FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C 20549
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31, 1996
Commission File Number 1-10312
SYNOVUS FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
Georgia 58-1134883
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
901 Front Avenue
P. O. Box 120
Columbus, Georgia 31902
(Address of principal executive offfices)
(706) 649-2197
(Registrants' telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Sections 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
YES __X__ NO _____
At April 30, 1996, 115,936,140 shares of the Registrant's Common
Stock, $1.00 par value, were outstanding.
SYNOVUS FINANCIAL CORP.
INDEX
Page
Part I. Financial Information Number
Item 1. Financial Statements
Consolidated Balance Sheets (unaudited)
March 31, 1996 and December 31, 1995 3
Consolidated Statements of Income (unaudited)
Three Months Ended March 31, 1996 and 1995 4
Consolidated Statements of Cash Flows (unaudited)
Three Months Ended March 31, 1996 and 1995 5
Notes to Consolidated Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II. Other Information
Item 6. (a) Exhibits 16
(b) Reports on Form 8-K 16
Signature Page 17
Exhibit Index 18
(11) Statement re Computation of Per Share Earnings 19
(27) Financial Data Schedule (for SEC purposes only,
not enclosed herewith)
PART I. FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
<TABLE>
SYNOVUS FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
<CAPTION> (Unaudited)
March 31, December 31,
(In thousands, except share and per share data) 1996 1995
---------- ----------
<S> <C> <C>
ASSETS
Cash and due from banks $ 336,183 382,696
Interest earning deposits with banks 907 1,093
Federal funds sold 14,764 123,832
Investment securities available for sale 1,184,778 1,106,298
Investment securities held to maturity 385,782 380,918
Loans 5,653,794 5,526,842
Less unearned income (13,592) (14,812)
Less reserve for loan losses (83,818) (81,384)
---------- ----------
Loans, net 5,556,384 5,430,646
Premises and equipment, net 226,653 220,197
Other assets 277,910 281,915
---------- ----------
Total assets $ 7,983,361 7,927,595
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing $ 1,072,551 1,141,716
Interest bearing 5,703,682 5,586,163
---------- ----------
Total deposits 6,776,233 6,727,879
Federal funds purchased and securities sold under
agreement to repurchase 241,691 229,477
Long-term debt 100,556 106,815
Other liabilities 132,971 142,079
---------- ----------
Total liabilities 7,251,451 7,206,250
---------- ----------
Minority interest in consolidated subsidiary 28,656 27,790
Shareholders' equity:
Common stock - $1.00 par value; authorized 600,000,000 shares; issued
115,999,244 in 1996 and 115,921,043 in 1995; outstanding 115,921,349
in 1996 and 115,855,148 in 1995 115,999 115,921
Surplus 89,228 88,381
Less treasury stock - 77,895 and 65,895 shares in
1996 and 1995, respectively (1,285) (1,022)
Less unamortized restricted stock (2,497) (2,663)
Net unrealized gain (loss) on investment
securities available for sale (1,765) 5,774
Retained earnings 503,574 487,164
---------- ----------
Total shareholders' equity 703,254 693,555
---------- ----------
Total liabilities and shareholders' equity $ 7,983,361 7,927,595
========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION> (Unaudited)
Three Months Ended
March 31,
-------------------
(In thousands, except per share data) 1996 1995
-------- --------
<S> <C> <C>
Interest income:
Loans, including fees $ 135,631 123,504
Investment securities:
U.S. Treasury and U.S. Government agencies 17,146 13,898
Mortgage-backed securities 4,569 4,115
State and municipal 1,813 1,868
Other investments 324 362
Federal funds sold 698 570
Interest earning deposits with banks 15 27
-------- --------
Total interest income 160,196 144,344
-------- --------
Interest expense:
Deposits 66,281 55,633
Federal funds purchased and securities sold under
agreement to repurchase 3,218 3,618
Long-term debt 1,568 2,263
-------- --------
Total interest expense 71,067 61,514
-------- --------
Net interest income 89,129 82,830
Provision for losses on loans 6,433 5,245
-------- --------
Net interest income after provision
for losses on loans 82,696 77,585
-------- --------
Non-interest income:
Data processing services 67,294 50,437
Service charges on deposit accounts 12,420 10,880
Fees for trust services 2,739 2,438
Credit card fees 1,514 1,543
Securities gains (losses), net 73 (243)
Other operating income 12,407 8,421
-------- --------
Total non-interest income 96,447 73,476
-------- --------
Non-interest expense:
Salaries and other personnel expense 72,627 60,185
Net occupancy and equipment expense 28,281 23,608
Other operating expenses 31,147 28,830
Minority interest in subsidiary's net income 1,149 920
-------- --------
Total non-interest expense 133,204 113,543
-------- --------
Income before income taxes 45,939 37,518
Income tax expense 16,312 13,448
-------- --------
Net income $ 29,627 24,070
======== ========
Net income per share $ 0.26 0.21
======== ========
Weighted average shares outstanding 115,901 113,791
======== ========
Dividends declared per share $ 0.11 0.09
======== ========
See accompanying notes to consolidated financial statements.
