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Investors, analysts and reporters have overestimated the Georgia bank's interest in doing M&A deals, chairman and CEO Kessel Stelling says.
June 5 -
Regulators let Synovus acquire a failed bank its first deal in four years though it still owes Tarp $968 million. A surprising number of similar deals have occurred in recent years.
May 16 -
Though profitable, Synovus is still trying to hit its stride. Still, CEO Kessell Stelling told analysts that he wants to make acquisitions at some point in the future.
April 23
Synovus Financial (SNV) said Thursday it plans to use a combination of new capital and cash on hand to repurchase preferred stock from the Troubled Asset Relief Program.
The Columbus, Ga., company, which reported improved second-quarter earnings that relied on declining credit costs rather than revenue growth, expects to pay $967.9 million to redeem all of its roughly 967,900 preferred shares issued to the Treasury Department in December 2008. It will use a $680 million dividend from its Synovus Bank, among other cash sources, to complete the transaction. The new capital will include a planned common stock sale of $185 million and a planned preferred stock offering of $130 million.
"Today's announcement of our planned Tarp redemption represents the culmination of a journey to return Synovus to a position of strength," Kessel Stelling, Synovus chairman and chief executive, said in a press release. "We laid out and successfully executed a clear, deliberate, and aggressive plan to return Synovus to sustainable profitability."
After the preferred stock redemption, Treasury will still hold warrants to purchase roughly 15.5 million shares of common stock at $9.36 per share. Synovus will evaluate buying the warrants back from Treasury or through an auction, the company said.
Synovus has the largest amount of outstanding Tarp funds still held by Treasury, followed by Popular (BPOP) in San Juan Puerto Rico, which owes $935 million. Synovus'
For the second quarter, the $26.6 billion-asset company earned $30.7 million, up almost 24% from a year earlier, as credit costs significantly declined. Earnings per share of three cents met expectations of analysts polled by Bloomberg.
Credit costs totaled $24 million, a drop of 51% from the first quarter and down more than 65% from a year earlier. Net chargeoffs, nonperforming loans and total delinquencies all fell from a year earlier. Distressed asset sales in the second quarter totaled roughly $67 million.
Net interest income, before the provision for loan losses, fell roughly 5% from a year earlier to $202.1 million, while noninterest income slid almost 15% to $65.1 million. Net loans rose less than 1%, to $19.3 billion, from a year earlier.
