Synovus (R) --------------------------------------------------------------
NEWS RELEASE
--------------------------------------------------------------
For Immediate Release
Contact: Patrick A. Reynolds
Director of Investor Relations
(706) 649-4973
Synovus Reports 17% Increase in Net Income for Third Quarter 2002
Net Interest Income, Expense Control, and TSYS Drive Profitability
Columbus, Ga., October 15, 2002 -- Synovus' third-quarter
earnings grew 17% over third quarter 2001 to $92.3 million, or $.31 per
share Synovus Chairman and CEO James H. Blanchard announced today.
"We are very pleased to report excellent third quarter
results," said Blanchard. "Our net interest income increased by 15%
over the third quarter last year, due to outstanding loan growth of 19%
over last year, coupled with continued strong credit quality, and net
interest margin of 4.64%, up from 4.62% last year. TSYS increased net
income by 27% over the same quarter last year. Throughout the Synovus
family of companies, our commitment to controlling our expenses
contributed to our excellent results in the quarter."
Return on assets for the quarter was 2.06% and return on
equity was 19.12%, as compared to 2.02% and 19.93%, respectively, for
the third quarter 2001. Shareholders' equity at September 30, 2002, was
$1.959 billion, which represented a very strong 10.58% of quarter-end
assets. Total assets ended the quarter at $18.5 billion, an increase of
17.3% from the same period last year. On July 31, 2002, Synovus
completed the acquisition of Community Financial Group, Inc., the
parent company of The Bank of Nashville, headquartered in Nashville,
Tennessee. This acquisition added approximately $370 million in loans
and $380 million in deposits to the Financial Services operations.
Asset quality remained strong during the third quarter.
Reflecting the emphasis on high credit quality and credit management,
the ratio of nonperforming assets to loans and other real estate was
0.59%, the allowance for loan losses was 1.38% of loans, and net
charge-offs were 0.32% of average loans for the third quarter. The
allowance for loan losses provides coverage of 340% of nonperforming
loans and the provision for loan losses covered net charge-offs by
1.51x for the quarter.
Synovus Financial Services' (formerly banking operations) net
income increased 13% over last year. Return on assets for the quarter
was 1.52% and return on equity was 18.08%. Financial Services'
non-interest income was up 17% as compared to the third quarter last
year, with increases in service charges on deposits of 15%, net
mortgage revenue of 21% and credit card fees of 8% over the same period
last year. Financial Management Services and insurance (formerly wealth
management) revenues increased 19% over the third quarter last year,
with trust up 4%, brokerage up 13%, financial planning/asset management
(which consists of Creative Financial Group and GLOBALT, acquired in
2001 and 2002, respectively) up 132%, and insurance up 9%. Financial
Services' non-interest income as a percentage of Financial Services'
revenues -- excluding securities gains/losses -- was 27% in the
Post Office Box 120 / Columbus, GA 31902
www.synovus.com
Synovus Reports 17% Increase in Net Income for Third Quarter/p. 2
quarter. The fundamental Financial Services' G&A expenses for the quarter were
up 6.0% over the same period last year. The efficiency ratios for the quarter
and first nine months were 52.78% and 52.15%, respectively, compared to 53.29%
and 54.06% last year.
TSYS reported net income of $32.3 million for the third
quarter 2002, a 27% increase in net income over the same period last
year. Diluted earnings per share for the quarter increased to $0.16, up
from $0.13 last year. TSYS' third quarter achievements included:
* Signing of a ten-year agreement with CIBC to process more than 5
million VISA accounts, which will be converted from its in-house
system in the first quarter of 2003
* Renewal of a five-year agreement with 5Star Bank
* Signing a letter of intent with Bank of Ireland to process its
consumer and commercial accounts, which will be converted from its
in-house system in the first half of 2003
With TSYS' contribution, Synovus' total non-interest income --
excluding securities gains/losses and reimbursable items at TSYS -- was
58.7% of revenues for the quarter.
Blanchard concluded, "Our vision is for Synovus to be the
finest financial services company in the world. Although the world and
our own economic perspective have changed significantly, we affirm our
corporate goal to achieve 15% earnings per share growth in 2002. Two
years ago we believed, under the then existing economic environment,
that our earnings per share growth for 2003 would be in the 15 -18%
range. The majority of the assumptions on which we based these growth
targets have changed, most significantly, TSYS signing and converting a
major client that would have provided substantial revenues in 2003.
Since this signing and conversion has not occurred to date, we now
expect our earnings per share growth to be with-in the 10 - 14% range
for 2003 based, in part, upon the following assumptions:
* Banking services' net income increases between 10 - 14%, with a net
interest margin of approximately 4.60%, loan growth of between 10 - 12%
and credit quality will remain at currently stable levels.
