0000018349us-gaap:FairValueMeasurementsNonrecurringMember2020-09-30

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 
FORM 10-Q
 

☒Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended September 30, 20172020
Commission file number 1-10312
 

syn-20200930_g1.jpg
SYNOVUS FINANCIAL CORP.
(Exact name of registrant as specified in its charter)

 
Georgia58-1134883
(State or other jurisdiction ofincorporation or organization)
   (I.R.S. EmployerIdentification No.)

1111 Bay Avenue,
Suite 500 Columbus, Georgia
31901

Columbus,Georgia31901
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (706) 649-2311
Securities registered pursuant to Section 12(b) of the Act:
641-6500
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $1.00 Par Value
Series B Participating Cumulative Preferred
SNVNew York Stock Purchase Rights
Exchange
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series CD
SNV - PrD
New York Stock Exchange
Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series ESNV - PrENew York Stock Exchange
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES x  NO ¨Yes ☒  No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   YES x  NO ¨Yes ☒  No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and, “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filer☒Accelerated filer☐
Large accelerated filerxAccelerated filer¨
Non-accelerated filer
¨ (Do not check if a smaller reporting company)
☐		Smaller reporting company¨☐
Emerging growth company¨☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 7(a)2(B)Section 13(a) of the SecuritiesExchange Act.  ¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨    NO xYes ☐    No ☒
Indicate the numberAs of November 4, 2020, 147,806,270 shares outstanding of each of the issuer’s class ofregistrant's common stock, as$1.00 par value, were outstanding.




Table of the latest practicable date.Contents

ClassNovember 2, 2017
Page
Common Stock, $1.00 Par ValueFinancial Information119,514,829


Table of Contents
Page
Part I.
Financial Information
Index of Defined Terms
i
Item 1.Financial Statements (Unaudited)
Consolidated Balance Sheets as of September 30, 20172020 and December 31, 20162019
1
Consolidated Statements of Income for the NineThree and ThreeNine Months Ended September 30, 20172020 and 20162019
2
Consolidated Statements of Comprehensive Income for the NineThree and ThreeNine Months Ended September 30, 20172020 and 20162019
3
Consolidated Statements of Changes in Shareholders' Equity for the Three and Nine Months Ended September 30, 20172020 and 20162019
4
Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 20172020 and 20162019
56
Notes to Unaudited Interim Consolidated Financial Statements
7
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
4243
Item 3.
7771
Item 4.Controls and Procedures
7771
Other Information
Item 1.Legal Proceedings
7872
Item 1A.Risk Factors
7872
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
7872
Item 3.Defaults Upon Senior Securities
7972
Item 4.Mine Safety Disclosures
7972
Item 5.Other Information
7972
Item 6.Exhibits
8073
Signatures
8174







SYNOVUS FINANCIAL CORP.
INDEX OF DEFINED TERMS

Throughout this discussion, references to "Synovus", "we", "our", "us", "the Company" and similar terms refer to the consolidated entity consisting of Synovus Financial Corp. and its subsidiaries unless the context indicates that we refer only to the Parent Company, Synovus Financial Corp. When we refer to the "Bank" or "Synovus Bank" we mean our only bank subsidiary, Synovus Bank.
ACL – Allowance for credit losses (ALL, reserve on unfunded loan commitments, and reserve, if required, on debt securities)
ALCO – Synovus' Asset Liability Management Committee
ALL – Allowance for loan losses
AOCI – Accumulated other comprehensive income
Acquisition Date – Effective January 1, 2019, Synovus completed its acquisition of FCB Financial Holdings, Inc.
ARRC – Alternative Reference Rates Committee
ASC – Accounting Standards Codification
ASC 310-30 loans – Loans accounted for in accordance with ASC 310 – 30, Loans and Debt Securities Acquired with Deteriorated Credit Quality
ASU – Accounting Standards Update
ATM – Automatic teller machine
Basel III – A global regulatory frameworkThe third Basel Accord developed by the Basel Committee on Banking Supervision to strengthen existing regulatory capital requirements
BOLI – Bank-Owned Life InsuranceBank-owned life insurance
BOV – Broker’s opinion of value
bpbp(s) – Basis point (bps - basis points)point(s)
C&I – Commercial and industrial loans
CARES Act – The Coronavirus Aid, Relief, and Economic Security Act
CDC – Centers for Disease Control
CDI – Core Deposit Intangible
CECL –Current expected credit losses
CET1 – Common Equity Tier 1 Capital defined by Basel III capital rules
CME – Chicago Mercantile Exchange
CMO – Collateralized Mortgage Obligationmortgage obligation
Cabela’s Transaction – The transaction completed on September 25, 2017 whereby Synovus Bank acquired certain assets and assumed certain liabilities of WFB and then immediately thereafter sold WFB’s credit card assets and certain related liabilities to Capital One Bank (USA), National Association, a bank subsidiary of Capital One Financial Corporation.  As a part of this transaction, Synovus Bank retained WFB’s $1.10 billion brokered time deposit portfolio and received a $75.0 million fee from Cabela’s and Capital One.  Throughout this Report, we refer to this transaction as the “Cabela’s Transaction” and the associated $75.0 million fee received from Cabela’s and Capital One as the “Cabela’s Transaction Fee”
Code – Internal Revenue Code, of 1986, as amended
Company – Synovus Financial Corp. and its wholly-owned subsidiaries, except where the context requires otherwise
Covered Litigation – Certain Visa litigation for which Visa is indemnified by Visa USA members
COVID-19 – Coronavirus disease 2019
CRA – Community Reinvestment Act
CRE – Commercial real estate
DIF DCF– Deposit Insurance FundDiscounted cash flow
Dodd-Frank Act – The Dodd-Frank Wall Street Reform and Consumer Protection Act
EFFR– Effective Federal Funds Rate
EVE – economicEconomic value of equity
Exchange Act – Securities Exchange Act of 1934, as amended
FASB – Financial Accounting Standards Board
i

FCA – Financial Conduct Authority
FCB – FCB Financial Holdings, Inc. and its wholly-owned subsidiaries, except where the context requires otherwise
FDIC – Federal Deposit Insurance Corporation
Federal Reserve Bank – The 12 banks that are the operating arms of the U.S. central bank. They implement the policies of the Federal Reserve Board and also conduct economic research
Federal Reserve Board – The 7-member Board of Governors that oversees the Federal Reserve System, establishes monetary policy (interest rates, credit, etc.), and monitors the economic health of the country. Its members are appointed by the President subject to Senate confirmation, and serve 14-year terms
Federal Reserve System – The 12 Federal Reserve Banks, with each one serving member banks in its own district. This system, supervised by the Federal Reserve Board, has broad regulatory powers over the money supply and the credit structure
FFIEC – Federal Financial Institutions Examination Council
FFIEC Retail Credit Classification Policy – FFIEC Uniform Retail Credit Classification and Account Management Policy
FHLB – Federal Home Loan Bank
FICO – Fair Isaac Corporation
FMS – Financial Management Services, a division of Synovus Bank
FOMC – Federal Open Market Committee
FTE – Fully taxable-equivalent
FTP – Funds transfer pricing
GA DBF – Georgia Department of Banking and Finance

i
Table of Contents

GAAP – Generally Accepted Accounting Principles in the United States of America
GGL – governmentGovernment guaranteed loans
Global One – Entaire Global Companies, Inc., the parent company of Global One Financial, Inc., as acquired by Synovus on October 1, 2016. Throughout this Report, we refer to this acquisition as "Global One"
HELOC – Home equity line of credit
Interagency Supervisory Guidance – Interagency Supervisory Guidance on Allowance for Loan and Lease Losses Estimation Practices for Loans and Lines of Credit Secured by Junior Liens on 1-4 Family Residential Properties
LGD – Loss given default
LIBOR – London Interbank Offered Rate
LIHTC – Low Income Housing Tax Credit
LTV – Loan-to-collateral value ratio
MBS – Mortgage-backed security
Merger Agreement – Agreement and Plan of Merger by and among Synovus, FCB and Azalea Merger Sub Corp., a subsidiary of Synovus, dated as of July 23, 2018
Merger – The merger effected by the Merger Agreement
MLO – Mortgage loan originator
MPS – Merchant processing servicer(s)
MRSU – Market Restricted Share Unit
NAICS – North American Industry Classification System
nm – not meaningful
NPA – Non-performing assets
NPL – Non-performing loans
NSF – Non-sufficient funds
ii

OCI – Other comprehensive income
OTC– Over-the-counter
ORE – Other real estate
OTTIP&I – Other-than-temporary impairmentPrincipal and interest
PAA – Purchase accounting adjustments
Parent Company – Synovus Financial Corp.
PCD – Purchased Credit Deteriorated
PCI – Purchased Credit Impaired
PD – Probability of Default
PPP –Paycheck Protection Program established as part of the CARES Act and launched on April 3, 2020 by the SBA and Treasury
PSU – Performance Share Unit
RSU – Restricted Share Unit
SBA – Small Business Administration
SCMSBIC – State, county, and municipalSmall Business Investment Company
SEC – U.S. Securities and Exchange Commission
Securities Act – Securities Act of 1933, as amended
Series CD Preferred Stock – Synovus' Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series C,D, $25 liquidation preference
Series E Preferred Stock – Synovus' Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series E, $25 liquidation preference
SOFR – Secured Overnight Financing Rate
Synovus – Synovus Financial Corp.
Synovus Bank – A Georgia state-chartered bank and wholly-owned subsidiary of Synovus through which Synovus conducts its banking operations
Synovus' 20162019 Form 10-K – Synovus' Annual Report on Form 10-K for the year ended December 31, 20162019
Synovus Mortgage – Synovus Mortgage Corp., a wholly-owned subsidiary of Synovus Bank
Synovus Securities – Synovus Securities, Inc., a wholly-owned subsidiary of Synovus
Synovus Trust – Synovus Trust Company, N.A., a wholly-owned subsidiary of Synovus Bank
TDR – Troubled debt restructuring (as defined in ASC 310-40)
Treasury TJCA– United States DepartmentU.S. Tax Cuts and Jobs Act of the Treasury2017
VIETSR – Variable interest entity, as defined in ASC 810-10Total shareholder return
UPB – Unpaid principal balance
Visa – The Visa U.S.A., Inc. card association or its affiliates, collectively
Visa Class A shares – Class A shares of common stock issued by Visa are publicly traded shares which are not subject to restrictions on sale
Visa Class B shares – Class B shares of common stock issued by Visa which are subject to restrictions with respect to sale until all of the Covered Litigation has been settledsettled. Class B shares will be convertible into Visa Class A shares using a then-current conversion ratio upon the lifting of restrictions with respect to sale of Visa Class B shares
Visa Derivative – A derivative contract with the purchaser of Visa Class B shares which provides for settlements between the purchaser and Synovus based upon a change in the ratio for conversion of Visa Class B shares into Visa Class A shares
Warrant – A warrant issued to the Treasury by Synovus to purchase up to 2,215,820 shares of Synovus common stock at a per share exercise price of $65.52 expiring on December 19, 2018, as was issued by Synovus to Treasury in 2008 in connection with the Capital Purchase Program, promulgated under the Emergency Stabilization Act of 2008
WFB – World's Foremost Bank, a wholly-owned subsidiary of Cabela's Incorporated


ii
iii
Table of Contents



PART I. FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
SYNOVUS FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share and per share data)September 30, 2017 December 31, 2016
ASSETS   
Cash and cash equivalents$386,459
 395,175
Interest bearing funds with Federal Reserve Bank1,297,581
 527,090
Interest earning deposits with banks6,047
 18,720
Federal funds sold and securities purchased under resale agreements48,820
 58,060
Trading account assets, at fair value12,329
 9,314
Mortgage loans held for sale, at fair value54,072
 51,545
Other loans held for sale31,253
 —
Investment securities available for sale, at fair value3,825,443
 3,718,195
Loans, net of deferred fees and costs24,487,360
 23,856,391
Allowance for loan losses(249,683) (251,758)
Loans, net$24,237,677
 23,604,633
Premises and equipment, net423,245
 417,485
Goodwill57,315
 59,678
Other intangible assets11,548
 13,223
Other real estate10,551
 22,308
Deferred tax asset, net272,052
 395,356
Other assets967,731
 813,220
Total assets$31,642,123
 30,104,002
LIABILITIES AND SHAREHOLDERS' EQUITY   
Liabilities   
Deposits:   
Non-interest bearing deposits$7,302,682
 7,085,804
Interest bearing deposits, excluding brokered deposits16,420,319
 16,183,273
Brokered deposits2,463,227
 1,378,983
Total deposits26,186,228
 24,648,060
Federal funds purchased and securities sold under repurchase agreements141,539
 159,699
Long-term debt1,882,607
 2,160,881
Other liabilities434,671
 207,438
Total liabilities$28,645,045
 27,176,078
Shareholders' Equity   
Series C Preferred Stock – no par value. Authorized 100,000,000 shares; 5,200,000 shares issued and outstanding at September 30, 2017 and December 31, 2016$125,980
 125,980
Common stock - $1.00 par value. Authorized 342,857,143 shares; 142,525,139 issued at September 30, 2017 and 142,025,720 issued at December 31, 2016; 119,566,625 outstanding at September 30, 2017 and 122,266,106 outstanding at December 31, 2016142,525
 142,026
Additional paid-in capital3,033,682
 3,028,405
Treasury stock, at cost – 22,958,514 shares at September 30, 2017 and 19,759,614 shares at December 31, 2016(800,509) (664,595)
Accumulated other comprehensive loss(39,596) (55,659)
Retained earnings534,996
 351,767
Total shareholders’ equity2,997,078
 2,927,924
Total liabilities and shareholders' equity$31,642,123
 30,104,002
    
See accompanying notes to unaudited interim consolidated financial statements.

SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
 Nine Months Ended September 30, Three Months Ended September 30,
(in thousands, except per share data)2017 2016 2017 2016
Interest income:       
      Loans, including fees$785,166
 700,340
 $273,847
 237,448
      Investment securities available for sale60,112
 49,926
 20,014
 16,269
      Trading account assets90
 46
 41
 13
      Mortgage loans held for sale1,478
 1,966
 506
 727
      Federal Reserve Bank balances4,084
 3,170
 1,569
 1,151
      Other earning assets4,633
 2,822
 1,675
 946
Total interest income855,563
 758,270
 297,652
 256,554
Interest expense:       
Deposits55,874
 48,072
 20,798
 15,858
Federal funds purchased and securities sold under repurchase agreements125
 154
 42
 58
Long-term debt45,967
 44,394
 14,240
 14,631
Total interest expense101,966
 92,620
 35,080
 30,547
Net interest income753,597
 665,650
 262,572
 226,007
Provision for loan losses58,620
 21,741
 39,686
 5,671
Net interest income after provision for loan losses694,977
 643,909
 222,886
 220,336
Non-interest income:       
Service charges on deposit accounts59,848
 60,772
 20,255
 20,822
Fiduciary and asset management fees37,290
 34,691
 12,615
 11,837
Brokerage revenue21,947
 20,019
 7,511
 6,199
Mortgage banking income17,151
 18,755
 5,603
 7,329
Bankcard fees24,339
 24,988
 7,901
 8,269
Cabela's Transaction Fee75,000
 —
 75,000
 —
Investment securities (losses) gains, net(289) 126
 (7,956) 59
Decrease in fair value of private equity investments, net(3,193) (527) (27) (249)
Other fee income16,127
 15,255
 5,094
 5,171
Other non-interest income27,754
 25,109
 9,439
 8,718
Total non-interest income275,974
 199,188
 135,435
 68,155
Non-interest expense:       
Salaries and other personnel expense322,079
 300,364
 109,675
 101,945
Net occupancy and equipment expense89,837
 81,480
 30,573
 28,120
Third-party processing expense39,882
 34,033
 13,659
 11,219
FDIC insurance and other regulatory fees20,723
 20,100
 7,078
 6,756
Professional fees20,048
 19,794
 7,141
 6,486
Advertising expense14,868
 15,358
 3,610
 5,597
Foreclosed real estate expense, net10,847
 9,998
 7,265
 2,725
Earnout liability adjustments3,766
 —
 2,059
 —
Merger-related expense110
 550
 23
 550
Loss on early extinguishment of debt, net—
 4,735
 —
 —
Fair value adjustment to Visa derivative—
 1,079
 —
 360
Restructuring charges, net7,043
 8,225
 519
 1,243
Other operating expenses65,577
 67,000
 24,044
 20,870
Total non-interest expense594,780
 562,716
 205,646
 185,871
Income before income taxes376,171
 280,381
 152,675
 102,620
Income tax expense130,303
 102,148
 54,668
 37,375
Net income245,868
 178,233
 98,007
 65,245
Dividends on preferred stock7,678
 7,678
 2,559
 2,559
Net income available to common shareholders$238,190
 170,555
 $95,448
 62,686
Net income per common share, basic$1.96
 1.36
 $0.79
 0.51
Net income per common share, diluted1.94
 1.36
 0.78
 0.51
Weighted average common shares outstanding, basic121,796
 125,076
 120,900
 122,924
Weighted average common shares outstanding, diluted122,628
 125,712
 121,814
 123,604
        
(in thousands, except share and per share data)September 30, 2020December 31, 2019
ASSETS
Cash and due from banks$578,026 $535,846 
Interest-bearing funds with Federal Reserve Bank1,266,313 553,390 
Interest earning deposits with banks20,929 20,635 
Federal funds sold and securities purchased under resale agreements120,095 77,047 
     Total cash, cash equivalents, restricted cash, and restricted cash equivalents1,985,363 1,186,918 
Investment securities available for sale, at fair value7,566,525 6,778,670 
Loans held for sale (includes $285,899 and $115,173 measured at fair value, respectively)745,160 115,173 
Loans, net of deferred fees and costs39,549,847 37,162,450 
Allowance for loan losses(603,800)(281,402)
Loans, net38,946,047 36,881,048 
Cash surrender value of bank-owned life insurance1,044,046 775,665 
Premises and equipment, net471,208 493,940 
Goodwill452,390 497,267 
Other intangible assets, net47,752 55,671 
Other assets1,782,047 1,418,930 
Total assets$53,040,538 $48,203,282 
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Non-interest-bearing deposits$13,075,081 $9,439,485 
Interest-bearing deposits31,590,823 28,966,019 
Total deposits44,665,904 38,405,504 
Federal funds purchased and securities sold under repurchase agreements202,344 165,690 
Other short-term borrowings400,000 1,753,560 
Long-term debt1,628,385 2,153,897 
Other liabilities1,079,363 782,941 
Total liabilities47,975,996 43,261,592 
Shareholders' Equity
Preferred stock - no par value; authorized 100,000,000 shares; issued 22,000,000537,145 537,145 
Common stock - $1.00 par value; authorized 342,857,143 shares; issued 167,410,950 and 166,800,623; outstanding 147,317,923 and 147,157,596167,411 166,801 
Additional paid-in capital3,832,142 3,819,336 
Treasury stock, at cost; 20,093,027 and 19,643,027 shares(731,806)(715,560)
Accumulated other comprehensive income, net174,914 65,641 
Retained earnings1,084,736 1,068,327 
Total shareholders' equity5,064,542 4,941,690 
Total liabilities and shareholders' equity$53,040,538 $48,203,282 
See accompanying notes to unaudited interim consolidated financial statements.

1

SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share data)2020201920202019
Interest income:
Loans, including fees$384,275 $463,437 $1,213,609 $1,368,769 
Investment securities available for sale43,196 53,761 139,784 156,493 
Loans held for sale6,341 978 9,047 2,144 
Federal Reserve Bank balances285 2,288 2,187 8,659 
Other earning assets1,453 2,951 6,389 8,320 
Total interest income435,550 523,415 1,371,016 1,544,385 
Interest expense:
Deposits43,194 94,082 185,670 274,466 
Federal funds purchased, securities sold under repurchase agreements, and other short-term borrowings176 7,843 7,885 18,599 
Long-term debt15,190 19,393 50,645 54,785 
Total interest expense58,560 121,318 244,200 347,850 
Net interest income376,990 402,097 1,126,816 1,196,535 
Provision for credit losses(1)
43,383 27,562 343,956 63,250 
Net interest income after provision for credit losses333,607 374,535 782,860 1,133,285 
Non-interest revenue:
Service charges on deposit accounts17,813 22,952 54,069 65,805 
Fiduciary and asset management fees15,885 14,686 46,009 42,743 
Card fees10,823 12,297 30,959 34,334 
Brokerage revenue10,604 11,071 32,987 30,502 
Mortgage banking income31,229 10,351 66,987 23,313 
Capital markets income5,690 7,396 22,984 21,557 
Income from bank-owned life insurance7,778 5,139 21,572 15,605 
Investment securities (losses) gains, net(1,550)(3,731)76,594 (5,502)
Other non-interest revenue16,139 8,599 39,591 29,588 
Total non-interest revenue114,411 88,760 391,752 257,945 
Non-interest expense:
Salaries and other personnel expense154,994 142,516 464,268 424,952 
Net occupancy, equipment, and software expense41,554 41,017 125,475 119,262 
Third-party processing and other services20,620 18,528 63,466 55,403 
Professional fees13,377 9,719 39,358 25,379 
FDIC insurance and other regulatory fees6,793 7,242 18,922 21,872 
Goodwill impairment44,877 0 44,877 0 
Merger-related expense0 353 0 57,493 
Other operating expenses34,440 56,935 120,710 128,486 
Total non-interest expense316,655 276,310 877,076 832,847 
Income before income taxes131,363 186,985 297,536 558,383 
Income tax expense39,789 51,259 74,250 146,287 
Net income91,574 135,726 223,286 412,096 
Less: Preferred stock dividends8,291 8,291 24,872 14,591 
Net income available to common shareholders$83,283 $127,435 $198,414 $397,505 
Net income per common share, basic$0.57 $0.84 $1.35 $2.53 
Net income per common share, diluted0.56 0.83 1.34 2.51 
Weighted average common shares outstanding, basic147,314 152,238 147,304 156,819 
Weighted average common shares outstanding, diluted147,976 154,043 148,037 158,595 
(1)    Beginning January 1, 2020, provision calculation is based on current expected credit loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.
See accompanying notes to unaudited interim consolidated financial statements.
2

SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)


 Nine Months Ended September 30,
 2017 2016
(in thousands)Before-tax Amount Tax (Expense) Benefit Net of Tax Amount Before-tax Amount Tax (Expense) Benefit Net of Tax Amount
Net income$376,171
 (130,303) 245,868
 280,381
 (102,148) 178,233
Net change related to cash flow hedges:           
Reclassification adjustment for losses realized in net income130
 (50) 80
 402
 (155) 247
Net unrealized gains on investment securities available for sale:           
Reclassification adjustment for net losses (gains) realized in net income289
 (111) 178
 (126) 49
 (77)
Net unrealized gains arising during the period25,715
 (9,903) 15,812
 56,648
 (21,821) 34,827
Net unrealized gains26,004
 (10,014) 15,990
 56,522
 (21,772) 34,750
Post-retirement unfunded health benefit:           
Reclassification adjustment for gains realized in net income(74) 29
 (45) (124) 48
 (76)
Actuarial gains arising during the period61
 (23)—
38
 102
 (39) 63
Net unrealized (realized) gains$(13) 6
 (7) (22) 9
 (13)
Other comprehensive income$26,121
 (10,058) 16,063
 56,902
 (21,918) 34,984
Comprehensive income    $261,931
     213,217
            

 Three Months Ended September 30,
 2017 2016
(in thousands)Before-tax Amount Tax (Expense) Benefit Net of Tax Amount Before-tax Amount Tax (Expense) Benefit Net of Tax Amount
Net income$152,675
 (54,668) 98,007
 102,620
 (37,375) 65,245
Net change related to cash flow hedges:           
Reclassification adjustment for losses realized in net income—
 —
 —
 65
 (25) 40
Net unrealized gains (losses) on investment securities available for sale:

 

        
Reclassification adjustment for net losses (gains) realized in net income7,956
 (3,063) 4,893
 (59) 23
 (36)
Net unrealized gains (losses) arising during the period5,465
 (2,106) 3,359
 (9,567) 3,672
 (5,895)
Net unrealized gains (losses)13,421
 (5,169) 8,252
 (9,626) 3,695
 (5,931)
Post-retirement unfunded health benefit:  

        
Reclassification adjustment for gains realized in net income(34) 13
 (21) (20) 8
 (12)
Actuarial gains arising during the period61
 (23)—
38
 102
 (39) 63
Net unrealized (realized) gains$27
 (10) 17
 82
 (31) 51
Other comprehensive income (loss)$13,448
 (5,179) 8,269
 (9,479) 3,639
 (5,840)
Comprehensive income    $106,276
     59,405
            
Three Months Ended September 30,
20202019
(in thousands)Before-tax AmountIncome TaxNet of Tax AmountBefore-tax AmountIncome TaxNet of Tax Amount
Net income$131,363 $(39,789)$91,574 $186,985 $(51,259)$135,726 
Unrealized gains (losses) on investment securities available for sale:
Net unrealized gains (losses) arising during the period(29,428)7,622 (21,806)33,919 (8,786)25,133 
Reclassification adjustment for realized (gains) losses included in net income1,550 (401)1,149 3,731 (966)2,765 
Net change(27,878)7,221 (20,657)37,650 (9,752)27,898 
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:
Net unrealized gains (losses) arising during the period(8,954)2,319 (6,635)(1,182)306 (876)
Reclassification adjustment for realized (gains) losses included in net income(1,031)267 (764)0 0 0 
Net change(9,985)2,586 (7,399)(1,182)306 (876)
Post-retirement unfunded health benefit:
Actuarial gains (losses) arising during the period0 0 0 (510)132 (378)
Reclassification adjustment for realized (gains) losses included in net income0 0 0 0 0 0 
Net change0 0 0 (510)132 (378)
Total other comprehensive income (loss)$(37,863)$9,807 $(28,056)$35,958 $(9,314)$26,644 
Comprehensive income$63,518 $162,370 
Nine Months Ended September 30,
20202019
(in thousands)Before-tax AmountIncome TaxNet of Tax AmountBefore-tax AmountIncome TaxNet of Tax Amount
Net income$297,536 $(74,250)$223,286 $558,383 $(146,287)$412,096 
Unrealized gains (losses) on investment securities available for sale:
Net unrealized gains (losses) arising during the period116,975 (30,297)86,678 226,160 (58,574)167,586 
Reclassification adjustment for realized (gains) losses included in net income(76,594)19,838 (56,756)5,502 (1,425)4,077 
Net change40,381 (10,459)29,922 231,662 (59,999)171,663 
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:
Net unrealized gains (losses) arising during the period108,508 (28,104)80,404 (1,182)306 (876)
Reclassification adjustment for realized (gains) losses included in net income(1,421)368 (1,053)0 0 0 
Net change107,087 (27,736)79,351 (1,182)306 (876)
Post-retirement unfunded health benefit:
Actuarial gains (losses) arising during the period0 0 0 (510)132 (378)
Reclassification adjustment for realized (gains) losses included in net income0 0 0 (70)14 (56)
Net change0 0 0 (580)146 (434)
Total other comprehensive income (loss)$147,468 $(38,195)$109,273 $229,900 $(59,547)$170,353 
Comprehensive income$332,559 $582,449 
See accompanying notes to unaudited interim consolidated financial statements.

3

SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(unaudited)
(in thousands, except per share data)Preferred StockCommon
Stock		Additional
Paid-in
Capital		Treasury
Stock		Accumulated
Other
Comprehensive
Income (Loss)		Retained EarningsTotal
Balance, July 1, 2020$537,145 $167,406 $3,826,726 $(731,806)$202,970 $1,050,527 $5,052,968 
Net income— — — — — 91,574 91,574 
Other comprehensive loss, net of income taxes— — — — (28,056)— (28,056)
Cash dividends declared on common stock - $0.33 per share— — — — — (48,614)(48,614)
Cash dividends declared on preferred stock(2)
— — — — — (8,291)(8,291)
Restricted share unit vesting and taxes paid related to net share settlement— 2 434 — — (460)(24)
Stock options exercised, net— 3 30 — — — 33 
Share-based compensation expense— — 4,952 — — — 4,952 
Balance at September 30, 2020$537,145 $167,411 $3,832,142 $(731,806)$174,914 $1,084,736 $5,064,542 
Balance, July 1, 2019$195,140 $166,080 $3,801,748 $(344,901)$49,289 $886,460 $4,753,816 
Net income— — — — — 135,726 135,726 
Other comprehensive income, net of income taxes— — — — 26,644 — 26,644 
Cash dividends declared on common stock - $0.30 per share— — — — — (44,476)(44,476)
Cash dividends declared on preferred stock(2)
— — — — — (8,291)(8,291)
Issuance of Series E Preferred Stock, net of issuance costs341,410 — — — — — 341,410 
Repurchases of common stock including costs to repurchase— — — (343,690)— — (343,690)
Restricted share unit vesting and taxes paid related to net share settlement— 9 219 — — (326)(98)
Stock options exercised, net— 112 2,514 — — — 2,626 
Warrants exercised with net settlement and common stock reissued— — (8,494)8,510 — (16)0 
Share-based compensation expense— — 5,171 — — — 5,171 
Balance at September 30, 2019$536,550 $166,201 $3,801,158 $(680,081)$75,933 $969,077 $4,868,838 
4

(in thousands, except per share data)Series C Preferred Stock 
Common
Stock
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Income (Loss)
 Retained Earnings Total
Balance at December 31, 2015$125,980
 140,592
 2,989,981
 (401,511) (29,819) 174,973
 3,000,196
Net income—
 —
 —
 —
 —
 178,233
 178,233
Other comprehensive income, net of income taxes—
 —
 —
 —
 34,984
 —
 34,984
Cash dividends declared on common stock -$0.36 per share—
 —
 —
 —
 —
 (44,737) (44,737)
Cash dividends paid on Series C Preferred Stock—
 —
 —
 —
 —
 (7,678) (7,678)
Repurchases of common stock—
 —
 (10,581) (252,503) —
 —
 (263,084)
Restricted share unit activity—
 301
 (4,860) —
 —
 (89) (4,648)
Stock options exercised—
 173
 2,808
 —
 —
 —
 2,981
Share-based compensation net tax benefit—
 —
 199
 —
 —
 —
 199
Share-based compensation expense—
 —
 10,213
 —
 —
 —
 10,213
Balance at September 30, 2016$125,980
 141,066
 2,987,760
 (654,014) 5,165
 300,702
 2,906,659
              
Balance at December 31, 2016$125,980
 142,026
 3,028,405
 (664,595) (55,659) 351,767
 2,927,924
Net income—
 —
 —
 —
 —
 245,868
 245,868
Other comprehensive income, net of income taxes—
 —
 —
 —
 16,063
 —
 16,063
Cash dividends declared on common stock - $0.45 per share—
 —
 —
 —
 —
 (54,671) (54,671)
Cash dividends paid on Series C Preferred Stock—
 —
 —
 —
 —
 (7,678) (7,678)
Repurchases of common stock—
 —
 —
 (135,914) —
 —
 (135,914)
Restricted share unit activity—
 335
 (8,007) —
 —
 (290) (7,962)
Stock options exercised—
 164
 2,708
 —
 —
 —
 2,872
Share-based compensation expense—
 —
 10,576
 —
 —
 —
 10,576
Balance at September 30, 2017$125,980
 $142,525
 3,033,682
 (800,509) (39,596) 534,996
 2,997,078
              
(in thousands, except per share data)Preferred StockCommon
Stock		Additional
Paid-in
Capital		Treasury
Stock		Accumulated
Other
Comprehensive
Income (Loss)		Retained EarningsTotal
Balance, December 31, 2019$537,145 $166,801 $3,819,336 $(715,560)$65,641 $1,068,327 $4,941,690 
Cumulative-effect of change in accounting principle for financial instruments - credit losses (ASU 2016-13), net of tax(1)
— — — — — (35,721)(35,721)
Net income— — — — — 223,286 223,286 
Other comprehensive income, net of income taxes— — — — 109,273 — 109,273 
Cash dividends declared on common stock - $0.99 per share— — — — — (145,824)(145,824)
Cash dividends declared on preferred stock(3)
— — — — — (24,872)(24,872)
Repurchases of common stock including costs to repurchase— — — (16,246)— — (16,246)
Restricted share unit vesting and taxes paid related to net share settlement— 381 (7,349)— — (460)(7,428)
Stock options exercised, net— 229 6,282 — — — 6,511 
Share-based compensation expense— — 13,873 — — — 13,873 
Balance at September 30, 2020$537,145 $167,411 $3,832,142 $(731,806)$174,914 $1,084,736 $5,064,542 
Balance, December 31, 2018$195,140 $143,300 $3,060,561 $(1,014,746)$(94,420)$843,767 $3,133,602 
Cumulative-effect of change in accounting principle for leases (ASU 2016-02), net of tax
— — — — — 4,270 4,270 
Net income— — — — — 412,096 412,096 
Other comprehensive income, net of income taxes— — — — 170,353 — 170,353 
FCB Acquisition:
Issuance of common stock, net of issuance costs— 22,043 682,103 — — — 704,146 
Common stock reissued— — — 1,014,746 — (137,176)877,570 
Fair value of exchanged equity awards and warrants attributed to purchase price— — 43,972 — — — 43,972 
Cash dividends declared on common stock - $0.90 per share— — — — — (138,947)(138,947)
Cash dividends declared on preferred stock(3)
— — — — — (14,591)(14,591)
Issuance of Series E Preferred Stock, net of issuance costs341,410 — — — — — 341,410 
Repurchases of common stock including costs to repurchase— — — (688,860)— — (688,860)
Restricted share unit vesting and taxes paid related to net share settlement— 294 (8,709)— — (326)(8,741)
Stock options/warrants exercised, net— 564 10,598 0 — — 11,162 
Warrants exercised with net settlement and common stock reissued— — (8,763)8,779 — (16)0 
Share-based compensation expense— — 21,396 — — — 21,396 
Balance at September 30, 2019$536,550 $166,201 $3,801,158 $(680,081)$75,933 $969,077 $4,868,838 
(1)    For additional information, see "Part I - Item 1. Financial Statements and Supplementary Data - Note 1 - Basis of Presentation" in this Report.
(2)    For the three months ended September 30, 2020, dividends per share were $0.39 and $0.37 for Series D and Series E Preferred Stock, respectively. For the three months ended September 30, 2019, dividends per share were $0.39 and $0.37 for Series D and Series E Preferred Stock, respectively.
(3)    For the nine months ended September 30, 2020, dividends per share were $1.17 and $1.11 for Series D and Series E Preferred Stock, respectively. For the nine months ended September 30, 2019, dividends per share were $1.17 and $0.37 for Series D and Series E Preferred Stock, respectively.
See accompanying notes to unaudited interim consolidated financial statements.

5

SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 Nine Months Ended September 30,
(in thousands)2017 2016
Operating Activities   
Net income$245,868
 178,233
Adjustments to reconcile net income to net cash provided by operating activities:   
Provision for loan losses58,620
 21,741
Depreciation, amortization, and accretion, net44,786
 43,615
Deferred income tax expense114,205
 94,436
Decrease in trading account assets(3,014) (2,212)
Originations of mortgage loans held for sale(490,202) (512,572)
Proceeds from sales of mortgage loans held for sale500,786
 486,690
Gain on sales of mortgage loans held for sale, net(10,587) (10,828)
Increase in other assets(18,598) (38,577)
Increase in other liabilities17,718
 37,068
Investment securities losses (gains), net289
 (126)
Losses and write-downs on other real estate, net9,869
 8,194
Decrease in fair value of private equity investments, net3,193
 527
Losses and write-downs on other assets held for sale, net1,872
 7,205
Loss on early extinguishment of debt, net—
 4,735
Share-based compensation expense10,576
 10,213
Net cash provided by operating activities$485,381
 328,342
    
Investing Activities   
Net decrease (increase) in interest earning deposits with banks12,673
 (988)
Net decrease (increase) in federal funds sold and securities purchased under resale agreements9,240
 (1,934)
Net increase in interest bearing funds with Federal Reserve Bank(770,491) (155,889)
Proceeds from maturities and principal collections of investment securities available for sale483,307
 711,882
Proceeds from sales of investment securities available for sale812,293
 596,824
Purchases of investment securities available for sale(1,195,302) (1,233,236)
Proceeds from sales of loans26,386
 8,433
Proceeds from sales of other real estate8,359
 25,415
Net increase in loans(755,231) (879,200)
Purchases of bank-owned life insurance policies(150,000) —
Net increase in premises and equipment(34,717) (24,491)
Proceeds from sales of other assets held for sale3,158
 5,673
Net cash used in investing activities$(1,550,325) (947,511)
    
Financing Activities   
Net increase in demand and savings deposits335,438
 1,054,389
Net increase (decrease) in certificates of deposit1,202,926
 (105,698)
Net (decrease) increase in federal funds purchased and securities sold under repurchase agreements(18,160) 18,000
Repayments on long-term debt(1,653,613) (1,730,106)
Proceeds from issuance of long-term debt1,375,000
 1,700,000
Dividends paid to common shareholders(36,681) (44,737)
Dividends paid to preferred shareholders(7,678) (7,678)
Stock options exercised2,872
 2,981
Repurchases of common stock(135,914) (263,084)
Restricted stock activity(7,962) (4,648)
Net cash provided by financing activities$1,056,228
 619,419
(Decrease) increase in cash and cash equivalents(8,716) 250
Cash and cash equivalents at beginning of period395,175
 367,092
Cash and cash equivalents at end of period$386,459
 367,342
    

Supplemental Cash Flow Information   
Cash paid during the period for:   
Income tax payments, net$11,195
 6,828
Interest paid101,632
 93,479
Non-cash Activities   
Premises and equipment transferred to other assets held for sale1,063
 23,667
Other assets held for sale transferred to premises and equipment4,450
 —
Loans foreclosed and transferred to other real estate6,571
 15,017
Loans transferred to other loans held for sale at fair value77,774
 10,482
   Securities purchased during the period but settled after period-end193,286
 49,479
   Dividends declared on common stock during the period but paid after period-end17,990
 —
    
Nine Months Ended September 30,
(in thousands)20202019
Operating Activities
Net income$223,286 $412,096 
Adjustments to reconcile net income to net cash (used) provided by operating activities:
Provision for credit losses343,956 63,250 
Depreciation, amortization, and accretion, net77,385 8,969 
Deferred income tax (benefit) expense(60,433)42,594 
Originations of loans held for sale(2,221,302)(603,086)
Proceeds from sales of loans held for sale1,657,738 527,354 
Gain on sales of loans held for sale, net(50,001)(15,453)
Increase in other assets(397,220)(135,448)
Increase in other liabilities234,018 32,345 
Investment securities (gains) losses, net(76,594)5,502 
Goodwill impairment44,877 0 
Loss on early extinguishment of debt2,057 4,592 
Share-based compensation expense13,873 21,396 
Net cash (used in) provided by operating activities(208,360)364,111 
Investing Activities
Net cash received in business combination, net of cash paid0 201,100 
Proceeds from maturities and principal collections of investment securities available for sale1,567,889 780,538 
Proceeds from sales of investment securities available for sale3,932,368 2,456,137 
Purchases of investment securities available for sale(6,180,812)(3,614,139)
Proceeds from sales of equity securities23,141 0 
Proceeds from sales of loans1,293,366 71,530 
Proceeds from sales of other real estate and other assets18,204 15,859 
Net increase in loans(3,703,203)(1,278,772)
Net redemptions (purchases) of Federal Home Loan Bank stock96,772 (75,735)
Net purchases of Federal Reserve Bank stock(454)(45,856)
Net (purchases) proceeds from settlement of bank-owned life insurance policies(248,023)15,208 
Net increase in premises and equipment(22,786)(40,195)
Net cash used in investing activities(3,223,538)(1,514,325)
Financing Activities
Net increase in deposits6,259,108 (185,362)
Net increase in federal funds purchased and securities sold under repurchase agreements36,655 (69,412)
Net change in other short-term borrowings(1,353,560)1,582,000 
Repayments and redemption of long-term debt(1,776,913)(157,226)
Proceeds from issuance of long-term debt, net1,248,441 497,045 
Dividends paid to common shareholders(141,353)(123,446)
Dividends paid to preferred shareholders(24,872)(9,450)
Proceeds from issuance of Preferred stock0 341,410 
Stock options and warrants exercised6,511 11,162 
Repurchase of common stock(16,246)(688,860)
Taxes paid related to net share settlement of equity awards(7,428)(8,741)
Net cash provided by financing activities4,230,343 1,189,120 
Increase in cash and cash equivalents including restricted cash798,445 38,906 
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period1,186,918 1,143,564 
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period$1,985,363 $1,182,470 
Supplemental Disclosures:
Income taxes paid$68,253 $88,480 
Interest paid268,046 350,388 
Non-cash Activities
Common stock issued, treasury stock reissued, equity awards/warrants exchanged to acquire FCB0 1,625,688 
Loans foreclosed and transferred to other real estate2,163 14,084 
Loans transferred to loans held for sale at fair value46,178 0 
Dividends declared on common stock during the period but paid after period-end48,614 44,476 
Dividends declared on preferred stock during the period but paid after period-end5,141 5,141 
See accompanying notes to unaudited interim consolidated financial statements.

6

Notes to Unaudited Interim Consolidated Financial Statements
Note 1 - SignificantBasis of Presentation and Accounting Policies
Business OperationsGeneral
The accompanying unaudited interim consolidated financial statements of Synovus Financial Corp. include the accounts of the Parent Company and its consolidated subsidiaries. Synovus Financial Corp. is a financial services company based in Columbus, Georgia. Through its wholly-owned subsidiary, Synovus Bank, a Georgia state-chartered bank that is a member of the Federal Reserve System, the companyCompany provides commercial and retail banking in addition to a full suite of specialized products and services including private banking, treasury management, wealth management, premium finance, asset-based lending, structured lending, and international banking.
Synovus Bank is positioned in some of the highest growth markets in the Southeast, with 249 292 branches and 328389 ATMs in Alabama, Florida, Georgia, Alabama, South Carolina, Florida, and Tennessee.
Basis of Presentation
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the instructions to the SEC Form 10-Q and Article 10 of Regulation S-X; therefore, they do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, comprehensive income, and cash flows in conformity with GAAP. All adjustments consisting of normally recurring accruals that, in the opinion of management, are necessary for a fair presentation of the consolidated financial position and results of operations for the periods covered by this Report have been included. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes appearing in Synovus' 20162019 Form 10-K. There have been no significant changes
Reclassifications
Prior periods' consolidated financial statements are reclassified whenever necessary to conform to the accounting policies as disclosedcurrent periods' presentation.
Use of Estimates in Synovus' 2016 Form 10-K.the Preparation of Financial Statements
In preparing the unaudited interim consolidated financial statements in accordance with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the respective consolidated balance sheets and the reported amounts of revenues and expenses for the periods presented. Actual results could differ significantly from those estimates.
Material estimates that are particularly susceptible to significant change relate to the determination of the ACL; estimates of fair value, including goodwill impairment assessment; income taxes; and contingent liabilities.
Non-TDR Modifications due to COVID-19
Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
The U.S. has been operating under a presidentially declared state of emergency since March 13, 2020 ("National Emergency"). On March 27, 2020, the CARES Act was signed into law. Among other emergency measures aimed to lessen the impact of COVID-19, the CARES Act creates a forbearance program for federally backed mortgage loans, protects borrowers from negative credit reporting due to loan accommodations related to the National Emergency, and provides financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time to account for the effects of COVID-19.
Regulatory agencies encouraged financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations because of COVID-19. In the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (initially issued on March 22, 2020 and revised on April 7, 2020), for example, the regulatory agencies expressed their view of loan modification programs as positive actions that may mitigate adverse effects on borrowers due to COVID-19 and their unwillingness to criticize institutions for working with borrowers in a safe and sound manner. Moreover, the Interagency Statement provided that eligible loan modifications related to COVID-19 may be accounted for under section 4013 of the CARES Act or in accordance with ASC 310-40. Section 4013 of the CARES Act allows banks to elect to not consider loan modifications related to COVID-19 that are made between March 1, 2020 and the earlier of December 31, 2020, or 60 days after the National Emergency ends to borrowers that are current (i.e., less than 30 days past due as of December 31, 2019) as TDRs. The regulatory agencies further stated that performing loans granted payment deferrals due to COVID-19 are not considered past due or non-accrual. FASB confirmed the foregoing regulatory agencies' view, that such short-term modifications (e.g., six months) made on a good-faith basis in response to COVID-19 for borrowers who are current are not TDRs. As such, beginning in late March 2020, Synovus provided relief programs consisting primarily of 90-day payment deferral relief of P&I to borrowers negatively impacted by COVID-19 and has primarily accounted for these loan modifications in accordance with ASC 310-40. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" to the consolidated financial statements of Synovus' 2019 Form 10-K for information on Synovus' TDR policy. During the third quarter, upon
7

