It was steady progress for regional bank Synovus Financial Corp. in the third quarter of this year, with the firm reporting Tuesday a profit of $62.7 million on total revenues of $294.1 million.
That translates to earnings per share of 51 cents for the parent company of Columbus Bank and Trust, the city’s largest bank, up from 42 cents per share in the same July-September period a year ago.
The bank, which is headquartered in downtown Columbus and does business in five Southeastern states, reported a profit, or net income, of $55.4 million in the third quarter last year. That was on total revenues of $274.8 million.
Kessel Stelling, Synovus chairman and chief executive officer, said the bank’s management was pleased with the quarter’s performance due to the bottom line progress and growth in earnings, revenue and loans. He also noted the company’s recent acquisition of Atlanta-based specialty lending firm Entaire.
“From a market perspective, we generated strong loan growth in key markets such as Atlanta, Birmingham, Chattanooga and Nashville, as well as several other markets throughout the footprint,” Stelling said on a conference call with stock market analysts who follow his bank. “We do expect loan growth, including the Entaire portfolio, to grow approximately 6 to 7 percent for 2016.”
Asked on the call by SunTrust Robinson Humphrey research analyst Jennifer Demba if Synovus is entertaining any other offers to buy companies such as Entaire or take part in an aquisition itself with another bank, the CEO said nothing is off the table, but nothing is imminent.
“There is still a lot of bank (acquisition) chatter out there,” Stelling said. “But we’ve been very consistent that our interest is not in doing a large diluted transaction that our current shareholders would pay the price for. So we’ll keep our powder dry. We’ll be very disciplined, as I think we have been.”
The CEO said any deal in the future would have to make “great strategic and financial sense.”
Synovus, in its report Tuesday, also said it made a move at the end of September that should benefit its stock investors. It entered an accelerated share repurchase agreement to buy back $50 million of its common stock. That would wrap up its overall $300 million in repurchases by the end of this year.
Stelling said the firm’s total share count already has been reduced by 7 percent from a year ago. Fewer Synovus shares on the open market in theory makes those remaining in the hands investors more valuable.
Overall, the company said in its report that it has seen improvement in several areas year over year. Loans on its books at the end of September totaled $23.3 billion, up about $1.4 billion from the same quarter in 2015. Average deposits rose $1.2 billion to just over $24 billion. Non-performing loans and total non-performing assets both were lower from a year ago.
Through the first nine months of this year, the firm has accrued a profit of $170.5 million, up nearly 7 percent from $160 million from the January-September period of last year. Total revenues thus far are $864.8 million, improved from $816.4 million a year ago.
Money that Synovus earns from interest is the major contributor to its bottom line, naturally, but it does bring in cash from non-interest sources such as service charges on deposits, mortgage and brokerage revenue, asset-management fees and bankcard fees. The mortgage side saw nearly 23 percent growth in the quarter, while brokerage was down nearly 11 percent.
Kevin Howard, Synovus chief credit officer, said on the call that the company has seen momentum in the mortgage area for several quarters. He said the growth is continuing despite an economy that is “not overly robust right now.”
“We’ve had a lot of new boots on the ground in places like Nashville, Atlanta and Tampa and had a lot of good growth there on the mortgage side,” he said.
Stelling said Synovus continues to grow its deposit market share in key cities that the bank operates in Georgia, Alabama, Florida, South Carolina and Tennessee. That growth, he said, means the firm will continue to invest in new talent and technology where it sees fit to improve the experience of its customers and drive revenue increases.
Along that vein, the bank reported that salaries and other personnel expense jumped about 8 percent from the same quarter a year ago, with $101.9 million being spent in that category. A year ago, the total was $94.3 million. Personnel costs are the largest non-interest expense for the bank.
Through the first nine months, salaries and personnel expenses have totaled $300.4 million, more than 5 percent higher than the $285.4 million the company spent a year ago. Other major expenses include net occupancy and equipment, third-party processing, FDIC insurance and regulatory fees, and outlays for professional services and advertising.
“Talent acquisition will remain a high priority, especially those who will drive mortgage and retail brokerage fee income growth,” Stelling stressed.
On the trading front, Synovus stock finished Monday at $31.99 per share, then released its financial report Tuesday morning. Shares opened slightly higher out of the gate and remained positive through the day to close at $32.28 apiece, up 29 cents or 0.9 percent, in trading on the New York Stock Exchange. The stock’s 52-week high is $33.80 per share, while its low is $25.48 per share.