Synovus Bank, struggling to fix a heavy load of bad loans, sees shares tumble to year low
There's no lack of banks struggling in this economy. Some are in worse shape than others. Synovus Financial Corp., parent of Synovus Bank, based in Georgia but with more than two dozen branches sprawled along Florida's gulf coast in Tampa Bay south to Naples, is one of them. Synovus shows more and more signs of distress, including a 52-week low on its stock today that's down 10 percent and hovering near $1.60. Shares of the company have fallen 57 percent in the last three months.
Last Friday, Synovus felt compelled to issue a statement saying it was not under the thumb of bank regulators (always a bad sign for banks) and that its capital position was okay. Here's the statement:
"In response to recent questions, Synovus Financial Corp. (NYSE: SNV) today reaffirms that it is not under a regulatory requirement to raise additional capital. The company’s capital position remains strong. Synovus is considered well-capitalized by regulatory standards and its ratios compare favorably to those of its peers. As of September 30, 2009, Synovus’ Tier 1 Capital Ratio was 10.48 percent compared to the regulatory minimum of 6.00 percent to be considered well-capitalized. The company’s Total Risk-Based Capital Ratio of 13.84 percent is well above regulatory minimums of 10.00 percent."
"Synovus continues to manage credit in a proactive and aggressive manner. Given our strength of capital combined with our continued focus on disposing of non-performing assets and improvements in core operating results, we remain confident in our belief that we have the opportunity to achieve profitability during 2010."
So that's what the bank is saying. What are others saying?
* They point to the last three quarters of losses -- heavy losses -- by Synovus. That includes a net loss for the third quarter of 2009 of $423.7 million, or $1.27 per common share; a net loss for the second quarter of 2009 of $586.9 million, or $1.82 per common share, and a first-quarter 2009 loss of $136.7 million, or 46 cents per common share. That's more than $1 billion lost in less than one year.
* Last week, Synovus shares tumbled to their lowest point in more than 17 years -- though that figure was eclipsed today with a new low. Last week's decline came after a Morgan Keegan analyst downgraded the regional bank, saying government pressure for banks to build capital reserves as well as ongoing credit issues will pressure the stock. Analyst Robert Patten cut his projection for 2010 to a loss of $1.10 per share from 75 cents per share because of the expected cost of bad debt provisions.
* Synovus has been one of the more aggressive sellers of bad loans, a strategy to dump a weak balance sheet to raise money and lower the bank's high percentage of bad assets. The bank shed some $339 million worth of similarly troubled real-estate development loans and mortgages in the third quarter. The company has said it plans on selling another $261 million by year end. Read more here.
Synovus has its recovery work cut out for itself. Whenever a larger bank like Synovus watches its stock sink under $2, it's time to pay attention. We'll keep track of its progress.
--Robert Trigaux, Times Business Columnist