By Malcolm Berko

December 25, 2013 5 min read

Dear Mr. Berko: In January of 2012, you recommended a bank stock called Synovus Financial, which was trading at $1.47 a share. I studied this stock for three days and did my research on it and read their financial reports and talked to two bank people and I even opened an account with them to see how efficient they were. Because I was very pleased with what learned, I purchased 400 shares for $600 plus $7.95 commission. Now my Synovus Financial stock is $3.47 and I have made better than made twice my investment, so I need your opinion. Should sell 125 of my shares to recover my investment or sell all my shares and double my money? — AW: Waterloo, Iowa

Dear AW: Synovus Financial (SNV-$3.48) is a regional bank with 290 locations and $26.8 billion in assets that barely made the top 50 list of bank holding companies in the country. In fact SNV just beat out Old West Bank of Pasadena, Calif., by a few hundred million dollars, which now is ranked number 51. However, my due diligence doesn't agree with either of your alternatives; rather, if you have the investible funds I suggest that you consider buying at least another 100 shares. Here's why: (1) SNV will make its first profit in five years of 15-cents a share in 2013 and perhaps 45-cents in 2014. (2) The 4-cent dividend may be raised to 15-cents by 2015 when the Street expects SNV to report earnings of $65-cents. (3) SNV shares trade below their $4.05 book value and total assets should increase to $28.4 billion in 2014. (4) SNV has paid off its $1 billion in TARP loan with internally generated cash, a $185 million stock offering and the issuance of $130 million in preferred stock. This should improve operations, give SNV a healthier balance sheet, provide stable net interest margins and allow better quality earnings. (5) Loan growth in SNV's commercial and industrial business (Georgia, North Carolina, Florida, Tennessee and Alabama) indicates a stronger and improving business climate, continued business expansion and an improving appetite for real estate acquisition. (6) SNV's long-term debt is decreasing and return on assets is expected to better than double in the coming three years from 0.7 percent to 1.6 percent. (7) Return on equity should also double to 11.0 percent and net charge-offs have now declined to under 0.5 percent. (8) SNV is now able to aggressively seek market share in its core regions, which should lead to a stronger and impressive asset base. (9) Finally, all these trends are expected to improve SNV's top and bottom in its future quarters.

SNV is not an exciting rah-rah, go-go bank. SNV is a plodding, straight-shooting bank run by capable group of managers who are cool as a trout. And unlike the pikers at Bank America, Citicorp or J.P, Morgan, the SNV folks are not frantic about improving revenues, earnings and the stock price. In fact, Chairman, CEO and President Kessel Stelling, receives a salary of only $1.35 million but owns 1.4 million shares of SNV stock. Synovus has been serving the South since 1888 and should be in business at least another 100 plus years. Big money in the market is made by holding your good stocks for decades, not for months. This is a good stock. SNV has capable management, a strong franchise area with an excellent mix of commercial, business and private banking clients. I believe you are chomping at the bit for action so you feel the need like to sell SNV, take your profits and move on to another investment. And I also believe that you're reluctant to take my advice, which is to forget that you own SNV for a few years even though I think it could easily be a $10 to $12 stock. I know very few stocks that can double your money in 18 months as this one did. But there are even fewer stocks that have the ability to triple in value in the next 3 to 6 years, and SNV could be one of them.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at [email protected] To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at

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