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 September 30, 1999
Commission File Number 1-10312
[LOGO] 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 offices)
(706) 649-2401
(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 October 31, 1999, 279,805,942 shares of the Registrant's Common Stock,
$1.00 par value, were outstanding.
PART I. FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
SYNOVUS FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
September 30, December 31,
(In thousands, except share and per share data) 1999 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 395,702 373,376
Interest earning deposits with banks 1,856 1,383
Federal funds sold 78,862 77,392
Mortgage loans held for sale 100,503 156,231
Investment securities available for sale 1,715,215 1,569,490
Investment securities held to maturity 283,518 307,983
Loans 8,609,231 7,612,142
Less unearned income (9,559) (8,537)
Less reserve for loan losses (122,560) (114,109)
- ----------------------------------------------------------------------------------------------
Loans, net 8,477,112 7,489,496
- ----------------------------------------------------------------------------------------------
Premises and equipment, net 417,668 381,385
Other assets 506,655 454,856
- ----------------------------------------------------------------------------------------------
Total assets $ 11,977,091 10,811,592
- ----------------------------------------------------------------------------------------------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Non-interest bearing $ 1,550,820 1,433,929
Interest bearing 7,724,526 7,363,483
- ----------------------------------------------------------------------------------------------
Total deposits 9,275,346 8,797,412
Federal funds purchased and securities sold under
agreement to repurchase 1,010,166 503,287
Long-term debt 228,790 131,802
Other liabilities 216,143 215,081
- ----------------------------------------------------------------------------------------------
Total liabilities 10,730,445 9,647,582
- ----------------------------------------------------------------------------------------------
Minority interest in consolidated subsidiary 60,801 52,093
Shareholders' equity:
Common stock - $1.00 par value; Authorized 600,000,000
shares; issued 279,902,088 in 1999 and 278,589,470 in
1998; outstanding 279,726,824 in 1999 and
278,414,206 in 1998 279,902 278,589
Surplus 69,267 57,725
Less treasury stock - 175,264 shares in 1999 and 1998 (1,285) (1,285)
Less unamortized restricted stock (1,500) (2,545)
Accumulated other comprehensive income (loss) (13,815) 10,475
Retained earnings 853,276 768,958
- ----------------------------------------------------------------------------------------------
Total shareholders' equity 1,185,845 1,111,917
- ----------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 11,977,091 10,811,592
===============================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
- ----------------------------------------------------------------------------------------------
(In thousands, except per share data) 1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income:
Loans, including fees $ 552,050 498,497 193,285 170,207
Investment securities:
U.S. Treasury and U.S. Government
agencies 60,207 61,416 20,713 19,789
Mortgage-backed securities 19,202 12,310 6,616 4,242
State and municipal 6,402 5,478 2,114 1,934
Other investments 2,168 1,848 732 646
Mortgage loans held for sale 6,018 3,369 1,759 1,321
Federal funds sold 1,611 4,035 492 1,454
Interest earning deposits with banks 61 39 21 11
- ----------------------------------------------------------------------------------------------
Total interest income 647,719 586,992 225,732 199,604
- ----------------------------------------------------------------------------------------------
Interest expense:
Deposits 238,116 234,678 82,513 79,037
Federal funds purchased and securities
sold under agreement to repurchase 24,847 10,476 9,453 3,810
Long-term debt 7,415 5,843 3,043 1,956
- ----------------------------------------------------------------------------------------------
Total interest expense 270,378 250,997 95,009 84,803
- ----------------------------------------------------------------------------------------------
Net interest income 377,341 335,995 130,723 114,801
Provision for losses on loans 25,343 20,551 8,613 5,781
- ----------------------------------------------------------------------------------------------
Net interest income after provision
for losses on loans 351,998 315,444 122,110 109,020
- ----------------------------------------------------------------------------------------------
Non-interest income:
Data processing services 357,105 264,843 126,500 91,665
Service charges on deposit accounts 51,474 45,949 18,043 15,905
Fees for trust services 15,046 11,104 5,041 3,747
Credit card fees 10,672 9,276 3,948 3,649
Securities gains (losses), net 874 750 159 428
Other operating income 99,791 85,967 33,159 30,668
- ----------------------------------------------------------------------------------------------
Total non-interest income 534,962 417,889 186,850 146,062
- ----------------------------------------------------------------------------------------------
Non-interest expense:
Salaries and other personnel expense 333,628 287,292 113,359 97,465
Net occupancy and equipment expense 151,556 114,401 53,991 40,227
Other operating expenses 142,128 107,881 48,466 37,321
Minority interest in subsidiary's
net income 9,289 7,139 3,257 2,921
- ----------------------------------------------------------------------------------------------
Total non-interest expense 636,601 516,713 219,073 177,934
- ----------------------------------------------------------------------------------------------
Income before income taxes 250,359 216,620 89,887 77,148
Income tax expense 88,308 76,369 31,882 27,540
- ----------------------------------------------------------------------------------------------
Net income $ 162,051 140,251 58,005 49,608
==============================================================================================
Net income per share :
Basic $ 0.58 0.52 0.21 0.18
==============================================================================================
Diluted 0.57 0.51 0.21 0.18
==============================================================================================
Weighted average shares outstanding:
Basic 279,381 271,155 279,694 272,681
==============================================================================================
Diluted 282,670 276,237 282,806 276,721
==============================================================================================
Dividends declared per share $ 0.27 0.22 0.09 0.07
==============================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
- ---------------------------------------------------------------------------------------
(In thousands) 1999 1998
- ---------------------------------------------------------------------------------------
<S> <C> <C>
Operating Activities
Net Income $ 162,051 140,251
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for losses on loans 25,343 20,551
Depreciation, amortization, and accretion, net 54,704 43,542
Deferred income tax expense (benefit) 4,895 (3,697)
Increase in interest receivable (12,497) (3,645)
Increase in interest payable 2,298 5,948
Minority interest in subsidiary's net income 9,289 7,139
Decrease (increase) in mortgage loans held for
sale 55,728 (28,725)
Other, net 5,564 7,104
- ------------------------------------------------------------------------------------
Net cash provided by operating activitie 307,375 188,468
- ------------------------------------------------------------------------------------
Investing Activities
Cash acquired from acquisition 1,842 13,231
Net (increase) decrease in interest earning deposits
with banks (473) 1,099
Net (increase) decrease in federal funds sold (1,470) 52,143
Proceeds from maturities and principal collections of
investment securities available for sale 375,762 435,299
Proceeds from sales of investment securities available 27,415 66,351
for sale
Purchases of investment securities available for sale (587,796) (536,305)
Proceeds from maturities and principal collections of
investment securities held to maturity 42,891 125,623
Purchases of investment securities held to maturity (18,706) (70,373)
Net increase in loans (1,012,959) (289,706)
Purchases of premises and equipment (86,988) (75,888)
Disposals of premises and equipment 4,128 637
Proceeds from sales of other real estate 5,290 7,329
Additions to contract acquisition costs (3,812) (16,283)
Additions to computer software (42,520) (24,520)
- ------------------------------------------------------------------------------------
Net cash used in investing activities (1,297,396) (311,363)
- ------------------------------------------------------------------------------------
Financing Activities
Net increase in demand and savings deposits 157,059 95,916
Net increase (decrease) in certificates of deposit 320,875 (75,913)
Net increase (decrease) in federal funds purchased and
securities sold under agreement to repurchase 506,879 115,897
Principal repayments on long-term debt (1,812) (12,965)
Proceeds from issuance of long-term debt 98,800 11,887
Purchases of treasury stock -- (3,792)
Distributions paid to shareholders prior to acquisition (4,865) (3,631)
Dividends paid to shareholders (69,496) (58,782)
Proceeds from issuance of common stock 4,907 7,845
- ------------------------------------------------------------------------------------
Net cash provided by financing activities 1,012,347 76,462
- ------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents 22,326 (46,433)
Cash and cash equivalents at beginning of period 373,376 420,419
- ------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 395,702 373,986
====================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
SYNOVUS FINANCIAL CORP.
INDEX
Page
Part I. Financial Information Number
Item 1. Financial Statements
Consolidated Balance Sheets (unaudited)
September 30, 1999 and December 31, 1998 3
Consolidated Statements of Income (unaudited)
Nine and Three Months Ended September 30, 1999 and 1998 4
Consolidated Statements of Cash Flows (unaudited)
Nine Months Ended September 30, 1999 and 1998 5
Notes to Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures About Market Risk 23
Part II. Other Information
Item 6. (a) Exhibits 24
(b) Report on Form 8-K 24
Signature Page 25
Exhibit Index 26
(10) Employment Agreement of James H. Blanchard
(11) Statement re Computation of Per Share Earnings
(27) Financial Data Schedule (for SEC purposes
only, not enclosed herewith)
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. The accompanying unaudited
consolidated financial statements should be read in conjunction with the Synovus
Financial Corp. (Synovus) consolidated financial statements and related notes
appearing in Synovus' 1998 annual report previously filed on Form 10-K.
Note B - Supplemental Cash Flow Information
For the nine months ended September 30,1999 and 1998, Synovus paid income taxes
of $80.0 million and $71.7 million, and interest of $268.1 million and $245.0
million, respectively.
