Synovus Financial Corp. reported financial results for the quarter ended June 30, 2016.

Second Quarter Highlights

• Net income available to common shareholders for the second quarter 2016 was $57.9 million or $0.46 per diluted share as compared to $50.0 million, or $0.39 per diluted share for the previous quarter and $53.2 million, or $0.40 per diluted share for the second quarter 2015.Total loans grew $302.7 million or 5.3% annualized from the previous quarter and $1.57 billion or 7.3% as compared to the second quarter 2015.

  • Adjusted diluted earnings per share of $0.49 grew 16.9% from $0.42 for the second quarter 2015.

• Total average deposits grew $397.8 million or 6.9% annualized from the previous quarter and $1.14 billion or 5.1% as compared to the second quarter 2015.

• Total revenues of $289.3 million grew $8.1 million or 2.9% from the previous quarter and 7.0% from the second quarter 2015.

• Credit quality metrics improved with the NPL ratio declining to 0.67% from 0.78% in the previous quarter and 0.81% in the second quarter 2015.

• The company continued to execute on the $300 million repurchase program announced in October 2015, acquiring $60.5 million of common stock in the second quarter.

  • From October 2015 through July 18, 2016, the company has repurchased $236.2 million of common stock, reducing total share count by 8.0 million.

“Our second quarter results demonstrate continued solid performance, including strong revenue growth and further diversification of our loan portfolio with increases in both C&I and consumer lending,” said Kessel D. Stelling, Synovus Chairman and CEO. “We were also pleased during the second quarter to be named by American Banker and the Reputation Institute as one of the nation’s most reputable banks. This recognition further demonstrates our team’s commitment to exceptional service, and further validates that our relationship-centered model is a highly-valued competitive differentiator. We were especially pleased with the number one ranking by non-customers, which we believe signals a strong opportunity to gain market share.”

Balance Sheet

• Total loans ended the quarter at $23.06 billion, up $302.7 million or 5.3% annualized from the previous quarter and up $1.57 billion or 7.3% as compared to the second quarter 2015.

  • Retail loans grew by $261.0 million from the previous quarter, or 24.1% annualized.

  • Commercial and industrial loans grew by $146.0 million from the previous quarter, or 5.4% annualized.

  • Commercial real estate loans declined $105.9 million from the previous quarter, or 5.6% annualized.

• Total average deposits for the quarter were $23.61 billion, and grew by $397.8 million or 6.9% annualized from the previous quarter and $1.14 billion or 5.1% as compared to the second quarter 2015.

  • Average core deposits for the quarter grew by $156.0 million or 2.8% annualized from the previous quarter and $1.36 billion or 6.5% as compared to the second quarter 2015.

  • Average core deposits, excluding state, county, and municipal deposits, grew by $316.7 million or 6.5% annualized from the previous quarter and $1.36 billion or 7.3% as compared to the second quarter 2015.

Core Performance

• Total revenues were $289.3 million for the second quarter 2016, up $8.1 million or 2.9% from the previous quarter and up 7.0% as compared to the second quarter 2015.

• Net interest income was $221.4 million for the second quarter 2016, up $3.3 million or 1.5% from the previous quarter and up 8.7% as compared to the second quarter 2015.

• Net interest margin was 3.27%, unchanged from the previous quarter. Yield on earning assets was 3.73% and the effective cost of funds was 0.46% for the second quarter 2016, both unchanged from the previous quarter.

• Total non-interest income was $67.9 million, up $4.7 million or 7.5% compared to the previous quarter and down 1.4% as compared to the second quarter 2015.Total non-interest expense for the second quarter of 2016 was $188.6 million, up $377 thousand from the previous quarter and up $10.8 million or 6.1% as compared to the second quarter of 2015.

  • Adjusted non-interest income increased $4.8 million or 7.6% compared to the previous quarter and 1.6% as compared to the second quarter 2015.

  • Core banking fees were $33.8 million, up $488 thousand or 1.5% from the previous quarter, primarily driven by higher service charges on deposits, which were $530 thousand.

  • Financial Management Services revenues, consisting primarily of fiduciary and asset management fees and brokerage revenue, increased $1.5 million, or 8.1% from the previous quarter.

  • Mortgage banking income increased $457 thousand, or 8.3% from the previous quarter.

  • Other non-interest income increased $2.2 million from the previous quarter, primarily driven by a $900 thousand net gain from private equity investments as compared to a $390 thousand net loss in the previous quarter.

• Adjusted non-interest expense for the second quarter 2016 was $182.4 million, up $3.1 million or 1.7% from the previous quarter and up $9.4 million or 5.4% as compared to the second quarter 2015.Adjusted efficiency ratio for the second quarter was 61.54% as compared to 61.92% the previous quarter and 61.62% in the second quarter of 2015.

  • Employment expense of $97.1 million decreased $4.3 million or 4.2% from the previous quarter, reflecting seasonal decline in payroll taxes.

  • Advertising expense of $7.4 million increased $4.9 million from the previous quarter as a result of resuming brand awareness activities.

  • Foreclosed real estate expense of $4.6 million increased $1.9 million from the previous quarter.

Credit Quality

Improvement in credit quality continued.

• Non-performing loans were $154.1 million at June 30, 2016, down $24.1 million or 13.5% from the previous quarter, and down $19.6 million or 11.3% from June 30, 2015. The non-performing loan ratio was 0.67% at June 30, 2016, as compared to 0.78% at the end of the previous quarter and 0.81% at June 30, 2015.

• Total non-performing assets were $187.4 million at June 30, 2016, down $29.3 million or 13.5% from the previous quarter, and down $52.7 million or 22.0% from June 30, 2015. The non-performing asset ratio was 0.81% at June 30, 2016, as compared to 0.95% at the end of the previous quarter and 1.11% at June 30, 2015.

• Net charge-offs were $6.1 million in the second quarter 2016, down $1.2 million or 16.6% from $7.4 million in the previous quarter. The annualized net charge-off ratio was 0.11% in the second quarter as compared to 0.13% in the previous quarter.

• Total delinquencies (consisting of loans 30 or more days past due and still accruing) remain low at 0.24% of total loans at June 30, 2016 as compared to 0.28% the previous quarter and 0.24% at June 30, 2015.

Capital Ratios

Capital ratios remained strong and include the impact of common stock repurchases completed through June 30, 2016 and phase-out of sub-debt maturing in the second quarter 2017.

• Common Equity Tier 1 ratio was 10.02% at June 30, 2016 compared to 10.04% at March 31, 2016.

• Tier 1 Capital ratio was 10.06% at June 30, 2016 compared to 10.04% at March 31, 2016.

• Total Risk Based Capital ratio was 12.05% at June 30, 2016 compared to 12.25% at March 31, 2016.

• Tier 1 Leverage ratio was 9.10% at June 30, 2016 compared to 9.15% at March 31, 2016.

• Tangible Common Equity ratio was 9.52% at June 30, 2016 compared to 9.62% at March 31, 2016.

Second Quarter Earnings Conference Call

Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on July 19, 2016. 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/events. The replay will be archived for 12 months and will be available 30-45 minutes after the call.