Synovus Financial (SNV) has made a profit in four consecutive quarters, but the real turning point may lie in the next two.

The Columbus, Ga., company is readying for its exit from the Troubled Asset Relief Program and to make its stab at remaining independent, executives say. Speculation has swirled for months that Synovus is a ripe takeover target.

"The next six months are critical, and we know it," Kessel Stelling, the chairman and chief executive, said in an interview Tuesday. "Over that time, we need to make that same sort of progress" with earnings to pave the way for exiting Tarp next year.

There is pressure on Synovus executives to sustain momentum through the rest of the year. However, they are pleased that speculation has shifted away from the $26 billion-asset company's solvency to its ability to determine its own destiny.

"There is no relief from pressure," Stelling said. "I'm just glad we've at least changed the conversation" to focus on Tarp and remaining independent.

The potential ace in the hole for Synovus involves an $800 million deferred tax asset sitting on its balance sheet. Sustained profitability will allow the company to realize the benefits of the DTA, which in turn will help it build the capital necessary to repay nearly $1 billion to the Treasury Department.

Credit improvement played a huge role in Synovus' second-quarter results.

It earned $24.8 million in the second quarter, compared with a $53.5 million loss a year earlier. The results included nearly $15 million in expenses tied to preferred stock, including Tarp shares.

Credit costs fell nearly 55% from a year earlier, to $70.3 million. Nonperforming assets fell 22% from a year earlier, to $961 million, marking the first time since the third quarter of 2008 that NPAs fell below $1 billion.

"We're not going to let up on exiting problem credits and getting levels of NPAs back to traditional levels," Stelling said.

Synovus has been hiring lenders to target corporate loans, assisted-living projects and asset-based lending, while continuing to purge commercial real estate loans. The company added $150 million in loans in those categories during the second quarter.

"This is high-quality, fairly priced asset generation. Still, it isn't a significant part of the balance sheet, so we certainly have room to grow that," he said.

Like executives at other regional banks, Stelling is wary about broader economic trends.

"The wild card remains the economy," Stelling said. "We can't control it. We had expectations of a better mood in the economy, but we're not letting that stop us."

The Treasury has no plans to force auctions of Synovus' Tarp shares as the agency has proposed for other participants in the four-year-old program, Stelling says.

Synovus hopes to use existing cash, dividends from its bank and debt or equity issuance to help repay the government. "The Treasury expects us to pay in full and at par," he said. "We expect that, too. We've laid out the timing of our plan with Treasury directly."

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