Synovus Financial Corp. today reported financial results for the quarter ended March 31, 2015.

First Quarter Highlights

• Net income available to common shareholders for the first quarter 2015 was $51.4 million or $0.38 per diluted share as compared to $50.6 million, or $0.37 per diluted share for the previous quarter and $45.9 million, or $0.33 per diluted share for the first quarter 2014.
• Total average loans grew $254.1 million or 4.9% annualized from the previous quarter and $1.03 billion or 5.1% as compared to the first quarter 2014.
• Average core deposits grew $286.6 million or 5.9% annualized from the previous quarter and $529.8 million or 2.7% as compared to the first quarter 2014. 
• Adjusted pre-tax, pre-credit costs income was $101.0 million for the first quarter 2015, an increase of $1.4 million from $99.6 million for the previous quarter and an increase of $4.5 million or 4.7% as compared to the first quarter 2014.
• The company continued to return capital to shareholders during the quarter, acquiring an additional $59.1 million of common stock. Since October 2014 through April 20, 2015, the company has repurchased $160.0 million of common stock, reducing total share count by 6.0 million or 4.3%.

"Growth in average loans and core deposits, continued improvement in credit quality, and a disciplined focus on expense management contributed to a solid first quarter,” said Kessel D. Stelling, Synovus Chairman and CEO.  “Investments in key talent as well as new and existing business lines continue to pay dividends as evidenced by revenue growth in mortgage banking, brokerage, and SBA lending.  Our senior housing, equipment finance, and medical office specialty lines also experienced significant loan growth during the quarter.  As we move forward, our team remains committed to improving the customer experience and building a more profitable, efficient, and competitive bank.”

Balance Sheet

• Total loans ended the quarter at $21.11 billion, up $8.5 million from the previous quarter and up $947.2 million or 4.7% as compared to the first quarter 2014. 
  • Commercial and industrial loans grew by $33.8 million from the previous quarter and $346.6 million or 3.5% as compared to the first quarter 2014.
  • Commercial real estate loans declined by $13.2 million from the previous quarter and increased by $319.8 million or 4.9% as compared to the first quarter 2014.
    • Residential C&D and land acquisition portfolios declined by $19.4 million.
  • Retail loans declined by $13.4 million from the previous quarter and increased by $281.8 million or 7.7% as compared to the first quarter 2014.
• Total average loans grew $254.1 million or 4.9% annualized from the previous quarter and $1.03 billion or 5.1% as compared to the first quarter 2014.
• Total average deposits for the quarter were $21.62 billion, and grew by $279.0 million or 5.3% annualized from the previous quarter and $889.8 million or 4.3% as compared to the first quarter 2014.
• Average core deposits for the quarter were $20.02 billion, and grew by $286.6 million or 5.9% annualized from the previous quarter and $529.8 million or 2.7% as compared to the first quarter 2014. 
• Average core deposits, excluding state, county, and municipal deposits, grew by $247.1 million or 5.7% annualized from the previous quarter and $670.7 million or 3.9% as compared to the first quarter 2014.
  • Average non-interest bearing demand deposit accounts increased 4.5% annualized from the previous quarter and 10.8% as compared to the first quarter 2014.
  • Average money market deposits increased 10.1% annualized from the previous quarter and 2.9% as compared to the first quarter 2014.

Core Performance

Adjusted pre-tax, pre-credit costs income was $101.0 million for the first quarter 2015, an increase of $1.4 million from $99.6 million for the previous quarter and an increase of $4.5 million or 4.7% as compared to the first quarter 2014. 