</TABLE>
<TABLE>
SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION> (Unaudited)
Three Months Ended
March 31,
--------------------
(In thousands) 1996 1995
--------- ---------
<S> <C> <C>
Operating Activities
Net Income $ 29,627 24,070
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for losses on loans 6,433 5,245
Depreciation, amortization, and accretion, net 10,221 9,177
Deferred income tax expense (benefit) 483 (1,357)
Increase in interest receivable (1,386) (1,611)
(Decrease) increase in interest payable (189) 5,288
Minority interest in subsidiary's net income 1,149 920
Increase in mortgage loans held for sale (12,492) (6,328)
Other, net (1,370) (5,964)
--------- ---------
Net cash provided by operating activities 32,476 29,440
--------- ---------
Investing Activities
Cash acquired from acquisitions --- 1,375
Net decrease in interest earning deposits with banks 186 686
Net decrease (increase) in federal funds sold 109,068 (19,864)
Proceeds from maturities of investment securities
available for sale 113,988 23,422
Proceeds from sales of investment securities
available for sale 40,594 40,104
Purchases of investment securities available for sale (245,295) (53,518)
Proceeds from maturities of investment securities
held to maturity 25,477 14,115
Purchases of investment securities held to maturity (30,456) (7,703)
Net increase in loans (119,679) (108,395)
Purchase of premises and equipment (15,901) (9,731)
Disposal of premises and equipment 802 122
Proceeds from sale of other real estate 1,971 2,057
Additions to internally developed computer software (1,612) (2,627)
--------- ---------
Net cash used in investing activities (120,857) (119,957)
--------- ---------
Financing Activities
Net decrease in demand and savings deposits (17,962) (8,645)
Net increase in certificates of deposit 66,316 334,260
Net increase (decrease) in federal funds purchased
and securities sold under agreement to repurchase 12,214 (259,938)
Principal repayments on long-term debt (6,259) (12,672)
Proceeds from issuance of long-term debt --- 2,238
Purchase of treasury stock (263) ---
Dividends paid to shareholders (12,753) (10,263)
Proceeds from issuance of common stock 575 579
--------- ---------
Net cash provided by financing activities 41,868 45,559
--------- ---------
Decrease in cash and cash equivalents (46,513) (44,958)
Cash and cash equivalents at beginning of period 382,696 344,637
--------- ---------
Cash and cash equivalents at end of period $ 336,183 299,679
========= =========
See accompanying notes to consolidated financial statements.
</TABLE>
SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
Supplemental cash flow information:
For the three months ended March 31, 1996 and 1995, Synovus Financial Corp.
(Synovus) paid income taxes of $5.8 million and $4.2 million, and interest of
$71.3 million and $56.2 million, respectively.
Supplemental information of noncash investing and financing activities:
Loans of approximately $1.7 million and $1.3 million were transferred to other
real estate during the three months ended March 31, 1996 and 1995, respectively.
During the three months ended March 31, 1995, upon consummation of the NBSC
business combination, Synovus transferred certain held to maturity securities of
the acquired subsidiary to the available for sale portfolio to adhere to
Synovus' existing asset-liability management policy and interest rate risk
strategy. Such transfer consisted of investment securities with an estimated
fair value of $27.1 million and an amortized cost of $27.7 million.
