Synovus Financial Corp. (SNV, Financial) filed Quarterly Report for the period ended 2010-09-30.
Synovus Financial Corp. has a market cap of $1.65 billion; its shares were traded at around $2.14 with and P/S ratio of 0.9. The dividend yield of Synovus Financial Corp. stocks is 1.8%.SNV is in the portfolios of Richard Snow of Snow Capital Management, L.P., Larry Robbins of Glenview Capital, James Barrow of Barrow, Hanley, Mewhinney & Strauss, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Chuck Royce of Royce& Associates, Bruce Kovner of Caxton Associates.
During 2009, Synovus undertook initiatives which added approximately $644 million in Tier 1 capital through a combination of a public equity offering, liability management, and strategic dispositions. During 2010, Synovus undertook additional initiatives to further bolster its capital, including the sale of its merchant services business in March 2010, which resulted in a pre-tax gain of $69.5 million, and public offerings completed in May 2010 which generated aggregate proceeds of $1.1 billion, including a public offering of 293.3 million shares of Synovus common stock and 13.8 million tangible equity units (tMEDS), which generated net proceeds of $769.0 million and $333.5 million, respectively. See Note 4 to the consolidated financial statements (unaudited) and Shareholders Equity in this report.
The net loss for the nine and three months ended September 30, 2010 was $625.4 million and $181.2 million, respectively, compared to $1.16 billion and $439.8 million, respectively, for the nine and three months ended September 30, 2009. The improvement from the prior year is primarily due to lower credit costs. Total credit costs (which include provision for losses on loans, foreclosed real estate expenses, provision for unfunded commitments, and charges related to other loans held for sale) for the nine and three months ended September 30, 2010 were $1.05 billion and $300.9 million, respectively, compared to $1.76 billion and $606.3 million for the same periods in the prior year. The decrease in credit costs was partially offset by a lower income tax benefit in 2010. Additionally, the results for the nine months ended September 30, 2010 include a $43.2 million after-tax gain from the sale of the merchant services business, which is reported as discontinued operations.
Pre-tax, pre-credit costs income (which excludes provision for losses on loans, other credit costs, goodwill impairment, net litigation contingency expense, and severance charges) was $355.9 million and $122.6 million for the nine and three months ended September 30, 2010, down $54.0 million, or 13.1%, and $17.2 million, or 12.3%, from the same periods in the prior year, respectively. See Non-GAAP Financial Measures in this report. The net interest margin for the first nine months of 2010 increased 20 basis points to 3.36% as compared to the same period in 2009, and the net interest margin for the three months ended September 30, 2010 increased 11 basis points to 3.33% as compared to the third quarter of 2009. On a sequential quarter basis, the net interest margin decreased by 1 basis point.
Loans, net of unearned income, have decreased $2.80 billion to $22.58 billion, or 14.8%, annualized as of September 30, 2010, from $25.38 billion at December 31, 2009 and have declined $3.75 billion, or 14.2%, from $26.33 billion at September 30, 2009. These decreases reflect the impact of net charge-offs which were $986.2 million and $1.35 billion for the nine and twelve months ended September 30, 2010 as well as problem loan sales. The rate of decline moderated in the third quarter, declining by $761.9 million, or 12.9% annualized, on a sequential quarter basis. Continued weakness in the housing market has impacted the residential construction and development loan portfolio which has declined $764.8 million, or 50.0% annualized, and $1.65 billion, or 56.4%, as compared to December 31 and September 30, 2009, respectively.
At September 30, 2010, total deposits were $25.24 billion compared to $26.26 billion at June 30, 2010 and $27.43 billion at December 31, 2009. The $1.02 billion sequential quarter decrease included the planned reduction in national market brokered deposits of approximately $627 million. Core deposits excluding time deposits (total deposits less national market brokered deposits and core time deposits) of $15.20 billion grew 2.5% annualized from June 30, 2010 and 6.1% over the same period in the 2009. See Non-GAAP Financial Measures in this report.
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Synovus Financial Corp. has a market cap of $1.65 billion; its shares were traded at around $2.14 with and P/S ratio of 0.9. The dividend yield of Synovus Financial Corp. stocks is 1.8%.SNV is in the portfolios of Richard Snow of Snow Capital Management, L.P., Larry Robbins of Glenview Capital, James Barrow of Barrow, Hanley, Mewhinney & Strauss, HOTCHKIS & WILEY of HOTCHKIS & WILEY Capital Management LLC, Chuck Royce of Royce& Associates, Bruce Kovner of Caxton Associates.
