1. Synovus Financial


Shares of Synovus Financial ( SNV) of Columbus, Ga., closed at $2.58 Thursday, returning 5% this year, following a 78% increase in 2012. The shares dropped 45% in 2011. From the end of 2010 through January, the total return for Synovus's shares was 2%.

The stock at the end of January traded for 0.9 times tangible book value, and for 14.3 times the consensus 2013 EPS estimate of 18 cents. The consensus 2013 EPS estimate is 12 cents.

The company's 2012 ROA was 3.14%, reflecting the recapture of "substantially all" of the its deferred tax asset valuation allowance. Synovus said in its fourth-quarter earnings release that the DTA recapture added $800 million to the fourth-quarter bottom line, and "drove the $0.89 increase in tangible book value per share during the quarter to $2.96."

The DTA recapture was very important for Synovus, which had been working for years to work through its nonperforming loans. Nonperformers totaled $543.3 million as of Dec. 31, or 2.78% of total loans, steadily improving from 4.4% a year earlier.

The company's next milestone is to repay $967.9 million in federal bailout funds received through the Troubled Asset Relief Program, or TARP, in December 2008. The preferred shares held by the government have a 5% coupon, which will increase to 9% at the end of this year, providing a healthy incentive for the company to exit TARP.

Jefferies analyst Emlen Harmon has a neutral rating on Synovus and on Jan. 23 said he was expecting the company to redeem the TARP preferred shares during the second quarter, "with the assumption that two-thirds of the TARP redemption is funded through balance sheet liquidity and a third is funded through preferred equity issuance at a 7% yield."

"The redemption should drive improved profitability," Harmon said, "as the company funds the redemption with the sale of lower-yielding assets, shrinking the balance sheet and lowering preferred dividends in the process."

SNV Chart SNV data by YCharts

Interested in more on Synovus Financial? See TheStreet Ratings' report card for this stock.

-- Written by Philip van Doorn in Jupiter, Fla.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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