0000018349us-gaap:~~FairValueMeasurementsNonrecurringMemberus-gaap:FairValueInputsLevel3Member2019-12-31~~FairValueMeasurementsNonrecurringMember2020-09-30

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~June~~September 30, 2020

Commission file number 1-10312

SYNOVUS FINANCIAL CORP.

(Exact name of registrant as specified in its charter)


Georgia						58-1134883
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1111 Bay Avenue, Suite 500

Columbus,

Georgia

31901

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code: (706) 641-6500


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 Par Value	SNV	New 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 E	SNV - PrE	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

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). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated 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). Yes ☐ No ☒

As of ~~August~~November 4, 2020, ~~147,312,937~~147,806,270 shares of the registrant's common stock, $1.00 par value, were outstanding.

Table of Contents

Page

Part I.

Financial Information

Index of Defined Terms

Item 1.

Financial Statements (Unaudited)

Consolidated Balance Sheets as of ~~June~~September 30, 2020 and December 31, 2019

Consolidated Statements of Income for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2020 and 2019

Consolidated Statements of Comprehensive Income for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2020 and 2019

Consolidated Statements of Changes in Shareholders' Equity for the Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2020 and 2019

Consolidated Statements of Cash Flows for the ~~Six~~Nine Months Ended ~~June~~September 30, 2020 and 2019

Notes to Unaudited Interim Consolidated Financial Statements

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

4443

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

6971

Item 4.

Controls and Procedures

6971

Part II.

Other Information

Item 1.

Legal Proceedings

7072

Item 1A.

Risk Factors

7072

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

7072

Item 3.

Defaults Upon Senior Securities

7072

Item 4.

Mine Safety Disclosures

7072

Item 5.

Other Information

7072

Item 6.

Exhibits

7173

Signatures

7274

SYNOVUS FINANCIAL CORP.

INDEX OF DEFINED TERMS

Throughout this discussion, references to "Synovus", "we", "our", "us", "the Company" and similar terms refer to the consolidated entity consisting of Synovus Financial Corp. and its subsidiaries unless the context indicates that we refer only to the Parent Company, Synovus Financial Corp. When we refer to the "Bank" or "Synovus Bank" we mean our only bank subsidiary, Synovus Bank.

ACL – Allowance for credit losses (ALL, reserve on unfunded loan commitments, and reserve, if required, on debt securities)

ALCO – Synovus' Asset Liability Management Committee

ALL – Allowance for loan losses

AOCI – Accumulated other comprehensive income

Acquisition Date – Effective January 1, 2019, Synovus completed its acquisition of FCB Financial Holdings, Inc.

ARRC – Alternative Reference Rates Committee

ASC – Accounting Standards Codification

ASC 310-30 loans – Loans accounted for in accordance with ASC 310 – 30, Loans and Debt Securities Acquired with Deteriorated Credit Quality

ASU – Accounting Standards Update

ATM – Automatic teller machine

~~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

bp(s) – Basis point(s)

C&I – Commercial and industrial

CARES Act – The Coronavirus Aid, Relief, and Economic Security Act

CDC – Centers for Disease Control

CDI – Core Deposit Intangible

CECL – Current expected credit losses

CET1 – Common Equity Tier 1 Capital defined by Basel III capital rules

CMO – Collateralized mortgage obligation

Code – Internal Revenue Code, as amended

Company – Synovus Financial Corp. and its wholly-owned subsidiaries, except where the context requires otherwise

Covered Litigation – Certain Visa litigation for which Visa is indemnified by Visa USA members

COVID-19 – Coronavirus disease 2019

CRA – Community Reinvestment Act

CRE – Commercial real estate

DCF – Discounted cash flow

Dodd-Frank Act – The Dodd-Frank Wall Street Reform and Consumer Protection Act

EFFR– Effective Federal Funds Rate

EVE – Economic value of equity

Exchange Act – Securities Exchange Act of 1934, as amended

FASB – Financial Accounting Standards Board

FCA – Financial Conduct Authority

FCB – FCB Financial Holdings, Inc. and its wholly-owned subsidiaries, except where the context requires otherwise

FDIC – Federal Deposit Insurance Corporation

Federal Reserve Bank – The 12 banks that are the operating arms of the U.S. central bank. They implement the policies of the Federal Reserve Board and also conduct economic research

Federal Reserve Board – The 7-member Board of Governors that oversees the Federal Reserve System, establishes monetary policy (interest rates, credit, etc.), and monitors the economic health of the country. Its members are appointed by the President subject to Senate confirmation, and serve 14-year terms

Federal Reserve System – The 12 Federal Reserve Banks, with each one serving member banks in its own district. This system, supervised by the Federal Reserve Board, has broad regulatory powers over the money supply and the credit structure

FFIEC – Federal Financial Institutions Examination Council

FFIEC Retail Credit Classification Policy – FFIEC Uniform Retail Credit Classification and Account Management Policy

FHLB – Federal Home Loan Bank

FICO – Fair Isaac Corporation

FMS – Financial Management Services, a division of Synovus Bank

FOMC – Federal Open Market Committee

FTE – Fully taxable-equivalent

FTP – Funds transfer pricing

GA DBF – Georgia Department of Banking and Finance

GAAP – Generally Accepted Accounting Principles in the United States of America

~~GDP~~ ~~– Gross domestic product~~

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 acquired entity as "Global One~~"

HELOC – Home equity line of credit

Interagency Supervisory Guidance – Interagency Supervisory Guidance on Allowance for Loan and Lease Losses Estimation Practices for Loans and Lines of Credit Secured by Junior Liens on 1-4 Family Residential Properties

LGD – Loss given default

LIBOR – London Interbank Offered Rate

LIHTC – Low Income Housing Tax Credit

LTV – Loan-to-collateral value ratio

MBS – Mortgage-backed security

Merger Agreement – Agreement and Plan of Merger by and among Synovus, FCB and Azalea Merger Sub Corp., a subsidiary of Synovus, dated as of July 23, 2018

Merger – The ~~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~~effected by the Merger Agreement

MLO – Mortgage loan originator

MPS – Merchant processing servicer(s)

MRSU – Market Restricted Share Unit

NAICS – North American Industry Classification System

nm – not meaningful

NPA – Non-performing assets

NPL – Non-performing loans

NSF – Non-sufficient funds

~~NSF~~ ~~– Non-sufficient funds~~

OCI – Other comprehensive income

ORE – Other real estate

P&I – Principal and interest

PAA – Purchase accounting adjustments

Parent Company – Synovus Financial Corp.

PCD – Purchased Credit Deteriorated

PCI – Purchased Credit Impaired

PD – Probability of Default

PPP – Paycheck Protection Program established as part of the CARES Act and launched on April 3, 2020 by the SBA and Treasury

PSU – Performance Share Unit

RSU – Restricted Share Unit

SBA – Small Business Administration

SBIC – Small Business Investment Company

SEC – U.S. Securities and Exchange Commission

Securities Act – Securities Act of 1933, as amended

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' 2019 Form 10-K – Synovus' Annual Report on Form 10-K for the year ended December 31, 2019

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)

TJCA – U.S. Tax Cuts and Jobs Act of 2017

TSR – Total shareholder return

UPB – Unpaid principal balance

Visa – The Visa U.S.A., Inc. card association or its affiliates, collectively

Visa Class A shares – Class A shares of common stock issued by Visa are publicly traded shares which are not subject to restrictions on sale

Visa Class B shares – Class B shares of common stock issued by Visa which are subject to restrictions with respect to sale until all of the Covered Litigation has been 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

iii

PART I. FINANCIAL INFORMATION

ITEM 1. - FINANCIAL STATEMENTS

SYNOVUS FINANCIAL CORP.

CONSOLIDATED BALANCE SHEETS

(unaudited)


(in thousands, except share and per share data)	(in thousands, except share and per share data)	June 30, 2020		December 31, 2019		(in thousands, except share and per share data)	September 30, 2020		December 31, 2019
ASSETS	ASSETS					ASSETS
Cash and due from banks	Cash and due from banks	$	572,169	$	535,846	Cash and due from banks	$	578,026	$	535,846
Interest-bearing funds with Federal Reserve Bank	Interest-bearing funds with Federal Reserve Bank	860,289		553,390		Interest-bearing funds with Federal Reserve Bank	1,266,313		553,390
Interest earning deposits with banks	Interest earning deposits with banks	20,719		20,635		Interest earning deposits with banks	20,929		20,635
Federal funds sold and securities purchased under resale agreements	Federal funds sold and securities purchased under resale agreements	118,048		77,047		Federal funds sold and securities purchased under resale agreements	120,095		77,047
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	Total cash, cash equivalents, restricted cash, and restricted cash equivalents	1,571,225		1,186,918		Total cash, cash equivalents, restricted cash, and restricted cash equivalents	1,985,363		1,186,918
Investment securities available for sale, at fair value	Investment securities available for sale, at fair value	7,197,493		6,778,670		Investment securities available for sale, at fair value	7,566,525		6,778,670
Loans held for sale (includes $266,306 and $115,173 measured at fair value, respectively)		900,936		115,173
Loans held for sale (includes $285,899 and $115,173 measured at fair value, respectively)						Loans held for sale (includes $285,899 and $115,173 measured at fair value, respectively)	745,160		115,173
Loans, net of deferred fees and costs	Loans, net of deferred fees and costs	39,914,297		37,162,450		Loans, net of deferred fees and costs	39,549,847		37,162,450
Allowance for loan losses	Allowance for loan losses	(588,648)		(281,402)		Allowance for loan losses	(603,800)		(281,402)
Loans, net	Loans, net	39,325,649		36,881,048		Loans, net	38,946,047		36,881,048
Cash surrender value of bank-owned life insurance	Cash surrender value of bank-owned life insurance	1,038,049		775,665		Cash surrender value of bank-owned life insurance	1,044,046		775,665
Premises and equipment, net	Premises and equipment, net	481,716		493,940		Premises and equipment, net	471,208		493,940
Goodwill	Goodwill	497,267		497,267		Goodwill	452,390		497,267
Other intangible assets, net	Other intangible assets, net	50,392		55,671		Other intangible assets, net	47,752		55,671
Receivable on unsettled securities sales		1,289,116		—
Other assets	Other assets	1,770,146		1,418,930		Other assets	1,782,047		1,418,930
Total assets	Total assets	$	54,121,989	$	48,203,282	Total assets	$	53,040,538	$	48,203,282
LIABILITIES AND SHAREHOLDERS' EQUITY	LIABILITIES AND SHAREHOLDERS' EQUITY					LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities	Liabilities					Liabilities
Deposits:	Deposits:					Deposits:
Non-interest-bearing deposits	Non-interest-bearing deposits	$	12,555,714	$	9,439,485	Non-interest-bearing deposits	$	13,075,081	$	9,439,485
Interest-bearing deposits	Interest-bearing deposits	31,638,866		28,966,019		Interest-bearing deposits	31,590,823		28,966,019
Total deposits	Total deposits	44,194,580		38,405,504		Total deposits	44,665,904		38,405,504
Federal funds purchased and securities sold under repurchase agreements	Federal funds purchased and securities sold under repurchase agreements	225,576		165,690		Federal funds purchased and securities sold under repurchase agreements	202,344		165,690
Other short-term borrowings	Other short-term borrowings	300,000		1,753,560		Other short-term borrowings	400,000		1,753,560
Long-term debt	Long-term debt	2,327,921		2,153,897		Long-term debt	1,628,385		2,153,897
Due on unsettled securities purchases		922,952		—
Other liabilities	Other liabilities	1,097,992		782,941		Other liabilities	1,079,363		782,941
Total liabilities	Total liabilities	49,069,021		43,261,592		Total liabilities	47,975,996		43,261,592
Shareholders' Equity	Shareholders' Equity					Shareholders' Equity
Preferred stock - no par value; authorized 100,000,000 shares; issued 22,000,000	Preferred stock - no par value; authorized 100,000,000 shares; issued 22,000,000	537,145		537,145		Preferred stock - no par value; authorized 100,000,000 shares; issued 22,000,000	537,145		537,145
Common stock - $1.00 par value; authorized 342,857,143 shares; issued 167,405,730 and 166,800,623; outstanding 147,312,703 and 147,157,596		167,406		166,801
Common stock - $1.00 par value; authorized 342,857,143 shares; issued 167,410,950 and 166,800,623; outstanding 147,317,923 and 147,157,596						Common stock - $1.00 par value; authorized 342,857,143 shares; issued 167,410,950 and 166,800,623; outstanding 147,317,923 and 147,157,596	167,411		166,801
Additional paid-in capital	Additional paid-in capital	3,826,726		3,819,336		Additional paid-in capital	3,832,142		3,819,336
Treasury stock, at cost; 20,093,027 and 19,643,027 shares	Treasury stock, at cost; 20,093,027 and 19,643,027 shares	(731,806)		(715,560)		Treasury stock, at cost; 20,093,027 and 19,643,027 shares	(731,806)		(715,560)
Accumulated other comprehensive income, net	Accumulated other comprehensive income, net	202,970		65,641		Accumulated other comprehensive income, net	174,914		65,641
Retained earnings	Retained earnings	1,050,527		1,068,327		Retained earnings	1,084,736		1,068,327
Total shareholders’ equity		5,052,968		4,941,690
Total shareholders' equity						Total shareholders' equity	5,064,542		4,941,690
Total liabilities and shareholders' equity	Total liabilities and shareholders' equity	$	54,121,989	$	48,203,282	Total liabilities and shareholders' equity	$	53,040,538	$	48,203,282

See accompanying notes to unaudited interim consolidated financial statements.

SYNOVUS FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	(in thousands, except per share data)	2020		2019		2020		2019		(in thousands, except per share data)	2020		2019		2020		2019
Interest income:	Interest income:									Interest income:
Loans, including fees	Loans, including fees	$	401,997	$	457,564	$	829,334	$	905,333	Loans, including fees	$	384,275	$	463,437	$	1,213,609	$	1,368,769
Investment securities available for sale	Investment securities available for sale	44,935		52,794		96,588		102,732		Investment securities available for sale	43,196		53,761		139,784		156,493
Loans held for sale	Loans held for sale	1,914		752		2,706		1,165		Loans held for sale	6,341		978		9,047		2,144
Federal Reserve Bank balances	Federal Reserve Bank balances	394		2,701		1,902		6,371		Federal Reserve Bank balances	285		2,288		2,187		8,659
Other earning assets	Other earning assets	2,329		2,320		4,936		5,369		Other earning assets	1,453		2,951		6,389		8,320
Total interest income	Total interest income	451,569		516,131		935,466		1,020,970		Total interest income	435,550		523,415		1,371,016		1,544,385
Interest expense:	Interest expense:									Interest expense:
Deposits	Deposits	56,474		92,700		142,476		180,383		Deposits	43,194		94,082		185,670		274,466
Federal funds purchased, securities sold under repurchase agreements, and other short-term borrowings	Federal funds purchased, securities sold under repurchase agreements, and other short-term borrowings	1,778		7,294		7,710		10,757		Federal funds purchased, securities sold under repurchase agreements, and other short-term borrowings	176		7,843		7,885		18,599
Long-term debt	Long-term debt	16,751		18,875		35,454		35,392		Long-term debt	15,190		19,393		50,645		54,785
Total interest expense	Total interest expense	75,003		118,869		185,640		226,532		Total interest expense	58,560		121,318		244,200		347,850
Net interest income	Net interest income	376,566		397,262		749,826		794,438		Net interest income	376,990		402,097		1,126,816		1,196,535
Provision for credit losses⁽¹⁾	Provision for credit losses⁽¹⁾	141,851		12,119		300,573		35,688		Provision for credit losses(1)	43,383		27,562		343,956		63,250
Net interest income after provision for credit losses	Net interest income after provision for credit losses	234,715		385,143		449,253		758,750		Net interest income after provision for credit losses	333,607		374,535		782,860		1,133,285
Non-interest revenue:	Non-interest revenue:									Non-interest revenue:
Service charges on deposit accounts	Service charges on deposit accounts	15,567		21,994		36,255		42,853		Service charges on deposit accounts	17,813		22,952		54,069		65,805
Fiduciary and asset management fees	Fiduciary and asset management fees	14,950		14,478		30,124		28,057		Fiduciary and asset management fees	15,885		14,686		46,009		42,743
Card fees	Card fees	9,186		11,161		20,136		22,037		Card fees	10,823		12,297		30,959		34,334
Brokerage revenue	Brokerage revenue	9,984		10,052		22,383		19,431		Brokerage revenue	10,604		11,071		32,987		30,502
Mortgage banking income	Mortgage banking income	23,530		7,907		35,757		12,962		Mortgage banking income	31,229		10,351		66,987		23,313
Capital markets income	Capital markets income	6,050		8,916		17,294		14,161		Capital markets income	5,690		7,396		22,984		21,557
Income from bank-owned life insurance	Income from bank-owned life insurance	7,756		5,176		13,794		10,466		Income from bank-owned life insurance	7,778		5,139		21,572		15,605
Investment securities gains (losses), net		69,409		(1,845)		78,144		(1,771)
Investment securities (losses) gains, net										Investment securities (losses) gains, net	(1,550)		(3,731)		76,594		(5,502)
Other non-interest revenue	Other non-interest revenue	17,052		11,968		23,454		20,989		Other non-interest revenue	16,139		8,599		39,591		29,588
Total non-interest revenue	Total non-interest revenue	173,484		89,807		277,341		169,185		Total non-interest revenue	114,411		88,760		391,752		257,945
Non-interest expense:	Non-interest expense:									Non-interest expense:
Salaries and other personnel expense	Salaries and other personnel expense	159,597		143,009		309,274		282,436		Salaries and other personnel expense	154,994		142,516		464,268		424,952
Net occupancy, equipment, and software expense	Net occupancy, equipment, and software expense	41,727		39,851		83,921		78,245		Net occupancy, equipment, and software expense	41,554		41,017		125,475		119,262
Third-party processing and other services	Third-party processing and other services	21,366		19,118		42,846		36,875		Third-party processing and other services	20,620		18,528		63,466		55,403
Professional fees	Professional fees	15,305		9,312		25,980		15,660		Professional fees	13,377		9,719		39,358		25,379
FDIC insurance and other regulatory fees	FDIC insurance and other regulatory fees	6,851		7,867		12,129		14,629		FDIC insurance and other regulatory fees	6,793		7,242		18,922		21,872
Goodwill impairment										Goodwill impairment	44,877		0		44,877		0
Merger-related expense	Merger-related expense	—		7,401		—		57,140		Merger-related expense	0		353		0		57,493
Other operating expenses	Other operating expenses	39,295		37,568		86,271		71,552		Other operating expenses	34,440		56,935		120,710		128,486
Total non-interest expense	Total non-interest expense	284,141		264,126		560,421		556,537		Total non-interest expense	316,655		276,310		877,076		832,847
Income before income taxes	Income before income taxes	124,058		210,824		166,173		371,398		Income before income taxes	131,363		186,985		297,536		558,383
Income tax expense	Income tax expense	30,866		54,640		34,461		95,028		Income tax expense	39,789		51,259		74,250		146,287
Net income	Net income	93,192		156,184		131,712		276,370		Net income	91,574		135,726		223,286		412,096
Less: Preferred stock dividends	Less: Preferred stock dividends	8,291		3,150		16,581		6,300		Less: Preferred stock dividends	8,291		8,291		24,872		14,591
Net income available to common shareholders	Net income available to common shareholders	$	84,901	$	153,034	$	115,131	$	270,070	Net income available to common shareholders	$	83,283	$	127,435	$	198,414	$	397,505
Net income per common share, basic	Net income per common share, basic	$	0.58	$	0.97	$	0.78	$	1.70	Net income per common share, basic	$	0.57	$	0.84	$	1.35	$	2.53
Net income per common share, diluted	Net income per common share, diluted	0.57		0.96		0.78		1.68		Net income per common share, diluted	0.56		0.83		1.34		2.51
Weighted average common shares outstanding, basic	Weighted average common shares outstanding, basic	147,288		157,389		147,300		159,148		Weighted average common shares outstanding, basic	147,314		152,238		147,304		156,819
Weighted average common shares outstanding, diluted	Weighted average common shares outstanding, diluted	147,733		159,077		148,067		160,908		Weighted average common shares outstanding, diluted	147,976		154,043		148,037		158,595

⁽¹⁾Beginning January 1, 2020, provision calculation is based on current expected credit loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.

