Southeast regional bank Synovus Financial Corp. on Tuesday reported a profit of $37.2 million in the third quarter, or 4 cents per share. That met the expectations of Wall Street analysts surveyed by Thomson Financial.
A year ago in the July-September period, net earnings, or profit, were $16 million, or 2 cents per share.
Columbus-based Synovus, parent of the city’s largest financial institution, Columbus Bank and Trust, said it continued to get a grip on its credit costs in the quarter, while total loans were up just over 2 percent from the second quarter of this year.
“We were pleased with the continued growth in profitability during the third quarter, with a 21 percent increase in net income available to common shareholders compared to last quarter,” Synovus Chairman and Chief Executive Officer Kessel Stelling said in a statement.
“Third quarter results also included other encouraging signs, including growth in loans and deposits, stability in the net interest margin, and continued positive credit trends,” he said.
The company released its earnings report before the New York Stock Exchange opened Tuesday, with shares slipping slightly during the day before closing down a penny at $3.38. That’s not far off the stock’s 52-week trading high of $3.52 per share. The low for the past year is $2.07 per share.
BernsteinResearch analyst Kevin St. Pierre, in a quick note after the earnings release, said the profit matched his firm’s target.
“Compared to our estimates, revenues were essentially in-line while higher expenses were offset by a lower loss provision and lower share count than we modeled,” he wrote, rating the company’s stock “market perform” with a 52-week price target of $3 per share. The research firm sees Synovus having earnings “difficulty” moving forward, although it remains an “attractive potential target” for a buyout.
Synovus, which endured three years of real estate-connected loan losses before turning a profit in the third quarter of 2012, will be marking its 125th anniversary on Oct. 31.
On the revenue front, net interest income in the quarter came in at $204 million, down nearly 4 percent from $212.3 million in the same period a year ago. But the company’s provision, or write-off, for loan losses was down sharply year over year, dropping nearly 90 percent from $63.5 million to $6.7 million.
Factoring out the loan provision, net interest income rose more than 32 percent from $148.7 million to just over $197 million.
Non-interest income, meanwhile, declined 13 percent from just over $73 million to $63.6 million. That money includes revenue from bank account service charges, asset management fees, brokerage income, credit-card fees, investment securities gains and mortgage income. The latter two were off sharply in the quarter.
The pain was nowhere near as severe from quarter to quarter, with non-interest income down slightly from $65 million in the second period of this year to $63.6 million in the current period.
“Our post-TARP redemption capital position is strong, and our company is well-positioned in growing markets throughout the Southeast,” Stelling said. “According to recently released FDIC data, we again retained top five market share in markets that represent approximately 80 percent of our core deposit franchise. We continue to invest in high-opportunity markets and business lines where we can leverage our proven, relationship-based delivery model to build long-term customer relationships.”
Synovus oversees roughly $27 billion in assets through its 280 bank offices in Georgia, Alabama, Florida, South Carolina and Tennessee. It does business in nearly 170 cities.
On the expense side, Synovus said non-interest costs were $171 million in the quarter, up $3.3 million from the second period. That was attributed to additional employee expenses, including merit raises and one extra pay day in the quarter.
The bank said total loans on its books as of Sept. 30 were at $19.7 billion, which is more than $103 million higher than the previous quarter. Commercial, industrial, retail and commercial real estate loans all were higher. Total deposits were at just under $21 billion.
Earlier this year, Synovus repaid the $967 million it owed the federal government through TARP, the national program aimed at keeping banks around the country from slipping into default as the housing and financial crises fueled the Great Recession.
The Columbus bank quickly set about slashing expenses, including employee cuts and branch closures, as it grappled methodically with the situation. Write-offs for bad loans and distressed asset sales were commonplace.
Synovus, in its numbers released Tuesday, is still working through the fallout, but apparently making progress. Net charge-offs are down from $96.5 million in the third quarter of 2012 to $23 million in the same period this year. Inflows of non-performing loans are down from $114.8 million to $47.4 million. Non-performing loans, minus those it plans to sell, are down from about $700 million to roughly $451 million.
Non-performing assets stand at nearly $587 million, down from $899 million, the company reported. Distressed asset sales came in at $56 million, down from $110 million in the third quarter a year ago.
While Synovus will celebrate its 125th year of doing business at the end of this month, Stelling will be treated to a big moment on behalf of the bank Nov. 13. That’s when the CEO rings the closing bell at the New York Stock Exchange.