evaluation of facts and circumstances, the CARES Act was elected for certain loan modifications that met the criteria of section 4013 of the CARES Act. The deferred payments along with interest accrued during the deferral period are generally due and payable on the maturity date of the existing loan. Based on the terms of the deferral relief program which did not provide for forgiveness of interest, Synovus has recognized interest income on loans during the deferral period.
U.S. Small Business Administration Paycheck Protection Program (PPP)
Synovus is participating in the Paycheck Protection Program, which is a loan program that originated from the CARES Act and was subsequently expanded by the Paycheck Protection Program and Health Care Enhancement Act ("PPPHCEA Act"). The PPP is designed to provide U.S. small businesses with cash-flow assistance through loans guaranteed by the SBA. If the borrower meets certain criteria and uses the proceeds toward certain eligible expenses in accordance with the requirements of the PPP, the borrower's obligation to repay the loan can be forgiven up to the full principal amount of the loan and any accrued interest. Upon borrower forgiveness, the SBA pays the Company for the principal and accrued interest owed on the loan. If the full principal of the loan is not forgiven, the loan will operate according to the original loan terms with the SBA guaranty remaining. Under this program, Synovus provided nearly $2.9 billion in funding to close to 19,000 customers. The average PPP loan was approximately $150 thousand, and the customers that received those loans employ over 335 thousand individuals. As compensation for originating the loans, the Company receives lender processing fees from the SBA ranging from 1% to 5%, based on the size of the loan, which are deferred and will be amortized over the loans' contractual lives and recognized as interest income. Upon forgiveness of a loan by the SBA, any unrecognized net deferred fees related to the loan will be recognized as interest income in the period the SBA forgiveness payment is received.
Recently Adopted Accounting Standards
ASU 2016-13, Financial Instruments-Credit Losses (ASC 326).On January 1, 2020, Synovus adopted ASU 2016-13 (and all subsequent ASUs on this topic), which replaces the existing incurred loss impairment guidance with an expected credit loss methodology (referred to as CECL). CECL requires management’s estimate of credit losses over the full remaining expected life of loans and other financial instruments and for Synovus, applies to loans, unfunded loan commitments, accrued interest receivable, and available for sale debt securities. Upon adoption, Synovus applied the modified retrospective approach and recorded an after-tax cumulative-effect adjustment to beginning retained earnings for non-PCD assets (formerly non-PCI assets) and unfunded commitments of $35.7 million. Additionally, an initial estimate of expected credit losses on PCD assets (formerly PCI or ASC 310-30) was recognized with an offset to the cost basis of the related loans of $62.2 million. As permitted by transition guidance, Synovus did not reassess whether PCI assets met the criteria of PCD assets as of the adoption date. The remaining non-credit discount (based on the adjusted amortized cost basis) will be accreted into interest income. Results for reporting periods after adoption are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP.
The following table illustrates the impact of ASC 326 adoption:
As of January 1, 2020
in thousandsPre-ASC 326 AdoptionImpact of ASC 326 AdoptionAs Reported under ASC 326
Assets
Allowance for loan losses:
Commercial and industrial$145,782 $(2,310)$143,472 
Commercial real estate67,430 (651)66,779 
Consumer68,190 85,955 154,145 
Total allowance for loan losses$281,402 $82,994 $364,396 
Liabilities
Reserve for unfunded commitments$1,375 $27,440 $28,815 
Allowance for credit losses$282,777 $110,434 $393,211 
The following table illustrates the distribution of the ASC 326 adoption impact to loans and equity:
As of January 1, 2020
in thousandsPre-ASC 326 AdoptionImpact of ASC 326 AdoptionAs Reported under ASC 326
Loans, net$36,881,048 $(20,767)$36,860,281 
Retained earnings1,068,327 (35,721)1,032,606 
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On August 26, 2020, the federal banking regulators issued a final rule (following an interim final rule issued on March 27, 2020) that allows electing banking organizations that adopt CECL during 2020 to mitigate the estimated effects of CECL on regulatory capital for two years, followed by a three-year phase-in transition period. Regulatory capital ratios in 2020 reflect Synovus' election of the five-year transition provision.
In conjunction with the adoption of ASC 326, the following are additional disclosures about our significant accounting policies related to CECL.
Investment Securities Available for Sale
Investment securities available for sale are carried at fair value with unrealized gains and losses, net of the related tax effect, excluded from earnings and reported as a separate component of shareholders' equity within accumulated other comprehensive income (loss) until realized.
For investment securities available for sale in an unrealized loss position, if Synovus has an intention to sell the security, or it is more likely than not that the security will be required to be sold prior to recovery, the security is written down to its fair value. The write down is charged against the ACL with any additional impairment recorded in earnings. If the aforementioned criteria is not met, Synovus performs a quarterly assessment of its available for sale debt securities to determine if the decline in fair value of a security below its amortized cost is related to credit losses or other factors. Management considers the extent to which fair value is less than amortized cost, the issuer of the security, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. In assessing whether credit related impairment exists, the present value of cash flows expected to be collected from the security is compared to the security's amortized cost. If the present value of cash flows expected to be collected is less than the security's amortized cost basis, the difference is attributable to credit losses. For such differences, Synovus records an ACL with an offset to provision for credit losses expense. Synovus limits the ACL recorded to the amount the security's fair value is less than the amortized cost basis. Impairment losses related to other factors are recognized in other comprehensive income (loss).
Accrued interest on available for sale debt securities is excluded from the ACL determination and is recognized within other assets on the consolidated balance sheets. Available-for-sale debt securities are placed on non-accrual status when we no longer expect to receive all contractual amounts due, which is generally at 90 days past due. Accrued interest receivable is reversed against interest income when a security is placed on non-accrual status. Accordingly, we do not recognize an allowance for credit loss against accrued interest receivable.
Loans Held for Investment and Interest Income
Loans the Company has the intent and ability to hold for the foreseeable future are reported at principal amounts outstanding less amounts charged off, net of deferred fees and costs, and purchase premiums/discounts. Interest income, net deferred fees, and purchase premium/discount amortization/accretion on loans, are recognized on a level yield basis.
Allowance for Credit Losses for Loans Held for Investment (ALL)
The allowance for credit losses on loans held for investment are included in the ALL and represent management's estimate of credit losses expected over the life of the loans included in Synovus' existing loans held for investment portfolio. Changes to the allowance are recorded through a provision for credit losses and reduced by loans charged-off, net of recoveries. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain.
Accrued but uncollected interest is recorded in other assets on the consolidated balance sheets. In general, the Company does not record an ACL for accrued interest receivables as allowable per ASC 326-20-30-5A as Synovus' non-accrual policies result in the timely write-off of accrued but uncollected interest.
Credit loss measurement
Synovus' loan loss estimation process includes procedures to appropriately consider the unique characteristics of its loan portfolio segments (C&I, CRE and consumer). These segments are further disaggregated into loan classes, the level at which credit quality is assessed and monitored (as described in the subsequent sections).
The ALL is measured on a collective (pool) basis when similar risk characteristics exist. Loans are grouped based upon the nature of the loan type and are further segregated based upon the individual loan risk ratings. Credit loss assumptions are primarily estimated using a DCF model applied to the aforementioned loan groupings. This model calculates an expected life-of-loan loss percentage for each loan category by considering the forecasted PD, which is the probability that a borrower will default, adjusted for relevant forecasted macroeconomic factors, and LGD, which is the estimate of the amount of net loss in the event of default.
Expected credit losses are estimated over the contractual term of the loan, adjusted for expected prepayments and curtailments when appropriate. Management's determination of the contract term excludes expected extensions, renewals, and
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modifications unless either of the following applies: there is a reasonable expectation at the reporting date that a TDR will be executed with an individual borrower, or an extension or renewal option is included in the contract at the reporting date that is not unconditionally cancellable by Synovus.
To the extent the lives of the loans in the portfolio extend beyond the period for which a reasonable and supportable forecast can be made (which is one year for Synovus), the Company reverts, on a straight-line basis back to the historical rates over a one year period.
Life-of-loan loss percentages may also be adjusted, as necessary, for certain quantitative and qualitative factors that in management's judgment are necessary to reflect losses expected in the portfolio. These adjustments address inherent limitations in the quantitative model including uncertainty and limitations, among others.
The above reflects the ALL estimation process for most commercial and consumer sub-pools. In some cases, Synovus may apply other acceptable loss rate models to smaller subpools.
Loans that do not share risk characteristics are individually evaluated on a loan by loan basis with specific reserves, if any, recorded as appropriate. Specific reserves are determined based on two methods: discounted cash flow based upon the loan's contractual effective interest rate or at the fair value of investment securities,the collateral, less costs to sell if the loan is collateral-dependent.
For individually evaluated loans, under the DCF method, resulting expected credit losses are recorded as a specific reserve with a charge-off for any portion of the expected credit loss that is determined not to be recoverable. The reserve is reassessed each quarter and adjusted as appropriate based on changes in estimated cash flows. Additionally, where guarantors are determined to be a source of repayment, an assessment of the guarantee is required. This guarantee assessment would include, but not be limited to, factors such as type and feature of the guarantee, consideration for the guarantor's financial strength and capacity to service the loan in combination with the guarantor's other financial obligations as well as the guarantor's willingness to assist in servicing the loan.
For individually evaluated loans, if the loan is collateral-dependent, then the fair value of private equity investments.the loan's collateral, less estimated selling costs, is compared to the loan's carrying amount to determine impairment. Fair value is estimated using appraisals performed by a certified or licensed appraiser. Management also considers other factors or recent developments, such as changes in absorption rates or market conditions at the time of valuation, selling costs and anticipated sales values, taking into account management's plans for disposition, which could result in adjustments to the fair value estimates indicated in the appraisals. The assumptions used in determining the amount of the impairment are subject to significant judgment. Use of different assumptions, for example, changes in the fair value of the collateral or management's plans for disposition could have a significant impact on the amount of impairment.
CashTroubled debt restructurings
The ALL on a TDR is measured using the same method as all other loans held for investment, except that the original interest rate, and Cash Equivalentsnot the rate specified with the restructuring, is used to discount the expected cash flows.
CashPurchased Loans with Credit Deterioration
Purchased loans are evaluated upon acquisition in order to determine if the loan, or pool of loans, has experienced more-than-insignificant deterioration in credit quality since origination or issuance. In the performance of this evaluation, Synovus considers migration of the credit quality of the loans at origination in comparison to the credit quality at acquisition.
Purchased loans classified as PCD are recognized in accordance with ASC 326-20-30, whereby the amortized cost basis of the PCD asset is ‘grossed-up’ by the initial estimate of credit losses with an offset to the ALL. This acquisition date allowance has no income statement effect. Post-acquisition, any changes in estimates of expected credit losses are recorded through the provision for credit losses. Non-credit discounts or premiums are accreted or amortized, respectively into interest income using the interest method.
Loans formerly accounted for as purchased credit-impaired in accordance with ASC 310-30 were automatically transitioned to PCD classification. The Company did not maintain ASC 310-30 pools. PCD loans were integrated into existing pool structures based upon the nature of the loan type and cash equivalents consistare further segregated based upon the individual loan risk ratings as noted above.
The accounting treatment for purchased loans classified as non-PCD is the same as loans held for investment as detailed in the above section.
Allowance for Credit Losses on Off-balance-sheet Credit Exposures
Synovus maintains a separate ACL for off-balance-sheet credit exposures, including unfunded loan commitments, unless the associated obligation is unconditionally cancellable by the Company. This allowance is included in other liabilities on the consolidated balance sheets with offsetting expense recognized as a component of cashthe provision for credit losses on the
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consolidated statements of income. The reserve for off-balance-sheet credit exposures considers the likelihood that funding will occur and dueestimates the expected credit losses on resulting commitments expected to be funded over its estimated life using the estimated loss rates on loans held for investment.
Recently Issued Accounting Standards Not Yet Adopted
ASU 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASC 848). Facilitation of the Effects of Reference Rate Reform on Financial Reporting, provides temporary, optional guidance to ease the potential burden in accounting for, or recognizing the effects of, the transition away from banks. Atthe LIBOR or other interbank offered rate on financial reporting. To help with the transition to new reference rates, the ASU provides optional expedients and exceptions for applying GAAP to affected contract modifications and hedge accounting relationships. The main provisions include:
•A change in a contract’s reference interest rate would be accounted for as a continuation of that contract rather than as the creation of a new one for contracts, including loans, debt, leases, and other arrangements, that meet specific criteria.
•When updating its hedging strategies in response to reference rate reform, an entity would be allowed to preserve its hedge accounting.
The guidance is applicable only to contracts or hedge accounting relationships that reference LIBOR or another reference rate expected to be discontinued. Because the guidance is meant to help entities through the transition period, it will be in effect for a limited time and will not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2016, $533 thousand2022, except for hedging relationships existing as of December 31, 2022, for which an entity has elected certain optional expedients that are retained through the end of the due from banks balancehedging relationship. The amendments in this ASU are effective March 12, 2020 through December 31, 2022. We are evaluating the impact of adopting the new guidance on the consolidated financial statements on an ongoing basis with no material expected impact at this time.
ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs. The guidance in this ASU pertains to the shortened amortization period for certain purchased callable debt securities held at a premium, which premium is amortized to the earliest call date in accordance with ASC 310-20-25-33, and clarifies that an entity should reevaluate whether a callable debt security is within the scope of paragraph 310-20-25-33 for each reporting period. The amendments in this ASU are effective for fiscal years beginning after December 15, 2020. Early adoption is not permitted. We are evaluating the impact of adopting the new guidance on the consolidated financial statements.
Note 2 - Acquisitions
Acquisition of FCB Financial Holdings, Inc.
Effective January 1, 2019, Synovus completed its acquisition of all of the outstanding stock of FCB, a bank holding company based in Weston, Florida, for total consideration of $1.63 billion. Effective January 1, 2019, FCB's wholly-owned banking subsidiary, Florida Community Bank, National Association, merged into Synovus Bank. The acquisition of FCB expanded Synovus' presence in Florida and the Southeast, adding $9.29 billion in loans and $10.93 billion in deposits on the Acquisition Date. The acquisition of FCB constituted a business combination and was restricted as to withdrawal. There were no cash and cash equivalents restricted as to withdrawal at September 30, 2017.
Short-term Investments
Short-term investments consistaccounted for under the acquisition method of interest bearing funds accounting in accordance with ASC Topic 805, Business Combinations, with the Federal Reserve Bank, interest earning deposits with banks, and federal funds sold and securities purchased under resale agreements. At September 30, 2017 andvaluation finalized as of December 31, 2016, interest bearing funds with2019. The results of FCB's operations are included in Synovus' consolidated financial statements since the Federal Reserve Bank included $57.7 million and $130.0 million, respectively, on deposit to meet Federal Reserve Bank requirements. Interest earning deposits with banks include $6.0 million and $5.6 million at September 30, 2017 and December 31, 2016, respectively, which are pledged as collateralAcquisition Date.
During 2019, in connection with certain letters of credit. Federal funds sold include $45.8the FCB acquisition, Synovus incurred merger-related expense totaling $0.4 million and $56.1$57.5 million at September 30, 2017for the three and December 31, 2016, respectively, which are pledged to collateralize certain derivative financial instruments. Federal funds sold and securities purchased under resale agreements, and federal funds purchased and securities sold under repurchase agreements, generally mature in one day.
Recently Adopted Accounting Standards Updates
During 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 simplified various aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. This accounting standard update included a requirement to record all tax effects associated with share-based compensation through the income statement. Prior to 2017, tax benefits in excess of compensation cost (“windfalls”) and tax deficiencies (“shortfalls”) were recorded in equity. During the nine and three months ended September 30, 2017, Synovus recognized $4.7 million and $211 thousand, respectively, of income tax benefits from excess tax benefits that occurred during the nine months ended September 30, 2017 from2019, respectively, primarily related to employment compensation agreements, severance, professional services, and contract termination charges.
See "Part II - Item 8. Financial Statements and Supplementary Data - Note 2 - Acquisitions" to the vesting of restricted share units and exercise of stock options. As of January 1, 2017, Synovus had no previously unrecognized excess tax benefits. Additionally, beginning January 1, 2017, Synovus modified the denominator in the diluted earnings per common share calculation under the treasury stock method to exclude future excess tax benefits as part of the assumed proceeds. Synovus elected to retain its existing accounting policy election to estimate award forfeitures.

During 2015, the FASB issued ASU 2015-17, Income Taxes: Balance Sheet Classification of Deferred Taxes, which became effective January 1, 2017. ASU 2015-17 required deferred income tax liabilities and assets be classified as noncurrent in the statement of financial position instead of separating deferred taxes into current and noncurrent amounts. Also, valuation allowances will no longer be classified between current and noncurrent because these allowances will be required to be classified as noncurrent under the new standard. This ASU only impacts classification in the balance sheet, and has no impact on required deferred tax footnote disclosures (i.e., required presentation of “gross” deferred tax assets and “gross” deferred tax liabilities). The current requirement that deferred tax liabilities and assets of a tax-paying component of an entity be offset and presented as a single amount is not affected by this ASU. There is no impact to our balance sheet as a result of this standard because Synovus has not historically distinguished deferred taxes on the balance sheet as current vs. non-current.
Reclassifications
Prior periods' consolidated financial statements are reclassified whenever necessary to conform to the current periods' presentation.

Note 2 - Acquisitions
Cabela's Transaction
On September 25, 2017,of Synovus' wholly owned subsidiary, Synovus Bank, completed the2019 Form 10-K for additional information on Synovus' acquisition of certain assets and assumption of certain liabilities of WFB. Immediately following the closing of this transaction, Synovus Bank sold WFB’s credit card assets and related liabilities to Capital One Bank (USA), National Association, a bank subsidiary of Capital One Financial Corporation.
Synovus retained WFB’s $1.10 billion brokered time deposits portfolio, which had a weighted average remaining maturity of approximately 2.53 years and a weighted average rate of 1.83% as of September 25, 2017. The transaction was accounted for as an assumption of a liability (accounted for under the asset acquisition model). In accordance with ASC 820, Fair Value Measurements and Disclosures, the brokered time deposit portfolio was recorded at $1.10 billion, which was the amount of cash received for the deposits and represented the estimated fair value of the deposits at the transaction date. Additionally, Synovus received a $75.0 million transaction fee from Cabela’s and Capital One, which was recognized into earnings upon closing of the transaction, based on having achieved the recognition criteria outlined in SEC SAB Topic 13.A, Revenue Recognition.FCB.
Acquisition of Global One
On October 1, 2016, Synovus completed its acquisition of all of the outstanding stock of Global One. Prior to its acquisition, Global One was an Atlanta-based private specialty financial services company that lended primarily to commercial entities, with all loans fully collateralized by cash value life insurance policies and/or annuities issued by investment grade life insurance companies. Under the terms of the merger agreement, Synovus acquired Global One for an up-front payment of $30 million, consisting of the issuance of 821 thousand shares of Synovus common stock valued at $26.6 million and $3.4 million in cash, with additional payments to Global One's former shareholders over the next three to five years based on earnings from the Global One business as further discussed below.
The acquisition of Global One constituted a business combination. Accordingly, the assets acquired and liabilities assumed were recorded at their estimated fair values as shown in the following table. The determination of fair value required management to make estimates about discount rates, future expected earnings and cash flows, market conditions, future loan growth, and other future events that are highly subjective in nature and subject to change. These fair value estimates reflect measurement period adjustments to the amounts reported as of December 31, 2016, the most significant of which consist of a reduction in goodwill of $2.4 million and a decrease in the estimated fair value of contingent consideration of $1.8 million (the income statement impact of such adjustments was insignificant).

Global One October 1, 2016
(in thousands) Fair Value
Assets acquired:  
Cash and due from banks $9,554
      Commercial and industrial loans(1)
 357,307
Goodwill(2)
 32,884
Other intangible assets 12,500
Other assets 3,681
Total assets acquired $415,926
   
Liabilities assumed:  
Notes payable(3)
 $358,560
Contingent consideration 12,234
Deferred tax liability, net 3,229
Other liabilities 11,903
Total liabilities assumed $385,926
Consideration paid $30,000
   
Cash paid $3,408
Fair value of common stock issued 26,592
   
(1) The unpaid principal balance of the loans was $356.7 million.
(2) The goodwill is not expected to be deductible for tax purposes.
(3) The unpaid principal balance of the notes payable was $357.0 million.
Under the terms of the merger agreement, the purchase price includesincluded additional annual payments ("Earnout Payments") to Global One's former shareholders over the next threea period not to five years,extend beyond June 30, 2021, with amounts based on a percentage of "Global One Earnings," as defined in the merger agreement. The Earnout Payments will consist of shares of Synovus common stock as well as a smaller cash consideration component.
Other intangible assets consist of existing borrower relationships (11 years useful life), trade name (10 years useful life), and distribution network (8 years useful life) with During the three months ended September 30, 2017 net carrying values2020, Synovus did not record any adjustments to the earnout liability and during the nine months ended September 30, 2020, Synovus recorded a $4.9 million increase to the earnout liability driven by increased earnings and earnings projections of $9.8 million, $990 thousand, and $525 thousand, respectively.
Global One. The following is a description of the methods used to determine the fair values of significant assets and liabilities:
Commercial and industrial loans: The fair value of loans was determined based on a discounted cash flow approach. The most significant assumptions used in the valuation of the loan portfolio consisted of the prepayment rate, the probability of extension at maturity, the interest rates on extended loans, and the discount rates. All loans are fully collateralized by cash value life insurance policies and/or annuities issued by investment grade insurance companies. Based on a history of no principal losses on the loan portfolio since inception as well as the collateral position, no losses were estimated in the event of default.
Notes payable: The notes payable were extinguished immediately after the closing of the acquisition. Accordingly, the fair value of notes payable was determined based on the amounts paid to extinguish such notes, inclusive of applicable prepayment penalties, which is consistent with the perspective of a market participant.
Contingent consideration: Thetotal fair value of the contingent consideration, which represents the fair value of the above referenced Earnout Payments,earnout liability at September 30, 2020 was determined based on option pricing methods and a Monte Carlo simulation. The most significant assumptions used in the valuation of the contingent consideration were the expected cash flows, volatility, and discount rates. Subsequent changes in the fair value of the contingent consideration are recognized in earnings until the contingent consideration arrangement is settled. $15.9 million.
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Note 3 - Share Repurchase Program
Synovus' Board of Directors authorized an up to $200 million share repurchase program that will expire at the end of 2017. This program was announced on January 17, 2017. As of September 30, 2017, Synovus had repurchased under this program a total of $135.9 million, or 3.2 million shares, at an average price of $42.47 per share.

Note 4 - Investment Securities Available for Sale
The amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities available for sale at September 30, 20172020 and December 31, 20162019 are summarized below.
September 30, 2020
(in thousands)Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
U.S. Treasury securities$20,254 $0 $0 $20,254 
U.S. Government agency securities153,984 3,056 (426)156,614 
Mortgage-backed securities issued by U.S. Government agencies1,132,816 2,655 (6,079)1,129,392 
Mortgage-backed securities issued by U.S. Government sponsored enterprises4,402,051 138,611 (276)4,540,386 
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises1,331,011 18,495 (4,222)1,345,284 
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises334,463 19,694 0 354,157 
State and municipal securities500 1 0 501 
Corporate debt securities and other debt securities20,186 141 (390)19,937 
Total investment securities available for sale$7,395,265 $182,653 $(11,393)$7,566,525 
December 31, 2019
(in thousands)Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
U.S. Treasury securities$19,855 $0 $0 $19,855 
U.S. Government agency securities35,499 1,042 0 36,541 
Mortgage-backed securities issued by U.S. Government agencies56,328 560 (72)56,816 
Mortgage-backed securities issued by U.S. Government sponsored enterprises5,079,396 103,495 (2,076)5,180,815 
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises629,706 7,349 (204)636,851 
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises357,291 14,301 0 371,592 
State and municipal securities2,069 6 0 2,075 
Asset-backed securities323,237 4,315 (152)327,400 
Corporate debt securities and other debt securities144,410 2,317 (2)146,725 
Total investment securities available for sale$6,647,791 $133,385 $(2,506)$6,778,670 
  September 30, 2017
(in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses  Fair Value
U.S. Treasury securities $83,550
 —
 (369) 83,181
U.S. Government agency securities 10,772
 266
 —
 11,038
Mortgage-backed securities issued by U.S. Government agencies 127,521
 715
 (852) 127,384
Mortgage-backed securities issued by U.S. Government sponsored enterprises 2,663,959
 7,917
 (20,024) 2,651,852
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises 943,583
 —
 (12,143) 931,440
State and municipal securities 180
 1
 —
 181
Corporate debt and other securities 20,297
 286
 (216) 20,367
Total investment securities available for sale $3,849,862
 9,185
 (33,604) 3,825,443
         
  December 31, 2016
(in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
U.S. Treasury securities $108,221
 225
 (644) 107,802
U.S. Government agency securities 12,727
 266
 —
 12,993
Mortgage-backed securities issued by U.S. Government agencies 174,440
 1,116
 (1,354) 174,202
Mortgage-backed securities issued by U.S. Government sponsored enterprises 2,543,495
 5,416
 (42,571) 2,506,340
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises 905,789
 1,214
 (16,561) 890,442
State and municipal securities 2,780
 14
 —
 2,794
Equity securities 919
 2,863
 —
 3,782
Corporate debt and other securities 20,247
 —
 (407) 19,840
Total investment securities available for sale $3,768,618
 11,114
 (61,537) 3,718,195
         
At September 30, 20172020 and December 31, 2016,2019, investment securities with a carrying value of $1.69$2.34 billion and $2.04$1.71 billion, respectively, were pledged to secure certain deposits and securities sold under repurchase agreementsother liabilities, as required by law andor contractual agreements.
Synovus has reviewed
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Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that areindividual securities have been in ana continuous unrealized loss position, asat September 30, 2020 and December 31, 2019 are presented below.
September 30, 2020
Less than 12 Months12 Months of LongerTotal
(in thousands)Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
U.S. Government agency securities$48,921 $(426)$0 $0 $48,921 $(426)
Mortgage-backed securities issued by U.S. Government agencies800,908 (6,079)0 0 800,908 (6,079)
Mortgage-backed securities issued by U.S. Government sponsored enterprises180,899 (276)0 0 180,899 (276)
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises609,208 (4,222)0 0 609,208 (4,222)
Corporate debt securities and other debt securities11,115 (390)0 0 11,115 (390)
Total$1,651,051 $(11,393)$0 $0 $1,651,051 $(11,393)
December 31, 2019
Less than 12 Months12 Months of LongerTotal
(in thousands)Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
Mortgage-backed securities issued by U.S. Government agencies$19,543 $(70)$355 $(2)$19,898 $(72)
Mortgage-backed securities issued by U.S. Government sponsored enterprises768,040 (2,076)0 0 768,040 (2,076)
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises57,670 (204)0 0 57,670 (204)
Asset-backed securities37,156 (116)4,954 (36)42,110 (152)
Corporate debt securities and other debt securities9,505 (2)0 0 9,505 (2)
Total$891,914 $(2,468)$5,309 $(38)$897,223 $(2,506)
As of September 30, 20172020, Synovus had 28 investment securities in a loss position for less than twelve months and 0 investment securities in a loss position for twelve months or longer. At December 31, 2016 for OTTI and does not consider any2019, Synovus had 26 investment securities in an unrealizeda loss position to be other-than-temporarily impaired. If Synovus intended to sellfor less than twelve months and 5 investment securities in a security in an unrealized loss position the entire unrealized loss would be reflected in earnings.for twelve months or longer. Synovus does not intend to sell investment securities in an unrealized loss position prior to the recovery of the unrealized loss, which may not be until maturity, and has the ability and intent to hold those securities for that period of time. Additionally, Synovus is not currently aware of any circumstances which will require it to sell any of the securities that are in an unrealized loss position prior to the respective securities' recovery of all such unrealized losses.
Declines As such, no write-downs to the amortized cost basis of the portfolio were recorded in the fair valuecurrent period. During the latter part of available for salethe second quarter of 2020, as part of an overall strategic repositioning of the investment securities below their cost that are deemed to have OTTI are reflected in earnings asportfolio, Synovus realized net gains of $69.4 million from sales of investment securities, including losses of $5.7 millionrelated to the extent the impairment is related to credit losses. The amountsale of Synovus' remaining portfolio of asset-backed securities.
At September 30, 2020, 0 ACL was established for investment securities. Substantially all of the impairment related to other factors is recognized in other comprehensive income. Currently, unrealized losses on debtthe securities are attributable to increasesportfolio were the result of changes in market interest rates on comparable securities fromcompared to the date of purchase. Synovus regularly evaluates its investmentthe securities portfolio to ensure that there are no conditions that would indicate that unrealized losses represent OTTI. These factors include the length of time the security has been in a loss position, the extent that the fair value is below amortized cost, andwere acquired rather than the credit standingquality of the issuer. As of September 30, 2017, Synovus had 75 investment securities in a loss position for less than twelve months and 13 investment securities in a loss position for twelve monthsissuers or longer.

Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at September 30, 2017 and December 31, 2016 are presented below.underlying loans.
13
 September 30, 2017
 Less than 12 Months 12 Months or Longer Total
(in thousands)
Fair
Value
 
Gross Unrealized
Losses
 
Fair
Value
 
Gross Unrealized
Losses
 
Fair
Value
 
Gross Unrealized
Losses
U.S. Treasury securities$64,351
 369
 —
 —
 64,351
 369
Mortgage-backed securities issued by U.S. Government agencies80,303
 552
 7,636
 300
 87,939
 852
Mortgage-backed securities issued by U.S. Government sponsored enterprises1,696,906
 19,128
 48,596
 896
 1,745,502
 20,024
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises569,191
 5,617
 240,355
 6,526
 809,546
 12,143
Corporate debt and other securities—
 —
 5,081
 216
 5,081
 216
    Total$2,410,751
 25,666
 301,668
 7,938
 2,712,419
 33,604
            
 December 31, 2016
 Less than 12 Months 12 Months or Longer Total
(in thousands)
Fair
Value
 
Gross Unrealized
Losses
 
Fair
Value
 
Gross Unrealized
Losses
 
Fair
Value
 
Gross Unrealized
Losses
U.S. Treasury securities$64,023
 644
 —
 —
 64,023
 644
Mortgage-backed securities issued by U.S. Government agencies128,121
 1,240
 3,626
 114
 131,747
 1,354
Mortgage-backed securities issued by U.S. Government sponsored enterprises2,123,181
 42,571
 —
 —
 2,123,181
 42,571
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises682,492
 15,653
 24,801
 908
 707,293
 16,561
Corporate debt and other securities14,952
 48
 4,888
 359
 19,840
 407
Total$3,012,769
 60,156
 33,315
 1,381
 3,046,084
 61,537
            


The amortized cost and fair value by contractual maturity of investment securities available for sale at September 30, 20172020 are shown below. The expected life of mortgage-backed securitiesMBSs or CMOs may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. For purposes of the maturity table, mortgage-backed securitiesMBSs and CMOs, which are not due at a single maturity date, have been classified based on the final contractual maturity date.
Distribution of Maturities at September 30, 2017Distribution of Maturities at September 30, 2020
(in thousands)
Within One
Year
 
1 to 5
Years
 
5 to 10
Years
 
More Than
10 Years
 
No Stated
Maturity
 Total(in thousands)Within One
Year		1 to 5
Years		5 to 10
Years		More Than
10 Years		Total
Amortized Cost           Amortized Cost
U.S. Treasury securities$18,830
 64,720
 —
 —
 —
 83,550
U.S. Treasury securities$20,254 $0 $0 $0 $20,254 
U.S. Government agency securities2,331
 6,437
 2,004
 —
 —
 10,772
U.S. Government agency securities430 26,432 127,122 0 153,984 
Mortgage-backed securities issued by U.S. Government agencies—
 —
 32,956
 94,565
 —
 127,521
Mortgage-backed securities issued by U.S. Government agencies0 1,585 311 1,130,920 1,132,816 
Mortgage-backed securities issued by U.S. Government sponsored enterprises44
 2,015
 446,255
 2,215,645
 —
 2,663,959
Mortgage-backed securities issued by U.S. Government sponsored enterprises0 310 73,420 4,328,321 4,402,051 
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 —
 20,910
 922,673
 —
 943,583
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises0 0 248 1,330,763 1,331,011 
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprisesCommercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises0 109,731 112,089 112,643 334,463 
State and municipal securities180
 —
 —
 —
 —
 180
State and municipal securities0 0 0 500 500 
Corporate debt and other securities—
 —
 15,000
 2,000
 3,297
 20,297
Corporate debt securities and other debt securitiesCorporate debt securities and other debt securities0 9,505 8,681 2,000 20,186 
Total amortized cost$21,385
 73,172
 517,125
 3,234,883
 3,297
 3,849,862
Total amortized cost$20,684 $147,563 $321,871 $6,905,147 $7,395,265 
           
Fair Value           Fair Value
U.S. Treasury securities$18,830
 64,351
 —
 —
 —
 83,181
U.S. Treasury securities$20,254 $0 $0 $0 $20,254 
U.S. Government agency securities2,385
 6,529
 2,124
 —
 —
 11,038
U.S. Government agency securities438 26,243 129,933 0 156,614 
Mortgage-backed securities issued by U.S. Government agencies—
 —
 33,073
 94,311
 —
 127,384
Mortgage-backed securities issued by U.S. Government agencies0 1,641 324 1,127,427 1,129,392 
Mortgage-backed securities issued by U.S. Government sponsored enterprises45
 2,127
 444,701
 2,204,979
 —
 2,651,852
Mortgage-backed securities issued by U.S. Government sponsored enterprises0 319 76,148 4,463,919 4,540,386 
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 —
 20,666
 910,774
 —
 931,440
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises0 0 259 1,345,025 1,345,284 
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprisesCommercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises0 116,705 118,468 118,984 354,157 
State and municipal securities181
 —
 —
 —
 —
 181
State and municipal securities0 0 0 501 501 
Corporate debt and other securities—
 —
 15,286
 1,919
 3,162
 20,367
Corporate debt securities and other debt securitiesCorporate debt securities and other debt securities0 9,315 8,822 1,800 19,937 
Total fair value$21,441
 73,007
 515,850
 3,211,983
 3,162
 3,825,443
Total fair value$20,692 $154,223 $333,954 $7,057,656 $7,566,525 
           
Proceeds from sales, gross gains, and gross losses on sales of securities available for sale for the ninethree and threenine months ended September 30, 20172020 and 20162019 are presented below. The specific identification method is used to reclassify gains and losses out of other comprehensive income at the time of sale.
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2020201920202019
Proceeds from sales of investment securities available for sale$1,249,507 $709,464 $3,932,368 $2,456,137 
Gross realized gains on sales0 140 83,840 9,270 
Gross realized losses on sales(1)
(1,550)(3,871)(7,246)(14,772)
Investment securities gains (losses), net$(1,550)$(3,731)$76,594 $(5,502)
  Nine Months Ended September 30, Three Months Ended September 30,
(in thousands) 2017 2016 2017 2016
Proceeds from sales of investment securities available for sale $812,293
 596,824
 $473,912
 353,215
Gross realized gains on sales 7,942
 2,590
 —
 1,635
Gross realized losses on sales (8,231) (2,464) (7,956) (1,576)
Investment securities (losses) gains, net $(289) 126
 $(7,956) 59
         

Note 5 - Restructuring Charges
For(1)    Losses recognized during 2020 primarily relate to the nine and three months ended September 30, 2017 and 2016, total restructuring charges consistsale of the following components:
 Nine Months Ended September 30, Three Months Ended September 30,
(in thousands)2017 2016 2017 2016
Severance charges$6,428
 —
 $(24) —
Asset impairment charges511
 8,120
 515
 1,240
Other charges104
 105
 28
 3
Total restructuring charges, net$7,043
 8,225
 $519
 1,243
        
Restructuring chargesSynovus' remaining portfolio of $7.0 million were recordedasset-backed securities during the nine months ended September 30, 2017 consisting primarily of severance charges of $6.4 million recorded during the firstsecond quarter of 2017. Severance charges included $6.2 million for termination benefits incurred in conjunction with a voluntary early retirement program offered during the first2020. Additionally, losses include an $802 thousand third quarter of 2017. This program was part of Synovus' ongoing efficiency initiatives. The $6.2 million accrual was based on the benefits to be paid to employees who accepted the early retirement offer on or prior2020 settlement adjustment to the expiration of the programgain recognized on March 30, 2017. The accrual balance for severance charges associated with the voluntary early retirement program was $1.2 million at September 30, 2017. For the three months ended September 30, 2017, Synovus recorded restructuring charges of $519 thousand due to additional asset impairment charges of $515 thousand on properties previously identified for disposition. During the nine months ended September 30, 2016, Synovus recorded restructuring charges of $8.2 million with $4.8 million of those charges related to corporate real estate optimization activities and $3.3 million associated with branch closures.
The following tables present aggregate activity within the accrual for restructuring charges for the nine and three months ended September 30, 2017 and 2016:second quarter 2020 securities sales.
14
(in thousands)Severance Charges Lease Termination Charges Total
Balance at December 31, 2016$81
 3,968
 4,049
Accruals for voluntary and involuntary termination benefits6,428
 —
 6,428
Payments(5,304) (540) (5,844)
Balance at September 30, 2017$1,205
 3,428
 4,633
      
Balance at July 1, 20173,731
 3,530
 7,261
Accruals for voluntary and involuntary termination benefits(24) —
 (24)
Payments(2,502) (102) (2,604)
Balance at September 30, 2017$1,205
 3,428
 4,633
      

(in thousands)Severance Charges Lease Termination Charges Total
Balance at December 31, 2015$1,930
 4,687
 6,617
Accruals for lease terminations—
 6
 6
Payments(1,702) (533) (2,235)
Balance at September 30, 2016$228
 4,160
 4,388
      
Balance at July 1, 2016593
 4,375
 4,968
Accruals for lease terminations—
 (25) (25)
Payments(365) (190) (555)
Balance at September 30, 2016$228
 4,160
 4,388
      
All other charges were paid in the quarters that they were incurred. No other restructuring charges resulted in payment accruals.

Note 64 - Loans and Allowance for Loan Losses
Aging and Non-Accrual Analysis
The following istables provide a summary of current, accruing past due, and non-accrual loans by portfolio class as of September 30, 20172020 and December 31, 2016.
2019.
September 30, 2020
Current, Accruing Past Due, and Non-accrual Loans 
September 30, 2017 
(in thousands)Current Accruing 30-89 Days Past Due Accruing 90 Days or Greater Past Due Total Accruing Past Due Non-accrual  Total (in thousands)Current
Accruing 30-89 Days Past Due
Accruing 90 Days or Greater Past DueTotal Accruing Past DueNon-accrual with an ALLNon-accrual without an ALLTotal
Commercial, financial and agriculturalCommercial, financial and agricultural$13,009,877 $13,967 $829 $14,796 $67,415 $27,950 $13,120,038 
Owner-occupiedOwner-occupied6,869,346 4,131 375 4,506 10,623 9,638 6,894,113 
Total commercial and industrialTotal commercial and industrial19,879,223 18,098 1,204 19,302 78,038 37,588 20,014,151 
Investment properties$5,919,393
 3,454
 186
 3,640
 2,063
 5,925,096
 Investment properties9,628,029 5,620 538 6,158 28,260 0 9,662,447 
1-4 family properties784,520
 6,588
 796
 7,384
 2,712
 794,616
 1-4 family properties649,225 2,092 350 2,442 2,135 1,236 655,038 
Land and development494,488
 5,732
 65
 5,797
 6,927
 507,212
 Land and development645,148 583 268 851 2,126 265 648,390 
Total commercial real estate7,198,401
 15,774
 1,047
 16,821
 11,702
 7,226,924
 Total commercial real estate10,922,402 8,295 1,156 9,451 32,521 1,501 10,965,875 
Commercial, financial and agricultural6,871,204
 30,010
 2,356
 32,366
 58,139
 6,961,709
 
Owner-occupied4,751,269
 9,586
 618
 10,204
 3,960
 4,765,433
 
Total commercial and industrial11,622,473
 39,596
 2,974
 42,570
 62,099
 11,727,142
 
Consumer mortgagesConsumer mortgages5,643,745 6,475 872 7,347 7,433 0 5,658,525 
Home equity lines1,505,556
 7,535
 160
 7,695
 15,638
 1,528,889
 Home equity lines1,601,705 3,176 29 3,205 10,297 0 1,615,207 
Consumer mortgages2,545,986
 5,225
 137
 5,362
 6,332
 2,557,680
 
Credit cards222,176
 2,312
 1,237
 3,549
 —
 225,725
 Credit cards259,262 1,894 3,673 5,567 0 0 264,829 
Other consumer loans1,234,355
 8,726
 130
 8,856
 2,067
 1,245,278
 Other consumer loans1,116,334 11,866 578 12,444 1,459 0 1,130,237 
Total consumer5,508,073
 23,798
 1,664
 25,462
 24,037
 5,557,572
 Total consumer8,621,046 23,411 5,152 28,563 19,189 0 8,668,798 
Total loans$24,328,947
 79,168
 5,685
 84,853
 97,838
 24,511,638
(1 
) 
Total loans$39,422,671 $49,804 $7,512 $57,316 $129,748 $39,089 $39,648,824 (1)
           
December 31, 2016 
(in thousands)Current Accruing 30-89 Days Past Due Accruing 90 Days or Greater Past Due Total Accruing Past Due Non-accrual  Total 
Investment properties$5,861,198
 2,795
 —
 2,795
 5,268
 5,869,261
 
1-4 family properties873,231
 4,801
 161
 4,962
 9,114
 887,307
 
Land and development598,624
 1,441
 —
 1,441
 16,233
 616,298
 
Total commercial real estate7,333,053
 9,037
 161
 9,198
 30,615
 7,372,866
 
Commercial, financial and agricultural6,839,699
 9,542
 720
 10,262
 59,074
 6,909,035
 
Owner-occupied4,601,356
 17,913
 244
 18,157
 16,503
 4,636,016
 
Total commercial and industrial11,441,055
 27,455
 964
 28,419
 75,577
 11,545,051
 
Home equity lines1,585,228
 10,013
 473
 10,486
 21,551
 1,617,265
 
Consumer mortgages2,265,966
 7,876
 81
 7,957
 22,681
 2,296,604
 
Credit cards229,177
 1,819
 1,417
 3,236
 —
 232,413
 
Other consumer loans809,419
 5,771
 39
 5,810
 2,954
 818,183
 
Total consumer4,889,790
 25,479
 2,010
 27,489
 47,186
 4,964,465
 
Total loans$23,663,898
 61,971
 3,135
 65,106
 153,378
 23,882,382
(2 
) 
           

December 31, 2019
(in thousands)CurrentAccruing 30-89 Days Past DueAccruing 90 Days or Greater Past DueTotal Accruing Past DueNon-accrual
ASC 310-30 Loans(2)
Total
Commercial, financial and agricultural$9,124,285 $38,916 $1,206 $40,122 $56,017 $1,019,135 $10,239,559 
Owner-occupied5,691,095 5,164 576 5,740 9,780 823,196 6,529,811 
Total commercial and industrial14,815,380 44,080 1,782 45,862 65,797 1,842,331 16,769,370 
Investment properties7,264,794 1,344 0 1,344 1,581 1,736,608 9,004,327 
1-4 family properties733,984 2,073 304 2,377 2,253 41,401 780,015 
Land and development629,363 808 0 808 1,110 78,161 709,442 
Total commercial real estate8,628,141 4,225 304 4,529 4,944 1,856,170 10,493,784 
Consumer mortgages3,681,553 4,223 730 4,953 11,369 1,848,493 5,546,368 
Home equity lines1,691,759 7,038 171 7,209 12,034 2,155 1,713,157 
Credit cards263,065 3,076 2,700 5,776 0 0 268,841 
Other consumer loans2,363,101 18,688 616 19,304 5,704 8,185 2,396,294 
Total consumer7,999,478 33,025 4,217 37,242 29,107 1,858,833 9,924,660 
Total loans$31,442,999 $81,330 $6,303 $87,633 $99,848 $5,557,334 $37,187,814 (3)
(1)    Total before net deferred fees and costs of $24.3$99.0 million.
(2)    Represents loans (at fair value) acquired from FCB accounted for under ASC 310-30, net of discount of $90.3 million and payments since Acquisition Date and also include $1.8 million in non-accrual loans, $9.6 million in accruing 90 days or greater past due loans, and $26.5 million in 30-89 days past due loans.
(3)    Total before net deferred fees and costs of $26.0$25.4 million.

Interest income on non-accrual loans outstanding that would have been recorded if the loans had been current and performing in accordance with their original terms was $4.3 million and $2.5 million for the three months ended September 30, 2020 and 2019, respectively, and $9.2 million and $8.0 million for the nine months ended September 30, 2020 and 2019,

15


respectively. Of the interest income recognized during the three months ended September 30, 2020 and 2019, cash-basis interest income was $1.3 million and $363 thousand, respectively. Cash-basis interest income was $2.7 million and $2.0 million for the nine months ended September 30, 2020 and 2019, respectively.

Pledged Loans

Loans with carrying values of $15.29 billion and $12.11 billion, respectively, were pledged as collateral for borrowings and capacity at September 30, 2020 and December 31, 2019, respectively, to the FHLB and Federal Reserve Bank.

Portfolio Segment Risk Factors

The risk characteristics and collateral information of each portfolio segment are as follows:
Commercial and Industrial Loans - The C&I loan portfolio is comprised of general middle market and commercial banking clients across a diverse set of industries. In accordance with Synovus' lending policy, each loan undergoes a detailed underwriting process which incorporates uniform underwriting standards and oversight in proportion to the size and complexity of the lending relationship. These loans are secured by collateral such as business equipment, inventory, and real estate. Whether for real estate or non-real estate purpose, credit decisions on loans in the C&I portfolio are based on cash flow from the operations of the business as the primary source of repayment of the debt, with underlying real estate or other collateral being the secondary source of repayment. PPP loans, which are categorized as C&I loans, were $2.71 billion net of unearned fees at September 30, 2020 and are guaranteed by the SBA.
Commercial Real Estate Loans - CRE loans primarily consist of income-producing investment properties loans. Additionally, CRE loans include 1-4 family properties loans as well as land and development loans. Investment properties loans consist of construction and mortgage loans for income-producing properties and are primarily made to finance multi-family properties, hotels, office buildings, shopping centers, warehouses and other commercial development properties. 1-4 family properties loans include construction loans to homebuilders and commercial mortgage loans related to 1-4 family rental properties and are almost always secured by the underlying property being financed by such loans. These properties are primarily located in the markets served by Synovus. Land and development loans include commercial and residential development as well as land acquisition loans and are secured by land held for future development, typically in excess of one year. Properties securing these loans are substantially within markets served by Synovus, and loan terms generally include personal guarantees from the principals. Loans in this portfolio are underwritten based on the LTV of the collateral and the capacity of the guarantor(s).
Consumer Loans - The consumer loan portfolio consists of a wide variety of loan products offered through Synovus' banking network including first and second residential mortgages, HELOCs, and credit card loans, as well as home improvement loans, student, and personal loans from third-party lending partnerships. The majority of Synovus' consumer loans are consumer mortgages and HELOCs secured by first and second liens on residential real estate primarily located in the markets served by Synovus. The primary source of repayment for all consumer loans is generally the personal income of the borrower(s).
Credit Quality Indicators
The credit quality of the loan portfolio is reviewed and updated no less frequently than quarterly using the standard asset classification system utilized by the federal banking agencies. These classifications are divided into three groups –groups: Not Criticized (Pass), Special Mention, and Classified or Adverse rating (Substandard, Doubtful, and Loss) and are defined as follows:
Pass- loans which are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell in a timely manner, of any underlying collateral.
Special Mention - loans which have potential weaknesses that deserve management's close attention. These loans are not adversely classified and do not expose an institution to sufficient risk to warrant an adverse classification.
Substandard - loans which are inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. Loans with this classification are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
Doubtful - loans which have all the weaknesses inherent in loans classified as Substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently known facts, conditions, and values.
Loss - loans which are considered by management to be uncollectible and of such little value that their continuance on the institution's books as an asset, without establishment of a specific valuation allowance or charge-off, is not warranted. Synovus fully reserves for any loans rated as Loss.
In the following tables, consumer loans are generally assigned a risk grade similar to the classifications described above; however, upon reaching 90 days and 120 days past due, they are generally downgraded to Substandard and Loss, respectively, in accordance with the FFIEC Uniform Retail Credit Classification and Account Management Policy. Additionally, in accordance with the Interagency Supervisory
16

Guidance, on Allowance for Loan and Lease Losses Estimation Practices for Loans and Lines of Credit Secured by Junior Liens on 1-4 Family Residential Properties, the risk grade classifications of consumer loans (home equity lines(consumer mortgages and consumer mortgages)HELOCs) secured by junior liens on 1-4 family residential properties also consider available information on the payment status of any associated senior liens with other financial institutions.

The following table summarizes each loan portfolio class by risk grade and origination year as of September 30, 2020 as required under CECL.
September 30, 2020
Term Loans Amortized Cost Basis by Origination YearRevolving Loans
(in thousands)20202019201820172016PriorAmortized Cost BasisConverted to Term LoansTotal
Commercial, financial and agricultural
Pass$4,056,896 $1,429,402 $974,892 $667,989 $566,178 $815,006 $4,049,741 $60,299 $12,620,403 
Special Mention49,283 39,929 21,599 33,376 8,404 7,986 63,455 506 224,538 
Substandard(1)
27,247 12,646 14,879 36,007 12,373 40,342 102,364 516 246,374 
Doubtful(2)
0 3,721 19,778 186 915 91 4,032 0 28,723 
Total commercial, financial and agricultural4,133,426 1,485,698 1,031,148 737,558 587,870 863,425 4,219,592 61,321 13,120,038 
Owner-occupied
Pass953,513 1,189,845 1,212,541 1,032,744 643,841 1,338,513 328,656 0 6,699,653 
Special Mention3,029 19,004 18,746 11,767 3,604 7,278 0 0 63,428 
Substandard(1)
1,788 14,686 36,319 29,794 6,521 32,286 0 0 121,394 
Doubtful(2)
0 0 9,638 0 0 0 0 0 9,638 
Total owner-occupied958,330 1,223,535 1,277,244 1,074,305 653,966 1,378,077 328,656 0 6,894,113 
Total commercial and industrial5,091,756 2,709,233 2,308,392 1,811,863 1,241,836 2,241,502 4,548,248 61,321 20,014,151 
Investment properties
Pass784,989 2,241,547 2,193,526 1,376,648 606,029 1,404,524 239,503 0 8,846,766 
Special Mention1,222 66,438 147,928 141,036 166,053 129,887 30,206 0 682,770 
Substandard(1)
812 2,655 24,965 14,927 821 88,693 38 0 132,911 
Total investment properties787,023 2,310,640 2,366,419 1,532,611 772,903 1,623,104 269,747 0 9,662,447 
1-4 family properties
Pass139,919 125,473 80,610 94,889 49,122 100,984 49,594 0 640,591 
Special Mention419 0 524 111 800 120 0 0 1,974 
Substandard(1)
1,514 1,517 3,837 1,038 489 2,560 1,518 0 12,473 
Total 1-4 family properties141,852 126,990 84,971 96,038 50,411 103,664 51,112 0 655,038 
17

Loan Portfolio Credit Exposure by Risk Grade 
September 30, 2017 
(in thousands)Pass 
Special
Mention
 
Substandard(1)
 
Doubtful(2)
 Loss Total 
Investment properties$5,847,902
 60,423
 16,771
 —
 —
 5,925,096
 
1-4 family properties756,665
 20,286
 17,438
 227
 —
 794,616
 
Land and development451,141
 36,523
 16,419
 3,129
 —
 507,212
 
Total commercial real estate7,055,708
 117,232
 50,628
 3,356
 —
 7,226,924
 
Commercial, financial and agricultural6,704,805
 106,117
 149,456
 1,250
 81
(3) 
6,961,709
 
Owner-occupied4,632,930
 52,797
 79,633
 73
 —
 4,765,433
 
Total commercial and industrial11,337,735
 158,914
 229,089
 1,323
 81
 11,727,142
 
Home equity lines1,505,724
 —
 20,771
 355
 2,039
(3) 
1,528,889
 
Consumer mortgages2,547,272
 —
 10,125
 177
 106
(3) 
2,557,680
 
Credit cards224,488
 —
 523
 —
 714
(4) 
225,725
 
Other consumer loans1,242,211
 —
 2,754
 299
 14
(3) 
1,245,278
 
Total consumer5,519,695
 —
 34,173
 831
 2,873
 5,557,572
 
Total loans$23,913,138
 276,146
 313,890
 5,510
 2,954
 24,511,638
(5 
) 
           September 30, 2020
December 31, 2016 Term Loans Amortized Cost Basis by Origination YearRevolving Loans
(in thousands)Pass 
Special
Mention
 
Substandard(1)
 
Doubtful(2)
 Loss Total (in thousands)20202019201820172016PriorAmortized Cost BasisConverted to Term LoansTotal
Investment properties$5,794,626
 43,336
 31,299
 —
 —
 5,869,261
 
1-4 family properties826,311
 33,928
 26,790
 278
 —
 887,307
 
Land and development521,745
 60,205
 27,361
 6,987
 —
 616,298
 Land and development
PassPass$56,935 $204,012 $91,630 $106,490 $12,564 $90,474 $58,092 $0 $620,197 
Special MentionSpecial Mention0 2,172 4,277 5,784 0 1,828 3,550 0 17,611 
Substandard(1)
Substandard(1)
1,627 1,104 4,675 1,085 527 1,564 0 0 10,582 
Total land and developmentTotal land and development58,562 207,288 100,582 113,359 13,091 93,866 61,642 0 648,390 
Total commercial real estate7,142,682
 137,469
 85,450
 7,265
 —

7,372,866
 Total commercial real estate987,437 2,644,918 2,551,972 1,742,008 836,405 1,820,634 382,501 0 10,965,875 
Commercial, financial and agricultural6,635,756
 126,268
 140,425
 6,445
 141
(3) 
6,909,035
 
Owner-occupied4,462,420
 60,856
 111,330
 1,410
 —

4,636,016
 
Total commercial and industrial11,098,176
 187,124
 251,755
 7,855
 141

11,545,051
 
Consumer mortgagesConsumer mortgages
PassPass1,579,366 964,882 481,718 764,384 755,595 1,102,091 1,005 0 5,649,041 
Substandard(1)
Substandard(1)
49 197 777 805 2,412 5,170 0 0 9,410 
Loss(3)
Loss(3)
0 0 0 0 0 74 0 0 74 
Total consumer mortgagesTotal consumer mortgages1,579,415 965,079 482,495 765,189 758,007 1,107,335 1,005 0 5,658,525 
Home equity lines1,589,199
 —
 22,774
 2,892
 2,400
(3) 
1,617,265
 Home equity lines
Consumer mortgages2,271,916
 —
 23,268
 1,283
 137
(3) 
2,296,604
 
PassPass0 0 0 0 0 0 1,513,600 86,404 1,600,004 
Substandard(1)
Substandard(1)
0 0 0 0 0 0 8,603 5,173 13,776 
Doubtful(2)
Doubtful(2)
0 0 0 0 0 0 0 19 19 
Loss(3)
Loss(3)
0 0 0 0 0 0 1,243 165 1,408 
Total home equity linesTotal home equity lines0 0 0 0 0 0 1,523,446 91,761 1,615,207 
Credit cards230,997
 —
 637
 —
 779
(4) 
232,413
 Credit cards
PassPass0 0 0 0 0 0 261,207 0 261,207 
Substandard(1)
Substandard(1)
0 0 0 0 0 0 828 0 828 
Loss(4)
Loss(4)
0 0 0 0 0 0 2,794 0 2,794 
Total credit cardsTotal credit cards0 0 0 0 0 0 264,829 0 264,829 
Other consumer loans814,844
 —
 3,233
 42
 64
(3) 
818,183
 Other consumer loans
PassPass136,944 229,039 142,260 161,717 112,805 76,244 268,840 0 1,127,849 
Substandard(1)
Substandard(1)
0 720 163 474 64 714 253 0 2,388 
Total other consumer loansTotal other consumer loans136,944 229,759 142,423 162,191 112,869 76,958 269,093 0 1,130,237 
Total consumer4,906,956
 —
 49,912
 4,217
 3,380
 4,964,465
 Total consumer1,716,359 1,194,838 624,918 927,380 870,876 1,184,293 2,058,373 91,761 8,668,798 
Total loans$23,147,814
 324,593
 387,117
 19,337
 3,521
 23,882,382
(6 
) 
Total loans(5)
Total loans(5)
$7,795,552 $6,548,989 $5,485,282 $4,481,251 $2,949,117 $5,246,429 $6,989,122 $153,082 $39,648,824 
           
(1) Includes $224.5 million and $256.6 millionThe majority of loans within Substandard risk grade are accruing loans at September 30, 2017 and December 31, 2016, respectively.2020.
(2) The loansLoans within thisDoubtful risk grade are on non-accrual status. Commercial loansstatus and generally have an allowance for loan losses in accordance with ASC 310, and retail loans generally have an allowance for loan lossesALL equal to 50% of the loan amount.
(3) The loansLoans within thisLoss risk grade are on non-accrual status and have an allowance for loan lossesALL equal to the full loan amount.
(4)    Represent amounts that were 120 days past due. These credits are downgraded to the Loss category with an allowance for loan lossesALL equal to the full loan amount and are generally charged off upon reaching 181 days past due in accordance with the FFIEC Uniform Retail Credit Classification and Account Management Policy.
(5)    Total before net deferred fees and costs of $24.3$99.0 million.
(6)


18

The following table summarizes each loan portfolio class by risk grade as of December 31, 2019.
December 31, 2019
(in thousands)PassSpecial Mention
Substandard(1)
Doubtful(2)
Loss(3)
Total
Commercial, financial and agricultural$9,927,059 $128,506 $182,831 $1,163 $0 $10,239,559 
Owner-occupied6,386,055 58,330 85,426 0 0 6,529,811 
Total commercial and industrial16,313,114 186,836 268,257 1,163 0 16,769,370 
Investment properties8,930,360 16,490 57,477 0 0 9,004,327 
1-4 family properties766,529 3,249 10,237 0 0 780,015 
Land and development681,003 18,643 9,796 0 0 709,442 
Total commercial real estate10,377,892 38,382 77,510 0 0 

10,493,784 
Consumer mortgages5,527,746 0 18,376 97 149 

5,546,368 
Home equity lines1,697,086 0 14,806 21 1,244 

1,713,157 
Credit cards266,146 0 818 0 1,877 (4)268,841 
Other consumer loans2,390,199 0 6,095 0 0 

2,396,294 
Total consumer9,881,177 0 40,095 118 3,270 9,924,660 
Total loans(5)
$36,572,183 $225,218 $385,862 $1,281 $3,270 $37,187,814 
(1)    The majority of loans within Substandard risk grade are accruing loans at December 31, 2019.
(2)    Loans within Doubtful risk grade are on non-accrual status and generally have an ALL equal to 50% of the loan amount.
(3)    Loans within Loss risk grade are on non-accrual status and have an ALL equal to the full loan amount.
(4)    Represent amounts that were 120 days past due. These credits are downgraded to the Loss category with an ALL equal to the full loan amount and are generally charged off upon reaching 181 days past due in accordance with the FFIEC Retail Credit Classification Policy.
(5)    Total before net deferred fees and costs of $26.0$25.4 million.

