Synovus Financial is scheduled to release its Q12010 earnings after the closing bell on Tuesday, April 20, 2010. Analysts, on average, expect the company to report a loss of $0.49 per share in the first quarter with estimates ranging from a loss of $0.37 per share to a loss of $0.61 per share. Revenues for the quarter are estimated to be $341.03 million. In Q12009, the company reported a loss of $0.46 per share on revenue of $331.99 million.Synovus Financial Corp., a diversified financial services and bank holding company, provides commercial and retail banking, financial management, insurance, and mortgage services in Georgia, Alabama, South Carolina, Florida, and Tennessee.
The company was hit hard by the subprime mortgage crisis as it struggled to manage its bad real-estate loans. Though southeast regional bank is still trying to recover from the financial crisis that struck two years back, it has certainly survived the recession- disappointing many naysayers. However, Synovus- which has about $35 billion in assets- holds many commercial real estate and construction loans in some of the worst markets in the country, making credit quality a major concern and raising questions about whether the bank will need to raise more capital. It has lost $2.1 billion since September 2008, hasn’t repaid a $968 million bailout from the Troubled Asset Relief Program and is the focus of a Securities and Exchange Commission inquiry. The firm has reported a net loss for the past six consecutive quarters, and is certain to report loss in upcoming quarter as well.
In the preceding Q42009, the New York-based company posted a narrower net loss of $249.9 million or $0.60 per share, compared with a net loss of $634 million, or $1.93 per share, in the year-ago quarter. Analysts, on average, expected the company to report a loss of $0.60 per share.Net charge-offs fell by $135 million from the previous quarter, while nonperforming assets were up by 4.8% quarter-on-quarter.
However, the bank officials are confident of return to profitability in fourth-quarter 2010, helped by improving credit trends. The company's efforts were evident in the most recent quarter as well as it managed to significantly trim its loss. “We expect to come out of this critical period stronger than we’ve ever been, and a leading mid-size Southeastern regional bank that will be able to be a consolidator ourselves." CEO, Richard Anthony stated recently.
The bank is pursuing several capital initiatives and sees potential for recovery of deferred tax asset valuation allowance in 2010. Credit costs already appear to have peaked while new problem loans and chargeoffs have fallen. Meanwhile, the non-performing assets are being written off their books. Moreover, the company's loan loss provision is set to fall as well. The firm has already done a remarkable job in cutting the cost of operations and curbing expenses.
Meanwhile, the bank is poised to benefit from diminished competition as a number of banks in the south-east region are going out of business or being taken over by FDIC. The bank is also poised to benefit from a sustained recovery in housing market.
The bank recently declared a 1 cent per share dividend, a move which is expected to further enhance investor's confidence.
The Columbus, Georgia-based bank is also widely seen as a potential takeover target. However, CEO Richard Anthony says that he’s ready to be a buyer, not a seller.
Among other developments, the bank recently announced that its affiliate, Columbus Bank and Trust Company, has completed the previously announced sale of CB&T's merchant services business to Merchant e-Solutions, Inc. for $70.5 million in cash. The sale also paves the way for the bank to get future revenue through a referral agreement,The latest move will provide it with significant capital to further strengthen our reserves and fund future growth opportunities. The company said that it will continue to look at additional strategic initiatives to bolster its capital position, including possible sale of more assets.
In terms of stock performance, Synovus shares have gained nearly 34 percent since the beginning of the year.
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