Noncash investing activities consisted of loans of approximately $3.3 million
and $5.6 million, which were foreclosed and transferred to other real estate
during the nine months ended September 30, 1999 and 1998, respectively.
Note C - Comprehensive Income
Other comprehensive income (loss) for Synovus consists of unrealized gains
(losses) on securities available for sale and foreign currency translation
adjustments. Comprehensive income consists of net income plus other
comprehensive income (loss). Comprehensive income for the three months ended
September 30, 1999 and 1998 was $59.3 million and $59.0 million, respectively.
Comprehensive income for the nine months ended September 30, 1999 was $137.8
million compared to $151.2 million for the nine months ended September 30, 1998.
Note D - Business Combinations
On January 31, 1999, Synovus issued 333,163 shares of common stock to acquire
the remaining 80% interest in Canterbury Trust Company, Inc., which provides
trust, custody, investment and consulting services to large institutional
clients. The acquisition was accounted for as a purchase resulting in goodwill
of $5.5 million which will be amortized on a straight-line basis over fifteen
years.
On December 18, 1998, Synovus completed the acquisition of the $178 million
asset Georgia Bank & Trust (GB&T), located in Calhoun, Georgia. Synovus issued
1,811,058 shares of common stock for all the issued and outstanding shares of
GB&T.
On November 30, 1998, Synovus completed the acquisition of the $55 million asset
Bank of Georgia, located in Watkinsville, Georgia. Synovus issued 850,269 shares
of common stock for all the issued and outstanding shares of Bank of Georgia.
On September 1, 1998, Synovus completed the acquisition of the $348 million
asset Community Bank Capital Corporation (CBCC). CBCC is the parent company of
the Bank of North Georgia, located in Alpharetta, Georgia. Synovus issued
3,774,531 shares of common stock for all the issued and outstanding shares of
CBCC.
The aforementioned three acquisitions have been accounted for as poolings of
interests, except that the financial information preceding the dates of
acquisition have not been restated to include the financial position and results
of operations of these acquired entities since the effect was not material. Net
income for the nine months ended September 30, 1998 would have been increased by
$3.9 million if the previous periods had been restated.
On September 30, 1999, Synovus completed the acquisition of the $306 million
asset Merit Holding Corporation. Merit Holding Corporation is the parent company
of Mountain National Bank in Tucker, Georgia, and Charter Bank & Trust Co. in
Marietta, Georgia. Synovus issued 5,995,085 shares of common stock for all the
issued and outstanding shares of Merit Holding Corporation.
On September 30, 1999, Synovus completed the acquisition of the debt collection
and bankruptcy management business offered by Wallace & de Mayo, a firm based in
Norcross, Georgia. Synovus issued 2,339,624 shares of common stock for all of
the outstanding common stock of Wallace & de Mayo (WDM). Effective September 30,
1999, WDM operates as TSYS Total Debt Management, Inc. (TTDM), a wholly-owned
subsidiary of Synovus.
The aforementioned two acquisitions have been accounted for as poolings of
interests. Accordingly, the financial statements for all periods presented have
been restated to include the financial condition and results of operations of
these two entities.
On October 31, 1999, Synovus completed the acquisitions of Ready Bank of West
Florida, with $65 million in assets, and Horizon Bank of Florida, with $60
million in assets. Both transactions will be accounted for as poolings of
interests, except that the financial information preceding the dates of
acquisition will not be restated to include the financial position and results
of operations of these acquired entities since the effect is not material.
Note E - Operating Segments
Synovus has two reportable segments: banking operations and transaction
processing services. The banking operations segment is predominately involved in
commercial banking activities and also provides retail banking, trust, mortgage,
and brokerage services. The transaction processing segment consists primarily of
operations at Total System Services, Inc. (TSYS), which include credit, debit,
commercial and private-label card processing. The transaction processing
services segment also includes TTDM's debt collection and bankruptcy management
operations. All inter-segment services provided are charged at the same rates as
those charged to unaffiliated customers. Such services are included in the
revenues and net income of the respective segments and are eliminated to arrive
at consolidated totals.
Segment information as of and for the three and nine months ended September 30,
1999 and 1998 is presented below:
Three months ended September 30, 1999, and 1998
<TABLE>
<CAPTION>
Transaction
(In thousands) Banking Processing
Operations Services(c) Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
Interest income and 1999 $268,385 146,574 (2,377)(a) $412,582
non-interest income 1998 236,222 110,774 (1,330)(a) 345,666
Income before taxes 1999 66,085 27,059 (3,257)(b) 89,887
1998 53,708 26,361 (2,921)(b) 77,148
Income tax expense 1999 23,296 8,586 - 31,882
1998 18,996 8,544 - 27,540
Net Income 1999 42,789 18,473 (3,257)(b) 58,005
1998 34,713 17,816 (2,921)(b) 49,608
Total Assets 1999 11,574,711 435,475 (33,095)(d) 11,977,091
1998 9,834,830 336,420 (23,638)(d) 10,147,612
</TABLE>
Nine months ended September 30, 1999, and 1998
<TABLE>
<CAPTION>
Transaction
(In thousands) Banking Processing
Operations Services(c) Eliminations Consolidated
<S> <C> <C> <C> <C> <C>
Interest income and non 1999 $774,579 413,817 (5,715)(a) $1,182,681
interest income 1998 691,778 316,095 (2,992)(a) 1,004,881
Income before taxes 1999 173,570 86,078 (9,289)(b) 250,359
1998 151,273 72,486 (7,139)(b) 216,620
Income tax expense 1999 63,780 24,528 - 88,308
1998 55,693 20,676 - 76,369
Net Income 1999 109,790 61,550 (9,289)(b) 162,051
1998 95,581 51,809 (7,139)(b) 140,251
Total Assets 1999 11,574,711 435,475 (33,095)(d) 11,977,091
1998 9,834,830 336,420 (23,638)(d) 10,147,612
</TABLE>
(a) Principally, computerized data processing service revenues provided to the
banking segment.
(b) Minority interest in TSYS.
(c) Includes equity in income of joint ventures, which is included in
other operating income.
(d) Primarily TSYS' cash deposits with the banking
operations segment.
Note F - Legal Proceedings
Synovus and its subsidiaries are 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 or results of operations.
Currently, multiple lawsuits seeking class action treatment, are pending against
one of Synovus' Alabama banking subsidiaries that involve: (1) payment of
service fees or interest rebates to automobile dealers in connection with the
assignment of automobile credit sales contracts to that Synovus subsidiary; (2)
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; and (3) the receipt of commissions by that Synovus
subsidiary in connection with the sale of credit life insurance to its consumer
credit customers and the charging of an interest surcharge and a processing fee
in connection with consumer loans made by that subsidiary. These lawsuits seek
unspecified damages, including punitive damages. 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, equitable, and factual 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.
On November 10, 1998, a class action complaint was filed against NationsBank of
Delaware, N.A., in the United States District Court for the Southern District of
Mississippi. On March 23, 1999, the named plaintiff amended the complaint and
named TSYS and certain credit bureaus as defendants in the case. The named
plaintiff alleges, among other things, that the defendants failed to report
properly the credit standing of each member of the putative class. The named
plaintiff has defined the class as all persons and entities within the United
States who obtained credit cards from NationsBank, and whose accounts were
purchased by or transferred to U.S. BankCard, and whose accounts were reported
to credit bureaus or credit agencies incorrectly. The amended complaint alleges
negligence, violation of the Fair Credit Reporting Act, breach of the duty of
good faith and fair dealing, and seeks declaratory relief, injunctive relief,
and the imposition of punitive damages. This lawsuit seeks unspecified damages.
This litigation is in its initial phases, and, though settlement negotiations
have occurred, these negotiations have to date been unproductive. TSYS is not in
a position to determine its possible exposure, if any, as a result of this
litigation.
Note G - Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards (SFAS) No. 133, "Accounting for Derivative
Instruments and Hedging Activities." SFAS No. 133 standardizes the accounting
for derivative instruments, including certain derivative instruments embedded in
other contracts. Under the standard, entities are required to carry all
derivative instruments on the balance sheet at fair value. The accounting for
changes in the fair value (i.e., gains or losses) of a derivative instrument
depends on whether it has been designated and qualifies as part of a hedging
relationship and, if so, on the reason for holding it. If certain conditions are
met, entities may elect to designate a derivative instrument as a hedge of
exposures to changes in fair values, cash flows, or foreign currencies. If the
hedged exposure is a fair value exposure, the gain or loss on the derivative
instrument is recognized in earnings in the period of change together with the
offsetting loss or gain on the hedged item attributable to the risk being
hedged. If the hedged exposure is a cash flow exposure, the effective portion of
the gain or loss on the derivative instrument is reported initially as a
component of other comprehensive income (outside earnings) and subsequently
reclassified into earnings when the forecasted transaction affects earnings. Any
amounts excluded from the assessment of hedge effectiveness as well as the
ineffective portion of the gain or loss is reported in earnings immediately. If
the derivative instrument is not designated as a hedge, the gain or loss is
recognized in earnings in the period of change.