Collateral-Dependent Loans
We classify a loan as collateral-dependent when our borrower is experiencing financial difficulty, and we expect repayment to be provided substantially through the operation or sale of collateral. Our commercial loans have collateral that is comprised of real estate and business assets. Our consumer loans have collateral that is substantially comprised of residential real estate.
There were no significant changes in the extent to which collateral secures our collateral-dependent loans during the three and nine months ended September 30, 2020.
19

Rollforward of Allowance for Loan Losses
The following table detailstables detail the changes in the allowance for loan lossesALL by loan segment for the three and nine months ended September 30, 2020 and 2019. Additionally, during the three and nine months ended September 30, 2020, Synovus reversed $6.1 million and $19.4 million, respectively, in previously established reserves for credit losses associated with the transfer to held for sale of $513.2 million and $1.31 billion, respectively, in performing loans primarily related to third-party single-service consumer loans and non-relationship consumer mortgages.
As Of and For the Three Months Ended September 30, 2020
(in thousands)Commercial & IndustrialCommercial Real EstateConsumerTotal
Allowance for loan losses:
Beginning balance$229,915 $171,526 $187,207 $588,648 
Charge-offs(19,367)(6,878)(9,101)(35,346)
Recoveries3,796 1,225 1,859 6,880 
Provision for (reversal of) loan losses46,256 (22,068)19,430 43,618 
Ending balance$260,600 $143,805 $199,395 $603,800 
As Of and For the Three Months Ended September 30, 2019
(in thousands)Commercial & IndustrialCommercial Real EstateConsumerTotal
Allowance for loan losses:
Beginning balance$138,004 $63,463 $55,909 $257,376 
Charge-offs(15,425)(3,275)(6,026)(24,726)
Recoveries2,276 1,490 1,035 4,801 
Provision for loan losses17,156 280 10,126 27,562 
Ending balance$142,011 $61,958 $61,044 $265,013 
As Of and For the Nine Months Ended September 30, 2020
(in thousands)Commercial & IndustrialCommercial Real EstateConsumerTotal
Allowance for loan losses:
Beginning balance, prior to adoption of ASU 2016-13$145,782 $67,430 $68,190 $281,402 
Impact from adoption of ASU 2016-13
(2,310)(651)85,955 82,994 
Charge-offs(57,497)(8,585)(23,917)(89,999)
Recoveries8,798 2,160 6,468 17,426 
Provision for loan losses165,827 83,451 62,699 311,977 
Ending balance$260,600 $143,805 $199,395 $603,800 
As Of and For the Nine Months Ended September 30, 2019
(in thousands)Commercial & IndustrialCommercial Real EstateConsumerTotal
Allowance for loan losses:
Beginning balance$133,123 $68,796 $48,636 $250,555 
Charge-offs(39,558)(5,369)(17,363)(62,290)
Recoveries6,087 3,788 3,623 13,498 
Provision for (reversal of) loan losses42,359 (5,257)26,148 63,250 
Ending balance$142,011 $61,958 $61,044 $265,013 




20

The ALL of $603.8 million and the reserve for unfunded commitments of $60.8 million, which is recorded in other liabilities, comprise the total ACL of $664.6 million at September 30, 2020. The ACL increased during the third quarter of 2020 by $14.9 million to $664.6 million as of September 30, 2020.Since the adoption of CECL on January 1, 2020, the ACL has increased $271.4 million due primarily to uncertainty and deterioration in the economic environment caused by the COVID-19 pandemic.Provision for credit losses (which includes the provision for loan losses and unfunded commitments) of $43.4 million for the three months ended September 30, 2017.
Allowance for Loan Losses and Recorded Investment in Loans

 As Of and For The Nine Months Ended September 30, 2017
(in thousands)Commercial Real Estate Commercial & Industrial Retail Total
Allowance for loan losses:       
Beginning balance$81,816
 125,778
 44,164
 251,758
Charge-offs(11,336) (41,390) (24,023) (76,749)
Recoveries6,191
 5,181
 4,682
 16,054
Provision for loan losses1,289
 36,934
 20,397
 58,620
Ending balance(1)
$77,960
 126,503
 45,220
 249,683
Ending balance: individually evaluated for impairment4,108
 7,360
 783
 12,251
Ending balance: collectively evaluated for impairment$73,852
 119,143
 44,437
 237,432
Loans:       
Ending balance: total loans(1)(2)
$7,226,924
 11,727,142
 5,557,572
 24,511,638
Ending balance: individually evaluated for impairment    64,909
 109,434
 30,132
 204,475
Ending balance: collectively evaluated for impairment$7,162,015
 11,617,708
 5,527,440
 24,307,163
        
 As Of and For The Nine Months Ended September 30, 2016
(in thousands)Commercial Real Estate Commercial & Industrial Retail Total
Allowance for loan losses:       
Beginning balance$87,133
 122,989
 42,374
 252,496
Charge-offs(13,361) (17,098) (10,611) (41,070)
Recoveries10,927
 6,122
 3,601
 20,650
Provision for loan losses(3,597) 18,875
 6,463
 21,741
Ending balance(1)
$81,102
 130,888
 41,827
 253,817
Ending balance: individually evaluated for impairment11,066
 11,474
 1,724
 24,264
Ending balance: collectively evaluated for impairment$70,036
 119,414
 40,103
 229,553
Loans:       
Ending balance: total loans(1)(3)
$7,472,551 11,009,021
 4,807,511
 23,289,083
Ending balance: individually evaluated for impairment102,837
 118,442
 37,820
 259,099
Ending balance: collectively evaluated for impairment$7,369,714
 10,890,579
 4,769,691
 23,029,984
        
(1) As2020 included net charge-offs of $28.5 million and the impact of downgrades largely concentrated in the hotel portfolio, which were mostly offset by improvement in the economic forecast which included adjustments for the estimated impact of currently enacted government stimulus plans, as well as reserve releases from loan dispositions. Provision for credit losses of $344.0 million for the nine months ended September 30, 20172020, resulted in the building of the ACL required under CECL primarily as a result of deterioration in the economic environment due to the impact of COVID-19.
Our modeling process incorporates quantitative and 2016, there were no purchased credit-impaired loans and no allowance for loan losses for purchased credit-impaired loans.
(2) Total before net deferred fees and costs of $24.3 million.
(3) Total before net deferred fees and costs of $26.2 million.





Allowance for Loan Losses and Recorded Investment in Loans

 As Of and For The Three Months Ended September 30, 2017
(in thousands)Commercial Real Estate Commercial & Industrial Consumer Total
Allowance for loan losses:       
Beginning balance$77,527
 123,437
 47,131
 248,095
Charge-offs(8,129) (21,855) (14,367) (44,351)
Recoveries2,543
 1,899
 1,811
 6,253
Provision for loan losses6,019
 23,022
 10,645
 39,686
Ending balance(1)
$77,960
 126,503
 45,220
 249,683
Ending balance: individually evaluated for impairment4,108
 7,360
 783
 12,251
Ending balance: collectively evaluated for impairment$73,852
 119,143
 44,437
 237,432
Loans:       
Ending balance: total loans(1)(2)
$7,226,924
 11,727,142
 5,557,572
 24,511,638
Ending balance: individually evaluated for impairment    64,909
 109,434
 30,132
 204,475
Ending balance: collectively evaluated for impairment$7,162,015
 11,617,708
 5,527,440
 24,307,163
        
 As Of and For The Three Months Ended September 30, 2016
(in thousands)Commercial Real Estate Commercial & Industrial Consumer Total
Allowance for loan losses:       
Beginning balance$79,359
 129,633
 46,084
 255,076
Charge-offs(4,084) (6,437) (3,463) (13,984)
Recoveries4,237
 1,780
 1,037
 7,054
Provision for loan losses1,590
 5,912
 (1,831) 5,671
Ending balance(1)
$81,102
 130,888
 41,827
 253,817
Ending balance: individually evaluated for impairment11,066
 11,474
 1,724
 24,264
Ending balance: collectively evaluated for impairment$70,036
 119,414
 40,103
 229,553
Loans:       
Ending balance: total loans(1)(3)
$7,472,551
 11,009,021
 4,807,511
 23,289,083
Ending balance: individually evaluated for impairment102,837
 118,442
 37,820
 259,099
Ending balance: collectively evaluated for impairment$7,369,714
 10,890,579
 4,769,691
 23,029,984
        
(1)As of and forqualitative considerations that are used to inform CECL estimates. The internally developed economic forecast used to determine the three months ended September 30, 2017 and 2016, there were no purchased credit-impaired loans and no allowance for loan losses for purchased credit-impaired loans.
(2) Total before net deferred fees and costs of $24.3 million.
(3) Total before net deferred fees and costs of $26.2 million.




The tables below summarize impaired loans (including accruing TDRs)ACL as of September 30, 2017 and December 31, 2016.
Impaired Loans (including accruing TDRs)
 September 30, 2017 Nine Months Ended September 30, 2017 Three Months Ended September 30, 2017
(in thousands)Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized
With no related allowance recorded             
Investment properties$—
 —
 —
 164
 —
 —
 —
1-4 family properties253
 2,582
 —
 374
 —
 253
 —
Land and development1,488
 3,172
 —
 2,084
 —
 1,911
 —
Total commercial real estate1,741
 5,754
 —
 2,622
 —
 2,164
 —
Commercial, financial and agricultural
20,696
 22,122
 —
 23,094
 —
 25,583
 —
Owner-occupied97
 744
 —
 8,875
 —
 7,164
 —
Total commercial and industrial20,793
 22,866
 —
 31,969
 —
 32,747
 —
Home equity lines1,072
 1,072
 —
 1,063
 —
 1,069
 —
Consumer mortgages—
 —
 —
 661
 —
 496
 —
Credit cards—
 —
 —
 —
 —
 —
 —
Other consumer loans—
 —
 —
 —
 —
 —
 —
Total consumer1,072
 1,072
 —
 1,724
 —
 1,565
 —
Total impaired loans with no
related allowance recorded
$23,606
 29,692
 —
 36,315
 —
 36,476

—
With allowance recorded             
Investment properties$28,651
 28,651
 1,116
 29,325
 903
 28,826
 306
1-4 family properties15,741
 15,741
 452
 16,552
 664
 15,665
 278
Land and development18,776
 18,832
 2,540
 24,825
 347
 18,544
 48
Total commercial real estate63,168
 63,224
 4,108
 70,702
 1,914
 63,035
 632
Commercial, financial and agricultural
51,819
 52,019
 5,730
 48,694
 1,175
 53,040
 388
Owner-occupied36,822
 36,855
 1,630
 41,627
 1,002
 37,004
 328
Total commercial and industrial88,641
 88,874
 7,360
 90,321
 2,177
 90,044
 716
Home equity lines5,995
 5,995
 119
 7,807
 265
 6,534
 82
Consumer mortgages18,336
 18,336
 382
 19,270
 687
 18,369
 222
Credit cards—
 —
 —
 —
 —
 —
 —
Other consumer loans4,729
 4,729
 282
 4,507
 191
 4,224
 59
Total consumer29,060
 29,060

783
 31,584
 1,143
 29,127
 363
Total impaired loans with
allowance recorded
$180,869
 181,158
 12,251
 192,607
 5,234
 182,206
 1,711
Total impaired loans             
Investment properties$28,651
 28,651

1,116
 29,489
 903

28,826
 306
1-4 family properties15,994
 18,323

452
 16,926
 664

15,918
 278
Land and development20,264
 22,004

2,540
 26,909
 347

20,455
 48
Total commercial real estate64,909
 68,978

4,108
 73,324
 1,914

65,199
 632
Commercial, financial and agricultural
72,515
 74,141

5,730
 71,788
 1,175

78,623
 388
Owner-occupied36,919
 37,599

1,630
 50,502
 1,002

44,168
 328
Total commercial and industrial109,434
 111,740

7,360
 122,290
 2,177

122,791
 716
Home equity lines7,067
 7,067

119
 8,870
 265

7,603
 82
Consumer mortgages18,336
 18,336

382
 19,931
 687

18,865
 222
Credit cards—
 —

—
 —
 —

—
 —
Other consumer loans4,729
 4,729

282
 4,507
 191

4,224
 59
Total consumer30,132
 30,132

783
 33,308
 1,143

30,692
 363
Total impaired loans$204,475
 210,850

12,251
 228,922
 5,234

218,682
 1,711
              

Impaired Loans (including accruing TDRs)
 December 31, 2016 Year Ended December 31, 2016
(in thousands)Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized
With no related allowance recorded         
Investment properties$748
 793
 —
 2,013
 —
1-4 family properties643
 2,939
 —
 1,021
 —
Land and development2,099
 7,243
 —
 6,769
 —
Total commercial real estate3,490
 10,975
 —
 9,803
 —
Commercial, financial and agricultural17,958
 20,577
 —
 6,321
 —
Owner-occupied5,508
 7,377
 —
 8,394
 —
Total commercial and industrial23,466
 27,954
 —
 14,715
 —
Home equity lines1,051
 1,051
 —
 1,045
 —
Consumer mortgages744
 814
 —
 870
 —
Credit cards—
 —
 —
 —
 —
Other consumer loans—
 —
 —
 —
 —
Total consumer1,795
 1,865
 —
 1,915
 —
Total impaired loans with no
related allowance recorded
$28,751
 40,794
 —
 26,433
 —
With allowance recorded         
Investment properties$31,489
 31,489
 2,044
 42,659
 1,436
1-4 family properties23,642
 23,649
 769
 39,864
 855
Land and development32,789
 32,788
 5,103
 25,568
 995
Total commercial real estate87,920
 87,926
 7,916
 108,091
 3,286
Commercial, financial and agricultural43,386
 45,913
 5,687
 51,968
 1,215
Owner-occupied53,708
 53,942
 2,697
 52,300
 1,946
Total commercial and industrial97,094
 99,855
 8,384
 104,268
 3,161
Home equity lines9,638
 9,638
 971
 9,668
 432
Consumer mortgages20,953
 20,953
 673
 20,993
 1,014
Credit cards—
 —
 —
 —
 —
Other consumer loans5,140
 5,140
 167
 5,062
 303
Total consumer35,731
 35,731
 1,811
 35,723
 1,749
Total impaired loans with
allowance recorded
$220,745
 223,512
 18,111
 248,082
 8,196
Total impaired loans         
Investment properties$32,237
 32,282
 2,044
 44,672
 1,436
1-4 family properties24,285
 26,588
 769
 40,885
 855
Land and development34,888
 40,031
 5,103
 32,337
 995
Total commercial real estate91,410
 98,901
 7,916
 117,894
 3,286
Commercial, financial and agricultural61,344
 66,490
 5,687
 58,289
 1,215
Owner-occupied59,216
 61,319
 2,697
 60,694
 1,946
Total commercial and industrial120,560
 127,809
 8,384
 118,983
 3,161
Home equity lines10,689
 10,689
 971
 10,713
 432
Consumer mortgages21,697
 21,767
 673
 21,863
 1,014
Credit cards—
 —
 —
 —
 —
Other consumer loans5,140
 5,140
 167
 5,062
 303
Total consumer37,526
 37,596
 1,811
 37,638
 1,749
Total impaired loans$249,496
 264,306
 18,111
 274,515
 8,196
          

2020 was approved late in the third quarter of 2020 pursuant to Synovus' economic forecasting governance processes. The average recorded investment in impaired loans was $281.2 million and $263.0 million, respectively,modeling assumptions for the ninethird quarter of 2020 included adjustments for the estimated impact of currently enacted government stimulus plans and three months endedan unemployment rate ending the 2020 year around8% before declining modestly in 2021. This, along with credit migration and other loan portfolio activity, resulted in an increase of the ACL to loans coverage ratio during the quarter of 5 bps to 1.68%, or1.80% excluding PPP loans, at September 30, 2016. Excluding accruing2020.
Significant economic uncertainty remains as a result of the continuing COVID-19 crisis, and the trajectory of the economic recovery including any additional government stimulus plans will impact subsequent period CECL reserves.

21


TDRs
Information about Synovus' TDRs there was no interest income recognized for the investment in impaired loans for the nine and three months ended September 30, 2016. Interest income recognized for accruing TDRs was $6.1 million and $2.1 million, respectively, for the nine and three months ended September 30, 2016. At September 30, 2017 and December 31, 2016, impaired loans of $37.6 million and $53.7 million, respectively, were on non-accrual status.
Concessions provided in a TDR are primarilyis presented in the formfollowing tables. Synovus began entering into loan modifications with borrowers in response to the COVID-19 pandemic, which have not been classified as TDRs, and therefore are not included in the discussion below. See "Part I-Item 1. Financial Statements and Supplementary Data - Note 1 - Basis of providing a below market interest rate given the borrower's credit risk, a period of time generally less than one year with a reduction of required principal and/or interest payments (e.g., interest onlyPresentation" in this Report for a period of time), or an extension of the maturity of themore information on Synovus' loan generally for less than one year. Insignificant periods of reduction of principal and/or interest payments, or one-time deferrals of 3 months or less, are generally not consideredmodifications due to be financial concessions.

COVID-19.The following tables represent, by concession type, the post-modification balance for loans modified or renewed during the ninethree and threenine months ended September 30, 20172020 and 20162019 that were reported as accruing or non-accruing TDRs.
TDRs by Concession Type
Three Months Ended September 30, 2020
(in thousands, except contract data)Number of ContractsBelow Market Interest Rate
Other Concessions(1)
Total
Commercial, financial and agricultural42 $3,335 $670 $4,005 
Owner-occupied7 1,753 0 1,753 
Total commercial and industrial49 5,088 670 5,758 
Investment properties2 294 93 387 
1-4 family properties5 74 114 188 
Land and development1 40 0 40 
Total commercial real estate8 408 207 615 
Consumer mortgages3 496 23 519 
Home equity lines17 471 648 1,119 
Other consumer loans3 48 85 133 
Total consumer23 1,015 756 1,771 
Total TDRs80 $6,511 $1,633 $8,144 (2)
Three Months Ended September 30, 2019
(in thousands, except contract data)Number of ContractsBelow Market Interest Rate
Other Concessions(1)
Total
Commercial, financial and agricultural27 $2,577 $1,917 $4,494 
Owner-occupied7 2,822 861 3,683 
Total commercial and industrial34 5,399 2,778 8,177 
Investment properties4 385 0 385 
1-4 family properties4 766 0 766 
Land and development1 473 0 473 
Total commercial real estate9 1,624 0 1,624 
Consumer mortgages10 1,008 118 1,126 
Home equity lines25 364 1,635 1,999 
Other consumer loans27 473 1,222 1,695 
Total consumer62 1,845 2,975 4,820 
Total TDRs105 $8,868 $5,753 $14,621 (3)
TDRs by Concession Type  
 Nine Months Ended September 30, 2017 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate Term Extensions and/or Other Concessions Total 
Investment properties—
 $—
 —
 —
 —
 
1-4 family properties21
 —
 2,090
 1,477
 3,567
 
Land acquisition4
 —
 157
 895
 1,052
 
Total commercial real estate25
 —
 2,247
 2,372
 4,619
 
Commercial, financial and agricultural50
 —
 8,703
 12,145
 20,848
 
Owner-occupied4
 —
 35
 1,705
 1,740
 
Total commercial and industrial54
 —
 8,738
 13,850
 22,588
 
Home equity lines—
 —
 —
 —
 —
 
Consumer mortgages8
 —
 248
 1,190
 1,438
 
Credit cards—
 —
 —
 —
 —
 
Other retail loans25
 —
 682
 958
 1,640
 
Total retail33
 —
 930
 2,148
 3,078
 
Total TDRs112
 $—
 11,915
 18,370
 30,285
(1 
) 
           
 Three Months Ended September 30, 2017 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate 
Term Extensions
and/or Other Concessions
 Total 
Investment properties—
 $—
 —
 —
 —
 
1-4 family properties5
 —
 —
 964
 964
 
Land and development3
 —
 157
 760
 917
 
Total commercial real estate8
 —
 157
 1,724
 1,881
 
Commercial, financial and agricultural22
 —
 2,943
 5,866
 8,809
 
Owner-occupied3
 —
 35
 1,683
 1,718
 
Total commercial and industrial25
 —
 2,978
 7,549
 10,527
 
Home equity lines—
 —
 —
 —
 —
 
Consumer mortgages7
 —
 248
 1,181
 1,429
 
Credit cards—
 —
 —
 —
 —
 
Other consumer loans17
 —
 682
 388
 1,070
 
Total consumer24
 —
 930
 1,569
 2,499
 
Total TDRs57
 $—
 4,065
 10,842
 14,907
(1 
) 
           
(1)    NoOther concessions generally include term extensions, interest only payments for a period of time, or principal forgiveness, but there was no principal forgiveness for the three months ending September 30, 2020 and 2019.
(2)    NaN net charge-offs were recorded during the nine and three months ended September 30, 2017 upon restructuring of these loans.2020.




TDRs by Concession Type  
 Nine Months Ended September 30, 2016 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate Term Extensions and/or Other Concessions Total 
Investment properties4
 $—
 1,826
 3,518
 5,344
 
1-4 family properties23
 —
 3,703
 1,211
 4,914
 
Land acquisition13
 —
 —
 1,766
 1,766
 
Total commercial real estate40
 —
 5,529
 6,495
 12,024
 
Commercial, financial and agricultural50
 —
 13,948
 5,232
 19,180
 
Owner-occupied7
 —
 5,458
 550
 6,008
 
Total commercial and industrial57
 —
 19,406
 5,782
 25,188
 
Home equity lines5
 —
 224
 123
 347
 
Consumer mortgages6
 —
 354
 51
 405
 
Credit cards—
 —
 —
 —
 —
 
Other retail loans24
 —
 394
 1,828
 2,222
 
Total retail35
 —
 972
 2,002
 2,974
 
Total TDRs132
 $—
 25,907
 14,279
 40,186
(2 
) 
           
 Three Months Ended September 30, 2016 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate 
Term Extensions
and/or Other Concessions
 Total 
Investment properties1
 $—
 —
 3,370
 3,370
 
1-4 family properties4
 —
 213
 47
 260
 
Land and development2
 —
 —
 497
 497
 
Total commercial real estate7
 —
 213
 3,914
 4,127
 
Commercial, financial and agricultural5
 —
 —
 387
 387
 
Owner-occupied1
 —
 2,791
 —
 2,791
 
Total commercial and industrial6
 —
 2,791
 387
 3,178
 
Home equity lines2
 —
 —
 123
 123
 
Consumer mortgages—
 —
 —
 —
 —
 
Credit cards—
 —
 —
 —
 —
 
Other consumer loans7
 —
 70
 294
 364
 
Total consumer9
 —
 70
 417
 487
 
Total TDRs22
 $—
 3,074
 4,718
 7,792
(2 
) 
           
(2) No(3)    NaN net charge-offs were recorded during the nine and three months ended September 30, 2016 upon restructuring2019.


22

Nine Months Ended September 30, 2020
(in thousands, except contract data)Number of ContractsBelow Market Interest Rate
Other Concessions(1)
Total
Commercial, financial and agricultural118 $8,562 $4,681 $13,243 
Owner-occupied19 3,573 1,530 5,103 
Total commercial and industrial137 12,135 6,211 18,346 
Investment properties6 28,963 93 29,056 
1-4 family properties15 867 1,105 1,972 
Land and development3 581 0 581 
Total commercial real estate24 30,411 1,198 31,609 
Consumer mortgages19 1,568 2,589 4,157 
Home equity lines50 926 2,530 3,456 
Other consumer loans50 145 2,779 2,924 
Total consumer119 2,639 7,898 10,537 
Total TDRs280 $45,185 $15,307 $60,492 (2)
Nine Months Ended September 30, 2019
(in thousands, except contract data)Number of ContractsBelow Market Interest Rate
Other Concessions(1)
Total
Commercial, financial and agricultural61 $5,703 $4,404 $10,107 
Owner-occupied13 4,854 861 5,715 
Total commercial and industrial74 10,557 5,265 15,822 
Investment properties6 1,048 0 1,048 
1-4 family properties14 2,072 0 2,072 
Land and development3 641 0 641 
Total commercial real estate23 3,761 0 3,761 
Consumer mortgages15 1,245 1,332 2,577 
Home equity lines50 2,686 1,740 4,426 
Other consumer loans79 1,167 3,599 4,766 
Total consumer144 5,098 6,671 11,769 
Total TDRs241 $19,416 $11,936 $31,352 (3)
(1)    Other concessions generally include term extensions, interest only payments for a period of these loans.time, or principal forgiveness, but there was no principal forgiveness for the nine months ending September 30, 2020 and 2019.

For(2)    NaN net charge-offs were recorded during the nine and three months ended September 30, 2017,2020.
(3)    NaN net charge-offs were recorded during the nine months ended September 30, 2019.
For the three and nine months ended September 30, 2020 there were fourwas 1 default with a recorded investment of $21 thousand and 5 defaults with a recorded investment of $498 thousand and one default with a recorded investment of $206$666 thousand, respectively, on accruing TDRs restructured during the previous twelve months (defaults are defined as the earlier of the TDR being placed on non-accrual status or reaching 90 days past due with respect to principal and/or interest payments) compared to two3 defaults with a recorded investment of $181$321 thousand and one default4 defaults with a recorded investment of $89$326 thousand respectively, for the three and nine months ended September 30, 2019, respectively. As of September 30, 2020and December 31, 2019, there were0 commitments to lend a material amount of additional funds to any customer whose loan was classified as a TDR.
23


Note 5 - Goodwill and Other Intangible Assets
Goodwill allocated to each reporting unit at September 30, 2020 and December 31, 2019 is presented as follows (the FMS reportable segment includes 2 reporting units of Consumer Mortgage and Wealth Management):
(in thousands)Community Banking Reporting UnitWholesale Banking Reporting UnitConsumer Mortgage Reporting UnitWealth Management Reporting UnitTotal
Balance as of December 31, 2019$256,323 $171,636 $44,877 $24,431 $497,267 
Goodwill impairment0 0 (44,877)0 (44,877)
Balance as of September 30, 2020$256,323 $171,636 $0 $24,431 $452,390 
Goodwill is evaluated for impairment on an annual basis or whenever an event occurs or circumstances change to indicate that it is more likely than not that an impairment loss has been incurred (i.e., a triggering event). Synovus conducted a goodwill impairment assessment as of December 31, 2019, following Synovus' reorganization, applying ASC 350-20-35-3A Goodwill Subsequent Measurement - Qualitative Assessment Approach and concluded that goodwill was not impaired. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 19 -Segment Reporting" to the consolidated financial statements of Synovus' 2019 Form 10-K for information on Synovus' reorganization during 2019.
During 2020, Synovus performed interim goodwill impairment tests as of September 30, 2020, June 30, 2020 and March 31, 2020 based on quarterly assessments of triggering events that included Synovus' stock price trading below book value, an extremely low interest rate environment, as well as general recessionary economic conditions caused by the COVID-19 pandemic. Quantitative assessments of goodwill impairment include determining the estimated fair value of each reporting unit, utilizing a combination of discounted cash flow and market-based approaches, and comparing that fair value to each reporting unit's carrying amount. The discounted cash flow method included updated internal forecasts, long-term profitability targets, growth rates and discount rates. The market approach was based on a comparison of certain financial metrics of Synovus' reporting units to guideline public company peers. The income-based discounted cash flow approach was more heavily weighted (60%) than the market-based approach (40%) due to significant volatility in the market since the pandemic was declared a National Emergency.
Based on the assessment performed at September 30, 2020, Synovus recognized a $44.9 million goodwill impairment charge representing all goodwill allocated to the Consumer Mortgage reporting unit, while the fair values of the Community Banking, Wholesale Banking and Wealth Management reporting units continued to exceed the respective carrying values. The projected cash flows of the Consumer Mortgage reporting unit declined from the prior period valuations due to significant mortgage refinance activity at record-low mortgage rates and the FOMC's updated guidance in the third quarter of 2020 regarding inflation targeting and their expectations for interest rates to remain low for an extended period of time. The primarily fixed rate, longer duration nature of Synovus’ mortgage portfolio especially impacted the Consumer Mortgage reporting unit. In addition, the excess of fair value over the carrying amount for the Community Banking and Wholesale Banking reporting units was less than 10% at September 30, 2020.
Due to the high degree of subjectivity involved in estimating the fair value of Synovus' reporting units, a decline in Synovus' expected future cash flows or estimated growth rates due to further deterioration in the economic environment, or continued market capitalization of Synovus below book value, could result in an additional goodwill impairment charge that is material to Synovus' results from operations, but would not materially impact our financial condition.
The following table shows the gross carrying amount and accumulated amortization of other intangible assets as of September 30, 2020 and December 31, 2019, which primarily consist of core deposit intangible assets acquired in the FCB acquisition. The CDI is being amortized over its estimated useful life of approximately ten years utilizing an accelerated method. Aggregate other intangible assets amortization expense for the three and nine months ended September 30, 2020 was $2.6 million and $7.9 million, respectively. Aggregate other intangible assets amortization for the three and nine months ended September 30, 2019 was $2.9 million and $8.7 million, respectively.
24

(in thousands)Gross Carrying AmountAccumulated AmortizationNet Carrying Value
September 30, 2020
CDI$57,400 $(17,481)$39,919 
Other12,500 (4,667)7,833 
Total other intangible assets$69,900 $(22,148)$47,752 
December 31, 2019
CDI$57,400 $(10,436)$46,964 
Other12,500 (3,793)8,707 
Total other intangible assets$69,900 $(14,229)$55,671 

Note 6 - Shareholders' Equity and Other Comprehensive Income (Loss)
Repurchases of Common Stock
During the three months ended September 30, 2016.
If, at2020, Synovus did not repurchase any shares of its common stock. During the time a loan was designated as a TDR, the loan was not already impaired, the measurement of impairment that resulted from the TDR designation closely approximates the reserve derived through specific loan measurement of impairment in accordance with ASC 310-10-35. Generally, the change in the allowance for loan losses resulting from such TDR designation is not significant. Atnine months ended September 30, 2017,2020, Synovus repurchased $16.2 million, or 450 thousand shares of its common stock, at an average price of $36.08 per share, under the allowance for loan losses allocatedshare repurchase program announced on January 24, 2020.
Dividends
The following table presents dividends declared related to accruing TDRs totaling $166.9 million was $8.5 million comparedcommon stock. For information related to accruing TDRspreferred stock dividends, see "Part II - Item 8. Financial Statements and Supplementary Data - Note 10 - Shareholders' Equity and Other Comprehensive Income" to the consolidated financial statements of $195.8 million with an allocated allowance for loan lossesSynovus' 2019 Form 10-K.
Three Months Ended September 30,Nine Months Ended September 30,
2020201920202019
Cash dividends declared per share$0.33 $0.30 $0.99 $0.90 

Equity-Based Compensation Plans
The following tables summarize the status of $9.8 million at December 31, 2016. Non-accrual, non-homogeneous loans (commercial-type impaired loans greater than $1 million) that are designatedSynovus' stock options, restricted share units, market restricted share units, and performance share units as TDRs are individually measuredof September 30, 2020 and activity for the amount of impairment, if any, both before and after the TDR designation.nine months ended September 30, 2020.

Stock Options
(in thousands, except per share amounts)QuantityWeighted-Average Exercise Price Per Share
Outstanding at January 1, 20203,037 $22.74 
Exercised(239)28.28 
Expired/canceled(64)29.75 
Outstanding at September 30, 20202,734 $22.09 
Note 7 -
25

RSUs, MRSUs, and PSUs
(in thousands, except per share amounts)QuantityWeighted-Average Grant Date Fair Value Per Share
Non-vested at January 1, 20201,312 $39.28 
Granted893 32.91 
Quantity change based on TSR and performance factors44 35.11 
Dividend equivalents granted56 33.50 
Vested(590)38.85 
Forfeited(58)36.22 
Non-vested at September 30, 20201,657 $35.80 
Changes in Accumulated Other Comprehensive Income (Loss) by Component (Net of Income Taxes)
The following tables illustrate activity within the balances in accumulated other comprehensive income (loss) by component for the ninethree and threenine months ended September 30, 20172020 and 2016.2019.
Changes in Accumulated Other Comprehensive Income (Loss) by Component (Net of Income Taxes)
(in thousands)
Net unrealized gains (losses) on investment securities available for sale(1)
Net unrealized gains (losses) on cash flow hedges(1)
Post-retirement unfunded health benefitTotal
Balance, July 1, 2020$134,245 $68,263 $462 $202,970 
Other comprehensive income (loss) before reclassifications(21,806)(6,635)0 (28,441)
Amounts reclassified from AOCI1,149 (764)0 385 
Net current period other comprehensive income (loss)(20,657)(7,399)0 (28,056)
Balance at September 30, 2020$113,588 $60,864 $462 $174,914 
Balance, July 1, 2019$60,586 $(12,137)$840 $49,289 
Other comprehensive income (loss) before reclassifications25,133 (876)(378)23,879 
Amounts reclassified from AOCI2,765 0 0 2,765 
Net current period other comprehensive income (loss)27,898 (876)(378)26,644 
Balance at September 30, 2019$88,484 $(13,013)$462 $75,933 
Balance, January 1, 2020$83,666 $(18,487)$462 $65,641 
Other comprehensive income (loss) before reclassifications86,678 80,404 0 167,082 
Amounts reclassified from AOCI(56,756)(1,053)0 (57,809)
Net current period other comprehensive income (loss)29,922 79,351 0 109,273 
Balance at September 30, 2020$113,588 $60,864 $462 $174,914 
Balance, January 1, 2019$(83,179)$(12,137)$896 $(94,420)
Other comprehensive income (loss) before reclassifications167,586 (876)(378)166,332 
Amounts reclassified from AOCI4,077 0 (56)4,021 
Net current period other comprehensive income (loss)171,663 (876)(434)170,353 
Balance at September 30, 2019$88,484 $(13,013)$462 $75,933 
Changes in Accumulated Other Comprehensive Income (Loss) by Component (Net of Income Taxes)
(in thousands)Net unrealized gains (losses) on cash flow hedges Net unrealized gains (losses) on investment securities available for sale Post-retirement unfunded health benefit Total
Balance at December 31, 2016$(12,217) (44,324) 882
 (55,659)
Other comprehensive income before reclassifications—
 15,812
 38
 15,850
Amounts reclassified from accumulated other comprehensive income (loss)80
 178
 (45) 213
Net current period other comprehensive income80
 15,990
 (7) 16,063
Balance as of September 30, 2017$(12,137) (28,334) 875
 (39,596)
        
Balance as of July 1, 2017$(12,137) (36,586) 858
 (47,865)
Other comprehensive income before reclassifications—
 3,359
 38
 3,397
Amounts reclassified from accumulated other comprehensive income (loss)—
 4,893
 (21) 4,872
Net current period other comprehensive income—
 8,252
 17
 8,269
Balance as of September 30, 2017$(12,137) (28,334) 875
 (39,596)
        
Changes in Accumulated Other Comprehensive Income (Loss) by Component (Net of Income Taxes)
(in thousands)Net unrealized gains (losses) on cash flow hedges Net unrealized gains (losses) on investment securities available for sale Post-retirement unfunded health benefit Total
Balance at December 31, 2015$(12,504) (18,222) 907
 (29,819)
Other comprehensive income before reclassifications—
 34,827
 63
 34,890
Amounts reclassified from accumulated other comprehensive income (loss)247
 (77) (76) 94
Net current period other comprehensive income247
 34,750
 (13) 34,984
Balance as of September 30, 2016$(12,257) 16,528
 894
 5,165
        
Balance as of July 1, 2016$(12,297) 22,459
 843
 11,005
Other comprehensive income (loss) before reclassifications—
 (5,895) 63
 (5,832)
Amounts reclassified from accumulated other comprehensive income (loss)40
 (36) (12) (8)
Net current period other comprehensive income (loss)40
 (5,931) 51
 (5,840)
Balance as of September 30, 2016$(12,257) 16,528
 894
 5,165
        
In accordance with ASC 740-20-45-11(b), a deferred tax asset valuation allowance associated with unrealized gains and losses not recognized in income is charged directly to other comprehensive income (loss). During(1)    For all periods presented, the years 2010 and 2011, Synovus recorded a deferred tax asset valuation allowance associated with unrealized gains and losses not recognized in income directly to other comprehensive income (loss) by applying the portfolio approach for allocation of the valuation allowance. Synovus has consistently applied the portfolio approach which treats derivative financial instruments, equity securities, and debt securities as

a single portfolio. As of September 30, 2017, theending balance in net unrealized gains (losses) on cash flow hedges and net unrealized gains (losses) on investment securities available for sale includes unrealized losses of $12.1 million and $13.3 million, respectively, related to the residual tax effects remaining in OCI due to a previously established deferred tax asset valuation allowance. Underallowances in 2010 and 2011. In accordance with ASC 740-20-45-11(b), under the portfolio approach, these unrealized losses are realized at the time the entire portfolio is sold or disposed.
26
Reclassifications out of Accumulated Other Comprehensive Income (Loss)
Details About
Accumulated Other Comprehensive Income (Loss) Components
 
Amount Reclassified from
Accumulated Other
Comprehensive Income (Loss)
 
Affected Line Item
in the Statement Where
Net Income is Presented
  For the Nine Months Ended September 30,  
  2017 2016  
Net unrealized gains (losses) on cash flow hedges:      
  Amortization of deferred losses $(130) (205) Interest expense
  Amortization of deferred losses —
 (197) Loss on early extinguishment of debt, net
  50
 155
 Income tax (expense) benefit
  $(80) (247) Reclassifications, net of income taxes
       
Net unrealized (losses) gains on investment securities available for sale:      
  Realized (losses) gains on sale of securities $(289) 126
 Investment securities (losses) gains, net
  111
 (49) Income tax (expense) benefit
  $(178) 77
 Reclassifications, net of income taxes
Post-retirement unfunded health benefit:      
  Amortization of actuarial gains $74
 124
 Salaries and other personnel expense
  (29) (48) Income tax (expense) benefit
  $45
 76
 Reclassifications, net of income taxes
       

Reclassifications out of Accumulated Other Comprehensive Income (Loss)
Details About
Accumulated Other Comprehensive Income (Loss) Components
 
Amount Reclassified from
Accumulated Other
Comprehensive Income (Loss)
Affected Line Item
in the Statement Where
Net Income is Presented
  For the Three Months Ended September 30, 
  2017 2016 
Net unrealized gains (losses) on cash flow hedges:     
  Amortization of deferred losses $—
 (65)Interest expense
  —
 25
Income tax (expense) benefit
  $—
 (40)Reclassifications, net of income taxes
      
Net unrealized gains on investment securities available for sale:     
  Realized net (loss)gain on sale of securities $(7,956) 59
Investment securities (losses) gains, net
  3,063
 (23)Income tax (expense) benefit
  $(4,893) 36
Reclassifications, net of income taxes
Post-retirement unfunded health benefit:     
  Amortization of actuarial gains $34
 20
Salaries and other personnel expense
  (13) (8)Income tax (expense) benefit
  $21
 12
Reclassifications, net of income taxes
      

Note 87 - Fair Value Accounting
Synovus carries various assets and liabilities at fair value based on the fairFair value accounting guidance under ASC 820, Fair Value Measurements, and ASC 825, Financial Instruments. Fairdefines fair value is defined as the exchange price that would be received forto sell an asset or paid to transfer a liability (an “exit price”"exit price") in the principal or most advantageous market foravailable to the asset or liabilityentity in an orderly transaction between market participants, on the measurement date.
Fair Value Hierarchy
Synovus determines the fair value of its financial instruments based on the fair value hierarchy established under ASC 820-10, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the financial instrument's fair value measurement in its entirety. There are three levels of inputs that may be used to measure fair value. The three levels of inputs of the valuation hierarchy are defined below:
Level 1Quoted prices (unadjusted) in active markets for identical assets and liabilities for the instrument or security to be valued. Level 1 assets include marketable equity securities, U.S. Treasury securities, and mutual funds.
Level 2Observable inputs other than Level 1 quoted prices, such as quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active or model-based valuation techniques for which all significant assumptions are derived principally from or corroborated by observable market data. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments and derivative contracts whose value is determined by using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. U.S. Government sponsored agency securities, mortgage-backed securities issued by U.S. Government sponsored enterprises and agencies, obligations of states and municipalities, collateralized mortgage obligations issued by U.S. Government sponsored enterprises, and mortgage loans held-for-sale are generally included in this category.
Level 3Unobservable inputs that are supported by little, if any, market activity for the asset or liability. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow models and similar techniques, and may also include the use of market prices of assets or liabilities that are not directly comparable to the subject asset or liability. These methods of valuation may result in a significant portion of the fair value being derived from unobservable assumptions that reflect Synovus' own estimates for assumptions that market participants would use in pricing the asset or liability. This category primarily includes collateral-dependent impaired loans, other real estate, certain equity investments, private equity investments, GGL/SBA loan servicing assets, and contingent consideration.

See "Part II - Item 8. Financial Statements and Supplementary Data - Note 161 - Fair Value Accounting" to the consolidated financial statementsSummary of Significant Accounting Policies" of Synovus' 20162019 Form 10-K for a description of valuation methodologies for assets and liabilities measured athow fair value on a recurring and non-recurring basis.

















measurements are determined.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table presentstables present all financial instruments measured at fair value on a recurring basis as of September 30, 20172020 and December 31, 2016, according to the valuation hierarchy included in ASC 820-10. For equity and debt securities, class was determined based on the nature and risks of the investments. Synovus did not have any transfers between levels during the nine and three months ended September 30, 2017 and year ended December 31, 2016.2019.
September 30, 2020
(in thousands)Level 1Level 2Level 3Total Assets and Liabilities at Fair Value
Assets
Trading securities:
Mortgage-backed securities issued by U.S. Government agencies$0 $18 $0 $18 
Collateralized mortgage obligations issued by U.S. Government sponsored enterprises0 604 0 604 
Other mortgage-backed securities0 673 0 673 
State and municipal securities0 579 0 579 
Asset-backed securities0 2,497 0 2,497 
Total trading securities$0 $4,371 $0 $4,371 
Investment securities available for sale:
U.S. Treasury securities$20,254 $0 $0 $20,254 
U.S. Government agency securities0 156,614 0 156,614 
Mortgage-backed securities issued by U.S. Government agencies0 1,129,392 0 1,129,392 
Mortgage-backed securities issued by U.S. Government sponsored enterprises0 4,540,386 0 4,540,386 
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises0 1,345,284 0 1,345,284 
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises0 354,157 0 354,157 
State and municipal securities0 501 0 501 
Corporate debt securities and other debt securities0 18,137 1,800 19,937 
Total investment securities available for sale$20,254 $7,544,471 $1,800 $7,566,525 
Mortgage loans held for sale0 285,899 0 285,899 
Private equity investments0 0 958 958 
Mutual funds and mutual funds held in rabbi trusts35,174 0 0 35,174 
GGL/SBA loans servicing asset0 0 3,100 3,100 
Derivative assets0 463,028 0 463,028 
Liabilities
Earnout liability$0 $0 $15,924 $15,924 
Derivative liabilities0 178,508 1,460 179,968 
27

September 30, 2017December 31, 2019
(in thousands)Level 1 Level 2 Level 3 Total Assets and Liabilities at Fair Value(in thousands)Level 1Level 2Level 3Total Assets and Liabilities at Fair Value
Assets       Assets
Trading securities:       Trading securities:
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 494
 —
 494
Collateralized mortgage obligations issued by
U.S. Government sponsored enterprises
—
 10,484
 —
 10,484
Collateralized mortgage obligations issued by U.S. Government sponsored enterprises$0 $2,486 $0 $2,486 
Other mortgage-backed securitiesOther mortgage-backed securities0 1,284 0 1,284 
State and municipal securities—
 1,101
 —
 1,101
State and municipal securities0 65 0 65 
Asset-backed securitiesAsset-backed securities0 3,227 0 3,227 
Other investments—
 250
 —
 250
Other investments0 150 0 150 
Total trading securities$—
 12,329
 —
 12,329
Total trading securities$0 $7,212 $0 $7,212 
Mortgage loans held for sale—
 54,072
 —
 54,072
       
Investment securities available for sale:       Investment securities available for sale:
U.S. Treasury securities83,181
 —
 —
 83,181
U.S. Treasury securities$19,855 $0 $0 $19,855 
U.S. Government agency securities—
 11,038
 —
 11,038
U.S. Government agency securities0 36,541 0 36,541 
Mortgage-backed securities issued by U.S. Government agencies—
 127,384
 —
 127,384
Mortgage-backed securities issued by U.S. Government agencies0 56,816 0 56,816 
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 2,651,852
 —
 2,651,852
Mortgage-backed securities issued by U.S. Government sponsored enterprises0 5,180,815 0 5,180,815 
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 931,440
 —
 931,440
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises0 636,851 0 636,851 
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprisesCommercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises0 371,592 0 371,592 
State and municipal securities—
 181
 —
 181
State and municipal securities0 2,075 0 2,075 
Corporate debt and other securities(1)
3,162
 15,287
 1,918
 20,367
Asset-backed securitiesAsset-backed securities0 327,400 0 327,400 
Corporate debt securities and other debt securitiesCorporate debt securities and other debt securities0 144,620 2,105 146,725 
Total investment securities available for sale$86,343
 3,737,182
 1,918
 3,825,443
Total investment securities available for sale$19,855 $6,756,710 $2,105 $6,778,670 
Mortgage loans held for saleMortgage loans held for sale0 115,173 0 115,173 
Private equity investments—
 —
 15,671
 15,671
Private equity investments15,502 0 3,887 19,389 
Mutual funds held in rabbi trusts13,439
 —
 —
 13,439
Mutual funds and mutual funds held in rabbi trustsMutual funds and mutual funds held in rabbi trusts32,348 0 0 32,348 
GGL/SBA loans servicing asset—
 —
 4,270
 4,270
GGL/SBA loans servicing asset0 0 3,040 3,040 
Derivative assets:       
Interest rate contracts—
 14,896
 —
 14,896
Mortgage derivatives(2)
—
 974
 —
 974
Total derivative assets$—
 15,870
 —
 15,870
Derivative assetsDerivative assets0 140,016 0 140,016 
Liabilities       Liabilities
Trading account liabilities—
 7,860
 —
 7,860
Earnout liability(3)
—
 —
 16,000
 16,000
Derivative liabilities:       
Interest rate contracts—
 12,369
 —
 12,369
Mortgage derivatives(2)
—
 32
 —
 32
Visa derivative—
 —
 4,693
 4,693
Total derivative liabilities$—
 12,401
 4,693
 17,094
Trading liability for short positionsTrading liability for short positions$1,560 $0 $0 $1,560 
Earnout liabilityEarnout liability0 0 11,016 11,016 
Derivative liabilitiesDerivative liabilities0 34,732 2,339 37,071 
       

Fair Value Option
 December 31, 2016
(in thousands)Level 1 Level 2 Level 3 Total Assets and Liabilities at Fair Value
Assets       
Trading securities:       
Mortgage-backed securities issued by U.S. Government agencies—
 3,460
 —
 3,460
Collateralized mortgage obligations issued by U.S. Government sponsored enterprises—
 3,438
 —
 3,438
State and municipal securities—
 426
 —
 426
Other investments1,890
 100
 —
 1,990
Total trading securities$1,890
 7,424
 —
 9,314
Mortgage loans held for sale—
 51,545
 —
 51,545
        
Investment securities available for sale:       
     U.S. Treasury securities107,802
 —
 —
 107,802
U.S. Government agency securities—
 12,993
 —
 12,993
Mortgage-backed securities issued by U.S. Government agencies—
 174,202
 —
 174,202
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 2,506,340
 —
 2,506,340
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 890,442
 —
 890,442
State and municipal securities—
 2,794
 —
 2,794
Equity securities3,782
 —
 —
 3,782
 Corporate debt and other securities(1)    
3,092
 14,952
 1,796
 19,840
Total investment securities available for sale$114,676
 3,601,723
 1,796
 3,718,195
Private equity investments—
 —
 25,493
 25,493
Mutual funds held in rabbi trusts11,479
 —
 —
 11,479
Derivative assets:       
Interest rate contracts—
 17,157
 —
 17,157
Mortgage derivatives(2)
—
 3,466
 —
 3,466
Total derivative assets$—
 20,623
 —
 20,623
Liabilities       
Earnout liability(3) 
—
 —
 14,000
 14,000
Derivative liabilities:       
Interest rate contracts—
 17,531
 —
 17,531
Visa derivative—
 —
 5,768
 5,768
Total derivative liabilities$—
 17,531
 5,768
 23,299
        
(1) Based on an analysis of the nature and risks of these investments, Synovus has determined that presenting these investments as a single asset class is appropriate.
(2) Mortgage derivatives consist of customer interest rate lock commitments that relate toelected the potential origination offair value option for mortgage loans which would be classified as held for sale primarily to ease the operational burden required to maintain hedge accounting for these loans. Synovus is still able to achieve effective economic hedges on mortgage loans held for sale without the time and forward loan sales commitments with third-party investors.
(3) Earnout liability consists of contingent consideration obligation relatedexpense needed to the Global One acquisition.