See accompanying notes to unaudited interim consolidated financial statements.

SYNOVUS FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)


		Three Months Ended June 30,																							Three Months Ended September 30,
		2020										2019											2020				2019
(in thousands)	(in thousands)	Before-tax Amount		Income Tax		Net of Tax Amount		Before-tax Amount		Income Tax		Net of Tax Amount		(in thousands)	Before-tax Amount		Income Tax		Net of Tax Amount		Before-tax Amount		Income Tax		Net of Tax Amount
Net income	Net income	$	124,058	$	(30,866)	$	93,192	$	210,824	$	(54,640)	$	156,184	Net income	$	131,363	$	(39,789)	$	91,574	$	186,985	$	(51,259)	$	135,726
Unrealized gains (losses) on investment securities available for sale:	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 period	Net unrealized gains (losses) arising during the period	(11,939)		3,092		(8,847)		89,459		(23,169)		66,290		Net unrealized gains (losses) arising during the period	(29,428)		7,622		(21,806)		33,919		(8,786)		25,133
Reclassification adjustment for realized (gains) losses included in net income	Reclassification adjustment for realized (gains) losses included in net income	(69,409)		17,977		(51,432)		1,845		(478)		1,367		Reclassification adjustment for realized (gains) losses included in net income	1,550		(401)		1,149		3,731		(966)		2,765
Net change	Net change	(81,348)		21,069		(60,279)		91,304		(23,647)		67,657		Net change	(27,878)		7,221		(20,657)		37,650		(9,752)		27,898
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:	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 period	Net unrealized gains (losses) arising during the period	8,823		(2,285)		6,538		—		—		—		Net unrealized gains (losses) arising during the period	(8,954)		2,319		(6,635)		(1,182)		306		(876)
Reclassification adjustment for realized (gains) losses included in net income	Reclassification adjustment for realized (gains) losses included in net income	(270)		70		(200)		—		—		—		Reclassification adjustment for realized (gains) losses included in net income	(1,031)		267		(764)		0		0		0
Net change	Net change	8,553		(2,215)		6,338		—		—		—		Net change	(9,985)		2,586		(7,399)		(1,182)		306		(876)
Post-retirement unfunded health benefit:	Post-retirement unfunded health benefit:													Post-retirement unfunded health benefit:
Actuarial gains (losses) arising during the period														Actuarial gains (losses) arising during the period	0		0		0		(510)		132		(378)
Reclassification adjustment for realized (gains) losses included in net income	Reclassification adjustment for realized (gains) losses included in net income	—		—		—		(35)		9		(26)		Reclassification adjustment for realized (gains) losses included in net income	0		0		0		0		0		0
Net change														Net change	0		0		0		(510)		132		(378)
Total other comprehensive income (loss)	Total other comprehensive income (loss)	$	(72,795)	$	18,854	$	(53,941)	$	91,269	$	(23,638)	$	67,631	Total other comprehensive income (loss)	$	(37,863)	$	9,807	$	(28,056)	$	35,958	$	(9,314)	$	26,644
Comprehensive income	Comprehensive income					$	39,251					$	223,815	Comprehensive income					$	63,518					$	162,370

		Six Months Ended June 30,																							Nine Months Ended September 30,
		2020										2019											2020				2019
(in thousands)	(in thousands)	Before-tax Amount		Tax Effect		Net of Tax Amount		Before-tax Amount		Tax Effect		Net of Tax Amount		(in thousands)	Before-tax Amount		Income Tax		Net of Tax Amount		Before-tax Amount		Income Tax		Net of Tax Amount
Net income	Net income	$	166,173	$	(34,461)	$	131,712	$	371,398	$	(95,028)	$	276,370	Net income	$	297,536	$	(74,250)	$	223,286	$	558,383	$	(146,287)	$	412,096
Unrealized gains (losses) on investment securities available for sale:	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 period	Net unrealized gains (losses) arising during the period	146,403		(37,919)		108,484		192,241		(49,788)		142,453		Net unrealized gains (losses) arising during the period	116,975		(30,297)		86,678		226,160		(58,574)		167,586
Reclassification adjustment for realized (gains) losses included in net income	Reclassification adjustment for realized (gains) losses included in net income	(78,144)		20,239		(57,905)		1,771		(459)		1,312		Reclassification adjustment for realized (gains) losses included in net income	(76,594)		19,838		(56,756)		5,502		(1,425)		4,077
Net change	Net change	68,259		(17,680)		50,579		194,012		(50,247)		143,765		Net change	40,381		(10,459)		29,922		231,662		(59,999)		171,663
Unrealized gains (losses) on derivative instruments designated as cash flow hedges:	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 period	Net unrealized gains (losses) arising during the period	117,462		(30,423)		87,039		—		—		—		Net unrealized gains (losses) arising during the period	108,508		(28,104)		80,404		(1,182)		306		(876)
Reclassification adjustment for realized (gains) losses included in net income	Reclassification adjustment for realized (gains) losses included in net income	(390)		101		(289)		—		—		—		Reclassification adjustment for realized (gains) losses included in net income	(1,421)		368		(1,053)		0		0		0
Net change	Net change	117,072		(30,322)		86,750		—		—		—		Net change	107,087		(27,736)		79,351		(1,182)		306		(876)
Post-retirement unfunded health benefit:	Post-retirement unfunded health benefit:													Post-retirement unfunded health benefit:
Reclassification adjustment for net gains realized in net income		—		—		—		(70)		14		(56)
Other comprehensive income (loss)		$	185,331	$	(48,002)	$	137,329	$	193,942	$	(50,233)	$	143,709
Actuarial gains (losses) arising during the period														Actuarial gains (losses) arising during the period	0		0		0		(510)		132		(378)
Reclassification adjustment for realized (gains) losses included in net income														Reclassification adjustment for realized (gains) losses included in net income	0		0		0		(70)		14		(56)
Net change														Net change	0		0		0		(580)		146		(434)
Total other comprehensive income (loss)														Total other comprehensive income (loss)	$	147,468	$	(38,195)	$	109,273	$	229,900	$	(59,547)	$	170,353
Comprehensive income	Comprehensive income					$	269,041					$	420,079	Comprehensive income					$	332,559					$	582,449

See accompanying notes to unaudited interim consolidated financial statements.

SYNOVUS FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(unaudited)


(in thousands, except per share data)	(in thousands, except per share data)	Preferred Stock		Common Stock		Additional Paid-in Capital		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total		(in thousands, except per share data)	Preferred Stock		Common Stock		Additional Paid-in Capital		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total
Balance, April 1, 2020		$	537,145	$	167,360	$	3,821,357	$	(731,806)	$	256,911	$	1,014,238	$	5,065,205
Balance, July 1, 2020																Balance, July 1, 2020	$	537,145	$	167,406	$	3,826,726	$	(731,806)	$	202,970	$	1,050,527	$	5,052,968
Net income	Net income	—		—		—		—		—		93,192		93,192		Net income	—		—		—		—		—		91,574		91,574
Other comprehensive loss, net of income taxes	Other comprehensive loss, net of income taxes	—		—		—		—		(53,941)		—		(53,941)		Other comprehensive loss, net of income taxes	—		—		—		—		(28,056)		—		(28,056)
Cash dividends declared on common stock - $0.33 per share	Cash dividends declared on common stock - $0.33 per share	—		—		—		—		—		(48,612)		(48,612)		Cash dividends declared on common stock - $0.33 per share	—		—		—		—		—		(48,614)		(48,614)
Cash dividends declared on preferred stock⁽²⁾	Cash dividends declared on preferred stock⁽²⁾	—		—		—		—		—		(8,291)		(8,291)		Cash dividends declared on preferred stock(2)	—		—		—		—		—		(8,291)		(8,291)
Restricted share unit vesting and taxes paid related to net share settlement	Restricted share unit vesting and taxes paid related to net share settlement	—		34		(181)		—		—		—		(147)		Restricted share unit vesting and taxes paid related to net share settlement	—		2		434		—		—		(460)		(24)
Stock options exercised		—		12		200		—		—		—		212
Stock options exercised, net																Stock options exercised, net	—		3		30		—		—		—		33
Share-based compensation expense	Share-based compensation expense	—		—		5,350		—		—		—		5,350		Share-based compensation expense	—		—		4,952		—		—		—		4,952
Balance at June 30, 2020		$	537,145	$	167,406	$	3,826,726	$	(731,806)	$	202,970	$	1,050,527	$	5,052,968
Balance at September 30, 2020																Balance at September 30, 2020	$	537,145	$	167,411	$	3,832,142	$	(731,806)	$	174,914	$	1,084,736	$	5,064,542

Balance, April 1, 2019		$	195,140	$	165,929	$	3,794,262	$	(319,898)	$	(18,342)	$	780,662	$	4,597,753
Balance, July 1, 2019																Balance, July 1, 2019	$	195,140	$	166,080	$	3,801,748	$	(344,901)	$	49,289	$	886,460	$	4,753,816
Net income	Net income	—		—		—		—		—		156,184		156,184		Net income	—		—		—		—		—		135,726		135,726
Other comprehensive income, net of income taxes	Other comprehensive income, net of income taxes	—		—		—		—		67,631		—		67,631		Other comprehensive income, net of income taxes	—		—		—		—		26,644		—		26,644
Cash dividends declared on common stock - $0.30 per share	Cash dividends declared on common stock - $0.30 per share	—		—		—		—		—		(47,236)		(47,236)		Cash dividends declared on common stock - $0.30 per share	—		—		—		—		—		(44,476)		(44,476)
Cash dividends declared on preferred stock⁽²⁾	Cash dividends declared on preferred stock⁽²⁾	—		—		—		—		—		(3,150)		(3,150)		Cash dividends declared on preferred stock(2)	—		—		—		—		—		(8,291)		(8,291)
Issuance of Series E Preferred Stock, net of issuance costs																Issuance of Series E Preferred Stock, net of issuance costs	341,410		—		—		—		—		—		341,410
Repurchases of common stock including costs to repurchase	Repurchases of common stock including costs to repurchase	—		—		—		(25,003)		—		—		(25,003)		Repurchases of common stock including costs to repurchase	—		—		—		(343,690)		—		—		(343,690)
Restricted share unit vesting and taxes paid related to net share settlement	Restricted share unit vesting and taxes paid related to net share settlement	—		50		(281)		—		—		—		(231)		Restricted share unit vesting and taxes paid related to net share settlement	—		9		219		—		—		(326)		(98)
Stock options exercised		—		101		1,786		—		—		—		1,887
Stock options exercised, net																Stock options exercised, net	—		112		2,514		—		—		—		2,626
Warrants exercised with net settlement and common stock reissued																Warrants exercised with net settlement and common stock reissued	—		—		(8,494)		8,510		—		(16)		0
Share-based compensation expense	Share-based compensation expense	—		—		5,981		—		—		—		5,981		Share-based compensation expense	—		—		5,171		—		—		—		5,171
Balance at June 30, 2019		$	195,140	$	166,080	$	3,801,748	$	(344,901)	$	49,289	$	886,460	$	4,753,816
Balance at September 30, 2019																Balance at September 30, 2019	$	536,550	$	166,201	$	3,801,158	$	(680,081)	$	75,933	$	969,077	$	4,868,838


(in thousands, except per share data)	(in thousands, except per share data)	Preferred Stock		Common Stock		Additional Paid-in Capital		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total		(in thousands, except per share data)	Preferred Stock		Common Stock		Additional Paid-in Capital		Treasury Stock		Accumulated Other Comprehensive Income (Loss)		Retained Earnings		Total
Balance, December 31, 2019	Balance, December 31, 2019	$	537,145	$	166,801	$	3,819,336	$	(715,560)	$	65,641	$	1,068,327	$	4,941,690	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⁾	Cumulative-effect of change in accounting principle for financial instruments - credit losses (ASU 2016-13), net of tax⁽¹⁾	—		—		—		—		—		(35,721)		(35,721)		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	Net income	—		—		—		—		—		131,712		131,712		Net income	—		—		—		—		—		223,286		223,286
Other comprehensive income, net of income taxes	Other comprehensive income, net of income taxes	—		—		—		—		137,329		—		137,329		Other comprehensive income, net of income taxes	—		—		—		—		109,273		—		109,273
Cash dividends declared on common stock - $0.66 per share		—		—		—		—		—		(97,210)		(97,210)
Cash dividends declared on common stock - $0.99 per share																Cash dividends declared on common stock - $0.99 per share	—		—		—		—		—		(145,824)		(145,824)
Cash dividends declared on preferred stock⁽³⁾	Cash dividends declared on preferred stock⁽³⁾	—		—		—		—		—		(16,581)		(16,581)		Cash dividends declared on preferred stock(3)	—		—		—		—		—		(24,872)		(24,872)
Repurchases of common stock including costs to repurchase	Repurchases of common stock including costs to repurchase	—		—		—		(16,246)		—		—		(16,246)		Repurchases of common stock including costs to repurchase	—		—		—		(16,246)		—		—		(16,246)
Restricted share unit vesting and taxes paid related to net share settlement	Restricted share unit vesting and taxes paid related to net share settlement	—		379		(7,783)		—		—		—		(7,404)		Restricted share unit vesting and taxes paid related to net share settlement	—		381		(7,349)		—		—		(460)		(7,428)
Stock options exercised		—		226		6,253		—		—		—		6,479
Stock options exercised, net																Stock options exercised, net	—		229		6,282		—		—		—		6,511
Share-based compensation expense	Share-based compensation expense	—		—		8,920		—		—		—		8,920		Share-based compensation expense	—		—		13,873		—		—		—		13,873
Balance at June 30, 2020		$	537,145	$	167,406	$	3,826,726	$	(731,806)	$	202,970	$	1,050,527	$	5,052,968
Balance at September 30, 2020																Balance at September 30, 2020	$	537,145	$	167,411	$	3,832,142	$	(731,806)	$	174,914	$	1,084,736	$	5,064,542

Balance, December 31, 2018	Balance, December 31, 2018	$	195,140	$	143,300	$	3,060,561	$	(1,014,746)	$	(94,420)	$	843,767	$	3,133,602	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	Cumulative-effect of change in accounting principle for leases (ASU 2016-02), net of tax	—		—		—		—		—		4,270		4,270		Cumulative-effect of change in accounting principle for leases (ASU 2016-02), net of tax	—		—		—		—		—		4,270		4,270
Net income	Net income	—		—		—		—		—		276,370		276,370		Net income	—		—		—		—		—		412,096		412,096
Other comprehensive income, net of income taxes	Other comprehensive income, net of income taxes	—		—		—		—		143,709		—		143,709		Other comprehensive income, net of income taxes	—		—		—		—		170,353		—		170,353
FCB Acquisition:	FCB Acquisition:															FCB Acquisition:
Issuance of common stock, net of issuance costs	Issuance of common stock, net of issuance costs	—		22,043		682,103		—		—		—		704,146		Issuance of common stock, net of issuance costs	—		22,043		682,103		—		—		—		704,146
Common stock reissued	Common stock reissued	—		—		—		1,014,746		—		(137,176)		877,570		Common stock reissued	—		—		—		1,014,746		—		(137,176)		877,570
Fair value of exchanged equity awards and warrants attributed to purchase price	Fair value of exchanged equity awards and warrants attributed to purchase price	—		—		43,972		—		—		—		43,972		Fair value of exchanged equity awards and warrants attributed to purchase price	—		—		43,972		—		—		—		43,972
Cash dividends declared on common stock - $0.60 per share		—		—		—		—		—		(94,471)		(94,471)
Cash dividends declared on common stock - $0.90 per share																Cash dividends declared on common stock - $0.90 per share	—		—		—		—		—		(138,947)		(138,947)
Cash dividends declared on preferred stock⁽³⁾	Cash dividends declared on preferred stock⁽³⁾	—		—		—		—		—		(6,300)		(6,300)		Cash dividends declared on preferred stock(3)	—		—		—		—		—		(14,591)		(14,591)
Issuance of Series E Preferred Stock, net of issuance costs																Issuance of Series E Preferred Stock, net of issuance costs	341,410		—		—		—		—		—		341,410
Repurchases of common stock including costs to repurchase	Repurchases of common stock including costs to repurchase	—		—		—		(345,170)		—		—		(345,170)		Repurchases of common stock including costs to repurchase	—		—		—		(688,860)		—		—		(688,860)
Restricted share unit vesting and taxes paid related to net share settlement	Restricted share unit vesting and taxes paid related to net share settlement	—		285		(8,928)		—		—		—		(8,643)		Restricted share unit vesting and taxes paid related to net share settlement	—		294		(8,709)		—		—		(326)		(8,741)
Stock options/warrants exercised, net	Stock options/warrants exercised, net	—		452		7,815		269		—		—		8,536		Stock options/warrants exercised, net	—		564		10,598		0		—		—		11,162
Warrants exercised with net settlement and common stock reissued																Warrants exercised with net settlement and common stock reissued	—		—		(8,763)		8,779		—		(16)		0
Share-based compensation expense	Share-based compensation expense	—		—		16,225		—		—		—		16,225		Share-based compensation expense	—		—		21,396		—		—		—		21,396
Balance at June 30, 2019		$	195,140	$	166,080	$	3,801,748	$	(344,901)	$	49,289	$	886,460	$	4,753,816
Balance at September 30, 2019																Balance at September 30, 2019	$	536,550	$	166,201	$	3,801,158	$	(680,081)	$	75,933	$	969,077	$	4,868,838

⁽¹⁾For additional information, see "Part I - Item 1. Financial Statements and Supplementary Data - Note 1 - Basis of Presentation" in this Report.

⁽²⁾For the three months ended ~~June~~September 30, 2020, dividends per share were $0.39 and $0.37 for Series D and Series E Preferred Stock, respectively. For the three months ended ~~June~~September 30, 2019, dividends per share were $0.39 and $0.37 for Series D and Series E Preferred ~~Stock.~~Stock, respectively.

⁽³⁾For the ~~six~~nine months ended ~~June~~September 30, 2020, dividends per share were ~~$0.78~~$1.17 and ~~$0.74~~$1.11 for Series D and Series E Preferred Stock, respectively. For the ~~six~~nine months ended ~~June~~September 30, 2019, dividends per share were ~~$0.78~~$1.17 and $0.37 for Series D and Series E Preferred ~~Stock.~~Stock, respectively.

See accompanying notes to unaudited interim consolidated financial statements.

