0000018349 us-gaap:EstimateOfFairValueFairValueDisclosureMember 2019-03-31

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 March 31, 20192020
Commission file number 1-10312
 

syn-20200331_g1.jpg
SYNOVUS FINANCIAL CORP.CORP.
(Exact name of registrant as specified in its charter)

 
Georgia58-1134883
(State or other jurisdiction of incorporation or organization)
   (I.R.S. Employer Identification No.)

1111 Bay Avenue
Suite 500, Columbus, Georgia
31901
Suite 500,Columbus,Georgia31901
(Address of principal executive offices)(Zip Code)
Registrant’s telephone number, including area code: (706) 649-2311
Securities registered pursuant to Section 12(b) of the Act:
641-6500
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $1.00 Par Value
SNVNew York Stock 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
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.    YESYes x☒  NONo ¨☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files).   YESYes x☒  NONo ¨☐
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”, “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer☒Accelerated filer☐
Large accelerated filerxAccelerated filer¨
Non-accelerated filer¨☐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 13(a) of the Exchange Act.  ¨ 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YESYes ¨☐    NONo x☒
Indicate the numberAs of May 7, 2020, 147,285,880 shares outstanding of each of the issuer’s class ofregistrant's common stock, as$1.00 par value, were outstanding.




Table of the latest practicable date.Contents

ClassApril 30, 2019
Page
Common Stock, $1.00 Par Value157,501,073


Table of Contents
Financial Information
Page
Part I.
Financial Information
Index of Defined Terms
i
Item 1.Financial Statements (Unaudited)
Consolidated Balance Sheets as of March 31, 20192020 and December 31, 20182019
1
Consolidated Statements of Income for the Three Months Ended March 31, 20192020 and 20182019
2
Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 20192020 and 20182019
3
Consolidated Statements of Changes in Shareholders' Equity for the Three Months Ended March 31, 20192020 and 20182019
4
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 20192020 and 20182019
5
Notes to Unaudited Interim Consolidated Financial Statements
6
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
3940
Item 3.
6365
Item 4.Controls and Procedures
6365
Other Information
Item 1.Legal Proceedings
6466
Item 1A.Risk Factors
6466
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
6468
Item 3.Defaults Upon Senior Securities
6468
Item 4.Mine Safety Disclosures
6468
Item 5.Other Information
6468
Item 6.Exhibits
6569
Signatures
6670






SYNOVUS FINANCIAL CORP.
INDEX OF DEFINED TERMS

Throughout this discussion, references to "Synovus", "we", "our", "us", "the Company" and similar terms refer to the consolidated entity consisting of Synovus Financial Corp. and its subsidiaries unless the context indicates that we refer only to the Parent Company, Synovus Financial Corp. When we refer to the "Bank" or "Synovus Bank" we mean our only bank subsidiary, Synovus Bank.
ACL – Allowance for credit losses (applies to debt securities, loans, and unfunded loan commitments)
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 all of the outstanding stock of FCB Financial Holdings, Inc.
ARRC – Alternative Reference Rates Committee
ASC – Accounting Standards Codification
ASC 310-30 loans – Loans accounted for in accordance with ASC 310 – 30, Loans and Debt Securities Acquired with Deteriorated Credit Quality
ASU – Accounting Standards Update
ATM – Automatic teller machine
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
CARES Act – The Coronavirus Aid, Relief, and Economic Security (CARES) Act, as enacted on March 27, 2020.
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") 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
CRA – Community Reinvestment Act
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

i
Table of Contents

Federal Reserve Bank – The 12 banks that are the operating arms of the U.S. central bank. They implement the policies of the Federal Reserve Board and also conduct economic research
Federal Reserve Board – The 7-member Board of Governors that oversees the Federal Reserve System, establishes monetary policy (interest rates, credit, etc.), and monitors the economic health of the country. Its members are appointed by the President subject to Senate confirmation, and serve 14-year terms
Federal Reserve System – The 12 Federal Reserve Banks, with each one serving member banks in its own district. This system, supervised by the Federal Reserve Board, has broad regulatory powers over the money supply and the credit structure
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 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 acquisitionacquired entity 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 January 1, 2019 merger of Azalea Merger Sub with and into FCB and immediately thereafter, the merger of FCB 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)
MRSU – Market Restricted Share Unit
NAICS – North American Industry Classification System
nm – not meaningful
NPA – Non-performing assets
NPL – Non-performing loans
NSF – Non-sufficient funds
OCI – Other comprehensive income
ORE – Other real estate
OTC – Over-the-counter
OTTI – Other-than-temporary impairment

ii
Table of Contents

Parent Company – Synovus Financial Corp.
PCD – Purchased Credit Deteriorated
PCI – Purchased Credit Impaired
PPP –Paycheck Protection Program established as part of the CARES Act and launched on April 3, 2020 by the Small Business Administration and Treasury
ii

PSU – Performance Share Unit
RSU – Restricted Share Unit
ROU – Right-of-use
SBA – Small Business Administration
SBIC – Small Business Investment Company
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
SOFR – Secured Overnight Financing Rate
Synovus – Synovus Financial Corp.
Synovus Bank – A Georgia state-chartered bank and wholly-owned subsidiary of Synovus, through which Synovus conducts its banking operations
Synovus' 20182019 Form 10-K – Synovus' Annual Report on Form 10-K for the year ended December 31, 2018
Synovus Mortgage – Synovus Mortgage Corp., a wholly-owned subsidiary of Synovus Bank2019
Synovus Securities – Synovus Securities, Inc., a wholly-owned subsidiary of Synovus
Synovus Trust – Synovus Trust Company, N.A., a wholly-owned subsidiary of Synovus Bank
TDR – Troubled debt restructuring (as defined in ASC 310-40)
the Treasury – United States Department of the Treasury
TJCA – U.S. Tax Cuts and Jobs Act of 2017
UPB – Unpaid principal balance
VIE – Variable interest entity (as defined in ASC 810-10)
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-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)March 31, 2019 December 31, 2018
ASSETS   
Cash and due from banks$519,681
 $468,426
Interest-bearing funds with Federal Reserve Bank688,470
 641,476
Interest earning deposits with banks24,147
 19,841
Federal funds sold and securities purchased under resale agreements33,627
 13,821
     Total cash, cash equivalents, restricted cash, and restricted cash equivalents1,265,925
 1,143,564
Mortgage loans held for sale, at fair value55,970
 37,129
Investment securities available for sale, at fair value6,808,191
 3,991,632
Loans35,634,501
 25,946,573
Allowance for loan losses(257,036) (250,555)
Loans, net35,377,465
 25,696,018
Cash surrender value of bank-owned life insurance761,098
 554,134
Premises and equipment, net479,965
 434,307
Goodwill485,000
 57,315
Other intangible assets74,683
 9,875
Other assets1,321,728
 745,218
Total assets$46,630,025
 $32,669,192
LIABILITIES AND SHAREHOLDERS' EQUITY   
Liabilities   
Deposits:   
Non-interest-bearing deposits$9,144,315
 $7,650,967
Interest-bearing deposits28,930,875
 19,069,355
Total deposits38,075,190
 26,720,322
Federal funds purchased and securities sold under repurchase agreements314,383
 237,692
Other short-term borrowings853,000
 650,000
Long-term debt2,106,037
 1,657,157
Other liabilities683,662
 270,419
Total liabilities42,032,272
 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 March 31, 2019 and December 31, 2018195,140
 195,140
Common stock - $1.00 par value. Authorized 342,857,143 shares; 165,929,349 issued at March 31, 2019 and 143,300,449 issued at December 31, 2018; 157,454,007 outstanding at March 31, 2019 and 115,865,510 outstanding at December 31, 2018165,929
 143,300
Additional paid-in capital3,794,262
 3,060,561
Treasury stock, at cost – 8,475,342 shares at March 31, 2019 and 27,434,939 shares at December 31, 2018(319,898) (1,014,746)
Accumulated other comprehensive loss, net(18,342) (94,420)
Retained earnings780,662
 843,767
Total shareholders’ equity4,597,753
 3,133,602
Total liabilities and shareholders' equity$46,630,025
 $32,669,192
    
See accompanying notes to unaudited interim consolidated financial statements.


SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
 Three Months Ended March 31,
(in thousands, except per share data)2019 2018
Interest income:   
      Loans, including fees$447,769
 $285,340
      Investment securities available for sale49,938
 23,928
      Mortgage loans held for sale391
 379
      Federal Reserve Bank balances3,671
 1,750
      Other earning assets3,070
 1,737
Total interest income504,839
 313,134
Interest expense:   
Deposits87,684
 26,375
Federal funds purchased, securities sold under repurchase agreements, and other short-term borrowings3,463
 1,601
Long-term debt16,517
 10,874
Total interest expense107,664
 38,850
Net interest income397,175
 274,284
Provision for loan losses23,569
 12,776
Net interest income after provision for loan losses373,606
 261,508
Non-interest income:   
Service charges on deposit accounts20,859
 19,940
Fiduciary and asset management fees13,578
 13,435
Card fees10,877
 10,199
Brokerage revenue9,406
 8,695
Mortgage banking income5,054
 5,047
Income from bank-owned life insurance5,290
 4,217
Swap fee income4,778
 690
Investment securities gains, net75
 —
Other non-interest income9,461
 4,823
Total non-interest income79,378
 67,046
Non-interest expense:   
Salaries and other personnel expense139,427
 113,720
Net occupancy and equipment expense38,394
 31,480
Third-party processing expense17,758
 13,945
FDIC insurance and other regulatory fees6,761
 6,793
Professional fees6,348
 5,505
Advertising expense5,123
 5,092
Amortization of intangibles3,392
 292
Merger-related expense49,738
 —
Other operating expenses25,469
 18,352
Total non-interest expense292,410
 195,179
Income before income taxes160,574
 133,375
Income tax expense40,388
 30,209
Net income120,186
 103,166
Less: Preferred stock dividends3,150
 2,559
Net income available to common shareholders$117,036
 $100,607
Net income per common share, basic$0.73
 $0.85
Net income per common share, diluted0.72
 0.84
Weighted average common shares outstanding, basic160,927
 118,666
Weighted average common shares outstanding, diluted162,760
 119,321
    
(in thousands, except share and per share data)March 31, 2020December 31, 2019
ASSETS
Cash and due from banks$652,451  $535,846  
Interest-bearing funds with Federal Reserve Bank1,020,775  553,390  
Interest earning deposits with banks20,717  20,635  
Federal funds sold and securities purchased under resale agreements129,891  77,047  
     Total cash, cash equivalents, restricted cash, and restricted cash equivalents1,823,834  1,186,918  
Investment securities available for sale, at fair value6,937,240  6,778,670  
Mortgage loans held for sale, at fair value119,841  115,173  
Loans, net of deferred fees and costs38,258,024  37,162,450  
Allowance for loan losses(493,452) (281,402) 
Loans, net37,764,572  36,881,048  
Cash surrender value of bank-owned life insurance1,031,544  775,665  
Premises and equipment482,462  493,940  
Goodwill497,267  497,267  
Other intangible assets53,032  55,671  
Other assets1,909,793  1,418,930  
Total assets$50,619,585  $48,203,282  
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits:
Non-interest-bearing deposits$9,659,451  $9,439,485  
Interest-bearing deposits30,167,134  28,966,019  
Total deposits39,826,585  38,405,504  
Federal funds purchased and securities sold under repurchase agreements312,776  165,690  
Other short-term borrowings1,175,000  1,753,560  
Long-term debt3,152,339  2,153,897  
Other liabilities1,087,680  782,941  
Total liabilities45,554,380  43,261,592  
Shareholders' Equity
Preferred stock - no par value; authorized 100,000,000 shares; issued 22,000,000537,145  537,145  
Common stock - $1.00 par value; authorized 342,857,143 shares; issued 167,359,689 and 166,800,623; outstanding 147,266,662 and 147,157,596167,360  166,801  
Additional paid-in capital3,821,357  3,819,336  
Treasury stock, at cost; 20,093,027 and 19,643,027 shares(731,806) (715,560) 
Accumulated other comprehensive income, net256,911  65,641  
Retained earnings1,014,238  1,068,327  
Total shareholders’ equity5,065,205  4,941,690  
Total liabilities and shareholders' equity$50,619,585  $48,203,282  
See accompanying notes to unaudited interim consolidated financial statements.

1

SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Three Months Ended March 31,
(in thousands, except per share data)20202019
Interest income:
Loans, including fees$427,337  $447,769  
Investment securities available for sale51,653  49,938  
Mortgage loans held for sale792  391  
Federal Reserve Bank balances1,508  3,671  
Other earning assets2,607  3,070  
Total interest income483,897  504,839  
Interest expense:
Deposits86,002  87,684  
Federal funds purchased, securities sold under repurchase agreements, and other short-term borrowings5,932  3,463  
Long-term debt18,703  16,517  
Total interest expense110,637  107,664  
Net interest income373,260  397,175  
Provision for credit losses(1)
158,722  23,569  
Net interest income after provision for credit losses214,538  373,606  
Non-interest revenue:
Service charges on deposit accounts20,689  20,859  
Fiduciary and asset management fees15,174  13,578  
Card fees10,950  10,877  
Brokerage revenue12,398  9,379  
Mortgage banking income12,227  5,054  
Capital markets income11,243  5,245  
Income from bank-owned life insurance6,038  5,290  
Investment securities gains, net8,734  75  
Other non-interest revenue6,404  9,021  
Total non-interest revenue103,857  79,378  
Non-interest expense:
Salaries and other personnel expense149,678  139,427  
Net occupancy and equipment expense42,194  38,394  
Third-party processing and other services21,480  17,758  
Professional fees10,675  6,348  
FDIC insurance and other regulatory fees5,278  6,761  
Advertising expense4,752  5,123  
Merger-related expense—  49,738  
Other operating expenses42,222  28,861  
Total non-interest expense276,279  292,410  
Income before income taxes42,116  160,574  
Income tax expense3,595  40,388  
Net income38,521  120,186  
Less: Preferred stock dividends8,291  3,150  
Net income available to common shareholders$30,230  $117,036  
Net income per common share, basic$0.21  $0.73  
Net income per common share, diluted0.20  0.72  
Weighted average common shares outstanding, basic147,311  160,927  
Weighted average common shares outstanding, diluted148,401  162,760  
(1) Beginning January 1, 2020, provision calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.
See accompanying notes to unaudited interim consolidated financial statements.
2

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

Three Months Ended March 31,Three Months Ended March 31,
2019 201820202019
(in thousands)Before-tax Amount Tax (Expense) Benefit Net of Tax Amount Before-tax Amount Tax (Expense) Benefit Net of Tax Amount(in thousands)Before-tax AmountIncome TaxNet of Tax AmountBefore-tax AmountIncome TaxNet of Tax Amount
Net income$160,574
 $(40,388) $120,186
 $133,375
 $(30,209) $103,166
Net income$42,116  $(3,595) $38,521  $160,574  $(40,388) $120,186  
Net unrealized gains (losses) on investment securities available for sale:           
Reclassification adjustment for net gains realized in net income(75) 19
 (56) —
 —
 —
Unrealized gains (losses) on investment securities available for sale:Unrealized gains (losses) on investment securities available for sale:
Net unrealized gains (losses) arising during the period102,785
 (26,621) 76,164
 (61,445) 15,914
 (45,531)Net unrealized gains (losses) arising during the period158,341  (41,011) 117,330  102,785  (26,621) 76,164  
Net unrealized gains (losses)102,710
 (26,602) 76,108
 (61,445) 15,914
 (45,531)
Reclassification adjustment for realized (gains) losses included in net incomeReclassification adjustment for realized (gains) losses included in net income(8,734) 2,262  (6,472) (75) 19  (56) 
Net changeNet change149,607  (38,749) 110,858  102,710  (26,602) 76,108  
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:Unrealized gains (losses) on derivative instruments designated as cash flow hedges:
Net unrealized gains (losses) arising during the periodNet unrealized gains (losses) arising during the period108,639  (28,138) 80,501  —  —  —  
Reclassification adjustment for realized (gains) losses included in net incomeReclassification adjustment for realized (gains) losses included in net income(120) 31  (89) —  —  —  
Net changeNet change108,519  (28,107) 80,412  —  —  —  
Post-retirement unfunded health benefit:           Post-retirement unfunded health benefit:
Reclassification adjustment for gains realized in net income(35) 5
 (30) (34) 13
 (21)
Other comprehensive income (loss)$102,675
 $(26,597) $76,078
 $(61,479) $15,927
 $(45,552)
Reclassification adjustment for realized (gains) losses included in net incomeReclassification adjustment for realized (gains) losses included in net income—  —  —  (35) 5  (30) 
Total other comprehensive income (loss)Total other comprehensive income (loss)$258,126  $(66,856) $191,270  $102,675  $(26,597) $76,078  
Comprehensive income    $196,264
     $57,614
Comprehensive income$229,791  $196,264  
           
See accompanying notes to unaudited interim consolidated financial statements.

3



SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(unaudited)
(in thousands, except per share data)Preferred StockCommon
Stock		Additional
Paid-in
Capital		Treasury
Stock		Accumulated
Other
Comprehensive
Income (Loss)		Retained EarningsTotal
Balance, December 31, 2019$537,145  $166,801  $3,819,336  $(715,560) $65,641  $1,068,327  $4,941,690  
Cumulative-effect of change in accounting principle for financial instruments - credit losses (ASU 2016-13), net of tax(1)
—  —  —  —  —  (35,721) (35,721) 
Net income—  —  —  —  —  38,521  38,521  
Other comprehensive income, net of income taxes—  —  —  —  191,270  —  191,270  
Cash dividends declared on common stock - $0.33 per share—  —  —  —  —  (48,598) (48,598) 
Cash dividends declared on preferred stock(2)
—  —  —  —  —  (8,291) (8,291) 
Repurchases of common stock including costs to repurchase—  —  —  (16,246) —  —  (16,246) 
Restricted share unit vesting and taxes paid related to net share settlement—  345  (7,602) —  —  —  (7,257) 
Stock options exercised—  214  6,053  —  —  —  6,267  
Share-based compensation expense—  —  3,570  —  —  —  3,570  
Balance at March 31, 2020$537,145  $167,360  $3,821,357  $(731,806) $256,911  $1,014,238  $5,065,205  
Balance, December 31, 2018$195,140  $143,300  $3,060,561  $(1,014,746) $(94,420) $843,767  $3,133,602  
Cumulative-effect of change in accounting principle for leases (ASU 2016-02), net of tax—  —  —  —  —  4,270  4,270  
Net income—  —  —  —  —  120,186  120,186  
Other comprehensive income, net of income taxes—  —  —  —  76,078  —  76,078  
FCB Acquisition:
Issuance of common stock, net of issuance costs—  22,043  682,713  —  —  —  704,756  
Common stock reissued—  —  —  1,014,746  —  (137,176) 877,570  
Fair value of exchanged equity awards and warrants attributed to purchase price—  —  43,362  —  —  —  43,362  
Cash dividends declared on common stock - $0.30 per share—  —  —  —  —  (47,235) (47,235) 
Cash dividends declared on preferred stock(2)
—  —  —  —  —  (3,150) (3,150) 
Repurchases of common stock including costs to repurchase—  —  —  (320,167) —  —  (320,167) 
Restricted share unit vesting and taxes paid related to net share settlement—  235  (8,647) —  —  —  (8,412) 
Stock options exercised—  351  6,029  269  —  —  6,649  
Share-based compensation expense—  —  10,244  —  —  —  10,244  
Balance at March 31, 2019$195,140  $165,929  $3,794,262  $(319,898) $(18,342) $780,662  $4,597,753  
(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 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—
 —
 —
 —
 —
 —
 103,166
 103,166
Other comprehensive loss, net of income taxes—
 —
 —
 —
 —
 (45,552) —
 (45,552)
Cash dividends declared on common stock - $0.25 per share—
 —
 —
 —
 —
 —
 (29,675) (29,675)
Cash dividends paid on Series C Preferred Stock - $0.49 per share—
 —
 —
 —
 —
 —
 (2,559) (2,559)
Repurchases of common stock—
 —
 —
 —
 (26,733) —
 —
 (26,733)
Restricted share unit vesting and taxes paid related to net share settlement—
 —
 266
 (8,494) —
 —
 —
 (8,228)
Stock options exercised—
 —
 73
 1,167
 —
 —
 —
 1,240
Share-based compensation expense—
 —
 —
 3,955
 —
 —
 —
 3,955
Balance at March 31, 2018$125,980
 $—
 $143,017
 $3,039,757
 $(866,407) $(107,777) $621,925
 $2,956,495
                
Balance at 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—
 —
 —
 —
 —
 —
 120,186
 120,186
Other comprehensive income, net of income taxes—
 —
 —
 —
 —
 76,078
 —
 76,078
FCB Acquisition:               
     Issuance of common stock, net of issuance costs—
 —
 22,043
 682,713
 —
 —
 —
 704,756
     Common stock reissued—
 —
 —
 —
 1,014,746
 —
 (137,176) 877,570
     Fair value of exchanged equity awards and warrants attributed to purchase price—
 —
 —
 43,362
 —
 —
 —
 43,362
Cash dividends declared on common stock - $0.30 per share—
 —
 —
 —
 —
 —
 (47,235) (47,235)
Cash dividends paid on Series D Preferred Stock - $0.39 per share—
 —
 —
 —
 —
 —
 (3,150) (3,150)
Repurchases of common stock including costs to repurchase—
 —
 —
 —
 (320,167) —
 —
 (320,167)
Restricted share unit vesting and taxes paid related to net share settlement—
 —
 235
 (8,647) —
 —
 —
 (8,412)
Stock options/warrants exercised, net—
 —
 351
 6,029
 269
 —
 —
 6,649
Share-based compensation expense—
 —
 —
 10,244
 —
 —
 —
 10,244
Balance at March 31, 2019$—
 $195,140
 $165,929
 $3,794,262
 $(319,898) $(18,342) $780,662
 $4,597,753
                
(1) For additional information, see "Part I - Item 1. Financial Statements and Supplementary Data - Note 1 - Basis of Presentation" in this Report.
(2) For the three months ended March 31, 2020, dividends per share were $0.39 and $0.37 for Series D and Series E Preferred Stock, respectively. For the three months ended March 31, 2019, dividends per share were $0.39 for Series D Preferred Stock.
See accompanying notes to unaudited interim consolidated financial statements.

4


SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 Three Months Ended March 31,
(in thousands)
2019 (1)
 2018
Operating Activities   
Net income$120,186
 $103,166
Adjustments to reconcile net income to net cash provided by operating activities:   
Provision for loan losses23,569
 12,776
Depreciation, amortization, and accretion, net7,000
 14,823
Deferred income tax expense6,915
 2,599
Originations of mortgage loans held for sale(120,207) (128,618)
Proceeds from sales of mortgage loans held for sale104,552
 130,805
Gain on sales of mortgage loans held for sale, net(3,534) (3,445)
Decrease (increase) in other assets21,634
 (45,764)
Decrease in other liabilities(27,776) (8,466)
Investment securities gains, net(75) —
Share-based compensation expense10,244
 3,955
Net cash provided by operating activities142,508
 81,831
    
Investing Activities   
Net cash received in business combination, net of cash paid201,100
 —
Proceeds from maturities and principal collections of investment securities available for sale197,726
 139,929
Proceeds from sales of investment securities available for sale1,188,239
 —
Purchases of investment securities available for sale(1,800,346) (211,085)
Proceeds from sales of loans13,654
 10,885
Proceeds from sales of other real estate and other assets6,273
 2,090
Net increase in loans excluding loans acquired in business combination(423,514) (109,180)
Net (purchases) redemptions of Federal Home Loan Bank stock(24,239) (6,375)
Net redemptions (purchases) of Federal Reserve Bank stock1,285
 (20)
Purchases of bank-owned life insurance policies, net of settlements656
 1,523
Net increase in premises and equipment(9,209) (9,212)
Net cash used in investing activities(648,375) (181,445)
    
Financing Activities   
Net increase in deposits434,677
 105,502
Net increase in federal funds purchased and securities sold under repurchase agreements47,552
 24,341
Net change in other short-term borrowings203,000
 (100,000)
Repayments and redemption of long-term debt—
 (2,030,030)
Proceeds from issuance of long-term debt, net297,045
 2,280,000
Dividends paid to common shareholders(28,966) (17,835)
Dividends paid to preferred shareholders(3,150) (2,559)
Stock options and warrants exercised6,649
 1,240
Repurchase of common stock(320,167) (26,733)
Taxes paid related to net share settlement of equity awards(8,412) (8,228)
Net cash provided by financing activities628,228
 225,698
Increase in cash and cash equivalents including restricted cash122,361
 126,084
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$1,265,925
 $1,059,017
    
Supplemental Disclosures:   
Income taxes paid (refunded)$1,050
 $183
Interest paid95,630
 33,431
Non-cash Activities   
Common stock issued, treasury stock reissued, equity awards/warrants exchanged to acquire FCB1,625,688
 —
Loans foreclosed and transferred to other real estate1,419
 3,407
Loans transferred to/(from) other loans held for sale at fair value12,237
 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-end47,235
 29,675
    

(1) Where applicable, changes for balances as of March 31, 2019, compared to December 31, 2018, exclude amounts acquired on the Acquisition Date.
Three Months Ended March 31,
(in thousands)20202019
Operating Activities
Net income$38,521  $120,186  
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses158,722  23,569  
Depreciation, amortization, and accretion, net23,649  7,000  
Deferred income tax (benefit) expense(10,978) 6,915  
Originations of mortgage loans held for sale(254,395) (120,207) 
Proceeds from sales of mortgage loans held for sale259,224  104,552  
Gain on sales of mortgage loans held for sale, net(9,497) (3,534) 
(Increase) decrease in other assets(442,711) 21,634  
Increase (decrease) in other liabilities260,486  (27,776) 
Investment securities gains, net(8,734) (75) 
Loss on early extinguishment of debt1,904  —  
Share-based compensation expense3,570  10,244  
Net cash provided by operating activities19,761  142,508  
Investing Activities
Net cash received in business combination, net of cash paid—  201,100  
Proceeds from maturities and principal collections of investment securities available for sale341,431  197,726  
Proceeds from sales of investment securities available for sale413,180  1,642,239  
Purchases of investment securities available for sale(755,558) (2,254,346) 
Proceeds from sales of loans11,808  13,654  
Proceeds from sales of other real estate and other assets8,547  6,273  
Net increase in loans(1,065,125) (423,514) 
Net (purchases) redemptions of Federal Home Loan Bank stock(978) 1,285  
Net (purchases) redemptions of Federal Reserve Bank stock(454) (24,239) 
Net (purchases) proceeds from settlement of bank-owned life insurance policies(249,942) 656  
Net increase in premises and equipment(6,941) (9,209) 
Net cash used in investing activities(1,304,032) (648,375) 
Financing Activities
Net increase in deposits1,420,659  434,677  
Net increase in federal funds purchased and securities sold under repurchase agreements147,086  47,552  
Net change in other short-term borrowings(578,560) 203,000  
Repayments and redemption of long-term debt(251,904) —  
Proceeds from issuance of long-term debt, net1,248,441  297,045  
Dividends paid to common shareholders(44,149) (28,966) 
Dividends paid to preferred shareholders(3,150) (3,150) 
Stock options and warrants exercised6,267  6,649  
Repurchase of common stock(16,246) (320,167) 
Taxes paid related to net share settlement of equity awards(7,257) (8,412) 
Net cash provided by financing activities1,921,187  628,228  
Increase in cash and cash equivalents including restricted cash636,916  122,361  
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period1,186,918  1,143,564  
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period$1,823,834  $1,265,925  
Supplemental Disclosures:
Income taxes paid$920  $1,050  
Interest paid109,340  95,630  
Non-cash Activities
Common stock issued, treasury stock reissued, equity awards/warrants exchanged to acquire FCB—  1,625,688  
Securities sold during the period but settled after period-end169,748  —  
Securities purchased during the period but settled after period-end113,818  —  
Premises and equipment transferred to other assets held for sale4,681  785  
Loans foreclosed and transferred to other real estate1,951  1,419  
Loans transferred to other loans held for sale at fair value11,893  12,237  
Dividends declared on common stock during the period but paid after period-end48,598  47,235  
Dividends declared on preferred stock during the period but paid after period-end5,141  —  
See accompanying notes to unaudited interim consolidated financial statements.

5

Notes to Unaudited Interim Consolidated Financial Statements
Note 1 - Basis of Presentation and Accounting Policies
General
The accompanying unaudited interim consolidated financial statements of Synovus Financial Corp. include the accounts of the Parent Company and its consolidated subsidiaries. Synovus Financial Corp. is a financial services company based in Columbus, Georgia. Through its wholly-owned subsidiary, Synovus Bank, a Georgia state-chartered bank that is a member of the Federal Reserve System, the companyCompany provides commercial and retail banking in addition to a full suite of specialized products and services including private banking, treasury management, wealth management, premium finance, asset-based lending, structured lending, and international banking. Synovus Bank is positioned in markets in the Southeast, with 300 299 branches and 384386 ATMs in Alabama, Florida, Georgia, South Carolina, and Tennessee.
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' 20182019 Form 10-K.
Reclassifications
Prior periods' consolidated financial statements are reclassified whenever necessary to conform to the current periods' presentation.
Use of Estimates in the Preparation of Financial Statements
In preparing the 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 change relate to the determination of the allowance for loan losses;ACL; estimates of fair value;value, including goodwill impairment assessment; income taxes; and contingent liabilities including legal matters, among others.
PurchasedNon-TDR Modifications due to COVID-19
Coronavirus Aid, Relief, and Economic Security Act (CARES Act)
The U.S. has been operating under a presidentially declared state of emergency since March 13, 2020 ("National Emergency"). On March 27, 2020, the CARES Act was signed into law. Among other emergency measures aimed to lessen the impact of COVID-19, the CARES Act creates a forbearance program for federally backed mortgage loans, protects borrowers from negative credit reporting due to loan accommodations related to the National Emergency, and provides financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time to account for the effects of COVID-19.
Purchased loansRegulatory agencies, as set forth in the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (initially issued on March 22, 2020 and revised on April 7, 2020), have encouraged financial institutions to work prudently with borrowers who are recorded at fair valueor may be unable to meet their contractual payment obligations because of the effects of COVID-19. In this statement, the regulatory agencies expressed their view of loan modification programs as positive actions that may mitigate adverse effects on borrowers due to COVID-19 and that the agencies will not criticize institutions for working with borrowers in a safe and sound manner. Moreover, the revised statement provides that eligible loan modifications related to COVID-19 may be accounted for under section 4013 of the CARES Act or in accordance with ASC Topic 820, Fair Value Measurement310-40. Section 4013 of The CARES Act allows banks to elect to not consider loan modifications related to COVID-19 that are made between March 1, 2020 and the earlier of December 31, 2020, or 60 days after the COVID-19 national emergency ends to borrowers that are current (i.e., consistent withless than 30 days past due as of December 31, 2019) as TDRs. The regulatory agencies further stated that performing loans granted payment deferrals due to COVID-19 are not considered past due or non-accrual. FASB confirmed the exit price conceptforegoing regulatory agencies' view, that such short-term modifications (e.g., six months) made on the datea good-faith basis in response to COVID-19 for borrowers who are current are not TDRs. As such, beginning in late March 2020, Synovus provided relief programs consisting primarily of 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. 90-day payment deferral relief to borrowers negatively impacted by COVID-19.

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 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 the loan at the acquisition date is amortized or accreted to interest income over the contractual life of the loans using the effective interest method. In the event of prepayment, the remaining unamortized amount is recognized in interest income in the quarter of prepayment.
6

Due to the significant difference in accounting for ASC 310-30 loans, Synovus believes inclusion of these loans in certain asset quality ratios that reflect non-performing assets in the numerator or denominator (or both) results in significant distortion to these ratios. In addition, because loan level charge-offs related to ASC 310-30 loans are not recognized in the financial statements until the cumulative amounts exceed the original loss projections on a pool basis, the net charge-off ratio is inconsistent with the

net charge-off ratio for other loan portfolios. The inclusion of ASC 310-30 loans in certain 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 quality of its loan portfolio.
Non-interest Income - Revenue from Contracts with Customers within the scope of ASC Topic 606
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 (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). In February 2016, the FASB issued ASU 2016-02, its new standard on lease accounting. ASU 2016-02 introduces a lessee model that brings substantially all operating leases on the balance sheet through the recognition of a ROU asset and a lease liability, and requires the disclosure of additional qualitative and quantitative information about leasing arrangements. The accounting model for financing leases from a lessee perspective, and for all leases from a lessor perspective remains largely unchanged from prior GAAP (ASC 840). Subsequent to the issuance of Topic 842, the FASB clarified the guidance through several ASUs; referred to hereinafter as “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 10-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, we 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 $387.3 million and $390.6 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 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 did not qualify for recognition). The ROU assets are included in other assets (other than $3.5 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 had no impact on cash flows.