For Synovus, SFAS No. 133, as amended by SFAS No. 137, is effective January 1,
2001. On adoption, the provisions of SFAS No. 133 must be applied prospectively.
Synovus is in the process of assessing the impact that SFAS No. 133 will have on
its financial statements.
Note H - Other
Certain amounts in 1998 have been reclassified to conform to the presentation
adopted in 1999.
ITEM 2 - MANAGEMENT'S DISCUSSION
AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Summary
As revenues for the nine months ended September 30, 1999 increased 21.0% over
the same period in 1998, net income was $162.1 million, up 15.5% from the same
period a year ago. Diluted net income per share increased to $.57 for the first
nine months of 1999 as compared to $.51 for the same period in 1998. Return on
average assets was 1.94% and return on average equity was 18.79% for the nine
months ended September 30, 1999. This compares to a return on average assets of
1.95% and a return on average equity of 19.01% for the first nine months of
1998.
Revenues for the three months ended September 30, 1999 increased 21.9% over the
same period in 1998 and net income was $58.0 million, up 16.9% from the same
period a year ago. Diluted net income per share increased to $.21 for the third
quarter of 1999 as compared to $.18 for the same period in 1998. Return on
average assets was 1.98% and return on average equity was 19.65% for the three
months ended September 30, 1999. This compares to a return on average assets of
2.01% and a return on average equity of 19.13% for the third quarter of 1998.
During the third and fourth quarters of 1998, Synovus completed three bank
acquisitions which were accounted for as poolings of interests; however,
financial information preceding the dates of acquisition have not been restated
since the effect was not material. Net income for the nine months ended
September 30, 1998, would have been increased by $3.9 million if the previous
periods had been restated.
Acquisitions
On January 31, 1999, Synovus issued 333,163 shares of common stock to acquire
the remaining 80% interest in Canterbury Trust Company, Inc., which provides
trust, custody, investment and consulting services to large institutional
clients. The acquisition was accounted for as a purchase resulting in goodwill
of $5.5 million which will be amortized on a straight-line basis over fifteen
years.
On September 30, 1999, Synovus completed the acquisition of the $306 million
asset Merit Holding Corporation. Merit Holding Corporation is the parent company
of Mountain National Bank in Tucker, Georgia, and Charter Bank & Trust Co. in
Marietta, Georgia. Synovus issued 5,995,085 shares of common stock for all the
issued and outstanding shares of Merit Holding Corporation.
On September 30, 1999, Synovus completed the acquisition of the $7 million asset
Wallace & de Mayo (WDM). WDM is a debt collection and bankruptcy management
business based in Norcross, Georgia. Synovus issued 2,339,624 shares of common
stock for all of the outstanding common stock of Wallace & de Mayo. Effective
September 30, 1999, WDM operates as TSYS Total Debt Management, Inc. (TTDM), a
wholly-owned subsidiary of Synovus.
The aforementioned two acquisitions have been accounted for as poolings of
interests. Accordingly, the financial statements for all periods presented have
been restated to include the financial condition and results of operations of
these two entities.
Balance Sheet
During the first nine months of 1999, total assets increased $1.2 billion,
resulting primarily from strong net loan growth of $987.6 million or 13.2% and
net increase in investment securities of $121.3 million or 6.5%. Providing the
necessary funding for the balance sheet growth during the first nine months of
1999, Synovus' deposit base grew $477.9 million, federal funds purchased and
securities sold under agreement to repurchase increased $506.9 million and
shareholders' equity increased $73.9 million.
Asset Quality
As measured by asset quality indicators, Synovus' asset quality remains strong.
During the first nine months of 1999, non-performing loans (consisting of
nonaccrual and restructured loans) and loans past due greater than ninety days
and still accruing, decreased $2.3 million, while loans increased $996.1 million
or 13.1%. Synovus' nonperforming assets ratio was .41% as of September 30, 1999,
which increased one basis point from December 31, 1998. Annualized net
charge-offs to average loans for the nine months ended September 30, 1999 were
.29% compared to .32% during the first nine months of 1998 and .35% for the
entire year in 1998. Net charge-offs to average loans for the quarter ended
September 30, 1999, were .24% compared to .33% during the third quarter of 1998.
Net credit card charge-offs represented 46% of total net charge-offs for the
nine months ended September 30, 1999 compared to 60% for the same period in
1998. Synovus' overall credit risk profile has continued to improve with credit
card loans representing only 2.7% of total outstandings at September 30, 1999
compared to 3.4% and 3.5% at December 31, 1998 and September 30, 1998,
respectively.
Loans 90 days past due and still accruing at September 30, 1999, were $16.9
million, or .20% of total loans, compared to $24.6 million, or .32% of total
loans at December 31, 1998, which is a decrease of $7.7 million, or 31.3%.
Management believes that the value of the underlying collateral securing these
commercial and consumer loans is generally sufficient to cover the principal and
interest 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 for loan losses was $122.6 million, or 1.43% of net loans, at
September 30, 1999, compared to $114.1 million, or 1.50% of net loans, at
December 31, 1998. The provision for loan losses for the nine months ended
September 30, 1999 was $25.3 million, compared to $20.6 million for the same
period in 1998. The higher provision expense was due to the increase in loan
volume, somewhat offset by continued strong asset quality. For the nine months
ended September 30, 1999, the provision for losses on loans was 1.47 times net
charge-offs compared to 1.24 for the nine months ended September 30, 1998.
<TABLE>
<CAPTION>
September 30, December 31,
(In thousands) 1999 1998
- --------------------------------------------------------------------------------
<S> <C> <C>
Nonperforming loans $ 26,628 21,208
Other real estate 8,668 9,536
- --------------------------------------------------------------------------------
Non-performing assets $ 35,296 30,744
================================================================================
Loans 90 days past due and still accruing $ 16,877 24,640
================================================================================
Reserve for loan losses $122,560 114,109
================================================================================
Reserve for loan losses as a % of loans 1.43% 1.50
================================================================================
As a % of loans and other real estate:
Nonperforming loans 0.31% 0.28
Other real estate 0.10 0.12
- --------------------------------------------------------------------------------
Non-performing assets 0.41% 0.40
================================================================================
Reserve to nonperforming loans 460.27% 538.05
================================================================================
</TABLE>
Capital Resources and Liquidity
Synovus continues to maintain its capital at levels that 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 guidelines. Synovus' total risk-based capital was $1.345
billion at September 30, 1999, compared to $1.231 billion at December 31, 1998.
The ratio of total risk-based capital to risk-weighted assets was 13.70% at
September 30, 1999 compared to 14.00% at December 31, 1998. Synovus' leverage
ratio at the end of the third quarter of 1999 was 10.52% compared to 10.82% at
the end of 1998. Synovus' equity-to-assets ratio was 9.90% at September 30, 1999
compared to 10.28% at year-end 1998.
Internal capital generation continues to support asset growth, as reflected in
the third quarter 1999 equity-to-asset ratio exclusive of net unrealized gains
(losses) on investment securities available for sale of 9.99%, compared to
10.20% at year-end 1998.
Synovus' liquidity position decreased moderately to 28.65% at September 30,
1999, compared to 39.87% at December 31, 1998, due to the majority of earning
asset growth being in loans. Additionally, the maturity mix of investment
securities and loans has not changed significantly during the first nine months
of 1999.
During the nine months ended September 30, 1999, net loans increased by 13.2%
while deposits increased by 5.4%. Due to the strong loan growth, our funding mix
has changed during 1999, compared to the funding mix we had at December 31,
1998. Accordingly, long-term debt (primarily in the form of Federal Home Loan
Bank advances) and short-term fundings (consisting mostly of federal funds
purchased) increased by a total of $603.9 million when compared to December 31,
1998.
Synovus' management monitors liquidity in coordination with the appropriate
committees at each subsidiary bank. Management must ensure that adequate
liquidity, at a reasonable cost, is available to meet the cash flow needs of
depositors, borrowers, and creditors. Management constantly monitors and
maintains appropriate levels of assets and liabilities so as to provide adequate
funding sources to meet estimated customer withdrawals and future loan requests.
Additionally, Synovus subsidiary banks have access to overnight federal funds
lines with various financial institutions, which total approximately $1.8
billion, that can be drawn upon for short-term liquidity needs. Synovus also has
access to a $25 million line of credit.
During the third quarter of 1999, TSYS officially opened the first phase of its
Riverfront Campus and essentially completed moving the majority of its downtown
employees to the facility. TSYS is leasing the Riverfront Campus under an
operating lease. The lease provides for a residual value guarantee of up to $87
million, and includes purchase options at the original cost of the property.
Real estate taxes, insurance, maintenance and operating expenses applicable to
the leased property are obligations of TSYS. TSYS expects the increase in
occupancy and equipment expense related to occupying the campus to be
approximately $5.3 million in 1999, net of the relinquished lease obligations.
The consolidated statements of cash flows detail Synovus' cash flows from
operating, investing, and financing activities. Operating activities provided
net cash of $307.4 million during the first nine months of 1999, while $1,012.3
million was provided by financing activities. Investing activities utilized
$1,297.4 million of this amount, resulting in an increase in cash and cash
equivalents of $22.3 million.
Earning Assets, Sources of Funds, and Net Interest Income
Average total assets for the first nine months of 1999 were $11.2 billion, up
16.1% over the first nine months average of 1998, which was $9.6 billion.
