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On Jul 27, 2013, Zacks Investment Research upgraded Synovus Financial Corporation (SNV - Analyst Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

The recent clearance of TARP dues and strong second-quarter 2013 earnings should help it grow going forward. Additionally, the long-term earnings growth forecast for the company is 6.50%.

On Jul 26, Synovus redeemed $986 million of its Series A preferred stock issued to the U.S. Department of Treasury, thereby exiting the Troubled Asset Relief Program (TARP). Consequently, we expect Synovus to deploy its capital through dividend hike and share repurchase, which will enhance investors’ confidence in the stock. Notably, the TARP loan repayment will remove the restrictions on both financial and executives’ pay package flexibility that the company was subject to, on being a TARP participant.

Further, on Jul 18, Synovus reported second-quarter net income of $30.7 million, more than double compared with $14.8 million in the prior quarter. A decline in non-interest expense, improvement in credit quality and strong capital ratios depict the scope of sustainable profitability in the forthcoming quarters.

Moreover, over the last 30 days, Synovus’ Zacks Consensus Estimate for 2013 increased 27.3% to 14 cents per share. For 2014, the Zacks Consensus Estimate advanced 17.6% to 20 cents per share over the same time period.

Favorable estimate revisions driven by positive second-quarter results and TARP redemption made way for the rank upgrade.

Other Stocks to Consider

Apart from Synovus, other banks worth considering include Farmers Capital Bank Corp. (FFKT - Snapshot Report), First Bancorp (FBNC - Snapshot Report) and Fidelity Southern Corp. (LION - Snapshot Report). All these stocks carry a Zacks Rank #1 (Strong Buy).

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