Fair Value Optionmanage a hedge accounting program.
The following table summarizes the difference between the fair value and the unpaid principal balanceUPB of mortgage loans held for sale measured at fair value and the changes in fair value of these loans. Mortgage loans held for sale are initially measured at fair value with subsequent changes in fair value recognized in earnings. Changes in fair value are recorded as a component of mortgage banking income in the Consolidated Statements of Income. An immaterial portion of these changes in fair value was attributable to changes in instrument-specific credit risk.
Mortgage Loans Held for Sale
(in thousands)As of September 30, 2020As of December 31, 2019
Fair value$285,899 $115,173 
Unpaid principal balance276,709 112,218 
Fair value less aggregate unpaid principal balance$9,190 $2,955 

28

Changes in Fair Value Included in Net Income       Changes in Fair Value Included in Net Income
For the Nine Months Ended September 30, For the Three Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2017 2016 2017 2016(in thousands)2020201920202019
Mortgage loans held for sale$850
 1,762
 $(104) (87)Mortgage loans held for sale$251 $892 $6,235 $1,593 
       

Mortgage Loans Held for Sale 
(in thousands)As of September 30, 2017 As of December 31, 2016
Fair value$54,072
 51,545
Unpaid principal balance52,791
 51,114
Fair value less aggregate unpaid principal balance$1,281
 431
    

Changes in Level 3 Fair Value Measurements Using Significant Unobservable Inputs (Level 3)
During the three and Quantitative Information about Level 3 Fair Value Measurements
As noted above,nine months ended September 30, 2020, Synovus uses significant unobservable inputsdid not have any transfers in determining the fair valueor out of assets and liabilities classified as Level 3 in the fair value hierarchy. The table below includes a roll-forward of the amounts on the Consolidated Balance Sheets for theDuring the nine and three months ended September 30, 2017 and 2016 (including the change in fair value), for financial instruments2019, Synovus had transfers out of a material nature that are classified by Synovus within Level 3 ofinto Level 1 in the fair value hierarchy and are measured at fair value on a recurring basis. Transfers between fair value levels are recognized at the end of the reporting period in which the associated changes in inputs occur. During the nine and three months ended September 30, 2017 and 2016, Synovus did not have any transfers between levels in the fair value hierarchy.as certain funds within private equity investments became public with traded securities.
Three Months Ended September 30, 2020
(in thousands)Investment Securities Available for SalePrivate Equity InvestmentsGGL / SBA
Loans Servicing Asset		Earnout
Liability		Visa Derivative
Beginning balance, July 1, 2020$1,662 $698 $3,019 $(15,924)$(1,755)
Total gains (losses) realized/unrealized:
Included in earnings0 260 (187)0 0 
Unrealized gains (losses) included in OCI138 0 0 0 0 
Additions0 0 268 0 0 
Settlements0 0 0 0 295 
Ending balance, September 30, 2020$1,800 $958 $3,100 $(15,924)$(1,460)
Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains/(losses) relating to assets/liabilities still held at September 30, 2020    $0 $260 $0 $0 $0 
Three Months Ended September 30, 2019
(in thousands)Investment Securities Available for SalePrivate Equity InvestmentsGGL / SBA
Loans Servicing Asset		Earnout
Liability		Visa Derivative
Beginning balance, July 1, 2019$2,017 $13,341 $3,326 $(14,353)$(1,049)
Total gains (losses) realized/unrealized:
Included in earnings0 1,194 (298)(10,457)(2,500)
Unrealized gains (losses) included in OCI(26)0 0 0 0 
Additions0 0 322 0 0 
Settlements0 (3,246)0 0 214 
Ending balance, September 30, 2019$1,991 $11,289 $3,350 $(24,810)$(3,335)
Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains/(losses) relating to assets/liabilities still held at September 30, 2019$0 $777 $0 $(10,457)$(2,500)
29

  
 Nine Months Ended September 30, 2017
(in thousands)Investment Securities Available for Sale Private Equity Investments Visa Derivative 
Earnout
Liability(1) 
 
GGL / SBA
Loans Servicing Asset(2)
Beginning balance, January 1,$1,796
 25,493
 (5,768) (14,000) —
Total (losses) gains realized/unrealized:         
Included in earnings    —
 (3,193) —
 (3,766) (721)
Unrealized gains (losses) included in other comprehensive income122
 —
 —
 —
 —
Additions—
 —
 —
 —
 539
Sales and settlements—
 (6,629) 1,075
 —
 —
Transfer from amortization method to fair value—
 —
 —
 —
 4,452
Measurement period adjustments related to Global One acquisition—
 —
 —
 1,766
 —
Ending balance, September 30,$1,918
 15,671
 (4,693) (16,000) 4,270
Total net (losses) gains for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets/liabilities still held at September 30,$—
 (3,193) —
 (3,766) (721)
          
          
 Three Months Ended September 30, 2017
(in thousands)
Investment Securities Available
for Sale
  Private Equity Investments Visa Derivative 
Earnout
Liability(1) 
 
GGL / SBA
Loans Servicing Asset(2)
Beginning balance, July 1,$1,927
 15,698
 (5,053) (13,941) 4,297
Total (losses) gains realized/unrealized:         
Included in earnings    —
 (27) —
 (2,059) (27)
Unrealized gains (losses) included in other comprehensive income(9) —
 —
 —
 —
Additions—
 —
 —
 —
 —
Sales and settlements—
 —
 360
 —
 —
Measurement period adjustments related to Global One acquisition—
 —
 —
 —
 —
Ending balance, September 30,$1,918
 15,671
 (4,693) (16,000) 4,270
Total net (losses) gains for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets/liabilities still held at September 30,$—
 (27) —
 (2,059) (27)
          
Nine Months Ended September 30, 2020
(in thousands)Investment Securities Available for SalePrivate Equity InvestmentsGGL / SBA
Loans Servicing Asset		Earnout
Liability		Visa Derivative
Beginning balance, January 1, 2020$2,105 $3,887 $3,040 $(11,016)$(2,339)
Total gains (losses) realized/unrealized:
Included in earnings(2,929)(742)(4,908)0 
Unrealized gains (losses) included in OCI(305)0 0 0 0 
Additions0 0 802 0 0 
Settlements0 0 0 0 879 
Ending balance, September 30, 2020$1,800 $958 $3,100 $(15,924)$(1,460)
Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains/(losses) relating to assets/liabilities still held at September 30, 2020    $0 $(2,929)$0 $(4,908)$0 
Nine Months Ended September 30, 2019
(in thousands)Investment Securities Available for SalePrivate Equity InvestmentsGGL / SBA
Loans Servicing Asset		Earnout
Liability		Visa Derivative
Beginning balance, January 1, 2019$1,785 $11,028 $3,729 $(14,353)$(1,673)
Total (losses) gains realized/unrealized:
Included in earnings0 3,507 (1,091)(10,457)(2,500)
Unrealized gains (losses) included in OCI206 0 0 0 0 
Additions0 0 712 0 0 
Settlements0 (3,246)0 0 838 
Ending balance, September 30, 2019$1,991 $11,289 $3,350 $(24,810)$(3,335)
Total net gains (losses) for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at September 30, 2019$0 $3,090 $0 $(10,457)$(2,500)
(1) Earnout liability consists of contingent consideration obligation related to the Global One acquisition.
(2)Effective January 1, 2017, Synovus elected the fair value option for determining the value of the GGL/SBA loans servicing asset. Synovus has retained servicing responsibilities on sold GGL/SBA loans and receives a servicing fee. The servicing asset is established at fair value at the time of the sale based on an analysis of future cash flows that incorporates estimates for discount rates, prepayment speeds, and delinquency rates. The servicing asset is measured at fair value on a quarterly basis with changes in fair value included with the associated servicing fee in other non-interest income. Prior to 2017, Synovus accounted for the GGL/SBA loans servicing asset using the amortization method.




30
  
 Nine Months Ended September 30, 2016
(in thousands)Investment Securities Available for Sale Private Equity Investments Visa Derivative
Beginning balance, January 1,$1,745
 27,148
 (1,415)
Total (losses) gains realized/unrealized:     
Included in earnings    —
 (527) (1,080)
Unrealized gains (losses) included in other comprehensive income28
 —
 —
Settlements—
 (629) 1,080
Ending balance, September 30,$1,773
 25,992
 (1,415)
Total net (losses) gains for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at September 30,$—
 (527) (1,080)
      
      
 Three Months Ended September 30, 2016
(in thousands)
Investment Securities Available
for Sale
  Private Equity Investments Visa Derivative
Beginning balance, July 1,$1,625
 26,866
 (1,415)
Total (losses) gains realized/unrealized:     
Included in earnings    —
 (249) (360)
Unrealized gains (losses) included in other comprehensive income148
 —
 —
Settlements—
 (625) 360
Ending balance, September 30,$1,773
 25,992
 (1,415)
Total net (losses) gains for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at September 30,$—
 (249) (360)
      




The table below provides an overview of the valuation techniques and significant unobservable inputs used in those techniques to measure financial instruments that are classified within Level 3 of the valuation hierarchy and are measured at fair value on a recurring basis. The range of sensitivities that management utilized in its fair value calculations is deemed acceptable in the industry with respect to the identified financial instruments.

September 30, 2020
(dollars in thousands)Valuation TechniqueSignificant Unobservable InputLevel 3 Fair ValueRate/Range
Assets measured at fair value on a recurring basis
September 30, 2017December 31, 2016
Valuation TechniqueSignificant Unobservable InputRange/Weighted AverageRange/Weighted Average
Assets and liabilities
measured at fair value
on a recurring basis
Investment Securities Available for Sale - Other Investments:
Corporate debt and other debt securities - trust preferred security
Trust preferred securitiesDiscounted cash flow analysisCredit spread embedded in discountDiscount rate
Forecasted average Prime reset rate		398 bps$1,800   442 bps5.83% 3.79%
Private equity investmentsIndividual analysis of each investee companyMultiple factors, including but not limited to, current operations, financial condition, cash flows, evaluation of business management and financial plans, and recently executed financing transactions related to the investee companies$958N/AN/A
Discount for lack of liquidity(1)
N/A15%
GGL/SBA loans servicing assetDiscounted cash flow analysisDiscount rate
Prepayment speeds		12.19% 6.75%$3,100 N/A9.68% 19.20%
Earnout liabilityOption pricing methods and Monte Carlo simulationFinancial projections of Global One Earnout, as defined in merger agreement, for the five years ending October 1, 2021
$11.8 million -
$16.7 million
$15,924
$9.3 million -
$14.2 million
N/A
Visa derivative liabilityDiscounted cash flow analysisEstimated timing of resolution of covered litigation,Covered Litigation and future cumulative deposits to the litigation escrow for settlement of the covered litigation, and estimated future monthly fees payable to the derivative counterpartyCovered Litigation1-5$1,460
0-1.2 years
1-5 years
(4Q 2021)
(1) Represents management's estimate of discount that market participants would require based on the instrument's lack of liquidity.

Assets Measured at Fair Value on a Non-recurring Basis
Certain assets are recordedrequired to be measured at fair value on a non-recurring basis.nonrecurring basis subsequent to their initial recognition. These non-recurringassets and liabilities are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments typically are a resultin certain circumstances, such as when there is evidence of the application of lower of cost or fair value accounting or a write-down occurring during the period. For example, if the fair value of an asset in these categories falls below its cost basis, it is considered to be at fair value at the end of the period of the adjustment.impairment. The following table presents assets measured at fair value on a non-recurring basis as of the dates indicated for which there was a fair value adjustment during the period.adjustment.
September 30, 2020December 31, 2019
(in thousands)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Loans(1)
$0 $0 $27,440 $27,440 $0 $0 $1,461 $1,461 
Other real estate0 0 1,750 1,750 0 0 8,023 8,023 
MPS receivable0 0 17,915 17,915 0 0 21,437 21,437 
Other assets held for sale0 0 1,634 1,634 0 0 1,238 1,238 


September 30, 2017 December 31, 2016
(in thousands)Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Impaired loans*
$—
 —
 3,114
 3,114
 —
 —
 21,742
 21,742
Other loans held for sale—
 —
 31,253
 31,253
 —
 —
 —
 —
Other real estate—

—

8,137

8,137
 —
 —
 19,305
 19,305
Other assets held for sale—
 —
 4,033
 4,033
 —
 —
 12,083
 12,083
                
* (1)    Collateral-dependent impaired loans that were written down to fair value duringof collateral.
ORE properties are included in other assets on the period.consolidated balance sheets. The carrying value of ORE at September 30, 2020 and December 31, 2019 was $5.4 million and $14.4 million, respectively.

31

The following table presents fair value adjustments recognized in earnings for the ninethree and threenine months ended September 30, 20172020 and 20162019 for the assets measured at fair value on a non-recurring basis.basis still held at period-end.
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2020201920202019
Loans(1)
$5,661 $4,170 $20,412 $4,718 
Other real estate107 74 138 569 
MPS receivable0 0 2,663 0 
Other assets held for sale0 0 2,120 91 
 Nine Months Ended September 30, Three Months Ended September 30,
(in thousands)2017 2016 2017 2016
Impaired loans*
$1,075
 1,329
 $83
 59
Other loans held for sale25,051
 2,096
 25,051
 2,096
Other real estate5,165
 2,405
 5,165
 968
Other assets held for sale1,683
 7,532
 1,683
 907
        
* (1)Collateral-dependent impaired loans that were written down to fair value during the period.


















of collateral.
The table below provides an overview of the valuation techniques and significant unobservable inputs used in those techniques to measure financial instruments that are classified within Level 3 of the valuation hierarchy and are measured at fair value on a non-recurring basis. The range of sensitivities that management utilized in its fair value calculations is deemed acceptable in the industry with respect to the identified financial instruments.

September 30, 2020
Valuation TechniqueSignificant Unobservable Input
Range
(Weighted Average)(1)
Assets measured at fair value on a non-recurring basis
LoansSeptember 30, 2017December 31, 2016
Valuation TechniqueSignificant Unobservable Input
Range
(Weighted Average)(1)
Range
(Weighted Average)(1)
Assets measured at fair
value on a non-recurring basis
Collateral dependent impaired loansThird-party appraised value of collateral less estimated selling costs
Discount to appraised value(2)

Estimated selling costs
0% - 60% (43%)
0% - 10% (7%)
0%-52% (25%-36% (28%)
0%-10% (7%)
Other loans held for saleThird-party appraised value of collateral less estimated selling costs
Discount to appraised value (2)
Estimated selling costs
0% - 85% (48%)
0% - 10% (2%)
N/A
Other real estateThird-party appraised value of real estate less estimated selling costs
Discount to appraised value(2)

Estimated selling costs
0% - 86% (32%)
0% - 10% (7%)
0%-10% (5%-20% (10%)
0%-10% (7%)
MPS receivable(2)
Third-party appraised value of business less estimated selling costsDiscount to appraised value
Estimated selling costs		N/A
Other assets held for saleThird-party appraised value less estimated selling costs or BOV
Discount to appraised value(2)

Estimated selling costs
15%-46% (22%
0%-66% (53%)
0%-10% (7%)
0%-81% (47%)
0%-10% (7%)
(1)    The range represents management's estimate of the high and low of the value that would be assigned to a particular input. For assets measured at fair value on a non-recurring basis, the weighted average is the measure of central tendencies; it is not the value that management is using for the asset or liability.
(2)    Synovus also makes adjustmentsSee "Part I - Item 1. Notes to the valuesUnaudited Interim Financial Statements - Note 10 - Commitments and Contingencies" of the assets listed abovethis Report for reasons including age of the appraisal,more information known by management about the property, suchon this receivable which was classified as occupancy rates, changes to the physical condition of the property,a NPA at September 30, 2020 and other factors. 3Q17 included certain balance sheet restructuring actions which included discounts to fair value for planned accelerated dispositions of other loans held for sale, other real estate, and other assets held for sale.December 31, 2019.

32

Fair Value of Financial Instruments
The following table presentstables present the carrying and estimated fair values of financial instruments at September 30, 20172020 and December 31, 2016.2019. The fair values represent management’s best estimates based on variousa range of methodologies and assumptions. ForSee "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" to the consolidated financial instruments that are not recorded atstatements of Synovus' 2019 Form 10-K for a description of how fair value on the balance sheet, such as loans held for investment, interest bearing deposits (including brokered deposits), and long-term debt, the fair value amounts should not be taken as an estimate of the amount that would be realized if all such financial instruments were to be settled immediately.measurements are determined.










The carrying and estimated fair values of financial instruments, as well as the level within the fair value hierarchy, as of September 30, 2017 and December 31, 2016 are as follows:
September 30, 2020
(in thousands)Carrying ValueFair ValueLevel 1Level 2Level 3
Financial assets
Total cash, cash equivalents, restricted cash, and restricted cash equivalents$1,985,363 $1,985,363 $1,985,363 $0 $0 
Trading securities4,371 4,371 0 4,371 0 
Investment securities available for sale7,566,525 7,566,525 20,254 7,544,471 1,800 
Loans held for sale745,160 744,615 0 285,899 458,716 
Private equity investments958 958 0 0 958 
Mutual funds and mutual funds held in rabbi trusts35,174 35,174 35,174 0 0 
Loans, net38,946,047 38,923,265 0 0 38,923,265 
GGL/SBA loans servicing asset3,100 3,100 0 0 3,100 
Derivative assets463,028 463,028 0 463,028 0 
Financial liabilities
Non-interest-bearing deposits$13,075,081 $13,075,081 $0 $13,075,081 $0 
Non-time interest-bearing deposits24,831,480 24,831,480 0 24,831,480 0 
Time deposits6,759,343 6,797,139 0 6,797,139 0 
Total deposits$44,665,904 $44,703,700 $0 $44,703,700 $0 
Federal funds purchased and securities sold under repurchase agreements202,344 202,344 202,344 0 0 
Other short-term borrowings400,000 400,000 0 400,000 0 
Long-term debt1,628,385 1,687,448 0 1,687,448 0 
Earnout liability15,924 15,924 0 0 15,924 
Derivative liabilities179,968 179,968 0 178,508 1,460 
33

 September 30, 2017

(in thousands)
Carrying Value Fair Value Level 1 Level 2 Level 3
Financial assets         
Cash and cash equivalents$386,459
 386,459
 386,459
 —
 —
Interest bearing funds with Federal Reserve Bank1,297,581
 1,297,581
 1,297,581
 —
 —
Interest earning deposits with banks6,047
 6,047
 6,047
 —
 —
Federal funds sold and securities purchased under resale agreements48,820
 48,820
 48,820
 —
 —
Trading account assets12,329
 12,329
 —
 12,329
 —
Mortgage loans held for sale54,072
 54,072
 —
 54,072
 —
Other loans held for sale31,253
 31,253
 —
 —
 31,253
Investment securities available for sale3,825,443
 3,825,443
 86,343
 3,737,182
 1,918
Private equity investments15,671
 15,671
 —
 —
 15,671
Mutual funds held in rabbi trusts13,439
 13,439
 13,439
 —
 —
Loans, net of deferred fees and costs24,487,360
 24,193,343
 —
 —
 24,193,343
GGL/SBA loans servicing asset4,270
 4,270
 —
 —
 4,270
Derivative assets15,870
 15,870
 —
 15,870
 —
          
Financial liabilities         
Trading account liabilities7,860
 7,860
   7,860
  
Non-interest bearing deposits7,302,682
 7,302,682
 —
 7,302,682
 —
Interest bearing deposits18,883,546
 18,891,446
 —
 18,891,446
 —
Federal funds purchased, other short-term borrowings and other short-term liabilities141,539
 141,539
 141,539
 —
 —
Long-term debt1,882,607
 1,929,043
 —
 1,929,043
 —
Other liabilities16,000
 16,000
 —
 —
 16,000
Derivative liabilities17,094
 17,094
 —
 12,401
 4,693
          

December 31, 2019
(in thousands)Carrying ValueFair ValueLevel 1Level 2Level 3
Financial assets
Total cash, cash equivalents, restricted cash, and restricted cash equivalents$1,186,918 $1,186,918 $1,186,918 $0 $0 
Trading securities7,212 7,212 0 7,212 0 
Investment securities available for sale6,778,670 6,778,670 19,855 6,756,710 2,105 
Mortgage loans held for sale115,173 115,173 0 115,173 0 
Private equity investments19,389 19,389 15,502 0 3,887 
Mutual funds and mutual funds held in rabbi trusts32,348 32,348 32,348 0 0 
Loans, net36,881,048 36,931,256 0 0 36,931,256 
GGL/SBA loans servicing asset3,040 3,040 0 0 3,040 
Derivative assets140,016 140,016 0 140,016 0 
Financial liabilities
Non-interest-bearing deposits$9,439,485 $9,439,485 $0 $9,439,485 $0 
Non-time interest-bearing deposits19,891,711 19,891,711 0 19,891,711 0 
Time deposits9,074,308 9,112,459 0 9,112,459 0 
Total deposits$38,405,504 $38,443,655 $0 $38,443,655 $0 
Federal funds purchased and securities sold under repurchase agreements165,690 165,690 165,690 0 0 
Trading liability for short positions1,560 1,560 1,560 0 0 
Other short-term borrowings1,752,000 1,752,000 0 1,752,000 0 
Long-term debt2,153,897 2,185,717 0 2,185,717 0 
Earnout liability11,016 11,016 0 0 11,016 
Derivative liabilities37,071 37,071 0 34,732 2,339 
 December 31, 2016

(in thousands)
Carrying Value Fair Value Level 1 Level 2 Level 3
Financial assets         
Cash and cash equivalents$395,175
 395,175
 395,175
 —
 —
Interest bearing funds with Federal Reserve Bank527,090
 527,090
 527,090
 —
 —
Interest earning deposits with banks18,720
 18,720
 18,720
 —
 —
Federal funds sold and securities purchased under resale agreements58,060
 58,060
 58,060
 —
 —
Trading account assets9,314
 9,314
 1,890
 7,424
 —
Mortgage loans held for sale51,545
 51,545
 —
 51,545
 —
Investment securities available for sale3,718,195
 3,718,195
 114,676
 3,601,723
 1,796
Private equity investments25,493
 25,493
 —
 —
 25,493
Mutual funds held in rabbi trusts11,479
 11,479
 11,479
 —
 —
Loans, net of deferred fees and costs23,856,391
 23,709,434
 —
 —
 23,709,434
Derivative assets20,623
 20,623
 —
 20,623
 —
          
Financial liabilities         
Non-interest bearing deposits7,085,804
 7,085,804
 —
 7,085,804
 —
Interest bearing deposits17,562,256
 17,560,021
 —
 17,560,021
 —
Federal funds purchased, other short-term borrowings and other short-term liabilities159,699
 159,699
 159,699
 —
 —
Long-term debt2,160,881
 2,217,544
 —
 2,217,544
 —
Other liabilities14,000
 14,000
 —
 —
 14,000
Derivative liabilities23,299
 23,299
 —
 17,531
 5,768
          

Note 98 - Derivative Instruments and Hedging Activities
As part of its overall interest rate risk management activities, Synovus utilizes derivative instruments to manage its exposure to various types of interest rate risk. Theserisk, exposures related to liquidity and credit risk, and to facilitate customer transactions. The primary types of derivative instruments generallyutilized by Synovus consist of interest rate swaps, interest rate lock commitments made to prospective mortgage loan customers, and commitments to sell fixed-rate mortgage loans.loans, and foreign currency exchange forwards. Interest rate lock commitments represent derivative instruments since it is intended that such loans will be sold.
Synovus may also utilize interest rate swaps to manage interest rate risks primarily arising from its core banking activities. These interest rate swap transactions generally involve the exchange of fixed and floating interest rate payment obligations without the exchange of underlying principal amounts. Swaps may be designated as either cash flow hedges or fair value hedges, as discussed below. As of September 30, 2017 and December 31, 2016, Synovus had no outstanding interest rate swap contracts utilized to manage interest rate risk related to core banking activities.
Synovus is party to master netting arrangements with its dealer counterparties; however, Synovus does not offset assets and liabilities under these arrangements for financial statement presentation purposes. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" to the consolidated financial statements of Synovus' 2019 Form 10-K for additional information regarding accounting policies for derivatives.
Hedging Derivatives
Cash flow hedge relationships mitigate exposure to the variability of future cash flows or other forecasted transactions. Synovus has entered into interest rate swap contracts to manage overall cash flow changes related to interest rate risk exposure on index-based variable rate commercial loans. The contracts effectively modify Synovus' exposure to interest rate risk by utilizing receive fixed/pay index-based variable rate interest rate swaps.
For cash flow hedges, the effective portion of the gain or loss related to the derivative instrument is initially reported as a component of other comprehensive income and subsequently reclassified into earnings when the forecasted transaction affects earnings or when the hedge is terminated and included in the same income statement line item as the earnings effect of the hedged item.
Synovus recorded an unrealized gain of $9.8 million, or $7.3 million, after-tax, in OCI, during the first quarter of 2020, related to terminated cash flow hedges, which is being recognized into earnings in conjunction with the effective terms of the original swaps through the third quarter of 2025. Synovus recognized pre-tax income of $1.0 million and $1.4 million, respectively, during the three and nine months ended September 30, 2020 related to the amortization of terminated cash flow hedges.
34

As of September 30, 2020, Synovus expects to reclassify approximately $40 million of pre-tax gains from AOCI into interest income on cash flow hedges over the next twelve months. Included in this amount is approximately $5 million in pre-tax gains related to the terminated cash flow hedges.As of September 30, 2020, the maximum length of time over which Synovus is hedging its exposure to the variability in future cash flows is through the first quarter of 2024.
For derivative instruments that are not designated as hedging instruments, changes in the fair value of the derivatives are recognized in earnings immediately.
Counterparty Credit Risk and Collateral
Entering into derivative contracts potentially exposes Synovus to the risk of counterparties’ failure to fulfill their legal obligations, including, but not limited to, potential amounts due or payable under each derivative contract. Notional principal amounts are often used to express the volume of these transactions, but the amounts potentially subject to credit risk are much smaller. Synovus assesses the credit risk of its dealer counterparties by regularly monitoring publicly available credit rating information, evaluating other market indicators, and periodically reviewing detailed financials. Dealer collateral requirements are determined via risk-based policies and procedures and in accordance with existing agreements. Synovus seeksseeks to minimize dealer credit risk by dealing with highly rated counterparties and by obtaining collateral for exposures above certain predetermined limits. Management closely monitors credit conditions within the customer swap portfolio, which management deems to be of higher risk than dealer counterparties. Collateral is secured at origination and credit related fair value adjustments are recorded against the asset value of the derivative as deemed necessary based upon an analysis, which includes consideration of the current asset value of the swap, customer creditrisk rating, collateral value, and customer standing with regards to its swap contractual obligations and other related matters. Such asset values fluctuate based upon changes in interest rates regardless of changes in notional amounts and changes in customer specific risk.
Cash Flow Hedges
As of September 30, 2017 and December 31, 2016, there were no cash flow hedges outstanding. The unamortized deferred net loss balance from previously terminated cash flow hedges at December 31, 2016 of $(130) thousand was recognized during the nine months ended September 30, 2017.
Fair Value Hedges
As of September 30, 2017 and December 31, 2016, there were no fair value hedges outstanding. The unamortized deferred gain balance on all previously terminated fair value hedges at December 31, 2016 of $873 thousand was recognized during the nine months ended September 30, 2017.
Customer Related Derivative Positions
Synovus enters into interest rate swap agreements to facilitate the risk management strategies of a small number of commercial banking customers. Synovus mitigates this risk by entering into equal and offsetting interest rate swap agreements with highly rated counterparties. The interest rate swap agreements are free-standing derivatives and are recorded at fair value on Synovus' Consolidated Balance Sheets. Fair value changes are recorded as a component of non-interest income. As of September 30, 2017, the notional amount of customer related interest rate derivative financial instruments, including both the customer position and the offsetting position, was $1.54 billion, an increase of $216.9 million compared to December 31, 2016.
Visa Derivative
In conjunction with the sale of Class B shares of common stock issued by Visa to Synovus as a Visa USA member, Synovus entered into a derivative contract with the purchaser, which provides for settlements between the parties based upon a change in the ratio for conversion of Visa Class B shares to Visa Class A shares. The conversion ratio changes when Visa deposits funds to a litigation escrow established by Visa to pay settlements for certain litigation, for which Visa is indemnified by Visa USA members. The litigation escrow is funded by proceeds from Visa’s conversion of Class B shares. The fair value of the derivative contract was $4.7 million and $5.8 million at September 30, 2017 and December 31, 2016, respectively. The fair value of the derivative contract is determined based on management's estimate of the timing and amount of the Covered Litigation settlement, and the resulting payments due to the counterparty under the terms of the contract. Management believes that the estimate of Synovus' exposure to the Visa indemnification and fees associated with the Visa derivative is adequate based on current information, including Visa's recent announcements and disclosures. However, future developments in the litigation could require potentially significant

changes to Synovus' estimate. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 19 - Visa Shares and Related Agreements" of Synovus' 2016 Form 10-K for further information.
Mortgage Derivatives
Synovus originates first lien residential mortgage loans for sale into the secondary market. Mortgage loans are sold by Synovus for conversion to securities and the servicing of these loans is generally sold to a third-party servicing aggregator, or Synovus sells the mortgage loans as whole loans to investors either individually or in bulk on a servicing released basis.
Synovus enters into interest rate lock commitments for residential mortgage loans which commits it to lend funds to a potential borrower at a specific interest rate and within a specified period of time. Interest rate lock commitments that relate to the origination of mortgage loans that, if originated, will be held for sale, are considered derivative financial instruments under applicable accounting guidance. Outstanding interest rate lock commitments expose Synovus to the risk that the price of the mortgage loans underlying the commitments may decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan.
At September 30, 2017 and December 31, 2016, Synovus had commitments to fund at a locked interest rate, primarily fixed-rate mortgage loans to customers in the amount of $64.3 million and $88.2 million, respectively. Fair value adjustments related to these commitments resulted in a loss of $595 thousand and a gain of $1.0 million for the nine months ended September 30, 2017 and 2016, respectively, which was recorded as a component of mortgage banking income in the Consolidated Statements of Income.
At September 30, 2017 and December 31, 2016, outstanding commitments to sell primarily fixed-rate mortgage loans amounted to $83.0 million and $126.5 million, respectively. Such commitments are entered into to reduce the exposure to market risk arising from potential changes in interest rates, which could affect the fair value of mortgage loans held for sale and outstanding rate lock commitments, which guarantee a certain interest rate if the loan is ultimately funded or granted by Synovus as a mortgage loan held for sale. The commitments to sell mortgage loans are at fixed prices and are scheduled to settle at specified dates that generally do not exceed 90 days. Fair value adjustments related to these outstanding commitments to sell mortgage loans resulted in a loss of $1.9 million and $830.0 thousand for the nine months ended September 30, 2017 and 2016, respectively, which were recorded as a component of mortgage banking income in the Consolidated Statements of Income.
Collateral Requirements
Pursuant to the Dodd-Frank Act, certain derivative transactions have collateral requirements, both at the inception of the trade and as the value of each derivative position changes. As of September 30, 2017,2020 and December 31, 2019, collateral totaling $45.8$159.8 million of federal funds soldand $84.6 million, respectively, was pledged to the derivative counterparties to comply with collateral requirements. Effective January 3, 2017,For derivatives cleared through central clearing houses, the CME amended its rulebook to legally characterize variation margin cash payments for cleared OTC derivativesmade are legally characterized as settlement rather than as collateral.settlements of the derivatives. As a result, these variation margin payments are netted against the fair value of the respective derivative contracts in 2017,the consolidated balance sheets and related disclosures. At September 30, 2020 and December 31, 2019, Synovus beganhad a variation margin of $187.0 million and $113.7 million respectively, each reducing the corresponding derivative assetliability.

35


The following table reflects the notional amount and liability balancesfair value of derivative instruments included on the consolidated balance sheets. Beginning on October 19, 2020, CME Group Inc. transitioned price alignment and discounting for CME-cleared OTC derivativesswap futures from the daily EFFR to reflect the settlement of thoseSOFR. This change will not have a material impact on Synovus' financial statements.
September 30, 2020December 31, 2019
Fair ValueFair Value
(in thousands)Notional Amount
Derivative Assets (1)
Derivative Liabilities (2)
Notional Amount
Derivative Assets (1)
Derivative Liabilities (2)
Derivatives in cash flow hedging relationships:
Interest rate contracts$2,750,000 $90,116 $0 $2,000,000 $54 $8,624 
Total derivatives designated as hedging instruments    $90,116 $0 $54 $8,624 
Derivatives not designated
as hedging instruments:
Interest rate contracts(3)
$8,761,038 $362,700 $176,338 $7,258,159 $138,672 $25,849 
Mortgage derivatives - interest rate lock commitments451,953 10,212 0 70,481 1,290 0 
Mortgage derivatives - forward commitments to sell fixed-rate mortgage loans492,500 0 1,793 107,000 0 168 
Other contracts(4)
186,074 0 377 145,764 0 91 
Visa derivative— 0 1,460 — 0 2,339 
Total derivatives not designated as hedging instruments    $372,912 $179,968 $139,962 $28,447 
(1)    Derivative assets are recorded in other assets on the consolidated balance sheets.
(2)    Derivative liabilities are recorded in other liabilities on the consolidated balance sheets.
(3)    Includes interest rate contracts for customer swaps and offsetting positions, via the exchangenet of variation margin.margin payments.
(4)    Includes risk participation agreements sold. Additionally, the notional amount of risk participation agreements purchased was $2.7 million and $3.0 million at September 30, 2020 and December 31, 2019, respectively.
Synovus also provides foreign currency exchange services, primarily forward contracts, with counterparties to allow commercial customers to mitigate exchange rate risk. Synovus covers its risk by entering into an offsetting foreign currency exchange forward contract. The impactnotional amount of foreign currency exchange forwards was $25.1 million and $32.9 million at September 30, 2020 and December 31, 2019, respectively. The fair value of foreign currency exchange forwards was negligible at September 30, 2020 and December 31, 2019 due to the very short duration of these contracts.
The following table presents the effect of hedging derivative instruments on the Consolidated Balance Sheets atconsolidated statements of income and the total amounts for the respective line item affected for the three and nine months ended September 30, 20172020 and December 31, 2016 is presented below.2019.

Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)2020201920202019
Total amounts presented in the consolidated statements of income in interest income on loans$8,509 $0 $13,595 $0 
 
Gain/loss on cash flow hedging relationships:(1)
Interest rate swaps:
Realized gains (losses) reclassified from AOCI, pre-tax, to interest income on loans1,031 0 1,421 0 
Pre-tax income recognized on cash flow hedges$1,031 $0 $1,421 $0 
(1)    See "Part I - Item 1. Financial Statements and Supplementary Data - Note 6 - Shareholders' Equity and Other Comprehensive Income (Loss) in this Report for additional information.

36
 Fair Value of Derivative Assets Fair Value of Derivative Liabilities

(in thousands)
Location on Consolidated Balance Sheets September 30, 2017 December 31, 2016 Location on Consolidated Balance Sheets September 30, 2017 December 31, 2016
Derivatives not designated
  as hedging instruments:
           
Interest rate contractsOther assets $14,896
 17,157
 Other liabilities 12,369
 17,531
Mortgage derivativesOther assets 974
 3,466
 Other liabilities 32
 —
Visa derivative  —
 —
 Other liabilities 4,693
 5,768
 Total derivatives not
  designated as hedging
  instruments    
  $15,870
 20,623
   17,094
 23,299
            

The pre-tax effect of changes in fair value hedgesfrom derivative instruments not designated as hedging instruments on the Consolidated Statementsconsolidated statements of Incomeincome for the ninethree and three months ended September 30, 2017 and 2016 is presented below.
  Location of Gain (Loss) Recognized in Income Gain (Loss) Recognized in Income
(in thousands)  Nine Months Ended September 30,
Derivatives not designated as hedging instruments  2017 2016
Interest rate contracts(1)    
 Other non-interest income $(5) 39
Mortgage derivatives(2)    
 Mortgage banking income (2,524) 189
Total   $(2,529) 228
       
       
    Gain (Loss) Recognized in Income
(in thousands)   Three Months Ended September 30,
Derivatives not designated as hedging instruments Location of Gain (Loss) Recognized in Income 2017 2016
Interest rate contracts(1)    
 Other non-interest income $(4) 5
Mortgage derivatives(2)    
 Mortgage banking income (451) 674
Total   $(455) 679
       
(1) Gain (loss) represents net fair value adjustments (including credit related adjustments) for customer swaps and offsetting positions.
(2) Gain (loss) represents net fair value adjustments recorded for interest rate lock commitments and commitments to sell mortgage loans to third-party investors.
During the nine months ended September 30, 20172020 and 2016, Synovus reclassified $873 thousand and $1.4 million, respectively, from hedge-related basis adjustment, a component of long-term debt, as a reduction to interest expense. During the nine months ended September 30, 2016, Synovus reclassified $1.3 million from hedge-related basis adjustment, as a reduction to loss on early extinguishment of debt, net. As of September 30, 2017, all deferred gains2019 is presented below.
Gain (Loss) Recognized in Consolidated Statements of Income
Three Months Ended September 30,Nine Months Ended September 30,
(in thousands)Location in Consolidated Statements of Income2020201920202019
Derivatives not designated as hedging instruments:
Interest rate contracts(1)    
Capital markets income$176 $549 $225 $640 
Other contracts(2)
Capital markets income47 (144)(286)(144)
Mortgage derivatives - interest rate lock commitmentsMortgage banking income2,532 22 8,922 970 
Mortgage derivatives - forward commitments to sell fixed-rate mortgage loansMortgage banking income(396)642 (1,624)413 
Visa derivativeOther non-interest expense0 (2,500)0 (2,500)
Total derivatives not designated as hedging instruments$2,359 $(1,431)$7,237 $(621)
(1)    Additionally, losses related to hedging relationships that had been previously terminated had been recognized into earnings.termination of customer swaps of $2.5 million were recorded in other non-interest expense during the first quarter of 2020.

(2)    Includes risk participation agreements sold.
Note 109 - Net Income Per Common Share
The following table displays a reconciliation of the information used in calculating basic and diluted earnings per common share for the ninethree and threenine months ended September 30, 20172020 and 2016.2019.

Nine Months Ended September 30, Three Months Ended September 30,Three Months Ended September 30,Nine Months Ended September 30,
(in thousands, except per share data)2017 2016 2017 2016(in thousands, except per share data)2020201920202019
Basic Net Income Per Common Share:       Basic Net Income Per Common Share:
Net income available to common shareholders$238,190
 170,555
 $95,448
 62,686
Net income available to common shareholders$83,283 $127,435 $198,414 $397,505 
Weighted average common shares outstanding121,796
 125,076
 120,900
 122,924
Weighted average common shares outstanding147,314 152,238 147,304 156,819 
Net income per common share, basic$1.96
 1.36
 $0.79
 0.51
Net income per common share, basic$0.57 $0.84 $1.35 $2.53 
Diluted Net Income Per Common Share:       Diluted Net Income Per Common Share:
Net income available to common shareholders$238,190
 170,555
 $95,448
 62,686
Net income available to common shareholders$83,283 $127,435 $198,414 $397,505 
Weighted average common shares outstanding121,796
 125,076
 120,900
 122,924
Weighted average common shares outstanding147,314 152,238 147,304 156,819 
Potentially dilutive shares from outstanding equity-based awards and Earnout Payments832
 636
 914
 680
Effect of dilutive outstanding equity-based awards, warrants, and earnout paymentsEffect of dilutive outstanding equity-based awards, warrants, and earnout payments662 1,805 733 1,776 
Weighted average diluted common shares122,628
 125,712
 121,814
 123,604
Weighted average diluted common shares147,976 154,043 148,037 158,595 
Net income per common share, diluted$1.94
 1.36
 $0.78
 0.51
Net income per common share, diluted$0.56 $0.83 $1.34 $2.51 
       
Basic net income per common share is computed by dividing net income available to common shareholders by the average common shares outstanding for the period. Diluted net income per common share reflects the dilution that could occur if securities or other contracts to issue common stock were exercised or converted. The dilutive effect of outstanding stock options, and restricted share units, and warrants is reflected in diluted net income per common share, unless the impact is anti-dilutive, by application of the treasury stock method.
As of September 30, 20172020 and 2016,2019, there were 2.2 million758 thousand and 2.5 million,40 thousand, respectively, potentially dilutive shares related to the Warrant and stock options to purchase shares of common stock that were outstanding during 2017 and 2016, but werethese quarters. Potentially dilutive shares are not included in the computation of diluted net income per common share because the effect would have beenbe anti-dilutive.
Note 11 - Share-based Compensation
General Description of Share-based Plans
Synovus has a long-term incentive plan under which the Compensation Committee of the Board of Directors has the authority to grant share-based awards to Synovus employees. At September 30, 2017, Synovus had a total of 5.7 million shares of its authorized but unissued common stock reserved for future grants under the 2013 Omnibus Plan. The 2013 Omnibus Plan authorizes 8.6 million common share equivalents available for grant, where grants of options count as one share equivalent and grants of full value awards (e.g., restricted share units, market restricted share units, and performance share units) count as two share equivalents. Any restricted share units that are forfeited and options that expire unexercised will again become available for issuance under the Plan. The Plan permits grants of share-based compensation including stock options, restricted share units, market restricted share units, and performance share units. The grants generally include vesting periods ranging from three to five years and contractual terms of ten years. Stock options are granted at exercise prices which equal the fair value of a share of common stock on the grant-date. Market restricted share units and performance share units are granted at target and are compared annually to required market and performance metrics to determine final units vested and compensation expense. Synovus has historically issued new shares to satisfy share option exercises and share unit conversions. Dividend equivalents are paid on outstanding restricted share units, market restricted share units, and performance share units in the form of additional restricted share units that vest over the same vesting period or the vesting period left on the original restricted share unit grant.
Share-based Compensation Expense
Total share-based compensation expense was $10.6 million and $3.7 million for the nine and three months ended September 30, 2017, respectively, and $10.2 million and $3.4 million for the nine and three months ended September 30, 2016, respectively.
Stock Options
No stock option grants were made during the nine months ended September 30, 2017. At September 30, 2017, there were 809 thousand outstanding stock options to purchase shares of common stock with a weighted average exercise price of $17.82 per share.

Restricted Share Units, Performance Share Units, and Market Restricted Share Units
During the nine months ended September 30, 2017, Synovus awarded 235 thousand restricted share units that have a service-based vesting period of three years and awarded 73 thousand performance share units that vest upon service and performance conditions. Synovus also granted 73 thousand market restricted share units during the nine months ended September 30, 2017. The weighted average grant-date fair value of the awarded restricted share units, performance share units and market restricted share units was $41.95 per share. Market restricted share units and performance share units are granted at target and are compared annually to required market and performance metrics. The performance share units vest upon meeting certain service and performance conditions. Return on average assets (ROAA) performance is evaluated each year over a three-year performance period, with share distribution determined at the end of the three years. The number of performance share units that will ultimately vest ranges from 0% to 150% of target based on Synovus' three-year weighted average ROAA (as defined). The market restricted share units have a three-year service-based vesting component as well as a total shareholder return multiplier. The number of market restricted share units that will ultimately vest ranges from 75% to 125% of target based on Synovus' total shareholder return. At September 30, 2017, including dividend equivalents granted, there were 973 thousand restricted share units, performance share units and market restricted share units outstanding with a weighted average grant-date fair value of $32.91 per share.
Note 1210 - Commitments and Contingencies
In the normal course of business, Synovus enters into commitments to extend credit such as loan commitments and letters of credit to meet the financing needs of its customers. Synovus uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments.instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed
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expiration dates or other termination clauses and may require payment of a fee. Synovus also has commitments to fund certain low-income housing investments, solar energy, and CRA investments.
The contractual amount of these financial instruments represents Synovus' maximum credit risk should the counterparty draw upon the commitment, and should the counterparty subsequently fail to perform according to the terms of the contract. Since many of the commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements. Additionally, certain commitments (primarily consumer) can generally be canceled by providing notice to the borrower.
The allowance for credit lossesACL associated with unfunded commitments and letters of credit is a component of the unfunded commitments reserve recorded within other liabilities on the Consolidated Balance Sheets.consolidated balance sheets. Upon adoption of CECL on January 1, 2020, Synovus recorded $27.4 million in unfunded commitment reserves due to the consideration under CECL of expected utilization over the life of such commitments. At September 30, 2020, the ACL for unfunded commitments was $60.8 million, including the impact of CECL and COVID-19, compared to a reserve of $1.4 million at December 31, 2019. Additionally, an immaterial amount of unearned fees relating to letters of credit are recorded within other liabilities on the Consolidated Balance Sheets. These amountsconsolidated balance sheets. See "Part I-Item 1. Financial Statements and Supplementary Data - Note 1 - Basis of Presentation" in this Report for more information on Synovus' adoption of CECL.
Synovus invests in certain LIHTC partnerships which are engaged in the development and operation of affordable multi-family housing pursuant to Section 42 of the Code. Additionally, Synovus invests in certain solar energy tax credit partnerships pursuant to Section 48 of the Code. Synovus typically acts as a limited partner in these investments and does not materialexert control over the operating or financial policies of the partnerships and as such, is not considered the primary beneficiary of the partnership. For certain of its LIHTC investments, Synovus provides financing during the construction and development of the properties and is at risk for the funded amount of its equity investment plus the outstanding amount of any construction loans in excess of the fair value of the collateral for the loan, but has no obligation to Synovus' Consolidated Balance Sheets.fund the operations or working capital of the partnerships and is not exposed to losses beyond Synovus’ investment. Synovus receives tax credits related to these investments which are subject to recapture by taxing authorities based on compliance provisions required to be met at the project level.
Unfunded lending commitments and lettersSynovus also invests in certain other CRA partnerships including SBIC programs. The SBIC is a program initiated by the SBA in 1958 to assist in the funding of credit at September 30, 2017 and December 31, 2016 are presented below.small business loans.
(in thousands)September 30, 2017 December 31, 2016(in thousands)September 30, 2020December 31, 2019
Letters of credit*$152,082
 150,948
Letters of credit*$177,000 $202,614 
Commitments to fund commercial and industrial loansCommitments to fund commercial and industrial loans7,990,189 7,018,152 
Commitments to fund commercial real estate, construction, and land development loans1,309,144
 1,394,162
Commitments to fund commercial real estate, construction, and land development loans2,891,857 3,032,252 
Commitments under home equity lines of creditCommitments under home equity lines of credit1,588,844 1,501,452 
Unused credit card lines1,170,429
 1,103,431
Unused credit card lines984,636 877,929 
Commitments under home equity lines of credit1,133,569
 1,096,052
Commitments to fund commercial and industrial loans5,164,553
 4,792,834
Other loan commitments326,672
 307,772
Other loan commitments458,509 485,371 
Total unfunded lending commitments and letters of credit$9,256,449
 8,845,199
   
Total letters of credit and unfunded lending commitmentsTotal letters of credit and unfunded lending commitments$14,091,035 $13,117,770 

Investments in low income housing, solar energy tax credit and other CRA partnerships:
Carrying amount included in other assets$214,615 $146,612 
Amount of future funding commitments included in carrying amount124,866 78,266 
Permanent and short-term construction loans and letter of credit commitments52,686 2,124 
Funded portion of permanent and short-term loans and letters of credit5,194 3,196 
*    Represent the contractual amount net of risk participations purchased of approximately $63$31 million and $83$33 million at September 30, 20172020 and December 31, 2016,2019, respectively.
Merchant Services
Note 13 - In accordance with credit and debit card association rules, Synovus provides merchant processing services for customers. Prior to the second quarter of 2020, these services were provided through a referral relationship which was replaced during the second quarter of 2020 with a new contractual arrangement under which certain sales and processing support are provided through an outside merchant services provider with Synovus owning the merchant contract relationship. In addition, Synovus sponsors various third-party MPS businesses that process credit and debit card transactions on behalf of merchants. In connection with these services, a liability may arise in the event of a billing dispute between the merchant and a cardholder that is ultimately resolved in the cardholder's favor. If the merchant defaults on its obligations, the cardholder, through its issuing bank, generally has until six months after the date of the transaction to present a chargeback to the MPS, which is primarily liable for any losses on covered transactions. However, if a sponsored MPS fails to meet its obligations, then Synovus, as the sponsor, could be held liable for the disputed amount. Synovus seeks to mitigate this risk through its contractual arrangements
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with the MPS and the merchants by withholding future settlements, retaining cash reserve accounts and/or obtaining other security. For the three and nine months ended September 30, 2020, Synovus and the sponsored entities processed and settled $20.23 billion and $55.47 billion of transactions, respectively. For the three and nine months ended September 30, 2019, the sponsored entities processed and settled $19.13 billion and $55.72 billion of transactions, respectively.
Synovus covered chargebacks related to a particular sponsored MPS during 2019 and 2018 where the MPS’s cash reserve account was unavailable to support the chargebacks. As of September 30, 2020, the remaining amount due to Synovus from the MPS is $20.6 million, compared to $21.4 million at December 31, 2019. During the first quarter of 2020, Synovus recorded a $2.7 million reserve in other operating expenses associated with the chargebacks, reflecting the amount that Synovus does not expect to collect. The net balance of $17.9 million at September 30, 2020 is included in other assets and classified in NPAs. While Synovus has contractual protections to mitigate against loss, repayment of the amounts owed to Synovus will depend in large part upon the continued financial viability and/or valuation of the MPS and the availability of any cash reserve accounts.
Legal Proceedings
Synovus and its subsidiaries are subject to various legal proceedings, claims and claimsdisputes that arise in the ordinary course of its business. Additionally, in the ordinary course of its business, Synovus and its subsidiaries are subject to regulatory examinations, information gathering requests, inquiries and investigations. Synovus, like many other financial institutions, has been the target of numerous legal actions and other proceedings asserting claims for damages and related relief for losses. These actions include mortgage loan and other loan put-back claims, claims and counterclaims asserted by individual borrowers related to their loans, and allegations of violations of state and federal laws and regulations relating to banking practices, and allegations related to Synovus' participation in government stimulus programs, including putative class action matters. In addition to actual damages, if Synovus does

not prevail in such asserted legal actions, credit-related litigation could result in additional write-downs or charge-offs of loans,assets, which could adversely affect Synovus' results of operations during the period in which the write-down or charge-off were to occur.
Synovus carefully examines and considers each legal matter, and, in those situations where Synovus determines that a particular legal matter presents loss contingencies that are both probable and reasonably estimable, Synovus establishes an appropriate accrual.reserve. An event is considered to be probable if the future event is likely to occur. While the final outcome of any legal proceeding is inherently uncertain, based on the information currently available, advice of counsel and available insurance coverage, management believes that the amounts accrued with respect to legal matters as of September 30, 20172020 are adequate. The actual costs of resolving legal claims may be higher or lower than the amounts accrued.
In addition, where Synovus determines that there is a reasonable possibility of a loss in respect of legal matters, Synovus considers whether it is able to estimate the total reasonably possible loss or range of loss. An event is “reasonably possible” if “the chance of the future event or events occurring is more than remote but less than likely.” An event is “remote” if “the chance of the future event or future eventevents occurring is more than slight but less than reasonably possible." In many situations, Synovus may be unable to estimate reasonably possible losses due to the preliminary nature of the legal matters, as well as a variety of other factors and uncertainties. For those legal matters where Synovus is able to estimate a range of reasonably possible losses, management currently estimates the aggregate range from our outstanding litigation is from zero0 to $10$5 million in excess of the amounts accrued, if any, related to those matters. This estimated aggregate range is based upon information currently available to Synovus, and the actual losses could prove to be lower or higher. As there are further developments in these legal matters, Synovus will reassess these matters, and the estimated range of reasonably possible losses may change as a result of this assessment. Based on Synovus' current knowledge and advice of counsel, management presently does not believe that the liabilities arising from these legal matters will have a material adverse effect on Synovus' consolidated financial condition, results of operations or cash flows. However, it is possible that the ultimate resolution of these legal matters could have a material adverse effect on Synovus' results of operations or financial condition for any particular period.
Synovus intends to vigorously pursue all available defenses to these legal matters, but will also consider other alternatives, including settlement, in situations where there is an opportunity to resolve such legal matters on terms that Synovus considers to be favorable, including in light of the continued expense and distraction of defending such legal matters. Synovus maintains insurance coverage, which may be available to cover legal fees, or potential losses that might be incurred in connection with such legal matters. The above-noted estimated range of reasonably possible losses does not take into consideration insurance coverage which may or may not be available for the respective legal matters.
Note 11 - Segment Reporting
Synovus' business segments are based on the products and services provided or the customers served, and as of the fourth quarter of 2019, reflect the manner in which financial information is evaluated by the chief operating decision makers. Prior to the fourth quarter of 2019, Synovus identified its overall banking operations as its only reportable segment. Synovus has 3 major reportable business segments: Community Banking, Wholesale Banking, and Financial Management Services (FMS),
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with functional activities such as treasury, technology, operations, marketing, finance, enterprise risk, legal, human resources, corporate communications, executive management, among others, included in Treasury and Corporate Other.
Business segment results are determined based upon Synovus' management reporting system, which assigns balance sheet and income statement items to each of the business segments. Certain assets, liabilities, revenues, and expenses not allocated or attributable to a particular business segment are included in Treasury and Corporate Other.Synovus's third-party lending partnership consumer loans and held for sale loans as well as PPP C&I loans are included in Treasury and Corporate Other. The management accounting policies and processes utilized in compiling segment financial information are highly subjective and, unlike financial accounting, are not based on authoritative guidance similar to GAAP. As a result, reported segment results are not necessarily comparable with similar information reported by other financial institutions.
The Community Banking business segment serves customers using a relationship-based approach through its branch, ATM, commercial, and private wealth network in addition to mobile, Internet, and telephone banking. This segment primarily provides individual, small business, and corporate customers with an array of comprehensive banking products and services including commercial, home equity, and other consumer loans, credit and debit cards, and deposit accounts.
The Wholesale Banking business segment serves primarily larger corporate customers by providing commercial lending and deposit services through specialty teams including middle market, CRE, senior housing, national accounts, premium finance, structured lending, healthcare, and asset-based lending.
The FMS business segment serves its customers by providing mortgage and trust services and also specializing in professional portfolio management for fixed-income securities, investment banking, the execution of securities transactions as a broker/dealer, asset management, and financial planning services, as well as the provision of individual investment advice on equity and other securities.
Synovus uses a centralized FTP methodology to attribute appropriate net interest income to the business segments. The intent of the FTP methodology is to transfer interest rate risk from the business segments by providing matched duration funding of assets and liabilities. The result is to centralize the financial impact, management, and reporting of interest rate risk in the Treasury and Corporate Other function where it can be centrally monitored and managed. Treasury and Corporate Other charges (credits) an internal cost of funds for assets held in (or pays for funding provided by) each business segment. The FTP rate is based on prevailing market interest rates for comparable duration assets (or liabilities).
The following tables present certain financial information for each reportable business segment for the three and nine months ended September 30, 2020. During the three months ended September 30, 2020, Synovus recognized a $44.9 million non-cash goodwill impairment charge representing all of the goodwill allocated to the Consumer Mortgage reporting unit (which is included in the FMS reportable segment) driven by significant mortgage refinance activity at record-low mortgage rates and the FOMC's updated guidance in the third quarter of 2020 regarding inflation targeting and their expectations for interest rates to remain low for an extended period of time. To provide comparable prior year information, Synovus has included proforma business segment financial information for the three and nine months ended September 30, 2019 utilizing various allocation methodologies based on balance sheet and income statement items assigned to each business segment. The application and development of management reporting methodologies is a dynamic process and is subject to periodic enhancements. As these enhancements are made, financial results presented by each reportable business segment may be periodically revised.
Three Months Ended September 30, 2020
(in thousands)Community BankingWholesale BankingFinancial Management ServicesTreasury and Corporate OtherSynovus Consolidated
Net interest income$220,426 $139,080 $20,986 $(3,502)$376,990 
Non-interest revenue29,982 5,496 65,820 13,113 114,411 
Non-interest expense68,571 19,530 92,931 135,623 316,655 
Pre-provision net revenue$181,837 $125,046 $(6,125)$(126,012)$174,746 



Three Months Ended September 30, 2019 Proforma
(in thousands)Community BankingWholesale BankingFinancial Management ServicesTreasury and Corporate OtherSynovus Consolidated
Net interest income$203,197 $133,773 $26,582 $38,545 $402,097 
Non-interest revenue35,145 7,092 40,966 5,557 88,760 
Non-interest expense76,414 25,413 40,413 134,070 276,310 
Pre-provision net revenue$161,928 $115,452 $27,135 $(89,968)$214,547 

Nine Months Ended September 30, 2020
(in thousands)Community BankingWholesale BankingFinancial Management ServicesTreasury and Corporate OtherSynovus Consolidated
Net interest income$638,311 $407,265 $56,600 $24,640 $1,126,816 
Non-interest revenue89,413 20,406 166,067 115,866 391,752 
Non-interest expense219,859 63,176 184,501 409,540 877,076 
Pre-provision net revenue$507,865 $364,495 $38,166 $(269,034)$641,492 

Nine Months Ended September 30, 2019 Proforma
(in thousands)Community BankingWholesale BankingFinancial Management ServicesTreasury and Corporate OtherSynovus Consolidated
Net interest income$625,450 $388,241 $86,425 $96,419 $1,196,535 
Non-interest revenue101,971 21,787 111,873 22,314 257,945 
Non-interest expense225,141 55,141 111,139 441,426 832,847 
Pre-provision net revenue$502,280 $354,887 $87,159 $(322,693)$621,633 

September 30, 2020
(dollars in thousands)Community BankingWholesale BankingFinancial Management ServicesTreasury and Corporate OtherSynovus Consolidated
Total loans net of deferred fees and costs$11,489,106 $19,204,961 $5,412,944 $3,442,836 $39,549,847 
Total deposits$28,870,928 $10,339,568 $414,243 $5,041,165 $44,665,904 
Total full-time equivalent employees2,200 285 843 1,904 5,232
December 31, 2019
(dollars in thousands)Community BankingWholesale BankingFinancial Management ServicesTreasury and Corporate OtherSynovus Consolidated
Total loans net of deferred fees and costs$12,170,914 $17,643,509 $5,285,455 $2,062,572 $37,162,450 
Total deposits$25,610,777 $8,314,184 $284,716 $4,195,827 $38,405,504 
Total full-time equivalent employees2,301 213 839 1,911 5,264 

Note 1412 - Subsequent Events

Issuance of Subordinated Debt by Synovus Bank
On September 25, 2017,October 29, 2020, Synovus Bank issued a notice of redemption to redeem all of the $300.0$200.0 million aggregate principal amount of its outstanding 7.875% senior notes4.000% Fixed-to-Fixed Rate Subordinated Bank Notes due 2019 on November 9, 2017October 29, 2030 (the "Maturity Date"). Subject to any redemption prior to the Maturity Date, the Notes will bear interest from and including the original issue date to, but excluding, October 29, 2025 (the ‘‘Reset Date’’), at a “make whole” premium,fixed rate of 4.000% per annum and from and including the Reset Date to, but excluding the Maturity Date, the Notes will


bear interest at a fixed rate that will be the Five-year U.S. Treasury Rate (as defined) as of the Reset Determination Date, plus 3.625% per annum. Interest on the Notes will be payable semi-annually in arrears on April 29 and October 29 of each year, commencing on April 29, 2021. Synovus Bank may redeem the Notes, in whole but not in part, (i) at any time within 90 days following a Regulatory Capital Treatment Event or Tax Event (in each case as defined) or Synovus Bank becoming required to be registered as an investment company pursuant to the Investment Company Act of 1940, as amended, or (ii) on the Reset Date, in each case at a redemption price equal to 100% of the principal amount of the Notes, plus accrued butand unpaid interest, on the 2019 notesif any, to but excluding the redemption date. The results forNotes are not redeemable at the three months ending December 31, 2017 will includeoption or election of holders.
Voluntary Early Retirement Program
Synovus incurred approximately $14 million in one-time termination benefit restructuring charges in October 2020 associated with a pre-tax loss of approximately $24 million relatedvoluntary early retirement program offered to early extinguishment of these notes. 