Synovus determines if an arrangement is a lease at inception in accordance with 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 2017-04, Intangibles-Goodwill and Other, Simplifying the Test for Goodwill Impairment: In January 2017, the FASB issued ASU 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 and will apply the guidance prospectively, beginning with its annual impairment test as of June 30, 2019. Based on goodwill impairment tests performed in 2018, which did not require the application of Step 2, Synovus does not expect the adoption of this ASU to have an immediate impact.
Recently Issued Accounting Standards Not Yet Adopted
ASU 2016-13, Financial Instruments--CreditInstruments-Credit Losses (CECL)(ASC 326). In June 2016, the FASB issued new guidance related to credit losses. The new guidanceOn January 1, 2020, Synovus adopted ASU 2016-13 (and all subsequent ASUs)ASUs on this topic), which replaces the existing incurred loss impairment guidance with an expected credit loss methodology. The new guidance will requiremethodology (referred to as CECL). CECL requires management’s estimate of credit losses over the full remaining expected life of loans and other financial instruments. Forinstruments and for Synovus, the standard will applyapplies 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 with early adoption permitted on January 1, 2019. Synovus will adopt the guidance on January 1, 2020.sale debt securities. Upon adoption, Synovus will record aapplied the modified retrospective approach and recorded an after-tax cumulative-effect adjustment to beginning retained earnings asfor non-PCD assets (formerly non-PCI assets) and unfunded commitments 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$35.7 million. Additionally, an initial estimate of expected credit losses on PCD assets will be(formerly PCI or ASC 310-30) was recognized through the ALL with an offset to the cost basis of the related financial asset at acquisition.  loans of $62.2 million. As permitted by transition guidance, Synovus did not reassess whether PCI assets met the criteria of PCD assets as of the adoption date. The remaining non-credit discount (based on the adjusted amortized cost basis) will be accreted into interest income. Results for reporting periods after adoption are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP.
Synovus is continuing its implementation effortsThe following table illustrates the impact of ASC 326 adoption:
As of January 1, 2020
in thousands  Pre-ASC 326 AdoptionImpact of ASC 326 AdoptionAs Reported under ASC 326
Assets  
Allowance for loan losses:  
Commercial and industrial  $145,782  $(2,310) $143,472  
Commercial real estate  67,430  (651) 66,779  
Consumer  68,190  85,955  154,145  
Total allowance for loan losses  $281,402  $82,994  $364,396  
Liabilities  
Reserve for unfunded commitments  $1,375  $27,440  $28,815  
Allowance for credit losses  $282,777  $110,434  $393,211  
The following table illustrates the distribution of the ASC 326 adoption impact to loans and equity:
As of January 1, 2020
in thousands  Pre-ASC 326 AdoptionImpact of ASC 326 AdoptionAs Reported under ASC 326
Loans, net  $36,881,048  $(20,767) $36,860,281  
Retained earnings  1,068,327  (35,721) 1,032,606  
On March 27, 2020, the federal banking regulators issued an interim final rule, updating CECL transition options, which are ledallows electing banking organizations to delay an estimate of the effect of CECL on regulatory capital for up to two years, followed by a cross-functional steering committee.three-year phase-in transition period. March 31, 2020 regulatory capital ratios reflect Synovus' election of the five-year transition provision.
In conjunction with the adoption of ASC 326, the following are additional disclosures about our significant accounting policies related to CECL.
Investment Securities Available for Sale
Investment securities available for sale are carried at fair value with unrealized gains and losses, net of the related tax effect, excluded from earnings and reported as a separate component of shareholders' equity within accumulated other comprehensive income (loss) until realized.
For investment securities available for sale in an unrealized loss position, if Synovus has an intention to sell the security or it is more likely than not that the security will be required to be sold prior to recovery, the security is written down to its fair value. The team meets periodicallywrite down is charged against the ACL with any additional impairment recorded in earnings. If the aforementioned criteria is not met, Synovus performs a quarterly assessment of its available for sale debt securities to discussdetermine if the latest developmentsdecline in fair value of a security below its amortized cost is related to credit losses or other factors. Management considers the extent to which fair value is less than amortized cost, the issuer of the security, any changes to the rating of the security by a rating agency, and ensure progressadverse conditions specifically related to the security, among other factors. In assessing whether credit related
7

impairment exists, the present value of cash flows expected to be collected from the security is compared to planned timings.  We commenced limited parallel testingthe security's amortized cost. If the present value of cash flows expected to be collected is less than the security's amortized cost basis, the difference is attributable to credit losses. For such differences, Synovus records an allowance for credit losses ("ACL") with an offset to provision for credit losses expense. Synovus limits the ACL recorded to the amount the security's fair value is less than the amortized cost basis. Impairment losses related to other factors are recognized in other comprehensive income (loss).
Accrued interest on available for sale debt securities is excluded from the ACL determination and will continueis recognized within other assets on the consolidated balance sheets. Available-for-sale debt securities are placed on non-accrual status when we no longer expect to receive all contractual amounts due, which is generally at 90 days past due. Accrued interest receivable is reversed against interest income when a security is placed on non-accrual status. Accordingly, we do not recognize an allowance for credit loss against accrued interest receivable.
Loans Held for Investment and Interest Income
Loans the Company has the intent and ability to hold for the foreseeable future are reported at principal amounts outstanding less amounts charged off, net of deferred fees and costs, and purchase premiums/discounts. Interest income, net deferred fees, and purchase premium/discount amortization/accretion on loans, are recognized on a level yield basis.
Allowance for Credit Losses for Loans Held for Investment
The allowance for credit losses on loans held for investment are included in the second quarter as we progress toward model validationALL and complete fit-for-purpose testing. Management expects thatrepresent management's estimate of credit losses expected over the life of the loans included in Synovus' existing loans held for investment portfolio. Changes to the allowance are recorded through a provision for credit losses and reduced by loans charged-off, net of recoveries. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain.
Accrued but uncollected interest is recorded in other assets on the consolidated balance sheets. The Company elected not to measure an ACL for accrued interest receivables as allowable per ASC 326-20-30-5A as Synovus' non-accrual policies result in the timely write-off of accrued but uncollected interest.
Credit loss measurement
Synovus' loan loss estimation process includes procedures to appropriately consider the unique characteristics of its loan portfolio segments (commercial and industrial ("C&I"), commercial real estate ("CRE") and consumer). These segments are further disaggregated into loan classes, the level at which credit quality is assessed and monitored (as described in the subsequent sections).
The ALL is measured on a collective (pool) basis when similar risk characteristics exist. Loans are grouped based upon the nature of the loan type and are further segregated based upon the individual loan risk ratings. Credit loss assumptions are primarily estimated using a discounted cash flow ("DCF") model applied to the aforementioned loan groupings. This model calculates an expected life-of-loan loss percentage for each loan category by considering the forecasted PD, which is the probability that a borrower will default, adjusted for relevant forecasted macroeconomic factors, and LGD, which is the estimate of the amount of net loss in the event of default.
Expected credit losses are estimated over the contractual term of the loan, adjusted for expected prepayments and curtailments when appropriate. Management's determination of the contract term excludes expected extensions, renewals, and modifications unless either of the following applies: there is a reasonable expectation at the reporting date that a TDR will be higher underexecuted with an individual borrower or the new standard; however, managementextension or renewal option is stillincluded in the process of determiningcontract at the magnitudereporting date and is not unconditionally cancellable by Synovus.
To the extent the lives of the impactloans in the portfolio extend beyond the period for which a reasonable and supportable forecast can be made (which is 1 year for Synovus), the Company reverts, on its financial statementsa straight-line basis back to the historical rates.
Life-of-loan loss percentages may also be adjusted, as necessary, for certain quantitative and regulatory capital ratios.  Additionally,qualitative factors that in management's judgment are necessary to reflect losses expected in the extentportfolio. These adjustments address inherent limitations in the quantitative model including uncertainty and limitations, among others.
The above reflects the ALL estimation process for most commercial and consumer sub-pools. In some cases, Synovus may apply other acceptable loss rate models (as permitted by policy) to smaller subpools.
Loans that do not share risk characteristics are individually evaluated on a loan by loan basis with specific reserves, if any, recorded as appropriate. Specific reserves are determined based on two methods: discounted cash flow based upon the loan's contractual effective interest rate or at the fair value of the collateral, less costs to sell if the loan is collateral-dependent.
Under the discounted cash flow method, resulting expected credit losses are recorded as a specific reserve with a charge-off for any portion of the expected increasecredit loss that is determined not to be recoverable. The reserve is reassessed each quarter and adjusted as appropriate based on changes in estimated cash flows. Additionally, where guarantors are determined to be a source
8

of repayment, an assessment of the guarantee is required. This guarantee assessment would include, but not be limited to, factors such as type and feature of the guarantee, consideration for the guarantor's financial strength and capacity to service the loan in combination with the guarantor's other financial obligations as well as the guarantor's willingness to assist in servicing the loan.
If the loan is collateral-dependent, then the fair value of the loan's collateral, less estimated selling costs, is compared to the loan's carrying amount to determine impairment. Fair value is estimated using appraisals performed by a certified or licensed appraiser. Management also considers other factors or recent developments, such as changes in absorption rates or market conditions at the time of valuation, selling costs and anticipated sales values, taking into account management's plans for disposition, which could result in adjustments to the fair value estimates indicated in the appraisals. The assumptions used in determining the amount of the impairment are subject to significant judgment. Use of different assumptions, for example, changes in the fair value of the collateral or management's plans for disposition could have a significant impact on the amount of impairment.
Troubled debt restructurings
The ALL on a TDR is measured using the same method as all other loans held for investment, except that the original interest rate, and not the rate specified with the restructuring, is used to discount the expected cash flows.
Purchased Loans with Credit Deterioration
Purchased loans are evaluated upon acquisition in order to determine if the loan or pool of loans has experienced more-than-insignificant deterioration in credit quality since origination or issuance. In the performance of this evaluation, Synovus considers migration of the credit quality of the loans at origination in comparison to the credit quality at acquisition.
Purchased loans classified as PCD are recognized in accordance with ASC 326-20-30, whereby the amortized cost basis of the PCD asset is ‘grossed-up’ by the initial estimate of credit losses with an offset to the ALL. This acquisition date allowance has no income statement effect. Post-acquisition, any changes in estimates of expected credit losses are recorded through the provision for loan losses will dependcredit losses. Non-credit discounts or premiums are accreted or amortized, respectively into interest income using the interest method.

Loans formerly accounted for as purchased credit-impaired in accordance with ASC 310-30 were automatically transitioned to PCD classification. The Company did not maintain ASC 310-30 pools. PCD loans were integrated into existing pool structures based upon the compositionnature of the loan portfoliotype and are further segregated based upon adoptionthe individual loan risk ratings as noted above.
The accounting treatment for purchased loans classified as non-PCD is the same as loans held for investment as detailed in the above section.
Allowance for Credit Losses on Off-balance-sheet Credit Exposures
Synovus maintains a separate ACL for off-balance-sheet credit exposures, including unfunded loan commitments, unless the associated obligation is unconditionally cancellable by the Company. This allowance is included in other liabilities on the consolidated balance sheets with offsetting expense recognized as a component of the standard,provision for credit losses on the consolidated statements of income. The reserve for off-balance-sheet credit exposures considers the likelihood that funding will occur and estimates the expected credit losses on resulting commitments expected to be funded over its estimated life.
Recently Issued Accounting Standards Not Yet Adopted
ASU 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASC 848). Facilitation of the Effects of Reference Rate Reform on Financial Reporting, provides temporary, optional guidance to ease the potential burden in accounting for, or recognizing the effects of, the transition away from the LIBOR or other interbank offered rate on financial reporting. To help with the transition to new reference rates, the ASU provides optional expedients and exceptions for applying GAAP to affected contract modifications and hedge accounting relationships. The main provisions include:
•A change in a contract’s reference interest rate would be accounted for as wella continuation of that contract rather than as economic conditionsthe creation of a new one for contracts, including loans, debt, leases, and forecastsother arrangements, that meet specific criteria.
•When updating its hedging strategies in response to reference rate reform, an entity would be allowed to preserve its hedge accounting.
The guidance is applicable only to contracts or hedge accounting relationships that reference LIBOR or another reference rate expected to be discontinued. Because the guidance is meant to help entities through the transition period, it will be in effect for a limited time and will not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, except for hedging relationships existing as of December 31, 2022, for which an entity has elected certain optional expedients that are retained through the end of the hedging relationship. The amendments in this ASU are effective
9

March 12, 2020 through December 31, 2022. We are evaluating the impact of adopting the new guidance on the consolidated financial statements on an ongoing basis with no material expected impact at thatthis time.
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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, Financial Holdings, Inc. (FCB), a bank holding company based in Weston, Florida, for total consideration of approximately $1.6$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 valuesThe acquisition of FCB included approximately $12.4 billion of identifiable assets, $9.3expanded Synovus' presence in Florida and the Southeast adding $9.29 billion in loans and $10.9$10.93 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 is scheduled to occur 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 $7.4 milliondeposits, 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 cash, 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 common stock valued at approximately $1.6 billion and $601 thousand in cash. Also, under the terms of the Merger 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 fair value of $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 converted restricted share units was based on Synovus' closing stock price on December 31, 2018 of $31.99, and the estimated fair value of the converted 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.
Date. 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,with the valuation finalized as of December 31, 2019. Accordingly, assets acquired, liabilities assumed, and consideration exchanged were recorded at their estimated fair value on The results of FCB's operations are included in Synovus' consolidated financial statements since the 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 will 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.
During the first quarter of 2019, Synovus recorded preliminary purchase price allocations related to FCB, which resulted in goodwill of $427.7 million, which 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 paid 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 measurements are based on third-party and internal valuations.


(in thousands)  
Consideration paid:  
     Synovus common stock issued and reissued from treasury(1)
 $1,582,743
     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)
 43,362
       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
 
  Loans9,287,813
 
  Cash surrender value of bank-owned life insurance216,848
 
  Premises and equipment44,890
 
  Core deposit intangible68,200
 
  Other assets266,607
 
     Total Assets$12,387,048
 
   
Liabilities

  Deposits$10,931,185
 
  Federal funds purchased and securities sold under repurchase agreements29,139
 
  Long-term debt153,236
 
  Other liabilities74,895
 
     Total Liabilities$11,188,455
 
   
Fair value of net identifiable assets acquired 1,198,593
Preliminary goodwill $427,685
   
(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 for 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 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 for 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.

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 March 31, 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 three months ended March 31, 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 three months ended March 31, 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 March 31, 2019(1)
 Pro Forma for Three Months Ended March 31, 2018
Net interest income$397,175
 $374,982
Non-interest income79,378
 74,269
Net income available to common shareholders117,036
 152,362
    
1) Actual results for the first quarter of 2019 include pre-tax merger-related expense of $49.7 million.
In connection with the FCB acquisition, Synovus incurred merger-related expense presented in the table below totaling $49.7 million for the three months ended March 31, 2019, primarily related to employeeemployment compensation agreements, severance, and professional services, including the payment of $21.8 millionand contract termination charges:
(in thousands)Three Months Ended March 31, 2019
Employment compensation agreements, severance, and other employee benefit costs$32,988 
Professional fees15,200 
All other expense(1)
1,550 
Total merger-related expense$49,738 
(1) Primarily relates to fees associated with lease exit accruals, asset impairments related to employment agreementsthe integration, and contract termination charges.
See "Part II - Item 8. Financial Statements and Supplementary Data - Note 2 - Acquisitions" to the consolidated financial statements of certain FCB executives. Merger-related expenseSynovus' 2019 Form 10-K for the three months ended March 31, 2019 is presented in the table below:
(in thousands)Three Months Ended March 31, 2019
Employee compensation, severance, and other employee benefit costs$32,988
Professional services15,200
All other expense(1)
1,550
  Total merger-related expense$49,738
  
(1)  Primarily relates to fees associated with lease exit accruals, asset impairments related to the integration, and contract termination charges.

additional information on Synovus' acquisition of FCB.
Acquisition of Global One
On October 1, 2016, Synovus completed its acquisition of all of the outstanding stock of Global One. Under the terms of the merger agreement, the purchase price included additional annual payments ("Earnout Payments") to Global One's former shareholders over a three to five year-year 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. During 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 valued at $7.4 million and $1.2 million in cash. The total fair value of the earnout liability at March 31, 20192020 was $14.4 million based on the estimated fair value of the remaining Earnout Payments.$11.0 million.

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Note 3 - Investment Securities Available for Sale
The amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities available for sale at March 31, 20192020 and December 31, 20182019 are summarized below.
  March 31, 2019
(in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
U.S. Treasury securities $19,584
 $—
 $—
 $19,584
U.S. Government agency securities 83,982
 1,299
 —
 85,281
Mortgage-backed securities issued by U.S. Government agencies 93,455
 216
 (1,734) 91,937
Mortgage-backed securities issued by U.S. Government sponsored enterprises 4,612,253
 42,710
 (30,649) 4,624,314
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises 1,001,493
 3,513
 (17,236) 987,770
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises 336,321
 5,672
 (168) 341,825
Asset-backed securities 506,125
 4,722
 (542) 510,305
State and municipal securities 2,108
 1
 (3) 2,106
Corporate debt securities 144,442
 811
 (184) 145,069
Total investment securities available for sale $6,799,763
 $58,944
 $(50,516) $6,808,191
         
  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
         

March 31, 2020
(in thousands)Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
U.S. Treasury securities$19,918  $—  $—  $19,918  
U.S. Government agency securities72,424  2,469  (37) 74,856  
Mortgage-backed securities issued by U.S. Government agencies53,557  1,866  (1) 55,422  
Mortgage-backed securities issued by U.S. Government sponsored enterprises5,312,698  237,127  —  5,549,825  
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises601,585  27,297  (2) 628,880  
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises311,235  24,502  —  335,737  
State and municipal securities1,007  2  (4) 1,005  
Asset-backed securities154,954  150  (9,129) 145,975  
Corporate debt securities and other debt securities129,376  921  (4,675) 125,622  
Total investment securities available for sale$6,656,754  $294,334  $(13,848) $6,937,240  
December 31, 2019
(in thousands)Amortized CostGross Unrealized GainsGross Unrealized LossesFair Value
U.S. Treasury securities  $19,855  $—  $—  $19,855  
U.S. Government agency securities35,499  1,042  —  36,541  
Mortgage-backed securities issued by U.S. Government agencies56,328  560  (72) 56,816  
Mortgage-backed securities issued by U.S. Government sponsored enterprises5,079,396  103,495  (2,076) 5,180,815  
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises629,706  7,349  (204) 636,851  
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises357,291  14,301  —  371,592  
State and municipal securities2,069  6  —  2,075  
Asset-backed securities323,237  4,315  (152) 327,400  
Corporate debt securities and other debt securities144,410  2,317  (2) 146,725  
Total investment securities available for sale$6,647,791  $133,385  $(2,506) $6,778,670  
At March 31, 20192020 and December 31, 2018,2019, investment securities with a carrying value of $1.84$2.16 billion and $1.56$1.71 billion, respectively, were pledged to secure certain deposits and securities sold under repurchase agreementsother liabilities, as required by law andor contractual agreements.

Synovus has evaluated
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Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that areindividual securities have been in ana continuous unrealized loss position, asat March 31, 2020 and December 31, 2019 are presented below.
March 31, 2020
Less than 12 Months12 Months of LongerTotal
(in thousands)Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
U.S. Government agency securities$38,502  $(37) $—  $—  $38,502  $(37) 
Mortgage-backed securities issued by U.S. Government agencies6  (1) —  —  6  (1) 
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises320  (1) 32  (1) 352  (2) 
State and municipal securities503  (4) —  —  503  (4) 
Asset-backed securities140,993  (9,129) —  —  140,993  (9,129) 
Corporate debt securities and other debt securities105,446  (4,675) —  —  105,446  (4,675) 
Total$285,770  $(13,847) $32  $(1) $285,802  $(13,848) 
December 31, 2019
Less than 12 Months12 Months of LongerTotal
(in thousands)Fair ValueGross Unrealized LossesFair ValueGross Unrealized LossesFair ValueGross Unrealized Losses
Mortgage-backed securities issued by U.S. Government agencies$19,543  $(70) $355  $(2) $19,898  $(72) 
Mortgage-backed securities issued by U.S. Government sponsored enterprises768,040  (2,076) —  —  768,040  (2,076) 
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises57,670  (204) —  —  57,670  (204) 
Asset-backed securities37,156  (116) 4,954  (36) 42,110  (152) 
Corporate debt securities and other debt securities9,505  (2) —  —  9,505  (2) 
Total$891,914  $(2,468) $5,309  $(38) $897,223  $(2,506) 
As of March 31, 20192020, Synovus had 17 investment securities in a loss position for less than twelve months and 3 investment securities in a loss position for twelve months or longer. At December 31, 2018 for OTTI and does not consider any2019, Synovus had 26 investment securities in an unrealizeda loss position to be other-than-temporarily impaired. If Synovus intended to sellfor less than twelve months and 5 investment securities in a security in an unrealized loss position the entire unrealized loss would be reflected in earnings.for twelve months or longer. Synovus does not intend to sell investment securities in an unrealized loss position prior to the recovery of the unrealized loss, which may not be until maturity, and has the ability and intent to hold those securities for that period of time. Additionally, Synovus is not currently aware of any circumstances which will require it to sell any of the securities that are in an unrealized loss position prior to the respective securities' recovery of all such unrealized losses. As such, no write-downs to the amortized cost basis of the portfolio were recorded in the current period.
ForSynovus has evaluated 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 credit component ofare in an OTTI would be recognized in earnings and the non-credit component would be recognized in 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.

Asas of March 31, 2019,2020 and determined the following by investment category:
Asset-backed securities - Synovus had 17considers the amount of credit support available to absorb losses for these holdings. For securities in which adequate credit support is not available, Synovus compares the present value of expected cash flows to the amortized cost of the individual securities. Assumptions used in cash flow determination include expected future default rates, severity of loss, and prepayments. The analysis performed at March 31, 2020 indicated the decline in fair value of asset-backed
13

securities was unrelated to credit losses and was instead attributable to wider market spreads. As such, no ACL was recorded during the period and unrealized losses were recognized in other comprehensive income, net of tax.
Corporate debt securities - Synovus considers the credit quality of each issuer and whether payments of principal and interest are current. None of the investment securities in a loss position for less than twelve months and 109 investmentdescribed above are past due as of March 31, 2020. At March 31, 2020, these 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 rated investment grade and will continue to be monitored as part of Synovus' ongoing impairment analysis, but are expected to performthe decline in accordance with their terms.
Grossfair value was largely driven by wider market spreads. As such, no ACL was recorded during the period and unrealized losses on investment securities and the fair valuewere recognized in other comprehensive income, net of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at March 31, 2019 and December 31, 2018 are presented below.
 March 31, 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$638
 $(3) $78,141
 $(1,731) $78,779
 $(1,734)
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 —
 1,729,242
 (30,649) 1,729,242
 (30,649)
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises512
 (1) 851,982
 (17,235) 852,494
 (17,236)
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises—
 —
 51,236
 (168) 51,236
 (168)
Asset-backed securities103,969
 (542) —
 —
 103,969
 (542)
State and municipal securities1,082
 (3) —
 —
 1,082
 (3)
Corporate debt securities9,344
 (165) 1,981
 (19) 11,325
 (184)
Total$115,545
 $(714) $2,712,582
 $(49,802) $2,828,127
 $(50,516)
            
 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)
            

tax.

The amortized cost and fair value by contractual maturity of investment securities available for sale at March 31, 20192020 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 March 31, 2020
(in thousands)Within One
Year		1 to 5
Years		5 to 10
Years		More Than
10 Years		Total
Amortized Cost
U.S. Treasury securities$19,918  $—  $—  $—  $19,918  
U.S. Government agency securities568  3,367  43,501  24,988  72,424  
Mortgage-backed securities issued by U.S. Government agencies—  1,542  803  51,212  53,557  
Mortgage-backed securities issued by U.S. Government sponsored enterprises—  517  86,523  5,225,658  5,312,698  
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—  —  296  601,289  601,585  
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises—  109,774  116,210  85,251  311,235  
State and municipal securities—  —  —  1,007  1,007  
Asset-backed securities—  —  154,954  —  154,954  
Corporate debt securities and other debt securities24,127  94,619  8,630  2,000  129,376  
Total amortized cost$44,613  $209,819  $410,917  $5,991,405  $6,656,754  
Fair Value
U.S. Treasury securities$19,918  $—  $—  $—  $19,918  
U.S. Government agency securities578  3,426  45,897  24,955  74,856  
Mortgage-backed securities issued by U.S. Government agencies—  1,588  831  53,003  55,422  
Mortgage-backed securities issued by U.S. Government sponsored enterprises—  536  92,059  5,457,230  5,549,825  
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—  —  309  628,571  628,880  
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises—  116,257  129,175  90,305  335,737  
State and municipal securities—  —  —  1,005  1,005  
Asset-backed securities—  —  145,975  —  145,975  
Corporate debt securities and other debt securities24,068  92,574  7,418  1,562  125,622  
Total fair value$44,564  $214,381  $421,664  $6,256,631  $6,937,240  
 Distribution of Maturities at March 31, 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$19,584
 $—
 $—
 $—
 $19,584
U.S. Government agency securities791
 2,100
 81,091
 —
 83,982
Mortgage-backed securities issued by U.S. Government agencies—
 —
 17,976
 75,479
 93,455
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 48,381
 462,977
 4,100,895
 4,612,253
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 —
 25,958
 975,535
 1,001,493
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises—
 22,765
 217,918
 95,638
 336,321
Asset-backed securities—
 4,495
 328,637
 172,993
 506,125
State and municipal securities—
 —
 1,085
 1,023
 2,108
Corporate debt securities—
 109,290
 33,152
 2,000
 144,442
Total amortized cost$20,375
 $187,031
 $1,168,794
 $5,423,563
 $6,799,763
          
Fair Value         
U.S. Treasury securities$19,584
 $—
 $—
 $—
 $19,584
U.S. Government agency securities800
 2,124
 82,357
 —
 85,281
Mortgage-backed securities issued by U.S. Government agencies—
 —
 17,700
 74,237
 91,937
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 48,194
 459,948
 4,116,172
 4,624,314
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 —
 25,495
 962,275
 987,770
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises—
 22,878
 221,506
 97,441
 341,825
Asset-backed securities—
 4,530
 332,485
 173,290
 510,305
State and municipal securities—
 —
 1,082
 1,024
 2,106
Corporate debt securities—
 109,353
 33,735
 1,981
 145,069
Total fair value$20,384
 $187,079
 $1,174,308
 $5,426,420
 $6,808,191
          

14

Proceeds from sales, gross gains, and gross losses on sales of securities available for sale for the three months ended March 31, 20192020 and 20182019 are presented below. The specific identification method is used to reclassify gains and losses out of other comprehensive income at the time of sale.
Three Months Ended March 31,
(in thousands)20202019
Proceeds from sales of investment securities available for sale$413,180  $1,642,239  
Gross realized gains on sales8,734  9,130  
Gross realized losses on sales—  (9,055) 
Investment securities gains, net$8,734  $75  
  Three Months Ended March 31,
(in thousands) 2019 2018
Proceeds from sales of investment securities available for sale $1,188,239
 $—
Gross realized gains on sales 9,130
 —
Gross realized losses on sales (9,055) —
Investment securities gains, net $75
 $—
     


15

Note 4 - Loans and Allowance for Loan Losses

The following istables provide a summary of current, accruing past due, and non-accrual originated (loans originated, renewed, refinanced, modified, or otherwise underwritten by Synovus) and acquired loans from business combinations by portfolio class as of March 31, 20192020 and December 31, 2018.2019.
Current, Accruing Past Due, and Non-accrual Loans
March 31, 2020
(in thousands)Current
Accruing 30-89 Days Past Due (1)
Accruing 90 Days or Greater Past Due (1)
Total Accruing Past Due (1)
Non-accrual with an ALL (1)
Non-accrual without an ALL (1)
Total
Commercial, financial and agricultural$10,896,890  $21,149  $829  $21,978  $78,263  $21,024  $11,018,155  
Owner-occupied6,614,799  10,279  852  11,131  7,718  9,639  6,643,287  
Total commercial and industrial17,511,689  31,428  1,681  33,109  85,981  30,663  17,661,442  
Investment properties9,252,438  3,056  85  3,141  2,212  —  9,257,791  
1-4 family properties744,451  4,636  56  4,692  2,325  —  751,468  
Land and development658,624  976  142  1,118  1,935  265  661,942  
Total commercial real estate10,655,513  8,668  283  8,951  6,472  265  10,671,201  
Consumer mortgages5,583,714  10,836  —  10,836  13,017  554  5,608,121  
Home equity lines1,759,571  5,873  943  6,816  12,475  —  1,778,862  
Credit cards256,445  2,465  2,671  5,136  —  —  261,581  
Other consumer loans2,277,102  17,567  820  18,387  6,860  —  2,302,349  
Total consumer9,876,832  36,741  4,434  41,175  32,352  554  9,950,913  
Total loans$38,044,034  $76,837  $6,398  $83,235  $124,805  $31,482  $38,283,556  (2) 
Current, Accruing Past Due, and Non-accrual Originated Loans 
 March 31, 2019 
(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$7,563,911
 $17,395
 $641
 $18,036
 $79,305
 $7,661,252
 
Owner-occupied5,356,411
 7,699
 329
 8,028
 11,239
 5,375,678
 
Total commercial and industrial12,920,322
 25,094
 970
 26,064
 90,544
 13,036,930
 
Investment properties5,712,709
 7,510
 —
 7,510
 726
 5,720,945
 
1-4 family properties654,046
 2,031
 —
 2,031
 1,722
 657,799
 
Land and development336,537
 3,749
 251
 4,000
 2,650
 343,187
 
Total commercial real estate6,703,292
 13,290
 251
 13,541
 5,098
 6,721,931
 
Consumer mortgages3,031,630
 5,721
 —
 5,721
 6,856
 3,044,207
 
Home equity lines1,521,292
 5,333
 345
 5,678
 13,756
 1,540,726
 
Credit cards248,066
 2,307
 2,389
 4,696
 —
 252,762
 
Other consumer loans2,002,539
 16,374
 531
 16,905
 4,249
 2,023,693
 
Total consumer6,803,527
 29,735
 3,265
 33,000
 24,861
 6,861,388
 
Total loans$26,427,141
 $68,119
 $4,486
 $72,605
 $120,503
 $26,620,249
(1) 
             
             


December 31, 2019
(in thousands)CurrentAccruing 30-89 Days Past DueAccruing 90 Days or Greater Past DueTotal Accruing Past DueNon-accrual
ASC 310-30 Loans(3)
Total
Commercial, financial and agricultural$9,137,585  $38,916  $1,206  $40,122  $56,017  $1,019,135  $10,252,859  
Owner-occupied5,691,095  5,164  576  5,740  9,780  823,196  6,529,811  
Total commercial and industrial14,828,680  44,080  1,782  45,862  65,797  1,842,331  16,782,670  
Investment properties7,303,146  1,344  —  1,344  1,581  1,736,608  9,042,679  
1-4 family properties733,984  2,073  304  2,377  2,253  41,401  780,015  
Land and development577,711  808  —  808  1,110  78,161  657,790  
Total commercial real estate8,614,841  4,225  304  4,529  4,944  1,856,170  10,480,484  
Consumer mortgages3,681,553  4,223  730  4,953  11,369  1,848,493  5,546,368  
Home equity lines1,691,759  7,038  171  7,209  12,034  2,155  1,713,157  
Credit cards263,065  3,076  2,700  5,776  —  —  268,841  
Other consumer loans2,363,101  18,688  616  19,304  5,704  8,185  2,396,294  
Total consumer7,999,478  33,025  4,217  37,242  29,107  1,858,833  9,924,660  
Total loans$31,442,999  $81,330  $6,303  $87,633  $99,848  $5,557,334  $37,187,814  (4) 
Current, Accruing Past Due, and Non-accrual Acquired Loans 
 March 31, 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$702,511
 $—
 $—
 $—
 $—
 $1,200,453
 $(16,400) $1,886,564
 
Owner-occupied76,452
 —
 —
 —
 —
 1,115,983
 (7,432) 1,185,003
 
Total commercial and industrial778,963
 —
 —
 —
 —
 2,316,436
 (23,832) 3,071,567
 
Investment properties991,352
 —
 —
 —
 —
 2,228,455
 (23,972) 3,195,835
 
1-4 family properties44,363
 —
 —
 —
 180
 63,960
 (1,301) 107,202
 
Land and development127,204
 —
 —
 —
 —
 113,053
 (2,853) 237,404
 
Total commercial real estate1,162,919
 —
 —
 —
 180
 2,405,468
 (28,126) 3,540,441
 
Consumer mortgages127,577
 —
 —
 —
 —
 2,319,288
 (100,251) 2,346,614
 
Home equity lines68,395
 75
 —
 75
 7
 5,377
 (8,353) 65,501
 
Other consumer loans358
 —
 —
 —
 —
 14,923
 (1,497) 13,784
 
Total consumer196,330
 75
 —
 75
 7
 2,339,588
 (110,101) 2,425,899
 
Total loans$2,138,212
 $75
 $—
 $75
 $187
 $7,061,492
 $(162,059) $9,037,907
(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 $23.7 million.
(2) For purposes of this table, non-performing and past due loans exclude COVID-19 loan modifications.
(2) Total before net deferred fees and costs of $25.5 million.
(3) Represents loans (at fair value) acquired loansfrom FCB accounted for under ASC 310-30.
(3) Represents $9.29 billion (at fair value) of loans acquired from FCB,310-30, net of discount of $90.3 million and payments since acquisition date.Acquisition Date and also include $1.8 million in non-accrual loans, $9.6 million in accruing 90 days or greater past due loans, and $26.5 million in 30-89 days past due loans.
(4)
(4) Total before net deferred fees and costs of $25.4 million.
Interest income on non-accrual loans outstanding at March 31, 2020 and 2019 that would have been recorded if the loans had been current and performing in accordance with their original terms was $2.1 million for each of the three months ended
16

Total before net deferred fees and costs of $24.1 million.

March 31, 2020 and 2019. Of the interest income recognized during the three months ended March 31, 2020 and 2019, cash-basis interest income was $961 thousand and $648 thousand, respectively.
Loans with carrying values of $11.59$15.24 billion and $8.40$12.11 billion, respectively, were pledged as collateral for borrowings and capacity at March 31, 20192020 and December 31, 2018,2019, 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 Retail Credit Classification Policy. Additionally, in accordance with Interagency Supervisory Guidance, the risk grade classifications of consumer loans (consumer mortgages and home equity lines)HELOCs) secured by junior liens on 1-4 family residential properties also consider available information on the payment status of any associated senior liens with other financial institutions.

The risk characteristics and collateral information of each portfolio segment are as follows:

Commercial and Industrial Loans

The C&I loan portfolio is comprised of general middle market and commercial banking clients across a diverse set of industries. In accordance with Synovus' lending policy, each loan undergoes a detailed underwriting process which incorporates uniform underwriting standards and oversight in proportion to the size and complexity of the lending relationship. These loans are secured by collateral such as business equipment, inventory, and real estate. Whether for real estate or non-real estate purpose, credit decisions on loans in the C&I portfolio are based on cash flow from the operations of the business as the primary source of repayment of the debt, with underlying real estate or other collateral being the secondary source of repayment.

Commercial Real Estate Loans
CRE loans primarily consist of income-producing investment properties loans. Additionally, CRE loans include 1-4 family properties loans as well as land and development loans. Investment properties loans consist of construction and mortgage loans for income-producing properties and are primarily made to finance multi-family properties, hotels, office buildings, shopping centers, warehouses and other commercial development properties. 1-4 family properties loans include construction loans to homebuilders and commercial mortgage loans related to 1-4 family rental properties and are almost always secured by the underlying property being financed by such loans. These properties are primarily located in the markets served by Synovus. Land and development loans include commercial and residential development as well as land acquisition loans and are secured by land held for future development, typically in excess of one year. Properties securing these loans are substantially within markets served by Synovus, and loan terms generally include personal guarantees from the principals. Loans in this portfolio are underwritten based on the LTV of the collateral and the capacity of the guarantor(s).
Consumer Loans
The consumer loan portfolio consists of a wide variety of loan products offered through Synovus' banking network including first and second residential mortgages, HELOCs, and credit card loans, as well as home improvement loans and student loans from third-party lending partnerships. The majority of Synovus' consumer loans are consumer mortgages and
17

Originated Loan Portfolio Credit Exposure by Risk Grade 
 March 31, 2019 
(in thousands)Pass Special
Mention		 
Substandard(1)
 
Doubtful(2)
 
Loss(3)
 Total 
Commercial, financial and agricultural$7,409,047
 $114,592
 $134,607
 $3,006
 $—
 $7,661,252
 
Owner-occupied5,261,553
 44,074
 69,626
 425
 —
 5,375,678
 
Total commercial and industrial12,670,600
 158,666
 204,233
 3,431
 —
 13,036,930
 
Investment properties5,674,855
 21,418
 24,672
 —
 —
 5,720,945
 
1-4 family properties644,165
 6,080
 7,554
 —
 —
 657,799
 
Land and development320,071
 13,057
 10,059
 —
 —
 343,187
 
Total commercial real estate6,639,091
 40,555
 42,285
 —
 —
 6,721,931
 
Consumer mortgages3,035,289
 —
 8,821
 97
 —

3,044,207
 
Home equity lines1,524,679
 —
 14,279
 22
 1,746

1,540,726
 
Credit cards250,379
 —
 820
 —
 1,563
(4) 
252,762
 
Other consumer loans2,019,300
 —
 4,393
 —
 —

2,023,693
 
Total consumer6,829,647
 —
 28,313
 119
 3,309
 6,861,388
 
Total loans$26,139,338
 $199,221
 $274,831
 $3,550
 $3,309
 $26,620,249
(5) 
             
             
Acquired Loan Portfolio Credit Exposure by Risk Grade 
 March 31, 2019 
(in thousands)Pass Special Mention 
Substandard(1)
 Doubtful Loss Total 
Commercial, financial and agricultural$1,851,159
 $18,283
 $17,122
 $—
 $—
 $1,886,564
 
Owner-occupied1,171,512
 5,723
 7,768
 —
 —
 1,185,003
 
Total commercial and industrial3,022,671
 24,006
 24,890
 —
 —
 3,071,567
 
Investment properties3,130,586
 21,853
 43,396
 —
 —
 3,195,835
 
1-4 family properties104,555
 164
 2,483
 —
 —
 107,202
 
Land and development237,274
 130
 —
 —
 —
 237,404
 
Total commercial real estate3,472,415
 22,147
 45,879
 —
 —
 3,540,441
 
Consumer mortgages2,341,245
 —
 5,369
 —
 —
 2,346,614
 
Home equity lines65,084
 —
 417
 —
 —
 65,501
 
Other consumer loans13,784
 —
 —
 —
 —
 13,784
 
Total consumer2,420,113
 —
 5,786
 —
 —
 2,425,899
 
Total loans$8,915,199
 $46,153
 $76,555
 $—
 $—
 $9,037,907
(6) 
             
             
HELOCs secured by first and second liens on residential real estate primarily located in the markets served by Synovus. The primary source of repayment for all consumer loans is generally the personal income of the borrower(s), which can be impacted by economic conditions in their market areas.