Average assets for the nine months ended September 30,1998 would have increased
by approximately $220 million if 1998 financial statements had been restated for
the bank acquisitions completed during the second half of 1998. Average earning
assets were up 15.8% in the first nine months of 1999 over the same period
a year ago and represented 90.2% of average total assets. When compared to the
same period last year, average deposits increased $903.3 million, average
shareholders' equity increased $167.2 million, and average federal funds
purchased and securities sold under agreement to repurchase increased $411.9
million. This growth provided the funding for the $1.1 billion growth in average
net loans, the $242.0 million increase in average investment securities,
partially offset by the $49.9 million decrease in average federal funds sold.
Net interest income was $377.3 million for the nine months ended September 30,
1999, up $41.3 million, or 12.3%, over the $336.0 million reported in the nine
months ended September 30, 1998. Net interest income, on a tax-equivalent basis,
for the first nine months of 1999 increased $41.9 million, or 12.3%, over the
same period in 1998.
Net interest income was $130.7 million for the third quarter of 1999, up $15.9
million, or 13.9%, over the $114.8 million reported for the third quarter of
1998. Net interest income, on a tax-equivalent basis, for the third quarter of
1999 increased $16.0 million, or 13.8%, over the third quarter of 1998. Net
interest income for the nine and three months ended September 30, 1998 would
have increased by $17.2 million and $5.1 million, respectively, if the previous
periods had been restated for the bank acquisitions completed during the second
half of 1998.
The year-to-date net interest margin was 5.09%, down sixteen basis points from
the same period last year. This decrease resulted from a forty-four basis point
decrease in the yield on earning assets, which was partially offset by a
twenty-eight basis point decrease in the effective cost of funds. The decreased
yield on earning assets was due to lower yields on investment securities and
loans. The decreased loan yields were primarily due to a 63 basis point decrease
in the average prime rate from the first nine months of 1998 compared to the
first nine months of 1999. The decreased effective cost of funds was due to
lower average rates paid on interest-bearing funding.
The tax-equivalent adjustment that is required in making 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.
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
- --------------------------------------------------------------------------------------
(In thousands) 1999 1998 1999 1998
- --------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income $ 647,719 586,992 225,732 199,604
Taxable-equivalent adjustment 4,336 3,811 1,451 1,324
- --------------------------------------------------------------------------------------
Interest income, taxable-equivalent 652,055 590,803 227,183 200,928
Interest expense 270,378 250,997 95,009 84,803
- --------------------------------------------------------------------------------------
Net interest income, taxable-equivalent $ 381,677 339,806 132,174 116,125
======================================================================================
</TABLE>
Non-Interest Income
Total non-interest income during the first nine months of 1999 increased $117.1
million, or 28.0%, over the same period in 1998. This increase in non-interest
income resulted primarily from higher data processing revenues, which increased
$92.3 million, or 34.8%, during the nine months ended September 30, 1999, over
the same period in 1998. For the year-to-date, banking operations' non-interest
income increased 20.6% or $21.9 million compared to the same period a year ago.
The growth in fee income was led by service charges on deposits up $5.5 million
or 12.0%, trust services up 35.6% or $4.0 million, brokerage up 24.3% or $2.0
million, and mortgage up 13.5% or $1.9 million. Additionally, other operating
income for the first nine months of 1999 included a $3.1 million gain from the
sale of a corporate investment.
Total non-interest income during the quarter ended September 30, 1999, increased
$40.8 million, or 27.9%, over the third quarter of 1998. The increase in
non-interest income resulted primarily from higher data processing revenues,
which increased $34.8 million, or 38.0%, during the quarter ended September 30,
1999, over the same period in 1998. Additionally, banking operations'
non-interest income increased 16.1% or $5.9 million during the quarter ended
September 30, 1999, compared to the same period a year ago. Service charges on
deposits, trust services, and mortgage revenues represented most of the
increase. Non-interest income for the nine and three months ended September 30,
1998 would have increased by $5.3 million and $1.5 million respectively, if the
previous periods had been restated for the bank acquisitions completed during
the second half of 1998.
Data processing services revenue is derived principally from the servicing of
individual bankcard accounts for the card-issuing customers of TSYS. TSYS'
revenues from bankcard data processing services increased $92.3 million, or
34.8%, for the nine months ended September 30, 1999, compared to the same period
in 1998. Increased revenues from bankcard data processing services are
attributable to the growth in the card portfolios of existing customers, as well
as cardholder accounts of new customers. Increases in the volumes of
authorizations and transactions associated with the additional cardholder
accounts also contributed to the increased revenues. Processing contracts with
large customers, representing a significant portion of TSYS' total revenues,
generally provide for discounts on certain services based on increases in the
level of cardholder accounts processed. As a result, bankcard data processing
revenues and the related margins are influenced by the customer mix relative to
the size of customer bankcard portfolios, as well as the number of individual
cardholder accounts processed for each customer.
In May 1998, TSYS signed a long-term processing agreement with Sears, Roebuck
and Co. to convert and process its private-label credit card portfolio. In April
1999, the conversion of the Sears portfolio was completed. The accounts
converted for Sears in 1999, combined with the 7.5 million converted in the
fourth quarter of 1998 and the internal growth in the portfolio, bring the total
accounts for Sears to 66 million.
During the second quarter of 1999, TSYS received a one-time termination fee of
$6.9 million from a client which terminated its processing agreement with TSYS
as a result of its merger with a financial institution that processes in-house.
The payment is in lieu of processing fees which would have been paid throughout
the remaining life of the processing contract.
A significant amount of TSYS' revenues is derived from long-term contracts with
large customers, including certain major customers. For the three months ended
September 30, 1999, three major customers accounted for approximately 38% of
total revenues, compared to 36% for the three months ended September 30, 1998.
For the nine months ended September 30, 1999, two major customers accounted for
approximately 30% of total revenues, compared to 35% for the nine months ended
September 30, 1998. The loss of one of TSYS' major customers, or other
significant customers, could have a material adverse effect on TSYS' financial
condition and results of operations.
Near the end of the first quarter of 1998, AT&T, a major customer of TSYS,
completed the sale of its Universal Card Services (UCS) to CITIBANK, now a part
of Citigroup after CITIBANK's merger with Travelers Group, Inc. On February
26,1999, CITIBANK notified TSYS of its decision to terminate UCS' processing
agreement with TSYS for consumer credit card accounts at the end of its original
term on August 1, 2000. TSYS' management believes that CITIBANK will continue to
be a major customer in 1999, but will not be a major customer in 2000. TSYS'
management further believes that the loss of revenues from UCS for the months of
August through December 2000, combined with decreased expenses from the
reduction in hardware and software and the redeployment of personnel, should not
have a material adverse effect on TSYS' financial condition or results of
operations for the year ending December 31, 2000.
Effective September 30, 1998, NationsBank and Bank of America merged. TSYS had
long-term processing contracts with each of these customers, with NationsBank's
ending in 2005 and Bank of America's ending in 2007. In September 1999, TSYS
announced a new ten-year agreement with the combined entity, known as Bank of
America, to continue processing its credit card portfolio until 2009. The
combination of NationsBank and Bank of America under a single processing
agreement with TSYS will reduce TSYS' revenues in 1999 and future years because
together NationsBank and Bank of America will be entitled to receive greater
discounts than either would have been entitled to receive standing alone. TSYS
expects its new processing agreement to produce a net profit margin consistent
with its historical net profit margins.
Non-Interest Expense
Total non-interest expense (excluding the minority interest in TSYS' net income)
for the nine months ended September 30, 1999, increased $117.7 million, or
23.1%, over the same period in 1998. Total non-interest expense for the third
quarter of 1999 increased $40.8 million, or 23.3%, over the third quarter of
1998. Management analyzes non-interest expense in two separate components:
banking operations and transaction processing services. The following
table summarizes this data for the first nine months of 1999 and 1998.
<TABLE>
<CAPTION>
1999 1998
- ----------------------------------------------------------------------------------------
Transaction Transaction
Processing Processing
(In thousands) Banking Services Banking Services
- ----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Salaries and other personnel expenses $ 173,693 159,935 161,578 125,714
Net occupancy and equipment expense 41,264 110,292 36,765 77,636
Other operating expenses 73,240 68,888 58,471 49,410
- ----------------------------------------------------------------------------------------
Total non-interest expense $ 288,197 339,115 256,814 252,760
========================================================================================
</TABLE>
Banking operations' non-interest expense increased $31.4 million or 12.2% for
the nine months ended September 30, 1999, compared to the same period in 1998.
During the third quarter of 1999, non-interest expense increased $4.5 million or
5.0%, compared to the same period in 1998. As expected, banking operations'
non-interest expense increased at a lower rate when compared to the increases
that we have been experiencing in previous quarters. Additionally, when compared
to the second quarter of 1999, non-interest expense decreased $2.3 million, the
first decline in six consecutive quarters. During the previous quarters,
non-interest expense increased at a faster pace due to the significant
investments that we made: building of The New Bank (completed in April 1999),
the conversion of our banks to a new information technology processing system
(completed during March 1999), and our human resource intiatives through PDE
(Personally Developing EveryONE - now underway for over one year). Non-interest
expense for the nine and three months ended September 30, 1998 would have been
$14.2 million and $5.1 million higher, respectively, if the previous periods had
been restated for the bank acquisitions completed during the second half of
1998.
