Treasury to buy stock in Columbus-based Synovus

Synovus has become the second Georgia bank to announce that it will receive an infusion of cash from Uncle Sam.

The Columbus, Ga.-based bank announced Friday that it had received approval to sell $973 million in preferred stock to the Treasury Department under the federal government’s Troubled Asset Relief Program, or TARP.

Synovus said it expects to use the proceeds to shore up its capital base, boost lending capabilities and pursue bank acquisitions.

Last month, Atlanta-based SunTrust Banks announced that it planned to sell $3.5 billion in preferred stock to the U.S. government.

Synovus officials said the government investment is a stamp of approval for the bank.

“The government, I think, is selecting the banks that they view as being the stronger institutions that will be able to create stability in the banking industry,” said Tommy Prescott, chief financial officer for Synovus. “We’re proud to be selected in that group.”

Synovus, Georgia’s second-largest bank by assets, is known for buying smaller community banks and allowing them to maintain their names and operate somewhat independently. In metro Atlanta, Synovus owns the Bank of North Georgia and the Bank of Coweta in Monroe.

The government has announced it would invest $250 billion in the nation’s banks in an attempt to stabilize the industry, which has been rocked by the collapse of the real estate market.

The government is requiring that participating banks, including Synovus, pay 5 percent returns for the first five years. The terms are generous, banking experts say, providing a much cheaper way for banks to raise capital than selling shares to private individuals, who demand far greater returns on their investment.

Synovus currently is not set up to sell preferred stock. The bank plans to ask its shareholders to authorize the issuance of preferred stock at a meeting next month.