On November 1, 2017, Synovus completed a public offering of $300.0 million of 3.125% senior notes due 2022. Proceeds from this offering will be used, inemployees as part to fund the redemption of the 2019 notes. Synovus Forward efficiency initiatives.

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ITEM 2. – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In this Report, the words “Synovus,” “the Company,” “we,” “us,” and “our” refer to Synovus Financial Corp. together with Synovus Bank and Synovus' other wholly-owned subsidiaries, except where the context requires otherwise.
FORWARD-LOOKING STATEMENTS
Certain statements made or incorporated by reference in this Report which are not statements of historical fact, including those under "Management's“Management's Discussion and Analysis of Financial Condition and Results of Operations,"” and elsewhere in this Report, constitute forward-looking statements within the meaning of, and subject to the protections of, Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements include statements with respect to Synovus' beliefs, plans, objectives, goals, targets, expectations, anticipations, assumptions, estimates, intentions and future performance and involve known and unknown risks, many of which are beyond Synovus' control and which may cause Synovus' actual results, performance or achievements or the commercial bankingfinancial services industry or economy generally, to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.
All statements other than statements of historical fact are forward-looking statements. You can identify these forward-looking statements through Synovus' use of words such as “believes,” “anticipates,” “expects,” “may,” “will,” “assumes,” “predicts,” “could,” “should,” “would,” “intends,” “targets,” “estimates,” “projects,” “plans,” “potential” and other similar words and expressions of the future or otherwise regarding the outlook for Synovus' future business and financial performance and/or the performance of the commercial bankingfinancial services industry and economy in general. Forward-looking statements are based on the current beliefs and expectations of Synovus' management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. A number of factors could cause actual results to differ materially from those contemplated by the forward-looking statements in this document. Many of these factors are beyond Synovus' ability to control or predict. These factors include, but are not limited to:
(1)the risk that competition inrisks and uncertainties related to the impact of the COVID-19 pandemic on our assets, business, capital and liquidity, financial services industry may adversely affect our future earningscondition, prospects and growth;results of operations;

(2)the risk that we may not realize the expected benefits fromcurrent and any further economic downturn and contraction could have a material adverse effect on our efficiencycapital, liquidity, financial condition, credit quality, results of operations and future growth, initiatives, whichincluding the risk that the current economic contraction could negatively
affect our future profitability;last much longer and be much more severe if efforts to contain the pandemic are unsuccessful and restrictions on movement last longer than currently anticipated;

(3)the risk that our current and future information technology system enhancements and initiativesasset quality may not be successfully implemented, which could negatively impact our operations;
(4)the risk that our enterprise risk management framework may not identify or address risks adequately, which may result in unexpected losses;
(5)the risk thatdeteriorate, our allowance for loancredit losses may prove to be inadequate or may be negatively affected by credit risk exposures;exposures, and the risk that we may be unable to obtain full payment in respect of any loan or other receivables;

(6)(4)the risk that anyimpact of recent, proposed, or potential changes in governmental policy, laws and regulations, including recently enacted laws, regulations and guidance related to government stimulus programs related to the COVID-19 pandemic, proposed and potential changes in the regulation and taxation of banks and financial institutions, or the interpretation or application thereof and the uncertainty of future economic downturn could have a material adverse effect on our capital, financial condition, resultsimplementation and enforcement of operations and future growth;these regulations;

(7)(5)changes in the cost and availability of funding due to changes in the deposit market and credit market;

(6)the risks that if economic conditions worsen further or regulatory capital rules are modified, we may be required to undertake initiatives to improve our capital position;

(7)the risk that we may be required to make substantial expenditures to keep pace with regulatory initiatives and the rapid technological changes in the financial services market;

(8)changes in the interest rate environment, including changes to the federal funds rate to include a possible negative interest rate environment, and competition in our primary market area may result in increased funding costs or reduced earning assets yields, thus further reducing margins and net interest income;

(8)(9)the risk that competition in the financial services industry may adversely affect our future earnings and growth;

43

(10)the risk that we may not realize the expected benefits from our efficiency and growth initiatives or that we may not be able to realize those cost savings or revenue initiatives in the time period expected, which could negatively impact our future profitability;

(11)our ability to identify and address cyber-security risks such as data security breaches, malware, "denial of service" attacks, "hacking" and identity theft, a failure of which could disrupt our business and result in the disclosure of and/or misuse or misappropriation of confidential or proprietary information, disruption or damage of our systems, increased costs, significant losses, or adverse effects to our reputation;

(12)the risk that our current and future information technology system enhancements and operational initiatives may not be successfully implemented, which could negatively impact our operations;

(13)our ability to attract and retain employees that are key employees;to our strategic and growth initiatives;

(9)(14)the risk that we may be requiredrelated to make substantial expenditures to keep pace with the rapid technological changes in the financialour implementation of new lines of business, new products and services market;or new technologies;

(10)(15)our ability to receive dividends from our subsidiaries could affect our liquidity, including our ability to pay dividends or take other capital actions;

(16)the risk that our enterprise risk management framework, our compliance program, or our corporate governance and supervisory oversight functions may not identify or address risks adequately, which may result in unexpected losses;

(17)risks related to our business relationships with, and reliance onupon, third parties tothat have strategic partnerships with us or that provide key components of our business infrastructure, including the costs of services and products provided to us by third parties, and risks related to disruptions in service or financial difficulties ofwith a third-party vendor;vendor or business relationship;

(11)(18)risks related to the ability of our operational framework to identify and manage risks associated with our business such as credit risk, compliance risk, reputational risk, and operational risk, including third-party business partners, as well as our relationship with third-party vendors and other service providers, which could, among other things, result in a breach of security systems as a result of cyber-attack or similar act;providers;


(12)our ability to identify and address cyber-security risks such as data security breaches, malware, 'denial of service' attacks, 'hacking', and identity theft, a failure of which could disrupt our business and result in disclosure of and/or misuse or misappropriation of confidential or proprietary information; disruption or damage to our systems; increased costs; significant loses; or adverse effects to our reputation;
(19)
(13)the impact of recent and proposed changes in governmental policy, laws and regulations, including proposed and recently enacted changes in the regulation of banks and financial institutions, or the interpretation or application thereof and the uncertainty of future implementation and enforcement of these regulations;
(14)the risk that we could realize losses if we determine to sell non-performing assets and the proceeds we receive are lower than the carrying value of such assets;
(15)the risk that we may be exposed to potential losses in the event of fraud on cash accounts and/or theft;
(16)the risk that we may not be able to identify suitable acquisition targets or strategic partners as part of our growth strategy and even if we are able to identify suitable acquisition counterparties, we may not be able to complete such transactions on favorable terms, if at all, or successfully integrate acquired bank or nonbank operations into our existing operations;
(17)the risk that we may not be able to realize the anticipated benefits from our balance sheet restructuring actions;
(18)the impact on our financial results, reputation, and business if we are unable to comply with all applicable federal and state regulations or other supervisory actions or directives and any necessary capital initiatives;
(19)the risks that if economic conditions worsen or regulatory capital rules are modified, or the results of mandated “stress testing” do not satisfy certain criteria, we may be required to undertake initiatives to improve our capital position;
(20)changes in the cost and availability of funding due to changes in the deposit market and credit market;
(21)restrictions or limitations on access to funds from historical and alternative sources of liquidity could adversely affect our overall liquidity, which could restrict our ability to make payments on our obligations and our ability to support asset growth and sustain our operations and the operations of Synovus Bank;

(22)(20)our abilitythe risk that we may be exposed to receive dividends from our subsidiaries could affect our liquidity, including our abilitypotential losses in the event of fraud and/or theft, or in the event that a third-party vendor, obligor, or business partner fails to pay dividendsamounts due to us under that relationship or take other capital actions;under any arrangement that we enter into with them;

(23)(21)the risk that we could realize losses if we sell non-performing assets and the proceeds we receive are lower than the carrying value of such assets;

(22)risks related to the fluctuation in our stock price and general volatility in the stock market;

(23)the impact on our financial results, reputation, and business if we are unable to comply with all applicable federal and state regulations or other supervisory actions or directives and any necessary capital initiatives;

(24)risks related to regulatory approval to take certain actions, including any dividends on our common stock or Series C Preferred Stock,preferred stock, any repurchases of common stock or any other issuance or redemption of any other regulatory capital instruments, as well as any applications in respect of expansionary initiatives;instruments;

(24)(25)risks related to recentthe continued use, availability and proposed changes in the mortgage banking industry, including the risk that we may be required to repurchase mortgage loans sold to third partiesreliability of LIBOR and the impact of the “ability to pay” and “qualified mortgage” rules on our loan origination process and foreclosure proceedings;other "benchmark" rates;

(25)(26)the risk that our current tax position, including the realization of our deferred tax assets in the future, could be subject to comprehensive tax reform;
(26)the risk that we could have an “ownership change” under Section 382 of the Code, which could impair our ability to timely and fully utilize our net operating losses and built-in losses that may exist when such “ownership change” occurs;
(27)the costs and effects of litigation, investigations, inquiries or similar matters, or adverse facts and developments related thereto;thereto, including the costs and effects of litigation related to our participation in government stimulus programs associated with the COVID-19 pandemic;

44

(28)(27)risks related to the fluctuation in our stock price;
(29)the effects of any damages to our reputation resulting from developments related to any of the items identified above; and

(30)(28)other factors and other information contained in this Report and in other reports and filings that we make with the SEC under the Exchange Act, including, without limitation, those found in "Risk"Part II - Item 1A. Risk Factors" of this Report.
For a discussion of these and other risks that may cause actual results to differ from expectations, refer to “Part I-Item 1A. Risk Factors” and other information contained in Synovus' 20162019 Form 10-K and our other periodic filings, including quarterly reports on Form 10-Q and current reports on Form 8-K, that we file from time to time with the SEC. All written or oral forward-looking statements that are made by or are attributable to Synovus are expressly qualified by this cautionary notice. You should

not place undue reliance on any forward-looking statements since those statements speak only as of the date on which the statements are made.Synovus undertakes no obligation to update any forward-looking information and statements, whether writtenoral or oral,written, to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of new information or unanticipated events, except as may otherwise be required by law.
INTRODUCTION AND CORPORATE PROFILE
Synovus Financial Corp. is a financial services company and a registered bank holding company headquartered in Columbus, Georgia. Through its wholly-owned subsidiary, Synovus Bank, a Georgia state-chartered bank that is a member of the Federal Reserve System, the companyCompany provides commercial and retail banking in addition to a full suite of specialized products and services including private banking, treasury management, wealth management, mortgage services, premium finance and international banking. Synovus also provides mortgage services, financial planning, and investment advisory services through its wholly-owned subsidiaries, Synovus Mortgage, Synovus Trust and Synovus Securities, as well as its GLOBALT and Creative Financial Group divisions.
Synovus Bank is positioned in some of the highest growth markets in the Southeast, with 249 branches and 328 ATMswith 292 branches in Alabama, Florida, Georgia, Alabama, South Carolina, Florida, and Tennessee.
The following financial review summarizes the significant trends, changes in our business, transactions, and other matters affecting Synovus’ results of operations for the ninethree and threenine months ended September 30, 20172020 and financial condition as of September 30, 20172020 and December 31, 2016.2019. This discussion supplements, and should be read in conjunction with, the unaudited interim consolidated financial statements and notes thereto contained elsewhere in this Report and the consolidated financial statements of Synovus, the notes thereto, and management’s discussion and analysis contained in Synovus’ 20162019 Form 10-K.
Management's Discussion and Analysis of Financial Condition and Results of Operations consists of:
Ÿ•Discussion of Results of Operations - Reviews Synovus' financial performance, as well as selected balance sheet items,
items from the statements of income, significant transactions, and certain key ratios that illustrate Synovus' performance.


Ÿ•Credit Quality, Capital Resources and Liquidity - Discusses credit quality, market risk, capital resources, and liquidity,
as well as performance trends. It also includes a discussion of liquidity policies, how Synovus obtains funding, and related performance.
performance.

Ÿ•Additional Disclosures - Discusses additional important matters including critical accounting policies and
non-GAAP financial measures used within this Report.
A reading of each section is important to understand fully the nature of our financial performance.

45

DISCUSSION OF RESULTS OF OPERATIONS
Consolidated Financial Highlights
Table 1 - Consolidated Financial Highlights
Three Months Ended September 30,Nine Months Ended September 30,
(dollars in thousands, except per share data)20202019Change20202019Change
Net interest income$376,990 $402,097 (6)%$1,126,816 $1,196,535 (6)%
Provision for credit losses(1)
43,383 27,562 57 343,956 63,250 444 
Non-interest revenue114,411 88,760 29 391,752 257,945 52 
Adjusted non-interest revenue(2)
115,701 91,297 27 310,446 259,940 19 
Total FTE revenues492,357 491,676 — 1,521,171 1,456,736 4 
Adjusted total revenues(2)
493,647 494,213 — 1,439,865 1,458,731 (1)
Non-interest expense316,655 276,310 15 877,076 832,847 5 
Adjusted non-interest expense(2)
268,742 258,474 4 816,310 757,834 8 
Income before income taxes131,363 186,985 (30)297,536 558,383 (47)
Net income91,574 135,726 (33)223,286 412,096 (46)
Net income available to common shareholders83,283 127,435 (35)198,414 397,505 (50)
Net income per common share, basic0.57 0.84 (32)1.35 2.53 (47)
Net income per common share, diluted0.56 0.83 (32)1.34 2.51 (47)
Adjusted net income per common share, diluted(2)
0.89 0.97 (9)1.32 2.96 (55)
Net interest margin(3)
3.10 %3.69 %(59)  bps3.20 %3.72 %(52)  bps
Net charge-off ratio(3)
0.29 0.22 7 0.25 0.18 7 
Return on average assets(3)
0.69 1.14 (45)0.58 1.18 (60)
Adjusted return on average assets(2)(3)
1.05 1.33 (28)0.57 1.39 (82)
Efficiency ratio-FTE64.31 56.20 811 57.66 57.17 49 
Adjusted tangible efficiency ratio(2)
53.91 51.71 220 56.14 51.36 478 
 Nine Months Ended September 30, Three Months Ended September 30,
(dollars in thousands, except per share data)2017 2016 Change 2017 2016 Change
Net interest income$753,597
 665,650
 13.2 % $262,572
 226,007
 16.2 %
Provision for loan losses58,620
 21,741
 169.6 39,686
 5,671
 599.8
Non-interest income275,974
 199,188
 38.5 135,435
 68,155
 98.7
Adjusted non-interest income(1)
204,456
 199,589
 2.4 68,418
 68,345
 0.1
Total revenues (2)
1,030,750
 865,676
 19.1 406,246
 294,433
 38.0
Adjusted total revenues(1)
958,943
 866,203
 10.7 331,273
 294,682
 12.4
Non-interest expense594,780
 562,716
 5.7 205,646
 185,871
 10.6
Adjusted non-interest expense(1)
576,150
 545,495
 5.6 194,102
 183,907
 5.5
Income before income taxes376,171
 280,381
 34.2 152,675
 102,620
 48.8
Net income245,868
 178,233
 37.9 98,007
 65,245
 50.2
Net income available to common shareholders238,190
 170,555
 39.7 95,448
 62,686
 52.3
Net income per common share, basic1.96
 1.36
 43.4 0.79
 0.51
 54.8
Net income per common share, diluted1.94
 1.36
 43.2 0.78
 0.51
 54.5
Adjusted net income per common share, diluted(1)
1.82
 1.45
 25.9 0.65
 0.52
 24.7
Net interest margin(3)
3.52% 3.27% 25  bps 3.63% 3.27
 36  bps
Net charge-off ratio(3)
0.33
 0.12
 21  bps 0.62
 0.12
 50  bps
Adjusted net charge-off ratio(1)(3)
0.15
 0.12
 3  bps 0.06
 0.12
 (6) bps
Return on average assets(3)
1.07
 0.81
 26  bps 1.27
 0.88
 39  bps
Adjusted return on average assets(1)(3)
1.01
 0.87
 14  bps 1.05
 0.90
 15  bps
Efficiency ratio57.70
 65.00
 (730) bps 50.62
 63.13
 (1,251) bps
Adjusted efficiency ratio(1)
60.08
 62.98
 (290) bps 58.59
 62.41
 (382) bps
            
(1)     Beginning January 1, 2020, provision calculation is based on current expected credit loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.
(2)    See “Non-GAAP"Table 14 - Reconciliation of Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
(2) Consists(3)    Annualized
September 30, 2020June 30, 2020Sequential Quarter ChangeSeptember 30, 2019Year-Over-Year Change
(dollars in thousands)
Loans, net of deferred fees and costs$39,549,847 $39,914,297 $(364,450)$36,417,826 $3,132,021 
Total average loans39,762,572 40,136,090 (373,518)36,201,322 3,561,250 
Total deposits44,665,904 44,194,580 471,324 37,433,070 7,232,834 
Core deposits (excludes brokered deposits)40,756,645 39,904,278 852,367 34,237,575 6,519,070 
Core transaction deposits (excludes brokered and public fund deposits)30,988,237 29,425,251 1,562,986 23,794,467 7,193,770 
Total average deposits44,339,497 43,096,475 1,243,022 37,714,145 6,625,352 
Non-performing assets ratio0.49 %0.44 %5   bps0.42 %7 bps
Non-performing loans ratio0.43 0.37 6 0.32 11 
Past due loans over 90 days0.02 0.02 — 0.04 (2)
CET1 capital$3,913,402 $3,827,229 $86,173 $3,660,078 $253,324 
Tier 1 capital4,450,547 4,364,374 86,173 4,196,628 253,919 
Total risk-based capital5,536,918 5,459,568 77,350 5,023,138 513,780 
CET1 capital ratio9.30 %8.90 %40   bps8.96 %34 bps
Tier 1 capital ratio10.57 10.15 42 10.27 30 
Total risk-based capital ratio13.16 12.70 46 12.30 86 
Total shareholders’ equity to total assets ratio9.55 9.34 21 10.22 (67)
Tangible common equity ratio(1)
7.67 7.41 26 8.04 (37)
Return on average common equity(2)
7.28 7.48 (20)11.36 (408)
Adjusted return on average common equity(1)(2)
11.48 3.00 848 13.35 (187)
Adjusted return on average tangible common equity(1)(2)
13.24 3.60 964 15.46 (222)
(1)    See "Table 14 - Reconciliation of net interest income and non-interest income excluding investment securities (losses) gains, net.
(3) Annualized
 September 30, 2017 June 30, 2017 Sequential Quarter Change September 30, 2016 Year-Over-Year Change 
(dollars in thousands, except per share data) 
Loans, net of deferred fees and costs$24,487,360
 24,430,512
 56,848
 23,262,887
 1,224,473 
Total deposits26,186,228
 25,218,816
 967,412
 24,192,003
 1,994,225 
Total average deposits25,286,919
 24,991,708
 295,211
 24,030,291
 1,256,628 
Average core deposits(1)
23,756,030
 23,612,149
 143,881
 22,620,552
 1,135,478 
Average core transaction deposits(1)
 
18,603,161
 18,409,170
 193,991
 17,362,060
 1,241,101 
           
Non-performing assets ratio0.57% 0.73
 (16) bps 0.77
 (20) bps 
Non-performing loans ratio0.40
 0.65
 (25) bps 0.64
 (24) bps 
Past due loans over 90 days0.02
 0.02
 —
 0.02
 —
 
           
Common equity Tier 1 capital (transitional)$2,749,304
 2,734,983
 14,321
 2,596,233
 153,071 
Tier 1 capital2,849,580
 2,829,340
 20,240
 2,620,379
 229,201 
Total risk-based capital3,362,127
 3,340,155
 21,972
 3,139,465
 222,662 
Common equity Tier 1 capital ratio transitional(2)
10.06% 10.02
 4  bps 9.96
 10  bps 
Tier 1 capital ratio(2)
10.43
 10.37
 6  bps 10.05
 38  bps 
Total risk-based capital ratio12.30
 12.24
 6  bps 12.04
 26  bps 
Total shareholders’ equity to total assets ratio9.47
 9.77
 (30) bps 9.78
 (31) bps 
Tangible common equity to tangible assets ratio(1)
8.88
 9.15
 (27) bps 9.28
 (40) bps 
Return on average common equity(3)
13.24
 10.34
 290  bps 8.89
 435  bps 
Adjusted return on average common equity(1)(3)
 
10.92
 10.49
 43  bps 9.08
 184  bps 
Adjusted return on average tangible common equity(1)(3)
11.19
 10.75
 44  bps 9.16
 203  bps 
           
(1) See “Non-GAAPNon-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
(2)    June 30, 2017 ratiosQuarter annualized
46

Economic Environment and Recent Events
The ongoing COVID-19 healthcare crisis and public health response have triggered recessionary economic and financial market conditions during the majority of the first nine months of 2020. During March 2020, in an effort to lessen the impact of COVID-19 on consumers and businesses, the Federal Reserve reduced the federal funds rate 1.5 percentage points to 0.00 to 0.25 percent and the U.S. government enacted the CARES Act, the largest economic stimulus package in the nation’s history.
Synovus responded to the COVID-19 pandemic by taking measures early, beginning in March 2020, to improve the health and safety of our customers, team members, and communities including remote work capabilities and branch service enhancements; bonus payments to hourly team members required to work on-site;payment deferments on approximately $6 billionof our loan portfolio during the second quarter; and forgiveness of NSF and monthly service charges for CET1 transitionalimpacted customers. Synovus participated in the Paycheck Protection Program (PPP) and Tier 1 capitaldelivered close to 19,000 loans totaling nearly $2.9 billion during the second quarter. The average PPP loan was approximately $150 thousand, and the customers that received those loans employed over 335 thousand individuals. Synovus has also participated in the Federal Reserve's Main Street Lending Program to support small and medium-sized businesses impacted by COVID-19. Additionally, although the vast majority of our customers were reportedno longer in error as 10.37%a payment deferment program at the end of the third quarter, we have continued to work with our borrowers who have been impacted by the pandemic.
In September, six months after converting our branches to drive-thru and 10.02%, respectively, onappointment-only, our retail branch network re-opened its lobbies to walk-in customers, implementing CDC safety guidelines and branch design enhancements, including plexiglass barriers, customer directional signage, mask requirements and social distancing protocols. Synovus' team members, many of whom worked remotely during the June 30, 2017 Report.second and third quarters, re-entered the work place in a phased-in approach. This re-entry was carefully designed by team members themselves and carefully monitored through re-entry surveys and touchpoints. Synovus also provided additional benefits for team members directly impacted by the virus, including supplemental paid-time off and expanded medical benefits. In our communities, we have responded to the COVID-19 healthcare crisis and economic uncertainty with financial contributions to more than a dozen organizations for COVID-19 relief efforts, matching contributions for COVID-19 donations to the American Red Cross, and meal donations for first responders and health care workers.
(3) AnnualizedIn light of current economic uncertainty, Synovus has suspended its share repurchase activity beyond the $16.2 million completed during the first quarter and withdrawn 2020 guidance and long-term goals announced at the beginning of the year. Significant economic uncertainty remains, including the trajectory of the economic recovery which we expect will be impacted by any additional government stimulus plans.


ResultsSynovus is committed to addressing racial equality and social justice and has taken a number of actions during the third quarter to expand efforts to advance economic empowerment and racial equity, including establishing an internal advisory council to the CEO comprised of certain senior African American leaders, funding a $1.0 million contribution to the United Negro College Fund for the Nineestablishment of a scholarship for African American students in our footprint, providing foundational unconscious bias training to additional leaders across the footprint, and Three Months Ended September 30, 2017
Third quartercontinuing to diversify an already strong and diverse Board of 2017 results includeDirectors with a new independent director. We continue to make progress toward the Cabela's Transaction Fee, partially offset by certain balance sheet restructuring actions which resulted in pre-tax charges totaling $44.5 million. The fourth quarter of 2017 results will include a pre-tax loss on early extinguishment of debt totaling approximately $24 million due to the previously announced redemptionobjectives of our 7.875%CEO-sponsored inclusion and diversity initiative to improve minority representation within our team member population and female and minority representation in senior notes due 2019leadership, all while improving inclusiveness of all team members.
During the third quarter, we communicated new leadership expectations and leadership training development tools for our team members. We also launched a new leadership development program for our leaders. These new expectation and training tools are intended to help team members understand what leadership looks like at a redemption premium on November 9, 2017.the Company, and to ensure alignment of the daily work experience with the Company’s culture and values.
For the nine months ended September 30, 2017, netExecutive Summary
Net income available to common shareholders for the third quarter of 2020 was $238.2$83.3 million, or $1.94$0.56 per diluted common share, an increasea decline of 39.7%35% and 43.2%32%, respectively, comparedcompared to the nine months ended September 30, 2016. For the three months ended September 30, 2017, net income available to common shareholders was $95.4 million, or $0.78 per diluted common share, an increasethird quarter of 52.3%2019 and 54.5%, respectively, compared to the three months ended September 30, 2016. For the three months ended September 30, 2017, adjusted net income per common share, diluted(1) was $0.65, up 24.7%$0.89, down 9% compared to $0.52$0.97 for the third quarter of 2016. For the three months ended September 30, 2017, return on average assets was 1.27%, annualized, up 39 basis points from the third quarter of 2016 (adjusted return on average assets was 1.05%, annualized, up 15 basis points from the third quarter of 2016). See "Non-GAAP Financial Measures" in this Report2019. Net income available to common shareholders for the applicable reconciliationfirst nine months of 2020 was $198.4 million, or $1.34 per diluted common share, a decline of 50% and 47%, respectively, compared to the most comparable GAAP measure.
Total revenuesfirst nine months of $1.0 billion2019 and adjusted net income per common share, diluted(1) was $1.32, down 55% compared to $2.96 for the first nine months of 2019. The year-over-year decline in adjusted net income per common share for all periods was impacted by deterioration in the economic environment caused by the COVID-19 pandemic and driven by a significant increase in provision for credit losses following the adoption of CECL on January 1, 2020, a 225 bps reduction in the federal funds rate, and PAA including loan discount accretion and deposit premium amortization that positively impacted 2019.
Net interest income for the nine months ended September 30, 2017 were up 19.1% compared to the nine months ended September 30, 2016. Adjusted total revenues, which excludes the Cabela's Transaction Fee, net investment securities (losses) gains, net, and decrease in fair value of private equity investments, net, of $958.92020 was $1.13 billion, down $69.7 million, for the nine months ended September 30, 2017 were up 10.7% compared to the nine months ended September 30, 2016. Total revenues of $406.2 million for the three months ended September 30, 2017 were up 38.0% compared to the three months ended September 30, 2016. Adjusted total revenues of $331.3 million for the three months ended September 30, 2017 were up 12.4%or 6%, compared to the same time period in 2016 driven by2019. The decrease in year-over-year net interest income growthwas due to declines of 16.2% from$62.5 million
47

in PAA (primarily comprised of declines of $27.0 million of loan accretion and $32.9 million of deposit premium amortization) associated with the prior year.FCB acquisition and declines in market interest rates, which were somewhat offset by higher average earning assets. Net interest margin was down 52 bps over the comparable nine-month periods to 3.20%, due primarily to the decline in market interest rates in addition to declines in PAA. On a sequential quarter basis, net interest income was $262.6 millionup $424 thousand and net interest margin for the three months ended September 30, 2017, up $36.6 million, or 16.2%third quarter was 3.10%, which was down 3 bps compared to the three months ended September 30, 2016.second quarter of 2020. The sequential quarter decline in net interest margin was 3.63% forprimarily driven by the three months ended September 30, 2017, an increaseimpact of 12 basis points frombond repositioning and student loan sales executed in the second quarter of 20172020, partially offset by further declines in deposit pricing and 36 basis pointsfavorable deposit remixing trends. We continue to expect modest downward pressure on NIM as the repricing within our fixed-rate asset portfolios is partially offset by continued declines in overall deposit costs. Excluding the potential impacts from 3.27% forPPP forgiveness, we expect net interest income and net interest margin to decrease modestly in the thirdfourth quarter of 2016. The yield on earning assets was 4.11%, up 12 basis points from the second quarter of 2017 and up 40 basis points2020 as compared to the third quarter of 2016, and the effective cost of funds was 0.48%, unchanged from second quarter of 2017 and up four basis points from third quarter of 2016. The yield on loans was 4.49%, an increase of 13 basis points sequentially and 35 basis points from2020.
Non-interest revenue for the third quarter of 2016. Earning asset yields also benefited from a reduction of the average balance of lower yielding funds held at the Federal Reserve. See "Non-GAAP Financial Measures" in this Report for the applicable reconciliation to the most comparable GAAP measure.
Non-interest income for the nine and three months ended September 30, 20172020 was $276.0$114.4 million, and $135.4 million, respectively, up $76.8$25.7 million, or 38.5%29%, and year-to-date was $391.8 million, up $67.3$133.8 million, or 98.7%, compared to the nine and three months ended September 30, 2016, respectively. Adjusted non-interest income, which excludes the Cabela's Transaction Fee, net investment securities (losses) gains, net, and decrease in fair value of private equity investments, net was up $4.9 million, or 2.4%, and flat, for the nine and three months ended September 30, 2017, compared to the same periods a year ago, respectively. See "Non-GAAP Financial Measures" in this Report for the applicable reconciliation to the most comparable GAAP measure.
Non-interest expense for the nine and three months ended September 30, 2017 was $594.8 million and $205.6 million, respectively, compared to $562.7 million and $185.9 million for the nine and three months ended September 30, 2016, respectively. Adjusted non-interest expense for the nine and three months ended September 30, 2017, which excludes the third quarter of 2017 balance sheet restructuring actions of impairments on ORE and other properties held for sale, restructuring charges, net, loss on early extinguishment of debt, net, litigation contingency/settlement expense, merger-related expense, fair value adjustment to Visa derivative, amortization of intangibles, and certain earnout liability adjustments, increased $30.7 million, or 5.6%, and $10.2 million, or 5.5%52%, compared to the same periods in 2016, respectively. Synovus continues to generate positive operating leverage with the year-over-year expense growth primarily driven by strategic2019. Adjusted non-interest revenue(1) which excludes net investment securities gains/(losses) and gain on sale/fair value increase/(decrease) of private equity investments, in talent and technology, higher third-party processing expense relating to third-party lending partnerships servicing fees, the addition of Global One, and expenses associated with Synovus Bank's transition to a single bank operating environment and single brand. Strategic investments in talent and technology accounted for approximately $15 million and $5 million of the increase for the nine and three months ended September 30, 2017, respectively, compared to the same periods in 2016, as Synovus continues to add key talent and invest in technology to enhance the customer experience. Third-party processing expense relating to the servicing fees of third-party lending partnerships increased by $3.4 million and $1.2 million for the nine and three months ended September 30, 2017, respectively, compared to the same periods in 2016, and Global One operating expenses accounted for $3.0 million and $1.2 million of the increase compared to the nine and three months ended September 30, 2016, respectively. Expenses associated with Synovus Bank's transition to a single bank operating environment and single brand resulted in higher expenses of $4.0 million and $1.1 million compared to the nine and three months ended September 30, 2016, respectively. See "Non-GAAP Financial Measures" in this Report for the applicable reconciliation to the most comparable GAAP measure.

During the third quarter of 2017, Synovus completed certain balance sheet restructuring actions which included $77.82020 was $115.7 million, in loans transferred to held-for-sale (consisting primarily of NPLs) that resulted in charge-offs of $34.2 million and provision expense of $27.7 million. Additionally, foreclosed real estate expenses for the quarter included $7.1 million of charges related to discounts to fair value for completed or planned accelerated dispositions. Non-performing loans were $97.8 million at September 30, 2017, down $61.5 million from June 30, 2017 and down $50.3 million from September 30, 2016. The non-performing loan ratio was 0.40% at September 30, 2017, as compared to 0.65% at June 30, 2017 and 0.64% at September 30, 2016. Total non-performing assets were $138.6 million at September 30, 2017, down $40.3 million from June 30, 2017 and down $40.5 million from September 30, 2016. The non-performing assets ratio was 0.57% at September 30, 2017, as compared to 0.73% in the prior quarter, and 0.77% a year ago. Net charge-offs for the nine months ended September 30, 2017 were $60.7up $24.4 million, or 0.33% as a percentage of average loans annualized, compared to $20.4 million, or 0.12% as a percentage of average loans annualized, for the nine months ended September 30, 2016. Excluding27%, from the third quarter of 2017 balance sheet restructuring actions, the adjusted net charge-off ratio2019, and on a year-to-date basis was $310.4 million compared to $259.9 million for the first nine months ended September 30, 2017 of 2019, up $50.5 million, or 19%. The increase in adjusted non-interest revenue was 0.15%. Total delinquencies (consisting of loans 30 or more days past due and still accruing) were 0.35% of total loans at September 30, 2017primarily to strong growth in mortgage banking income with record production driven by the current rate environment. In the fourth quarter, we expect to see declines in mortgage revenue, as compared to 0.27% at June 30, 2017 and 0.27% at September 30, 2016. The allowance for loan losses at September 30, 2017 was $249.7 million, or 1.02% of total loans, compared to $251.8 million, or 1.06% of total loans, at December 31, 2016 and $253.8 million, or 1.09% of total loans, at September 30, 2016. See "Non-GAAP Financial Measures" in this Report for the applicable reconciliation to the most comparable GAAP measure.
Restructuring charges of $7.0 million were recorded during the nine months ended September 30, 2017 consisting primarily of severance charges of $6.4 million recorded during the first quarter of 2017 associated primarily with termination benefits incurred in conjunction with a voluntary early retirement program offered during the quarter. This program was part of Synovus' ongoing efficiency initiatives. Additionally, during the three months ended September 30, 2017, Synovus recorded restructuring charges of $519 thousand due to additional asset impairment charges of $515 thousand on properties previously identified for disposition. During the nine months ended September 30, 2016, Synovus recorded restructuring charges of $8.2 million consisting primarily of asset impairment charges related to corporate real estate optimization activities and branch closures.
At September 30, 2017, total loans were $24.49 billion, an increase of $631.0 million, or 3.5% annualized, and $1.22 billion or 5.3%, compared to December 31, 2016 and September 30, 2016, respectively. Year-over-year loan growth was driven by a $750.1 million or 15.6% increase in consumer loans and a $718.1 million or 6.5% increase in C&I loans, partially offset by a $245.6 million or 3.3% decline in CRE loans.
During the third quarter of 2017, total average deposits increased $295.22020.
Non-interest expense for the third quarter of 2020 was $316.7 million, up $40.3 million, or 4.7% annualized, compared to the second quarter of 2017, and increased $1.26 billion, or 5.2%15%, compared to the third quarter of 2016. Excluding the acquired WFB brokered time deposits, average deposits for the third quarter 2019 and adjusted non-interest expense(1) of 2017 increased $223.3$268.7 million was up $10.3 million, or 3.5% annualized, compared to the second quarter of 2017. Average core transaction deposits increased $194.04%. On a year-to-date basis, non-interest expense was up $44.2 million, or 4.2% annualized, compared to the prior quarter,5%, and wereadjusted non-interest expense(1) was up $1.24 billion,$58.5 million, or 7.1%, compared to the third quarter of 2016. The increase in average deposits for8%. During the three months ended September 30, 20172020, Synovus recognized a $44.9 million non-cash goodwill impairment charge representing the goodwill allocated to the Consumer Mortgage reporting unit. The increase in adjusted expense during the first nine months of 2020 was largely driven by mortgage production commissions, expense associated with Synovus' internal revenue growth and efficiency initiatives, COVID-19 related expenses, and investments in talent and technology. The efficiency ratio-FTE for the first nine months of 2020 was 57.66%, compared to 57.17% for the first nine months of 2019. The adjusted tangible efficiency ratio(1) for the first nine months of 2020 was 56.14%, up 478 bps compared to the three months ended September 30, 2016 was duesame period a year ago. Excluding up-front expenses associated with Synovus Forward initiatives, we expect adjusted non-interest expense in the fourth quarter to growthbe in-line with adjusted non-interest expense in average core transaction deposits, which represented 73.6% of average deposits for the third quarter of 2017 compared to 72.3% a year ago. See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.2020.
During January 2016, Synovus repurchased $124.7 million of its subordinated notes that matured on June 15, 2017 in conjunction with Synovus' cash tender offer that commenced on December 23, 2015 and expired on January 22, 2016. Results for the nine months endedAt September 30, 2016 included a $4.7 million pre-tax loss relating to this tender offer.
On September 25, 2017, Synovus issued a notice of redemption to redeem all of the $300.0 million aggregate principal amount of its outstanding 7.875% senior notes due 2019 on November 9, 2017 at a “make whole” premium, plus accrued but unpaid interest on the 2019 notes to the redemption date.  The results for the three months ending December 31, 2017 will include a pre-tax loss of approximately $24 million related to early extinguishment of these notes.
During the nine months ended September 30, 2017, Synovus repurchased $135.9 million in common stock under the current share repurchase program, which authorizes repurchases of up to $200 million of the Company's common stock to be executed during 2017. Additionally, during the first quarter of 2017, Synovus increased the quarterly common stock dividend by 25% to $0.15 per share effective with the quarterly dividend declared during the first quarter of 2017. Total shareholders' equity was $3.00 billion at September 30, 2017, compared to $2.93 billion at December 31, 2016, and $2.91 billion at September 30, 2016. Return on average common equity was 13.24%, annualized, for the three months ended September 30, 2017, compared to 10.34%, annualized, for the three months ended June 30, 2017, and 8.89%, annualized, for the three months ended September 30, 2016. Adjusted return on average common equity was 10.92%, annualized, for the three months ended September 30, 2017, compared to 10.49%, annualized, for the three months ended June 30, 2017, and 9.08%, annualized, for the three months ended September 30, 2016. Adjusted return on average tangible common equity was 11.19%, annualized, for the three months ended September 30, 2017, compared to 10.75%, annualized, for the three months ended June 30, 2017, and 9.16%, annualized, for the three months ended September 30, 2016. See "Non-GAAP Financial Measures" in this Report for the applicable reconciliation to the most comparable GAAP measure.

