Synovus Financial said on Thursday it will sell more than a half billion dollars in distressed loans and other assets in the fourth quarter in a series of moves to help clean up the company’s balance sheet and pay off of its finanical crisis-era government aid sometime next year.
Columbus-based Synovus has grappled with real estate and other loans that soured in the wake of the housing collapse, when an economic meltdown left scores of borrowers unable to pay their IOUs.
The bank has been profitable, however, for five straight quarters after nearly three years in the red. Bank Chairman and CEO Kessel Stelling told analysts recently that the bank should be able to repay the nearly $1 billion it got from the Troubled Asset Relief Program by the end of 2013, and possibly as soon as the second quarter.
Synovus, the second largest banking company based in Georgia and the parent of Bank of North Georgia and banks in several southern states, said it will record a pre-tax expense of about $155 million in the fourth quarter related to the sales.
“The sale of these distressed assets is an important and strategic step in our continued efforts to further strengthen our balance sheet, improve asset quality and enhance future earnings,” Stelling said in a news release.
TARP repayment is likely to correspond with the company’s recovery of deferred tax assets, or DTAs, which Synovus values at $787 million. A DTA is a sort of tax credit that companies can accrue for periods of losses that they can later use to reduce their tax burdens once a firm is consistently profitable.
Synovus said Thursday it expects to recover its DTA by the end of second quarter next year, and possibly as soon as the end of this month.