SYNOVUS FINANCIAL CORP.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

Six Months Ended June 30,
(in thousands) 2020 2019
Operating Activities
Net income $ 131,712 $ 276,370
Adjustments to reconcile net income to net cash (used) provided by operating activities:
Provision for credit losses 300,573 35,688
Depreciation, amortization, and accretion, net 49,921 11,446
Deferred income tax (benefit) expense (54,741) 27,539
Originations of loans held for sale (1,806,895) (325,109)
Proceeds from sales of loans held for sale 1,045,342 287,648
Gain on sales of loans held for sale, net (25,785) (8,286)
Increase in other assets⁽¹⁾
(1,631,678) (22,191)
Increase (decrease) in other liabilities⁽¹⁾
1,175,881 (45,265)
Investment securities (gains) losses, net (78,144) 1,771
Loss on early extinguishment of debt 1,904 —
Share-based compensation expense 8,920 16,225
Net cash (used in) provided by operating activities (882,990) 255,836
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 sale 930,004 444,865
Proceeds from sales of investment securities available for sale 2,682,861 1,746,673
Purchases of investment securities available for sale (3,890,074) (2,717,383)
Proceeds from sales of equity securities 23,141 —
Proceeds from sales of loans 17,969 44,229
Proceeds from sales of other real estate and other assets 10,373 8,255
Net increase in loans (2,748,040) (970,160)
Net redemptions (purchases) of Federal Home Loan Bank stock 71,272 (43,775)
Net purchases of Federal Reserve Bank stock (454) (24,239)
Net (purchases) proceeds from settlement of bank-owned life insurance policies (249,273) 656
Net increase in premises and equipment (20,186) (31,767)
Net cash used in investing activities (3,172,407) (1,341,546)
Financing Activities
Net increase in deposits 5,788,189 337,552
Net increase in federal funds purchased and securities sold under repurchase agreements 59,886 6,650
Net change in other short-term borrowings (1,453,560) 680,000
Repayments and redemption of long-term debt (1,076,759) —
Proceeds from issuance of long-term debt, net 1,248,441 497,045
Dividends paid to common shareholders (92,741) (76,203)
Dividends paid to preferred shareholders (16,581) (6,300)
Stock options and warrants exercised 6,479 8,536
Repurchase of common stock (16,246) (345,170)
Taxes paid related to net share settlement of equity awards (7,404) (8,643)
Net cash provided by financing activities 4,439,704 1,093,467
Increase in cash and cash equivalents including restricted cash 384,307 7,757
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period 1,186,918 1,143,564
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period $ 1,571,225 $ 1,151,321
Supplemental Disclosures:
Income taxes paid $ 257 $ 62,913
Interest paid 194,687 221,475
Non-cash Activities
Common stock issued, treasury stock reissued, equity awards/warrants exchanged to acquire FCB — 1,625,688
Loans foreclosed and transferred to other real estate 2,013 7,586
Loans transferred to loans held for sale at fair value 933,353 47,927
Dividends declared on common stock during the period but paid after period-end 48,612 47,236
Dividends declared on preferred stock during the period but paid after period-end 5,141 —

⁽¹⁾Increase in other assets includes $1.29 billion for receivable on unsettled securities sales, and increase in other liabilities includes $923.0 million for amount due on unsettled securities purchases.


	Nine Months Ended September 30,
(in thousands)	2020		2019
Operating Activities
Net income	$	223,286	$	412,096
Adjustments to reconcile net income to net cash (used) provided by operating activities:
Provision for credit losses	343,956		63,250
Depreciation, amortization, and accretion, net	77,385		8,969
Deferred income tax (benefit) expense	(60,433)		42,594
Originations of loans held for sale	(2,221,302)		(603,086)
Proceeds from sales of loans held for sale	1,657,738		527,354
Gain on sales of loans held for sale, net	(50,001)		(15,453)
Increase in other assets	(397,220)		(135,448)
Increase in other liabilities	234,018		32,345
Investment securities (gains) losses, net	(76,594)		5,502
Goodwill impairment	44,877		0
Loss on early extinguishment of debt	2,057		4,592
Share-based compensation expense	13,873		21,396
Net cash (used in) provided by operating activities	(208,360)		364,111
Investing Activities
Net cash received in business combination, net of cash paid	0		201,100
Proceeds from maturities and principal collections of investment securities available for sale	1,567,889		780,538
Proceeds from sales of investment securities available for sale	3,932,368		2,456,137
Purchases of investment securities available for sale	(6,180,812)		(3,614,139)
Proceeds from sales of equity securities	23,141		0
Proceeds from sales of loans	1,293,366		71,530
Proceeds from sales of other real estate and other assets	18,204		15,859
Net increase in loans	(3,703,203)		(1,278,772)
Net redemptions (purchases) of Federal Home Loan Bank stock	96,772		(75,735)
Net purchases of Federal Reserve Bank stock	(454)		(45,856)
Net (purchases) proceeds from settlement of bank-owned life insurance policies	(248,023)		15,208
Net increase in premises and equipment	(22,786)		(40,195)
Net cash used in investing activities	(3,223,538)		(1,514,325)
Financing Activities
Net increase in deposits	6,259,108		(185,362)
Net increase in federal funds purchased and securities sold under repurchase agreements	36,655		(69,412)
Net change in other short-term borrowings	(1,353,560)		1,582,000
Repayments and redemption of long-term debt	(1,776,913)		(157,226)
Proceeds from issuance of long-term debt, net	1,248,441		497,045
Dividends paid to common shareholders	(141,353)		(123,446)
Dividends paid to preferred shareholders	(24,872)		(9,450)
Proceeds from issuance of Preferred stock	0		341,410
Stock options and warrants exercised	6,511		11,162
Repurchase of common stock	(16,246)		(688,860)
Taxes paid related to net share settlement of equity awards	(7,428)		(8,741)
Net cash provided by financing activities	4,230,343		1,189,120
Increase in cash and cash equivalents including restricted cash	798,445		38,906
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period	1,186,918		1,143,564
Cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period	$	1,985,363	$	1,182,470

Supplemental Disclosures:
Income taxes paid	$	68,253	$	88,480
Interest paid	268,046		350,388
Non-cash Activities
Common stock issued, treasury stock reissued, equity awards/warrants exchanged to acquire FCB	0		1,625,688
Loans foreclosed and transferred to other real estate	2,163		14,084
Loans transferred to loans held for sale at fair value	46,178		0
Dividends declared on common stock during the period but paid after period-end	48,614		44,476
Dividends declared on preferred stock during the period but paid after period-end	5,141		5,141

See accompanying notes to unaudited interim consolidated financial statements.

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 Company provides commercial and retail banking in addition to a full suite of specialized products and services including private banking, treasury management, wealth management, premium finance, asset-based lending, structured lending, and international banking. Synovus Bank is positioned in markets in the Southeast, with ~~293~~292 branches and 389 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' 2019 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 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 ACL; estimates of fair value, including goodwill impairment assessment; income taxes; and contingent liabilities.

Non-TDR Modifications due to COVID-19

Coronavirus Aid, Relief, and Economic Security Act (CARES Act)

The U.S. has been operating under a presidentially declared state of emergency since March 13, 2020 ("National Emergency"). On March 27, 2020, the CARES Act was signed into law. Among other emergency measures aimed to lessen the impact of COVID-19, the CARES Act creates a forbearance program for federally backed mortgage loans, protects borrowers from negative credit reporting due to loan accommodations related to the National Emergency, and provides financial institutions the option to temporarily suspend certain requirements under GAAP related to TDRs for a limited period of time to account for the effects of COVID-19.

evaluation of facts and circumstances, the CARES Act was elected for certain loan modifications that met the criteria of section 4013 of the CARES Act. The deferred payments along with interest accrued during the deferral period are generally due and payable on the maturity date of the ~~existing~~existing loan. Based on the terms of the deferral relief program which did not provide for forgiveness of interest, Synovus has recognized interest income on loans during the deferral period.

U.S. Small Business Administration Paycheck Protection Program (PPP)

Synovus is participating in the Paycheck Protection Program, ~~(PPP),~~ which is a loan program that originated from the CARES Act and was subsequently expanded by the Paycheck Protection Program and Health Care Enhancement Act ("PPPHCEA Act"). The PPP is designed to provide U.S. small businesses with cash-flow assistance through loans guaranteed by the SBA. If the borrower meets certain criteria and uses the proceeds toward certain eligible expenses in accordance with the requirements of the PPP, the borrower's obligation to repay the loan can be forgiven up to the full principal amount of the loan and any accrued interest. Upon borrower forgiveness, the SBA pays the Company for the principal and accrued interest owed on the loan. If the full principal of the loan is not forgiven, the loan will operate according to the original loan terms with the SBA guaranty remaining. ~~As of June 30, 2020,~~Under this program, Synovus ~~had~~ provided nearly $2.9 billion in funding to close to 19,000 ~~customers through the PPP.~~customers. The average PPP loan was approximately $150 thousand, and the customers that received those loans employ over 335 thousand individuals. As compensation for originating the loans, the Company receives lender processing fees from the SBA ranging from 1% to 5%, based on the size of the loan, which are deferred and will bebe amortized over the loans' contractual lives and recognized as interest income. Upon forgiveness of a loan by the SBA, any unrecognized net deferred fees related to the loan will be recognized as interest income in ~~that period.~~

the period the SBA forgiveness payment is received.

Recently Adopted Accounting Standards

ASU 2016-13, Financial Instruments-Credit Losses (ASC 326). On January 1, 2020, Synovus adopted ASU 2016-13 (and all subsequent ASUs on this topic), which replaces the existing incurred loss impairment guidance with an expected credit loss methodology (referred to as CECL). CECL requires management’s estimate of credit losses over the full remaining expected life of loans and other financial instruments and for Synovus, applies to loans, unfunded loan commitments, accrued interest receivable, and available for sale debt securities. Upon adoption, Synovus applied the modified retrospective approach and recorded an after-tax cumulative-effect adjustment to beginning retained earnings for non-PCD assets (formerly non-PCI assets) and unfunded commitments of $35.7 million. Additionally, an initial estimate of expected credit losses on PCD assets (formerly PCI or ASC 310-30) was recognized with an offset to the cost basis of the related loans of $62.2 million. As permitted by transition guidance, Synovus did not reassess whether PCI assets met the criteria of PCD assets as of the adoption date. The remaining non-credit discount (based on the adjusted amortized cost basis) will be accreted into interest income. Results for reporting periods after adoption are presented under ASC 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP.

The following table illustrates the impact of ASC 326 adoption:


	As of January 1, 2020
in thousands	Pre-ASC 326 Adoption		Impact of ASC 326 Adoption		As 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 Adoption		Impact of ASC 326 Adoption		As 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,~~August 26, 2020, the federal banking regulators issued a final rule (following an interim final rule ~~updating CECL transition options, which~~issued on March 27, 2020) that allows electing banking organizations that adopt CECL during 2020 to ~~delay an estimate of~~mitigate the ~~effect~~estimated effects of CECL on regulatory capital for ~~up to~~ two years, followed by a three-year phase-in transition period. ~~June 30, 2020 regulatory~~Regulatory capital ratios in 2020 reflect Synovus' election of the five-year transition provision.

In conjunction with the adoption of ASC 326, the following are additional disclosures about our significant accounting policies related to CECL.

Investment Securities Available for Sale

Investment securities available for sale are carried at fair value with unrealized gains and losses, net of the related tax effect, excluded from earnings and reported as a separate component of shareholders' equity within accumulated other comprehensive income (loss) until realized.

For investment securities available for sale in an unrealized loss position, if Synovus has an intention to sell the security, or it is more likely than not that the security will be required to be sold prior to recovery, the security is written down to its fair value. The write down is charged against the ACL with any additional impairment recorded in earnings. If the aforementioned criteria is not met, Synovus performs a quarterly assessment of its available for sale debt securities to determine if the decline in fair value of a security below its amortized cost is related to credit losses or other factors. Management considers the extent to which fair value is less than amortized cost, the issuer of the security, any changes to the rating of the security by a rating agency, and adverse conditions specifically related to the security, among other factors. In assessing whether credit related impairment exists, the present value of cash flows expected to be collected from the security is compared to the security's amortized cost. If the present value of cash flows expected to be collected is less than the security's amortized cost basis, the difference is attributable to credit losses. For such differences, Synovus records an ACL with an offset to provision for credit losses expense. Synovus limits the ACL recorded to the amount the security's fair value is less than the amortized cost basis. Impairment losses related to other factors are recognized in other comprehensive income (loss).

Accrued interest on available for sale debt securities is excluded from the ACL determination and is recognized within other assets on the consolidated balance sheets. Available-for-sale debt securities are placed on non-accrual status when we no longer expect to receive all contractual amounts due, which is generally at 90 days past due. Accrued interest receivable is reversed against interest income when a security is placed on non-accrual status. Accordingly, we do not recognize an allowance for credit loss against accrued interest receivable.

Loans Held for Investment and Interest Income

Loans the Company has the intent and ability to hold for the foreseeable future are reported at principal amounts outstanding less amounts charged off, net of deferred fees and costs, and purchase premiums/discounts. Interest income, net deferred fees, and purchase premium/discount amortization/accretion on loans, are recognized on a level yield basis.

Allowance for Credit Losses for Loans Held for Investment (ALL)

The allowance for credit losses on loans held for investment are included in the ALL and represent management's estimate of credit losses expected over the life of the loans included in Synovus' existing loans held for investment portfolio. Changes to the allowance are recorded through a provision for credit losses and reduced by loans charged-off, net of recoveries. Determining the appropriateness of the allowance is complex and requires judgment by management about the effect of matters that are inherently uncertain.

Accrued but uncollected interest is recorded in other assets on the consolidated balance sheets. In general, the Company does not record an ACL for accrued interest receivables as allowable per ASC 326-20-30-5A as Synovus' non-accrual policies result in the timely write-off of accrued but uncollected interest.

Credit loss measurement

Synovus' loan loss estimation process includes procedures to appropriately consider the unique characteristics of its loan portfolio segments (C&I, CRE and consumer). These segments are further disaggregated into loan classes, the level at which credit quality is assessed and monitored (as described in the subsequent sections).

The ALL is measured on a collective (pool) basis when similar risk characteristics exist. Loans are grouped based upon the nature of the loan type and are further segregated based upon the individual loan risk ratings. Credit loss assumptions are primarily estimated using a DCF model applied to the aforementioned loan groupings. This model calculates an expected life-of-loan loss percentage for each loan category by considering the forecasted PD, which is the probability that a borrower will default, adjusted for relevant forecasted macroeconomic factors, and LGD, which is the estimate of the amount of net loss in the event of default.

Expected credit losses are estimated over the contractual term of the loan, adjusted for expected prepayments and curtailments when appropriate. Management's determination of the contract term excludes expected extensions, renewals, and

modifications unless either of the following applies: there is a reasonable expectation at the reporting date that a TDR will be executed with an individual borrower, or an extension or renewal option is included in the contract at the reporting date that is not unconditionally cancellable by Synovus.

To the extent the lives of the loans in the portfolio extend beyond the period for which a reasonable and supportable forecast can be made (which is one year for Synovus), the Company reverts, on a straight-line basis back to the historical rates over a one year period.

Life-of-loan loss percentages may also be adjusted, as necessary, for certain quantitative and qualitative factors that in management's judgment are necessary to reflect losses expected in the portfolio. These adjustments address inherent limitations in the quantitative model including uncertainty and limitations, among others.

The above reflects the ALL estimation process for most commercial and consumer sub-pools. In some cases, Synovus may apply other acceptable loss rate models to smaller subpools.

Loans that do not share risk characteristics are individually evaluated on a loan by loan basis with specific reserves, if any, recorded as appropriate. Specific reserves are determined based on two methods: discounted cash flow based upon the loan's contractual effective interest rate or at the fair value of the collateral, less costs to sell if the loan is collateral-dependent.

For individually evaluated loans, under the DCF method, resulting expected credit losses are recorded as a specific reserve with a charge-off for any portion of the expected credit loss that is determined not to be recoverable. The reserve is reassessed each quarter and adjusted as appropriate based on changes in estimated cash flows. Additionally, where guarantors are determined to be a source of repayment, an assessment of the guarantee is required. This guarantee assessment would include, but not be limited to, factors such as type and feature of the guarantee, consideration for the guarantor's financial strength and capacity to service the loan in combination with the guarantor's other financial obligations as well as the guarantor's willingness to assist in servicing the loan.

For individually evaluated loans, if the loan is collateral-dependent, then the fair value of 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 credit losses. Non-credit discounts or premiums are accreted or amortized, respectively into interest income using the interest method.

Loans formerly accounted for as purchased credit-impaired in accordance with ASC 310-30 were automatically transitioned to PCD classification. The Company did not maintain ASC 310-30 pools. PCD loans were integrated into existing pool structures based upon the nature of the loan type and are further segregated based upon the individual loan risk ratings as noted above.

The accounting treatment for purchased loans classified as non-PCD is the same as loans held for investment as detailed in the above section.

Allowance for Credit Losses on Off-balance-sheet Credit Exposures

Synovus maintains a separate ACL for off-balance-sheet credit exposures, including unfunded loan commitments, unless the associated obligation is unconditionally cancellable by the Company. This allowance is included in other liabilities on the consolidated balance sheets with offsetting expense recognized as a component of the 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 using the estimated loss rates on loans held for investment.

Recently Issued Accounting Standards Not Yet Adopted

ASU 2020-04, Reference Rate Reform: Facilitation of the Effects of Reference Rate Reform on Financial Reporting (ASC 848). Facilitation of the Effects of Reference Rate Reform on Financial Reporting, provides temporary, optional guidance to ease the potential burden in accounting for, or recognizing the effects of, the transition away from 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 a continuation of that contract rather than as the creation of a new one for contracts, including loans, debt, leases, and other arrangements, that meet specific criteria.

•When updating its hedging strategies in response to reference rate reform, an entity would be allowed to preserve its hedge accounting.

The guidance is applicable only to contracts or hedge accounting relationships that reference LIBOR or another reference rate expected to be discontinued. Because the guidance is meant to help entities through the transition period, it will be in effect for a limited time and will not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 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 March 12, 2020 through December 31, 2022. We are evaluating the impact of adopting the new guidance on the consolidated financial statements on an ongoing basis with no material expected impact at this time.

ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables – Nonrefundable Fees and Other Costs. The guidance in this ASU pertains to the shortened amortization period for certain purchased callable debt securities held at a premium, which premium is amortized to the earliest call date in accordance with ASC 310-20-25-33, and clarifies that an entity should reevaluate whether a callable debt security is within the scope of paragraph 310-20-25-33 for each reporting period. The amendments in this ASU are effective for fiscal years beginning after December 15, 2020. Early adoption is not permitted. We are evaluating the impact of adopting the new guidance on the consolidated financial statements.

Note 2 - Acquisitions

Acquisition of FCB Financial Holdings, Inc.

Effective January 1, 2019, ~~(the "Acquisition Date"),~~ Synovus completed its acquisition of all of the outstanding stock of FCB, a bank holding company based in Weston, Florida, for total consideration of $1.63 billion. Effective January 1, 2019, FCB's wholly-owned banking subsidiary, Florida Community Bank, National Association, merged into Synovus Bank. The acquisition of FCB expanded Synovus' presence in Florida and the Southeast, adding $9.29 billion in loans and $10.93 billion in deposits on the Acquisition Date. The acquisition of FCB constituted a business combination and was 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. The results of FCB's operations are included in Synovus' consolidated financial statements since the Acquisition Date.

