0000018349 syn:CommercialAndIndustrialMember us-gaap:InterestRateBelowMarketReductionMember 2018-01-01 2018-06-30
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 June 30, 20182019
Commission file number 1-10312
 

financialappendix930a87.jpg
SYNOVUS FINANCIAL CORP.CORP.
(Exact name of registrant as specified in its charter)

 
Georgia 58-1134883
(State or other jurisdiction ofincorporation or organization)
 
   (I.R.S. EmployerIdentification No.)
1111 Bay Avenue
Suite 500,Columbus,Georgia 31901
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (706) (706) 649-2311
Securities registered pursuant to Section 12(b) of the Act:
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 D
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 filerx☒Accelerated 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 number of shares outstanding of each of the issuer’s class of common stock, as of the latest practicable date.
ClassJuly 31, 2019August 6, 2018

Common Stock, $1.00 Par Value154,320,484117,348,421





Table of Contents
 
    Page
Part I.
Financial Information 
  Index of Defined Terms
i
 Item 1.Financial Statements (Unaudited) 
  Consolidated Balance Sheets as of June 30, 20182019 and December 31, 20172018
1
  Consolidated Statements of Income for the SixThree and ThreeSix Months Ended June 30, 20182019 and 20172018
2
  Consolidated Statements of Comprehensive Income for the SixThree and ThreeSix Months Ended June 30, 20182019 and 20172018
3
  Consolidated Statements of Changes in Shareholders' Equity for the Three and Six Months Ended June 30, 20182019 and 20172018
4
  Consolidated Statements of Cash Flows for the Six Months Ended June 30, 20182019 and 20172018
56
  Notes to Unaudited Interim Consolidated Financial Statements
67
 Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
4443
 Item 3.
Quantitative and Qualitative Disclosures About Market Risk
7169
 Item 4.Controls and Procedures
7169
     
Part II.
Other Information 
 Item 1.Legal Proceedings
7270
 Item 1A.Risk Factors
7270
 Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
7570
 Item 3.Defaults Upon Senior Securities
7571
 Item 4.Mine Safety Disclosures
7571
 Item 5.Other Information
7571
 Item 6.Exhibits
7672
 Signatures
7773
     







SYNOVUS FINANCIAL CORP.
INDEX OF DEFINED TERMS
AICPA – American Institute of Certified Public Accountants
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.
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
Azalea Merger Sub – Azalea Merger Sub Corp., a wholly-owned subsidiary of Synovus which was formed for the express and limited purpose of the Merger
Basel III – The third Basel Accord developed by the Basel Committee on Banking Supervision to strengthen existing regulatory capital requirements
BOLI – Bank-owned life insurance
BOV – Broker’s opinion of value
bp(s) – Basis point(s)
C&I – Commercial and industrial loans
CECL –Current expected credit losses
CET1 – Common Equity Tier 1 Capital defined by Basel III capital rules
CME – Chicago Mercantile Exchange
CMO – Collateralized Mortgage Obligation
Cabela’s Transaction – The transaction completed on September 25, 2017 whereby Synovus Bank acquired certain assets and assumed certain liabilities of World's Foremost Bank ("WFB")WFB and then immediately thereafter sold WFB’s credit card assets and certain related liabilities to Capital One Bank (USA), National Association.  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 Incorporated 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
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
CRE – Commercial real estate
DIF – Deposit Insurance Fund
Dodd-Frank Act – The Dodd-Frank Wall Street Reform and Consumer Protection Act
EVE – Economic value of equity
Exchange Act – Securities Exchange Act of 1934, as amended
FASB – Financial Accounting Standards Board
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

i

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
Federal Tax Reform – Enactment of H.R. 1, formerly known as the Tax Cuts and Jobs Act, on December 22, 2017, legislation in which a number of changes were made under the Internal Revenue Code, including a reduction of the corporate income tax rate, significant limitations on the deductibility of interest, allowance of the expensing of capital expenditures, limitation on

i
Table of Contents

deductibility of FDIC insurance premiums, and limitation of the deductibility of certain performance-based compensation, among others
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
FTE – Fully taxable-equivalent
GA DBF – Georgia Department of Banking and Finance
GAAP – Generally Accepted Accounting Principles in the United States of America
GGL – Government 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"
GSE – Government sponsored enterprise
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
LIBOR – London Interbank Offered Rate
LIHTC – Low Income Housing Tax Credit
LTV – Loan-to-collateral value ratio
Merger Agreement – Agreement and Plan of Merger by and among Synovus, FCB and Azalea Merger Sub Corp. dated as of July 23, 2018
Merger– The proposedJanuary 1, 2019 merger of Azalea Merger Sub Corp. with and into FCB pursuant toand immediately thereafter, the terms and conditionsmerger of the Merger Agreement, with FCB continuing as the surviving entity. Immediately thereafter, FCB will merge with and into Synovus, with Synovus continuing as the surviving entity pursuant to the terms and conditions of the Merger Agreement
MPS – Merchant processing servicer(s)
NAICS – North American Industry Classification System
nm – not meaningful
NPA – Non-performing assets
NPL – Non-performing loans
NSF – Non-sufficient funds
OCI – Other comprehensive income
ORE – Other real estate
OTC– Over-the-counter
OTTI – Other-than-temporary impairment
Parent Company – Synovus Financial Corp.

ii

ROU – Right-of-use
SBA – Small Business Administration
SEC – U.S. Securities and Exchange Commission
Securities Act – Securities Act of 1933, as amended
Series C Preferred Stock – Synovus' Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series C, $25 liquidation preference
Series D Preferred Stock – Synovus' Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D, $25 liquidation preference
Series E Preferred Stock – Synovus' Fixed-Rate Reset Non-Cumulative Perpetual Preferred Stock, Series E, $25 liquidation preference
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' 20172018 Form 10-K – Synovus' Annual Report on Form 10-K for the year ended December 31, 20172018
Synovus Mortgage – Synovus Mortgage Corp., a wholly-owned subsidiary of Synovus Bank
Synovus Securities – Synovus Securities, Inc., a wholly-owned subsidiary of Synovus

ii
Table of Contents

Synovus Trust – Synovus Trust Company, N.A., a wholly-owned subsidiary of Synovus Bank
TDR – Troubled debt restructuring (as defined in ASC 310-40)
the Treasury – United States Department of the Treasury
UPB – Unpaid principal balance
VIE – Variable interest entity as(as defined in ASC 810-10810-10)
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 settled. Class B shares will be convertible into Visa Class A shares using a then currentthen-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


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)June 30, 2018 December 31, 2017June 30, 2019 December 31, 2018
ASSETS      
Cash and due from banks$404,080
 $397,848
$549,616
 $468,426
Interest bearing funds with Federal Reserve Bank613,082
 460,928
Interest-bearing funds with Federal Reserve Bank531,488
 641,476
Interest earning deposits with banks33,754
 26,311
20,271
 19,841
Federal funds sold and securities purchased under resale agreements40,872
 47,846
49,946
 13,821
Total cash, cash equivalents, restricted cash, and restricted cash equivalents(1)
1,091,788
 932,933
1,151,321
 1,143,564
Investment securities available for sale, at fair value7,007,012
 3,991,632
Mortgage loans held for sale, at fair value53,673
 48,024
81,855
 37,129
Investment securities available for sale, at fair value3,929,962
 3,987,069
Loans, net of deferred fees and costs25,134,056
 24,787,464
Loans36,138,561
 25,946,573
Allowance for loan losses(251,725) (249,268)(257,376) (250,555)
Loans, net24,882,331
 24,538,196
35,881,185
 25,696,018
Cash surrender value of bank-owned life insurance547,261
 540,958
766,287
 554,134
Premises and equipment, net428,633
 426,813
490,644
 434,307
Goodwill57,315
 57,315
492,390
 57,315
Other intangible assets10,458
 11,254
61,473
 9,875
Deferred tax asset, net182,983
 165,788
Other assets555,901
 513,487
1,386,036
 745,218
Total assets$31,740,305
 $31,221,837
$47,318,203
 $32,669,192
LIABILITIES AND SHAREHOLDERS' EQUITY      
Liabilities      
Deposits:      
Non-interest bearing deposits$7,630,491
 $7,686,339
Interest bearing deposits, excluding brokered deposits16,961,187
 16,500,436
Brokered deposits1,851,010
 1,961,125
Non-interest-bearing deposits$9,205,066
 $7,650,967
Interest-bearing deposits28,761,656
 19,069,355
Total deposits26,442,688
 26,147,900
37,966,722
 26,720,322
Federal funds purchased and securities sold under repurchase agreements207,580
 161,190
273,481
 237,692
Other short-term borrowings1,330,000
 650,000
Long-term debt1,656,647
 1,706,138
2,306,072
 1,657,157
Other liabilities265,696
 245,043
688,112
 270,419
Total liabilities28,572,611
 28,260,271
42,564,387
 29,535,590
Shareholders' Equity      
Series D Preferred Stock – no par value. Authorized 100,000,000 shares; 8,000,000 shares issued and outstanding at June 30, 2018195,138
 —
Series C Preferred Stock - no par value. 5,200,000 shares outstanding at June 30, 2018 and December 31, 2017125,980
 125,980
Common stock - $1.00 par value. Authorized 342,857,143 shares; 143,077,973 issued at June 30, 2018 and 142,677,449 issued at December 31, 2017; 117,841,369 outstanding at June 30, 2018 and 118,897,295 outstanding at December 31, 2017143,078
 142,678
Series D Preferred Stock – no par value. Authorized 100,000,000 shares; 8,000,000 shares issued and outstanding at June 30, 2019 and December 31, 2018195,140
 195,140
Common stock - $1.00 par value. Authorized 342,857,143 shares; 166,079,543 issued at June 30, 2019 and 143,300,449 issued at December 31, 2018; 156,872,026 outstanding at June 30, 2019 and 115,865,510 outstanding at December 31, 2018166,080
 143,300
Additional paid-in capital3,045,014
 3,043,129
3,801,748
 3,060,561
Treasury stock, at cost – 25,236,604 shares at June 30, 2018 and 23,780,154 shares at December 31, 2017(916,484) (839,674)
Accumulated other comprehensive loss(125,720) (54,754)
Treasury stock, at cost – 9,207,517 shares at June 30, 2019 and 27,434,939 shares at December 31, 2018(344,901) (1,014,746)
Accumulated other comprehensive income (loss), net49,289
 (94,420)
Retained earnings700,688
 544,207
886,460
 843,767
Total shareholders’ equity3,167,694
 2,961,566
4,753,816
 3,133,602
Total liabilities and shareholders' equity$31,740,305
 $31,221,837
$47,318,203
 $32,669,192
      
See accompanying notes to unaudited interim consolidated financial statements.
(1) See "Note 1 - Significant Accounting Policies" of this Report for information on Synovus' change in presentation of cash and cash equivalents.


SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Six Months Ended June 30, Three Months Ended June 30,Three Months Ended June 30, Six Months Ended June 30,
(in thousands, except per share data)2018 2017 2018 20172019 2018 2019 2018
Interest income:              
Loans, including fees$585,396
 $511,319
 $300,056
 $261,971
$457,564
 $300,056
 $905,333
 $585,396
Investment securities available for sale47,812
 40,099
 23,884
 20,266
52,794
 23,884
 102,732
 47,812
Trading account assets220
 49
 166
 21
Mortgage loans held for sale936
 972
 557
 505
752
 557
 1,143
 936
Federal Reserve Bank balances4,568
 2,515
 2,818
 1,304
2,701
 2,818
 6,371
 4,568
Other earning assets4,036
 2,957
 2,353
 1,443
2,320
 2,519
 5,391
 4,256
Total interest income642,968
 557,911
 329,834
 285,510
516,131
 329,834
 1,020,970
 642,968
Interest expense:              
Deposits58,975
 35,075
 32,600
 18,118
92,700
 32,600
 180,383
 58,975
Federal funds purchased and securities sold under repurchase agreements310
 84
 203
 45
Federal funds purchased, securities sold under repurchase agreements, and other short-term borrowings7,294
 203
 10,757
 310
Long-term debt24,822
 31,728
 12,454
 16,250
18,875
 12,454
 35,392
 24,822
Total interest expense84,107
 66,887
 45,257
 34,413
118,869
 45,257
 226,532
 84,107
Net interest income558,861
 491,024
 284,577
 251,097
397,262
 284,577
 794,438
 558,861
Provision for loan losses24,566
 18,934
 11,790
 10,260
12,119
 11,790
 35,688
 24,566
Net interest income after provision for loan losses534,295
 472,090
 272,787
 240,837
385,143
 272,787
 758,750
 534,295
Non-interest income:              
Service charges on deposit accounts39,938
 40,370
 19,999
 20,252
21,994
 19,999
 42,853
 39,938
Fiduciary and asset management fees27,419
 24,676
 13,983
 12,524
14,478
 13,983
 28,057
 27,419
Card fees21,032
 19,885
 10,833
 10,041
11,161
 10,833
 22,037
 21,032
Brokerage revenue17,596
 14,436
 8,900
 7,210
10,052
 8,709
 19,431
 17,085
Capital markets income8,385
 1,118
 13,291
 2,086
Mortgage banking income9,887
 11,548
 4,839
 5,784
7,907
 4,839
 12,962
 9,887
Income from bank-owned life insurance7,949
 6,328
 3,733
 3,272
5,176
 3,733
 10,466
 7,949
Investment securities (losses) gains, net(1,296) 7,667
 (1,296) (1)
Decrease in fair value of private equity investments, net(3,093) (3,166) (37) (1,352)
Other fee income9,877
 11,033
 5,259
 6,164
Investment securities losses, net(1,845) (1,296) (1,771) (1,296)
Other non-interest income11,124
 7,762
 7,174
 4,807
12,499
 11,469
 21,859
 16,333
Total non-interest income140,433
 140,539
 73,387
 68,701
89,807
 73,387
 169,185
 140,433
Non-interest expense:              
Salaries and other personnel expense225,583
 212,404
 111,863
 105,213
143,009
 111,863
 282,436
 225,583
Net occupancy and equipment expense64,134
 59,264
 32,654
 29,933
39,851
 32,654
 78,245
 64,134
Third-party processing expense29,012
 26,223
 15,067
 13,620
19,118
 15,067
 36,875
 29,012
Professional fees9,312
 6,284
 15,660
 11,789
FDIC insurance and other regulatory fees13,335
 13,645
 6,543
 6,875
7,867
 6,543
 14,629
 13,335
Professional fees11,789
 12,907
 6,284
 7,551
Advertising expense10,312
 11,258
 5,220
 5,346
5,923
 5,220
 11,045
 10,312
Valuation adjustment to Visa derivative2,328
 —
 2,328
 —
Foreclosed real estate expense, net749
 3,582
 (107) 1,448
Earnout liability adjustment—
 1,707
 —
 1,707
Restructuring charges, net(212) 6,524
 103
 13
Amortization of intangibles2,410
 292
 5,802
 583
Merger-related expense7,401
 —
 57,140
 —
Other operating expenses42,204
 41,619
 24,102
 20,041
29,235
 26,134
 54,705
 44,486
Total non-interest expense399,234
 389,133
 204,057
 191,747
264,126
 204,057
 556,537
 399,234
Income before income taxes275,494
 223,496
 142,117
 117,791
210,824
 142,117
 371,398
 275,494
Income tax expense61,146
 75,635
 30,936
 41,788
54,640
 30,936
 95,028
 61,146
Net income214,348
 147,861
 111,181
 76,003
156,184
 111,181
 276,370
 214,348
Dividends on preferred stock5,119
 5,119
 2,559
 2,559
Less: Preferred stock dividends3,150
 2,559
 6,300
 5,119
Net income available to common shareholders$209,229
 $142,742
 $108,622
 $73,444
$153,034
 $108,622
 $270,070
 $209,229
Net income per common share, basic$1.77
 $1.17
 $0.92
 $0.60
$0.97
 $0.92
 $1.70
 $1.77
Net income per common share, diluted1.75
 1.16
 0.91
 0.60
0.96
 0.91
 1.68
 1.75
Weighted average common shares outstanding, basic118,531
 122,251
 118,397
 122,203
157,389
 118,397
 159,148
 118,531
Weighted average common shares outstanding, diluted119,229
 123,043
 119,139
 123,027
159,077
 119,139
 160,908
 119,229
              
See accompanying notes to unaudited interim consolidated financial statements.


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


 Six Months Ended June 30,
 2018 2017
(in thousands)Before-tax Amount Tax (Expense) Benefit Net of Tax Amount Before-tax Amount Tax (Expense) Benefit Net of Tax Amount
Net income$275,494
 $(61,146) $214,348
 $223,496
 $(75,635) $147,861
Net change related to cash flow hedges:           
  Reclassification adjustment for losses realized in net income—
 —
 —
 130
 (50) 80
Net unrealized (losses) gains on investment securities available for sale:           
Reclassification adjustment for net losses (gains) realized in net income1,296
 (336) 960
 (7,667) 2,952
 (4,715)
Net unrealized (losses) gains arising during the period(86,921) 22,512
 (64,409) 20,250
 (7,797) 12,453
Net unrealized (losses) gains(85,625) 22,176
 (63,449) 12,583
 (4,845) 7,738
Post-retirement unfunded health benefit:           
Reclassification adjustment for gains realized in net income(68) 22
 (46) (40) 16
 (24)
Net unrealized (realized) gains(68) 22
 (46) (40) 16
 (24)
Other comprehensive (loss) income$(85,693) $22,198
 $(63,495) $12,673
 $(4,879) $7,794
Comprehensive income    $150,853
     $155,655
            
 Three Months Ended June 30,
 2018 2017
(in thousands)Before-tax Amount Tax (Expense) Benefit Net of Tax Amount Before-tax Amount Tax (Expense) Benefit Net of Tax Amount
Net income$142,117
 $(30,936) $111,181
 $117,791
 $(41,788) $76,003
Net change related to cash flow hedges:           
  Reclassification adjustment for losses realized in net income—
 —
 —
 65
 (25) 40
Net unrealized (losses) gains on investment securities available for sale:

 

        
Reclassification adjustment for net losses realized in net income1,296
 (336) 960
 1
 —
 1
Net unrealized (losses) gains arising during the period(25,476) 6,598
 (18,878) 11,150
 (4,293) 6,857
Net unrealized (losses) gains(24,180) 6,262
 (17,918) 11,151
 (4,293) 6,858
Post-retirement unfunded health benefit:  

        
Reclassification adjustment for gains realized in net income(34) 9
 (25) (20) 8
 (12)
Net unrealized (realized) gains(34) 9
 (25) (20) 8
 (12)
Other comprehensive (loss) income$(24,214) $6,271
 $(17,943) $11,196
 $(4,310) $6,886
Comprehensive income    $93,238
     $82,889
            
 Three Months Ended June 30,
 2019 2018
(in thousands)Before-tax Amount Tax Effect Net of Tax Amount Before-tax Amount Tax Effect Net of Tax Amount
Net income$210,824
 $(54,640) $156,184
 $142,117
 $(30,936) $111,181
Net unrealized gains (losses) on investment securities available for sale:           
Reclassification adjustment for net losses realized in net income1,845
 (478) 1,367
 1,296
 (336) 960
Net unrealized gains (losses) arising during the period89,459
 (23,169) 66,290
 (25,476) 6,598
 (18,878)
Net unrealized gains (losses)91,304
 (23,647) 67,657
 (24,180) 6,262
 (17,918)
Post-retirement unfunded health benefit:           
Reclassification adjustment for gains realized in net income(35) 9
 (26) (34) 9
 (25)
Other comprehensive income (loss)$91,269
 $(23,638) $67,631
 $(24,214) $6,271
 $(17,943)
Comprehensive income    $223,815
     $93,238
            
 Six Months Ended June 30,
 2019 2018
(in thousands)Before-tax Amount Tax Effect Net of Tax Amount Before-tax Amount Tax Effect Net of Tax Amount
Net income$371,398
 $(95,028) $276,370
 $275,494
 $(61,146) $214,348
Net unrealized gains (losses) on investment securities available for sale:           
Reclassification adjustment for net losses realized in net income1,771
 (459) 1,312
 1,296
 (336) 960
Net unrealized gains (losses) arising during the period192,241
 (49,788) 142,453
 (86,921) 22,512
 (64,409)
Net unrealized gains (losses)194,012
 (50,247) 143,765
 (85,625) 22,176
 (63,449)
Post-retirement unfunded health benefit:           
Reclassification adjustment for gains realized in net income(70) 14
 (56) (68) 22
 (46)
Other comprehensive income (loss)$193,942
 $(50,233) $143,709
 $(85,693) $22,198
 $(63,495)
Comprehensive income    $420,079
     $150,853
            
See accompanying notes to unaudited interim consolidated financial statements.








SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(unaudited)
(in thousands, except per share data)Series D Preferred Stock Series C Preferred Stock Common
Stock		 Additional
Paid-in
Capital		 Treasury
Stock		 Accumulated
Other
Comprehensive
Income (Loss)		 Retained Earnings Total
Balance at December 31, 2016$—
 $125,980
 $142,026
 $3,028,405
 $(664,595) $(55,659) $351,767
 $2,927,924
Net income—
 —
 —
 —
 —
 —
 147,861
 147,861
Other comprehensive income, net of income taxes—
 —
 —
 —
 —
 7,794
 —
 7,794
Cash dividends declared on common stock - $0.30 per share—
 —
 —
 —
 —
 —
 (36,696) (36,696)
Cash dividends paid on Series C Preferred Stock—
 —
 —
 —
 —
 —
 (5,119) (5,119)
Repurchases of common stock—
 —
 —
 —
 (45,349) —
 —
 (45,349)
Restricted share unit activity—
 —
 330
 (7,850) —
 —
 (290) (7,810)
Stock options exercised—
 —
 143
 2,361
 —
 —
 —
 2,504
Share-based compensation expense—
 —
 —
 6,838
 —
 —
 —
 6,838
Balance at June 30, 2017$—
 $125,980
 $142,499
 $3,029,754
 $(709,944) $(47,865) $457,523
 $2,997,947
                
Balance at December 31, 2017$—
 $125,980
 $142,678
 $3,043,129
 $(839,674) $(54,754) $544,207
 $2,961,566
Cumulative effect adjustment from adoption of ASU 2014-09—
 —
 —
 —
 —
 —
 (685) (685)
Reclassification from adoption of ASU 2018-02—
 —
 —
 —
 —
 (7,588) 7,588
 —
Cumulative effect adjustment from adoption of ASU 2016-01—
 —
 —
 —
 —
 117
 (117) —
Net income—
 —
 —
 —
 —
 —
 214,348
 214,348
Other comprehensive loss, net of income taxes—
 —
 —
 —
 —
 (63,495) —
 (63,495)
Cash dividends declared on common stock - $0.50 per share—
 —
 —
 —
 —
 —
 (59,185) (59,185)
Cash dividends paid on Series C Preferred Stock—
 —
 —
 —
 —
 —
 (5,119) (5,119)
Issuance of Series D Preferred Stock, net of issuance costs195,138
 —
 —
 —
 —
 —
 —
 195,138
Repurchases of common stock—
 —
 —
 —
 (76,810) —
 —
 (76,810)
Restricted share unit activity—
 —
 289
 (8,220) —
 —
 (349) (8,280)
Stock options exercised—
 —
 111
 1,785
 —
 —
 —
 1,896
Share-based compensation expense—
 —
 —
 8,320
 —
 —
 —
 8,320
Balance at June 30, 2018$195,138
 $125,980
 $143,078
 $3,045,014
 $(916,484) $(125,720) $700,688
 $3,167,694
                
(in thousands, except per share data)Series C Preferred Stock Series D Preferred Stock Common
Stock		 Additional
Paid-in
Capital		 Treasury
Stock		 Accumulated
Other
Comprehensive
Income (Loss)		 Retained Earnings Total
Balance, April 1, 2019$—
 $195,140
 $165,929
 $3,794,262
 $(319,898) $(18,342) $780,662
 $4,597,753
Net income—
 —
 —
 —
 —
 —
 156,184
 156,184
Other comprehensive income (loss), net of income taxes—
 —
 —
 —
 —
 67,631
 —
 67,631
Cash dividends declared on common stock - $0.30 per share—
 —
 —
 —
 —
 —
 (47,236) (47,236)
Cash dividends paid on Series D Preferred Stock - $0.39 per share—
 —
 —
 —
 —
 —
 (3,150) (3,150)
Repurchases of common stock including costs to repurchase—
 —
 —
 —
 (25,003) —
 —
 (25,003)
Restricted share unit vesting and taxes paid related to net share settlement—
 —
 50
 (281) —
 —
 —
 (231)
Stock options/warrants exercised, net—
 —
 101
 1,786
 —
 —
 —
 1,887
Share-based compensation expense—
 —
 —
 5,981
 —
 —
 —
 5,981
Balance, June 30, 2019$—
 $195,140
 $166,080
 $3,801,748
 $(344,901) $49,289
 $886,460
 $4,753,816
                
Balance, April 1, 2018$125,980
 $—
 $143,017
 $3,039,757
 $(866,407) $(107,777) $621,925
 $2,956,495
Net income—
 —
 —
 —
 —
 —
 111,181
 111,181
Other comprehensive income (loss), net of income taxes—
 —
 —
 —
 —
 (17,943) —
 (17,943)
Cash dividends declared on common stock - $0.25 per share—
 —
 —
 —
 —
 —
 (29,510) (29,510)
Cash dividends paid on Series C Preferred Stock - $0.49 per share—
 —
 —
 —
 —
 —
 (2,559) (2,559)
Issuance of Series D Preferred Stock, net of issuance costs—
 195,138
 —
 —
 —
 —
 —
 195,138
Repurchases of common stock including costs to repurchase—
 —
 —
 —
 (50,077) —
 —
 (50,077)
Restricted share unit vesting and taxes paid related to net share settlement—
 —
 23
 274
 —
 —
 (349) (52)
Stock options exercised—
 —
 38
 618
 —
 —
 —
 656
Share-based compensation expense—
 —
 —
 4,365
 —
 —
 —
 4,365
Balance, June 30, 2018$125,980
 $195,138
 $143,078
 $3,045,014
 $(916,484) $(125,720) $700,688
 $3,167,694
                

SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(unaudited) (continued)
                
(in thousands, except per share data)Series C Preferred Stock Series D Preferred Stock Common
Stock		 Additional
Paid-in
Capital		 Treasury
Stock		 Accumulated
Other
Comprehensive
Income (Loss)		 Retained Earnings Total
Balance, December 31, 2018$—
 $195,140
 $143,300
 $3,060,561
 $(1,014,746) $(94,420) $843,767
 $3,133,602
Cumulative-effect adjustment from adoption of ASU 2016-02—
 —
 —
 —
 —
 —
 4,270
 4,270
Net income—
 —
 —
 —
 —
 —
 276,370
 276,370
Other comprehensive income (loss), net of income taxes—
 —
 —
 —
 —
 143,709
 —
 143,709
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 - $0.60 per share—
 —
 —
 —
 —
 —
 (94,471) (94,471)
Cash dividends paid on Series D Preferred Stock - $0.78 per share—
 —
 —
 —
 —
 —
 (6,300) (6,300)
Repurchases of common stock including costs to repurchase—
 —
 —
 —
 (345,170) —
 —
 (345,170)
Restricted share unit vesting and taxes paid related to net share settlement—
 —
 285
 (8,928) —
 —
 —
 (8,643)
Stock options/warrants exercised, net—
 —
 452
 7,815
 269
 —
 —
 8,536
Share-based compensation expense—
 —
 —
 16,225
 —
 —
 —
 16,225
Balance, June 30, 2019$—
 $195,140
 $166,080
 $3,801,748
 $(344,901) $49,289
 $886,460
 $4,753,816
                
Balance, December 31, 2017$125,980
 $—
 $142,678
 $3,043,129
 $(839,674) $(54,754) $544,207
 $2,961,566
Cumulative-effect adjustment from adoption of ASU 2014-09—
 —
 —
 —
 —
 —
 (685) (685)
Reclassification from adoption of ASU 2018-02—
 —
 —
 —
 —
 (7,588) 7,588
 —
Cumulative-effect adjustment from adoption of ASU 2016-01—
 —
 —
 —
 —
 117
 (117) —
Net income—
 —
 —
 —
 —
 —
 214,348
 214,348
Other comprehensive income (loss), net of income taxes—
 —
 —
 —
 —
 (63,495) —
 (63,495)
Cash dividends declared on common stock - $0.50 per share—
 —
 —
 —
 —
 —
 (59,185) (59,185)
Cash dividends paid on Series C Preferred Stock - $0.98 per share—
 —
 —
 —
 —
 —
 (5,119) (5,119)
Issuance of Series D Preferred Stock, net of issuance costs—
 195,138
 —
 —
 —
 —
 —
 195,138
Repurchases of common stock including costs to repurchase—
 —
 —
 —
 (76,810) —
 —
 (76,810)
Restricted share unit vesting and taxes paid related to net share settlement—
 —
 289
 (8,220) —
 —
 (349) (8,280)
Stock options exercised—
 —
 111
 1,785
 —
 —
 —
 1,896
Share-based compensation expense—
 —
 —
 8,320
 —
 —
 —
 8,320
Balance, June 30, 2018$125,980
 $195,138
 $143,078
 $3,045,014
 $(916,484) $(125,720) $700,688
 $3,167,694
                
See accompanying notes to unaudited interim consolidated financial statements.





SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 Six Months Ended June 30,
(in thousands)
2019(1)
 2018
Operating Activities   
Net income$276,370
 $214,348
Adjustments to reconcile net income to net cash provided by operating activities:   
Provision for loan losses35,688
 24,566
Depreciation, amortization, and accretion, net11,446
 28,661
Deferred income tax expense27,539
 5,222
Originations of mortgage loans held for sale(325,109) (286,070)
Proceeds from sales of mortgage loans held for sale287,648
 287,175
Gain on sales of mortgage loans held for sale, net(8,286) (6,198)
Increase in other assets(22,191) (54,639)
(Decrease) increase in other liabilities(45,265) 8,292
Investment securities losses, net1,771
 1,296
Share-based compensation expense16,225
 8,320
Net cash provided by operating activities255,836
 230,973
    
Investing Activities   
Net cash received in business combination, net of cash paid201,100
 —
Proceeds from maturities and principal collections of investment securities available for sale444,865
 294,152
Proceeds from sales of investment securities available for sale1,292,673
 35,066
Purchases of investment securities available for sale(2,263,383) (367,458)
Proceeds from sales of loans44,229
 13,954
Proceeds from sales of other real estate and other assets8,255
 6,737
Net increase in loans excluding loans acquired in business combination(970,160) (382,086)
Net (purchases) redemptions of Federal Home Loan Bank stock(43,775) (6,155)
Net (purchases) redemptions of Federal Reserve Bank stock(24,239) 8,500
Proceeds from settlements of bank-owned life insurance policies656
 1,783
Net increase in premises and equipment(31,767) (26,780)
Net cash used in investing activities(1,341,546) (422,287)
    
Financing Activities   
Net increase in deposits337,552
 294,516
Net increase in federal funds purchased and securities sold under repurchase agreements6,650
 46,390
Net change in other short-term borrowings680,000
 —
Repayments and redemption of long-term debt—
 (2,330,052)
Proceeds from issuance of long-term debt, net497,045
 2,280,000
Dividends paid to common shareholders(76,203) (47,510)
Dividends paid to preferred shareholders(6,300) (5,119)
Proceeds from issuance of Series D Preferred Stock—
 195,138
Stock options and warrants exercised8,536
 1,896
Repurchase of common stock(345,170) (76,810)
Taxes paid related to net share settlement of equity awards(8,643) (8,280)
Net cash provided by financing activities1,093,467
 350,169
Increase in cash and cash equivalents including restricted cash7,757
 158,855
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period1,143,564
 932,933
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period$1,151,321
 $1,091,788
    
Supplemental Disclosures:   
Income taxes paid (refunded)$62,913
 $38,619
Interest paid221,475
 80,884
Non-cash Activities   
Common stock issued, treasury stock reissued, equity awards/warrants exchanged to acquire FCB1,625,688
 —
Premises and equipment transferred to other assets held for sale—
 785
Loans foreclosed and transferred to other real estate7,586
 7,561
Loans transferred to/(from) other loans held for sale at fair value47,927
 5,233
Subtopic 825-10 equity investment securities available for sale transferred to other assets—
 3,162
   Dividends declared on common stock during the period but paid after period-end47,236
 29,510
    

 Six Months Ended June 30,
(in thousands)2018 2017
Operating Activities   
Net income$214,348
 $147,861
Adjustments to reconcile net income to net cash provided by operating activities:   
Provision for loan losses24,566
 18,934
Depreciation, amortization, and accretion, net28,661
 29,334
Deferred income tax expense5,222
 70,484
Originations of mortgage loans held for sale(286,070) (325,094)
Proceeds from sales of mortgage loans held for sale287,175
 323,861
Gain on sales of mortgage loans held for sale, net(6,198) (7,049)
Increase in other assets(52,294) (4,124)
Increase (decrease) in other liabilities8,292
 (9,667)
Investment securities losses (gains), net1,296
 (7,667)
Share-based compensation expense8,320
 6,838
Net cash provided by operating activities233,318
 243,711
    
Investing Activities   
Proceeds from maturities and principal collections of investment securities available for sale294,152
 313,902
Proceeds from sales of investment securities available for sale35,066
 338,381
Purchases of investment securities available for sale(367,458) (748,754)
Proceeds from sales of loans13,954
 10,747
Proceeds from sales of other real estate4,631
 5,492
Net increase in loans(382,086) (612,309)
Purchases of bank-owned life insurance policies, net of settlements1,783
 (73,110)
Net increase in premises and equipment(26,780) (15,386)
Proceeds from sales of other assets held for sale2,106
 3,158
Net cash used in investing activities(424,632) (777,879)
    
Financing Activities   
Net (decrease) increase in demand and savings deposits(39,614) 367,450
Net increase in certificates of deposit334,130
 202,927
Net increase (decrease) in federal funds purchased and securities sold under repurchase agreements46,390
 (9,320)
Repayments and redemption of long-term debt(2,330,052) (1,128,591)
Proceeds from issuance of long-term debt2,280,000
 1,075,000
Dividends paid to common shareholders(47,510) (18,349)
Dividends paid to preferred shareholders(5,119) (5,119)
Proceeds from issuance of Series D Preferred Stock195,138
 —
Stock options exercised1,896
 2,504
Repurchase of common stock(76,810) (45,349)
Taxes paid related to net share settlement of equity awards(8,280) (7,810)
Net cash provided by financing activities350,169
 433,343
Increase/(decrease) in cash and cash equivalents including restricted cash158,855
 (100,825)
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period(1)
932,933
 999,045
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period(1)
$1,091,788
 $898,220
    
Supplemental Cash Flow Information   
Cash paid during the period for:   
Income tax payments, net$38,619
 $8,768
Interest paid80,884
 67,007
Non-cash Activities   
Premises and equipment transferred to other assets held for sale785
 —
Other assets held for sale transferred to premises and equipment—
 4,450
Loans foreclosed and transferred to other real estate7,561
 5,516
Loans transferred to other loans held for sale at fair value5,233
 10,584
   ASU 2014-09 cumulative effect adjustment to opening balance of retained earnings(685) —
   Equity investment securities available for sale transferred to other assets at fair value3,162
 —
   Dividends declared on common stock during the period but paid after period-end29,510
 18,349
    
(1) Where applicable, changes for balances as of June 30, 2019, compared to December 31, 2018, exclude amounts acquired on the Acquisition Date.
See accompanying notes to unaudited interim consolidated financial statements.
(1) See "Note 1 - Significant Accounting Policies" of this Report for information on Synovus' change in presentation of cash and cash equivalents.


Notes to Unaudited Interim Consolidated Financial Statements
Note 1 - Significant Accounting PoliciesBasis of Presentation
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 company 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 and international banking.
Synovus Bank is positioned in some of the highest growth markets in the Southeast, with 250297 branches and 334385 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' 20172018 Form 10-K.
In connection with the adoption of ASU 2016-18, Statement of Cash Flows-Restricted Cash, Synovus changed its presentation of cash and cash equivalents, effective January 1, 2018,Reclassifications
Prior periods' consolidated financial statements are reclassified whenever necessary to include cash and due from banks as well as interest bearing funds with the Federal Reserve Bank, interest earning deposits with banks, and federal funds sold and securities purchased under resale agreements, which are inclusive of any restricted cash and restricted cash equivalents. Prior to 2018, cash and cash equivalents only included cash and due from banks. Prior periods have been revised to maintain comparability. Excluding the aforementioned presentation change, there have been no significant changesconform to the accounting policies as disclosedcurrent periods' presentation.
Use of Estimates in Synovus' 2017 Form 10-K.the Preparation of Financial Statements
In preparing the unaudited interim consolidated financial statements in accordance with U.S. 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 allowance for loan losses,losses; estimates of fair value; income taxes; and contingent liabilities including legal matters, among others.
Purchased loans
Purchased loans are recorded at fair value in accordance with ASC Topic 820, Fair Value Measurement, consistent with the exit price concept on the date of acquisition. Credit risk assumptions and resulting credit discounts are included in the determination of fair value; therefore, no ALL is recorded at the acquisition date. 
Pursuant to an AICPA letter dated December 18, 2009, the AICPA summarized the SEC staff's view regarding the accounting in subsequent periods for discount accretion associated with loan receivables acquired in a business combination or asset purchase. Regarding the accounting for such loan receivables, in the absence of further standard setting, the AICPA understands the SEC staff would not object to an accounting policy based on contractual cash flows (ASC Topic 310-20, Nonrefundable Fees and Other Costs) or an accounting policy based on expected cash flows (ASC 310-30, Loans and Debt Securities Acquired with Deteriorated Credit Quality). Synovus analogizes to ASC Topic 310-30 to account for the fair value discount.
Purchased loans are evaluated upon acquisition as following the ASC 310-30 approach or ASC 310-20. Loans meeting the scope exception of ASC 310-30 (e.g. loans with revolving components) are not permitted to be analogized and will be accounted for in accordance with ASC 310-20.  For ASC 310-30 loans, expected cash flows at the acquisition date in excess of the fair value of investment securities,loans are recorded as interest income over the life of the loans using a level yield method if the timing and amount of the future cash flows is reasonably estimable. Subsequent to the acquisition date, increases in cash flows over those expected at the acquisition date are recognized prospectively as interest income. Decreases in expected cash flows due to credit deterioration are recognized by recording an ALL. Loan removals from pools due to pay-off or charge-off are removed at their carrying amount.  The difference between the carrying amount and the amount received to satisfy the loan is recorded in interest income.  For ASC 310-20 loans, the difference between the fair value and UPB of private equity investments.
Cash and Cash Equivalents
Cash and cash equivalents consistthe loan at the acquisition date is amortized or accreted to interest income over the contractual life of cash and due from banks,the loans using the effective interest bearing funds withmethod. In the Federal Reserve Bank,event of prepayment, the remaining unamortized amount is recognized in interest earning deposits with banks, federal funds sold and securities purchased under resale agreements, and is inclusive of any restricted cash and restricted cash equivalents. Restricted cash and restricted cash equivalents primarily relate to cash held on deposit with the Federal Reserve to meet reserve requirements as well as cash posted as collateral for derivatives in a liability position. At June 30, 2018 and December 31, 2017, interest bearing funds with the Federal Reserve Bank included $35.7 million and $8.6 million, respectively, on deposit to meet Federal Reserve Bank requirements. Interest earning deposits with banks include $2.7 million and $5.9 million at June 30, 2018 and December 31, 2017, respectively, which are pledged as collateral in connection with certain letters of credit. Federal funds sold include $30.6 million and $43.8 million at June 30, 2018 and December 31, 2017, respectively, which are pledged to collateralize certain derivative financial instruments. Federal funds sold and securities purchased under resale agreements generally mature in one day.
Income Taxes
On December 22, 2017, Federal Tax Reform was enacted into law. The new legislation included a decreaseincome in the corporate federal income tax rate from 35%quarter of prepayment.
Due to 21% effective January 1, 2018. Underthe significant difference in accounting for ASC 740,310-30 loans, Synovus believes inclusion of these loans in certain asset quality ratios that reflect non-performing assets in the effects of the changesnumerator or denominator (or both) results in tax rates and lawssignificant distortion to these ratios. In addition, because loan level charge-offs related to ASC 310-30 loans are not recognized in the period in whichfinancial statements until the new legislationcumulative amounts exceed the original loss projections on a pool basis, the net charge-off ratio is enacted. Therefore, Synovus was required to remeasure its deferred tax assets and liabilities and recordinconsistent with the adjustment to income tax expense effective December 22, 2017. In December 2017, the SEC issued Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (SAB 118), which allowed companies to record provisional amounts during a measurement period not to extend beyond one year of the enactment date. Since Federal Tax Reform was enacted late in 2017, management expects that certain deferred tax assets and liabilities will continue to be evaluated in the context of Federal Tax Reform through the date of the filing of our 2017 federal income tax return, and may change as a result of evolving management interpretations, elections, and assumptions, as well as new guidance that may be issued by the Internal Revenue Service.   Accordingly, the federal income tax expense of $47.2 million

recordednet charge-off ratio for other loan portfolios. The inclusion of ASC 310-30 loans in 2017 relatingcertain asset quality ratios could result in a lack of comparability across quarters or years, and could impact comparability with other portfolios that were not impacted by ASC 310-30 accounting. Synovus believes that presenting certain loan and asset quality disclosures separately for ASC 310-20 and ASC 310-30 loans, and/or excluding ASC 310-30 loans, where appropriate and indicated within each table, provides better perspective into underlying trends related to the effects from Federal Tax Reform is considered provisional. Management expects to completequality of its analysis within the measurement period in accordance with SAB 118.  loan portfolio.
Recently Adopted Accounting Standards Updates
ASU 2014-09, Non-interest Income - Revenue from Contracts with Customers (Topic 606) issued bywithin the FASB in May 2014, and all subsequent ASUsscope of ASC Topic 606
Synovus' contracts with customers generally do not contain terms that modified 606. ASU 2014-09 implements a commonrequire significant judgment to determine the amount of revenue standard that establishes principlesto recognize. Synovus' policies for reporting information aboutrecognizing non-interest income within the scope of ASC Topic 606, including the nature amount,and timing of such revenue streams, are included below.
Service Charges on Deposit Accounts: Revenue from service charges on deposit accounts is earned through cash management, wire transfer, and uncertainty of revenue and cash flows arising from contracts to provide goods orother deposit-related services, to customers. 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 manyoverdraft, non-sufficient funds, account management and other revenuesdeposit-related fees. Revenue is recognized for these services either over time, corresponding with deposit accounts' monthly cycle, or at a point in time for transaction-related services and fees. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers' accounts.
Fiduciary and Asset Management Fees: Fiduciary and asset management fees are primarily comprised of fees earned from financialthe management and administration of trusts and other customer assets. Management reviewed its revenue streamsSynovus' performance obligation is generally satisfied over time and contracts with customersthe resulting fees are recognized monthly, based upon the month-end market value of the assets under management and didthe applicable fee rate. Payment is generally received a few days after month-end through a direct charge to customers' accounts. Synovus does not identify material changes to the timing or amountearn performance-based incentives.
Card Fees: Card fees consist primarily of revenue recognition. Synovus adopted these ASUs on the required effective date of January 1, 2018 utilizing the modified retrospective method of adoption.  The adoption resulted in a cumulative effect adjustment of ($685) thousand to the opening balance of retained earnings.  Beginning January 1, 2018, in connection with the adoption of this standard, Synovus began includinginterchange fees from consumer credit and debit cards processed by card association networks, as well as merchant discounts, and other card-related services. Interchange rates are generally set by the credit card associations and based on purchase volumes and other factors. Interchange fees and merchant discounts are recognized concurrently with the delivery of service on a daily basis as transactions occur. Payment is typically received immediately or in card fees. Forthe following month. Card fees are reported net of certain associated expense items including loyalty program expenses and network expenses.
Brokerage Revenue: Brokerage revenue consists primarily of commissions. Additionally, brokerage revenue includes advisory fees earned from the management of customer assets. Advisory fees for brokerage services are recognized and collected monthly and are based upon the month-end market value of the assets under management at a rate predetermined in the contract. Transactional revenues are based on the size and number of transactions executed at the client's direction and are generally recognized on the trade date with payment received on the settlement date.
Insurance Revenue (included in other non-interest income on the consolidated statements of income): Insurance revenue primarily consists of commissions received on annuity and life product sales. The commissions are recognized as revenue when the customer executes an insurance policy with the insurance carrier. In some cases, Synovus receives payment of trailing commissions each year when the customer pays its annual premium.
Recently Adopted Accounting Standards
ASU 2016-02, Leases (ASC 842). Synovus adopted ASC 842 prospectively as of January 1, 2019 for existing leasing arrangements. As such, financial information was not updated and the disclosures required under the new standard are not presented for dates and periods prior to January 1, 2019.Refer to the 2018 these10-K for lease disclosures surrounding prior period information reported under ASC 840, Leases. For leases that commenced prior to the effective date of ASC 842, Synovus elected the package of practical expedients not to reassess (a) whether existing contracts contain leases, (b) lease classification for existing leases, and (c) initial direct cost for any existing leases as well as the short-term lease recognition exemption for all leases that qualify. Additionally, Synovus did not elect the practical expedient to combine lease and non-lease components for all of our leases.
Adoption of the new standard resulted in the recording of ROU assets and lease liabilities of $381.1 million and $391.0 million, respectively, as of January 1, 2019. These amounts were based on the present value of the remaining rental payments for existing leases and include consideration for renewal and termination options available that we were reasonably certain of exercising. The difference between the asset and liability balance is primarily the result of lease liabilities that existed prior to adoption of the new guidance. The adoption of the standard also resulted in a cumulative-effect adjustment, net of income taxes, to the beginning balance of retained earnings of $4.3 million ($3.9 million of which consisted of deferred gains associated with sale-leaseback transactions that previously presenteddid not qualify for recognition). The ROU assets are included in other non-interestassets (other than $4.0 million of finance leases included in premises and equipment) on the consolidated balance sheet and the lease liabilities are included in other liabilities. Adoption of the standard did not materially impact our consolidated statements of income and have been reclassified for comparability. See "Part I - Item 1. Financial Statements and Supplementary Data - Note 12 - Non-interest Income" for the required disclosureshad no impact on cash flows.
Synovus determines if an arrangement is a lease at inception in accordance with this ASU.ASC 842-10-15-3 and classifies leases as either operating or financing from a lessee perspective and operating or direct financing and sales-type from a lessor perspective based on criteria that are largely similar to those applied under ASC 840, Leases, but without explicit bright lines.

ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. The determination of future minimum lease payments includes consideration for extension or termination options when it is reasonably certain Synovus will exercise that option as well as rent escalation clauses (including market or index-based escalations) and abatements, capital improvement funding or other lease concessions. As most leases in Synovus' portfolio do not provide an implicit rate, Synovus utilizes a collateralized incremental borrowing rate, referenced to the Federal Home Loan Bank rates for borrowings of similar terms, based on the information available at lease commencement date in determining the present value of future payments. Additionally, for all real estate leases, Synovus applies a portfolio approach (based on lease term) in the application of the discount rate. Determination of the ROU asset also includes prepaid lease payments and amounts recognized relating to favorable or unfavorable lease terms from leases acquired through business combinations.
For operating leases, minimum rental expense is recognized on a straight-line basis based on the fixed components of leasing arrangements. Variable lease components represent amounts that are not fixed in nature and are not tied to an index or rate, and are recognized as expense when incurred. For financing leases, rent expense is recognized as amortization expense on a straight-line basis and interest expense using the effective interest method.Additionally, leases with an initial term of 12 months or less are not recorded on the balance sheet; lease expense for these leases is recognized on a straight-line basis over the lease term. Net lease cost is recorded net of sublease income. For leases beginning in 2019 and later, lease components (e.g., base rent) are accounted for separately from non-lease components (e.g., common-area maintenance costs, real estate taxes and insurance costs).
ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated2017-04, Intangibles-Goodwill and Other, Comprehensive Income.Simplifying the Test for Goodwill Impairment: In February 2018,January 2017, the FASB issued finalASU 2017- 04, which simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test. Therefore, any carrying amount which exceeds the reporting unit’s fair value (up to the amount of goodwill recorded) will be recognized as an impairment loss. The ASU is effective for annual reporting periods beginning after December 15, 2019, including interim periods within those periods. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. Synovus elected to early adopt the guidance, effective January 1, 2019. Synovus performed a qualitative assessment as allowed under ASC 350-20-35 during its annual impairment test as of June 30, 2019 and based on reclassificationthe assessment performed, management concluded goodwill was not impaired. As such, the adoption of tax effects stranded inthis ASU had no impact.
Recently Issued Accounting Standards Not Yet Adopted
ASU 2016-13, Financial Instruments--Credit Losses (CECL).In June 2016, the FASB issued new guidance related to credit losses. The new guidance (and all subsequent ASUs) replaces the existing incurred loss impairment guidance with an expected credit loss methodology. The new guidance will require management’s estimate of credit losses over the full remaining expected life of loans and other comprehensive income duefinancial instruments. For Synovus, the standard will apply to Federal Tax Reform.loans, unfunded loan commitments, and debt securities available for sale. The guidance provides entities the option to reclassify the tax effects that are stranded in accumulated other comprehensive income, or AOCI, as a result of Federal Tax Reform to retained earnings. The guidancestandard is effective for fiscal years beginning after December 15, 2018;2019 and interim periods within those fiscal years with early adoption is permitted. Synovus elected to early adopt ASU 2018-02 as ofpermitted on January 1, 2018 and elected to reclassify2019. Synovus will adopt the income tax effects of Federal Tax Reform from AOCI to retained earnings. For Synovus, tax effects stranded in AOCI due to Federal Tax Reform totaled $7.6 million at December 31, 2017 and primarily related to unrealized lossesguidance on the available-for-sale investment securities portfolio. The reclassification adjustment resulted in an increase to retained earnings as of January 1, 2018 of $7.6 million and a corresponding decrease to AOCI for the same amount.
ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. In January 2016, the FASB issued ASU 2016-01 that included targeted amendments to accounting guidance for recognition, measurement, presentation, and disclosure of financial instruments. ASU 2016-01 requires equity investments (except those accounted for under the equity method of accounting or consolidated) to be measured at fair value with changes in fair value recognized in net income. This ASU requires2020. Upon adoption, Synovus will record a cumulative-effect adjustment to retained earnings as of the beginning of the reporting period of adoption. In addition, the amendments provide for a simplified accounting model for purchased financial assets with a more-than-insignificant amount of credit deterioration since their acquisition ("PCD assets"). The initial estimate of expected credit losses on PCD assets will be recognized through the ALL with an offset to the cost basis of the related financial asset at acquisition.  
Synovus is continuing its implementation efforts which are led by a cross-functional steering committee. The team meets periodically to discuss the latest developments and ensure progress compared to the planned timeline. We continued our limited parallel testing during the second quarter of 2019.  The results are being utilized to refine our models and estimation techniques.  Documentation of new processes and internal controls that will be implemented as part of standard adoption is also in process. Implementation status updates are provided quarterly to reclassifyexecutive management and the cumulative changeAudit Committee of the Board.
Management expects that the allowance for loan losses will be higher under the new standard primarily for longer duration consumer loans, due to the difference between loss emergence periods currently used versus the remaining life of the asset required under CECL. However, management is still in the process of refining estimates to ultimately determine the impact on the financial statements and regulatory capital ratios. Additionally, the extent of the expected increase on the ALL will depend upon the composition of the loan portfolio upon adoption of the standard, as well as economic conditions and forecasts at that time.


Note 2 - Acquisitions
Acquisition of FCB Financial Holdings, Inc.
Effective January 1, 2019 (the "Acquisition Date"), 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. On the Acquisition Date, the preliminary estimated fair values of FCB included approximately $12.4 billion of identifiable assets, $9.3 billion in loans, and $10.9 billion in deposits. With the addition of FCB and its 51 full service banking centers, Synovus expanded its deposit base in the Southeast. The addition of FCB elevated Synovus' growth profile through a deepened presence in high-growth Florida markets. Conversion of FCB systems occurred during the second quarter of 2019. The results of FCB's operations are included in Synovus' consolidated financial statements since the Acquisition Date.
Under the terms of the Merger Agreement, each outstanding share of FCB common stock was converted into the right to receive 1.055 Synovus common shares and cash in lieu of fractional shares. Additionally, under the terms of the Merger Agreement, certain outstanding FCB non-vested equity awards with a fair value of equity securities previously recognized$7.5 million on the Acquisition Date accelerated vesting and converted automatically into the right to receive merger consideration at the merger exchange ratio of 1.055, or an equivalent amount in AOCI. ASU 2016-01 became effective forcash, of which $3.5 million was allocated to purchase price and the remaining to merger-related compensation expense. In the aggregate, on the Acquisition Date, FCB stockholders received 49.5 million shares of Synovus on January 1, 2018. The adoptioncommon stock valued at $1.58 billion and $601 thousand in cash. Also, under the terms of the guidance resulted inMerger Agreement, FCB employee and non-employee director outstanding stock options and non-vested restricted share units as well as outstanding FCB warrants were converted into options, restricted share units, and warrants, respectively, to purchase and receive Synovus common stock. The converted options and restricted share units had a transfer of investments in mutual funds of $3.2 million, at fair value, from investment securities available for sale to other assets and a $117 thousand cumulative-effect adjustment that decreased retained earnings, with offsetting related adjustments to deferred taxes and AOCI. ASU 2016-01 also emphasizes the existing requirement to use an exit price concept to measure fair value for disclosure purposes in determining the fair value of loans. Determination$41.5 million on the Acquisition Date, of which $37.3 million was allocated to purchase price and the remaining to compensation expense and the converted warrants had a fair value of $6.7 million attributed to purchase price. The estimated fair value of the fair value under the exit price method requires judgment because substantially all of the loans within the loan portfolio do not have observable market prices. The adoption of this guidance did not have a significant impactconverted restricted share units was based on Synovus' fair value disclosures.
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, Synovus' wholly owned subsidiary, Synovus Bank, completed the acquisitionclosing stock price on December 31, 2018 of certain assets$31.99, and assumption of certain liabilities of World's Foremost Bank, or 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 depositsconverted stock options was determined using a Hull-White model in a binomial lattice option pricing framework. The estimated fair value of the converted warrants was determined using the Black-Scholes-Merton model.
The acquisition of FCB constituted a business combination and was accounted for under the acquisition method of accounting in accordance with ASC Topic 805, Business Combinations. Accordingly, assets acquired, liabilities assumed, and consideration exchanged were recorded at their estimated fair value on the transaction date. Additionally,Acquisition Date. The determination of estimated fair values requires management to make certain estimates about discount rates, future expected cash flows, market conditions, and other future events that are highly subjective in nature and may require adjustments. Upon receipt of final fair value estimates during the measurement period, which must be within one year of the acquisition date, Synovus receivedwill record any adjustments to the preliminary fair value estimates in the reporting period in which the adjustments are determined. Fair value adjustments based on updated estimates could materially affect the goodwill recorded on the acquisition. Synovus may incur losses on the acquired loans that are materially different from losses Synovus originally projected.
Preliminary goodwill of $435.1 million was recorded as a $75.0 million transaction fee from Cabela’s Incorporated and Capital One, which was recognized into earnings on September 25, 2017 upon closingresult of the transaction and is not-deductible for tax purposes. FCB's $19.6 million of merger-based success fees payable to third-party advisors and investment bankers were accounted for as part of the business combination and an assumed liability. Since the success fees payable by FCB were contingent upon the consummation of the merger, the expense was recognized as an "on the line" expense with no expense recognition in either the pre- or post-acquisition financials of FCB or Synovus. The following table reflects the consideration transferred for FCB's net assets and the identifiable assets purchased and liabilities assumed at their estimated fair values as of January 1, 2019. These fair value measurement estimates are based on having achievedthird-party and internal valuations and reflect measurement period adjustments to the recognition criteria outlinedamounts reported as of March 31, 2019, the most significant of which consists of a decrease in SEC SABcore deposit intangibles of $10.8 million, with offsetting increases in goodwill and net deferred tax assets (the income statement impact of such adjustments was immaterial).


(in thousands)  
Consideration transferred:  
     Synovus common stock issued and reissued from treasury attributed to purchase price(1)
$1,582,133
     Cash payments to FCB stockholders attributed to purchase price(2)
 173
     Fair value of exchanged employee and director equity awards and FCB warrants attributed to purchase price(1)
 43,972
       Total purchase price $1,626,278
   
Statement of Net Assets Acquired at Fair Value (Preliminary): 
Assets 
  Cash and cash equivalents$201,689
 
  Investment securities available for sale2,301,001
 
  Loans9,289,208
 
  Cash surrender value of bank-owned life insurance216,848
 
  Premises and equipment44,875
 
  Core deposit intangible57,400
 
  Other assets268,804
 
     Total Assets$12,379,825
 
   
Liabilities

  Deposits$10,930,724
 
  Federal funds purchased and securities sold under repurchase agreements29,139
 
  Long-term debt153,236
 
  Other liabilities75,523
 
     Total Liabilities$11,188,622
 
   
Fair value of net identifiable assets acquired 1,191,203
Preliminary goodwill $435,075
   
(1) Based on Synovus' closing stock price of $31.99 on December 31, 2018.
(2) $173 thousand of cash payment of $601 thousand attributed to purchase price with remaining allocated to compensation expense.

The following is a description of the methods used to determine the fair values of significant assets acquired and liabilities assumed presented above.

Investment Securities Available for Sale: Fair values of securities were based on quoted market prices from multiple third-party pricing services as well as realized proceeds upon sale of certain corporate bonds.

Loans: The Income Approach was utilized in accordance with ASC Topic 13.A, Revenue Recognition.820 to estimate the fair value of the loans as of the Acquisition Date. The Income Approach utilizes a discounted cash flow method, to present value the expected cash flows using a market-based discount rate. The acquired loans were grouped together based on the terms of the loans, variable or fixed interest rate, variable index rate, interest or principal only loans, payment plans and amortizing or non-amortizing loans.

The discounted cash flow model utilized the contractual loan data and market-based assumptions for prepayment rates, loss rates, and servicing fee, at the loan group level, to project expected loan cash flows as of the Acquisition Date.

Core Deposit Intangible (CDI): This intangible asset represents the value of the relationships with deposit customers. The fair value of the core deposit intangible asset was estimated based on a discounted cash flow methodology that gave appropriate consideration to expected customer attrition rates, net maintenance cost of the deposit base, alternative costs of funds, and the interest costs associated with the customer deposits. The CDI is being amortized over its estimated useful life of approximately ten years utilizing an accelerated method. The decrease in the CDI of $10.8 million during the quarter was based on further review of the alternative cost of funds assumptions at the Acquisition Date.

Deposits: Certificates of deposit were valued by projecting out the expected cash flows based on the contractual terms of the certificates of deposit. These cash flows were discounted based on a market rate for a certificate of deposit with a corresponding

maturity. The fair values for demand and savings deposits were assumed to approximate the carrying value as these accounts have no stated maturity and are payable on demand.

Long-term Debt: Fair values for FHLB borrowings were based on market values and market rates provided by the FHLB.

The following table presents consolidated financial information included in Synovus' unaudited consolidated statements of income from the Acquisition Date (January 1, 2019) through June 30, 2019 under the column "Actual from Acquisition Date." Synovus does not provide separate summary financial information of FCB from the Acquisition Date since it would be impracticable to do so as certain systems and processes were integrated during the six months ended June 30, 2019. The following table also presents unaudited pro forma information as if the acquisition occurred on January 1, 2018 under the "Pro Forma" column. The unaudited pro forma results include the estimated impact of amortizing and accreting certain estimated purchase accounting adjustments such as intangible assets as well as fair value adjustments to loans and deposits. Merger-related expenses that occurred at the effective time of the merger or subsequent to the merger are not reflected in the unaudited pro forma amounts. Cost savings are also not reflected in the unaudited pro forma amounts for the six months ended June 30, 2018. The pro forma information does not necessarily reflect the results of operations that would have occurred had Synovus merged with FCB at the beginning of 2018.
(in thousands) 
Actual from Acquisition Date (January 1, 2019) through June 30, 2019(1)
 Pro Forma for Six Months Ended June 30, 2018
Net interest income $794,438
 $760,304
Non-interest income 169,185
 155,610
Net income available to common shareholders 270,070
 309,786
     
(1) Actual results for the six months ended June 30, 2019 include pre-tax merger-related expense of $57.1 million.
In connection with the FCB acquisition, Synovus incurred merger-related expense totaling $7.4 million and $57.1 million for the three and six months ended June 30, 2019, primarily related to employment compensation agreements, severance, professional services, and contract termination charges, including the payment of $21.8 million related to employment agreements of certain FCB executives. Merger-related expense for the three and six months ended June 30, 2019 is presented in the table below:
(in thousands)Three Months Ended June 30, 2019 Six Months Ended June 30, 2019
Employment compensation agreements, severance, and other employee benefit costs$1,774
 $34,762
Professional fees1,791
 16,991
All other expense(1)
3,836
 5,387
  Total merger-related expense$7,401
 $57,140
    

(1) Primarily relates to fees associated with lease exit accruals, asset impairments related to the integration, and contract termination charges.
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 provided financing 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 a three to five year period 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 on October 1, 2016. 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. During the three months ended September 30, 2017, Synovus completed the determination of the final allocation of the purchase price with respect to the assets acquired and liabilities assumed.
Under the terms of the merger agreement, the purchase price includesincluded additional annual payments ("Earnout Payments") to Global One's former shareholders over a three to five yearyears period, with amounts based on a percentage of "Global One Earnings," as defined in the merger agreement. The Earnout Payments consist of shares of Synovus common stock as well as a smaller cash consideration component. The firstDuring 2018, Synovus recorded an $11.7 million increase to the earnout liability driven by increased earnings projections of Global One and issued the second annual Earnout Payment of 199 thousand shares of Synovus common stock and cash valued at $6.4$7.4 million was made during November 2017.and $1.2 million in cash. The balancetotal fair value of the earnout liability at June 30, 20182019 was $11.3$14.4 million based on the estimated fair value of the remaining Earnout Payments.
Note 3 - Share Repurchase Program
On January 23, 2018, Synovus announced a share repurchase program of up to $150 million to be completed during 2018. As of June 30, 2018, Synovus had repurchased under this program a total of $76.8 million, or 1.5 million shares of its common stock, at an average price of $52.72 per share.

Note 43 - Investment Securities Available for Sale
The amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities available for sale at June 30, 20182019 and December 31, 20172018 are summarized below.
  June 30, 2019
(in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
U.S. Treasury securities $19,689
 $—
 $—
 $19,689
U.S. Government agency securities 64,070
 1,617
 —
 65,687
Mortgage-backed securities issued by U.S. Government agencies 88,677
 367
 (767) 88,277
Mortgage-backed securities issued by U.S. Government sponsored enterprises 4,873,285
 84,794
 (9,408) 4,948,671
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises 859,235
 6,391
 (3,093) 862,533
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises 354,104
 14,339
 —
 368,443
State and municipal securities 2,107
 —
 (7) 2,100
Asset-backed securities 501,713
 4,044
 (640) 505,117
Corporate debt securities 144,401
 2,124
 (30) 146,495
Total investment securities available for sale $6,907,281
 $113,676
 $(13,945) $7,007,012
         
  December 31, 2018
(in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
U.S. Treasury securities $123,436
 $—
 $(1,359) $122,077
U.S. Government agency securities 38,021
 361
 —
 38,382
Mortgage-backed securities issued by U.S. Government agencies 100,060
 172
 (3,027) 97,205
Mortgage-backed securities issued by U.S. Government sponsored enterprises 2,460,498
 1,981
 (63,829) 2,398,650
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises 1,215,406
 2,997
 (29,885) 1,188,518
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises 131,492
 613
 (2,240) 129,865
Corporate debt securities 17,000
 150
 (215) 16,935
Total investment securities available for sale $4,085,913
 $6,274
 $(100,555) $3,991,632
         

  June 30, 2018
(in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses  Fair Value
U.S. Treasury securities $122,800
 $—
 $(2,167) $120,633
U.S. Government agency securities 40,753
 181
 —
 40,934
Mortgage-backed securities issued by U.S. Government agencies 111,406
 107
 (3,569) 107,944
Mortgage-backed securities issued by U.S. Government sponsored enterprises 2,614,668
 59
 (87,882) 2,526,845
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises 1,159,859
 139
 (43,550) 1,116,448
State and municipal securities 115
 —
 —
 115
Corporate debt and other debt securities 17,000
 186
 (143) 17,043
Total investment securities available for sale $4,066,601
 $672
 $(137,311) $3,929,962
         
  December 31, 2017
(in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
U.S. Treasury securities $83,608
 $—
 $(934) $82,674
U.S. Government agency securities 10,771
 91
 —
 10,862
Mortgage-backed securities issued by U.S. Government agencies 121,283
 519
 (1,362) 120,440
Mortgage-backed securities issued by U.S. Government sponsored enterprises 2,666,818
 5,059
 (31,354) 2,640,523
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises 1,135,259
 144
 (23,404) 1,111,999
State and municipal securities 180
 —
 —
 180
Corporate debt and other securities 20,320
 294
 (223) 20,391
Total investment securities available for sale $4,038,239
 $6,107
 $(57,277) $3,987,069
         
At June 30, 20182019 and December 31, 2017,2018, investment securities with a carrying value of $1.351.59 billion and $2.00$1.56 billion, respectively, were pledged to secure certain deposits and securities sold under repurchase agreements as required by law and contractual agreements.
Synovus has reviewedevaluated investment securities that are in an unrealized loss position as of June 30, 20182019 and December 31, 20172018 for OTTI and does not consider any securities in an unrealized loss position to be other-than-temporarily impaired. If Synovus intended to sell a security in an unrealized loss position, the entire unrealized loss would be reflected in earnings. 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 inFor investment securities that Synovus does not expect to sell, or it is not more likely than not it will be required to sell prior to recovery of its amortized cost basis, the fair valuecredit component of available for sale securities below their cost that are deemed to havean OTTI are reflectedwould be recognized in earnings as realized losses toand the extent the impairment is related to credit losses. The amount of the impairment related to other factors isnon-credit component would be recognized in other comprehensive income.OCI. Currently, unrealized losses on debt securities are attributable to increases in interest rates on comparable securities from the date of purchase. Synovus regularly evaluates its investment 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, and the credit standing of the issuer.

As of June 30, 2018,2019, Synovus had 8021 investment securities in a loss position for less than twelve months and 5569 investment securities in a loss position for twelve months or longer.
Asset-backed securities and corporate bonds and other debt securities acquired as part of the FCB acquisition were generally underwritten in accordance with Synovus' credit extension standards, without relying on a bond issuer's guarantee in making the investment decision. These investments are investment grade and will continue to be monitored as part of Synovus' ongoing impairment analysis, but are expected to perform in accordance with their terms.
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 June 30, 20182019 and December 31, 20172018 are presented below.
 June 30, 2019
 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
Mortgage-backed securities issued by U.S. Government agencies$626
 $(4) $61,656
 $(763) $62,282
 $(767)
Mortgage-backed securities issued by U.S. Government sponsored enterprises10,523
 (15) 1,213,574
 (9,393) 1,224,097
 (9,408)
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises44,539
 (21) 345,169
 (3,072) 389,708
 (3,093)
State and municipal securities1,599
 (7) —
 —
 1,599
 (7)
Asset-backed securities124,312
 (640) —
 —
 124,312
 (640)
Corporate debt securities9,478
 (30) —
 —
 9,478
 (30)
Total$191,077
 $(717) $1,620,399
 $(13,228) $1,811,476
 $(13,945)
            
 December 31, 2018
 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$39,031
 $(118) $63,570
 $(1,241) $102,601
 $(1,359)
Mortgage-backed securities issued by U.S. Government agencies2,059
 (2) 79,736
 (3,025) 81,795
 (3,027)
Mortgage-backed securities issued by U.S. Government sponsored enterprises130,432
 (700) 2,105,358
 (63,129) 2,235,790
 (63,829)
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 —
 964,732
 (29,885) 964,732
 (29,885)
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises58,998
 (1,298) 44,220
 (942) 103,218
 (2,240)
Corporate debt securities—
 —
 1,785
 (215) 1,785
 (215)
Total$230,520
 $(2,118) $3,259,401
 $(98,437) $3,489,921
 $(100,555)
            
 June 30, 2018
 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$72,386
 $1,378
 $29,255
 $789
 $101,641
 $2,167
Mortgage-backed securities issued by U.S. Government agencies23,240
 632
 67,765
 2,937
 91,005
 3,569
Mortgage-backed securities issued by U.S. Government sponsored enterprises1,703,526
 49,197
 812,767
 38,685
 2,516,293
 87,882
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises609,505
 21,190
 412,961
 22,360
 1,022,466
 43,550
Corporate debt and other debt securities—
 —
 1,857
 143
 1,857
 143
    Total$2,408,657
 $72,397
 $1,324,605
 $64,914
 $3,733,262
 $137,311
            
 December 31, 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$34,243
 $443
 $29,562
 $491
 $63,805
 $934
Mortgage-backed securities issued by U.S. Government agencies36,810
 357
 55,740
 1,005
 92,550
 1,362
Mortgage-backed securities issued by U.S. Government sponsored enterprises1,271,012
 10,263
 929,223
 21,091
 2,200,235
 31,354
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises653,781
 9,497
 426,237
 13,907
 1,080,018
 23,404
Corporate debt and other securities—
 —
 5,097
 223
 5,097
 223
Total$1,995,846
 $20,560
 $1,445,859
 $36,717
 $3,441,705
 $57,277
            


The amortized cost and fair value by contractual maturity of investment securities available for sale at June 30, 20182019 are shown below. The expected life of mortgage-backed securities 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 securities 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 June 30, 2019
(in thousands)Within One
Year		 1 to 5
Years		 5 to 10
Years		 More Than
10 Years		 Total
Amortized Cost         
U.S. Treasury securities$19,689
 $—
 $—
 $—
 $19,689
U.S. Government agency securities791
 2,100
 61,179
 —
 64,070
Mortgage-backed securities issued by U.S. Government agencies—
 809
 16,111
 71,757
 88,677
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 43,477
 467,320
 4,362,488
 4,873,285
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 —
 370
 858,865
 859,235
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises—
 22,699
 236,738
 94,667
 354,104
State and municipal securities—
 —
 1,084
 1,023
 2,107
Asset-backed securities—
 4,496
 324,224
 172,993
 501,713
Corporate debt securities—
 109,216
 33,185
 2,000
 144,401
Total amortized cost$20,480
 $182,797
 $1,140,211
 $5,563,793
 $6,907,281
          
Fair Value         
U.S. Treasury securities$19,689
 $—
 $—
 $—
 $19,689
U.S. Government agency securities793
 2,107
 62,787
 —
 65,687
Mortgage-backed securities issued by U.S. Government agencies—
 810
 16,022
 71,445
 88,277
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 43,479
 469,441
 4,435,751
 4,948,671
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 —
 377
 862,156
 862,533
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises—
 23,158
 246,337
 98,948
 368,443
State and municipal securities—
 —
 1,078
 1,022
 2,100
Asset-backed securities—
 4,607
 327,521
 172,989
 505,117
Corporate debt securities—
 110,354
 34,124
 2,017
 146,495
Total fair value$20,482
 $184,515
 $1,157,687
 $5,644,328
 $7,007,012
          
 Distribution of Maturities at June 30, 2018
(in thousands)
Within One
Year
 
1 to 5
Years
 
5 to 10
Years
 
More Than
10 Years
 Total
Amortized Cost         
U.S. Treasury securities$18,993
 $103,807
 $—
 $—
 $122,800
U.S. Government agency securities2,330
 6,437
 31,986
 —
 40,753
Mortgage-backed securities issued by U.S. Government agencies—
 —
 27,725
 83,681
 111,406
Mortgage-backed securities issued by U.S. Government sponsored enterprises1
 1,471
 615,334
 1,997,862
 2,614,668
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 —
 17,355
 1,142,504
 1,159,859
State and municipal securities115
 —
 —
 —
 115
Corporate debt and other debt securities—
 —
 15,000
 2,000
 17,000
Total amortized cost$21,439
 $111,715
 $707,400
 $3,226,047
 $4,066,601
          
Fair Value         
U.S. Treasury securities$18,993
 $101,640
 $—
 $—
 $120,633
U.S. Government agency securities2,337
 6,455
 32,142
 —
 40,934
Mortgage-backed securities issued by U.S. Government agencies—
 —
 27,266
 80,678
 107,944
Mortgage-backed securities issued by U.S. Government sponsored enterprises1
 1,520
 596,366
 1,928,958
 2,526,845
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 —
 16,855
 1,099,593
 1,116,448
State and municipal securities115
 —
 —
 —
 115
Corporate debt and other debt securities—
 —
 15,186
 1,857
 17,043
Total fair value$21,446
 $109,615
 $687,815
 $3,111,086
 $3,929,962
          

Proceeds from sales, gross gains, and gross losses on sales of securities available for sale for the sixthree and threesix months ended June 30, 20182019 and 20172018 are presented below. The specific identification method is used to reclassify gains and losses out of other comprehensive income at the time of sale. On January 1, 2018, Synovus transferred $3.2 million, at fair value, from investment securities available for sale to other assets upon adoption of ASU 2016-01.
 Three Months Ended June 30, Six Months Ended June 30,
(in thousands)2019 2018 2019 2018
Proceeds from sales of investment securities available for sale$104,434
 $35,066
 $1,292,673
 $35,066
Gross realized gains on sales—
 —
 9,129
 —
Gross realized losses on sales(1,845) (1,296) (10,900) (1,296)
Investment securities losses, net$(1,845) $(1,296) $(1,771) $(1,296)
        

  Six Months Ended June 30, Three Months Ended June 30,
(in thousands) 2018 2017 2018 2017
Proceeds from sales of investment securities available for sale $35,066
 $338,381
 $35,066
 $55,752
Gross realized gains on sales —
 7,942
 —
 239
Gross realized losses on sales (1,296) (275) (1,296) (240)
Investment securities (losses) gains, net $(1,296) $7,667
 $(1,296) $(1)
         

Note 5 - Restructuring Charges
For the six and three months ended June 30, 2018 and 2017, total restructuring charges consist of the following components:
 Six Months Ended June 30, Three Months Ended June 30,
(in thousands)2018 2017 2018 2017
Severance charges$—
 $6,453
 $—
 $—
Other charges, net(212) 71
 103
 13
Total restructuring charges, net$(212) $6,524
 $103
 $13
        
For the six months ended June 30, 2018, Synovus recorded net lease termination accrual reversals of $377 thousand related to branches closed in prior years offset somewhat by other property related charges of $165 thousand. During the six months ended June 30, 2017, Synovus recorded severance charges of $6.5 million including $6.2 million for termination benefits incurred in conjunction with a voluntary early retirement program offered to Synovus employees during the first quarter of 2017.
The following tables present aggregate activity within the accrual for restructuring charges for the six and three months ended June 30, 2018 and 2017:
(in thousands)Severance Charges Lease Termination Charges Total
Balance at December 31, 2017$336
 $3,276
 $3,612
Accruals for lease terminations—
 (377) (377)
Payments(336) (1,031) (1,367)
Balance at June 30, 2018$—
 $1,868
 $1,868
      
Balance at April 1, 2018—
 2,506
 2,506
Payments—
 (638) (638)
Balance at June 30, 2018$—
 $1,868
 $1,868
      
(in thousands)Severance Charges Lease Termination Charges Total
Balance at December 31, 2016$81
 $3,968
 $4,049
Accrual for voluntary and involuntary termination benefits6,453
 —
 6,453
Payments(2,803) (438) (3,241)
Balance at June 30, 2017$3,731
 $3,530
 $7,261
      
Balance at April 1, 20176,315
 3,689
 10,004
Payments(2,584) (159) (2,743)
Balance at June 30, 2017$3,731
 $3,530
 $7,261
      
All other charges were paid in the quarters in which they were incurred. No other restructuring charges resulted in payment accruals.

Note 64 - Loans and Allowance for Loan Losses
The following istables provide a summary of current, accruing past due, and non-accrual loans separately reported by originated (loans originated, renewed, refinanced, modified, or otherwise underwritten by Synovus) and acquired loans from business combinations by portfolio class as of June 30, 20182019 and December 31, 2017.
2018. See "Part I - Item 1. Financial Statements and Supplementary Data - Note 1 - Basis of Presentation" in this Report for more information on Synovus' accounting for purchased loans.
Current, Accruing Past Due, and Non-accrual Loans 
Current, Accruing Past Due, and Non-accrual Originated LoansCurrent, Accruing Past Due, and Non-accrual Originated Loans 
June 30, 2018 June 30, 2019 
(in thousands)Current Accruing 30-89 Days Past Due Accruing 90 Days or Greater Past Due Total Accruing Past Due Non-accrual Total Current Accruing 30-89 Days Past Due Accruing 90 Days or Greater Past Due Total Accruing Past Due Non-accrual Total 
Commercial, financial and agricultural$7,170,877
 $18,425
 $547
 $18,972
 $81,231
 $7,271,080
 $7,712,371
 $19,804
 $462
 $20,266
 $68,573
 $7,801,210
 
Owner-occupied4,994,038
 4,180
 98
 4,278
 6,076
 5,004,392
 5,348,232
 6,331
 284
 6,615
 11,557
 5,366,404
 
Total commercial and industrial12,164,915
 22,605
 645
 23,250
 87,307
 12,275,472
 13,060,603
 26,135
 746
 26,881
 80,130
 13,167,614
 
Investment properties5,505,409
 1,838
 611
 2,449
 1,738
 5,509,596
 5,924,501
 1,525
 881
 2,406
 799
 5,927,706
 
1-4 family properties715,154
 2,309
 —
 2,309
 3,247
 720,710
 639,534
 2,296
 —
 2,296
 1,618
 643,448
 
Land and development407,639
 1,602
 —
 1,602
 4,624
 413,865
 359,921
 1,874
 158
 2,032
 2,735
 364,688
 
Total commercial real estate6,628,202
 5,749
 611
 6,360
 9,609
 6,644,171
 6,923,956
 5,695
 1,039
 6,734
 5,152
 6,935,842
 
Consumer mortgages3,175,355
 4,494
 550
 5,044
 13,628
 3,194,027
 
Home equity lines1,430,778
 8,450
 362
 8,812
 14,265
 1,453,855
 1,569,312
 4,783
 265
 5,048
 13,494
 1,587,854
 
Consumer mortgages2,741,064
 4,805
 244
 5,049
 4,822
 2,750,935
 
Credit cards235,406
 1,793
 1,225
 3,018
 —
 238,424
 253,331
 2,503
 2,449
 4,952
 —
 258,283
 
Other consumer loans1,783,466
 8,990
 135
 9,125
 1,325
 1,793,916
 2,213,665
 18,272
 802
 19,074
 4,667
 2,237,406
 
Total consumer6,190,714
 24,038
 1,966
 26,004
 20,412
 6,237,130
 7,211,663
 30,052
 4,066
 34,118
 31,789
 7,277,570
 
Total loans$24,983,831
 $52,392
 $3,222
 $55,614
 $117,328
 $25,156,773
(1 
) 
$27,196,222
 $61,882
 $5,851
 $67,733
 $117,071
 $27,381,026
(1) 
                        
December 31, 2017             
(in thousands)Current Accruing 30-89 Days Past Due Accruing 90 Days or Greater Past Due Total Accruing Past Due Non-accrual Total 
Commercial, financial and agricultural$7,097,127
 $11,214
 $1,016
 $12,230
 $70,130
 $7,179,487
 
Owner-occupied4,830,150
 6,880
 479
 7,359
 6,654
 4,844,163
 
Total commercial and industrial11,927,277
 18,094
 1,495
 19,589
 76,784
 12,023,650
 
Investment properties5,663,665
 2,506
 90
 2,596
 3,804
 5,670,065
 
1-4 family properties775,023
 3,545
 202
 3,747
 2,849
 781,619
 
Land and development476,131
 1,609
 67
 1,676
 5,797
 483,604
 
Total commercial real estate6,914,819
 7,660
 359
 8,019
 12,450
 6,935,288
 
Home equity lines1,490,808
 5,629
 335
 5,964
 17,455
 1,514,227
 
Consumer mortgages2,622,061
 3,971
 268
 4,239
 7,203
 2,633,503
 
Credit cards229,015
 1,930
 1,731
 3,661
 —
 232,676
 
Other consumer loans1,461,223
 10,333
 226
 10,559
 1,669
 1,473,451
 
Total consumer5,803,107
 21,863
 2,560
 24,423
 26,327
 5,853,857
 
Total loans$24,645,203
 $47,617
 $4,414
 $52,031
 $115,561
 $24,812,795
(2 
) 
            

(1) Total before net deferred fees and costs of $22.7 million.
(2) Total before net deferred fees and costs of $25.3 million.
Current, Accruing Past Due, and Non-accrual Acquired Loans 
 June 30, 2019 
(in thousands)Current 
Accruing 30-89 Days Past Due(2)
 
Accruing 90 Days or Greater Past Due(2)
 
Total Accruing Past Due(2)
 
Non-accrual(2)
 ASC 310-30 Loans Discount/Premium Total 
Commercial, financial and agricultural$754,672
 $317
 $—
 $317
 $—
 $1,177,713
 $(16,166) $1,916,536
 
Owner-occupied69,569
 —
 —
 —
 —
 1,098,670
 (4,846) 1,163,393
 
Total commercial and industrial824,241
 317
 —
 317
 —
 2,276,383
 (21,012) 3,079,929
 
Investment properties991,090
 —
 —
 —
 —
 2,105,867
 (19,563) 3,077,394
 
1-4 family properties49,695
 —
 —
 —
 174
 55,192
 (1,119) 103,942
 
Land and development125,101
 —
 —
 —
 —
 109,342
 (3,174) 231,269
 
Total commercial real estate1,165,886
 —
 —
 —
 174
 2,270,401
 (23,856) 3,412,605
 
Consumer mortgages132,011
 —
 —
 —
 —
 2,165,966
 (84,242) 2,213,735
 
Home equity lines65,112
 155
 —
 155
 55
 5,088
 (7,519) 62,891
 
Other consumer loans308
 —
 —
 —
 —
 12,902
 (1,279) 11,931
 
Total consumer197,431
 155
 —
 155
 55
 2,183,956
 (93,040) 2,288,557
 
Total loans$2,187,558
 $472
 $—
 $472
 $229
 $6,730,740
 $(137,908) $8,781,091
(3) 
                 






Current, Accruing Past Due, and Non-accrual Loans 
 December 31, 2018 
(in thousands)Current Accruing 30-89 Days Past Due Accruing 90 Days or Greater Past Due Total Accruing Past Due Non-accrual Total 
Commercial, financial and agricultural$7,372,301
 $7,988
 $114
 $8,102
 $69,295
 $7,449,698
 
Owner-occupied5,317,023
 5,433
 81
 5,514
 8,971
 5,331,508
 
Total commercial and industrial12,689,324
 13,421
 195
 13,616
 78,266
 12,781,206
 
Investment properties5,557,224
 1,312
 34
 1,346
 2,381
 5,560,951
 
1-4 family properties674,648
 2,745
 96
 2,841
 2,381
 679,870
 
Land and development319,978
 739
 —
 739
 2,953
 323,670
 
Total commercial real estate6,551,850
 4,796
 130
 4,926
 7,715
 6,564,491
 
Consumer mortgages2,922,136
 7,150
 —
 7,150
 4,949
 2,934,235
 
Home equity lines1,496,562
 7,092
 28
 7,120
 12,114
 1,515,796
 
Credit cards252,832
 3,066
 2,347
 5,413
 —
 258,245
 
Other consumer loans1,894,352
 17,604
 1,098
 18,702
 3,689
 1,916,743
 
Total consumer6,565,882
 34,912
 3,473
 38,385
 20,752
 6,625,019
 
Total loans$25,807,056
 $53,129
 $3,798
 $56,927
 $106,733
 $25,970,716
(4) 
             
(1)
Total before net deferred fees and costs of $23.6 million.
(2)
For purposes of this table, non-performing and past due loans exclude acquired loans accounted for under ASC 310-30.
(3)
Represents $9.29 billion (at fair value) of loans acquired from FCB, net of paydowns and payoffs since acquisition date.
(4)
Total before net deferred fees and costs of $24.1 million.




