Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter and year ended December 31, 2017.

Net income available to common shareholders for the fourth quarter 2017 was $27.0 million or $0.23 per diluted share as compared to $95.4 million or $0.78 per diluted share for the third quarter 2017 and $66.0 million or $0.54 per diluted share for the fourth quarter 2016. Fourth quarter 2017 results include a $23.2 million loss on early extinguishment of debt, as well as a $47.2 million charge related to Federal tax reform.¹ Adjusted earnings per diluted share for the fourth quarter 2017 was $0.72, a 10.7% increase from the third quarter 2017 and a 32.4% increase from the fourth quarter 2016.

2017 Highlights

• Net income available to common shareholders for 2017 was $265.2 million or $2.17 per diluted share as compared to $236.5 million or $1.89 per diluted share for 2016. Diluted EPS grew 15.0% for 2017 compared to 2016.
  • Adjusted earnings per diluted share for 2017 was $2.53 as compared to $1.98 for 2016, an increase of 27.7%.
• Return on average assets for 2017 was 0.89%, an increase of 5 basis points from 2016.
  • Adjusted return on average assets for 2017 was 1.04%, an increase of 16 basis points from 2016.
• Return on average common equity for 2017 was 9.32%, an increase of 91 basis points from 2016.
  • Adjusted return on average common equity for 2017 was 10.86%, an increase of 204 basis points from 2016.
• Total average loans for the year grew $1.28 billion or 5.5% as compared to 2016.
  • Total loans ended the year at $24.79 billion, a $931.1 million or 3.9% increase from 2016.
• Total average deposits grew $1.49 billion or 6.3% as compared to 2016.
• Efficiency ratio of 59.95% improved 479 basis points from 2016.
  • Adjusted efficiency ratio of 59.87% improved 280 basis points from 2016.
• Non-performing loans of $115.6 million at December 31, 2017, declined 24.7% from December 31, 2016, and the non-performing loan ratio declined 17 basis points from December 31, 2016, to 0.47% at December 31, 2017.
• Returned $244.5 million to common shareholders during 2017 through $175.1 million in common share repurchases and $69.4 million in common stock dividends.
• Common Equity Tier 1 ratio was 9.99% at December 31, 2017, compared to 9.96% at December 31, 2016.
• Completed the Cabela’s transaction effective September 25, 2017.
• Completed the transition to a single-bank operating environment and began transitioning to a single brand — Synovus — across all markets.

“2017 was another outstanding year for Synovus, with strong financial and operating results,” said Kessel Stelling, Synovus chairman and CEO. “We achieved a number of long-term goals, including double-digit earnings-per-share growth, 1-plus percent adjusted ROA, and an efficiency ratio below 60 percent. The year was highlighted by our ranking as the country’s most reputable bank by Reputation Institute and American Banker, successful completion of the Cabela’s transaction, and implementation of a single-bank operating environment. We are pleased to begin 2018 by announcing a 67 percent increase in our common dividend, and our team is energized as we intensify our focus on improving the customer experience and complete the transition to a unified Synovus brand.”

Fourth Quarter Financial Results

Balance Sheet

• Total loans ended the quarter at $24.79 billion, up $300.1 million or 4.9% annualized from the previous quarter and up $931.1 million or 3.9% as compared to the fourth quarter 2016.
  • Commercial and industrial loans grew by $297.7 million or 10.1% annualized from the previous quarter and $479.8 million or 4.2% as compared to the fourth quarter 2016.
  • Consumer loans grew by $296.3 million or 21.2% annualized from the previous quarter and $889.4 million or 17.9% as compared to the fourth quarter 2016.
  • Commercial real estate loans declined by $292.8 million or 16.1% annualized from the previous quarter and $438.8 million or 6.0% as compared to the fourth quarter 2016.
• Total average deposits for the quarter were $26.29 billion, up $999.1 million or 15.7% annualized from the previous quarter and up $1.62 billion or 6.6% as compared to the fourth quarter 2016.
  • Average core transaction accounts² grew by $188.6 million or 4.0% annualized from the previous quarter and $1.02 billion or 5.7% as compared to the fourth quarter 2016.

