Aided by a sharp drop in problem loans, Synovus Financial Corp. in Columbus, Ga., reported a third-quarter profit of $15.7 million — its first quarterly profit in more than three years.
The $28.3 billion-asset company, which had been battered by defaults on loans to homebuilders, said Thursday that its total nonperforming assets have declined by more than 25% since last year's third quarter, when it lost nearly $200 million. Net chargeoffs fell 42%, year-over-year, to $138.3 million and potential problem commercial loans declined for the fourth straight quarter.
The decline in problem assets allowed Synovus to lower its provision for loan losses by more than 58% year over year, to $364 million.
In a news release, Synovus President and Chief Executive Officer Kessel D. Stelling said that the company is "gaining positive traction in every key area necessary for long-term, sustained profitability and growth." Aside from the improvements in credit quality, Kessel pointed out that core deposits rose significantly, core expenses continued to declined, and regulatory capital ratios improved during the quarter.
Stelling said in July that he expected Synovus to start making money again in 2011, but analysts were skeptical. Analysts polled by Thomson Reuters had predicted that Synovus would lose three cents per share in the third quarter and a penny a share in the fourth quarter. It earned two cents per share in the quarter, compared to a loss of seven cents in last year's third quarter.
Synovus' shares charged up 10% Thursday, to close at $1.54