Synovus to cut about 650 jobs over two years

Synovus, the second largest banking company based in Georgia, said Wednesday it plans to cut roughly 650 job over the next two years.

The cuts represent 9 percent of its work force. About 120 of the jobs will be trimmed from its 1,000 employees in metro Atlanta. Most of the targeted positions are back-office functions, according to the company.

The action comes with the financial sector reeling from a year-long crisis peppered with high-profile failures, from the collapse of Bear Stearns to this week’s federal takeover of Fannie Mae and Freddie Mac, the two mortgage giants.

The bottom has not yet been reached, said Richard Anthony, chairman and chief executive, during a teleconference Wednesday.

“So far, the conditions are not getting any better. I can certainly see it going well into next year.”

Synovus, whose assets total more than $34 billion, owns a series of banks, investment services and teller machines. The company is known for buying smaller, community banks and allowing them to maintain their names and operate somewhat independently.

Among the 20 companies Synovus owns in Georgia are the Bank of North Georgia in Atlanta, Citizens and Merchants Bank of Douglasville and Bank of Coweta in Monroe.

Hiring at Synovus has, for the most part, been on hold since April already, and more than half the cuts will come through attrition, The company, which also slashed its dividend payment by 65 percent, said the plans should save about $50 million a year.

The change should add $25 million to revenue annually, he said.

Synovus revenue in the most recent fiscal quarter was $549.7 million. Earnings during the period were 9 cents a share. That compares to revenues of $660.8 million and earnings of 32 cents a share during the same quarter of last year.

“We are anxious to get to the bottom of the cycle and start working our way back,” Anthony said.

The top of the cycle was lucrative: Revenues during the comparable quarter of 2006 reached $1 billion, while earnings were 47 cents a share.

It will be some time before the company starts looking to accumulate more banks, Anthony said. “We’ll get back in it, but not right now.”

Unfortunately for the bottom line, the company’s current holdings have been active in the troubled markets of Florida and Georgia.

With the slump in housing sales, the crash of construction and the epidemic of foreclosures, many banks have found their portfolios riddled with bad loans.

In late August, federal regulators took control of Integrity Bank in Alpharetta, a $1.1 billion bank that had been hobbled with construction and development loans.

“The failure of Integrity was the first of a bank in the metro Atlanta area in this credit cycle, and it is extremely unlikely that it will be the last,” wrote analysts Kevin Reynolds and Douglas Rainwater of Philadelphia-based Janney Montgomery Scott in a recent report about Southern banks.

While naming no other specific candidates for failure, The co-authors said that more than 40 Atlanta-area institutions had balance sheets in the red zone.

Synovus is among the companies that have “significant portions” of their bank business in the riskiest of the Southern metro areas, the report said.

This implies “a relatively higher degree of exposure to depressed residential markets and the potential for additional deterioration in credit quality over the next several quarters,” the report said.

Synovus, which has about 7,100 employees now, expects to take a $21 million restructuring charge to pay for the changes.

Company shares ended the trading day at $9.77, down 25 cents.

The stock has rallied from a low of $7.19 a share in mid-July. Company stock hit at 52-week high of $13.58 a share in early February. Its high in 2007 was $14.60 a share.