2017 Outlook
For 2017, excluding the impact from the Cabela's Transaction Fee and balance sheet restructuring actions recognized during the third quarter of 2017, management currently expects:
Average loan growth of 5% to 7%
Average2020, total deposits growth of 5% to 7%
Net interest income growth of 12% to 14%
Adjusted non-interest income* growth of 2% to 4%
Adjusted total non-interest expense* growth of 2% to 4%
Effective income tax rate of 34% to 35%
Adjusted net charge-off ratio* of 15 to 20 bps
* See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
Changes in Financial Condition
During the nine months ended September 30, 2017, total assets increased $1.54 billion from $30.10 billion at December 31, 2016 to $31.64 billion. The principal components of this increase were an increase in loans, net of deferred fees and costs of $631.0$39.55 billion, increased $2.39 billion, or 6%, from December 31, 2019 led by C&I growth of $3.24 billion, including $2.71 billion in PPP loans net of unearned fees, and CRE growth of $472.1 million, partially offset by a $1.26 billion decline in consumer loans. The decline in consumer loans is the result of the strategic disposition of $1.28 billion in third-party single-service consumer and non-relationship consumer mortgage loans. We expect loans, excluding the impact of PPP forgiveness, to be relatively flat in the fourth quarter, as compared to the third quarter of 2020.
The ACL at September 30, 2020 totaled $664.6 million, an increase of $381.8 million from December 31, 2019, reflecting a building of the ACL required under CECL primarily as a result of uncertainty and deterioration in the economic environment due to COVID-19. The ACL to loans coverage ratio was 1.68%, or 1.80%, excluding PPP loans, at September 30, 2020. Current credit metrics deteriorated slightly with NPAs at 49 bps, NPLs at 43 bps, and total past due loans at 14 bps; however, we have not experienced widespread deterioration in the portfolio. Year-to-date, net charge-offs are 25 bps compared to 18 bps in the prior year. Synovus expects some pressure on credit metrics over the next few quarters, which aligns with the reserve builds to-date during 2020 under CECL.
Total period-end deposits at September 30, 2020 increased $6.26 billion, or 16%, compared to December 31, 2019. Core transaction deposits increased $6.82 billion, or 28%, compared to December 31, 2019. The significant increase in deposit balances compared to December 31, 2019 is due largely to the current economic environment as well as government stimulus programs including deposits associated with PPP loans.
At September 30, 2020, Synovus' CET1 ratio was 9.30%, well in excess of regulatory requirements including the capital conservation buffer of 2.5%. The September 30, 2020 CET1 ratio improved 40 bps compared to June 30, 2020 and improved 35 bps compared to December 31, 2019 from a combination of earnings and balance sheet activities. These balance sheet activities included the settlement of our second quarter bond repositioning and our on-going efforts to manage non-relationship loan portfolios as we prioritize our balance sheet for core, client relationships.
More detail on Synovus' financial results for the three and nine months ended September 30, 2020 may be found in subsequent sections of "Item 2. – Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Report. See also "Item 1A. - Risk Factors" of this Report.
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(1) See "Table 14 - Reconciliation of Non-GAAP Financial Measures” in this Report for applicable reconciliation to the most comparable GAAP measure.
Changes in Financial Condition
During the nine months ended September 30, 2020, total assets increased $4.84 billion from $48.20 billion at December 31, 2019 to $53.04 billion. Loans increased $2.39 billion, including $2.71 billion in PPP loans net of unearned fees, and loans held for sale increased $630.0 million as Synovus transitioned certain third-party lending partnership consumer loans to held for sale. Investment securities available for sale increased $787.9 million and cash and cash equivalents increased $798.4 million. Additional increases in total assets at September 30, 2020, compared to December 31, 2019, included increases in BOLI investments of $268.4 million driven by additional investments in BOLI policies and increases in other assets of $363.1 million primarily from an increase in the fair value of derivative assets of $323.0 million.
The growth in assets was primarily funded by increases of $6.26 billion in deposits. Other short-term borrowings declined $1.35 billion and long-term debt decreased $525.5 million. Other liabilities increased $296.4 million and included an increase in the fair value of derivative liabilities of $142.9 million, an increase in reserves on unfunded commitments of $59.4 million, and an increase in interest bearing funds with the Federal Reserveincome taxes payable of $770.5$38.4 million. Additionally, investment securities available for sale, at fair value,Total shareholders' equity increased by $107.2 million, and Synovus increased its investment in BOLI policies by $150.0$122.9 million during the nine months ended September 30, 2017. An increase2020, primarily due to net income of $1.54 billion$223.3 million, increases in deposits, which includes the $1.10 billionunrealized gains of $29.9 million in brokered time deposits acquired from WFB in the Cabela's Transaction, provided the primary funding source for the growth in assets. Long-term debt declined by $278.3 million during the nine months ended September 30, 2017 with Synovus' payoff of $278.6 million of subordinated notes at their maturity date of June 15, 2017. Other liabilities, at September 30, 2017, included $193.3 million accrued for purchases of investment securities available for sale settled during October, 2017.and $79.4 million in cash flow hedges, offset partially by dividends declared on common stock of $145.8 million and dividends declared on preferred stock of $24.9 million.
Synovus adopted CECL on January 1, 2020 with an increase to the ALL of $83.0 million and an increase to the reserve on unfunded commitments of $27.4 million with offsetting increases in loans of $62.2 million related to acquired PCI loans and net deferred tax assets of $12.5 million and a reduction to retained earnings of $35.7 million. The ACL at September 30, 2020 was $664.6 million, an increase of $381.8 million from December 31, 2019, reflecting significant economic stress due to the COVID-19 healthcare crisis.
The loan to deposit ratio was 88.6% at September 30, 2020, compared to 96.8% at December 31, 2019, and 97.3% at September 30, 2019.
Loans
The following table compares the composition of the loan portfolio at September 30, 2017,2020, December 31, 2016,2019, and September 30, 2016.2019.
(dollars in thousands)September 30, 2017 December 31, 2016 
September 30, 2017 vs.
December 31, 2016 % Change(1)
 September 30, 2016 
September 30, 2017 vs.
September 30, 2016
% Change
Investment properties$5,925,096
 5,869,261
 1.3 % 5,898,631
 0.4 %
1-4 family properties794,616
 887,307
 (14.0) 921,688
 (13.8)
Land and development507,212
 616,297
 (23.7) 652,232
 (22.2)
  Total commercial real estate7,226,924
 7,372,865
 (2.6) 7,472,551
 (3.3)
Commercial, financial and agricultural6,961,709
 6,909,036
 1.0
 6,537,656
 6.5
Owner-occupied4,765,433
 4,636,016
 3.7
 4,471,365
 6.6
Total commercial and industrial11,727,142
 11,545,052
 2.1
 11,009,021
 6.5
Home equity lines1,528,889
 1,617,265
 (7.3) 1,638,844
 (6.7)
Consumer mortgages2,557,680
 2,296,604
 15.2
 2,243,154
 14.0
Credit cards225,725
 232,413
 (3.8) 232,309
 (2.8)
Other consumer loans1,245,278
 818,183
 69.8
 693,204
 79.6
Total consumer5,557,572
 4,964,465
 16.0
 4,807,511
 15.6
Total loans24,511,638
 23,882,382
 3.5
 23,289,083
 5.2
Deferred fees and costs, net(24,278) (25,991) (8.8) (26,196) (7.3)
Total loans, net of deferred fees and costs$24,487,360
 23,856,391
 3.5 % 23,262,887
 5.3 %
          
(1) Percentage changes are annualized


Table 2 - Loans by Portfolio Class
September 30, 2020 vs. December 31, 2019 ChangeSeptember 30, 2020 vs. September 30, 2019 Change
(dollars in thousands)September 30, 2020December 31, 2019September 30, 2019
Commercial, financial and agricultural$13,120,038 33.2 %$10,239,559 27.6 %$2,880,479 28 %$9,846,830 27.0 %$3,273,208 33 %
Owner-occupied6,894,113 17.4 6,529,811 17.6 364,302 6 6,571,485 18.1 322,628 5 
Total commercial and industrial20,014,151 50.6 16,769,370 45.2 3,244,781 19 16,418,315 45.1 3,595,836 22 
Investment properties9,662,447 24.4 9,004,327 24.2 658,120 7 8,843,545 24.3 818,902 9 
1-4 family properties655,038 1.7 780,015 2.1 (124,977)(16)805,756 2.2 (150,718)(19)
Land and development648,390 1.6 709,442 1.9 (61,052)(9)663,689 1.8 (15,299)(2)
Total commercial real estate10,965,875 27.7 10,493,784 28.2 472,091 4 10,312,990 28.3 652,885 6 
Consumer mortgages5,658,525 14.3 5,546,368 14.9 112,157 2 5,470,730 15.0 187,795 3 
Home equity lines1,615,207 4.1 1,713,157 4.6 (97,950)(6)1,675,092 4.6 (59,885)(4)
Credit cards264,829 0.7 268,841 0.7 (4,012)(1)267,874 0.8 (3,045)(1)
Other consumer loans1,130,237 2.9 2,396,294 6.5 (1,266,057)(53)2,295,486 6.3 (1,165,249)(51)
Total consumer8,668,798 22.0 9,924,660 26.7 (1,255,862)(13)9,709,182 26.7 (1,040,384)(11)
Total loans39,648,824 100.3 37,187,814 100.1 2,461,010 7 36,440,487 100.1 3,208,337 9 
Deferred fees and costs, net(98,977)(0.3)(25,364)(0.1)(73,613)290 (22,661)(0.1)(76,316)337 
Total loans, net of deferred fees and costs$39,549,847 100.0 %$37,162,450 100.0 %$2,387,397 6 %$36,417,826 100.0 %$3,132,021 9 %
At September 30, 2017,2020, total loans, were $24.49net of deferred fees and costs of $39.55 billion, an increase of $631.0 million, or 3.5% annualized, and $1.22increased $2.39 billion, or 5.3%6%, compared tofrom December 31, 20162019 led by C&I growth of $3.24 billion, including $2.71 billion in PPP loans net of unearned fees, and September 30, 2016, respectively. Year-over-year loanCRE growth was driven by a $718.1of $472.1 million, or 6.5% increase in C&I loans and a $750.1 million or 15.6% increase in consumer loans, partially offset by a $245.6 million or 3.3%$1.26 billion decline in consumer loans. The decline in consumer loans is the result of the strategic disposition of $1.28 billion in third-party single-service consumer and non-relationship consumer mortgage loans. Total loans at September 30, 2020 declined $364.5 million sequentially due to strategic dispositions of $531.8
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million primarily in third-party single-service consumer loans and non-relationship consumer mortgage loans. Excluding the impact of asset dispositions and PPP loan payoffs, we had sequential quarter net loan growth of $170.3 million. We expect loans, excluding the impact of PPP forgiveness, to be relatively flat in the fourth quarter, as compared to the third quarter of 2020.C&I loans remain the largest component of our loan portfolio, representing 50.6% of total loans, while CRE loans.and consumer loans represent 27.7% and 22.0%, respectively. Our portfolio composition is established through a comprehensive concentration management policy which sets limits for C&I, CRE, and consumer loan levels as well as for sub-categories therein.
U.S. Small Business Administration Paycheck Protection Program (PPP)
Synovus is participating in the Paycheck Protection Program (“PPP”), which is a loan program that originated from the CARES Act and was subsequently expanded by the Paycheck Protection Program and Health Care Enhancement Act (“PPPHCEA Act”) which was passed by Congress on April 23, 2020 and signed into law on April 24, 2020. PPP loans are forgivable, in whole or in part, if the proceeds are used for payroll and other permitted purposes in accordance with the requirements of the PPP. These loans carry a fixed rate of 1.00% and a term of two years, if not forgiven, in whole or in part. The loans are guaranteed by the SBA. The SBA pays the originating bank a processing fee ranging from 1% to 5%, based on the size of the loan. Synovus began accepting applications from qualified customers on April 3, 2020 and provided nearly $2.9 billion in funding to close to 19,000 customers through the PPP during the second quarter. The average PPP loan was approximately $150 thousand, and the customers that received those loans employ over 335 thousand individuals. In October 2020, the SBA announced a streamlined forgiveness process for certain PPP loans of $50,000 or less and approximately 7% of our PPP balances fall within this threshold.
Commercial Loans
Total commercial loans (which are comprised of C&I and CRE loans) at September 30, 20172020 were $18.95$30.98 billion,, or 77.4%78.3%, of the total loan portfolio, compared to $18.92$27.26 billion,, or 79.3%73.4%, at December 31, 20162019 and $18.48$26.73 billion, or 79.4%73.4%, at September 30, 2016.2019.
At September 30, 2017 and December 31, 2016,2020, Synovus had 26 and 296 commercial loan relationships respectively, with total commitments of $50$100 million or more (including amounts funded). The average funded balance of these relationships at both September 30, 2017 and December 31, 2016 was approximately $33, with no single relationship exceeding $150 million and $34 million, respectively.in commitments.
Commercial and Industrial Loans
The C&I loan portfolio represents the largest category of Synovus' total loan portfolio and is currently concentrated on small toprimarily comprised of general middle market C&I lending dispersed throughoutand commercial banking clients across a diverse groupset of industries primarily in the Southeast and other selected areas in the United States.industries. The following table shows the composition of the C&I loan portfolio aggregated by NAICS code. The portfolio is relationship focused and, as a result, Synovus' lenders have in-depth knowledge of the borrowers, most of which have guaranty arrangements. C&I loans are originated through Synovus' local market banking divisions and the Corporate Banking Group to commercial customers primarily to finance capital expenditures, including real property, plant and equipment, or as a source of working capital. In accordance with Synovus' lending policy, each loan undergoes a detailed underwriting process which incorporates uniform underwriting standards and oversight in proportion to the size and complexity of the lending relationship. As of September 30, 2017, approximately 93%2020, 80.7% (93.7% excluding PPP loans) of Synovus' C&I loans are secured by real estate, business equipment, inventory, and other types of collateral.collateral compared to 92.6% as of December 31, 2019. C&I loans of $11.73grew $3.24 billion, representing 47.9% of the total loan portfolio, grew $182.0 million, or 2.1% annualized,19.3%, from December 31, 2016 and $718.1 million, or 6.5%, from2019, driven primarily by$2.71 billion in PPP loans net of unearned fees at September 30, 2016. The year-over-year growth in C&I loans reflects $356.7 million in loans added from the Global One acquisition on October 1, 2016.2020.
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Table 3 - Commercial and Industrial Loans by IndustryTable 3 - Commercial and Industrial Loans by Industry
September 30, 2020December 31, 2019
Commercial and Industrial Loans by IndustrySeptember 30, 2017 December 31, 2016
(dollars in thousands)Amount 
%(1)
 Amount 
%(1)
(dollars in thousands)Amount
%(1)
Amount
%(1)
Health care and social assistance$2,709,369
 23.1% $2,598,438
 22.5%Health care and social assistance$3,679,193 18.4 %$3,083,355 18.4 %
Finance and insuranceFinance and insurance1,531,747 7.7 1,263,521 7.5 
Manufacturing932,355
 8.0
 872,559
 7.6
Manufacturing1,384,392 6.9 1,208,688 7.2 
Retail trade844,068
 7.2
 876,951
 7.6
Retail trade1,364,773 6.8 1,202,958 7.2 
Real estate and rental and leasing817,497
 7.0
 764,296
 6.6
Other services785,735
 6.7
 816,846
 7.1
Finance and insurance733,843
 6.3
 764,811
 6.6
Accommodation and food servicesAccommodation and food services1,310,059 6.5 921,515 5.5 
Professional, scientific, and technical services704,515
 6.0
 719,056
 6.2
Professional, scientific, and technical services1,266,776 6.3 883,433 5.3 
Wholesale trade719,717
 6.0
 645,124
 5.6
Wholesale trade1,181,295 5.9 1,138,145 6.8 
Real estate other582,041
 5.0
 561,133
 4.9
Accommodation and food services538,749
 4.6
 530,232
 4.6
Other servicesOther services1,178,357 5.9 1,005,420 6.0 
Real estate and rental and leasingReal estate and rental and leasing1,118,949 5.6 1,126,828 6.7 
Construction455,816
 3.9
 465,632
 4.0
Construction1,081,726 5.4 702,892 4.2 
Transportation and warehousing407,663
 3.5
 385,350
 3.3
Transportation and warehousing953,810 4.8 854,954 5.1 
Arts, entertainment and recreationArts, entertainment and recreation854,972 4.3 771,846 4.6 
Real estate otherReal estate other686,309 3.4 615,441 3.7 
Educational servicesEducational services606,981 3.0 409,639 2.4 
Public AdministrationPublic Administration421,655 2.1 342,329 2.0 
Administration, support, waste management, and remediationAdministration, support, waste management, and remediation404,894 2.0 302,711 1.8 
Agriculture, forestry, fishing, and hunting363,640
 3.1
 387,589
 3.4
Agriculture, forestry, fishing, and hunting392,273 2.0 369,185 2.2 
Administration, support, waste management, and remediation268,458
 2.3
 287,391
 2.5
Educational services231,003
 2.0
 222,516
 1.9
Information212,829
 1.8
 240,437
 2.1
Information377,391 1.9 314,740 1.9 
Other industries419,844
 3.5
 406,691
 3.5
Other IndustriesOther Industries218,599 1.1 251,770 1.5 
Total commercial and industrial loans$11,727,142
 100.0% $11,545,052
 100.0%Total commercial and industrial loans$20,014,151 100.0 %$16,769,370 100.0 %
       
(1)    Loan balance in each category expressed as a percentage of total C&I loans.
At September 30, 2017, $6.962020, $13.12 billion of C&I loans, or 28.4%33.2% of the total loan portfolio (including PPP loans of $2.71 billion net of unearned fees), represented loans originated for the purpose of financing commercial, financial, and agricultural business activities. The primary source of repayment on these loans is revenue generated from products or services offered by the business or organization. The secondary source of repayment is the collateral, which consists primarily of equipment, inventory, accounts receivable, time deposits, cash surrender value of life insurance, and other business assets.

At September 30, 2017, $4.772020, $6.89 billion of C&I loans, or 19.5%17.4% of the total loan portfolio, represented loans originated for the purpose of financing owner-occupied properties. The primary sourcefinancing of repaymentowner-occupied facilities is considered a C&I loan even though there is improved real estate as collateral. This treatment is a result of the credit decision process, which focuses on these loans is revenue generatedcash flow from products or services offered byoperations of the business or organization.to repay the debt. The secondary source of repayment on these loans is the underlying real estate. These loans are predominately secured by owner-occupied properties and other real estate, and to a lesser extent, other types of collateral.
Commercial Real Estate Loans
Total CRE loans consist primarily of income-producing investment properties loans. Additionally, CRE loans include 1-4 family properties loans as well as land and development loans. These loans are subject to the same uniform lending policies referenced above.loans. Total CRE loans of $7.23$10.97 billion representing 29.5% of the total loan portfolio, decreased $145.9increased$472.1 million, or 2.6% annualized,4%, from December 31, 2016 and decreased $245.6 million, or 3.3%2019, from September 30, 2016. The decline from a year ago was driven by strategic reductions in 1-4 family properties and land and development loans and a $15.7 million reduction from sales and transfers to held for sale during the third quarter of 2017.  This decline was partially offsetprimarily by growth in income-producing investment properties.
Investment Properties Loans
Investment properties loans consist of construction and mortgage loans for income income-producing properties and are primarily made to finance multi-family properties, hotels, office buildings, shopping centers, warehouses and other investment property.commercial development properties. Total investment properties loans as of September 30, 20172020 were $5.93$9.66 billion,, or 82.0%88.1%, of the total CRE loan portfolio, and 24.2% of the total loan portfolio, compared to $5.87 billion,increased $658.1 million, or 79.6% of the total CRE portfolio and 24.6% of the total loan portfolio at7%,from December 31, 2016, an increase of $55.82019 with most sub-categories experiencing growth other than shopping centers, which were down $86.6 million, or 1.3% annualized. The net growth since year-end reflects an $84.0 million or 15.0% annualized growth in hotel loans, a $68.2 million or 5.8% annualized growth rate in multi-family loans, partially offset by a $124.0 million or 17.2% annualized decline in the shopping center portfolio. Synovus' investment properties portfolio is well diversified by property type, geography (primarily within Synovus' primary market areas of Georgia, Alabama, Tennessee, South Carolina, and Florida)5%, and tenants. The investment properties loans are primarily secured by the property being financed by the loans; however, these loans may also be secured by real estate or other assets beyond the property being financed.from December 31, 2019.
1-4 Family Properties Loans
1-4 family properties loans include construction loans to homebuildershome builders and commercial mortgage loans related to real estate investors1-4 family rental properties and are almost always secured by the underlying property being financed by such loans. These properties are primarily located in the markets served by Synovus. Construction loans are generally interest-only loans and typically have maturities of three years or less, and commercial mortgage loans generally have maturities of three to five years, with amortization periods of up to fifteen to twenty years. At September 30, 2017,2020, 1-4 family properties loans totaled $794.6$655.0 million,, or 11.0%6.0% of the total CRE loan portfolio, and 3.2% of the total loan portfolio, compared to $887.3decreased by $125.0 million, or 12.0% of the total CRE portfolio and 3.7% of the total loan portfolio at16%, from December 31, 2016.2019.

51

Land and Development Loans
Land and development loans include commercial and residential development as well as land acquisition loans and are secured by land held for future development, typically in excess of one year. These loans have short-term maturities and are typically unamortized. Properties securing these loans are substantially within themarkets served by Synovus footprint, and loan terms generally include personal guarantees from the principals. Loans in this portfolio are underwritten based on the loan to valueLTV of the collateral and the capacity of the guarantor(s). Total landLand and development loans were $507.2of $648.4 million at September 30, 2017, or 2.1% of the total loan portfolio, a decline of $109.12020 decreased $61.1 million, or 23.7% annualized,9%, from $709.4 million at December 31, 2016. Synovus continues to strategically reduce its exposure to these types of loans.2019.
Consumer Loans
The consumer loan portfolio consists of a wide variety of loan products offered through Synovus' banking network as well as third-party lending partnerships, including first and second residential mortgages, home equity lines,HELOCs, and credit card loans, as well as home improvementimprovement, student, and personal loans student loans, and other consumer loans.from third-party lending partnerships. The majority of Synovus' consumer loans are consumer mortgages and home equity linesHELOCs secured by first and second liens on residential real estate primarily located in the markets served by Synovus.
Consumer loans at September 30, 2017 totaled $5.562020 of $8.67 billion representing 22.6%decreased $1.26 billion, or 13%, compared to December 31, 2019 due to the strategic disposition of certain third-party single-service consumer loans and non-relationship consumer mortgage loans. Consumer mortgages grew $112.2 million, or 2.0%, from December 31, 2019 due to record production primarily resulting from the low rate environment in addition to continued successful recruiting of MLOs somewhat offset by the strategic sale of $180.2 million in non-relationship consumer mortgage loans. HELOCs decreased $98.0 million, or 6%, from December 31, 2019. Credit card loans of $264.8 million at September 30, 2020 included $56.6 million of commercial credit card loans,and decreased $4.0 million from $268.8 million at December 31, 2019. Other consumer loans decreased $1.27 billion, or 53%, from December 31, 2019 primarily due to the strategic disposition of certain third-party single-service consumer loans totaling $1.10 billion. As of September 30, 2020, third-party lending partnerships had combined balances of $714.3 million, or 1.8%, of the total loan portfolio, compared to $4.96$1.98 billion,, or 20.7%5.3%, of the total loan portfolio, at December 31, 2016, and $4.81 billion, or 20.6% of the total loan portfolio at September 30, 2016. Consumer loans increased $593.1 million, or 16.0% annualized, from December 31, 2016 and $750.1 million, or 15.6%, from September 30, 2016. Consumer mortgages grew $261.1 million or 15.2% annualized, from December 31, 2016, and $314.5 million, or 14.0%, from September 30, 2016 primarily due to continued recruiting of mortgage loan originators in strategic markets throughout the footprint as well as enhanced origination efforts, which also create additional cross-selling opportunities for other products. Credit card loans totaled $225.7 million at September 30, 2017, including $59.1 million of commercial credit card loans. The commercial credit card loans relate to Synovus' commercial customers who utilize corporate credit cards for various business activities. Other consumer loans increased $427.1 million, or 69.8% annualized, from December2019.

31, 2016, and $552.1 million, or 79.6%, from September 30, 2016 due to two consumer-based lending partnerships. One lending partnership, which began in the third quarter of 2015, is a program that provides merchants and contractors nationwide with the ability to offer term financing to their customers for major purchases and home improvement projects. The other lending partnership, which began in the second quarter of 2016, primarily provides qualified borrowers the ability to refinance student loan debt. As of September 30, 2017, these partnerships had combined balances of $915.2 million, or 3.7% of the total loan portfolio.
Consumer loans are subject to uniform lending policies and consist primarily of loans with strong borrower credit scores. Synovus makes consumer lending decisions based upon a number of key credit risk determinants including FICO scores as well as loan-to-value and debt-to-income ratios. Risk levels 1-6 (descending)Consumer loans are generally assigned to consumer loans based upon a risk score matrix.rating on a 9-point scale based on credit bureau scores, with a loan grade of 1 assigned as the lowest level of risk and a loan grade of 6 as the highest level of risk. No loans graded higher than a 6 at origination are approved for funding. At least annually, the consumer loan portfolio data is sent to a consumer credit reporting agency for a refresh of customers' credit scores so that management can evaluate ongoing consistency or negative migration in the quality of the portfolio, which impacts the allowance for loan losses. The most recent credit score refresh was completed as of June 30, 2017.ALL. Revolving lines of credit are regularly reviewed for anya material change in financial circumstances, and when appropriate, the line of credit may be suspended for further advances. FICO scores within the residential real estate portfolio have generally remained stable over the last several years.
At June As of September 30, 2017,2020, weighted-average FICO scores within the residential real estate portfolio based on committed balances were 761790 for HELOCs and 770778 for consumer mortgages.Conservative debt-to-income ratios (average HELOC debt to income ratio of loans originated) were maintained in both the third quarter and second quarter of 2017 at 32.3%. HELOC utilization rates (total amount outstanding as a percentage of total available lines) were 55.9% and 58.3% atSeptember 30, 2017 and December 31, 2016, respectively. Additionally, we maintained loan-to-value ratios based upon prudent guidelines to ensure consistency with Synovus' overall risk philosophy. At September 30, 2017, 36% of home equity line balances were secured by a first lien, and 64% were secured by a second lien. Apart from credit card loans and unsecured loans, Synovus does not originate loans with LTV ratios greater than 100% at origination except for infrequent situations provided that certain underwriting requirements are met. Additionally, at origination, loan maturities are determined based on the borrower's ability to repay (cash flow or earning power that represents the primary source of repayment) and the collateralization of the loan, including the economic life of the asset being pledged. Collateral securing these loans provides a secondary source of repayment in that the collateral may be liquidated. Synovus determines the need for collateral on a case-by-case basis. Factors considered include the purpose of the loan, current and prospective credit-worthiness of the customer, terms of the loan, and economic conditions.Consumer Mortgages.
Higher-risk consumer loans as defined by the FDIC are consumer loans (excluding consumer loans defined as nontraditional mortgage loans) where, as of the origination date or, if the loan has been refinanced, as of the refinance date, the probability of default within two years is greater than 20%, as determined using a defined historical stress period. These loans are not a part of Synovus' consumer lending strategy, and Synovus does not currently offer specific higher-risk consumer loans, alt-A, no documentation or stated income residential real estate loan products. Synovus estimates that, as of September 30, 2017, it had $87.0 million of higher-risk consumer loans (1.6% of the consumer portfolio and 0.4% of the total loan portfolio) compared to $105.3 million as of September 30, 2016. Included in these amounts as of September 30, 2017 and 2016 are approximately $11 million and $12 million, respectively, of accruing TDRs.
52


Deposits
Deposits provide the most significant funding source for interest earning assets. The following table shows the relative composition of period-end deposits as of the dates indicated. See Table 10 - Average Balances and Yields/Rates in this Report for information on average deposits for the time periods indicated.including average rates.
Table 4 - Composition of Period-end Deposits
(dollars in thousands)September 30, 2020
%(1)
June 30, 2020
%(1)
December 31, 2019
%(1)
September 30, 2019
%(1)
Non-interest-bearing demand deposits(2)
$12,129,777 27.2 %$11,830,675 26.8 %$8,661,220 22.6 %$8,970,218 24.0 %
Interest-bearing demand deposits(2)
5,291,135 11.8 5,057,234 11.4 4,769,505 12.4 4,714,817 12.6 
Money market accounts(2)
12,441,340 27.8 11,457,223 26.0 9,827,357 25.6 9,212,140 24.6 
Savings deposits(2)
1,125,985 2.5 1,080,119 2.4 909,500 2.4 897,292 2.4 
Public funds5,791,944 13.0 5,347,351 12.1 4,622,318 12.0 3,795,320 10.1 
Time deposits(2)
3,976,464 8.9 5,131,676 11.6 6,185,611 16.1 6,647,788 17.8 
Brokered deposits3,909,259 8.8 4,290,302 9.7 3,429,993 8.9 3,195,495 8.5 
Total deposits$44,665,904 100.0 %$44,194,580 100.0 %$38,405,504 100.0 %$37,433,070 100.0 %
Core deposits(3)    
$40,756,645 91.2 %$39,904,278 90.3 %$34,975,511 91.1 %$34,237,575 91.5 %
Core transaction deposits(4)    
$30,988,237 69.4 %$29,425,251 66.6 %$24,167,582 62.9 %$23,794,467 63.6 %
Time deposits greater than $100,000, including brokered and public funds$5,478,221 12.3 %$6,875,462 15.6 %$7,262,833 18.9 %$7,574,038 20.2 %
Brokered time deposits$1,996,133 4.5 %$2,442,940 5.5 %$2,154,095 5.6 %$2,098,643 5.6 %
Composition of Average Deposits
                
(dollars in thousands)September 30, 2017 
%(1)
 June 30, 2017 
%(1)
 December 31, 2016 
%(1)
 September 30, 2016 
%(1)
Non-interest bearing demand deposits$7,305,508
 28.9% 7,298,845
 29.2 7,280,033
 29.5 $7,042,908
 29.3
Interest bearing demand deposits4,868,372
 19.3
 4,837,053
 19.4 4,488,135
 18.2 4,274,117
 17.8
Money market accounts, excluding brokered deposits7,528,036
 29.8
 7,427,562
 29.7 7,359,067
 29.8 7,227,030
 30.1
Savings deposits803,185
 3.2
 805,019
 3.2 908,725
 3.7 797,961
 3.3
Time deposits, excluding brokered deposits3,250,929
 12.9
 3,243,670
 13.0 3,244,373
 13.2 3,278,536
 13.6
Brokered deposits1,530,889
 6.1
 1,379,559
 5.5 1,380,932
 5.6 1,409,739
 5.9
Total average deposits$25,286,919
 100.0
 24,991,708
 100.0 24,661,265
 100.0 $24,030,291
 100.0
Average core deposits(2)    
23,756,030
 93.9
 23,612,149
 94.5 23,280,334
 94.4 22,620,552
 94.1
Average core transaction deposits (2)    
$18,603,161
 73.6
 18,409,170
 73.7 17,776,147
 72.1 $17,362,060
 72.3
                
(1)Deposits balance in each category expressed as percentage of total deposits.
(2)Excluding any public funds or brokered deposits.
(3)    Core deposits exclude brokered deposits.
(4)    Core transaction deposits consist of non-interest-bearing demand deposits, interest-bearing demand deposits, money market accounts, and savings deposits excluding public funds and brokered deposits.
Total period-end deposits at September 30, 2020 increased $471.3 million, or 1%, compared to June 30, 2020, and increased $6.26 billion, or 16%, compared to December 31, 2019. Core transaction deposits increased $1.56 billion, or 5%, sequentially, and increased $6.82 billion, or 28%, compared to December 31, 2019. The significant increase in deposit balances compared to December 31, 2019 is due largely to the current uncertain economic environment as well as government stimulus programs including deposits associated with PPP loans. The sequential quarter growth in lower cost core transaction accounts of $1.56 billion included growth in non-interest-bearing demand deposits of $299.1 million, money market accounts of $984.1 million, NOW accounts of $233.9 million, and savings balances of $45.9 million, and more than offset strategic declines of $1.16 billion and $381.0 million in time deposits and brokered deposits, respectively. Total deposit cost declined 14 bps during the third quarter of 2020, compared to the second quarter of 2020 due to pricing diligence and product remixing.
On an average basis, the increase in total deposits was $1.24 billion, or 3%, compared to the second quarter of 2020.
Non-interest Revenue
Non-interest revenue for the third quarter of 2020 was $114.4 million, up $25.7 million, or 29%, and year-to-date was $391.8 million, up $133.8 million, or 52%, compared to the same periods in 2019. Adjusted non-interest revenue, which excludes net investment securities gains/(losses) and gain on sale/fair value increase/(decrease) of private equity investments, for the third quarter of 2020 was $115.7 million, up $24.4 million, or 27%, from the third quarter of 2019, and on a year-to-date basis was $310.4 million compared to $259.9 million for the first nine months of 2019, up $50.5 million, or 19%. The increase in adjusted non-interest revenue was due primarily to strong growth in mortgage banking income with record production driven by the current rate environment. In the fourth quarter, we expect to see declines in mortgage revenue, as compared to the third quarter of 2020. See “Non-GAAP"Table 14 - Reconciliation of Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.measures.
During the third quarter of 2017, total average deposits increased $295.2 million, or 4.7% annualized, compared to the second quarter of 2017, and increased $1.26 billion, or 5.2%, compared to the third quarter of 2016. Excluding the acquired WFB brokered time deposits, average deposits for the third quarter of 2017 increased $223.3 million, or 3.5% annualized, compared to the second quarter of 2017. Average core transaction deposits increased $194.0 million, or 4.2% annualized, compared to the prior quarter, and were up $1.24 billion, or 7.1%, compared to the third quarter of 2016. The increase in average deposits for the three months ended September 30, 2017 compared to the three months ended September 30, 2016 was due to growth in average core transaction deposits, which represented 73.6% of average deposits for the third quarter of 2017 compared to 72.3% a year ago. See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
53
Average non-interest bearing demand deposits as a percentage of total average deposits were 28.9% for the three months ended September 30, 2017, compared to 29.2% for the three months ended June 30, 2017 and 29.3% for the three months ended September 30, 2016.

Average time deposits of $100,000 and greater for the three months ended September 30, 2017, June 30, 2017, and September 30, 2016 were $3.05 billion, $2.86 billion, and $2.81 billion, respectively, and included average brokered time deposits of $983.4 million, $815.5 million, and $775.1 million, respectively. These larger deposits represented 12.1%, 11.4%, and 11.7% of total average deposits for the three months ended September 30, 2017, June 30, 2017, and September 30, 2016, respectively, and included brokered time deposits which represented 3.9%, 3.3%, and 3.2% of total average deposits for the three months ended September 30, 2017, June 30, 2017, and September 30, 2016, respectively. Brokered time deposits acquired from WFB in the Cabela's Transaction increased average brokered time deposits by $71.9 million for the three months ended September 30, 2017.
During May 2016, Synovus launched a bank deposit sweep product, which resulted in the addition of approximately $293 million in deposits from existing customers of Synovus Securities.   These customers previously had their cash balances invested in mutual funds with an unaffiliated institution. The total aggregate balance of these accounts was approximately $326.2 million as of September 30, 2017. 
During the third quarter of 2017, total average brokered deposits represented 6.1% of total average deposits compared to 5.5% and 5.9% of total average deposits the previous quarter and the third quarter a year ago, respectively.

Non-interest Income
Non-interest income for the nine and three months ended September 30, 2017 was $276.0 million and $135.4 million, respectively, up $76.8 million, or 38.5%, and up $67.3 million, or 98.7%, compared to the nine and three months ended September 30, 2016, respectively. Adjusted non-interest income, which excludes the Cabela's Transaction Fee, net investment securities (losses) gains, net, and decrease in fair value of private equity investments, net was up $4.9 million, or 2.4%, and flat, for the nine and three months ended September 30, 2017, compared to the same periods a year ago, respectively. See "Non-GAAP Financial Measures" in this Report for the applicable reconciliation to the most comparable GAAP measure.
The following table shows the principal components of non-interest income.revenue.
Table 5 - Non-interest revenue
Three Months Ended September 30,Nine Months Ended September 30,
(dollars in thousands)20202019% Change20202019% Change
Service charges on deposit accounts$17,813 $22,952 (22)%$54,069 $65,805 (18)%
Fiduciary and asset management fees15,885 14,686 8 46,009 42,743 8 
Card fees10,823 12,297 (12)30,959 34,334 (10)
Brokerage revenue10,604 11,071 (4)32,987 30,502 8 
Mortgage banking income31,229 10,351 202 66,987 23,313 187 
Capital markets income5,690 7,396 (23)22,984 21,557 7 
Income from bank-owned life insurance7,778 5,139 51 21,572 15,605 38 
Investment securities (losses) gains, net(1,550)(3,731)nm76,594 (5,502)nm
Gain on sale and increase in fair value of private equity investments260 1,194 nm4,712 3,507 nm
Other non-interest revenue15,879 7,405 114 34,879 26,081 34 
Total non-interest revenue$114,411 $88,760 29 %$391,752 $257,945 52 %
Non-interest Income

Nine Months Ended September 30, Three Months Ended September 30,
(in thousands)2017 2016 % Change 2017 2016 % Change
Service charges on deposit accounts$59,848
 60,772
 (1.5)% $20,255
 20,822
 (2.7)%
Fiduciary and asset management fees37,290
 34,691
 7.5
 12,615
 11,837
 6.6
Brokerage revenue21,947
 20,019
 9.6
 7,511
 6,199
 21.2
Mortgage banking income17,151
 18,755
 (8.6) 5,603
 7,329
 (23.6)
Bankcard fees24,339
 24,988
 (2.6) 7,901
 8,269
 (4.5)
Cabela's Transaction Fee75,000
 —
 nm
 75,000
 —
 nm
Investment securities (losses) gains, net(289) 126
 nm
 (7,956) 59
 nm
Decrease in fair value of private equity investments, net(3,193) (527) nm
 (27) (249) nm
Other fee income16,127
 15,255
 5.7
 5,094
 5,171
 (1.5)
Other non-interest income27,754
 25,109
 10.5
 9,439
 8,718
 8.3
Total non-interest income$275,974
 199,188
 38.5 % $135,435
 68,155
 98.7 %
            
Three and Nine Months Ended September 30, 2020 compared to September 30, 2019
Principal Components of Non-interest Income
Service charges on deposit accounts for the ninethree and threenine months ended September 30, 20172020 were down $924 thousand,$5.1 million, or 1.5%22%, and down $567 thousand,$11.7 million, or 2.7%18%, respectively, compareddue primarily to the nineimpact of COVID-19, including fewer transactions and three months ended September 30, 2016.the impact of higher average balances due to stimulus funds. Service charges on deposit accounts consist of NSF fees, account analysis fees, and all other service charges. NSF fees were $27.4down $4.4 million, or 43%, and $9.4$9.3 million, or 33%, for the ninethree and threenine months ended September 30, 2017, respectively, down $6472020, respectively. Account analysis fees were up $168 thousand, or 2.3%2%, and $236down $283 thousand, or 2.4%1%, compared tofor the ninethree and threenine months ended September 30, 2016, respectively. The decline in NSF fees from prior year is primarily due to lower Regulation E opt-in rates on new accounts as well as lower incident levels given higher average deposit balances. Account analysis fees were $18.6 million and $6.3 million for the nine and three months ended September 30, 2017, respectively, up $382 thousand, or 2.1%, and up $122 thousand, or 2.0%, compared to the nine and three months ended September 30, 2016,2020, respectively. All other service charges on deposit accounts, which consist primarily of monthly fees on retail demand depositdeposits, saving accounts, and savingsmall business accounts, for the ninethree and threenine months ended September 30, 20172020, were $13.9 million and $4.5 million, down $659$882 thousand, or 4.5%16%, and $452 thousand,$2.2 million, or 9.2%14%, compared to the same periods in 2016. The decline in all other service charges is largely due to a one-time impact during 2017 from account level conversions required for Synovus Bank's transition to a single bank operating environment.respectively.
Fiduciary and asset management fees are derived from providing estate administration, employee benefit plan administration, personal trust, corporate trust, corporate bond, investment management, and financial planning services. Fiduciary and asset management fees increased $2.6$1.2 million, or 7.5%8%, and $778 thousand,$3.3 million, or 6.6%8%, for the ninethree and threenine months ended September 30, 2017, respectively, compared to the nine and three months ended September 30, 2016.2020, respectively. The year-over-year increase isincreases were driven by growth in total assets under management which ended the quarter at $13.0 billion, an increase of 14.8% from September 30, 2016, from higher equity markets as well as increased banker productivity, as Synovus continuesby 8% year-over-year to benefit from new talent additions.$17.54 billion.
Brokerage revenue, which consists primarily of brokerage commissions, was $21.9 million and $7.5 millionCard fees for the ninethree and three months ended September 30, 2017, respectively, up $1.9 million, or 9.6%, and up $1.3 million, or 21.2%, compared to the nine and three months ended September 30, 2016, respectively. The increase for 2017 compared to 2016 is largely driven by growth in brokerage assets under management, which ended the quarter at $2.25 billion, an increase of 22.3% from September 30, 2016, as well as increased banker productivity, as Synovus continues to benefit from new talent additions.


Mortgage banking income was $17.2 million and $5.6 million for the nine and three months ended September 30, 2017, respectively, compared to $18.8 million and $7.3 million for the same periods in 2016. During the third quarter of 2017, mortgage production excluding portfolio loan production decreased 1.9% sequentially and declined 14.3% from the same time period in 2016, reflecting a decline in refinancing volume. Total mortgage production for the first nine months of 2017 was $978.7 million. Mortgage production excluding portfolio loan production for the nine months ended September 30, 2017 was $491.32020 were down $1.5 million, down 5.2% fromor 12%, and $3.4 million, or 10%, respectively, due to lower transaction volume as a result of the same time periodimpact of 2016.
Bankcard fees totaled $24.3 million and $7.9 million for the nine and three months ended September 30, 2017, respectively, compared to $25.0 million and $8.3 million for the same periods in 2016. BankcardCOVID-19. Card fees consist primarily of credit card interchange fees, and debit card interchange fees. Debit card interchange fees, were $12.9and merchant discounts. Card fees are reported net of certain associated expense items including customer loyalty program expenses and network expenses.
Brokerage revenue of $10.6 million up $109 thousand, or 0.9%, and $4.3 million, up $4 thousand, or 0.1%, for the nine and three months ended September 30, 2017, respectively, compared to the same periods in 2016. Credit card interchange fees were $16.6 million,2020 was down $254$466 thousand, or 1.5%4%, and $5.5 million, down $147 thousand, or 2.6%, for the nine months ended September 30, 2020 was $33.0 million, up $2.5 million, or 8%. The year-over-year growth was driven by growth in assets under management, increasing contributions from 2019 new hires, and higher transaction revenue from elevated market volatility. Brokerage revenue consists primarily of brokerage commissions as well as advisory fees earned from the management of customer assets.
Mortgage banking income was significantly higher in the first nine months of 2020, with increases of $20.9 million and $43.7 million for the three and nine months ended September 30, 2020, respectively. Mortgage banking income was driven by higher production and sales, including an increase in refinance volume, due primarily to a decline in long-term interest rates. Total secondary market mortgage loan production was $653.9 million, up $371.3 million, and $1.54 billion, up $916.9 million, for the three and nine months ended September 30, 2020, respectively.
Capital markets income primarily includes fee income from customer derivative transactions. Additionally, capital markets income includes fee income from capital raising investment banking transactions and foreign exchange as well as other miscellaneous income from capital market transactions. While capital markets income was $1.7 million lower for the three months ended September 30, 2017, respectively, compared to the same periods in 2016.
On September 25, 2017, Synovus Bank completed the Cabela's Transaction and received the Cabela's Transaction Fee.
Investment securities (losses) gains, net, were ($289) thousand and ($8.0) million,2020, capital markets income for the first nine months of 2020 was up $1.4 million, as commercial clients locked in lower rates on borrowings late in the first quarter.
Income from BOLI, which includes increases in the cash surrender value of policies and proceeds from insurance benefits, increased $2.6 million, or 51%, and $6.0 million, or 38%, for the three and nine months ended September 30, 2017, respectively. During2020,
54

respectively, due primarily to additional investments in BOLI policies during the third quarter of 2017, as part of its balance sheet restructuring actions, Synovus repositioned the available for sale securities portfolio and recorded a net loss of ($8.0) million. The first quarter of 20172020. The first nine months of 2020 included a $3.4income on proceeds from insurance benefits of $1.3 million gaincompared to $233 thousand in 2019.
Investment securities gains (losses), net, of $(1.6) million and $76.6 million for the three and nine months ended September 30, 2020, respectively, reflected strategic repositioning of the portfolio primarily during the latter part of the second quarter of 2020. The transactions were primarily focused on agency mortgage-backed securities, but also included the disposition of Synovus' remaining $155.0 million in asset-backed securities.
Gain on sale and increase/(decrease) in fair value of private equity investments included realized gains during the second quarter of 2020 from the sale of anpositions in two publicly traded equity position and a $4.3 million gain from the repositioninginvestments, offset partially by write-downs on two smaller remaining investments.
The main components of the investment securities portfolio.
Other fee income includesother non-interest revenue are fees for letters of credit and unused lines of credit, safe deposit box fees, access fees for automated teller machineATM use, customer swap dealer fees, and other service charges. Other feecharges, income was higher by $871 thousand, or 5.7%, for the nine months ended September 30, 2017, compared to the same period in 2016 driven by higher customer swap dealer fees and syndication arranger fees.
The main components of other non-interest income are income from BOLI policies, insurance commissions, gains from sales of GGL/SBA loans, card sponsorship fees, and other miscellaneous items. The increase of $2.6 million, or 10.5%,items. Insurance commission revenue for the three and $721 thousand, or 8.3%, during the nine and three months ended September 30, 2017, respectively, compared to the same periods in 2016,2020 was due primarily to growth in BOLI revenues and gains on sales of GGL/SBA loans. BOLI revenues grew $2.2up $1.6 million and $726 thousand during the nine$1.7 million, respectively. The third quarter of 2020 included a $2.8 million favorable valuation adjustment for tax credit investments and three months ended September 30, 2017, respectively, driven by additional investments in BOLI policies. Gainsa gain of $2.5 million from the sale of GGL/SBA loans were up $1.1non-relationship mortgage loans. Additionally, the first quarter of 2020 included a sale-leaseback gain of $2.4 million compared to 2016 onassociated with a year-to-date basis and lower by $112 thousandbank office property while the second quarter of 2020 included an unfavorable valuation adjustment of $1.6 million for tax credit investments.
Non-interest Expense
Non-interest expense for the third quarter of 20172020 was $316.7 million, up $40.3 million, or 15%, compared to the third quarter of 2016.
Non-interest Expense
Non-interest2019 and adjusted non-interest expense forof $268.7 million was up $10.3 million, or 4%. On a year-to-date basis, non-interest expense was up $44.2 million, or 5%, and adjusted non-interest expense was up $58.5 million, or 8%. During the nine and three months ended September 30, 20172020, Synovus recognized a $44.9 million non-cash goodwill impairment charge representing the goodwill allocated to the Consumer Mortgage reporting unit. The increase in adjusted expense during the first nine months of 2020 was $594.8 millionlargely driven by mortgage production commissions, expense associated with Synovus' internal revenue growth and $205.6 million, respectively,efficiency initiatives, COVID-19 related expenses, and investments in talent and technology. The efficiency ratio-FTE for the first nine months of 2020 was 57.66%, compared to $562.7 million and $185.9 million57.17% for the first nine and three months ended September 30, 2016, respectively. Adjustedof 2019. The adjusted tangible efficiency ratio for the first nine months of 2020 was 56.14%, up 478 bps compared to the same period a year ago. Excluding expenses associated with Synovus Forward initiatives, we expect adjusted non-interest expense forin the nine and three months ended September 30, 2017, which excludesfourth quarter to be in-line with adjusted non-interest expense in the third quarter of 2017 balance sheet restructuring actions2020. See "Table 14 - Reconciliation of impairments on ORE and other properties held for sale, restructuring charges, net, loss on early extinguishment of debt, net, litigation contingency/settlement expense, merger-related expense, fair value adjustment to Visa derivative, amortization of intangibles, and certain earnout liability adjustments, increased $30.7 million, or 5.6%, and $10.2 million, or 5.5%, compared to the same periods in 2016, respectively. Synovus continues to generate positive operating leverage with the year-over-year expense growth primarily driven by strategic investments in talent and technology, higher third-party processing expense relating to third-party lending partnerships servicing fees, the addition of Global One, and expenses associated with Synovus Bank's transition to a single bank operating environment and single brand. Strategic investments in talent and technology accounted for approximately $15 million and $5 million of the increase for the nine and three months ended September 30, 2017, respectively, compared to the same periods in 2016, as Synovus continues to add key talent and invest in technology to enhance the customer experience. Third-party processing expense relating to the servicing fees of third-party lending partnerships increased by $3.4 million and $1.2 million for the nine and three months ended September 30, 2017, respectively, compared to the same periods in 2016, and Global One operating expenses accounted for $3.0 million and $1.2 million of the increase compared to the nine and three months ended September 30, 2016, respectively. Expenses associated with Synovus Bank's transition to a single bank operating environment and single brand resulted in higher expenses of $4.0 million and $1.1 million compared to the nine and three months ended September 30, 2016, respectively. See "Non-GAAPNon-GAAP Financial Measures"Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.

measures.
The following table summarizes the components of non-interest expense.
Table 6 - Non-interest Expense
Three Months Ended September 30,Nine Months Ended September 30,
(dollars in thousands)20202019% Change20202019% Change
Salaries and other personnel expense$154,994 $142,516 9 %$464,268 $424,952 9 %
Net occupancy, equipment, and software expense41,554 41,017 1 125,475 119,262 5 
Third-party processing and other services20,620 18,528 11 63,466 55,403 15 
Professional fees13,377 9,719 38 39,358 25,379 55 
FDIC insurance and other regulatory fees6,793 7,242 (6)18,922 21,872 (14)
Amortization of intangibles2,640 2,901 (9)7,920 8,702 (9)
Goodwill impairment44,877 — nm44,877 — nm
Earnout liability adjustments— 10,457 nm4,908 10,457 nm
Merger-related expense— 353 nm— 57,493 nm
Restructuring charges2,882 (66)nm8,924 (29)nm
Loss on early extinguishment of debt154 4,592 nm2,057 4,592 nm
Valuation adjustment to Visa derivative— 2,500 nm— 2,500 nm
Other operating expenses28,764 36,551 (21)96,901 102,264 (5)
Total non-interest expense$316,655 $276,310 15 %$877,076 $832,847 5 %


55

Three and Nine Months Ended September 30, 2020 compared to September 30, 2019
Salaries and other personnel expense increased $12.5 million, or 9%, and $39.3 million, or 9%, for the ninethree and threenine months ended September 30, 20172020, respectively, due primarily to higher mortgage production-based commissions, COVID-19 related bonus payments to certain front-line employees, and 2016.investments in talent. Total headcount of 5,347 declined 81 from June 30, 2020 and 57 from September 30, 2019.
Non-interest Expense

           
 Nine Months Ended September 30, Three Months Ended September 30,
(in thousands)2017 2016 % Change 2017 2016 % Change
Salaries and other personnel expense$322,079
 300,364
 7.2 % $109,675
 101,945
 7.6 %
Net occupancy and equipment expense89,837
 81,480
 10.3
 30,573
 28,120
 8.7
Third-party processing expense39,882
 34,033
 17.2
 13,659
 11,219
 21.7
FDIC insurance and other regulatory fees20,723
 20,100
 3.1
 7,078
 6,756
 4.8
Professional fees20,048
 19,794
 1.3
 7,141
 6,486
 10.1
Advertising expense14,868
 15,358
 (3.2) 3,610
 5,597
 (35.5)
Foreclosed real estate expense, net10,847
 9,998
 8.5
 7,265
 2,725
 166.6
Earnout liability adjustment3,766
 —
 nm
 2,059
 —
 nm
Merger-related expense110
 550
 (80.0) 23
 550
 (95.8)
Loss on early extinguishment of debt, net—
 4,735
 nm
 —
 —
 nm
Fair value adjustment to Visa derivative—
 1,079
 nm
 —
 360
 nm
Restructuring charges, net7,043
 8,225
 (14.4) 519
 1,243
 (58.2)
Other operating expenses65,577
 67,000
 (2.1) 24,044
 20,870
 15.2
Total non-interest expense$594,780
 562,716
 5.7 % $205,646
 185,871
 10.6 %
            
SalariesNet occupancy, equipment, and other personnel expensessoftware expense increased $21.7$537 thousand, or 1%, and $6.2 million, or 7.2%5%, during the three and $7.7 million, or 7.6%, for the nine and three months ended September 30, 2017,2020, respectively, compared to the same periods in 2016, primarily due to annual meritinvestments in technology as well as increases talent additions, higher self-insurancein net rent expense. Synovus expects net rent expense and Global One.
Net occupancy and equipment expense was up $8.4 million, or 10.3%, and $2.5 million, or 8.7%, forto decline during the nine and three months ended September 30, 2017, respectively,fourth quarter of 2020, as compared to expense during the same periods in 2016third quarter of 2020, as costs associatedSynovus optimizes its physical space with growth in technology investments offset efficiencies gained in occupancybranch and related expenses. Synovus' branch network consists of 249 locations at September 30, 2017 compared to 250 branches a year ago.   corporate real estate closures.
Third-party processing expenseand other services includes all third-party core operating system and processing charges as well as third-party loan servicing charges. Third-party processing expense increased $5.8$2.1 million, or 17.2%11%, and $2.4$8.1 million, or 21.7%15%, for the ninethree and threenine months ended September 30, 2017, respectively, compared to the same periods in 2016, driven by an2020, respectively. The increase of $3.4 million and $1.2 million for the nine and three months ended September 30, 2017, respectively, compared to the same periods in 2016, from servicing feesis primarily associated with loan growth from Synovus' two consumer-based lending partnerships. However, during the second quarter of 2020, Synovus restructured certain of its third-party consumer-based lending partnership arrangements with a shift of new originations to held for sale and thereby reducing future third-party loan servicing expense.
Professional fees increased $3.7 million, or 38%, and $14.0 million, or 55%, for the three and nine months ended September 30, 2020, respectively, from increases in consulting fees related to Synovus' internal revenue growth and efficiency initiative, "Synovus Forward".
FDIC insurance and other regulatory fees increased by $623were down $449 thousand or 3.1%, and $322 thousand, or 4.8%,$3.0 million for the three and nine andmonths ended September 30, 2020, respectively, due primarily to strategic balance sheet management actions, aimed at reducing FDIC expense.
During the three months ended September 30, 2017, compared2020, Synovus recognized a $44.9 million non-cash goodwill impairment charge representing the goodwill allocated to the same periodsConsumer Mortgage reporting unit resulting from a combination of factors including the extended duration of lower market valuations, high volumes in 2016. On March 15, 2016,refinance activity that have reduced mortgage yields, and the FDIC approved a final ruleclarity around longer term policy actions designed to increasekeep interest rates low.
Earnout liability fair value adjustments associated with the DIF toGlobal One acquisition are the statutorily required minimum levelresult of 1.35%. Congress, inhigher than projected earnings and higher earnings estimates over the Dodd-Frank Act, increasedremaining contractual earnout period, reflecting the minimumcontinued success of the Global One enterprise. The earnout period ends on June 30, 2021.
In connection with the FCB acquisition, Synovus incurred merger-related expense totaling $353 thousand and $57.5 million for the DIF reserve ratio, the ratio of the amount in the fund to insured deposits, from 1.15% percent to 1.35%three and required that the ratio reach that level by September 30, 2020. Further, the Dodd-Frank Act also made banks with $10 billion or more in total assets responsible for the increase from 1.15% to 1.35%. Under a rule adopted by the FDIC in 2011, regular assessment rates for all banks would decline when the reserve ratio reached 1.15%, which occurred during the second quarter of 2016. Banks with total assets of less than $10 billion have substantially lower assessment rates under the 2011 rule. The final rule imposed on banks with at least $10 billion in assets a surcharge of 4.5 cents per $100 of their assessment base, after making certain adjustments. The FDIC expects the reserve ratio will likely reach 1.35% after approximately two years of payments of the surcharges. The final rule became effective on July 1, 2016 with surcharge assessments beginning July 1, 2016. Synovus' FDIC insurance cost remained relatively flat to prior levels following the surcharge assessment since regular assessment rates declined at the same time the surcharge assessment became effective.
Professional fees for the nine and three months ended September 30, 2017 were up $254 thousand, or 1.3%, and $655 thousand, or 10.1%,2019, respectively, compared to the same periods in 2016, driven by increases in consulting expense primarily related to Synovus Bank's transition to a single bank operating environment.
Foreclosed real estate expense for the nineemployment compensation agreements, severance, and three months ended September 30, 2017 included the third quarter of 2017 balance sheet restructuring actions with $7.1 million recorded for discounts to fair value for completed or planned ORE accelerated dispositions. ORE balances declined $17.9 million to $10.6 million at September 30, 2017 compared to prior year.

