Thursday, Aug. 21, 2008

Synovus to combine Florida Panhandle banks

Analyst keeps 'Buy' rating despite mortgage losses

Synovus Financial Corp. said Thursday it is combining two of its Florida Panhandle banks into a single charter with the name Coastal Bank and Trust of Florida.

The Columbus-based regional bankholding firm said its consolidation of Bank of Pensacola and Vanguard Bank and Trust in Valparaiso makes sense because of their geographic proximity.

"Since both banks serve contiguous markets along the Gulf Coast, from the Alabama state line to Panama City, and offer products and services that benefit similar customer needs, it was a natural fit to combine their resources under one name," Fred Green, Synovus president and chief operating officer, said in a statement.

The charter merger requires federal regulatory approval, but should be completed by year's end, Synovus said.

Once it occurs, Coastal Bank and Trust of Florida will boast total assets topping $1.8 billion, with 27 branch offices and 320 employees. Its service area includes about 32,000 households, the company said.

Synovus overall oversees more than $34 billion in assets through its 35 banks in Georgia, Alabama, South Carolina, Florida and Tennessee.

The company is currently reviewing its entire operations for ways to cut expenses in light of a mortgage crunch that has seen it and virtually every other bank in the U.S. write off large loan losses.

SunTrust Robinson Humphrey analyst Jennifer Demba, in an Associated Press article Thursday, said she expects more loan losses at Synovus, but they should begin to slow as the company rids itself of the troubled properties.

"Non-performing assets should continue to increase, but at a slower pace, while net chargeoffs are unlikely to be materially different than the second-quarter 2008 levels in the near future," Demba said in the AP report.

Demba held firm on her "Buy" rating for Synovus stock, though she recommended the company cut its quarterly dividend despite its solid capital reserves.

Synovus shares (Ticker: SNV) rose 3 pennies to $9.01 in trading Thursday on the New York Stock Exchange. Its 52-week trading range is $7.19 to $29.92 per share.