On August 19, 1995, Synovus converted $1.1 million in 12% subordinated
debentures into 452,829 shares of Synovus common stock on a post-split basis.
Depreciation, amortization, and accretion, net for the three months ended March
31, 1996 includes amortization of internally developed computer software of $1.0
million. Internally developed computer software has a current net carrying value
of $31.1 million.
See accompanying notes to consolidated financial statements.
SYNOVUS FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and therefore do not include
all information and footnotes necessary for a fair presentation of financial
position, results of operations, and cash flows in conformity with generally
accepted accounting principles. All adjustments consisting of normally occurring
accruals which, in the opinion of management, are necessary for a fair
presentation of the financial position and results of operations for the periods
covered by this report have been included.
On March 11, 1996, Synovus declared a three-for-two stock split which was
effected on April 8, 1996 in the form of a 50% stock dividend. All share, per
share data, and shareholders' equity account balances for all periods presented
in the accompanying consolidated financial statements have been restated to give
effect to the stock split.
Note B - Other
Certain amounts in 1995 have been reclassified to conform with presentation
adopted in 1996.
ITEM 2 - MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Summary
Net income for the three months ended March 31, 1996, was $29.6 million, up $5.6
million, or 23.1% from the same period a year ago. Net income per share
increased to $.26 in the first quarter of 1996 as compared to $.21 for the first
quarter of 1995. This performance resulted in a return on average assets of 1.51
% and a return on equity of 16.84% for the three months ended March 31, 1996.
This compares to a return on average assets of 1.36% and a return on average
equity of 16.33 % for the first three months of 1995.
On March 11, 1996, Synovus declared a three-for-two stock split which was
effected on April 8, 1996 in the form of a 50% stock dividend. All share, per
share data, and shareholders' equity account balances for all periods presented
in the accompanying consolidated financial statements have been restated to give
effect to the stock split.
Earning Assets, Sources of Funds, and Net Interest Income
Average total assets for the first quarter of 1996 were $7.9 billion, up 9.8 %
over the first quarter 1995 average of $7.2 billion. Average earnings assets
were up 9.8 % in the first quarter of 1996 over the same quarter a year ago and
represented 91% of average total assets. A $603.8 million, or 9.9% increase in
average deposits provided the funding for the $200.3 million increase in average
investment securities and $427.2 million increase in average net loans. Average
shareholders' equity for the first quarter of 1996 was $707.5 million.
Net interest income was $89.1 million for the first quarter of 1996, up $6.3
million, or 7.6% over the $82.8 million reported for the first quarter of 1995.
Net interest income, on a tax-equivalent basis, for the first quarter of 1996
increased $6.2 million, or 7.4% over the first quarter of 1995.
The net interest margin was 5.13% for the current quarter, down 12 basis points
from the same period last year. This decrease resulted from a twenty-seven basis
point increase in the cost of funds offset by a seven basis point increase in
the yield on interest earning assets. This increase in the cost of funds was
primarily due to the change in the mix of interest bearing liabilities as
customers began moving their deposits back to higher paying time deposits from
lower paying transactions accounts during 1995 as their expectations of the
market rates changed.
The tax-equivalent adjustment required to make yields on tax-exempt loans and
investment securities comparable to taxable loans and investment securities is
shown in the following table. The taxable-equivalent adjustment is based on a
35% federal income tax rate in both 1996 and 1995.
<TABLE>
Three Months Ended
<CAPTION> March 31,
(in thousands) 1996 1995
------- --------
<S> <C> <C>
Interest income $ 160,196 144,344
Taxable-equivalent adjustment 1,316 1,408
------- --------
Interest income, taxable-equivalent 161,512 145,752
Interest expense 71,067 61,514
------- --------
Net interest income, taxable-equivalent $ 90,445 84,238
======= ========
</TABLE>
Non-Interest Income
Total non-interest income during the first three months of 1996 increased $23.0
million, or 31.3% over the same period in 1995. This increase in non-interest
income resulted largely from higher data processing revenues, which increased
$16.9 million, or 33.4 % during the three months ended March 31, 1996, over the
same period in 1995. Other increases in non-interest income during the period
include a $1.5 million, or 14.2%, increase in service charges on deposit
accounts, principally due to increased volume and fee structures on deposit
accounts. The increase in other operating income was primarily due to increases
in revenues from mortgage banking and related servicing fees, income from an
unconsolidated subsidiary, and specialty printing services.