Loans with carrying values of $12.16 billion and $8.40 billion were pledged as collateral for borrowings and capacity at June 30, 2019 and December 31, 2018, respectively, to the FHLB and Federal Reserve Bank.
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 – 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 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 (consumer mortgages and home equity lines and consumer mortgageslines) 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.




Loan Portfolio Credit Exposure by Risk Grade 
Originated Loan Portfolio Credit Exposure by Risk GradeOriginated Loan Portfolio Credit Exposure by Risk Grade 
June 30, 2018 June 30, 2019 
(in thousands)Pass 
Special
Mention
 
Substandard(1)
 
Doubtful(2)
 Loss Total Pass Special Mention 
Substandard(1)
 
Doubtful(2)
 
Loss(3)
 Total 
Commercial, financial and agricultural$6,996,081
 $107,251
 $164,581
 $3,167
 $—
 $7,271,080
 $7,534,124
 $117,878
 $144,660
 $4,548
 $—
 $7,801,210
 
Owner-occupied4,873,936
 63,373
 67,010
 73
 —
 5,004,392
 5,268,926
 17,844
 79,561
 73
 —
 5,366,404
 
Total commercial and industrial11,870,017
 170,624
 231,591
 3,240
 —
 12,275,472
 12,803,050
 135,722
 224,221
 4,621
 —
 13,167,614
 
Investment properties5,422,727
 51,279
 35,590
 —
 —
 5,509,596
 5,860,735
 22,206
 44,765
 —
 —
 5,927,706
 
1-4 family properties698,532
 9,245
 12,933
 —
 —
 720,710
 631,648
 3,610
 8,190
 —
 —
 643,448
 
Land and development369,071
 29,612
 12,053
 3,129
 —
 413,865
 342,427
 9,880
 12,381
 —
 —
 364,688
 
Total commercial real estate6,490,330
 90,136
 60,576
 3,129
 —
 6,644,171
 6,834,810
 35,696
 65,336
 —
 —
 6,935,842
 
Consumer mortgages3,179,300
 —
 13,708
 943
 76

3,194,027
 
Home equity lines1,435,724
 —
 16,599
 175
 1,357
(3) 
1,453,855
 1,572,002
 —
 14,362
 21
 1,469

1,587,854
 
Consumer mortgages2,743,245
 —
 7,588
 102
 —
(3) 
2,750,935
 
Credit cards237,198
 —
 447
 —
 779
(4) 
238,424
 255,836
 —
 934
 —
 1,513
(4) 
258,283
 
Other consumer loans1,792,568
 —
 1,087
 257
 4
(3) 
1,793,916
 2,232,459
 —
 4,947
 —
 —

2,237,406
 
Total consumer6,208,735
 —
 25,721
 534
 2,140
 6,237,130
 7,239,597
 —
 33,951
 964
 3,058
 7,277,570
 
Total loans$24,569,082
 $260,760
 $317,888
 $6,903
 $2,140
 $25,156,773
(5 
) 
$26,877,457
 $171,418
 $323,508
 $5,585
 $3,058
 $27,381,026
(5) 
                        
            
Acquired Loan Portfolio Credit Exposure by Risk GradeAcquired Loan Portfolio Credit Exposure by Risk Grade 
December 31, 2017 June 30, 2019 
(in thousands)Pass 
Special
Mention
 
Substandard(1)
 
Doubtful(2)
 Loss Total Pass Special Mention 
Substandard(1)
 Doubtful Loss Total 
Commercial, financial and agricultural$6,929,506 $115,912 $132,818 $1,251 $—
 $7,179,487 $1,881,798
 $19,981
 $14,757
 $—
 $—
 $1,916,536
 
Owner-occupied4,713,877
 50,140
 80,073
 73
 —
 4,844,163
 1,153,900
 5,686
 3,807
 —
 —
 1,163,393
 
Total commercial and industrial11,643,383
 166,052
 212,891
 1,324
 —
 12,023,650
 3,035,698
 25,667
 18,564
 —
 —
 3,079,929
 
Investment properties5,586,792
 64,628
 18,645
 —
 —
 5,670,065
 3,035,213
 6,439
 35,742
 —
 —
 3,077,394
 
1-4 family properties745,299
 19,419
 16,901
 —
 —
 781,619
 101,480
 —
 2,462
 —
 —
 103,942
 
Land and development431,759
 33,766
 14,950
 3,129
 —
 483,604
 231,141
 128
 —
 —
 —
 231,269
 
Total commercial real estate6,763,850
 117,813
 50,496
 3,129
 —

6,935,288
 3,367,834
 6,567
 38,204
 —
 —
 3,412,605
 
Consumer mortgages2,213,735
 —
 —
 —
 —
 2,213,735
 
Home equity lines1,491,105
 —
 21,079
 285
 1,758
(3) 
1,514,227
 62,746
 —
 145
 —
 —
 62,891
 
Consumer mortgages2,622,499
 —
 10,607
 291
 106
(3) 
2,633,503
 
Credit cards230,945
 —
 399
 —
 1,332
(4) 
232,676
 
Other consumer loans1,470,944
 —
 2,168
 329
 10
(3) 
1,473,451
 11,931
 —
 —
 —
 —
 11,931
 
Total consumer5,815,493
 —
 34,253
 905
 3,206
 5,853,857
 2,288,412
 —
 145
 —
 —
 2,288,557
 
Total loans$24,222,726
 $283,865
 $297,640
 $5,358
 $3,206
 $24,812,795
(6 
) 
$8,691,944
 $32,234
 $56,913
 $—
 $—
 $8,781,091
(6) 
                        
            
(1) Includes $209.6
Loan Portfolio Credit Exposure by Risk Grade 
 December 31, 2018 
(in thousands)Pass Special Mention 
Substandard(1)
 
Doubtful(2)
 
Loss(3)
 Total 
Commercial, financial and agricultural$7,190,517
 $118,188
 $140,218
 $775
 $—
 $7,449,698
 
Owner-occupied5,212,473
 55,038
 63,572
 425
 —
 5,331,508
 
Total commercial and industrial12,402,990
 173,226
 203,790
 1,200
 —
 12,781,206
 
Investment properties5,497,344
 40,516
 23,091
 —
 —
 5,560,951
 
1-4 family properties663,692
 6,424
 9,754
 —
 —
 679,870
 
Land and development297,855
 12,786
 13,029
 —
 —
 323,670
 
Total commercial real estate6,458,891
 59,726
 45,874
 —
 —

6,564,491
 
Consumer mortgages2,926,712
 —
 7,425
 98
 —

2,934,235
 
Home equity lines1,501,316
 —
 13,130
 174
 1,176

1,515,796
 
Credit cards255,904
 —
 858
 —
 1,483
(4) 
258,245
 
Other consumer loans1,912,902
 —
 3,841
 —
 —

1,916,743
 
Total consumer6,596,834
 —
 25,254
 272
 2,659
 6,625,019
 
Total loans$25,458,715
 $232,952
 $274,918
 $1,472
 $2,659
 $25,970,716
(7) 
             
(1)
Includes $265.0 million and $172.3 million of Substandard accruing loans at June 30, 2019 and December 31, 2018, respectively.
(2)
The loans within this risk grade are on non-accrual status and $190.6 million of Substandard accruing loans at June 30, 2018 and December 31, 2017, respectively.
(2) The loans within this risk grade are on non-accrual status. Commercial loans generally have an allowance for loan losses in accordance with ASC 310, and retail loans generally have an allowance for loan losses equal to 50% of the loan amount.
(3)
The loans within this risk grade are on non-accrual status and have an allowance for loan losses 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 losses 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 $23.6 million.
(6)
Represents $9.29 billion (at fair value) of loans acquired from FCB, net of paydowns and payoffs since acquisition date.
(7)
Total before net deferred fees and costs of $24.1 million.

Acquired loans
As discussed in "Part I - Item 1. Financial Statements and Supplementary Data - Note 2 - Acquisitions", on January 1, 2019, Synovus acquired loans from FCB with fair values of $9.29 billion net of total discount of $168.0 million.
At the Acquisition Date, the contractual required payments receivable on the purchased loans accounted for under ASC 310-20 totaled $2.45 billion, with a corresponding fair value of $2.15 billion. The estimated cash flows not expected to be collected at the Acquisition Date were $39.5 million.
Information about the acquired FCB loan portfolio accounted for under ASC 310-30 as of the loan amount.Acquisition Date is in the following table.
(3) The loans within this risk grade are on non-accrual status and have an allowance for loan losses equal to the full loan amount.
(in thousands)ASC 310-30 Loans
Contractually required principal and interest at acquisition$8,377,942
Non-accretable difference (expected losses and foregone interest)(163,147)
    Cash flows expected to be collected at acquisition8,214,795
Accretable yield(1,066,689)
    Basis in ASC 310-30 loans at acquisition$7,148,106
  

(4) Represent amounts that were 120 days past due. These credits are downgraded to the Loss category with an allowance for loan losses 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 $22.7 million.
(6) Total before net deferred fees and costs of $25.3 million.




The following table detailsis a summary of changes in the accretable difference for all loans accounted for under ASC 310-30 for the six months ended June 30, 2019.
(in thousands)Six Months Ended June 30, 2019
Beginning balance$—
Additions1,066,689
Transfers from non-accretable difference to accretable yield(1)
13,516
Accretion(182,944)
Changes in expected cash flows not affecting non-accretable differences(2)
24,929
Ending balance$922,190
  
(1) Represents improvement in the credit component of expected cash flows.
(2) Includes changes in cash flows expected to be collected due to the impact of changes in actual or expected timing of liquidation events, modifications, changes in interest rates and changes in prepayment assumptions.

The following tables detail the changes in the allowance for loan losses by loan segment for the sixthree and three months ended June 30, 2018 and 2017.
Allowance for Loan Losses and Recorded Investment in Loans

 As Of and For The Six Months Ended June 30, 2018
(in thousands)Commercial & Industrial Commercial Real Estate Consumer Total
Allowance for loan losses:       
Beginning balance$126,803
 $74,998
 $47,467
 $249,268
Charge-offs(23,786) (2,446) (9,894) (36,126)
Recoveries3,995
 6,964
 3,058
 14,017
Provision for loan losses23,323
 (4,311) 5,554
 24,566
Ending balance(1)
$130,335
 $75,205
 $46,185

$251,725
Ending balance: individually evaluated for impairment$9,474
 $4,687
 $771
 $14,932
Ending balance: collectively evaluated for impairment$120,861
 $70,518
 $45,414
 $236,793
Loans:       
Ending balance: total loans(1)(2)
$12,275,472
 $6,644,171
 $6,237,130
 $25,156,773
Ending balance: individually evaluated for impairment    $107,544
 $53,805
 $27,676
 $189,025
Ending balance: collectively evaluated for impairment$12,167,928
 $6,590,366
 $6,209,454
 $24,967,748
        
 As Of and For The Six Months Ended June 30, 2017
(in thousands)Commercial & Industrial Commercial Real Estate Consumer Total
Allowance for loan losses:       
Beginning balance$125,778
 $81,816
 $44,164
 $251,758
Charge-offs(19,535) (3,207) (9,656) (32,398)
Recoveries3,282
 3,648
 2,871
 9,801
Provision for loan losses13,912
 (4,730) 9,752
 18,934
Ending balance(1)
$123,437
 $77,527
 $47,131
 $248,095
Ending balance: individually evaluated for impairment$7,226
 $4,386
 $1,038
 $12,650
Ending balance: collectively evaluated for impairment$116,211
 $73,141
 $46,093
 $235,445
Loans:       
Ending balance: total loans(1)(3)
$11,742,945
 $7,422,234
 $5,291,371
 $24,456,550
Ending balance: individually evaluated for impairment$122,889
 $73,638
 $31,688
 $228,215
Ending balance: collectively evaluated for impairment$11,620,056
 $7,348,596
 $5,259,683
 $24,228,335
        
(1)As of and for the six months ended June 30, 20182019 and 2017, 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 $22.7 million.
(3) Total before net deferred fees and costs of $26.0 million.

2018.
Allowance for Loan Losses and Recorded Investment in Loans

Allowance for Loan Losses and Recorded Investment in Loans

Allowance for Loan Losses and Recorded Investment in Loans

As Of and For The Three Months Ended June 30, 2018As Of and For The Three Months Ended June 30, 2019
(in thousands)Commercial & Industrial Commercial Real Estate Consumer TotalCommercial & Industrial Commercial Real Estate Consumer Total
Allowance for loan losses:              
Beginning balance$134,745
 $73,991
 $49,028
 $257,764
$135,639
 $69,009
 $52,388
 $257,036
Charge-offs(15,770) (523) (5,211) (21,504)(11,095) (861) (4,909) (16,865)
Recoveries1,635
 480
 1,560
 3,675
1,821
 1,954
 1,311
 5,086
Provision for loan losses9,725
 1,257
 808
 11,790
Provision for (reversal of) loan losses11,639
 (6,639) 7,119
 12,119
Ending balance(1)
$130,335
 $75,205
 $46,185
 $251,725
$138,004
 $63,463
 $55,909
 $257,376
Ending balance: individually evaluated for impairment$9,474
 $4,687
 $771
 $14,932
$16,126
 $1,229
 $811
 $18,166
Ending balance: collectively evaluated for impairment$120,861
 $70,518
 $45,414
 $236,793
$121,878
 $62,234
 $55,098
 $239,210
Loans:              
Ending balance: total loans(1)(2)
$12,275,472
 $6,644,171
 $6,237,130
 $25,156,773
Ending balance: total loans(2)
$16,247,543
 $10,348,447
 $9,566,127
 $36,162,117
Ending balance: individually evaluated for impairment $107,544
 $53,805
 $27,676
 $189,025
$135,548
 $28,231
 $31,713
 $195,492
Ending balance: collectively evaluated for impairment$12,167,928
 $6,590,366
 $6,209,454
 $24,967,748
Ending balance: collectively evaluated for impairment(3)
$13,857,183
 $8,070,437
 $7,433,959
 $29,361,579
Ending balance: acquired loans accounted for under ASC 310-30(4)
$2,254,812
 $2,249,779
 $2,100,455
 $6,605,046
              
As Of and For The Three Months Ended June 30, 2017As Of and For The Three Months Ended June 30, 2018
(in thousands)Commercial & Industrial Commercial Real Estate Consumer TotalCommercial & Industrial Commercial Real Estate Consumer Total
Allowance for loan losses:              
Beginning balance$127,096
 $78,314
 $48,104
 $253,514
$134,745
 $73,991
 $49,028
 $257,764
Charge-offs(12,642) (1,299) (5,722) (19,663)(15,770) (523) (5,211) (21,504)
Recoveries1,458
 759
 1,767
 3,984
1,635
 480
 1,560
 3,675
Provision for loan losses7,525
 (247) 2,982
 10,260
9,725
 1,257
 808
 11,790
Ending balance(1)
$123,437
 $77,527
 $47,131
 $248,095
Ending balance$130,335
 $75,205
 $46,185
 $251,725
Ending balance: individually evaluated for impairment$7,226
 $4,386
 $1,038
 $12,650
$9,474
 $4,687
 $771
 $14,932
Ending balance: collectively evaluated for impairment$116,211
 $73,141
 $46,093
 $235,445
$120,861
 $70,518
 $45,414
 $236,793
Loans:              
Ending balance: total loans(1)(3)
$11,742,945
 $7,422,234
 $5,291,371
 $24,456,550
Ending balance: total loans(5)(6)
$12,275,472
 $6,644,171
 $6,237,130
 $25,156,773
Ending balance: individually evaluated for impairment$122,889
 $73,638
 $31,688
 $228,215
$107,544
 $53,805
 $27,676
 $189,025
Ending balance: collectively evaluated for impairment$11,620,056
 $7,348,596
 $5,259,683
 $24,228,335
$12,167,928
 $6,590,366
 $6,209,454
 $24,967,748
              
(1(1) )As of and for the three months ended June 30, 2018 and 2017,2019, there were no purchased credit-impaired loans andwas no allowance for loan losses for purchased credit-impaired loans.acquired loans accounted for under ASC 310-30.
(2)
Total before net deferred fees and costs of $23.6 million.
(3)
These loans are presented net of the remaining fair value discount of $12.2 million at June 30, 2019.
(4)
These loans are presented net of the remaining fair value discount of $125.7 million at June 30, 2019.
(5)
Total before net deferred fees and costs of $22.7 million.
(6)
As of and for the three months ended June 30, 2018, 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 $22.7 million.
(3) Total before net deferred fees and costs of $26.0 million.



Allowance for Loan Losses and Recorded Investment in Loans

 As Of and For The Six Months Ended June 30, 2019
(in thousands)Commercial & Industrial Commercial Real Estate Consumer Total
Allowance for loan losses:       
Beginning balance$133,123
 $68,796
 $48,636
 $250,555
Charge-offs(24,133) (2,093) (11,337) (37,563)
Recoveries3,810
 2,298
 2,588
 8,696
Provision for (reversal of) loan losses25,204
 (5,538) 16,022
 35,688
Ending balance(1)
$138,004
 $63,463
 $55,909
 $257,376
Ending balance: individually evaluated for impairment$16,126
 $1,229
 $811
 $18,166
Ending balance: collectively evaluated for impairment$121,878
 $62,234
 $55,098
 $239,210
Loans:       
Ending balance: total loans(2)
$16,247,543
 $10,348,447
 $9,566,127
 $36,162,117
Ending balance: individually evaluated for impairment    $135,548
 $28,231
 $31,713
 $195,492
Ending balance: collectively evaluated for impairment(3)
$13,857,183
 $8,070,437
 $7,433,959
 $29,361,579
Ending balance: acquired loans accounted for under ASC 310-30(4)    
$2,254,812
 $2,249,779
 $2,100,455
 $6,605,046
        
 As Of and For The Six Months Ended June 30, 2018
(in thousands)Commercial & Industrial Commercial Real Estate Consumer Total
Allowance for loan losses:       
Beginning balance$126,803
 $74,998
 $47,467
 $249,268
Charge-offs(23,786) (2,446) (9,894) (36,126)
Recoveries3,995
 6,964
 3,058
 14,017
Provision for (reversal of) loan losses23,323
 (4,311) 5,554
 24,566
Ending balance$130,335
 $75,205
 $46,185
 $251,725
Ending balance: individually evaluated for impairment$9,474
 $4,687
 $771
 $14,932
Ending balance: collectively evaluated for impairment$120,861
 $70,518
 $45,414
 $236,793
Loans:       
Ending balance: total loans(5)(6)
$12,275,472
 $6,644,171
 $6,237,130
 $25,156,773
Ending balance: individually evaluated for impairment$107,544
 $53,805
 $27,676
 $189,025
Ending balance: collectively evaluated for impairment$12,167,928
 $6,590,366
 $6,209,454
 $24,967,748
        
(1)
As of and for the six months ended June 30, 2019, there was no allowance for loan losses for acquired loans accounted for under ASC 310-30.
(2)
Total before net deferred fees and costs of $23.6 million.
(3)
These loans are presented net of the remaining fair value discount of $12.2 million at June 30, 2019.
(4)
These loans are presented net of the remaining fair value discount of $125.7 million at June 30, 2019.
(5)
Total before net deferred fees and costs of $22.7 million.
(6)
As of and for the six months ended June 30, 2018 , there were no purchased credit-impaired loans and no allowance for loan losses for purchased credit-impaired loans.














The tables below summarizeBelow is a detailed summary of impaired loans (including accruing TDRs) by class as of June 30, 20182019 and December 31, 2017.
Impaired Loans (including accruing TDRs)
 June 30, 2018 Six Months Ended June 30, 2018 Three Months Ended June 30, 2018
(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             
Commercial, financial and agricultural$21,549
 $32,458
 $—
 $11,129
 $—
 $13,575
 $—
Owner-occupied—
 —
 —
 —
 —
 —
 —
Total commercial and industrial21,549
 32,458
 —
 11,129
 —
 13,575
 —
Investment properties—
 —
 —
 —
 —
 —
 —
1-4 family properties—
 —
 —
 —
 —
 —
 —
Land and development—
 —
 —
 19
 —
 —
 —
Total commercial real estate—
 —
 —
 19
 —
 —
 —
Home equity lines—
 —
 —
 1,423
 —
 724
 —
Consumer mortgages62
 87
 —
 1,330
 —
 1,780
 —
Credit cards—
 —
 —
 —
 —
 —
 —
Other consumer loans—
 —
 —
 —
 —
 —
 —
Total consumer62
 87
 —
 2,753
 —
 2,504
 —
Total impaired loans with no
related allowance recorded
$21,611
 $32,545
 $—
 $13,901
 $—
 $16,079

$—
With allowance recorded             
Commercial, financial and agricultural$45,171
 $45,385
 $6,813
 $62,564
 $428
 $57,930
 $155
Owner-occupied40,824
 40,884
 2,660
 38,073
 730
 38,432
 373
Total commercial and industrial85,995
 86,269
 9,473
 100,637
 1,158
 96,362
 528
Investment properties24,218
 24,218
 1,659
 23,604
 418
 24,439
 220
1-4 family properties10,458
 10,458
 309
 11,466
 442
 11,217
 226
Land and development19,129
 20,869
 2,720
 18,280
 150
 18,428
 74
Total commercial real estate53,805
 55,545
 4,688
 53,350
 1,010
 54,084
 520
Home equity lines3,915
 3,915
 174
 3,822
 76
 3,262
 30
Consumer mortgages18,767
 18,767
 350
 19,283
 394
 19,459
 199
Credit cards—
 —
 —
 —
 —
 4,985
 —
Other consumer loans4,932
 4,938
 248
 5,188
 143
 —
 72
Total consumer27,614
 27,620

772
 28,293
 613
 27,706
 301
Total impaired loans with
allowance recorded
$167,414
 $169,434
 $14,933
 $182,280
 $2,781
 $178,152
 $1,349
Total impaired loans             
Commercial, financial and agricultural$66,720
 $77,843
 $6,813
 $73,693
 $428
 $71,505
 $155
Owner-occupied40,824
 40,884
 2,660
 38,073
 730
 38,432
 373
Total commercial and industrial107,544
 118,727
 9,473
 111,766
 1,158
 109,937
 528
Investment properties24,218
 24,218

1,659
 23,604
 418

24,439
 220
1-4 family properties10,458
 10,458

309
 11,466
 442

11,217
 226
Land and development19,129
 20,869

2,720
 18,299
 150

18,428
 74
Total commercial real estate53,805
 55,545

4,688
 53,369
 1,010

54,084
 520
Home equity lines3,915
 3,915

174
 5,245
 76

3,986
 30
Consumer mortgages18,829
 18,854

350
 20,613
 394

21,239
 199
Credit cards—
 —

—
 —
 —

4,985
 —
Other consumer loans4,932
 4,938

248
 5,188
 143

—
 72
Total consumer27,676
 27,707

772
 31,046
 613

30,210
 301
Total impaired loans$189,025
 $201,979

$14,933
 $196,181
 $2,781

$194,231
 $1,349
              

Impaired Loans (including accruing TDRs)
 December 31, 2017 Year Ended December 31, 2017
(in thousands)Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized
With no related allowance recorded         
Commercial, financial and agricultural$8,220
 $9,576
 $—
 $21,686
 $—
Owner-occupied—
 —
 —
 6,665
 —
Total commercial and industrial8,220
 9,576
 —
 28,351
 —
Investment properties—
 —
 —
 123
 —
1-4 family properties—
 —
 —
 323
 —
Land and development56
 1,740
 —
 1,816
 —
Total commercial real estate56
 1,740
 —
 2,262
 —
Home equity lines2,746
 2,943
 —
 1,205
 —
Consumer mortgages—
 —
 —
 496
 —
Credit cards—
 —
 —
 —
 —
Other consumer loans—
 —
 —
 —
 —
Total consumer2,746
 2,943
 —
 1,701
 —
Total impaired loans with no
related allowance recorded
$11,022
 $14,259
 $—
 $32,314
 $—
With allowance recorded         
Commercial, financial and agricultural$65,715
 $65,851
 $7,406
 $50,468
 $1,610
Owner-occupied37,399
 37,441
 2,109
 40,498
 1,382
Total commercial and industrial103,114
 103,292
 9,515
 90,966
 2,992
Investment properties23,364
 23,364
 1,100
 28,749
 1,144
1-4 family properties15,056
 15,056
 504
 16,257
 925
Land and development18,420
 18,476
 2,636
 23,338
 404
Total commercial real estate56,840
 56,896
 4,240
 68,344
 2,473
Home equity lines5,096
 5,096
 114
 7,476
 334
Consumer mortgages18,668
 18,668
 569
 19,144
 896
Credit cards—
 —
 —
 —
 —
Other consumer loans5,546
 5,546
 470
 4,765
 266
Total consumer29,310
 29,310
 1,153
 31,385
 1,496
Total impaired loans with
allowance recorded
$189,264
 $189,498
 $14,908
 $190,695
 $6,961
Total impaired loans         
Commercial, financial and agricultural$73,935
 $75,427
 $7,406
 $72,154
 $1,610
Owner-occupied37,399 37,441 2,109 47,163 1,382
Total commercial and industrial111,334 112,868 9,515 119,317 2,992
Investment properties23,364 23,364 1,100 28,872 1,144
1-4 family properties15,056
 15,056
 504
 16,580
 925
Land and development18,476
 20,216
 2,636
 25,154
 404
Total commercial real estate56,896
 58,636
 4,240
 70,606
 2,473
Home equity lines7,842
 8,039
 114
 8,681
 334
Consumer mortgages18,668
 18,668
 569
 19,640
 896
Credit cards—
 —
 —
 —
 —
Other consumer loans5,546
 5,546
 470
 4,765
 266
Total consumer32,056
 32,253
 1,153
 33,086
 1,496
Total impaired loans$200,286
 $203,757
 $14,908
 $223,009
 $6,961
          

The average recorded investment in impaired loans was $233.8 million2018 and $232.5 million respectively for the sixthree and threesix months ended June 30, 2017. Excluding accruing TDRs, there was no interest income recognized for the investment in impaired loans for the six2019 and three months ended June 30, 2017. Interest income recognized for accruing TDRs was $3.5 million and $1.8 million respectively for the six and three months ended June 30, 2017. 2018.At June 30, 20182019 and December 31, 2017,2018, impaired loans of $63.7$69.1 million and $49.0$51.3 million, respectively, were on non-accrual status.
Concessions provided
Impaired Loans (including accruing TDRs)
 June 30, 2019 December 31, 2018
  Recorded Investment   Recorded Investment 
(in thousands)Unpaid Principal BalanceWithout an ALLWith an ALLRelated Allowance Unpaid Principal BalanceWithout an ALLWith an ALLRelated Allowance
Commercial, financial and agricultural$94,581
$24,420
$59,760
$13,248
 $65,150
$22,298
$34,222
$7,133
Owner-occupied53,576
116
51,252
2,878
 49,588
—
48,902
3,074
Total commercial and industrial148,157
24,536
111,012
16,126
 114,738
22,298
83,124
10,207
Investment properties12,493
—
12,494
585
 13,916
—
13,916
1,523
1-4 family properties5,369
—
5,369
181
 5,586
—
5,586
131
Land and development11,636
1,055
9,313
463
 16,283
265
13,431
944
Total commercial real estate29,498
1,055
27,176
1,229
 35,785
265
32,933
2,598
Consumer mortgages19,988
883
18,814
268
 19,506
—
19,506
343
Home equity lines5,666
—
5,604
335
 3,264
—
3,235
224
Other consumer loans6,412
—
6,412
208
 5,565
—
5,565
177
Total consumer32,066
883
30,830
811
 28,335
—
28,306
744
Total loans$209,721
$26,474
$169,018
$18,166
 $178,858
$22,563
$144,363
$13,549
          

 Three Months Ended June 30, 2019 Three Months Ended June 30, 2018
(in thousands)Average Recorded Investment
Interest Income Recognized(1)
 Average Recorded Investment
Interest Income Recognized(1)
Commercial, financial and agricultural$86,393
$384
 $71,505
$452
Owner-occupied51,549
614
 38,432
444
Total commercial and industrial137,942
998
 109,937
896
Investment properties12,929
157
 24,439
220
1-4 family properties5,096
134
 11,217
226
Land and development11,061
34
 18,428
74
Total commercial real estate29,086
325
 54,084
520
Consumer mortgages19,565
217
 3,986
200
Home equity lines4,849
37
 21,239
56
Other consumer loans5,940
81
 4,985
71
Total consumer30,354
335
 30,210
327
 Total loans$197,382
$1,658
 $194,231
$1,743
      
(1)
Of the interest income recognized during the three months ended June 30, 2019 and 2018, cash-basis interest income was $290 thousand and $394 thousand, respectively.


 Six Months Ended June 30, 2019 Six Months Ended June 30, 2018
(in thousands)Average Recorded Investment
Interest Income Recognized(1)
 Average Recorded Investment
Interest Income Recognized(1)
Commercial, financial and agricultural$81,373
$938
 $73,693
$851
Owner-occupied50,794
1,140
 38,073
814
Total commercial and industrial132,167
2,078
 111,766
1,665
Investment properties12,984
298
 23,604
418
1-4 family properties5,302
265
 11,466
442
Land and development11,062
69
 18,299
150
Total commercial real estate29,348
632
 53,369
1,010
Consumer mortgages19,801
429
 5,245
395
Home equity lines4,076
73
 20,613
102
Other consumer loans5,701
159
 5,188
143
Total consumer29,578
661
 31,046
640
 Total loans$191,093
$3,371
 $196,181
$3,315
      
(1)
Of the interest income recognized during the six months ended June 30, 2019 and 2018, cash-basis interest income was $690 thousand and $535 thousand, respectively.
Information about Synovus' TDRs is presented in the following tables. Modifications of loans that are accounted for within a pool under ASC Topic 310-30 are excluded as TDRs. Accordingly, such modifications do not result in the removal of those loans from the pool, even if the modification of those loans would otherwise be considered a TDR. As a result, all such acquired loans that would otherwise meet the criteria for classification as a TDR are primarily inexcluded from the form 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 only for a period of time), or an extension of the maturity of the 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 considered to be financial concessions.
tables below. The following tables represent, by concession type, the post-modification balance for loans modified or renewed during the sixthree and threesix months ended June 30, 20182019 and 20172018 that were reported as accruing or non-accruing TDRs.

TDRs by Concession Type  
 Six Months Ended June 30, 2018 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate Term Extensions and/or Other Concessions Total 
Commercial, financial and agricultural14
 $—
 $—
 $1,565
 $1,565
 
Owner-occupied6
 —
 4,799
 684
 5,483
 
Total commercial and industrial20
 —
 4,799
 2,249
 7,048
 
Investment properties3
 —
 6,011
 2,215
 8,226
 
1-4 family properties7
 —
 965
 492
 1,457
 
Land and development3
 —
 —
 1,786
 1,786
 
Total commercial real estate13
 —
 6,976
 4,493
 11,469
 
Home equity lines3
 —
 172
 148
 320
 
Consumer mortgages14
 —
 4,695
 87
 4,782
 
Credit cards—
 —
 —
 —
 —
 
Other consumer loans31
 —
 925
 821
 1,746
 
Total consumer48
 —
 5,792
 1,056
 6,848
 
Total TDRs81
 $—
 $17,567
 $7,798
 $25,365
(1 
) 
           
 Three Months Ended June 30, 2018 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate Term Extensions and/or Other Concessions Total 
Commercial, financial and agricultural5
 $—
 $—
 $576
 $576
 
Owner-occupied4
 —
 2,094
 592
 2,686
 
Total commercial and industrial9
 —
 2,094
 1,168
 3,262
 
Investment properties2
 —
 6,011
 256
 6,267
 
1-4 family properties1
 —
 —
 492
 492
 
Land and development3
 —
 —
 1,786
 1,786
 
Total commercial real estate6
 —
 6,011
 2,534
 8,545
 
Home equity lines3
 —
 172
 148
 320
 
Consumer mortgages7
 —
 2,963
 87
 3,050
 
Credit cards—
 —
 —
 —
 —
 
Other consumer loans17
 —
 388
 313
 701
 
Total consumer27
 —
 3,523
 548
 4,071
 
Total TDRs42
 $—
 $11,628
 $4,250
 $15,878
(1 
) 
           
TDRs by Concession Type  
 Three Months Ended June 30, 2019 
(in thousands, except contract data)Number of Contracts Below Market Interest Rate 
Other Concessions(1)
 Total 
Commercial, financial and agricultural21
 $1,343
 $1,589
 $2,932
 
Owner-occupied4
 1,082
 —
 1,082
 
Total commercial and industrial25
 2,425
 1,589
 4,014
 
Investment properties1
 180
 —
 180
 
1-4 family properties4
 514
 —
 514
 
Land and development2
 169
 —
 169
 
Total commercial real estate7
 863
 —
 863
 
Consumer mortgages1
 109
 —
 109
 
Home equity lines24
 2,321
 —
 2,321
 
Other consumer loans34
 586
 1,332
 1,918
 
Total consumer59
 3,016
 1,332
 4,348
 
Total TDRs91
 $6,304
 $2,921
 $9,225
(2) 
   
 Three Months Ended June 30, 2018 
(in thousands, except contract data)Number of Contracts Below Market Interest Rate 
Other Concessions(1)
 Total 
Commercial, financial and agricultural5
 $—
 $576
 $576
 
Owner-occupied4
 2,094
 592
 2,686
 
Total commercial and industrial9
 2,094
 1,168
 3,262
 
Investment properties2
 6,011
 256
 6,267
 
1-4 family properties1
 —
 492
 492
 
Land and development3
 —
 1,786
 1,786
 
Total commercial real estate6
 6,011
 2,534
 8,545
 
Consumer mortgages7
 2,963
 87
 3,050
 
Home equity lines3
 172
 148
 320
 
Other consumer loans17
 388
 313
 701
 
Total consumer27
 3,523
 548
 4,071
 
Total TDRs42
 $11,628
 $4,250
 $15,878
(3) 
   
(1) Other concessions generally include term extensions, interest only payments for a period of time, or principal forgiveness, but there was no principal forgiveness for each of the three months ended June 30, 2019 and 2018.
(2) No net charge-offs were recorded during the six andthree months ended June 30, 2019 upon restructuring of these loans.
(3) No net charge-offs were recorded during the three months ended June 30, 2018 upon restructuring of these loans.


TDRs by Concession TypeSix Months Ended June 30, 2019 
(in thousands, except contract data)Number of Contracts Below Market Interest Rate 
Other Concessions(1)
 Total 
Commercial, financial and agricultural34
 $3,126
 $2,488
 $5,614
 
Owner-occupied6
 2,031
 —
 2,031
 
Total commercial and industrial40
 5,157
 2,488
 7,645
 
Investment properties2
 663
 —
 663
 
1-4 family properties10
 1,307
 —
 1,307
 
Land and development2
 169
 —
 169
 
Total commercial real estate14
 2,139
 —
 2,139
 
Consumer mortgages5
 237
 1,214
 1,451
 
Home equity lines25
 2,321
 105
 2,426
 
Other consumer loans52
 694
 2,377
 3,071
 
Total consumer82
 3,252
 3,696
 6,948
 
Total TDRs136
 $10,548
 $6,184
 $16,732
(2 
) 
   
 Six Months Ended June 30, 2018 
(in thousands, except contract data)Number of Contracts Below Market Interest Rate 
Other Concessions(1)
 Total 
Commercial, financial and agricultural14
 $—
 $1,565
 $1,565
 
Owner-occupied6
 4,799
 684
 5,483
 
Total commercial and industrial20
 4,799
 2,249
 7,048
 
Investment properties3
 6,011
 2,215
 8,226
 
1-4 family properties7
 965
 492
 1,457
 
Land and development3
 —
 1,786
 1,786
 
Total commercial real estate13
 6,976
 4,493
 11,469
 
Consumer mortgages14
 4,695
 87
 4,782
 
Home equity lines3
 172
 148
 320
 
Other consumer loans31
 925
 821
 1,746
 
Total consumer48
 5,792
 1,056
 6,848
 
Total TDRs81
 $17,567
 $7,798
 $25,365
(3) 
         

TDRs by Concession Type  
 Six Months Ended June 30, 2017 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate Term Extensions and/or Other Concessions Total 
Commercial, financial and agricultural28
 $—
 $5,760
 $6,279
 $12,039
 
Owner-occupied1
 —
 —
 22
 22
 
Total commercial and industrial29
 —
 5,760
 6,301
 12,061
 
Investment properties—
 —
 —
 —
 —
 
1-4 family properties16
 —
 2,089
 513
 2,602
 
Land and development1
 —
 —
 135
 135
 
Total commercial real estate17
 —
 2,089
 648
 2,737
 
Home equity lines—
 —
 —
 —
 —
 
Consumer mortgages1
 —
 —
 9
 9
 
Credit cards—
 —
 —
 —
 —
 
Other consumer loans8
 —
 —
 570
 570
 
Total consumer9
 —
 —
 579
 579
 
Total TDRs55
 $—
 $7,849
 $7,528
 $15,377
(2 
) 
           
 Three Months Ended June 30, 2017 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate Term Extensions and/or Other Concessions Total 
Commercial, financial and agricultural10
 $—
 $1,895
 $740
 $2,635
 
Owner-occupied1
 —
 —
 22
 22
 
Total commercial and industrial11
 —
 1,895
 762
 2,657
 
Investment properties—
 —
 —
 —
 —
 
1-4 family properties8
 —
 478
 196
 674
 
Land and development1
 —
 —
 135
 135
 
Total commercial real estate9
 —
 478
 331
 809
 
Home equity lines—
 —
 —
 —
 —
 
Consumer mortgages1
 —
 —
 9
 9
 
Credit cards—
 —
 —
 —
 —
 
Other consumer loans5
 —
 —
 295
 295
 
Total consumer6
 —
 —
 304
 304
 
Total TDRs26
 $—
 $2,373
 $1,397
 $3,770
(2 
) 
           
(1) Other concessions generally include term extensions, interest only payments for a period of time, or principal forgiveness, but there was no principal forgiveness for each of the six months ended June 30, 2019 and 2018.
(2) No net charge-offs were recorded during the six and three months ended June 30, 20172019 upon restructuring of these loans.

For both(3) No net charge-offs were recorded during the six and three months ended June 30, 2018 upon restructuring of these loans.
For both the three and six months ended June 30, 2019 there were eight defaultswas one default with a recorded investment of $10.5 million$5 thousand 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 threeeight defaults for both the six and three months ended June 30, 2017 with a recorded investment of $292 thousand.$10.5 million for both the three and six months ended June 30, 2018.
If, at 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. At June 30, 2018,2019, the allowance for loan losses allocated to accruing TDRs totaling $125.3$126.4 million was $6.5$5.7 million compared to accruing TDRs of $151.3$115.6 million with an allocated allowance for loan losses of $8.7$6.1 million at December 31, 2017.2018. Non-accrual, non-homogeneous loans (commercial-type impaired loans greater than $1 million) that are designated as TDRs are individually measured for the amount of impairment, if any, both before and after the TDR designation.designation.As of June 30, 2019 and December 31, 2018, there were no commitments to lend a material amount of additional funds to any customer whose loan was classified as a TDR.


