Introduction
To better understand financial trends and performance, Synovus
analyzes certain financial data in two separate components: banking
operations and transaction processing services. Banking operations
represents 55.3% and 73.4% of 1999's consolidated revenues and
net income, respectively. Transaction processing services consists
of majority-owned Total System Services, Inc. (TSYS) and wholly-owned
TSYS Total Debt Management, Inc. (TDM). TSYS provides bankcard
data processing and related services to banks and other institutions
generally under long-term processing contracts. TDM is a debt
collection and bankruptcy management business. TSYS represented
96.4% and 93.7% of 1999's total transaction processing revenues
and net income, respectively.
The following discussion reviews the results
of operations and assesses the financial condition of Synovus.
This discussion should be read in conjunction with the preceding
consolidated financial statements and accompanying notes as
well as the selected financial data.
Summary
1999 was another exceptional year for Synovus. Total revenues
for 1999 were $1.252 billion, a 20.8% increase over 1998. Net
income for 1999 was $225.3 million, an increase of 14.7% over
1998 net income of $196.5 million. Diluted net income per share
increased to $0.80 in 1999, up 12.2% over $0.71 per share in
1998. Return on assets was 1.97% in 1999, compared to 2.00%
in 1998. Return on equity was 19.33% in 1999, compared to 19.39%
in 1998.
Two major growth areas - fee income from both
TSYS and banking operations; and core commercial lending - were
the primary contributors to 1999's financial performance. Synovus'
operating results for 1999 also reflect the impact of expense
control management and continued strong credit quality, as exhibited
by the credit quality indicators.
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Banking operations' revenues increased by 13.2%
over 1998, while net income increased 11.9% over 1998. Return
on assets for the year was 1.49%, and return on equity was 18.04%,
compared to 1.55% and 18.16%, respectively, for 1998.
Transaction processing services revenues for
1999 were $568.6 million, a 33.0% increase over 1998. Net income
for 1999 was $73.2 million, up 23.5% from $59.2 million in 1998.
The increase in revenues and net income was due primarily to
the addition of various retail credit card portfolios to TSYS'
customer base in 1999, net internal growth of existing customers,
as well as portfolio acquisitions by existing customers.
Synovus' total assets ended the year at $12.5
billion, a growth rate of 16.1% for 1999, resulting primarily
from net loan growth of $1.451 billion, or 19.4%. This asset
growth was partially funded by a $642.7 million, or 7.3%, increase
in total deposits. Additional funding was provided by long-term
debt (primarily in the form of Federal Home Loan Bank advances)
and short-term fundings (consisting mostly of federal funds
purchased) which increased by a total of $944.9 million, or
48.8%, over 1998. The increase in loans reflects the continued
strength of the regional economy and our competitive advantage
in the local markets we serve. Shareholders' equity grew 10.3%
to $1.2 billion, which represented 9.78% of total assets.
During 1998, Synovus completed three bank acquisitions
which were accounted for as poolings of interests; however,
financial information preceding the dates of acquisition have
not been restated since the effect was not material. Net income
for the years ended December 31, 1998 and 1997 would have been
increased by $2.6 million and $7.2 million, respectively, if
the previous periods had been restated for these acquisitions.
Additionally, total assets, net loans, and deposits at December
31, 1997 would have increased by $589.9 million, $345.4 million,
and $540.9 million, respectively, if prior periods had been
restated.
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