Approximately 97% of total transaction processing services non-interest expense
relates to TSYS, with the remainder related to TTDM. The following paragraphs
provide an analysis of the non-interest expense components at TSYS. Non-interest
expense related to TSYS increased 35.1% or $85.1 million and 44.5% or $9.0
million for the nine and three months ended September 30, 1999, respectively,
compared to the same periods in 1998. Employment expenses increased 28.2% and
37.2% for the nine and three months ended September 30, 1999, respectively,
compared to the same periods in 1998. The increase in employment expenses is due
to growth in the number of employees, normal salary increases and related
benefits, offset by $12.8 million and 2.7 million invested in software
development costs and contract acquisition costs for the nine and three months
ended September 30, 1999, respectively. The majority of the software development
costs were related to the development of a commercial card system for TS2 which
began in May 1998 and is expected to be substantially completed in early 2000.
The average number of employees in the third quarter of 1999 increased to 4,081,
an 18.8% increase over the 3,434 in the same period of 1998. For the first nine
months of 1999, the average number of employees was 3,938, a 17.2% increase over
the first nine months of 1998.
Net occupancy and equipment expense at TSYS increased 42.7% and 48.4% for the
nine and three months ended September 30, 1999, respectively, over the same
periods in 1998. Computer equipment and software rentals, which represent the
largest component of net occupancy and equipment expense, increased 57.6% to
$21.4 million in the third quarter of 1999, compared to $13.6 million in the
same period of 1998. During the first nine months of 1999, computer equipment
and software rentals increased 48.7% to $57.8 million compared to $38.9 million
in the same period in 1998. Due to rapidly changing technology in computer
equipment, TSYS' equipment needs are achieved primarily through operating
leases. During 1998 and the first half of 1999, TSYS made significant
investments in computer software licenses and hardware related to the new East
Center data center and to accommodate increased volumes due to the expected
growth in the number of accounts associated with new customers.
Other operating expenses at TSYS increased 40.2% and 56.2% for the nine and
three months ended September 30,1999, respectively, compared to the same periods
in 1998. The growth in other operating expenses for 1999 is primarily due to
increased business development costs associated with exploring new business
opportunities, both domestically and internationally; the establishment of a new
international office in London, and increased amortization of contract
acquisition costs. The conversions of Sears, Royal Bank, and Canadian Tire
Acceptance Limited (CTAL), begun in March 1999 and completed early in the second
quarter, contributed to the increase in amortization of contract acquisition
costs.
Year 2000 Readiness Disclosure
Many computer programs were written with a two digit date field, and, if these
programs are not made Year 2000 compliant, they will be unable to correctly
process date information for the year 2000 and after. Through separate task
forces, Synovus is continuing its ongoing projects to assure its processing
systems will be Year 2000 compliant for its banking activities and at TSYS. The
task forces are composed of dedicated resources as well as members from other
areas within the banks and TSYS. Each Board of Directors has reviewed the
overall project plans for the banks and TSYS with progress toward completion
monitored regularly. The primary components of the plans include: awareness -
assuring a common understanding of the issues throughout Synovus; assessment -
identification of non-compliant hardware, equipment, and software as well as
suppliers and vendors; renovation - renovation, replacement or retirement of
programs; validation - testing modifications of programs including coordination
of testing with third parties and vendors; and implementation - moving validated
code to production.
Banking Operations:
For the banks, the conversion of the core processing systems to Marshall &
Illsley Data Services (M&I) has provided for Year 2000 compliance for the core
applications, including loans, deposits, and sales platforms. M&I has completed
the Year 2000 renovation for its banking systems and is currently utilizing this
renovated code for all processing. During the first quarter of 1999, M&I
completed the testing phase. Since March 31, 1999, all Synovus banks are being
processed using the M&I Year 2000 renovated code. The remaining personal
computer hardware platforms and software programs, as well as other ancillary
systems such as ATM's, fax machines, copiers, and phone systems, have been
reviewed and all significant applications or infrastructure which need to be
modified have been identified and their renovation and testing was completed as
of June 30, 1999.
In August 1998, M&I received ITAA*2000 certification from the Information
Technology Association of America. The program examines processes and methods
used by companies to perform their year 2000 software conversions. In addition,
M&I's progress and plans are subject to periodic review and evaluation by
banking regulatory agencies. In August, 1998, M&I adopted a "Year 2000
Contingency Strategy" plan which follows all the Federal Financial Institutions
Examination Council's (FFIEC) guidelines. This plan includes an analysis of
"most reasonably likely year 2000 worst case scenarios" and M&I's planned
solutions to those scenarios. Examples of these scenarios and planned solutions
are, a power interruption at a data processing facility mitigated by an onsite
generator, and simultaneous disasters at all data processing locations mitigated
by use of a prearranged third party facility.
Business resumption contingency planning is underway at Synovus in accordance
with the FFIEC guidelines and progressing on schedule. This planning effort
addresses specific issues related to Year 2000 service interruptions.
Operational plans which will allow Synovus to operate in the event of the
disruption of services from mission critical service providers have been
completed and will be tested during the remaining months of 1999. Included in
the Synovus business resumption contingency planning are measures that address
liquidity and the ready availability of cash.
Based on currently available information, while management anticipates there
could be isolated and short-term disruptions of various services and interfaces
at its business sites, there is no expectation of extensive or protracted
systemic failures that would have a material adverse effect on the financial
condition or results of operations of Synovus.
TSYS:
At TSYS, the core system of TS2 was designed to be Year 2000 compliant, and TSYS
is continuing its ongoing project to ensure that all of TSYS' processing systems
are Year 2000 compliant. As of December 31, 1998, TSYS had completed the
awareness, assessment, renovation, and validation phases of its Year 2000
project. During 1998, two major milestones were met. The first milestone, 100%
of all critical code converted, was achieved in April 1998. The second, 100% of
all non-critical code renovated, was completed in July 1998. As units were
renovated they were returned to production, and, as of December 31, 1998, TSYS
was fully operating in Year 2000 compliant systems. The validation phase at TSYS
included setting up a test environment, testing core system functionality and
providing test results to clients. It was during this phase that Turn of The
Century, Monthly Cycling, Leap Year and Millennium Year, and Month and
Quarter-end dates were tested. This phase concluded during October, 1998 and
results were sent to customers in November and December 1998. The implementation
phase, which allowed clients the opportunity to test their specific code within
a Year 2000 environment, began in 1998. As of September 30,1999 all three client
test iterations were completed.
Another significant aspect of the Year 2000 project is contingency planning,
which is a process to ensure that TSYS can continue operations in the event that
information technology systems, noninformation technology systems, or vendors
are not Year 2000 compliant. In June 1999, TSYS completed its Business
Resumption Contingency Plan, or Y2K Day Plan, which is based on the TSYS
Disaster Recovery Plan. This plan sets forth processes and procedures to follow
in case TSYS experiences a problem with processing Year 2000 data or if
mission-critical service providers suffer disruption. The plan was validated by
a walk-through and a role play during June 1999. An abbreviated version of the
plan was shared with clients in July 1999. A client forum to discuss the Y2K Day
Plan was conducted in August 1999. The plan includes the following:
TSYS programming staff will be on site from December 26, 1999 to January 5, 2000
to immediately remediate any coding issues encountered. The Year 2000 Command
Center will act as the nerve center during the century changeover, monitoring
processing status of over 88 business areas through 12 command posts, conveying
management decisions, and deploying resources where required.
If a power loss is experienced for any reason at TSYS Data Centers which house
mainframe and associated hardware, all of TSYS' critical systems would be
powered through battery backup and diesel generators without experiencing any
downtime. This process, referred to as TSYS' Uninterrupted Power Supply system,
has enough fuel for 72 hours. TSYS has contracts with two separate fuel
distributors to ensure that its operations could continue indefinitely. The fuel
companies have backup generators to keep their fuel pumps operational in case of
a power failure.
TSYS has service agreements with IBM's Global Services to provide, through its
business unit, Business Recovery Services, hot-site assistance and equipment for
data center and network recovery in case of a natural or man-made disaster.
Also, TSYS has contracts with other companies to receive immediate service
and/or top priority in an emergency situation. Additionally, vendor technicians
for key equipment will be on site for the period of December 31, 1999 through
January 3, 2000.
TSYS management believes that the most likely Year 2000 risks relate to third
parties with which it has material relationships. A failure or disruption of (i)
TSYS' mission-critical computer systems caused by third-party hardware/software,
(ii) third-party service/network/gateway providers, or (iii) significant clients
for an extended period, could adversely affect the financial condition and
results of operations of TSYS. TSYS' Year 2000 Project Office has reviewed
compliance and tested with TSYS' top 11 customers defined by number of accounts
on file and/or by revenues generated and found them to be Year 2000 ready.
