Bank on Synovus
09/30/2005 12:00 am EST
"Very small banks are generally not well-managed and very large banks are inefficient and don't care about customers; but I love mid-cap banks," says Nancy Zambell, who began her career in the banking industry. Here, she highlights a banking favorite.
"That leaves the mid-cap tier. And in that segment I have found many firms that actually know how to run a bank and please their customers. Eventually these well-run banks are bought up by their larger brethren, and that is often when savvy investors cash out. Along the way, we can collect nice dividends. Those are the kinds of banks that I like. Synovus Financial (SNV NYSE) is just such a bank.
"The bank controls more than $26 billion in assets, and offers traditional financial services through its 39 banks and other offices in Georgia, Alabama, South Carolina, Florida, and Tennessee. Founded in 1888, Synovus has proven itself a survivor, chewing up and digesting its smaller rivals along the way. In 1959, its predecessor bank, Columbus Bank and Trust, offered one of the country's first charge cards. And in 1976, the company was the first Georgia bank to take advantage of the state's new multibank holding company law which permitted banks to own and operate other banks. Since 1977, Synovus has acquired 85 of its competitors and continued to be profitable along the way.
"Synovus holds an 81% interest in TSYS, a NYSE-listed company that has been providing transaction processing services for more than 20 years. TSYS is the #1 third-party processor of non-domestic accounts with a global presence. Its joint venture with Visa to support merchant processing includes the top 25 merchant acquirers in the world, and handles some seven billion transactions annually worldwide. The potential for this business is tremendous.
"The company's financials are strong, with expanding profits and dividends. Indeed, it has a proven track record of revenue and profitability growth for more than 100 years. Synovus has a nice 2.54% dividend yield. It has grown its dividend 14% in the last five years. Since 1977, the company's shareholders have been rewarded with a 17.4% annual return, including dividends. History has shown us that a really nice place to be amid market and economic uncertainty is a solid mid-cap bank with a good dividend. Don't miss out on this one. I recommend that you buy up to $30 per share, with a mental stop-loss of 20% below your purchase price."