Synovus Financial Corp. stock tumbled Monday after the regional bankholding company said over the weekend that it expects to write off $350 million in real estate loan losses in the fourth quarter of 2008.
Columbus-based Synovus, which operates 31 banks in five Southeastern states, reported Friday that it expects loan losses to reach $250 million in the fourth quarter. It corrected that release Saturday, however, adding an additional $100 million to the total.
Write-offs were around $70 million in the same three-month period a year ago.
The banking firm cited “current economic conditions” in making its loan-loss projection. “The largest component of these elevated charges relates to Atlanta market residential real estate credits,” the company said in its release.
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Synovus shares fell out of the gate Monday, dropping $1.41 to under $7 before recovering slightly by mid-afternoon. The stock closed down $1.03 per share, or 12.5 percent, at $7.17.
Several stock market analysts downgraded their financial estimates for the firm based on the loan-loss projections.
Deutsche Bank analyst Rob Rutschow cut his full-year 2008 estimate to a loss of 30 cents per share from a profit of 20 cents. He also revised his 2009 estimate to a loss of 25 cents per share from a profit of 30 cents.
SunTrust Robinson Humphrey analyst Jennifer Demba revised her fourth-quarter estimate to a loss of 51 cents per share from a loss of 31 cents per share.
“Given Synovus’ loan mix and geographic footprint, we believe provisioning will continue to be very elevated this year and the loan loss rate may need to be substantially higher,” she wrote in a note to her clients.
Synovus, responsible for more than $35 billion in banking assets, plans to release its earnings report for the fourth quarter and the full-year 2008 on Jan. 22.
In October, the company reported a $26.9 million loss for the third quarter of the year, down from a $135 million profit in the same period the year prior.
It posted a $66 million profit for the first nine months of 2008, but that was down from a $444 million profit the year before as the housing markets were beginning to unravel.
In November, Synovus received federal approval to participate in the Troubled Asset Relief Program.
The company got the green light in December to receive nearly $968 million in funds from the sale of its stock to the U.S. government.
“Longer term, I think all banks will basically put that capital to work through some additional expansion and loan growth, and maybe even acquisitions or expansion into new markets,” Richard Anthony, Synovus chairman and chief executive officer, said at the time. “But that’s not a 2008, and maybe not a 2009, priority.”
The firm’s banks are located in Georgia, Alabama, South Carolina, Florida and Tennessee.