18

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) 
             
The following table summarizes each loan portfolio class by risk grade and origination as of March 31, 2020.
Loan Portfolio by Risk Grade and Origination
March 31, 2020
Term Loans Amortized Cost Basis by Origination YearRevolving Loans
(in thousands)20202019201820172016PriorAmortized Cost BasisConverted to Term LoansTotal
Commercial, financial and agricultural
Pass$550,653  $1,657,933  $1,115,403  $769,493  $642,584  $954,718  $4,922,661  $78,912  $10,692,357  
Special Mention1,884  6,304  18,293  30,775  2,090  13,352  57,251  2,223  132,172  
Substandard(1)
2,935  13,677  46,404  6,442  10,500  40,659  63,437  721  184,775  
Doubtful(2)
—  —  —  198  915  91  6,919  728  8,851  
Total commercial, financial and agricultural555,472  1,677,914  1,180,100  806,908  656,089  1,008,820  5,050,268  82,584  11,018,155  
Owner-occupied
Pass  386,363  1,213,917  1,271,307  1,116,905  714,764  1,503,199  284,048  —  6,490,503  
Special Mention  —  5,742  5,000  12,431  5,058  15,252  —  —  43,483  
Substandard(1)
338  7,352  38,459  29,820  3,912  29,397  23  —  109,301  
Total owner-occupied386,701  1,227,011  1,314,766  1,159,156  723,734  1,547,848  284,071  —  6,643,287  
Total commercial and industrial942,173  2,904,925  2,494,866  1,966,064  1,379,823  2,556,668  5,334,339  82,584  17,661,442  
Investment properties
Pass  387,787  1,961,810  2,339,056  1,690,528  855,438  1,765,377  184,095  —  9,184,091  
Special Mention  836  92  2,117  4,754  5  10,146  —  —  17,950  
Substandard(1)
160  1,668  1,718  2,124  1,278  48,802  —  —  55,750  
Total investment properties  388,783  1,963,570  2,342,891  1,697,406  856,721  1,824,325  184,095  —  9,257,791  
1-4 family properties
Pass  47,219  203,421  103,044  118,126  54,752  138,793  70,505  —  735,860  
Special Mention  5  2,006  —  —  815  410  2,273  —  5,509  
Substandard(1)
69  2,920  3,726  988  387  1,923  86  —  10,099  
Total 1-4 family properties  47,293  208,347  106,770  119,114  55,954  141,126  72,864  —  751,468  
Land and development
Pass  21,204  205,099  104,987  87,990  26,427  96,809  90,201  —  632,717  
Special Mention  —  1,544  2,394  639  —  8,608  5,738  —  18,923  
Substandard(1)
115  1,327  2,905  635  964  4,356  —  —  10,302  
Total land and development  21,319  207,970  110,286  89,264  27,391  109,773  95,939  —  661,942  
Total commercial real estate457,395  2,379,887  2,559,947  1,905,784  940,066  2,075,224  352,898  —  10,671,201  
19

Loan Portfolio by Risk Grade and Origination (continued)
March 31, 2020
Term Loans Amortized Cost Basis by Origination YearRevolving Loans
(in thousands)20202019201820172016PriorAmortized Cost BasisConverted to Term LoansTotal
Consumer mortgages
Pass  $279,510  $1,149,232  $701,190  $942,965  $898,374  $1,622,114  $880  $—  $5,594,265  
Substandard(1)
—  784  281  1,488  1,811  9,418  —  —  13,782  
Loss(3)
—  —  —  —  —  74  —  —  74  
Total consumer mortgages  279,510  1,150,016  701,471  944,453  900,185  1,631,606  880  —  5,608,121  
Home equity lines
Pass  —  —  —  —  —  —  1,666,627  93,499  1,760,126  
Substandard(1)
—  —  —  —  —  —  11,824  5,949  17,773  
Doubtful(2)
—  —  —  —  —  —  17  20  37  
Loss(3)
—  —  —  —  —  —  736  190  926  
Total home equity lines  —  —  —  —  —  —  1,679,204  99,658  1,778,862  
Credit cards
Pass  —  —  —  —  —  —  258,904  —  258,904  
Substandard(1)
—  —  —  —  —  —  736  —  736  
Loss(4)
—  —  —  —  —  —  1,941  —  1,941  
Total credit cards  —  —  —  —  —  —  261,581  —  261,581  
Other consumer loans
Pass  121,380  788,397  438,760  413,899  185,671  100,619  245,304  —  2,294,030  
Substandard(1)
—  1,117  588  3,849  1,439  1,111  215  —  8,319  
Total other consumer loans  121,380  789,514  439,348  417,748  187,110  101,730  245,519  —  2,302,349  
Total consumer400,890  1,939,530  1,140,819  1,362,201  1,087,295  1,733,336  2,187,184  99,658  9,950,913  
Total loans(5)
$1,800,458  $7,224,342  $6,195,632  $5,234,049  $3,407,184  $6,365,228  $7,874,421  $182,242  $38,283,556  
(1) Includes $214.3 million and $172.3$266.4 million of Substandard accruing loans at March 31, 2019 and December 31, 2018, respectively.2020.
(2) The loans within this risk grade are on non-accrual status and generally have an allowance for loan lossesALL 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 lossesALL equal to the full loan amount.
(4)Represent amounts that were 120 days past due. These credits are downgraded to the Loss category with an allowance for loan lossesALL equal to the full loan amount and are generally charged off upon reaching 181 days past due in accordance with the FFIEC Retail Credit Classification Policy.
(5) Total before net deferred fees and costs of $25.5 million.


20

Loan Portfolio by Risk Grade
December 31, 2019
(in thousands)PassSpecial Mention
Substandard(1)
Doubtful(2)
Loss(3)
Total
Commercial, financial and agricultural$9,940,359  $128,506  $182,831  $1,163  $—  $10,252,859  
Owner-occupied6,386,055  58,330  85,426  —  —  6,529,811  
Total commercial and industrial16,326,414  186,836  268,257  1,163  —  16,782,670  
Investment properties8,968,712  16,490  57,477  —  —  9,042,679  
1-4 family properties766,529  3,249  10,237  —  —  780,015  
Land and development629,351  18,643  9,796  —  —  657,790  
Total commercial real estate10,364,592  38,382  77,510  —  —  

10,480,484  
Consumer mortgages5,527,746  —  18,376  97  149 ��

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

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

2,396,294  
Total consumer9,881,177  —  40,095  118  3,270  9,924,660  
Total loans(5)
$36,572,183  $225,218  $385,862  $1,281  $3,270  $37,187,814  
(1) Includes $288.8 million of substandard accruing loans at December 31, 2019.
(2) The loans within this risk grade are on non-accrual status and generally have an ALL equal to 50% of the loan amount.
(3) The loans within this risk grade are on non-accrual status and have an ALL equal to the full loan amount.
(4) Represent amounts that were 120 days past due. These credits are downgraded to the Loss category with an ALL equal to the full loan amount and are generally charged off upon reaching 181 days past due in accordance with the FFIEC Retail Credit Classification Policy.
(5) Total before net deferred fees and costs of $23.7$25.4 million.
(6) Represents $9.29 billion (at fair value) of loans acquired from FCB, net of payments since acquisition date.Collateral-Dependent Loans
(7) Total before net deferred feesWe classify a loan as collateral-dependent when our borrower is experiencing financial difficulty, 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 $169.4 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 expectedwe expect repayment to be collected atprovided substantially through the Acquisition Dateoperation or sale of collateral. Our commercial loans have collateral that is comprised of real estate and business assets. Our consumer loans have collateral that is substantially comprised of residential real estate.
There were $39.5 million.
Information about the acquired FCB loan portfolio accounted for under ASC 310-30 as of the Acquisition Date is in the following table.
(dollars 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
  

The following table is a summary ofno significant changes in the accretable difference for allextent to which collateral secures our collateral-dependent loans accounted for under ASC 310-30 forduring the three months ended March 31, 2019.2020.
21
(dollars in thousands)Three Months Ended March 31, 2019
Beginning balance$—
Additions1,066,689
Transfers from non-accretable difference to accretable yield—
Accretion(88,928)
Changes in expected cash flows not affecting non-accretable differences(1)
—
Ending balance$977,761
  
(1) 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 lossesALL by loan segment for the three months ended March 31, 20192020 and 2018.2019.
Allowance for Loan Losses Roll Forward
As Of and For the Three Months Ended March 31, 2020
(in thousands)Commercial & IndustrialCommercial Real EstateConsumerTotal
Allowance for loan losses:
Beginning balance, prior to adoption of ASU 2016-13$145,782  $67,430  $68,190  $281,402  
Impact from adoption of ASU 2016-13(2,310) (651) 85,955  82,994  
Charge-offs(14,885) (1,017) (7,972) (23,874) 
Recoveries1,741  399  1,673  3,813  
Provision for loan losses86,622  40,956  21,539  149,117  
Ending balance$216,950  $107,117  $169,385  $493,452  
As Of and For the Three Months Ended March 31, 2019
(in thousands)Commercial & IndustrialCommercial Real EstateConsumerTotal
Allowance for loan losses:  
Beginning balance  $133,123  $68,796  $48,636  $250,555  
Charge-offs  (13,039) (1,233) (6,427) (20,699) 
Recoveries  1,990  344  1,277  3,611  
Provision for loan losses  13,565  1,102  8,902  23,569  
Ending balance$135,639  $69,009  $52,388  $257,036  
Allowance for Loan Losses and Recorded Investment in Loans

 As Of and For The Three Months Ended March 31, 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(13,039) (1,233) (6,427) (20,699)
Recoveries1,990
 344
 1,277
 3,611
Provision for loan losses13,565
 1,102
 8,902
 23,569
Ending balance(1)
$135,639
 $69,009
 $52,388
 $257,036
Ending balance: individually evaluated for impairment$17,948
 $1,610
 $763
 $20,321
Ending balance: collectively evaluated for impairment$117,691
 $67,399
 $51,625
 $236,715
Loans:       
Ending balance: total loans(2)
$16,108,497
 $10,262,372
 $9,287,287
 $35,658,156
Ending balance: individually evaluated for impairment    $135,825
 $28,107
 $28,347
 $192,279
Ending balance: collectively evaluated for impairment(3)
$13,680,451
 $7,854,004
 $7,018,033
 $28,552,488
Ending balance: acquired loans accounted for under ASC 310-30(4)    
$2,292,221
 $2,380,261
 $2,240,907
 $6,913,389
        
 As Of and For The Three Months Ended March 31, 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(8,015) (1,911) (4,455) (14,381)
Recoveries3,112
 5,723
 1,266
 10,101
Provision for loan losses12,845
 (4,819) 4,750
 12,776
Ending balance(1)
$134,745
 $73,991
 $49,028
 $257,764
Ending balance: individually evaluated for impairment$14,405
 $3,740
 $797
 $18,942
Ending balance: collectively evaluated for impairment$120,340
 $70,251
 $48,231
 $238,822
Loans:       
Ending balance: total loans(1)(5)
$12,101,917
 $6,835,727
 $5,969,354
 $24,906,998
Ending balance: individually evaluated for impairment$112,823
 $49,221
 $29,608
 $191,652
Ending balance: collectively evaluated for impairment$11,989,094
 $6,786,506
 $5,939,746
 $24,715,346
        
(1) AsProvision for credit losses and allowance for the quarter, which includes both the ALL and the reserve for unfunded commitments, were impacted by the adoption of andCECL on January 1, 2020. The impact on provision for credit losses for the three months endedending March 31, 20192020 and 2018, there was nothe allowance for loan losses for acquired loans accounted for under ASC 310-30.
(2) Total before net deferred fees and costs of $23.7 million.
(3) These loans are presented net of the remaining fair value discount of $14.0 million at March 31. 2019.
(4) These loans are presented net of the remaining fair value discount of $148.1 million at March 31, 2019.2020, compared to prior year, was amplified by the heightened economic distress resulting from the COVID-19 pandemic.
(5) Total before net deferred feesOur 2019 disclosures included in "Part II - Item 8. Financial Statements and costsSupplementary Data - Note 1 - Summary of $24.0 million.Significant Accounting Policies" of Synovus' 2019 Form 10-K referenced a two-year reasonable and supportable forecast period used in CECL estimates, but it was deemed more appropriate to reduce that to a one-year horizon during this period of heightened economic uncertainty. A one-year reversion to historical losses follows the reasonable and supportable forecast period.












Below is a detailed summary of impaired loans (including TDRs) by classOur modeling process incorporates quantitative and qualitative considerations that are used to inform CECL estimates. The internally developed economic forecast used to determine the allowance for credit losses as of March 31, 20192020 was approved late in the first quarter pursuant to Synovus' economic forecasting governance processes. Between that approval date and December 31, 2018 and for the three months ended March 31, 20192020, further deterioration in the economic outlook occurred which resulted in the need for a qualitative overlay to our allowance for credit losses. The qualitative overlay of $37.3 million adds 10 bps to the allowance for credit losses and 2018.Atbetter aligns the total allowance with the economic indicators and forecasts at March 31, 20192020.
The deterioration of the economic environment since January 1, 2020 due to the effects of COVID-19 resulted in an ACL to loans ratio of 1.39% at March 31, 2020.
Economic projections are an important consideration in CECL estimates. Significant economic uncertainty remains as a result of the continuing healthcare crisis and December 31, 2018, impaired loansthe ultimate impact of $80.1 million and $51.3 million, respectively, weregovernment stimulation efforts. If our economic outlook on non-accrual status.
Impaired Loans (including accruing TDRs)
 March 31, 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$98,263
$32,007
$53,145
$15,063
 $65,150
$22,298
$34,222
$7,133
Owner-occupied53,433
124
50,549
2,885
 49,588
—
48,902
3,074
Total commercial and industrial151,696
32,131
103,694
17,948
 114,738
22,298
83,124
10,207
Investment properties13,019
—
13,019
894
 13,916
—
13,916
1,523
1-4 family properties5,044
—
5,044
144
 5,586
—
5,586
131
Land and development12,632
265
9,779
572
 16,283
265
13,431
944
Total commercial real estate30,695
265
27,842
1,610
 35,785
265
32,933
2,598
Consumer mortgages19,751
—
19,751
280
 19,506
—
19,506
343
Home equity lines3,389
—
3,339
307
 3,264
—
3,235
224
Other consumer loans5,257
—
5,257
176
 5,565
—
5,565
177
Total consumer28,397
—
28,347
763
 28,335
—
28,306
744
Total loans$210,788
$32,396
$159,883
$20,321
 $178,858
$22,563
$144,363
$13,549
          

 Three Months Ended March 31, 2019 Three Months Ended March 31, 2018
(in thousands)Average Recorded Investment
Interest Income Recognized(1)
 Average Recorded Investment
Interest Income Recognized(1)
Commercial, financial and agricultural$76,353
$554
 $75,880
$399
Owner-occupied50,038
526
 37,715
370
Total commercial and industrial126,391
1,080
 113,595
769
Investment properties13,040
142
 22,769
198
1-4 family properties5,509
131
 11,715
216
Land and development11,062
35
 18,170
76
Total commercial real estate29,611
308
 52,654
490
Consumer mortgages20,037
213
 19,986
195
Home equity lines3,302
35
 6,505
45
Other consumer loans5,463
78
 5,391
72
Total consumer28,802
326
 31,882
312
 Total loans$184,804
$1,714
 $198,131
$1,571
      
(1)
Of the interest income recognized during the three months ended March 31, 2019 and 2018, cash-basis interest income was $400 thousand and $141 thousand, respectively.








June 30, 2020 evidences further deterioration, then we would expect to see a further increase in the allowance for credit losses.
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 excluded from the tables below. The following tables represent, by concession type, the post-modification balance for loans modified or renewed during the three months ended March 31, 20192020 and March 31, 20182019 that were reported as accruing or non-accruing TDRs.
TDRs by Concession Type  
 Three Months Ended March 31, 2019 
(in thousands, except contract data)Number of Contracts Below Market Interest Rate 
Other Concessions(1)
 Total 
Commercial, financial and agricultural13
 $1,783
 $899
 $2,682
 
Owner-occupied2
 949
 —
 949
 
Total commercial and industrial15
 2,732
 899
 3,631
 
Investment properties1
 482
 —
 482
 
1-4 family properties6
 793
 —
 793
 
Total commercial real estate7
 1,275
 —
 1,275
 
Consumer mortgages4
 128
 1,214
 1,342
 
Home equity lines1
 —
 105
 105
 
Other consumer loans18
 108
 1,046
 1,154
 
Total consumer23
 236
 2,365
 2,601
 
Total TDRs45
 $4,243
 $3,264
 $7,507
(2) 
         
22


 Three Months Ended March 31, 2018 
(in thousands, except contract data)Number of Contracts Below Market Interest Rate 
Other Concessions(1)
 Total 
Commercial, financial and agricultural9
 $—
 $989
 $989
 
Owner-occupied2
 2,705
 93
 2,798
 
Total commercial and industrial11
 2,705
 1,082
 3,787
 
Investment properties1
 —
 1,959
 1,959
 
1-4 family properties6
 963
 —
 963
 
Total commercial real estate7
 963
 1,959
 2,922
 
Consumer mortgages7
 1,733
 —
 1,733
 
Other consumer loans14
 537
 508
 1,045
 
Total consumer21
 2,270
 508
 2,778
 
Total TDRs39
 $5,938
 $3,549
 $9,487
(3) 
         

TDRs by Concession Type
Three Months Ended March 31, 2020
(in thousands, except contract data)Number of ContractsBelow Market Interest Rate
Other Concessions(1)
Total
Commercial, financial and agricultural36  $3,724  $2,011  $5,735  
Owner-occupied5  1,367  96  1,463  
Total commercial and industrial41  5,091  2,107  7,198  
Investment properties2  23,070  —  23,070  
1-4 family properties6  724  442  1,166  
Land and development1  449  —  449  
Total commercial real estate9  24,243  442  24,685  
Consumer mortgages6  515  1,083  1,598  
Home equity lines19  275  964  1,239  
Other consumer loans29  78  1,897  1,975  
Total consumer54  868  3,944  4,812  
Total TDRs104  $30,202  $6,493  $36,695  
(2)
Three Months Ended March 31, 2019
(in thousands, except contract data)Number of ContractsBelow Market Interest RateOther Concessions(1)Total
Commercial, financial and agricultural13  $1,783  $899  $2,682  
Owner-occupied2  949  —  949  
Total commercial and industrial15  2,732  899  3,631  
Investment properties1  482  —  482  
1-4 family properties6  793  —  793  
Total commercial real estate7  1,275  —  1,275  
Consumer mortgages4  128  1,214  1,342  
Home equity lines1  —  105  105  
Other consumer loans18  108  1,046  1,154  
Total consumer23  236  2,365  2,601  
Total TDRs45  $4,243  $3,264  $7,507  
(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 endedending March 31, 20192020 and 2018.2019.
(2) NoNaN net charge-offs were recorded during the three months ended March 31, 2019 upon restructuring of these loans.2020.
(3) NoNaN net charge-offs were recorded during the three months ended March 31, 2018 upon restructuring of these loans.2019.
For each of the three months ended March 31, 2019 and 2018,2020 there were no3 defaults with a recorded investment of $618 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).
If, at compared to 0 defaults for 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. Atthree months ended March 31, 2019, the allowance for loan losses allocated to accruing TDRs totaling $112.2 million was $4.7 million compared to accruing TDRs of $115.6 million with an allocated allowance for loan losses of $6.1 million at December 31, 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.2019. As of March 31, 2019 2020and December 31, 2018,2019, there were no0 commitments to lend a material amount of additional funds to any customer whose loan was classified as a troubled debt restructuring.TDR.

Note 5 - Goodwill and Other Intangible Assets
ChangesGoodwill allocated to the carrying amount of goodwill byeach reporting unit for the three months endedat March 31, 2019 are provided in the following table. There were no changes to the carrying amount of goodwill during the year ended2020 and December 31, 2018.2019 is presented as follows (the FMS reportable segment includes 2 reporting units of Consumer Mortgages and Wealth Management):
(in thousands)Community Banking Reporting UnitWholesale Banking Reporting UnitConsumer Mortgages Reporting UnitWealth Management Reporting UnitTotal
Balance as of December 31, 2019$256,323  $171,636  $44,877  $24,431  $497,267  
Goodwill acquired and adjustments during the year—  —  —  —  —  
Balance as of March 31, 2020$256,323  $171,636  $44,877  $24,431  $497,267  
(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) 427,685
 —
 427,685
Balance as of March 31, 2019 $460,569
 $24,431
 $485,000
       
23

Effective January 1, 2019,Goodwill is evaluated for impairment on an annual basis or whenever an event occurs or circumstances change to indicate that it is more likely than not that an impairment loss has been incurred (i.e. a triggering event). Synovus acquired FCB. In connection with the acquisition, Synovus has recorded $427.7 million ofconducted a goodwill based on preliminary fair value estimates of the assets acquired and liabilities assumed in the business combinationimpairment assessment as of MarchDecember 31, 2019. Additionally, Synovus recorded a $68.2 million core deposit intangible asset on the Acquisition Date.2019, following Synovus' reorganization, applying ASC 350-20-35-3A Goodwill Subsequent Measurement - Qualitative Assessment Approach and concluded that goodwill was not impaired. See "Part III - Item 1.8. Financial Statements and Supplementary Data - Note 2 - Acquisitions" in this Report19 -Segment Reporting" to the consolidated financial statements of Synovus' 2019 Form 10-K for additional information on Synovus' reorganization during 2019.
During the FCB acquisition.
Asfirst quarter of June 30, 2018,2020, Synovus completed its annualassessed the indicators of goodwill impairment evaluation applying ASC 350-20-35-3A, Goodwill Subsequent Measurement - Qualitative Assessment Approachfor each reporting unit and concludednoted certain events related to COVID-19 that indicated it was more likely than not that goodwill was impaired, necessitating an interim test. Triggering events included Synovus' stock price trading below book value for several weeks prior to quarter-end, a series of emergency rate cuts by the Federal Reserve in March, as well as general economic uncertainty surrounding the pandemic. As such, Synovus performed a quantitative assessment of goodwill impairment as of March 31, 2020, which included determining the estimated fair value of each reporting unit and comparing that fair value to the reporting unit's carrying amount. The results of this test indicated that the estimated fair value of each reporting unit exceeded its carrying amount as of March 31, 2020; therefore, goodwill is not impaired. No eventsimpaired as of the testing date. A significant decline in Synovus’ expected future cash flows or circumstances have occurred since that dateestimated growth rates, or a prolonged decline in the price of Synovus’ common stock, due to warrant a subsequentfurther deterioration in the economic environment, may necessitate additional interim evaluation.tests and/or the recording of an impairment charge on goodwill during 2020.
The following table shows the gross carrying amount and accumulated amortization of other intangible assets as of March 31, 20192020 and December 31, 2018,2019, which primarily consist of core deposit intangible assets acquired in the FCB acquisition. Core deposit intangible assets were $65.1 million at March 31, 2019. The CDI is being amortized over its estimated useful life of approximately ten years utilizing an accelerated method. Amortization expense recognized onAggregate other intangible assets amortization expense for the three months ended March 31, 2020 and 2019 was $2.6 million and 2018 was $3.4 million, and $292 thousand, respectively.
(in thousands)Gross Carrying AmountAccumulated AmortizationNet Carrying Value
March 31, 2020
CDI$57,400  $(12,784) $44,616  
Other12,500  (4,084) 8,416  
Total other intangible assets$69,900  $(16,868) $53,032  
December 31, 2019
CDI$57,400  $(10,436) $46,964  
Other12,500  (3,793) 8,707  
Total other intangible assets$69,900  $(14,229) $55,671  
(in thousands) March 31, 2019 December 31, 2018
Other intangible assets, gross carrying amount $81,128
 $13,140
Other intangible assets, adjustment —
 (212)
Other intangible assets, accumulated amortization (6,445) (3,053)
Other intangible assets, net carrying amount $74,683
 $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 paid by Synovus was approximately $1.6 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 January 15, 2019, Synovus announced a share repurchase program of up to $400 million. As ofDuring the three months ended March 31, 2019,2020, Synovus had repurchased under this program a total of $320.0$16.2 million, or 8.5 million450 thousand shares of its common stock, at an average price of $37.71$36.08 per share.share, under the share repurchase program announced on January 24, 2020.
Dividends
The following table presents dividends declared related to common stock. For information related to preferred stock dividends, see "Part II - Item 8. Financial Statements and Supplementary Data - Note 10 - Shareholders' Equity and Other Comprehensive Income" to the consolidated financial statements of Synovus' 2019 Form 10-K.
Three Months Ended March 31,
20202019
Cash dividends declared per share$0.33  $0.30  

24

Equity-Based Compensation Plans
The following tables summarize the status of Synovus' stock options, restricted share units, market restricted share units, and performance share units as of March 31, 2020 and activity for the three months ended March 31, 2020.
Stock Options
(in thousands, except per share amounts)QuantityWeighted-Average Exercise Price Per Share
Outstanding at January 1, 20203,037  $22.74  
Exercised(220) 29.05  
Expired/canceled(6) 20.99  
Outstanding at March 31, 20202,811  $22.25  

RSUs, MRSUs, and PSUs
(in thousands, except per share amounts)QuantityWeighted-Average Grant Date Fair Value Per Share
Non-vested at January 1, 20201,312  $39.28  
Granted689  36.63  
Quantity change based on TSR and performance factors23  36.63  
Dividend equivalents granted12  36.63  
Vested(556) 39.25  
Forfeited(5) 36.63  
Non-vested at March 31, 20201,475  $38.01  
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 three months ended March 31, 20192020 and 2018.2019.

Changes in Accumulated Other Comprehensive Income (Loss) by Component (Net of Income Taxes)
(in thousands)
Net unrealized gains (losses) on investment securities available for sale(1)
Net unrealized gains (losses) on cash flow hedges(1)
Post-retirement unfunded health benefitTotal
Balance, December 31, 2019$83,666  $(18,487) $462  $65,641  
Other comprehensive income (loss) before reclassifications117,330  80,501  —  197,831  
Amounts reclassified from AOCI(6,472) (89) —  (6,561) 
Net current period other comprehensive income (loss)110,858  80,412  —  191,270  
Balance at March 31, 2020$194,524  $61,925  $462  $256,911  
Balance, December 31, 2018$(83,179) $(12,137) $896  $(94,420) 
Other comprehensive income (loss) before reclassifications76,164  —  —  76,164  
Amounts reclassified from AOCI(56) —  (30) (86) 
Net current period other comprehensive income (loss)76,108  —  (30) 76,078  
Balance at March 31, 2019$(7,071) $(12,137) $866  $(18,342) 
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 as of December 31, 2018$(12,137) $(83,179) $896
 $(94,420)
Other comprehensive income (loss) before reclassifications—
 76,164
 —
 76,164
Amounts reclassified from accumulated other comprehensive income (loss)—
 (56) (30) (86)
Net current period other comprehensive income (loss)—
 76,108
 (30) 76,078
Balance as of March 31, 2019$(12,137) $(7,071) $866
 $(18,342)
        
Balance as of December 31, 2017$(12,137) $(43,470) $853
 $(54,754)
Other comprehensive income (loss) before reclassifications—
 (45,531) —
 (45,531)
Amounts reclassified from accumulated other comprehensive income (loss)—
 —
 (21) (21)
Net current period other comprehensive income (loss)—
 (45,531) (21) (45,552)
Reclassification from adoption of ASU 2018-02—
 (7,763) 175
 (7,588)
Cumulative-effect adjustment from adoption of ASU 2016-01—
 117
 —
 117
Balance as of March 31, 2018$(12,137) $(96,647) $1,007
 $(107,777)
        

(1) In accordance with ASC 740-20-45-11(b), in 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 which treats derivative instruments and available for sale securities as a single portfolio. For all periods presented, the ending balance in net unrealized gains (losses) on cash flow hedges and 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. Underallowances in 2010 and 2011. In accordance with ASC 740-20-45-11(b), under the portfolio approach, these unrealized losses are realized at the time the entire portfolio is sold or disposed.

25


Note 7 - Fair Value Accounting
Fair value accounting guidance defines fair value as the exchange price that would be received to sell an asset or paid to transfer a liability (an "exit price") in the principal or most advantageous market available to the entity in an orderly transaction between market participants, on the measurement date. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" to the consolidated financial statements of Synovus' 20182019 Form 10-K for a description of thehow fair value hierarchy and valuation methodologies for assets and liabilities measured at fair value on a recurring and non-recurring basis.measurements are determined.
Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following tables present all financial instruments measured at fair value on a recurring basis as of March 31, 20192020 and December 31, 2018.2019.
March 31, 2020
(in thousands)Level 1Level 2Level 3Total Assets and Liabilities at Fair Value
Assets
Trading securities:
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises$—  $637  $—  $637  
Other mortgage-backed securities—  1,582  —  1,582  
State and municipal securities—  680  —  680  
Asset-backed securities—  1,913  —  1,913  
Other investments—  45  —  45  
Total trading securities$—  $4,857  $—  $4,857  
Investment securities available for sale:
U.S. Treasury securities$19,918  $—  $—  $19,918  
U.S. Government agency securities—  74,856  —  74,856  
Mortgage-backed securities issued by U.S. Government agencies—  55,422  —  55,422  
Mortgage-backed securities issued by U.S. Government sponsored enterprises—  5,549,825  —  5,549,825  
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—  628,880  —  628,880  
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises—  335,737  —  335,737  
State and municipal securities—  1,005  —  1,005  
Asset-backed securities—  145,975  —  145,975  
Corporate debt securities and other debt securities—  124,060  1,562  125,622  
Total investment securities available for sale$19,918  $6,915,760  $1,562  $6,937,240  
Mortgage loans held for sale—  119,841  —  119,841  
Private equity investments11,877  —  3,255  15,132  
Mutual funds and mutual funds held in rabbi trusts31,241  —  —  31,241  
GGL/SBA loans servicing asset—  —  3,149  3,149  
Derivative assets—  466,401  —  466,401  
Liabilities
Earnout liability$—  $—  $11,016  $11,016  
Derivative liabilities—  184,021  2,050  186,071  
 March 31, 2019
(in thousands)Level 1 Level 2 Level 3 Total Assets and Liabilities at Fair Value
Assets       
Trading securities:       
Mortgage-backed securities issued by U.S. Government agencies$—
 $241
 $—
 $241
Collateralized mortgage obligations issued by
U.S. Government sponsored enterprises    
—
 1,217
 —
 1,217
Other investments200
 82
 —
 282
Total trading securities$200
 $1,540
 $—
 $1,740
Mortgage loans held for sale—
 55,970
 —
 55,970
Investment securities available for sale:       
U.S. Treasury securities$19,584
 $—
 $—
 $19,584
U.S. Government agency securities—
 85,281
 —
 85,281
Mortgage-backed securities issued by U.S. Government agencies—
 91,937
 —
 91,937
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 4,624,314
 —
 4,624,314
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 987,770
 —
 987,770
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises—
 341,825
 —
 341,825
State and municipal securities—
 2,106
 —
 2,106
Asset-backed securities—
 510,305
 —
 510,305
 Corporate debt securities    —
 143,088
 1,981
 145,069
Total investment securities available for sale$19,584
 $6,786,626
 $1,981
 $6,808,191
Private equity investments—
 —
 11,886
 11,886
Mutual funds16,147
 —
 —
 16,147
Mutual funds held in rabbi trusts12,579
 —
 —
 12,579
GGL/SBA loans servicing asset—
 —
 3,447
 3,447
Derivative assets:       
Interest rate contracts$—
 $74,114
 $—
 $74,114
Mortgage derivatives(1)
—
 1,637
 —
 1,637
Total derivative assets$—
 $75,751
 $—
 $75,751
Liabilities       
Earnout liability(2)
—
 —
 14,353
 14,353
Derivative liabilities:       
Interest rate contracts$—
 $22,755
 $—
 22,755
Mortgage derivatives(1)
—
 806
 —
 806
Visa derivative—
 —
 1,366
 1,366
Total derivative liabilities$—
 $23,561
 $1,366
 $24,927
        
26


 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
Mortgage loans held for sale—
 37,129
 —
 37,129
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
 $3,991,632
Private equity investments—
 —
 11,028
 11,028
Mutual funds3,168
 —
 —
 3,168
Mutual funds held in rabbi trusts12,844
 —
 —
 12,844
GGL/SBA loans servicing asset—
 —
 3,729
 3,729
Derivative assets:       
Interest rate contracts$—
 $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
        

(1) 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.
(2) Earnout liability consists of contingent consideration obligation related to the Global One acquisition.