During 2019, in connection with the FCB acquisition, Synovus incurred merger-related expense totaling ~~$7.4~~$0.4 million and ~~$57.1~~$57.5 million for the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively, primarily related to employment compensation agreements, severance, professional services, and contract termination charges.

See "Part II - Item 8. Financial Statements and Supplementary Data - Note 2 - Acquisitions" to the consolidated financial statements of Synovus' 2019 Form 10-K for 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 period not to extend beyond June 30, 2021, 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 the three months ended ~~June~~September 30, 2020, Synovus did not record any adjustments to the earnout liability and during the nine months ended September 30, 2020, Synovus recorded a $4.9 million increase to the earnout liability driven by increased earnings and earnings projections of Global One. The total fair value of the earnout liability at ~~June~~September 30, 2020 was $15.9 million.

1211

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 ~~June~~September 30, 2020 and December 31, 2019 are summarized below.


		June 30, 2020															September 30, 2020
(in thousands)	(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. Treasury securities	U.S. Treasury securities	$	19,921	$	—	$	—	$	19,921	U.S. Treasury securities	$	20,254	$	0	$	0	$	20,254
U.S. Government agency securities	U.S. Government agency securities	168,918		2,504		(56)		171,366		U.S. Government agency securities	153,984		3,056		(426)		156,614
Mortgage-backed securities issued by U.S. Government agencies	Mortgage-backed securities issued by U.S. Government agencies	860,773		3,721		(66)		864,428		Mortgage-backed securities issued by U.S. Government agencies	1,132,816		2,655		(6,079)		1,129,392
Mortgage-backed securities issued by U.S. Government sponsored enterprises	Mortgage-backed securities issued by U.S. Government sponsored enterprises	4,293,563		150,689		—		4,444,252		Mortgage-backed securities issued by U.S. Government sponsored enterprises	4,402,051		138,611		(276)		4,540,386
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	1,191,630		21,597		(146)		1,213,081		Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	1,331,011		18,495		(4,222)		1,345,284
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises	Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises	342,974		22,335		(56)		365,253		Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises	334,463		19,694		0		354,157
State and municipal securities	State and municipal securities	1,003		4		—		1,007		State and municipal securities	500		1		0		501
Corporate debt securities and other debt securities	Corporate debt securities and other debt securities	119,573		40		(1,428)		118,185		Corporate debt securities and other debt securities	20,186		141		(390)		19,937
Total investment securities available for sale	Total investment securities available for sale	$	6,998,355	$	200,890	$	(1,752)	$	7,197,493	Total investment securities available for sale	$	7,395,265	$	182,653	$	(11,393)	$	7,566,525

		December 31, 2019															December 31, 2019
(in thousands)	(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value		(in thousands)	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value
U.S. Treasury securities	U.S. Treasury securities	$	19,855	$	—	$	—	$	19,855	U.S. Treasury securities	$	19,855	$	0	$	0	$	19,855
U.S. Government agency securities	U.S. Government agency securities	35,499		1,042		—		36,541		U.S. Government agency securities	35,499		1,042		0		36,541
Mortgage-backed securities issued by U.S. Government agencies	Mortgage-backed securities issued by U.S. Government agencies	56,328		560		(72)		56,816		Mortgage-backed securities issued by U.S. Government agencies	56,328		560		(72)		56,816
Mortgage-backed securities issued by U.S. Government sponsored enterprises	Mortgage-backed securities issued by U.S. Government sponsored enterprises	5,079,396		103,495		(2,076)		5,180,815		Mortgage-backed securities issued by U.S. Government sponsored enterprises	5,079,396		103,495		(2,076)		5,180,815
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	629,706		7,349		(204)		636,851		Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	629,706		7,349		(204)		636,851
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises	Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises	357,291		14,301		—		371,592		Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises	357,291		14,301		0		371,592
State and municipal securities	State and municipal securities	2,069		6		—		2,075		State and municipal securities	2,069		6		0		2,075
Asset-backed securities	Asset-backed securities	323,237		4,315		(152)		327,400		Asset-backed securities	323,237		4,315		(152)		327,400
Corporate debt securities and other debt securities	Corporate debt securities and other debt securities	144,410		2,317		(2)		146,725		Corporate debt securities and other debt securities	144,410		2,317		(2)		146,725
Total investment securities available for sale	Total investment securities available for sale	$	6,647,791	$	133,385	$	(2,506)	$	6,778,670	Total investment securities available for sale	$	6,647,791	$	133,385	$	(2,506)	$	6,778,670

At ~~June~~September 30, 2020 and December 31, 2019, investment securities with a carrying value of ~~$2.49~~$2.34 billion and $1.71 billion, respectively, were pledged to secure certain deposits and other liabilities, as required by law or contractual agreements.

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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 individual securities have been in a continuous unrealized loss position, at ~~June~~September 30, 2020 and December 31, 2019 are presented below.


		June 30, 2020																							September 30, 2020
		Less than 12 Months						12 Months of Longer								Total					Less than 12 Months				12 Months of Longer		Total
(in thousands)	(in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		(in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
U.S. Government agency securities	U.S. Government agency securities	$	47,091	$	(56)	$	—	$	—	$	47,091	$	(56)	U.S. Government agency securities	$	48,921	$	(426)	$	0	$	0	$	48,921	$	(426)
Mortgage-backed securities issued by U.S. Government agencies	Mortgage-backed securities issued by U.S. Government agencies	25,126		(66)		—		—		25,126		(66)		Mortgage-backed securities issued by U.S. Government agencies	800,908		(6,079)		0		0		800,908		(6,079)
Mortgage-backed securities issued by U.S. Government sponsored enterprises														Mortgage-backed securities issued by U.S. Government sponsored enterprises	180,899		(276)		0		0		180,899		(276)
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	142,634		(146)		—		—		142,634		(146)		Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	609,208		(4,222)		0		0		609,208		(4,222)
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises		33,285		(56)		—		—		33,285		(56)
Corporate debt securities and other debt securities	Corporate debt securities and other debt securities	42,782		(1,428)		—		—		42,782		(1,428)		Corporate debt securities and other debt securities	11,115		(390)		0		0		11,115		(390)
Total	Total	$	290,918	$	(1,752)	$	—	$	—	$	290,918	$	(1,752)	Total	$	1,651,051	$	(11,393)	$	0	$	0	$	1,651,051	$	(11,393)

		December 31, 2019																							December 31, 2019
		Less than 12 Months						12 Months of Longer								Total					Less than 12 Months				12 Months of Longer		Total
(in thousands)	(in thousands)	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		(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	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 agencies	$	19,543	$	(70)	$	355	$	(2)	$	19,898	$	(72)
Mortgage-backed securities issued by U.S. Government sponsored enterprises	Mortgage-backed securities issued by U.S. Government sponsored enterprises	768,040		(2,076)		—		—		768,040		(2,076)		Mortgage-backed securities issued by U.S. Government sponsored enterprises	768,040		(2,076)		0		0		768,040		(2,076)
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	57,670		(204)		—		—		57,670		(204)		Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	57,670		(204)		0		0		57,670		(204)
Asset-backed securities	Asset-backed securities	37,156		(116)		4,954		(36)		42,110		(152)		Asset-backed securities	37,156		(116)		4,954		(36)		42,110		(152)
Corporate debt securities and other debt securities	Corporate debt securities and other debt securities	9,505		(2)		—		—		9,505		(2)		Corporate debt securities and other debt securities	9,505		(2)		0		0		9,505		(2)
Total	Total	$	891,914	$	(2,468)	$	5,309	$	(38)	$	897,223	$	(2,506)	Total	$	891,914	$	(2,468)	$	5,309	$	(38)	$	897,223	$	(2,506)

As of ~~June~~September 30, 2020, Synovus had 1228 investment securities in a loss position for less than twelve months and 0 investment securities in a loss position for twelve months or longer. At December 31, 2019, Synovus had 26 investment securities in a loss position for less than twelve months and 5 investment securities in a loss position 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. During the latter part of the second quarter of 2020, as part of an overall strategic repositioning of the investment securities portfolio, Synovus realized net gains of $69.4 million from sales of investment securities, including losses of $5.7 million related to the sale of Synovus' remaining portfolio of asset-backed securities.

~~Synovus has evaluated~~At September 30, 2020, 0 ACL was established for investment securities. Substantially all of the unrealized losses on the securities ~~that are~~portfolio were the result of changes in ~~an unrealized loss position as of June 30, 2020~~ ~~and determined~~market interest rates compared to the ~~following:~~

~~Corporate debt~~date the securities ~~- Synovus considers~~were acquired rather than the credit quality of ~~each issuer and whether payments of principal and interest are current. None of~~ the ~~investment securities described above are past due as of June 30, 2020. At June 30, 2020, these~~issuers or underlying loans.

1413

securities are rated investment grade and the decline in fair value was largely driven by liquidity and wider market spreads. As such, no ACL was recorded during the period and unrealized losses were recognized in other comprehensive income, net of tax.

The amortized cost and fair value by contractual maturity of investment securities available for sale at ~~June~~September 30, 2020 are shown below. The expected life of MBSs 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, MBSs and CMOs, which are not due at a single maturity date, have been classified based on the final contractual maturity date.

Distribution of Maturities at June 30, 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 $ 19,921 $ — $ — $ — $ 19,921
U.S. Government agency securities 568 27,714 140,636 — 168,918
Mortgage-backed securities issued by U.S. Government agencies — 1,398 715 858,660 860,773
Mortgage-backed securities issued by U.S. Government sponsored enterprises — 410 83,168 4,209,985 4,293,563
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises — — 273 1,191,357 1,191,630
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises — 109,753 116,092 117,129 342,974
State and municipal securities — — 500 503 1,003
Corporate debt securities and other debt securities 24,049 84,869 8,655 2,000 119,573
Total amortized cost $ 44,538 $ 224,144 $ 350,039 $ 6,379,634 $ 6,998,355
Fair Value
U.S. Treasury securities $ 19,921 $ — $ — $ — $ 19,921
U.S. Government agency securities 571 27,770 143,025 — 171,366
Mortgage-backed securities issued by U.S. Government agencies — 1,442 743 862,243 864,428
Mortgage-backed securities issued by U.S. Government sponsored enterprises — 423 89,415 4,354,414 4,444,252
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises — — 285 1,212,796 1,213,081
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises — 116,639 125,274 123,340 365,253
State and municipal securities — — 501 506 1,007
Corporate debt securities and other debt securities 23,967 83,922 8,634 1,662 118,185
Total fair value $ 44,459 $ 230,196 $ 367,877 $ 6,554,961 $ 7,197,493


	Distribution of Maturities at September 30, 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	$	20,254	$	0	$	0	$	0	$	20,254
U.S. Government agency securities	430		26,432		127,122		0		153,984
Mortgage-backed securities issued by U.S. Government agencies	0		1,585		311		1,130,920		1,132,816
Mortgage-backed securities issued by U.S. Government sponsored enterprises	0		310		73,420		4,328,321		4,402,051
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	0		0		248		1,330,763		1,331,011
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises	0		109,731		112,089		112,643		334,463
State and municipal securities	0		0		0		500		500
Corporate debt securities and other debt securities	0		9,505		8,681		2,000		20,186
Total amortized cost	$	20,684	$	147,563	$	321,871	$	6,905,147	$	7,395,265

Fair Value
U.S. Treasury securities	$	20,254	$	0	$	0	$	0	$	20,254
U.S. Government agency securities	438		26,243		129,933		0		156,614
Mortgage-backed securities issued by U.S. Government agencies	0		1,641		324		1,127,427		1,129,392
Mortgage-backed securities issued by U.S. Government sponsored enterprises	0		319		76,148		4,463,919		4,540,386
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	0		0		259		1,345,025		1,345,284
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises	0		116,705		118,468		118,984		354,157
State and municipal securities	0		0		0		501		501
Corporate debt securities and other debt securities	0		9,315		8,822		1,800		19,937
Total fair value	$	20,692	$	154,223	$	333,954	$	7,057,656	$	7,566,525

Proceeds from sales, gross gains, and gross losses on sales of securities available for sale for the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019 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 June 30,						Six Months Ended June 30,							Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	(in thousands)	2020		2019		2020		2019		(in thousands)	2020		2019		2020		2019
Proceeds from sales of investment securities available for sale	Proceeds from sales of investment securities available for sale	$	2,269,682	$	104,434	$	2,682,861	$	1,746,673	Proceeds from sales of investment securities available for sale	$	1,249,507	$	709,464	$	3,932,368	$	2,456,137
Gross realized gains on sales	Gross realized gains on sales	75,105		—		83,839		9,129		Gross realized gains on sales	0		140		83,840		9,270
Gross realized losses on sales⁽¹⁾	Gross realized losses on sales⁽¹⁾	(5,696)		(1,845)		(5,695)		(10,900)		Gross realized losses on sales(1)	(1,550)		(3,871)		(7,246)		(14,772)
Investment securities gains, net		$	69,409	$	(1,845)	$	78,144	$	(1,771)
Investment securities gains (losses), net										Investment securities gains (losses), net	$	(1,550)	$	(3,731)	$	76,594	$	(5,502)

⁽¹⁾Losses recognized ~~during~~during 2020 ~~related~~primarily relate to the sale of Synovus' remaining portfolio of asset-backed securities during the second quarter of ~~2020~~2020. Additionally, losses inclu.de an $802 thousand third quarter 2020 settlement adjustment to the gain recognized on second quarter 2020 securities sales.

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Note 4 - Loans and Allowance for Loan Losses

Aging and Non-Accrual Analysis

The following tables provide a summary of current, accruing past due, and non-accrual loans by portfolio class as of ~~June~~September 30, 2020 and December 31, 2019.


Current, Accruing Past Due, and Non-accrual Loans
		June 30, 2020																												September 30, 2020
(in thousands)	(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			(in thousands)	Current		Accruing 30-89 Days Past Due		Accruing 90 Days or Greater Past Due		Total Accruing Past Due		Non-accrual with an ALL		Non-accrual without an ALL		Total
Commercial, financial and agricultural	Commercial, financial and agricultural	$	13,041,583	$	9,515	$	2,598	$	12,113	$	67,535	$	15,465	$	13,136,696		Commercial, financial and agricultural	$	13,009,877	$	13,967	$	829	$	14,796	$	67,415	$	27,950	$	13,120,038
Owner-occupied	Owner-occupied	6,779,043		1,894		1,038		2,932		9,206		10,399		6,801,580			Owner-occupied	6,869,346		4,131		375		4,506		10,623		9,638		6,894,113
Total commercial and industrial	Total commercial and industrial	19,820,626		11,409		3,636		15,045		76,741		25,864		19,938,276			Total commercial and industrial	19,879,223		18,098		1,204		19,302		78,038		37,588		20,014,151
Investment properties	Investment properties	9,444,615		829		118		947		1,638		—		9,447,200			Investment properties	9,628,029		5,620		538		6,158		28,260		0		9,662,447
1-4 family properties	1-4 family properties	689,660		1,507		1,204		2,711		4,437		—		696,808			1-4 family properties	649,225		2,092		350		2,442		2,135		1,236		655,038
Land and development	Land and development	680,445		469		46		515		2,302		265		683,527			Land and development	645,148		583		268		851		2,126		265		648,390
Total commercial real estate	Total commercial real estate	10,814,720		2,805		1,368		4,173		8,377		265		10,827,535			Total commercial real estate	10,922,402		8,295		1,156		9,451		32,521		1,501		10,965,875
Consumer mortgages	Consumer mortgages	5,786,762		7,176		—		7,176		17,086		352		5,811,376			Consumer mortgages	5,643,745		6,475		872		7,347		7,433		0		5,658,525
Home equity lines	Home equity lines	1,692,542		3,495		27		3,522		14,200		—		1,710,264			Home equity lines	1,601,705		3,176		29		3,205		10,297		0		1,615,207
Credit cards	Credit cards	243,333		4,395		2,720		7,115		—		—		250,448			Credit cards	259,262		1,894		3,673		5,567		0		0		264,829
Other consumer loans	Other consumer loans	1,460,672		8,719		640		9,359		4,552		—		1,474,583			Other consumer loans	1,116,334		11,866		578		12,444		1,459		0		1,130,237
Total consumer	Total consumer	9,183,309		23,785		3,387		27,172		35,838		352		9,246,671			Total consumer	8,621,046		23,411		5,152		28,563		19,189		0		8,668,798
Total loans	Total loans	$	39,818,655	$	37,999	$	8,391	$	46,390	$	120,956	$	26,481	$	40,012,482	(2)	Total loans	$	39,422,671	$	49,804	$	7,512	$	57,316	$	129,748	$	39,089	$	39,648,824	(1)


		December 31, 2019																												December 31, 2019
(in thousands)	(in thousands)	Current		Accruing 30-89 Days Past Due		Accruing 90 Days or Greater Past Due		Total Accruing Past Due		Non-accrual		ASC 310-30 Loans⁽³⁾		Total			(in thousands)	Current		Accruing 30-89 Days Past Due		Accruing 90 Days or Greater Past Due		Total Accruing Past Due		Non-accrual		ASC 310-30 Loans(2)		Total
Commercial, financial and agricultural	Commercial, financial and agricultural	$	9,124,285	$	38,916	$	1,206	$	40,122	$	56,017	$	1,019,135	$	10,239,559		Commercial, financial and agricultural	$	9,124,285	$	38,916	$	1,206	$	40,122	$	56,017	$	1,019,135	$	10,239,559
Owner-occupied	Owner-occupied	5,691,095		5,164		576		5,740		9,780		823,196		6,529,811			Owner-occupied	5,691,095		5,164		576		5,740		9,780		823,196		6,529,811
Total commercial and industrial	Total commercial and industrial	14,815,380		44,080		1,782		45,862		65,797		1,842,331		16,769,370			Total commercial and industrial	14,815,380		44,080		1,782		45,862		65,797		1,842,331		16,769,370
Investment properties	Investment properties	7,264,794		1,344		—		1,344		1,581		1,736,608		9,004,327			Investment properties	7,264,794		1,344		0		1,344		1,581		1,736,608		9,004,327
1-4 family properties	1-4 family properties	733,984		2,073		304		2,377		2,253		41,401		780,015			1-4 family properties	733,984		2,073		304		2,377		2,253		41,401		780,015
Land and development	Land and development	629,363		808		—		808		1,110		78,161		709,442			Land and development	629,363		808		0		808		1,110		78,161		709,442
Total commercial real estate	Total commercial real estate	8,628,141		4,225		304		4,529		4,944		1,856,170		10,493,784			Total commercial real estate	8,628,141		4,225		304		4,529		4,944		1,856,170		10,493,784
Consumer mortgages	Consumer mortgages	3,681,553		4,223		730		4,953		11,369		1,848,493		5,546,368			Consumer mortgages	3,681,553		4,223		730		4,953		11,369		1,848,493		5,546,368
Home equity lines	Home equity lines	1,691,759		7,038		171		7,209		12,034		2,155		1,713,157			Home equity lines	1,691,759		7,038		171		7,209		12,034		2,155		1,713,157
Credit cards	Credit cards	263,065		3,076		2,700		5,776		—		—		268,841			Credit cards	263,065		3,076		2,700		5,776		0		0		268,841
Other consumer loans	Other consumer loans	2,363,101		18,688		616		19,304		5,704		8,185		2,396,294			Other consumer loans	2,363,101		18,688		616		19,304		5,704		8,185		2,396,294
Total consumer	Total consumer	7,999,478		33,025		4,217		37,242		29,107		1,858,833		9,924,660			Total consumer	7,999,478		33,025		4,217		37,242		29,107		1,858,833		9,924,660
Total loans	Total loans	$	31,442,999	$	81,330	$	6,303	$	87,633	$	99,848	$	5,557,334	$	37,187,814	(4)	Total loans	$	31,442,999	$	81,330	$	6,303	$	87,633	$	99,848	$	5,557,334	$	37,187,814	(3)

⁽¹⁾~~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 ~~$98.2~~$99.0 million.

