Two of the largest banking companies based in Georgia showed improved results in the third quarter, with one, Synovus Financial, showing its first profit since 2008.
Synovus, a Columbus-based operator of community banks in five states, had been in the red for its past 12 quarters, but returned to the black thanks in part to lower credit costs and a gain on investment securities.
Blairsville-based United Community Banks reported a slight loss, but it was a significant improvement from a year ago.
Synovus and United are, respectively, the second- and third-largest banking companies based in Georgia, but in many ways they are considered bellwethers for the smaller banks that make up Georgia’s beleaguered community banking industry.
Both banks have been dogged for three years by soured real estate development loans -- particularly in metro Atlanta.
Chris Marinac, bank analyst with FIG Partners in Atlanta, said Synovus and United showed substantial improvements since last year in problem loans and the amount of bad loans they’re charging off.
“There [has] definitely been a moving of the needle to the positive,” he said of both banks. “They still have their challenges.”
Synovus posted a profit of $15.7 million, or 2 cents per diluted share, compared with a loss of $195.8 million, or 25 cents per share, in the third quarter a year ago.
Like many Southern banks, Synovus has been battered by the implosion of the housing market. Since its last profitable quarter, Synovus suffered more than $3 billion in quarterly losses, received nearly $1 billion in taxpayer-funded aid and twice sold new shares.
Synovus is trying to diversify into more commercial lending and has cut core expenses, including closing branches and reducing staff. The company has shed more than 800 jobs, or 13.5 percent of its workforce, since the end of 2010.
“We are still experiencing, as are our competitors, sluggishness in this economy, and certainly loan demand is soft,” Synovus President and CEO Kessel Stelling told analysts, but he highlighted some growth opportunities in small business and commercial lending.
Total credit costs dropped to $142.5 million, nearly 53 percent lower than a year ago.
Net charge-offs declined 42 percent from last year. Total nonperforming assets were $1.16 billion, down 25 percent from the July-September period last year.
United posted a net loss to common shareholders in the third quarter of $9.2 million, a stark improvement over the year-ago quarterly loss of $238.9 million. United’s loss a year ago included a $210.6 million noncash charge.
The loss was 16 cents per share compared with $1.50 per share a year ago.
United also was hurt by development loans gone awry after the housing bubble burst. The bank was profitable in second quarter 2011 for the first time in three years.
United said it would have turned a profit this quarter if not for a special reserve of $25 million taken because of doubts its largest borrower can repay its loans.
United received $180 million in aid under the Troubled Asset Relief Program and sold this year $380 million in new stock as it raced to cure its balance sheet of bad loans.
United President and CEO Jimmy Tallent called the third quarter result "disappointing," but said United's objective is improving credit issues and the bank is on the "right path to be profitable next quarter and into 2012."
About the Author
