Synovus Financial (SNV) in Columbus, Ga., reported lower quarterly earnings because of a decline in mortgage banking revenue and a litigation-related charge.

The $26 billion-asset company's earnings fell 4% from the third quarter and 95% from a year earlier, to $35.8 million. Synovus benefited in the fourth quarter of 2012 from recapturing the use of an $800 million deferred-tax asset. Earnings per share of 4 cents were about a penny below the average estimate of analysts polled by Bloomberg.

The company set aside $10 million to cover potential costs tied to "outstanding legal matters," though the company's Tuesday press release did not detail any specific issues.

Noninterest income fell 25% from a year earlier, to $60.2 million, largely because of a 96% decrease in gains from investment securities and a 68% drop in mortgage banking revenue.

Net interest income fell 2% from a year earlier, to $204.3 million. The net interest margin compressed by 7 basis points from a year earlier, to 3.38%.

Noninterest expense fell 10% from the fourth quarter of 2012, to $190.7 million, largely because of a 124% drop in losses from other loans held for sale and an 85% decrease in foreclosed real estate expenses.

Improved credit quality allowed Synovus to slash its loan-loss provision by 90% from a year earlier, to $14 million. Net chargeoffs fell 87% from a year earlier, to $25.1 million. The company took advantage of its DTA recapture to get aggressive with problem loans during the fourth quarter of 2012.

Synovus bought a failed bank in May and exited the Troubled Asset Relief Program in July.

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