SOURCE: The Bedford Report

The Bedford Report

November 01, 2011 08:16 ET

Synovus Financial and Flagstar Bancorp -- Regional Banking's Top Turnaround Stories

The Bedford Report Provides Equity Research on Synovus Financial & Flagstar Bancorp

NEW YORK, NY--(Marketwire - Nov 1, 2011) - It appears Regional Banks have finally put the worst of the recession behind them. For well over a year banks have posted improved credit quality and in the second half of 2011 have begun to report adequate loan growth. Analysts said business borrowers are increasingly relying on banks for financing that they used to get from the bond markets and elsewhere. The Bedford Report examines the outlook for companies in the Regional Banking sector and provides equity research on Synovus Financial Corporation (NYSE: SNV) and Flagstar Bancorp, Inc. (NYSE: FBC). Access to the full company reports can be found at:

Regional bank stocks struggled as the European crisis deepened over the last two months. The concern is that a debt default by Greece could severely harm European banks that hold Greek debt. Although many Regional Banks do not have a lot of -- if any -- direct exposure to the debts of European countries or banks, analysts warned that a the European debt crisis could push the US economy into recession, which would surely hurt regional banks.

With the Eurozone debt crisis showing signs of calming last week, investors can once again focus on domestic operations at US regional banks.

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Synovus Financial has become somewhat of a turnaround story this year. The regional bank posted its first quarterly profit in three years, helped by a steep drop in provisions for bad loans and a big securities gain. Provisions for loan losses fell nearly 60 percent to $364 million, while net charge offs dipped 41 percent from $237.2 million in the third quarter of 2010.

Despite still being in the red, Flagstar Bancorp reported a third quarter 2011 net loss applicable to common shareholders of $(14.2) million, as compared to a second quarter 2011 net loss of $(74.9) million and a third quarter 2010 net loss of $(22.6) million. The company said its results were buoyed by strong revenue growth, with its "largest quarterly level of earnings, before taxes and credit costs, since 2009."

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