Note 75 - Goodwill and Other Intangible Assets
Changes to the carrying amount of goodwill by reporting unit for the six months ended June 30, 2019 are provided in the following table. There were no changes to the carrying amount of goodwill during the year ended December 31, 2018.
(in thousands) Synovus Bank Reporting Unit Trust Services Reporting Unit Total
Balance as of December 31, 2018 $32,884
 $24,431
 $57,315
Goodwill acquired during the year (preliminary allocation) and adjustments 435,075
 —
 435,075
Balance as of June 30, 2019 $467,959
 $24,431
 $492,390
       

Effective January 1, 2019, Synovus acquired FCB. In connection with the acquisition, Synovus recorded $435.1 million of goodwill based on Acquisition Date preliminary fair value estimates of the assets acquired and liabilities assumed in the business combination, including measurement period adjustments recorded during the three months ended June 30, 2019, the most significant of which consisted of a decrease in core deposit intangible assets of $10.8 million, with offsetting increases in goodwill and net deferred tax assets. Additionally, Synovus recorded a $57.4 million core deposit intangible asset on the Acquisition Date, including the aforementioned measurement period adjustment recorded during the three months ended June 30, 2019. See "Part I - Item 1. Financial Statements and Supplementary Data - Note 2 - Acquisitions" in this Report for additional information on the FCB acquisition.
As of June 30, 2019, Synovus completed its annual goodwill impairment evaluation applying ASC 350-20-35-3A, Goodwill Subsequent Measurement - Qualitative Assessment Approach based on the preliminary allocation of goodwill to the reporting units shown above and concluded that goodwill was not impaired.
The following table shows the gross carrying amount and accumulated amortization of other intangible assets as of June 30, 2019 and December 31, 2018, which primarily consist of core deposit intangible assets acquired in the FCB acquisition. Core deposit intangible assets were $52.2 million at June 30, 2019. The CDI is being amortized over its estimated useful life of approximately ten years utilizing an accelerated method. Amortization expense recognized on intangible assets for the three and six months ended June 30, 2019, was $2.4 million and $5.8 million, respectively. Amortization expense recognized on intangible assets for the three and six months ended June 30, 2018 was $292 thousand and $583 thousand, respectively.
(in thousands) June 30, 2019 December 31, 2018
Other intangible assets, gross carrying amount $70,328
 $12,928
Other intangible assets, accumulated amortization (8,855) (3,053)
Other intangible assets, net carrying amount $61,473
 $9,875
     

Note 6 - Shareholders' Equity and Other Comprehensive Income (Loss)

Stock issued for acquisition of FCB
On January 1, 2019, as part of the FCB acquisition, Synovus issued 22.0 million shares of common stock and reissued 27.4 million shares of treasury stock and incurred $417 thousand in costs related to the issuance. FCB stockholders received 1.055 shares of Synovus common stock for each outstanding share of FCB common stock. Also, under the terms of the Merger Agreement, outstanding stock options, non-vested restricted share units, and warrants were converted into options, restricted share units, and warrants, respectively, to purchase and receive Synovus common stock. The total value of the acquisition consideration transferred by Synovus was $1.63 billion. See "Part I - Item 1. Financial Statements and Supplementary Data - Note 2 - Acquisitions" in this Report for more information on the FCB acquisition.
Repurchases of Common Stock
On June 17, 2019, Synovus announced that the Board of Directors increased its prior $400 million share repurchase authorization to $725 million for the year 2019. As of June 30, 2019, Synovus had repurchased under this program a total of $345.0 million, or 9.2 million shares of its common stock, at an average price of $37.43 per share.
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 sixthree and threesix months ended June 30, 20182019 and 2017.2018.
Changes in Accumulated Other Comprehensive Income (Loss) by Component (Net of Income Taxes)
(in thousands)
Net unrealized losses on cash flow hedges(1)
 
Net unrealized gains (losses) on investment securities available for sale(1)
 Post-retirement unfunded health benefit Total
Balance, April 1, 2019$(12,137) $(7,071) $866
 $(18,342)
Other comprehensive income (loss) before reclassifications—
 66,290
 —
 66,290
Amounts reclassified from AOCI—
 1,367
 (26) 1,341
Net current period other comprehensive income (loss)—
 67,657
 (26) 67,631
Balance, June 30, 2019$(12,137) $60,586
 $840
 $49,289
        
Balance, April 1, 2018$(12,137) $(96,647) $1,007
 $(107,777)
Other comprehensive income (loss) before reclassifications—
 (18,878) —
 (18,878)
Amounts reclassified from AOCI—
 960
 (25) 935
Net current period other comprehensive income (loss)—
 (17,918) (25) (17,943)
Balance, June 30, 2018$(12,137) $(114,565) $982
 $(125,720)
        
Balance, January 1, 2019$(12,137) $(83,179) $896
 $(94,420)
Other comprehensive income (loss) before reclassifications—
 142,453
 —
 142,453
Amounts reclassified from AOCI—
 1,312
 (56) 1,256
Net current period other comprehensive income (loss)—
 143,765
 (56) 143,709
Balance, June 30, 2019$(12,137) $60,586
 $840
 $49,289
        
Balance, December 31, 2017$(12,137) $(43,470) $853
 $(54,754)
Reclassification from adoption of ASU 2018-02—
 (7,763) 175
 (7,588)
Cumulative-effect adjustment from adoption of ASU 2016-01—
 117
 —
 117
Other comprehensive income (loss) before reclassifications—
 (64,409) —
 (64,409)
Amounts reclassified from AOCI—
 960
 (46) 914
Net current period other comprehensive income (loss)—
 (63,449) (46) (63,495)
Balance, June 30, 2018$(12,137) $(114,565) $982
 $(125,720)
        

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, 2017$(12,137) $(43,470) $853
 $(54,754)
Other comprehensive income (loss) before reclassifications—
 (64,409) —
 (64,409)
Amounts reclassified from accumulated other comprehensive income (loss)—
 960
 (46) 914
Net current period other comprehensive loss—
 (63,449) (46) (63,495)
Reclassification from adoption of ASU 2018-02—
 (7,763) 175
 (7,588)
Cumulative-effect adjustment from adoption of ASU 2016-01—
 117
 —
 117
Balance as of June 30, 2018$(12,137) $(114,565) $982
 $(125,720)
        
Balance as of April 1, 2018$(12,137) $(96,647) $1,007
 $(107,777)
Other comprehensive income (loss) before reclassifications—
 (18,878) —
 (18,878)
Amounts reclassified from accumulated other comprehensive income (loss)—
 960
 (25) 935
Net current period other comprehensive income—
 (17,918) (25) (17,943)
Balance as of June 30, 2018$(12,137) $(114,565) $982
 $(125,720)
        

(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
 $(55,659)
Other comprehensive income before reclassifications—
 12,453
 —
 12,453
Amounts reclassified from accumulated other comprehensive income (loss)80
 (4,715) (24) (4,659)
Net current period other comprehensive income80
 7,738
 (24) 7,794
Balance as of June 30, 2017$(12,137) $(36,586) $858
 $(47,865)
        
Balance as of April 1, 2017$(12,177) $(43,444) $870
 $(54,751)
Other comprehensive income before reclassifications—
 6,857
 —
 6,857
Amounts reclassified from accumulated other comprehensive income (loss)40
 1
 (12) 29
Net current period other comprehensive income (loss)40
 6,858
 (12) 6,886
Balance as of June 30, 2017$(12,137) $(36,586) $858
 (47,865)
        

(1) 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 the years 2010 and 2011, Synovus recorded a deferred tax asset valuation allowance associated with net unrealized 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 instruments and available for sale securities as a single portfolio. As of June 30, 2018,For all periods presented, the ending 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 the previously established deferred tax asset valuation allowance. Under the portfolio approach, these unrealized losses are realized at the time the entire portfolio is sold or disposed.



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 Six Months Ended June 30,  
  2018 2017  
Net unrealized gains (losses) on cash flow hedges:      
  Amortization of deferred losses $—
 $(130) Interest expense
  —
 50
 Income tax (expense) benefit
  $—
 $(80) Reclassifications, net of income taxes
       
Net unrealized gains on investment securities available for sale:      
  Realized (losses) gains on sale of securities $(1,296) $7,667
 Investment securities gains, net
  336
 (2,952) Income tax (expense) benefit
  $(960) $4,715
 Reclassifications, net of income taxes
Post-retirement unfunded health benefit:      
  Amortization of actuarial gains $68
 $40
 Salaries and other personnel expense
  (22) (16) Income tax (expense) benefit
  $46
 $24
 Reclassifications, net of income taxes
       

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 June 30,  
  2018 2017  
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 losses on sale of securities $(1,296) $(1) Investment securities gains, net
  336
 —
 Income tax (expense) benefit
  $(960) $(1) Reclassifications, net of income taxes
Post-retirement unfunded health benefit:      
  Amortization of actuarial gains $34
 $20
 Salaries and other personnel expense
  (9) (8) Income tax (expense) benefit
  $25
 $12
 Reclassifications, net of income taxes
       

Note 87 - Fair Value Accounting
Synovus carries various assets and liabilities at fair value based on the fair value accounting guidance under ASC 820, Fair Value Measurements, and ASC 825, Financial Instruments. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an “exit price”) in the principal or most advantageous market for the asset or liability 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 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 GSEs and agencies, obligations of states and municipalities, collateralized mortgage obligations issued by GSEs, 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 loans held for sale, other real estate, certain corporate securities, private equity investments, GGL/SBA loan servicing assets, and the earnout liability.

See "Part II - Item 8. Financial Statements and Supplementary Data - Note 151 - Fair Value Accounting"Summary of Significant Accounting Policies" to the consolidated financial statements of Synovus' 20172018 Form 10-K for a description of the fair value hierarchy and valuation methodologies for assets and liabilities measured at fair value on a recurring and non-recurring basis.

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 June 30, 20182019 and December 31, 2017, according to the valuation hierarchy included in ASC 820-10. For debt securities, class was determined based on the nature and risks of the investments. Synovus did not have any transfers between levels during the six and three months ended June 30, 2018 and year ended December 31, 2017.2018.
 June 30, 2019
(in thousands)Level 1 Level 2 Level 3 Total Assets and Liabilities at Fair Value
Assets       
Trading securities:       
U.S. Government agency securities$—
 $31
 $—
 $31
Mortgage-backed securities issued by U.S. Government agencies—
 3,504
 —
 3,504
Collateralized mortgage obligations issued by
U.S. Government sponsored enterprises    
—
 999
 —
 999
Other mortgage-backed securities—
 1,464
 —
 1,464
State and municipal securities—
 382
 —
 382
Corporate debt securities—
 77
 —
 77
Total trading securities$—
 $6,457
 $—
 $6,457
Investment securities available for sale:       
U.S. Treasury securities$19,689
 $—
 $—
 $19,689
U.S. Government agency securities—
 65,687
 —
 65,687
Mortgage-backed securities issued by U.S. Government agencies—
 88,277
 —
 88,277
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 4,948,671
 —
 4,948,671
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 862,533
 —
 862,533
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises—
 368,443
 —
 368,443
State and municipal securities—
 2,100
 —
 2,100
Asset-backed securities—
 505,117
 —
 505,117
 Corporate debt securities    —
 144,478
 2,017
 146,495
Total investment securities available for sale$19,689
 $6,985,306
 $2,017
 $7,007,012
Mortgage loans held for sale—
 81,855
 —
 81,855
Private equity investments—
 —
 13,341
 13,341
Mutual funds16,390
 —
 —
 16,390
Mutual funds held in rabbi trusts14,816
 —
 —
 14,816
GGL/SBA loans servicing asset—
 —
 3,326
 3,326
Derivative assets:       
Interest rate contracts$—
 $134,504
 $—
 $134,504
Mortgage derivatives(1)
—
 1,892
 —
 1,892
Total derivative assets$—
 $136,396
 $—
 $136,396
Liabilities       
Earnout liability(2)
—
 —
 14,353
 14,353
Derivative liabilities:       
Interest rate contracts$—
 $32,193
 $—
 $32,193
Mortgage derivatives(1)
—
 1,049
 —
 1,049
Visa derivative—
 —
 1,049
 1,049
Total derivative liabilities$—
 $33,242
 $1,049
 $34,291
        
 June 30, 2018
(in thousands)Level 1 Level 2 Level 3 Total Assets and Liabilities at Fair Value
Assets       
Trading securities:       
U.S. Government agency securities$—
 $17,164
 $—
 $17,164
Mortgage-backed securities issued by U.S. Government agencies—
 577
 —
 577
Collateralized mortgage obligations issued by
U.S. Government sponsored enterprises    
—
 409
 —
 409
State and municipal securities—
 2,495
 —
 2,495
Other investments906
 —
 —
 906
Total trading securities$906
 $20,645
 $—
 $21,551
Mortgage loans held for sale—
 53,673
 —
 53,673
Investment securities available for sale:       
U.S. Treasury securities120,633
 —
 —
 120,633
U.S. Government agency securities—
 40,934
 —
 40,934
Mortgage-backed securities issued by U.S. Government agencies—
 107,944
 —
 107,944
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 2,526,845
 —
 2,526,845
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 1,116,448
 —
 1,116,448
State and municipal securities—
 115
 —
 115
 Corporate debt and other debt securities(1)    
—
 15,186
 1,857
 17,043
Total investment securities available for sale$120,633
 $3,807,472
 $1,857
 $3,929,962
Private equity investments—
 —
 12,678
 12,678
Mutual funds3,124
 —
 —
 3,124
Mutual funds held in rabbi trusts13,638
 —
 —
 13,638
GGL/SBA loans servicing asset—
 —
 4,186
 4,186
Derivative assets:       
Interest rate contracts—
 10,034
 —
 10,034
Mortgage derivatives(2)
—
 1,302
 —
 1,302
Total derivative assets$—
 $11,336
 $—
 $11,336
Liabilities       
Trading account liabilities—
 12,328
 —
 12,328
Earnout liability(3)
—
 —
 11,348
 11,348
Derivative liabilities:       
Interest rate contracts—
 19,303
 —
 19,303
Mortgage derivatives(2)
—
 248
 —
 248
Visa derivative—
 —
 5,943
 5,943
Total derivative liabilities$—
 $19,551
 $5,943
 $25,494
        


 December 31, 2018
(in thousands)Level 1 Level 2 Level 3 Total Assets and Liabilities at Fair Value
Assets       
Trading securities:       
U.S. Government agency securities$—
 $44
 $—
 $44
State and municipal securities—
 1,064
 —
 1,064
 Other investments1,128
 894
 —
 2,022
Total trading securities$1,128
 $2,002
 $—
 $3,130
Investment securities available for sale:       
     U.S. Treasury securities$122,077
 $—
 $—
 $122,077
U.S. Government agency securities—
 38,382
 —
 38,382
Mortgage-backed securities issued by U.S. Government agencies—
 97,205
 —
 97,205
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 2,398,650
 —
 2,398,650
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 1,188,518
 —
 1,188,518
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises—
 129,865
 —
 129,865
 Corporate debt securities    —
 15,150
 1,785
 16,935
Total investment securities available for sale$122,077
 $3,867,770
 $1,785
 $3,991,632
Mortgage loans held for sale—
 37,129
 —
 37,129
Private equity investments—
 —
 11,028
 11,028
Mutual funds3,168
 —
 —
 3,168
Mutual funds held in rabbi trusts12,844
 —
 —
 12,844
GGL/SBA loans servicing asset—
 —
 3,729
 3,729
Derivative assets:       
Interest rate contracts$—
 $18,388
 $—
 $18,388
Mortgage derivatives(1)
—
 944
 —
 944
Total derivative assets$—
 $19,332
 $—
 $19,332
Liabilities       
Earnout liability(2) 
—
 —
 14,353
 14,353
Derivative liabilities:       
Interest rate contracts$—
 $15,716
 $—
 $15,716
Mortgage derivatives(1)
—
 819
 —
 819
Visa derivative—
 —
 1,673
 1,673
Total derivative liabilities$—
 $16,535
 $1,673
 $18,208
        

 December 31, 2017
(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$—
 $3,002
 $—
 $3,002
Collateralized mortgage obligations issued by U.S. Government sponsored enterprises—
 296
 —
 296
 Other investments522
 —
 —
 522
Total trading securities$522
 $3,298
 $—
 $3,820
Mortgage loans held for sale—
 48,024
 —
 48,024
        
Investment securities available for sale:       
     U.S. Treasury securities82,674
 —
 —
 82,674
U.S. Government agency securities—
 10,862
 —
 10,862
Mortgage-backed securities issued by U.S. Government agencies—
 120,440
 —
 120,440
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 2,640,523
 —
 2,640,523
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 1,111,999
 —
 1,111,999
State and municipal securities—
 180
 —
 180
 Corporate debt and other securities(1)    
3,162
 15,294
 1,935
 20,391
Total investment securities available for sale$85,836
 $3,899,298
 $1,935
 $3,987,069
Private equity investments—
 —
 15,771
 15,771
Mutual funds held in rabbi trusts14,140
 —
 —
 14,140
GGL/SBA loan servicing asset—
 —
 4,101
 4,101
Derivative assets:       
Interest rate contracts—
 10,786
 —
 10,786
Mortgage derivatives(2)
—
 936
 —
 936
Total derivative assets$—
 $11,722
 $—
 $11,722
Liabilities       
Trading account liabilities—
 1,000
 —
 1,000
Earnout liability(3) 
—
 —
 11,348
 11,348
Derivative liabilities:       
Interest rate contracts—
 12,638
 —
 12,638
Mortgage derivatives(2)
—
 129
 —
 129
Visa derivative—
 —
 4,330
 4,330
Total derivative liabilities$—
 $12,767
 $4,330
 $17,097
        
(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 to the potential origination of mortgage loans, which would be classified as held for sale and forward loan sales commitments with third-party investors.
(3)(2) Earnout liability consists of contingent consideration obligation related to the Global One acquisition.

Fair Value Option
Synovus has elected the fair value option for mortgage loans 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 expense needed to manage a hedge accounting program.
The following table summarizes the difference between the fair value and the unpaid principal balance 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 June 30, 2019 As of December 31, 2018
Fair value$81,855
 $37,129
Unpaid principal balance79,873
 35,848
Fair value less aggregate unpaid principal balance$1,982
 $1,281
    
Changes in Fair Value Included in Net Income       
 For the Six Months Ended June 30, For the Three Months Ended June 30,
(in thousands)2018 2017 2018 2017
Mortgage loans held for sale$155
 $954
 $40
 $(249)
        

Changes in Fair Value Included in Net Income       
 Three Months Ended June 30, Six Months Ended June 30,
(in thousands)2019 2018 2019 2018
Mortgage loans held for sale$345
 $40
 $701
 $155
        
Mortgage Loans Held for Sale 
(in thousands)As of June 30, 2018 As of December 31, 2017
Fair value$53,673
 $48,024
Unpaid principal balance52,333
 46,839
Fair value less aggregate unpaid principal balance$1,340
 $1,185
    


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,six months ended June 30, 2019 and 2018, 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 ofFor the amounts on the consolidated balance sheet for thethree and six and three months ended June 30, 2018 and 2017 (including the change in fair value) for financial instruments of a material nature that are classified by Synovus within Level 3 of 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 six and three months ended June 30, 2018 and 2017, Synovus did not have any transfers between levels in the fair value hierarchy. For the six and three months ended June 30, 2018,2019, total net lossesgains/(losses) included in earnings attributable to the change in unrealized lossesgains/(losses) relating to assets/liabilities still held at June 30, 2019 were a $1.5 million gain and a $2.3 million gain, respectively. For the three and six months ended June 30, 2018, total net gains/(losses) included in earnings attributable to the change in unrealized gains/(losses) relating to assets/liabilities still held at June 30, 2018 was $6.2 million and $2.7 million, respectively. For the six and three months ended June 30, 2017, total net losses included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at June 30, 2017 waswere a $2.4 million loss and $2.1a $5.4 million loss, respectively.
 Three Months Ended June 30, 2019
(in thousands)Investment Securities Available for Sale Private Equity Investments 
GGL / SBA
Loans Servicing Asset
 Earnout
Liability		 Visa Derivative
Beginning balance, April 1, 2019$1,981
 $11,886
 $3,447
 $(14,353) $(1,366)
Total gains (losses) realized/unrealized:         
Included in earnings—
 1,455
 (305) —
 —
Unrealized gains (losses) included in OCI36
 —
 —
 —
 —
Additions—
 —
 184
 —
 —
Settlements—
 —
 —
 —
 317
Ending balance, June 30, 2019$2,017
 $13,341
 $3,326
 $(14,353) $(1,049)
Total net gains for the period included in earnings attributable to the change in unrealized gains/(losses) relating to assets/liabilities still held at June 30, 2019    $—
 $1,455
 $—
 $—
 $—
  
 Three Months Ended June 30, 2018
(in thousands)Investment Securities Available for Sale Private Equity Investments GGL / SBA
Loans Servicing Asset		 Earnout
Liability		 Visa Derivative
Beginning balance, April 1, 2018$1,852
 $12,715
 $3,971
 $(11,348) $(3,974)
Total (losses) gains realized/unrealized:         
Included in earnings—
 (37) (312) —
 (2,328)
Unrealized gains (losses) included in OCI5
 —
 —
 —
 —
Additions—
 —
 527
 —
 —
Settlements—
 —
 —
 —
 359
Ending balance, June 30, 2018$1,857
 $12,678
 $4,186
 $(11,348) $(5,943)
Total net losses for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at June 30, 2018$—
 $(37) $—
 $—
 $(2,328)
          
 Six Months Ended June 30, 2019
(in thousands)Investment Securities Available for Sale Private Equity Investments GGL / SBA
Loans Servicing Asset		 Earnout
Liability		 Visa Derivative
Beginning balance, January 1, 2019$1,785
 $11,028
 $3,729
 $(14,353) $(1,673)
Total gains (losses) realized/unrealized:         
Included in earnings—
 2,313
 (793) —
 —
Unrealized gains (losses) included in OCI232
 —
 —
 —
 —
Additions—
 —
 390
 —
 —
Settlements—
 —
 —
 —
 624
Ending balance, June 30, 2019$2,017
 $13,341
 $3,326
 $(14,353) $(1,049)
Total net losses for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at June 30, 2019    $—
 $2,313
 $—
 $—
 $—
          
  
 Six Months Ended June 30, 2018
(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, 2018$1,935
 $15,771
 $(4,330) $(11,348) $4,101
Total (losses) gains realized/unrealized:         
Included in earnings    —
 (3,093) (2,328) —
 (734)
Unrealized losses included in other comprehensive income(78) —
 —
 —
 —
Additions—
 —
 —
 —
 819
Settlements—
 —
 715
 —
 —
Ending balance, June 30, 2018$1,857
 $12,678
 $(5,943) $(11,348) $4,186
Total net losses for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at June 30, 2018$—
 $(3,093) $(2,328) $—
 $(734)
          
 Three Months Ended June 30, 2018
(in thousands)
Investment Securities Available
for Sale
  Private Equity Investments Visa Derivative 
Earnout
Liability(1) 
 
GGL / SBA
Loans Servicing Asset
Beginning balance, April 1, 2018$1,852
 $12,715
 $(3,974) $(11,348) $3,971
Total (losses) gains realized/unrealized:         
Included in earnings    —
 (37) (2,328) —
 (312)
Unrealized gains included in other comprehensive income5
 —
 —
 —
 —
Additions—
 —
 —
 —
 527
Settlements—
 —
 359
 —
 —
Ending balance, June 30, 2018$1,857
 $12,678
 $(5,943) $(11,348) $4,186
Total net losses for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at June 30, 2018$—
 $(37) $(2,328) $—
 $(312)
          



 Six Months Ended June 30, 2018
(in thousands)Investment Securities Available for Sale Private Equity Investments GGL / SBA
Loans Servicing Asset		 Earnout
Liability		 Visa Derivative
Beginning balance, January 1, 2018$1,935
 $15,771
 $4,101
 $(11,348) $(4,330)
Total (losses) gains realized/unrealized:         
Included in earnings—
 (3,093) (734) —
 (2,328)
Unrealized gains (losses) included in OCI(78) —
 —
 —
 —
Additions—
 —
 819
 —
 —
Sales and settlements—
 —
 —
 —
 715
Ending balance, June 30, 2018$1,857
 $12,678
 $4,186
 $(11,348) $(5,943)
Total net losses for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at June 30, 2018$—
 $(3,093) $—
 $—
 $(2,328)
          

      
 Six Months Ended June 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, 2017$1,796
 $25,493
 $(5,768) $(14,000) $—
Total (losses) gains realized/unrealized:         
Included in earnings    —
 (3,166) —
 (1,707) (694)
Unrealized gains (losses) included in other comprehensive income131
 

 —
 —
 —
Additions—
 —
 —
 —
 539
Sales and settlements—
 (6,629) 715
 —
 —
Transfer from amortization method to fair value—
 —
 —
 —
 4,452
Measurement period adjustments related to Global One acquisition—
 —
 —
 1,766
 —
Ending balance, June 30, 2017$1,927
 $15,698
 $(5,053) $(13,941) $4,297
Total net losses for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at June 30, 2017$—
 $—
 $—
 $(1,707) $(694)
          
 Three Months Ended June 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, April 1, 2017$1,851
 $23,679
 $(5,412) $(11,421) $4,178
Total (losses) gains realized/unrealized:         
Included in earnings    —
 (1,352) —
 (1,707) (376)
Unrealized gains included in other comprehensive income76
 —
 —
 —
 —
Additions—
 —
 —
 —
 495
Sales and settlements—
 (6,629) 359
 —
 —
Measurement period adjustments related to Global One acquisition—
 —
 —
 (813) —
Ending balance, June 30, 2017$1,927
 $15,698
 $(5,053) $(13,941) $4,297
Total net losses for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at June 30, 2017$—
 $—
 $—
 $(1,707) $(376)
          
(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. Prior to 2017, Synovus accounted for the GGL/SBA loans servicing asset using the amortization method.


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.
    June 30, 2018 December 31, 2017
  Valuation TechniqueSignificant Unobservable Input
Level 3
Fair Value
 Range or Weighted Average 
Level 3
Fair Value
 Range or Weighted Average
Assets and liabilities
measured at fair value
on a recurring basis
          
           
Investment Securities Available for Sale - Other Investments:          
           
Trust preferred securities Discounted cash flow analysisCredit spread embedded in discount rate$1,857 438 bps $1,935 398 bps
           
Private equity investments Individual 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 companies12,678 N/A 15,771 N/A
           
GGL/SBA loans servicing asset Discounted cash flow analysisDiscount rate Prepayment speeds4,186 13.40% 8.64% 4,101 13.16% 7.50%
           
Earnout liability Option pricing methods and Monte Carlo simulationFinancial projections of Global One11,348 N/A 11,348 N/A
           
Visa derivative liability Discounted cash flow analysisEstimated timing of resolution of covered litigation, future cumulative deposits to the litigation escrow for settlement of the covered litigation, and estimated future monthly fees payable to the derivative counterparty5,943 1-3 years 4,330 1-4 years
           



Assets Measured at Fair Value on a Non-recurring Basis

Certain assets are recorded at fair value on a non-recurring basis. These assets are not measured at fair value on an ongoing basis. Non-recurring fair value adjustments typically are a result of the application of lower of cost or fair value accounting occurring during the period recorded as a charge-off with associated provision expense or a write-down occurring during the period.in non-interest expense. 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. 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 six months ended June 30, 2018 and year ended December 31, 2017.period.


June 30, 2018 December 31, 2017June 30, 2019 December 31, 2018
(in thousands)Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 TotalLevel 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Impaired loans*
$—
 $—
 $12,820
 $12,820
 $—
 $—
 $3,603
 $3,603
Impaired loans(1)
$—
 $—
 $1,540
 $1,540
 $—
 $—
 $21,742
 $21,742
Other loans held for sale—
 —
 —
 —
 —
 —
 10,197
 10,197
—
 —
 —
 —
 —
 —
 1,494
 1,494
Other real estate—
 —
 —
 —
 —
 —
 3,363
 3,363
—
 —
 2,332
 2,332
 —
 —
 3,827
 3,827
Other assets held for sale—
 —
 695
 695
 —
 —
 5,334
 5,334
—
 —
 350
 350
 —
 —
 1,104
 1,104
                              
* (1) Collateral-dependent impaired loans that were written down to fair value during the period.
    Other real estate (ORE) properties are included in other assets on the consolidated balance sheet.sheets. The carrying value of ORE at June 30, 20182019 and December 31, 20172018 was $6.3$14.8 million and $3.8$6.2 million, respectively.
The following table presents fair value adjustments recognized in earnings for the sixthree and threesix months ended June 30, 20182019 and 20172018 for assets measured at fair value on a non-recurring basis still held at period-end.
 Three Months Ended June 30, Six Months Ended June 30,
(in thousands)2019 2018 2019 2018
Impaired loans(1)
$—
 $6,828
 $2,625
 $7,548
Other real estate612
 —
 624
 —
Other assets held for sale—
 499
 91
 499
        

 Six Months Ended June 30, Three Months Ended June 30,
(in thousands)2018 2017 2018 2017
Impaired loans*
$7,548
 $5,808
 $6,828
 $5,776
Other loans held for sale—
 3,519
 —
 —
Other real estate—
 518
 —
 280
Other assets held for sale499
 238
 499
 —
        
*(1) Collateral-dependent impaired loans that were written down to fair value during the period.


















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.
June 30, 2018December 31, 2017
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% - 68% (38%)
0% - 10% (7%)
0%-50% (15%)
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
N/A
N/A
5% - 99% (54%)
0% - 10% (2%)
Other real estateThird-party appraised value of real estate less estimated selling costs
Discount to appraised value (2)
Estimated selling costs
N/A
N/A
0%-85% (35%)
0%-10% (7%)
Other assets held for saleThird-party appraised value less estimated selling costs or BOV
Discount to appraised value (2)
Estimated selling costs
27%-43% (42%)
0%-10% (7%)
21%-52% (25%)
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 adjustments to the values of the assets listed above for reasons including age of the appraisal, information known by management about the property, such as occupancy rates, changes to the physical condition of the property, and other factors.

Fair Value of Financial Instruments
The following table presentstables present the carrying and fair values of financial instruments at June 30, 20182019 and December 31, 2017.2018. The fair values represent management’s estimates based on various 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' 2018 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.










The carrying and estimated fair values of financial instruments, as well as the level within the fair value hierarchy, as of June 30, 2018 and December 31, 2017measurements are as follows:determined.
June 30, 2018June 30, 2019
(in thousands)Carrying Value Fair Value Level 1 Level 2 Level 3Carrying Value Fair Value Level 1 Level 2 Level 3
Financial assets                  
Total cash, cash equivalents, restricted cash, and restricted cash equivalents$1,091,788
 $1,091,788
 $1,091,788
 $—
 $—
$1,151,321
 $1,151,321
 $1,151,321
 $—
 $—
Trading account assets21,551
 21,551
 906
 20,645
 —
Trading securities6,457
 6,457
 —
 6,457
 —
Investment securities available for sale7,007,012
 7,007,012
 19,689
 6,985,306
 2,017
Mortgage loans held for sale53,673
 53,673
 —
 53,673
 —
81,855
 81,855
 —
 81,855
 —
Other loans held for sale2,733
 2,733
 —
 —
 2,733
4,861
 4,861
 —
 —
 4,861
Investment securities available for sale3,929,962
 3,929,962
 120,633
 3,807,472
 1,857
Private equity investments12,678
 12,678
 —
 —
 12,678
13,341
 13,341
 —
 —
 13,341
Mutual funds3,124
 3,124
 3,124
 —
 —
16,390
 16,390
 16,390
 —
 —
Mutual funds held in rabbi trusts13,638
 13,638
 13,638
 —
 —
14,816
 14,816
 14,816
 —
 —
Loans, net24,882,331
 24,732,689
 —
 —
 24,732,689
35,881,185
 35,674,964
 —
 —
 35,674,964
GGL/SBA loans servicing asset4,186
 4,186
 —
 —
 4,186
3,326
 3,326
 —
 —
 3,326
Derivative assets11,336
 11,336
 —
 11,336
 —
136,396
 136,396
 —
 136,396
 —
                  
Financial liabilities
 
 
 
  
 
 
 
  
Trading account liabilities12,328
 12,328
 —
 12,328
 —
         
Non-interest bearing deposits7,630,491
 7,630,491
 —
 7,630,491
 —
Non-time interest bearing deposits13,958,048
 13,958,048
 —
 13,958,048
 —
Non-interest-bearing deposits$9,205,066
 $9,205,066
 $—
 $9,205,066
 $—
Non-time interest-bearing deposits18,264,053
 18,264,053
 —
 18,264,053
 —
Time deposits4,854,149
 4,826,356
 —
 4,826,356
 —
10,497,603
 10,542,659
 —
 10,542,659
 —
Total deposits$26,442,688
 $26,414,895
 $—
 $26,414,895
 $—
$37,966,722
 $38,011,778
 $—
 $38,011,778
 $—
Federal funds purchased, other short-term borrowings and other short-term liabilities207,580
 207,580
 207,580
 —
 —
Federal funds purchased and securities sold under repurchase agreements273,481
 273,481
 273,481
 —
 —
Other short-term borrowings1,330,000
 1,330,000
 —
 1,330,000
 —
Long-term debt1,656,647
 1,658,790
 —
 1,658,790
 —
2,306,072
 2,334,573
 —
 2,334,573
 —
Earnout liabilities11,348
 11,348
 —
 —
 11,348
Earnout liability14,353
 14,353
 —
 —
 14,353
Derivative liabilities25,494
 25,494
 —
 19,551
 5,943
34,291
 34,291
 —
 33,242
 1,049
         

 December 31, 2018
(in thousands)Carrying Value Fair Value Level 1 Level 2 Level 3
Financial assets         
Total cash, cash equivalents, restricted cash, and restricted cash equivalents$1,143,564
 $1,143,564
 $1,143,564
 $—
 $—
Trading securities3,130
 3,130
 1,128
 2,002
 —
Investment securities available for sale3,991,632
 3,991,632
 122,077
 3,867,770
 1,785
Mortgage loans held for sale37,129
 37,129
 —
 37,129
 —
Other loans for sale1,506
 1,506
 —
 —
 1,506
Private equity investments11,028
 11,028
 —
 —
 11,028
Mutual funds3,168
 3,168
 3,168
 —
 —
Mutual funds held in rabbi trusts12,844
 12,844
 12,844
 —
 —
Loans, net25,696,018
 25,438,890
 —
 —
 25,438,890
GGL/SBA loans servicing asset3,729
 3,729
 —
 —
 3,729
Derivative assets19,332
 19,332
 —
 19,332
 —
          
Financial liabilities         
Non-interest-bearing deposits$7,650,967
 $7,650,967
 $—
 $7,650,967
 $—
Non-time interest-bearing deposits14,065,959
 14,065,959
 —
 14,065,959
 —
Time deposits5,003,396
 4,989,570
 —
 4,989,570
 —
     Total deposits$26,720,322
 $26,706,496
 $—
 $26,706,496
 $—
Federal funds purchased and securities sold under repurchase agreements237,692
 237,692
 237,692
 —
 —
Other short-term borrowings650,000
 650,000
 —
 650,000
 —
Long-term debt1,657,157
 1,649,642
 —
 1,649,642
 —
Earnout liability14,353
 14,353
 —
 —
 14,353
Derivative liabilities18,208
 18,208
 —
 16,535
 1,673
          
 December 31, 2017

(in thousands)
Carrying Value Fair Value Level 1 Level 2 Level 3
Financial assets         
Total cash, cash equivalents, restricted cash, and restricted cash equivalents$932,933
 $932,933
 $932,933
 $—
 $—
Trading account assets3,820
 3,820
 522
 3,298
 —
Mortgage loans held for sale48,024
 48,024
 —
 48,024
 —
Other loans for sale11,356
 11,356
 —
 —
 11,356
Investment securities available for sale3,987,069
 3,987,069
 85,836
 3,899,298
 1,935
Private equity investments15,771
 15,771
 —
 —
 15,771
Mutual funds held in rabbi trusts14,140
 14,140
 14,140
 —
 —
Loans, net24,538,196
 24,507,141
 —
 —
 24,507,141
GGL/SBA loans servicing asset4,101
 4,101
 —
 —
 4,101
Derivative assets11,722
 11,722
 —
 11,722
 —
          
Financial liabilities         
Trading account liabilities1,000
 1,000
 —
 1,000
 —
          
Non-interest bearing deposits7,686,339
 7,686,339
 —
 7,686,339
 —
Non-time interest bearing deposits13,941,814
 13,941,814
 —
 13,941,814
 —
Time deposits4,519,747
 4,523,661
 —
 4,523,661
 —
     Total deposits$26,147,900
 $26,151,814
 $—
 $26,151,814
 $—
Federal funds purchased, other short-term borrowings and other short-term liabilities161,190
 161,190
 161,190
 —
 —
Long-term debt1,706,138
 1,721,814
 —
 1,721,814
 —
Earnout liabilities11,348
 11,348
 —
 —
 11,348
Derivative liabilities17,097
 17,097
 —
 12,767
 4,330
          

Note 98 - Derivative Instruments
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. 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 June 30, 20182019 and December 31, 2017,2018, 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.
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 seeks 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 relatedcredit-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 credit 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.

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 sheet. Fair value changes are recorded as a component of non-interest income. As of June 30, 2018, the notional amount of customer related interest rate derivative financial instruments, including both the customer position and the offsetting position, was $1.67 billion, an increase of $201.4 million compared to December 31, 2017.
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 $5.9 million and $4.3 million at June 30, 2018 and December 31, 2017, 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. During the three months ended June 30, 2018, Synovus recorded a $2.3 million valuation adjustment to the Visa derivative following Visa's announcement on June 26, 2018 that it would deposit $600 million into its litigation escrow account. 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 18 - Visa Shares and Related Agreements" of Synovus' 2017 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 June 30, 2018 and December 31, 2017, Synovus had commitments to fund at a locked interest rate, primarily fixed-rate mortgage loans to customers in the amount of $69.7 million and $49.3 million, respectively. Fair value adjustments related to these commitments resulted in a gain of $366 thousand and a loss of $(416) thousand for the six months ended June 30, 2018 and 2017, respectively, which was recorded as a component of mortgage banking income in the consolidated statements of income.
At June 30, 2018 and December 31, 2017, outstanding commitments to sell primarily fixed-rate mortgage loans amounted to $86.0 million and $72.5 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 $(119) thousand and $(1.7) million for the six months ended June 30, 2018 and 2017, 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 June 30, 2018,2019, collateral totaling $30.6$77.4 million of federal funds sold 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, Synovus began reducing the corresponding derivative assetbalance sheet and liability balances for CME-cleared OTC derivatives to reflect the settlement of those positions via the exchange of variation margin.related disclosures. At June 30, 20182019 and December 31, 2017,2018, Synovus had a variation margin of $8.9$103.0 million and $1.5$3.1 million respectively, each reducing the derivative asset.

liability.
The impactfollowing table reflects the notional amount and fair value of derivative instruments included on the Consolidated Balance Sheetsconsolidated balance sheets.
 June 30, 2019 December 31, 2018
   Fair Value   Fair Value
(in thousands)Notional Amount 
Derivative Assets (1)
 
Derivative Liabilities (2)
 Notional Amount 
Derivative Assets (1)
 
Derivative Liabilities (2)
Derivatives not designated
as hedging instruments:		           
Interest rate contracts(3)
$5,799,682
 $134,504
 $32,193
 $1,840,288
 18,388
 $15,716
Mortgage derivatives - interest rate lock commitments119,590
 1,892
 —
 52,420
 944
 —
Mortgage derivatives - forward commitments to sell fixed-rate mortgage loans127,519
 —
 1,049
 65,500
 —
 819
Visa derivative—
 —
 1,049
 —
 —
 1,673
Total derivatives not designated as hedging instruments      $136,396
 $34,291
   $19,332
 $18,208
            

(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, net of variation margin payments.
Synovus has entered into risk participation agreements with counterparties to transfer or assume credit exposures related to interest rate derivatives. The notional amounts of risk participation agreements sold were $102.2 million and $69.9 million at June 30, 20182019 and December 31, 2017 is presented below.
 Fair Value of Derivative Assets Fair Value of Derivative Liabilities

(in thousands)
Location on Consolidated Balance Sheets June 30, 2018 December 31, 2017 Location on Consolidated Balance Sheets June 30, 2018 December 31, 2017
Derivatives not designated
  as hedging instruments:
           
Interest rate contractsOther assets $10,034
 $10,786
 Other liabilities $19,303
 $12,638
Mortgage derivativesOther assets 1,302
 936
 Other liabilities 248
 129
Visa derivative  —
 —
 Other liabilities 5,943
 4,330
 Total derivatives not
  designated as hedging
  instruments    
  $11,336
 $11,722
   $25,494
 $17,097
            
2018, respectively. Assuming all underlying third-party customers referenced in the swap contracts defaulted at June 30, 2019 and December 31, 2018, the exposure from these agreements would not be material based on the fair value of the underlying swaps.
The pre-tax effect of changes in fair value hedgesfrom derivative instruments not designated as hedging instruments on the consolidated statements of income for the sixthree and threesix months ended June 30, 20182019 and 20172018 is presented below.
  Location of Gain (Loss) Recognized in Income Gain (Loss) Recognized in Income
(in thousands)  Six Months Ended June 30,
Derivatives not designated as hedging instruments  2018 2017
Interest rate contracts(1)    
 Other non-interest income $(9) $(1)
Mortgage derivatives(2)    
 Mortgage banking income 247
 (2,073)
Total   $238
 $(2,074)
       
  Location of Gain (Loss) Recognized in Income Gain (Loss) Recognized in Income
(in thousands)  Three Months Ended June 30,
Derivatives not designated as hedging instruments  2018 2017
Interest rate contracts(1)    
 Other non-interest income $(16) $—
Mortgage derivatives(2)    
 Mortgage banking income (680) (289)
Total   $(696) $(289)
       
    Gain (Loss) Recognized in Consolidated Statements of Income
    Three Months Ended June 30, Six Months Ended June 30,
(in thousands) Location in Consolidated Statements of Income 2019 2018 2019 2018
Derivatives not designated as hedging instruments:          
Interest rate contracts(1)    
 Capital markets income $221
 $(16) $91
 $(9)
Mortgage derivatives - interest rate lock commitments Mortgage banking income 255
 (369) 948
 366
Mortgage derivatives - forward commitments to sell fixed-rate mortgage loans Mortgage banking income (243) (311) (229) (119)
Total derivatives not designated as hedging instruments   $233
 $(696) $810
 $238
           
(1)
Gain (loss) represents net fair value adjustments (including credit-related adjustments and interest settlements on variation margin payments) for customer swaps and offsetting positions.
(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.

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 sixthree and threesix months ended June 30, 20182019 and 2017.2018.

Three Months Ended June 30, Six Months Ended June 30,
(in thousands, except per share data)2019 2018 2019 2018
Basic Net Income Per Common Share:       
Net income available to common shareholders$153,034
 $108,622
 $270,070
 $209,229
Weighted average common shares outstanding157,389
 118,397
 159,148
 118,531
Net income per common share, basic$0.97
 $0.92
 $1.70
 $1.77
Diluted Net Income Per Common Share:       
Net income available to common shareholders$153,034
 $108,622
 $270,070
 $209,229
Weighted average common shares outstanding157,389
 118,397
 159,148
 118,531
Effect of dilutive outstanding equity-based awards, warrants, and earnout payments1,688
 742
 1,760
 698
Weighted average diluted common shares159,077
 119,139
 160,908
 119,229
Net income per common share, diluted$0.96
 $0.91
 $1.68
 $1.75
        

Six Months Ended June 30, Three Months Ended June 30,
(in thousands, except per share data)2018 2017 2018 2017
Basic Net Income Per Common Share:       
Net income available to common shareholders$209,229
 $142,742
 $108,622
 $73,444
Weighted average common shares outstanding118,531
 122,251
 118,397
 122,203
Net income per common share, basic$1.77
 $1.17
 $0.92
 $0.60
Diluted Net Income Per Common Share:       
Net income available to common shareholders$209,229
 $142,742
 $108,622
 $73,444
Weighted average common shares outstanding118,531
 122,251
 118,397
 122,203
Potentially dilutive shares from outstanding equity-based awards and Earnout Payments698
 792
 742
 824
Weighted average diluted common shares119,229
 123,043
 119,139
 123,027
Net income per common share, diluted$1.75
 $1.16
 $0.91
 $0.60
        

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 June 30, 20182019, there were 40 thousand potentially dilutive shares related to stock options to purchase shares of common stock that were outstanding during 2019, and 2017,as of June 30, 2018, there were 2.2 million potentially dilutive shares related to the Warrant to purchase shares of common stock that were outstanding during 2018 and 2017 but were not included in the computation of diluted net income per common share because the effect would have been anti-dilutive.


