Georgia's 2nd largest banking company suffers another quarterly loss

By Paul Donsky

The Atlanta Journal-Constitution

Mounting real estate losses sent Synovus, Georgia’s second-largest banking company, reeling to a fourth straight quarterly loss.

The Columbus-based company on Thursday reported a $587 million loss in the second quarter, or $1.82 a share, compared to a profit of $12 million, or 4 cents a share, in the same period a year ago.

Synovus’s losses more than quadrupled from the first quarter as the bank moved aggressively to shed bad loans from its books. The bank sold $404 million in assets during the second quarter, mostly homes and vacant lots, losing $165 million in the transactions.

“We have taken some bold and accelerated action during the quarter that’s going to serve us well in the future,” said Richard Anthony, Synovus’s chairman and CEO.

Anthony said he hopes the company can return to profitability sometime next year.

Synovus said it expects to sell an additional $600 million in assets in the second half of the year, losing about $300 million in the process. Anticipating that, the bank built up its allowance for future loan losses by $276 million to $918.7 million, contributing to the quarterly loss.

Synovus officials said some signs indicate better times ahead. Most notably, the bank said its loan delinquency rate fell sharply, to 1.2 percent of all loans from 2.12 percent in the first quarter.

The bank last year received nearly $1 billion from the federal government’s aid program, but it was not included in the “stress tests” to determine capital needs. However, Synovus said its own internal test showed a “capital burn” in 2009 and 2010 of $782 million, including possible credit losses of $2.2 billion in 2009 and 2010 and pre-tax income of $1.2 billion.

The company does not plan to raise capital to offset losses, Anthony said.

Synovus operates banks around the state under various names, including Alpharetta-based Bank of North Georgia.