* Financial Management Services and insurance revenues will increase
between 15 - 20%.
* Increases in Financial Services' expenses will not exceed 4%.
* TSYS will increase net income between 12 - 15%.
We believe that our current strategies, team members, technological
advantages, and our strong balance sheet will position us well to
achieve this level of earnings growth, which we believe will place us
among the top of the industry performers for 2003."
Synovus will host an earnings highlights conference call at
2:00 pm ET, on October 16, 2002. The conference call can be accessed at
www.synovus.com. Please log on 5-10 minutes ahead of the call time.
Synovus (NYSE: "SNV") is a diverse financial services holding
company with more than $18.5 billion in assets based in Columbus, Ga.
Synovus provides integrated financial services including banking,
financial management, insurance, mortgage and leasing services through
39 affiliate banks and other Synovus offices in Georgia, Alabama, South
Carolina, Florida and Tennessee; and electronic payment processing
through an 81-percent stake in TSYS (NYSE: "TSS"), the world's largest
third-party processor of international payments. Synovus is No. 5 on
FORTUNE magazine's list of "The 100 Best Companies To Work For" in
2002. See Synovus on the Web at www.synovus.com.
Post Office Box 120 / Columbus, GA 31902
www.synovus.com
Synovus Reports 17% Increase in Net Income for Third Quarter /p. 3
This press release contains statements that constitute
"forward-looking statements" within the meaning of the Securities Act
of 1933 and the Securities Exchange Act of 1934 as amended by the
Private Securities Litigation Reform Act of 1995. These forward-looking
statements include, among others, statements regarding Synovus'
expected growth in earnings per share for 2002 and 2003 and the
assumptions underlying such statements, including, with respect to
Synovus' expected increase in earnings per share for 2003; expected
increases of 10 - 14% in banking services' net income, with a net
interest margin of approximately 4.6%, loan growth of between 10 - 12%,
and credit quality remaining stable; expected increase of 15 - 20% in
Financial Management Services and insurance revenues; expected increase
of 12 -15% in net income of TSYS; and expected increase in Financial
Services' expenses of not more than 4%. Prospective investors are
cautioned that any such forward-looking statements are not guarantees
of future performance and involve risks and uncertainties, and that
actual results may differ materially from those contemplated by such
forward-looking statements. A number of important factors could cause
actual results to differ materially from those contemplated by the
forward-looking statements in this press release. Many of these factors
are beyond Synovus' ability to control or predict. These factors
include, but are not limited to, Synovus' inability to achieve its net
income goals for banking services; Synovus' inability to increase its
revenues derived from Financial Management Services and insurance;
TSYS' inability to achieve its net income goal for 2003; competitive
pressures arising from aggressive competition from other lenders;
factors that affect the delinquency rate on Synovus' loans and the rate
at which Synovus' loans are charged off; changes in the cost and
availability of funding due to changes in the deposit market and credit
market, or the way in which Synovus is perceived in such markets;
changes in prevailing interest rates; the timely development of
competitive new products and services and the acceptance of such by
customers; Synovus' inability to control expenses; a deterioration in
credit quality or a reduced demand for credit; hostilities in the
Middle East or elsewhere; and the effects of changes in government
policy and regulations, including restrictions and/or limitations
arising from banking laws, regulations and examinations. Additional
factors that could cause actual results to differ materially from those
contemplated in this press release can be found in Synovus' filings
with the Securities and Exchange Commission, including its Annual
Report on Form 10-K, quarterly reports on Form 10-Q and current reports
on Form 8-K. We believe these forward-looking statements are
reasonable; however, undue reliance should not be placed on any
forward-looking statements, which are based on current expectations.