Note 1110 - Share-based Compensation
General Description of Share-based Plans
Synovus hasAs a long-term incentive plan under which the Compensation Committeeresult of the BoardFCB acquisition on January 1, 2019, Synovus assumed 3.2 million outstanding FCB stock option awards and 136 thousand outstanding FCB restricted stock unit awards. Pursuant to the Merger Agreement, each stock option and restricted share unit outstanding on the Acquisition Date was assumed and converted into a stock option or restricted stock unit award relating to shares of Directors hasSynovus common stock, with the authoritysame terms and conditions as were applicable under such award prior to grant share-based awards to Synovus employees.the acquisition. The 2013 Omnibus Plan authorizes 8.6 million common share equivalents available for grant, where grants ofconverted options count as one share equivalent and grants of full value awards (e.g., restricted share units markethad a fair value of $41.5 million on the Acquisition Date, of which $4.2 million was allocated to compensation expense and the remaining to purchase price. The estimated fair value of the converted restricted share units was based on Synovus' closing stock price on December 31, 2018, and performance share units) count as two share equivalents. Any restricted share units that are forfeited andthe estimated fair value of the converted stock options that expire unexercised will again become available for issuancewas determined using a Hull-White model in a binomial lattice option pricing framework. Additionally, under the Plan. At June 30, 2018, Synovus hadterms of the Merger Agreement, certain outstanding FCB non-vested equity awards with a totalfair value of 4.9$7.5 million shareson the Acquisition Date, accelerated vesting and converted automatically into the right to receive merger consideration at the merger exchange ratio of its authorized but unissued common stock reserved for future grants under1.055, or an equivalent amount in cash, of which $3.9 million was allocated to merger-related compensation expense consisting of $3.5 million settled in equity and $400 thousand settled in cash with the 2013 Omnibus Plan. remaining $3.5 million allocated to purchase price.
The Plan permits grantsfollowing tables summarize the status of share-based compensation includingSynovus' 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 termsunits as of ten years. Vesting for grants made in 2018 accelerates upon retirement for plan participants who have reached age 65 and who also have no less than 10 years of service at the date of their election to retire. Market restricted share units and performance share units are granted at a defined target level and are compared annually to required market and performance metrics to determine actual 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 $8.3 million and $4.4 million for the six and three months ended June 30, 2018, respectively,2019, and $6.8 million and $3.5 millionactivity for the six and three months ended June 30, 2017, respectively. Accelerated share-based compensation expense associated with the provision in 2018 of a retirement vesting provision was approximately $200 thousand and $30 thousand for the six and three months ended June 30, 2018 for retirement eligible employees.
Stock Options
No stock option grants were made during the six months ended June 30, 2018. At2019.
  Stock Options
(in thousands, except per share amounts) Quantity Weighted-Average Exercise Price Per Share
Outstanding at January 1, 2019 640
 $16.93
Assumed 3,230
 23.22
Exercised (461) 19.23
Outstanding at June 30, 2019 3,409
 $22.58
     

  
Restricted Share
 Units
 Market Restricted Share Units 
Performance Share
 Units
(in thousands, except per share amounts) Quantity Weighted-Average Grant Date Fair Value Per Share Quantity Weighted-Average Grant Date Fair Value Per Share Quantity Weighted-Average Grant Date Fair Value Per Share
Non-vested at January 1, 2019 526
 $41.18
 144
 $41.91
 248
 $38.29
Granted 537
 36.26
 151
 36.96
 140
 37.34
Assumed 136
 31.99
 —
 —
 —
 —
Quantity change by TSR factor —
 —
 (18) 38.06
 —
 —
Dividend equivalents granted 10
 36.26
 2
 36.96
 10
 37.34
Vested (292) 36.78
 (55) 38.06
 (93) 26.35
Forfeited (82) 36.14
 (19) 40.94
 (31) 40.65
Non-vested at June 30, 2019 835
 $38.49
 205
 $39.68
 274
 $41.56
             

Total share-based compensation expense recognized for the three and six months ended June 30, 2019 and 2018 there were 655 thousand outstanding stockis presented in the following table by its classification within total non-interest expense.
 Three Months Ended June 30, Six Months Ended June 30,
(in thousands)2019 2018 2019 2018
Salaries and other personnel expense$5,405
 $3,976
 $11,713
 $7,749
Merger-related expense413
 —
 4,219
 —
Other operating expenses163
 389
 293
 571
  Total share-based compensation expense included in non-interest expense$5,981
 $4,365
 $16,225
 $8,320
        



Note 11 - Leases

Synovus’ leasing activities are primarily comprised of real estate leases used for retail branch locations and office space for core administrative and operating activities of Synovus’ banking and financial services business, and to a significantly lesser extent, certain equipment. The majority of these leases provide for fixed lease payments, including periodic escalators which are fixed at lease inception, however, a number of leases provide for variable lease payments where periodic increases in payment amounts are indexed to a consumer price index. Many leases include one or more options to renew which generally range from one to five years. Optional extension periods which are reasonably certain to be exercised in the future were included in the measurement of ROU assets and lease liabilities. Synovus’ leasing arrangements do not contain any material residual value guarantees, material restrictive covenants, or material end of lease purchase sharesoptions.
The following table presents the lease balances within the consolidated balance sheet as of common stock with aJune 30, 2019. The difference between the asset and liability balance is primarily the result of lease liabilities that existed prior to the January 1, 2019 adoption of the new accounting guidance for leases.
Leases   
(in thousands)Classification June 30, 2019
Assets   
OperatingOther Assets $373,675
Finance
Premises and Equipment, net(1)
 3,233
Total leased assets  $376,908
Liabilities   
OperatingOther Liabilities 381,345
FinanceOther Liabilities 3,050
Total lease liabilities  $384,395
    
(1) Finance lease assets are recorded net of accumulated amortization of $448 thousand as of June 30, 2019.

For the three and six months ended June 30, 2019, the components of lease expense were as follows:
Lease Cost     
(in thousands)Classification Three Months Ended June 30, 2019 Six Months Ended June 30, 2019
Operating lease cost, net(1)
Net occupancy and equipment expense $8,137
 $16,309
Finance lease cost     
Amortization of leased assetsNet occupancy and equipment expense 224
 448
Interest on lease liabilitiesNet occupancy and equipment expense 19
 39
Sublease income(2)
Net occupancy and equipment expense (157) (323)
Net lease cost  $8,223
 $16,473
      
(1)Excludes variable and short-term lease costs, which are not material.
(2) Sublease income excludes rental income from owned properties of $639 thousand and $1.2 million, respectively, for the three and six months ended June 30, 2019, which is also included in net occupancy and equipment expenses.

The following table presents the weighted average exercise priceremaining lease term and weighted average discount rates related to Synovus' leases as of $16.92 per share.June 30, 2019:
Restricted Share Units, Performance Share Units, and Market Restricted Share Units
Lease Term and Discount Rate   
 Weighted-average remaining lease term (years) Weighted-average discount rate (percentage)
Operating leases21.5 3.55%
Finance leases4.2 2.44
    

During


Supplemental cash flow information related to the Company's leasing activities for the six months ended June 30, 2018, Synovus awarded 234 thousand restricted share units that have a service-based vesting period of three years and awarded 87 thousand performance share units that vest upon service and performance conditions. Synovus also granted 58 thousand market restricted share units during the six months ended June 30, 2018. The weighted average grant-date fair value of the awarded restricted share units, performance share units and market restricted share units was $47.67 per share. Market restricted share units and performance share units2019 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) and return on average tangible common equity (ROATCE) 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) and ROATCE (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 June 30, 2018, including dividend equivalents granted, there were 910 thousand restricted share units, performance share units and market restricted share units outstanding with a weighted average grant-date fair value of $40.82 per share.follows:

Other Information 
(in thousands)Six Months Ended June 30, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$(14,893)
Operating cash flows from finance leases(39)
Financing cash flows from finance leases(357)
  

Note 12 - Non-interest Income


The following table reflects revenue disaggregated by revenue type and linepresents the maturity of business for the six and three months endedCompany’s lease liabilities as of June 30, 2018 and 2017.

2019:
Maturity of Lease Liabilities     
(in thousands)Operating Leases Finance Leases Total
2019$14,732
 $494
 $15,226
202029,437
 871
 30,308
202128,104
 839
 28,943
202227,369
 465
 27,834
202325,711
 180
 25,891
After 2023434,340
 343
 434,683
Total lease payments$559,693
 $3,192
 $562,885
Less: Imputed interest178,348
 142
 178,490
Present value of lease liabilities$381,345
 $3,050
 $384,395
      

Non-interest Income by Line of Business

For the Six Months Ended June 30, 2018
(in thousands)Total Community Banking Corporate Banking Retail Banking Financial Management Services Other
Service charges on deposit accounts$39,938
 $11,404
 $985
 $26,518
 $—
 $1,031
Fiduciary and asset management fees27,419
 —
 —
 —
 27,419
 —
Card fees21,032
 420
 —
 20,612
 —
 —
Brokerage revenue17,596
 —
 —
 —
 17,596
 —
Insurance revenue3,092
 —
 —
 —
 3,092
 —
Other fees1,588
 —
 —
 1,033
 —
 555
 $110,665
 $11,824
 $985
 $48,163
 $48,107
 $1,586
            
Other revenues(1)
29,768
 5,841
 3,581
 3,242
 11,408
 5,696
Total non-interest income$140,433
 $17,665
 $4,566
 $51,405
 $59,515
 $7,282
            


 For the Six Months Ended June 30, 2017
(in thousands)Total Community Banking Corporate Banking Retail Banking Financial Management Services Other
Service charges on deposit accounts$40,370
 $11,415
 $887
 $26,970
 $—
 $1,098
Fiduciary and asset management fees24,676
 —
 —
 —
 24,676
 —
Card fees19,885
 437
 —
 19,448
 —
 —
Brokerage revenue14,436
 —
 —
 —
 14,436
 —
Insurance revenue2,364
 —
 —
 —
 2,364
 —
Other fees1,590
 —
 —
 1,060
 —
 530
 $103,321
 $11,852
 $887
 $47,478
 $41,476
 $1,628
            
Other revenues(1)
37,218
 4,641
 4,376
 3,183
 13,413
 11,605
Total non-interest income$140,539
 $16,493
 $5,263
 $50,661
 $54,889
 $13,233
            
(1) Other revenues primarily relate to revenues not derived from contracts with customers.

Non-interest Income by Line of Business

For the Three Months Ended June 30, 2018
(in thousands)TotalCommunity Banking Corporate Banking Retail Banking Financial Management Services Other
Service charges on deposit accounts$19,999
$5,724
 $453
 $13,096
 $—
 $726
Fiduciary and asset management fees13,983
—
 —
 —
 13,983
 —
Card fees10,833
215
 —
 10,618
 —
 —
Brokerage revenue8,900
—
 —
 —
 8,900
 —
Insurance revenue1,879
—
 —
 —
 1,879
 —
Other fees756
—
 —
 474
 —
 282
 $56,350
$5,939
 $453
 $24,188
 $24,762
 $1,008
           
Other revenues(1)
17,037
3,390
 1,848
 1,713
 5,565
 4,521
Total non-interest income$73,387
$9,329

$2,301

$25,901

$30,327

$5,529
           
 For the Three Months Ended June 30, 2017
(in thousands)TotalCommunity Banking Corporate Banking Retail Banking Financial Management Services Other
Service charges on deposit accounts$20,252
$5,644
 $428
 $13,533
 $—
 $647
Fiduciary and asset management fees12,524
—
 —
 —
 12,524
 —
Card fees10,041
218
 —
 9,823
 —
 —
Brokerage revenue7,210
—
 —
 —
 7,210
 —
Insurance revenue1,060
—
 —
 —
 1,060
 —
Other fees748
—
 —
 486
 —
 262
 $51,835
$5,862
 $428
 $23,842
 $20,794
 $909
           
Other revenues(1)
16,866
2,993
 2,758
 1,618
 6,816
 2,681
Total non-interest income$68,701
$8,855
 $3,186
 $25,460
 $27,610
 $3,590
           
(1) Other revenues primarily relate to revenues not derived from contracts with customers.

Following is a discussion of key revenues within the scope of the new revenue guidance:

Service Charges on Deposit Accounts: Revenue from service charges on deposit accounts is earned through cash management, wire transfer, and other deposit-related services, as well as overdraft, non-sufficient funds, account management and other deposit-related fees. Revenue is recognized for these services either over time, corresponding with deposit accounts' monthly cycle, or at a point in time for transaction related services and fees. Payment for service charges on deposit accounts is primarily received immediately or in the following month through a direct charge to customers' accounts.

Fiduciary and Asset Management Fees: Fiduciary and asset management fees are primarily comprised of fees earned from the management and administration of trusts and other customer assets. Synovus' performance obligation is generally satisfied over time and the resulting fees are recognized monthly, based upon the month-end market value of the assets under management and the applicable fee rate. Payment is generally received a few days after month-end through a direct charge to customers' accounts. Synovus does not earn performance-based incentives.

Card Fees: Card fees consist primarily of interchange fees from consumer credit and debit cards processed by card association networks, as well as merchant discounts, and other card related services. Interchange rates are generally set by the credit card associations and based on purchase volumes and other factors. Interchange fees and merchant discounts are recognized concurrently with the delivery of service on a daily basis as transactions occur. Payment is typically received immediately or in the following month. Card fees are reported net of certain associated expense items including loyalty program expenses and network expenses.

Brokerage Revenue: Brokerage revenue consists primarily of commissions. Additionally, brokerage revenue includes advisory fees earned from the management of customer assets. Advisory fees for brokerage services are recognized and collected monthly and are based upon the month-end market value of the assets under management at a rate predetermined in the contract. Transactional revenues are based on the size and number of transactions executed at the client's direction and are generally recognized on the trade date with payment received on the settlement date.

Insurance Revenue: Insurance revenue primarily consists of commissions received on annuity and life product sales. The commissions are recognized as revenue when the customer executes an insurance policy with the insurance carrier. In some cases, Synovus receives payment of trailing commissions each year when the customer pays its annual premium. For the six and three months ended June 30, 2018, Synovus recognized an immaterial amount of insurance trailing commissions related to performance obligations satisfied in prior periods.

Other Fees: Other fees primarily consist of revenues generated from safe deposit box rental fees and lockbox services. Fees are recognized over time, on a monthly basis, as Synovus' performance obligation for services is satisfied. Payment is received upfront for safe deposit box rentals and in the following month for lockbox services.
Contract Balances
A contract asset balance occurs when an entity performs a service for a customer before the customer pays consideration (resulting in a contract receivable) or before payment is due (resulting in a contract asset). A contract liability balance is an entity's obligation to transfer a service to a customer for which the entity has already received payment (or payment is due) from the customer. Synovus' non-interest revenue streams are largely based on transactional activity, or standard month-end revenue accruals such as asset management fees based on month-end market values. Consideration is often received immediately or shortly after Synovus satisfies its performance obligation and revenue is recognized. Synovus does not typically enter into long-term revenue contracts with customers, and therefore, does not experience significant contract balances. As of June 30, 2018 and December 31, 2017, Synovus did2019, minimum lease payments related to operating leases that had not have any significant contract balances.yet commenced were $20.8 million.
Note 1312 - 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. 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 expiration dates or other termination clauses and may require payment of a fee. Synovus also has commitments to fund certain low income housing 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) maycan generally be canceled by providing notice to the borrower.

The allowance for credit losses associated with unfunded commitments and letters of credit is a component of the unfunded commitments reserve recorded within other liabilities on the consolidated balance sheet.sheets. Additionally, unearned fees relating to letters of credit are recorded within other liabilities on the consolidated balance sheet.sheets. These amounts are not material to Synovus' consolidated balance sheet.sheets.
Unfunded lettersSynovus invests in certain low income housing tax credit partnerships which are engaged in the development and operation of creditaffordable multi-family housing utilizing the LIHTC pursuant to Section 42 of the Code. Synovus typically acts as a limited partner in these investments and lending commitmentsdoes not exert control over the operating or financial policies of the partnerships and as such, is not considered the primary beneficiary of the partnership. Synovus typically provides financing during the construction and development of the properties and is at June 30, 2018risk for the 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 fund the operations or working capital of the

partnerships and December 31, 2017is not exposed to losses beyond Synovus’ investment. Synovus receives tax credits related to these investments which are presented below.subject to recapture by taxing authorities based on compliance features required to be met at the project level.
(in thousands)June 30, 2018 December 31, 2017June 30, 2019 December 31, 2018
Letters of credit*$179,860
 $153,372
$216,304
 $157,675
Commitments to fund commercial and industrial loans5,361,671
 5,090,827
6,065,365
 5,527,017
Commitments to fund commercial real estate, construction, and land development loans1,652,834
 1,567,583
3,020,509
 2,034,223
Commitments under home equity lines of credit1,179,074
 1,137,714
1,419,312
 1,258,657
Unused credit card lines743,376
 779,254
857,536
 775,003
Other loan commitments365,861
 351,358
473,824
 400,983
Total unfunded lending commitments and letters of credit$9,482,676
 $9,080,108
$12,052,850
 $10,153,558
   
Investments in low income housing tax credit partnerships:   
Carrying amount included in other assets$79,541
 $83,736
Amount of future funding commitments included in carrying amount28,382
 47,123
Short-term construction loans and letter of credit commitments259
 1,585
Funded portion of short-term loans and letters of credit2,822
 5,595
    
* Represent the contractual amount net of risk participations of approximately $70$34 million and $77$46 million at June 30, 20182019 and December 31, 2017,2018, respectively.

Merchant Services

In accordance with credit and debit card association rules, Synovus sponsors merchant processing servicersvarious MPS businesses that process credit and debit card transactions on behalf of various 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 obligation to reimburse the cardholder,obligations, the cardholder, through its issuing bank, generally has until six months after the date of the transaction to present a chargeback to the merchant processor,MPS, which is primarily liable for any losses on covered transactions. However, if the merchant processorMPS fails to meet its obligation to reimburse the cardholder for disputed transactions,obligations, then Synovus, as the sponsor, could be held liable for the disputed amount. Synovus mitigatesseeks to mitigate this risk through its contractual arrangements with the merchant processing servicersMPS and the merchants and by withholding future settlements, by retaining cash reserve accounts and/or by obtaining other security. DuringFor the three and six months ended June 30, 2019, the sponsored entities processed and settled $18.88 billion and $36.59 billion of transactions, respectively. For the three and six months ended June 30, 2018, and 2017, the sponsored entities processed and settled $17.63 billion and $34.35 billion of transactions, respectively.
Synovus began covering and $30.42 billion, respectively, in total transactions. Forhas continued to cover chargebacks related to a particular MPS during 2019 and 2018 where the six months endedMPS’s cash reserve account was unavailable to support the chargebacks. As of June 30, 2018 and 2017,2019, Synovus incurred an immaterial amount of losses in connection withhad advanced approximately $22.6 million to the MPS to cover these chargebacks. During July 2018,While Synovus began to accrue a receivable for chargebacks associated with one merchant processing relationship.

has contractual protections against loss, repayment of such amounts will depend 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 and claims that arise in the ordinary course of its business. Additionally, in the ordinary course of business, Synovus and its subsidiaries are subject to regulatory examinations, information gathering requests, tax matters, 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 claims and counterclaims asserted by individual borrowersindividuals related to their loans and allegations of violations of state and federal laws and regulations relating to banking practices, including putative class action matters.matters and also claims asserted by shareholders or purported shareholders against Synovus, members of Synovus' Board of Directors, and members of Synovus' management team. In addition to actual damages, if Synovus does not prevail in asserted legal actions, credit-related litigation could result in additional write-downs or charge-offs of loans, 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 June 30, 20182019 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 events 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 zero to $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 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 1413 - Subsequent EventsEvent


Pending AcquisitionIssuance of FCB Financial Holdings, Inc.

Series E Preferred Stock
On July 23, 2018,1, 2019, Synovus entered into the Merger Agreement by and among Synovus, FCB and Azalea Merger Sub Corp.  pursuant to which Synovus will acquire FCB incompleted a reverse triangular merger. At the effective time of the Merger, each outstanding share of FCB Class A common stock, par value $0.001 per share, will be converted into the right to receive, without interest, 1.055 shares of Synovus common stock, par value $1.00 per share.  The Merger Agreement has been unanimously approved by both companies’ Board of Directors.  The transaction is subject to customary closing conditions, including approval of Synovus and FCB shareholders and approval of state and federal regulators, and is expected to close by the first quarter of 2019. 

FCB operates 50 full service banking centers through its wholly-owned banking subsidiary, Florida Community Bank.  Following closing, Florida Community Bank will merge with and into Synovus Bank and operate under the Synovus brand.   


Redemption$350 million public offering of Series CE Preferred Stock

On AugustStock. The offering generated net proceeds of $341.5 million. Dividends on the shares are non-cumulative and, if declared, will accrue and be payable, in arrears, quarterly at a rate per annum equal to 5.875% for each dividend period from the original issue date to, but excluding, July 1, 2018, Synovus redeemed all 5,200,000 outstanding shares of2024. From and including July 1, 2024, the dividend rate will change and reset every five years on July 1 at a rate equal to the five-year U.S. Treasury Rate plus 4.127% per annum. The Series CE Preferred Stock foris redeemable at Synovus' option in whole or in part, from time to time, on July 1, 2024 or any subsequent reset date, or in whole but not in part, at any time within 90 days following a cashregulatory capital treatment event, in each case at a redemption price ofequal to $25.00 per share, plus any declared and unpaid dividends, without interest, for an aggregate redemption priceaccumulation of $130 million and paid a dividend of $2.6 million onany undeclared dividends. The Series E Preferred Stock has no preemptive or conversion rights. Except in limited circumstances, the Series C Preferred Stock. The redemption of the Series CE Preferred Stock was funded primarily with proceeds from Synovus' public offering of $200 million of Series D Preferred Stock completed on June 21, 2018. Concurrent with the redemption, Synovus will recognize an extinguishment loss of $4.1 million to net income available to common shareholders. The $4.1 million extinguishment loss will be recognized in a manner similar to the treatment of dividends paid on preferred stock during the three months ending September 30, 2018.does not have any voting rights.









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 in the financial services industry may adversely affect our future earnings and growth;
(2) the risk that we may not realize the expected benefits from our efficiency and growth initiatives, which could negatively
impact our future profitability;
(3) that we may fail to realize all of the anticipated benefits of the Merger, or those benefits may take longer to realize than expected, and that we may encounter significant difficulties in integrating and managing FCB and its businesses;
(4)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;
(4)(5) 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;
(5)(6) the risk that our asset quality may deteriorate, our allowance for loan 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 trade or other receivables;

(6)(7) the risk that any future economic downturn could have a material adverse effect on our capital, financial condition, results of operations and future growth;
(7)changes in the interest rate environment, including changes to the federal funds rate, and competition in our primary market area may result in increased funding costs or reduced earning assets yields, thus reducing margins and net interest income;
(8) our ability to attract and retain key employees;
(9) 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;
(10) 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) 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 vendors and other service providers, which could among other things, result in a breach of operating or security systems as a result of cyber attacks or similar acts;providers;

(12) our ability to identify and address cyber-security risks such as data security breaches, malware, "denial of service" attacks, "ransomware", "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;
(13) the risk related to our implementation of new lines of business or new products and services;
(14)changes in interest rate environment, including changes to the federal funds rate, and competition in our primary market area may result in increased funding costs or reduced earning assets yields, thus reducing margins and net interest income;
(15)the impact of recent and proposed changes in governmental policy, laws and regulations, including proposed and recently enacted changes in the regulation and taxation 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 Federal Tax Reform could have an adverse impact on our business or our customers, including with respect to demand and pricing for our loan products;
(15)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;
(16) the risk that we may be exposed to potential losses in the event of fraud and/or theft, or in the event that a third partythird-party vendor, obligor, or obligorbusiness partner fails to pay amounts due to us under that relationship;relationship or under any arrangement that we enter into with them;
(17) the risk that we may not be able to identify suitable bank and non-bank acquisition targets or strategic partnersopportunities as part of our growth strategy and even if we are able to identify suitableattractive acquisition counterparties,opportunities, 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 or realize anticipated benefits from such transactions;
(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) changes in the cost and availability of funding due to changes in the deposit market and credit market;
(20)the risks that if economic conditions worsen or regulatory capital rules are modified, 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) 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;
(23)our ability to receive dividends from our subsidiaries could affect our liquidity, including our ability to pay dividends or take other capital actions;
(23)(24) risks related to regulatory approval to take certain actions, including any dividends on our common stock or Series D Preferred Stock,preferred stock, any repurchases of common stock or any issuance or redemption of any other regulatory capital instruments, as well as any applications in respect of expansionary initiatives;
(24)risks related to recent and proposed changes in the mortgage banking industry, including the risk that we may be required to repurchase mortgage loans sold to third parties and the impact of the “ability to pay” and “qualified mortgage” rules on our loan origination process and foreclosure proceedings;

(25) risks related to the risk that we may be required to take additional charges with respect to our deferred tax assets as a resultcontinued use, availability and reliability of Federal Tax Reform in the event our estimates prove inaccurate;LIBOR and other "benchmark" rates;
(26)the risk that Federal Tax Reform could have an adverse impact on our business or our customers, including with respect to demand and pricing for our loan products;
(27) the costs and effects of litigation, investigations, inquiries or similar matters, or adverse facts and developments related thereto;
(27)(28) risks related to the fluctuation in our stock price;
(28)(29) the effects of any damages to our reputation resulting from developments related to any of the items identified above;
(29)the risk that the required shareholder approvals of the Merger with FCB may not be obtained; and
(30)the risk that Synovus or FCB may be unable to obtain all of the regulatory approvals required to complete the Merger;

(31)the risk that the other conditions to closing the Merger with FCB may not be satisfied;
(32)the risk that the length of time necessary to consummate the Merger with FCB may be longer than anticipated for various reasons;
(33)the risk that the businesses of Synovus and FCB will not be integrated successfully or that the integration may take longer than expected;
(34)the risk that the cost savings, synergies, growth, and other benefits from the Merger with FCB may not be fully realized or may take longer to realize than expected;
(35)the risk that management’s time and attention will be diverted to issues associated with the Merger with FCB rather than our ongoing businesses;
(36)the risk that costs associated with the integration of the businesses of Synovus and FCB will be higher than anticipated;
(37)the risk of litigation arising in connection with the Merger and that could cause the transaction to be more costly than expected or delay its completion;
(38)the risk that events could lead to the termination of the Merger Agreement (or otherwise result in payment of termination fee);
(39)the risk of business disruption following the Merger; and
(40) 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 "Part I - 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' 20172018 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, 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 250297 branches and 334 ATMs 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 sixthree and threesix months ended June 30, 20182019 and financial condition as of June 30, 20182019 and December 31, 2017.2018. 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’ 20172018 Form 10-K.
Management's Discussion and Analysis of Financial Condition and Results of Operations consists of:
ŸDiscussion 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.


ŸCredit 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.


ŸAdditional 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 our financial performance.


DISCUSSION OF RESULTS OF OPERATIONS
Consolidated Financial Highlights
Table 1 - Consolidated Financial Highlights           
Six Months Ended June 30, Three Months Ended June 30,Three Months Ended June 30, Six Months Ended June 30,
(dollars in thousands, except per share data)2018 2017 Change 2018 2017 Change2019 2018 Change 2019 2018 Change
Net interest income$558,861
 $491,024
 13.8 % $284,577
 $251,097
 13.3 %$397,262
 $284,577
 39.6 % $794,438
 $558,861
 42.2 %
Provision for loan losses24,566
 18,934
 29.7 11,790
 10,260
 14.9
12,119
 11,790
 2.8
 35,688
 24,566
 45.3
Non-interest income140,433
 140,539
 (0.1) 73,387
 68,701
 6.8
89,807
 73,387
 22.4
 169,185
 140,433
 20.5
Adjusted non-interest income(1)
144,822
 136,038
 6.5 74,720
 70,054
 6.7
90,197
 74,720
 20.7
 168,643
 144,822
 16.4
Total revenues (2)
700,590
 623,896
 12.3 359,260
 319,799
 12.3
Total FTE revenues487,880
 358,084
 36.2
 965,064
 699,530
 38.0
Adjusted total revenues(1)
488,270
 359,417
 35.9
 964,522
 703,919
 37.0
Non-interest expense399,234
 389,133
 2.6 204,057
 191,747
 6.4
264,126
 204,057
 29.4
 556,537
 399,234
 39.4
Adjusted non-interest expense(1)
400,561
 382,048
 4.8 202,734
 191,442
 5.9
256,707
 203,026
 26.4
 499,360
 401,144
 24.5
Income before income taxes275,494
 223,496
 23.3 142,117
 117,791
 20.7
210,824
 142,117
 48.3
 371,398
 275,494
 34.8
Net income214,348
 147,861
 45.0 111,181
 76,003
 46.3
156,184
 111,181
 40.5
 276,370
 214,348
 28.9
Net income available to common shareholders209,229
 142,742
 46.6 108,622
 73,444
 47.9
153,034
 108,622
 40.9
 270,070
 209,229
 29.1
Net income per common share, basic1.77
 1.17
 51.2 0.92
 0.60
 52.7
0.97
 0.92
 6.0
 1.70
 1.77
 (3.9)
Net income per common share, diluted1.75
 1.16
 51.3 0.91
 0.60
 52.7
0.96
 0.91
 5.5
 1.68
 1.75
 (4.4)
Adjusted net income per common share, diluted(1)
1.78
 1.17
 52.1 0.92
 0.61
 52.6
1.00
 0.92
 8.4
 1.98
 1.78
 11.6
Net interest margin(3)
3.82% 3.46% 36  bps 3.86% 3.51% 35  bps
Net charge-off ratio(3)
0.18
 0.19
 (1) 0.29
 0.26
 3
Return on average assets(3)
1.38
 0.98
 40
 1.42
 1.00
 42
Adjusted return on average assets(1)(3)
1.40
 0.99
 41
 1.43
 1.01
 42
Efficiency ratio56.97
 62.31
 (534) 56.78
 59.90
 (312)
Adjusted efficiency ratio(1)
56.90
 60.87
 (397) 56.41
 59.56
 (315)
Net interest margin(2)
3.69% 3.86% (17) bps 3.74% 3.82% (8) bps
Net charge-off ratio(2)
0.13
 0.29
 (16) 0.16
 0.18
 (2)
Return on average assets(2)
1.34
 1.42
 (8) 1.21
 1.38
 (17)
Adjusted return on average assets(1)(2)
1.39
 1.43
 (4) 1.42
 1.39
 3
Efficiency ratio-FTE54.14
 56.99
 (285) 57.67
 57.07
 60
Adjusted tangible efficiency ratio(1)
52.08
 56.41
 (433) 51.17
 56.90
 (573)
                      
(1) See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
(2) Consists of net interest income and non-interest income excluding investment securities gains (losses), net.
(3) Annualized
June 30, 2018 March 31, 2018 Sequential Quarter Change June 30, 2017 Year-Over-Year ChangeJune 30, 2019 March 31, 2019 Sequential Quarter Change June 30, 2018 Year-Over-Year Change
(dollars in thousands, except per share data)
(dollars in thousands)June 30, 2019 March 31, 2019 Sequential Quarter Change June 30, 2018 Year-Over-Year Change
Loans, net of deferred fees and costs$25,134,056
 $24,883,037
 $251,019
 $24,430,512
 $703,544
Total average loans24,946,307
 24,852,399
 93,908
 24,350,004
 596,303
35,777,127
 35,320,014
 457,113
 24,946,307
 10,830,820
Total deposits26,442,688
 26,253,507
 189,181
 25,218,816
 1,223,872
37,966,722
 38,075,190
 (108,468) 26,442,688
 11,524,034
Core deposits(1)
34,963,178
 35,366,186
 (403,008) 24,591,678
 10,371,500
Core transaction deposits(1)
23,268,923
 23,168,085
 100,838
 19,091,115
 4,177,808
Total average deposits26,268,074
 25,788,073
 480,001
 24,991,708
 1,276,366
37,899,662
 37,826,952
 72,710
 26,268,074
 11,631,588
Average core deposits (1)
24,345,157
 23,836,163
 508,994
 23,612,149
 733,008
         
Non-performing assets ratio(3)0.50% 0.53% (3) bps 0.73% (23) bps0.39% 0.44% (5)bps 0.50% (11)bps
Non-performing loans ratio(3)0.47
 0.48
 (1) 0.65
 (18)0.34
 0.40
 (6) 0.47
 (13)
Past due loans over 90 days0.01
 0.02
 (1) 0.02
 (1)0.02
 0.01
 1
 0.01
 1
         
Common equity Tier 1 capital (transitional)$2,838,616
 $2,801,073
 $37,543
 $2,734,983
 $103,633
CET1 capital (transitional)$3,899,532
 $3,790,395
 $109,137
 $2,838,616
 $1,060,916
Tier 1 capital3,156,805
 2,924,109
 232,696
 2,829,340
 327,465
4,094,672
 3,985,535
 109,137
 3,156,805
 937,867
Total risk-based capital3,668,904
 3,442,921
 225,983
 3,340,155
 328,749
4,913,043
 4,803,641
 109,402
 3,668,904
 1,244,139
Common equity Tier 1 capital ratio (transitional)10.12% 10.09% 3  bps 10.02% 10  bps
CET1 capital ratio (transitional)9.61% 9.52% 9 bps 10.12% (51)bps
Tier 1 capital ratio11.25
 10.53
 72
 10.37
 88
10.09
 10.01
 8
 11.25
 (116)
Total risk-based capital ratio13.08
 12.40
 68
 12.24
 84
12.11
 12.06
 5
 13.08
 (97)
Total shareholders’ equity to total assets ratio9.98
 9.39
 59
 9.77
 21
10.05
 9.86
 19
 9.98
 7
Tangible common equity ratio(1)
8.77
 8.79
 (2) 9.15
 (38)8.56
 8.34
 22
 8.77
 (21)
Return on average common equity(2)
15.39
 14.62
 77
 10.34
 505
13.90
 10.98
 292
 15.39
 (149)
Adjusted return on average common equity(1)(2)
15.59
 14.86
 73
 10.49
 510
14.43
 15.03
 (60) 15.56
 (113)
Adjusted return on average tangible common equity(1)(2)
15.97
 15.23
 74
 10.75
 522
16.70
 17.52
 (82) 15.97
 73
                  
(1) See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
(2) Quarter annualized

(3)For purposes of this table, 2019 non-performing loans exclude acquired loans accounted for under ASC 310-30 that are currently accruing income.


Results

Executive Summary
Net income available to common shareholders for the Sixsecond quarter of 2019 was $153.0 million, or $0.96 per diluted common share, an increase of 40.9% and Three Months Ended June 30, 2018
5.5%, respectively, compared to the second quarter of 2018. Adjusted net income per common share, diluted(1) was $1.00 for the second quarter of 2019, up 8.4% compared to $0.92 for the second quarter of 2018. Net income available to common shareholders for the first six months of 20182019 was $209.2$270.1 million, or $1.75$1.68 per diluted common share, an increase of 46.6%29.1% and 51.3%decrease of 4.4%, respectively, compared to the first six months of 2017. Net2018. Adjusted net income availableper common share, diluted(1) was $1.98 for the first six months of 2019, up 11.6% compared to common shareholders$1.78 for the first six months of 2018. Results for 2019 include the impact of the Merger with FCB, which closed on January 1, 2019. Synovus incurred $7.4 million and $57.1 million in merger-related expense associated with the FCB acquisition for the second quarter and year-to-date 2019, respectively. On the Acquisition Date, the preliminary estimated fair values of 2018 was $108.6 million, or $0.91 per diluted common share, an increaseFCB included approximately $12.4 billion of 47.9%identifiable assets, $9.3 billion in loans, and 52.7%, respectively, compared to the second quarter of 2017.$10.9 billion in deposits. Return on average assets for the first six months of 2019 was 1.21%, down 17 basis points from the first six months of 2018, and the adjusted return on average assets(1) was 1.42% for the first six months of 2019, up 3 basis points from the first six months of 2018.
Net interest income was $397.3 million for the three months ended June 30, 2019, and $794.4 million for the six months ended June 30, 2018 was 1.38%2019, up 39.6% and 42.2%, up 40 basis points fromrespectively, over the same periodcomparable periods of 2017,2018. Both quarter-over-quarter and return on average assets for the second quarter of 2018 was 1.42%, up 42 basis points from the second quarter of 2017. Results for the first half of 2018year-over-year increases were driven primarily by revenue growth and also reflect the benefit from a lower effective tax rate, due to the reduction of the Federal tax rate.
Total revenues, excluding investment securities losses, for the first half of 2018 were $700.6 million, up 12.3% compared to the same period in 2017. Total revenues, excluding investment securities losses, for the second quarter were $359.3 million, up 12.3% compared to the second quarter a year ago.FCB acquisition. Net interest income for the first half of 2018 was $558.9 million, an increase of $67.8 million, or 13.8%, compared to $491.0 million for the same period in 2017. The net interest margin was 3.82% fordown 17 basis points and 8 basis points over the six months endedcomparable three and six-month periods to 3.69% and 3.74%, respectively, impacted by the FCB acquisition, the continued deposit shift to time deposits, and the issuance of subordinated debt. Year-to-date June 30, 2018, an increase of 36 basis points from 3.46% for2019, the six months ended June 30, 2017. The yield on earning assets was 4.39%4.80%, up 46an increase of 41 basis points compared to the six months ended June 30, 2017 and2018, while the effectivetotal cost of funds increased 1051 basis points to 0.57%1.11%. The yield on loans was 4.79%, an increase of 48 basis points from the six months ended June 30, 2017 and the yield on investment securities was 2.34%, an increase of 25 basis points from the six months ended June 30, 2017. On a sequential quarter basis, net interest
Non-interest income increased by $10.3 million and the net interest margin increased by 8 basis points to 3.86%. The yield on earning assets was 4.47%, up 16 basis points from the first quarter of 2018. This increase was driven by an 18 basis point increase in loan yields. The effective cost of funds was 0.61% for the second quarter of 2018,2019 was $89.8 million, up 8 basis points from$16.4 million, or 22.4%, compared to the firstsecond quarter of 2018. The recent rate increases favorably impacted net interestOn a year-to-date basis, non-interest income and net interest margin for 2018.
Non-interest incomewas $169.2 million compared to $140.4 million for the first six months of 2018, was $140.4up $28.8 million, compared to $140.5 million foror 20.5%. These increases were primarily driven by the first six months of 2017. FCB acquisition with growth in most revenue categories.
Non-interest incomeexpense for the second quarter of 20182019 was $73.4$264.1 million, up $4.7$60.1 million, or 6.8%29.4%, compared to the second quarter of 2017. Adjusted2018. On a year-to-date basis, non-interest income, which excludes investment securities gains (losses) and decrease in fair value of private equity investments,expense was up $8.8$157.3 million, or 6.5%39.4%, versus the same period a year ago. Comparisons to prior year are impacted by the FCB acquisition and merger-related expense. The efficiency ratio-FTE for the first six months of 20182019 was 57.67%, compared to 201757.07% for the first six months of 2018. The adjusted tangible efficiency ratio(1) for the first six months of 2019 was 51.17%, down 573 basis points compared to the same period a year ago.
Synovus continued to benefit from a stable credit environment with the non-performing assets ratio at 39 basis points, non-performing loans ratio at 34 basis points, and up $4.7 million, or 6.7%,total past due loans at 22 basis points. Net charge-offs for the second quarter of 2018 compared to2019 were 13 basis points, annualized, down from 19 basis points in the first quarter of 2019. Year-to-date, net charge-offs are 16 basis points, well within Synovus' guidance of 15-20 basis points. For the second quarter of 2017. Synovus experienced2019, the provision for loan losses was $12.1 million, a decline of $11.5 million, or 48.6%, compared to the first quarter of 2019, primarily due to lower charge-offs and reduction of impaired reserves. The allowance for loan losses at June 30, 2019 was $257.4 million, or 0.71% of total loans, compared to $250.6 million, or 0.97% of total loans, at December 31, 2018, reflecting a lower ratio at June 30, 2019 due to the impact of acquisition date accounting for acquired loans.
Sequential quarter loan growth of $504.1 million, or 5.7% annualized, was broad-based across all categories. At June 30, 2019, total loans were $36.14 billion, an increase of $10.19 billion, or39.2%, compared to December 31, 2018, including acquired loan balances from FCB of $9.29 billion. On a year-to-date basis, organic loan growth was $902.8 million, or 5.2% annualized, with growth of $463.5 million in consumer loans, $238.7 million in CRE loans, and $200.0 million in C&I loans.
Total deposits of $37.97 billion at June 30, 2019 declined slightly by $108.5 million, or 1.1% annualized, compared to the first quarter of 2019, from decreases in public funds and other time deposits of $278.7 million and $225.1 million, respectively. The decline in these deposits was offset partially by growth in multiple categoriesbrokered deposits of $294.5 million, which largely replaced maturing time deposits at a shorter duration, and growth in core transaction deposits(1), which increased $100.8 million during the quarter. Compared to December 31, 2018, total period-end deposits increased $11.25 billion, or 42.1%, including $10.93 billion in deposits acquired from FCB and $315.7 million of organic growth.
On June 17, 2019, the Company announced that the Board of Directors increased its prior $400 million share repurchase authorization to $725 million for the year 2019, of which $345.0 million was repurchased during the first halfsix months of 2018 compared2019. On July 1, 2019, Synovus completed a $350 million public offering of Series E Preferred Stock. Proceeds from the preferred stock offering will be used for general corporate purposes, including share repurchases under the new authorization. At June 30, 2019, Synovus' regulatory capital levels continue to be well above regulatory capital requirements.