December 31, 2019
(in thousands)Level 1Level 2Level 3Total Assets and Liabilities at Fair Value
Assets
Trading securities:
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises$—  $2,486  $—  $2,486  
Other mortgage-backed securities—  1,284  —  1,284  
State and municipal securities—  65  —  65  
Asset-backed securities—  3,227  —  3,227  
Other investments—  150  —  150  
Total trading securities$—  $7,212  $—  $7,212  
Investment securities available for sale:
U.S. Treasury securities$19,855  $—  $—  $19,855  
U.S. Government agency securities—  36,541  —  36,541  
Mortgage-backed securities issued by U.S. Government agencies—  56,816  —  56,816  
Mortgage-backed securities issued by U.S. Government sponsored enterprises—  5,180,815  —  5,180,815  
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—  636,851  —  636,851  
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises—  371,592  —  371,592  
State and municipal securities—  2,075  —  2,075  
Asset-backed securities—  327,400  —  327,400  
Corporate debt securities and other debt securities—  144,620  2,105  146,725  
Total investment securities available for sale$19,855  $6,756,710  $2,105  $6,778,670  
Mortgage loans held for sale—  115,173  —  115,173  
Private equity investments15,502  —  3,887  19,389  
Mutual funds and mutual funds held in rabbi trusts32,348  —  —  32,348  
GGL/SBA loans servicing asset—  —  3,040  3,040  
Derivative assets—  140,016  —  140,016  
Liabilities
Trading liability for short positions$1,560  $—  $—  $1,560  
Earnout liability—  —  11,016  11,016  
Derivative liabilities—  34,732  2,339  37,071  
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 balanceUPB of mortgage loans held for sale measured at fair value and the changes in fair value of these loans. 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 March 31, 2020As of December 31, 2019
Fair value$119,841  $115,173  
Unpaid principal balance116,268  112,218  
Fair value less aggregate unpaid principal balance$3,573  $2,955  
Mortgage Loans Held for Sale 
(in thousands)As of March 31, 2019 As of December 31, 2018
Fair value$55,970
 $37,129
Unpaid principal balance54,333
 35,848
Fair value less aggregate unpaid principal balance$1,637
 $1,281
    

Changes in Fair Value Included in Net Income   
 For the Three Months Ended March 31,
(in thousands)2019 2018
Mortgage loans held for sale$356
 $115
    
27


Changes in Fair Value Included in Net Income
Three Months Ended March 31,
(in thousands)20202019
Mortgage loans held for sale$619  $356  
Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

During the three months ended March 31, 2019 and 2018,2020, Synovus did not have any transfers in or out of Level 3 in the fair value hierarchy. For theDuring the three months ended March 31, 2019, Synovus had transfers out of Level 3 into Level 1 in the fair value hierarchy as certain funds within private equity investments became public with traded securities.
Three Months Ended March 31, 2020
(in thousands)Investment Securities Available for SalePrivate Equity InvestmentsGGL / SBA
Loans Servicing Asset		Earnout
Liability		Visa Derivative
Beginning balance, December 31, 2019$2,105  $3,887  $3,040  $(11,016) $(2,339) 
Total gains (losses) realized/unrealized:
Included in earnings—  (632) (264) —  —  
Unrealized gains (losses) included in OCI(543) —  —  —  —  
Additions—  —  373  —  —  
Settlements—  —  —  —  289  
Ending balance, March 31, 2020$1,562  $3,255  $3,149  $(11,016) $(2,050) 
Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains/(losses) relating to assets/liabilities still held at March 31, 2020 $—  $(632) $—  $—  $—  
Three Months Ended March 31, 2019
(in thousands)Investment Securities Available for SalePrivate Equity InvestmentsGGL / SBA
Loans Servicing Asset		Earnout
Liability		Visa Derivative
Beginning balance, December 31, 2018$1,785  $11,028  $3,729  $(14,353) $(1,673) 
Total gains (losses) realized/unrealized:
Included in earnings—  28  (488) —  —  
Unrealized gains (losses) included in OCI196  —  —  —  —  
Additions—  —  206  —  —  
Settlements—  —  —  —  307  
Transfers out of Level 3—  (1,575) —  —  —  
Ending balance, March 31, 2019$1,981  $9,481  $3,447  $(14,353) $(1,366) 
Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains/(losses) relating to assets/liabilities still held at March 31, 2019$—  $28  $—  $—  $—  

28

The table below provides an overview of the valuation techniques and 2018, total net gains/losses includedsignificant unobservable inputs used in earnings attributablethose techniques to measure financial instruments that are classified within Level 3 of the valuation hierarchy and are measured at fair value on a recurring basis. The range of sensitivities that management utilized in its fair value calculations is deemed acceptable in the industry with respect to the change in unrealized gains/(losses) relating to assets/liabilities still held at March 31, 2019 and 2018 were a $858 thousand gain and a $3.1 million loss, respectively.identified financial instruments.

 Three Months Ended March 31, 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—
 858
 (488) —
 —
Unrealized gains (losses) included in OCI196
 —
 —
 —
 —
Additions—
 —
 206
 —
 —
Settlements—
 —
 —
 —
 307
Ending balance, March 31, 2019$1,981
 $11,886
 $3,447
 $(14,353) $(1,366)
Total net gains for the period included in earnings attributable to the change in unrealized gains/(losses) relating to assets/liabilities still held at March 31, 2019    $—
 $858
 $—
 $—
 $—
  
 Three Months Ended March 31, 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—
 (3,056) (422) —
 —
Unrealized gains (losses) included in OCI(83) —
 —
 —
 —
Additions—
 —
 292
 —
 —
Settlements—
 —
 —
 —
 356
Ending balance, March 31, 2018$1,852
 $12,715
 $3,971
 $(11,348) $(3,974)
Total net losses for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at March 31, 2018$—
 $(3,056) $—
 $—
 $—
          

March 31, 2020
(dollars in thousands)Valuation TechniqueSignificant Unobservable InputLevel 3 Fair ValueRange / Weighted Average
Assets measured at fair value on a recurring basis
Investment Securities Available for Sale -
Corporate debt and other debt securities - trust preferred security		Discounted cash flow analysisDiscount rate
Forecasted average Prime reset rate		$1,562  7.01% 3.56%
Private equity investmentsIndividual analysis of each investee companyMultiple factors, including but not limited to, current operations, financial condition, cash flows, evaluation of business management and financial plans, and recently executed financing transactions related to the investee companies$3,255N/A
GGL/SBA loans servicing assetDiscounted cash flow analysisDiscount rate
Prepayment speeds		$3,14912.16% 16.10%
Earnout liabilityOption pricing methods and Monte Carlo simulationFinancial projections of Global One$11,016N/A
Visa derivative liabilityDiscounted cash flow analysisEstimated timing of resolution of covered litigation and future cumulative deposits to the litigation escrow for settlement of the Covered Litigation$2,050
0-2 years
(4Q 2021)
Assets Measured at Fair Value on a Non-recurring Basis

Certain assets are recordedrequired to be measured at fair value on a non-recurring basis. Non-recurringnonrecurring basis in periods subsequent to their initial recognition. These assets and liabilities are not measured at fair value on an ongoing basis; however, they are subject to fair value adjustments typically are a resultin certain circumstances, such as when there is evidence of the application of lower of cost or fair value accounting occurring during the period recorded as a charge-off with associated provision expense or a write-down 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.impairment. The following table presents assets measured at fair value on a non-recurring basis as of the dates indicated for which there was a fair value adjustment during the period.


March 31, 2020December 31, 2019
(in thousands)Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Other real estate$—  $—  $460  $460  $—  $—  $8,023  $8,023  
MPS receivable—  —  18,490  18,490  —  —  21,437  21,437  
Other assets held for sale—  —  1,206  1,206  —  —  1,238  1,238  


March 31, 2019 December 31, 2018
(in thousands)Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Impaired loans(1)
$—
 $—
 $1,578
 $1,578
 $—
 $—
 $21,742
 $21,742
Other loans held for sale—
 —
 —
 —
 —
 —
 1,494
 1,494
Other real estate—
 —
 159
 159
 —
 —
 3,827
 3,827
Other assets held for sale—
 —
 517
 517
 —
 —
 1,104
 1,104
                
29

(1) Collateral-dependent impaired loans that were written down to fair value during the period.
    Other real estate (ORE)ORE properties are included in other assets on the consolidated balance sheets. The carrying value of ORE at March 31, 20192020 and December 31, 20182019 was $11.3$15.2 million and $6.2$14.4 million, respectively.
The following table presents fair value adjustments recognized in earnings for the three months ended March 31, 20192020 and 20182019 for assets measured at fair value on a non-recurring basis still held at period-end.
Three Months Ended March 31,
(in thousands)20202019
Other real estate$5  $18  
MPS receivable2,663  —  
Other assets held for sale1,391  96  
 Three Months Ended March 31,
(in thousands)2019 2018
Impaired loans(1)
$2,625
 $720
Other loans held for sale—
 1,512
Other real estate18
 731
Other assets held for sale96
 107
    
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.

March 31, 2020
Valuation TechniqueSignificant Unobservable Input
Range
(Weighted Average)(1)
Assets measured at fair value on a non-recurring basis
Other real estateThird-party appraised value of real estate less estimated selling costsDiscount to appraised value
Estimated selling costs		0%-1% (1%) 0%-10% (7%)
MPS receivable(2)
Third-party appraised value of business less estimated selling costsDiscount to appraised value
Estimated selling costs		N/A
Other assets held for saleThird-party appraised value less estimated selling costs or BOVDiscount to appraised value
Estimated selling costs		0%-76% (58%) 0%-10% (7%)
(1) Collateral-dependent impaired loansThe weighted average is the measure of central tendencies; it is not the value that were written downmanagement is using for the asset or liability.
(2) See "Part I - Item 1. Notes to fair value during the period.Unaudited Interim Financial Statements - Note 10 - Commitments and Contingencies" of this Report for more information on this receivable which was classified as a NPA at March 31, 2020 and December 31, 2019.
Fair Value of Financial Instruments
The following tables present the carrying and estimated fair values of financial instruments at March 31, 20192020 and December 31, 2018.2019. The fair values represent management’s best estimates based on variousa range of methodologies and assumptions. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" to the consolidated financial statements of Synovus' 20182019 Form 10-K for a description of how fair value measurements are determined.

30

March 31, 2020
(in thousands)Carrying ValueFair ValueLevel 1Level 2Level 3
Financial assets
Total cash, cash equivalents, restricted cash, and restricted cash equivalents$1,823,834  $1,823,834  $1,823,834  $—  $—  
Trading securities4,857  4,857  —  4,857  —  
Investment securities available for sale6,937,240  6,937,240  19,918  6,915,760  1,562  
Mortgage loans held for sale119,841  119,841  —  119,841  —  
Private equity investments15,132  15,132  11,877  —  3,255  
Mutual funds and mutual funds held in rabbi trusts31,241  31,241  31,241  —  —  
Loans, net37,764,572  38,168,063  —  —  38,168,063  
GGL/SBA loans servicing asset3,149  3,149  —  —  3,149  
Derivative assets466,401  466,401  —  466,401  —  
Financial liabilities
Non-interest-bearing deposits$9,659,451  $9,659,451  $—  $9,659,451  $—  
Non-time interest-bearing deposits21,305,350  21,305,350  —  21,305,350  —  
Time deposits8,861,784  8,934,652  —  8,934,652  —  
Total deposits$39,826,585  $39,899,453  $—  $39,899,453  $—  
Federal funds purchased and securities sold under repurchase agreements312,776  312,776  312,776  —  —  
Other short-term borrowings1,175,000  1,175,000  —  1,175,000  —  
Long-term debt3,152,339  3,122,480  —  3,122,480  —  
Earnout liability11,016  11,016  —  —  11,016  
Derivative liabilities186,071  186,071  —  184,021  2,050  
31

 March 31, 2019
(in thousands)Carrying Value Fair Value Level 1 Level 2 Level 3
Financial assets         
Total cash, cash equivalents, restricted cash, and restricted cash equivalents$1,265,925
 $1,265,925
 $1,265,925
 $—
 $—
Trading securities1,740
 1,740
 200
 1,540
 —
Mortgage loans held for sale55,970
 55,970
 —
 55,970
 —
Other loans held for sale12
 12
 —
 —
 12
Investment securities available for sale6,808,191
 6,808,191
 19,584
 6,786,626
 1,981
Private equity investments11,886
 11,886
 —
 —
 11,886
Mutual funds16,147
 16,147
 16,147
 —
 —
Mutual funds held in rabbi trusts12,579
 12,579
 12,579
 —
 —
Loans, net35,377,465
 35,086,637
 —
 —
 35,086,637
GGL/SBA loans servicing asset3,447
 3,447
 —
 —
 3,447
Derivative assets75,751
 75,751
 —
 75,751
 —
          
Financial liabilities
 
 
 
  
Non-interest-bearing deposits$9,144,315
 $9,144,315
 $—
 $9,144,315
 $—
Non-time interest-bearing deposits18,345,758
 18,345,758
 —
 18,345,758
 —
Time deposits10,585,117
 10,592,682
 —
 10,592,682
 —
     Total deposits$38,075,190
 $38,082,755
 $—
 $38,082,755
 $—
Federal funds purchased and securities sold under repurchase agreements314,383
 314,383
 314,383
 —
 —
Other short-term borrowings853,000
 853,000
 —
 853,000
 —
Long-term debt2,106,037
 2,119,630
 —
 2,119,630
 —
Earnout liability14,353
 14,353
 —
 —
 14,353
Derivative liabilities24,927
 24,927
 —
 23,561
 1,366
 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
 —
Mortgage loans held for sale37,129
 37,129
 —
 37,129
 —
Other loans for sale1,506
 1,506
 —
 —
 1,506
Investment securities available for sale3,991,632
 3,991,632
 122,077
 3,867,770
 1,785
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, 2019
(in thousands)Carrying ValueFair ValueLevel 1Level 2Level 3
Financial assets
Total cash, cash equivalents, restricted cash, and restricted cash equivalents$1,186,918  $1,186,918  $1,186,918  $—  $—  
Trading securities7,212  7,212  —  7,212  —  
Investment securities available for sale6,778,670  6,778,670  19,855  6,756,710  2,105  
Mortgage loans held for sale115,173  115,173  —  115,173  —  
Private equity investments19,389  19,389  15,502  —  3,887  
Mutual funds and mutual funds held in rabbi trusts32,348  32,348  32,348  —  —  
Loans, net36,881,048  36,931,256  —  —  36,931,256  
GGL/SBA loans servicing asset3,040  3,040  —  —  3,040  
Derivative assets140,016  140,016  —  140,016  —  
Financial liabilities
Non-interest-bearing deposits$9,439,485  $9,439,485  $—  $9,439,485  $—  
Non-time interest-bearing deposits19,891,711  19,891,711  —  19,891,711  —  
Time deposits9,074,308  9,112,459  —  9,112,459  —  
     Total deposits$38,405,504  $38,443,655  $—  $38,443,655  $—  
Federal funds purchased and securities sold under repurchase agreements165,690  165,690  165,690  —  —  
Trading liability for short positions1,560  1,560  1,560  —  —  
Other short-term borrowings1,752,000  1,752,000  —  1,752,000  —  
Long-term debt2,153,897  2,185,717  —  2,185,717  —  
Earnout liability11,016  11,016  —  —  11,016  
Derivative liabilities37,071  37,071  —  34,732  2,339  

Note 8 - Derivative Instruments and Hedging Activities
As part of its overall interest rate risk management activities, Synovus utilizes derivative instruments to manage its exposure to various types of interest rate risk. Theserisk, exposures related to liquidity and credit risk, and to facilitate customer transactions. The primary types of derivative instruments generallyutilized by Synovus consist of interest rate swaps, interest rate lock commitments made to prospective mortgage loan customers, and commitments to sell fixed-rate mortgage loans.loans, and foreign currency exchange forwards. Interest rate lock commitments represent derivative instruments since it is intended that such loans will be sold. Synovus may also utilize interest rate swaps to manage interest rate risks primarily arising from its core banking activities. As of March 31, 2019 and December 31, 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. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" to the consolidated financial statements of Synovus' 2019 Form 10-K for additional information regarding accounting policies for derivatives.
Hedging Derivatives
Cash flow hedge relationships mitigate exposure to the variability of future cash flows or other forecasted transactions. Synovus has entered into interest rate swap contracts to manage overall cash flow changes related to interest rate risk exposure on index-based variable rate commercial loans. The contracts effectively modify Synovus' exposure to interest rate risk by utilizing receive fixed/pay index-based variable rate interest rate swaps.
For cash flow hedges, the effective portion of the gain or loss related to the derivative instrument is initially reported as a component of other comprehensive income and subsequently reclassified into earnings when the forecasted transaction affects earnings or when the hedge is terminated and included in the same income statement line item as the earnings effect of the hedged item.
Synovus recorded an unrealized gain of $9.8 million, or $7.3 million after-tax, in OCI, during the three months ended March 31, 2020, related to terminated cash flow hedges, which will be amortized into earnings in conjunction with the effective terms of the original swaps through the third quarter of 2025. Synovus recognized pre-tax income of $120 thousand during the three months ended March 31, 2020 related to the amortization of terminated cash flow hedges.
32

As of March 31, 2020, Synovus expects to reclassify approximately $32 million of pre-tax gains from AOCI into interest income on cash flow hedges over the next twelve months. Included in this amount is approximately $3 million in pre-tax gains related to the amortization of terminated cash flow hedges. As of March 31, 2020, the maximum length of time over which Synovus is hedging its exposure to the variability in future cash flows is through the first quarter of 2024.
For derivative instruments that are not designated as hedging instruments, changes in the fair value of the derivatives are recognized in earnings immediately.
Counterparty Credit Risk and Collateral
Entering into derivative contracts potentially exposes Synovus to the risk of counterparties’ failure to fulfill their legal obligations, including, but not limited to, potential amounts due or payable under each derivative contract. Notional principal amounts are often used to express the volume of these transactions, but the amounts potentially subject to credit risk are much smaller. Synovus assesses the credit risk of its dealer counterparties by regularly monitoring publicly available credit rating information, evaluating other market indicators, and periodically reviewing detailed financials. Dealer collateral requirements are determined via risk-based policies and procedures and in accordance with existing agreements. Synovus seeksseeks to minimize dealer credit risk by dealing with highly rated counterparties and by obtaining collateral for exposures above certain predetermined limits. Management closely monitors credit conditions within the customer swap portfolio, which management deems to be of higher risk than dealer counterparties. Collateral is secured at origination and credit-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.
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 March 31, 2020 and December 31, 2019, collateral totaling $64.2$157.8 million and $84.6 million, respectively, was pledged to the derivative counterparties to comply with collateral requirements. For derivatives cleared through central clearing houses, the variation margin payments made are legally characterized as settlements of the derivatives. As a result, these variation margin payments are netted against the fair value of the respective derivative contracts in the consolidated balance sheetsheets and related disclosures. At March 31, 20192020 and December 31, 2018,2019, Synovus had a variation margin of $51.9$193.4 million and $3.1$113.7 million respectively, each reducing the derivative liability.

33

The following table reflects the notional amount and fair value of derivative instruments included on the consolidated balance sheets including derivatives acquired from FCB.sheets.

March 31, 2020December 31, 2019
Fair ValueFair Value
(in thousands)Notional Amount
Derivative Assets (1)
Derivative Liabilities (2)
Notional Amount
Derivative Assets (1)
Derivative Liabilities (2)
Derivatives in cash flow hedging relationships:
Interest rate contracts$2,750,000  $90,246  $—  $2,000,000  $54  $8,624  
Total derivatives designated as hedging instruments $90,246  $—  $54  $8,624  
Derivatives not designated
as hedging instruments:
Interest rate contracts(3)
$8,260,884  $367,841  $178,496  $7,258,159  $138,672  $25,849  
Mortgage derivatives - interest rate lock commitments412,218  8,314  —  70,481  1,290  —  
Mortgage derivatives - forward commitments to sell fixed-rate mortgage loans330,000  —  5,097  107,000  —  168  
Other contracts(4)
159,412  —  428  145,764  —  91  
Visa derivative—  —  2,050  —  —  2,339  
Total derivatives not designated as hedging instruments $376,155  $186,071  $139,962  $28,447  
 March 31, 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)
$5,403,031
 $74,114
 $22,755
 $1,840,288
 18,388
 $15,716
Mortgage derivatives - interest rate lock commitments95,053
 1,637
 —
 52,420
 944
 —
Mortgage derivatives - forward commitments to sell fixed-rate mortgage loans93,500
 —
 806
 65,500
 —
 819
Visa derivative—
 —
 1,366
 —
 —
 1,673
Total derivatives not designated as hedging instruments      $75,751
 $24,927
   $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.
(4) Includes risk participation agreements sold. Additionally, the notional amount of risk participation agreements purchased was $2.9 million and $3.0 million at March 31, 2020 and December 31, 2019, respectively.
Synovus also provides foreign currency exchange services, primarily forward contracts, with counterparties to allow commercial customers to mitigate exchange rate risk. Synovus covers its risk by entering into an offsetting foreign currency exchange forward contract. The notional amount of foreign currency exchange forwards was $47.2 million and $32.9 million at March 31, 2020 and December 31, 2019, respectively. The fair value of foreign currency exchange forwards was negligible at March 31, 2020 and December 31, 2019 due to the very short duration of these contracts.
The following table presents the effect of hedging derivative instruments on the consolidated statements of income and the total amounts for the respective line item affected for the three months ended March 31, 2020 and 2019.
Three Months Ended March 31,
(in thousands)20202019
Total amounts presented in the consolidated statements of income in interest income on loans$3,637  $—  
Gain/loss on cash flow hedging relationships:(1)
Interest rate swaps:
Realized gains (losses) reclassified from AOCI, pre-tax, to interest income on loans120  —  
Pre-tax income recognized on cash flow hedges$120  $—  
(1) See "Part I - Item 1. Financial Statements and Supplementary Data - Note 6 - Shareholders' Equity and Other Comprehensive Income (Loss) in this Report for additional information.

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The pre-tax effect of changes in fair value from derivative instruments not designated as hedging instruments on the consolidated statements of income for the three months ended March 31, 20192020 and 20182019 is presented below.
Gain (Loss) Recognized in Consolidated Statements of Income
Three Months Ended March 31,
(in thousands)Location in Consolidated Statements of Income20202019
Derivatives not designated as hedging instruments:
Interest rate contracts(1) 
Capital markets income$(604) $(130) 
Other contracts(2)
Capital markets income(337) —  
Mortgage derivatives - interest rate lock commitmentsMortgage banking income7,024  693  
Mortgage derivatives - forward commitments to sell fixed-rate mortgage loansMortgage banking income(4,929) 13  
Total derivatives not designated as hedging instruments$1,154  $576  
    Gain (Loss) Recognized in Consolidated Statements of Income
    Three Months Ended March 31,
(in thousands) Location in Consolidated Statements of Income 2019 2018
Derivatives not designated as hedging instruments:      
Interest rate contracts(1)    
 Other non-interest income $(130) $7
Mortgage derivatives - interest rate lock commitments Mortgage banking income 693
 735
Mortgage derivatives - forward commitments to sell fixed-rate mortgage loans Mortgage banking income 13
 192
Total derivatives not designated as hedging instruments   $576
 $934
       
(1) Gain (loss) represents net fair value adjustments (including credit-related adjustments) forAdditionally, losses related to termination of customer swaps and offsetting positions.of $2.5 million were recorded in other non-interest expense for the three months ended March 31, 2020.

(2) Includes risk participation agreements sold.
Note 9 - 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 three months ended March 31, 20192020 and 2018.2019.

Three Months Ended March 31,
(in thousands, except per share data)2019 2018
Basic Net Income Per Common Share:   
Net income available to common shareholders$117,036
 $100,607
Weighted average common shares outstanding160,927
 118,666
Net income per common share, basic$0.73
 $0.85
Diluted Net Income Per Common Share:   
Net income available to common shareholders$117,036
 $100,607
Weighted average common shares outstanding160,927
 118,666
Effect of dilutive outstanding equity-based awards, warrants, and earnout payments1,833
 655
Weighted average diluted common shares162,760
 119,321
Net income per common share, diluted$0.72
 $0.84
    

Three Months Ended March 31,
(in thousands, except per share data)20202019
Basic Net Income Per Common Share:
Net income available to common shareholders$30,230  $117,036  
Weighted average common shares outstanding147,311  160,927  
Net income per common share, basic$0.21  $0.73  
Diluted Net Income Per Common Share:
Net income available to common shareholders$30,230  $117,036  
Weighted average common shares outstanding147,311  160,927  
Effect of dilutive outstanding equity-based awards, warrants, and earnout payments1,090  1,833  
Weighted average diluted common shares148,401  162,760  
Net income per common share, diluted$0.20  $0.72  
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, 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 March 31, 2020 and 2019, there were 557 thousand and 40 thousand, ofrespectively, potentially dilutive shares related to stock options to purchase shares of common stock that were outstanding during 2019, and as of March 31, 2018, there were 2.2 million potentially dilutive shares related to the Warrant to purchase shares of common stock that were outstanding during 2018.these quarters. Potentially dilutive shares are not included in the computation of diluted net income per common share because the effect would be anti-dilutive.

Note 10 - Share-based Compensation
As a result of the FCB acquisition on January 1, 2019, Synovus assumed 3.2 million outstanding FCB stock option awards and 136 thousand outstanding FCB restricted stock unit awards. Per 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 Synovus common stock, with the same terms and conditions as were applicable under such award prior to the acquisition. The converted options and restricted share units had 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 the estimated fair value of the converted stock options was determined using a Hull-White model in a binomial lattice option pricing framework. Additionally, under the terms of the Merger Agreement, certain outstanding FCB non-vested equity awards with a fair value of $7.4 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 cash, of which $3.8 million was allocated to merger-related compensation expense and the remaining to purchase price.
The following tables summarize the status of Synovus' stock options, restricted share units, market restricted share units, and performance share units as of March 31, 2019, and activity for the three months ended March 31, 2019.
  Stock Options
(amounts 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 (361) 19.36
Outstanding at March 31, 2019 3,509
 $22.47
     

  
Restricted Share
 Units
 Market Restricted Share Units 
Performance Share
 Units
(amounts 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 438
 36.60
 151
 36.53
 140
 37.34
Assumed 136
 31.99
 —
 —
 —
 —
Quantity change by TSR factor —
 —
 (18) 38.11
 —
 —
Dividend equivalents granted 3
 36.60
 —
 —
 8
 37.34
Vested (236) 37.09
 (55) 38.11
 (93) 26.35
Forfeited (6) 41.18
 —
 —
 —
 —
Non-vested at March 31, 2019 861
 $38.50
 222
 $39.50
 303
 $41.50
             

Total share-based compensation expense recognized for the three months ended March 31, 2019 and 2018 is presented in the following table by its classification within total non-interest expense.
  Three Months Ended March 31,
(in thousands) 2019 2018
Salaries and other personnel expense $6,312
 $3,773
Merger-related expense 3,806
 —
Other operating expenses 126
 182
  Total share-based compensation expense included in non-interest expense $10,244
 $3,955
     



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 (CPI). 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 options.
The following table presents the lease balances within the consolidated balance sheet as of March 31, 2019:
Leases   
(in thousands)Classification March 31, 2019
Assets   
OperatingOther Assets $378,903
Finance
Premises and Equipment, net(1)
 3,457
Total leased assets  $382,360
Liabilities   
OperatingOther Liabilities 385,734
FinanceOther Liabilities 3,229
Total lease liabilities  $388,963
    
(1) Finance lease assets are recorded net of accumulated amortization of $224 thousand as of March 31, 2019.

For the three months ended March 31, 2019, the components of lease expense were as follows:
Lease Cost   
(in thousands)Classification March 31, 2019
Operating lease cost, net(1)
Net occupancy and equipment expense $8,171
Finance lease cost   
Amortization of leased assetsNet occupancy and equipment expense 224
Interest on lease liabilitiesNet occupancy and equipment expense 20
Sublease income(2)
Net occupancy and equipment expense (166)
Net lease cost  $8,249
    
(1)Excludes variable and short-term lease costs, which are not material.
(2) Sublease income excludes rental income from owned properties of $594 thousand for the three months ended March 31, 2019 which is also included in net occupancy and equipment expenses.

The following table presents the weighted average remaining lease term and weighted average discount rates related to Synovus' leases as of March 31, 2019:
Lease Term and Discount Rate   
 Weighted-average remaining lease term (years) Weighted-average discount rate (percentage)
Operating leases21.6 3.55%
Finance leases4.4 2.45
    






Supplemental cash flow information related to the Company's leasing activities for the three months ended March 31, 2019 are as follows:
Other Information 
(in thousands)Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases$(7,461)
Operating cash flows from finance leases(20)
Financing cash flows from finance leases(178)
  


The following table presents the maturity of the Company’s lease liabilities as of March 31, 2019:
Maturity of Lease Liabilities     
(in thousands)Operating Leases Finance Leases Total
2019$22,242
 $692
 $22,934
202029,454
 871
 30,325
202128,000
 839
 28,839
202227,280
 465
 27,745
202325,704
 180
 25,884
After 2023433,753
 343
 434,096
Total lease payments$566,433
 $3,390
 $569,823
Less: Imputed interest180,699
 161
 180,860
Present value of lease liabilities$385,734
 $3,229
 $388,963
      


As of March 31, 2019, minimum lease payments related to operating leases that had not yet commenced were $20.6 million.
Note 1210 - Commitments and Contingencies
In the normal course of business, Synovus enters into commitments to extend credit such as loan commitments and letters of credit to meet the financing needs of its customers. Synovus uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. 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 incomelow-income housing investments, solar energy, and CRA investments.
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The contractual amount of these financial instruments represents Synovus' maximum credit risk should the counterparty draw upon the commitment, and should the counterparty subsequently fail to perform according to the terms of the contract. Since many of the commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements. Additionally, certain commitments (primarily consumer) can generally be canceled by providing notice to the borrower.
The allowance for credit lossesACL associated with unfunded commitments and letters of credit is a component of the unfunded commitments reserve recorded within other liabilities on the consolidated balance sheets. Upon adoption of CECL on January 1, 2020, Synovus recorded $27.4 million in unfunded commitment reserves due to the consideration under CECL of expected utilization over the life of such commitments. At March 31, 2020, the ACL for unfunded commitments was $38.4 million, including the impact of CECL and COVID-19, compared to a reserve of $1.4 million at December 31, 2019. Additionally, an immaterial amount of unearned fees relating to letters of credit are recorded within other liabilities on the consolidated balance sheets. These amounts are not material toSee "Part I-Item 1. Financial Statements and Supplementary Data - Note 1 - Basis of Presentation" in this Report for more information on Synovus' consolidated balance sheets.adoption of CECL.
Synovus invests in certain low income housing tax creditLIHTC partnerships which are engaged in the development and operation of affordable multi-family housing utilizing the LIHTC pursuant to Section 42 of the Code. Additionally, Synovus invests in certain solar energy tax credit partnerships pursuant to Section 48 of the Code. Synovus typically acts as a limited partner in these investments and does not exert control over the operating or financial policies of the partnerships and as such, is not considered the primary beneficiary of the partnership. For certain of its LIHTC investments, Synovus typically provides financing during the construction and development of the properties and is at risk for the funded amount of its equity investment plus the outstanding amount of any construction loans in excess of the fair value of the collateral for the loan, but has no obligation to fund the operations or working capital of the partnerships and areis not exposed to losses beyond Synovus’ investment. Synovus receives tax credits related to these investments

which are subject to recapture by taxing authorities based on compliance featuresprovisions required to be met at the project level.
(in thousands)March 31, 2019 December 31, 2018
Letters of credit*$212,696
 $157,675
Commitments to fund commercial and industrial loans5,823,618
 5,527,017
Commitments to fund commercial real estate, construction, and land development loans3,016,716
 2,034,223
Commitments under home equity lines of credit1,396,313
 1,258,657
Unused credit card lines833,990
 775,003
Other loan commitments639,049
 400,983
Total unfunded lending commitments and letters of credit$11,922,382
 $10,153,558
    
Synovus also invests in certain other CRA partnerships including SBIC programs. The SBIC is a program initiated by the SBA in 1958 to assist in the funding of small business loans.
(in thousands)March 31, 2020December 31, 2019
Letters of credit*$182,629  $202,614  
Commitments to fund commercial and industrial loans6,994,969  7,018,152  
Commitments to fund commercial real estate, construction, and land development loans2,925,791  3,032,252  
Commitments under home equity lines of credit1,508,176  1,501,452  
Unused credit card lines940,016  877,929  
Other loan commitments469,958  485,371  
Total letters of credit and unfunded lending commitments$13,021,539  $13,117,770  
Investments in low income housing tax credit partnerships:   
Carrying amount included in other assets$81,611
 $83,736
Amount of future funding commitments included in carrying amount33,463
 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
    

Investments in low income housing, solar energy tax credit, and other CRA partnerships:
Carrying amount included in other assets$166,460  $146,612  
Amount of future funding commitments included in carrying amount93,749  78,266  
Short-term construction loans and letter of credit commitments792  2,124  
Funded portion of short-term loans and letters of credit4,516  3,196  
* Represent the contractual amount net of risk participations purchased of approximately $39$32 million and $46$33 million at March 31, 20192020 and December 31, 2018,2019, respectively.
Merchant Services
In accordance with credit and debit card association rules, Synovus sponsors various 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 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 obligations, then Synovus, as the sponsor, could be held liable for the disputed amount. Synovus seeks to mitigate this risk through its contractual arrangements with the MPS and the merchants by withholding future settlements, retaining cash reserve accounts and/or obtaining other security. For the three months ended March 31, 20192020 and 2018,2019, the sponsored entities processed and settled $17.71$18.37 billion and $16.72$17.71 billion of transactions, respectively.
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Synovus began covering and has continued to covercovered chargebacks related to a particular MPS during 2019 and 2018 where the MPS’s cash reserve account was unavailable to support the chargebacks. As of March 31, 2019,2020, the remaining amount due to Synovus had advanced $23.5 million tofrom the MPS is $21.2 million, compared to cover these chargebacks.$21.4 million at December 31, 2019. During the three months ended March 31, 2020, Synovus recorded a $2.7 million reserve in other operating expenses associated with the chargebacks, reflecting the amount that Synovus does not expect to collect. The net balance of $18.5 million at March 31, 2020 is included in other assets and classified in NPAs. While Synovus has contractual protections to mitigate against loss, repayment of suchthe amounts owed to Synovus will depend in large part upon the continued financial viability and/or valuation of the MPS and the favorable resolutionavailability of any resulting disputes over the funds.cash reserve accounts.
Legal Proceedings
Synovus and its subsidiaries are subject to various legal proceedings, claims and claimsdisputes that arise in the ordinary course of its business. Additionally, in the ordinary course of 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 mortgage loan and other loan put-back claims, claims and counterclaims asserted by individualsindividual borrowers related to their loans, and allegations of violations of state and federal laws and regulations relating to banking practices, and allegations related to Synovus' participation in government stimulus programs, including putative class action matters and also claims asserted by shareholders or purported shareholders against Synovus, members of Synovus' Board of Directors, and members of Synovus' management team.matters. In addition to actual damages, if Synovus does not prevail in such asserted legal actions, credit-related litigation could result in additional write-downs or charge-offs of loans,assets, which could adversely affect Synovus' results of operations during the period in which the write-down or charge-off were to occur.
Synovus carefully examines and considers each legal matter, and, in those situations where Synovus determines that a particular legal matter presents loss contingencies that are both probable and reasonably estimable, Synovus establishes an appropriate 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 March 31, 20192020 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 zero0 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 or financial condition for any particular period.
Synovus intends to vigorously pursue all available defenses to these legal matters, but will also consider other alternatives, including settlement, in situations where there is an opportunity to resolve such legal matters on terms that Synovus considers to be favorable, including in light of the continued expense and distraction of defending such legal matters. Synovus maintains insurance coverage, which may be available to cover legal fees, or potential losses that might be incurred in connection with such legal matters. The above-noted estimated range of reasonably possible losses does not take into consideration insurance coverage which may or may not be available for the respective legal matters.


