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Average total assets for 1999 were $11.4 billion, or 16.4% over 1998 average total assets of $9.8 billion. Average earning assets for 1999 were $10.2 billion, which represented 89.4% of average total assets. An $890.2 million, or 10.9%, increase in average deposits for 1999 provided the primary funding for a $1.2 billion, or 17.6%, increase in average net loans. Average shareholders' equity for 1999 was $1.2 billion.
For 1998, average total assets increased $760.7 million, or 8.4%. Average earning assets for 1998 were $8.8 billion, which represented 89.5% of average total assets. For more detailed information on Synovus' average balance sheets for 1999, 1998, and 1997, refer to Table Two.
Net interest income (interest income less interest expense) is a major component of Synovus' net income, representing the earnings of Synovus' primary business of gathering funds from deposit sources and investing those funds in loans and securities. Synovus' long term objective is to manage those assets and liabilities to provide the largest possible amount of income while balancing interest rate, credit, liquidity, and capital risks.
Net interest income is presented in this discussion on a tax-equivalent basis, so that the income from assets exempt from federal income taxes is adjusted based on a statutory marginal federal tax rate of 35% in all years (See Table One). The net interest margin is defined as taxable-equivalent net interest income divided by average total interest earning assets and provides an indication of the efficiency of the earnings from balance sheet activities. The net interest margin is affected by changes in the spread between interest earning asset yields and interest bearing liability costs (spread rate), and by the percentage of interest earning assets funded by non-interest bearing liabilities.
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Net interest income for 1999 was a record $513.3 million, up $58.2 million, or 12.8%, from 1998. On a taxable-equivalent basis, net interest income was $518.6 million, up $58.9 million, or 12.8%, over 1998. During 1999, average interest earning assets increased $1.4 billion, or 16.3%, with the majority of this increase attributable to loan growth. Increases in the level of federal funds purchased and time, money market, and interest-bearing demand deposits were the main contributors to the $1.3 billion, or 18%, growth in average interest bearing liabilities.
The 5.07% net interest margin achieved in 1999 is a 16-basis point decrease over the 5.23% reported for 1998. This decrease is the result of lower loan and investment yields partially offset by lower cost of funds. A 35-basis point decrease in the average prime rate for 1999 was the primary cause of the decreased loan yields. Another influence impacting the net interest margin is the percentage of earning assets funded by non-interest bearing liabilities. Funding for Synovus' earning assets comes from interest bearing liabilities, non-interest bearing liabilities, and shareholders' equity. Earning assets funded by non-interest bearing liabilities continue to provide a positive impact on the net interest margin.
During 1998, net interest income and tax-equivalent net interest income increased 6.8%. Average interest earning assets grew 7.9% while interest bearing liabilities increased 6.5%. The net interest margin of 5.23% is a 5-basis-point decrease over the 5.28% reported in 1997. This decrease is the result of lower loan and investment yields partially offset by a lower cost of funds.
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