More detail on Synovus' financial results for the same time periodthree and six months ended June 30, 2019 may be found in 2017 including an increasesubsequent sections of $6.6 million, or 16.0%, in combined fiduciary and asset management fees, brokerage, and insurance revenues. See "Part II - Item 7."Item 2. – Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures"Operations" of this Report for applicable reconciliation to GAAP measure.Report.
Non-interest expense for
2019 Outlook
For the first six months of 2018 increased $10.1 million, or 2.6%,full year 2019, compared to 2018(2), previously stated guidance has been updated for deposit growth and effective income tax rate, considering the first six months of 2017interest rate environment, other macroeconomic factors, and non-interest expense for the second quarter of 2018 increased $12.3 million, or 6.4%, compared to the second quarter of 2017. The second quarter of 2018 included a $2.3 million expense for a valuation adjustment to the Visa derivative, offset in part by a $1.4 million benefit from a recovery of litigation settlement expense. The first quarter of 2018 included a $2.6 million reduction in litigation contingency accruals and the first quarter of 2017 included $6.5 million in restructuring charges. Adjusted non-interest expense, which excludes valuation adjustment to Visa derivative, restructuring charges, net, amortization of intangibles, and litigation settlement/contingency expense, increased $18.5 million, or 4.8%, for the first half of 2018 compared to the first half of 2017. Strong operating leverage for the first half of 2018 resulted in an efficiency ratio of 56.97%, improved from 62.31% for the first half of 2017. The adjusted efficiency ratio for the first six months of 2018 was 56.90%, down 397 basis points from the same period a year ago. See "Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures" of this Report for applicable reconciliation to GAAP measures.
Credit quality metrics continuedinternal initiatives. Additionally, Synovus expects revenue growth to be favorable duringat the second quarterlower end of 2018 with a reduction in both the non-performing loan ratio and non-performing asset ratio. Non-performing loans were $117.3 million at June 30, 2018, down $2.8 million, or 2.3%, from the prior quarter and down $42.0 million from June 30, 2017. The non-performing loan ratio was 0.47% at June 30, 2018, as compared to 0.48% in the prior quarter and 0.65% a year ago. Total non-performing assets were $126.3 million at June 30, 2018, down $4.8 million, or 3.7%, from the prior quarter and down $52.6 million, or 29.4%, from a year ago. The non-performing assets ratio was 0.50% at June 30, 2018, down 3 basis points from the prior quarter and down 23 basis points from a year ago. Net charge-offs for the six months ended June 30, 2018 were $22.1 million, or 0.18% as a percentage of average loans annualized, compared to $22.6 million, or 0.19%, as a percentage of average loans annualized for the six months ended June 30, 2017. Loans past due over 90 days were 0.01% of total loans at June 30, 2018 as compared to 0.02% at June 30, 2017. For the six months ended June 30, 2018, the provision for loan losses was $24.6 million, an increase of $5.6 million, or 29.7%, compared to the six months ended June 30, 2017. The increase in provision expense for the six months ended June 30, 2018 compared to the six months ended June 30, 2017 is primarily due to loan growth as well as a slightly increased level of charge-offs above reserves.The allowance for loan losses at June 30, 2018 was $251.7 million, or 1.00% of total loans, compared to $249.3 million, or 1.01% of total loans, at December 31, 2017 and $248.1 million, or 1.02% of total loans, at June 30, 2017.

At June 30, 2018, total loans were $25.13 billion, an increase of $346.6 million, or 2.8% annualized, and $703.5 million or 2.9%, compared to December 31, 2017 and June 30, 2017, respectively. Year-over-year loan growth was driven by a $532.5 million or 4.5% increase in C&I loans and a $945.8 million or 17.9% increase in consumer loans, with our lending partnerships growing $744.4 million and mortgage loans growing $280.3 million. This growth was partially offset by a $778.1 million or 10.5% decline in CRE loans.
During the second quarter of 2018, total average deposits increased $480.0 million, or 7.5% annualized, compared to the first quarter of 2018, and increased $1.28 billion, or 5.1%, compared to the second quarter of 2017. Average brokered deposits declined $29.0 million compared to the prior quarter. Average core deposits, during the second quarter of 2018, increased $509.0 million, or 8.6% annualized, compared to the prior quarter, and increased $733.0 million, or 3.1%, compared to the second quarter of 2017. During the first quarter of 2018, Synovus obtained FDIC approval to report deposits related to our sweep money market product, offered by Synovus Securities, as a component of core deposits. This product was reported as a brokered deposit through February of 2018. The second quarter average balance in these accounts totaled $310.0 million, and resulted in an increase of $198.0 million in average core deposits for the quarter,guidance range provided, due to the reclassification.interest rate environment.
Loan growth of 5.5% to 7.5%
Deposit growth of 3.0% to 5.0%
Revenue growth of 5.5% to 7.5%
Adjusted tangible non-interest expense growth of 2% to 4%
Effective income tax rate of 24% to 25%
Net charge-off ratio of 15 to 20 basis points
(1) See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
On June 21, 2018, Synovus completed a public offering of $200 million of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D. The offering generated net proceeds of $195 million, which were largely used to fund the redemption of all of the outstanding shares of Series C Preferred Stock on August 1, 2018 for an aggregate redemption price of $130 million.
On January 23, 2018, Synovus announced a share repurchase program of up to $150 million to be completed during 2018. As of June 30, 2018, Synovus had repurchased under this program a total of $76.8 million, or 1.5 million shares of its common stock, at an average price of $52.72 per share. Additionally, during the first quarter of 2018, Synovus increased the quarterly common stock dividend by 67% to $0.25 per share effective with the quarterly dividend declared during the first quarter of 2018. Total shareholders’ equity was $3.17 billion at June 30, 2018 and $3.0 billion at December 31, 2017. Return on average common equity annualized for the second quarter of 2018 was 15.39%, an increase of 505 basis points from the same period in 2017. Adjusted return on average common equity annualized for the second quarter of 2018 was 15.59%, an improvement of 510 basis points from the same period in 2017. Adjusted return on average tangible common equity annualized for the second quarter of 2018 was 15.97%, an increase of 522 basis points from the same period in 2017. See Non-GAAP"Non-GAAP Financial Measures" in this Report for applicable reconciliation to the most comparable GAAP measures.measure.
(2)2018 Expectations
For the full year 2018 as compared to the full year 2017, management expectationsresults are noted below:
Average loan growth of 4% to 6%
Average total deposits growth of 4% to 6%
Net interest income growth of 11% to 13%
•
Adjusted non-interest income(1) growth of 4% to 6%
Total non-interest expense growth of 0% to 3%
Effective income tax rate of 23% to 24%
Net charge-off ratio of 15 to 25 bps
Common share repurchases of up to $150 million
(1)See Non-GAAP Financial Measures" in this Reporton a pro forma combined basis for applicable reconciliation to the most comparable GAAP measure.

Synovus and FCB.
Changes in Financial Condition
During the six months ended June 30, 2018,2019, total assets increased $518.5 million$14.65 billion from $31.22$32.67 billion at December 31, 20172018 to $31.74 billion. The principal components$47.32 billion, due primarily to the acquisition of this increase were an increaseFCB on January 1, 2019. On the Acquisition Date, the preliminary estimated fair values of FCB included $12.4 billion of identifiable assets, $9.3 billion in loans, netand $10.9 billion in deposits. Additionally, based on preliminary purchase price allocations, goodwill increased by $435.1 million. Excluding the acquired balances of deferred fees and costs, of $346.6FCB, loans increased $902.8 million and an increase in interest bearing funds withinvestment securities available for sale increased $714.4 million while cash and cash equivalents declined $193.9 million. Excluding the Federal Reserveacquired balances of $152.2 million. An increaseFCB, increases of $294.8$680.0 million in depositsother short-term borrowings, $495.7 million in long-term debt, and Synovus' $200$315.7 million preferred stock issuance completed on June 21, 2018in deposits provided the funding source for the growth in assets. The loan to deposit ratio was 95.2% at June 30, 2019, compared to 97.1% at December 31, 2018, and 95.1% at June 30, 2018.

Loans
The following table compares the composition of the loan portfolio at June 30, 2018,2019, December 31, 2017,2018, and June 30, 2017.2018.
Table 2 - Loans by Portfolio ClassTable 2 - Loans by Portfolio Class          
June 30, 2019 December 31, 2018 June 30, 2019 vs. December 31, 2018 % Change June 30, 2018 June 30, 2019 vs. June 30, 2018 % Change
(dollars in thousands)June 30, 2018 December 31, 2017 
June 30, 2018 vs.
December 31, 2017 % Change(1)
 June 30, 2017 
June 30, 2018 vs.
June 30, 2017
% Change
Total Loans Total Originated Loans 
Total Acquired(1) Loans
 Total Loans Total Loans 
Commercial, financial and agricultural$7,271,080
 $7,179,487
 2.6 % $6,993,817
 4.0 %$9,717,746
 $7,801,210
 $1,916,536
 $7,449,698
 30.4 % $7,271,080
 33.6%
Owner-occupied5,004,392
 4,844,163
 6.7
 4,749,128
 5.4
6,529,797
 5,366,404
 1,163,393
 5,331,508
 22.5
 5,004,392
 30.5
Total commercial and industrial12,275,472
 12,023,650
 4.2
 11,742,945
 4.5
16,247,543
 13,167,614
 3,079,929
 12,781,206
 27.1
 12,275,472
 32.4
Investment properties5,509,596
 5,670,065
 (5.7) 6,035,664
 (8.7)%9,005,100
 5,927,706
 3,077,394
 5,560,951
 61.9
 5,509,596
 63.4
1-4 family properties720,710
 781,619
 (15.7) 836,826
 (13.9)747,390
 643,448
 103,942
 679,870
 9.9
 720,710
 3.7
Land and development413,865
 483,604
 (29.1) 549,744
 (24.7)595,957
 364,688
 231,269
 323,670
 84.1
 413,865
 44.0
Total commercial real estate6,644,171
 6,935,288
 (8.5) 7,422,234
 (10.5)10,348,447
 6,935,842
 3,412,605
 6,564,491
 57.6
 6,644,171
 55.8
Consumer mortgages5,407,762
 3,194,027
 2,213,735
 2,934,235
 84.3
 2,750,935
 96.6
Home equity lines1,453,855
 1,514,227
 (8.0) 1,563,167
 (7.0)1,650,745
 1,587,854
 62,891
 1,515,796
 8.9
 1,453,855
 13.5
Consumer mortgages2,750,935
 2,633,503
 9.0
 2,470,665
 11.3
Credit cards238,424
 232,676
 5.0
 225,900
 5.5
258,283
 258,283
 —
 258,245
 —
 238,424
 8.3
Other consumer loans1,793,916
 1,473,451
 43.9
 1,031,639
 73.9
2,249,337
 2,237,406
 11,931
 1,916,743
 17.4
 1,793,916
 25.4
Total consumer6,237,130
 5,853,857
 13.2
 5,291,371
 17.9
9,566,127
 7,277,570
 2,288,557
 6,625,019
 44.4
 6,237,130
 53.4
Deferred fees and costs, net(23,556) (23,556) —
 (24,143) (2.4) (22,717) 3.7
Total loans25,156,773
 24,812,795
 2.8
 24,456,550
 2.9
$36,138,561
 $27,357,470
 $8,781,091
 $25,946,573
 39.3 % $25,134,056
 43.8%
Deferred fees and costs, net(22,717) (25,331) (20.8) (26,038) (12.8)
Total loans, net of deferred fees and costs$25,134,056
 $24,787,464
 2.8 % $24,430,512
 2.9 %
                      
(1) Percentage changes are annualizedRepresents $9.29 billion (at fair value) of loans acquired from FCB, net of paydowns and payoffs since acquisition date.
At June 30, 2018,2019, total loans were $25.13$36.14 billion, an increase of $346.6 million,$10.19 billion, or 2.8% annualized,39.3%, and $703.5 million$11.00 billion, or 2.9%43.8%, compared to December 31, 20172018 and June 30, 2017, respectively. Year-over-year2018, respectively, including acquired loan growth was driven by a $532.5balances from FCB of $9.29 billion.

Excluding acquired FCB balances, period-end loans increased $902.8 million, or 4.5% increase in C&I loans and a $945.85.2% annualized, compared to December 31, 2018, with growth of $463.5 million, or 17.9% increase10.3% annualized, in consumer loans, with our lending partnerships growing $744.4 million and mortgage loans growing $280.3 million. This growth was partially offset by a $778.1$238.7 million, or 10.5% decline4.8% annualized, in CRE loans, and $200.0 million, or 2.5% annualized, in C&I loans.The mix within the loan portfolio has shifted slightly as a result of the consolidation with FCB, but it remains in-line with the targets indicated in our strategic plan. C&I loans remain the largest component of our balance sheet representing 44.9% of total loans, while CRE and consumer loans represent 28.6%, and 26.5%, respectively.
Commercial Loans
Total commercial loans (which are comprised of C&I and CRE loans) at June 30, 20182019 were $18.92$26.60 billion, or 75.3%73.5% of the total loan portfolio, compared to $18.96$19.35 billion, or 76.5%74.5%, at December 31, 20172018 and $19.17$18.92 billion, or 78.4%75.2%, at June 30, 2017.2018.
At June 30, 2018 and December 31, 2017,2019, Synovus had 30 and 25, respectively,six commercial loan relationships with total commitments of $50$100 million or more (including amounts funded). The average funded balance of these relationships was approximately $35, with no single relationship exceeding $125 million for both June 30, 2018 and December 31, 2017.in commitments.
Commercial and Industrial Loans
The C&I loan portfolio represents the largest category of Synovus' total loan portfolio. 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 markets 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 June 30, 2018,2019, approximately 93%92% of Synovus' C&I loans are secured by real estate, business equipment, inventory, and other types of collateral. C&I loans of $12.28$16.25 billion, representing 48.8%44.9% of the total loan portfolio, grew $251.8 million,$3.47 billion, or 4.2% annualized,27.1%, from December 31, 2017 and$532.52018 including acquired loan balances from FCB of $3.27 billion. Excluding acquired FCB balances, growth was $200.0 million, or 4.5%, from June 30, 2017. The growth in C&I loans2.5% annualized, compared to December 31, 2018 and was broad-based, driven by small business, premium finance,continued strong contributions across a number of markets, lending specialties, and senior housing.

industries.
Commercial and Industrial Loans by IndustryJune 30, 2018 December 31, 2017
Table 3 - Commercial and Industrial Loans by IndustryTable 3 - Commercial and Industrial Loans by Industry
June 30, 2019 December 31, 2018
(dollars in thousands)Amount 
%(1)
 Amount 
%(1)
Amount 
%(1)
 Amount 
%(1)
Health care and social assistance$2,863,586
 23.3% $2,764,907
 23.0%$2,995,374
 18.4% $3,044,132
 23.8%
Retail trade1,227,234
 7.6
 903,965
 7.1
Manufacturing1,015,076
 8.3
 930,751
 7.7
1,216,021
 7.5
 1,077,460
 8.4
Retail trade840,398
 6.8
 857,348
 7.1
Finance and insurance1,192,218
 7.3
 906,955
 7.1
Wholesale trade1,098,361
 6.8
 693,920
 5.4
Other services948,847
 5.8
 793,948
 6.2
Arts, entertainment and recreation916,433
 5.6
 234,310
 1.8
Accommodation and food services888,969
 5.5
 663,106
 5.2
Real estate and rental and leasing828,961
 6.8
 851,303
 7.1
888,531
 5.5
 675,824
 5.3
Finance and insurance782,753
 6.4
 780,279
 6.5
Other services778,208
 6.3
 761,916
 6.3
Professional, scientific, and technical services727,213
 5.9
 771,809
 6.4
872,600
 5.4
 844,929
 6.6
Wholesale trade687,157
 5.6
 675,741
 5.6
Transportation and warehousing834,626
 5.1
 477,386
 3.7
Construction726,359
 4.5
 615,903
 4.8
Other industries555,118
 3.4
 235,143
 2.0
Real estate other597,073
 4.9
 586,707
 4.9
517,983
 3.2
 452,360
 3.5
Accommodation and food services586,609
 4.8
 562,877
 4.7
Construction536,779
 4.4
 500,091
 4.2
Transportation and warehousing494,487
 4.0
 427,608
 3.6
Other industries452,432
 3.7
 438,312
 3.6
Educational services359,202
 2.2
 284,840
 2.2
Agriculture, forestry, fishing, and hunting322,286
 2.6
 349,181
 2.9
356,959
 2.2
 344,136
 2.7
Information329,746
 2.0
 251,208
 2.0
Administration, support, waste management, and remediation263,902
 2.1
 273,189
 2.3
322,962
 2.0
 281,681
 2.2
Educational services259,170
 2.1
 259,367
 2.2
Information239,382
 2.0
 232,264
 1.9
Total commercial and industrial loans$12,275,472
 100.0% $12,023,650
 100.0%$16,247,543
 100.0% $12,781,206
 100.0%
              
(1) Loan balance in each category expressed as a percentage of total C&I loans.
At June 30, 2018, $7.272019, $9.72 billion of C&I loans, or 28.9%26.9% of the total loan portfolio, 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 June 30, 2018, $5.002019, $6.53 billion of C&I loans, or 19.9%18.0% of the total loan portfolio, represented loans originated for the purpose of financing owner-occupied properties. The financing of owner-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 cash flow from operations of the business 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 and other real estate, and to a lesser extent, other types of collateral.
Commercial Real Estate Loans
Total CRE loans consist of investment properties loans, 1-4 family properties loans, as well as land and development loans. These loans are subject to the same uniform lending policies referenced above.Total CRE loans of $6.64were $10.35 billion, representing 26.4%28.6% of the total loan portfolio, decreased $291.1 million,and increased $3.78 billion, or 8.5% annualized,57.6%, from December 31, 2017 and decreased $778.12018, driven by the FCB acquisition, which included $3.55 billion of CRE loans on the Acquisition Date. Excluding the acquisition, CRE loans grew $238.7 million, or 10.5%, from June 30, 2017. The $291.1 million decline was driven4.8% annualized, as compared to December 31, 2018, led by a $160.5 million decreasegrowth in the Investment Properties portfolio and a $69.7 million decrease in the non-strategic Land and Development portfolio. The decline in CRE is largely the result of the continued higher velocity of pay-off activity across the portfolio.investment properties.
Investment Properties Loans
Investment properties loans consist of construction and mortgage loans for income producingincome-producing properties and are primarily made to finance multi-family properties, hotels, office buildings, shopping centers, warehouses and other commercial development properties. Total investment properties loans as of June 30, 20182019 were $5.51$9.01 billion, or 82.9%87.0% of the total CRE loan portfolio and 21.9%24.9% of the total loan portfolio, compared to $5.67$5.56 billion, or 81.8%84.7% of the total CRE loan portfolio and 22.9%21.4% of the total loan portfolio, at December 31, 2017, a decrease2018. The increase in investment properties was primarily driven by FCB which included $3.15 billion of $160.5acquired investment properties loans. Excluding the Merger, investment properties loans grew $291.7 million, or 5.7%6.8% annualized, primarily duecompared to a declineDecember 31, 2018, driven by increases in most sub-categories including multi-family, office buildings, and multi-family properties. Synovus' investment properties portfolio is well diversified by property type, geography (primarily within Synovus' primary market areas of Georgia, Alabama, South Carolina, Florida, and Tennessee), 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.hotels.
1-4 Family Properties Loans
1-4 family properties loans include construction loans to homebuilders and commercial mortgage loans to real estate investors 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 June 30, 2018,2019, 1-4 family properties loans totaled $720.7$747.4 million, or 10.8%7.2% of the total CRE loan portfolio and 2.9%2.1% of the total loan portfolio, compared to $781.6$679.9 million, or 11.3%10.4% of the total CRE loan portfolio and 3.2%2.6% of the total loan portfolio, at December 31, 2017.2018. Outside of $112.0 million loans acquired from FCB, 1-4 family properties loans declined by $44.5 million, or 11.3% annualized, compared to December 31, 2018.
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 LTV of the collateral and the capacity of the guarantor(s). Total land and development loans were $413.9$596.0 million at June 30, 2018,2019, or 1.6% of the total loan portfolio, a declinean increase of $69.7$272.3 million, or 29.1% annualized,84.1% from December 31, 2017. Synovus continues2018, which was driven by $280.9 million of loans acquired from FCB. Outside of the acquisition, land and development loans declined slightly by $8.6 million, or 2.9% annualized, compared to strategically reduce its exposure to these types of loans.December 31, 2018.
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, credit card loans, home improvement loans, student loans, and other consumer loans. The majority of Synovus' consumer loans are consumer mortgages and home equity lines secured by first and second liens on residential real estate primarily located in the markets served by Synovus.
Consumer loans at June 30, 20182019 totaled $6.24$9.57 billion, representing 24.8%26.5% of the total loan portfolio, compared to $5.85$6.63 billion, or 23.6%25.5% of the total loan portfolio, at December 31, 2017, and $5.29 billion, or 21.7% of the total loan portfolio at June 30, 2017.2018. Consumer loans increased $383.3 million,$2.94 billion, or 13.2% annualized,44.4%, from December 31, 2017 and $945.82018, primarily driven by $2.48 billion of loans acquired from FCB. Excluding the acquisition, consumer loans grew $463.5 million, or 17.9%, from June 30, 2017. 10.3% annualized, compared to December 31, 2018.
Consumer mortgages grew $117.4 million$2.47 billion, or 9.0% annualized,84.3%, from December 31, 2017, and $280.32018. Excluding the $2.40 billion in consumer mortgages acquired in the FCB acquisition, year-to-date growth of $76.9 million, or 11.3%, from June 30, 2017 given2.9% annualized, was driven by solid production in the private wealth, managementphysician and physician categoriesaffordable mortgage products as well as the continued addition ofproduction added by mortgage loan originators. originators hired in 2018 and 2019. HELOCs decreased $60.4increased $134.9 million, or 8.0%8.9%, from December 31, 2017. 2018, driven primarily by the FCB acquisition. Excluding FCB acquired loans, HELOCs increased $69.1 million, or 8.8% annualized, compared to December 31, 2018.Credit card loans totaled $238.4$258.3 million at June 30, 2018,2019, including $67.8$72.1 million of commercial credit card loans.
loans, and increased slightly compared to $258.2 million at December 31, 2018. Other consumer loans increased $320.5$332.6 million, or 43.9% annualized,17.4%, from December 31, 2017, and $762.3 million, or 73.9%, from June 30, 2017

2018, primarily due to our 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 June 30, 2018,2019, these partnerships had combined balances of $1.4$1.91 billion, or 5.7%5.3% of the total loan portfolio.
Consumer loans including those through our lending partnerships, 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) are assigned to consumer loans based upon a risk score matrix. 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 December 31, 2017. Revolving lines of credit wereare reviewed for any 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.
As of the most recent FICO score refresh on March 31, 2018,June 30, 2019, weighted-average FICO scores within the residential real estate portfolio based on committed balances were 774784 for HELOCs and 785 for consumer mortgages. HELOC utilization rates (total amount outstanding as a percentage of total available lines) were 53.7% and 55.6% at June 30, 2018 and December 31, 2017, respectively. Additionally, we maintained loan-to-value ratios based upon prudent guidelines to ensure consistency with Synovus' overall risk philosophy. At June 30, 2018, 35% of home equity line balances were secured by a first lien, and 65% 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.
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 develop or offer specific sub-prime, alt-A, no documentation or stated income residential real estate loan products. Synovus estimates that, as of June 30, 2018, it had $83.7 million of higher-risk consumer loans (1.3% of the consumer portfolio and 0.3% of the total loan portfolio) compared to $100.7 million as of June 30, 2017. Included in these amounts as of June 30, 2018 and 2017 are approximately $9 million and $12 million, respectively, of accruing TDRs.Consumer Mortgages.
Deposits
Deposits provide the most significant funding source for interest earning assets. The following table shows the relative composition of average deposits foras of the time periodsdates indicated.
 Composition of Average Deposits
 
 (dollars in thousands)June 30, 2018 
%(1)
 March 31, 2018 
%(1)
 December 31, 2017 
%(1)
 June 30, 2017 
%(1)
 Non-interest bearing demand deposits$7,539,451
 28.7% $7,391,696
 28.7% $7,621,147
 29.0% $7,298,845
 29.2%
 Interest bearing demand deposits5,001,825
 19.0
 5,032,000
 19.5
 4,976,239
 18.9
 4,837,053
 19.4
 Money market accounts, excluding brokered deposits7,791,107
 29.7
 7,561,554
 29.3
 7,514,992
 28.6
 7,427,562
 29.7
 Savings deposits829,800
 3.2
 811,588
 3.1
 804,853
 3.0
 805,019
 3.2
 Time deposits, excluding brokered deposits3,182,974
 12.1
 3,039,325
 11.8
 3,170,445
 12.1
 3,243,670
 13.0
 Brokered deposits1,922,917
 7.3
 1,951,910
 7.6
 2,198,333
 8.4
 1,379,559
 5.5
 Total average deposits$26,268,074
 100.0% $25,788,073
 100.0% $26,286,009
 100.0% $24,991,708
 100.0%
 
Average core deposits (2)    
$24,345,157
 92.7% $23,836,163
 92.4% $24,087,676
 91.6% $23,612,149
 94.5%
                 
Table 4 - Composition of Period-end Deposits          
(dollars in thousands)June 30, 2019 
%(1)
 March 31, 2019 
%(1)
 December 31, 2018 
%(1)
 June 30, 2018 
%(1)
Non-interest-bearing demand deposits, excluding public funds$8,577,612
 22.6% $8,440,520
 22.2% $6,926,513
 25.9% $6,820,002
 25.8%
Interest-bearing demand deposits, excluding public funds4,847,242
 12.8
 4,911,215
 12.8
 3,690,689
 13.9
 4,060,293
 15.4
Money market accounts, excluding brokered deposits and public funds8,952,875
 23.6
 8,912,528
 23.4
 7,681,836
 28.7
 7,388,202
 27.9
Savings deposits, excluding public funds891,194
 2.3
 903,822
 2.4
 812,495
 3.0
 822,618
 3.1
Public funds4,351,304
 11.5
 4,630,022
 12.2
 2,374,892
 8.9
 2,224,631
 8.4
Time deposits, excluding brokered deposits and public funds7,342,951
 19.3
 7,568,079
 19.9
 3,685,867
 13.8
 3,275,932
 12.4
Brokered deposits3,003,544
 7.9
 2,709,004
 7.1
 1,548,030
 5.8
 1,851,010
 7.0
Total deposits$37,966,722
 100.0% $38,075,190
 100.0% $26,720,322
 100.0% $26,442,688
 100.0%
Core deposits(2)    
$34,963,178
 92.1% $35,366,186
 92.9% $25,172,292
 94.2% $24,591,678
 93.0%
Core transaction deposits(3)    
$23,268,923
 61.3% $23,168,085
 60.8% $19,111,533
 71.5% $19,091,115
 72.2%
                
Time deposits greater than $100,000, including brokered deposits and public funds$8,290,297
 21.8% $8,318,082
 21.8% $3,749,928
 14.0% $3,667,029
 13.9%
                
Brokered time deposits$2,095,240
 5.5% $1,902,962
 5.0% $1,199,670
 4.5% $1,507,996
 5.7%
                
(1) Deposits balance in each category expressed as percentage of total deposits.
(2) Core deposits exclude brokered deposits. See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.reconciliation.
During the second quarter of 2018, total average(3) Core transaction deposits increased $480.0 million, or 7.5% annualized, compared to the first quarter of 2018, and increased $1.28 billion, or 5.1%, compared to the second quarter of 2017. Averageexclude brokered deposits declined $29.0 million compared to the prior quarter. Average core deposits, during the second quarter of 2018, increased $509.0 million, or 8.6% annualized, compared to the prior quarter, and increased $733.0 million, or 3.1%, compared to the second quarter of 2017. During the first quarter of 2018, Synovus obtained FDIC approval to report deposits related to our sweep money market product, offered by Synovus Securities, as a component of core deposits. This product was reported as a brokered deposit through February of 2018. The second quarter average balance in these accounts totaled $310.0 million, and resulted in an increase of $198.0 million in average core deposits for the quarter, due to the reclassification.public funds. See “Non-GAAP Financial Measures” in this Report for the applicable reconciliationreconciliation.
Total period-end deposits decreased $108.5 million, or 1.1% annualized, compared to the most comparable GAAP measure.
Average non-interest bearing demand deposits as a percentagefirst quarter of total average deposits were 28.7% for both the three months ended June 30, 20182019. The quarterly decline resulted from decreases in public funds and three months ended March 31, 2018 and 29.2% for the three months ended June 30, 2017.
Averageother time deposits of $100,000$278.7 million and greater for$225.1 million, respectively. The decline in these deposits was offset partially by growth in brokered deposits of $294.5 million, which largely replaced maturing time deposits at a shorter duration, and growth in core transaction deposits, which increased $100.8 million during the three months ended June 30, 2018, Marchquarter. Compared to December 31, 2018, and June 30, 2017 were $3.68total period-end deposits increased $11.25 billion, $3.42or 42.1%, driven by the acquisition of FCB which contributed $10.93 billion and $2.86in total deposits, including $9.67 billion respectively, and included average brokered timein core deposits of $1.66 billion, $1.53 billion, and $815.5on the Acquisition Date. Excluding the acquired balances, total deposits grew $315.7 million respectively. These larger deposits represented 14.0%, 13.3%, and 11.4% of total average deposits for the three months ended June 30, 2018, March 31, 2018, and June 30, 2017, respectively, and included brokered time deposits which represented 6.3%, 5.9%, and 3.3% of total average deposits for the three months ended June 30, 2018, March 31, 2018, and June 30, 2017, respectively.
During the second quarter of 2018, total average brokered deposits represented 7.3% of total average deposits compared to 7.6% and 5.5% of total average deposits the previous quarter and the second quarter a year ago, respectively.December 31, 2018.



Non-interest Income
Non-interest income for the first six monthssecond quarter of 2019 was $89.8 million, up $16.4 million, or 22.4%, compared to the second quarter of 2018 including the impact of the acquisition of FCB. On a year-to-date basis, non-interest income was $140.4$169.2 million compared to $140.5$140.4 million for the first six months of 2017. Non-interest income for the second quarter of 2018 was $73.4 million, up $4.72018. The $28.8 million, or 6.8%20.5%, compared toincrease is impacted by the second quarter of 2017.FCB acquisition. Adjusted non-interest income, which excludes net investment securities gains (losses)losses and decreasechanges in fair value of private equity investments, was up $8.8$15.5 million, or 6.5%20.7%, for the second quarter of 2019 compared to the second quarter of 2018, and year-to-date, adjusted non-interest income was up $23.8 million, or 16.4%, compared to the first six months of 2018, compared to 2017 and up $4.7 million, or 6.7%, for the second quarter of 2018 compared to the second quarter of 2017. Synovus experiencedwith growth in multiple categories during the first half of 2018 compared to the same time period in 2017 including an increase of $6.6 million, or 16.0%, in combined fiduciary and asset management fees, brokerage, and insurance revenues.most revenue categories. See "Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures" of this Report for applicable reconciliation to GAAP measure.measures.
The following table shows the principal components of non-interest income.
Non-interest incomeSix Months Ended June 30, Three Months Ended June 30,
(in thousands)2018 2017 % Change 2018 2017 % Change
Table 5 - Non-interest income           
Three Months Ended June 30, Six Months Ended June 30,
(dollars in thousands)2019 2018 % Change 2019 2018 % Change
Service charges on deposit accounts$39,938
 $40,370
 (1.1)% $19,999
 $20,252
 (1.2)%$21,994
 $19,999
 10.0 % $42,853
 $39,938
 7.3%
Fiduciary and asset management fees27,419
 24,676
 11.1
 13,983
 12,524
 11.6
14,478
 13,983
 3.5
 28,057
 27,419
 2.3
Card fees21,032
 19,885
 5.8
 10,833
 10,041
 7.9
11,161
 10,833
 3.0
 22,037
 21,032
 4.8
Brokerage revenue17,596
 14,436
 21.9
 8,900
 7,210
 23.4
10,052
 8,709
 15.4
 19,431
 17,085
 13.7
Capital markets income8,385
 1,118
 650.0
 13,291
 2,086
 537.2
Mortgage banking income9,887
 11,548
 (14.4) 4,839
 5,784
 (16.3)7,907
 4,839
 63.4
 12,962
 9,887
 31.1
Income from bank-owned life insurance7,949
 6,328
 25.6
 3,733
 3,272
 14.1
5,176
 3,733
 38.7
 10,466
 7,949
 31.7
Investment securities (losses) gains, net(1,296) 7,667
 nm
 (1,296) (1) nm
Decrease in fair value of private equity investments, net(3,093) (3,166) nm
 (37) (1,352) nm
Other fee income9,877
 11,033
 (10.5) 5,259
 6,164
 (14.7)
Investment securities losses, net(1,845) (1,296) nm
 (1,771) (1,296) nm
Increase (decrease) in fair value of private equity investments, net1,455
 (37) nm
 2,313
 (3,093) nm
Other non-interest income11,124
 7,762
 43.3
 7,174
 4,807
 49.2
11,044
 11,506
 (4.0) 19,546
 19,426
 0.6
Total non-interest income$140,433
 $140,539
 (0.1)% $73,387
 $68,701
 6.8 %$89,807
 $73,387
 22.4 % $169,185
 $140,433
 20.5%
                      
Principal Components of Non-interest IncomeThree and Six Months Ended June 30, 2019 compared to June 30, 2018
Service charges on deposit accounts for the sixthree and threesix months ended June 30, 20182019 were down $432 thousand,up $2.0 million, or 1.1%10.0%, and down $253 thousand,$2.9 million, or 1.2%7.3%, respectively, compared toincluding the six and three months ended June 30, 2017.impact of FCB. Service charges on deposit accounts consist of NSF fees, account analysis fees, and all other service charges. NSF fees were up $940 thousand, or 10.8%, and $659 thousand, or 3.7%, for the sixthree and threesix months ended June 30, 20182019, respectively, primarily due to the FCB acquisition. Account analysis fees were down $267up $823 thousand, or 1.5%12.7%, and $241 thousand,$1.8 million, or 2.7%14.5%, respectively, compared tofor the sixthree and threesix months ended June 30, 2017. Account analysis fees for the six and three months ended June 30, 2018 were up $171 thousand, or 1.4%, and $284 thousand, or 4.6%, respectively, compared to the six and three months ended June 30, 2017.2019, 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 sixthree and threesix months ended June 30, 20182019, were down $336up $233 thousand or 3.3%, and $297$441 thousand, or 5.8%, compared to the same periods in 2017.respectively.
Fiduciary and asset management fees are derived from providing estate administration, personal trust, corporate trust, corporate bond, investment management, and financial planning services. Fiduciary and asset management fees increased $2.7 million,$495 thousand, or 11.1%3.5%, and $1.5 million,$638 thousand, or 11.6%2.3%, for the sixthree and threesix months ended June 30, 2018, respectively, compared2019, respectively. The increases were driven by growth in total assets under management which increased by 10.0% year-over-year to $15.82 billion (including growth in brokerage assets under management).
Card fees for the sixthree and threesix months ended June 30, 2017. The increase was driven by2019, increased $328 thousand, or 3.0%, and $1.0 million, or 4.8%, respectively, including growth in assets under management. Total assets under management (including brokerage assets under management) increased by 16% year-over-year to approximately $14.4 billion, due to overall market conditions, increased productivity as well astransaction volume and the additionimpact of new talent.
Card fees totaled $21.0 million and $10.8 million for the six and three months ended June 30, 2018, respectively, compared to $19.9 million and $10.0 million for the same periods in 2017.FCB. Card fees consist primarily of credit card interchange fees, debit card interchange fees, and merchant discounts. Card fees are reported net of certain associated expense items including customer loyalty program expenses and network expenses.
Brokerage revenue was $17.6$10.1 million and $8.9$19.4 million for the sixthree and threesix months ended June 30, 2018,2019, respectively, up $3.2$1.3 million, or 21.9%15.4%, and up $1.7$2.3 million, or 23.4%13.7%, compared to the sixthree and threesix months ended June 30, 2017, respectively. The increase in 2018 from 2017 was largely driven by growth in brokerage assets under management due primarily to new talent additions.2018. Brokerage revenue consists primarily of brokerage commissions. Additionally, brokerage revenue includescommissions as well as advisory fees earned from the management of customer assets. Brokerage assets under management were $3.29 billion at June 30, 2019, an increase of 19.3% from $2.76 billion at June 30, 2018.
Capital markets income primarily includes fee income from customer derivative and investment banking transactions. Capital markets income increased $7.3 million and $11.2 million for the three and six months ended June 30, 2019, respectively, driven by contributions from newly acquired Florida markets.

Mortgage banking income decreased $1.7increased $3.1 million or 14.4%,for both the three and $945 thousand, or 16.3%, compared to the six and three months ended June 30, 2017, respectively, reflecting softer2019. Mortgage banking income was driven by higher overall production volumedue to an increase in a rising interest rate environment.mortgage loan originators and the addition of FCB.
Income from bank-owned life insurance, increased $1.6 million, or 25.6%, and $461 thousand, or 14.1%, compared to the six and three months ended June 30, 2017, respectively, due to additional investments in bank-owned life insurance policies during the first quarter of 2017,which includes increases in the cash surrender value of these policies and death benefits.proceeds from insurance benefits, increased $1.4 million, or 38.7%, and $2.5 million, or 31.7%, for the three and six months ended June 30, 2019, primarily driven by the impact of acquired FCB policies. The first six months of 2019 included income on proceeds from insurance benefits of $233 thousand compared to $561 thousand in 2018.
Investment securities losses, net, of $1.8 million for both the three and six months ended June 30, 2019 included net losses due to repositioning of the portfolio to better align with long-term liquidity objectives. Investment securities losses of $1.3 million, for both the sixthree and threesix months ended June 30, 2018, included a loss of $1.3 million from a strategic sale to improve portfolio performance. Investment securities gains, net
Increase/(decrease) in the fair value of $7.7private equity investments was up $1.5 million and $5.4 million, respectively, for the three and six months ended June 30, 2017 included a $3.42019 due to favorable fair value adjustments to private equity investments of $1.5 million gain on the sale of an equity position and a $4.3$2.3 million gain from the repositioning of the investment securities portfolio during the first quarterthree and six months ended June 30, 2019, respectively, compared to unfavorable fair value adjustments of 2017.
Private equity investments consist of an equity method investment in a venture capital fund. The net loss of$37 thousand and $3.1 million for the first halfsame period a year ago.
The main components of 2018 consisted mostly of net unrealized losses on certain investments within the fund. The net loss of $3.2 million during the first half of 2017 consisted mostly of realized losses on sales of investments within the fund.
Other feeother non-interest income includesare 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 fee income was lower by $1.2 million, or 10.5%, and $905 thousand, or 14.7%, compared to the six and three months ended June 30, 2017, respectively, due primarily to higher customer swap dealer fees and syndication arranger fees in 2017.
The main components of other non-interest income arecharges, income from insurance commissions, gains from sales of GGL/SBA loans, and other miscellaneous items. Other non-interest income was up $3.4Gains from sales of GGL/SBA loans were down $1.5 million or 43.3%, and $2.4$2.1 million, or 49.2%, compared torespectively, for the sixthree and threesix months ended June 30, 2017, respectively, due primarily to higher insurance commissions, higher2019, offset by valuation gains on salesmutual funds held in rabbi trusts of GGL/SBA loans,$1.8 million and miscellaneous items.$1.7 million, respectively, for the three and six months ended June 30, 2019.
Non-interest Expense
Non-interest expense for the first six months of 2018 increased $10.1 million, or 2.6%, compared to the first six months of 2017 and non-interest expense for the second quarter of 2018 increased $12.32019 was $264.1 million, up $60.1 million, or 6.4%29.4%, compared to the second quarter of 2017. The second quarter of 2018 included2018. On a $2.3year-to-date basis, non-interest expense was up $157.3 million, expense foror 39.4%, versus the same period a valuation adjustmentyear ago. Comparisons to prior year are impacted by the Visa derivative offset in part by a $1.4 million benefit from a recovery of litigation settlementFCB acquisition and merger-related expense. The first quarter of 2018 included a $2.6 million reduction in litigation contingency accruals and the first quarter of 2017 included $6.5 million in restructuring charges. Adjusted non-interest expense, which excludes valuation adjustment to Visa derivative, restructuring charges, net, amortizationmerger-related expense and certain other items, for the second quarter of intangibles, and litigation settlement/contingency2019 was up $53.7 million, or 26.4%, versus the same period a year ago. On a year-to-date basis, adjusted non-interest expense increased $18.5$98.2 million, or 4.8%,24.5%. The efficiency ratio-FTE for the first halfsix months of 20182019 was 57.67%, compared to the first half of 2017. Strong operating leverage57.07% for the first halfsix months of 2018 resulted in an efficiency ratio of 56.97%, improved from 62.31% for the first half of 2017.2018. The adjusted tangible efficiency ratio for the first six months of 20182019 was 56.90%51.17%, down 397573 basis points fromcompared to the same period a year ago. See "Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures" of this Report for applicable reconciliation to GAAP measures.
The following table summarizes the components of non-interest expense.
Non-interest Expense

           
Table 6 - Non-interest Expense           
Six Months Ended June 30, Three Months Ended June 30,Three Months Ended June 30, Six Months Ended June 30,
(in thousands)2018 2017 % Change 2018 2017 % Change
(dollars in thousands)2019 2018 % Change 2019 2018 % Change
Salaries and other personnel expense$225,583
 $212,404
 6.2 % $111,863
 $105,213
 6.3 %$143,009
 $111,863
 27.8% $282,436
 $225,583
 25.2%
Net occupancy and equipment expense64,134
 59,264
 8.2
 32,654
 29,933
 9.1
39,851
 32,654
 22.0
 78,245
 64,134
 22.0
Third-party processing expense29,012
 26,223
 10.6
 15,067
 13,620
 10.6
19,118
 15,067
 26.9
 36,875
 29,012
 27.1
Professional fees9,312
 6,284
 48.2
 15,660
 11,789
 32.8
FDIC insurance and other regulatory fees13,335
 13,645
 (2.3) 6,543
 6,875
 (4.8)7,867
 6,543
 20.2
 14,629
 13,335
 9.7
Professional fees11,789
 12,907
 (8.7) 6,284
 7,551
 (16.8)
Advertising expense10,312
 11,258
 (8.4) 5,220
 5,346
 (2.4)5,923
 5,220
 13.5
 11,045
 10,312
 7.1
Valuation adjustment to Visa derivative2,328
 —
 nm
 2,328
 —
 nm
Foreclosed real estate expense, net749
 3,582
 (79.1) (107) 1,448
 (107.4)
Earnout liability adjustment—
 1,707
 nm
 —
 1,707
 nm
Restructuring charges, net(212) 6,524
 nm
 103
 13
 nm
Amortization of intangibles2,410
 292
 nm
 5,802
 583
 nm
Merger-related expense7,401
 —
 nm
 57,140
 —
 nm
Other operating expenses42,204
 41,619
 1.4
 24,102
 20,041
 20.3
29,235
 26,134
 11.9
 54,705
 44,486
 23.0
Total non-interest expense$399,234
 $389,133
 2.6 % $204,057
 $191,747
 6.4 %$264,126
 $204,057
 29.4% $556,537
 $399,234
 39.4%
                      
Three and Six Months Ended June 30, 2019 compared to June 30, 2018
Salaries and other personnel expensesexpense increased $13.2$31.1 million, or 6.2%27.8%, and $6.7$56.9 million, or 6.3%25.2%, for the sixthree and threesix months ended June 30, 2018,2019, respectively, compared toincluding the same periods in 2017, primarily due toimpact of FCB, talent additions, higher production-based commission and incentive compensation expense, annual merit increases, and higher incentive compensation expense.employee insurance.

