Synovus Downgraded On Capital, Regulation Worries

NEW YORK (AP) — Shares of Synovus Financial Corp. tumbled to their lowest point in more than 17 years Wednesday after a Morgan Keegan analyst downgraded the regional bank, saying government pressure for banks to build capital reserves as well as ongoing credit issues will pressure the stock.

Analyst Robert Patten cut his projection for 2010 to a loss of $1.10 per share from 75 cents per share because of the expected cost of bad debt provisions. Analysts polled by Thomson Reuters expect a loss of $1.02 per share in 2010, on average.

In a regulatory filing with the Securities and Exchange Commission on Monday, Synovus used "cautious wording" on "potential regulatory enforcement increasing," Patten noted.

Synovus warned that the possibility of deteriorating credit, further regulatory directives, more non-performing assets and the need to set aside more money to cover bad debt could hurt its liquidity position and capital ratios and require the bank to seek additional capital.

"The potential need for more capital and/or loan loss reserve has heightened our concerns," Patten said. Meanwhile non-performing loans — loans written off as not being repaid — are still high.