Data processing services revenue is derived principally from the servicing of
individual bankcard accounts for the card issuing customers of Total System
Services, Inc. (TSYS), Synovus' majority-owned, publicly traded subsidiary.
TSYS' revenues from bankcard data processing services increased $16.3 million,
or 35.0% in the first quarter of 1996, compared to the first quarter of 1995.
Increased revenues from bankcard data processing are primarily attributable to
growth in the card portfolios of existing customers and the related increases in
the volume of authorizations and transactions.
A significant amount of TSYS' revenues are derived from certain major customers
who are processed under long-term contracts. For the quarters ended March 31,
1996 and 1995, two customers accounted for approximately 32% and 35% of total
revenues, respectively. As a result, the loss of one of TSYS' major customers
could have a material adverse effect on TSYS' results of operations.
TSYS has begun the conversion of Bank of America's cardholder accounts to its
new cardholder system, TS2. Conversions to TS2 of remaining portions of Bank of
America's cardholder accounts are currently expected to continue during the
remainder of 1996, and into 1997. Management believes all of Bank of America's
cardholder accounts will be successfully converted to TS2.
Since the end of the first quarter, TSYS and Bank of America have amended their
processing agreement to, among other things, eliminate the financial penalties
and termination rights associated with prior conversion delays. The conversion
and processing of Bank of America's cardholder accounts is not expected to have
a material impact on TSYS' 1996 financial condition or results of operations.
Non-Interest Expense
Total non-interest expense for the three months ended March 31, 1996, increased
$19.7 million, or 17.3%, over the same period in 1995. Management analyzes
non-interest expense in two separate components: banking operations and TSYS.
The table below summarizes this data for the first three months of 1996 and
1995.
<TABLE>
<CAPTION>
1996 1995
---------------- ----------------
(in thousands) Banking TSYS Banking TSYS
------- ------ ------- ------
<S> <C> <C> <C> <C>
Salaries and other personnel expenses $ 41,380 31,247 37,810 22,375
Net occupancy and equipment expense 9,335 18,946 8,448 15,160
Other operating expenses 18,250 12,897 20,807 8,023
Minority interest in subsidiary's
net income 1,149 920
------ ------ ------ ------
Total non-interest expense $ 70,114 63,090 67,985 45,558
====== ====== ====== ======
</TABLE>
Non-interest expense related to TSYS increased 38.5% for the first quarter of
1996, compared to the same period in 1995. Increases in expenses are reflected
in all categories and are attributable to the addition of personnel and
equipment; the cost of materials associated with the services provided by all of
TSYS' companies, particularly the supplies related to processing the increased
number of accounts; certain processing provisions, and expenses associated with
the conversion of customers to TS2.
In the first three months of 1996, non-interest expense for Synovus' banking
operations increased $2.1 million, or 3.1%. The majority of increased expenses
were in employment expense and relate primarily to normal salary increases and
additional employees as the average number of employees increased to 4,130 for
the first quarter of 1996 as compared to 3,897 for the same period a year ago.
The decrease in other operating expenses is due to the lowering of the FDIC
assessment rate on deposits from that in place during the first quarter of 1995.
Income Tax Expense
Income tax expense for the three months ended March 31, 1996, was $16.3 million
compared to $13.4 million for the same period a year ago. The effective tax rate
was 35.5% and 35.8% in 1996 and 1995, respectively.
Provision for Loan Losses
During the first three months of 1996, the provision for loan losses increased
$1.2 million, or 22.7% over the same period in 1995. Net charge-offs to average
net loans for the quarter ended March 31, 1996, were .29% compared to .13%
during the first three months of 1995.
Balance Sheet
Total assets increased $55.8 million, or .70%, during the first three months of
1996 compared to December 31, 1995. Net loans increased $125.7 million, or 2.3%,
and investment securities increased $83.2 million, or 5.6%. Offsetting the
increase in net loans and investment securities, federal funds sold decreased
$109.1 million in the first quarter of 1996. The reduction of federal funds sold
and the deposit base increase of $48.4 million or .72% provided the necessary
funding for the balance sheet growth experienced in the first quarter.