Net occupancy and equipment expense increased $4.9$7.2 million, or 8.2%22.0%, and $2.7$14.1 million, or 9.1%22.0%, during the sixthree and threesix months ended June 30, 2018,2019, respectively, comparedprimarily due to additional branches from the same periods in 2017 driven primarily by costs associated with growth in technology investments.acquisition of FCB.
Third-party processing expense includes all third-party core operating system and processing charges as well as third-party servicing charges. Third-party processing expense increased $2.8$4.1 million, or 10.6%26.9%, and $1.4$7.9 million, or 10.6%27.1%, duringfor the sixthree and threesix months ended June 30, 2018, respectively, compared to the same periods in 2017.2019, respectively. The increase is primarily due to an increase of $2.5 million and $1.1 million for the six and three months ended June 30, 2018, respectively, compared to the same periods in 2017, from servicing fees associated with loan growth from Synovus' two consumer-based lending partnerships.partnerships and the acquisition of FCB.
DuringProfessional fees increased $3.0 million, or 48.2%, and $3.9 million, or 32.8%, for the three months ended June 30, 2018, Synovus recorded a $2.3 million valuation adjustment to the Visa derivative following Visa's announcement on June 26, 2018 that it would deposit $600 million into its litigation escrow account.
For theand six months ended June 30, 2018, Synovus recorded net lease termination accrual reversals of $377 thousand related2019, respectively, primarily from increases in consulting fees due to branches closed in prior years offset somewhat byplanned strategic and technology initiatives.
FDIC insurance and other property related charges of $165 thousand. Duringregulatory fees were up $1.3 million for both the three and six months ended June 30, 2017, Synovus recorded severance charges2019 primarily due to the acquisition of $6.5FCB, somewhat offset by the FDIC's elimination of the assessment surcharge for all large banks in the fourth quarter of 2018.
Amortization of intangibles was up $2.1 million including $6.2and $5.2 million for termination benefitsthe three and six months ended June 30, 2019, respectively, due to amortization of the core deposit intangible asset created from the FCB acquisition, which will be amortized using an accelerated method over an estimated life of 10 years.
In connection with the FCB acquisition, Synovus incurred merger-related expense totaling $7.4 million and $57.1 million for the three and six months ended June 30, 2019, primarily related to employment compensation agreements, severance, and professional services. See "Note 2 - Acquisitions" in conjunction with a voluntary early retirement program offered to Synovus employees duringthis Report for more information on the first quarteracquisition of 2017.FCB.
Other operating expenses were up $3.1 million and $10.2 million, respectively, for the three and six months ended June 30, 2019 including the impact of FCB. Other operating expenses for the sixthree and threesix months ended June 30, 2018 included a benefit of $4.0$1.4 million and $1.4$4.0 million, respectively, from recoveries and reductions in litigation contingency accruals. Other operating expenses foraccruals and a $2.3 million valuation adjustment expense related to the six and three months ended June 30, 2017 included a $2.4 million gain from the settlement of a contingent receivable.Visa Derivative.
Income Tax Expense
Income tax expense was $61.1$54.6 million and $30.9$95.0 million for the three and six months ended June 30, 2019, respectively, representing an effective tax rate of 25.9% and 25.6% for the respective periods. Income tax expense was $30.9 million and $61.1 million for the three and six months ended June 30, 2018, respectively, representing an effective tax rate of 22.2%21.8% and 21.8% for the respective periods. Income tax expense was $75.6 million and $41.8 million for the six and three months ended June 30, 2017, respectively, representing an effective tax rate of 33.8% and 35.5%22.2% for the respective periods. The increase in the effective tax rate is lower for the three and six months ended June 30, 2019, as compared to the three and threesix months ended June 30, 2018, was largely due to Federal Tax Reform that reducednon-deductible merger-related expenses, an increase in state tax expense resulting from a shift of earnings into higher tax jurisdictions, and a decrease in the federal statutory rate from 35% to 21% for tax years beginning after December 31, 2017.benefit recognized as a result of employee share-based award vesting.
The effective tax rate is affected by many factors including, but not limited to, the level of pre-tax income, bank-owned life insurance, tax-exempt interest, 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, income tax credits earned, and changes to unrecognized tax benefits. Accordingly, the comparability of the effective tax rate between periods may be impacted.

The effective income tax rate for the six months ended June 30, 2018 included a net discrete income tax benefit of $2.8 million predominantly resulting from tax benefits associated with the exercise and vesting of employee equity awards.


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 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 favorableSynovus continued to benefit from a relatively stable credit environment during the first six months of 2018.2019.
The table below includes selected credit quality metrics.
Credit Quality Metrics 
Table 7 - Credit Quality Metrics 
(dollars in thousands)June 30, 2018 December 31, 2017 June 30, 2017June 30, 2019 December 31, 2018 June 30, 2018
Non-performing loans (1)$117,328
 $115,561
 $159,317
$124,083
 $106,733
 $117,328
Impaired loans held for sale(1)(2)
2,733
 11,278
 127
631
 1,506
 2,733
Other real estate6,288
 3,758
 19,476
14,848
 6,220
 6,288
Non-performing assets (1)$126,349
 $130,597
 $178,920
$139,562
 $114,459
 $126,349
Total loans$36,138,561
 $25,946,573
 $25,134,056
Non-performing loans as a % of total loans0.47% 0.47
 0.65
0.34% 0.41% 0.47%
Non-performing assets as a % of total loans, other loans held for sale, and ORE0.50
 0.53
 0.73
0.39
 0.44
 0.50
Loans 90 days past due and still accruing$3,222
 4,414
 4,550
$5,851
 $3,798
 $3,222
As a % of total loans0.01% 0.02
 0.02
0.02% 0.01% 0.01%
Total past due loans and still accruing$55,614
 52,031
 66,788
Total past due loans and still accruing(3)
$80,792
 $56,927
 $55,614
As a % of total loans0.22% 0.21
 0.27
0.22% 0.22% 0.22%
Net charge-offs, quarter$17,829
 8,979
 15,679
$11,779
 $13,044
 $17,829
Net charge-offs/average loans, quarter0.29% 0.15
 0.26
0.13% 0.20% 0.29%
Net charge-offs, year-to-date$22,109
 69,675
 22,597
$28,867
 $50,410
 $22,109
Net charge-offs/average loans, year-to-date0.18% 0.29
 0.19
0.16% 0.20% 0.18%
Provision for loan losses, quarter$11,790
 8,564
 10,260
$12,119
 $12,148
 $11,790
Provision for loan losses, year-to-date24,566
 67,185
 18,934
35,688
 51,697
 24,566
Allowance for loan losses251,725
 249,268
 248,095
257,376
 250,555
 251,725
Allowance for loan losses as a % of total loans1.00% 1.01
 1.02
0.71% 0.97% 1.00%
          
(1) For purposes of this table, June 30, 2019 non-performing loans exclude acquired loans accounted for under ASC 310-30 that are currently accruing income.
(2) Represent only impaired loans that have been specifically identified to be sold. Impaired loans held 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.
(3) For purposes of this table, June 30, 2019 total past due loans and still accruing include acquired loans accounted for under ASC 310-30 that are contractually 30-89 days past due.
Non-performing Assets
Total NPAs were $126.3 million at June 30, 2018, a $4.2 million, or 3.3%, decrease from $130.6 million at December 31, 2017 and a $52.6 million, or 29.4%, decrease from $178.9 million at June 30, 2017. The year-over-year decline in non-performing assets was driven by the continued resolution of problem assets, including accelerated dispositions in conjunction with the balance sheet restructuring actions in the third quarter of 2017. Total non-performing assets as a percentage of total loans, otherimpaired loans held for sale, and other real estate wereORE improved 5 basis points and 11 basis points, respectively, to 0.39% at June 30, 2019 compared to 0.44% at December 31, 2018 and 0.50% at June 30, 2018 compared to 0.53%2018. Total NPAs were $139.6 million at June 30, 2019, a $25.1 million, or 21.9%, increase from $114.5 million at December 31, 20172018 and 0.73%a $13.2 million, or 10.5%, increase from $126.3 million at June 30, 2017.2018, primarily due to NPAs from the FCB acquisition. NPAs declined $15.7 million, or 10.1%, from the March 31, 2019 balance of $155.3 million, primarily due to the sale of FCB acquired NPLs during the second quarter of 2019 at a price that exceeded the preliminary fair value recorded at the Acquisition Date.
Net Charge-offs
Net charge-offs for the six months ended June 30, 2019 were $28.9 million, or 0.16%, as a percentage of average loans annualized, compared to $22.1 million, or 0.18%, as a percentage of average loans annualized, for the six months ended June 30, 2018. The increase in net charge-offs from 2018 is primarily attributable to a higher level of recoveries in the previous year. Year-to-date net charge-offs of 16 basis points is well within Synovus' guidance of 15-20 basis points. Net charge-offs for the second quarter of 2019 were 13 basis points annualized, down from 29 basis points in the second quarter of 2018, primarily due to lower gross charge-offs in the current quarter.

Provision for Loan Losses and Allowance for Loan Losses
For the six months ended June 30, 2019, the provision for loan losses was $35.7 million, an increase of $11.1 million, or 45.3%, compared to the six months ended June 30, 2018. The year-to-date increase in provision expense was driven by organic loan growth as well as an increased level of net charge-offs due to lower recoveries. The provision for loan losses covered 124% of net charge-offs for the six months ended June 30, 2019 compared to 111% for the six months ended June 30, 2018. For the second quarter of 2019, provision expense was $12.1 million, a decline of $11.5 million, or 48.6%, compared to the first quarter of 2019, primarily due to lower charge-offs and reduction of impaired reserves.
The ALL at June 30, 2019 was $257.4 million, or 0.71% of total loans, compared to $250.6 million, or 0.97% of total loans, at December 31, 2018 and $251.7 million, or 1.00% of total loans, at June 30, 2018, reflecting a lower ratio at June 30, 2019 due to the impact of acquisition date accounting for acquired loans. The allowance to non-performing loans at June 30, 2019 remained strong at 207%, compared to 235% at December 31, 2018 and 215% at June 30, 2018.
Table 8 - Accruing TDRs by Risk Grade           
 June 30, 2019 December 31, 2018 June 30, 2018
(dollars in thousands)Amount % Amount % Amount %
Pass$60,586
 47.9% $50,668
 43.9% $57,013
 45.5%
Special Mention12,841
 10.2
 14,480
 12.5
 19,799
 15.8
Substandard accruing52,942
 41.9
 50,440
 43.6
 48,498
 38.7
  Total accruing TDRs$126,369
 100.0% $115,588
 100.0% $125,310
 100.0%
            
Troubled Debt Restructurings
Accruing TDRs were $126.4 million at June 30, 2019, compared to $115.6 million at December 31, 2018 and $125.3 million at June 30, 2018. Accruing TDRs increased $10.8 million from December 31, 2018 and$1.1 million fromJune 30, 2018. Non-accruing TDRs were $12.8 million at June 30, 2019, compared to $151.3$26.2 million at December 31, 20172018 and $167.4$30.4 million at June 30, 2017. Accruing2018, a decrease of $13.4 million and $17.6 million, respectively. The primary driver of the increase in accruing TDRs declined $26.0 million, or 17.2%, fromand decline in non-accruing TDRs compared to December 31, 20172018 and $42.1 million, or 25.1%, from a year ago primarily due to continued decline in TDR inflows, fewer loans qualifying for removal of TDR designation upon subsequent renewal, refinance, or modification, and pay-offs.
At June 30, 2018 is a result of a large TDR relationship being upgraded from non-accruing to accruing status based on the allowance for loan losses allocated to these accruing TDRs was $6.5 million compared to $8.7 millionat December 31, 2017extent of its payment performance and $8.5 million at June 30, 2017. the expectation of the collectability of all contractual amounts.
Accruing TDRs are considered performing because they are performing in accordance with the restructured terms.At June 30, 2019, December 31, 2018, and December 31, 2017, June 30, 2018, approximately97%, 98%, and 99%97%, 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 at low levels. There were eight defaults for the six months ended June 30, 2018 and three defaults for the six months ended June 30, 2017.

Accruing TDRs by Risk GradeJune 30, 2018 December 31, 2017 June 30, 2017
(dollars in thousands)Amount % Amount % Amount %
Pass$57,013
 45.5% $57,136
 37.8% $69,943
 41.8%
Special Mention19,799
 15.8
 15,879
 10.5
 20,550
 12.3
Substandard accruing48,498
 38.7
 78,256
 51.7
 76,902
 45.9
  Total accruing TDRs$125,310
 100.0% $151,271
 100.0% $167,395
 100.0%
            
Accruing TDRs Aging by Portfolio Class
 June 30, 2018
(in thousands)Current 30-89 Days Past Due 90+ Days Past Due Total 
Commercial, financial and agricultural$11,302
 $817
 $—
 $12,119
 
Owner-occupied36,388
 62
 —
 36,450
 
Total commercial and industrial47,690
 879
 —
 48,569
 
Investment properties24,218
 —
 —
 24,218
 
1-4 family properties10,347
 111
 —
 10,458
 
Land and development15,281
 589
 —
 15,870
 
Total commercial real estate49,846
 700
 —
 50,546
 
Home equity lines1,312
 1,108
 333
 2,753
 
Consumer mortgages18,572
 195
 —
 18,767
 
Credit cards—
 —
 —
 —
 
Other consumer loans4,630
 45
 —
 4,675
 
Total consumer24,514
 1,348
 333
 26,195
 
Total accruing TDRs$122,050

$2,927
 $333

$125,310
 
         
 December 31, 2017
(in thousands)Current 30-89 Days Past Due 90+ Days Past Due Total 
Commercial, financial and agricultural$33,789
 $1,161
 $44
 $34,994
 
Owner-occupied35,554
 —
 —
 35,554
 
Total commercial and industrial69,343
 1,161
 44
 70,548
 
Investment properties21,398
 —
 —
 21,398
 
1-4 family properties14,865
 191
 —
 15,056
 
Land and development14,835
 381
 —
 15,216
 
Total commercial real estate51,098
 572
 —
 51,670
 
Home equity lines5,096
 —
 —
 5,096
 
Consumer mortgages18,588
 80
 —
 18,668
 
Credit cards—
 —
 —
 —
 
Other consumer loans5,097
 192
 —
 5,289
 
Total consumer28,781
 272
 —
 29,053
 
Total accruing TDRs$149,222
 $2,005
 $44
 $151,271
 
         
Non-accruing TDRs were $30.4 million at June 30, 2018 compared to $11.7 million at December 31, 2017. Non-accruing TDRs generally may be returned to accrual status if there has been a period of performance, consisting usually of at least a six month sustained period of repayment performance in accordance with the terms of the agreement.
Potential Problem Loans
Potential problem loans are defined by management as being certain performing loans with a well-defined weakness where there is known information about possible credit problems 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 $153.5 million at June 30, 2018 compared to $103.3 million and $149.2 million at December 31, 2017 and June 30, 2017, respectively. Synovus cannot predict whether these potential problem loans ultimately will become non-performing loans or result in losses.
Net Charge-offs
Net charge-offs for the six months ended June 30, 2018 were $22.1 million, or 0.18% as a percentage of average loans annualized, compared to $22.6 million, or 0.19%, as a percentage of average loans annualized for the six months ended June 30, 2017.
Provision for Loan Losses and Allowance for Loan Losses
For the six months ended June 30, 2018, the provision for loan losses was $24.6 million, an increase of $5.6 million, or 29.7%, compared to the six months ended June 30, 2017. The increase in provision expense for the six months ended June 30, 2018 compared to the six months ended June 30, 2017 is primarily due to loan growth as well as a slightly increased level of charge-offs above reserves.
The allowance for loan losses at June 30, 2018 was $251.7 million, or 1.00% of total loans, compared to $249.3 million, or 1.01% of total loans, at December 31, 2017 and $248.1 million, or 1.02% of total loans, at June 30, 2017.

Capital Resources
Synovus and Synovus Bank are required to comply with capital adequacy standards established by their primary federal regulator, the Federal Reserve. Synovus and Synovus Bank measure capital adequacy using the standardized approach to the Basel III Final Rule. Synovus has always placed great emphasis on maintaining a solid capital base and continues to satisfy applicable regulatory capital requirements.
At June 30, 2018,2019, Synovus and Synovus Bank's capital levels remained strong and each exceeded well-capitalized requirements currently in effect. The following table presents certain ratios used to measure Synovus and Synovus Bank's capitalization.
Capital Ratios   
Table 9 - Capital Ratios   
(dollars in thousands) June 30, 2018 December 31, 2017June 30, 2019 December 31, 2018
Common equity Tier 1 capital (transitional)   
CET1 capital (transitional)   
Synovus Financial Corp.$2,838,616
 $2,763,168
$3,899,532
 $2,897,997
Synovus Bank3,285,713
 3,155,163
4,513,247
 3,382,497
Tier 1 capital   
Tier 1 risk-based capital   
Synovus Financial Corp.3,156,805
 2,872,001
4,094,672
 3,090,416
Synovus Bank3,285,713
 3,155,163
4,513,247
 3,382,497
Total risk-based capital      
Synovus Financial Corp.3,668,904
 3,383,081
4,913,043
 3,601,376
Synovus Bank3,537,812
 3,406,243
4,771,618
 3,633,457
Common equity Tier 1 capital ratio (transitional)   
CET1 capital ratio (transitional)   
Synovus Financial Corp.10.12% 9.99%9.61% 9.95%
Synovus Bank11.72
 11.43
11.13
 11.62
Tier 1 capital ratio   
Tier 1 risk-based capital ratio   
Synovus Financial Corp.11.25
 10.38
10.09
 10.61
Synovus Bank11.72
 11.43
11.13
 11.62
Total risk-based capital to risk-weighted assets ratio      
Synovus Financial Corp.13.08
 12.23
12.11
 12.37
Synovus Bank12.61
 12.33
11.77
 12.49
Leverage ratio      
Synovus Financial Corp.10.03
 9.19
8.89
 9.60
Synovus Bank10.45
 10.12
9.80
 10.51
Tangible common equity to tangible assets ratio (1)
   
Tangible common equity ratio(1)
   
Synovus Financial Corp.8.77
 8.79
8.56
 8.34
      
(1) See " Non-GAAP Financial 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, subject to a transition period for several aspects, including the capital conservation buffer and certain 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.
On June 21, 2018, Synovus completed a public offering of $200 million of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D. The offering generated net proceeds of $195 million, which were largely used to fund the redemption of all of the outstanding shares of Series C Preferred Stock on August 1, 2018 for an aggregate redemption price of $130 million.
On January 23, 2018, Synovus announced a share repurchase program of up to $150 million to be completed during 2018. As of June 30, 2018, Synovus had repurchased under this program a total of $76.8 million, or 1.5 million shares of its common stock, at an average price of $52.72 per share. As of June 30, 2018 and August 6, 2018, the remaining authorization under this program was $73.2 million and $44.6 million, respectively.
As of June 30, 2018, total disallowed deferred tax assets were $63.6 million or 0.23% of risk-weighted assets, compared to $70.4 million, or 0.25% of risk-weighted assets, at December 31, 2017. Disallowed deferred tax assets for CET1 were $50.9 million at June 30, 2018 compared to $56.3 million at December 31, 2017. See "Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Income Taxes" in Synovus' 2017 Form 10-K for more information on Synovus' net deferred tax asset.
At June 30, 2018,2019, Synovus' CET1 ratio was 10.12%9.61% under the Basel III transitional provisions, and the estimated fully phased-in CET1 ratio was 10.06%9.60% (See "Non-GAAP Financial Measures" in this Report), both of which are well in excess of regulatory requirements including the capital conservation buffer. On November 21, 2017, federal banking regulators adopted a final rulebuffer which has now reached the fully-phased in amount of 2.5% effective January 1, 2019. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 11 - Regulatory Capital" to extend the consolidated financial statements of Synovus' 2018 Form 10-K for additional information on regulatory capital transition for certain items applicable during 2017 to future periods for banking organizations (such as Synovus) that are not subject to the advanced approaches capital rule. This reduced the capital impact to Synovus in 2018 from the fully phased-in implementation of Basel III that was originally required. See "Non-GAAP Financial Measures" in this Report for the applicable reconciliation to the most comparable GAAP measure.requirements. Management currently believes, based on internal capital analyses and earnings projections, that Synovus' capital position is adequate to meet current and future regulatory minimum capital requirements.requirements inclusive of the capital conservation buffer.
Effective January 1, 2019, Synovus completed its acquisition of all of the outstanding stock of FCB for total consideration of $1.63 billion. See "Part I - Item 1. Financial Statements and Supplementary Data - Note 2 - Acquisitions" in this Report for more information on the FCB acquisition.
On June 17, 2019, the Company announced that the Board of Directors increased its prior $400 million share repurchase authorization to $725 million for the year 2019. As of June 30, 2019, Synovus had repurchased under this program a total of $345.0 million, or 9.2 million shares of its common stock, at an average price of $37.43 per share. As of July 31, 2019, the remaining authorization under this program was $286.8 million. The timing and amount of future repurchases under the share repurchase program will depend upon a variety of factors, including market conditions, regulatory requirements, availability of funds, and other relevant considerations, as determined by us and applicable law and regulations.
Additionally, Synovus increased the quarterly common stock dividend by 20% to $0.30 per share effective with the first quarter 2019 dividend paid in April 2019.

On February 7, 2019, Synovus completed a public offering of $300.0 million aggregate principal amount of 5.900% Fixed-to-Fixed Rate Subordinated Notes due in 2029.
On July 1, 2019, Synovus completed a $350 million public offering of Series E Preferred Stock. The offering generated net proceeds of $341.5 million.
In December 2018, the federal banking regulators adopted as final the transitional arrangements to permit banking organizations to phase-in the day-one impact of the adoption of ASU 2016-13, referred to as the current expected credit loss model, on regulatory capital over a period of three years. For additional information on ASU 2016-13, see "Note 1 - Basis of Presentation" in 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 dividends from subsidiaries), financial markets and other economic trends, as well as regulatory requirements regarding the payment of dividends. During the first quarter of 2018, Synovus increased the quarterly common stock dividend by 67%20% to $0.25$0.30 per share effective with the quarterly dividend declared during the first quarter of 2018.2019 dividend paid in April 2019.
Synovus' ability to pay dividends on its capital stock, consisting of the common stock and the preferred stock is primarily dependent upon dividends and distributions that it receives from its bank and non-banking subsidiaries, which are restricted by various regulations administered by federal and state bank regulatory authorities, as further discussed below. During the six months ended June 30, 2018, Synovus Bank paid upstream cash dividends to Synovus totaling $110.0 million. For the year ended December 31, 2017, Synovus Bank and non-bank subsidiaries made upstream cash distributions to the Parent Company totaling $451.0 million including cash dividends of $283.2 million.authorities.
Synovus declared dividends of $0.50$0.60 and $0.30$0.50 per common share for the six months ended June 30, 20182019 and six months ended June 30, 2017,2018, respectively. In addition to dividends paid on its common stock, Synovus paid dividends of $6.3 million on its Series D Preferred Stock during the six months ended June 30, 2019 and paid dividends of $5.1 million on its Series C Preferred Stock during both the six months ended June 30, 2018 and 2017.
On June 21, 2018, Synovus completed a public offering of $200 million of Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series D. The offering generated net proceeds of $195 million, which were largely used to fund the redemption of all of the outstanding shares of Series C Preferred Stock on August 1, 2018 for an aggregate redemption price of $130 million.2018.
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, and market risk and has the authority to establish policies relative to these risks. ALCO, operating under liquidity and funding policies approved by the Board of Directors, actively analyzes 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 lookingforward-looking liquidity needs and sources. 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 placed on maintaining numerous sources of current and potential liquidity to allow Synovus to meet its obligations to depositors, borrowers, and creditors on a timely basis.
Liquidity is generated primarily through maturities and repayments of loans by customers, maturities and sales of investment securities, core deposit growth, and access to sources of funds other than 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 funding maturities. Liquidity is also enhanced by the acquisition of new deposits. Each of the local markets monitors deposit flows and evaluates local market conditions in an effort to retain and grow deposits.
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 funding 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.percent (the balance of these deposits at June 30, 2019 was $530.2 million). In addition, Synovus Bank has the capacity to access funding through its membership in the FHLB system. At June 30, 2018,2019, based on currently pledged collateral, Synovus Bank had access to incremental funding of $1.26$2.06 billion, subject to FHLB credit policies, through utilization of FHLB advances.

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 six months ended June 30, 2018, Synovus Bank paid upstream cash dividends to Synovus totaling $110.0 million. For the year ended December 31, 2017, Synovus Bank and non-bank subsidiaries made upstream cash distributions to the Parent Company totaling $451.0 million including cash dividends of $283.2 million. 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, liquidity, and overall condition. In addition, GA DBF rules and related statutes contain limitations on payments of dividends by Synovus without the approval of the GA DBF.
On June 21, 2018,February 7, 2019, Synovus completed a public offering of $200$300.0 million aggregate principal amount of Fixed-to-Floating5.900% Fixed-to-Fixed Rate Non-Cumulative PerpetualSubordinated Notes due in 2029.  Subject to any redemption prior to February 7, 2029, the notes will bear interest at the rate of 5.900% per annum for the first five years and, thereafter, at a fixed rate which will be 3.379% above the 5-Year Mid-Swap Rate as of the reset date. Interest on the notes will be payable semi-annually in arrears. The notes will mature on February 7, 2029. Proceeds from these notes were primarily used to repurchase common stock under the current authorization.
On July 1, 2019, Synovus completed a $350 million public offering of Series E Preferred Stock, Series D.Stock. The offering generated net proceeds of $195 million, which were largely used$341.5 million. Dividends on the shares are non-cumulative and, if declared, will accrue and be payable, in arrears, quarterly at a rate per annum equal to fund5.875% for each dividend period from the redemption of all oforiginal issue date to, but excluding, July 1, 2024. From and including July 1, 2024, the outstanding shares ofdividend rate will change and reset every five years on July 1 at a rate equal to the five-year U.S. Treasury Rate plus 4.127% per annum. The Series CE Preferred Stock is redeemable at Synovus' option in whole or in part, from time to time, on AugustJuly 1, 2018 for an aggregate2024 or any subsequent reset date, or in whole but not in part, at any time within 90 days following a regulatory capital treatment event, in each case, at a redemption price equal to $25.00 per share, plus any declared and unpaid dividends, without accumulation of $130 million.any undeclared dividends. The Series E Preferred Stock has no preemptive or conversion rights. Except in limited circumstances, the Series E Preferred Stock does not have any voting rights. Proceeds from the preferred stock offering will be used for general corporate purposes, including share repurchases under the new authorization.
On November 1, 2017, Synovus issued $300.0 million aggregate principal amount of 3.125% senior notes maturing in 2022 in a public offering with aggregate proceeds of $296.9 million, net of discount and debt issuance costs. On November 9, 2017, Synovus redeemed all of the $300.0 million aggregate principal amount of its 7.875% senior notes due 2019 at a "make whole" premium. 2017 results included a loss of $23.2 million related to early extinguishment of these notes. Additionally, during 2017, Synovus paid off the remaining balance of $278.6 million of its subordinated notes at their maturity date of June 15, 2017.
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 - 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." ofSynovus' 20172018 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, which is redeemable beginning on August 1, 2018, or strengthen its liquidity or capital position.
Earning Assets and Sources of Funds
Average total assets for the six months ended June 30, 20182019 increased $838.0 million$14.86 billion, or 2.7%47.4%, to $31.37$46.24 billion as compared to $30.54$31.37 billion for the first six months of 2017.2018. Average earning assets increased $968.6 million,$13.32 billion, or 3.4%45.0%, in the first six months of 20182019 compared to the same period in 20172018 and represented 94.3%92.8% of average total assets at June 30, 2018,2019, as compared to 93.7%94.3% at June 30, 2017.2018. The increase in average earning assets resulted from a $708.9 million$10.64 billion increase in average loans, net, and a $242.8 million$2.66 billion increase in average taxable investment securities. securities primarily attributable to the FCB acquisition.
Average interest bearinginterest-bearing liabilities increased $632.9 million,$11.05 billion, or 3.1%53.2%, to $20.76$31.81 billion for the first six months of 20182019 compared to the same period in 2017.2018. The increase in average interest bearinginterest-bearing liabilities was driven byprimarily related to the $10.93 billion in deposits acquired from FCB, of which $9.42 billion were interest-bearing. The year-over-year increase in average interest-bearing liabilities included a $672.8 million$5.72 billion increase in average time deposits, and a $206.0$2.97 billion increase in average money market deposit accounts, a $1.35 billion increase in average interest-bearing demand deposits, a $608.1 million increase in average interest bearing demand deposits. These increases were partially offset byother short-term borrowings, and a $238.2$256.4 million decreaseincrease in average long-term debt.debt, primarily due to the $300.0 million aggregate principal amount of fixed-to-fixed rate subordinated notes issued in February 2019. Average non-interest bearingnon-interest-bearing demand deposits increased $229.1 million,$1.71 billion, or 3.2%23.0%, to $7.47$9.18 billion for the first six months of 20182019 compared to the same period in 2017.2018, due primarily to the FCB acquisition.
Net interest income for the six months ended June 30, 20182019 was $558.9$794.4 million, an increase of $67.8$235.6 million, or 13.8%42.2%, compared to $491.0$558.9 million for the six months ended June 30, 2017.
The net2018, driven primarily by the FCB acquisition. Net interest margin was 3.82% for the six months ended June 30, 2018, an increase of 36down 8 basis points from 3.46% forover the six months ended June 30, 2017.comparable six-month periods to 3.74% , and was impacted by the FCB acquisition, the continued deposit shift to time deposits, and the issuance of subordinated debt. The yield on earning assets was 4.39%4.80%, up 46an increase of 41 basis points compared to the six months ended June 30, 2017 and2018, while the effectivetotal cost of funds increased 1051 basis points to 0.57%1.11%. The yield on loans was 4.79%, an increase of 48increased 38 basis points fromto 5.17%, and the yield on investment securities increased 71 basis points to 3.05% over the six months ended June 30, 2017 and the yield on investment securities was 2.34%, an increase of 25 basis points from the six months ended June 30, 2017.2018.
On a sequential quarter basis, net interest income increased by $10.3 million and the net interest margin increased by 8 basis points to 3.86%.was essentially flat. The increase in net interest income was driven by an $81.3 million increase in average loans, net. The increase in net interest income for the quarter was also driven by margin expansion. Additionally, the rate increases in March and June favorably impacted net interest income and the net interest margin for the three months ended June 30, 2018 compared to the previous quarter. The yield on earning assetsquarter was 4.47%3.69%, up 16down 9 basis points from the first quarter of 2018. This increase was driven by2019, and included a 1 basis point decrease in earning asset yields and an 188 basis point increase in loan yields. The effectivethe total cost of funds was 0.61%funds. Net interest income and margin for the second quarter of 2018, up 82019 were favorably impacted by $21.0 million, or 21 basis points, fromof purchase accounting adjustments primarily comprised of $9.8 million of loan accretion and $11.0 million of deposit premium amortization compared to a favorable impact of $18.8 million, or 19 basis points, including $7.4 million of loan accretion and $11.0 million of deposit premium amortization, in the first quarter of 2018.2019. The sequential quarter decrease in the net interest margin was driven by the full quarter effect of sub-debt issuance and continued upward repricing of

time deposits. The net interest margin, excluding the impact of purchase accounting adjustments was 3.48% for the second quarter of 2019, down 11 basis points sequentially.


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.
Average Balances, Interest, and Yields2018 2017
Table 10 - Average Balances and Yields/Rates2019 2018
(dollars in thousands) (yields and rates annualized)Second Quarter 
First
Quarter
 Fourth Quarter Third Quarter Second QuarterSecond Quarter First Quarter Fourth Quarter Third Quarter Second Quarter
Interest Earning Assets:                  
Taxable investment securities (1)
$4,077,564
 4,097,162
 3,937,278
 3,786,436
 3,844,688
Investment securities(1)(2)
$6,955,386
 6,536,199
 4,073,685
 4,061,328
 4,077,679
Yield2.34% 2.34
 2.29
 2.11
 2.11
3.03% 3.06
 2.45
 2.39
 2.36
Tax-exempt investment securities(1)(3)
$115
 140
 180
 259
 340
Yield (taxable equivalent) (3)
6.87% 6.57
 7.97
 7.86
 6.87
Trading account assets(4)
$23,772
 8,167
 7,360
 7,823
 3,667
Trading account assets(3)
$4,853
 2,049
 7,493
 16,646
 23,772
Yield2.79% 2.66
 2.78
 2.09
 2.28
1.83% 1.30
 1.90
 2.52
 2.79
Commercial loans(2)(3)
$18,857,271
 18,963,515
 18,935,774
 19,059,936
 19,137,733
Commercial loans(2)(4)
$26,353,973
 26,140,672
 19,150,252
 19,025,830
 18,857,271
Yield4.85% 4.64
 4.49
 4.41
 4.27
5.13% 5.16
 5.13
 4.98
 4.85
Consumer loans(2)
$6,092,899
 5,899,015
 5,704,629
 5,440,765
 5,215,258
Consumer loans(4)
$9,423,427
 9,180,679
 6,476,026
 6,298,643
 6,092,899
Yield4.76% 4.71
 4.54
 4.55
 4.49
5.17% 5.10
 4.85
 4.80
 4.76
Allowance for loan losses$(257,966) (251,635) (252,319) (249,248) (251,219)$(259,284) (252,815) (251,098) (251,684) (257,966)
Loans, net (2)
$24,692,204
 24,610,895
 24,388,084
 24,251,453
 24,101,772
Loans, net(4)
$35,518,116
 35,068,536
 25,375,180
 25,072,789
 24,692,204
Yield4.88% 4.70
 4.55
 4.49
 4.36
5.17% 5.17
 5.11
 4.99
 4.88
Mortgage loans held for sale$50,366
 38,360
 45,353
 52,177
 52,224
$70,497
 34,913
 36,477
 49,030
 50,366
Yield4.42% 3.95
 3.96
 3.88
 3.87
4.27% 4.48
 4.79
 4.71
 4.42
Other earning assets (5)
$724,537
 516,575
 922,296
 543,556
 561,503
$511,488
 679,477
 641,832
 544,704
 724,537
Yield1.77% 1.48
 1.31
 1.23
 1.00
2.37% 2.45
 2.20
 1.90
 1.77
Federal Home Loan Bank and Federal Reserve Bank Stock(4)
$165,845
 177,381
 159,455
 175,263
 177,323
Federal Home Loan Bank and Federal Reserve Bank Stock(3)
$234,949
 211,408
 162,369
 163,568
 165,845
Yield4.63% 3.39
 4.03
 3.50
 2.99
3.29% 4.82
 4.31
 4.41
 4.63
Total interest earning assets$29,734,403
 29,448,680
 29,460,006
 28,816,967
 28,741,517
$43,295,289

42,532,582

30,297,036

29,908,065

29,734,403
Yield4.47% 4.31
 4.15
 4.11
 3.99
4.79% 4.80
 4.69
 4.58
 4.47
Interest Bearing Liabilities:         
Interest bearing demand deposits$5,001,826
 5,032,000
 4,976,239
 4,868,372
 4,837,053
Interest-Bearing Liabilities:         
Interest-bearing demand deposits$6,335,953
 6,393,304
 4,692,804
 4,701,204
 5,001,826
Rate0.35% 0.31
 0.28
 0.27
 0.23
0.71% 0.68
 0.41
 0.38
 0.35
Money Market accounts, excluding brokered deposits$7,791,107
 7,561,554
 7,514,992
 7,528,036
 7,427,562
Money market accounts, excluding brokered deposits$10,024,836
 10,244,556
 8,050,732
 7,936,621
 7,791,107
Rate0.55% 0.43
 0.36
 0.34
 0.32
1.23% 1.18
 0.89
 0.72
 0.55
Savings deposits$829,800
 811,587
 804,853
 803,184
 805,019
$904,183
 901,059
 815,588
 824,935
 829,800
Rate0.03% 0.03
 0.03
 0.03
 0.04
0.05% 0.06
 0.04
 0.03
 0.03
Time deposits under $100,000$1,161,890
 1,143,780
 1,166,413
 1,183,582
 1,202,746
$2,245,878
 2,238,568
 1,242,811
 1,205,987
 1,161,890
Rate0.82% 0.71
 0.70
 0.68
 0.67
1.39% 1.24
 1.16
 0.99
 0.82
Time deposits over $100,000$2,021,084
 1,895,545
 2,004,031
 2,067,347
 2,040,924
$6,331,665
 6,211,067
 2,478,649
 2,273,582
 2,021,084
Rate1.22% 1.02
 0.99
 0.97
 0.94
1.70% 1.60
 1.67
 1.46
 1.22
Non-maturing brokered deposits$262,976
 424,118
 546,413
 547,466
 564,043
$766,718
 937,629
 349,480
 358,277
 262,976
Rate1.94% 1.14
 0.81
 0.73
 0.54
2.46% 2.60
 2.46
 2.10
 1.94
Brokered time deposits$1,659,941
 1,527,793
 1,651,920
 983,423
 815,515
$1,985,589
 1,845,819
 1,275,276
 1,414,700
 1,659,941
Rate1.85% 1.75
 1.63
 1.16
 0.94
2.28% 2.13
 2.03
 1.94
 1.85
Total interest bearing deposits$18,728,624
 18,396,377
 18,664,861
 17,981,410
 17,692,862
Total interest-bearing deposits$28,594,822
 28,772,002
 18,905,340
 18,715,306
 18,728,624
Rate0.70% 0.58
 0.54
 0.46
 0.41
1.30% 1.24
 0.96
 0.83
 0.70
Federal funds purchased and securities sold under repurchase agreements$210,679
 202,226
 184,369
 191,585
 183,400
$300,168
 233,076
 194,370
 230,504
 207,655
Rate0.38% 0.21
 0.15
 0.08
 0.10
0.20% 0.22
 0.18
 0.25
 0.35
Other short-term borrowings$1,090,581
 517,456
 112,228
 146,794
 3,024
Rate2.59% 2.58
 2.51
 2.12
 2.84
Long-term debt$1,852,094
 2,127,994
 1,713,982
 1,985,175
 2,270,452
$2,114,819
 1,983,910
 1,657,022
 1,656,743
 1,852,094
Rate2.66% 2.32
 2.67
 2.81
 2.83
3.53% 3.33
 3.06
 2.87
 2.66
Total interest bearing liabilities$20,791,397
 20,726,597
 20,563,212
 20,158,170
 20,146,714
Total interest-bearing liabilities$32,100,390
 31,506,444

20,868,960

20,749,347

20,791,397
Rate0.87% 0.76
 0.72
 0.69
 0.68
1.48% 1.38
 1.12
 0.99
 0.87
Non-interest bearing demand deposits$7,539,451
 7,391,695
 7,621,147
 7,305,508
 7,298,845
Effective cost of funds0.61% 0.53
 0.50
 0.48
 0.48
Non-interest-bearing demand deposits$9,304,839
 9,054,949
 8,014,761
 7,672,006
 7,539,451
Cost of funds1.15% 1.07
 0.81
 0.73
 0.64
Effective cost of funds(6)
1.10% 1.02
 0.77
 0.69
 0.61
Net interest margin3.86% 3.78
 3.65
 3.63
 3.51
3.69% 3.78
 3.92
 3.89
 3.86
Taxable equivalent adjustment (3)
$120
 116
 234
 283
 298
Taxable equivalent adjustment(2)
$811
 630
 181
 136
 120
                  
(1)
Excludes net unrealized gains (losses).
(2)
Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 21%, in adjusting interest on tax-exempt loans and investment securities to a taxable-equivalent basis.
(3)
Included as a component of other assets on the consolidated balance sheets.
(1)(4) Excludes net unrealized gains (losses).
(2) Average loans are shown net of deferred fees and costs. Non-performing loans 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.
(3) Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 21% beginning in 2018, and 35% for prior years, in adjusting interest on tax-exempt loans and investment securities to a taxable-equivalent basis.
(4) Included as a component of Other Assets on the balance sheet.
(5) Includes interest bearing funds with Federal Reserve Bank, interest earning deposits with banks, and federal funds sold and securities purchased under resale agreements.


