Synovus Financial Corp. today reported financial results for the quarter and year ended December 31, 2020.

2020 Highlights

• Net income available to common shareholders for 2020 was $340.5 million or $2.30 per diluted share as compared to $540.9 million or $3.47 per diluted share for 2019.

  • Adjusted earnings per diluted share for 2020 were $2.41 as compared to $3.90 for 2019, a decrease of 38%.

• CET1 ratio increased 72 basis points to 9.67%; total risk-based capital ratio of 13.43% the highest since 2014.

• Allowance for Credit Losses (ACL) increased $370.7 million or 105 basis points (to loans) to 1.81% year-over-year, excluding Paycheck Protection Program (PPP) loans.

  • Includes increase of $110.4 million or 30 basis points from the adoption of Current Expected Credit Losses on January 1, 2020.

• Processed and approved nearly $2.9 billion in PPP loans, supporting approximately 19,000 customers.

• Announced Synovus Forward in January, a plan expected to add $100 million pre-tax benefit with a combination of revenue and expense initiatives.

• In December, a CEO transition plan was announced, and Kevin Blair was named to the Board. In April 2021, Chairman and CEO Kessel Stelling will move into the role of Executive Chairman and Kevin Blair will become CEO.

Fourth Quarter 2020 Highlights

• Net income available to common shareholders was $142.1 million or $0.96 per diluted share as compared to $83.3 million or $0.56 in the prior quarter.

  • Adjusted earnings per diluted share of $1.08, up 22% sequentially and 15% year-over-year.

• Period-end loan decline of $1.30 billion or 3% sequentially.

  • Loans declined by $700 million or 2% from the third quarter, excluding PPP forgiveness of $540 million or $516 million, net of unearned fees, and lending partnership balance reductions of $81 million.

• Period-end deposit growth of $2.03 billion or 5% from the third quarter.

  • Core transaction deposits (non-interest bearing, NOW/savings, and money market deposits excluding public and brokered funds) increased $1.77 billion or 6% sequentially.

  • Total deposit costs of 28 basis points declined 11 basis points from the third quarter.

• Net interest income of $385.9 million increased $8.9 million or 2% sequentially.

• Non-interest revenue of $114.8 million stable with the prior quarter and increased $16.8 million year-over-year.

• Non-interest expense of $302.5 million, a decrease of $14.2 million from the third quarter and an increase of $36.4 million from the prior-year quarter.

  • Adjusted non-interest expense of $275.1 million increased $6.4 million sequentially, primarily due to a $4.5 million increase in expenses related to Synovus Forward, PPP, and COVID.

• Credit quality metrics remained relatively stable, with a non-performing loan ratio of 0.39% and non-performing asset ratio of 0.50%; net charge-off ratio of 0.23%.

Fourth Quarter Summary

“In a year marked by extraordinary volatility, we drew on the strength of our relationship-centered model to support our team members, customers, and communities,” said Kessel Stelling, Synovus chairman and CEO. “During 2020, we delivered approximately 19,000 PPP loans totaling $2.9 billion to small business customers throughout the Southeast and grew core transaction deposits $8.6 billion. We also accelerated investments in several technology initiatives that provided more convenience and a better digital experience as customers adapted to this highly virtual environment. And at year end, our higher capital levels, improved liquidity, and strong credit quality further demonstrated the strength and resiliency of our balance sheet in a challenging environment. In the year ahead, we expect our Synovus Forward initiatives to produce additional revenue opportunities, expense savings, and efficiencies that will further strengthen our bank. We continue to move forward with purpose, meeting the very real needs of individuals and businesses, and remain committed to being a source of stability, unity, and value creation for all we serve.”

Balance Sheet

• Total loans ended the quarter at $38.25 billion, down $1.30 billion or 3% sequentially.

• Commercial and industrial (C&I) loans decreased $640.5 million or 3% from the prior quarter.

  • PPP forgiveness of $540 million, or $516 million, net of unearned fees, in the fourth quarter.

  • C&I line utilization remains near historic lows at 40%, down 6% year-over-year.

• Consumer loans decreased by $282.3 million or 3% sequentially.

  • Strategic declines in lending partnership balances of $81 million.

• Commercial real estate loans declined by $395.4 million or 4% from the prior quarter as pay-off and pay-down activity increased during the quarter.

• Total deposits ended the quarter at $46.69 billion up $2.03 billion or 5% sequentially.

  • Core transaction deposits increased $1.77 billion or 6% from the prior quarter.

  • Strong seasonal inflows supported a $968.7 million increase in public funds compared to the third quarter.

• Total deposit costs declined 11 basis points from the third quarter to 28 basis points.

Core Performance

• Total FTE revenues were $501.5 million in the fourth quarter up $9.2 million sequentially.

• Net interest income increased $8.9 million or 2% compared to the prior quarter, primarily due to PPP fee accretion of $24.8 million up $12.9 million from the third quarter.

• Net interest margin was 3.12% up 2 basis points from the previous quarter.

• Non-interest revenue of $114.8 million was stable with the third quarter and increased $16.8 million or 17% compared to fourth quarter 2019.

  • The fourth quarter included broad-based growth with increases in service charges, fiduciary and asset management, card fees, and brokerage offset by declines in capital markets and mortgage revenues.

• Non-interest expense decreased $14.2 million or 4% sequentially. Adjusted non-interest expense increased $6.4 million or 2% from the prior quarter.

  • Adjusted non-interest expense includes a $4.5 million increase in fees related to Synovus Forward, PPP, and COVID.

• Provision for credit losses was $11.1 million a $32.3 million decrease from the previous quarter.

  • The decrease includes net charge-offs of $22.1 million. Provision for credit losses other than net charge-offs reflects lower loan balances and a more favorable economic outlook.

• The effective tax rate was 19.6% for the quarter.

Capital

• CET1 ratio increased 37 basis points sequentially to 9.67%, above the higher end of the 9.0-9.5% operating range.

• Total risk-based capital ratio of 13.43% increased 27 basis points from the prior quarter and includes subordinated debt optimization efforts completed in the fourth quarter.

• The Board of Directors has authorized share repurchases of up to $200 million in 2021.