Loans
Synovus' loan growth during the first quarter of 1996 is mainly attributable to
internal growth derived from a continued focus on meeting the needs of customers
in the markets we serve while adhering to sound lending principles. Through this
continued focus, three affiliates headquartered in Birmingham, Alabama,
Columbia, South Carolina, and Valparaiso, Florida experienced significant loan
growth of $25.3 million, $25.3 million, and $22.9 million, respectively. This
growth resulted in increases during the first quarter of 1996 in real estate
construction loans, commercial and retail real estate mortgage loans of $38.1
million, $25.7 million and $12.9 million, respectively, which is indicative of
the economic growth occurring in the markets Synovus serves. Additionally,
mortgage loans held for Sale increased $12.5 million from December 31, 1995 due
to increased mortgage production during the first quarter of 1996.
Asset Quality
As measured by general asset quality indicators, Synovus' asset quality remains
strong while experiencing growth in loans. Synovus continues to underwrite loans
that further diversify its loan portfolio in markets served and emphasize
customer relationships in small and middle market businesses. Commercial credits
are routinely monitored for cash flows, liquidity, financial condition, and
collateral adequacy. Management continues to focus on maintaining a high quality
loan portfolio by knowing the market and the borrower.
Nonperforming assets consist of nonaccrual loans, restructured loans, and other
real estate. The nonperforming asset ratio as a percentage of loans and other
real estate as of March 31, 1996 was .69% compared to .64% at December 31, 1995.
During the first three months of 1996, nonperforming assets increased $3.8
million, while net loans increased $125.7 million.
The reserve for loan losses increased $2.4 million, or 3.0%, from December 31,
1995 to $83.8 million. Additions to the reserve for loan losses are made
periodically to maintain the reserve at an appropriate level based on
management's analysis of the potential risk inherent within the loan portfolio.
Relevant factors are considered when determining the amount of loan loss
provisions. These relevant factors include the level of nonperforming loans,
impaired loan balances, historical loan loss experience, the amount of loan loss
actually charged against the reserve in the given period, and the current and
anticipated economic conditions.
Loans 90 days past due and still accruing increased $.6 million, or 5.1%, since
December 31, 1995. Management believes that the value of the underlying
collateral securing these loans is sufficient to cover the principal and
interest payments on these loans and management does not expect a material
increase in nonperforming assets in future periods as a result of the resolution
of these delinquencies.
The reserve to nonperforming loans and loans 90 days past due and still accruing
was 212.7% at March 31, 1996, compared to 235.1% at year-end 1995. Management
continues to focus on asset quality with an emphasis on proactive management of
problem assets, early detection of potential problem assets, and timely
charge-offs. The Synovus asset quality strategy adequately identifies problem
loans in a timely manner and management believes that current loan loss reserves
will adequately provide for potential future loan charge-offs.
<TABLE>
<CAPTION> March 31, December 31,
(in thousands) 1996 1995
--------- ----------
<S> <C> <C>
Nonperforming Loans $ 27,408 23,202
Other Real Estate 11,662 12,071
------ ------
Nonperforming Assets $ 39,070 35,273
====== ======
Loans 90 Days Past Due and Still Accruing $ 11,999 11,417
====== ======
Reserve for Loan Losses $ 83,818 81,384
====== ======
Reserve for Loan Losses as a % of Loans 1.49% 1.48
====== ======
As a % of Loans and Other Real Estate:
Nonperforming Loans 0.48% 0.42
Other Real Estate 0.21 0.22
------ ------
Nonperforming Assets 0.69 0.64
====== ======
Reserve to Nonperforming Loans 305.82% 350.76
====== ======
</TABLE>
Capital Resources and Liquidity
Synovus continues to maintain its capital at levels which exceed the minimum
regulatory guidelines. Additionally, based on internal calculations and previous
regulatory exams, each of Synovus' subsidiary banks is currently in compliance
with regulatory capital and liquidity guidelines. Synovus' total risk-based
capital was $772.0 million at March 31, 1996, compared to $751.4 million at
December 31, 1995. The ratio of total risk-based capital to risk-weighted assets
was 12.58% at March 31, 1996 compared to 12.57% at December 31, 1995. Synovus'
leverage ratio at the end of the first quarter of 1996 was 8.84% compared to
8.71% at the end of 1995. Synovus equity-to-assets ratio increased to 8.81% at
March 31, 1996 from 8.75% at year-end 1995 indicating continued internal capital
generation to support asset growth.
