As Columbus-based Synovus gobbled up community banks over the years, it tried to leave them with as much local control and flavor as possible.
In a bid to keep loyal customers, the acquired banks retained their brand names. Each bank had its own CEO and board of directors.
But over time, experts say, the stable of banks under the Synovus umbrella grew large and unwieldy -- a problem that became more pronounced amid a deep recession.
That’s changing. Synovus, Georgia’s second largest banking company, recently announced it will restructure this year to consolidate 30 separate banking charters into one. Analysts cheered, saying the move should cut costs by reducing regulatory red tape while making it easier for executives to manage the now-sprawling company.
Synovus CEO Richard Anthony said his goal is to reduce complexity while keeping the local feel. The banks will keep their names, and most critical decisions will continue to be made at the individual banks.
Efficiencies gained include filing one financial report with regulators instead of 30. Bank managers “today have to spend a lot of time just satisfying the information requirements that come from the regulators,” Anthony said. “It’s . . . time that could be spent with customers.”
Atlanta bank analyst Chris Marinac said Synovus could save $10 million a year or more. Marinac said better central oversight might have reined in Synovus banks that ramped up risky real estate lending over the last decade.
Synovus lost nearly $2 billion in the past two years as real estate in key markets collapsed. Its stock price has fallen sharply as well.
Jeff Davis, an analyst with FTN Equity Capital Markets, said a single charter could make the company more attractive to a buyer.
“If Synovus makes it through this [crisis], more than likely it is going to be a wounded franchise,” he said. “And selling a bank holding company that has 30 subsidiary banks is an unappealing acquisition from an operational standpoint for your typical acquirer.”
As Columbus-based Synovus gobbled up small community banks over the years, it adopted a strategy to maintain as much local control and flavor as possible.
In a bid to keep customer loyalty, the acquired banks retained their brand names. Each bank also had their own CEOs and boards of directors.
But over time, experts say, the stable of banks under the Synovus umbrella grew large and unwieldy – a problem that became more pronounced amid a deep recession.
That’s changing. Synvous, Georgia’s second largest banking company, recently announced it will restructure this year to consolidate its 30 separate banking charters into one.
Analysts cheered, saying the move should cut costs by reducing regulatory red tape while making it easier for executives to manage the now-sprawling company. For Synovus, the change marks the end of an era, an acknowledgement that more central control is needed for a banking company that has grown to operate in five Southern states.
Synovus CEO Richard Anthony said his goal is to reduce the company’s complexity while also keeping much control at the local level. The banks will keep their names, and most critical decisions will continue to be made at the individual banks.
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Efficiencies gained include filing one financial report each quarter with regulators instead of 30. Bankers in the company’s offices “today have to spend a lot of time just satisfying the information requirements that come from the regulators,” Anthony said. “It’s become a distraction for them, time that could be spent with customers.”
Synvous said the conversion to one charter will likely take place in late spring, though it may be another year before all of the affiliate banks’ operations are merged.
Atlanta bank analyst Chris Marinac said Synovus could save $10 million a year or more, though Anthony said the bank has yet to do such an analysis.
Marinac said better central oversight might have reined in Synovus banks that ramped up risky real estate lending over the last decade.
Synovus posted nearly $2 billion in losses in the past two years as real estate in key markets collapsed. The company’s stock price has fallen sharply as well.
Jeff Davis, an analyst with FTN Equity Capital Markets, said a single charter could make the company a more attractive target for a potential buyer.
"If Synovus makes it through this [crisis], more than likely it is going to be a wounded franchise,” he said. “And selling a bank holding company that has 30 subsidiary banks is an unappealing acquisition from an operational standpoint for your typical acquirer.”
About Synovus:
Headquartered in Columbus, Synovus is Georgia's second-largest banking company. It operates 30 different banking subsidiaries, including Bank of North Georgia and Bank of Coweta in the metro Atlanta market.
The company's largest banks, by asset size:
Columbus Bank & Trust, Columbus: $7.7 billion
Bank of North Georgia, Alpharetta: $5.5 billion
The National Bank of South Carolina, Sumter: $4.7 billion
First Commercial Bank, Birmingham: $2 billion
Coastal Bank & Trust of Florida, Pensacola: $1.8 billion
The change:
Synvous plans to ditch its current model, in which each of the companies 30 banks has its own banking charter, in favor of a single charter. The hope is to reduce regulatory red tape and provide executives with more control over
By the numbers:
Synovus's net loss over the past two years: $2 billion
Potential annual savings from charter consolidation: $10 million*
Stock price, per share, in February 2007:$33.10
Stock price, per share, February 2010: $2.61
* according to bank analyst Chris Marinac
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