Synovus Financial Corp. today reported financial results for the quarter ended June 30, 2013.

Second Quarter Results

• Pre-tax income increased to $72.9 million for the second quarter of 2013, up 56.6% from $46.6 million in the first quarter of 2013, and up 95.2% from $37.3 million in the second quarter of 2012.
• Net income available to common shareholders increased to $30.7 million for the second quarter of 2013, compared to $14.8 million for the first quarter of 2013 and $24.8 million for the second quarter of 2012. Diluted net income per common share for the second quarter of 2013 was $0.03 compared to $0.02 for the first quarter of 2013 and $0.03 for the second quarter of 2012.
  • The second quarter of 2013 results included income tax expense of $27.4 million compared to $17.0 million in the first quarter of 2013 and a tax benefit of $2.1 million in the second quarter of 2012.
• Credit costs declined substantially to $24.0 million for the second quarter of 2013, compared to $49.3 million for the first quarter of 2013 and $70.3 million for the second quarter of 2012.
• Total loans grew $240.4 million sequentially or 5.0% annualized.

“Our second quarter results reflect continued, steady progress,” said Kessel D. Stelling, Chairman and CEO of Synovus.  “During the quarter, net income available to common shareholders increased to $31 million, credit costs again declined significantly to $24 million –  down 51%  from the previous quarter – and net charge-offs declined by 48% compared to last quarter. While continuing to operate in a challenging environment, we grew loans $240 million sequentially, or 5% annualized.”

Core Performance

Pre-tax, pre-credit costs income was $98.0 million for the second quarter of 2013, down $2.7 million from $100.7 million for the first quarter of 2013.

• Net interest income was $202.1 million for the second quarter of 2013, up $2.3 million from $199.8 million in the previous quarter.
• The net interest margin was 3.39%, down four basis points from the first quarter of 2013, due to a decline in the yield on earning assets of seven basis points which was partially offset by a decline in the effective cost of funds of three basis points.
• Total non-interest income was $65.1 million for the second quarter of 2013, up $0.4 million, compared to $64.7 million for the first quarter of 2013.
  • Bankcard fees increased $0.8 million.
  • Mortgage banking income increased $0.4 million.
  • Fiduciary and asset management fees increased $0.1 million.
  • Service charges on deposit accounts declined $0.3 million.
  • Brokerage revenue declined $0.6 million.
  • Securities gains were $1.4 million in the quarter.
• Adjusted non-interest expense (excludes Visa indemnification charges, restructuring charges and other credit costs) was $167.8 million, up $4.0 million from $163.8 million for the first quarter of 2013, due primarily to higher professional fees.

Balance Sheet Fundamentals

• Total reported loans ended the quarter at $19.61 billion, a $240.4 million increase from the first quarter of 2013.
  • Commercial and industrial loans grew by $184.6 million from the first quarter of 2013, or 8.2% annualized.
  • Retail loans grew by $78.5 million from the first quarter of 2013, or 7.9% annualized.
  • Commercial real estate loans declined by $20.4 million from the first quarter of 2013.
• Total deposits ended the quarter at $20.71 billion, up $149.5 million from the previous quarter due primarily to increases in non-interest bearing demand deposits and NOW account balances.
• Core deposits ended the quarter at $19.37 billion, up $144.1 million compared to the first quarter of 2013. Core deposits, excluding time deposits, increased $249.1 million compared to the previous quarter.

Credit Trends

• Total credit costs were $24.0 million in the second quarter of 2013, down from $49.3 million in the first quarter of 2013 and $70.3 million in the second quarter of 2012.
• Net charge-offs were $30.0 million in the second quarter of 2013, down from $57.3 million in the first quarter of 2013 and $98.7 million in the second quarter of 2012. The annualized net charge-off ratio was 0.61% in the second quarter, down from 1.18% in the previous quarter and 1.99% in the second quarter of 2012.
• Non-performing loan inflows were $66.9 million in the second quarter of 2013, down from $83.9 million in the first quarter of 2013 and $124.3 million in the second quarter of 2012.
• Non-performing loans, excluding loans held for sale, were $483.5 million at June 30, 2013, down $29.8 million from the previous quarter, and down $271.7 million or 36.0% from the second quarter of 2012. The non-performing loan ratio was 2.47% at June 30, 2013, down from 2.65% at the end of the previous quarter and 3.84% at June 30, 2012.
• Total non-performing assets were $635.2 million at June 30, 2013, down $42.4 million from the previous quarter, and down $326.2 million or 33.9% from the second quarter of 2012. The non-performing asset ratio was 3.21% at June 30, 2013, compared to 3.47% at the end of the previous quarter and 4.83% at June 30, 2012.
• Total delinquencies (consisting of loans 30 or more days past due and still accruing) declined to 0.41% of total loans at June 30, 2013, compared to 0.46% at March 31, 2013, and 0.47% at June 30, 2012. Total loans past due 90 days or more and still accruing declined to 0.02% at June 30, 2013, compared to 0.03% at March 31, 2013, and 0.03% at June 30, 2012.
• Distressed asset sales were approximately $67 million during the second quarter, compared to approximately $61 million in the first quarter of 2013, and approximately $128 million in the second quarter of 2012.

Capital Ratios

• Tier 1 Capital ratio was 13.49% at June 30, 2013, compared to 13.50% at March 31, 2013.
• Tier 1 Common Equity ratio was 8.97% at June 30, 2013, compared to 8.93% at March 31, 2013.
• Total Risk Based Capital ratio was 16.00% at June 30, 2013, compared to 16.45% at March 31, 2013.
• Tier 1 Leverage ratio was 11.33% at June 30, 2013, compared to 11.27% at March 31, 2013.
• Tangible Common Equity ratio was 9.71% at June 30, 2013, compared to 9.89% at March 31, 2013.

Stelling concluded, “We are pleased with the growth in loans and deposits, the strong improvement in credit trends, and the growth in profitability– all accomplishments that continue to signal our increasing strength.  We have entered the second half of 2013 with even greater confidence in our company's future.  Our enhanced financial performance, attractive Southeastern footprint, and passion for service to customers and communities provide the right formula for long-term success in this competitive banking environment.”