⁽³⁾(2) Represents loans (at fair value) acquired from FCB accounted for under ASC 310-30, net of discount of $90.3 million and payments since Acquisition Date and also include $1.8 million in non-accrual loans, $9.6 million in accruing 90 days or greater past due loans, and $26.5 million in 30-89 days past due loans.

⁽⁴⁾(3) Total before net deferred fees and costs of $25.4 million.

Interest income on non-accrual loans outstanding that would have been recorded if the loans had been current and performing in accordance with their original terms was ~~$2.8~~$4.3 million and ~~$3.4~~$2.5 million for the three months ended ~~June~~September 30, 2020 and 2019, respectively, and ~~$4.9~~$9.2 million and ~~$5.5~~$8.0 million for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019,

respectively. Of the interest income recognized during the three months ended ~~June~~September 30, 2020 and 2019, cash-basis interest income was

~~$484 thousand~~ $1.3 million and ~~$996~~$363 thousand, respectively. Cash-basis interest income was ~~$1.4~~$2.7 million and ~~$1.6~~$2.0 million for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, respectively.

Pledged Loans

Loans with carrying values of ~~$15.42~~$15.29 billion and $12.11 billion, respectively, were pledged as collateral for borrowings and capacity at ~~June~~September 30, 2020 and December 31, 2019, respectively, to the FHLB and Federal Reserve Bank.

Portfolio Segment Risk Factors

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

Commercial and Industrial Loans - The C&I loan portfolio is comprised of general middle market and commercial banking clients across a diverse set of industries. In accordance with Synovus' lending policy, each loan undergoes a detailed underwriting process which incorporates uniform underwriting standards and oversight in proportion to the size and complexity of the lending relationship. These loans are secured by collateral such as business equipment, inventory, and real estate. Whether for real estate or non-real estate purpose, credit decisions on loans in the C&I portfolio are based on cash flow from the operations of the business as the primary source of repayment of the debt, with underlying real estate or other collateral being the secondary source of repayment. PPP loans, which are categorized as C&I loans, were $2.71 billion net of unearned fees at September 30, 2020 and are guaranteed by the SBA.

Commercial Real Estate Loans - CRE loans primarily consist of income-producing investment properties loans. Additionally, CRE loans include 1-4 family properties loans as well as land and development loans. Investment properties loans consist of construction and mortgage loans for income-producing properties and are primarily made to finance multi-family properties, hotels, office buildings, shopping centers, warehouses and other commercial development properties. 1-4 family properties loans include construction loans to homebuilders and commercial mortgage loans related to 1-4 family rental properties and are almost always secured by the underlying property being financed by such loans. These properties are primarily located in the markets served by Synovus. Land and development loans include commercial and residential development as well as land acquisition loans and are secured by land held for future development, typically in excess of one year. Properties securing these loans are substantially within markets served by Synovus, and loan terms generally include personal guarantees from the principals. Loans in this portfolio are underwritten based on the LTV of the collateral and the capacity of the guarantor(s).

Consumer Loans - The consumer loan portfolio consists of a wide variety of loan products offered through Synovus' banking network including first and second residential mortgages, HELOCs, and credit card loans, as well as home improvement loans, student, and personal loans from third-party lending partnerships. The majority of Synovus' consumer loans are consumer mortgages and HELOCs secured by first and second liens on residential real estate primarily located in the markets served by Synovus. The primary source of repayment for all consumer loans is generally the personal income of the borrower(s).

Credit Quality Indicators

The credit quality of the loan portfolio is reviewed and updated no less frequently than quarterly using the standard asset classification system utilized by the federal banking agencies. These classifications are divided into three ~~groups –~~groups: Not Criticized (Pass), Special Mention, and Classified or Adverse rating (Substandard, Doubtful, and Loss) and are defined as follows:

Pass - loans which are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell in a timely manner, of any underlying collateral.

Special Mention - loans which have potential weaknesses that deserve management's close attention. These loans are not adversely classified and do not expose an institution to sufficient risk to warrant an adverse classification.

Substandard - loans which are inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. Loans with this classification are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.

Doubtful - loans which have all the weaknesses inherent in loans classified as Substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently known facts, conditions, and values.

Loss - loans which are considered by management to be uncollectible and of such little value that their continuance on the institution's books as an asset, without establishment of a specific valuation allowance or charge-off, is not warranted. Synovus fully reserves for any loans rated as Loss.

In the following tables, consumer loans are generally assigned a risk grade similar to the classifications described above; however, upon reaching 90 days and 120 days past due, they are generally downgraded to Substandard and Loss, respectively, in accordance with the FFIEC Retail Credit Classification Policy. Additionally, in accordance with Interagency Supervisory

Guidance, the risk grade classifications of consumer loans (consumer mortgages and 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. ~~PPP loans, which are categorized as C&I loans, were $2.71 billion net of unearned fees at June 30, 2020 and are guaranteed by the SBA.~~

~~Commercial Real Estate Loans~~

CRE loans primarily consist of income-producing investment properties loans. Additionally, CRE loans include 1-4 family properties loans as well as land and development loans. Investment properties loans consist of construction and mortgage loans for income-producing properties and are primarily made to finance multi-family properties, hotels, office buildings, shopping centers, warehouses and other commercial development properties. 1-4 family properties loans include construction loans to homebuilders and commercial mortgage loans related to 1-4 family rental properties and are almost always secured by the underlying property being financed by such loans. These properties are primarily located in the markets served by Synovus. Land and development loans include commercial and residential development as well as land acquisition loans and are secured by land held for future development, typically in excess of one year. Properties securing these loans are substantially within markets served by Synovus, and loan terms generally include personal guarantees from the principals. Loans in this portfolio are underwritten based on the LTV of the collateral and the capacity of the guarantor(s).

~~Consumer Loans~~

The consumer loan portfolio consists of a wide variety of loan products offered through Synovus' banking network including first and second residential mortgages, HELOCs, and credit card loans, as well as home improvement loans, student, and personal loans from third-party lending partnerships. The majority of Synovus' consumer loans are consumer mortgages

and HELOCs secured by first and second liens on residential real estate primarily located in the markets served by Synovus. The primary source of repayment for all consumer loans is generally the personal income of the borrower(s).

~~The~~ following table summarizes each loan portfolio class by risk grade and origination year as of ~~June~~September 30, ~~2020.~~2020 as required under CECL.


Loan Portfolio by Risk Grade and Origination
		June 30, 2020																																			September 30, 2020
		Term Loans Amortized Cost Basis by Origination Year																								Revolving Loans							Term Loans Amortized Cost Basis by Origination Year						Revolving Loans
(in thousands)	(in thousands)	2020		2019		2018		2017		2016		Prior		Amortized Cost Basis		Converted to Term Loans		Total		(in thousands)	2020		2019		2018		2017		2016		Prior		Amortized Cost Basis		Converted to Term Loans		Total
Commercial, financial and agricultural	Commercial, financial and agricultural																			Commercial, financial and agricultural
Pass	Pass	$	3,740,787	$	1,597,917	$	1,036,299	$	708,156	$	612,390	$	892,294	$	4,122,798	$	77,917	$	12,788,558	Pass	$	4,056,896	$	1,429,402	$	974,892	$	667,989	$	566,178	$	815,006	$	4,049,741	$	60,299	$	12,620,403
Special Mention	Special Mention	7,352		7,740		19,208		31,223		3,910		14,110		61,580		2,820		147,943		Special Mention	49,283		39,929		21,599		33,376		8,404		7,986		63,455		506		224,538
Substandard⁽¹⁾	Substandard⁽¹⁾	4,674		11,579		15,952		20,561		11,095		37,335		65,753		1,016		167,965		Substandard(1)	27,247		12,646		14,879		36,007		12,373		40,342		102,364		516		246,374
Doubtful⁽²⁾	Doubtful⁽²⁾	—		3,721		19,778		186		915		91		6,810		729		32,230		Doubtful(2)	0		3,721		19,778		186		915		91		4,032		0		28,723
Total commercial, financial and agricultural	Total commercial, financial and agricultural	3,752,813		1,620,957		1,091,237		760,126		628,310		943,830		4,256,941		82,482		13,136,696		Total commercial, financial and agricultural	4,133,426		1,485,698		1,031,148		737,558		587,870		863,425		4,219,592		61,321		13,120,038
Owner-occupied	Owner-occupied																			Owner-occupied
Pass	Pass	688,033		1,216,238		1,250,906		1,082,002		669,572		1,419,946		308,851		—		6,635,548		Pass	953,513		1,189,845		1,212,541		1,032,744		643,841		1,338,513		328,656		0		6,699,653
Special Mention	Special Mention	2,700		6,233		13,990		6,776		3,219		7,362		—		—		40,280		Special Mention	3,029		19,004		18,746		11,767		3,604		7,278		0		0		63,428
Substandard⁽¹⁾	Substandard⁽¹⁾	1,101		11,466		35,225		30,457		6,749		31,093		23		—		116,114		Substandard(1)	1,788		14,686		36,319		29,794		6,521		32,286		0		0		121,394
Doubtful⁽²⁾	Doubtful⁽²⁾	—		—		9,638		—		—		—		—		—		9,638		Doubtful(2)	0		0		9,638		0		0		0		0		0		9,638
Total owner-occupied	Total owner-occupied	691,834		1,233,937		1,309,759		1,119,235		679,540		1,458,401		308,874		—		6,801,580		Total owner-occupied	958,330		1,223,535		1,277,244		1,074,305		653,966		1,378,077		328,656		0		6,894,113
Total commercial and industrial	Total commercial and industrial	4,444,647		2,854,894		2,400,996		1,879,361		1,307,850		2,402,231		4,565,815		82,482		19,938,276		Total commercial and industrial	5,091,756		2,709,233		2,308,392		1,811,863		1,241,836		2,241,502		4,548,248		61,321		20,014,151
Investment properties	Investment properties																			Investment properties
Pass	Pass	584,995		2,148,882		2,367,168		1,568,115		794,784		1,645,276		225,887		—		9,335,107		Pass	784,989		2,241,547		2,193,526		1,376,648		606,029		1,404,524		239,503		0		8,846,766
Special Mention	Special Mention	828		717		—		22,446		21,406		4,499		—		—		49,896		Special Mention	1,222		66,438		147,928		141,036		166,053		129,887		30,206		0		682,770
Substandard⁽¹⁾	Substandard⁽¹⁾	154		1,982		4,691		2,328		976		52,026		40		—		62,197		Substandard(1)	812		2,655		24,965		14,927		821		88,693		38		0		132,911
Total investment properties	Total investment properties	585,977		2,151,581		2,371,859		1,592,889		817,166		1,701,801		225,927		—		9,447,200		Total investment properties	787,023		2,310,640		2,366,419		1,532,611		772,903		1,623,104		269,747		0		9,662,447
1-4 family properties	1-4 family properties																			1-4 family properties
Pass	Pass	94,373		150,134		90,084		102,285		51,637		124,109		67,053		—		679,675		Pass	139,919		125,473		80,610		94,889		49,122		100,984		49,594		0		640,591
Special Mention	Special Mention	430		1,996		160		—		807		410		—		—		3,803		Special Mention	419		0		524		111		800		120		0		0		1,974
Substandard⁽¹⁾	Substandard⁽¹⁾	1,518		922		4,399		1,092		382		2,640		2,377		—		13,330		Substandard(1)	1,514		1,517		3,837		1,038		489		2,560		1,518		0		12,473
Total 1-4 family properties	Total 1-4 family properties	96,321		153,052		94,643		103,377		52,826		127,159		69,430		—		696,808		Total 1-4 family properties	141,852		126,990		84,971		96,038		50,411		103,664		51,112		0		655,038
Land and development
Pass		41,600		222,580		103,868		115,763		21,025		103,966		48,039		—		656,841
Special Mention		—		1,533		2,390		636		—		7,186		5,642		—		17,387
Substandard⁽¹⁾		1,101		1,274		2,864		630		1,190		2,240		—		—		9,299
Total land and development		42,701		225,387		109,122		117,029		22,215		113,392		53,681		—		683,527
Total commercial real estate		724,999		2,530,020		2,575,624		1,813,295		892,207		1,942,352		349,038		—		10,827,535

2017


Loan Portfolio by Risk Grade and Origination (continued)
		June 30, 2020																																			September 30, 2020
		Term Loans Amortized Cost Basis by Origination Year																								Revolving Loans							Term Loans Amortized Cost Basis by Origination Year						Revolving Loans
(in thousands)	(in thousands)	2020		2019		2018		2017		2016		Prior		Amortized Cost Basis		Converted to Term Loans		Total		(in thousands)	2020		2019		2018		2017		2016		Prior		Amortized Cost Basis		Converted to Term Loans		Total
Land and development																				Land and development
Pass																				Pass	$	56,935	$	204,012	$	91,630	$	106,490	$	12,564	$	90,474	$	58,092	$	0	$	620,197
Special Mention																				Special Mention	0		2,172		4,277		5,784		0		1,828		3,550		0		17,611
Substandard(1)																				Substandard(1)	1,627		1,104		4,675		1,085		527		1,564		0		0		10,582
Total land and development																				Total land and development	58,562		207,288		100,582		113,359		13,091		93,866		61,642		0		648,390
Total commercial real estate																				Total commercial real estate	987,437		2,644,918		2,551,972		1,742,008		836,405		1,820,634		382,501		0		10,965,875
Consumer mortgages	Consumer mortgages																			Consumer mortgages
Pass	Pass	$	1,087,169	$	1,042,318	$	560,207	$	841,101	$	826,726	$	1,433,288	$	991	$	—	$	5,791,800	Pass	1,579,366		964,882		481,718		764,384		755,595		1,102,091		1,005		0		5,649,041
Substandard⁽¹⁾	Substandard⁽¹⁾	29		1,116		895		4,741		2,500		10,221		—		—		19,502		Substandard(1)	49		197		777		805		2,412		5,170		0		0		9,410
Loss⁽³⁾	Loss⁽³⁾	—		—		—		—		—		74		—		—		74		Loss(3)	0		0		0		0		0		74		0		0		74
Total consumer mortgages	Total consumer mortgages	1,087,198		1,043,434		561,102		845,842		829,226		1,443,583		991		—		5,811,376		Total consumer mortgages	1,579,415		965,079		482,495		765,189		758,007		1,107,335		1,005		0		5,658,525
Home equity lines	Home equity lines																			Home equity lines
Pass	Pass	—		—		—		—		—		—		1,600,837		89,969		1,690,806		Pass	0		0		0		0		0		0		1,513,600		86,404		1,600,004
Substandard⁽¹⁾	Substandard⁽¹⁾	—		—		—		—		—		—		11,234		6,047		17,281		Substandard(1)	0		0		0		0		0		0		8,603		5,173		13,776
Doubtful⁽²⁾	Doubtful⁽²⁾	—		—		—		—		—		—		17		20		37		Doubtful(2)	0		0		0		0		0		0		0		19		19
Loss⁽³⁾	Loss⁽³⁾	—		—		—		—		—		—		1,898		242		2,140		Loss(3)	0		0		0		0		0		0		1,243		165		1,408
Total home equity lines	Total home equity lines	—		—		—		—		—		—		1,613,986		96,278		1,710,264		Total home equity lines	0		0		0		0		0		0		1,523,446		91,761		1,615,207
Credit cards	Credit cards																			Credit cards
Pass	Pass	—		—		—		—		—		—		247,884		—		247,884		Pass	0		0		0		0		0		0		261,207		0		261,207
Substandard⁽¹⁾	Substandard⁽¹⁾	—		—		—		—		—		—		898		—		898		Substandard(1)	0		0		0		0		0		0		828		0		828
Loss⁽⁴⁾	Loss⁽⁴⁾	—		—		—		—		—		—		1,666		—		1,666		Loss(4)	0		0		0		0		0		0		2,794		0		2,794
Total credit cards	Total credit cards	—		—		—		—		—		—		250,448		—		250,448		Total credit cards	0		0		0		0		0		0		264,829		0		264,829
Other consumer loans	Other consumer loans																			Other consumer loans
Pass	Pass	259,282		326,999		221,013		196,955		126,927		88,033		249,397		—		1,468,606		Pass	136,944		229,039		142,260		161,717		112,805		76,244		268,840		0		1,127,849
Substandard⁽¹⁾	Substandard⁽¹⁾	—		1,246		536		2,517		715		677		286		—		5,977		Substandard(1)	0		720		163		474		64		714		253		0		2,388
Total other consumer loans	Total other consumer loans	259,282		328,245		221,549		199,472		127,642		88,710		249,683		—		1,474,583		Total other consumer loans	136,944		229,759		142,423		162,191		112,869		76,958		269,093		0		1,130,237
Total consumer	Total consumer	1,346,480		1,371,679		782,651		1,045,314		956,868		1,532,293		2,115,108		96,278		9,246,671		Total consumer	1,716,359		1,194,838		624,918		927,380		870,876		1,184,293		2,058,373		91,761		8,668,798
Total loans⁽⁵⁾	Total loans⁽⁵⁾	$	6,516,126	$	6,756,593	$	5,759,271	$	4,737,970	$	3,156,925	$	5,876,876	$	7,029,961	$	178,760	$	40,012,482	Total loans(5)	$	7,795,552	$	6,548,989	$	5,485,282	$	4,481,251	$	2,949,117	$	5,246,429	$	6,989,122	$	153,082	$	39,648,824

⁽¹⁾The majority of loans within Substandard risk grade are accruing loans at ~~June~~September 30, 2020.

⁽²⁾Loans within Doubtful risk grade are on non-accrual status and generally have an ALL equal to 50% of the loan amount.

⁽³⁾Loans within Loss risk grade are on non-accrual status and have an ALL equal to the full loan amount.

⁽⁴⁾Represent amounts that were 120 days past due. These credits are downgraded to the Loss category with an ALL equal to the full loan amount and are generally charged off upon reaching 181 days past due in accordance with the FFIEC Retail Credit Classification Policy.

⁽⁵⁾Total before net deferred fees and costs of ~~$98.2~~$99.0 million.

Loan Portfolio by Risk Grade
December 31, 2019
(in thousands) Pass Special Mention
Substandard⁽¹⁾
Doubtful⁽²⁾
Loss⁽³⁾
Total
Commercial, financial and agricultural $ 9,927,059 $ 128,506 $ 182,831 $ 1,163 $ — $ 10,239,559
Owner-occupied 6,386,055 58,330 85,426 — — 6,529,811
Total commercial and industrial 16,313,114 186,836 268,257 1,163 — 16,769,370
Investment properties 8,930,360 16,490 57,477 — — 9,004,327
1-4 family properties 766,529 3,249 10,237 — — 780,015
Land and development 681,003 18,643 9,796 — — 709,442
Total commercial real estate 10,377,892 38,382 77,510 — —

10,493,784
Consumer mortgages 5,527,746 — 18,376 97 149

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

1,713,157
Credit cards 266,146 — 818 — 1,877
⁽⁴⁾
268,841
Other consumer loans 2,390,199 — 6,095 — —

2,396,294
Total consumer 9,881,177 — 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
The following table summarizes each loan portfolio class by risk grade as of December 31, 2019.