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 six months ended June 30, 20182019 and 2017,2018, as well as the variances between the periods caused by changes in interest rates versus changes in volume.
Net Interest Income and Rate/Volume Analysis
Table 11 - Net Interest Income and Rate/Volume AnalysisTable 11 - Net Interest Income and Rate/Volume Analysis
Six Months Ended June 30, 2018 Compared to 2017Six Months Ended June 30, 2019 Compared to 2018
Average Balances Interest Annualized Yield/Rate Change due to Increase (Decrease)Average Balances Interest Annualized Yield/Rate Change due to Increase (Decrease)
(dollars in thousands)2018 2017 2018 2017 2018 2017 Volume Rate 2019 2018 2019 2018 2019 2018 Volume Rate 
Assets                                  
Interest earning assets:                                  
Taxable investment securities$4,087,309
 $3,843,131
 $47,812
 $40,069
 2.34% 2.09% $2,531
 $5,212
 $7,743
Tax-exempt investment securities(2)
128
 1,528
 4
 45
 6.71
 5.95
 (41) —
 (41)
Total investment securities4,087,437
 3,844,659
 47,816
 40,114
 2.34
 2.09
 2,490
 5,212
 7,702
Investment securities$6,746,950
 $4,087,437
 $102,789
 $47,816
 3.05% 2.34% $31,103
 $23,870
 $54,973
Trading account assets16,012
 5,047
 220
 49
 2.75
 1.93
 105
 66
 171
3,459
 16,012
 29
 220
 1.67
 2.75
 (171) (20) (191)
Taxable loans, net(1)
24,854,408
 24,122,851
 584,543
 510,222
 4.74
 4.27
 15,490
 58,831
 74,321
35,207,787
 24,854,408
 900,151
 584,543
 5.16
 4.74
 243,358
 72,250
 315,608
Tax-exempt loans, net(1)(2)
52,184
 72,553
 1,120
 1,688
 4.33
 4.69
 (474) (94) (568)342,848
 52,184
 6,587
 1,120
 3.87
 4.33
 6,241
 (774) 5,467
Allowance for loan losses(254,818) (252,565)              (256,067) (254,818)              
Loans, net24,651,774
 23,942,839
 585,663
 511,910
 4.79
 4.31
 15,016
 58,737
 73,753
35,294,568
 24,651,774
 906,738
 585,663
 5.17
 4.79
 249,599

71,476
 321,075
Mortgage loans held for sale44,396
 49,405
 936
 972
 4.22
 3.93
 (98) 62
 (36)52,803
 44,396
 1,143
 936
 4.33
 4.22
 176
 31
 207
Other earning assets(3)
621,131
 607,656
 5,147
 2,684
 1.65
 0.88
 59
 2,404
 2,463
595,018
 621,131
 7,233
 5,147
 2.42
 1.65
 (212) 2,298
 2,086
Federal Home Loan Bank and Federal Reserve Bank stock171,581
 174,101
 3,422
 2,788
 3.99
 3.20
 (40) 674
 634
223,244
 171,581
 4,479
 3,422
 4.01
 3.99
 1,022
 35
 1,057
Total interest earning assets29,592,331
 28,623,707
 643,204
 558,517
 4.39
 3.93
 17,532
 67,155
 84,687
42,916,042

29,592,331
 1,022,411

643,204
 4.80
 4.39
 281,517

97,690

379,207
Cash and due from banks387,472
 396,305
              517,958
 387,472
              
Premises and equipment, net427,291
 414,810
              483,420
 427,291
              
Other real estate3,709
 21,723
              14,056
 3,709
              
Cash surrender value of bank-owned life insurance763,741
 543,233
              
Other assets(4)
964,141
 1,080,397
              1,544,423
 420,908
              
Total assets$31,374,944
 $30,536,942
              $46,239,640

$31,374,944
              
                                  
Liabilities and Shareholders' EquityLiabilities and Shareholders' Equity                Liabilities and Shareholders' Equity                
Interest-bearing liabilities:                                  
Interest-bearing demand deposits$5,016,830
 $4,810,836
 $8,151
 $5,001
 0.33% 0.21% $215
 $2,935
 $3,150
$6,364,470
 $5,016,830
 $21,974
 $8,151
 0.70% 0.33% $2,205
 $11,618
 $13,823
Money market accounts8,020,066
 8,017,785
 21,192
 12,857
 0.53
 0.32
 3
 8,332
 8,335
10,985,791
 8,020,066
 71,264
 21,192
 1.31
 0.53
 7,794
 42,278
 50,072
Savings deposits820,744
 857,050
 118
 329
 0.03
 0.08
 (14) (197) (211)902,630
 820,744
 258
 118
 0.06
 0.03
 12
 128
 140
Time deposits4,705,778
 4,032,971
 29,514
 16,887
 1.26
 0.84
 2,803
 9,824
 12,627
10,430,033
 4,705,778
 86,887
 29,514
 1.68
 1.26
 35,767
 21,606
 57,373
Federal funds purchased and securities sold under repurchase agreements206,476
 180,145
 310
 84
 0.30
 0.09
 12
 214
 226
266,807
 204,956
 281
 288
 0.21
 0.28
 86
 (93) (7)
Other short-term borrowings805,602
 197,460
 10,476
 1,516
 2.59
 1.53
 4,614
 4,346
 8,960
Long-term debt1,989,282
 2,227,501
 24,822
 31,728
 2.48
 2.83
 (3,343) (3,563) (6,906)2,049,726
 1,793,342
 35,392
 23,328
 3.43
 2.60
 3,306
 8,758
 12,064
Total interest-bearing liabilities20,759,176
 20,126,288
 84,107
 66,886
 0.81
 0.67
 (324) 17,545
 17,221
31,805,059

20,759,176
 226,532
 84,107
 1.43
 0.81
 53,784

88,641

142,425
Non-interest bearing deposits7,465,982
 7,236,840
              
Non-interest-bearing deposits9,180,584
 7,465,982
              
Other liabilities201,790
 214,381
              689,462
 201,790
              
Shareholders' equity2,947,996
 2,959,433
              4,564,535
 2,947,996
              
Total liabilities and equity$31,374,944
 $30,536,942
              $46,239,640

$31,374,944
              
Interest rate spread:        3.58% 3.26%              3.37% 3.58%      
Net interest income - FTE/margin(5)
    $559,097
 $491,631
 3.82% 3.46% $17,856
 $49,610
 $67,466
    $795,879
 $559,097
 3.74% 3.82% $227,733

$9,049

$236,782
Taxable equivalent adjustment    236
 607
              1,441
 236
          
Net interest income, actual    $558,861
 $491,024
              $794,438
 $558,861
          
                                  
(1) Average loans are shown net of unearned income. Non-performing loans are included. Interest income includes fees as follows: 2019 - $17.1 million, 2018 - $15.5 million, 2017 - $15.7 million.
(2) Reflects taxable-equivalent adjustments, using the statutory federal income tax rate (21% in 2018 and 35% in 2017)of 21%, in adjusting interest on tax-exempt loans and investment securities
to a taxable-equivalent basis.
(3) Includes interest bearinginterest-bearing funds with Federal Reserve Bank, interest earning deposits with banks, and federal funds sold and securities purchased under resale agreements.
(4) Includes average net unrealized gains (losses) on investment securities available for sale of $(115.1)$(36.5) million and $(41.2)$(115.1) million for the six months ended June 30, 2019 and 2018, andrespectively.
2017, respectively.
(5) The net interest margin is calculated by dividing annualized net interest income - FTE by average total interest earnings assets.

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 to determine a baseline net interest income forecast and the sensitivity of this forecast to changes in interest rates. These simulations include all of Synovus’ earning assets and liabilities. Forecasted balance sheet changes, primarily reflecting loan and deposit growth forecasts, are included in the periods modeled. Anticipated deposit mix changes in each interest rate scenario are also included in the periods modeled. Assumptions utilized in the model are updated on an ongoing basis and are reviewed and approved by ALCO and the Risk Committee of the Board of Directors.
Synovus has modeled its baseline net interest income forecast assuming a flat interest rate environment with the federal funds rate at the Federal Reserve’s current targeted range of 1.75%2.25% to 2.00%2.50% and the current prime rate of 5.00%5.50%. Synovus has modeled the impact of a gradual increase in short-term ratesthe targeted federal funds range and the prime rate of 100 and 200 basis points and a gradual decline of 100 and 200 basis points to determine the sensitivity of net interest income for the next twelve months. Synovus continues to maintain aSynovus' current rate risk position is considered modestly asset sensitive position whichasset-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 June 30, 2018,2019, with comparable information for December 31, 2017.2018.
 
Table 12 - Twelve Month Net Interest Income Sensitivity(1)
   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) June 30, 2019 December 31, 2018
 +200 4.7% 3.4%
 +100 3.0% 2.0%
 Flat —% —%
 -100 (1.5)% (2.0)%
 -200 (4.8)% N/A
      
   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) June 30, 2018 December 31, 2017
 +200 3.0% 3.6%
 +100 1.4% 1.9%
 Flat —% —%
 -100 -3.7% -4.7%
      
Several factors could serve to diminish or eliminate this asset sensitivity in a rising rate environment. These factors(1) December 31, 2018 does not include a higher than projected levelassets and liabilities of deposit customer migration to higher cost deposits, such as certificates of deposit,FCB 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 basedwere acquired 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.
  As of June 30, 2018
Change in Short-term Interest Rates (in basis points) Base Scenario 15% Increase in Average Repricing Beta
+200 3.0% 1.4%
+100 1.4% 0.7%
     
January 1, 2019.
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 value of equity and its sensitivity to immediate changes in interest rates. This EVE modeling allows Synovus to capture longer-term repricing risk and options risk embedded in the balance sheet. These simulations value only the current balance sheet and do not incorporate growth assumptions used in the net interest income simulation. The economic value of equity is 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 in various interest rate scenarios to determine the net impact on the economic value of equity. Key assumptions utilized in the model, namely loan prepayments, investment security prepayments, deposit repricing betas, and non-maturity deposit duration have a significant impact on the results of the EVE simulations. As illustrated in the table below, the EVE model indicates that, compared with a valuation assuming stable rates, EVE is projected to increasedecrease by 1.6%0.5% and by 1.5%4.3%, assuming an immediate and sustained increase in interest rates of 100 and 200 basis points, respectively. Assuming an immediate 100 basis point and 200 basis point decline in rates, EVE is projected to decrease by 14.7%.7.0% and 19.2%, respectively. These metrics reflect a relatively stable long termchanges in long-term interest rate risk position as comparedsensitivity are primarily due to the impact of the acquisition of FCB.
Table 13 - Economic Value of Sensitivity(1)
    
  Estimated Change in EVE
Immediate Change in Interest Rates (in basis points) June 30, 2019 December 31, 2018
+200 (4.3)% 0.7%
+100 (0.5)% 1.3%
-100 (7.0)% (13.9)%
-200 (19.2)% N/A
     
(1) December 31, 2017.

  Estimated Change in EVE
Immediate Change in Interest Rates (in basis points) June 30, 2018 December 31, 2017
+200 1.5% -0.2%
+100 1.6% 1.6%
-100 -14.7% -16.9%
     
ADDITIONAL DISCLOSURES
Recently Issued Accounting Standards
Several accounting standards will be effective in fiscal year 2019 or later. Synovus is currently evaluating the requirements2018 does not include assets and liabilities 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 2017-04, Intangibles-Goodwill and Other, Simplifying the Test for Goodwill Impairment
ASU 2016-13, Financial Instruments-Credit Losses (CECL)
ASU 2016-02, Leases
The ASUs with the most significant impact on Synovus are ASU 2016-13, Financial Instruments-Credit Losses (CECL), effective in 2020 and ASU 2016-02, Leases, effective in 2019.
ASU 2016-13, Financial Instruments--Credit Losses (CECL).In June 2016, the FASB issued the new guidance related to credit losses. The new guidance replaces the existing incurred loss impairment guidance with an expected credit loss methodology. The new guidance will require management’s estimate of credit losses over the full remaining expected life of loans and other financial instruments. For Synovus, 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 permittedFCB which were acquired on January 1, 2019.  Upon adoption, Synovus will record a cumulative effect adjustment to retained earnings as of the beginning of the reporting period of adoption.  

Synovus has begun its implementation efforts which are led by a cross-functional steering committee.  Management expects that the allowance for loan losses will be higher under the new standard; however, management is still in the process of determining the magnitude of the impact on its financial statements and regulatory capital ratios.  Additionally, the extent of the expected 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 2016-02, Leases.In February 2016, the FASB issued ASU 2016-02, 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, including operating leases, with a lease term greater than 12 months. From a lessor perspective, the accounting model is largely unchanged, though the new standard does include certain targeted improvements to align, where necessary, lessor accounting with the lessee accounting model and the revenue recognition guidance in ASC Topic 606 (those related to evaluating when profit can be recognized). For Synovus, the impact of this ASU will primarily relate to its accounting and reporting of leases as a lessee. The new ASU will be effective for Synovus beginning January 1, 2019. Synovus will adopt this ASU retrospectively, at the beginning of the period of adoption, through a cumulative-effect adjustment to retained earnings. 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 contracts that may include embedded leases. Synovus currently expects to recognize lease liabilities and corresponding right-of-use assets (at their present value) related to substantially all of the $230 million of future minimum lease commitments as disclosed in Note 7 of Synovus' 2017 Form 10-K. However, the population of contracts requiring balance sheet recognition and their initial measurement continues to be under evaluation.
See "Note 1 - Significant Accounting Policies" in this Report for a discussion of recently adopted accounting standards updates.


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' 20172018 Form 10-K should be reviewed for a greater understanding of how we record and report our financial performance. In connection with the adoption of ASU 2016-18, Statement of Cash Flows-Restricted Cash, Synovus changed its presentation of cash and cash equivalents, effective January 1, 2018, to include cash and due from banks as well as interest bearing funds with the Federal Reserve Bank, interest earning deposits with banks, and federal funds sold and securities purchased under resale agreements, which are inclusive of any restricted cash and restricted cash equivalents. Prior to 2018, cash and cash equivalents only included cash and due from banks. Prior periods have been revised to maintain comparability. Excluding the aforementioned presentation change,recently adopted accounting standards and purchased loans accounting policy disclosed in "Note 1 - Basis of Presentation" in this Report, there have been no significant changes to the accounting policies, estimates and assumptions, or the judgments affecting the application of these estimates and assumptions from those disclosed in Synovus' 20172018 Form 10-K.













Non-GAAP Financial Measures
The measures entitled adjusted non-interest income; adjusted non-interest expense; adjusted total revenues; adjusted tangible efficiency ratio; adjusted net income per common share, diluted; adjusted return on average assets; adjusted return on average common equity; adjusted return on average tangible common equity; average core deposits; core transaction deposits; tangible common equity ratio; and common equity Tier 1 (CET1)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; total non-interest expense; total revenues; efficiency ratio;ratio-FTE; net income per common share, diluted; return on average assets; return on average common equity; total average deposits; the ratio of total shareholders' equity to total assets; and the CET1 ratio, 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 income is a measureare measures used by management to evaluate non-interest income exclusive of net investment securities gains/lossesgains (losses) and changes in fair value of private equity investments, 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. The adjusted return on average tangible common equity is a measure 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. AverageCore deposits and core transaction deposits is a measureare measures used by management to evaluate organic growth of deposits and the quality of deposits as a funding source. The tangible common equity ratio and common equity Tier 1 (CET1)CET1 ratio (fully phased-in) are 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.

Reconciliation of Non-GAAP Financial Measures

Six Months Ended Three Months Ended
(in thousands, except per share data)June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Adjusted non-interest income       
Total non-interest income$140,433
 $140,539
 $73,387
 $68,701
Add/subtract: Investment securities losses (gains), net1,296
 (7,667) 1,296
 1
Add: Decrease in fair value of private equity investments, net3,093
 3,166
 37
 1,352
     Adjusted non-interest income$144,822
 $136,038
 $74,720
 $70,054
        
Adjusted non-interest expense       
Total non-interest expense$399,234
 $389,133
 $204,057
 $191,747
Subtract: Merger-related expense—
 (86) —
 —
Add: Litigation settlement/contingency expense4,026
 —
 1,400
 —
Add/subtract: Restructuring charges, net212
 (6,524) (103) (13)
Subtract: Amortization of intangibles(583) (475) (292) (292)
Subtract: Valuation adjustment to Visa derivative(2,328) —
 (2,328) —
 Adjusted non-interest expense$400,561
 $382,048
 $202,734
 $191,442
        



Table 14 - Reconciliation of Non-GAAP Financial Measures       
 Three Months Ended Six Months Ended
(in thousands)June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
Adjusted non-interest income       
Total non-interest income$89,807
 $73,387
 $169,185
 $140,433
Add: Investment securities losses, net1,845
 1,296
 1,771
 1,296
Subtract/add: (Increase) decrease in fair value of private equity investments, net(1,455) 37
 (2,313) 3,093
     Adjusted non-interest income$90,197
 $74,720
 $168,643
 $144,822
        
Adjusted non-interest expense       
Total non-interest expense$264,126
 $204,057
 $556,537
 $399,234
Subtract: Merger-related expense(7,401) —
 (57,140) —
Add: Litigation settlement/contingency expense—
 1,400
 —
 4,026
Subtract/add: Restructuring charges, net(18) (103) (37) 212
Subtract: Fair value adjustment to Visa derivative—
 (2,328) —
 (2,328)
Adjusted non-interest expense$256,707
 $203,026
 $499,360
 $401,144
        

Reconciliation of Non-GAAP Financial Measures, continued

Six Months Ended Three Months Ended
(in thousands, except per share data)June 30, 2018 June 30, 2017 June 30, 2018 June 30, 2017
Adjusted efficiency ratio       
Adjusted non-interest expense$400,561
 $382,048
 $202,734
 $191,442
        
Net interest income558,861
 491,024
 284,577
 251,097
Add: Tax equivalent adjustment236
 607
 120
 298
Add: Total non-interest income140,433
 140,539
 73,387
 68,701
Add/subtract: Investment securities losses (gains), net1,296
 (7,667) 1,296
 1
Total FTE revenues$700,826
 $624,503
 $359,380
 $320,097
Add: Decrease in fair value of private equity investments, net3,093
 3,166
 37
 1,352
Adjusted total revenues$703,919
 $627,669
 $359,417
 $321,449
Efficiency ratio56.97% 62.31% 56.78% 59.90%
      Adjusted efficiency ratio56.90
 60.87
 56.41
 59.56
        
Adjusted net income per common share, diluted       
Net income available to common shareholders$209,229
 $142,742
 $108,622
 $73,444
Add/subtract: Income tax expense related to effects of State Tax Reform717
 —
 (608) —
Add: Merger-related expense—
 86
 —
 —
Subtract: Litigation settlement/contingency expense(4,026) —
 (1,400) —
Subtract/add: Restructuring charges, net(212) 6,524
 103
 13
Add: Amortization of intangibles583
 475
 292
 292
Add: Valuation adjustment to Visa derivative2,328
 —
 2,328
 —
Add/subtract: Investment securities losses (gains), net1,296
 (7,667) 1,296
 1
Add: Decrease in fair value of private equity investments, net3,093
 3,166
 37
 1,352
Subtract: Tax effect of adjustments(719) (963) (624) (613)
Adjusted net income available to common shareholders$212,289
 $144,363
 $110,046
 $74,489
Weighted average common shares outstanding, diluted119,229
 123,304
 119,139
 123,027
Adjusted net income per common share, diluted$1.78
 $1.17
 $0.92
 $0.61
        
Adjusted return on average assets (annualized)       
Net income$214,348
 $147,861
 $111,181
 $76,003
Add/subtract: Income tax expense related to effects of State Tax Reform717
 —
 (608) —
Add: Merger-related expense—
 86
 —
 —
Add: Litigation settlement/contingency expense(4,026) —
 (1,400) —
Subtract/add: Restructuring charges, net(212) 6,524
 103
 13
Add: Amortization of intangibles583
 475
 292
 292
Add: Valuation adjustment to Visa derivative2,328
 —
 2,328
 —
Add/subtract: Investment securities losses (gains), net1,296
 (7,667) 1,296
 1
Add: Decrease in fair value of private equity investments, net3,093
 3,166
 37
 1,352
Subtract: Tax effect of adjustments(719) (963) (624) (613)
Adjusted net income$217,408
 $149,482
 $112,605
 $77,048
Net income annualized$432,249
 $298,173
 $445,946
 $304,847
Adjusted net income annualized$438,419
 $301,442
 $451,657
 $309,039
Total average assets$31,374,944
 $30,536,942
 $31,502,758
 $30,630,748
Return on average assets1.38% 0.98% 1.42% 1.00%
Adjusted return on average assets (annualized)1.40
 0.99
 1.43
 1.01
        
Table 14 - Reconciliation of Non-GAAP Financial Measures, continued    

Three Months Ended Six Months Ended
(in thousands, except per share data)June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
Adjusted total revenues and adjusted tangible efficiency ratio       
Adjusted non-interest expense$256,707
 $203,026
 $499,360
 $401,144
Subtract: Amortization of intangibles(2,410) (292) (5,802) (583)
Adjusted tangible non-interest expense$254,297
 $202,734
 $493,558
 $400,561
        
Net interest income$397,262
 $284,577
 $794,438
 $558,861
Add: Tax equivalent adjustment811
 120
 1,441
 236
Add: Total non-interest income89,807
 73,387
 169,185
 140,433
Total FTE revenues$487,880
 $358,084
 $965,064
 $699,530
Add: Investment securities losses, net1,845
 1,296
 1,771
 1,296
Subtract/add: (Increase) decrease in fair value of private equity investments, net(1,455) 37
 (2,313) 3,093
Adjusted total revenues$488,270
 $359,417
 $964,522
 $703,919
Efficiency ratio-FTE54.14% 56.99% 57.67% 57.07%
 Adjusted tangible efficiency ratio52.08
 56.41
 51.17
 56.90
        
Adjusted net income per common share, diluted       
Net income available to common shareholders$153,034
 $108,622
 $270,070
 $209,229
Subtract/add: Income tax expense, net related to State Tax Reform—
 (608) —
 717
Add: Merger-related expense7,401
 —
 57,140
 —
Subtract: Litigation settlement/contingency expense—
 (1,400) —
 (4,026)
Add/subtract: Restructuring charges, net18
 103
 37
 (212)
Add: Fair value adjustment to Visa derivative—
 2,328
 —
 2,328
Add: Investment securities losses, net1,845
 1,296
 1,771
 1,296
Subtract/add: (Increase) decrease in fair value of private equity investments, net(1,455) 37
 (2,313) 3,093
Subtract: Tax effect of adjustments(1,951) (554) (7,659) (582)
Adjusted net income available to common shareholders$158,892
 $109,824
 $319,046
 $211,843
Weighted average common shares outstanding, diluted159,077
 119,139
 160,908
 119,229
Adjusted net income per common share, diluted$1.00
 $0.92
 $1.98
 $1.78
        






Reconciliation of Non-GAAP Financial Measures, continuedThree Months Ended
(dollars in thousands)June 30, 2018 March 31, 2018 June 30, 2017
Adjusted return on average common equity and adjusted return on average tangible common equity (annualized)     
Net income available to common shareholders$108,622
 $100,607
 $73,444
Subtract/add: Income Tax expense related to effects of State Tax Reform(608) 1,325
 —
Subtract: Litigation settlement/contingency expense(1,400) (2,626) —
Add/subtract: Restructuring charges, net103
 (315) 13
Add: Amortization of intangibles292
 292
 292
Add: Valuation adjustment to Visa derivative2,328
 —
 —
Add: Investment securities losses, net1,296
 —
 1
Add: Decrease in fair value of private equity investments, net37
 3,056
 1,352
Subtract: Tax effect of adjustments(624) (96) (613)
Adjusted net income available to common shareholders$110,046
 $102,243
 $74,489
Net income annualized$441,393
 $414,652
 $298,775
      
Total average shareholders' equity less preferred stock$2,831,368
 $2,790,648
 $2,849,069
Subtract: Goodwill(57,315) (57,315) (57,018)
Subtract: Other intangible assets, net(10,555) (10,915) (11,966)
Total average tangible shareholders' equity less preferred stock$2,763,498
 $2,722,418
 $2,780,085
Return on average common equity (annualized)15.39%
14.62%
10.34%
Adjusted return on average common equity (annualized)15.59
 14.86
 10.49
Adjusted return on average tangible common equity (annualized)15.97
 15.23
 10.75
      
Table 14 - Reconciliation of Non-GAAP Financial Measures, continued    
 Three Months Ended Six Months Ended
(dollars in thousands)June 30, 2019 June 30, 2018 June 30, 2019 June 30, 2018
Adjusted return on average assets (annualized)       
Net income$156,184
 $111,181
 $276,370
 $214,348
Subtract/add: Income tax expense, net related to State Tax Reform—
 (608) —
 717
Add: Merger-related expense7,401
 —
 57,140
 —
Subtract: Litigation settlement/contingency expense—
 (1,400) —
 (4,026)
Add/subtract: Restructuring charges, net18
 103
 37
 (212)
Add: Fair value adjustment to Visa derivative—
 2,328
 —
 2,328
Add: Investment securities losses, net1,845
 1,296
 1,771
 1,296
Subtract/add: (Increase) decrease in fair value of private equity investments, net(1,455) 37
 (2,313) 3,093
Subtract: Tax effect of adjustments(1,951) (554) (7,659) (582)
Adjusted net income$162,042
 $112,383
 $325,346
 $216,962
Net income annualized626,452
 445,946
 557,321
 432,249
Adjusted net income annualized649,949
 450,767
 656,084
 437,520
Total average assets46,679,769
 31,502,758
 46,239,640
 31,374,944
Return on average assets1.34% 1.42% 1.21% 1.38%
Adjusted return on average assets (annualized)1.39
 1.43
 1.42
 1.39
        



Reconciliation of Non-GAAP Financial Measures, continued

       
(dollars in thousands)June 30, 2018 March 31, 2018 December 31, 2018 June 30, 2017
Average core deposits       
Average total deposits$26,268,074
 $25,788,073
 $26,286,009
 $24,991,708
Subtract: Average brokered deposits(1,922,917) (1,951,910) (2,198,333) (1,379,559)
Average core deposits$24,345,157
 $23,836,163
 $24,087,676
 $23,612,149
        
Tangible common equity ratio       
Total assets$31,740,305
 $31,501,028
 $31,221,837
 $30,687,966
Subtract: Goodwill(57,315) (57,315) (57,315) (57,092)
Subtract: Other intangible assets, net(10,458) (10,750) (11,254) (11,843)
Tangible assets$31,672,532
 $31,432,963
 $31,153,268
 $30,619,031
Total shareholders' equity$3,167,694
 $2,956,495
 $2,961,566
 $2,997,947
Subtract: Goodwill(57,315) (57,315) (57,315) (57,092)
Subtract: Other intangible assets, net(10,458) (10,750) (11,254) (11,843)
Subtract: Preferred Stock, no par value(321,118) (125,980) (125,980) (125,980)
Tangible common equity$2,778,803
 $2,762,450
 $2,767,017
 $2,803,032
Total shareholders' equity to total assets ratio9.98% 9.39% 9.49% 9.77%
     Tangible common equity ratio8.77
 8.79
 8.88
 9.15
        
Common equity Tier 1 (CET1) ratio (fully phased-in)       
Common equity Tier 1 (CET1)$2,838,616
      
Subtract: Adjustment related to capital components(3,599)      
CET1 (fully phased-in)$2,835,017
     

Total risk-weighted assets$28,056,193
      
Total risk-weighted assets (fully phased-in)$28,182,637
      
Common equity Tier 1 (CET1) ratio10.12%     

     Common equity Tier 1 (CET1) ratio (fully phased-in)10.06
     

        
Table 14 - Reconciliation of Non-GAAP Financial Measures, continued     
 Three Months Ended
(dollars in thousands)June 30, 2019 March 31, 2019 June 30, 2018
Adjusted return on average common equity and adjusted return on average tangible common equity (annualized)     
Net income available to common shareholders$153,034
 $117,036
 $108,622
Subtract: Income tax expense, net related to State Tax Reform—
 —
 (608)
Add: Merger-related expense7,401
 49,738
 —
Subtract: Litigation settlement/contingency expense—
 —
 (1,400)
Add: Restructuring charges, net18
 19
 103
Add: Fair value adjustment to Visa derivative—
 —
 2,328
Add/subtract: Investment securities losses (gains), net1,845
 (75) 1,296
Subtract/add: (Increase) decrease in fair value of private equity investments, net(1,455) (858) 37
Subtract: Tax effect of adjustments(1,951) (5,705) (554)
Net income available to common shareholders$158,892
 $160,155
 $109,824
      
Adjusted net income available to common shareholders' annualized$637,314
 $649,518
 $440,502
Add: Amortization of intangibles7,250
 10,317
 896
Adjusted net income available to common shareholders excluding amortization of intangibles annualized$644,564

$659,835

$441,398
      
Total average shareholders' equity less preferred stock$4,416,705
 $4,321,561
 $2,831,368
Subtract: Goodwill(487,601) (480,215) (57,315)
Subtract: Other intangible assets, net(69,853) (75,191) (10,555)
Total average tangible shareholders' equity less preferred stock$3,859,251
 $3,766,155
 $2,763,498
Return on average common equity (annualized)13.90% 10.98% 15.39%
Adjusted return on average common equity (annualized)14.43
 15.03
 15.56
Adjusted return on average tangible common equity (annualized)16.70
 17.52
 15.97
      


Table 14 - Reconciliation of Non-GAAP Financial Measures, continued
(in thousands)June 30, 2019 March 31, 2019 December 31, 2018 June 30, 2018
Period-end core deposits and core transaction deposits       
Total deposits$37,966,722
 $38,075,190
 $26,720,322
 $26,442,688
Subtract: Brokered deposits(3,003,544) (2,709,004) (1,548,030) (1,851,010)
Core deposits34,963,178
 35,366,186
 25,172,292
 24,591,678
Subtract: Time deposits, excluding brokered deposits(7,342,951) (7,568,079) (3,685,867) (3,275,932)
Subtract: Public funds(4,351,304) (4,630,022) (2,374,892) (2,224,631)
Core transaction deposits$23,268,923
 $23,168,085
 $19,111,533
 $19,091,115
        


 Current expectation- increase (decrease) vs. 2017
(dollars in thousands)2017 $ %
2018 Expectation for adjusted non-interest income growth     
Total non-interest income, as reported$345,327
 $285 million-$290 million (16%)-(18%)
Subtract: Cabela's Transaction Fee(75,000)    
Add: Investment securities losses, net289
    
Add: decrease in fair value of private equity investments, net3,093
    
Adjusted non-interest income$273,709
 $285 million-$290 million 4%-6%
      
Table 14 - Reconciliation of Non-GAAP Financial Measures, continued
(dollars in thousands)June 30, 2019
March 31, 2019
June 30, 2018
Tangible common equity ratio     
Total assets$47,318,203
 $46,630,025
 $31,740,305
Subtract: Goodwill(492,390) (485,000) (57,315)
Subtract: Other intangible assets, net(61,473) (74,683) (10,458)
Tangible assets$46,764,340
 $46,070,342
 $31,672,532
Total shareholders' equity$4,753,816
 $4,597,753
 $3,167,694
Subtract: Goodwill(492,390) (485,000) (57,315)
Subtract: Other intangible assets, net(61,473) (74,683) (10,458)
Subtract: Preferred Stock, no par value(195,140) (195,140) (321,118)
Tangible common equity$4,004,813
 $3,842,930
 $2,778,803
Total shareholders' equity to total assets ratio10.05% 9.86% 9.98%
Tangible common equity ratio8.56
 8.34
 8.77
      
CET1 ratio (fully phased-in)     
CET1$3,899,532
    
Total risk-weighted assets40,562,547
    
Total risk-weighted assets (fully phased-in)40,630,953
    
CET1 ratio9.61%   

     CET1 ratio (fully phased-in)9.60
   

      






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 June 30, 2018,2019, 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 June 30, 20182019 that have materially affected, or are reasonably likely to materially affect, Synovus' internal control over financial reporting.




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, 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 "Note 13"Note 12 - Commitments and Contingencies"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’ 2017Synovus' 2018 Form 10-K 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. 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.
As a result of Synovus entering intoThere are no material changes during the Merger Agreement with FCB, certainperiod covered by this Report to the risk factors as provided below, have been identified in addition to those previously reported in Synovus’ 2017 10-K. These risks and the other risks associated with the proposed Merger will be more fully discusseddisclosed in the joint proxy statement/prospectus that will be included in the registration statement onSynovus' 2018 Form S-4 that Synovus will file with the SEC in connection with the Merger. We urge you to read the registration statement on Form S-4 once it becomes available because it will contain important information about the Merger, including relevant risk factors.

The consummation of the Merger is contingent upon the satisfaction of a number of conditions, including shareholder and regulatory approvals, that are outside of our or FCB’s control and that we and FCB may be unable to satisfy or obtain or which may delay the consummation of the Merger or result in the imposition of conditions that could reduce the anticipated benefits from the Merger or cause the parties to abandon the Merger.

Consummation of the Merger is contingent upon the satisfaction of a number of conditions, some of which are beyond our and FCB’s control, including, among others: (i) the adoption of the Merger Agreement by the holders of FCB’s class A common stock, (ii) the approval of the issuance of shares of our common stock to be issued to the FCB stockholders in the Merger by our shareholders, (iii) the authorization for listing on the New York Stock Exchange of the shares our common stock to be issued to the FCB stockholders in the Merger, (iv) the effectiveness of the registration statement registering our common stock to be issued to FCB stockholders in the Merger, (v) the absence of any order, injunction or other legal restraint preventing the completion of the Merger or making the consummation of the Merger illegal and (vi) the receipt of required regulatory approvals, including the approval of the Board of Governors of the Federal Reserve System and the Georgia Department of Banking and Finance. Furthermore, each party’s obligation to complete the Merger is also subject to certain additional customary conditions, including (i) subject to certain exceptions, the accuracy of the representations and warranties of the other party, generally subject to a material adverse effect qualification, (ii) performance in all material respects by the other party of its obligations under the Merger Agreement and (iii) receipt by such party of an opinion from its counsel to the effect that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.

These conditions to the closing of the Merger may not be fulfilled in a timely manner or at all, and, accordingly, the Merger may not be completed. In addition, the parties can mutually decide to terminate the Merger Agreement at any time, before or after receipt of the requisite approvals by our shareholders or FCB's stockholders, or we or FCB may elect to terminate the Merger Agreement in certain other circumstances.


In addition, we and FCB may be subject to lawsuits challenging the Merger, and adverse rulings in these lawsuits may delay or prevent the Merger from being completed or require us or FCB to incur significant costs to defend or settle these lawsuits. Any delay in completing the Merger could cause us not to realize, or to be delayed in realizing, some or all of the benefits that we expect it to achieve if the Merger is successfully completed within its expected time frame.

We may fail to realize all of the anticipated benefits of the Merger, or those benefits may take longer to realize than expected. We may also encounter significant difficulties in integrating FCB.
Our ability to realize the anticipated benefits of the Merger will depend, to a large extent, on our ability to successfully integrate the acquired businesses. The integration and combination of the acquired businesses is a complex, costly and time-consuming process. As a result, we will be required to devote significant management attention and resources to integrating their business practices and operations with ours. The integration process may disrupt our business and the business of FCB and, if implemented ineffectively, could limit the full realization of the anticipated benefits of the acquisition. The failure to meet the challenges involved in integrating the acquired businesses and to realize the anticipated benefits of the Merger could cause an interruption of, or a loss of momentum in, our business activities or those of FCB and could adversely impact our business, financial condition and results of operations. In addition, the overall integration of the businesses may result in material unanticipated problems, expenses, liabilities, loss of customers and diversion of our management’s and employees’ attention. The challenges of combining the operations of the companies include, among others:
difficulties in achieving anticipated cost savings, synergies, business opportunities and growth prospects from the acquisition;
difficulties in the integration of operations and systems;
difficulties in the assimilation of employees;
difficulties in managing the expanded operations of a larger and more complex company;
challenges in keeping existing customers and obtaining new customers;
challenges in attracting and retaining key personnel, including personnel that are considered key to the future success of FCB’s businesses; and
challenges in keeping key business relationships in place.
Many of these factors will be outside of our control and any one of them could result in increased costs and liabilities, decreases in the amount of expected income and diversion of management’s time and energy, which could have a material adverse effect on our business, financial condition and results of operations.
In addition, even if the operations of FCB are integrated successfully with our business, the full benefits of the transaction may not be realized, including the synergies, cost savings, growth opportunities or earnings accretion that are expected. These benefits may not be achieved within the anticipated time frame, or at all, and additional unanticipated costs may be incurred in the integration of the businesses. Furthermore, FCB may have unknown or contingent liabilities that we would assume in the acquisition and that were not discovered during the course of our due diligence. These liabilities could include exposure to unexpected asset quality problems, compliance and regulatory violations, key employee and client retention problems and other problems that could result in significant costs to us.
All of these factors could cause dilution to our earnings per share, decrease or delay the expected accretive effect of the transaction, negatively impact the price of our common stock, or have a material adverse effect on our business, financial condition and results of operations.

Failure to complete the Merger could negatively impact our stock price and the future business and financial results.

Completion of the Merger is not assured. If the Merger is not completed, our ongoing business and financial results may be adversely affected and we will be subject to several risks, including the following:

the price of our common stock may decline to the extent that current market prices reflect a market assumption that the Merger will be completed;
having to pay significant costs relating to the Merger without receiving the benefits of the Merger, including, in certain circumstances, a termination fee of $93.5 million;
negative reactions from customers, shareholders, market analysts, employees and future acquisition partners;
the possible loss of employees necessary to operate our business;
we will have been subject to certain restrictions on the conduct of our business, which may have prevented us from making certain acquisitions or dispositions or pursuing certain business opportunities while the Merger was pending; and

the diversion of the focus of our management to the Merger instead of on pursuing other opportunities that could have been beneficial to us and our business.

If the Merger is not completed, we cannot assure our shareholders that these risks will not materialize and will not materially adversely affect our business, financial results, and stock price. Additionally, if the Merger is not completed, we will not recognize the anticipated benefits of the Merger, yet will still incur significant expenses.

While the Merger is pending, we will be subject to business uncertainties and contractual restrictions that could adversely affect our business and operations.

Uncertainty about the effect of the Merger on employees, customers and other persons with whom we or FCB have a business relationship may have an adverse effect on our business, operations and stock price. In connection with the pendency of the acquisition, existing customers of FCB could decide to no longer do business with FCB, reducing the anticipated benefits of the Merger. Synovus is also subject to certain restrictions on the conduct of its business while the Merger is pending. As a result, certain other projects may be delayed or ceased and business decisions could be deferred. Employee retention at FCB, and also at Synovus, may be challenging during the pendency of the Merger, as certain employees may experience uncertainty about their future roles with the combined company. If key employees depart because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with Synovus, FCB or the combined company, the benefits of the Merger could be materially diminished.

In addition, shareholders and market analysts could also have a negative perception of the Merger, which could cause a material reduction in our stock price and could also result in (i) our not achieving the requisite vote to approve the issuance of our shares in the Merger and/or (ii) FCB not achieving the requisite vote to adopt the Merger Agreement.

The Merger may not be accretive and may cause dilution of our adjusted earnings per share following the Merger, which may negatively affect the market price of our common stock.

We currently anticipate that the Merger will be accretive to shareholders of the combined company on an earnings per share basis in 2020. This expectation is based on preliminary estimates, which may materially change. We could also encounter additional transaction and integration-related costs or other factors resulting in the failure to realize all of the benefits anticipated in the Merger. All of these factors could cause dilution of our adjusted earnings per share or decrease or delay the expected accretive effect of the Merger and cause a decrease in the market value of our common stock.

We are expected to incur substantial expenses related to the Merger and our integration with FCB.

Both Synovus and FCB will incur substantial expenses in connection with the Merger and our integration with FCB. There are a large number of processes, policies, procedures, operations, technologies, and systems that must be integrated. While we have assumed that a certain level of expenses would be incurred, there are many factors beyond our control that could affect the total amount or the timing of the integration expenses. Moreover, many of the expenses that will be incurred are, by their nature, difficult to estimate accurately. These expenses could, particularly in the near term, exceed the savings that we expect to achieve from the elimination of duplicative expenses and the realization of economies of scale and cost savings. These integration expenses likely will result in us taking significant charges against earnings following the completion of the Merger, and the amount and timing of such charges are uncertain at present.

Our future results will suffer if we do not effectively manage our expanded operations following the Merger.

Following the Merger, the size of our business will increase significantly beyond its current size. Our future success depends, in part, upon our ability to manage this expanded business, which will pose substantial challenges for our management, including challenges related to the management and monitoring of new operations and associated increased costs and complexity. There can be no assurances we will be successful or that we will realize the expected operating efficiencies, cost savings and other benefits currently anticipated from the Merger.

Current Synovus shareholders may have a reduced ownership and voting interest in the combined company after the Merger.

Synovus expects to issue or reserve for issuance approximately 52 million shares of Synovus common stock to FCB stockholders in connection with the Merger (including shares of Synovus common stock to be issued in connection with outstanding FCB equity awards). Upon completion of the Merger, each Synovus shareholder will remain a shareholder of Synovus with a percentage ownership of the combined company that may be smaller than the shareholder's percentage of Synovus prior to the transaction, depending upon such shareholder's current ownership of Synovus shares. As a result of these potentially reduced ownership

percentages, Synovus shareholders may have less voting power in the combined company than they now have with respect to Synovus.

10-K.
ITEM 2. – UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS
(a) None.
(b) None.
(c) Issuer Purchases of Equity Securities:
Synovus'On June 17, 2019, the Company announced that the Board of Directors authorized a $150increased its prior $400 million share repurchase program that will expire atauthorization to $725 million for the end of 2018. This program was announced on January 23, 2018. The table below sets forth information regarding repurchases of our common stock during the second quarter of 2018.year 2019.
Share Repurchases
(in thousands, except per share data) 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
 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
April 2018 22
 $52.98
 22
 $122,112
May 2018 479
 53.63
 479
 96,408
June 2018 421
 55.14
 421
 73,220
April 2019 —
 $—
 —
 $80,002
May 2019 137
 36.52
 137
 75,002
June 2019 595
 33.58
 595
 380,014
Total 922
 $54.30
 922
 
 732
 $37.71
 732
 
                
(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 second quarter of 20182019 were purchased through open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act. The timing and amount of future repurchases under the share repurchase program will depend upon a variety of factors, including market conditions, regulatory requirements, availability of funds, and other relevant considerations, as determined by us and applicable law and regulations.

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


ITEM 6. – EXHIBITS
   
Exhibit
Number
 Description
  
2.1

 
Agreement and Plan of Merger by and among Synovus Financial Corp., FCB Financial Holdings, Inc. and Azalea Merger Sub Corp., dated as of July 23, 2018, incorporated by reference to Exhibit 2.1 to Synovus' Current Report on Form 8-K dated July 23, 2018, as filed with the SEC on July 25, 2018.
   
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 to Synovus' Current Report on Form 8-K dated April 29, 2014, as filed with the SEC on April 29, 2014.
   
3.4

 
Articles of Amendment to the Amended and Restated Articles of Incorporation of Synovus, incorporated by reference to Exhibit 3.1 to Synovus' Current Report on Form 8-K dated May 19, 2014, as filed with the SEC on May 19, 2014.
   
3.5

 
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 June 20, 2018, as filed with the SEC on June 21, 2018.
   
3.6

 
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 July 1, 2019, as filed with the SEC on July 1, 2019.
3.7
Bylaws, as amended, of Synovus, incorporated by reference to Exhibit 3.1 of Synovus' Current Report on Form 8-K dated November 8, 2010, as filed with the SEC on November 9, 2010.
  
12.131.1

 
Ratio of Earnings to Fixed Charges.
31.1
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 20022002..
   
31.2

 
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   
32

 
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 20022002..
   
101

 Interactive Data File
   


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.
   
August 8, 20182, 2019By: /s/ Kevin S. BlairAndrew J. Gregory, Jr.
Date  Kevin S. BlairAndrew J. Gregory, Jr.
   Executive Vice President and Chief Financial Officer
   (Duly Authorized Officer and Principal Financial Officer)




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