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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 I 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 I sell 125 of my shares to recover my investment or sell all my shares and double my money?

A.W.

Waterloo, Iowa

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Dear A.W.: Synovus Financial (SNV-$3.53) is a regional bank with 290 locations and $26.8 billion in assets that barely made the top 50 list of U.S. bank holding companies. In fact, Synovus 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 investable funds, I suggest that you consider buying at least another 100 shares. Here’s why: 1, Synovus 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 Synovus to report earnings of 65 cents a share; 3, Synovus shares trade below their $4.05 book value, and total assets should increase to $28.4 billion in 2014; 4, Synovus 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 Synovus a healthier balance sheet, provide stable net interest margins and allow better quality earnings; 5, loan growth in Synovus’ 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, Synovus’ 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 percent and net charge-offs have now declined to under 0.5 percent; 8, Synovus is now able to aggressively seek market share in its core regions, which should lead to a stronger and impressive asset base; and 9, all of these trends are expected to improve Synovus’ top and bottom in its future quarters.

Synovus is not an exciting, rah-rah, go-go bank. It is a plodding, straight-shooting bank run by a capable group of managers who are as cool as a trout. And unlike the pikers at Bank America, Citicorp or JPMorgan, the Synovus 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 Synovus stock. Synovus has been serving the South since 1888 and should be in business at least another hundred years. Big money in the market is made by holding good stocks for decades, not for months. This is a good stock. Synovus has capable management, a strong franchise area with an excellent mix of commercial, business and private banking clients. I believe you are champing at the bit for action, so you feel the need to sell Synovus, 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 Synovus 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 investors’ 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 three to six years, and Synovus could be one of them.

Address your financial questions to Malcolm Berko, c/o The Daily Journal of Commerce, P.O. Box 8303, Largo, FL 33775, or email him at [email protected]. © 2013 Creators.com