^{December 31, 2019
(in thousands) Pass Special Mention Substandard(1) Doubtful(2) Loss(3) Total
Commercial, financial and agricultural $ 9,927,059 $ 128,506 $ 182,831 $ 1,163 $ 0 $ 10,239,559
Owner-occupied 6,386,055 58,330 85,426 0 0 6,529,811
Total commercial and industrial 16,313,114 186,836 268,257 1,163 0 16,769,370
Investment properties 8,930,360 16,490 57,477 0 0 9,004,327
1-4 family properties 766,529 3,249 10,237 0 0 780,015
Land and development 681,003 18,643 9,796 0 0 709,442
Total commercial real estate 10,377,892 38,382 77,510 0 0
10,493,784
Consumer mortgages 5,527,746 0 18,376 97 149
5,546,368
Home equity lines 1,697,086 0 14,806 21 1,244
1,713,157
Credit cards 266,146 0 818 0 1,877 (4) 268,841
Other consumer loans 2,390,199 0 6,095 0 0
2,396,294
Total consumer 9,881,177 0 40,095 118 3,270 9,924,660
Total loans(5) $ 36,572,183 $ 225,218 $ 385,862 $ 1,281 $ 3,270 $ 37,187,814}

(1)The majority of loans within Substandard risk grade are accruing loans at December 31, 2019.

⁽²⁾Loans within Doubtful risk grade are on non-accrual status and generally have an ALL equal to 50% of the loan amount.

⁽³⁾Loans within Loss risk grade are on non-accrual status and have an ALL equal to the full loan amount.

⁽⁵⁾Total before net deferred fees and costs of $25.4 million.

Collateral-Dependent Loans

We classify a loan as collateral-dependent when our borrower is experiencing financial difficulty, and we expect repayment to be provided substantially through the operation or sale of collateral. Our commercial loans have collateral that is comprised of real estate and business assets. Our consumer loans have collateral that is substantially comprised of residential real estate.

There were no significant changes in the extent to which collateral secures our collateral-dependent loans during the three and ~~six~~nine months ended ~~June~~September 30, 2020.

2219

Rollforward of Allowance for Loan Losses

The following tables detail the changes in the ALL by loan segment for the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019. Additionally, during the three and nine months ended ~~June~~September 30, 2020, Synovus reversed ~~$13.3~~$6.1 million and $19.4 million, respectively, in previously established reserves for credit losses associated with the transfer ~~of $801.0 million in certain third-party lending partnership consumer loans~~ to held for sale ~~loans.~~of $513.2 million and $1.31 billion, respectively, in performing loans primarily related to third-party single-service consumer loans and non-relationship consumer mortgages.


Allowance for Loan Losses Roll Forward
		As Of and For the Three Months Ended June 30, 2020															As Of and For the Three Months Ended September 30, 2020
(in thousands)	(in thousands)	Commercial & Industrial		Commercial Real Estate		Consumer		Total		(in thousands)	Commercial & Industrial		Commercial Real Estate		Consumer		Total
Allowance for loan losses:	Allowance for loan losses:									Allowance for loan losses:
Beginning balance	Beginning balance	$	216,950	$	107,117	$	169,385	$	493,452	Beginning balance	$	229,915	$	171,526	$	187,207	$	588,648
Charge-offs	Charge-offs	(23,245)		(689)		(6,844)		(30,778)		Charge-offs	(19,367)		(6,878)		(9,101)		(35,346)
Recoveries	Recoveries	3,261		536		2,935		6,732		Recoveries	3,796		1,225		1,859		6,880
Provision for loan losses		32,949		64,562		21,731		119,242
Provision for (reversal of) loan losses										Provision for (reversal of) loan losses	46,256		(22,068)		19,430		43,618
Ending balance	Ending balance	$	229,915	$	171,526	$	187,207	$	588,648	Ending balance	$	260,600	$	143,805	$	199,395	$	603,800

		As Of and For the Three Months Ended June 30, 2019															As Of and For the Three Months Ended September 30, 2019
(in thousands)	(in thousands)	Commercial & Industrial		Commercial Real Estate		Consumer		Total		(in thousands)	Commercial & Industrial		Commercial Real Estate		Consumer		Total
Allowance for loan losses:	Allowance for loan losses:									Allowance for loan losses:
Beginning balance	Beginning balance	$	135,639	$	69,009	$	52,388	$	257,036	Beginning balance	$	138,004	$	63,463	$	55,909	$	257,376
Charge-offs	Charge-offs	(11,095)		(861)		(4,909)		(16,865)		Charge-offs	(15,425)		(3,275)		(6,026)		(24,726)
Recoveries	Recoveries	1,821		1,954		1,311		5,086		Recoveries	2,276		1,490		1,035		4,801
Provision for (reversal of) loan losses		11,639		(6,639)		7,119		12,119
Provision for loan losses										Provision for loan losses	17,156		280		10,126		27,562
Ending balance	Ending balance	$	138,004	$	63,463	$	55,909	$	257,376	Ending balance	$	142,011	$	61,958	$	61,044	$	265,013

		As Of and For the Six Months Ended June 30, 2020															As Of and For the Nine Months Ended September 30, 2020
(in thousands)	(in thousands)	Commercial & Industrial		Commercial Real Estate		Consumer		Total		(in thousands)	Commercial & Industrial		Commercial Real Estate		Consumer		Total
Allowance for loan losses:	Allowance for loan losses:									Allowance for loan losses:
Beginning balance, prior to adoption of ASU 2016-13	Beginning balance, prior to adoption of ASU 2016-13	$	145,782	$	67,430	$	68,190	$	281,402	Beginning balance, prior to adoption of ASU 2016-13	$	145,782	$	67,430	$	68,190	$	281,402
Impact from adoption of ASU 2016-13	Impact from adoption of ASU 2016-13	(2,310)		(651)		85,955		82,994		Impact from adoption of ASU 2016-13	(2,310)		(651)		85,955		82,994
Charge-offs	Charge-offs	(38,130)		(1,706)		(14,816)		(54,652)		Charge-offs	(57,497)		(8,585)		(23,917)		(89,999)
Recoveries	Recoveries	5,002		935		4,608		10,545		Recoveries	8,798		2,160		6,468		17,426
Provision for loan losses	Provision for loan losses	119,571		105,518		43,270		268,359		Provision for loan losses	165,827		83,451		62,699		311,977
Ending balance	Ending balance	$	229,915	$	171,526	$	187,207	$	588,648	Ending balance	$	260,600	$	143,805	$	199,395	$	603,800

		As Of and For the Six Months Ended June 30, 2019															As Of and For the Nine Months Ended September 30, 2019
(in thousands)	(in thousands)	Commercial & Industrial		Commercial Real Estate		Consumer		Total		(in thousands)	Commercial & Industrial		Commercial Real Estate		Consumer		Total
Allowance for loan losses:	Allowance for loan losses:									Allowance for loan losses:
Beginning balance	Beginning balance	$	133,123	$	68,796	$	48,636	$	250,555	Beginning balance	$	133,123	$	68,796	$	48,636	$	250,555
Charge-offs	Charge-offs	(24,133)		(2,093)		(11,337)		(37,563)		Charge-offs	(39,558)		(5,369)		(17,363)		(62,290)
Recoveries	Recoveries	3,810		2,298		2,588		8,696		Recoveries	6,087		3,788		3,623		13,498
Provision for (reversal of) loan losses	Provision for (reversal of) loan losses	25,204		(5,538)		16,022		35,688		Provision for (reversal of) loan losses	42,359		(5,257)		26,148		63,250
Ending balance	Ending balance	$	138,004	$	63,463	$	55,909	$	257,376	Ending balance	$	142,011	$	61,958	$	61,044	$	265,013

The ALL of ~~$588.6~~$603.8 million and the reserve for unfunded commitments of ~~$61.0~~$60.8 million, which is recorded in other liabilities, comprise the total ACL of ~~$649.7~~$664.6 million at ~~June~~September 30, 2020. The ACL increased during the ~~second~~third quarter of 2020 by ~~$117.8~~$14.9 million to ~~$649.7~~$664.6 million as of ~~June~~September 30, ~~2020.~~2020. Since the adoption of CECL on January 1, 2020, the ACL has increased ~~$256.5 million.The increase for~~$271.4 million due primarily to uncertainty and deterioration in the ~~three and six months ended June 30, 2020 continues to be primarily driven by the deteriorated~~ economic environment caused by the COVID-19 pandemic. Provision for credit losses (which includes the provision for loan losses and unfunded commitments) of ~~$141.9 million and $300.6~~$43.4 million for the three ~~and six~~ months ended

~~June~~ September 30, 2020 ~~respectively,~~included net charge-offs of $28.5 million and the impact of downgrades largely concentrated in the hotel portfolio, which were mostly offset by improvement in the economic forecast which included adjustments for the estimated impact of currently enacted government stimulus plans, as well as reserve releases from loan dispositions. Provision for credit losses of $344.0 million for the nine months ended September 30, 2020, resulted in the building of the ACL required under CECL primarily as a result of deterioration in the economic environment due to the impact of COVID-19.

Our modeling process incorporates quantitative and qualitative considerations that are used to inform CECL estimates. The internally developed economic forecast used to determine the ACL as of ~~June~~September 30, 2020 was approved late in the ~~second~~third quarter of 2020 pursuant to Synovus' economic forecasting governance processes. The ~~economic~~modeling assumptions for the ~~second~~third quarter of 2020 included adjustments for the estimated impact of currently enacted government stimulus plans and an unemployment rate ending the 2020 year around ~~10%. Our model forecast includes moderate economic expansion following significant declines~~8% before declining modestly in ~~real GDP in the second quarter of 2020.~~2021. This, ~~represented further deterioration of the economic environment since March 31, 2020~~along with credit migration and other loan portfolio activity, resulted in an increase of the ACL to loans coverage ratio during the quarter of 245 bps to ~~1.63% at June 30, 2020,~~1.68%, or ~~1.74%~~1.80% excluding PPP ~~loans.~~loans, at September 30, 2020.

Significant economic uncertainty remains as a result of the continuing COVID-19 crisis, and ~~the~~the trajectory of the economic recovery including any additional government stimulus plans will impact subsequent period CECL reserves.

TDRs

Information about Synovus' TDRs is presented in the following tables. Synovus began entering into loan modifications with borrowers in response to the COVID-19 pandemic, which have not been classified as TDRs, and therefore are not included in the discussion below. See "Part I-Item 1. Financial Statements and Supplementary Data - Note 1 - Basis of Presentation" in this Report for more information on Synovus' loan modifications due to COVID-19. The following tables represent, by concession type, the post-modification balance for loans modified or renewed during the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019 that were reported as accruing or non-accruing TDRs.


TDRs by Concession Type	TDRs by Concession Type															TDRs by Concession Type
		Three Months Ended June 30, 2020															Three Months Ended September 30, 2020
(in thousands, except contract data)	(in thousands, except contract data)	Number of Contracts	Below Market Interest Rate		Other Concessions⁽¹⁾		Total			(in thousands, except contract data)	Number of Contracts	Below Market Interest Rate		Other Concessions(1)			Total
Commercial, financial and agricultural	Commercial, financial and agricultural	40	$	1,503	$	2,000	$	3,503		Commercial, financial and agricultural	42	$	3,335	$	670		$	4,005
Owner-occupied	Owner-occupied	7	453		1,434		1,887			Owner-occupied	7	1,753		0			1,753
Total commercial and industrial	Total commercial and industrial	47	1,956		3,434		5,390			Total commercial and industrial	49	5,088		670			5,758
Investment properties	Investment properties	2	5,599		—		5,599			Investment properties	2	294		93			387
1-4 family properties	1-4 family properties	4	69		549		618			1-4 family properties	5	74		114			188
Land and development	Land and development	1	91		—		91			Land and development	1	40		0			40
Total commercial real estate	Total commercial real estate	7	5,759		549		6,308			Total commercial real estate	8	408		207			615
Consumer mortgages	Consumer mortgages	10	556		1,482		2,038			Consumer mortgages	3	496		23			519
Home equity lines	Home equity lines	14	181		918		1,099			Home equity lines	17	471		648			1,119
Other consumer loans	Other consumer loans	18	19		798		817			Other consumer loans	3	48		85			133
Total consumer	Total consumer	42	756		3,198		3,954			Total consumer	23	1,015		756			1,771
Total TDRs	Total TDRs	96	$	8,471	$	7,181	$	15,652	⁽²⁾	Total TDRs	80	$	6,511	$	1,633		$	8,144	(2)

		Three Months Ended June 30, 2019															Three Months Ended September 30, 2019
(in thousands, except contract data)	(in thousands, except contract data)	Number of Contracts	Below Market Interest Rate		Other Concessions⁽¹⁾		Total			(in thousands, except contract data)	Number of Contracts	Below Market Interest Rate		Other Concessions(1)			Total
Commercial, financial and agricultural	Commercial, financial and agricultural	21	$	1,343	$	1,589	$	2,932		Commercial, financial and agricultural	27	$	2,577	$	1,917		$	4,494
Owner-occupied	Owner-occupied	4	1,082		—		1,082			Owner-occupied	7	2,822		861			3,683
Total commercial and industrial	Total commercial and industrial	25	2,425		1,589		4,014			Total commercial and industrial	34	5,399		2,778			8,177
Investment properties	Investment properties	1	180		—		180			Investment properties	4	385		0			385
1-4 family properties	1-4 family properties	4	514		—		514			1-4 family properties	4	766		0			766
Land and development	Land and development	2	169		—		169			Land and development	1	473		0			473
Total commercial real estate	Total commercial real estate	7	863		—		863			Total commercial real estate	9	1,624		0			1,624
Consumer mortgages	Consumer mortgages	1	109		—		109			Consumer mortgages	10	1,008		118			1,126
Home equity lines	Home equity lines	24	2,321		—		2,321			Home equity lines	25	364		1,635			1,999
Other consumer loans	Other consumer loans	34	586		1,332		1,918			Other consumer loans	27	473		1,222			1,695
Total consumer	Total consumer	59	3,016		1,332		4,348			Total consumer	62	1,845		2,975			4,820
Total TDRs	Total TDRs	91	$	6,304	$	2,921	$	9,225	⁽³⁾	Total TDRs	105	$	8,868	$	5,753		$	14,621	(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 the three months ending ~~June~~September 30, 2020 and 2019.

⁽²⁾NaN net charge-offs were recorded during the three months ended ~~June~~September 30, 2020.

⁽³⁾NaN net charge-offs were recorded during the three months ended ~~June~~September 30, 2019.


	Nine Months Ended September 30, 2020
(in thousands, except contract data)	Number of Contracts	Below Market Interest Rate		Other Concessions(1)		Total
Commercial, financial and agricultural	118	$	8,562	$	4,681	$	13,243
Owner-occupied	19	3,573		1,530		5,103
Total commercial and industrial	137	12,135		6,211		18,346
Investment properties	6	28,963		93		29,056
1-4 family properties	15	867		1,105		1,972
Land and development	3	581		0		581
Total commercial real estate	24	30,411		1,198		31,609
Consumer mortgages	19	1,568		2,589		4,157
Home equity lines	50	926		2,530		3,456
Other consumer loans	50	145		2,779		2,924
Total consumer	119	2,639		7,898		10,537
Total TDRs	280	$	45,185	$	15,307	$	60,492	(2)

	Nine Months Ended September 30, 2019
(in thousands, except contract data)	Number of Contracts	Below Market Interest Rate		Other Concessions(1)		Total
Commercial, financial and agricultural	61	$	5,703	$	4,404	$	10,107
Owner-occupied	13	4,854		861		5,715
Total commercial and industrial	74	10,557		5,265		15,822
Investment properties	6	1,048		0		1,048
1-4 family properties	14	2,072		0		2,072
Land and development	3	641		0		641
Total commercial real estate	23	3,761		0		3,761
Consumer mortgages	15	1,245		1,332		2,577
Home equity lines	50	2,686		1,740		4,426
Other consumer loans	79	1,167		3,599		4,766
Total consumer	144	5,098		6,671		11,769
Total TDRs	241	$	19,416	$	11,936	$	31,352	(3)

Six Months Ended June 30, 2020
(in thousands, except contract data) Number of Contracts Below Market Interest Rate
Other Concessions⁽¹⁾
Total
Commercial, financial and agricultural 76 $ 5,226 $ 4,011 $ 9,237
Owner-occupied 12 1,821 1,530 3,351
Total commercial and industrial 88 7,047 5,541 12,588
Investment properties 4 28,669 — 28,669
1-4 family properties 10 793 991 1,784
Land and development 2 541 — 541
Total commercial real estate 16 30,003 991 30,994
Consumer mortgages 16 1,072 2,566 3,638
Home equity lines 33 455 1,882 2,337
Other consumer loans 47 97 2,694 2,791
Total consumer 96 1,624 7,142 8,766
Total TDRs 200 $ 38,674 $ 13,674 $ 52,348
⁽²⁾
Six Months Ended June 30, 2019
(in thousands, except contract data) Number of Contracts Below Market Interest Rate
Other Concessions⁽¹⁾
Total
Commercial, financial and agricultural 34 $ 3,126 $ 2,488 $ 5,614
Owner-occupied 6 2,031 — 2,031
Total commercial and industrial 40 5,157 2,488 7,645
Investment properties 2 663 — 663
1-4 family properties 10 1,307 — 1,307
Land and development 2 169 — 169
Total commercial real estate 14 2,139 — 2,139
Consumer mortgages 5 237 1,214 1,451
Home equity lines 25 2,321 105 2,426
Other consumer loans 52 694 2,377 3,071
Total consumer 82 3,252 3,696 6,948
Total TDRs 136 $ 10,548 $ 6,184 $ 16,732
⁽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 the ~~six~~nine months ending ~~June~~September 30, 2020 and 2019.

⁽²⁾NaN net charge-offs were recorded during the ~~six~~nine months ended ~~June~~September 30, 2020.

⁽³⁾NaN net charge-offs were recorded during the ~~six~~nine months ended ~~June~~September 30, 2019.

For the three and ~~six~~nine months ended ~~June~~September 30, 2020 there was 1 default with a recorded investment of ~~$27~~$21 thousand and 45 defaults with a recorded investment of ~~$645~~$666 thousand, respectively, on accruing TDRs restructured during the previous twelve months (defaults are defined as the earlier of the TDR being placed on non-accrual status or reaching 90 days past due with respect to principal and/or interest payments) compared to ~~1 default~~3 defaults with a recorded investment of $5$321 thousand and 4 defaults with a recorded investment of $326 thousand for ~~both~~ the three and ~~six~~nine months ended ~~June~~September 30, ~~2019.~~2019, respectively. As of ~~June~~September 30, 2020 and December 31, 2019, there were0 commitments to lend a material amount of additional funds to any customer whose loan was classified as a TDR.

