Synovus Financial, the second-largest banking company based in Georgia, reported on Tuesday a profit for the third straight quarter, continuing a slow-healing process from a brutal recession.
The Columbus-based parent of 30 community banks, including Bank of North Georgia, has struggled with residential development and commercial real estate loans in metro Atlanta and other Southeastern markets in the wake of the Great Recession.
Synovus said first quarter results included significantly fewer charge-offs of bad loans, and noted improvement in other credit trends.
Non-performing assets, those no longer earning interest, were $1.06 billion in first quarter, down from $1.28 billion in the same period last year.
Net income to common shareholders was $21.4 million, or 2 cents per share in first quarter, compared to a loss of $93.7 million or 12 cents per share a year ago. Non-interest income, largely from fees, excluding securities gains, was up slightly to $64.1 million.
"They are making progress, but they just have so much farther to go in terms of making real money," said Chris Marinac, banking analyst with FIG Partners.
Synovus Chairman and CEO Kessel Stelling said recent actions by other banks to pay off crisis-era federal aid also gives hope to Synovus, which received nearly $1 billion in under the Troubled Asset Relief Program and has paid more than $150 million in dividends to the government.
Stelling told analysts “we do want to get out [of TARP], and we’ll get out in a manner and a time frame that is prudent, efficient and acceptable for all our constituencies,” including shareholders, the government and debt holders.
Synovus has on its balance sheet a deferred tax asset, or DTA, of more than $800 million. DTAs are like tax credits companies can accrue for periods of losses that they can use later to reduce their tax burdens once they have returned to sustained profitability.
Stelling said TARP repayment isn’t necessarily dependent on fully obtaining the company’s DTA, which could happen later this year or next. But analyst Marinac said it is likely the two will come hand-in-hand.
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