Management believes its internal review indicates that TSYS' mission-critical
systems are Year 2000 ready; however, failure of a mission critical third-party
provider could have a material adverse effect on TSYS' business, operations and
financial results. However, based on currently available information, while
management anticipates there could be isolated and intermittent disruptions of
various services and interfaces at its business sites related to third parties
with which it has material Year 2000 relationships, there is no expectation of
extensive or protracted systemic failures that would have a material adverse
effect on the financial condition or results of operations of TSYS.
The majority of Synovus' costs in becoming Year 2000 compliant are related to
TSYS. Such costs are being expensed as incurred and are not expected to have a
material effect on Synovus' financial condition or results of operations for
1999. TSYS currently estimates the total cost for the Year 2000 project will
amount to approximately $18 million of direct costs. This amount consists
primarily of the costs associated with personnel dedicated to the Year 2000
project. During the first nine months of 1999, TSYS incurred $5.0 million of
direct costs associated with the Year 2000 project and has incurred $14.0
million since project inception. The banking operations' Year 2000 remediation
costs, other than those related to the conversion to M&I, are not material.
Synovus estimates that the total cost for its banking operations Year 2000
project will be approximately $2.5 million (approximately $1.4 million incurred
in 1998, with the remainder to be incurred during 1999). These costs are
exclusive of the costs associated with the conversion to the M&I system and
consist primarily of direct personnel costs and customer notifications. The
failure of Synovus or TSYS to be Year 2000 compliant would have a material
adverse effect on Synovus' financial condition and results of operations.
The costs of the projects and the dates on which Synovus and TSYS believe they
will complete the Year 2000 modifications are based on management's best
estimates, which were derived utilizing numerous assumptions about future
events, including the continued availability of necessary technical resources
and the cooperation of customers and vendors. However, there are no guarantees
that these estimates will be achieved and actual results could differ materially
from those anticipated.
All forward-looking statements regarding Year 2000 readiness, including
estimates, forecasts and expectations, are inherently uncertain as they are
based on various expectations and assumptions concerning future events and are
subject to numerous risks and uncertainties which could cause actual events or
results to differ materially from those projected. Important factors upon which
Synovus' Year 2000 forward-looking statements are premised include: (a)
retention of employees and contractors working on Year 2000 projects; (b) TSYS
customers' remediation of their internal systems to be Year 2000 ready and their
cooperation in timely testing; (c) no material disruption of telecommunication,
data transmission networks, payment networks, government services, utilities or
other infrastructure services and no unexpected failure of third-party products;
(d) no unexpected failures by third-parties providing services to Synovus; (e)
no undiscovered subversion of systems or program code affecting Synovus'
systems; and (f) no undiscovered material flaws in Synovus' test processes.
Income Tax Expense
Income tax expense for the nine months ended September 30, 1999, was $88.3
million compared to $76.4 million for the same period a year ago. Income tax
expense for the third quarter of 1999 was $31.9 million compared to $27.5
million in the third quarter of 1998. The effective tax rate for the third
quarter of 1999 was 35.5% compared to 35.7% in the same quarter of 1998. The
effective tax rate for the first nine months of 1999 and 1998 was 35.3% for both
periods.
Forward-Looking Statements
Certain statements contained in this filing which are not statements of
historical fact constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act (the "Act"). In addition, certain
statements in future filings by Synovus with the Securities and Exchange
Commission, in press releases, and in oral and written statements made by or
with the approval of Synovus which are not statements of historical fact
constitute forward-looking statements within the meaning of the Act. Examples of
forward-looking statements include, but are not limited to: (i) projections of
revenues, income or loss, earnings or loss per share, the payment or non-payment
of dividends, capital structure and other financial terms; (ii) statements of
plans and objectives of Synovus or its management or Board of Directors,
including those relating to products or services; (iii) statements of future
economic performance; and (iv) statements of assumptions underlying such
statements. Words such as "believes," "anticipates," "expects," "intends,"
"targeted," and similar expressions are intended to identify forward-looking
statements but are not the exclusive means of identifying such statements.
Forward-looking statements involve risks and uncertainties, which may cause
actual results to differ materially from those in such statements. Factors that
could cause actual results to differ from those discussed in the forward-looking
statements include, but are not limited to: (i) the strength of the U.S. economy
in general and the strength of the local economies in which operations are
conducted; (ii) the effects of and changes in trade, monetary and fiscal
policies, and laws, including interest rate policies of the Federal Reserve
Board; (iii) inflation, interest rate, market and monetary fluctuations; (iv)
the timely development of and acceptance of new products and services and
perceived overall value of these products and services by users; (v) changes in
consumer spending, borrowing, and saving habits; (vi) technological changes
(including "Year 2000" data systems compliance issues) are more difficult or
expensive than anticipated; (vii) acquisitions; (viii) the ability to increase
market share and control expenses; (ix) the effect of changes in laws and
regulations (including laws and regulations concerning taxes, banking,
securities, and insurance) with which Synovus and its subsidiaries must comply;
(x) the effect of changes in accounting policies and practices, as may be
adopted by the regulatory agencies, the Financial Accounting Standards Board, or
other authoritative bodies; (xi) changes in Synovus' organization, compensation,
and benefit plans; (xii) the costs and effects of litigation and of unexpected
or adverse outcomes in such litigation; and (xiii) the success of Synovus at
managing the risks involved in the foregoing.
Such forward-looking statements speak only as of the date on which such
statements are made, and Synovus undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after the date on
which such statement is made to reflect the occurrence of unanticipated events.
ITEM 3 - QUANTITATIVE AND
QUALITATIVE DISCLOSURES ABOUT
MARKET RISK
Quantitative and qualitative disclosures about market risk were included in the
annual report which was incorporated by reference in Synovus' 1998 10-K. There
have been no significant changes in the contractual balances and the estimated
fair value of Synovus' on-balance sheet financial instruments, the notional
amount and estimated fair value of the company's off-balance sheet derivative
financial instruments, or weighted-average interest rates.
ITEM 6 - EXHIBITS AND REPORT ON FORM 8-K
(a) Exhibits
(10) Employment Agreement of James H. Blanchard
(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 the
third quarter of 1999.
(1) The report filed on September 30, 1999, included the following events:
On September 29, 1999, Total System Services, Inc. ("TSYS"), an 80.8 percent
owned subsidiary of Synovus Financial Corp., announced a ten-year agreement with
Bank of America to continue processing its credit card portfolio until 2009. The
new agreement extends the existing agreement by two years and includes the card
portfolios of Bank of America and NationsBank which merged in 1998.
On September 30, 1999, TSYS announced that it expects its 1999 net income to
exceed its 1998 net income by at least 23 percent and that it expects its 2000
net income to exceed its 1999 projected net income by at least 13 to 15 percent.
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: November 15, 1999 BY: /s/ Thomas J. Prescott
----------------------------
Thomas J. Prescott
Executive Vice President and
Chief Financial Officer
INDEX TO EXHIBITS
Sequentially
Exhibit Number Description Numbered Page
10 Employment Agreement of 27
James H. Blanchard
11 Statement re Computation of
Per Share Earnings
27 Financial Data Schedule
(for SEC purposes only, not
enclosed herewith)
STATE OF GEORGIA
COUNTY OF MUSCOGEE
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT
This Amended and Restated Employment Agreement ("Agreement") is entered
into this 13th day of September, 1999 by and between Synovus Financial Corp.
("Synovus"), a Georgia corporation, and James H. Blanchard ("Executive"), an
individual resident of the State of Georgia.
WHEREAS, Synovus and Executive and Columbus Bank and Trust Company, a
wholly-owned banking subsidiary of Synovus, were parties to an Employment
Agreement dated October 13, 1977 and amended on January 7, 1982, April 18, 1989,
January 1, 1990, and March 9, 1992 ("Existing Agreement");
WHEREAS, Synovus desires to retain the services of Executive for
an additional seven years; and
WHEREAS, Synovus desires to amend and restate the provisions of the
Existing Agreement.
NOW, THEREFORE, in consideration of the mutual promises and agreements
contained in this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Synovus and Executive
hereby agree as follows:
Section 1.
Definitions
1.1. Board. The term "Board" means the Board of Directors of SYNOVUS.
1.2. Cause. The term "Cause" for purposes of this Agreement shall mean
matters which the Board determines to consist of the Executive's embezzlement,
deceit and/or dishonesty, gross negligence or willful misconduct in the
performance of his duties or responsibilities under this Agreement or a breach
of Sections 4 or 5 or any other material provision of this Agreement.
1.3. Confidential or Proprietary Information. The term "Confidential or
Proprietary Information" for purposes of this Agreement shall mean any secret,
confidential, or proprietary information of SYNOVUS or a SYNOVUS AFFILIATE (not
otherwise included in the definition of Trade Secret in Section 1.7 of this
Agreement) that has not become generally available to the public by the act of
one who has the right to disclose such information without violating any right
of SYNOVUS or a SYNOVUS AFFILIATE.
1.4. Disability. The term "Disability" for purposes of this Agreement
means a bodily or mental illness, disease or injury to the extent that, in the
reasonable judgment of the Board, it prevents Executive from performing his
material and substantial duties and responsibilities under this Agreement.
1.5. SYNOVUS. The term "SYNOVUS" for purposes of this Agreement
means SYNOVUS FINANCIAL CORP. and any successor to SYNOVUS FINANCIAL CORP.
