Columbus-based banking giant Synovus this week reported its first quarterly profit in three years. While other obstacles loom, the company said it’s a milestone.
The company reported a $15 million profit for the three months ending Sept. 30. By contrast, it had a nearly $200 million loss during the same period last year.
“We are pleased to return to profitability, a key milestone for all of our stakeholders,” said Kessel D. Stelling, president of Synovus, in a statement.
He said core deposits were up significantly and expenses were trending down. Total deposits rose 1 percent $23 billion in the quarter ended Sept. 30.
"We are gaining positive traction in almost every key area necessary for long-term, sustained profitability and growth,” he said.
Experts say better performance and a key investment gain this past quarter helped Synovus return to profitability.
The bank still owes nearly $1 billion to the federal Troubled Asset Relief Program, known as “TARP.”
Christopher Marinac, an analyst with FIG Partners, says that’s partly because of regulatory delays. But he says it's also because Synovus made an exceptionally large number of questionable loans, compared to other banks.
“Synovus, unfortunately, made a bed that was very bad for itself with all of these problem loans. That’s the bad news," Marinac said in an interview. "The good news is they have worked very hard to reduce those problems and begin to reposition the company.”
Marinac said it will take some more time before the company completely recovers from the Recession. He said about 14 percent of its loans are considered faulty. The company, he said, needs to whittle that percentage down to about four or five percent.
Synovus said it also expects to be profitable in the current quarter.