Magazine article American Banker

Margins, Loan Books Grow at Colonial and Synovus

Magazine article American Banker

Margins, Loan Books Grow at Colonial and Synovus

Article excerpt

Colonial BancGroup Inc. of Montgomery, Ala., and Synovus Financial Corp. of Columbus, Ga., both attributed increases in second-quarter earnings to loan growth and wider margins.

Both companies reported their earnings Wednesday.

The $21 billion-asset Colonial's profits rose 10% from the first quarter and 33% from a year earlier, to $57.5 million. Earnings per share rose a penny from the first quarter and 5 cents from a year earlier, to 38 cents, which matched analysts' average estimate.

The results included several one-time items. Gains of $9.6 million for selling seven branches and $2.3 million for the sale of properties and other assets were offset by $3.5 million of securities losses, $5.6 million of fees for prepaying long-term debt, and $2 million of deal-related expenses. (Colonial bought First Federal Savings Bank of Lake County in Florida in the quarter.)

Colonial chairman and CEO Robert E. Lowder said the internal loan growth "may appear a little bit smaller" than what investors expected, due to $100 million in payoffs at the end of the quarter. "I can tell you our pipelines are very full and we feel very good about where were are," he said in a Wednesday conference call to discuss the earnings.

Net interest income increased 7% from the first quarter and 24% from a year earlier, to $177 million.

Total loans, excluding mortgage-warehouse lending, rose 9% from a quarter earlier and 23% from a year earlier, to $13.9 billion. The increase included $937 million of loans acquired from First Federal and $185 million of internal growth.

Deposits rose 9% from the first quarter and 28% from a year earlier, to $14 billion. Colonial shed $139 million of deposits through the branch sales but gained $838 million from First Florida.

The net interest margin expanded 6 basis points from a quarter earlier and 18 basis points from a year earlier, to 3.78%. Noninterest income, excluding one-time items, rose 15% from the first quarter and 23% from year earlier, to $41 million, including $3.9 million of mortgage warehouse lending fees, $14. …

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