###
TABLE>
Synovus
INCOME STATEMENT Nine Months Ended
(Amounts in thousands, except per share data) September 30,
------------------------------------------------------
2002 2001 Change
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Interest Income (Taxable Equivalent) $ 791,289 866,759 (8.7)%
Interest Expense 254,997 402,381 (36.6)
--------------------- ------------ -------------
Net Interest Income (Taxable Equivalent) 536,292 464,378 15.5
Tax Equivalent Adjustment 5,395 5,359 0.7
--------------------- ------------ -------------
Net Interest Income 530,897 459,019 15.7
Provision for Loan Losses 49,497 34,956 41.6
--------------------- ------------ -------------
Net Interest Income After Provision 481,400 424,063 13.5
--------------------- ------------ -------------
Non-Interest Income:
Data Processing 503,734 470,531 7.1
Service Charges on Deposits 69,512 62,357 11.5
Fees For Trust Services 21,295 19,215 10.8
Brokerage Revenue 13,605 12,343 10.2
Mortgage Banking Income 27,986 27,604 1.4
Credit Card Fees 16,609 15,306 8.5
Securities Gains (Losses) 2,606 1,183 120.3
Other Fee Income 14,792 12,586 17.5
Other Non-Interest Income 64,999 62,828 3.5
--------------------- ------------ -------------
Non-Interest Income before Reimbursable Items
and Impairment Loss on Private Equity Investment 735,138 683,953 7.5
Reimbursable Items 173,495 177,115 (2.0)
Impairment Loss on Private Equity Investment (8,355) -- N/A
--------------------- ------------ -------------
Total Non-Interest Income 900,278 861,068 4.6
--------------------- ------------ -------------
Non-Interest Expense:
Personnel Expense 443,839 413,164 7.4
Occupancy & Equipment Expense 181,833 175,903 3.4
Other Non-Interest Expense 159,016 148,442 7.1
--------------------- ------------ -------------
Non-Interest Expense before Reimbursable Items 784,688 737,509 6.4
Reimbursable Items 173,495 177,115 (2.0)
--------------------- ------------ -------------
Total Non-Interest Expense 958,183 914,624 4.8
--------------------- ------------ -------------
Minority Interest in Consolidated Subsidiaries 16,967 14,208 19.4
Income Before Taxes 406,528 356,299 14.1
Income Tax Expense 145,609 129,894 12.1
--------------------- ------------ -------------
Net Income 260,919 226,405 15.2
===================== ============ =============
Basic Earnings Per Share 0.88 0.78 12.6
Diluted Earnings Per Share 0.87 0.77 13.3
Dividends Declared Per Share 0.44 0.38 15.7
Return on Assets 2.05 % 2.00 5 bp
Return on Equity 19.34 19.99 (65)
Average Shares Outstanding - Basic 296,387 289,642 2.3 %
Average Shares Outstanding - Diluted 300,816 295,623 1.8
bp - change is measured as difference in basis points.
On January 1, 2002, Synovus adopted the provisions of the Financial Accounting
Standards Board Staff Announcement Topic D-103, "Income Statement
Characterization of Reimbursements Received for Out-of-Pocket Expenses
Incurred." The Announcement requires that reimbursements received for
out-of-pocket expenses be characterized as revenue. These items are reflected as
"reimbursable items" on the accompanying income statements. All prior periods
presented have been restated to conform with the new presentation.
Synovus
INCOME STATEMENT
(Amounts in thousands, except per share data) 2002 2001 3rd Quarter
----------------------------------------------------------------- -----------
Third Second First Fourth Third '02 vs. '01
Quarter Quarter Quarter Quarter Quarter Change
----------------------------------------------------------------- -----------
Interest Income (Taxable Equivalent) $ 270,997 260,448 259,844 271,378 282,587 (4.1)%
Interest Expense 86,205 83,336 85,456 98,716 122,035 (29.4)
---------------- --------- ----------- ----------- -------- -----------
Net Interest Income (Taxable Equivalent) 184,792 177,112 174,388 172,662 160,552 15.1
Tax Equivalent Adjustment 1,853 1,771 1,771 1,890 1,834 1.0
---------------- --------- ----------- ----------- ---------- -----------
Net Interest Income 182,939 175,341 172,617 170,772 158,718 15.3
Provision for Loan Losses 16,410 19,978 13,109 16,717 10,799 52.0
---------------- --------- ----------- ----------- ---------- -----------