Core Performance

• Total revenues were $339.1 million compared to $398.0 million the previous quarter and $307.5 million for the fourth quarter 2016.
  • Total adjusted revenues were $339.2 million, up $7.9 million or 2.4% from the previous quarter and up 12.1% from the fourth quarter 2016.
• Net interest income was $269.7 million, up $7.1 million or 2.7% from the previous quarter and up 15.5% from the fourth quarter 2016.
• Net interest margin was 3.65%, up 2 basis points from the previous quarter. Yield on earning assets was 4.15%, up 4 basis points from the previous quarter, and the effective cost of funds was 0.50%, up 2 basis points from the previous quarter.
• Total non-interest income was $69.4 million, down $66.1 million from the previous quarter and down $4.7 million from the fourth quarter 2016.
  • Third quarter 2017 non-interest income included the $75.0 million Cabela’s transaction fee, partially offset by $8.0 million in investment securities losses. Fourth quarter 2016 non-interest income included investment securities gains of $5.9 million.
• Adjusted non-interest income was $69.3 million, an increase of $835 thousand or 1.2% from the previous quarter and up 0.9% as compared to the fourth quarter 2016.
  • Core banking fees³ were $33.0 million, down $121 thousand or 0.4% from the previous quarter and down 6.9% from the fourth quarter 2016.
  • Fiduciary and asset management fees, brokerage revenue, and insurance revenues were $21.8 million, up $599 thousand or 2.8% from the previous quarter and 7.1% as compared to the fourth quarter 2016.
  • Mortgage banking income was $5.6 million, up $42 thousand or 0.7% from the previous quarter and up 2.6% as compared to the fourth quarter 2016.
• Total non-interest expense was $226.5 million, up $20.9 million or 10.2% from the previous quarter and up 17.2% as compared to the fourth quarter 2016.
  • Fourth quarter 2017 total non-interest expense includes a $23.2 million loss from the redemption of $300 million senior debt. Third quarter 2017 included other real estate and other impairment charges totaling $8.8 million.
  • Efficiency ratio for the fourth quarter 2017 was 66.77% as compared to 50.62% in the previous quarter and 63.98% in the fourth quarter 2016.

• Adjusted non-interest expense was $201.1 million, up $7.0 million or 3.6% from the previous quarter and up 7.6% as compared to the fourth quarter 2016.
  • The sequential quarter increase includes a $4.5 million increase in advertising, a one-time $1 thousand cash award to non-bonus plan participants totaling $3.3 million, and asset impairment charges on held for sale assets of $2.5 million.
  • Adjusted efficiency ratio for the fourth quarter 2017 was 59.29% as compared to 58.59% in the previous quarter and 61.81% in the fourth quarter 2016.

Credit Quality

• Non-performing loans were $115.6 million at December 31, 2017, up $17.7 million or 18.1% from the previous quarter and down $37.8 million or 24.7% from December 31, 2016. The non-performing loan ratio was 0.47% at December 31, 2017, as compared to 0.40% at the end of the previous quarter and 0.64% at December 31, 2016.
• Total non-performing assets were $130.6 million at December 31, 2017, down $8.0 million or 5.8% from the previous quarter and down $45.1 million or 25.7% from December 31, 2016. The non-performing asset ratio was 0.53% at December 31, 2017, as compared to 0.57% at the end of the previous quarter and 0.74% at December 31, 2016.
• Net charge-offs were $9.0 million in the fourth quarter 2017, down $29.1 million or 76.4% from $38.1 million in the previous quarter. The annualized net charge-off ratio was 0.15% in the fourth quarter as compared to 0.62% in the previous quarter.
  • Third quarter 2017 net charge-offs included $34.2 million related to loans transferred to held-for-sale.
• Total delinquencies (consisting of loans 30 or more days past due and still accruing) declined to 0.21% of total loans at December 31, 2017, as compared to 0.35% the previous quarter and 0.27% at December 31, 2016.

Capital Ratios

• Common Equity Tier 1 ratio was 9.99% at December 31, 2017, compared to 10.06% at September 30, 2017.
• Tier 1 Capital ratio was 10.38% at December 31, 2017, compared to 10.43% at September 30, 2017.
• Total Risk Based Capital ratio was 12.23% at December 31, 2017, compared to 12.30% at September 30, 2017.
• Tier 1 Leverage ratio was 9.19% at December 31, 2017, compared to 9.34% at September 30, 2017.
• Tangible Common Equity ratio was 8.88% at December 31, 2017, unchanged from September 30, 2017.

Capital Management

• During the fourth quarter, the Company repurchased $39.2 million in common stock as part of the $200 million share repurchase program authorized in the fourth quarter 2016. Share repurchases in 2017 totaled $175.1 million and resulted in a reduction of 4.0 million shares, a 3.3% share count reduction from December 31, 2016.
• Additionally, the Board of Directors authorized a new share repurchase program of up to $150 million of the Company’s common stock to be executed during 2018.
• The Board of Directors also approved a 67% increase in the Company’s quarterly common stock dividend from $0.15 to $0.25 per share, effective with the quarterly dividend payable in April 2018.

Fourth Quarter Earnings Conference Call

Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on January 23, 2018. 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 $31 billion in assets. Synovus provides commercial and retail banking, investment, and mortgage services through 250 branches in Georgia, Alabama, South Carolina, Florida, and Tennessee. Synovus Bank, a wholly owned subsidiary of Synovus, was recognized as the “Most Reputable Bank” by American Banker and the Reputation Institute in 2017. Synovus is on the web at synovus.com, on Twitter @synovus, and on LinkedIn at http://linkedin.com/company/synovus.

¹ Certain components related to Federal tax reform impact are considered reasonable estimates or provisional amounts as defined by SEC Staff Accounting Bulletin No. 118. These amounts could be adjusted during the measurement period ending December 31, 2018.

² Consist of non-interest bearing, NOW/Savings, and money market deposits excluding SCMs.

³ Include service charges on deposit accounts, bankcard fees, letter of credit fees, ATM fee income, line of credit non-usage fees, gains from sales of government guaranteed loans, and miscellaneous other service charges.