The exact price tag is $967,870,000.
That’s the amount that Synovus Financial Corp. will repay the U.S. Treasury under the Troubled Asset Relief Program (TARP).
The Columbus-based bank took another step in that direction Monday, saying a public offering of $130 million in preferred stock is now under way.
That follows a move last week to offer nearly 60 million shares of its common stock at $3.09 per share. That process, which should wrap up Wednesday, will raise about $185 million, with $175 million of that — after transaction fees — going to TARP.
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The balance of $680 million will come from a “dividend” passed up from the bank’s subsidary, Synovus Bank, which is the umbrella charter for its various divisions. Those divisions include Columbus Bank and Trust, the city’s largest financial institution.
The company, which reported its second-quarter earnings data a week early last Thursday, has not given a date for repayment of TARP funds. The program was set up by the federal government in 2007 to help avert a national banking meltdown ignited by a U.S. housing market crisis.
Synovus already has received some good news on the financial front, with Fitch Ratings on Friday putting the firm’s long-term default rating on slightly more stable footing. It was boosted from “BB-” to “BB.” The short-term rating remains at “B,” although the company’s overall investment quality is still graded “junk” by Fitch.
Still, Fitch said the company’s outlook appears to be improving, thus the possibility for additional profits in coming quarters.
In last week’s conference call with Synovus management, Sandler O’Neill research director Kevin Fitzsimmons asked how the pending TARP repayment might affect the bank’s outlook with ratings agencies.
“I would assume TARP is something they’ve been waiting to be dealt with,” he said. “What do you think the timing is on (when) they could step in and take you guys back up to investment grade?”
Synovus Chairman and Chief Executive Officer Kessel Stelling sidestepped the question somewhat, saying he can’t predict what the ratings agencies will do, although the bank is keeping them as informed as possible.
“I don’t want to appear critical of any of them, but sometimes they’re a little quicker to take you down than they are to take you up. So I would not want to predict their timing,” Stelling said. “But, certainly, it gives us the opportunity for additional business based on potential actions by the agencies.”
Shares of Synovus, which reached a 52-week high of $3.30 on Friday, added to that on Monday, closing up 8 cents, or nearly 2.5 percent, at $3.32. The stock’s low for the past year is $1.81 per share.