During the nineprofessional services. See "Part I - Item 1. Financial Statements and three months ended September 30, 2017, Synovus recorded contingent consideration expense of $3.8 million, and $2.1 million, respectively, resulting from updates to the estimated fair value of the Global One earnout liability.   
Merger-related expense consists of professional fees relating to the October 1, 2016 acquisition of Global One. See "Note 2-Supplementary Data - Note 2 - Acquisitions" in this Report for more information on the acquisition of Global One.FCB.
During January 2016, Synovus repurchased $124.7 million of its subordinated notes that matured on June 15, 2017 in conjunction with Synovus' cash tender offer that commenced on December 23, 2015the three and expired on January 22, 2016. Results for the nine months ended September 30, 2016 included a $4.72020, Synovus recorded $2.9 million pre-tax loss relatingand $8.9 million, respectively, in restructuring charges primarily related to this tender offer. branch closures and restructuring of corporate real estate as part of the Synovus Forward initiative. Synovus Bank operated 292 branches at September 30, 2020 and at November 2, 2020 Synovus Bank operated 288 branches, compared to 298 branches at December 31, 2019, following the closing of 12 branches and opening of two new branches during 2020. See "Part I - Item 1. Financial Statements and Supplementary Data - Note 12 - Subsequent Events", regarding Synovus' voluntary early retirement program and associated one-time termination benefit restructuring charge of approximately $14 million recorded in October, 2020.
On February 25, 2020, Synovus terminated a $250.0 million long-term FHLB obligation and incurred a $1.9 million loss on early extinguishment of debt and on September 25, 2017,15, 2020, Synovus issuedterminated a notice$500 million long-term FHLB obligation and incurred a $154 thousand loss on early extinguishment of redemption to redeem all of the $300.0debt.
Other operating expenses includes advertising, travel, insurance, network and communication, other taxes, subscriptions and dues, other loan and ORE expense, postage and freight, training, business development, supplies, donations, and other miscellaneous expenses. Other operating expenses were down $7.8 million aggregate principal amount of its outstanding 7.875% senior notes due 2019 on November 9, 2017 at a “make whole” premium, plus accrued but unpaid interest on the 2019 notes to the redemption date.  The resultsand $5.4 million, for the three months ending December 31, 2017 will include a pre-tax loss of approximately $24 million related to early extinguishment of these notes.
    Restructuring charges of $7.0 million were recorded during theand nine months ended September 30, 2017 consisting primarily of severance charges of $6.42020, respectively. Advertising expense was down $3.3 million recorded during the first quarter of 2017. Severance charges included $6.2and $6.7 million for termination benefits incurred in conjunction with a voluntary early retirement program offered during the first quarter of 2017. This program was part of Synovus' ongoing efficiency initiatives. For the three months ended September 30, 2017, Synovus recorded restructuring charges of $519 thousand due to additional asset impairment charges of $515 thousand on properties previously identified for disposition. During theand nine months ended September 30, 2016, Synovus recorded restructuring charges of $8.22020, respectively, and travel expense was down $1.8 million withand $4.8 million of those charges related to corporate real estate optimization activities and $3.3 million associated with branch closures.
Other operating expenses for the three and nine months ended September 30, 2017 included balance sheet restructuring charges of $1.2 million for asset impairment charges related to accelerated disposition of other properties held for sale while other operating expenses for the three months ended September 30, 2016 were reduced by $1.7 million in gains on sales of properties held for sale. Additionally, the three months ended September 30, 2016 included a $2.4 million gain related to the purchase of an additional interest in an existing NPL at a discount that was subsequently paid in full.2020, respectively. Other operating expenses for the nine months ended September 30, 2017 included2020 includes a $2.4$2.7 million gainvaluation adjustment on a MPS receivable, a $2.5 million charge from termination of customer swaps, and a $1.0 million donation to the settlementUnited Negro College Fund.
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Income Tax Expense
Income tax expense was $39.8 million for the three months ended September 30, 2020, representing an effective tax rate of 30.3%, compared to income tax expense of $51.3 million for the three months ended September 30, 2019, representing an effective tax rate of 27.4%. The increase in the effective tax rate for the three months ended September 30, 2020, as compared to the three months ended September 30, 2019, is primarily related to a contingent receivablenon-deductible goodwill impairment charge of $44.9 million recorded during the secondthird quarter of 2017 while2020.
Income tax expense was $74.3 million for the nine months ended September 30, 2016 included litigation settlement expense of $2.5 million recognized primarily during the first quarter of 2016.
The efficiency ratio improved to below 59% during the third quarter of 2017. The adjusted efficiency ratio was 58.59% in the third quarter of 2107 compared to 62.41% in the third quarter of 2016. The calculation of the adjusted efficiency ratio was revised during the first quarter of this year.  ORE expense and other credit costs had been excluded since the financial crisis due to the abnormal level of expenditure.  Given the more normalized level of expense that Synovus is now experiencing, these costs will be included in the calculation hereafter (excluding the third quarter of 2017 balance sheet restructuring actions) and previous quarters have been restated as well. The change in the calculation resulted in a higher adjusted efficiency ratio. See "Non-GAAP Financial Measures" in this Report for the applicable reconciliation to the most comparable GAAP measure.
Income Tax Expense
Income tax expense was $130.3 million and $54.7 million for the nine and three months ended September 30, 2017, respectively,2020, representing an effective tax rate of 34.6% and 35.8% for the respective periods25.0%, compared to income tax expense of $102.1 million and $37.4$146.3 million for the nine and three months ended September 30, 2016, respectively,2019, representing an effective tax rate of 36.4% for both periods.
26.2%. The effective tax rate is impactedfor the nine months ended September 30, 2020 includes the impact of the non-deductible goodwill impairment charge recognized during the third quarter of 2020, partly offset by discrete tax benefits including a $2.7 million benefit for carrying back net operating loss deductions to pre-TJCA tax periods, as allowed by the CARES Act, a $1.4 million benefit for a state tax rate change, and $2.3 million in other net discrete benefit items, including discrete items related to prior periods. The effective tax rate in the first nine months of 2019 was higher largely due to nondeductible merger-related expenses associated with the FCB acquisition.
Synovus’ effective tax rate considers many factors including, but not limited to, the level of pre-tax income, BOLI, tax-exempt interest, certain income tax credits, and nondeductible expenses. In addition, the effective tax rate is affected by items that may occur in any given period but are not consistent from period-to-period, such as tax benefits related to share-based compensation, jurisdiction statutory tax rate changes, valuation allowance changes, and changes to unrecognized tax benefits. The decrease inAccordingly, the comparability of the effective tax rate in 2017 as comparedbetween periods may be impacted.
With the exception of the net operating loss carryback deductions and certain state concessions, we do not expect the provisions of the CARES Act to 2016 is primarily relatedhave a significant impact on the Company’s current tax provision. With regard to the adoptionCARES Act payroll tax deferrals, Synovus estimates the payment of ASU 2016-09, as further described below. The effective tax rate for 2017 also reflects a $2.6approximately $16.6 million reductionof employer payroll taxes otherwise due in the deferred tax asset valuation allowance relating to certain tax credits.
As disclosed in Note 1, Synovus adopted ASU 2016-09 effective January 1, 2017, which includes a requirement to record all tax effects associated2020 will be delayed, with share-based compensation through the income statement.  These tax effects, which are determined upon the vesting of restricted share units50% due by December 31, 2021 and the exercise of stock options, are treated as discrete items in the period in which they occur.  For the nine and three months ended September 30, 2017, the impact from the adoption of ASU 2016-09 was an income tax benefit of $4.7 million and $211 thousand, respectively. remaining 50% by December 31, 2022.

CREDIT QUALITY, CAPITAL RESOURCES AND LIQUIDITY
Credit Quality
Synovus continuously monitors the quality of its loan portfolio by industry, property type, geography, as well as credit quality metrics. Credit metrics and maintains an allowance for loan losses that management believes is sufficient to absorb probable losses inherent in its loan portfolio. Credit quality metrics have remained favorabledeteriorated slightly during the first nine monthsthird quarter of 2017. The decline2020 with slight increases in non-performing assets is driven byNPAs, NPLs, and past dues from June 30, 2020; however, these increases were primarily isolated to specific credits, and we have not experienced widespread deterioration in the activities described below.portfolio.
During the three months ended September 30, 2017, Synovus completed certain balance sheet restructuring actions which included the transfer2020, loan downgrades to Special Mention and Substandard totaled $731.0 million and $137.5 million, respectively, primarily due to downgrades of $77.8$600.0 million in loans (consisting primarilythe hotel portfolio, one of non-performing loans)the hardest hit industries. Synovus' hotel loan portfolio totaled $1.41 billion at September 30, 2020 compared to held-for-sale.  This action resulted in provision expense of $27.7 million$1.36 billion at June 30, 2020.
57

Synovus does expect some pressure on credit metrics over the next few quarters, which aligns with the reserve builds to-date during 2020 under CECL. We are continuously working with our customers to evaluate how the current economic conditions are impacting, and net charge-offs of $34.2 million duewill continue to the actual or planned sale of such loans in an accelerated timeline, which required discounts below fair value.  Additionally, the third quarter results also reflect ORE write-downs totaling $7.1 million consisting of discounts to fair value for completed or planned ORE accelerated dispositions.  impact, their business operations.
The table below includes selected credit quality metrics.
Table 7 - Credit Quality Metrics
(dollars in thousands)September 30, 2020December 31, 2019September 30, 2019
Non-performing loans$168,837 $101,636 $115,915 
ORE and other assets23,280 35,810 35,400 
Non-performing assets$192,117 $137,446 $151,315 
 Total loans$39,549,847 $37,162,450 $36,417,826 
 Non-performing loans as a % of total loans0.43 %0.27 %0.32 %
Non-performing assets as a % of total loans, ORE, and specific other assets0.49 0.37 0.42 
Loans 90 days past due and still accruing$7,512 $15,943 $15,660 
As a % of total loans0.02 %0.04 %0.04 %
Total past due loans and still accruing$57,316 $123,793 $88,219 
As a % of total loans0.14 %0.33 %0.24 %
Net charge-offs, quarter$28,466 $8,821 $19,925 
Net charge-offs/average loans, quarter0.29 %0.10 %0.22 %
Net charge-offs, year-to-date$72,573 $57,612 $48,792 
Net charge-offs/average loans, year-to-date0.25 %0.16 %0.18 %
Provision for loan losses, quarter$43,618 $24,470 $27,562 
Provision for unfunded commitments, quarter(235)**
Provision for credit losses, quarter$43,383 $24,470 $27,562 
Provision for loan losses, year-to-date311,977 87,720 63,250 
Provision for unfunded commitments, year-to-date31,979 **
Provision for credit losses, year-to-date343,956 87,720 63,250 
Allowance for loan losses603,800 281,402 265,013 
Reserve for unfunded commitments60,794 1,375 1,496 
Allowance for credit losses$664,594 $282,777 $266,509 
ACL to loans coverage ratio1.68 %0.76 %0.73 %
ALL to loans coverage ratio1.53 0.76 0.73 
ACL/NPLs393.63 278.23 229.92 
ALL/NPLs357.62 276.87 228.63 
Credit Quality Metrics 
(dollars in thousands)September 30, 2017 December 31, 2016 September 30, 2016
Non-performing loans    $97,838
 153,378
 148,155
Impaired loans held for sale(1)
30,197
 —
 2,473
Other real estate10,551
 22,308
 28,438
 Non-performing assets    $138,586
 175,686
 179,066
Non-performing loans as a % of total loans0.40% 0.64
 0.64
Non-performing assets as a % of total loans, other loans held for sale, and ORE0.57
 0.74
 0.77
Loans 90 days past due and still accruing$5,685
 3,135
 5,358
As a % of total loans0.02% 0.01
 0.02
Total past due loans and still accruing$84,853
 65,106
 61,781
As a % of total loans0.35% 0.27
 0.27
Net charge-offs, quarter$38,098
 8,319
 6,930
Net charge-offs/average loans, quarter0.62% 0.14
 0.12
Net charge-offs, year-to-date$60,695
 28,738
 20,420
Net charge-offs/average loans, year-to-date0.33% 0.12
 0.12
Provision for loan losses, quarter$39,686
 6,259
 5,671
Provision for loan losses, year-to-date58,620
 28,000
 21,741
Allowance for loan losses249,683
 251,758
 253,817
Allowance for loan losses as a % of total loans1.02% 1.06
 1.09
      
(1) Represent only impaired loans that have been specifically identified*    Prior to be sold. Impaired loans heldCECL implementation on January 1, 2020, the provision for sale are carried at the lower of cost or fair value, less costs to sell, based primarily on estimated sales proceeds net of selling costs.unfunded commitments was reflected within other non-interest expense.
Non-performing Assets
Total NPAs were $138.6 million at September 30, 2017, a $37.1 million, or 21.1%, decrease from $175.7 million at December 31, 2016 and a $40.5 million, or 22.6%, decrease from $179.1 million at September 30, 2016. The year-over-year decline in non-performing assets was driven by the continued resolution of problem assets including accelerated dispositions and transfers to held for sale in conjunction with the balance sheet restructuring actions described above. Total non-performing assets as a percentage of total loans, ORE, and specific other loans held for sale, and other real estateassets were 0.57%0.49% at September 30, 20172020 compared to 0.74%0.37% at December 31, 20162019 and 0.77%0.42% at September 30, 2016.
Retail Trade Loan Portfolio
As of2019. Total NPAs were $192.1 million at September 30, 2017, loans2020 compared to $137.4 million at December 31, 2019 and $151.3 million at September 30, 2019. The increase in NPLs and NPAs compared to December 31, 2019 was mostly isolated to a few larger commercial relationships being designated as non-performing.
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Provision for Credit Losses and Allowance for Credit Losses
Provision for credit losses (which includes the provision for loan losses and unfunded commitments) of $43.4 million for the three months ended September 30, 2020 included net charge-offs of $28.5 million and the impact of downgrades largely concentrated in the retail trade industry consistedhotel portfolio, which were mostly offset by improvement in the economic forecast which included adjustments for the estimated impact of $844.1currently enacted government stimulus plans, as well as reserve releases from loan dispositions. Provision for credit losses of $344.0 million of C&I loans and $840.4 million of CRE (investment properties) loans. These portfolios are well-diversified geographically. Based on an analysis of these portfolios as offor the nine months ended September 30, 2017, we believe that2020, resulted in the majoritybuilding of these loans do not have exposurethe ACL required under CECL primarily as a result of uncertainty and deterioration in the economic environment due to the retail sectors which are most adversely impacted by competition from online retailimpact of COVID-19. The amount of provision for credit losses going forward will continue to fluctuate based on a number of factors including economic outlook, loan growth, loan mix, risk grade migration, as well as the timing and big-box retail store closures. Asimpact of any future government stimulus plans. The ACL at September 30, 2017, these portfolios had non-performing2020 totaled $664.6 million consisting of an ALL of $603.8 million and reserve for unfunded commitments of $60.8 million, resulting in an ACL to loans coverage ratio of $4.3 million, 0.01%1.68% and an ACL to NPLs ratio of 394%. Excluding PPP loans, past due 90 days or more, and 0.13% ofthe ACL to loans past due 30 days or more as a percentage of total retail trade loans outstanding.coverage ratio was 1.80%.

Table 8 - Accruing TDRs by Risk Grade
September 30, 2020December 31, 2019September 30, 2019
(dollars in thousands)Amount%Amount%Amount%
Pass$69,433 42.5 %$70,574 53.0 %$65,171 50.1 %
Special mention13,303 8.1 11,735 8.8 14,053 10.8 
Substandard accruing80,775 49.4 50,836 38.2 50,795 39.1 
Total accruing TDRs$163,511 100.0 %$133,145 100.0 %$130,019 100.0 %
Troubled Debt Restructurings
Accruing TDRs were $166.9$163.5 million at September 30, 2017,2020, compared to $195.8$133.1 million at December 31, 20162019 and $201.9$130.0 million at September 30, 2016.2019. Accruing TDRs declined $28.9increased $30.4 million or 14.7%, from December 31, 20162019 and $35.0$33.5 million or 17.3%, from September 30, 2019. The primary driver of the increase in accruing TDRs compared to December 31, 2019 is a year ago primarilyresult of a large relationship being designated as an accruing TDR in the first quarter of 2020 due to continued decline in TDR inflows, fewerinterest rate and term concessions. Non-accruing TDRs needing to retain the TDR designation upon subsequent renewal, refinance, or modification, and pay-offs.
Atwere $4.6 million at September 30, 2017, the allowance for loan losses allocated to these accruing TDRs was $8.5 million2020, compared to $9.8$17.1 million at December 31, 20162019 and $11.8$13.6 million at September 30, 2016. 2019.
Accruing TDRs are considered performing because they are performing in accordance with the restructuredrestructured terms. At September 30, 2017 and2020, December 31, 2016, 94%2019, and September 30, 2019, approximately99%, 99%, and 98%, respectively, of accruing TDRs were current. In addition, subsequent defaults on accruing TDRs (defaults defined as the earlier of the TDR being placed on non-accrual status or reaching 90 days past due with respect to principal and/or interest payments within twelve months of the TDR designation) have remained negligible,continued to remain at low levels.
Non-TDR Modifications due to COVID-19
Regulatory agencies encouraged financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations because of COVID-19. In the Interagency Statement on Loan Modifications and consistedReporting for Financial Institutions Working with Customers Affected by the Coronavirus (initially issued on March 22, 2020 and revised on April 7, 2020), for example, the regulatory agencies expressed their view of four defaultsloan modification programs as positive actions that may mitigate adverse effects on borrowers due to COVID-19 and their unwillingness to criticize institutions for working with borrowers in a recorded investmentsafe and sound manner. Moreover, the Interagency Statement provided that eligible loan modifications related to COVID-19 may be accounted for under section 4013 of $498 thousand for the nine months ended September 30, 2017 comparedCARES Act or in accordance with ASC 310-40. Section 4013 of the CARES Act allows banks to two defaults with a recorded investmentelect to not consider loan modifications related to COVID-19 that are made between March 1, 2020 and the earlier of $181 thousand for the nine months ended September 30, 2016.
Accruing TDRs by Risk GradeSeptember 30, 2017 December 31, 2016 September 30, 2016
(dollars in thousands)Amount % Amount % Amount %
Pass$65,018
 39.0% 81,615
 41.7 66,887
 33.1
Special Mention17,759
 10.6
 29,250
 14.9 37,259
 18.6
Substandard accruing84,141
 50.4
 84,911
 43.4 97,750
 48.4
  Total accruing TDRs$166,918
 100.0% 195,776
 100.0 201,896
 100.0
            

Accruing TDRs Aging by Portfolio Class
 September 30, 2017
(in thousands)Current 30-89 Days Past Due 90+ Days Past Due Total 
Investment properties$27,715
 —
 —
 27,715
 
1-4 family properties15,695
 46
 —
 15,741
 
Land and development15,344
 229
 —
 15,573
 
Total commercial real estate58,754
 275
 —
 59,029
 
Commercial, financial and agricultural36,094
 7,166
 58
 43,318
 
Owner-occupied34,085
 1,683
 —
 35,768
 
Total commercial and industrial70,179
 8,849
 58
 79,086
 
Home equity lines5,988
 7
 —
 5,995
 
Consumer mortgages17,038
 1,298
 —
 18,336
 
Credit cards—
 —
 —
 —
 
Other consumer loans4,469
 3
 —
 4,472
 
Total consumer27,495
 1,308
 —
 28,803
 
Total accruing TDRs$156,428
 10,432
 58
 166,918
 
         
 December 31, 2016
(in thousands)Current 30-89 Days Past Due 90+ Days Past Due Total 
Investment properties$30,182
 133
 —
 30,315
 
1-4 family properties22,694
 —
 —
 22,694
 
Land and development26,015
 10
 —
 26,025
 
Total commercial real estate78,891
 143
 —
 79,034
 
Commercial, financial and agricultural31,443
 798
 —
 32,241
 
Owner-occupied52,333
 —
 —
 52,333
 
Total commercial and industrial83,776
 798
 —
 84,574
 
Home equity lines7,526
 412
 —
 7,938
 
Consumer mortgages18,518
 572
 —
 19,090
 
Credit cards—
 —
 —
 —
 
Other consumer loans5,013
 127
 —
 5,140
 
Total consumer31,057
 1,111
 —
 32,168
 
Total accruing TDRs$193,724
 2,052
 —
 195,776
 
         
Non-accruing TDRs were $9.0 million at September 30, 2017 compared to $11.4 million at December 31, 2016. Non-accruing2020, or 60 days after the National Emergency ends to borrowers that are current (i.e., less than 30 days past due as of December 31, 2019) as TDRs. The regulatory agencies further stated that performing loans granted payment deferrals due to COVID-19 are not considered past due or non-accrual. FASB confirmed the foregoing regulatory agencies' view, that such short-term modifications (e.g., six months) made on a good-faith basis in response to COVID-19 for borrowers who are current are not TDRs generally may be returned. Beginning in late March 2020, Synovus provided relief programs consisting primarily of 90-day payment deferral relief to accrual status if thereborrowers negatively impacted by COVID-19 and has been a period of performance, consisting usually of at least a six month sustained period of repayment performanceprimarily accounted for these loan modifications in accordance with ASC 310-40. During the third quarter, upon evaluation of facts and circumstances, the CARES Act was elected for certain loan modifications that met the criteria of section 4013 of the CARES Act. The deferred payments along with interest accrued during the deferral period are generally due and payable on the maturity date of the existing loan. Based on the terms of the agreement.
Potential Problem Loans
Potential problemdeferral relief program which did not provide for forgiveness of interest, Synovus has recognized interest income on loans are defined by management as being certain performing loans with a well-defined weakness where there is known information about possible credit problemsduring the deferral period. As of borrowers which causes management to have concerns about the ability of such borrowers to comply with the present repayment terms of such loans. Potential problem commercial loans consist of commercial Substandard accruing loans but exclude loans 90 days past due and still accruing interest and accruing TDRs classified as Substandard since these loans are disclosed separately. Potential problem commercial loans were $125.4 million at September 30, 2017 compared2020, approximately 1% of the total loan portfolio was in a P&I deferral status, down significantly from approximately 15% of our loan portfolio that had been granted P&I deferral through our relief programs as of the filing of our first quarter 2020 10-Q.In addition to $162.0 million and $172.5 million at December 31, 2016 and September 30, 2016, respectively. Synovus cannot predict whether these potential problem loans ultimately will become non-performing loans or result in losses.our
Net Charge-offs
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Net charge-offs for the nine months ended September 30, 2017 were $60.7 million, or 0.33% as a percentage of average loans annualized, compared to $20.4 million, or 0.12%, as a percentage of average loans annualized for the nine months ended September 30, 2016. The $40.3 million increase from 2016 is primarily due to $34.2 million in net charge-offs recordedP&I deferment program, we have also provided borrowers who have been impacted during the third quarter of 2017 in conjunctioncurrent crisis with the aforementioned transfers to held for sale completed during the quarter.

Provision for Loan Losses and Allowance for Loan Losses
For the nine months ended September 30, 2017, the provision for loan losses was $58.6 million, an increase of $36.9 million,other modifications such as interest only relief or 169.6%, compared to the nine months ended September 30, 2016primarily due to $27.7 million incurred in connection with the aforementioned transfers to held for sale completed during the third quarter.
The allowance for loan losses at September 30, 2017 was $249.7 million, or 1.02%amortization extensions on approximately 2% of total loans, compared to $251.8 million, or 1.06% of total loans, at December 31, 2016 and $253.8 million, or 1.09% of total loans, at September 30, 2016.  loans.
Capital Resources
Synovus and Synovus Bank are required to comply with capital adequacy standards established by their primary federal regulator, the Federal Reserve. Synovus has always placed great emphasis on maintaining a solidand Synovus Bank measure capital base and continuesadequacy using the standardized approach to satisfy applicable regulatory capital requirements.
Basel III. At September 30, 2017,2020, Synovus and Synovus Bank's capital levels each exceeded well-capitalized requirements currently in effect. The following table presents certain ratios used to measure Synovus and Synovus Bank's capitalization.
Table 9 - Capital Ratios
(dollars in thousands)September 30, 2020December 31, 2019
CET1 capital
Synovus Financial Corp.$3,913,402 $3,743,459 
Synovus Bank4,674,063 4,640,501 
Tier 1 risk-based capital
Synovus Financial Corp.4,450,547 4,280,604 
Synovus Bank4,674,063 4,640,501 
Total risk-based capital
Synovus Financial Corp.5,536,918 5,123,381 
Synovus Bank5,201,409 4,923,279 
CET1 capital ratio
Synovus Financial Corp.9.30 %8.95 %
Synovus Bank11.08 11.10 
Tier 1 risk-based capital ratio
Synovus Financial Corp.10.57 10.23 
Synovus Bank11.08 11.10 
Total risk-based capital to risk-weighted assets ratio
Synovus Financial Corp.13.16 12.25 
Synovus Bank12.33 11.78 
Leverage ratio
Synovus Financial Corp.8.48 9.16 
Synovus Bank8.91 9.94 
Tangible common equity ratio(1)
Synovus Financial Corp.7.67 8.08 
Capital Ratios   
(dollars in thousands)    September 30, 2017 December 31, 2016
Common equity Tier 1 capital (transitional)   
Synovus Financial Corp.$2,749,304
 2,654,287
Synovus Bank3,164,640
 3,187,583
Tier 1 capital   
Synovus Financial Corp.2,849,580
 2,685,880
Synovus Bank3,164,640
 3,187,583
Total risk-based capital   
Synovus Financial Corp.3,362,127
 3,201,268
Synovus Bank3,417,187
 3,441,563
Common equity Tier 1 capital ratio (transitional)   
Synovus Financial Corp.10.06% 9.96
Synovus Bank11.59
 11.97
Tier 1 capital ratio   
Synovus Financial Corp.10.43
 10.07
Synovus Bank11.59
 11.97
Total risk-based capital to risk-weighted assets ratio   
Synovus Financial Corp.12.30
 12.01
Synovus Bank12.52
 12.93
Leverage ratio   
Synovus Financial Corp.9.34
 8.99
Synovus Bank10.40
 10.68
Tangible common equity to tangible assets ratio (1)
   
Synovus Financial Corp.8.88
 9.09
    
(1)See ""Table 14 - Reconciliation of Non-GAAP Financial Measures"Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
The Basel III capital rules became effective January 1, 2015, for Synovus and Synovus Bank, subjectAt September 30, 2020, Synovus' CET1 ratio increased to a transition period for several aspects,9.30%, well in excess of regulatory requirements including the capital conservation buffer of 2.5%. The September 30, 2020 CET1 ratio improved 40 bps compared to June 30, 2020 and certain35 bps compared to December 31, 2019 from a combination of earnings and balance sheet activities. These balance sheet activities included the settlement of our second quarter bond repositioning and our on-going efforts to manage non-relationship loan portfolios as we prioritize our balance sheet for core, client relationships. We remain focused on supporting our overall capital position and are targeting the higher end of our CET1 operating range of 9.0% to 9.5%, given the heightened uncertainty in the current economic environment. For additional information on regulatory capital adjustments and deductions, as described below. Under the Basel III capital rules, the minimum capital requirements, for Synovus and Synovus Bank include a common equity Tier 1 (CET1) ratio of 4.5%; Tier 1 capital ratio of 6%; total capital ratio of 8%; and leverage ratio of 4%. When fully phased-in on January 1, 2019, the Basel III capital rules include a capital conservation buffer of 2.5% that is added on top of each of the minimum risk-based capital ratios. The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and will be phased-in over a three-year period (increasing by that amount on each subsequent January 1, until it reaches 2.5% on January 1, 2019). As a financial holding company, Synovus and its subsidiary bank, Synovus Bank, are required to maintain capital levels required for a well-capitalized institution as defined by federal banking regulations. Under the Basel III capital rules, Synovus and Synovus Bank are well-capitalized if each has a CET1 ratio of 6.5% or greater, a Tier 1 risk-based capital ratio of 8% or greater, a total risk-based capital ratio of 10% or greater, a leverage ratio of 5% or greater, and are not subject to any written agreement, order, capital directive, or prompt corrective action directive from a federal and/or state banking regulatory

agency to meet and maintain a specific capital level for any capital measure.
During the nine months ended September 30, 2017, Synovus repurchased $135.9 million in common stock under the current share repurchase program which was authorized during the fourth quarter of 2016 by Synovus' Board of Directors. The current share repurchase program authorized share repurchases of up to $200 million of the Company's common stock to be executed during 2017. As of September 30, 2017 and November 2, 2017, the remaining authorization under this program was $64.1 million and $56.6 million, respectively.
As of September 30, 2017, total disallowed deferred tax assets were $112.7 million or 0.41% of risk-weighted assets compared to $218.3 million or 0.82% of risk-weighted assets at December 31, 2016. Disallowed deferred tax assets for CET1 were $90.2 million at September 30, 2017 compared to $131.0 million at December 31, 2016, due to a three-year phase-in of the total disallowed deferred tax asset for the CET1 capital measure. Basel III revised the deferred tax asset limitation criteria effective January 1, 2015 and now includes the component of deferred tax assets arising from temporary timing differences in regulatory capital up to certain levels of CET1. Thus, the disallowed portion of deferred tax assets is comprised of net operating loss carryforwards and tax credit carryforwards. Synovus' deferred tax asset is projected to continue to decline, thus creating additional regulatory capital in future periods. Seesee "Part II - Item 7. Management's Discussion8. Financial Statements and Analysis of Financial Condition and Results of OperationsSupplementary Data - Income Taxes" in Synovus' 2016 Form 10-K for more information on Synovus' net deferred tax asset.
Synovus' CET1 ratio was 10.06% at September 30, 2017 under Basel III transitional provisions and the estimated fully phased-in CET1 ratio, as of September 30, 2017, was 9.88%, both of which are well in excess of regulatory requirements. See "Non-GAAP Financial Measures" in this Report for the applicable reconciliationNote 11 - Regulatory Capital" to the most comparable GAAP measure.
consolidated financial statements of Synovus' 2019 Form 10-K. Management currentlyreviews the Company's capital position on an on-going basis and believes, based on internal capital analysisanalyses and earnings projections, that Synovus' capital positionSynovus is adequatewell positioned to meet relevant regulatory capital standards.
As a result of the greater economic uncertainty associated with the current pandemic, Synovus suspended its share repurchase activity beyond the $16.2 million (450 thousand shares) of its common stock repurchased during the first quarter.
On August 26, 2020, the federal banking regulators issued a final rule (following an interim final rule issued on March 27, 2020) that allows electing banking organizations that adopt CECL during 2020 to mitigate the estimated effects of CECL on regulatory capital for two years, followed by a three-year phase-in transition period. Synovus adopted CECL on January 1, 2020 and futurethe September 30, 2020 regulatory minimum capital requirements. Synovus' 2017 DFAST results show that capital ratios remain above regulatory minimums throughoutreflect Synovus' election of the forecast periodfive-year transition provision. For
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additional information on Synovus' adoption of CECL, see "Part I - Item 1. Financial Statements and Supplementary Data - Note 1 - Basis of Presentation and Accounting Policies" in the severely adverse scenario. Synovus expects to announce its 2018 capital plan in January of 2018.this Report.
Dividends
Synovus has historically paid a quarterly cash dividend to the holders of its common stock. Management and the Board of Directors closely monitor current and projected capital levels, liquidity (including dividendsdividends from subsidiaries), financial markets and other economic trends, as well as regulatory requirements regarding the payment of dividends. DuringAs Synovus navigates through the first quarter of 2017, Synovus increasedcurrent recession and regulatory guidelines, the quarterlyapproach to common stock dividend by 25% to $0.15 per share effective with the quarterly dividend declared during the first quarterdividends will be continually evaluated based on an assessment of 2017.long-term earnings, capital projections, and liquidity.
Synovus' ability to pay dividends on its capital stock, consisting of the common stock and the Series C Preferred Stock,preferred stock is primarily dependent upon dividends and distributions that it receives from its bank and non-banking subsidiaries,subsidiaries, which are restricted by various regulations administered by federal and state bank regulatory authorities, as further discussed below in the section titled "Liquidity." During the nine months ended September 30, 2017, authorities.
Synovus Bank made upstream cash distributions to Synovus totaling $350.0 million including cashdeclared common stock dividends of $215.2 million. Additionally, during the nine months ended September 30, 2017, Synovus Securities made upstream cash distributions to Synovus of $10.0 million. For the year ended December 31, 2016, Synovus Bank paid upstream cash dividends to Synovus totaling $325.0$145.8 million, with $260.0 million paid during the first nine months of 2016.
    Synovus declared dividends of $0.45 and $0.36or $0.99 per common share, for the nine months ended September 30, 2017 and 2016, respectively. In addition to dividends paid on its2020, up from $138.9 million, or $0.90 per common stock, Synovus paid dividends of $7.7 million on its Series C Preferred Stock during bothshare, for the nine months ended September 30, 20172019, respectively. In addition, Synovus declared dividends on its preferred stock of $24.9 million and 2016.$14.6 million during the nine months ended September 30, 2020 and 2019, respectively.
Liquidity
Liquidity represents the extent to which Synovus has readily available sources of funding needed to meet the needs of depositors, borrowers and creditors, to support asset growth, and to otherwise sustain operations of Synovus and its subsidiaries, at a reasonable cost, on a timely basis, and without adverse consequences. ALCO monitors Synovus' economic, competitive, and regulatory environment and is responsible for measuring, monitoring, and reporting on liquidity and funding risk interest rate risk,as well as market risk.
In accordance with Synovus policies and market risk and has the authority to establish policies relative to these risks.regulatory guidance, ALCO operating under liquidity and funding policies approved by the Board of Directors, actively analyzesevaluates contractual and anticipated cash flows in order to properly manage Synovus’ liquidity position.
Contractual and anticipated cash flows are analyzed under normal and stressed conditions to determine forward lookingproperly manage the Company’s liquidity needs and sources.profile. Synovus analyzes liquidity needs under various scenarios of market conditions and operating performance. This analysis includes stress testing and measures expected sources and uses of funds under each scenario. Emphasis

is placedplaces an emphasis on maintaining numerous sources of current and potentialcontingent liquidity to allow Synovus to meet its obligations to depositors, borrowers, and creditors on a timely basis.
Liquidity is generated primarily through various sources, including, but not limited to, maturities and repayments of loans by customers, maturities and sales of investment securities, depositand growth and access to sources of funds other thanin core or wholesale deposits. Management continuously monitors and maintains appropriate levels of liquidity so as to provide adequate funding sources to manage customer deposit withdrawals, loan requests, and other funding maturities. Liquidity is also enhanced by the acquisition of new deposits. Each of the banking divisions monitors deposit flows and evaluates local market conditions in an effort to retain and grow deposits.demands.
Synovus Bank also generates liquidity through the national deposit markets through the issuance of brokered certificates of deposit and money market accounts. Synovus Bank accesses these funds from a broad geographic base to diversify its sources of fundingfunding and liquidity. On September 25, 2017, Synovus Bank completed the Cabela's Transaction and thereby retained WFB’s $1.10 billion brokered time deposit portfolio with a weighted average remaining maturity of approximately 2.53 years and a weighted average rate of 1.83 percent.
Synovus Bankalso has thethe capacity to access funding through its membership in the FHLB System.system and through the Federal Reserve discount window. During the first quarter of 2020, Synovus increased its FHLB availability by over $2.0 billion through expanding pledged collateral. At September 30, 2017,2020, based on currently pledged collateral, Synovus Bank had access to incremental FHLB funding of $667 million,of $4.57 billion, subject to FHLB credit policies, through utilization of FHLB advances.policies.
In addition to bank level liquidity management, Synovus must manage liquidity at the parent company level for various operating needs including the servicing of debt, the payment of dividends on our common stock and preferred stock, share repurchases, payment of general corporate expenses and potential capital infusions into subsidiaries. The primary source of liquidity for Synovus consists of dividends from Synovus Bank, which is governed by certain rules and regulations of the GA DBF and the Federal Reserve Bank. During the nine months ended September 30, 2017, Synovus Bank made upstream cash distributions to Synovus totaling $350.0 million including cash dividends of $215.2 million. Additionally, during the nine months ended September 30, 2017, Synovus Securities made upstream cash distributions to Synovus of $10.0 million. For the year ended December 31, 2016, Synovus Bank paid upstream cash dividends to Synovus totaling $325.0 million with $260.0 million paid during the first nine months of 2016.
Synovus' ability to receive dividends from Synovus Bank in future periods will depend on a number of factors, including, without limitation, Synovus Bank's future profits, asset quality, liquidityliquidity, and overall condition. InIn addition, both the GA DBF rules and relatedFederal Reserve Bank may require approval to pay dividends, based on certain regulatory statutes contain limitations on payments of dividends byand limitations.
On February 12, 2020, Synovus Bank without the approval of the GA DBF. During the second quarter, Synovus paid off the remaining balance of $278.6 million of its subordinated notes at their maturity date of June 15, 2017. On September 25, 2017, Synovus issued a notice of redemption to redeem all of the $300.0$400.0 million aggregate principal amount of its outstanding 7.875% senior notes2.289% Fixed-to-Floating Rate Senior Bank Notes due 2019 on November 9, 20172023. From and including the original issue date to, but excluding, February 10, 2022, the Notes bear interest at a “make whole” premium,fixed rate of 2.289% per annum, payable semi-annually in arrears on each February 10 and August 10, beginning on August 10, 2020. Unless redeemed, from and including February 10, 2022 to but excluding the Maturity Date, the interest rate on the Notes is computed quarterly using an interest rate based on the SOFR with a daily index maturity plus a spread of 94.5 bps per annum, payable quarterly in arrears. Synovus Bank may redeem the Notes, at its option, on February 10, 2022 (which is the date that is one year prior to the Maturity Date) upon not less than 10 nor more than 60 days’ prior notice given to holders of the Notes. The redemption price for any redemption is 100% of the principal amount of the Notes, plus accrued butand unpaid interest onthereon to but excluding the 2019 notes todate of redemption. The Notes are not redeemable at the redemption date.  The results for the three months ending December 31, 2017 will includeoption or election of holders.
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On February 25, 2020, Synovus terminated a pre-tax$250.0 million long-term FHLB obligation and incurred a $1.9 million loss of approximately $24 million related toon early extinguishment of these notes. On November 1, 2017,debt and on September 15, 2020, Synovus completedterminated a public offering$500 million long-term FHLB obligation and incurred a $154 thousand loss on early extinguishment of $300.0 million of 3.125% senior notes due 2022. Proceeds from this offering will be used, in part, to fund the redemption of the 2019 notes. debt.
Synovus presently believes that the sources of liquidity discussed above, including existing liquid funds on hand, are sufficient to meet its anticipated funding needs. However, if economic conditions were to significantly deteriorate, regulatory capital requirements for Synovus or Synovus Bank were to increase as the result of regulatory directives or otherwise, or Synovus believes it is prudent to enhance current liquidity levels, then Synovus may seek additional liquidity from external sources. See "Part I- Item 1A. Risk Factors - the COVID-19 pandemic has resulted in significant market volatility and lower interest rates that could materially affect Synovus’ results of operations and access to capital" of this Report and "Part I – Item 1A. Risk Factors - Changes in the cost and availability of funding due to changes in the deposit market and credit market may adversely affect our capital resources, liquidity and financial results.results" ofSynovus' 20162019 Form 10-K. Furthermore, Synovus may, from time to time, take advantage of attractive market opportunities to refinance its existing debt, redeem its preferred stock, or strengthen its liquidity or capital position.
Earning Assets and Sources of Funds
Average total assets for the nine months ended September 30, 20172020 increased $1.35$5.00 billion, or 4.6%11%, to $30.58$51.57 billion as compared to $29.24$46.57 billion for the first nine months of 2016.2019. Average earning assets increased $1.43$4.18 billion, or 5.2%10%, in the first nine months of 20172020 compared to the same period in 20162019 and represented 93.8%91.8% of average total assets at September 30, 2017,2020, as compared to 93.2%92.7% at September 30, 2016.2019. The increase in average earning assets primarily resulted from a $1.41$3.17 billion, or 9%, increase in average loans, net, andwhich included average PPP loans of $1.64 billion, as well as a $284.6$578.3 million increase in average taxable investment securities.interest-bearing funds held at the Federal Reserve Bank and a $287.4 million increase in loans held for sale.
Average interest-bearing liabilities increased $2.19 billion, or 7%, to $34.11 billion for the first nine months of 2020 compared to the same period in 2019. The increase in average interest-bearing liabilities resulted from a $3.08 billion, or 28%, increase in average money market deposits (includes an increase of $863.7 million in other brokered deposits), a $879.2 million increase in average interest-bearing demand deposits, and a $451.8 million increase in average long-term debt, including $400.0 million of senior notes issued in February 2020. These increases were partially offset by a $309.4$1.98 billion, or 19%, decrease in average time deposits (includes an increase of $230.2 million in brokered time deposits) and a $316.6 million decrease in average interest bearing funds held at the Federal Reserve Bank.other short-term borrowings. Average interest bearing liabilitiesnon-interest-bearing demand deposits increased $981.4 million,$2.13 billion, or 5.1%23%, to $20.14$11.37 billion for the first nine months of 20172020 compared to the same period in 2016. The increase in average interest bearing liabilities was driven by a $594.7 million increase in average interest bearing demand deposits and a $434.1 million increase in average money market deposit accounts. Average non-interest bearing demand deposits increased $331.1 million, or 4.8%,2019, due largely to $7.26 billion for the first nine months of 2017 compared to the same period in 2016.liquidity associated with PPP lending.
Net interest income for the nine months ended September 30, 20172020 was $753.6 million, an increase of $87.9$1.13 billion, down $69.7 million, or 13.2%6%, compared to $665.7the same period in 2019. The decrease in year-over-year net interest income was due to declines of $62.5 million forin PAA (primarily comprised of declines of $27.0 million of loan accretion and $32.9 million of deposit premium amortization) associated with the FCB acquisition and declines in market interest rates, which were somewhat offset by higher average earning assets. Net interest margin was down 52 bps over the comparable nine-month periods to 3.20%, due primarily to the decline in market interest rates in addition to declines in PAA. For the nine months ended September 30, 2016.

The net interest margin2020, the yield on earning assets was 3.52% for3.88%, a decrease of 91 bps compared to the nine months ended September 30, 2017, an increase2019, while the effective cost of 25 basis points from 3.27% forfunds decreased 39 bps to 0.68%. The yield on loans decreased 96 bps to 4.20% while the yield on investment securities decreased 36 bps to 2.72% over the nine months ended September 30, 2016. The yield on earning assets was 3.99%, up 27 basis points compared to the first nine months of 2016 and the effective cost of funds increased 2 basis points to 0.47%. The yield on loans was 4.37%, an increase of 23 basis points from the nine months ended September 30, 2016 and the yield on investment securities was 2.10%, an increase of 22 basis points from the nine months ended September 30, 2016. Earning asset yields also benefited from a reduction of the average balance of lower yielding funds held at the Federal Reserve.2019.
On a sequential quarter basis, net interest income increased by $11.5 millionwas up $424 thousand and the net interest margin increased by 12 basis pointsfor the third quarter was 3.10%, which was down 3 bps compared to 3.63%the second quarter of 2020. The increasesequential quarter decline in net interest incomemargin was primarily driven by a $75.5 million increasethe impact of bond repositioning and student loan sales executed in average earning assets with a $149.7 million increase in average loans, net. This increase in loans wasthe second quarter of 2020, partially offset by a $58.3further declines in deposit pricing and favorable deposit remixing trends. The third quarter included average PPP loan balances of $2.70 billion versus $2.21 billion in the second quarter and $11.9 million decrease in average taxable investment securities. The increaseaccretion of associated PPP processing fees versus $9.2 million in net interest income for the second quarter. For the third quarter was also driven by margin expansion. Theof 2020, the yield on earning assets was 4.11%, up 12 basis points fromdecreased 17 bps, while the effective cost of funds decreased 14 bps compared to the second quarter of 2017. This increase was driven2020.
We continue to expect modest downward pressure on NIM as the repricing within our fixed-rate asset portfolios is partially offset by a 13 basis point increasecontinued declines in loan yields. The effective costoverall deposit costs. Excluding the potential impacts from PPP forgiveness, we expect net interest income and net interest margin to decrease modestly in the fourth quarter of funds was 0.48% for2020 as compared to the third quarter 2017, unchanged from the second quarter of 2017.2020.

62

Quarterly yields earned on average interest-earning assets and rates paid on average interest-bearing liabilities for the five most recent quarters are presented below.
Table 10 - Average Balances and Yields/Rates20202019
(dollars in thousands) (yields and rates annualized)Third QuarterSecond QuarterFirst QuarterFourth QuarterThird Quarter
Interest Earning Assets:
Investment securities(1)(2)
$7,227,400 6,618,533 6,680,047 6,696,768 6,831,036 
Yield2.39 %2.72 3.09 3.12 3.14 
Trading account assets(3)
$5,391 6,173 6,306 7,986 5,519 
Yield1.69 %2.19 2.70 2.69 4.01 
Commercial loans(2)(4)
$30,730,135 30,236,919 27,607,343 26,698,202 26,567,719 
Yield3.80 %3.95 4.57 4.82 5.09 
Consumer loans(4)
$9,032,437 9,899,172 9,985,702 9,809,832 9,633,603 
Yield4.08 %4.34 4.60 5.07 5.08 
Allowance for loan losses$(591,098)(498,545)(368,033)(269,052)(258,024)
    Loans, net(4)
$39,171,474 39,637,546 37,225,012 36,238,982 35,943,298 
Yield3.92 %4.08 4.62 4.93 5.13 
Mortgage loans held for sale$244,952 221,157 86,415 117,909 99,556 
Yield2.92 %3.09 3.67 3.77 3.93 
Other loans held for sale$493,940 19,246 — — 475 
Yield3.61 %4.19 — — — 
Other earning assets(5)
$1,265,880 1,709,086 652,130 514,635 513,160 
Yield0.11 %0.11 1.02 1.71 2.08 
Federal Home Loan Bank and Federal Reserve Bank Stock(3)
$200,923 247,801 284,082 278,586 254,994 
Yield2.73 %3.60 3.38 2.85 3.85 
Total interest earning assets$48,609,960 48,459,542 44,933,992 43,854,866 43,648,038 
Yield3.58 %3.75 4.33 4.60 4.78 
Interest-Bearing Liabilities:
Interest-bearing demand deposits$7,789,095 7,260,940 6,445,986 6,381,282 6,138,810 
Rate0.19 %0.21 0.51 0.60 0.69 
Money market accounts, excluding brokered deposits$13,272,972 12,238,479 11,548,014 10,526,296 10,138,783 
Rate0.36 %0.46 1.00 1.13 1.26 
Savings deposits$1,114,956 1,036,024 926,822 915,640 900,366 
Rate0.02 %0.02 0.05 0.05 0.05 
Time deposits under $100,000$1,379,923 1,621,943 1,761,741 1,873,350 2,100,492 
Rate1.03 %1.43 1.64 1.27 1.39 
Time deposits over $100,000$3,863,821 4,772,555 5,051,705 5,198,266 5,957,691 
Rate1.44 %1.80 2.04 1.51 1.69 
Other brokered deposits$1,912,114 1,998,571 1,376,669 1,156,131 993,078 
Rate0.23 %0.25 1.42 1.84 2.47 
Brokered time deposits$2,232,940 2,244,429 2,166,496 2,121,069 2,119,149 
Rate1.59 %1.86 2.11 2.16 2.27 
   Total interest-bearing deposits$31,565,821 31,172,941 29,277,433 28,172,034 28,348,369 
Rate0.54 %0.73 1.18 1.16 1.32 
Federal funds purchased and securities sold under repurchase agreements$180,342 250,232 167,324 192,731 221,045 
Rate0.09 %0.12 0.30 0.24 0.22 
Other short-term borrowings$46,739 550,000 1,384,362 1,565,507 1,307,370 
Rate1.12 %1.23 1.66 1.87 2.31 
Long-term debt$2,234,665 2,834,188 2,678,651 2,153,983 2,286,221 
Rate2.71 %2.36 2.78 3.07 3.32 
Total interest-bearing liabilities$34,027,567 34,807,361 33,507,770 32,084,255 32,163,005 
Rate0.68 %0.86 1.30 1.30 1.47 
Non-interest-bearing demand deposits$12,773,676 11,923,534 9,409,774 9,706,784 9,365,776 
Cost of funds0.50 %0.65 1.04 1.02 1.16 
Effective cost of funds(6)
0.48 %0.62 0.96 0.95 1.09 
Net interest margin3.10 %3.13 3.37 3.65 3.69 
Taxable equivalent adjustment(2)
$956 861 786 769 819 
Average Balances, Interest, and Yields2017 2016
(dollars in thousands) (yields and rates annualized)Third Quarter Second Quarter First Quarter Fourth Quarter Third Quarter
Interest Earning Assets:         
Taxable investment securities (1)
$3,786,436
 3,844,688
 3,841,556
 3,643,510
 3,544,933
Yield2.11% 2.11% 2.06% 1.92
 1.83
Tax-exempt investment securities(1)(3)
$259
 340
 2,730
 2,824
 2,943
Yield (taxable equivalent) (3)
7.86% 6.87
 5.81
 5.82
 5.96
Trading account assets$7,823
 3,667
 6,443
 6,799
 5,493
Yield2.09% 2.28
 1.72
 2.63
 0.93
Commercial loans(2)(3)
$19,059,936
 19,137,733
 19,043,384
 18,812,659
 18,419,484
Yield4.41% 4.27
 4.16
 4.05
 4.03
Consumer loans(2)
$5,440,765
 5,215,258
 4,992,683
 4,911,149
 4,720,082
Yield4.55% 4.49
 4.40
 4.27
 4.30
Allowance for loan losses$(249,248) (251,219) (253,927) (253,713) (255,675)
    Loans, net (2)
$24,251,453
 24,101,772
 23,782,140
 23,470,095
 22,883,891
Yield4.49% 4.36
 4.25
 4.14
 4.14
Mortgage loans held for sale$52,177
 52,224
 46,554
 77,652
 87,524
Yield3.88% 3.87
 4.01
 3.51
 3.32
Federal funds sold, due from Federal Reserve Bank, and other short-term investments$543,556
 561,503
 654,322
 982,355
 998,565
Yield1.23% 1.00
 0.77
 0.49
 0.48
Federal Home Loan Bank and Federal Reserve Bank Stock(4)
$175,263
 177,323
 170,844
 121,079
 70,570
Yield3.50% 2.99% 3.42
 3.75
 4.99
Total interest earning assets$28,816,967
 28,741,517
 28,504,589
 28,304,314
 27,593,919
Yield4.11% 3.99
 3.88
 3.73
 3.71
Interest Bearing Liabilities:         
Interest bearing demand deposits$4,868,372
 4,837,053
 4,784,329
 4,488,135
 4,274,117
Rate0.27% 0.23
 0.19
 0.16
 0.16
Money Market accounts, excluding brokered deposits$7,528,036
 7,427,562
 $7,424,627
 7,359,067
 7,227,030
Rate0.34% 0.32
 0.31
 0.29
 0.29
Savings deposits$803,184
 805,019
 909,660
 908,725
 797,961
Rate0.03% 0.04
 0.11
 0.12
 0.07
Time deposits under $100,000$1,183,582
 1,202,746
 1,215,593
 1,229,809
 1,248,294
Rate0.68% 0.67
 0.64
 0.64
 0.64
Time deposits over $100,000$2,067,347
 2,040,924
 2,029,713
 2,014,564
 2,030,242
Rate0.97% 0.94% 0.92
 0.90
 0.88
Non-maturing brokered deposits$547,466
 564,043
 619,627
 638,779
 634,596
Rate0.73% 0.54
 0.41
 0.31
 0.29
Brokered time deposits$983,423
 815,515
 761,159
 742,153
 775,143
Rate1.16% 0.94
 0.92
 0.90
 0.88
   Total interest bearing deposits$17,981,410
 17,692,862
 17,744,708
 17,381,232
 16,987,383
Rate0.46% 0.41
 0.39
 0.37
 0.37
Federal funds purchased and securities sold under repurchase agreements$191,585
 183,400
 176,854
 219,429
 247,378
Rate0.08% 0.10
 0.09
 0.08
 0.09
Long-term debt$1,985,175
 2,270,452
 2,184,072
 2,190,716
 2,114,193
Rate2.81% 2.83
 2.83
 2.65
 2.71
Total interest bearing liabilities$20,158,170
 20,146,714
 20,105,634
 19,791,377
 19,348,954

Rate0.69% 0.68
 0.65
 0.62
 0.63
Non-interest bearing demand deposits$7,305,508
 7,298,845
 7,174,146
 7,280,033
 $7,042,908
Effective cost of funds0.48% 0.48
 0.46
 0.44
 0.44
Net interest margin3.63% 3.51
 3.42
 3.29
 3.27
Taxable equivalent adjustment (3)
$283
 298
 309
 322
 $330
          
(1)Excludes net unrealized gains (losses).
(2) Average loans are shown net of deferred fees and costs. Non-performing loans are included.
(3) Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 35%21%, in adjusting interest on tax-exempt loans and investment securities to a taxable-equivalent basis.
(4) (3)    Included as a component of Other Assetsother assets on the consolidated balance sheet.sheets.

