Synovus Maintained at Outperform

Zacks

On Jan 2, 2014, we retained our Outperform recommendation on Synovus Financial Corporation (SNV). We are encouraged by the company’s efforts to reduce operating costs and implement strategies to broaden its loan portfolio and increase non-interest income.

Why the Reiteration?

Synovus’ initiatives to reduce expenses and streamline its processes are commendable. Such measures are expected to aid the company’s bottom-line growth amid a tepid economic environment. Additionally, the company’s disposal of distressed assets is expected to strengthen its balance sheet, improve asset quality and enhance future earnings.

On Oct 22, 2013, Synovus reported a whopping 100% rise in earnings per share to 4 cents per share in the third quarter of 2013 from the year-ago quarter period. Lower non-interest expenses and a significant improvement in credit quality were tailwinds for the quarter.

Also, in Jul 2013, Synovus repaid the bailout money taken from the government during the financial crisis. The company repurchased $968 million of its Series A Preferred Stock, which were issued to the U.S. Department of the Treasury as part of Synovus’ participation in the Troubled Asset Relief Program (:TARP). After settling the TARP obligation, we expect Synovus to deploy its capital through dividend hikes and share repurchases, which will further enhance investors’ confidence in the stock.

Following the release of third-quarter results, the Zacks Consensus Estimate for 2013 as well as 2014 remained stable at 14 cents and 19 cents, respectively, over the past 60 days. Synovus now has a Zacks Rank #4 (Sell).

Other Stocks That Warrant a Look

Some better-ranked stocks in the same sector include Capital City Bank Group Inc. (CCBG), First Bancorp (FBNC) and State Bank Financial Corporation (STBZ). All of these carry a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on SNV
Read the Full Research Report on CCBG
Read the Full Research Report on FBNC
Read the Full Research Report on STBZ


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