After several quarters of hinting that a repayment of its crisis-era bailout might be soon, Synovus Financial on Tuesday put a finer point on when taxpayers would be made whole.
The Columbus-based parent of community banks across five southeastern states told analysts during its third quarter earnings conference call that repayment of its nearly $1 billion in Troubled Asset Relief Program funding should come by the end of 2013, and possibly as soon as the second quarter.
Synovus, the second-largest banking company based in Georgia, has the largest amount still outstanding of any bank under TARP. The company has paid about $165 million to the U.S. Treasury in dividends.
Synovus has struggled to shake off the effects of the housing collapse and the Great Recession, however the July-September period marked the bank’s fifth-straight profitable quarter after nearly three years in the red.
Net income to common shareholders was $16 million in third quarter, or 2 cents per share, virtually flat from $15.7 million and 2 cents per share in the period a year ago.
“We’ve come through this cycle as a strong, healthy franchise, and (we are) excited about the days ahead,” said Kessel Stelling, Synovus chairman and CEO.
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.
Stelling said Synovus expects to be able to reclaim the value of its DTA between next quarter and second quarter 2013, with TARP repayment happening by the end of next year.
As Synovus has slashed bad loans, head count and branches to cope with the economy, the company also has pivoted its business away from a heavy dependence on residential and commercial real estate development lending to more traditional business lending.
Non-performing assets, including loans not earning interest and foreclosed real estate, fell to $899 million, down from $1.16 billion a year ago.
Total loans dipped 2 percent compared to third quarter last year, but commercial and industrial lending grew 3 percent in that period.
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