Note 11 - Segment Reporting
Synovus' business segments are based on the products and services provided or the customers served, and as of the fourth quarter of 2019, reflect the manner in which financial information is evaluated by the chief operating decision maker. Prior to the fourth quarter of 2019, Synovus identified its overall banking operations as its only reportable segment. Synovus has 3 major reportable business segments: Community Banking, Wholesale Banking, and Financial Management Services (FMS), with functional activities such as treasury, technology, operations, marketing, finance, enterprise risk, legal, human resources, corporate communications, executive management, among others, included in Treasury and Corporate Other.
Business segment results are determined based upon Synovus' management reporting system, which assigns balance sheet and income statement items to each of the business segments. Certain assets, liabilities, revenues, and expenses not allocated or
37

attributable to a particular business segment are included in Treasury and Corporate Other. The management accounting policies and processes utilized in compiling segment financial information are highly subjective and, unlike financial accounting, are not based on authoritative guidance similar to GAAP. As a result, reported segment results are not necessarily comparable with similar information reported by other financial institutions.
The Community Banking business segment serves customers using a relationship-based approach through its branch, ATM, commercial, and private wealth network in addition to mobile, Internet, and telephone banking. This segment primarily provides individual, small business, and corporate customers with an array of comprehensive banking products and services including commercial, home equity, and other consumer loans, credit and debit cards, and deposit accounts.
The Wholesale Banking business segment serves primarily larger corporate customers by providing commercial lending and deposit services through specialty teams including middle market, CRE, senior housing, national accounts, premium finance, structured lending, healthcare, and asset-based lending.
The Financial Management Services (FMS) business segment serves its customers by providing mortgage and trust services and also specializing in professional portfolio management for fixed-income securities, investment banking, the execution of securities transactions as a broker/dealer, asset management, and financial planning services, as well as the provision of individual investment advice on equity and other securities.
Synovus uses a centralized FTP methodology to attribute appropriate net interest income to the business segments. The intent of the FTP methodology is to transfer interest rate risk from the business segments by providing matched duration funding of assets and liabilities. The result is to centralize the financial impact, management, and reporting of interest rate risk in the Treasury and Corporate Other function where it can be centrally monitored and managed. Treasury and Corporate Other charges (credits) an internal cost of funds for assets held in (or pays for funding provided by) each business segment. The FTP rate is based on prevailing market interest rates for comparable duration assets (or liabilities).
The following table presents certain financial information for each reportable business segment for the first quarter of 2020. To provide comparable information, Synovus has included proforma business segment financial information for the first quarter of 2019 utilizing various allocation methodologies based on balance sheet and income statement items assigned to each business segment. The application and development of management reporting methodologies is a dynamic process and is subject to periodic enhancements. As these enhancements are made, financial results presented by each reportable business segment may be periodically revised.
(in thousands)Community BankingWholesale BankingFinancial Management ServicesTreasury and Corporate OtherSynovus Consolidated
First Quarter 2020
Net interest income$197,246  $123,170  $16,782  $36,062  $373,260  
Non-interest revenue33,449  9,256  47,275  13,877  103,857  
Non-interest expense75,304  18,202  43,289  139,484  276,279  
Pre-provision net revenue$155,391  $114,224  $20,768  $(89,545) $200,838  

(in thousands)Community BankingWholesale BankingFinancial Management ServicesTreasury and Corporate OtherSynovus Consolidated
First Quarter 2019 Proforma
Net interest income$214,759  $125,611  $28,865  $27,940  $397,175  
Non-interest revenue32,776  6,758  32,279  7,565  79,378  
Non-interest expense74,816  15,019  33,218  169,357  292,410  
Pre-provision net revenue$172,719  $117,350  $27,926  $(133,852) $184,143  

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March 31, 2020
(dollars in thousands)Community BankingWholesale BankingFinancial Management ServicesTreasury and Corporate OtherSynovus Consolidated
Total loans net of deferred fees and costs$12,224,112  $18,691,302  $5,344,276  $1,998,334  $38,258,024  
Total deposits25,364,034  9,111,207  266,839  5,084,505  39,826,585  
Total full-time equivalent employees2,291  237  838  1,936  5,302  
December 31, 2019
(dollars in thousands)Community BankingWholesale BankingFinancial Management ServicesTreasury and Corporate OtherSynovus Consolidated
Total loans net of deferred fees and costs$12,170,914  $17,643,509  $5,285,455  $2,062,572  $37,162,450  
Total deposits25,610,777  8,314,184  284,716  4,195,827  38,405,504  
Total full-time equivalent employees2,301  213  839  1,911  5,264  

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ITEM 2. – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In this Report, the words “Synovus,” “the Company,” “we,” “us,” and “our” refer to Synovus Financial Corp. together with Synovus Bank and Synovus' other wholly-owned subsidiaries, except where the context requires otherwise.
FORWARD-LOOKING STATEMENTS
Certain statements made or incorporated by reference in this Report which are not statements of historical fact, including those under “Management's 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 financial 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 financial 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 risks and uncertainties related to the impact of the COVID-19 pandemic on our assets, business, capital and liquidity, financial condition, prospects and results of operations;

(2)the risk that the current and any further economic downturn and contraction could have a material adverse effect on our capital, liquidity, financial condition, credit quality, results of operations and future growth, including the risk that the current economic contraction could last much longer and be much more severe if efforts to contain the pandemic are unsuccessful and restrictions on movement last longer than currently anticipated;

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

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

(3)(5)that we may failchanges in the cost and availability of funding due to realize all ofchanges in the anticipated benefits of the Merger, or those benefits may take longer to realize than expected,deposit market and that we may encounter significant difficulties in integrating FCB;credit market;

(4)(6)the risk thatrestrictions or limitations on access to funds from historical and alternative sources of liquidity could adversely affect our current and future information technology system enhancements and operational initiatives may not be successfully implemented,overall liquidity, which could negatively impactrestrict our operations;ability to make payments on our obligations and our ability to support asset growth and sustain our operations and the operations of Synovus Bank;

(5)(7)the riskrisks that our enterprise risk management framework, our compliance program,if economic conditions worsen further or our corporate governance and supervisory oversight functions may not identify or address risks adequately, which may result in unexpected losses;
(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, and the risk that we may be unable to obtain full payment in respect of any trade or other receivables;
(7)the risk that any future economic downturn could have a material adverse effect on ourregulatory capital financial condition, results of operations and future growth;
(8)our ability to attract and retain key employees;
(9)the risk thatrules are modified, we may be required to make substantial expendituresundertake initiatives to keep pace with regulatory initiatives and the rapid technological changes in the financial services market;improve our capital position;

(10)(8)risks related to our business relationships with, and reliance upon, third parties that 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 with a third-party 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;

(12)our ability to identify and address cyber-security risks such as data security breaches, malware, "denial of service" attacks, "hacking" and identity theft, a failure of which could disrupt our business and result in 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)(9)the risk related to our implementation of new lines of business or new products and services;
(14)changes in the interest rate environment, including changes to the federal funds rate to include a possible negative interest rate environment, and competition in our primary market area may result in increased funding costs or reduced earning assets yields, thus further reducing margins and net interest income;

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(15)(10)the risk that our asset quality may deteriorate, our allowance for credit losses may prove to be inadequate or may be negatively affected by credit risk exposures, and the risk that we may be unable to obtain full payment in respect of any loan or other receivables;

(11)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;

(12)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;

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

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

(15)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;

(16)risks related to our business relationships with, and reliance upon, third parties that 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 with a third-party vendor or business relationship;

(17)risks related to the ability of our operational framework to identify and manage risks associated with our business such as credit risk, compliance risk, reputational risk, and operational risk, including third-party business partners, as well as our relationship with third-party vendors and other service providers;

(18)the risk related to our implementation of new lines of business, new products and services or new technologies;

(19)the impact of recent and proposed changes in governmental policy, laws and regulations, including recently enacted laws, regulations and guidance related to government stimulus programs related to the COVID-19 pandemic, proposed and 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;

(16)(20)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;

(21)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-party vendor, obligor, or business partner fails to pay amounts due to us under that relationship or under any arrangement that we enter into with them;

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

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

(24)risks related to regulatory approval to take certain actions, including any dividends on our common stock or preferred stock, any repurchases of common stock or any issuance or redemption of any other regulatory capital instruments;

(25)risks related to the continued use, availability and reliability of LIBOR and other "benchmark" rates;

(26)the costs and effects of litigation, investigations, inquiries or similar matters, or adverse facts and developments related thereto, including the costs and effects of litigation related to our participation in government stimulus programs associated with the COVID-19 pandemic;

(27)the risk that we may fail to realize all of the anticipated benefits of the Merger or those benefits may take longer to realize than expected;
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(28)the risk that we may not be able to identify suitable bank and non-bank acquisition opportunities as part of our growth strategy and even if we are able to identify attractive acquisition opportunities, we may not be able to complete such transactions on favorable terms or realize anticipated benefits from such transactions;

(18)(29)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;
(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;
(24)risks related to regulatory approval to take certain actions, including any dividends on our common stock or Series D 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;
(25)risks related to the continued use, availability and reliability of 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;
(28)risks related to the fluctuation in our stock price;
(29)the effects of any damages to our reputation resulting from developments related to any of the items identified above; and

(30)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 III - 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' 20182019 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 oral or written, to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of new information or unanticipated events, except as may otherwise be required by law.
INTRODUCTION AND CORPORATE PROFILE
Synovus Financial Corp. is a financial services company and a registered bank holding company headquartered in Columbus, Georgia. Through its wholly-owned subsidiary, Synovus Bank, a Georgia state-chartered bank that is a member of the Federal Reserve System, the companyCompany provides commercial and retail banking in addition to a full suite of specialized products and services including private banking, treasury management, wealth management, mortgage services, premium finance and international banking. Synovus also provides mortgage services, financial planning, and investment advisory services through its wholly-owned subsidiaries, Synovus Mortgage, Synovus Trust and Synovus Securities, as well as its GLOBALT and Creative Financial Group divisions.
Synovus Bank is positioned in some of the highest growth markets in the Southeast, with 300299 branches in Alabama, Florida, Georgia, South Carolina, 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 three months ended March 31, 20192020 and financial condition as of March 31, 20192020 and December 31, 2018.2019. This discussion supplements, and should be read in conjunction with, the unaudited interim consolidated financial statements and notes thereto contained elsewhere in this Report and the consolidated financial statements of Synovus, the notes thereto, and management’s discussion and analysis contained in Synovus’ 20182019 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.
•Discussion of Results of Operations - Reviews Synovus' financial performance, as well as selected balance sheet items, items from the statements of income, significant transactions, and certain key ratios that illustrate Synovus' performance.

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

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

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DISCUSSION OF RESULTS OF OPERATIONS
Table 1 - Consolidated Financial Highlights
Three Months Ended March 31,
(dollars in thousands, except per share data)20202019Change
Net interest income$373,260  $397,175  (6.0)%
Provision for credit losses(1)
158,722  23,569  573.4  
Non-interest revenue103,857  79,378  30.8  
Adjusted non-interest revenue(2)
99,378  78,445  26.7  
Total FTE revenues477,903  477,183  0.2  
Adjusted total revenues(2)
473,424  476,250  (0.6) 
Non-interest expense276,279  292,410  (5.5) 
Adjusted non-interest expense(2)
271,155  242,653  11.7  
Income before income taxes42,116  160,574  (73.8) 
Net income38,521  120,186  (67.9) 
Net income available to common shareholders30,230  117,036  (74.2) 
Net income per common share, basic0.21  0.73  (71.8) 
Net income per common share, diluted0.20  0.72  (71.7) 
Adjusted net income per common share, diluted(2)
0.21  0.98  (79.0) 
Net interest margin(3)
3.37 %3.78 %(41)bps
Net charge-off ratio(3)
0.21  0.19  2  
Return on average assets(3)
0.32  1.06  (74) 
Adjusted return on average assets(2)(3)
0.32  1.45  (113) 
Efficiency ratio-FTE57.81  61.28  (347) 
Adjusted tangible efficiency ratio(2)
56.72  50.24  648  
Table 1 - Consolidated Financial Highlights     
 Three Months Ended March 31,
(dollars in thousands, except per share data)2019 2018 Change
Net interest income$397,175
 $274,284
 44.8 %
Provision for loan losses23,569
 12,776
 84.5
Non-interest income79,378
 67,046
 18.4
Adjusted non-interest income(1)
78,445
 70,102
 11.9
Total revenues476,554
 341,330
 39.6
Adjusted total revenues(1)
476,250
 344,502
 38.2
Non-interest expense292,410
 195,179
 49.8
Adjusted non-interest expense(1)
242,653
 198,120
 22.5
Income before income taxes160,574
 133,375
 20.4
Net income120,186
 103,166
 16.5
Net income available to common shareholders117,036
 100,607
 16.3
Net income per common share, basic0.73
 0.85
 (14.2)
Net income per common share, diluted0.72
 0.84
 (14.7)
Adjusted net income per common share, diluted(1)
0.98
 0.86
 15.1
Net interest margin(2)
3.78% 3.78% —
Net charge-off ratio(2)
0.19
 0.07
 12
Return on average assets(2)
1.06
 1.34
 (28)
Adjusted return on average assets(1)(2)
1.45
 1.36
 9
Efficiency ratio61.29
 57.16
 413
Adjusted tangible efficiency ratio(1)
50.24
 57.42
 (718)
      
(1)  Beginning January 1, 2020, provision calculation is based on current expected loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.
(2) See “Non-GAAP"Table 14 - Reconciliation of Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
(2)(3) Annualized
March 31, 2020December 31, 2019Sequential Quarter ChangeMarch 31, 2019Year-Over-Year Change
March 31, 2019 December 31, 2018 Sequential Quarter Change March 31, 2018 Year-Over-Year Change
(dollars in thousands, except per share data)
(dollars in thousands)(dollars in thousands)March 31, 2020December 31, 2019Sequential Quarter ChangeMarch 31, 2019Year-Over-Year Change
Loans, net of deferred fees and costs$35,634,501
 $25,946,573
 $9,687,928
 $24,883,037
 $10,751,464
Loans, net of deferred fees and costs
Total average loans35,320,014
 25,626,249
 9,693,765
 24,852,399
 10,467,615
Total average loans37,593,045  36,508,035  1,085,010  35,320,014  2,273,031  
Total deposits38,075,190
 26,720,322
 11,354,868
 26,253,507
 11,821,683
Total deposits39,826,585  38,405,504  1,421,081  38,075,190  1,751,395  
Total core deposits(1)
35,366,186
 25,172,292
 10,193,894
 24,246,930
 11,119,256
Core depositsCore deposits35,838,637  34,975,511  863,126  35,366,186  472,451  
Core transaction depositsCore transaction deposits24,790,621  24,167,582  623,039  23,168,085  1,622,536  
Total average deposits37,826,952
 26,920,101
 10,906,851
 25,788,073
 12,038,879
Total average deposits38,687,207  37,878,818  808,389  37,826,952  860,255  
Non-performing assets ratio(3)
0.44% 0.44% —
 0.53% (9)bps0.50 %0.37 %13 bps0.44 %6  bps  
Non-performing loans ratio(3)
0.40
 0.41
 (1) 0.48
 (8)0.41  0.27  14  0.40  1  
Past due loans over 90 days0.01
 0.01
 —
 0.02
 (1)Past due loans over 90 days0.02  0.04  (2) 0.01  1  
CET1 capital (transitional)$3,790,395
 $2,897,997
 $892,398
 $2,814,494
 $975,901
CET1 capitalCET1 capital$3,744,415  $3,743,459  $956  $3,790,393  $(45,978) 
Tier 1 capital3,985,535
 3,090,416
 895,119
 2,924,109
 1,061,426
Tier 1 capital4,281,560  4,280,604  956  3,985,533  296,027  
Total risk-based capital4,803,641
 3,601,376
 1,202,265
 3,442,921
 1,360,720
Total risk-based capital5,289,039  5,123,381  165,658  4,803,639  485,400  
CET1 capital ratio (transitional)9.52% 9.95% (43)bps 10.13% (61)bps
CET1 capital ratioCET1 capital ratio8.70 %8.95 %(25)bps9.52 %(82) bps  
Tier 1 capital ratio10.01
 10.61
 (60) 10.53
 (52)Tier 1 capital ratio9.95  10.23  (28) 10.01  (6) 
Total risk-based capital ratio12.06
 12.37
 (31) 12.39
 (33)Total risk-based capital ratio12.29  12.25  4  12.06  23  
Total shareholders’ equity to total assets ratio9.86
 9.59
 27
 9.39
 47
Total shareholders’ equity to total assets ratio10.01  10.25  (24) 9.86  15  
Tangible common equity ratio(1)
8.34
 8.81
 (47) 8.79
 (45)
Tangible common equity ratio(1)
7.94  8.08  (14) 8.34  (40) 
Return on average common equity(2)
10.98
 14.25
 (327) 14.62
 (364)
Return on average common equity(2)
2.75  13.08  (1,033) 10.98  (823) 
Adjusted return on average common equity(1)(2)
15.03
 14.96
 7
 14.82
 21
Adjusted return on average common equity(1)(2)
2.79  12.78  (999) 15.03  nm  
Adjusted return on average tangible common equity(1)(2)
17.52
 15.36
 216
 15.23
 229
Adjusted return on average tangible common equity(1)(2)
3.39  14.84  (1,145) 17.52  nm  
         
(1) See “Non-GAAP"Table 14 - Reconciliation of Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
(2) Quarter annualized
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(3)
COVID-19 Healthcare Crisis and Economic Environment
The COVID-19 outbreak and public health response to contain it have resulted in recessionary economic and financial market conditions as of the end of the first quarter. During March 2020 in response, the Federal Reserve reduced the federal funds rate 1.5 percentage points to 0.00 to 0.25 percent and the U.S. government enacted the CARES Act, the largest economic stimulus package in the nation’s history in an effort to lessen the impact of COVID-19 on consumers and businesses. Synovus' response to the COVID-19 pandemic has included the following actions:
•For purposesOver 95% of this table, March 31, 2019 non-performing loans exclude acquired loans accounted for under ASC 310-30 that are currently accruing income.branches were converted to drive-thru and appointment-only, and Synovus implemented aggressive cleaning, sanitizing and hygiene protocols at all company facilities;

•More than 80 percent of Synovus' 5,400 team members were repositioned to work remotely;

•Offered bonus payments to hourly team members required to work on-site and provided additional paid time off to team members who are sick, quarantining, or dealing with childcare or other COVID-related family hardships;
•To help customers through the period of financial distress, Synovus is offering to waive NSF and monthly service charges for customers impacted by COVID-19, and offering payment deferment and other loan relief as appropriate;
•Synovus participated in delivering PPP loans to customers beginning on April 3, 2020.
Additionally, in light of current economic uncertainty, Synovus has suspended share repurchase activity beyond the $16.2 million completed during the first quarter and withdrawn 2020 guidance and long-term goals announced at the beginning of the year.
Executive Summary
Net income available to common shareholders for the first quarter of 20192020 was $117.0$30.2 million, or $0.72$0.20 per diluted common share, an increasea decrease of 16.3%74.2% and decline of 14.7%71.7%, respectively, compared to the first quarter of 2018.2019. Adjusted net income per common share, diluted(1) was $0.21 for the first quarter of 2020, down 79.0% compared to $0.98 for the first quarter of 2019. The year-over-year decline was driven by a significant increase in provision for credit losses following the adoption of CECL on January 1, 2020, as well as the impact of COVID-19, a 225 bps reduction in the federal funds rate, and PAA including loan discount accretion and deposit premium amortization that positively impacted 2019, up 15.1% compared to $0.86.
Net interest income was $373.3 million for the first quarter of 2018. Results forthree months ended March 31, 2020, down 6.0% from the firstcomparable period in 2019 and down 6.5% from the fourth quarter of 2019, include the impact of the merger with FCB, which closed on January 1, 2019. Synovus incurred $49.7 million in pre-tax merger-related expenses associated with the FCB acquisition, which impacted EPS by $0.27. 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. Excluding the impact of acquired balances, the first quarter of 2019 results were positively impacted with period-end organic loan and deposit growth of $400.1 million and $423.7 million, respectively. Return on average assets for the first quarter of 2019 was 1.06%, down 28 basis points from the first quarter of 2018, and the adjusted return on average assets(1) was 1.45%, up 9 basis points from the first quarter of 2018.
On a sequential quarter basis, net interest income increased $99.2 million, or 33.3%, and compareddue primarily to the same quarterdecline in 2018, net interest income increased $122.9 million, or 44.8%, driven byrates and decline in PAA associated with the FCB acquisition. The net interest margin for the quarter was 3.78%, down 14 basis points from the fourth quarter of 2018. Net interest income and margin were favorably impacted by $18.8 million, or 19 basis points, of purchase accounting adjustments. Purchase accounting adjustments are primarily comprised of $7.4 million of loan accretion and $11.0 million of deposit premium amortization in the first quarter of 2019. The sequential quarter decrease in the net interest margin was driven by the FCB merger, the issuance of subordinated debt, and continued deposit mix shift into time deposits. The net interest margin, excluding the impact of purchase accounting adjustments was 3.59%3.37% for the first quarter of 2019. The2020, down 41 bps and 28 bps from the first and fourth quarter of 2019, respectively. Synovus expects net interest income in the second quarter to be relatively flat compared to first quarter levels as a result of significant loan growth associated with the PPP. However, with this growth, along with a depressed rate environment and an elevated cash position, we expect continued downward pressure on our net interest margin decline for the quarter, compared to the fourth quarter of 2018, included an 11 basis point increase in earning asset yields and a 25 basis point increase in the effective cost of funds.second quarter.
Non-interest incomerevenue for the first quarter of 20192020 was $79.4$103.9 million, up $12.3$24.5 million, or 18.4%30.8%, compared to the first quarter of 2018.2019 and adjusted non-interest revenue(1) of $99.4 million was up $20.9 million, or 26.7%. The acquisition of FCB contributed approximately $7.3 million ofincrease in adjusted non-interest revenue was due primarily to strong growth in mortgage banking income, capital markets income, and growth in fiduciary businesses. The disruption from COVID-19 will likely result in non-interest revenue declining 15-25% in the firstsecond quarter from our recent run rate of 2019. Adjustedapproximately $90 million. We expect non-interest income(1), which excludes investment securities gains/(losses), net and changes in fair value of private equity investments, was up $8.3 million, or 11.9%, forrevenues to normalize, assuming the first quarter of 2019 compared to the first quarter of 2018.economy stabilizes.
Non-interest expense for the first quarter of 20192020 was $292.4$276.3 million, up $97.2down $16.1 million, or 49.8%5.5%, compared to the first quarter of 2018. Adjusted2019 and adjusted non-interest expense(1), which excludes merger-related expense of $49.7$271.2 million was $242.7 million, up $44.5$28.5 million, or 22.5%, compared to11.7%. The increase in adjusted expense over the first quarter of 2018, including $26.8 million2019 was largely driven by investments in talent and technology and growth in production related to the operations of FCBcommissions and $3.1 million in additional amortization of intangibles.fees. The efficiency ratioratio-FTE for the first three months of 20192020 was 61.29%57.81%, compared to 57.16%61.28% for the first three months of 2018.2019. The adjusted tangible efficiency ratio(1) for the first three months of 20192020 was 50.24%56.72%, down 718 basis points fromup 648 bps compared to the same period a year ago.
Synovus continued With the increased levels of COVID-19 related expenses, which we currently estimate at $5-6 million in the second quarter, we expect adjusted expenses to benefit from aremain relatively stable credit environmentquarter-on quarter, before declining in the second half of the year if the economy stabilizes.
The decrease in the effective tax rate for the three months ended March 31, 2020 to 8.5%, from 25.2% for the three months ended March 31, 2019, reflects a one-time benefit of $2.7 million for carrying back net operating loss deductions to pre-TJCA tax periods, as allowed by the CARES Act, and other discrete benefit items, while the effective tax rate in the first quarter of 2019 was higher largely due to non-deductible merger-related expenses associated with the non-performing assetsFCB acquisition.
Loans grew $1.10 billion, or11.9% annualized, sequentially, with total loans of $38.26 billion at March 31, 2020: C&I loan growth was $878.8 million, CRE loan growth was $190.7 million, and consumer loan growth was $26.3 million.
Synovus' adoption of CECL resulted in a January 1, 2020 ACL increase of $110.4 million, or 39.1%, over December 31, 2019. Provision for credit losses of $158.7 million during the first quarter included the impact of the COVID-19 healthcare
44

crisis and the first quarter under CECL. The ACL at March 31, 2020 totaled $531.9 million consisting of an ALL of $493.5 million and reserve on unfunded commitments of $38.4 million resulting in an ACL to loans coverage ratio at 44 basis points, non-performing loansof 1.39%. While Synovus did see an increase from year-end 2019 in the March 31, 2020 NPA ratio at 40 basis points,of 0.50% and NPL ratio of 0.41%, the NPL ratio is up only one bp over prior year and total past due loans at 25 basis points. Additionally, loans past due 90 days or more remain at an insignificant level.dues declined to 0.22% from 0.33%, sequentially. Net charge-offs for the first quarter of 20192020 were $17.1 million, or 0.19%, as a percentage of average loans21 bps, annualized, compared to $13.0 million, or 0.20%, and $4.3 million, or 0.07%, for the three months ended December 31, 2018 and March 31, 2018, respectively. The increaseup from 10 bps in net charge-offs was primarily attributable to a higher level of recoveries in the previous and prior year quarters, with gross charge-offs for the first quarter of 2019 remaining in-line with the fourth quarter of 2018 but slightly elevated from2019. While Synovus does expect to experience stress in the first quarterportfolio as we progress through the current economic environment, the credit quality of 2018. For the first quarter of 2019, the provision for loan losses was $23.6 million, an increase of $11.4 million, or 94.0%, and $10.8 million, or 84.5%, compared to the three months ended December 31, 2018 and March 31, 2018, respectively. The increase in provision expense was driven by an accelerated rate of new and renewed loan production with the addition of FCB, increases to the loan loss reserve, and a lower level of recoveries and upgrades compared to previous quarters in 2018. The allowance for loan lossesportfolio at March 31, 20192020 was $257.0 million, or 0.72% of total loans, comparedgenerally stable. If economic forecasts continue to $250.6 million, or 0.97% of total loans, at December 31, 2018 and $257.8 million, or 1.04% of total loans, at March 31, 2018, reflectingdeteriorate, we would expect to see a lower ratio at March 31, 2019, with no allowance for loan losses recorded for acquired loans atfurther increase in the Acquisition Date in accordance with ASC Topic 820.
At March 31, 2019, total loans were $35.63 billion, an increase of $9.69 billion, or37.3% and $10.75 billion or 43.2%, compared to December 31, 2018 and March 31, 2018, respectively, including acquired loan balances from FCB of $9.29 billion and broad-based organic growth of $400.1 million compared to December 31, 2018. 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 45% of total loans, while CRE and consumer loans represent 29%, and 26%, respectively.ACL.
Total period-end deposits at March 31, 20192020 increased $11.35$1.42 billion, or 42.5%,14.9% annualized, compared to December 31, 2018,2019, including $10.93 billion in deposits acquired from FCB and $423.7strong core transaction deposit growth of $623.0 million, of organic growth. The organic growth was driven largely by the continued market preference for time deposits, which increased $614.6 million. Time deposits, excluding brokered time deposits, now represent 22.8% of Synovus' deposit base following the acquisition of FCB.or 10.4% annualized.

During the fourth quarter of 2018, the Board of Directors authorized a new share repurchase program of up to $400 million, of which $320.0 million was repurchased during the first quarter of 2019. Additionally, the Board of Directors approved a 20% increase in the quarterly common stock dividend to $0.30 per share, effective with the quarterly dividend payable 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. Proceeds from these notes were primarily used to repurchase common stock under the current authorization. At March 31, 2019,2020, Synovus' regulatory capital levels continue to be well above regulatory capital requirements with a CET1 ratio was 8.70%, well in excess of 9.52%, a Tier 1regulatory requirements including the capital conservation buffer of 2.5%. The 23 bps decline in Synovus' CET1 ratio from December 31, 2019 was largely due to the increase in risk-weighted assets from loan growth of 10.01%, a total risk-based capital ratio of 12.06%, and a leverage ratio of 8.81%.

$1.10 billion.
More detail on Synovus' financial results for the three months ended March 31, 2019 can2020 and current and expected effects from COVID-19 may be found in subsequent sections of "Item 2. – Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Report. See also "Item 1A. - Risk Factors" of this Report.
2019 Outlook
For the full year 2019, compared to 2018 results on a pro forma combined basis for Synovus and FCB, previously stated 2019 guidance remains unchanged:
Loan growth of 5.5% to 7.5%
Deposit growth of 5.5% to 7.5%
Revenue Growth of 5.5% to 7.5%
Adjusted tangible non-interest expense growth of 2% to 4%
Effective income tax rate of 23% to 24%
Net charge-off ratio of 15 to 20 bps
(1) See "Non-GAAP"Table 14 - Reconciliation of Non-GAAP Financial Measures"Measures” in this Report for applicable reconciliation to the most comparable GAAP measure.measure.
Changes in Financial Condition
During the three months ended March 31, 2019,2020, total assets increased $13.96$2.42 billion from $32.67$48.20 billion at December 31, 20182019 to $46.63$50.62 billion. Loans increased $1.10 billion, due primarily to the acquisition of FCB on January 1, 2019. On the Acquisition Date, the preliminary estimated fair values of FCB included approximately $12.4 billion of identifiable assets, $9.3 billion in loans,cash and $10.9 billion in deposits. Additionally, based on preliminary purchase price allocations, goodwillcash equivalents increased by $427.7 million. Excluding the acquired balances of FCB,$636.9 million, and investment securities available for sale increased $515.6$158.6 million. Additional investments in BOLI policies of $250.0 million during the three months ended March 31, 2020 also contributed to the increase in total assets. Other assets increased $490.9 million including increases in the fair value of derivative assets of $326.4 million and loans increased $400.1 million. Excludinga $169.7 million receivable for securities available for sale sold during the acquired balancesquarter that will settle after quarter-end. The growth in assets was funded primarily by increases of FCB, an increase of $423.7 million$1.42 billion in deposits and a combined increasethe issuance of $498.6$400.0 million in other short-term borrowings and long-term debt providedon February 12, 2020. Other liabilities increased $304.7 million including an increase in the funding sourcefair value of derivative liabilities of $149.0 million and an accrued liability of $113.8 million for purchases of securities available for sale that will settle after quarter-end.
Synovus adopted CECL on January 1, 2020 with an increase to the growthALL of $83.0 million and an increase to the reserve on unfunded commitments of $27.4 million with offsetting increases in assets. loans of $62.2 million related to acquired PCI loans and net deferred tax assets of $12.5 million and a reduction to retained earnings of $35.7 million.
The net loan to deposit ratio was 96.1% at March 31, 2020, compared to 96.8% at December 31, 2019, and 93.6% at March 31, 2019, compared to 97.1% at December 31, 2018, and 94.8% at March 31, 2018.2019.

45

Loans
The following table compares the composition of the loan portfolio at March 31, 2019,2020, December 31, 2018,2019, and March 31, 2018.2019.
Table 2 - Loans by Portfolio Class
March 31, 2020 vs. December 31, 2019 % Change(1)
March 31, 2020 vs. March 31, 2019 % Change
(dollars in thousands)March 31, 2020December 31, 2019March 31, 2019
Commercial, financial and agricultural$11,018,155  $10,252.859  30.0 %$9,566,403  15.2 %
Owner-occupied6,643,287  6,529.811  7.0  6,542,506  1.5  
Total commercial and industrial17,661,442  16,782,670  21.1  16,108,909  9.6  
Investment properties9,257,791  9,042,679  9.6  8,853,494  4.6  
1-4 family properties751,468  780,015  (14.7) 838,727  (10.4) 
Land and development661,942  657,790  2.5  594,925  11.3  
Total commercial real estate10,671,201  10,480,484  7.3  10,287,146  3.7  
Consumer mortgages5,608,121  5,546,368  4.5  5,365,635  4.5  
Home equity lines1,778,862  1,713,157  15.4  1,606,227  10.7  
Credit cards261,581  268,841  (10.9) 252,762  3.5  
Other consumer loans2,302,349  2,396,294  (15.8) 2,037,477  13.0  
Total consumer9,950,913  9,924,660  1.1  9,262,101  7.4  
Total loans38,283,556  37,187,814  11.9  35,658,156  7.4  
Deferred fees and costs, net(25,532) (25,364) 2.7  (23,655) 7.9  
Total loans, net of deferred fees and costs$38,258,024  $37,162,450  11.9 %$35,634,501  7.4 %
Table 2 - Loans by Portfolio Class          
 March 31, 2019 December 31, 2018 Linked Quarter % Change March 31, 2018 Year/Year % Change
(dollars in thousands)Total Loans Total Originated Loans 
Total Acquired(1) Loans
 Total Loans  Total Loans 
Commercial, financial and agricultural$9,547,816
 $7,661,252
 $1,886,564
 $7,449,698
 28.2 % $7,191,531
 32.8 %
Owner-occupied6,560,681
 5,375,678
 1,185,003
 5,331,508
 23.1
 4,910,386
 33.6
Total commercial and industrial16,108,497
 13,036,930
 3,071,567
 12,781,206
 26.0
 12,101,917
 33.1
Investment properties8,916,780
 5,720,945
 3,195,835
 5,560,951
 60.3
 5,619,050
 58.7
1-4 family properties765,001
 657,799
 107,202
 679,870
 12.5
 758,904
 0.8
Land and development580,591
 343,187
 237,404
 323,670
 79.4
 457,773
 26.8
Total commercial real estate10,262,372
 6,721,931
 3,540,441
 6,564,491
 56.3
 6,835,727
 50.1
Consumer mortgages5,390,821
 3,044,207
 2,346,614
 2,934,235
 83.7
 2,663,371
 102.4
Home equity lines1,606,227
 1,540,726
 65,501
 1,515,796
 6.0
 1,472,471
 9.1
Credit cards252,762
 252,762
 —
 258,245
 (2.1) 226,713
 11.5
Other consumer loans2,037,477
 2,023,693
 13,784
 1,916,743
 6.3
 1,606,799
 26.8
Total consumer9,287,287
 6,861,388
 2,425,899
 6,625,019
 40.2
 5,969,354
 55.6
Deferred fees and costs, net(23,655) (23,655) —
 (24,143) (2.0) (23,961) (1.3)
Total loans$35,634,501
 $26,596,594
 $9,037,907
 $25,946,573
 37.3 % $24,883,037
 43.2 %
              
(1)Represents $9.29 billion (at fair value) of loans acquired from FCB, net of payments since acquisition date. Percentage changes are annualized.
At March 31, 2019,2020, total loans, were $35.63net of deferred fees and costs of $38.26 billion an increase of $9.69 billion, or37.3% and $10.75increased $1.10 billion, or 43.2%11.9% annualized, from December 31, 2019 and $2.62 billion, or 7.4%, compared to December 31, 2018 and March 31, 2018, respectively, including acquired loan balances from FCB of $9.29 billion. Excluding acquired FCB balances, period-end loans increased $400.1 million compared to December 31, 2018, with growth of $184.7 million in consumer loans, $151.5 million in CRE loans, and $55.9 million in C&I loans. FCB contributed approximately $214 million in organic growth during the first quarter. 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.2019. C&I loans remain the largest component of our balance sheet representing 45.2%46.1% of total loans, while CRE and consumer loans represent 28.8%27.9%, and 26.0%, respectively.Our portfolio composition is established through a comprehensive concentration management policy which sets limits for C&I, CRE, and Consumer loan levels as well as for sub-categories therein.
Commercial Loans
Total commercial loans (which are comprised of C&I and CRE loans) at March 31, 20192020 were $26.37$28.33 billion, or 74.0% of the total loan portfolio, compared to $19.35$27.26 billion, or 74.5%73.4%, at December 31, 20182019 and $18.94$26.40 billion, or 76.0%74.0%, at March 31, 2018.2019.
At March 31, 2019,2020, Synovus had 76 commercial loan relationships with total commitments of $100 million or more (including amounts funded), with no single relationship exceeding $130$150 million in commitments.
Commercial and Industrial Loans
The C&I loan portfolio represents the largest category of Synovus' total loan portfolio.portfolio and is primarily comprised of general middle market and commercial banking clients across a diverse set of industries. The following table shows the composition of the C&I loan portfolio aggregated by NAICS code. 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.relationship. As of March 31, 2019, approximately 93%2020, 92.3% of Synovus' C&I loans are secured by real estate, business equipment, inventory, and other types of collateral.C&I loans of $16.11$17.66 billion, representing 45.2%or 46.1% of the total loan portfolio, grew $3.33 billion,$878.8 million, or 26.0%21.1% annualized, from December 31, 2018 and $4.01 billion, or 33.1%,2019, driven primarily by strong productivity from March 31, 2018 including acquired loan balances from FCB of $3.27 billion. Excluding acquired FCB balances, growth was $55.9 million and driven by lending specialties including ABL and insurance-premium finance. These gains were partially offset by a small decline in senior housingour Wholesale Banking segment across many specialty divisions as well as a seasonal declinean increase in commercial line utilization.utilization due to the economic and financial market conditions as of the end of the first quarter of 2020.