1.6. SYNOVUS AFFILIATE. The term "SYNOVUS AFFILIATE" for purposes of
this Agreement means any organization whose employees would be treated as
employees of SYNOVUS under ss. 414(b) or ss. 414(c) of the Internal Revenue Code
of 1986, as amended, if the figure 50% was substituted for the figure 80% in the
income tax regulations under these two sections of such Code.
1.7. Trade Secret. The term "Trade Secret" for purposes of this
Agreement shall mean information, including, but not limited to, technical or
nontechnical data, a formula, a pattern, a compilation, a program, a source
code, an object code, a device, a method, a technique, a drawing, a process,
financial data, financial plans, product plans, or a list of actual or potential
customers or suppliers which is not commonly known by or available to the public
and which information:
(a) derives economic value, actual or potential, from not
being generally known to, and not being readily ascertainable by proper
means by, other persons who can obtain economic value from its
disclosure or use, and
(b) is the subject of reasonable efforts by SYNOVUS or any
SYNOVUS AFFILIATE to maintain its secrecy.
Section 2.
Terms And Conditions Of Employment
2.1. Term. The term of Executive's employment under this Agreement
(subject to the terms and conditions of this Agreement) shall be the seven (7)
consecutive year period which starts on the date of this Agreement.
2.2. Title, Duties and Responsibilities. Executive shall serve as
Chairman and Chief Executive Officer of SYNOVUS through September 13, 2004,
after which Executive's title, duties and responsibilities under this Agreement
shall be set by SYNOVUS' Board of Directors. Executive shall devote all of his
working time, attention, and energy to fulfilling such duties and
responsibilities and shall not engage in any substantial outside business or
other activities unrelated to serving SYNOVUS' business interests.
Notwithstanding the foregoing, Executive may devote reasonable time to fulfill
his duties with any governmental appointments, and nothing in this Section 2.2
shall preclude Executive from (a) participating or serving on corporate,
industry, civic, charitable or professional boards or committees, (b) delivering
lectures, fulfilling speaking engagements, or teaching at education
institutions, or (c) investing his personal assets in any form or manner so long
as such activities do not significantly interfere with the performance of
Executive's duties and responsibilities as an employee of SYNOVUS.
2.3. Compensation.
(a) Base Salary. Executive's annual Base Salary at the start
of his term shall be $670,000, payable in accordance with SYNOVUS'
standard payroll policies and practices. Such Base Salary shall be
reviewed no less frequently than annually by the SYNOVUS Compensation
Committee in accordance with SYNOVUS' standard practices for reviewing
base salary for similarly situated executives of SYNOVUS.
(b) Vacation. Executive shall be entitled to paid vacation in
accordance with the plans, policies, programs and practices of SYNOVUS
as in effect for similarly situated executives of SYNOVUS.
(c) Bonus Plan and Other Benefits. Executive shall be eligible
to participate in the Synovus Financial Corp. Incentive Bonus Plan (as
amended from time to time), in the SYNOVUS Long-Term Incentive Plan(s),
and the various welfare and fringe benefit plans and the tax qualified
retirement plans as adopted by SYNOVUS. Executive shall also be
entitled to receive the same perquisites in accordance with the plans,
policies, programs and practices of SYNOVUS as in effect for similarly
situated executives of SYNOVUS.
(d) Change in Control Agreement. SYNOVUS has entered into a
separate Change in Control Agreement with Executive as of January 1,
1996.
(e) Challenge Grant of Stock Options. SYNOVUS has agreed to
grant performance accelerated options to Executive that are exercisable
upon the earlier of (i) the expiration of this Agreement, or (ii) the
attainment and maintenance of specified stock price hurdles until the
time of exercise, i.e., one-third would be exercisable if the price
equals or exceeds $40 at the time of exercise, one-third would be
exercisable if the price equals or exceeds $45 at the time of exercise,
and the remaining third would be exercisable if the price equals or
exceeds $50 at the time of exercise. An initial grant of an option to
purchase 500,000 shares will be made as of the date of this Agreement.
It is the intention of Synovus, subject to the provisions of Synovus'
Long-Term Incentive Plans and the recommendation of the Compensation
Committee, that similar grants will be made at future dates. The
initial grant agreement is attached hereto as Exhibit "A" and made a
part hereof.
Section 3.
Deferred Compensation
3.1. Amount of Deferred Compensation. For all services heretofore and
hereafter rendered by Executive on behalf of SYNOVUS during the term of this
Agreement, SYNOVUS shall pay Executive or his beneficiary (as the case may be)
deferred compensation in the total amount of $468,000, said deferred
compensation to be in addition to any and all amounts of deferred compensation
which may be payable to Executive or his beneficiary (as the case may be) under
qualified or nonqualified defined contribution or defined benefit plans
maintained by SYNOVUS, under insurance policies, or otherwise.
3.2. Forfeiture of Deferred Compensation. Executive and his beneficiary
shall forfeit all rights to deferred compensation under this Section 3 upon the
date of the occurrence of either of the following events: (a) SYNOVUS'
termination of the employment of Executive with SYNOVUS for Cause; (b)
Executive's violation of the terms of the Noncompetition Covenants set forth in
Section 4 below or the Trade Secrets and Confidentiality Covenants set forth in
Section 5 below; or (c) Executive commits suicide.
3.3. Payment of Deferred Compensation. Subject to the provisions of
Section 3.2 above, deferred compensation shall be due and payable under this
Agreement to Executive or his beneficiary or beneficiaries (hereinabove and
hereinafter referred to as "beneficiary") as follows, to-wit:
(a) Termination of Executive's Employment. Should Executive
voluntarily terminate his employment with SYNOVUS or should SYNOVUS
terminate Executive's employment with SYNOVUS for reasons other than
Cause, then in either of such events, SYNOVUS shall commence payment of
deferred compensation to Executive at the rate of $2,600 per month for
180 consecutive calendar months, the first of such monthly payments to
commence 30 days after the date of the termination of Executive's
employment; provided, however, should Executive die prior to receiving
all of said 180 monthly payments, then in such event, the then
remaining unpaid balance of the $468,000 of deferred compensation due
to Executive shall be paid to Executive's beneficiary in approximately
equal monthly installments, the first of such monthly payments to
commence 30 days after the date of Executive's death and the succeeding
monthly installments shall extend over a period not to exceed 120
months from the date of the payment of the first monthly deferred
compensation installment to Executive under this Section 3.3(a);
(b) Termination of Executive's Employment Due to Disability.
Should Executive's employment with SYNOVUS be terminated on account of
Executive's Disability, then in such event, SYNOVUS shall commence
paying deferred compensation to Executive in the amount of $2,600 per
month for 180 consecutive calendar months, the first of such monthly
payments to commence 30 days after the date of Executive's Disability;
provided, however, should Executive die prior to receiving all of said
180 monthly payments, then in such event, the then remaining unpaid
balance of the $468,000 of deferred compensation due Executive shall be
paid to Executive's beneficiary in approximately equal monthly
installments, the first of such monthly installments shall commence 30
days after the date of Executive's death and the succeeding monthly
installments shall extend over a period not to exceed 120 months from
the date of the payment of the first such monthly deferred compensation
installment to Executive under this Section 3.3(b).
(c) Termination of Executive's Employment Due to Death. In the
event Executive's employment with SYNOVUS is terminated on account of
Executive's death, then in such event, SYNOVUS shall commence paying
$468,000 in deferred compensation to Executive's beneficiary in 120
consecutive monthly payments, the first of such monthly payments to
commence 30 days after the date of Executive's death, as follows:
SYNOVUS shall pay Executive's beneficiary $6,825 per month for 12
consecutive calendar months, and SYNOVUS shall thereafter pay
Executive's beneficiary $3,575 per month for an additional 180
consecutive calendar months.
(d) Designation of Beneficiary to Receive Deferred
Compensation in the Event of Executive's Death. Should Executive die
prior to the commencement or completion of SYNOVUS' payment of deferred
compensation pursuant to this Section 3, then in such event, SYNOVUS
shall pay said deferred compensation to the beneficiary or
beneficiaries designated by Executive on the Beneficiary Designation
Form attached hereto as Exhibit "B" and made a part hereof, or to
Executive's estate in the absence of an effective beneficiary
designation, at the times and in the amounts provided for in Section
3.3 above.
Section 4.
Noncompetition
4.1. No Competitive Activity. For a period of two (2) years after the
date of Executive's termination of employment with SYNOVUS hereunder, Executive
will not become a director and/or a principal executive officer of (a) any
financial institution (including, but not limited to, a bank and/or a bank
holding company and/or a savings and loan association and/or a savings and loan
holding company) having a place of business in any county of any state in which
SYNOVUS or any SYNOVUS AFFILIATE then has an office; or (b) any business entity
or organization that is a credit/debit/transaction card processor which competes
with SYNOVUS or any SYNOVUS AFFILIATE.