Net Interest Income After Provision 166,529 155,363 159,508 154,055 147,919 12.6
---------------- --------- ----------- ----------- ---------- -----------
Non-Interest Income:
Data Processing 173,199 170,469 160,066 166,866 161,892 7.0
Service Charges on Deposits 24,281 23,059 22,172 24,182 21,152 14.8
Fees For Trust Services 6,928 7,451 6,916 7,294 6,637 4.4
Brokerage Revenue 4,372 4,589 4,644 4,020 3,858 13.3
Mortgage Banking Income 10,793 8,454 8,739 10,668 8,938 20.8
Credit Card Fees 6,010 5,803 4,796 5,878 5,553 8.2
Securities Gains (Losses) 717 960 929 539 337 112.8
Other Fee Income 5,254 4,792 4,746 4,613 4,109 27.9
Other Non-Interest Income 23,518 22,366 19,115 23,638 16,899 39.2
---------------- --------- ----------- ----------- ---------- -----------
Non-Interest Income before Reimbursable Items
and Impairment Loss on Private Equity Investment 255,072 247,943 232,123 247,698 229,375 11.2
Reimbursable Items 56,473 60,032 56,990 55,450 54,993 2.7
Impairment Loss on Private Equity Investment -- (8,355) -- -- -- N/A
---------------- --------- ----------- ----------- ---------- -----------
Total Non-Interest Income 311,545 299,620 289,113 303,148 284,368 9.6
---------------- --------- ----------- ----------- ---------- -----------
Non-Interest Expense:
Personnel Expense 162,209 139,559 142,071 152,920 141,455 14.7
Occupancy & Equipment Expense 62,327 58,437 61,069 59,749 58,088 7.3
Other Non-Interest Expense 46,956 57,859 54,201 49,739 48,927 (4.0)
---------------- --------- ----------- ----------- ---------- -----------
Non-Interest Expense before Reimbursable Items 271,492 255,855 257,341 262,408 248,470 9.3
Reimbursable Items 56,473 60,032 56,990 55,450 54,993 2.7
---------------- --------- ----------- ----------- ---------- -----------
Total Non-Interest Expense 327,965 315,887 314,331 317,858 303,463 8.1
---------------- --------- ----------- ----------- ---------- -----------
Minority Interest in Consolidated Subsidiaries 6,254 5,625 5,088 5,651 4,976 25.7
Income Before Taxes 143,855 133,471 129,202 133,694 123,848 16.2
Income Tax Expense 51,583 47,576 46,450 48,483 44,943 14.8
---------------- --------- ----------- ----------- ---------- -----------
Net Income 92,272 85,895 82,752 85,211 78,905 16.9
================ ========= =========== =========== ========== ===========
Basic Earnings Per Share 0.31 0.29 0.28 0.29 0.27 13.9
Diluted Earnings Per Share 0.31 0.29 0.28 0.29 0.27 15.1
Dividends Declared Per Share 0.15 0.15 0.15 0.13 0.13 15.7
Return on Assets 2.06 % 2.05 2.03 2.11 2.02 4 bp
Return on Equity 19.12 19.40 19.52 20.51 19.93 (81)
Average Shares Outstanding - Basic 298,564 295,629 294,927 292,271 290,868 2.6 %
Average Shares Outstanding - Diluted 301,986 300,282 300,158 296,556 297,357 1.6
bp - change is measured as difference in basis points.
On January 1, 2002, Synovus adopted the provisions of the Financial Accounting
Standards Board Staff Announcement Topic D-103, "Income Statement
Characterization of Reimbursements Received for Out-of-Pocket Expenses
Incurred." The Announcement requires that reimbursements received for
out-of-pocket expenses be characterized as revenue. These items are reflected as
"reimbursable items" on the accompanying income statements. All prior periods
presented have been restated to conform with the new presentation.
Synovus
SELECTED BALANCE SHEET DATA
(Amounts in thousands, except per share data) 2002 2001 3rd Quarter
---------------------------------------------------------------------- -----------
Third Second First Fourth Third '02 vs. '01
Quarter Quarter Quarter Quarter Quarter Change
---------------------------------------------------------------------- -----------
Total Assets $ 18,510,215 17,315,782 16,725,734 16,654,891 15,778,199 17.3 %
Investment Securities 2,162,135 2,094,544 2,076,461 2,088,287 2,087,135 3.6
Loans (net of unearned income) 14,058,387 13,201,121 12,698,763 12,417,917 11,852,572 18.6
Total Deposits 13,644,457 12,941,487 12,451,008 12,146,198 11,525,774 18.4
Demand Deposits 2,204,906 2,067,367 1,918,674 1,984,524 1,750,644 25.9
Certificates of Deposit 5,663,974 5,320,555 5,177,699 5,183,225 5,200,227 8.9