Highlight of Business Operations:
While asset quality remains stressed, most of Synovus credit trends are tracking in a positive direction. For the three months ended September 30, 2010, total credit costs decreased for the fifth consecutive quarter to $300.9 million. Provision expense, the most significant component of total credit costs (which includes provision for losses on loans, foreclosed real estate expenses, provision for unfunded commitments, and charges related to other loans held for sale), declined by $59.9 million, or 20%, as compared to the second quarter of 2010. Total net charge-offs were $237.2 million, the lowest level in seven quarters, and down $195.9 million from the second quarter. Non-performing loan inflows were $422 million as compared to $339 million in the second quarter of 2010 and $531 million in the first quarter of 2010. Total non-performing assets declined by $16.3 million from the second quarter; the second consecutive quarterly decline. Past due loans remained at favorable levels, with total past due loans of 1.12% and total past due loans still accruing interest of 0.11%.During 2009, Synovus undertook initiatives which added approximately $644 million in Tier 1 capital through a combination of a public equity offering, liability management, and strategic dispositions. During 2010, Synovus undertook additional initiatives to further bolster its capital, including the sale of its merchant services business in March 2010, which resulted in a pre-tax gain of $69.5 million, and public offerings completed in May 2010 which generated aggregate proceeds of $1.1 billion, including a public offering of 293.3 million shares of Synovus common stock and 13.8 million tangible equity units (tMEDS), which generated net proceeds of $769.0 million and $333.5 million, respectively. See Note 4 to the consolidated financial statements (unaudited) and Shareholders Equity in this report.
The net loss for the nine and three months ended September 30, 2010 was $625.4 million and $181.2 million, respectively, compared to $1.16 billion and $439.8 million, respectively, for the nine and three months ended September 30, 2009. The improvement from the prior year is primarily due to lower credit costs. Total credit costs (which include provision for losses on loans, foreclosed real estate expenses, provision for unfunded commitments, and charges related to other loans held for sale) for the nine and three months ended September 30, 2010 were $1.05 billion and $300.9 million, respectively, compared to $1.76 billion and $606.3 million for the same periods in the prior year. The decrease in credit costs was partially offset by a lower income tax benefit in 2010. Additionally, the results for the nine months ended September 30, 2010 include a $43.2 million after-tax gain from the sale of the merchant services business, which is reported as discontinued operations.
Pre-tax, pre-credit costs income (which excludes provision for losses on loans, other credit costs, goodwill impairment, net litigation contingency expense, and severance charges) was $355.9 million and $122.6 million for the nine and three months ended September 30, 2010, down $54.0 million, or 13.1%, and $17.2 million, or 12.3%, from the same periods in the prior year, respectively. See Non-GAAP Financial Measures in this report. The net interest margin for the first nine months of 2010 increased 20 basis points to 3.36% as compared to the same period in 2009, and the net interest margin for the three months ended September 30, 2010 increased 11 basis points to 3.33% as compared to the third quarter of 2009. On a sequential quarter basis, the net interest margin decreased by 1 basis point.
Loans, net of unearned income, have decreased $2.80 billion to $22.58 billion, or 14.8%, annualized as of September 30, 2010, from $25.38 billion at December 31, 2009 and have declined $3.75 billion, or 14.2%, from $26.33 billion at September 30, 2009. These decreases reflect the impact of net charge-offs which were $986.2 million and $1.35 billion for the nine and twelve months ended September 30, 2010 as well as problem loan sales. The rate of decline moderated in the third quarter, declining by $761.9 million, or 12.9% annualized, on a sequential quarter basis. Continued weakness in the housing market has impacted the residential construction and development loan portfolio which has declined $764.8 million, or 50.0% annualized, and $1.65 billion, or 56.4%, as compared to December 31 and September 30, 2009, respectively.
At September 30, 2010, total deposits were $25.24 billion compared to $26.26 billion at June 30, 2010 and $27.43 billion at December 31, 2009. The $1.02 billion sequential quarter decrease included the planned reduction in national market brokered deposits of approximately $627 million. Core deposits excluding time deposits (total deposits less national market brokered deposits and core time deposits) of $15.20 billion grew 2.5% annualized from June 30, 2010 and 6.1% over the same period in the 2009. See Non-GAAP Financial Measures in this report.
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