Synovus Financial Corp.

P.O. Box 120
Columbus, Georgia 31902–0129
U.S.A.
(706) 649–5220
Fax: (706) 649–2342

Public Company
Incorporated: 1972
Employees: 5,300
Total Assets: $7.3 billion
Stock Exchanges: New York
SICs: 6021 National Commercial Banks; 6022 State
Commercial Banks; 6211 Securities Brokers and Dealers;
6712 Bank Holding Companies

Synovus Financial Corp. is a major bank holding company with banking operations in Georgia, Florida, and Alabama. In addition to operating more than 30 community banks, Synovus is a leading provider of diversified financial services through its fee–based subsidiary, Total System Services, Inc. Synovus achieved stellar growth throughout the 1980s and early 1990s, increasing its assets more than seven–fold to $7.3 billion.

Columbus Bank and Trust, a relatively small regional institution headquartered in Columbus, Georgia, changed its structure to a bank holding company to take advantage of new state and federal laws related to the banking industry in the early 1970s. Columbus Bank and Trust created CB&T Bancshares as a subsidiary in 1972. Through Synovus, Columbus could expand its operations more easily within the state of Georgia. It could also begin participating in a number of non–banking–related financial markets.

Prior to the formation of Synovus, James W. Blanchard led Columbus Bank and Trust. He was highly regarded by his fellow managers and employees. Under Blanchard’s guidance, Columbus’s assets more than tripled between the late 1950s and late 1960s. Blanchard, unfortunately, died of lung cancer in 1969, leaving the bank without a chief executive. Columbus had a seasoned banking staff from which it could have drawn Blanchard’s successor, but the bank’s board hired Blanchard’s son, James H. (Jimmy) Blanchard. The board’s decision was startling because the younger Blanchard was only 28 years old and a practicing attorney with no banking experience. “We already had executives who knew banking, but what we needed was dynamic leadership,” said Synovus chairman William B. Turner in Georgia Trend. “We had watched Jimmy grow up; we had seen his success at school. He was a very, very capable, involved person who we felt would make a good choice.”

Doubting his ability to lead Columbus, Blanchard rejected the bank’s offer. But three months later, realizing that it was a tremendous opportunity, he changed his mind. “I wouldn’t have been asked to do it if my last name had not been Blanchard,” he told Georgia Trend.” It was a radical decision. I wasn’t really equipped to do it. But I decided to do it, and I’m glad I did.” Blanchard took Columbus’s helm in 1970 and spent several years getting acclimated to the industry and environment at Columbus.

Although Blanchard lacked banking experience, he later considered that deficiency an advantage because his mind was more open to emerging opportunities. “I think not being a banker was a real plus,” he said in Forbes. An example of Blanchard’s enlightened opportunism was his interest in fee–based financial services. Blanchard’s intrigue with fee–based financial services was piqued in 1974 when a Florida banker told him about the huge fees he was having to pay for credit card processing. Blanchard thought Columbus could combine its computerized operations (that it had installed in 1966) with the advancements in telecommunications that were occurring at the time, to provide credit card processing and other services. Moreover, because Columbus had access to inexpensive labor, Blanchard thought that Columbus could undercut the competition and still enjoy large profit margins. Under Blanchard’s direction, Synovus was among the first banks to enter the financial services boom that would proliferate throughout the 1980s and early 1990s.

By the late 1970s Synovus had become a regional bank holding company with more than $500 million in assets and annual income of about $5 million. Although Synovus had established itself as a major player in its core regional markets, during the next decade the holding company would far exceed the pace of growth it had achieved in any previous period. The expansion would result largely from continued state and federal deregulation. Notably, the legislation Congress passed in the mid 1980s that allowed holding companies like Synovus to begin expanding their operations across state lines. More importantly, though, Synovus’s keen and aggressive management would help it to overcome many of its peers, making it one of the fastest growing banks and financial service providers in the nation.

Synovus launched an ambitious growth program in 1983 when it acquired one banking systems in Florida and two in Georgia: Buena Vista Loan & Savings (Florida); Bank of Hazlehurst; and Citizens Bank & Trust, a relatively large banking chain based in Carrollton. In 1984, Synovus added just one institution, Citizens Bank of Colquitt, Georgia. That acquisition boosted Synovus’s asset base to nearly $1 billion and its annual net income to nearly $12 million.

Augmenting the company’s profits during that period was its subsidiary, Total System Services, Inc. Synovus had spun off its growing financial services operations in 1983, creating Total System Services. As a part of Columbus, Total System had generated fees of about $15 million in 1982, but by 1985 and as a subsidiary Total System had sales of $28 million, of which $4.3 million was netted as profit.

Blanchard increased Synovus’s expansion effort in 1985, and acquired a total of seven new Georgia–based banks. During 1986 and 1987 the company acquired six more institutions, bringing its total asset base going into 1988 to nearly $2 billion. Furthermore, following interstate banking deregulation, Synovus bought three Florida banks in 1988, and two Alabama banks and one more Georgia institution in 1989. As a result of its aggressive acquisition strategy and keen management of its existing assets, Synovus’s assets grew to $2.4 billion by the end of the 1980s as its net income rose to a record $31.4 million. Synovus had boosted both its holdings and profits more than four–fold since the start of the decade.

