After a three-year hiatus from acquisitions, Synovus Financial Corp. of Columbus, Ga., has improved its profit mix and is going on a bank-buying binge.
In seven days recently the $9.4 billion-asset company agreed to buy three banks that would add $564 million.
"We hadn't been in the business of buying any banks, but our appetite is a little greater," said Thomas J. Prescott, chief financial officer. Also, he said, "the market is right."
Profit gains at Total System Services, the credit card processing company of which Synovus owns 80.7%, have made buying easier.
Investors have pushed Synovus to focus growth efforts on the unit, and officials said they have been aiming for it to produce 30% of total profits. The percentage had fallen to below 20% three years ago, but by yearend it was 23.2%, according to Patrick A. Reynolds, director of investor relations.
Total System's net was up 20.4% in the first quarter, and the unit's rapid growth has contributed to the steep climb of Synovus stock in recent years. Synovus now trades at about 30 times projected 1999 earnings and seven times book value.
Christopher T. Kelley, an analyst with Morgan Keegan & Co., Memphis, said the multiple gives Synovus a leg up on competitors in the acquisition game.
"They have got, in my opinion, an incredibly valuable currency that enables them to buy a whole lot of things," said Mr. Kelley. "There are few banks trading at that high a premium."
Synovus bought two NationsBank Corp. branches in October 1996, but the last time it bought a bank was in early 1995, when it acquired National Bank of South Carolina in Columbia.
A project under way at Synovus focuses on boosting fee income from its trust, retail brokerage, and mortgage operations. The purchase of well- placed bank branches helps that effort, said analysts.
"It's the only way to grow," said R. Harold Schroeder of Keefe, Bruyette & Woods Inc. Increasing the branch system provides more outlets in which to sell fee-based products, he added.
The first of Synovus' recent bank deals was announced last week. The company said it had agreed to buy $348 million-asset Community Bank Capital Corp., which is based in the north Atlanta suburb of Alpharetta. Community Bank operates six branches in three north Atlanta counties and a full- service mortgage company.
The second deal was announced Monday; Synovus said it would purchase $161 million-asset Georgia Bank and Trust Co., which has three branches in the Calhoun area, about an hour north of Atlanta.
The two stock deals are slated for completion by the end of the third quarter. The target banks would retain their names and management teams, in keeping with Synovus' decentralized structure.
The third deal, announced Wednesday, is for $55 million-asset Bank of Georgia, Athens. The bank is to be merged into Synovus' Athens First Bank and Trust, company officials said.
Synovus would not reveal the price tags for any of the transactions. They would add to a string of 34 banking units Synovus operates throughout Georgia, Alabama, Florida, and South Carolina.