Synovus Financial (SNV) Concludes FCB Financial Acquisition

Recently, Synovus Financial Corp. (NYSE:SNV) completed the buyout of FCB Financial Holdings, Inc. (NYSE:FCB) . Following the completion, systems, customers, branches and branding of FCB are expected to be transitioned into Synovus by the second quarter of 2019. Notably, the deal was announced in July 2018.

“Synovus has long been known for combining the personal service of a community bank with the financial resources and market capabilities of a large regional bank,” said Kessel Stelling, Synovus chairman and CEO. “The addition of FCB, with its complementary culture, capabilities, and commitment to service, significantly increases the value-creation potential we offer customers, communities, and shareholders. We are happy to welcome FCB customers and team members to Synovus and are excited to begin working together as a single company,” Stelling added.

Background

The all-stock deal, when announced, was valued at $2.9 billion. Per the terms of the merger agreement, shareholders of FCB will get a fixed ratio of 1.055 shares of Synovus common stock per share. Based on Synovus’ closing share price on Jul 23, 2018, the deal is valued at $58.15 per FCB share. On transition, approximately 30% of the combined entity will be held by the existing shareholders of FCB.

Following the merger’s completion, about $40 million in pretax synergies is anticipated to be fully realized by 2020. Excluding one-time charges, the acquisition is likely to be around 6.5% accretive to earnings per share in 2020. Moreover, tangible book value per share dilution of 3.3%, with an earn-back period of less than two years, is estimated from the deal.

Both companies’ boards of directors have approved the merger, along with regulatory nod from the Federal Reserve Board, and the Georgia Department of Banking and Finance in December 2018.

As of September 2018, FCB holds $12.4 billion in assets and $10.2 billion in deposits, along with 51 branches in Florida. Notably, post merger, Synovus will become one of the top five regional banks by deposits in the Southeast, with around assets worth $45 billion, $37 billion in deposits, loans of around $35 billion and 300 branches in Georgia, Alabama, South Carolina, Tennessee and Florida which also includes 51 FCB branches.

Our Take

We believe Synovus’ focus on both organic and inorganic growth, together with cost-containment efforts, will pay off and aid bottom-line expansion in subsequent years. Furthermore, completion of the deal will facilitate the bank with additional liquidity and capital, aiding organic growth, and achievement of expected long-term ROA and efficiency goals, creating one of the largest mid-cap banks in the Southeast by deposits.

Currently, Synovus carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of the company have lost around 29.1% over the past three months compared with a decline of 22.3% recorded by the industry.

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