$4,027,255 $3,968,164 $3,785,851 
Total shareholders’ equity to total assets ratio
9.55 %9.34 %10.22 %
Tangible common equity ratio
7.67 7.41 8.04