46

Table 3 - Commercial and Industrial Loans by IndustryTable 3 - Commercial and Industrial Loans by IndustryTable 3 - Commercial and Industrial Loans by Industry
March 31, 2019 December 31, 2018March 31, 2020December 31, 2019
(dollars in thousands)Amount 
%(1)
 Amount 
%(1)
(dollars in thousands)Amount
%(1)
Amount
%(1)
Health care and social assistance$3,063,354
 19.0% $3,044,132
 23.8%Health care and social assistance$3,176,354  18.0 %$3,083,355  18.4 %
Finance and insuranceFinance and insurance1,506,106  8.5  1,263,521  7.5  
Manufacturing1,267,347
 7.9
 1,077,460
 8.4
Manufacturing1,282,100  7.3  1,208,688  7.2  
Retail trade1,212,612
 7.5
 903,965
 7.1
Retail trade1,214,539  6.9  1,202,958  7.2  
Finance and insurance1,139,324
 7.1
 906,955
 7.1
Wholesale trade1,101,199
 6.8
 693,920
 5.4
Wholesale trade1,163,175  6.6  1,138,145  6.8  
Other services912,576
 5.7
 793,948
 6.2
Real estate and rental and leasing887,721
 5.5
 675,824
 5.3
Real estate and rental and leasing1,147,800  6.5  1,126,828  6.7  
Accommodation and food services882,918
 5.5
 663,106
 5.2
Accommodation and food services1,002,118  5.7  921,515  5.5  
Professional, scientific, and technical services868,054
 5.4
 844,929
 6.6
Professional, scientific, and technical services1,000,676  5.7  883,433  5.3  
Arts, entertainment and recreation849,283
 5.3
 234,310
 1.8
Other servicesOther services986,081  5.6  1,005,420  6.0  
Transportation and warehousing841,532
 5.2
 477,386
 3.7
Transportation and warehousing863,306  4.9  854,954  5.1  
Construction684,516
 4.2
 615,903
 4.8
Construction825,388  4.7  716,192  4.3  
Arts, entertainment and recreationArts, entertainment and recreation789,778  4.5  771,846  4.6  
Real estate other534,098
 3.3
 452,360
 3.5
Real estate other625,449  3.5  615,441  3.7  
Other industries520,934
 3.3
 235,143
 2.0
Educational servicesEducational services483,554  2.7  409,639  2.4  
Agriculture, forestry, fishing, and hunting339,939
 2.1
 344,136
 2.7
Agriculture, forestry, fishing, and hunting363,669  2.1  369,185  2.2  
Educational services339,679
 2.1
 284,840
 2.2
Public AdministrationPublic Administration345,702  2.0  342,329  2.0  
Administration, support, waste management, and remediation334,260
 2.1
 281,681
 2.2
Administration, support, waste management, and remediation318,624  1.8  302,711  1.8  
Information329,151
 2.0
 251,208
 2.0
Information307,495  1.7  314,740  1.9  
Other IndustriesOther Industries259,528  1.3  251,770  1.4  
Total commercial and industrial loans$16,108,497
 100.0% $12,781,206
 100.0%Total commercial and industrial loans$17,661,442  100.0 %$16,782,670  100.0 %
       
(1) Loan balance in each category expressed as a percentage of total C&I loans.
At March 31, 2019, $9.552020, $11.02 billion of C&I loans, or 26.8%28.8% 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 March 31, 2019, $6.562020, $6.64 billion of C&I loans, or 18.4%17.3% 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
CRE loans consist primarily of income-producing investment properties loans. Additionally, CRE loans include 1-4 family properties loans as well as land and development loans.loans. Total CRE loans were $10.26of $10.67 billion, representing 28.8%or 27.9% of the total loan portfolio, and increased $3.70 billion,$190.7 million, or 56.3%7.3% annualized, from December 31, 2018 and increased $3.43 billion, or 50.1%, from March 31, 2018,2019, driven by the FCB acquisition, which included $3.55 billion of CRE loans on the Acquisition Date.Excluding the acquisition, CRE loans grew $151.5 million sequentially ledprimarily by growth in income-producing investment properties partially offset by continued strategic declines in 1-4 family properties and land and development loans.properties.
Investment Properties Loans
Investment properties loans consist of construction and mortgage loans for income-producing properties and are primarily made to finance multi-family properties, hotels, office buildings, shopping centers, warehouses and other commercial development properties. Total investment properties loans as of March 31, 20192020 were $8.92$9.26 billion, or 86.9%86.8% of the total CRE loan portfolio and 25.0%24.2% of the total loan portfolio, compared to $5.56 billion, or 84.7% of the total CRE loan portfolio, and 21.4% of the total loan portfolio atincreased $215.1 million, or 9.6% annualized, from December 31, 2018. The increase in investment properties was primarily driven by FCB which included $3.15 billion of acquired investment properties loans. Excluding the acquisition, investment properties loans grew $202.3 million sequentially, driven by increases in2019 with most sub-categories including multi-family,experiencing growth other than office buildings and shopping centers, which were flat and other investment properties.

down 10.0% annualized, respectively.
1-4 Family Properties Loans
1-4 family properties loans include construction loans to homebuildershome builders and commercial mortgage loans related to real estate investors1-4 family rental properties and are almost always secured by the underlying property being financed by such loans. These properties are primarily located in the markets served by Synovus. At March 31, 2019,2020, 1-4 family properties loans totaled $765.0
47

$751.5 million, or 7.5%7.0% of the total CRE loan portfolio and2.2% 2.0% of the total loan portfolio, compared to $679.9 million, or 10.4% of the total CRE loan portfolio, and 2.6% of the total loan portfolio atdecreased by $28.5 million, or 14.7% annualized from December 31, 2018. Outside of $112.0 million loans acquired from FCB, 1-4 family properties loans declined $26.9 million sequentially.2019.
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. Properties securing these loans are substantially within markets served by Synovus, and loan terms generally include personal guarantees from the principals. Loans in this portfolio are underwritten based on the LTV of the collateral and the capacity of the guarantor(s). Total landLand and development loans were $580.6of $661.9 million at March 31, 2019,2020, or1.6% 1.7% of the total loanportfolio, an increase of $256.9increased slightly by $4.2 million, or 79.4%2.5% annualized, from December 31, 2018 which was driven by $280.9 million of loans acquired from FCB. Outside of the acquisition, land and development loans declined $23.9 million sequentially.2019.
Consumer Loans
The consumer loan portfolio consists of a wide variety of loan products offered through Synovus' banking network as well as third-party lending partnerships, including first and second residential mortgages, home equity lines,HELOCs, and credit card loans, as well as home improvementimprovement, student, and personal loans student loans, and other consumer loans.from third-party lending partnerships. The majority of Synovus' consumer loans are consumer mortgages and home equity linesHELOCs secured by first and second liens on residential real estate primarily located in the markets served by Synovus.
Consumer loans at March 31, 2019 totaled $9.292020 of $9.95 billion, representingor 26.0% of the total loan portfolio, increased $26.3 million, or 1.1% annualized, compared to $6.63$9.92 billion or 25.5% of the total loan portfolio at December 31, 2018, and $5.97 billion,2019. Consumer mortgages grew $61.8 million, or 24.0% of the total loan portfolio at March 31, 2018. Consumer loans increased $2.66 billion, or 40.2%4.5% annualized, from December 31, 20182019 primarily as a result of the rate environment and $3.32 billion,additional mortgage loan originators. HELOCs increased $65.7 million, or 55.6%, from March 31, 2018. The increases were primarily driven by $2.48 billion of loans acquired from FCB. Excluding the acquisition, consumer loans grew $184.7 million sequentially, driven by growth in other consumer loans, including our lending partnerships, of $105.7 million, consumer mortgages of $60.0 million, and HELOCs of $24.5 million.
Consumer mortgages grew $2.46 billion or 83.7%15.4% annualized, from December 31, 2018, and $2.73 billion, or 102.4%, from March 31, 2018. Excluding the $2.40 billion in consumer mortgages acquired in the FCB acquisition, the sequential quarter growth of $60.0 million was driven by solid production in the physician and affordable mortgage products as well as production added by mortgage loan originators hired in 2018.
HELOCs increased $90.4 million or 6.0%, from December 31, 2018,2019, driven primarily by an increase in line utilization due to the FCB acquisition. economic and financial market conditions as of the end of the first quarter of 2020. Credit card loans totaled $252.8of $261.6 million at March 31, 2019, including $72.62020 included $62.4 million of commercial credit card loans,and declined slightly compared to $258.2decreased marginally from $268.8 million at December 31, 2018.2019. Other consumer loans increased $120.7decreased $93.9 million, or 6.3%15.8% annualized, from December 31, 2018, and $430.7 million, or 26.8%, from March 31, 20182019, primarily due to pay-downs related to our two consumer-basedthird-party lending partnerships.partnerships. As of March 31, 2019,2020, these partnerships had combined balances of $1.70$1.89 billion, or 4.8%4.9% of the total loan portfolio.
Consumer loans are subject to uniform lending policies and consist primarily of loans with strong borrower credit scores. Synovus makes consumer lending decisions based upon a number of key credit risk determinants including FICO scores as well as loan-to-value and debt-to-income ratios. Risk levels 1-6 (descending)Consumer loans are generally assigned to consumer loans based upon a risk score matrix.rating on a 9-point scale based on credit bureau scores, with a loan grade of 1 assigned as the lowest level of risk and a loan grade of 6 as the highest level of risk. No loans graded higher than a 6 at origination are approved for funding. At least annually, the consumer loan portfolio data is sent to a consumer credit reporting agency for a refresh of customers' credit scores so that management can evaluate ongoing consistency or negative migration in the quality of the portfolio, which impacts the allowance for loan losses.ALL. Revolving lines of credit wereare reviewed for anya material change in financial circumstances, and when appropriate, the line of credit may be suspended for further advances. FICO scores within the residential real estate portfolio have generally remained stable over the last several years. As of the most recent FICO score refresh as of DecemberMarch 31, 2018,2020, weighted-average FICO scores within the residential real estate portfolio based on committed balances were 772786 for HELOCs and 786775 for Consumer Mortgages.
U.S. Small Business Administration Paycheck Protection Program
The CARES Act included an allocation of $349 billion for loans to be issued by financial institutions through the Small Business Administration (“SBA”). This program is known as the Paycheck Protection Program (“PPP”). PPP loans are forgivable, in whole or in part, if the proceeds are used for payroll and other permitted purposes in accordance with the requirements of the PPP. These loans carry a fixed rate of 1.00% and a term of two years, if not forgiven, in whole or in part. Payments are deferred for the first six months of the loan. The loans are 100% guaranteed by the SBA. The SBA pays the originating bank a processing fee ranging from 1% to 5%, based on the size of the loan. The Paycheck Protection Program and Health Care Enhancement Act (“PPP / HCEA Act”) was passed by Congress on April 23, 2020 and signed into law on April 24, 2020. The PPP / HCEA Act authorizes additional funding under the CARES Act of $310 billion for PPP loans to be issued by financial institutions through the SBA. Synovus began accepting applications from qualified customers on April 3, 2020 and has provided over $2.8 billion in funding to over 18,000 customers through the PPP, as of May 7, 2020.



48

Deposits
Deposits provide the most significant funding source for interest earning assets. The following table shows the relative composition of period-end deposits as of the dates indicated.See Table 10 - Average Balances and Yields/Rates in this Report for information on average deposits including average rates.
Table 4 - Composition of Period-end Deposits
(dollars in thousands)March 31, 2020
%(1)
December 31, 2019
%(1)
March 31, 2019
%(1)
Non-interest-bearing demand deposits(2)
$8,968,756  22.5 %$8,661,220  22.6 %$8,440,520  22.2 %
Interest-bearing demand deposits(2)
4,617,368  11.6  4,769,505  12.4  4,911,215  12.8  
Money market accounts(2)
10,255,014  25.8  9,827,357  25.6  8,912,528  23.4  
Savings deposits(2)
949,483  2.4  909,500  2.4  903,822  2.4  
Public funds5,261,383  13.2  4,622,318  12.0  4,630,022  12.2  
Time deposits(2)
5,786,633  14.5  6,185,611  16.1  7,568,079  19.9  
Brokered deposits3,987,948  10.0  3,429,993  8.9  2,709,004  7.1  
Total deposits$39,826,585  100.0 %$38,405,504  100.0 %$38,075,190  100.0 %
Core deposits(3) 
$35,838,637  90.0 %$34,975,511  91.1 %$35,366,186  92.9 %
Core transaction deposits(4) 
$24,790,621  62.2 %$24,167,582  62.9 %$23,168,085  60.8 %
Time deposits greater than $100,000, including brokered and public funds$7,176,468  18.0 %$7,262,833  18.9 %$8,318,082  21.8 %
Brokered time deposits$2,229,596  5.6 %$2,154,095  5.6 %$1,902,962  5.0 %
Table 4 - Composition of Period-end Deposits          
(dollars in thousands)March 31, 2019 
%(1)
 December 31, 2018 
%(1)
 March 31, 2018 
%(1)
Non-interest-bearing demand deposits$9,144,315
 24.0% $7,650,967
 28.6% $7,381,070
 28.1%
Interest-bearing demand deposits6,507,460
 17.1
 4,756,239
 17.8
 5,104,004
 19.4
Money market accounts, excluding brokered deposits10,122,853
 26.6
 8,143,975
 30.5
 7,865,144
 30.0
Savings deposits909,403
 2.4
 817,385
 3.1
 833,571
 3.2
Time deposits, excluding brokered deposits8,682,155
 22.8
 3,803,726
 14.2
 3,063,141
 11.7
Brokered deposits2,709,004
 7.1
 1,548,030
 5.8
 2,006,577
 7.6
Total deposits$38,075,190
 100.0% $26,720,322
 100.0% $26,253,507
 100.0%
Total core deposits(2)    
$35,366,186
 92.9% $25,172,292
 94.2% $24,246,930
 92.4%
            
Time deposits greater than $100,000$8,318,082
 21.8% $3,749,928
 14.0% $3,695,809
 14.1%
            
Brokered time deposits$1,902,962
 5.0% $1,199,670
 4.5% $1,779,049
 6.8%
            
(1)Deposits balance in each category expressed as percentage of total deposits.
(2) See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.Excluding any public funds or brokered deposits.
(3) Core deposits exclude brokered deposits.
(4) Core transaction deposits consist of non-interest-bearing demand deposits, interest-bearing demand deposits, money market accounts, and savings deposits excluding public funds and brokered deposits.
Total period-end deposits at March 31, 20192020 increased $11.35$1.42 billion, or 42.5%,14.9% annualized, compared to December 31, 2018. Total2019. Core transaction deposit growth was very strong, up $623.0 million, or 10.4% annualized, compared to December 31, 2019. Within the core transaction deposit category, non-interest-bearing deposits increased $307.5 million and money market accounts increased $427.7 million. Public fund deposits increased $639.1 million while higher cost time deposits declined $399.0 million, compared to year-end 2019. Additionally, Synovus increased funding by $558.0 million in lower priced brokered deposits, at March 31, 2019 increased $10.19 billion, or 40.5%,2020, compared to December 31, 2018. The acquisition of FCB contributed $10.93 billion2019.
On an average basis, the increase in total deposits including $9.67 billion in core deposits. Excluding the acquired balances, total deposits grew $423.7was $808.4 million, or 8.6% annualized, compared to the prior quarter driven largely by the continued market preference for time deposits, which increased $614.6 million. Time deposits, excluding brokered time deposits, now represent 22.8% of Synovus' deposit base following the acquisition of FCB.
Non-interest-bearing demand deposits as a percentage of total deposits declined during the firstfourth quarter of 2019 and represented 24.0%, 28.6%, and 28.1% at March 31, 2019, December 31, 2018, and March 31, 2018, respectively.2019.
Brokered deposits, as a percentage of total deposits, increased during the first quarter of 2019 following the acquisition of FCB and represented 7.1%, 5.8% and 7.6%, at March 31, 2019, December 31, 2018, and March 31, 2018, respectively.
Non-interest IncomeRevenue
Non-interest incomerevenue for the first quarter of 20192020 was $79.4$103.9 million, up $12.3$24.5 million, or 18.4%30.8%, compared to the first quarter of 2018. The acquisition2019 and adjusted non-interest revenue of FCB contributed approximately $7.3$99.4 million of non-interest income in the first quarter of 2019, which was primarily attributable to swap fee income, income from bank-owned life insurance, and service charges on deposits. Other non-interest income included favorable fair value adjustments to private equity investments of $858 thousand during the first quarter of 2019 compared to unfavorable fair value adjustments of $3.1 million for the same period a year ago. Adjusted non-interest income, which excludes investment securities gains/(losses), net and changes in fair value of private equity investments was up $8.3$20.9 million, or 11.9%, for the first quarter26.7%. The increase in adjusted non-interest revenue was due primarily to strong growth in mortgage banking income, capital markets income, and growth in fiduciary businesses including growth in brokerage revenue. See "Table 14 - Reconciliation of 2019 compared to the first quarter of 2018. See "Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Non-GAAP Financial Measures" ofMeasures” in this Report for applicable reconciliation to GAAP measures.
49

The following table shows the principal components of non-interest income.revenue.
Table 5 - Non-interest revenueTable 5 - Non-interest revenue
Three Months Ended March 31,
Table 5 - Non-interest income     
Three Months Ended March 31,
(in thousands)2019 2018 % Change
(dollars in thousands)(dollars in thousands)20202019% Change
Service charges on deposit accounts$20,859
 $19,940
 4.6%Service charges on deposit accounts$20,689  $20,859  (0.8)%
Fiduciary and asset management fees13,578
 13,435
 1.1
Fiduciary and asset management fees15,174  13,578  11.8  
Card fees10,877
 10,199
 6.6
Card fees10,950  10,877  0.7  
Brokerage revenue9,406
 8,695
 8.2
Brokerage revenue12,398  9,379  32.2  
Mortgage banking income5,054
 5,047
 0.1
Mortgage banking income12,227  5,054  141.9  
Capital markets incomeCapital markets income11,243  5,245  114.4  
Income from bank-owned life insurance5,290
 4,217
 25.4
Income from bank-owned life insurance6,038  5,290  14.1  
Swap fee income4,778
 690
 nm
Investment securities gains, net75
 —
 nm
Investment securities gains, net8,734  75  nm  
Increase (decrease) in fair value of private equity investments, net858
 (3,056) nm
Other non-interest income8,603
 7,879
 9.2
Total non-interest income$79,378
 $67,046
��18.4%
(Decrease) increase in fair value of private equity investments(Decrease) increase in fair value of private equity investments(4,255) 858  nm  
Other non-interest revenueOther non-interest revenue10,659  8,163  30.6  
Total non-interest revenueTotal non-interest revenue$103,857  $79,378  30.8 %
     
Three Months Ended March 31, 20192020 compared to March 31, 20182019
Service charges on deposit accounts for the three months ended March 31, 20192020 were up $919down $170 thousand, with $1.3 million from FCB.or 0.8%, Service charges on deposit accounts consist of NSF fees, account analysis fees, and all other service charges. NSF fees were down $281up $215 thousand, and mostly offset by an increase of $222 thousand in account analysis feesor 2.5%, for the three months ended March 31, 2019. The decline in NSF2020. Account analysis fees fromwere down $19 thousand, or 0.3%, for the same period a year ago was primarily due to a higher level of NSF fees during the first quarter of 2018 as well as slightly increased charge-offs of uncollectible overdraft fees during the first quarter of 2019.three months ended March 31, 2020. All other service charges on deposit accounts, which consist primarily of monthly fees on retail demand deposits, saving accounts, and small business accounts, for the three months ended March 31, 2019,2020, were up $978down $366 thousand, due primarilyor 7.1%. Beginning in March, to help customers through the period of financial distress, Synovus is offering to waive NSF and monthly service charges for customers impacted by COVID-19. The impact to the additionfirst quarter of FCB.2020 from fee waivers was immaterial; however, Synovus does expect a larger impact in the second quarter of 2020.
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 slightly, with no direct impact from FCB. The increase was driven by growth$1.6 million, or 11.8%, for the three months ended March 31, 2020, due primarily to increases in total assets under management during the quarter which increased by 5.7% year-over-year to approximately $15.0totaled $15.25 billion (including growthat March 31, 2020, as well as talent additions in brokeragethe second quarter of 2019. Since certain fiduciary and asset management fees are based on the value of assets under management).management, the second quarter of 2020 may be negatively impacted by market dynamics due to COVID-19.
Card fees for the three months ended March 31, 2019, increased $678 thousand, or 6.6%, with $302 thousand from FCB.2020 were essentially flat compared to the same period in 2019. 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. While flat compared to the same period a year ago, card fees did decline during the last two weeks of March due to lower transaction volume as a result of the impact of COVID -19, a trend that may continue in the second quarter due to economic uncertainty.
Brokerage revenue was $9.4$12.4 million for the three months ended March 31, 2020, up $3.0 million, or 32.2%, compared to the three months ended March 31, 2019, up $711 thousand, or 8.2%.driven by growth in assets under management, increasing contributions from 2019 new hires, and higher transaction revenue from elevated market volatility. Brokerage revenue consists primarily of brokerage commissions as well as advisory fees earned from the management of customer assets. Brokerage assets under management were approximately$3.4 billion at March 31, 2020, an increase of 11.5% from $3.1 billion at March 31, 2019, an increase2019. Since certain advisory fees are based on the value of 19% from $2.6 billion at March 31, 2018. The additionbrokerage assets under management, the second quarter of FCB had no direct impact on our reported results in this category.2020 may be negatively impacted by market environment due to COVID-19.
Mortgage banking income increased $7.2 million for the three months ended March 31, 2020. Mortgage banking income was essentially flat whendriven by higher production and sales, including an increase in refinance volume, due primarily to a decline in long-term interest rates during the quarter. Total secondary market mortgage loan production was $250.8 million for the three months ended March 31, 2020, up $127.5 million, or 103.4%, compared to the three months ended March 31, 2018,2019.
Capital markets income primarily includes fee income from customer derivative transactions. Additionally, capital markets income includes fee income from capital raising investment banking transactions and included $204 thousandforeign exchange as well as other miscellaneous income from FCB.capital market transactions. Capital markets income increased $6.0 million for the three months ended March 31, 2020 as commercial clients locked in lower rates on borrowings.
50

Income from bank-owned life insurance,BOLI, which includes increases in the cash surrender value of policies and proceeds from insurance benefits, increased $1.1 million,$748 thousand, or 25.4%,14.1% for the three months ended March 31, 2019, with $1.4 million from FCB.

The2020, due primarily to additional investments in BOLI policies during the first quarter of 20192020. The first three months of 2020 included income on proceeds from insurance benefits of $233$118 thousand compared to $536$233 thousand in 2018.2019.
Swap fee income increased $4.1Investment securities gains of $8.7 million for the three months ended March 31, 2019, driven by $3.4 million from FCB.
Investment securities gains, net, of $75 thousand, for the three months ended March 31, 2019 included gains of $9.2 million and losses of $9.1 million, due to2020 reflected strategic repositioning of the portfolio to better align with long-term liquidity objectives.portfolio.
Increase/(decrease)(Decrease)/increase in the fair value of private equity investments was up $3.9included unrealized decreases in fair value of $4.3 million forduring the three months ended March 31, 20192020, due primarily to favorable fair value adjustments to private equitymarket volatility in certain investments of $858 thousand during the first quarter of 2019 compared to unfavorable fair value adjustments of $3.1 million for the same period a year ago.which recently became public and contain lock-up periods.
The main components of other non-interest incomerevenue are fees for letters of credit and unused lines of credit, safe deposit box fees, access fees for automated teller machineATM use, other service charges, income from insurance commissions, gains from sales of GGL/SBA loans, and other miscellaneous items. The first quarter of 2020 included a sale-leaseback gain of $2.4 million associated with a bank office property. While fees included in other non-interest revenue were not materially impacted by COVID-19 during the first quarter, Synovus does expect to see a decline in ATM and other services charges during the second quarter of 2020.
Non-interest Expense
Non-interest expense for the first quarter of 20192020 was $292.4$276.3 million, up $97.2down $16.1 million, or 49.8%5.5%, compared to the first quarter of 2018. Adjusted2019 and adjusted non-interest expense, which excludes merger-related expense, loss on early extinguishment of $49.7debt, and restructuring charges,of $271.2 million was $242.7 million, up $44.5$28.5 million, or 22.5%, compared to11.7%. The increase in adjusted expense over the first quarter of 2018, including $26.8 million related to the operations of FCB2019 was largely driven by investments in talent and $3.1 milliontechnology and growth in additional amortization of intangibles. Theproduction-related commissions and fees. The efficiency ratioratio-FTE for the first three months of 20192020 was 61.29%57.81%, compared to 57.16%61.28% for the first three months of 2018.2019. The adjusted tangible efficiency ratio for the first three months of 20192020 was 50.24%56.72%, down 718 basis points fromup 648 bps compared to the same period a year ago. See "Part II"Table 14 - Item 7. Management's Discussion and AnalysisReconciliation of Financial Condition and Results of Operations - Non-GAAP Financial Measures" ofMeasures” in this Report for applicable reconciliation to GAAP measures.
The following table summarizes the components of non-interest expense.
Table 6 - Non-interest Expense     Table 6 - Non-interest Expense
Three Months Ended March 31,Three Months Ended March 31,
(in thousands)2019 2018 % Change
(dollars in thousands)(dollars in thousands)20202019% Change
Salaries and other personnel expense$139,427
 $113,720
 22.6 %Salaries and other personnel expense$149,678  $139,427  7.4 %
Net occupancy and equipment expense38,394
 31,480
 22.0
Net occupancy and equipment expense42,194  38,394  9.9  
Third-party processing expense17,758
 13,945
 27.3
Third-party processing and other servicesThird-party processing and other services21,480  17,758  21.0  
Professional feesProfessional fees10,675  6,348  68.2  
FDIC insurance and other regulatory fees6,761
 6,793
 (0.5)FDIC insurance and other regulatory fees5,278  6,761  (21.9) 
Professional fees6,348
 5,505
 15.3
Advertising expense5,123
 5,092
 0.6
Advertising expense4,752  5,123  (7.2) 
Amortization of intangibles3,392
 292
 nm
Merger-related expense49,738
 —
 nm
Merger-related expense—  49,738  nm  
Restructuring chargesRestructuring charges3,220  19  nm  
Loss on early extinguishment of debtLoss on early extinguishment of debt1,904  —  nm  
Other operating expenses25,469
 18,352
 38.8
Other operating expenses37,098  28,842  28.6  
Total non-interest expense$292,410
 $195,179
 49.8 %Total non-interest expense$276,279  $292,410  (5.5)%
     
Three Months Ended March 31, 20192020 compared to March 31, 20182019
Salaries and other personnel expensesexpense increased $25.7$10.3 million, or 22.6%7.4%, for the three months ended March 31, 2019,2020 including $16.0 million from FCB, talent additions and higher production-based commission and incentive compensation expense and annual merit increases.including $1.0 million in COVID-19 related bonus payments to certain front-line employees. Synovus will continue to assess the need for bonus pay to front-line team members during the healthcare crisis.
Net occupancy and equipment expense increased $6.9$3.8 million, or 22.0%9.9%, during the three months ended March 31, 2019, including $4.1 million related2020, primarily due to additional branches from the acquisition of FCB.investments in technology. Synovus expects minimal technology expense due to COVID-19.
Third-party processing expenseand other services includes all third-party core operating system and processing chargescharges as well as third-party loan servicing charges. Third-party processing expense increased $3.8$3.7 million, or 27.3%21.0%, including $3.1 million from FCB and increasesfor the three months ended March 31, 2020. The increase is primarily associated with loan growth from Synovus' consumer-based lending partnerships.
FDIC insurance and other regulatory fees include the impact of FCB for the three months ended March 31, 2019, but are essentially flat compared to the same period a year ago due to the FDIC's elimination of the assessment surcharge for all large banks in the fourth quarter of 2018.
51


Professional fees increased $843 thousand,$4.3 million, or 15.3%68.2%, for the three months ended March 31, 2019, including $341 thousand2020 mostly from FCB.increases in consulting fees with $2.0 million related to Synovus' internal revenue growth and efficiency initiative, "Synovus Forward".
Amortization of intangibles was up $3.1FDIC insurance and other regulatory fees were down $1.5 million for the three months ended March 31, 20192020 due to amortizationreversal of $1.5 million in estimated additional expense accrued during the core deposit intangible asset created from FCB acquisition, which will be amortized using an accelerated method over an estimated lifefourth quarter of 10 years.2019.
In connection with the FCB acquisition, Synovus incurred merger-related expense totaling $49.7 million for the three months ended March 31, 2019, primarily related to employeeemployment compensation agreements, severance, and professional services. See "Note"Part I - Item 1. Financial Statements and Supplementary Data - Note 2 - Acquisitions" in this Report for more information on the acquisition of FCB.
During the three months ended March 31, 2020, Synovus recorded $3.2 million in restructuring charges from asset impairments, lease terminations, and severance related to 7 branches closed in the first quarter of 2020.
On February 25, 2020, Synovus terminated a $250 million long-term FHLB obligation and incurred a $1.9 million loss on early extinguishment of debt.
Other operating expenses includes travel, insurance, network and communication, other taxes, subscriptions and dues, other loan and ORE expense, postage and freight, training, business development, supplies, donations, and other miscellaneous expenses. Other operating expenses were up $7.1$8.3 million for the three months ended March 31, 2019 with travel2020 including a $2.7 million valuation adjustment on a MPS receivable and a $2.5 million charge from termination of customer swaps.
Income Tax Expense
Income tax expense up $1.6 million. Other operating expenses duringwas $3.6 million and $40.4 million for the three months ended March 31, 2018 included2020 and 2019, respectively. The effective tax rate for the benefit of a contingency recovery of $2.6 million, unfunded commitment reserve release of $1.0 million,same periods was 8.5% and restructuring charge recovery of $315 thousand.
Income Tax Expense
Income25.2%. The decrease in the effective tax expense was $40.4 million and $30.2 millionrate for the three months ended March 31, 2020, as compared to the three months ended March 31, 2019, reflects a one-time benefit of $2.7 million for carrying back net operating loss deductions to pre-TJCA tax periods, as allowed by the CARES Act, and 2018, respectively, representing an effective tax rate of 25.2% and 22.7% for the respective$3.4 million in other discrete benefit items, including discrete items related to prior periods. The increase inAdditionally, the effective tax rate in the first quarter of 2019 was higher largely due to non-deductible merger-related expenses incurred duringassociated with the first quarter of 2019 and higher tax benefits recognized during the first quarter of 2018 from vesting of employee share-based awards.FCB acquisition.
The effective tax rate is affected by many factors including, but not limited to, the level of pre-tax income, bank-owned life insurance,BOLI, 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.

With the exception of the net operating loss carryback recorded in the first quarter of 2020, we do not expect the provisions of the CARES Act to have a significant impact on the Company’s current tax provision.
52

CREDIT QUALITY, CAPITAL RESOURCES AND LIQUIDITY
Credit Quality
SynovSynovusus continuously monitors the quality of its loan portfolio by industry, property type, geography, as well as credit quality metrics and maintains anmetrics. While we expect to experience stress in the portfolio as we progress through the current economic environment, the credit quality of the portfolio at March 31, 2020 was generally stable. If economic forecasts continue to deteriorate, we would expect to see a further increase in the allowance for credit losses.

