As Synovus Financial Corp. was reporting a $69.3 million first-quarter profit Monday — roughly 15 hours earlier than planned — the regional bank confirmed it is involved in a mega-deal with outdoors retailers Bass Pro Shops and Cabela’s, and credit-card issuer Capital One, that will net the Columbus-based company a cool $75 million.
“We’re going ahead of schedule with first quarter earnings because the release includes an announcement of our acquisition of certain assets and certain liabilities of World’s Foremost Bank (WFB), a wholly-owned subsidiary of Cabela’s,” Synovus spokesman Lee Underwood said via email shortly after the stock markets closed on Monday.
In a nutshell, to divest Cabela’s of federally scrutinized financial strings attached to its $5.5 billion sale to Bass Pro Shops, Synovus has agreed to purchase the credit-card assets and liabilities from World’s Foremost Bank, which is owned by Cabela’s. When that deal closes, Synovus will immediately sell the card assets to Capital One Bank, a subsidiary of Capital One Financial Corp.
Synovus, however, will keep the roughly $1.2 billion brokered time-deposit portfolio of World’s Foremost Bank, with Cabela’s and Capital One paying the locally based bank $75 million. The whole ball of wax is expected to close in the third quarter of this year — that would be in the July-September timeframe — and is subject to typical regulatory approvals and the closing of the retail merger between Bass Pro Shops and Cabela’s. The acquisition was announced last October.
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“This transaction will provide Synovus with additional liquidity to support organic growth, as well as incremental capital that can be utilized to accelerate progress toward achieving our stated long-term (return on assets) and efficiency goals,” Synovus Chairman and Chief Executive Officer Kessel Stelling said in a statement.
The role of Synovus in the acquisition of Sydney, Neb.-based Cabela’s by competitor, Springfield, Mo.-based Bass Pro Shops, had been telegraphed nearly three weeks ago in various media reports. The feeling was that without third parties becoming involved in the divestiture of Lincoln, Neb.-based World’s Foremost Bank by Cabela’s the merger would be in jeopardy and at risk of failing.
Bass Pro Shops, founded in 1972, has about 100 flagship stores and Tracker Marine Centers, primarily in the the eastern U.S. and Canada. It also operates Big Cedar Lodge, a wilderness resort in the Ozark Mountains of Missouri. Cabela’s, founded in 1961, has grown to 85 specialty retail stores, most of them in the western U.S. and Canada. It also has catalog and e-commerce businesses.
The whirl of financial agreements Monday related to the big retail deal overshadowed at least a bit the earnings report of Synovus, which was scheduled to be released before the stock markets open early Tuesday morning. Synovus is the parent company of Columbus Bank and Trust, doing business in 28 markets across the Southeast, in the states of Georgia, Alabama, Florida, South Carolina and Tennessee. It handles about $30 billion assets.
In its first-quarter earnings report, which covers January through March, Synovus posted net income, or a profit, of $69.3 million, or 56 cents per diluted share. That’s up from $50 million, or 39 cents per share, in the same quarter of 2016.
Total revenues for the first three months of this year came in at $304.1 million, up about 8 percent from just over $280 million in the January-March quarter of 2016.
“We are pleased with our strong first quarter performance, highlighted by an 8 percent year-over-year revenue increase driven by steady balance sheet growth and expanded net interest margin,” Stelling said. “We remain confident in our ability to deliver on our 2017 financial targets, and we are excited about the work under way to prepare for our 2018 transition to a single brand. Leveraging a common brand while maintaining our local, relationship-centered delivery model will further boost Synovus brand awareness and enhance our ability to promote our broader banking capabilities to prospects and existing customers.”
Synovus signaled in its most recent annual report that it plans to change the names of all 28 locally branded banks to that of “Synovus” sometime next year. That, of course, include Columbus Bank and Trust, or CB&T, which has used that brand nearly 90 years.
Shares of Synovus jumped 80 cents apiece, or about 2 percent, to close at $39.91 in trading Monday on the New York Stock Exchange. That was amid an overall strong performance by the overall market. The bank’s shares are moving toward their 52-week trading high of $44.09. The stock’s low for the past year is $26.90 per share.