4.2. No Solicitation of Customers or Clients. Executive shall neither
during his employment by SYNOVUS, nor during the two (2) year period which ends
on the date of his employment by SYNOVUS terminates, solicit any customer or
client of SYNOVUS or any SYNOVUS AFFILIATE with whom Executive had any material
business contact during the two (2) year period which ends on the date his
employment by SYNOVUS or a SYNOVUS AFFILIATE terminates or the purpose of
competing with SYNOVUS or any SYNOVUS AFFILIATE, either individually, or as an
owner, partner, employee, agent, consultant, advisor, contractor, salesman,
stockholder, investor, officer or director of, or service provider to, any
corporation, partnership, venture or other business entity.
4.3. Antipirating of Employees. Executive shall neither during his
employment by SYNOVUS, nor during the two (2) year period ending on the date his
employment by SYNOVUS terminates, employ or seek to employ on his own behalf or
on behalf of any other person, firm or corporation, any person employed by
SYNOVUS or a SYNOVUS AFFILIATE in an executive, managerial, or supervisory
capacity during the term of Executive" employment by SYNOVUS or a SYNOVUS
AFFILIATE, with whom Executive had contact during the two (2) year period which
ends on the date Executive's employment by SYNOVUS terminates (whether or not
such employee would commit a breach of contract).
Section 5.
Trade Secrets and Confidential Information
5.1. Trade Secrets. Executive hereby agrees that he will hold in a
fiduciary capacity for the benefit of SYNOVUS and each SYNOVUS AFFILIATE, and
will not directly or indirectly use or disclose, any Trade Secret that Executive
may have acquired during the term of his employment by SYNOVUS for so long as
such information remains a Trade Secret.
5.2. Confidential or Proprietary Information. Executive hereby agrees
that during his employment by SYNOVUS and during the two (2) year period ending
on the date his employment by SYNOVUS terminates, he will hold in a fiduciary
capacity for the benefit of SYNOVUS and each SYNOVUS AFFILIATE, and will not
directly or indirectly use or disclose, any Confidential or Proprietary
Information that Executive may have acquired (whether or not developed or
compiled by Executive and whether or not Executive was authorized to have access
to such information) during the term of, in the course of, or as a result of his
employment by SYNOVUS.
5.3. State Law. The provisions of Sections 5.1 and 5.2 are in addition
to, and not in lieu of, the protections provided under state law, and nothing in
either Sections 5.1 or 5.2 shall diminish or otherwise limit the rights of
SYNOVUS or a SYNOVUS AFFILIATE under state law.
Section 6.
Specific Performance
Executive acknowledges that the obligations undertaken by him pursuant
to this Agreement are unique and that SYNOVUS likely will have no adequate
remedy at law if Executive shall fail to perform any of his obligations under
this Agreement, and Executive therefore confirms that SYNOVUS' right to specific
performance of the terms of Sections 3, 4 and 5 of this Agreement is essential
to protect the rights and interests of SYNOVUS. Accordingly, in addition to any
other remedies that SYNOVUS may have at law or in equity, SYNOVUS will have the
right to have all obligations, covenants, agreements and other provisions of
Sections 3, 4 and 5 of this Agreement specifically performed by Executive, and
SYNOVUS will have the right to obtain preliminary and permanent injunctive
relief to secure specific performance and to prevent a breach or contemplated
breach of this Agreement by Executive, and Executive submits to the jurisdiction
of the courts of the State of Georgia for this purpose.
Section 7.
Miscellaneous Provisions
7.1. Assignment. This Agreement is for the personal services of
Executive, and the rights and obligations of Executive under this Agreement are
not assignable or delegable in whole or in part by Executive without the prior
written consent of SYNOVUS. This Agreement is assignable in whole or in part by
SYNOVUS to any SYNOVUS AFFILIATE.
7.2. Governing Law. This Agreement will be governed by and construed
under the laws of the State of Georgia (without reference to the choice of law
principles thereof). Executive consents to jurisdiction and venue in the state
and federal courts of the State of Georgia for any action arising from a dispute
under this Agreement, and for any such action brought in such a court, expressly
waives any defense he might otherwise have based on lack of personal
jurisdiction or improper venue, or that the action has been brought in an
inconvenient forum.
7.3. Counterparts. This Agreement may be executed in counterparts, each
of which will be deemed an original, but all of which together will constitute
one and the same instrument.
7.4. Headings, References. The headings and captions used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
7.5. Attorneys' Fees. If any action is taken with respect to this
Agreement, SYNOVUS shall bear its own attorneys' fees and expenses and Executive
shall bear his own attorneys' fees and expenses.
7.6. Amendments and Waivers. Except as otherwise specified in this
Agreement, this Agreement may be amended, and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of SYNOVUS and
Executive.
7.7. Severability. Any provision of this Agreement held to be
unenforceable under applicable law will be enforced to the maximum extent
possible, and the balance of this Agreement will remain in full force and
effect.
7.8. Entire Agreement. This Agreement constitutes the entire
understanding and agreement of SYNOVUS and Executive with respect to the
transactions contemplated in this Agreement, and supersedes all prior
understandings and agreements between SYNOVUS and Executive with respect to such
transactions.
7.9. Notices. Any notice required hereunder to be given by either
SYNOVUS or Executive will be in writing and will be deemed effectively given
upon personal delivery to the party to be notified or five (5) days after
deposit with the United States Post Office by registered or certified mail,
postage prepaid, to the other party at the address set forth below or to such
other address as either party may from time to time designate by ten (10) days
advance written notice pursuant to this Section 7.9. All such written
communication will be directed as follows:
If to SYNOVUS:
SYNOVUS FINANCIAL CORP.
901 Front Avenue, Suite 301
One Arsenal Place
Columbus, Georgia 31901
Attention: General Counsel
If to Executive:
James H. Blanchard
1101 Marina Cove Circle
Columbus, Georgia 31904
7.10. Binding Effect. This Agreement shall be for the benefit of, and
shall be binding upon, SYNOVUS and Executive and their respective heirs,
personal representatives, legal representatives, successors and assigns,
subject, however, to the provisions in Section 7.1 of this Agreement.
IN WITNESS WHEREOF, SYNOVUS and Executive have executed this Agreement
effective as of the date set forth on the first page of this Agreement.
SYNOVUS FINANCIAL CORP.
By: /s/G.S. Griffith, III
--------------------------------
Title: Senior Executive Vice President
and Secretary
-------------------------------
EXECUTIVE
/s/James H. Blanchard
--------------------------------------
James H. Blanchard
EXHIBIT 11
SYNOVUS FINANCIAL CORP.
COMPUTATION OF NET INCOME
PER COMMON SHARE
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended September 30, 1999 Three Months Ended September 30, 1998
- -------------------------------------------------------------------------------------------------------
Net Average Net Income Net Average Net Income
Income Shares per Share Income Shares Per Share
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
EPS - Basic $ 58,005 279,694 $ 0.21 $ 49,608 272,681 $ 0.18
Effect of dilutive options 3,112 4,040
- --------------------------------------------------------------------------------------------------------
EPS - Diluted $ 58,005 282,806 $ 0.21 $ 49,608 276,721 $ 0.18
========================================================================================================
</TABLE>
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1999 Nine Months Ended September 30, 1998
- --------------------------------------------------------------------------------------------------------
Net Average Net Income Net Average Net Income
Income Shares Per Share Income Shares Per Share
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> C> <C>
EPS - Basic $ 162,051 279,381 $ 0.58 $ 140,251 271,155 $ 0.52
Effect of dilutive options 3,289 5,082
- ---------------------------------------------------------------------------------------------------------
EPS - Diluted $ 162,051 282,670 $ 0.57 $ 140,251 276,237 $ 0.51
=========================================================================================================
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF SYNOVUS FINANCIAL CORP. AS OF
AND FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999, AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 395,702
<INT-BEARING-DEPOSITS> 1,856
<FED-FUNDS-SOLD> 78,862
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,715,215
<INVESTMENTS-CARRYING> 283,518
<INVESTMENTS-MARKET> 282,171
<LOANS> 8,700,175
<ALLOWANCE> 122,560
<TOTAL-ASSETS> 11,977,091
<DEPOSITS> 9,275,346
<SHORT-TERM> 1,010,166
<LIABILITIES-OTHER> 216,143
<LONG-TERM> 228,790
0
0
<COMMON> 279,902
<OTHER-SE> 905,943
<TOTAL-LIABILITIES-AND-EQUITY> 11,977,091
<INTEREST-LOAN> 558,068
<INTEREST-INVEST> 87,979
<INTEREST-OTHER> 1,672
<INTEREST-TOTAL> 647,719
<INTEREST-DEPOSIT> 238,116
<INTEREST-EXPENSE> 270,378
<INTEREST-INCOME-NET> 377,341
<LOAN-LOSSES> 25,343
<SECURITIES-GAINS> 874
<EXPENSE-OTHER> 636,601
<INCOME-PRETAX> 250,359
<INCOME-PRE-EXTRAORDINARY> 162,051
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 162,051
<EPS-BASIC> 0.58
<EPS-DILUTED> 0.57
<YIELD-ACTUAL> 5.09
<LOANS-NON> 26,628
<LOANS-PAST> 16,877
<LOANS-TROUBLED> 309
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 114,109
<CHARGE-OFFS> 22,845
<RECOVERIES> 5,660
<ALLOWANCE-CLOSE> 122,560
<ALLOWANCE-DOMESTIC> 122,560
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 28,066
</TABLE>
