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Synovus Reports Results for Second Quarter of 2011
 
Improved Performance Driven by Lower Credit Costs

Columbus, Ga., July 28, 2011 - Synovus Financial Corp. (NYSE: SNV) today reported a net loss attributable to common shareholders of $53.5 million for the second quarter of 2011, a 42.9% improvement from the first quarter of 2011 and a 77.9% improvement from the second quarter of 2010. The net loss per common share for the second quarter of 2011 was $0.07 compared to $0.12 for the first quarter of 2011. The second quarter of 2011 results include $3.1 million in restructuring charges compared to $24.3 million in the previous quarter. Excluding these charges, the net loss per common share was $0.06 in the second quarter of 2011, compared to $0.09 in the previous quarter.

Second Quarter Business Results

Credit Trends

  • Total credit costs declined for the eighth consecutive quarter to $157.9 million for the second quarter of 2011, from $177.1 million in the first quarter of 2011.
  • New non-performing loan inflows were $231.1 million in the second quarter of 2011, down 24.6% from $306.5 million in the first quarter of 2011.
  • Distressed asset sales were approximately $195 million during the second quarter, compared to approximately $192 million in the first quarter of 2011.
  • Total non-performing assets were $1.22 billion at June 30, 2011, down $56.8 million from the previous quarter, and down $353.8 million from the second quarter of 2010. The non-performing asset ratio was 5.85% at June 30, 2011, compared to 5.97% at the end of the previous quarter.
  • Net charge-offs were $167.2 million in the quarter, relatively unchanged from the first quarter of 2011, and down 61.4% from the second quarter of 2010.
  • Potential problem commercial loans (potential problem loans consist of substandard accruing loans but exclude substandard loans 90 days past due and still accruing and accruing troubled debt restructurings which are reported separately) declined for the third consecutive quarter to $1.20 billion, a 35.9% decrease from the peak of $1.87 billion in the third quarter of 2010.
  • Total delinquencies (consist of loans 30 or more days past due and still accruing) were 0.97% of total loans at June 30, 2011, compared to 0.96% at March 31, 2011.
  • The allowance for loan losses was $631.4 million at June 30, 2011, or 3.08% of total loans, compared to $678.4 million or 3.23% at March 31, 2011.

Core Performance

  • Pre-tax, pre-credit costs income was $117.3 million for the second quarter of 2011, compared to $122.0 million in the first quarter of 2011.
    • Net interest income declined $6.5 million due primarily to lower loan balances.
    • Net interest margin was 3.51%, down one basis point from the first quarter of 2011 and up 17 basis points from the second quarter of 2010.
      • Yield on earning assets was down 5 basis points, while the effective cost of funds was down 4 basis points.
      • Excluding the carrying cost of non-performing loans and interest charge-offs, the net interest margin was unchanged from the previous quarter.
    • Non-interest income was up $3.7 million or 5.7% from the previous quarter.
      • Mortgage revenues were up $3.1 million from the prior quarter.
      • Service charges on deposits were down $1.1 million from the prior quarter.
      • Bankcard fees were up $1.5 million versus the prior quarter.
    • Total reported non-interest expense was $222.4 million for the quarter compared to $239.7 million in the first quarter of 2011.
      • Fundamental non-interest expense (excludes gain/loss on curtailment of post-retirement defined benefit plan, restructuring charges, and credit costs) increased $1.9 million from the first quarter of 2011, due primarily to higher FDIC insurance expense and professional fees, while employment expenses declined $1.4 million primarily due to lower headcount.
      • Efficiency initiatives are on track to achieve $75 million in expense savings in 2011.
        • Total headcount is 5,400 at June 30, 2011, down 709 or 11.6% from December 31, 2010.
        • 31 branches were closed during the second quarter of 2011 with minimal impact on total revenue and deposits.

Balance Sheet Fundamentals

  • Net loan pay-downs moderated during the second quarter, and were approximately $168 million for the quarter, compared to approximately $202 million for the first quarter of 2011. Net loan pay-downs exclude the impact of loan sales, transfers to loans held-for-sale, charge-offs, and foreclosures. The reported sequential quarter decrease in loans outstanding was $492.6 million.
  • Total deposits ended the quarter at $22.88 billion, a decline of $330.9 million from the previous quarter.
    • The decline was driven primarily by a planned reduction of national market brokered deposits, down $288.0 million, and a continued wind-down of the Shared Deposits program, down $130.0 million.
    • Total core deposits, excluding time deposits, were up $114.6 million.
    • Non-interest bearing deposits were up $178.7 million or 15.3% (annualized) from the first quarter of 2011, and up $626.7 million or 14.7% from the second quarter of 2010.
    • Non-interest bearing deposits represent approximately 24% of total core deposits at June 30, 2011, up from approximately 19% at June 30, 2010.
    • The effective cost of core deposits (includes non-interest bearing deposits) continued to improve, with an effective cost of 67 basis points for the second quarter of 2011, compared to 72 basis points for the previous quarter and 102 basis points in the second quarter of 2010.

"Significant progress in credit resolution and the continued implementation of efficiency initiatives were the primary drivers of our improved performance," said Kessel D. Stelling, President and CEO of Synovus. "Total credit costs, provision for loan losses, non-performing loan inflows and potential problem commercial loans all declined during the quarter, and we are on track to achieve our projected $75 million in expense savings in 2011."

Stelling continued, "While credit and efficiency are still key, intense focus on the customer experience is critical to our long-term success. We continue to work toward making it easier to do business with our company, including the time required to open an account or to obtain a loan. During the quarter, we added significant talent with very specific product expertise, including our recently announced Senior Housing Group. We are building meaningful pipelines with early success in loan fundings from our corporate banking team."

Stelling concluded, "Credit improvement, a continued focus on efficiency, and balance sheet stabilization will drive our return to sustainable profitability, which we continue to believe will occur during 2011. This assumption is based on an economic environment that is generally consistent with the first half of 2011."

Synovus will host an earnings highlights conference call at 8:00 a.m. EST on July 28, 2011. The earnings call will be accompanied by a slide presentation. Shareholders and other interested parties can access the slide presentation and listen to the conference call via simultaneous Internet broadcast at www.synovus.com by clicking on the "Live Webcast" icon. RealPlayer or Windows Media Player can be downloaded 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.

About Synovus

Synovus Financial Corp. is a financial services company with over $28 billion in assets based in Columbus, Georgia. Synovus Financial Corp. provides commercial and retail banking, investment and mortgage services to customers in Georgia, Alabama, South Carolina, Florida and Tennessee. See Synovus Financial Corp. on the web at www.synovus.com.

 
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Contact
Patrick A. Reynolds
Title: Director of Investor Relations
Phone: (706) 649-4973