COLUMBUS, Ga.--(BUSINESS WIRE)--Synovus Financial Corp. (NYSE: SNV) today reported financial results for the quarter ended September 30, 2020.

Third Quarter 2020 Highlights

• Diluted EPS of $0.56; adjusted diluted EPS of $0.89.
  • Non-cash goodwill impairment charge of $44.9 million, or $0.30 per share, driven by lower rate forecast impact to mortgage reporting unit.
• Period-end loan decline of $364.5 million or 1% sequentially; net increase of approximately $245 million excluding the impact of Paycheck Protection Program (PPP) loan payoffs and asset dispositions.
  • As of September 30, slightly less than 1% of loans were receiving a principal and interest deferral, down from 15% in May.
• Core transaction deposits (non-interest bearing, NOW/savings, and money market deposits excluding public and brokered funds) increased $1.56 billion or 5% sequentially.
• Total deposit costs of 0.39% down 14 bps from the second quarter due to pricing diligence and product remixing.
• Net interest income of $377.0 million was stable with the second quarter; net interest margin of 3.10% vs. 3.13% in 2Q20.
• Non-interest revenue declined $59.1 million sequentially and increased $25.7 million compared to prior year; investment losses of $1.3 million compared to gains of $78.1 million in the second quarter.
  • Adjusted non-interest revenue increased $20.3 million sequentially due primarily to higher net mortgage revenue and core banking fees.
• Non-interest expense increased $32.5 million sequentially and $40.3 million compared to prior year.
  • Adjusted non-interest expense declined $7.7 million sequentially due primarily to lower employment expense.
• Provision for credit losses of $43.4 million; allowance for credit losses coverage ratio (to loans) of 1.68%, or 1.80% excluding PPP loans.
• Credit quality metrics remain relatively stable, with the non-performing loan ratio and net charge-off ratio of 0.43% and 0.29%, respectively.
• Preliminary CET1 and Total Risk Based Capital ratios improved to 9.30% and 13.16%, respectively.

Third Quarter Summary

“The third quarter reflected strong operating performance, highlighted by growth in core transaction deposits of $1.6 billion and adjusted fee income growth of $20 million, as well as disciplined expense management, all contributing to improved profitability,” said Kessel D. Stelling, Synovus Chairman and CEO. “We continued to strengthen our balance sheet, growing total risk-based capital by 46 basis points to 13.16 percent, the highest level since 2014. The responsiveness of team members and their unwavering support of customers — especially those managing through this challenging credit cycle — demonstrates the effectiveness of our local relationship delivery model and our ability to execute even in the face of uncertainty. These strengths, along with an improving economy, contributed to a solid third quarter and position us well for the fourth quarter and coming year.”

Core Performance

• Total revenues were $492.4 million in the third quarter, down $58.6 million sequentially.
• Net interest income of $377.0 million was stable from the second quarter, benefiting from favorable trends in deposit pricing and remixing.
  • PPP fee accretion of $11.9 million, up $2.7 million from the second quarter.
• Net interest margin was 3.10%, down 3 bps from the prior quarter.
• Non-interest revenue decreased $59.1 million, or 34% sequentially, and increased $25.7 million, or 29% year-over-year. The sequential decrease was largely attributable to $69.4 million of securities gains as a result of repositioning the investment portfolio in the second quarter.
• Adjusted non-interest revenue increased $20.3 million, or 21% sequentially, and $24.4 million, or 27% year-over-year. Net mortgage revenue increased $7.7 million and core banking fees increased $4.9 million sequentially.
• Non-interest expense increased $32.5 million, or 11% sequentially. Adjusted non-interest expense decreased $7.7 million, or 3% sequentially.
  • Non-cash goodwill impairment charge of $44.9 million driven by lower rate forecast impact to mortgage reporting unit.
  • Employment expense decreased $4.6 million primarily as a result of lower commissions, lower headcount, and reduced COVID-related staffing expenses.
• Provision for credit losses of $43.4 million; allowance for credit losses coverage ratio (to loans) of 1.68%, or 1.80% excluding PPP loans.
• Tax expense was $39.8 million, an increase of $8.9 million driven by higher taxable pre-tax income.
  • Year-to-date effective tax rate of 24.95% (impacted by non-deductible goodwill impairment).

Synovus Financial Corp. is a financial services company based in Columbus, Georgia, with approximately $53 billion in assets. Synovus provides commercial and retail banking, investment, and mortgage services through 288 branches in Alabama, Florida, Georgia, South Carolina, and Tennessee. Synovus Bank, a wholly owned subsidiary of Synovus, has been recognized as one of the country's “Most Reputable Banks” by American Banker and the Reputation Institute. Synovus is on the web at synovus.com, and on Twitter, Facebook, LinkedIn, and Instagram.