Synovus Reaches For Growth, And Gets Its Hand Slapped

Institutional investors can be a curious bunch at times, and trying to please them can be a little like dealing with Veruca Salt. Bank stocks have fallen out of favor recently as investors have grown more concerned about growth in the sector, but companies that choose to put surplus capital to work in growth-oriented M&A are getting punished even worse. Georgia-based mid-cap bank Synovus (SNV) is seeing that first-hand, as the shares are down about 10% since the company has announced both second-quarter earnings and its all-stock deal for Florida-based FCB Financial (FCB).

Although I don't think FCB is necessarily the best target for Synovus, the deal significantly raises Synovus's status in the Southeast region of the country and gives it a fast-growing loan franchise in a state with above-average population growth trends. I also didn't think that Synovus was particularly cheap prior to this announcement, but I do believe this deal will add value provided the credit quality of FCB's rapidly-built loan book holds out.

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Synovus Reaches For Growth, And Gets Its Hand Slapped