Synovus Financial Corp. ( SNV) shares were falling 5% in after-hours trading, after the company posted a first-quarter loss worse than Wall Street expected and was hit by a downgrade from Moody's Investors Service.

The Columbus, Ga., bank holding company reported a first- quarter net loss of $137 million, which followed a net loss of $635 million in the fourth quarter and compared to net income of $81 million in the first quarter of 2008. Fourth-quarter results included $443 million in goodwill impairment charges.

After dividends and accretion of discounts on preferred stock totaling $14 million, the company's first-quarter net loss available to common shareholder was $151 million, or 46 cents per share. The loss exceeded the Thomsen Reuters consensus estimate of a net loss of 37 cents per share.

Synovus shares had closed at $4.06 Wednesday, down 16% on the day.

Moody's quickly followed the Synovus earnings release by downgrading the company's subordinated debt to B2 from Baa1, and the financial strength rating of two of its bank subsidiaries. Columbus Bank & Trust, of Columbus, Ga. and First Commercial Bank of Birmingham, Ala, were both knocked down to D from C+, with a rating outlook of negative.

Synovus had 31 bank subsidiaries as of Dec. 31, with 15 headquartered in Georgia, representing 56% of the company's total assets. None of Synovus's subsidiaries were included in TheStreet.com's recent look at Georgia banks hard hit by the bursting of the Atlanta real estate bubble.

Synovus saw bottom-line improvement vs. the fourth quarter not only due to the large writedown of goodwill in the prior period, but a lower provision for loan losses. The company set aside $290 million in the first quarter, down from $364 million in the fourth quarter.

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