During the third quarter of 1994, Synovus announced its plan to acquire up to
1,125,000 shares of Synovus common stock, on a post-split basis, in the open
market. Through March 31, 1996, 555,900 shares of Synovus common stock have been
purchased under this plan at an average price of $16.50. Of these shares,
399,747 shares were used in 1995 to acquire Peach State Bank. Approximately
78,000 shares were issued to employees for vested stock options exercises. The
remaining shares will be used to fund incentive stock award plans and other
employee benefit plans. The remaining shares under this stock purchase plan
along with other treasury shares acquired before this plan amount to 77,895 as
of March 31, 1996. The remaining shares to be purchased under the stock purchase
plan will be acquired based on market conditions over the next two years.
Synovus' liquidity position and sources of funds have improved since December
31, 1995, primarily due to the increase in deposits which allows for the
purchase of more liquid assets. Synovus' maturity mix of investment securities
and loan portfolios have not changed significantly during the first three months
of 1996.
Synovus' management monitors liquidity in coordination with the appropriate
committees at each affiliate bank. Management must ensure that appropriate
liquidity is available to meet the cash flow needs of depositors, borrowers, and
creditors at a reasonable cost. Management constantly monitors and maintains
appropriate levels of assets and liabilities so that maturities of assets will
provide adequate funding to meet estimated customer withdrawals and loan
requests. Additionally, Synovus and its affiliate banks have access to short-
term borrowings, such as federal funds, through correspondent banking
relationships and a $20 million line of credit held by Synovus.
The consolidated statements of cash flows detail Synovus' cash flows from
operating, investing, and financing activities. Operating activities provided
net cash of $32.5 million during the first three months of 1996, while $41.9
million was provided by financing activities. Investing activities utilized
$120.9 million of this amount, resulting in a decrease in cash and cash
equivalents of $46.5 million.
Accounting and Regulatory Matters
On October 23, 1995, SFAS No. 123, "Accounting for Stock-Based Compensation",
was issued. SFAS No. 123 allows companies to retain the current approach set
forth in Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees", for recognizing stock-based compensation expense in the
basic financial statements; however, companies are encouraged to adopt a new
accounting method based on the estimated fair value of employee compensation.
Companies that do not adopt the new fair value based method will be required to
provide expanded disclosures. SFAS No. 123 is effective for fiscal years ended
December 31, 1996, and Synovus intends to provide such information in expanded
disclosures in the footnotes to the financial statements.
Legal Proceedings
Synovus is subject to various legal proceedings and claims which arise in the
ordinary course of its business. Any litigation is vigorously defended by
Synovus and, in the opinion of management, based on consultation with external
legal counsel, any outcome of such litigation would not materially affect
Synovus' consolidated financial position.
Currently, multiple lawsuits, some seeking class action treatment, are pending
against one of Synovus' Alabama banking subsidiaries that involve: (1) the sale
of credit life insurance made in connection with consumer credit transactions;
(2) payments of service fees or interest rebates to automobile dealers in
connection with the assignment of automobile credit sales contracts to that
Synovus subsidiary; and (3) the forced placement of insurance to protect that
Synovus subsidiary's interest in collateral for which consumer credit customers
have failed to obtain or maintain insurance. These lawsuits seek unspecified
damages, including punitive damages, and purport to be class actions which, if
certified, may involve many of such subsidiary's consumer credit transactions in
Alabama for a number of years. Synovus intends to vigorously contest these
lawsuits and all other litigation to which Synovus and its subsidiaries are
parties. Based upon information presently available, and in light of legal and
other defenses available to Synovus and its subsidiaries, contingent liabilities
arising from the threatened and pending litigation are not considered material.
It should be noted; however, that large punitive damage awards, bearing little
relation to the actual damages sustained by plaintiffs, have been awarded in
Alabama.