• Net interest income was $203.3 million for the first quarter 2015, down $4.2 million from $207.5 million in the previous quarter and up $2.7 million or 1.4% as compared to the first quarter 2014.
• The net interest margin declined six basis points to 3.28% compared to 3.34% in the previous quarter.  The yield on earning assets was 3.73%, five basis points lower than the previous quarter, and the effective cost of funds increased 1 basis point to 0.45%.
• Adjusted non-interest income was $65.1 million, up $580 thousand or 0.9% compared to $64.5 million for the previous quarter and up $2.1 million or 3.3% as compared to the first quarter 2014.
  • Mortgage banking income increased $1.6 million or 32.5% from the previous quarter, driven by an 18.6% increase in production.
  • Financial Management Services revenues, consisting primarily of fiduciary and asset management fees and brokerage revenue, increased $690 thousand or 3.5% from the previous quarter, driven by a $363 thousand or 5.3% increase in brokerage revenue.
  • Core banking fees1 were $31.5 million, down $1.5 million or 4.6% from the previous quarter, driven by seasonality.
  • Gains from the sale of SBA loans of $1.5 million were up $829 thousand from the previous quarter.
• Total non-interest expense for the first quarter 2015 was $178.9 million, down $6.0 million from the previous quarter and down $5.3 million or 2.9% as compared to the first quarter 2014.
• Adjusted non-interest expense for the first quarter 2015 was $167.4 million, down $5.0 million or 2.9% from the previous quarter and flat as compared to the first quarter 2014.
• Employment expense of $96.5 million increased $4.4 million from the previous quarter driven by seasonally higher employment taxes.
• Professional fees of $5.6 million decreased $2.4 million from the previous quarter.
• Advertising expense of $3.4 million decreased $4.7 million from the previous quarter.
• FDIC insurance and other regulatory fees of $7.0 million decreased $1.2 million from the previous quarter.

Credit Quality

Broad-based improvement in credit quality continued.

• Total credit costs were $15.7 million in the first quarter 2015 compared to $16.4 million in the previous quarter.
• Non-performing loans, excluding loans held for sale, were $194.2 million at March 31, 2015, down $3.5 million or 1.8% from the previous quarter, and down $190.1 million or 49.5% from March 31, 2014. The non-performing loan ratio was 0.92% at March 31, 2015, compared to 0.94% at the end of the previous quarter and 1.91% at March 31, 2014.
• Total non-performing assets were $270.1 million at March 31, 2015, down $16.7 million or 5.8% from the previous quarter, and down $228.1 million or 45.8% from March 31, 2014. The non-performing asset ratio was 1.28% at March 31, 2015, compared to 1.35% at the end of the previous quarter and 2.46% at March 31, 2014.
• Total delinquencies (consisting of loans 30 or more days past due and still accruing) remain low at 0.27% of total loans at March 31, 2015 compared to 0.24% the previous quarter and 0.37% at March 31, 2014. Total loans past due 90 days or more and still accruing were 0.02% of total loans at March 31, 2015, unchanged from December 31, 2014 and compared to 0.03% at March 31, 2014.
• Net charge-offs were $12.3 million in the first quarter 2015, down $3.9 million or 24.1% from $16.3 million in the previous quarter.  The annualized net charge-off ratio was 0.23% in the first quarter compared to 0.31% in the previous quarter.

Capital Ratios

Capital ratios remained strong and include the impact of common stock repurchases completed through March 31, 2015.  March 31, 2015 ratios are Basel III transitional, and ratios prior to March 31, 2015 were based on Basel I rules.

• Common Equity Tier 1 ratio was 10.78% at March 31, 2015.
• Tier 1 Capital ratio was 10.78% at March 31, 2015 compared to 10.86% at December 31, 2014.
• Total Risk Based Capital ratio was 12.64% at March 31, 2015 compared to 12.75% at December 31, 2014.
• Tier 1 Leverage ratio was 9.65% at March 31, 2015 compared to 9.67% at December 31, 2014.
• Tangible Common Equity ratio was 10.43% at March 31, 2015 compared to 10.69% at December 31, 2014.

First Quarter Earnings Conference Call

Synovus will host an earnings highlights conference call at 8:30 a.m. EDT on April 21, 2015.  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 www.synovus.com/webcasts. You may download RealPlayer or Windows Media Player (free download available) prior to accessing the actual call or the replay.  The replay will be archived for 12 months and will be available 30-45 minutes after the call.