Synovus Financial Corp. today reported financial results for the quarter ended March 31, 2021.

First Quarter 2021 Highlights

• Net income available to common shareholders of $178.8 million or $1.19 per diluted share, up $0.23 sequentially and $0.99 compared to prior year.

  • Adjusted diluted EPS of $1.21, up $0.13 sequentially and $1.00 compared to prior year.

• Period-end loans increased $552.1 million or 1% sequentially.

  • Paycheck Protection Program (PPP) loans increased $170.1 million and third-party consumer loan balances, including a prime auto purchase of $476 million, increased $503.2 million sequentially.

• Core transaction deposits (non-interest bearing, NOW/savings, and money market deposits excluding public and brokered funds) increased $2.05 billion or 6% sequentially.

• Total deposit costs of 0.22% down 6 bps sequentially due to ongoing repricing and product remixing.

• Net interest income of $373.9 million declined $12.1 million sequentially as lower deposit costs and deployment of excess liquidity partially offset a lower day count, continued fixed-rate asset repricing, and accelerated prepayment activity.

  • Net interest margin of 3.04% vs 3.12% sequentially.

• Non-interest revenue declined $3.8 million sequentially and increased $7.1 million compared to prior year.

  • Adjusted non-interest revenue increased $0.6 million sequentially as broad-based growth helped offset normalization of net mortgage revenue.

• Non-interest expense declined $35.4 million sequentially and $9.1 million compared to prior year.

  • Adjusted non-interest expense declined $8.5 million sequentially led by reduction in professional fees, partially offset by seasonal increases in payroll taxes and benefits.

• Reversal of provision for credit losses of $18.6 million, primarily from a more favorable economic outlook.

  • Allowance for credit losses coverage ratio (to loans) of 1.58%, or 1.69% excluding PPP loans.

• Credit quality metrics remain relatively stable with a net charge-off ratio of 0.21%; non-performing assets, non-performing loans, and past dues remained near prior cycle lows.

• Preliminary CET1 ratio increased 8 bps sequentially to 9.74%, with strong core earnings helping offset a $1.20 billion increase in risk-weighted assets.

• In April, executed share repurchases of approximately $10 million as part of the $200 million authorization for 2021.

First Quarter Summary

“Our results in the first quarter of 2021 reflect strong financial performance as we continue to position the company for long-term growth,” said Kessel Stelling, Synovus Chairman and CEO. “Solid earnings drove capital growth, core transaction deposits grew $2 billion from the previous quarter, credit quality remained strong, and our efficiency initiatives enabled additional investments in improving the customer experience. We continued to support our customers and communities through the Paycheck Protection Program in the first quarter, including approximately $1 billion in phase two fundings. As the economic recovery accelerates and Kevin Blair steps in as CEO, the energy and optimism among our team are high, and I have never been more confident in our future.”

Kevin Blair, Synovus President and COO, said, “I’m honored for the opportunity to lead this exceptional team, and to build upon our strong foundation in driving growth as we deliver differentiated, value-adding solutions and advice to attract and build relationships with our clients.”

Balance Sheet

• Total loans ended the quarter at $38.81 billion, up $552.1 million or 1% sequentially.

• Commercial and industrial (C&I) loan growth of $173.7 million sequentially.

  • Total PPP loans increased by $170.1 million.

    • Phase 1 forgiveness of $711 million, or $687 million net of unearned, and Phase 2 fundings of $894 million, or $857 million net of unearned.

  • C&I line utilization remains near historic lows ~40%.

• CRE loans increased $208.2 million as the recovery in commercial real estate continues.

• Consumer loans increased $170.2 million sequentially, with a prime auto portfolio purchase of $476 million partially offset by declines in consumer mortgages and HELOCs of $214.3 million and $105.4 million, respectively.

• Total deposits ended the quarter at $47.37 billion, up $677.4 million or 1% sequentially.

• Core transaction deposits increased $2.05 billion or 6% sequentially.

  • Broad-based growth in all categories including MMA, DDA, NOW, and savings supported declines in higher cost deposits.

• Total deposit costs declined 6 bps to 0.22% sequentially.

Core Performance

• Net interest income of $373.9 million in the first quarter, down $12.1 million sequentially as lower deposit costs and deployment of excess liquidity helped offset declines from continued fixed-rate repricing and accelerated prepayment activity.

  • Net PPP fee accretion of $24.9 million, up $0.1 million sequentially.

  • Net interest margin was 3.04%, down 8 bps sequentially.

• Non-interest revenue decreased $3.8 million, or 3% sequentially, and increased $7.1 million, or 7% compared to prior year. Adjusted non-interest revenue increased $0.6 million, or 1% sequentially, and $13.6 million, or 14% compared to prior year.

  • Broad-based growth including $3.2 million in capital markets income helped offset normalization of net mortgage revenue, which declined $2.1 million sequentially.

• Non-interest expense decreased $35.4 million, or 12% sequentially. Adjusted non-interest expense decreased $8.5 million, or 3% sequentially.

  • Seasonal increases in employment-related expenses such as payroll taxes and benefits more than offset by lower headcount and day count as well as lower professional fees associated with Synovus Forward and COVID/PPP.

• Reversal of provision for credit losses of $18.6 million; allowance for credit losses coverage ratio (to loans) of 1.58%, or 1.69% excluding PPP loans.

• Tax expense was $49.2 million, an increase of $12.4 million driven by higher taxable income.

  • Effective tax rate of 20.81%.