At March 31, 2020, 12% of Synovus' loan lossesportfolio, or approximately $4.6 billion, is in sectors we expect to be most sensitive to the COVID-19 pandemic. Within this group, hotels represented the largest exposure at $1.31 billion, followed by shopping centers (excluding those with a grocery, pharmacy, or discount store anchor) at $1.01 billion and restaurants at $800 million. While our entire loan portfolio is being continuously assessed, enhanced monitoring for these sectors has been introduced. We are continuously working with these customers to evaluate how the current economic conditions are impacting, and will continue to impact, their business operations. Solid underwriting and strong credit performance, coupled with stronger balance sheets that management believes is sufficient to absorb probable losses inherenthave been built during our extended expansionary period, give us confidence that these sectors enter this downturn in its loan portfolio. Synovus continued to benefit from a relatively stable credit environment during the first three months of 2019.best possible position.
The table below includes selected credit quality metrics.
Table 7 - Credit Quality Metrics
(dollars in thousands)March 31, 2020December 31, 2019March 31, 2019
Non-performing loans$156,287  $101,636  $143,976  
ORE and other assets33,679  35,810  11,341  
Non-performing assets$189,966  $137,446  $155,317  
 Total loans$38,258,024  $37,162,450  $35,634,501  
 Non-performing loans as a % of total loans0.41 %0.27 %0.40 %
Non-performing assets as a % of total loans, ORE, and specific other assets0.50  0.37  0.44  
Loans 90 days past due and still accruing$6,398  $15,943  $4,486  
As a % of total loans0.02 %0.04 %0.01 %
Total past due loans and still accruing$83,235  $123,793  $88,135  
As a % of total loans0.22 %0.33 %0.25 %
 Net charge-offs, quarter$20,061  $8,821  $17,088  
 Net charge-offs annualized/average loans, quarter0.21 %0.10 %0.19 %
Provision for loan losses, quarter$149,117  $24,470  $23,569  
Provision for unfunded commitments, quarter9,605  **
Provision for credit losses, quarter$158,722  $24,470  $23,569  
Allowance for loan losses493,452  281,402  257,036  
Reserve for unfunded commitments38,420  1,375  1,070  
Allowance for credit losses$531,872  $282,777  $258,106  
ACL to loans coverage ratio1.39 %0.76 %0.72 %
ALL to loans coverage ratio1.29  0.76  0.72  
ACL/NPLs340.32278.23179.27
ALL/NPLs315.74276.87178.53
Table 7 - Credit Quality Metrics 
(dollars in thousands)March 31, 2019 December 31, 2018 March 31, 2018
Non-performing loans(1)
$143,976
 $106,733
 $120,081
Impaired loans held for sale(2)
12
 1,506
 6,591
Other real estate11,329
 6,220
 4,496
Non-performing assets(1)
$155,317
 $114,459
 $131,168
Total loans$35,634,501
 $25,946,573
 $24,883,037
Non-performing loans as a % of total loans0.40% 0.41% 0.48%
Non-performing assets as a % of total loans, other loans held for sale, and ORE0.44
 0.44
 0.53
Loans 90 days past due and still accruing$4,486
 $3,798
 $5,416
As a % of total loans0.01% 0.01% 0.02%
Total past due loans and still accruing$88,135
 $56,927
 $54,150
As a % of total loans0.25% 0.22% 0.22%
Net charge-offs, quarter$17,088
 $13,044
 $4,280
Net charge-offs/average loans, quarter0.19% 0.20% 0.07%
Net charge-offs, year-to-date$17,088
 $50,410
 $4,280
Net charge-offs/average loans, year-to-date0.19% 0.20% 0.07%
Provision for loan losses, quarter$23,569
 $12,148
 $12,776
Provision for loan losses, year-to-date23,569
 51,697
 12,776
Allowance for loan losses257,036
 250,555
 257,764
Allowance for loan losses as a % of total loans0.72% 0.97% 1.04%
      
(1) For purposes of this table, March 31, 2019 non-performing loans exclude acquired loans accounted* Prior to CECL implementation on January 1, 2020, the provision 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.unfunded commitments was reflected within other non-interest expense.
Non-performing Assets
Total NPAs were $155.3 million at March 31, 2019, a $40.9 million, or 35.7%, increase from $114.5 million at December 31, 2018 and a $24.1 million, or 18.4%, increase from $131.2 million at March 31, 2018. Total non-performing assets as a percentage of total loans, ORE, and specific other loans held for sale,assets were 0.50% at March 31, 2020 compared to 0.37% at December 31, 2019 and other real estate were 0.44% at bothMarch 31, 2019. Total NPAs were $190.0 million at March 31, 2020 compared to $137.4 million at December 31, 2019 and $155.3 million at March 31, 2019. The sequential increase in NPLs and NPAs primarily related to the designation of a large C&I relationship as non-performing which is collateralized and carries a specific reserve. The NPL ratio at 0.41% at March 31, 2020 is up only 1 bp over March 31, 2019, and December 31, 2018 and 0.53%total past dues of 0.22% at March 31, 2018.2020 improved over both December 31, 2019 and March 31, 2019.
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Provision for Credit Losses and Allowance for Credit Losses
Synovus' adoption of CECL resulted in a January 1, 2020 ACL increase of $110.4 million, or 39.1%, over December 31, 2019. Provision for credit losses of $158.7 million for the three months ended March 31, 2020 included the impact of the COVID-19 healthcare crisis and the first quarter under CECL. The ACL at March 31, 2020 totaled $531.9 million consisting of an ALL of $493.5 million and reserve for unfunded commitments of $38.4 million, resulting in an ACL to loans coverage ratio of 1.39% and an ACL to NPLs ratio of 340%.
Our modeling process incorporates quantitative and qualitative considerations that are used to inform CECL estimates. The internally developed economic forecast used to determine the allowance for credit losses as of March 31, 2020 was approved late in the first quarter, pursuant to Synovus' economic forecasting governance processes. Between that approval date and March 31, 2020, we saw further deterioration in the economic outlook which resulted in the need for a qualitative overlay to our allowance for credit losses. The qualitative overlay of $37.3 million adds 10 bps to the allowance for credit losses and better aligns the total allowance with the economic indicators and forecasts at March 31, 2020. Economic projections are an important consideration in CECL estimates. Significant economic uncertainty remains as a result of the continuing healthcare crisis and the ultimate impact of government stimulation efforts. If our economic outlook on June 30, 2020 evidences further deterioration, as might be suggested by certain external economic forecasts, then we would expect to see a further increase in the allowance for credit losses.
Table 8 - Accruing TDRs by Risk Grade
March 31, 2020December 31, 2019March 31, 2019
(dollars in thousands)Amount%Amount%Amount%
Pass$75,073  46.9 %$70,574  53.0 %$54,999  49.0 %
Special Mention10,925  6.8  11,735  8.8  13,188  11.8  
Substandard accruing74,130  46.3  50,836  38.2  44,018  39.2  
Total accruing TDRs$160,128  100.0 %$133,145  100.0 %$112,205  100.0 %
Troubled Debt Restructurings
Accruing TDRs were $112.2$160.1 million at March 31, 2019,2020, compared to $115.6$133.1 million at December 31, 20182019 and $129.4$112.2 million at March 31, 2018.2019. Accruing TDRs decreased $3.4increased $27.0 million or 2.9%, from December 31, 20182019 and$17.2 $47.9 million or, 13.3% from a year ago primarily due to more loans qualifying for removal of TDR designation upon subsequent renewal, refinance, or modification, and pay-offs.March 31, 2019. Non-accruing TDRs were $12.8 million at March 31, 2020, compared to $17.1 million at December 31, 2019 and $22.3 million at March 31, 20192019. The primary driver of the increase in accruing TDRs compared to $26.2 million at December 31, 2018.2019 is a result of a large relationship being designated as an accruing TDR due to interest rate and term concessions.
At March 31, 2019, the allowance for loan losses allocated to these accruing TDRs was $4.7 million compared to $6.1 million at both December 31, 2018 and March 31, 2018. Accruing TDRs are considered performing because they are performing in accordance with the restructuredrestructured terms.At March 31, 2020, December 31, 2019, and DecemberMarch 31, 20182019, approximately 98%, 99%, and 98%99%, 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 remainedcontinued to remain at low levels. There were no defaults
Non-TDR Modifications due to COVID-19
Regulatory agencies, as set forth in the Interagency Statement on Loan Modifications and Reporting for eachFinancial Institutions Working with Customers Affected by the Coronavirus (initially issued on March 22, 2020 and revised on April 7, 2020), have encouraged financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations because of the three months ended March 31, 2019effects of COVID-19. In this statement, the regulatory agencies expressed their view of loan modification programs as positive actions that may mitigate adverse effects on borrowers due to COVID-19 and 2018.

Table 8 - Accruing TDRs by Risk Grade           
 March 31, 2019 December 31, 2018 March 31, 2018
(dollars in thousands)Amount % Amount % Amount %
Pass$54,999
 49.0% $50,668
 43.9% $56,924
 44.0%
Special Mention13,188
 11.8
 14,480
 12.5
 15,429
 11.9
Substandard accruing44,018
 39.2
 50,440
 43.6
 57,041
 44.1
  Total accruing TDRs$112,205
 100.0% $115,588
 100.0% $129,394
 100.0%
            
Net Charge-offs
Net charge-offsthat the agencies will not criticize institutions for working with borrowers in a safe and sound manner. Moreover, the three months ended March 31, 2019 were $17.1 million,revised statement provides that eligible loan modifications related to COVID-19 may be accounted for under section 4013 of the CARES Act or 0.19% as a percentage of average loans annualized, compared to $13.0 million, or 0.20%, and $4.3 million, or 0.07%, for the three months ended December 31, 2018 and three months ended March 31, 2018, respectively. The increase in net charge-offs was primarily attributable to a higher level of recoveries in the previous and prior year quarters, with gross charge-offs for the first quarter of 2019 remaining in-line with the fourth quarter of 2018 but slightly elevated from the first quarter of 2018.
Provision for Loan Losses and Allowance for Loan Losses
For the three months ended March 31, 2019, the provision for loan losses was $23.6 million, an increase of $11.4 million, or 94.0%, and $10.8 million, or 84.5%, compared to the three months ended December 31, 2018 and three months ended March 31, 2018, respectively. The increase in provision expense was driven by an accelerated rate of new and renewed loan production with the addition of FCB, increases to the loan loss reserve, and a lower level of recoveries and upgrades compared to previous quarters in 2018.
The allowance for loan losses at March 31, 2019 was $257.0 million, or 0.72% of total loans, compared to $250.6 million, or 0.97% of total loans, at December 31, 2018 and $257.8 million, or 1.04% of total loans, at March 31, 2018, reflecting a lower ratio at March 31, 2019, with no allowance for loan losses recorded for acquired loans at the Acquisition Date in accordance with ASC Topic 820.310-40. Section 4013 of The allowanceCARES Act allows banks to non-performingelect to not consider loan modifications related to COVID-19 that are made between March 1, 2020 and the earlier of December 31, 2020, or 60 days after the COVID-19 national emergency ends to borrowers that are current (i.e., less than 30 days past due as of December 31, 2019) as TDRs. The regulatory agencies further stated that performing loans ratio atgranted payment deferrals due to COVID-19 are not considered past due or non-accrual. FASB confirmed the foregoing regulatory agencies' view, that such short-term modifications (e.g., six months) made on a good-faith basis in response to COVID-19 for borrowers who are current are not TDRs. Accordingly, beginning in late March 2020, Synovus provided relief programs consisting primarily of 90-day payment deferral relief to borrowers negatively impacted by COVID-19. At March 31, 2019 remained strong at 178.53%2020, Synovus had approved payment deferral relief to borrowers due to the effects of COVID-19 on approximately $2.4 billion, or approximately 6%, of our loan portfolio. As of May 7, 2020, Synovus had approved payment deferral relief on approximately $5.8 billion, or 213.30%15%, excluding acquired FCB loans accounted for under ASC 310-30 that are currently accruing income as well as acquired FCB loans that are not accruing income, compared to 234.75% at December 31, 2018 and 214.66% at March 31, 2018.of our loan portfolio.

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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. At March 31, 2019,2020, Synovus and Synovus Bank's capital levels remained strong and exceeded well-capitalized requirements currently in effect. The following table presents certain ratios used to measure Synovus and Synovus Bank's capitalization.
Table 9 - Capital Ratios
(dollars in thousands)March 31, 2020December 31, 2019
CET1 capital
Synovus Financial Corp.$3,744,415  $3,743,459  
Synovus Bank4,607,218  4,640,501  
Tier 1 risk-based capital
Synovus Financial Corp.4,281,560  4,280,604  
Synovus Bank4,607,218  4,640,501  
Total risk-based capital
Synovus Financial Corp.5,289,039  5,123,381  
Synovus Bank5,054,697  4,923,279  
CET1 capital ratio
Synovus Financial Corp.8.70 %8.95 %
Synovus Bank10.69  11.10  
Tier 1 risk-based capital ratio
Synovus Financial Corp.9.95  10.23  
Synovus Bank10.69  11.10  
Total risk-based capital to risk-weighted assets ratio
Synovus Financial Corp.12.29  12.25  
Synovus Bank11.72  11.78  
Leverage ratio
Synovus Financial Corp.8.92  9.16  
Synovus Bank9.62  9.94  
Tangible common equity ratio(1)
Synovus Financial Corp.7.94  8.08  
Table 9 - Capital Ratios   
(dollars in thousands)March 31, 2019 December 31, 2018
CET1 capital (transitional)   
Synovus Financial Corp.$3,790,395
 $2,897,997
Synovus Bank4,431,463
 3,382,497
Tier 1 risk-based capital   
Synovus Financial Corp.3,985,535
 3,090,416
Synovus Bank4,431,463
 3,382,497
Total risk-based capital   
Synovus Financial Corp.4,803,641
 3,601,376
Synovus Bank4,689,569
 3,633,457
CET1 capital ratio (transitional)   
Synovus Financial Corp.9.52% 9.95%
Synovus Bank11.13
 11.62
Tier 1 risk-based capital ratio   
Synovus Financial Corp.10.01
 10.61
Synovus Bank11.13
 11.62
Total risk-based capital to risk-weighted assets ratio   
Synovus Financial Corp.12.06
 12.37
Synovus Bank11.78
 12.49
Leverage ratio   
Synovus Financial Corp.8.81
 9.60
Synovus Bank9.80
 10.51
Tangible common equity to tangible assets ratio(1)
   
Synovus Financial Corp.8.34
 8.81
    
(1)See ""Table 14 - Reconciliation of Non-GAAP Financial Measures"Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
At March 31, 2019,2020, Synovus' CET1 ratio was 9.52% under the Basel III transitional provisions, and the estimated fully phased-in CET1 ratio was 9.48% (See "Non-GAAP Financial Measures" in this Report)8.70%, both of which are well in excess of regulatory requirements including the capital conservation buffer which has now reachedof 2.5%. The 25 bps decline in Synovus' CET1 ratio from December 31, 2019 was largely due to the fully-phasedincrease in amountrisk-weighted assets from loan growth of 2.5% effective January 1, 2019. See$1.10 billion. For additional information on regulatory capital requirements, see "Part II - Item 8. Financial Statements and Supplementary Data - Note 11 - Regulatory Capital" to the consolidated financial statements of Synovus' 20182019 Form 10-K for additional information on regulatory capital requirements.10-K. 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 inclusive of the capital conservation buffer.
EffectiveSynovus is suspending share repurchase activity beyond the $16.2 million (450 thousand shares) of its common stock repurchased during the first quarter under the share repurchase program announced on January 24, 2020, due to greater economic uncertainty.
On March 27, 2020, the federal banking regulators issued an interim final rule, updating CECL transition options, which allows electing banking organizations to delay an estimate of the effect of CECL on regulatory capital for up to two years, followed by a three-year phase-in transition period. Synovus adopted CECL on January 1, 2019, Synovus completed its acquisition of all2020 and the March 31, 2020 regulatory capital ratios reflect Synovus' election of the outstanding stockfive-year transition provision. For additional information on Synovus' adoption of FCB for total consideration of approximately $1.6 billion. SeeCECL, see "Part I - Item 1. Financial Statements and Supplementary Data - Note 2 - Acquisitions" in this Report for more information on the FCB acquisition.
On January 15, 2019, Synovus announced a share repurchase program of up to $400 million to be completed during 2019. As of March 31, 2019, Synovus had repurchased under this program a total of $320.0 million, or 8.5 million shares of its common stock, at an average price of $37.71 per share. As of April 30, 2019, the remaining authorization under this program was $80.0 million. Additionally, during the fourth quarter of 2018, the Board of Directors approved a 20% increase in the quarterly common stock dividend to $0.30 per share, effective with the quarterly dividend payable 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.

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"Presentation and Accounting Policies" in this Report.
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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. As Synovus increasednavigates through the quarterlycurrent recession, the approach to common stock dividend by 20% to $0.30 per share effective with the quarterly dividend declared during the first quarterdividends will be continually evaluated based on an assessment of 2019.long-term earnings, capital projections, and liquidity.
Synovus' ability to pay dividends on its common stock and preferred stock is primarily dependent upon dividends and distributions that it receives from its bank and non-banking subsidiaries,subsidiaries, which are restricted by various regulations administered by federal and state bank regulatory authorities.
Synovus declared common stock dividends of $48.6 million, or $0.33 per common share, for the three months ended March 31, 2020, up from $47.2 million, or $0.30 and $0.25 per common share, for the three months ended March 31, 2019, and 2018, respectively. In addition, toSynovus declared dividends paid on its commonpreferred stock Synovus paid dividends of $8.3 million and $3.2 million on its Series D Preferred Stock during the three months ended March 31, 2020 and 2019, and paid dividends of $2.6 million on its Series C Preferred Stock during the three months ended March 31, 2018.respectively.
Liquidity
Liquidity represents the extent to which Synovus has readily available sources of funding needed to meet the needs of depositors, borrowers and creditors, to support asset growth, and to otherwise sustain operations of Synovus and its subsidiaries, at a reasonable cost, on a timely basis, and without adverse consequences. ALCO monitors Synovus' economic, competitive, and regulatory environment and is responsible for measuring, monitoring, and reporting on liquidity and funding risk, interest rate risk, and market riskrisk.
In accordance with Synovus policies and has the authority to establish policies relative to these risks.regulatory guidance, ALCO operating under liquidity and funding policies approved by the Board of Directors, actively analyzesevaluates contractual and anticipated cash flows in order to properly manage Synovus’ liquidity position.
Contractual and anticipated cash flows are analyzed under normal and stressed conditions to determine forward lookingproperly manage the Company’s liquidity needs and sources.profile. Synovus analyzes liquidity needs under various scenarios of market conditions and operating performance. This analysis includes stress testing and measures expected sources and uses of funds under each scenario. Emphasis is placedplaces an emphasis on maintaining numerous sources of current and potentialcontingent liquidity to allow Synovus to meet its obligations to depositors, borrowers, and creditors on a timely basis.
Liquidity is generated primarily through various sources, including, but not limited to, maturities and repayments of loans by customers, maturities and sales of investment securities, depositand growth and access to sources of funds other thanin core or wholesale deposits. Management continuously monitors and maintains appropriate levels of liquidity so as to provide adequate funding sources to manage customer deposit withdrawals, loan requests, and other funding maturities. Liquidity is also enhanced by the acquisition of new deposits. Each of the local markets monitors deposit flows and evaluates local market conditions in an effort to retain and grow deposits.demands.
Synovus Bank also generates liquidity through the issuance of brokered certificates of deposit and money market accounts. Synovus Bank accesses these funds from a broad geographic base to diversify its sources of fundingfunding and liquidity. On September 25, 2017, Synovus Bank completed the Cabela's Transaction and thereby retained WFB's $1.10 billion brokered time deposit portfolio with a weighted average remaining maturity of approximately 2.53 years and a weighted average rate of 1.83 percent (the balance of these deposits at March 31, 2019 was $619.8 million). Synovus Bankalso has the capacity to access funding through its membership in the FHLB system.system and through the Federal Reserve Discount Window. During the first quarter of 2020, Synovus increased its FHLB availability by over $2.0 billion through expanding pledged collateral. At March 31, 2019,2020, based on currently pledged collateral, Synovus Bank had access to incremental FHLB funding of $2.52$3.20 billion, subject to FHLB credit policies,policies. In addition, Synovus expects to have considerable liquidity available through utilization of FHLB advances.the Federal Reserve's Paycheck Protection Program Lending Facility.
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. 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,liquidity, and overall condition. InIn addition, both the GA DBF rules and relatedFederal Reserve Bank may require approval to pay dividends, based on certain regulatory statutes contain limitations on payments of dividends by Synovus without the approval of the GA DBF.and limitations.
On February 7, 2019,12, 2020, Synovus completed a public offering of $300.0Bank issued $400.0 million aggregate principal amount of 5.900% fixed-to-fixed rate subordinated notes2.289% Fixed-to-Floating Rate Senior Bank Notes due in 2029.  Subject2023. From and including the original issue date to, any redemption prior tobut excluding, February 7, 2029,10, 2022, the notes willNotes 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 be2.289% per annum, payable semi-annually in arrears on each February 10 and August 10, beginning on August 10, 2020. Unless redeemed, from and including February 10, 2022 to but excluding the Maturity Date, the interest rate on the Notes is computed quarterly using an interest rate based on the SOFR with a daily index maturity plus a spread of 94.5 bps per annum, payable quarterly in arrears. The notes will matureSynovus Bank may redeem the Notes, at its option, on February 7, 2029. Proceeds from these notes were primarily used10, 2022 (which is the date that is one year prior to repurchase common stock under the current authorization.Maturity Date) upon not less than 10 nor more than 60 days’ prior notice given to holders of the Notes. The redemption price for any redemption is 100% of the principal amount of the Notes, plus accrued and unpaid interest thereon to but excluding the date of redemption. The Notes are not redeemable at the option or election of holders.
On February 25, 2020, Synovus terminated a $250.0 million long-term FHLB obligation and incurred a $1.9 million loss on early extinguishment of debt.
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Synovus presently believes that the sources of liquidity discussed above, including existing liquid funds on hand, are sufficient to meet its anticipated funding needs. However, if economic conditions were to significantly deteriorate, regulatory capital requirements for Synovus or Synovus Bank were to increase as the result of regulatory directives or otherwise, or Synovus believes it is prudent to enhance current liquidity levels, then Synovus may seek additional liquidity from external sources. See "Part I- Item 1A. Risk Factors - the COVID-19 pandemic has resulted in significant market volatility and lower interest rates that could materially affect Synovus’ results of operations and access to capital" of this Report and "Part I – Item 1A. Risk Factors - Changes in the cost and availability of funding due to changes in the deposit market and credit market may adversely affect our capital resources, liquidity and financial results.results" of Synovus' 20182019 Form 10-K. Furthermore, Synovus may, from time to time, take advantage of attractive market opportunities to refinance its existing debt, redeem its preferred stock, or strengthen its liquidity or capital position.
Earning Assets and Sources of Funds
Average total assets for the three months ended March 31, 20192020 increased $14.55 billion.$2.90 billion, or 46.6%6.3%, to $45.79$48.70 billion as compared to $31.25$45.79 billion for the first three months of 2018.2019. Average earning assets increased $13.08$2.40 billion, or 44.4%5.6%, in the first three months of 20192020 compared to the same period in 20182019 and represented 92.9%92.3% of average total assets at March 31, 2019,2020, as compared to 94.2%92.9% at March 31, 2018.2019. The increase in average earning assets primarily resulted from a $10.46$2.16 billion increase in average loans, net, and a $2.42 billion$143.8 million increase in average taxable investment securities. These increases were primarily attributable to the $9.29 billion in loans and $2.30 billion in investment securities acquired from FCB.
Average interest-bearing liabilities increased $10.78$2.00 billion, or 52.0%6.4%, to $31.51$33.51 billion for the first three months of 20192020 compared to the same period in 2018.2019. The increase in average interest-bearing liabilities was primarily related to the $10.93resulted from a $1.74 billion, in deposits acquired from FCB, of which $9.42 billion was interest-bearing. The year-over-year increase in average interest-bearing liabilities included a $5.73 billion increase in average time deposits, a $3.20 billionor 15.6%, increase in average money market deposit accounts,deposits, a $1.36 billion$866.9 million increase in average interest-bearing demand deposits,other short-term borrowings, and a $250.0$694.7 million increase in average long-term debt, primarily due to the fixed-to-fixed rate subordinatedincluding $400.0 million of senior notes issued in February 2019, and $123.4 million increase2020. These increases were partially offset by a $1.32 billion, or 12.8%, decrease in average other short-term borrowings.time deposits. Average non-interest-bearing demand deposits increased $1.66 billion,$354.8 million, or 22.5%3.9%, to $9.05$9.41 billion for the first three months of 20192020 compared to the same period in 2018, due primarily to the FCB acquisition.2019.
Net interest income for the three months ended March 31, 2019 was $397.2 million, an increase of $122.9 million, or 44.8%, compared to $274.3$373.3 million for the three months ended March 31, 2018 driven by the FCB acquisition. Net interest margin was flat at 3.78% over the comparable three-month periods, and was impacted by the FCB merger and three 25 basis point federal funds rate increases since March 31, 2018. The yield on earning assets was 4.80%2020, down $23.9 million, or 6.0%, an increase of 49 basis points compared to the three months ended March 31, 2018, while the effective costsame period of funds increased 49 basis points to 1.02%2019. The yield on loans increased 47 basis points to 5.17%, and the yield on investment securities increased 72 basis points to 3.06% over the three months ended March 31, 2018.
On a sequential quarter basis, net interest income increased $99.2 million, or 33.3%, driven by the FCB acquisition. The net interest margin forwas down 41 bps to 3.37%, due primarily to the quarter was 3.78%, down 14 basis points from the fourth quarterdecline in market interest rates and decline of 2018. Net interest income and margin were favorably impacted by $18.8$17.3 million or 19 basis points, of purchase accounting adjustments. Purchase accounting adjustments arein PAA primarily comprised of $7.4$5.8 million of loan accretion and $11.0 million of deposit premium amortization inassociated with the FCB acquisition. For the three months ended March 31, 2020, the yield on earning assets was 4.33%, a decrease of 47 bps compared to the three months ended March 31, 2019, while the total cost of funds decreased 3 bps to 1.04%. The yield on loans decreased 55 bps to 4.62% while the yield on investment securities increased 3 bps to 3.09% over the three months ended March 31, 2019.
On a sequential quarter basis, net interest income was down $26.0 million, or 6.5%, and the net interest margin for the first quarter was 3.37%, which was down 28 bps compared to the fourth quarter of 2019. The sequential quarter decreasedecline in the net interest income and margin was drivenincluded a decline of $24.8 million in PAA primarily comprised of $13.6 million of loan accretion and $11.0 million of deposit premium amortization associated with the FCB acquisition as well as declines in market interest rates including a series of emergency rate cuts by the FCB merger, the issuance of subordinated debt, and continued deposit mix shift into time deposits.Federal Reserve in March. The net interest margin, excluding the impact of purchase accounting adjustments, was 3.59%down 5 bps sequentially to 3.35% for the first quarter of 2019. The net interest margin decline for2020, driven by a 13 bp decrease in the quarter, compared to the fourth quarter of 2018, included an 11 basis point increase inyield on earning asset yieldsassets and a 25 basis point increase8 bp decrease in the effective cost of funds.

Synovus expects net interest income in the second quarter to be relatively flat compared to first quarter levels as a result of significant loan growth associated with the PPP. However, with this growth, along with a depressed rate environment and an elevated cash position, we expect continued downward pressure on our net interest margin in the second quarter.


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Quarterly yields earned on average interest-earning assets and rates paid on average interest-bearing liabilities for the five most recent quarters are presented below.
Table 10 - Average Balances and Yields/Rates20202019
(dollars in thousands) (yields and rates annualized)First QuarterFourth QuarterThird QuarterSecond QuarterFirst Quarter
Interest Earning Assets:
Investment securities(1)(2)
$6,680,047  6,696,768  6,831,036  6,955,386  6,536,199  
Yield3.09 %3.12  3.14  3.03  3.06  
Trading account assets(3)
$6,306  7,986  5,519  4,853  2,049  
Yield2.70 %2.69  4.01  1.83  1.30  
Commercial loans(2)(4)
$27,607,343  26,698,202  26,568,194  26,353,973  26,140,672  
Yield4.57 %4.82  5.09  5.13  5.16  
Consumer loans(4)
$9,985,702  9,809,832  9,633,603  9,423,427  9,180,679  
Yield4.60 %5.07  5.08  5.17  5.10  
Allowance for loan losses$(368,033) (269,052) (258,024) (259,284) (252,815) 
    Loans, net(4)
$37,225,012  36,238,982  35,943,773  35,518,116  35,068,536  
Yield4.62 %4.93  5.13  5.17  5.17  
Mortgage loans held for sale$86,415  117,909  99,556  70,497  34,913  
Yield3.67 %3.77  3.93  4.27  4.48  
Other earning assets(5)
$652,130  514,635  513,160  511,488  679,477  
Yield1.02 %1.71  2.08  2.37  2.45  
Federal Home Loan Bank and Federal Reserve Bank Stock(3)
$284,082  278,586  254,994  234,949  211,408  
Yield3.38 %2.85  3.85  3.29  4.82  
Total interest earning assets$44,933,992  43,854,866  43,648,038  43,295,289  42,532,582  
Yield4.33 %4.60  4.78  4.79  4.80  
Interest-Bearing Liabilities:
Interest-bearing demand deposits$6,445,986  6,381,282  6,138,810  6,335,953  6,393,304  
Rate0.51 %0.60  0.69  0.71  0.68  
Money market accounts, excluding brokered deposits$11,548,014  10,526,296  10,138,783  10,024,836  10,244,556  
Rate1.00 %1.13  1.26  1.23  1.18  
Savings deposits$926,822  915,640  900,366  904,183  901,059  
Rate0.05 %0.05  0.05  0.05  0.06  
Time deposits under $100,000$1,761,741  1,873,350  2,100,492  2,245,878  2,238,568  
Rate1.64 %1.27  1.39  1.39  1.24  
Time deposits over $100,000$5,051,705  5,198,266  5,957,691  6,331,665  6,211,067  
Rate2.04 %1.51  1.69  1.70  1.60  
Non-maturing brokered deposits$1,376,669  1,156,131  993,078  766,718  937,630  
Rate1.42 %1.84  2.47  2.46  2.60  
Brokered time deposits$2,166,496  2,121,069  2,119,149  1,985,589  1,845,819  
Rate2.11 %2.16  2.27  2.28  2.13  
   Total interest-bearing deposits$29,277,433  28,172,034  28,348,369  28,594,822  28,772,003  
Rate1.18 %1.16  1.32  1.30  1.24  
Federal funds purchased and securities sold under repurchase agreements$167,324  192,731  221,045  300,168  233,076  
Rate0.30 %0.24  0.22  0.20  0.22  
Other short-term borrowings$1,384,362  1,565,507  1,307,370  1,090,581  517,456  
Rate1.66 %1.87  2.31  2.59  2.58  
Long-term debt$2,678,651  2,153,983  2,286,221  2,114,819  1,983,910  
Rate2.78 %3.07  3.32  3.53  3.33  
Total interest-bearing liabilities$33,507,770  32,084,255  32,163,005  32,100,390  31,506,445  
Rate1.30 %1.30  1.47  1.48  1.38  
Non-interest-bearing demand deposits$9,409,774  9,706,784  9,365,776  9,304,839  9,054,949  
Cost of funds1.04 %1.02  1.16  1.15  1.07  
Effective cost of funds(6)
0.96 %0.95  1.09  1.10  1.02  
Net interest margin3.37 %3.65  3.69  3.69  3.78  
Taxable equivalent adjustment(2)
$786  769  819  811  630  
Table 10 - Average Balances and Yields/Rates2019 2018
(dollars in thousands) (yields and rates annualized)First Quarter Fourth Quarter Third
Quarter		 Second Quarter First Quarter
Interest Earning Assets:         
Taxable investment securities(1)
$6,515,561
 4,073,685
 4,061,239
 4,077,564
 4,097,162
Yield3.05% 2.45
 2.38
 2.34
 2.34
Tax-exempt investment securities(1)(3)
$20,638
 —
 89
 115
 140
Yield (taxable equivalent)(3)
4.45% —
 5.91
 6.87
 6.57
Trading account assets(4)
$2,049
 7,493
 16,646
 23,772
 8,167
Yield1.30% 1.90
 2.52
 2.79
 2.66
Commercial loans(2)(3)
$26,140,672
 19,150,252
 19,025,830
 18,857,271
 18,963,515
Yield5.16% 5.13
 4.98
 4.85
 4.64
Consumer loans(2)
$9,180,679
 6,476,026
 6,298,643
 6,092,899
 5,899,015
Yield5.10% 4.85
 4.80
 4.76
 4.71
Allowance for loan losses$(252,815) (251,098) (251,684) (257,966) (251,635)
    Loans, net(2)
$35,068,536
 25,375,180
 25,072,789
 24,692,204
 24,610,895
Yield5.17% 5.11
 4.99
 4.88
 4.70
Mortgage loans held for sale$34,913
 36,477
 49,030
 50,366
 38,360
Yield4.48% 4.79
 4.71
 4.42
 3.95
Other earning assets(5)
$679,477
 641,832
 544,704
 724,537
 516,575
Yield2.45% 2.20
 1.90
 1.77
 1.48
Federal Home Loan Bank and Federal Reserve Bank Stock(4)
$211,408
 162,369
 163,568
 165,845
 177,381
Yield4.82% 4.31
 4.41
 4.63
 3.39
Total interest earning assets$42,532,582
 30,297,036
 29,908,065
 29,734,403
 29,448,680
Yield4.80% 4.69
 4.58
 4.47
 4.31
Interest-Bearing Liabilities:         
Interest-bearing demand deposits$6,393,304
 4,692,804
 4,701,204
 5,001,826
 5,032,000
Rate0.68% 0.41
 0.38
 0.35
 0.31
Money Market accounts, excluding brokered deposits$10,244,556
 8,050,732
 7,936,621
 7,791,107
 7,561,554
Rate1.18% 0.89
 0.72
 0.55
 0.43
Savings deposits$901,059
 815,588
 824,935
 829,800
 811,587
Rate0.06% 0.04
 0.03
 0.03
 0.03
Time deposits under $100,000$2,238,568
 1,242,811
 1,205,987
 1,161,890
 1,143,780
Rate1.24% 1.16
 0.99
 0.82
 0.71
Time deposits over $100,000$6,211,067
 2,478,649
 2,273,582
 2,021,084
 1,895,545
Rate1.60% 1.67
 1.46
 1.22
 1.02
Non-maturing brokered deposits$937,629
 349,480
 358,277
 262,976
 424,118
Rate2.60% 2.46
 2.10
 1.94
 1.14
Brokered time deposits$1,845,819
 1,275,276
 1,414,700
 1,659,941
 1,527,793
Rate2.13% 2.03
 1.94
 1.85
 1.75
   Total interest-bearing deposits$28,772,002
 18,905,340
 18,715,306
 18,728,624
 18,396,377
Rate1.24% 0.96
 0.83
 0.70
 0.58
Federal funds purchased and securities sold under repurchase agreements$233,076
 194,370
 230,504
 207,655
 202,226
Rate0.22% 0.18
 0.25
 0.35
 0.21
Other short-term borrowings$517,456
 112,228
 146,794
 3,024
 394,056
Rate2.58% 2.51
 2.12
 2.84
 1.52
Long-term debt$1,983,910
 1,657,022
 1,656,743
 1,852,094
 1,733,938
Rate3.33% 3.06
 2.87
 2.66
 2.51
Total interest-bearing liabilities$31,506,444
 20,868,960

20,749,347

20,791,397

20,726,597
Rate1.38% 1.12
 0.99
 0.87
 0.76
Non-interest-bearing demand deposits$9,054,949
 8,014,761
 7,672,006
 7,539,451
 7,391,695
Cost of funds1.07% 0.81
 0.73
 0.64
 0.56
Effective cost of funds(6)
1.02% 0.77
 0.69
 0.61
 0.53
Net interest margin3.78% 3.92
 3.89
 3.86
 3.78
Taxable equivalent adjustment(3)
$630
 181
 136
 120
 116
          
(1)
Excludes net unrealized gains (losses).
(2) Average loans are shown net of deferred fees and costs. Non-performing loans are included.
(3)
Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 21%, 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 consolidated balance sheets.
(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.