(4)    Average loans are shown net of deferred fees and costs. NPLs are included.
(5)    Includes interest-bearing funds with Federal Reserve Bank, interest earning deposits with banks, and federal funds sold and securities purchased under resale agreements.
(6)    Includes the impact of non-interest-bearing capital funding sources.
63

Net Interest Income and Rate/Volume Analysis
The following tables settable sets forth the major components of net interest income and the related annualized yields and rates for the nine months ended September 30, 20172020 and 2016,2019, as well as the variances between the periods caused by changes in interest rates versus changes in volume.
Table 11 - Net Interest Income and Rate/Volume Analysis
Nine Months Ended September 30,2020 Compared to 2019
Average BalancesInterestAnnualized Yield/RateChange due toIncrease (Decrease)
(dollars in thousands)202020192020201920202019VolumeRate
Assets
Interest earning assets:
Investment securities$6,843,400 $6,775,287 $139,791 $156,554 2.72 %3.08 %$1,571 $(18,334)$(16,763)
Trading account assets5,955 4,153 99 84 2.22 2.70 37 (22)15 
Taxable loans, net(1)
38,671,202 35,421,137 1,203,839 1,360,511 4.16 5.14 125,062 (281,734)(156,672)
Tax-exempt loans, net(1)(2)
494,885 348,246 12,366 10,453 3.34 4.01 4,402 (2,489)1,913 
Allowance for loan losses(486,276)(256,727)
Loans, net38,679,811 35,512,656 1,216,205 1,370,964 4.20 5.16 129,464 (284,223)(154,759)
Mortgage loans held for sale184,396 68,558 4,291 2,122 3.10 4.13 3,581 (1,412)2,169 
Other loans held for sale172,241 692 4,756 22 3.63 4.11 5,279 (545)4,734 
Other earning assets(3)
1,209,239 567,433 2,477 9,964 0.27 2.32 11,099 (18,586)(7,487)
Federal Home Loan Bank and Federal Reserve Bank stock244,111 233,943 6,000 6,931 3.28 3.95 301 (1,232)(931)
Total interest earning assets47,339,153 43,162,722 1,373,619 1,546,641 3.88 4.79 151,332 (324,354)(173,022)
Cash and due from banks532,808 516,789 
Premises and equipment, net485,790 486,141 
Other real estate11,709 14,803 
Cash surrender value of bank-owned life insurance989,238 765,204 
Other assets(4)
2,209,923 1,621,335 
Total assets$51,568,621 $46,566,994 
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits$7,167,617 $6,288,424 $15,561 $32,611 0.29 %0.69 %$4,541 $(21,591)$(17,050)
Money market accounts14,119,510 11,035,016 61,799 109,711 0.58 1.33 30,712 (78,624)(47,912)
Savings deposits1,026,259 901,867 204 371 0.03 0.05 46 (213)(167)
Time deposits8,361,942 10,344,873 108,106 131,773 1.73 1.70 (25,236)1,569 (23,667)
Federal funds purchased and securities sold under repurchase agreements199,230 251,385 242 404 0.16 0.21 (82)(80)(162)
Other short-term borrowings658,128 974,696 7,643 18,195 1.53 2.46 (5,830)(4,722)(10,552)
Long-term debt2,581,232 2,129,424 50,645 54,785 2.54 3.39 11,466 (15,606)(4,140)
Total interest-bearing liabilities34,113,918 31,925,685 244,200 347,850 0.94 1.44 15,617 (119,267)(103,650)
Non-interest-bearing deposits11,374,121 9,242,993 
Other liabilities1,028,401 691,357 
Shareholders' equity5,052,181 4,706,959 
Total liabilities and equity$51,568,621 $46,566,994 
Interest rate spread:2.94 %3.35 %
Net interest income - FTE/margin(5)
$1,129,419 $1,198,791 3.20 %3.72 %$135,715 $(205,087)$(69,372)
Taxable equivalent adjustment2,603 2,256 
  Net interest income, actual$1,126,816 $1,196,535 
Net Interest Income and Rate/Volume Analysis
 Nine Months Ended September 30, 2017 Compared to 2016
 Average Balances Interest Annualized Yield/Rate Change due to Increase (Decrease)
(dollars in thousands)2017 2016 2017 2016 2017 2016 Volume Rate 
Assets                 
Interest earning assets:                 
Taxable investment securities$3,824,025
 3,537,060
 $60,079
 49,820
 2.09% 1.88
 $4,035
 6,224
 $10,259
Tax-exempt investment securities(2)
1,101
 3,506
 51
 162
 6.13
 6.16
 (111) —
 (111)
Total investment securities3,825,126
 3,540,566
 60,130
 49,982
 2.10
 1.88
 3,924
 6,224
 10,148
Trading account assets5,983
 4,840
 90
 46
 1.99
 1.28
 11
 33
 44
Taxable loans, net(1)
24,227,567
 22,812,346
 783,546
 698,657
 4.32
 4.09
 43,293
 41,596
 84,889
Tax-exempt loans, net(1)(2)
70,721
 74,691
 2,492
 2,591
 4.71
 4.63
 (138) 39
 (99)
Allowance for loan losses(251,448) (254,960)              
Loans, net24,046,840
 22,632,077
 786,038
 701,248
 4.37
 4.14
 43,155
 41,635
 84,790
Mortgage loans held for sale50,339
 74,494
 1,478
 1,966
 3.91
 3.52
 (636) 148
 (488)
Federal funds sold, due from Federal Reserve Bank, and other short-term investments586,055
 930,954
 4,396
 3,343
 0.99
 0.48
 (1,212) 2,265
 1,053
Federal Home Loan Bank and Federal Reserve Bank stock174,493
 76,252
 4,321
 2,649
 3.30
 4.63
 3,402
 (1,730) 1,672
  Total interest earning assets$28,688,836
 27,259,183
 $856,453
 759,234
 3.99% 3.72
 $48,644
 48,575
 $97,219
Cash and due from banks391,829
 400,222
              
Premises and equipment, net416,835
 434,889
              
Other real estate20,246
 39,282
              
Other assets(3)
1,066,863
 1,103,504
              
Total assets$30,584,609
 29,237,080
              
                  
Liabilities and Shareholders' Equity                
Interest-bearing liabilities:                 
Interest-bearing demand deposits$4,830,226
 4,235,529
 $8,366
 5,420
 0.23% 0.17% $756
 2,190
 $2,946
Money market accounts8,037,235
 7,603,136
 20,268
 17,620
 0.34
 0.31
 1,007
 1,641
 2,648
Savings deposits838,898
 755,608
 394
 366
 0.06
 0.06
 37
 (9) 28
Time deposits4,100,836
 4,094,525
 26,846
 24,666
 0.88
 0.80
 37
 2,143
 2,180
Federal funds purchased and securities sold under repurchase agreements184,000
 215,641
 125
 154
 0.09
 0.09
 (21) (8) (29)
Long-term debt2,145,838
 2,251,235
 45,967
 44,394
 2.82
 2.59
 (2,073) 3,646
 1,573
Total interest-bearing liabilities$20,137,033
 19,155,674
 $101,966
 92,620
 0.68
 0.64
 $(257) 9,603
 $9,346
Non-interest bearing deposits7,259,981
 6,928,906
              
Other liabilities219,388
 203,989
              
Shareholders' equity2,968,207
 2,948,511
              
Total liabilities and equity$30,584,609
 29,237,080
              
Interest rate spread:        3.31
 3.08
      
Net interest income - FTE/margin(4)
    754,487
 666,614
 3.52% 3.27
 $48,901
 38,972
 $87,873
Taxable equivalent adjustment    890
 964
          
  Net interest income, actual    $753,597
 665,650
          
                  
(1)     Average loans are shown net of unearned income. Non-performing loansNPLs are included. Interest income includes fees as follows: 20172020 - $23.4$42.8 million, 20162019 - $23.4$26.4 million.
(2)Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 35%21%, in adjusting interest on tax-exempt loans and investment securities to a taxable-taxable-equivalent basis.
equivalent basis.(3)    Includes interest-bearing funds with Federal Reserve Bank, interest earning deposits with banks, and federal funds sold and securities purchased under resale agreements.
(3)(4)    Includes average net unrealized gains (losses) on investment securities available for sale of $(34.7)$212.9 million and $35.7$14.7 million for the nine months ended September 30, 20172020 and 2019, respectively.
2016, respectively.
(4)(5)    The net interest margin is calculated by dividing annualized net interest income - FTE by average total interest earnings assets.

64

Market Risk Analysis
Interest rate risk is the primary market risk to which Synovus is potentially exposed. Synovus measures its sensitivity to changes in market interest rates through the use of a simulation model. Synovus uses this simulation model which incorporates all of Synovus’ earning assets and liabilities. These simulations are used to determine a baseline net interest income forecastprojection and the sensitivity of this forecast tothe income profile based on changes in interest rates. These simulations include allsimulations incorporate assumptions and factors, including, but not limited to, changes in market rates, in the size or composition of Synovus’ earning assets and liabilities. Forecastedthe balance sheet, changes, primarily reflecting loan and deposit growth forecasts, are included in the periods modeled. Anticipated deposit mix changesrepricing characteristics as well as customer behaviors. This process is reviewed and updated on an on-going basis in each interest rate scenario are also included in the periods modeled.a manner consistent with Synovus’ ALCO governance framework.
Synovus has modeled its baseline net interest income forecastprojection assuming a flat interest rate environment with the federal funds rate at the Federal Reserve’s current targeted range of 1.00%0% to 1.25%0.25% and the current prime rate of 4.25%3.25%. Synovus has modeled the impact of a gradual increase in short-termmarket interest rates across the yield curve of 100 and 200 basis pointsbps and a gradual decline of 25 basis pointsbps to determine the sensitivity of net interest income for the next twelve months. Synovus continues to maintain a modestly asset sensitiveThe lesser decline of the downrate scenario presented was selected in light of the low absolute level of monetary policy rates and generally incorporates an assumption that rates are floored at the zero-lower-bound. Synovus' current rate risk position whichis considered asset-sensitive and would be expected to benefit net interest income in a rising interest rate environment and reduce net interest income in a declining interest rate environment. The following table represents the estimated sensitivity of net interest income to these changes in short-term interest rates at September 30, 2017,2020, with comparable information for December 31, 2016.2019.
   Estimated % Change in Net Interest Income as Compared to Unchanged Rates (for the next twelve months)
 
 Change in Short-term Interest Rates (in basis points) September 30, 2017 December 31, 2016
 +200 4.9% 4.6%
 +100 2.9% 2.2%
 Flat —% —%
 -25 -1.5% -2.3%
      
Several factors could serve to diminish or eliminate this asset sensitivity in a rising rate environment. These factors include a higher than projected level of deposit customer migration to higher cost deposits, such as certificates of deposit, which would increase total interest expense and serve to reduce the realized level of asset sensitivity. Another factor which could impact the realized interest rate sensitivity is the repricing behavior of interest bearing non-maturity deposits. Assumptions for repricing are expressed as a beta relative to the change in the prime rate. For instance, a 50% beta would correspond to a deposit rate that would increase 0.5% for every 1% increase in the prime rate. Projected betas for interest bearing non-maturity deposit repricing are a key component of determining the Company's interest rate risk positioning. Projected betas are based on historical analysis, current product features, and deposit mix. These projected betas reflect an assumption that realized betas will increase as short-term rates increase. Should realized betas be higher than projections, the expected benefit from higher interest rates would be diminished. The following table presents an example of the potential impact of an increase in repricing betas on Synovus' realized interest rate sensitivity position.
Table 12 - Twelve Month Net Interest Income SensitivityTable 12 - Twelve Month Net Interest Income Sensitivity
Estimated % Change in Net Interest Income as Compared to Unchanged Rates (for the next twelve months)
 As of September 30, 2017
Change in Short-term Interest Rates (in basis points) Base Scenario 15% Increase in Average Repricing Beta
Change in Short-term Interest Rates (in bps)Change in Short-term Interest Rates (in bps)September 30, 2020December 31, 2019
+200 4.9% 3.1%+2002.4%2.8%
+100 2.9% 2.1%+1001.0%2.0%
FlatFlat—%—%
-25-25(0.2)%N/A
 
The net interest income simulation model is the primary tool utilized to evaluate potential interest rate risks over a shorter termshorter-term time horizon. Synovus also evaluates potential longer termlonger-term interest rate risk through modeling and evaluation of EVE. Simulation modeling is utilized to measure the economic valuesensitivity of equity and its sensitivity to immediate changes in interest rates. These simulations value only the current balance sheet and do not incorporate growth assumptions used in the net interest income simulation.Company's Economic Value of Equity (EVE). The economic value of equity isEVE measurement process estimates the net fair value of assets, liabilities, and off-balance sheet financial instruments derived from the present value of future cash flows discounted at current market interest rates. From this baseline valuation, Synovus evaluates changes in the value of each of these items inunder various interest rate scenariosscenarios. Management uses EVE sensitivity analyses as an additional means of measuring interest rate risk and incorporates this form of analysis within its governance and limits framework.
LIBOR
In July 2017, the Financial Conduct Authority, which regulates LIBOR, announced that it intends to determinestop persuading or compelling banks to submit rates for the net impactcalculation of LIBOR after 2021, confirming the continuation of LIBOR will not be guaranteed beyond that date. However, due to the COVID-19 pandemic, the FCA has since softened its stance on the economic value of equity. Key assumptions utilizedpre-cessation end dates scheduled in the model, namely loan prepayments, investment security prepayments, deposit repricing betas,2020 and non-maturity deposit duration have a significant impactearly 2021 on the resultsissuance of the EVE simulations.instruments tied to LIBOR. The ARRC has proposed SOFR as its preferred rate as an alternative to LIBOR and has proposed a paced market transition plan to SOFR from LIBOR. The ISDA recently recommended a spread adjustment methodology for derivative products based on historical differences between LIBOR and SOFR. Organizations are currently working on industry-wide and company-specific transition plans as it relates to derivatives and cash markets exposed to LIBOR. As illustrated in the table below, the EVE model indicatesnoted within our 10-K Risk Factors, Synovus holds instruments that compared with a valuation assuming stable rates, EVE is projected to increase by 2.6% and by 1.2%, assuming an immediate and sustained increase in interest rates of 100 and 200 basis points, respectively. Assuming an immediate 25 basis point decline in rates, EVE is projected to decrease by 3.2%. These metrics reflect a slight moderation in long term asset sensitivity as compared to December 31, 2016. This moderation is primarily due to an increase in the duration of the investment portfolio and a slight increase in loan duration.

  Estimated Change in EVE
Immediate Change in Interest Rates (in basis points) September 30, 2017 December 31, 2016
+200 1.2% 2.8%
+100 2.6% 3.2%
-25 -3.2% -3.3%
     
ADDITIONAL DISCLOSURES
Recently Issued Accounting Standards
Several accounting standards willmay be effective in fiscal year 2018 or later. Synovus is currently evaluating the requirements of these new ASUs to determine the impact on the consolidated financial statements:
ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities
ASU 2017-08, Receivables-Nonrefundable Fees and Other Costs: Premium Amortization on Purchased Callable Debt Securities
ASU 2017-05, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets
ASU 2017-04, Intangibles-Goodwill and Other, Simplifying the Test for Goodwill Impairment
ASU 2017-01, Business Combinations-Clarifying the Definition of a Business
ASU 2016-18, Statement of Cash Flows-Restricted Cash
ASU 2016-15, Statement of Cash Flows-Classification of Certain Cash Receipts and Cash Payments
ASU 2016-13, Financial Instruments-Credit Losses (CECL)
ASU 2016-02, Leases
ASU 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities
ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and subsequent related Updates
The ASUs with the most significant impact on Synovus are ASU 2016-13, Financial Instruments-Credit Losses (CECL), effective in 2020, followedimpacted by the ASU 2014-09, Revenue from Contracts with Customers, effective in 2018,discontinuance of LIBOR including floating rate obligations, loans, deposits, derivatives and ASU 2016-02, Leases, effective in 2019.

ASU 2016-13, Financial Instruments-Credit Losses (CECL).In June 2016, the FASB issued new accounting guidance related to credit losses. The new guidance replaces the existing incurred loss impairment guidance with a single expected credit loss methodology. The new guidance will require management’s estimate of credit losses over the full remaining expected life of loanshedges, and other financial instruments. For Synovus,instruments but is not able to currently predict the standard will apply to loans, unfunded loan commitments, and debt securities available for sale. The standard is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years.  Early adoption is permitted on January 1, 2019.  Upon adoption, Synovus expects to record a cumulative effect adjustment to retained earnings asassociated financial impacts of the beginning of the reporting period of adoption.  
Synovus' implementation efforts, which are led bytransition to an alternative reference rate. Synovus has established a cross-functional steering committee, are in process. To date, the focus of the committee has been on assessing the data, calculations, and disclosures required by the standard as well asLIBOR transition working through the project plan to address these requirements and provide for the implementation of the new standard. Management expectsgroup that the allowance for loan losses will be higher under the new standard; however, management is still in the process of determiningi) assessing the magnitude of the increaseCompany's current exposure to LIBOR indexed instruments and the impact on its financial statementsdata, systems and regulatory capital ratios. Additionally, the extent of the increase on the allowance for loan losses will depend upon the composition of the loan portfolio upon adoption of the standard, as well as economic conditions and forecasts at that time. 

ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and subsequent related Updates. In May 2014, the FASB issued new accounting guidance for recognizing revenue from contracts with customers, which is effective on January 1, 2018. ASU 2014-09 and subsequent related updates establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The standard is intended to increase comparability across industries. The core principle of the revenue model is that a company will recognize revenue when it transfers control of goods or services to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. The scope of the guidance explicitly excludes net interest income as well as many other revenues from financial assets.
Synovus will adopt the new revenue recognition guidance in the first quarter of 2018 using the modified retrospective method with a cumulative-effect adjustment to opening retained earnings. Synovus has substantially completed its assessment of revenue

contracts. Based on this review, management has not identified material changes to the timing or amount of revenue recognition. In connection with the adoption of this standard, Synovus will provide new footnote disclosures beginning in the first quarter of 2018 Form 10-Q consisting of expanded disaggregated non-interest income disclosures. Synovus does not expect the new standard to have a material impact on its consolidated financial position, results of operations, or disclosures.

ASU 2016-02, Leases.In February 2016, the FASB issued its new standard on lease accounting. ASU 2016-02 introduces a lessee model that brings most leases on the balance sheet. Under the new standard, all lessees will recognize a right-of-use asset and a lease liability for all leases, including operating leases, with a lease term greater than 12 months. From a lessor perspective, the accounting model is largely unchanged. For Synovus, the impact of this ASU will predominately relate to its accounting and reporting of leases as a lessee. The new ASU will be effective for Synovus beginning January 1, 2019. A modified retrospective approach is required at adoption which requires all prior periods presented in the financial statements to be restated with a cumulative effect adjustment to retained earnings as of the beginning of the earliest period presented. The standard also requires additional disclosures regarding leasing arrangements.
Synovus is currently evaluating the potential financial statement impact from the implementation of this standard by reviewing its existing lease contracts and other contractsprocesses that may include embedded leases. Synovus currently expects to recognize lease liabilitiesalso be impacted; ii) establishing an implementation plan; and corresponding right-of-use assets (at their present value) related to substantially all ofiii) developing a formal governance structure for the $282 million of future minimum lease commitments as disclosed in Note 8 of Synovus' 2016 Form 10-K. However, the population of contracts requiring balance sheet recognition and their initial measurement continues to be under evaluation.transition.
See "Note 1 - Significant Accounting Policies" in this Report for a discussion of recently adopted accounting standards updates.
65

Critical Accounting Policies
The accounting and financial reporting policies of Synovus are in accordance with GAAP and conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. Synovus has identified certain of its accounting policies as “critical accounting policies,” consisting of those related to the allowance for loan losses, and determination of the fair value of financial instruments.measurements and income taxes. In determining which accounting policies are critical in nature, Synovus has identified the policies that require significant judgment or involve complex estimates. It is management's practice to discuss critical accounting policies with the Board of Directors' Audit Committee, including the development, selection, implementation and disclosure of the critical accounting policies. The application of these policies has a significant impact on Synovus’ unaudited interim consolidated financial statements. Synovus’ financial results could differ significantly if different judgments or estimates are used in the application of these policies. All accounting policies described in "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" in Synovus' 20162019 Form 10-K should be reviewed for a greater understanding of how we record and report our financial performance. Duringperformance. Excluding the nine months ended September 30, 2017,adoption of ASU 2016-13, Financial Instruments-Credit Losses (CECL) on January 1, 2020 as disclosed in "Part I - Item 1. Financial Statements and Supplementary Data - Note 1 - Basis of Presentation and Accounting Policies" in this Report, there have been no significant changes to Synovus’ criticalthe accounting policies, estimates and assumptions, or the judgments affecting the application of these estimates and assumptions from those disclosed in Synovus' 20162019 Form 10-K.

Goodwill
Goodwill assessments are highly sensitive to economic projections and the related assumptions and estimates used by management. Synovus includes goodwill impairment analysis and reporting unit valuations as part of its critical accounting policy for fair value measurements. For additional information, see "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" in Synovus' 2019 Form 10-K and "Part I - Item 1. Financial Statements and Supplementary Data - Note 5 - Goodwill and Other Intangible Assets" in this Report.
Non-GAAP Financial Measures
The measures entitled adjusted non-interest income;revenue; adjusted non-interest expense; adjusted total revenues; adjusted tangible efficiency ratio; adjusted net income per common share, diluted; adjusted return on average assets; adjusted net charge-off ratio; adjusted return on average common equity; return on average tangible common equity, adjusted return on average tangible common equity; average total deposit growth excluding WFB deposits; average core deposits; average core transaction deposits;and tangible common equity to tangible assets ratio; and common equity Tier 1 (CET1) ratio (fully phased-in); are not measures recognized under GAAP and therefore are considered non-GAAP financial measures. The most comparable GAAP measures to these measures are total non-interest income;revenue; total non-interest expense; total revenues; efficiency ratio;ratio-FTE; net income per common share, diluted; return on average assets; net charge-off ratio; return on average common equity; average deposit growth; total average deposits;and the ratio of total shareholders' equity to total assets; and the CET1 ratio;assets, respectively.
Management believes that these non-GAAP financial measures provide meaningful additional information about Synovus to assist management and investors in evaluating Synovus’ operating results, financial strength, the performance of its business, and the strength of its capital position. However, these non-GAAP financial measures have inherent limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of operating results or capital position as reported under GAAP. The non-GAAP financial measures should be considered as additional views of the way our financial measures are affected by significant items and other factors, and since they are not required to be uniformly applied, they may not be comparable to other similarly titled measures at other companies. Adjusted total revenues and adjusted non-interest incomerevenue are measures used by management to evaluate totalnon-interest revenue and non-interest income exclusive of net investment securities gains/losses,gains (losses) and gains on sale and changes in fair value of private equity investments, net, and the Cabela's Transaction Fee.net. Adjusted non-interest expense and the adjusted tangible efficiency ratio are measures utilized by management to measure the success of expense management initiatives focused on reducing recurring controllable operating costs. Adjusted net income per common share, diluted, adjusted return on average assets, and adjusted return on average common equity are measurements used by management to evaluate operating results exclusive of items that management believes are not indicative of ongoing operations and impact period-to-period comparisons. Average total deposit growth excluding WFB deposits,Return on average core deposits,tangible common equity and average core transaction deposits are measures used by management to evaluate organic growth of deposits and the quality of deposits as a funding source. Adjusted net charge-off ratio is a measure used by management to evaluate charge-offs exclusive of charge-offs on loans transferred to held-for-sale. The adjusted return on average tangible common equity is a measureare measures used by management to compare Synovus' performance with other financial institutions because it calculates the return available to common shareholders without the impact of intangible assets and their related amortization, thereby allowing management to evaluate the performance of the business consistently. The tangible common equity to tangible assets ratio and common equity Tier 1 (CET1) ratio (fully phased-in) areis used by management and bank regulators to assess the strength of our capital position. The computations of these measures are set forth in the tables below.

66

Reconciliation of Non-GAAP Financial Measures

Nine Months Ended Three Months Ended Year Ended
(in thousands, except per share data)September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016 December 31, 2016
Adjusted non-interest income         
Total non-interest income$275,974
 199,188
 135,435
 68,155
 273,194
Subtract: Cabela's Transaction Fee(75,000) —
 (75,000) —
 —
Add/subtract: Investment securities (losses) gains, net289
 (126) 7,956
 (59) (6,011)
Add: Decrease in fair value of private equity investments, net3,193
 527
 27
 249
 1,026
     Adjusted non-interest income$204,456
 199,589
 68,418
 68,345
 268,209
          
Adjusted non-interest expense         
Total non-interest expense$594,780
 562,716
 205,646
 185,871
  
Subtract: Discounts to fair value for completed or planned ORE accelerated dispositions(7,082) —
 (7,082) —
  
Subtract: Asset impairment charges related to accelerated disposition of corporate real estate and other properties(1,168) —
 (1,168) —
  
Subtract: Earnout liability adjustments(2,059) —
 (2,059) —
  
Subtract: Restructuring charges, net(7,043) (8,225) (519) (1,243)  
Subtract: Fair value adjustment to Visa derivative—
 (1,079) —
 (360)  
Subtract: Litigation contingency/settlement expenses(401) (2,511) (401) 189
  
Subtract: Loss on early extinguishment of debt, net—
 (4,735) —
 —
  
Subtract: Amortization of intangibles(767) (121) (292) —
  
Subtract: Merger-related expense(110) (550) (23) (550)  
 Adjusted non-interest expense$576,150
 545,495
 194,102
 183,907
  
          
Table 14 - Reconciliation of Non-GAAP Financial Measures
Three Months EndedNine Months Ended
(in thousands)September 30, 2020September 30, 2019September 30, 2020September 30, 2019
Adjusted non-interest revenue
Total non-interest revenue$114,411 $88,760 $391,752 $257,945 
Add/subtract: Investment securities losses (gains), net1,550 3,731 (76,594)5,502 
Subtract: Gain on sale and increase in fair value of private equity investments, net(260)(1,194)(4,712)(3,507)
Adjusted non-interest revenue$115,701 $91,297 $310,446 $259,940 
Adjusted non-interest expense
Total non-interest expense$316,655 $276,310 $877,076 $832,847 
Subtract: Earnout liability adjustments— (10,457)(4,908)(10,457)
Subtract: Goodwill impairment(44,877)— (44,877)— 
Subtract: Merger-related expense— (353)— (57,493)
Subtract/add: Restructuring charges, net(2,882)66 (8,924)29 
Subtract: Valuation adjustment to Visa derivative— (2,500)— (2,500)
Subtract: Loss on early extinguishment of debt, net(154)(4,592)(2,057)(4,592)
Adjusted non-interest expense$268,742 $258,474 $816,310 $757,834 


67

Reconciliation of Non-GAAP Financial Measures, continued

Nine Months Ended Three Months Ended
(in thousands, except per share data)September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Adjusted efficiency ratio       
Adjusted non-interest expense$576,150
 545,495
 194,102
 183,907
Net interest income753,597
 665,650
 262,572
 226,007
Add: Tax equivalent adjustment890
 964
 283
 330
Add: Total non-interest income275,974
 199,188
 135,435
 68,155
Add/Subtract: Investment securities (losses) gains, net289
 (126) 7,956
 (59)
Total FTE revenues1,030,750
 865,676
 406,246
 294,433
Subtract: Cabela's Transaction Fee(75,000) —
 (75,000) —
Add: Decrease in fair value of private equity investments, net3,193
 527
 27
 249
Adjusted total revenues$958,943
 866,203
 331,273
 294,682
Efficiency ratio57.70% 65.00
 50.62
 63.13
      Adjusted efficiency ratio60.08
 62.98
 58.59
 62.41
        
Adjusted net income per common share, diluted       
Net income available to common shareholders$238,190
 170,555
 95,448
 62,686
Add:Earnout liability adjustments2,059
 —
 2,059
 —
Add: Merger-related expense110
 550
 23
 550
Add: Fair value adjustment to VISA derivative—
 1,079
 —
 360
Add/subtract: Litigation contingency/recovery401
 2,511
 401
 (189)
Add: Restructuring charges7,043
 8,225
 519
 1,243
Add: Amortization of intangibles767
 121
 292
 —
Add: Loss on early extinguishment of debt, net—
 4,735
 —
 —
Add: Provision expense on loans transferred to held-for-sale27,710
 —
 27,710
 —
Add: Discounts to fair value for completed or planned ORE accelerated dispositions7,082
 —
 7,082
 —
Add: Asset impairment charges related to accelerated disposition of corporate real estate and other properties1,168
 —
 1,168
 —
Add/subtract: Investment securities (losses) gains, net289
 (126) 7,956
 (59)
Add: Decrease in fair value of private equity investments, net3,193
 527
 27
 249
Subtract: Cabela's Transaction Fee(75,000) —
 (75,000) —
Add/subtract: Tax effect of adjustments10,078
 (6,520) 11,034
 (797)
Adjusted net income$223,090
 181,657
 78,719
 64,043
Weighted average common shares outstanding122,628
 125,712
 121,814
 123,604
Adjusted net income per common share, diluted$1.82
 1.45
 0.65
 0.52
        
Three Months EndedNine Months Ended
(in thousands, except per share data)September 30, 2020September 30, 2019September 30, 2020September 30, 2019
Adjusted total revenues and adjusted tangible efficiency ratio
Adjusted non-interest expense$268,742 $258,474 $816,310 $757,834 
Subtract: Amortization of intangibles(2,640)(2,901)(7,920)(8,702)
Adjusted tangible non-interest expense$266,102 $255,573 $808,390 $749,132 
Net interest income$376,990 $402,097 $1,126,816 $1,196,535 
Add: Tax equivalent adjustment956 819 2,603 2,256 
Add: Total non-interest revenue114,411 88,760 391,752 257,945 
Total FTE revenues$492,357 $491,676 $1,521,171 $1,456,736 
Add/subtract: Investment securities losses (gains), net1,550 3,731 (76,594)5,502 
Subtract: Gain on sale and increase in fair value of private equity investments, net(260)(1,194)(4,712)(3,507)
Adjusted total revenues$493,647 $494,213 $1,439,865 $1,458,731 
Efficiency ratio-FTE64.31 %56.20 %57.66 %57.17 %
 Adjusted tangible efficiency ratio53.91 51.71 56.14 51.36 
Adjusted net income per common share, diluted
Net income available to common shareholders$83,283 $127,435 $198,414 $397,505 
Add: Income tax expense, net related to State Tax Reform— 4,402 — 4,402 
Add: Earnout liability adjustments— 10,457 4,908 10,457 
Add: Goodwill impairment44,877 — 44,877 — 
Add: Merger-related expense— 353 — 57,493 
Add/subtract: Restructuring charges, net2,882 (66)8,924 (29)
Add: Valuation adjustment to Visa derivative— 2,500 — 2,500 
Add: Loss on early extinguishment of debt, net154 4,592 2,057 4,592 
Add/subtract: Investment securities losses (gains), net1,550 3,731 (76,594)5,502 
Subtract: Gain on sale and increase in fair value of private equity investments, net(260)(1,194)(4,712)(3,507)
Subtract/add: Tax effect of adjustments(1,122)(2,478)18,214 (10,137)
Adjusted net income available to common shareholders$131,364 $149,732 $196,088 $468,778 
Weighted average common shares outstanding, diluted147,976 154,043 148,037 158,595 
Adjusted net income per common share, diluted$0.89 $0.97 $1.32 $2.96 



68

Reconciliation of Non-GAAP Financial Measures, continued

Nine Months Ended Three Months Ended 
(dollars in thousands)September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016 
         
Adjusted return on average assets (annualized)  
 
 
 
Net income$245,868
 178,233
 98,007
 65,245
 
Add: Earnout liability adjustments2,059
 —
 2,059
 —
 
Add: Merger-related expense110
 550
 23
 550
 
Add: Fair value adjustment to VISA derivative—
 1,079
 —
 360
 
Add/subtract: Litigation contingency/recovery401
 2,511
 401
 (189) 
Add: Restructuring charges7,043
 8,225
 519
 1,243
 
Add: Amortization of intangibles767
 121
 292
 —
 
Add: Loss on early extinguishment of debt, net—
 4,735
 —
 —
 
Add: Provision expense on loans transferred to held-for-sale27,710
 —
 27,710
 —
 
Add: Discounts to fair value for completed or planned ORE accelerated dispositions7,082
 —
 7,082
 —
 
Add: Asset impairment charges related to accelerated disposition of corporate real estate and other properties1,168
 —
 1,168
 —
 
Add/subtract: Investment securities (losses) gains, net289
 (126) 7,956
 (59) 
Add: Decrease in fair value of private equity investments, net3,193
 527
 27
 249
 
Subtract: Cabela's Transaction Fee(75,000) —
 (75,000) —
 
Add/subtract: Tax effect of adjustments10,078
 (6,520) 11,034
 (797) 
Adjusted net income$230,768
 189,335
 81,278
 66,602
 
Net income annualized308,536

252,907
 322,462
 264,960
 
Total average assets$30,584,607
 29,237,109
 30,678,388
 29,528,435
 
Adjusted return on average assets (annualized)1.01% 0.87
 1.05
 0.90
 
         
Adjusted net charge-off ratio (annualized)        
Net charge-offs$60,695
   38,099
   
Charge-offs on loans transferred to held-for-sale during 3Q17(34,235)   (34,235)   
Net-charges-offs excluding charge-offs on loans transferred to held-for-sale$26,460
   3,864
   
Net charge-offs excluding charge-offs on loans transferred to held-for-sale annualized35,377
   15,330
   
Average loan balances$24,297,002
   24,499,923
   
Net charge-off ratio, as reported (annualized)0.33%   0.62
   
Adjusted net charge-off ratio, excluding 3Q17 transfers to held-for-sale (annualized)0.15%   0.06
   
         
Table 14 - Reconciliation of Non-GAAP Financial Measures, continued
Three Months EndedNine Months Ended
(dollars in thousands)September 30, 2020September 30, 2019September 30, 2020September 30, 2019
Adjusted return on average assets (annualized)
Net income$91,574 $135,726 $223,286 $412,096 
Add: Income tax expense, net related to State Tax Reform— 4,402 — 4,402 
Add: Earnout liability adjustments— 10,457 4,908 10,457 
Add: Goodwill impairment44,877 — 44,877 — 
Add: Merger-related expense— 353 — 57,493 
Add/subtract: Restructuring charges, net2,882 (66)8,924 (29)
Subtract: Valuation adjustment to Visa derivative— 2,500 — 2,500 
Add: Loss on early extinguishment of debt, net154 4,592 2,057 4,592 
Add/subtract: Investment securities losses (gains), net1,550 3,731 (76,594)5,502 
Subtract: Gain on sale and increase in fair value of private equity investments, net(260)(1,194)(4,712)(3,507)
Subtract/add: Tax effect of adjustments(1,122)(2,478)18,214 (10,137)
Adjusted net income$139,655 $158,023 $220,960 $483,369 
Net income annualized364,305 538,478 298,258 550,971 
Adjusted net income annualized555,584 626,939 295,151 646,263 
Total average assets53,138,334 47,211,026 51,568,621 46,566,994 
Return on average assets (annualized)0.69 %1.14 %0.58 %1.18 %
Adjusted return on average assets (annualized)1.05 1.33 0.57 1.39 

69

Outlook 2017 (Yr)
Adjusted net charge-off ratio excluding balance sheet restructuring actions
Net charge-off ratio29-34 b.p.s
Subtract: Net charge-off ratio related to loans transferred to held-for-sale14 b.p.s
Net charge-off ratio, excluding transfers to held-for-sale15-20 b.p.s
Table 14 - Reconciliation of Non-GAAP Financial Measures, continued
Three Months Ended
(dollars in thousands)September 30, 2020June 30, 2020September 30, 2019
Adjusted return on average common equity, return on average tangible common equity, and adjusted return on average tangible common equity (annualized)
Net income available to common shareholders$83,283 $84,901 $127,435 
Add: Income tax expense, net related to State Tax Reform— — 4,402 
Add: Earnout liability adjustments— 4,908 10,457 
Add: Goodwill impairment44,877 — — 
Add: Merger-related expense— — 353 
Add/subtract: Restructuring charges, net2,882 2,822 (66)
Add: Valuation adjustment to Visa derivative— — 2,500 
Add: Loss on early extinguishment of debt, net154 — 4,592 
Add/subtract: Investment securities losses (gains), net1,550 (69,409)3,731 
Subtract: Gain on sale and increase in fair value of private equity investments(260)(8,707)(1,194)
Subtract/add: Tax effect of adjustments(1,122)19,500 (2,478)
Net income available to common shareholders$131,364 $34,015 $149,732 
Adjusted net income available to common shareholders' annualized$522,600 $136,808 $594,045 
Add: Amortization of intangibles7,782 7,868 8,632 
Adjusted net income available to common shareholders excluding amortization of intangibles annualized$530,382 $144,676 $602,677 
Net income available to common shareholders annualized$331,322 $341,470 $505,585 
Add: Amortization of intangibles7,782 7,868 8,632 
Net income available to common shareholders excluding amortization of intangibles$339,104 $349,338 $514,217 
Total average shareholders' equity less preferred stock$4,553,159 $4,567,254 $4,450,301 
Subtract: Goodwill(497,267)(497,267)(492,320)
Subtract: Other intangible assets, net(49,075)(51,667)(60,278)
Total average tangible shareholders' equity less preferred stock$4,006,817 $4,018,320 $3,897,703 
Return on average common equity (annualized)7.28 %7.48 %11.36 %
Adjusted return on average common equity (annualized)11.48 3.00 13.35 
Return on average tangible common equity (annualized)8.46 8.69 13.19 
Adjusted return on average tangible common equity (annualized)13.24 3.60 15.46 






70

Reconciliation of Non-GAAP Financial Measures, continuedThree Months Ended
(dollars in thousands)September 30, 2017 June 30, 2017 December 31, 2016 September 30, 2016 
Adjusted return on average common equity (annualized)        
Net income available to common shareholders$95,448
 73,444
 65,990
 62,686
 
Add:Earnout liability adjustments2,059
 —
 —
 —
 
Add: Merger-related expense23
 —
 1,086
 550
 
Add: Fair value adjustment to VISA derivative—
 —
 4,716
 360
 
Add/subtract: Litigation contingency/recovery401
 —
 —
 (189) 
Add: Restructuring charges519
 13
 42
 1,243
 
Add: Amortization of intangibles292
 292
 400
 —
 
Add: Provision expense on loans transferred to held-for-sale27,710
 —
 —
 —
 
Add: Discounts to fair value for completed or planned ORE accelerated dispositions7,082
 —
 —
 —
 
Add: Asset impairment charges related to accelerated disposition of corporate real estate and other properties1,168
 —
 —
 —
 
Add/subtract: Investment securities (losses) gains, net7,956
 1
 (5,885) (59) 
Add: Decrease in fair value of private equity investments, net27
 1,352
 499
 249
 
Subtract: Cabela's Transaction Fee(75,000) —
 —
 —
 
Add/subtract: Tax effect of adjustments11,034
 (613) (318) (797) 
Adjusted net income$78,719
 74,489
 66,530
 64,043
 
Net income annualized$312,309
 298,775
 264,674
 254,780
 
         
Total average shareholders' equity less preferred stock$2,859,491
 2,849,069
 2,786,707
 2,806,533
 
Subtract: Goodwill(57,167) (57,018) (55,144) (24,431) 
Subtract: Other intangible assets, net(11,648) (11,965) (233) (226) 
Total average tangible shareholders' equity less preferred stock$2,790,676
 2,780,086
 2,731,330
 2,781,876
 
Adjusted return on average common equity (annualized)10.92% 10.49
 9.50
 9.08
 
Adjusted return on average tangible common equity (annualized)11.19% 10.75
 9.69
 9.16
 
         
Sequential quarter growth in total average deposits excluding acquired WFB deposits        
3Q17 sequential quarter total average deposits growth, as reported$295,210
       
Subtract: Average balance WFB acquired deposits(71,920)       
3Q17 sequential quarter total average deposits growth, as adjusted$223,290
       
3Q17 sequential quarter growth, excluding WFB acquired deposits$223,290
       
2Q17 total average deposits$24,991,708
       
Sequential quarter percent change, as reported, annualized4.7%       
Sequential quarter percent change, as adjusted, annualized3.5%       
         
(dollars in thousands)September 30, 2020June 30,
2020		September 30, 2019
Tangible common equity ratio
Total assets$53,040,538 $54,121,989 $47,661,182 
Subtract: Goodwill(452,390)(497,267)(487,865)
Subtract: Other intangible assets, net(47,752)(50,392)(58,572)
Tangible assets$52,540,396 $53,574,330 $47,114,745 
Total shareholders' equity$5,064,542 $5,052,968 $4,868,838 
Subtract: Goodwill(452,390)(497,267)(487,865)
Subtract: Other intangible assets, net(47,752)(50,392)(58,572)
Subtract: Preferred Stock, no par value(537,145)(537,145)(536,550)
Tangible common equity$4,027,255 $3,968,164 $3,785,851 
Total shareholders' equity to total assets ratio9.55 %9.34 %10.22 %
Tangible common equity ratio7.67 7.41 8.04 



Reconciliation of Non-GAAP Financial Measures, continued

   
(dollars in thousands)September 30, 2017 June 30, 2017 December 31, 2016 September 30, 2016 
Average core deposits and average core transaction deposits        
Average total deposits$25,286,919
 24,991,708
 24,661,265
 24,030,291
 
Subtract: Average brokered deposits(1,530,889) (1,379,559) (1,380,931) (1,409,739) 
     Average core deposits23,756,030
 23,612,149

23,280,334
 22,620,552
 
Subtract: Average total SCM deposits(1,991,954) (2,051,646) (2,356,567) (2,105,126) 
Subtract: Average time deposits excluding SCM deposits(3,160,915) (3,151,333) (3,147,620) (3,153,366) 
Average core transaction deposits18,603,161

18,409,170

17,776,147

17,362,060
 
         
Tangible common equity to tangible assets ratio        
Total assets$31,642,123
 30,687,966
 30,104,002
 29,727,096
 
Subtract: Goodwill(57,315) (57,092) (59,678) (24,431) 
Subtract: Other intangible assets, net(11,548) (11,843) (13,223) (225) 
Tangible assets$31,573,260
 30,619,031

30,031,101
 29,702,440
 
Total shareholders' equity$2,997,079
 2,997,947
 2,927,924
 2,906,659
 
Subtract: Goodwill(57,315) (57,092) (59,678) (24,431) 
Subtract: Other intangible assets, net(11,548) (11,843) (13,223) (225) 
Subtract: Series C Preferred Stock, no par value(125,980) (125,980) (125,980) (125,980) 
Tangible common equity$2,802,236
 2,803,032

2,729,043
 2,756,023
 
Total shareholders' equity to total assets ratio9.47% 9.77%
9.73
 9.78
 
     Tangible common equity to tangible assets ratio8.88
 9.15

9.09
 9.28
 
         
Common equity Tier 1 (CET1) ratio (fully phased-in)        
Common equity Tier 1 (CET1)$2,749,304
       
Subtract: Adjustment related to capital components(25,704)       
CET1 (fully phased-in)2,723,600
 


    
Total risk-weighted assets27,329,260
       
Total risk-weighted assets (fully phased-in)27,554,994
       
Common equity Tier 1 (CET1) ratio10.06
 


    
     Common equity Tier 1 (CET1) ratio (fully phased-in)9.88
 


    
         
         



 Nine Months Ended   
(dollars in thousands)September 30, 2017 September 30, 2016 Increase 
Total non-interest expense growth excluding balance sheet restructuring actions      
Total non-interest expense, as reported$594,780
 562,716
 5.7% 
Subtract: Discounts to fair value for completed or planned ORE accelerated dispositions(7,082) —
   
Subtract: Asset impairment charges related to accelerated disposition of corporate real estate and other properties(1,683) —
   
Total non-interest expense excluding balance sheet restructuring actions$586,015
 562,716
 4.1% 
       


Reconciliation of Non-GAAP Financial Measures, continuedYear Ending December 31,   
(dollars in thousands)2017 2016 Increase 
Total non-interest expense growth excluding balance sheet restructuring actions      
Total non-interest expense, as reported$804,806 to $819,925
 755,923
 6.5%-8.5% 
Subtract: Discounts to fair value for completed or planned ORE accelerated dispositions(7,082) —
 — 
Subtract: Asset impairment charges related to accelerated disposition of corporate real estate and other properties(1,683) —
 — 
Subtract: Estimated loss on early extinguishment of debt to be recorded in 4Q17(24,000) —
 — 
Total non-interest expense excluding balance sheet restructuring actions$772,041 to $787,160
 755,923
 2.1%-4.1% 
     




ITEM 3. – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information presented in the Market Risk Analysis section of the Management's Discussion and Analysis of Financial Condition and Results of Operations is incorporated herein by reference.
ITEM 4. – CONTROLS AND PROCEDURES
In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by Synovus' management, with the participation of Synovus' Chief Executive Officer and Chief Financial Officer, of the effectiveness of Synovus' disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. Based on that evaluation, Synovus' Chief Executive Officer and Chief Financial Officer have concluded that, as of September 30, 2017,2020, Synovus' disclosure controls and procedures were effective.
There have been no material changes in Synovus' internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended September 30, 20172020 that have materially affected, or are reasonably likely to materially affect, Synovus' internal control over financial reporting.



71

PART II. – OTHER INFORMATION
ITEM 1. – LEGAL PROCEEDINGS
Synovus and its subsidiaries are subject to various legal proceedings, claims and disputes that arise in the ordinary course of its business. Additionally, in the ordinary course of its business, Synovus and its subsidiaries are subject to regulatory examinations, information gathering requests, inquiries and investigations. Synovus, like many other financial institutions, has been the target of legal actions and other proceedings asserting claims for damages and related relief for losses. These actions include mortgage loan and other loan put-back claims, claims and counterclaims asserted by individual borrowers related to their loans, and allegations of violations of state and federal laws and regulations relating to banking practices, and allegations related to Synovus' participation in government stimulus programs, including putative class action matters. In addition to actual damages, if Synovus does not prevail in such asserted legal actions, credit-related litigation could result in additional write-downs or charge-offs of assets, which could adversely affect Synovus' results of operations during the period in which the write-down or charge-off were to occur.
Based on Synovus' current knowledge and advice of counsel, management presently does not believe that the liabilities arising from these legal matters will have a material adverse effect onof Synovus' consolidated financial condition, results of operations or cash flows. However, it is possible that the ultimate resolution of these legal matters could have a material adverse effect on Synovus' results of operations and financial condition for any particular period. For additional information, see ""Part I - Item 1. Financial Statements and Supplementary Data - Note 1310 - Legal Proceedings"Commitments and Contingencies" of this Report, which Note is incorporated herein by this reference.
ITEM 1A. – RISK FACTORS
In addition to the other information set forth in this Report, you should carefully consider the factors discussed in "Part I - Item IA - Risk Factors” of Synovus’ 2016Synovus' 2019 Form 10-K and "Item 1A. - Risk Factors" of Synovus' Form 10-Q for the period ended March 31, 2020 ("1Q 2020 Form 10-Q"), which could materially affect its business, financial position, results of operations, cash flows, or future results. Please be aware that these risks may change over time and other risks may prove to be important in the future. In addition, these risks may be heightened by the disruption and uncertainty resulting from COVID-19. New risks may emerge at any time, and we cannot predict such risks or estimate the extent to which they may affect our business, financial condition or results of operations, or the trading price of our securities.
There wereare no material changes during the period covered by this Report to the risk factors previously disclosed in Synovus’ 2016 10-K.Synovus' 2019 Form 10-K and 1Q 2020 Form 10-Q.
ITEM 2. – UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS
(a) None.
(b) None.
(c) Issuer Purchases of Equity Securities:
Synovus'The Company announced on January 24, 2020 that its Board of Directors authorized share repurchases in 2020 at a $200 millionlevel that would be consistent with Synovus retaining a 9% CET1 ratio target. As a result of the greater economic uncertainty associated with the current pandemic, Synovus suspended its share repurchase program that will expire atactivity beyond the end$16.2 million (450 thousand shares) of 2017. This program was announced on January 17, 2017. The table below sets forth information regarding repurchases of ourits common stock repurchased during the third quarter of 2017.first quarter.
Share Repurchases Total Number of Shares Repurchased 
Average Price Paid per Share(1)
 
Total Number
of Shares Repurchased as
Part of
Publicly Announced
Plans or Programs
 
Maximum Approximate
Dollar Value
of Shares
that May Yet Be
Purchased Under the
Plans or Programs
     
July 2017 175,900
 $43.84
 175,900
 $146,962,549
August 2017 960,000
 42.67
 960,000
 105,996,984
September 2017 984,800
 42.49
 984,800
 64,149,735
Total 2,120,700
 $42.69
 2,120,700
 
         
(1) The average price paid per share is calculated on a trade date basis for all open market transactions and excludes commissions and other transaction expenses.

The foregoing repurchases during the third quarter of 2017 were purchased through open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.

ITEM 3. – DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. – MINE SAFETY DISCLOSURES
None.
ITEM 5. – OTHER INFORMATION
None.

72

ITEM 6. – EXHIBITS
Exhibit

Number
Description
3.1
Amended and Restated Articles of Incorporation of Synovus, as amended, incorporated by reference to Exhibit 3.1 of Synovus’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, as filed with the SEC on August 9, 2010.
3.2
Articles of Amendment to the Amended and Restated Articles of Incorporation of Synovus with respect to the Series C Preferred Stock, incorporated by reference to Exhibit 3.1 to Synovus' Current Report on Form 8-K dated July 25, 2013, as filed with the SEC on July 25, 2013.
3.3
Articles of Amendment to the Amended and Restated Articles of Incorporation of Synovus, incorporated by reference to Exhibit 3.1 of Synovus’ Current Report on Form 8-K dated April 22, 2020, as filed with the SEC on April 24, 2020.
3.2 
Restated Bylaws of Synovus, incorporated by reference to Exhibit 3.2 of Synovus' Current Report on Form 8-K dated April 29, 2014,22, 2020, as filed with the SEC on April 29, 2014.24, 2020.
3.44.1 
3.5
Bylaws, as amended, of Synovus, incorporated by reference to Exhibit 3.14.1 of Synovus' Current Report on Form 8-K dated November 8, 2010,October 29, 2020, as filed with the SEC on November 9, 2010.October 29, 2020.
12.131.1 
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
32
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101
Interactive Data File
104 Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).


73

SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.


 
SYNOVUS FINANCIAL CORP.
November 7, 20176, 2020By:/s/ Kevin S. BlairAndrew J. Gregory, Jr.
DateKevin S. BlairAndrew J. Gregory, Jr.
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)



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