Synovus Financial, the Georgia banking company that owes nearly $1 billion to the federal government as part of a 2008 bailout program, announced Thursday it is paying the money back.
The Columbus company had for months given hints that it planned this year to repay the $968 million it still owes as part of the Troubled Asset Relief Program. The cost of the TARP loan was due to rise this fall, five years after it was granted.
While nine Georgia banks still owed money through the program at the end of June, Synovus owes more than any other bank in the country.
Last month, Fidelity Southern Corp., an Atlanta banking company, announced its plans to repay the $48.2 million it owes.
To redeem shares the government held as collateral for the loan, Synovus will offer $185 million worth of common stock and $130 million of preferred stock for sale. It will also use $680 million from Synovus Bank.
“Today’s announcement of our planned TARP redemption represents the culmination of a journey to return Synovus to a position of strength,” chairman and CEO Kessel Stelling said in a statement.
In addition to its TARP announcement, Synovus reported Thursday that profits available to common shareholders in the second quarter were up 23.8 percent, to $30.7 million, over last year.
Net charge-offs — bad loans written off by the bank — were down nearly 70 percent from the same quarter a year ago. Loans were up 5 percent, to $19.6 billion, from the first quarter.
Stelling, in a conference call, said employees are energized. Last year, Synovus made its first annual profit since 2007.
“This company is well-positioned for the future,” he said.
Synovus was hard-hit during the recession, beset by bad loans for residential development and the ill-fated redevelopment of Sea Island. It shed more than 2,500 employees through the recession.
After Synovus redeems the TARP stock, the Treasury department will still have warrants to purchase more than 15.5 million shares of common stock at $9.36 a share. The stock closed at $3.09 a share Thursday. Synovus said it will evaluate buying the warrants back.
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