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UPDATE: Regional bank Synovus reports first-quarter profit of $21.4 million as bad loan inflows fall

Make it three quarterly profits in a row for regional bank Synovus Financial Corp.

The Columbus-based company this morning reported first-quarter net income of $21.4 million, or 2.4 cents per share.

That's sharply improved from a loss of $93.7 million in the same January-March period of 2011, or 11.9 cents per share.

It beat the average estimate of Wall Street equity analysts surveyed by research firm Thomson Financial. They were expecting a profit of a penny per share.

This marks the third straight quarterly profit for the bank, which is recovering from three years of losses because of the massive loan losses it suffered from the U.S. housing market implosion and subsequent Great Recession.

Kessel Stelling, Synovus chairman and chief executive officer, noted the company's inflowing non-performing loan levels experienced a "significant reduction" in the first quarter. Net charge-offs on bad loans also were down, while the firm saw improvement in its net interest margin and remained iron-fisted on expenses.

"This quarter marks another significant step on our path to sustained profitability," Stelling said in a statement. "While credit improvement and expense discipline remain key to our long-term success, we are very focused on core revenue growth and providing great value to our customers. We continue to invest in new technology and talent, all with the goal of providing unparalleled service throughout our markets."

The CEO said his bank is also seeing growth in the number of customer accounts and core deposit balances. It holds the top market share in 12 of the cities or metro areas in which it operates, he said, and the top five spot in the vast majority of cities that it does business.

That includes Columbus, where its division, Columbus Bank and Trust, has about 60 percent of market share in terms of total deposits, according to 2011 Federal Deposit Insurance Corp. data.

Synovus oversees more than $27 billion in assets through its banking offices and branches in the Southeastern states of Georgia, Alabama, Florida, South Carolina and Tennessee. Prior to its financial struggles, that asset number topped $34 billion.

On the money-making front, the bank said its net interest income grew sharply in the first quarter, while its provision, or charge-off, for loan losses dropped. The provision was $66 million, down more than 53 percent from nearly $142 million in the first quarter of 2011. After the bad-loan writeoff, net interest income was $154.9 million, up nearly 62 percent from the $95.6 million posted a year ago.

Total non-interest income jumped 31 percent from $64.2 million in the first quarter of 2011 to just over $84 million in the first three months of this year. Non-interest income includes money that Synovus makes from service charges on checking accounts, asset management fees, brokerage and mortgage revenue and fees from credit cards.

Synovus has been working to jumpstart its sales and revenue after three long years of writing off loan losses suffered from the housing crisis that pushed many of its residential development customers out of business. It was hit hardest in the Atlanta market, coastal Florida areas and portions of South Carolina. It also had a key commercial client, the posh coastal resort operator Sea Island Co., file for bankruptcy protection before being sold to private investors out of bankruptcy court.

The upheaval forced the company to restructure twice since 2008 -- once under now-retired Chairman and CEO Richard Anthony and again under Stelling. About 2,000 jobs were eliminated companywide, leaving Synovus with just over 5,000 employees overall, with more than 1,000 in Columbus, which includes the corporate headquarters overlooking the Chattahoochee River.

In today's financial report, the company said non-interest expense is down from a year ago at $203 million, more than 15 percent lower than the nearly $240 million it reported in the first quarter of 2011. Salaries and personnel expenses were up less than 1 percent at $92.6 percent in the quarter.

Synovus still is trying to position itself to repay the $968 million it owes the U.S. government through the Troubled Asset Relief Program. Stelling has said that moment will come when the company's revenue is stronger and more of its loan losses behind it.

FINANCIAL METRICS

Here are other critical financial data released by the company in today's news release:

-- Non-performing loan inflows came in at $139.6 million in the first quarter, down 26.2 percent from $189.2 million in the fourth quarter of 2011 and down 54.5 percent from $306.5 million in the first quarter of 2011.

-- Net charge-offs were $94.7 million in the quarter, down 16.5 percent from $113.5 million in the fourth quarter of 2011, and down 43.2 percent from $166.9 million in the first quarter of 2011.

-- Potential problem commercial loans declined for the sixth consecutive quarter to $685.5 million, a 12.1 percent drop from the fourth quarter of 2011, and a 46.6 percent decrease from the first quarter of 2011.

-- Total non-performing assets were $1.06 billion as of March 31, down $61.6 million from the previous quarter, and down $219.7 million, or 17.2 percent, from the first quarter of 2011.

-- Total accruing troubled debt restructurings (TDRs) decreased to $651.2 million as of March 31, down from $668.5 million the previous quarter. As of March 31, about 97 percent of accruing TDRs are current on principal and interest.

-- Distressed asset sales were approximately $135 million during the first quarter, compared to approximately $147 million in the fourth quarter of 2011, and approximately $192 million in the first quarter of 2011.

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