2523

Note 5 - Goodwill and Other Intangible Assets

Goodwill allocated to each reporting unit at ~~June~~September 30, 2020 and December 31, 2019 is presented as follows (the FMS reportable segment includes 2 reporting units of Consumer ~~Mortgages~~Mortgage and Wealth Management):


(in thousands)	(in thousands)	Community Banking Reporting Unit		Wholesale Banking Reporting Unit		Consumer Mortgages Reporting Unit		Wealth Management Reporting Unit		Total		(in thousands)	Community Banking Reporting Unit		Wholesale Banking Reporting Unit		Consumer Mortgage Reporting Unit		Wealth Management Reporting Unit		Total
Balance as of December 31, 2019	Balance as of December 31, 2019	$	256,323	$	171,636	$	44,877	$	24,431	$	497,267	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 June 30, 2020		$	256,323	$	171,636	$	44,877	$	24,431	$	497,267
Goodwill impairment												Goodwill impairment	0		0		(44,877)		0		(44,877)
Balance as of September 30, 2020												Balance as of September 30, 2020	$	256,323	$	171,636	$	0	$	24,431	$	452,390

Goodwill is evaluated for impairment on an annual basis or whenever an event occurs or circumstances change to indicate that it is more likely than not that an impairment loss has been incurred (i.e., a triggering event). Synovus conducted a goodwill impairment assessment as of December 31, 2019, following Synovus' reorganization, applying ASC 350-20-35-3A Goodwill Subsequent Measurement - Qualitative Assessment Approach and concluded that goodwill was not impaired. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 19 -Segment Reporting" to the consolidated financial statements of Synovus' 2019 Form 10-K for information on Synovus' reorganization during 2019.

During~~the~~ ~~second quarter of~~ 2020, Synovus ~~assessed the indicators of~~performed interim goodwill impairment ~~for each reporting unit~~tests as of September 30, 2020, June 30, 2020 and ~~noted certain~~March 31, 2020 based on quarterly assessments of triggering events ~~related to COVID-19~~ that ~~indicated it was more likely than not that goodwill was impaired, necessitatingan interim test. Triggering events~~ included Synovus' stock price trading below book value, ~~for the entire quarter, a~~n an extremely low interest rate environment, as well as general recessionary economic ~~uncertainty surrounding~~conditions caused by the ~~pandemic, which has led to an economic recession.~~ ~~As such, Synovus performed a quantitative assessment~~COVID-19 pandemic. Quantitative assessments of goodwill impairment ~~as of June 30, 2020, which included~~include determining the estimated fair value of each reporting unit,, utilizing a combination of discounted cash flow and market-based approaches, and comparing that fair value to each reporting unit's carrying amount. The discounted cash flow method included updated internal forecasts, long-term profitability targets, growth rates and discount rates.The market approach was based on a comparison of certain financial metrics of Synovus' reporting units to guideline public company peers. The income-based discounted cash flow approach was more heavily weighted (60%) than the market-based approach (40%) due to significant volatility in the market since the pandemic was declared a National Emergency.

Based on ~~assessments~~the assessment performed at ~~June~~September 30, 2020, ~~and March 31, 2020,~~Synovus recognized a $44.9 million goodwill impairment charge representing all goodwill allocated to the Consumer Mortgage reporting unit, while the fair ~~value~~values of ~~each of our~~the Community Banking, Wholesale Banking and Wealth Management reporting units ~~exceeded its~~continued to exceed the respective carrying ~~amount~~values. The projected cash flows of the Consumer Mortgage reporting unit declined from the prior period valuations due to significant mortgage refinance activity at ~~June 30,~~record-low mortgage rates and the FOMC's updated guidance in the third quarter of 2020 regarding inflation targeting and ~~March 31, 2020; therefore, goodwill is 0t impaired. However,~~their expectations for interest rates to remain low for an extended period of time. The primarily fixed rate, longer duration nature of Synovus’ mortgage portfolio especially impacted the Consumer Mortgage reporting unit. In addition, the excess of fair value over the carrying amount for the Community Banking and Wholesale Banking reporting units was ~~significantly~~ less than ~~the excess~~10% at ~~December 31, 2019.~~September 30, 2020.

Due to the high degree of subjectivity ~~involved~~involved in estimating the fair value of Synovus' reporting units, a ~~significant~~ decline in Synovus' expected future cash flows or estimated growth rates due to further deterioration in the economic environment, or ~~a prolonged decline in the price~~continued market capitalization of ~~Synovus' common stock, may necessitate additional future interim assessments that~~Synovus below book value, could result in aan additional goodwill impairment charge that is material to Synovus' results from operations, but would not materially impact our financial ~~condition.~~condition.

The following table shows the gross carrying amount and accumulated amortization of other intangible assets as of ~~June~~September 30, 2020 and December 31, 2019, which primarily consist of core deposit intangible assets acquired in the FCB acquisition. The CDI is being amortized over its estimated useful life of approximately ten years utilizing an accelerated method. Aggregate other intangible assets amortization expense for the three and ~~six~~nine months ended ~~June~~September 30, 2020 was $2.6 million and ~~$5.3~~$7.9 million, respectively. Aggregate other intangible assets amortization for the three and ~~six~~nine months ended ~~June~~September 30, 2019 was ~~$2.4~~$2.9 million and ~~$5.8~~$8.7 million, respectively.

(in thousands) Gross Carrying Amount Accumulated Amortization Net Carrying Value
June 30, 2020
CDI $ 57,400 $ (15,132) $ 42,268
Other 12,500 (4,376) 8,124
Total other intangible assets $ 69,900 $ (19,508) $ 50,392
December 31, 2019
CDI $ 57,400 $ (10,436) $ 46,964
Other 12,500 (3,793) 8,707
Total other intangible assets $ 69,900 $ (14,229) $ 55,671

2624


(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Value
September 30, 2020
CDI	$	57,400	$	(17,481)	$	39,919
Other	12,500		(4,667)		7,833
Total other intangible assets	$	69,900	$	(22,148)	$	47,752
December 31, 2019
CDI	$	57,400	$	(10,436)	$	46,964
Other	12,500		(3,793)		8,707
Total other intangible assets	$	69,900	$	(14,229)	$	55,671

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

Repurchases of Common Stock

During the three months ended ~~June~~September 30, 2020, Synovus did not repurchase any shares of its common stock. During the ~~six~~nine months ended ~~June~~September 30, 2020, Synovus repurchased $16.2 million, or 450 thousand shares of its common stock, at an average price of $36.08 per share, under the 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 June 30, Six Months Ended June 30,
2020 2019 2020 2019
Cash dividends declared per share $ 0.33 $ 0.30 $ 0.66 $ 0.60


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Cash dividends declared per share	$	0.33	$	0.30	$	0.99	$	0.90

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 ~~June~~September 30, 2020 and activity for the ~~six~~nine months ended ~~June~~September 30, 2020.


		Stock Options					Stock Options
(in thousands, except per share amounts)	(in thousands, except per share amounts)	Quantity	Weighted-Average Exercise Price Per Share		(in thousands, except per share amounts)	Quantity	Weighted-Average Exercise Price Per Share
Outstanding at January 1, 2020	Outstanding at January 1, 2020	3,037	$	22.74	Outstanding at January 1, 2020	3,037	$	22.74
Exercised	Exercised	(232)	28.59		Exercised	(239)	28.28
Expired/canceled	Expired/canceled	(16)	25.00		Expired/canceled	(64)	29.75
Outstanding at June 30, 2020		2,789	$	22.24
Outstanding at September 30, 2020					Outstanding at September 30, 2020	2,734	$	22.09

RSUs, MRSUs, and PSUs
(in thousands, except per share amounts) Quantity Weighted-Average Grant Date Fair Value Per Share
Non-vested at January 1, 2020 1,312 $ 39.28
Granted 743 35.11
Quantity change based on TSR and performance factors 44 35.11
Dividend equivalents granted 41 35.11
Vested (582) 38.40
Forfeited (48) 36.22
Non-vested at June 30, 2020 1,510 $ 37.43


	RSUs, MRSUs, and PSUs
(in thousands, except per share amounts)	Quantity	Weighted-Average Grant Date Fair Value Per Share
Non-vested at January 1, 2020	1,312	$	39.28
Granted	893	32.91
Quantity change based on TSR and performance factors	44	35.11
Dividend equivalents granted	56	33.50
Vested	(590)	38.85
Forfeited	(58)	36.22
Non-vested at September 30, 2020	1,657	$	35.80

Changes in Accumulated Other Comprehensive Income (Loss) by Component (Net of Income Taxes)

The following tables illustrate activity within the balances in accumulated other comprehensive income (loss) by component for the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 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 benefit		Total
Balance, July 1, 2020	$	134,245	$	68,263	$	462	$	202,970
Other comprehensive income (loss) before reclassifications	(21,806)		(6,635)		0		(28,441)
Amounts reclassified from AOCI	1,149		(764)		0		385
Net current period other comprehensive income (loss)	(20,657)		(7,399)		0		(28,056)
Balance at September 30, 2020	$	113,588	$	60,864	$	462	$	174,914

Balance, July 1, 2019	$	60,586	$	(12,137)	$	840	$	49,289
Other comprehensive income (loss) before reclassifications	25,133		(876)		(378)		23,879
Amounts reclassified from AOCI	2,765		0		0		2,765
Net current period other comprehensive income (loss)	27,898		(876)		(378)		26,644
Balance at September 30, 2019	$	88,484	$	(13,013)	$	462	$	75,933

Balance, January 1, 2020	$	83,666	$	(18,487)	$	462	$	65,641
Other comprehensive income (loss) before reclassifications	86,678		80,404		0		167,082
Amounts reclassified from AOCI	(56,756)		(1,053)		0		(57,809)
Net current period other comprehensive income (loss)	29,922		79,351		0		109,273
Balance at September 30, 2020	$	113,588	$	60,864	$	462	$	174,914

Balance, January 1, 2019	$	(83,179)	$	(12,137)	$	896	$	(94,420)
Other comprehensive income (loss) before reclassifications	167,586		(876)		(378)		166,332
Amounts reclassified from AOCI	4,077		0		(56)		4,021
Net current period other comprehensive income (loss)	171,663		(876)		(434)		170,353
Balance at September 30, 2019	$	88,484	$	(13,013)	$	462	$	75,933

Changes in Accumulated Other Comprehensive Income (Loss) by Component (Net of Income Taxes)
(in thousands)
Net unrealized gains (losses) on investment securities available for sale⁽¹⁾
Net unrealized gains (losses) on cash flow hedges⁽¹⁾
Post-retirement unfunded health benefit Total
Balance, April 1, 2020 $ 194,524 $ 61,925 $ 462 $ 256,911
Other comprehensive income (loss) before reclassifications (8,847) 6,538 — (2,309)
Amounts reclassified from AOCI (51,432) (200) — (51,632)
Net current period other comprehensive income (loss) (60,279) 6,338 — (53,941)
Balance at June 30, 2020 $ 134,245 $ 68,263 $ 462 $ 202,970
Balance, April 1, 2019 $ (7,071) $ (12,137) $ 866 $ (18,342)
Other comprehensive income (loss) before reclassifications 66,290 — — 66,290
Amounts reclassified from AOCI 1,367 — (26) 1,341
Net current period other comprehensive income (loss) 67,657 — (26) 67,631
Balance at June 30, 2019 $ 60,586 $ (12,137) $ 840 $ 49,289
Balance, December 31, 2019 $ 83,666 $ (18,487) $ 462 $ 65,641
Other comprehensive income (loss) before reclassifications 108,484 87,039 — 195,523
Amounts reclassified from AOCI (57,905) (289) — (58,194)
Net current period other comprehensive income (loss) 50,579 86,750 — 137,329
Balance at June 30, 2020 $ 134,245 $ 68,263 $ 462 $ 202,970
Balance, December 31, 2018 $ (83,179) $ (12,137) $ 896 $ (94,420)
Other comprehensive income (loss) before reclassifications 142,453 — — 142,453
Amounts reclassified from AOCI 1,312 — (56) 1,256
Net current period other comprehensive income (loss) 143,765 — (56) 143,709
Balance at June 30, 2019 $ 60,586 $ (12,137) $ 840 $ 49,289

⁽¹⁾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 residual tax effects remaining in OCI due to previously established deferred tax asset valuation allowances 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.

2826

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" of Synovus' 2019 Form 10-K for a description of how fair value 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 ~~June~~September 30, 2020 and December 31, 2019.


		June 30, 2020															September 30, 2020
(in thousands)	(in thousands)	Level 1		Level 2		Level 3		Total Assets and Liabilities at Fair Value		(in thousands)	Level 1		Level 2		Level 3		Total Assets and Liabilities at Fair Value
Assets	Assets									Assets
Trading securities:	Trading securities:									Trading securities:
Mortgage-backed securities issued by U.S. Government agencies	Mortgage-backed securities issued by U.S. Government agencies	$	—	$	18	$	—	$	18	Mortgage-backed securities issued by U.S. Government agencies	$	0	$	18	$	0	$	18
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises		—		288		—		288
Collateralized mortgage obligations issued by U.S. Government sponsored enterprises										Collateralized mortgage obligations issued by U.S. Government sponsored enterprises	0		604		0		604
Other mortgage-backed securities	Other mortgage-backed securities	—		1,620		—		1,620		Other mortgage-backed securities	0		673		0		673
State and municipal securities	State and municipal securities	—		165		—		165		State and municipal securities	0		579		0		579
Asset-backed securities	Asset-backed securities	—		2,535		—		2,535		Asset-backed securities	0		2,497		0		2,497
Total trading securities	Total trading securities	$	—	$	4,626	$	—	$	4,626	Total trading securities	$	0	$	4,371	$	0	$	4,371
Investment securities available for sale:	Investment securities available for sale:									Investment securities available for sale:
U.S. Treasury securities	U.S. Treasury securities	$	19,921	$	—	$	—	$	19,921	U.S. Treasury securities	$	20,254	$	0	$	0	$	20,254
U.S. Government agency securities	U.S. Government agency securities	—		171,366		—		171,366		U.S. Government agency securities	0		156,614		0		156,614
Mortgage-backed securities issued by U.S. Government agencies	Mortgage-backed securities issued by U.S. Government agencies	—		864,428		—		864,428		Mortgage-backed securities issued by U.S. Government agencies	0		1,129,392		0		1,129,392
Mortgage-backed securities issued by U.S. Government sponsored enterprises	Mortgage-backed securities issued by U.S. Government sponsored enterprises	—		4,444,252		—		4,444,252		Mortgage-backed securities issued by U.S. Government sponsored enterprises	0		4,540,386		0		4,540,386
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	—		1,213,081		—		1,213,081		Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	0		1,345,284		0		1,345,284
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises	Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises	—		365,253		—		365,253		Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises	0		354,157		0		354,157
State and municipal securities	State and municipal securities	—		1,007		—		1,007		State and municipal securities	0		501		0		501
Corporate debt securities and other debt securities	Corporate debt securities and other debt securities	—		116,523		1,662		118,185		Corporate debt securities and other debt securities	0		18,137		1,800		19,937
Total investment securities available for sale	Total investment securities available for sale	$	19,921	$	7,175,910	$	1,662	$	7,197,493	Total investment securities available for sale	$	20,254	$	7,544,471	$	1,800	$	7,566,525
Mortgage loans held for sale	Mortgage loans held for sale	—		266,306		—		266,306		Mortgage loans held for sale	0		285,899		0		285,899
Private equity investments	Private equity investments	—		—		698		698		Private equity investments	0		0		958		958
Mutual funds and mutual funds held in rabbi trusts	Mutual funds and mutual funds held in rabbi trusts	34,219		—		—		34,219		Mutual funds and mutual funds held in rabbi trusts	35,174		0		0		35,174
GGL/SBA loans servicing asset	GGL/SBA loans servicing asset	—		—		3,019		3,019		GGL/SBA loans servicing asset	0		0		3,100		3,100
Derivative assets	Derivative assets	—		496,978		—		496,978		Derivative assets	0		463,028		0		463,028
Liabilities	Liabilities									Liabilities
Earnout liability	Earnout liability	$	—	$	—	$	15,924	$	15,924	Earnout liability	$	0	$	0	$	15,924	$	15,924
Derivative liabilities	Derivative liabilities	—		194,376		1,755		196,131		Derivative liabilities	0		178,508		1,460		179,968

2927


		December 31, 2019															December 31, 2019
(in thousands)	(in thousands)	Level 1		Level 2		Level 3		Total Assets and Liabilities at Fair Value		(in thousands)	Level 1		Level 2		Level 3		Total Assets and Liabilities at Fair Value
Assets	Assets									Assets
Trading securities:	Trading securities:									Trading securities:
Commercial mortgage-backed securities issued by U.S. Government sponsored enterprises		$	—	$	2,486	$	—	$	2,486
Collateralized mortgage obligations issued by U.S. Government sponsored enterprises										Collateralized mortgage obligations issued by U.S. Government sponsored enterprises	$	0	$	2,486	$	0	$	2,486
Other mortgage-backed securities	Other mortgage-backed securities	—		1,284		—		1,284		Other mortgage-backed securities	0		1,284		0		1,284
State and municipal securities	State and municipal securities	—		65		—		65		State and municipal securities	0		65		0		65
Asset-backed securities	Asset-backed securities	—		3,227		—		3,227		Asset-backed securities	0		3,227		0		3,227
Other investments	Other investments	—		150		—		150		Other investments	0		150		0		150
Total trading securities	Total trading securities	$	—	$	7,212	$	—	$	7,212	Total trading securities	$	0	$	7,212	$	0	$	7,212
Investment securities available for sale:	Investment securities available for sale:									Investment securities available for sale:
U.S. Treasury securities	U.S. Treasury securities	$	19,855	$	—	$	—	$	19,855	U.S. Treasury securities	$	19,855	$	0	$	0	$	19,855
U.S. Government agency securities	U.S. Government agency securities	—		36,541		—		36,541		U.S. Government agency securities	0		36,541		0		36,541
Mortgage-backed securities issued by U.S. Government agencies	Mortgage-backed securities issued by U.S. Government agencies	—		56,816		—		56,816		Mortgage-backed securities issued by U.S. Government agencies	0		56,816		0		56,816
Mortgage-backed securities issued by U.S. Government sponsored enterprises	Mortgage-backed securities issued by U.S. Government sponsored enterprises	—		5,180,815		—		5,180,815		Mortgage-backed securities issued by U.S. Government sponsored enterprises	0		5,180,815		0		5,180,815
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	—		636,851		—		636,851		Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises	0		636,851		0		636,851
Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises	Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises	—		371,592		—		371,592		Commercial mortgage-backed securities issued by U.S. Government agencies or sponsored enterprises	0		371,592		0		371,592
State and municipal securities	State and municipal securities	—		2,075		—		2,075		State and municipal securities	0		2,075		0		2,075
Asset-backed securities	Asset-backed securities	—		327,400		—		327,400		Asset-backed securities	0		327,400		0		327,400
Corporate debt securities and other debt securities	Corporate debt securities and other debt securities	—		144,620		2,105		146,725		Corporate debt securities and other debt securities	0		144,620		2,105		146,725
Total investment securities available for sale	Total investment securities available for sale	$	19,855	$	6,756,710	$	2,105	$	6,778,670	Total investment securities available for sale	$	19,855	$	6,756,710	$	2,105	$	6,778,670
Mortgage loans held for sale	Mortgage loans held for sale	—		115,173		—		115,173		Mortgage loans held for sale	0		115,173		0		115,173
Private equity investments	Private equity investments	15,502		—		3,887		19,389		Private equity investments	15,502		0		3,887		19,389
Mutual funds and mutual funds held in rabbi trusts	Mutual funds and mutual funds held in rabbi trusts	32,348		—		—		32,348		Mutual funds and mutual funds held in rabbi trusts	32,348		0		0		32,348
GGL/SBA loans servicing asset	GGL/SBA loans servicing asset	—		—		3,040		3,040		GGL/SBA loans servicing asset	0		0		3,040		3,040
Derivative assets	Derivative assets	—		140,016		—		140,016		Derivative assets	0		140,016		0		140,016
Liabilities	Liabilities									Liabilities
Trading liability for short positions	Trading liability for short positions	$	1,560	$	—	$	—	$	1,560	Trading liability for short positions	$	1,560	$	0	$	0	$	1,560
Earnout liability	Earnout liability	—		—		11,016		11,016		Earnout liability	0		0		11,016		11,016
Derivative liabilities	Derivative liabilities	—		34,732		2,339		37,071		Derivative liabilities	0		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 UPB of mortgage loans held for sale 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	Mortgage Loans Held for Sale								Mortgage Loans Held for Sale
(in thousands)	(in thousands)	As of June 30, 2020		As of December 31, 2019		(in thousands)	As of September 30, 2020			As of December 31, 2019
Fair value	Fair value	$	266,306	$	115,173	Fair value	$	285,899		$	115,173
Unpaid principal balance	Unpaid principal balance	257,365		112,218		Unpaid principal balance	276,709			112,218
Fair value less aggregate unpaid principal balance	Fair value less aggregate unpaid principal balance	$	8,941	$	2,955	Fair value less aggregate unpaid principal balance	$	9,190		$	2,955

