Synovus Financial ( SNV) of Columbus, Ga. closed at $2.66 Thursday, or 0.8 times tangible book value. Shares were up 30% for 2010, even after pulling back from a closing high of $3.82 on April 20.

The company announced on June 1 that it had completed the consolidation of 28 of its 30 bank charters operating in the Southeast U.S. into one Georgia charter. Synovus's two remaining Tennessee charters are to be consolidated by June 30. While the local branches will still operate under their own brand names, this move will make it easier for the holding company to manage its capital and cash more easily and greatly simplify its relationship with regulators.

TARP Status: Synovus owes $968 million in bailout money, and has not missed any dividend payments on preferred shares held by the Treasury.

Capital: The holding company's Tier 1 leverage ratio was 7.68% as of March 31, and its total risk-based capital ratio was 13.03%. June capital ratios will be significantly higher, since Synovus raised $769 million through a common stock offering in May, along with another $334 million from an offering of "tangible equity units" that feature a $25 par value and consist of prepaid common stock purchase contracts and subordinated amortizing notes.

Earnings: Synovus posted a first-quarter net loss to common shareholders of $230 million, or 47 cents a share, following a 2009 net loss of $1.49 billion or $3.99 a share during 2009, as the company worked through its nonperforming loans.

Asset Quality: The nonperforming assets ratio was 6.49% as of March 31, and while this was up from 6.23% the previous quarter, the company also reduced its provision for loan loss reserves as it expects credit losses to continue declining, because the inflow of problem assets had fallen for four straight quarters.

Prospects: Several analysts are neutral on the shares, saying they are fairly valued after the recent equity raise. Guggenheim Partners analyst Jeff Davis projects the company will return to profitability during the second half of 2011, while Adam Barkstrom of Sterne Agee expects the company to continue losing money through 2011.

Tom Brown of Second Curve Capital, who also writes commentary on, remains bullish on the company but also believes the capital raise, while reducing the company's risk, has taken away "some of the potential upside" of the shares. Second Curve Capital held 13.4 million or 1.71/% of the outstanding shares in the company as of March 31, according to an SEC filing.

Brown believes that at "7 times normalized earnings, the stock trades as if Synovus is still on life support." (The consensus earnings estimate among analysts polled by Thomson Reuters for the company's earnings in 2012 is 34 cents a share). He also thinks the stock could double over the next two to three years.

While the reported financials and the capital raise make a pretty clear case that Synovus is in pretty decent shape and heading toward profitability, there is a potential risk of dilution if the company decides to raise even more capital. Then again, shares are trading at a big enough discount to address some of that risk. For investors who can commit to the shares for three years and avoid reacting to the short-term swings of the market, Synovus looks like a nice recovery play.

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