Though Synovus grew rapidly during the 1980s (and during the early 1990s), its growth reflected a dominant banking industry trend toward consolidation that had been occurring since the late 1970s. Banks had increasingly been under pressure since the late 1970s from less–regulated financial sectors that were quickly stealing market share. In an effort to compete in the competitive environment, bank holding companies had been purchasing smaller competitors. The owners and managers of those holding companies typically benefitted from economies of scale. In addition, the better managed banks were able to improve the performance of the acquisitions by restructuring their operations and improving their margins. Synovus was one of more than 1,300 bank holding companies that emerged by the end of the 1980s. It was also among the most successful.

Although Synovus’s general growth strategy was reflective of overall trends, its specific tactics represented a departure from industry norms. Most bank holding companies completely integrated the banks that they acquired into the parent organization. Integrating acquisitions usually entailed changing the name of the bank and its branches to reflect the parent’s name, making the bank look and feel like the other banks throughout the holding company’s chain, and sometimes installing an entirely new management team. The general idea was to reduce costs, such as those related to advertising and administration, by creating an integrated chain of similar banks.

Synovus adopted a unique, decentralized approach. It allowed the banks that it purchased to retain their name and management. One result was that Synovus had higher operating costs. However, Blanchard believed that the strategy resulted in overall greater returns because the banks retained their local image and appeal. To the surprise of some critics, Synovus significantly outperformed industry averages with the strategy throughout the 1980s and early 1990s.

As Synovus swelled its asset base through merger and acquisition during the 1980s, it also continued to post solid gains with its Total System subsidiary. In fact, Total System benefitted greatly from banking industry trends during the decade. Indeed, when bank holding companies acquired new banks they were often faced with the task of processing as many as twice the number of credit card accounts that they had previously managed. Rather than scramble to expand their own processing facilities, they turned to companies like Total System, paying them a fee to service the accounts for them. At the same time, several non–banking entities sought Total System’s services.

Total System’s competitive advantage over similar service companies was a technical orientation. Indeed, Synovus had invested heavily in top–notch technology to make its subsidiary one of the most efficient, low–cost credit card account processors in the nation. As a result of its efforts, Total System had quickly become one of the largest contenders in that industry, second only to American Express. By 1990, Total System was processing 16 million accounts, generating fees of about $84 million annually, and capturing annual profits of nearly $12 million. It was the processor of choice for several major creditors, including General Electric Capital Corp. and Prudential. In 1990, moreover, the company scored a major victory when it landed a five–year contract to service the newly created AT&T Universal Card. Within three years that huge client added ten million new accounts and was contributing nearly 30 percent of Total System’s entire revenue base.

After achieving growth during the 1980s, Synovus aggressively increased its expansion efforts during the early 1990s. After a depression in real estate and construction markets in the late 1980s, a string of bank and savings and loans failed. As banks failed at a rate unparalleled since the Great Depression, still–healthy banks were selling at an apparent discount. Synovus took advantage of the bargains. During the first three years of the 1990s, it bought 20 new banks that were scattered throughout Georgia, Alabama, and North Florida. By 1992, Synovus’s asset base had risen to $5.2 billion as its net income had increased to $61 million.

Synovus tempered its acquisition activity during 1993, choosing instead to focus on streamlining its existing operations. The company added one new bank to its fold; Birmingham Federal Savings Bank, its largest acquisition ever. Synovus’s 1993 gains, however, were largely attributable to Synovus’s fast–growing Total System subsidiary. In 1993, the fee–based service provider announced a string of successes, including a new seven–year contract with its biggest customer, AT&T, and negotiations to acquire the card–processing business of Bank of America, one of the largest credit card issuers in the nation. Most importantly, Total System designed and implemented a $33 million software system designed to place it at the forefront of the industry in terms of service and cost. “It is the single biggest event in the history of this company,” Blanchard said about the new system in the Atlanta Constitution. “This is like a rocket ship to the moon in terms of technology.”

The value of Synovus’s strategy and long–term potential was evidenced in its stock price, which increased more than 20 percent in 1993. At the same time, Total System Services’s stock price rose nearly 50 percent. Any doubts about Blanchard’s ability to lead the company had long ago been put to rest. “In my first ten years here, I probably had 1,000 people tell me I’d never measure up to my daddy,” Blanchard recalled in the Atlanta Constitution. “He was always used as a club to bang me over the head... but he was a great banker.” Still under the direction of the 52–year–old Blanchard, Synovus managed to boost its assets to $5.6 billion in 1993 and to bolster its income about 18 percent to a record $74 million. Synovus continued to pursue its proven growth tactics going into 1994.

Principal Subsidiaries

Columbus Bank and Trust Company; Total System Services, Inc. (82%).

Further Reading

Crockett, Barton, “Synovus at Crossroads after Decade of Growth,” American Banker, February 16, 1993, p. 1A.

Fleming, John, “James Blanchard: Is It Time to Deregulate Banking?,” Georgia Trend, February 1991, sec. 1, p. 72.

King, Jim, “Synovus CEO Putting Hope on ‘;Rocket Ship,’ “Atlanta Constitution, October 3, 1993, sec. H, p. 1.

Lindsey, Kelly, “Big Profits from Small Banks: Like Other Regional Banks, Synovus Has Been on a Buying Spree,” Georgia Trend, October 1993, sec. 1, p. 28.

Novack, Janet, “Backwater Bliss,” Forbes, August 20, 1990.

Seward, Christopher, “Synovus to Merge with Bank in S.C.,” Atlanta Constitution, October 6, 1994, sec. E, p. 1.

“Synovus Financial: Does its Price Fully Reflect its Performance?,” Better Investing, May 1994, p. 58.

—Dave Mote