Synovus Financial Corp. (SNV) has become prudently conservative in its lending practices, clearing up numerous uncertainties in its balance sheet while, at the same time, the Southeastern housing environment seemed to be improving, leading Jonathan S. Raclin, Principal at Barrington Asset Management, Inc., to include the stock in his investment strategy.
“It is admittedly a relatively high-risk, but potentially a high-reward opportunity. They recently announced that they had sold off a large portion of their bad loans. While I think it’s very tough to make money in the banking industry with an incredible amount of regulation and with interest rates as low as they are, the news for Synovus going forward should be better,” Raclin said.
Raclin also says smaller banks like SVN‘s Coastal Bank are able to provide a more personalized banking relationship, especially now that large banks are extremely focused on cost structures rather than personal service. He also says its g may provide exposure to positive trends going forward.
“There may also be some further consolidation in the banking industry, and Synovus is in a part of the world — Georgia, South Carolina, Alabama and Florida — which may prove attractive to an outside entity. We began to acquire the position at $1.50. It’s now trading at approximately $2.50. We think it could be worth more as the housing recovery, especially in the Southeast, continues to show strength,” Raclin said.
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80% good news, 20% bad
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