Growth in its bread-and-butter banking business, combined with expense control, lifted Synovus Financial Corp. to a $53.2 million profit, or 40 cents per share, in the second quarter of this year.
The regional bank, headquartered in downtown Columbus, reported its April-June financial figures before Tuesday morning's opening bell on the New York Stock Exchange. Investors apparently liked what they saw initially, with shares jumping 89 cents, or nearly 3 percent, out of the gate to a 52-week high of $32.11. But that gave way to profit-taking, with a sell-off leaving the firm's stock up only 4 cents at $31.26 by closing time. The stock's 52-week low of $21.91 per share came Oct. 16.
The net income of 40 cents per share beat the consensus estimate of Wall Street analysts by a penny, according to research firm Thomson Financial.
The current profit also was sharply higher than the $44.3 million, or 32 cents per share, posted by Synovus in the second quarter a year ago. It comes with the bank continuing to pick up stride amid its recovery from the pain and suffering experienced by employees and shareholders during the Great Recession.
All in all, Kessel Stelling, Synovus chairman and chief executive officer, called it a "solid quarter" punctuated by strong growth in loans and core deposits, and higher fee income, including in the firm's mortgage department.
"As we move further along in the second half of the year, we’re confident about our growth plan," Stelling said during a conference call with Wall Street analysts Tuesday. "We believe it provides the right road map for providing accelerating performance. No doubt there continue to be headwinds putting pressure on the entire industry. But our team is clearly demonstrating its ability to overcome the challenges and find solutions that will allow us to win relationships and new business from customers and prospects in a variety of segments."
The bank's second quarter profits came on net interest income — after a $6.6 million loan loss provision — of $197 million, which was up 2.2 percent from $192.7 million in the same quarter of last year.
Non-interest income, meanwhile, climbed from $63.4 million in the year-ago quarter to $68.8 million, up 8.6 percent. This category includes service charges on deposits, asset management fees, brokerage sales, bankcard fees and mortgage income.
The mortgage revenue stream jumped about 42 percent from $5.3 million to $7.5 million. That's significant considering real-estate lending — particularly to home-building developers — during the U.S. housing crisis put Synovus in dangerous financial straits. The Atlanta and Florida markets were especially hard hit, with the CEO saying in recent quarters that those areas are rebounding and doing better.
"We plan to aggressively hire commission-based mortgage originators ... especially in key strategic markets like Tampa, like Atlanta and like Nashville," said Stelling, noting new hires also will include regional brokerage consultants.
On the expense front, Synovus appears to be keeping an overall lid on spending. It reported total non-interest expense of $177.8 million in the quarter, down 2.4 percent from $182.2 million a year ago.
That balance sheet item reflects "the continued implementation of efficiency initiatives that, as we say often, is a continuous process here as we look everyday for ways to drive down expense," the CEO said.
Salaries and personnel costs did rise from $92.5 million to $94.6 million, or 2.2 percent, even with the company closing branch offices throughout its five-state footprint in recent years. Stelling has said the company will invest strategically in new talent as it grows business and expands online and mobile banking offerings to customers.
"Transaction migration continues as our customers are enjoying more convenient channels for their routine service transactions with increases in both mobile and ATM deposit usage, and decreases in teller transactions," he said. "Simply put, our investments in technology are paying off and we’re real pleased to see this."
Notable areas of spending that did experience reductions were professional fees and FDIC insurance and regulatory fees, with both of those now falling after a precipitous rise during the recession as the federal government kept a close eye on Synovus' operations and performance.
Advertising expense also fell sharply from the same quarter a year ago, with the company using "The Bank of Here" campaign to promote its message to customers of being a hometown-style bank with big-city services. The effort has encompassed TV ads on various programs, including Atlanta Braves games. Ad spending fell 54 percent year over year from $6.3 million to $2.9 million.
"We do expect advertising expense in the second half of the year to increase from the first-half levels based on increased levels of spend related to our branding campaign, as well as various product campaigns," Stelling said.
Other key highlights for Synovus in the second quarter included:
Growing loans by $1 billion over the past year, or about 5 percent, to a total of $21.49 billion. Commercial real estate, retail and commercial and industrial loans all experienced momentum, rising from the first quarter.
"Atlanta, Nashville, Tampa, Jacksonville and Columbus all posted solid loan growth," the executive said. "We continue to expect loan growth in the single mid-digits for the full year."
Average deposits grew $1.6 billion, or nearly 8 percent, over the year to $22.47 billion, with just over half of that $1.6 billion in the second quarter alone.
Non-performing loans (minus loans the bank is still holding for sale) fell by nearly $86 million over the past year to $173.6 million.
Non-performing assets were down $123 million, or about 34 percent, with the total now at $240 million.
Net charge-offs were $5.3 million, sharply lower than in the first quarter, while total delinquencies, the company said, "remain low at 0.24 percent of total loans."
Repurchasing just over $50 million in shares of its common stock in the second quarter, bringing the total it has bought back since last October to nearly $203 million, lowering its total share count by 7.5 million. Fewer shares on the market make those still held by investors more valuable. The company said it has about $47 million in share repurchases remaining under the current authorization by its board of directors.
Stelling also mentioned a key honor for the company during the second quarter, with it named one of "America's Most Reputable Banks" by American Banker magazine and the Reputation Institute. Synovus was one of only three firms ranked in the top 10 by both customers and non-customers.
"We’re very proud of that coming out of this long financial crisis," he said. "Our ability to return to a position of strength post-crisis and continue to report improved performance quarter after quarter, we believe, is driven primarily by the way we were able to and are able to personally connect with our customers in our local markets."
Synovus, parent company of Columbus Bank and Trust, oversees about $28 billion in assets through its 28 locally branded divisions in Georgia, Alabama, South Carolina, Florida and Tennessee. Its operation now includes 258 branch offices and 341 automated teller machines.
THROUGH SIX MONTHS
Here are the basic financial numbers for Synovus through the first six months of 2015:
Net income, or profit, of $104.6 million (78 cents per share), up 16 percent from $90.2 million (65 cents per share) in 2014
Total net interest income of $406.9 million, up 0.3 percent from $405.6 million in 2014
Total non-interest income of $134.7 million, up 0.8 percent from $133.6 million in 2014