Synovus: Bank Buy, Below Book

05/13/2020 5:00 am EST

Focus: FINANCIALS

Brett Owens

Chief Investment Strategist, BNK Invest, Inc.

Regional bank Synovus Financial (SNV), with branches and ATMs in Georgia, Alabama, Tennessee, South Carolina and Florida, is one of the best run banks in America, explains Brett Owens, editor of Contrarian Income Report.

The bank is led by an industry veteran who is no stranger to financial crises. Current CEO Kessel Stelling was a regional manager when the firm needed a $968 million TARP loan after the last financial crisis.

Kessel was promoted up several ranks to the top spot to save the day. In July 2013, Synovus repaid its TARP loan in full.

And in late 2014, the bank hiked its payout for the first time in seven years. It was the start of an incredible run for the firm’s dividend, which has increased an amazing 230% over the last five years.

In early 2019, investors were paying 2.2-times book value for shares of Synovus. In just a few manic months that has all been replaced with despair, with shares now trading hands at just 67% of book value.

Buying a bank for less than book is as close to “free money” as it gets on Wall Street. The dividend is safe and the 10% raise that shareholders just received should stay. This means shares will pay a fat 5.7% in the year ahead. At two-thirds book value, Synovus offers plenty of buffer to protect our investment here.

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