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Synovus Reports Results for First Quarter of 2011
 
Losses Narrow as Credit Costs Improve Significantly

Columbus, Ga., April 26, 2011 - Synovus Financial Corp. (NYSE: SNV) today reported a net loss attributable to common shareholders of $93.7 million for the first quarter of 2011, a 48% improvement from the fourth quarter of 2010 and a 59% improvement from the first quarter of 2010. The net loss per common share for the first quarter of 2011 was $0.12 compared to $0.23 for the fourth quarter of 2010. The first quarter 2011 results include $24.3 million in restructuring charges. Excluding these charges, the net loss attributable to common shareholders was $69.3 million or $0.09 per common share. Synovus" overall credit trends continued to track in a positive direction, and its capital position remains strong.

First Quarter Business Results

Credit Trends

  • Total credit costs declined to $177 million for the first quarter of 2011, from $282 million in the fourth quarter of 2010. This is the lowest level since the second quarter of 2008.
  • Net charge-offs were $167 million in the quarter compared to $385 million in the fourth quarter of 2010, the lowest level since the third quarter of 2008.
  • Distressed asset sales were approximately $192 million during the first quarter, with an average realization rate of 45% of unpaid principal balance, compared to $573 million in the fourth quarter of 2010 and a realization rate of 46%.
  • Total non-performing assets were $1.275 billion at March 31, 2011, down slightly from the previous quarter. The non-performing asset ratio was 5.97% at March 31, 2011, compared to 5.83% at the end of the previous quarter.
  • New non-performing loan inflows were $307 million in the first quarter of 2011, compared to $295 million in the fourth quarter of 2010, in line with management expectations.
  • Potential problem commercial loans (potential problem loans consist of substandard accruing loans but exclude loans 90 days past due and troubled debt restructurings which are reported separately) declined for the second consecutive quarter to $1.28 billion from a peak of $1.87 billion in the third quarter of 2010, a 31% decrease.
  • Loans past due over 90 days and still accruing ended the first quarter at 0.05% of total loans, down from 0.08% at the end of the previous quarter. Total delinquencies (consist of loans 30 or more days past due and still accruing) were 0.96% of total loans at March 31, 2011, compared to 0.82% at December 31, 2010.
  • The allowance for loan losses was $678 million at March 31, 2011, or 3.23% of total loans, compared to $704 million or 3.26% at December 31, 2010.

Strong Capital Position

As of March 31, 2011, capital ratios were as follows:

  • Tier 1 Capital Ratio - 12.79%
  • Tier 1 Common Equity Ratio - 8.47%
  • Tangible Common Equity to Tangible Assets Ratio - 6.66%
  • Total Risk-based Capital Ratio - 16.33%

Core Performance

  • Pre-tax, pre-credit costs income increased to $122.0 million for the first quarter of 2011, from $117.2 million in the fourth quarter of 2010.
    • The net interest margin expanded 15 basis points to 3.52% benefiting from a continuing decline in funding costs, a lower negative impact of non-performing assets, and a reduction in excess liquidity. Net interest income declined $4.5 million due to lower loan balances and two fewer calendar days.
    • Non-interest income decreased by $15.7 million, due primarily to lower mortgage revenues, NSF fees, and brokerage revenue, which were down $8.5 million, $3.9 million and $2.5 million, respectively, from the fourth quarter of 2010.
    • Total reported non-interest expense was $239.7 million for the quarter. Fundamental non-interest expense decreased $25.0 million from the fourth quarter of 2010, due primarily to lower salaries and other personnel expenses, data processing fees, and professional fees.
    • Total headcount is 5,518 at March 31, 2011, down 591 from December 31, 2010.

Balance Sheet Fundamentals

  • Total loans declined $588 million during the quarter, compared to a $995 million decline during the fourth quarter of 2010, and a $966 million decline a year ago. The lower rate of decline during the quarter was driven by a decrease in loan dispositions and charge-offs. The loan mix continues to improve with the combined commercial and industrial and retail portfolios now representing 62% of the total loan portfolio. The commercial real estate portfolio now represents 38% of the total loan portfolio, down from a peak of 45%.
  • The overall deposit mix continues to improve with noninterest bearing deposits increasing by $400 million over the previous quarter, and growing 8% over the same period last year. Non-interest bearing deposits represent 20% of total deposits at March 31, 2011. The effective cost of core deposits decreased 10 basis points to 72 basis points for the quarter.
  • The number of transaction accounts increased slightly, while total deposits declined $1.29 billion from the prior quarter driven primarily by a continued planned reduction in brokered deposits, a continued wind-down of the Shared Deposit program, and an expected decline in collateralized deposits.

"During the quarter, we continued to execute on credit resolution and efficiency," said Kessel D. Stelling, President and CEO of Synovus. "Total credit costs and provision for loan losses were at their lowest level since the second quarter of 2008, and net charge-offs are at their lowest levels since the third quarter of 2008. We are ahead of our projections for headcount reductions, as we reduced headcount by 591 during the first quarter, and are on track to achieve our projected $75 million in expense savings in 2011. The net interest margin expanded by 15 basis points to 3.52%, and pre-tax, pre-credit costs income grew 4.1% from the previous quarter. These improving trends support our belief that we will return to sustainable profitability during 2011."

Stelling continued, "We are in the final stage of a comprehensive, customer-focused redesign of all loan and deposit processes. These changes will make Synovus an easier bank with which to do business, as well as free up our bankers to play offense and pursue new growth opportunities."

Synovus will host an earnings highlights conference call at 8:30 a.m. EST on April 26, 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 $29 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.

 
SNV_1Q_2011.pdf SNV Q1 Earnings Charts
 
Contact
Patrick A. Reynolds
Title: Director of Investor Relations
Phone: (706) 649-4973