Net Interest Income and Rate/Volume Analysis
The following tables set forth the major components of net interest income and the related annualized yields and rates for the three months ended March 31, 2019 and 2018, as well as the variances between the periods caused by changes in interest rates versus changes in volume.
Table 11 - Net Interest Income and Rate/Volume Analysis
 Three Months Ended March 31, 2019 Compared to 2018
 Average Balances Interest Annualized Yield/Rate Change due to Increase (Decrease)
(dollars in thousands)2019 2018 2019 2018 2019 2018 Volume Rate 
Assets                 
Interest earning assets:                 
Taxable investment securities$6,515,561
 $4,097,162
 $49,756
 $23,929
 3.05% 2.34% $13,954
 $11,873
 $25,827
Tax-exempt investment securities(2)
20,638
 140
 230
 2
 4.45
 6.57
 332
 (104) 228
Total investment securities6,536,199
 4,097,302
 49,986
 23,931
 3.06
 2.34
 14,286
 11,769
 26,055
Trading account assets2,049
 8,167
 7
 54
 1.30
 2.66
 (40) (7) (47)
Taxable loans, net(1)
34,987,418
 24,810,104
 445,602
 284,919
 5.17
 4.66
 116,942
 43,741
 160,683
Tax-exempt loans, net(1)(2)
333,933
 52,426
 2,770
 552
 3.36
 4.27
 2,964
 (746) 2,218
Allowance for loan losses(252,815) (251,635)              
Loans, net35,068,536
 24,610,895
 448,372
 285,471
 5.17
 4.70
 119,906

42,995
 162,901
Mortgage loans held for sale34,913
 38,360
 391
 379
 4.48
 3.95
 (34) 46
 12
Other earning assets(3)
679,477
 516,575
 4,164
 1,914
 2.45
 1.48
 591
 1,659
 2,250
Federal Home Loan Bank and Federal Reserve Bank stock211,408
 177,381
 2,549
 1,501
 4.82
 3.39
 285
 763
 1,048
  Total interest earning assets42,532,582

29,448,680
 505,469

313,250
 4.80
 4.31
 134,994

57,225

192,219
Cash and due from banks519,073
 398,865
              
Premises and equipment, net479,200
 426,902
              
Other real estate14,078
 3,785
              
Cash surrender value of bank-owned life insurance764,590
 541,465
              
Other assets(4)
1,485,098
 426,011
              
Total assets$45,794,621

$31,245,708
              
                  
Liabilities and Shareholders' Equity                
Interest-bearing liabilities:                 
Interest-bearing demand deposits$6,393,304
 $5,032,000
 $10,681
 $3,814
 0.68% 0.31% $1,041
 $5,826
 $6,867
Money market accounts11,182,186
 7,985,672
 35,833
 9,152
 1.30
 0.46
 3,626
 23,055
 26,681
Savings deposits901,059
 811,587
 138
 59
 0.06
 0.03
 7
 72
 79
Time deposits10,295,454
 4,567,118
 41,032
 13,350
 1.62
 1.19
 16,808
 10,874
 27,682
Federal funds purchased and securities sold under repurchase agreements233,076
 202,226
 127
 107
 0.22
 0.21
 16
 4
 20
Other short-term borrowings517,456
 394,056
 3,336
 1,494
 2.58
 1.52
 463
 1,379
 1,842
Long-term debt1,983,910
 1,733,938
 16,517
 10,874
 3.33
 2.51
 1,547
 4,096
 5,643
Total interest-bearing liabilities31,506,445

20,726,597
 107,664
 38,850
 1.38
 0.76
 23,508

45,306

68,814
Non-interest-bearing deposits9,054,949
 7,391,695
              
Other liabilities716,527
 210,558
              
Shareholders' equity4,516,700
 2,916,858
              
Total liabilities and equity$45,794,621

$31,245,708
              
Interest rate spread:        3.42% 3.55%      
Net interest income - FTE/margin(5)
    $397,805
 $274,400
 3.78% 3.78% $111,486

$11,919

$123,405
Taxable equivalent adjustment    630
 116
          
  Net interest income, actual    $397,175
 $274,284
          
                  
(1) Average loans are shownExcludes net of unearned income. Non-performing loans are included. Interest income includes fees as follows: 2019 - $8.2 million, 2018 - $7.9 million.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.
(4) Average loans are shown net of deferred fees and costs. NPLs are included.
(5) Includes interest-bearing funds with Federal Reserve Bank, interest earning deposits with banks, and federal funds sold and securities purchased under resale agreements.
(6) Includes the impact of non-interest-bearing capital funding sources.
58

Net Interest Income and Rate/Volume Analysis
        The following table sets forth the major components of net interest income and the related annualized yields and rates for the three months ended March 31, 2020 and 2019, as well as the variances between the periods caused by changes in interest rates versus changes in volume.
Table 11 - Net Interest Income and Rate/Volume Analysis
Three Months Ended March 31,2020 Compared to 2019
Average BalancesInterestAnnualized Yield/RateChange due toIncrease (Decrease)
(dollars in thousands)202020192020201920202019VolumeRate
Assets
Interest earning assets:
Investment securities$6,680,047  $6,536,199  $51,655  $49,986  3.09 %3.06 %$1,094  $575  $1,669  
Trading account assets6,306  2,049  43  7  2.70  1.30  14  22  36  
Taxable loans, net(1)
37,177,611  34,987,418  424,387  445,602  4.59  5.17  28,154  (49,369) (21,215) 
Tax-exempt loans, net(1)(2)
415,434  333,933  3,734  2,770  3.61  3.36  681  283  964  
Allowance for loan losses(368,033) (252,815) 
Loans, net37,225,012  35,068,536  428,121  448,372  4.62  5.17  28,835  (49,086) (20,251) 
Mortgage loans held for sale86,415  34,913  792  391  3.67  4.48  574  (173) 401  
Other earning assets(3)
652,130  679,477  1,675  4,164  1.02  2.45  (166) (2,323) (2,489) 
Federal Home Loan Bank and Federal Reserve Bank stock284,082  211,408  2,397  2,549  3.38  4.82  871  (1,023) (152) 
Total interest earning assets44,933,992  42,532,582  484,683  505,469  4.33  4.80  31,222  (52,008) (20,786) 
Cash and due from banks515,153  519,073  
Premises and equipment, net491,244  479,200  
Other real estate13,395  14,078  
Cash surrender value of bank-owned life insurance892,861  764,590  
Other assets(4)
1,849,950  1,485,098  
Total assets$48,696,595  $45,794,621  
Liabilities and Shareholders' Equity
Interest-bearing liabilities:
Interest-bearing demand deposits$6,445,986  $6,393,304  $8,109  $10,681  0.51 %0.68 %$89  $(2,661) $(2,572) 
Money market accounts12,924,683  11,182,186  33,625  35,833  1.05  1.30  5,632  (7,840) (2,208) 
Savings deposits926,822  901,059  110  138  0.05  0.06  4  (32) (28) 
Time deposits8,979,942  10,295,454  44,158  41,032  1.98  1.62  (5,299) 8,425  3,126  
Federal funds purchased and securities sold under repurchase agreements167,324  233,076  127  127  0.30  0.22  (36) 36  —  
Other short-term borrowings1,384,362  517,456  5,805  3,336  1.66  2.58  5,561  (3,092) 2,469  
Long-term debt2,678,651  1,983,910  18,703  16,517  2.78  3.33  5,752  (3,566) 2,186  
Total interest-bearing liabilities33,507,770  31,506,445  110,637  107,664  1.30  1.38  11,703  (8,730) 2,973  
Non-interest-bearing deposits9,409,774  9,054,949  
Other liabilities817,627  716,527  
Shareholders' equity4,961,424  4,516,700  
Total liabilities and equity$48,696,595  $45,794,621  
Interest rate spread:3.03 %3.42 %
Net interest income - FTE/margin(5)
$374,046  $397,805  3.37 %3.78 %$19,519  $(43,278) $(23,759) 
Taxable equivalent adjustment786  630  
  Net interest income, actual$373,260  $397,175  
(1) Average loans are shown net of unearned income. NPLs are included. Interest income includes fees as follows: 2020 - $7.9 million, 2019 - $8.2 million.
(2) Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 21%, in adjusting interest on tax-exempt loans to a taxable-equivalent basis.
(3) Includes interest-bearing funds with Federal Reserve Bank, interest earning deposits with banks, and federal funds sold and securities purchased under resale agreements.
(4)Includes average net unrealized gains (losses) on investment securities available for sale of $(85.6)$166.8 million and $(100.6)$(85.6) million for the three months ended March 31, 20192020 and 2018,2019, respectively.
(5)The net interest margin is calculated by dividing annualized net interest income - FTE by average total interest earnings assets.

59

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 2.25%0% to 2.50%0.25% and the current prime rate of 5.50%3.25%. 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 pointsbps and a gradual decline of 100 and 200 basis points25 bps 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 whichand 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 March 31, 2019,2020, with comparable information for December 31, 2018.2019.
 
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) March 31, 2019 December 31, 2018
 +200 2.2% 3.4%
 +100 1.6% 2.0%
 Flat —% —%
 -100 (1.8)% (2.0)%
 -200 (4.5)% N/A
      
(1) December 31, 2018 does not include assets and liabilities of FCB which were acquired on January 1, 2019.
Table 12 - Twelve Month Net Interest Income Sensitivity
Estimated % Change in Net Interest Income as Compared to Unchanged Rates (for the next twelve months)
Change in Short-term Interest Rates (in bps)March 31, 2020December 31, 2019
+2002.8%2.8%
+1000.6%2.0%
Flat—%—%
-25(0.7)%N/A
The net interest income simulation model is the primary tool utilized to evaluate potential interest rate risks over a shorter termshorter-term time horizon. Synovus also evaluates potential longer termlonger-term interest rate risk through modeling and evaluation of EVE. Simulation modeling is utilized to measure the economic value of equityEVE 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 equityEVE 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.EVE. 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
LIBOR
In July 2017, the table below,Financial Conduct Authority (FCA), which regulates LIBOR, announced that it intends to stop persuading or compelling banks to submit rates for the EVE model indicatescalculation of LIBOR after 2021, confirming the continuation of LIBOR will not be guaranteed beyond that compared with a valuation assuming stable rates, EVE is projected to decrease by 3.9% and by 9.3%, 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 7.3% and 20.0%, respectively. These changes in long-term interest rate sensitivity are primarilydate. However, due to the impactCOVID-19 pandemic, the FCA has since softened its stance on the pre-cessation end dates scheduled in 2020 and early 2021 on the issuance of instruments tied to LIBOR. The ARRC has proposed SOFR as its preferred rate as an alternative to LIBOR and has proposed a paced market transition plan to SOFR from LIBOR. The ARRC recently recommended a spread adjustment methodology for cash products based on a historical median over a five-year lookback period calculating the difference between LIBOR and SOFR. Organizations are currently working on industry-wide and company-specific transition plans as it relates to derivatives and cash markets exposed to LIBOR. As noted within our 10-K Risk Factors, Synovus holds instruments that may be impacted by the discontinuance of LIBOR including floating rate obligations, loans, deposits, derivatives and hedges, and other financial instruments but is not able to currently predict the associated financial impacts of the acquisitiontransition to an alternative reference rate. Synovus has established a cross-functional LIBOR transition working group that is in the process of FCB.i) assessing the Company's current exposure to LIBOR indexed instruments and the data, systems and processes that may also be impacted; ii) establishing an implementation plan; and iii) developing a formal governance structure for the transition.
Table 13 - Economic Value of Sensitivity(1)
    
  Estimated Change in EVE
Immediate Change in Interest Rates (in basis points) March 31, 2019 December 31, 2018
+200 (9.3)% 0.7%
+100 (3.9)% 1.3%
-100 (7.3)% (13.9)%
-200 (20.0)% N/A
     
60
(1) December 31, 2018 does not include assets and liabilities of FCB which were acquired on January 1, 2019.

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, determination of the fair value of financial instrumentsmeasurements 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' 20182019 Form 10-K should be reviewed for a greater understanding of how we record and report our financial performance.performance. Excluding the recently adopted accounting standardsadoption of ASU 2016-13, Financial Instruments-Credit Losses (CECL) on January 1, 2020 as disclosed in "Note"Part I - Item 1. Financial Statements and Supplementary Data - Note 1 - Basis of Presentation"Presentation and Accounting Policies" 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' 20182019 Form 10-K.
61







Non-GAAP Financial Measures
The measures entitled adjusted non-interest income;revenue; adjusted non-interest expense; adjusted total revenues; adjusted tangible efficiency ratio; adjusted net income per common share, diluted; adjusted return on average assets; adjusted return on average common equity; adjusted return on average tangible common equity; total core deposits;and tangible common equity ratio; and CET1 ratio (fully phased-in) are not measures recognized under GAAP and therefore are considered non-GAAP financial measures. The most comparable GAAP measures to these measures are total non-interest income;revenue; total non-interest expense; total revenues; efficiency ratio;ratio-FTE; net income per common share, diluted; return on average assets; return on average common equity; total deposits;and the ratio of total shareholders' equity to total assets; and the CET1 ratio,assets, respectively.
Management believes that these non-GAAP financial measures provide meaningful additional information about Synovus to assist management and investors in evaluating Synovus’ operating results, financial strength, the performance of its business, and the strength of its capital position. However, these non-GAAP financial measures have inherent limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of operating results or capital position as reported under GAAP. The non-GAAP financial measures should be considered as additional views of the way our financial measures are affected by significant items and other factors, and since they are not required to be uniformly applied, they may not be comparable to other similarly titled measures at other companies. Adjusted total revenues and adjusted non-interest incomerevenue are measures used by management to evaluate non-interest incomerevenue exclusive of net investment securities gains (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 adjustedAdjusted 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. Total core deposits is a measure used by management to evaluate organic growth of deposits and the quality of deposits as a funding source. The tangible common equity ratio and CET1 ratio (fully phased-in) areis used by management and bank regulators to assess the strength of our capital position. The computations of these measures are set forth in the tables below.
Table 14 - Reconciliation of Non-GAAP Financial Measures
Three Months Ended
(in thousands)March 31, 2020March 31, 2019
Adjusted non-interest revenue
Total non-interest revenue$103,857  $79,378  
Subtract: Investment securities gains, net(8,734) (75) 
Add/subtract: Decrease (increase) in fair value of private equity investments, net4,255  (858) 
Adjusted non-interest revenue$99,378  $78,445  
Adjusted non-interest expense
Total non-interest expense$276,279  $292,410  
Subtract: Merger-related expense—  (49,738) 
Subtract: Restructuring charges, net(3,220) (19) 
Subtract: Loss on early extinguishment of debt, net(1,904) —  
Adjusted non-interest expense$271,155  $242,653  

62

Table 14 - Reconciliation of Non-GAAP Financial Measures   
 Three Months Ended
(dollars in thousands)March 31, 2019 March 31, 2018
Adjusted non-interest income   
Total non-interest income$79,378
 $67,046
Subtract: Investment securities gains, net(75) —
Subtract/add: (Increase) decrease in fair value of private equity investments, net(858) 3,056
     Adjusted non-interest income$78,445
 $70,102
    
Adjusted non-interest expense   
Total non-interest expense$292,410
 $195,179
Subtract: Merger-related expense(49,738) —
Add: Litigation settlement/contingency expense—
 2,626
Subtract/add: Restructuring charges, net(19) 315
Adjusted non-interest expense$242,653
 $198,120
    
Table 14 - Reconciliation of Non-GAAP Financial Measures, continued
Three Months Ended
(in thousands, except per share data)March 31, 2020March 31, 2019
Adjusted total revenues and adjusted tangible efficiency ratio
Adjusted non-interest expense$271,155  $242,653  
Subtract: Amortization of intangibles(2,640) (3,392) 
Adjusted tangible non-interest expense$268,515  $239,261  
Net interest income$373,260  $397,175  
Add: Tax equivalent adjustment786  630  
Add: Total non-interest revenue103,857  79,378  
Total FTE revenues$477,903  $477,183  
Subtract: Investment securities gains, net(8,734) (75) 
Add/subtract: Decrease (increase) in fair value of private equity investments, net4,255  (858) 
Adjusted total revenues$473,424  $476,250  
Efficiency ratio-FTE57.81 %61.28 %
 Adjusted tangible efficiency ratio56.72  50.24  
Adjusted net income per common share, diluted
Net income available to common shareholders$30,230  $117,036  
Add: Merger-related expense—  49,738  
Add: Restructuring charges, net3,220  19  
Add: Loss on early extinguishment of debt, net1,904  —  
Subtract: Investment securities gains, net(8,734) (75) 
Add/subtract: Decrease (increase) in fair value of private equity investments, net4,255  (858) 
Subtract: Tax effect of adjustments(167) (5,705) 
Adjusted net income available to common shareholders$30,708  $160,155  
Weighted average common shares outstanding, diluted148,401  162,760  
Adjusted net income per common share, diluted$0.21  $0.98  


Three Months Ended
(dollars in thousands)March 31, 2020March 31, 2019
Adjusted return on average assets (annualized)
Net income$38,521  $120,186  
Add: Merger-related expense—  49,738  
Add: Restructuring charges, net3,220  19  
Add: Loss on early extinguishment of debt, net1,904  —  
Subtract: Investment securities gains, net(8,734) (75) 
Add/subtract: Decrease (increase) in fair value of private equity investments, net4,255  (858) 
Subtract: Tax effect of adjustments(167) (5,705) 
Adjusted net income$38,999  $163,305  
Net income annualized154,931  487,421  
Adjusted net income annualized156,853  662,293  
Total average assets48,696,595  45,794,621  
Return on average assets (annualized)0.32 %1.06 %
Adjusted return on average assets (annualized)0.32  1.45  

63

Table 14 - Reconciliation of Non-GAAP Financial Measures, continued

Three Months Ended
(in thousands, except per share data)March 31, 2019 March 31, 2018
Adjusted total revenues and adjusted tangible efficiency ratio   
Adjusted non-interest expense$242,653
 $198,120
Subtract: Amortization of intangibles(3,392) (292)
Adjusted tangible non-interest expense$239,261
 $197,828
    
Net interest income$397,175
 $274,284
Add: Tax equivalent adjustment630
 116
Add: Total non-interest income79,378
 67,046
Subtract: Investment securities gains, net(75) —
Total FTE revenues$477,108
 $341,446
Subtract/add: (Increase) decrease in fair value of private equity investments, net(858) 3,056
Adjusted total revenues$476,250
 $344,502
Efficiency ratio61.29% 57.16%
 Adjusted tangible efficiency ratio50.24
 57.42
    
Adjusted net income per common share, diluted   
Net income available to common shareholders$117,036
 $100,607
Add: Income tax expense, net related to State Tax Reform—
 1,325
Add: Merger-related expense49,738
 —
Subtract: Litigation settlement/contingency expense—
 (2,626)
Add/subtract: Restructuring charges, net19
 (315)
Subtract: Investment securities gains, net(75) —
Subtract/add: (Increase) decrease in fair value of private equity investments, net(858) 3,056
Subtract: Tax effect of adjustments(5,705) (27)
Adjusted net income available to common shareholders$160,155
 $102,020
Weighted average common shares outstanding, diluted162,760
 119,321
Adjusted net income per common share, diluted$0.98
 $0.86
    
Table 14 - Reconciliation of Non-GAAP Financial Measures, continued
Three Months Ended
(dollars in thousands)March 31, 2020December 31, 2019March 31, 2019
Adjusted return on average common equity and adjusted return on average tangible common equity (annualized)
Net income available to common shareholders$30,230  $143,393  $117,036  
Subtract/add: Merger-related expense—  (913) 49,738  
Add: Restructuring charges, net3,220  1,259  19  
Add: Valuation adjustment to Visa derivative—  1,111  —  
Add: Loss on early extinguishment of debt, net1,904  —  —  
Subtract/add: Investment securities (gains) losses, net(8,734) 2,157  (75) 
Add/subtract: Decrease (increase) in fair value of private equity investments4,255  (8,100) (858) 
Subtract/add: Tax effect of adjustments(167) 1,162  (5,705) 
Net income available to common shareholders$30,708  $140,069  $160,155  
Adjusted net income available to common shareholders' annualized$123,507  $555,709  $649,518  
Add: Amortization of intangibles7,868  8,528  10,317  
Adjusted net income available to common shareholders excluding amortization of intangibles annualized$131,375  $564,237  $659,835  
Net income available to common shareholders annualized$121,584  $568,896  $474,646  
Add: Amortization of intangibles7,868  8,528  10,317  
Net income available to common shareholders excluding amortization of intangibles$129,452  $577,424  $484,963  
Total average shareholders' equity less preferred stock$4,424,278  $4,348,250  $4,321,561  
Subtract: Goodwill(497,267) (488,223) (480,215) 
Subtract: Other intangible assets, net(54,514) (57,149) (75,191) 
Total average tangible shareholders' equity less preferred stock$3,872,497  $3,802,878  $3,766,155  
Return on average common equity (annualized)2.75 %13.08 %10.98 %
Adjusted return on average common equity (annualized)2.79  12.78  15.03  
Return on average tangible common equity (annualized)3.34  15.18  12.88  
Adjusted return on average tangible common equity (annualized)3.39  14.84  17.52  


(dollars in thousands)
Tangible common equity ratioMarch 31, 2020December 31, 2019March 31, 2019
Total assets$50,619,585  $48,203,282  $46,630,025  
Subtract: Goodwill(497,267) (497,267) (485,000) 
Subtract: Other intangible assets, net(53,032) (55,671) (74,683) 
Tangible assets$50,069,286  $47,650,344  $46,070,342  
Total shareholders' equity$5,065,205  $4,941,690  $4,597,753  
Subtract: Goodwill(497,267) (497,267) (485,000) 
Subtract: Other intangible assets, net(53,032) (55,671) (74,683) 
Subtract: Preferred Stock, no par value(537,145) (537,145) (195,140) 
Tangible common equity$3,977,761  $3,851,607  $3,842,930  
Total shareholders' equity to total assets ratio10.01 %10.25 %9.86 %
Tangible common equity ratio7.94  8.08  8.34  


64
Table 14 - Reconciliation of Non-GAAP Financial Measures, continued
 Three Months Ended
(dollars in thousands)March 31, 2019 March 31, 2018
Adjusted return on average assets (annualized)   
Net income$120,186
 $103,166
Add: Income tax expense, net related to State Tax Reform—
 1,325
Add: Merger-related expense49,738
 —
Subtract: Litigation settlement/contingency expense—
 (2,626)
Add/subtract: Restructuring charges, net19
 (315)
Subtract: Investment securities gains, net(75) —
Subtract/add: (Increase) decrease in fair value of private equity investments, net(858) 3,056
Subtract: Tax effect of adjustments(5,705) (27)
Adjusted net income$163,305
 $104,579
Net income annualized487,421
 418,395
Adjusted net income annualized662,293
 424,126
Total average assets45,794,621
 31,245,708
Return on average assets1.06% 1.34%
Adjusted return on average assets (annualized)1.45
 1.36
    


 Three Months Ended
(dollars in thousands)March 31, 2019 December 31, 2018 March 31, 2018
Adjusted return on average common equity and adjusted return on average tangible common equity (annualized)     
Net income available to common shareholders$117,036
 $101,919
 $100,607
Add: Income tax expense, net related to State Tax Reform—
 —
 1,325
Add: Merger-related expense49,738
 3,381
 —
Subtract: Litigation settlement/contingency expense—
 —
 (2,626)
Add/subtract: Restructuring charges, net19
 140
 (315)
Subtract: Investment securities gains, net(75) —
 —
Subtract/add: (Increase) decrease in fair value of private equity investments, net(858) 2,084
 3,056
Subtract: Tax effect of adjustments(5,705) (522) (27)
Net income available to common shareholders$160,155
 $107,002
 $102,020
      
Adjusted net income available to common shareholders' annualized$649,518
 $424,519
 $413,747
Add: Amortization of intangibles10,317
 886
 906
Adjusted net income available to common shareholders excluding amortization of intangibles annualized$659,835

$425,405

$414,653
      
Total average shareholders' equity less preferred stock$4,321,561
 $2,837,740
 $2,790,878
Subtract: Goodwill(480,215) (57,315) (57,315)
Subtract: Other intangible assets, net(75,191) (9,972) (10,915)
Total average tangible shareholders' equity less preferred stock$3,766,155
 $2,770,453
 $2,722,648
Return on average common equity (annualized)10.98% 14.25% 14.62%
Adjusted return on average common equity (annualized)15.03
 14.96
 14.82
Adjusted return on average tangible common equity (annualized)17.52
 15.36
 15.23
      


Table 14 - Reconciliation of Non-GAAP Financial Measures, continued
(dollars in thousands)March 31, 2019 December 31, 2018 March 31, 2018
Period-end core deposits     
Total deposits$38,075,190
 $26,720,322
 $26,253,507
Subtract: Brokered deposits(2,709,004) (1,548,030) (2,006,577)
Total core deposits$35,366,186
 $25,172,292
 $24,246,930
      
Tangible common equity ratio     
Total assets$46,630,025
 $32,669,192
 $31,501,028
Subtract: Goodwill(485,000) (57,315) (57,315)
Subtract: Other intangible assets, net(74,683) (9,875) (10,750)
Tangible assets$46,070,342
 $32,602,002
 $31,432,963
Total shareholders' equity$4,597,753
 $3,133,602
 $2,956,495
Subtract: Goodwill(485,000) (57,315) (57,315)
Subtract: Other intangible assets, net(74,683) (9,875) (10,750)
Subtract: Preferred Stock, no par value(195,140) (195,140) (125,980)
Tangible common equity$3,842,930
 $2,871,272
 $2,762,450
Total shareholders' equity to total assets ratio9.86% 9.59% 9.39%
Tangible common equity ratio8.34
 8.81
 8.79
      
CET1 ratio (fully phased-in)     
CET1$3,790,395
    
Total risk-weighted assets39,827,136
    
Total risk-weighted assets (fully phased-in)39,994,724
    
CET1 ratio9.52%   

     CET1 ratio (fully phased-in)9.48
   

      




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 March 31, 2019,2020, Synovus' disclosure controls and procedures were effective.
There have been no material changes in Synovus' internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended March 31, 20192020 that have materially affected, or are reasonably likely to materially affect, Synovus' internal control over financial reporting.


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PART II. – OTHER INFORMATION
ITEM 1. – LEGAL PROCEEDINGS
Synovus and its subsidiaries are subject to various legal proceedings, claims and disputes that arise in the ordinary course of its business. Additionally, in the ordinary course of its business, Synovus and its subsidiaries are subject to regulatory examinations, information gathering requests, inquiries and investigations. Synovus, like many other financial institutions, has been the target of legal actions and other proceedings asserting claims for damages and related relief for losses. These actions include mortgage loan and other loan put-back claims, claims and counterclaims asserted by individual borrowers related to their loans, and allegations of violations of state and federal laws and regulations relating to banking practices, and allegations related to Synovus' participation in government stimulus programs, including putative class action matters. In addition to actual damages, if Synovus does not prevail in such asserted legal actions, credit-related litigation could result in additional write-downs or charge-offs of assets, which could adversely affect Synovus' results of operations during the period in which the write-down or charge-off were to occur.
Based on Synovus' current knowledge and advice of counsel, management presently does not believe that the liabilities arising from these legal matters will have a material adverse effect of 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 12"Part I - Item 1. Financial Statements and Supplementary Data - Note 10 - Commitments and Contingencies" of this Report, which Note inis 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' 20182019 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. In addition, these risks may be heightened by the disruption and uncertainty resulting from COVID-19. New risks may emerge at any time, and we cannot predict such risks or estimate the extent to which they may affect our business, financial condition or results of operations, or the trading price of our securities.
ThereOther than the risk factors set forth below related to COVID-19, there are no material changes during the period covered by this Report to the risk factors previously disclosed in the Synovus' 20182019 Form 10-K.
The COVID-19 pandemic has resulted in significant economic uncertainty and disruption in Synovus’ markets.
In March 2020, the outbreak of COVID-19 caused by a novel strain of the coronavirus was recognized as a pandemic by the World Health Organization. Shortly thereafter, the President of the U.S. declared a national emergency throughout the U.S. attributable to such outbreak. The outbreak has become increasingly widespread in the U.S., including in the markets in which Synovus operates. Though the magnitude of the impact remains to be seen, Synovus has taken a number of steps to assess the effects of the outbreak and mitigate the adverse consequences to its businesses. Nonetheless, Synovus’s business will likely be adversely impacted by the outbreak of COVID-19.
As previously disclosed in “Part I - Item IA - Risk Factors” of Synovus' 2019 Form 10-K, Synovus’ operations and profitability are impacted by business and economic conditions generally, as well as those in the primary banking markets in which it operates. The COVID-19 pandemic has resulted in historic job losses and decreases in economic activity. While the duration and full extent of job losses and magnitude of economic dislocation are not yet known, it is clear that they may impact the ability of individuals and businesses to make payments, adversely affect the value of underlying collateral and the ability of guarantors to make payments in the case of default, which may decrease demand for Synovus’ products and services and otherwise adversely impact Synovus’ financial condition, results of operations and business. While the U.S. and various state and local governments have implemented various programs designed to aid individuals and businesses, the impact of, and extent to which, these efforts will be successful cannot be determined at this time.
Specifically, many of Synovus’ customers and counterparties have been and may continue to be adversely impacted by the COVID-19 pandemic and resulting economic downturn. As a result, Synovus has faced and may continue to face a decrease in demand for certain products, reduced access to its branches by its customers, and disruptions in the operations of its vendors and third party partners. The pandemic could also result in recognition of additional credit losses in Synovus’ loan portfolios and increase its allowance for credit losses as both businesses and consumers are negatively impacted by the economic downturn. In addition, in future periods Synovus will be required to evaluate the impact of COVID-19 on the carrying value of certain of its assets, including goodwill, and to conduct impairments tests on those assets, which may result in impairment charges on these assets in future periods that could be material. Synovus may also be required to take valuation allowances with respect to its deferred tax assets in future periods in the event it suffers losses or has reduced income or is unable to rely on future forecasts due to the uncertainty resulting from COVID-19.
66


Any of these occurrences could have a material adverse effect on Synovus’ financial condition, results of operations and business.The extent to which the pandemic impacts Synovus’ results will depend on future developments, which are highly uncertain and cannot be predicted, including the duration of the pandemic, government and regulatory responses to the pandemic, new information which may emerge concerning its severity and the actions necessary to contain it or address its impact, among others.Behavioral changes are not fully known and may not be temporary.
The COVID-19 pandemic has resulted in significant market volatility and lower interest rates that could materially affect Synovus’ results of operations and access to capital.
The COVID-19 pandemic has also caused significant recent volatility in financial markets and adverse economic conditions and may have significant long-term adverse effects on the U.S. economy, including increased instability in capital markets, declines in business and consumer confidence, reduction in economic activity, increased unemployment and recession.This may result in decreased capital and liquidity.If the economic situation deteriorates, federal and state regulators may also consider taking actions such as suspension of dividends, share repurchases and other capital distributions in order to conserve capital and retain capacity, any of which could adversely impact Synovus’ business. Further, sustained adverse effects from the COVID-19 pandemic may also prevent us from satisfying our regulatory and other supervisory requirements or result in downgrades in our credit ratings, making it more difficult to access the capital markets.
Additionally, the economic disruption caused by COVID-19 has resulted in a number of Federal Reserve actions resulting in market interest rates declining significantly. On March 3, 2020, the 10-year Treasury yield fell below 1.00% for the first time, and the Federal Reserve reduced the target federal funds rate by 50 bps to 1.00% to 1.25%. On March 15, 2020, the Federal Reserve further reduced the target federal funds rate by 100 bps to 0.00% to 0.25% and announced a $700 billion quantitative easing program in response to the expected economic downturn caused by the COVID-19 pandemic. The Federal Reserve reduced the interest that it pays on excess reserves from 1.60% to 1.10% on March 3, 2020, and then to 0.10% on March 15, 2020. We expect that these reductions in interest rates, especially if prolonged, could adversely affect Synovus’ net interest income, net interest margins and profitability.
Furthermore, such low rates increase the risk of a negative interest rate environment in which interest rates drop below zero, either broadly or for some types of instruments. Such an occurrence would likely further reduce the interest Synovus earns on loans and other earning assets, while also likely requiring Synovus to pay to maintain its deposits with the Federal Reserve Bank. Synovus’ systems may not be able to handle adequately a negative interest rate environment and not all variable rate instruments are designed for such a circumstance. Synovus cannot predict the nature or timing of future changes in monetary policies in response to COVID-19 or the precise effects that they may have on Synovus’ activities and financial results.
The COVID-19 pandemic has impacted, and will likely continue to impact, Synovus’ operations.
As a result of the COVID-19 pandemic, Synovus has taken significant precautions to ensure the health and safety of its team members and customers, which include operating over 95% of its branches as drive-thru and appointment only branches and having over 80% of its team member working remotely.These precautions could impact demand for Synovus’ products and services.The increased reliance on remote access to information systems increases Synovus’ exposure to potential cybersecurity breaches and could impact Synovus’ productivity.Additionally, Synovus’ business customers are increasingly required to work remotely as well and may not have appropriately secured remote networks may be more vulnerable to cyber-attacks or phishing schemes that could also affect us.Furthermore, if a large proportion of Synovus’ key employees were to contract COVID-19 or be quarantined as a result of the virus, Synovus’ operations could be adversely impacted and its business continuity plans may not prove effective.
Federal, state and local governments have mandated or encouraged financial services companies to make accommodations to borrowers and other customers affected by the COVID-19 pandemic. Legal and regulatory responses to concerns about the COVID-19 pandemic could result in additional regulation or restrictions affecting the conduct of our business in the future. In addition to the potential affects from negative economic conditions noted above, Synovus instituted a program to help COVID-19 impacted customers. This program includes waiving NSF and monthly service charges and offering payment deferment and other loan relief, as appropriate, for customers impacted by COVID-19. Synovus’ liquidity could be negatively impacted if a significant number of customers apply and are approved for the deferral of payments. In addition, if these deferrals are not effective in mitigating the effect of COVID-19 on Synovus’ customers, it may adversely affect its business and results of operations more substantially over a longer period of time. In addition, a significant amount of the loan growth Synovus experienced in April has been a direct result of PPP loans. This loan growth is likely to end in the near-tern. Furthermore, there has been meaningful litigation against banks such as Synovus related to their participation in the PPP and other government stimulus programs. The costs and effects of such litigation could be material to Synovus.
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ITEM 2. – UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS
(a) None.
(b) None.
(c) Issuer Purchases of Equity Securities:
Synovus'The Company announced on January 24, 2020 that its Board of Directors authorized share repurchases in 2020 at a $400 millionlevel that would be consistent with Synovus retaining a 9% CET1 ratio target. In light of current economic uncertainty, Synovus suspended share repurchase program that will expire atactivity beyond the end of 2019. This program was announced on January 15, 2019. The table below sets forth information regarding repurchases of our common stock$16.2 million completed during the first quarter of 2019.quarter.
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
January 2020100  $35.97  100  $196,403  
February 2020350  36.11  350  183,763  
March 2020—  —  —  183,763  
Total450  $36.08  450  
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
January 2019 350
 $36.18
 350
 $387,337
February 2019 7,020
 37.51
 7,020
 123,985
March 2019 1,115
 39.45
 1,115
 80,002
Total 8,485
 $37.71
 8,485
 
         
(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 first quarter of 20192020 were purchased through open market transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.
ITEM 3. – DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. – MINE SAFETY DISCLOSURES
None.
ITEM 5. – OTHER INFORMATION
None.

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ITEM 6. – EXHIBITS  
Exhibit

Number
Description
2.13.1 
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'Synovus’ Current Report on Form 8-K dated June 20, 2018,April 22, 2020, as filed with the SEC on June 21, 2018.April 24, 2020.
3.63.2 
Restated Bylaws as amended, of Synovus, incorporated by reference to Exhibit 3.13.2 of Synovus' Current Report on Form 8-K dated November 8, 2010,April 22, 2020, as filed with the SEC on November 9, 2010.April 24, 2020.
10.1
31.1
31.2
32
Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101
Interactive Data File
104 Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).


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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.
May 11, 2020SYNOVUS FINANCIAL CORP.By:/s/ Andrew J. Gregory, Jr.
DateAndrew J. Gregory, Jr.
May 3, 2019By:/s/ Kevin S. Blair
DateKevin S. Blair
Senior Executive Vice President Chief Operating Officer and Interim Chief Financial Officer
(Duly Authorized Officer and Principal Financial Officer)


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