Savings Accounts 452,403 454,375 447,737 420,311 422,393 7.1
NOW Accounts 2,109,585 1,965,599 1,974,827 1,916,259 1,677,840 25.7
Money Market 3,213,589 3,133,591 2,932,071 2,641,879 2,474,670 29.9
Shareholders' Equity 1,959,254 1,814,199 1,728,095 1,694,946 1,618,271 21.1
Book Value Per Share 6.54 6.12 5.85 5.75 5.56 17.6
Equity to Assets 10.58 10.48 10.33 10.18 10.26 32bp
Loan to Deposit Ratio 103.03 102.01 101.99 102.24 102.84 19
Demand Deposits / Total Deposits 16.16 15.97 15.41 16.34 15.19 97
Common Shares Outstanding 299,704 296,396 295,252 294,674 291,057 3.0 %
CREDIT QUALITY DATA
(Dollars in thousands) 2002 2001 3rd Quarter
---------------------------------------------------------------------- -----------
Third Second First Fourth Third '02 vs. '01
Quarter Quarter Quarter Quarter Quarter Change
---------------------------------------------------------------------- -----------
Nonperforming Loans $ 57,069 53,679 55,791 51,585 49,197 16.0 %
Other Real Estate 25,860 21,615 17,970 15,867 14,720 75.7
Nonperforming Assets 82,929 75,294 73,761 67,452 63,917 29.7
Allowance for Loan Losses 194,005 180,321 174,774 170,769 162,117 19.7
Net Charge-Offs - Quarter 10,884 14,431 9,104 12,023 8,280 31.4
Net Charge-Offs - YTD 34,419 23,535 9,104 34,988 22,965 49.9
Net Charge-Offs/Average Loans - Quarter 0.32 0.44 0.29 0.39 0.28
Net Charge-Offs/Average Loans - YTD 0.35 0.37 0.29 0.30 0.27
Nonperforming Loans/Loans & ORE 0.41 0.41 0.44 0.42 0.42
Nonperforming Assets/Loans & ORE 0.59 0.57 0.58 0.54 0.54
Allowance/Loans 1.38 1.37 1.38 1.38 1.37
Allowance/Nonperforming Loans 339.95 335.92 313.27 331.04 329.52
Allowance/Nonperforming Assets 233.94 239.49 236.95 253.17 253.64
bp - change is measured as difference in basis points.
Synovus
AVERAGE BALANCES AND YIELDS/RATES
(Amounts in thousands)
2002 2001
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Third Second First Fourth Third
Quarter Quarter Quarter Quarter Quarter
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Interest Earning Assets
-----------------------
Investment Securities $ 2,071,924 2,045,096 2,038,865 2,025,366 2,011,548
Yield 5.84 % 6.08 6.08 6.19 6.34
Loans, Net $ 13,468,509 12,804,139 12,401,910 11,967,899 11,498,072
Yield 6.98 % 7.08 7.31 7.79 8.50
Mortgage Loans Held for Sale $ 209,780 164,313 276,682 262,476 181,372
Yield 6.39 % 6.92 6.65 6.78 7.34
Federal Funds Sold $ 72,161 62,129 61,136 40,360 110,100
Yield 2.01 % 2.49 2.40 3.73 3.80
Time Deposits with Banks $ 4,122 3,859 3,328 3,561 4,087
Yield 1.26 % 1.37 1.65 2.29 3.62
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Total Interest Earning Assets $ 15,826,496 15,079,536 14,781,921 14,299,662 13,805,179
Yield 6.80 % 6.92 7.11 7.54 8.13
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Interest Bearing Liabilities
----------------------------
Time Deposits Over $100,000 $ 3,109,639 2,833,173 2,569,115 2,596,808 2,583,032
Rate 3.41 % 3.52 3.89 4.51 5.28
Time Deposits Under $100,000 $ 2,425,038 2,394,123 2,439,460 2,526,555 2,602,377
Rate 3.39 % 3.59 4.07 4.78 5.48
Other Interest Bearing Deposits $ 5,608,037 5,389,194 5,215,169 4,777,271 4,459,166
Rate 1.37 % 1.37 1.32 1.56 2.44
Federal Funds Purchased $ 1,033,111 1,019,305 1,290,957 1,334,622 1,207,804
Rate 1.65 % 1.71 1.70 2.00 3.48
Other Short-Term Borrowings $ 7,682 5,136 9,428 8,707 20,228
Rate 1.40 % 1.50 1.38 2.16 3.24
Other Borrowings $ 1,232,646 1,136,670 1,082,675 963,619 923,290
Rate 4.76 % 5.02 5.19 5.38 5.74
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Total Interest Bearing Liabilities $ 13,416,153 12,777,601 12,606,804 12,207,582 11,795,897
Rate 2.54 % 2.61 2.74 3.20 4.10
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Non-Interest Bearing Demand Deposits $ 2,031,031 1,955,444 1,826,432 1,755,795 1,693,111
Shareholders' Equity $ 1,914,915 1,776,173 1,719,380 1,647,933 1,570,921
Total Assets $ 17,743,648 16,823,662 16,522,858 16,021,119 15,472,034
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Spread 4.25 % 4.31 4.37 4.33 4.03
Net Interest Margin 4.64 % 4.71 4.77 4.80 4.62
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