It was steady as she goes for Synovus Financial Corp. in the fourth quarter of 2015, with the company on Tuesday reporting a profit of $55.8 million, up 10.3 percent from $50.6 million a year ago.
For 2015 as a whole, the regional bank posted a profit of $215.8 million, an increase of 16.7 percent from $185 million in 2014.
Headquartered in Columbus and the parent company of Columbus Bank and Trust, Synovus saw loans and core deposits grow in the fourth quarter, while non-performing assets and charge-offs for bad loans continued to decline amid an overall banking sector still nursing itself back to health after the Great Recession.
“I think a good way to summarize it is just good steady progress,” Synovus Chairman and Chief Executive Officer Kessel Stelling said during a conference call with banking sector analysts who follow the firm.
The CEO, who said the company’s credit quality continues to improve, pointed to “talent realignment” in 2014 paying dividends last year and ultimately boosting the numbers released Tuesday.
“Our bankers and investment teams were better positioned to identify and pursue and serve strategic high-potential customers by segment,” he said. “Our retail team increased sales productivity by 27 percent through improved staffing, process enhancements and new in-branch sales tools.”
The profit in the October-December timeframe translated to 43 cents per share, compared to 37 cents per share in the same period of 2014. That matched the expectations of Wall Street analysts who follow the Southeast regional bank, according to surveys by research firm Thomson Financial.
Shares of Synovus stock, traded on the New York Stock Exchange, closed Friday at $29.16 per share. The stock’s 52-week trading range is $24.41 to $33.80 per share.
The bank’s stock leaped 83 cents per share, or 2.8 percent, out of the gate Tuesday to $29.99. But it then gave up all of that ground and an extra dime, finishing at $29.06 per share.
Stelling pointed to the “strong performance” in the fourth quarter that helped the bank wrap up the year with double-digit growth in net income, “balanced” loan growth and rising core deposits.
“Our work to drive solid performance in 2016 is well under way,” the executive said, with the recipe this year including mid-single digit loan growth in several sectors and the “acquisition” of new and better talent in critical midsized markets.
The cities that did well for the bank in 2015 included Tampa, Fla., Nashville, Tenn., Charleston, S.C., Birmingham, Ala., Atlanta and Chattanooga, Tenn.
“All posted strong loan growth for the year,” he said, noting Synovus holds top five market share in the majority of cities in which it does business.
All of which contributed to the fourth-quarter profit, or net income, which came on interest income of $242.8 million, up 3.5 percent from $234.7 million in the same three-month period the previous year. A provision for loan losses took a $5 million bite out of that, although it was nearly 39 percent less than the $8.2 million provision reported a year ago.
Another revenue driver, total non-interest income, rose 2.5 percent from $64.5 million to just over $66 million. That category includes things like service charges on deposits, asset management and brokerage fees, mortgage income and credit-card fees.
On the expense side of its financial books, Synovus saw that overall figure fall 1 percent during the quarter to $183 million. Salaries and personnel expenses were up 3.8 percent, occupancy and equipment grew 5.5 percent and third-party processing rose 5.3 percent. But those were offset by tumbling fees for FDIC insurance and regulatory activities (down 16.5 percent), advertising outlays (54.6 percent lower) and foreclosed real-estate expenses (down 31.5 percent).
Restructuring charges in the quarter came in at a relatively low $69,000, 98 percent lower than the nearly $3.5 million in the same period a year ago.
Stelling said Synovus will continue its “intense effort” to control non-interest expense moving forward as it stays focused on improving the bank’s financial performance. It has been steadily improving after three years of losses during the recession and, now, amid a U.S. economy that is slowly gaining traction and recently saw its first quarter-point interest rate hike since the severe downturn began in 2007.
“As we move into 2016, our base assumption is that we’ll see an additional 25 basis point (quarter of one percent) increase in both the summer and after the election,” he said of the expected rate hikes by the Federal Reserve. The absence of such rising rates would put “modest pressure” on the firm’s lending margins, he said.
For all of 2015, the company again was on a steady upward trajectory. Synovus reported interest income of $945.9 million for the year, up 1.9 percent from $928.6 million in 2014. Non-interest income was up 2.2 percent from $262.1 million to $267.9 million. That, minus expenses and other items, added up to the full-year profit of $215.8 million.
For investors, those numbers equated to diluted earnings per share of $1.62 for the year, up nearly 22 percent from $1.33 per share in 2014. Analysts polled by Thomson Financial were anticipating $1.63 per share this year.
Expenses for the year were down 3.7 percent overall, with the various categories mostly mirroring the fourth quarter. Salaries and personnel costs, occupancy and equipment, and third-party processing fees all grew, while FDIC/regulatory, advertising, foreclosed real-estate and restructuring expenses were lower.
In its earnings report Tuesday, Synovus did note that it has returned more than $250 million to its common stock shareholders via share repurchases and cash dividends.
“During the quarter, we repurchased 1.2 million shares for approximately $37.1 million and at an average price of $32.16 in connection with our $300 million repurchase program launched in October,” Stelling said. “Year to date through Jan. 16 we repurchased an additional approximately 1 million shares for $31.3 million at an average price $30.30.”
Stock repurchases tend to make those shares still on the market and in the hands of investors that much more valuable.
The CEO also noted the constant specter of retail, computer and mobile transaction hackers looking to separate its banking customers from their hard-earned money. One such move to prevent that took place in 2015.
“We’re making continuing investments to protect our customers from the ever-present cyber security threat, replacing all customer credit cards with chip-enabled cards during 2015,” he said.
Synovus is the fourth-largest bank in Georgia, handling about 6 percent of deposits in the state, although that’s well behind the top three of SunTrust, Wells Fargo and Bank of America, according to the Federal Deposit Insurance Corp. But locally Columbus Bank and Trust CB&T dominates with 63 percent of the market.
Companywide, it oversees about $29 billion in assets through its banks across the Southeast, doing business in Georgia, Alabama, Florida, South Carolina and Tennessee. Its operations include 28 locally branded divisions, 257 bank branches and 336 ATMs, although the firm has been ramping up its online and mobile banking services over the last couple of years. The bank in 2015 was honored by American Banker magazine and the Reputation Institute as one of “America’s Most Reputable Banks.”