Synovus Financial in Columbus, Ga., rode strong demand for both commercial and consumer loans to double-digit profit growth in the first quarter.
The $30.7 billion-asset company said late Monday that net income in the quarter that ended March 31 increased nearly 39% year over year, to $69.3 million. Earnings per share increased 44% to 56 cents, beating by a nickel the estimates of analysts polled by FactSet Research Systems.
Also late Monday, Synovus announced that it is buying certain assets and liabilities of the banking unit of the retailer Cabela’s in a three-way transaction that also involves Capital One Financial.
In a deal that had been previously reported, Synovus agreed to buy the deposits and credit card assets of World's Foremost Bank and then immediately sell the card assets to Capital One while retaining roughly $1.2 billion of brokered time deposits. Synovus said it would receive $75 million as compensation from Capital One and Cabela’s, which is being sold to rival retailer Bass Pro Shops.
In a news release, Synovus Chairman and CEO Kessel D. Stelling said that the deal would provide Synovus with additional liquidity to support organic growth, as well as incremental capital that can help accelerate progress in achieving efficiency and return on equity targets. The deal is expected to close in the third quarter, pending regulatory approval and the completion of the Cabela’s merger with Bass Pro Shops.
At March 31, Synovus reported total loans of nearly $24.3 billion, an increase of 6.6% from the first quarter of 2016. Commercial and industrial loans climbed nearly 9% year over while consumer loans increased 16.5%, more than offsetting a 2% drop in commercial real estate loans. The loan growth, combined with a modest increase in interest rates, boosted net interest income by 10% year over year, to almost $240 million.
Noninterest income increased 4% year over year, to $66 million, due in part to higher fees from mortgage banking and fiduciary and asset management activity.