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORT ON FORM 8-K
(a) Exhibits
(11) Statement re Computation of Per Share Earnings
(27) Financial Data Schedule (for SEC purposes only,
not enclosed herewith)
(b) Report on Form 8-K
The following report on Form 8-K was filed during or subsequent to the first
quarter of 1996.
(1) The report filed on March 11, 1996, included the following event:
On March 11, 1996, Synovus announced a three-for two stock split to be issued on
April 8, 1996 to shareholders of record as of March 21, 1996. Synovus also
announced a 22.2% increase in its quarterly dividend. On a pre-split basis,
the quarterly dividend will be increased to $.1650 from $.1350 and will be
payable on April 1, 1996 to shareholders of record as of March 21, 1996.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYNOVUS FINANCIAL CORP.
Date: May 13, 1996 BY:/s/Stephen L. Burts, Jr.
Stephen L. Burts, Jr.
President and Chief Financial Officer
INDEX TO EXHIBITS
Sequentially
Exhibit Number Description Numbered Page
- -------------- ----------- -------------
11 Statement re Computation of 19
Per Share Earnings.
27 Financial Data Schedule
(for SEC purposes only,
not enclosed herewith)
<TABLE>
EXHIBIT 11
SYNOVUS FINANCIAL CORP.
COMPUTATION OF NET INCOME
PER COMMON SHARE
(In thousands, except per share data)
<CAPTION> (Unaudited)
Three Months Ended
March 31,
1996 1995
Primary ------- -------
<S> <C> <C>
- -------
Net income $ 29,627 24,070
======= =======
Average common shares outstanding 115,901 113,791
Average common shares added, assuming
exercise of dilutive stock options 1,582 1,281
------- -------
Average common shares, as adjusted 117,483 115,072
======= =======
Primary net income per common share $ 0.25 0.21
======= =======
Fully Diluted
- -------------
Net income $ 29,627 24,070
Adjustments:
Interest expense on subordinated debentures --- 34
Income tax effect on such interest expense --- (12)
------- -------
Net income, as adjusted $ 29,627 24,092
------- -------
Average common shares outstanding 115,901 113,791
Average common shares added, assuming
exercise of dilutive stock options 1,809 1,324
Average common shares to be issued, assuming
conversion of subordinated debentures --- 453
------- -------
Average common shares, as adjusted 117,710 115,568
======= =======
Fully diluted net income per common share $ 0.25 0.21
======= =======
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF SYNOVUS FINANCIAL CORP. FOR THE THREE MONTHS ENDED
MARCH 31, 1996, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<CASH> 336,183
<INT-BEARING-DEPOSITS> 907
<FED-FUNDS-SOLD> 14,764
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,184,778
<INVESTMENTS-CARRYING> 385,782
<INVESTMENTS-MARKET> 388,558
<LOANS> 5,640,202
<ALLOWANCE> 83,818
<TOTAL-ASSETS> 7,983,361
<DEPOSITS> 6,776,233
<SHORT-TERM> 241,691
<LIABILITIES-OTHER> 132,971
<LONG-TERM> 100,556
0
0
<COMMON> 115,999
<OTHER-SE> 587,255
<TOTAL-LIABILITIES-AND-EQUITY> 7,983,361
<INTEREST-LOAN> 135,631
<INTEREST-INVEST> 23,852
<INTEREST-OTHER> 713
<INTEREST-TOTAL> 160,196
<INTEREST-DEPOSIT> 66,281
<INTEREST-EXPENSE> 71,067
<INTEREST-INCOME-NET> 89,129
<LOAN-LOSSES> 6,433
<SECURITIES-GAINS> 73
<EXPENSE-OTHER> 133,204
<INCOME-PRETAX> 45,939
<INCOME-PRE-EXTRAORDINARY> 45,939
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 29,627
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
<YIELD-ACTUAL> 5.13
<LOANS-NON> 27,408
<LOANS-PAST> 11,999
<LOANS-TROUBLED> 88,309
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 81,384
<CHARGE-OFFS> 5,289
<RECOVERIES> 1,290
<ALLOWANCE-CLOSE> 83,818
<ALLOWANCE-DOMESTIC> 12,932
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 70,886
</TABLE>