3028


Changes in Fair Value Included in Net Income	Changes in Fair Value Included in Net Income									Changes in Fair Value Included in Net Income
		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	(in thousands)	2020		2019		2020		2019		(in thousands)	2020		2019		2020		2019
Mortgage loans held for sale	Mortgage loans held for sale	$	5,365	$	345	$	5,984	$	701	Mortgage loans held for sale	$	251	$	892	$	6,235	$	1,593

Fair Value Measurements Using Significant Unobservable Inputs (Level 3)

During the three and ~~six~~nine months ended ~~June~~September 30, 2020, Synovus did not have any transfers in or out of Level 3 in the fair value hierarchy. During the ~~six~~nine months ended ~~June~~September 30, 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 June 30, 2020																			Three Months Ended September 30, 2020
(in thousands)	(in thousands)	Investment Securities Available for Sale		Private Equity Investments		GGL / SBA Loans Servicing Asset		Earnout Liability		Visa Derivative		(in thousands)	Investment Securities Available for Sale		Private Equity Investments		GGL / SBA Loans Servicing Asset		Earnout Liability		Visa Derivative
Beginning balance, April 1, 2020		$	1,562	$	3,255	$	3,149	$	(11,016)	$	(2,050)
Beginning balance, July 1, 2020												Beginning balance, July 1, 2020	$	1,662	$	698	$	3,019	$	(15,924)	$	(1,755)
Total gains (losses) realized/unrealized:	Total gains (losses) realized/unrealized:											Total gains (losses) realized/unrealized:
Included in earnings	Included in earnings	—		(2,557)		(291)		(4,908)		—		Included in earnings	0		260		(187)		0		0
Unrealized gains (losses) included in OCI	Unrealized gains (losses) included in OCI	100		—		—		—		—		Unrealized gains (losses) included in OCI	138		0		0		0		0
Additions	Additions	—		—		161		—		—		Additions	0		0		268		0		0
Settlements	Settlements	—		—		—		—		295		Settlements	0		0		0		0		295
Ending balance, June 30, 2020		$	1,662	$	698	$	3,019	$	(15,924)	$	(1,755)
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 June 30, 2020		$	—	$	(2,557)	$	—	$	(4,908)	$	—
Ending balance, September 30, 2020												Ending balance, September 30, 2020	$	1,800	$	958	$	3,100	$	(15,924)	$	(1,460)
Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains/(losses) relating to assets/liabilities still held at September 30, 2020												Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains/(losses) relating to assets/liabilities still held at September 30, 2020	$	0	$	260	$	0	$	0	$	0

		Three Months Ended June 30, 2019																			Three Months Ended September 30, 2019
(in thousands)	(in thousands)	Investment Securities Available for Sale		Private Equity Investments		GGL / SBA Loans Servicing Asset		Earnout Liability		Visa Derivative		(in thousands)	Investment Securities Available for Sale		Private Equity Investments		GGL / SBA Loans Servicing Asset		Earnout Liability		Visa Derivative
Beginning balance, April 1, 2019		$	1,981	$	9,481	$	3,447	$	(14,353)	$	(1,366)
Beginning balance, July 1, 2019												Beginning balance, July 1, 2019	$	2,017	$	13,341	$	3,326	$	(14,353)	$	(1,049)
Total gains (losses) realized/unrealized:	Total gains (losses) realized/unrealized:											Total gains (losses) realized/unrealized:
Included in earnings	Included in earnings	—		82		(305)		—		—		Included in earnings	0		1,194		(298)		(10,457)		(2,500)
Unrealized gains (losses) included in OCI	Unrealized gains (losses) included in OCI	36		—		—		—		—		Unrealized gains (losses) included in OCI	(26)		0		0		0		0
Additions	Additions	—		—		184		—		—		Additions	0		0		322		0		0
Settlements	Settlements	—		—		—		—		317		Settlements	0		(3,246)		0		0		214
Ending balance, June 30, 2019		$	2,017	$	9,563	$	3,326	$	(14,353)	$	(1,049)
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 June 30, 2019		$	—	$	82	$	—	$	—	$	—
Ending balance, September 30, 2019												Ending balance, September 30, 2019	$	1,991	$	11,289	$	3,350	$	(24,810)	$	(3,335)
Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains/(losses) relating to assets/liabilities still held at September 30, 2019												Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains/(losses) relating to assets/liabilities still held at September 30, 2019	$	0	$	777	$	0	$	(10,457)	$	(2,500)

3129


		Six Months Ended June 30, 2020																			Nine Months Ended September 30, 2020
(in thousands)	(in thousands)	Investment Securities Available for Sale		Private Equity Investments		GGL / SBA Loans Servicing Asset		Earnout Liability		Visa Derivative		(in thousands)	Investment Securities Available for Sale		Private Equity Investments		GGL / SBA Loans Servicing Asset		Earnout Liability		Visa Derivative
Beginning balance, December 31, 2019		$	2,105	$	3,887	$	3,040	$	(11,016)	$	(2,339)
Beginning balance, January 1, 2020												Beginning balance, January 1, 2020	$	2,105	$	3,887	$	3,040	$	(11,016)	$	(2,339)
Total gains (losses) realized/unrealized:	Total gains (losses) realized/unrealized:											Total gains (losses) realized/unrealized:
Included in earnings	Included in earnings	—		(3,189)		(555)		(4,908)		—		Included in earnings			(2,929)		(742)		(4,908)		0
Unrealized gains (losses) included in OCI	Unrealized gains (losses) included in OCI	(443)		—		—		—		—		Unrealized gains (losses) included in OCI	(305)		0		0		0		0
Additions	Additions	—		—		534		—		—		Additions	0		0		802		0		0
Settlements	Settlements	—		—		—		—		584		Settlements	0		0		0		0		879
Ending balance, June 30, 2020		$	1,662	$	698	$	3,019	$	(15,924)	$	(1,755)
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 June 30, 2020		$	—	$	(3,189)	$	—	$	(4,908)	$	—
Ending balance, September 30, 2020												Ending balance, September 30, 2020	$	1,800	$	958	$	3,100	$	(15,924)	$	(1,460)
Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains/(losses) relating to assets/liabilities still held at September 30, 2020												Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains/(losses) relating to assets/liabilities still held at September 30, 2020	$	0	$	(2,929)	$	0	$	(4,908)	$	0

		Six Months Ended June 30, 2019																			Nine Months Ended September 30, 2019
(in thousands)	(in thousands)	Investment Securities Available for Sale		Private Equity Investments		GGL / SBA Loans Servicing Asset		Earnout Liability		Visa Derivative		(in thousands)	Investment Securities Available for Sale		Private Equity Investments		GGL / SBA Loans Servicing Asset		Earnout Liability		Visa Derivative
Beginning balance, December 31, 2018		$	1,785	$	11,028	$	3,729	$	(14,353)	$	(1,673)
Beginning balance, January 1, 2019												Beginning balance, January 1, 2019	$	1,785	$	11,028	$	3,729	$	(14,353)	$	(1,673)
Total (losses) gains realized/unrealized:	Total (losses) gains realized/unrealized:											Total (losses) gains realized/unrealized:
Included in earnings	Included in earnings	—		110		(793)		—		—		Included in earnings	0		3,507		(1,091)		(10,457)		(2,500)
Unrealized gains (losses) included in OCI	Unrealized gains (losses) included in OCI	232		—		—		—		—		Unrealized gains (losses) included in OCI	206		0		0		0		0
Additions	Additions	—		—		390		—		—		Additions	0		0		712		0		0
Settlements	Settlements	—		—		—		—		624		Settlements	0		(3,246)		0		0		838
Transfers out of Level 3		—		(1,575)		—		—		—
Ending balance, June 30, 2019		$	2,017	$	9,563	$	3,326	$	(14,353)	$	(1,049)
Total net gains (losses) for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at June 30, 2019		$	—	$	110	$	—	$	—	$	—
Ending balance, September 30, 2019												Ending balance, September 30, 2019	$	1,991	$	11,289	$	3,350	$	(24,810)	$	(3,335)
Total net gains (losses) for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at September 30, 2019												Total net gains (losses) for the period included in earnings attributable to the change in unrealized losses relating to assets/liabilities still held at September 30, 2019	$	0	$	3,090	$	0	$	(10,457)	$	(2,500)

3230

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

~~June~~September 30, 2020

(dollars in thousands)

Valuation Technique

Significant Unobservable Input

Level 3 Fair Value

Rate/Range

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 analysis

Discount rate
Forecasted average Prime reset rate

$~~1,662~~1,800

~~6.51% 3.68%~~5.83% 3.79%

Private equity investments

Individual analysis of each investee company

Multiple 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

$~~698~~958

N/A

GGL/SBA loans servicing asset

Discounted cash flow analysis

Discount rate
Prepayment speeds

$~~3,019~~3,100

~~12.16% 16.10%~~9.68% 19.20%

Earnout liability

Option pricing methods and Monte Carlo simulation

Financial projections of Global One

$15,924

N/A

Visa derivative liability

Discounted cash flow analysis

Estimated timing of resolution of Covered Litigation and future cumulative deposits to the litigation escrow for settlement of the Covered Litigation

$~~1,755~~1,460

~~0-1.5~~0-1.2 years

(4Q 2021)

Assets Measured at Fair Value on a Non-recurring Basis

Certain assets are required to be measured at fair value on a nonrecurring basis 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 in certain circumstances, such as when there is evidence of 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.


	September 30, 2020								December 31, 2019
(in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Loans(1)	$	0	$	0	$	27,440	$	27,440	$	0	$	0	$	1,461	$	1,461
Other real estate	0		0		1,750		1,750		0		0		8,023		8,023
MPS receivable	0		0		17,915		17,915		0		0		21,437		21,437
Other assets held for sale	0		0		1,634		1,634		0		0		1,238		1,238

(1) Collateral-dependent loans that were written down to fair value of collateral.

June 30, 2020 December 31, 2019
(in thousands) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Loans⁽¹⁾
$ — $ — $ 21,138 $ 21,138 $ — $ — $ 1,461 $ 1,461
Other real estate — — 5,902 5,902 — — 8,023 8,023
MPS receivable — — 18,202 18,202 — — 21,437 21,437
Other assets held for sale — — 1,634 1,634 — — 1,238 1,238

ORE properties are included in other assets on the consolidated balance sheets. The carrying value of ORE at ~~June~~September 30, 2020 and December 31, 2019 was ~~$12.0~~$5.4 million and $14.4 million, respectively.

The following table presents fair value adjustments recognized in earnings for the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019 for assets measured at fair value on a non-recurring basis still held at period-end.


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	(in thousands)	2020		2019		2020		2019		(in thousands)	2020		2019		2020		2019
Loans⁽¹⁾	Loans⁽¹⁾	$	14,950	$	—	$	14,950	$	2,625	Loans(1)	$	5,661	$	4,170	$	20,412	$	4,718
Other real estate	Other real estate	1,228		612		1,228		624		Other real estate	107		74		138		569
MPS receivable	MPS receivable	—		—		2,663		—		MPS receivable	0		0		2,663		0
Other assets held for sale	Other assets held for sale	729		—		2,120		91		Other assets held for sale	0		0		2,120		91

⁽¹⁾ Collateral-dependent loans that were written down to fair value of collateral.

~~June~~September 30, 2020

Valuation Technique

Significant Unobservable Input

Range

(Weighted Average)⁽¹⁾

Assets measured at fair value on a non-recurring basis

Loans

Third-party appraised value of collateral less estimated selling costs

Discount to appraised value
Estimated selling costs

0%~~-43% (24%~~-36% (28%) 0%-10% (7%)

Other real estate

Third-party appraised value of real estate less estimated selling costs

Discount to appraised value
Estimated selling costs

0%~~-33% (23%~~-20% (10%) 0%-10% (7%)

MPS receivable⁽²⁾

Third-party appraised value of business less estimated selling costs

Discount to appraised value
Estimated selling costs

N/A

Other assets held for sale

Third-party appraised value less estimated selling costs or BOV

Discount to appraised value
Estimated selling costs

0%-66% ~~(63%~~(53%) 0%-10% (7%)

⁽¹⁾The weighted average is the measure of central tendencies; it is not the value that management is using for the asset or liability.

⁽²⁾See "Part I - Item 1. Notes to 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 ~~June~~September 30, 2020 and December 31, 2019.

Fair Value of Financial Instruments

The following tables present the carrying and estimated fair values of financial instruments at ~~June~~September 30, 2020 and December 31, 2019. The fair values represent management’s best estimates based on a 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' 2019 Form 10-K for a description of how fair value measurements are determined.


		June 30, 2020																			September 30, 2020
(in thousands)	(in thousands)	Carrying Value		Fair Value		Level 1		Level 2		Level 3		(in thousands)	Carrying Value		Fair Value		Level 1		Level 2		Level 3
Financial assets	Financial assets											Financial assets
Total cash, cash equivalents, restricted cash, and restricted cash equivalents	Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	1,571,225	$	1,571,225	$	1,571,225	$	—	$	—	Total cash, cash equivalents, restricted cash, and restricted cash equivalents	$	1,985,363	$	1,985,363	$	1,985,363	$	0	$	0
Trading securities	Trading securities	4,626		4,626		—		4,626		—		Trading securities	4,371		4,371		0		4,371		0
Investment securities available for sale	Investment securities available for sale	7,197,493		7,197,493		19,921		7,175,910		1,662		Investment securities available for sale	7,566,525		7,566,525		20,254		7,544,471		1,800
Loans held for sale	Loans held for sale	900,936		900,936		—		266,306		634,630		Loans held for sale	745,160		744,615		0		285,899		458,716
Private equity investments	Private equity investments	698		698		—		—		698		Private equity investments	958		958		0		0		958
Mutual funds and mutual funds held in rabbi trusts	Mutual funds and mutual funds held in rabbi trusts	34,219		34,219		34,219		—		—		Mutual funds and mutual funds held in rabbi trusts	35,174		35,174		35,174		0		0
Loans, net	Loans, net	39,325,649		39,386,584		—		—		39,386,584		Loans, net	38,946,047		38,923,265		0		0		38,923,265
GGL/SBA loans servicing asset	GGL/SBA loans servicing asset	3,019		3,019		—		—		3,019		GGL/SBA loans servicing asset	3,100		3,100		0		0		3,100
Derivative assets	Derivative assets	496,978		496,978		—		496,978		—		Derivative assets	463,028		463,028		0		463,028		0
Financial liabilities	Financial liabilities											Financial liabilities
Non-interest-bearing deposits	Non-interest-bearing deposits	$	12,555,714	$	12,555,714	$	—	$	12,555,714	$	—	Non-interest-bearing deposits	$	13,075,081	$	13,075,081	$	0	$	13,075,081	$	0
Non-time interest-bearing deposits	Non-time interest-bearing deposits	23,236,436		23,236,436		—		23,236,436		—		Non-time interest-bearing deposits	24,831,480		24,831,480		0		24,831,480		0
Time deposits	Time deposits	8,402,430		8,458,264		—		8,458,264		—		Time deposits	6,759,343		6,797,139		0		6,797,139		0
Total deposits	Total deposits	$	44,194,580	$	44,250,414	$	—	$	44,250,414	$	—	Total deposits	$	44,665,904	$	44,703,700	$	0	$	44,703,700	$	0
Federal funds purchased and securities sold under repurchase agreements	Federal funds purchased and securities sold under repurchase agreements	225,576		225,576		225,576		—		—		Federal funds purchased and securities sold under repurchase agreements	202,344		202,344		202,344		0		0
Other short-term borrowings	Other short-term borrowings	300,000		300,000		—		300,000		—		Other short-term borrowings	400,000		400,000		0		400,000		0
Long-term debt	Long-term debt	2,327,921		2,351,494		—		2,351,494		—		Long-term debt	1,628,385		1,687,448		0		1,687,448		0
Earnout liability	Earnout liability	15,924		15,924		—		—		15,924		Earnout liability	15,924		15,924		0		0		15,924
Derivative liabilities	Derivative liabilities	196,131		196,131		—		194,376		1,755		Derivative liabilities	179,968		179,968		0		178,508		1,460

3533

December 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 $ 1,186,918 $ 1,186,918 $ 1,186,918 $ — $ —
Trading securities 7,212 7,212 — 7,212 —
Investment securities available for sale 6,778,670 6,778,670 19,855 6,756,710 2,105
Mortgage loans held for sale 115,173 115,173 — 115,173 —
Private equity investments 19,389 19,389 15,502 — 3,887
Mutual funds and mutual funds held in rabbi trusts 32,348 32,348 32,348 — —
Loans, net 36,881,048 36,931,256 — — 36,931,256
GGL/SBA loans servicing asset 3,040 3,040 — — 3,040
Derivative assets 140,016 140,016 — 140,016 —
Financial liabilities
Non-interest-bearing deposits $ 9,439,485 $ 9,439,485 $ — $ 9,439,485 $ —
Non-time interest-bearing deposits 19,891,711 19,891,711 — 19,891,711 —
Time deposits 9,074,308 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 agreements 165,690 165,690 165,690 — —
Trading liability for short positions 1,560 1,560 1,560 — —
Other short-term borrowings 1,752,000 1,752,000 — 1,752,000 —
Long-term debt 2,153,897 2,185,717 — 2,185,717 —
Earnout liability 11,016 11,016 — — 11,016
Derivative liabilities 37,071 37,071 — 34,732 2,339


	December 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	$	1,186,918	$	1,186,918	$	1,186,918	$	0	$	0
Trading securities	7,212		7,212		0		7,212		0
Investment securities available for sale	6,778,670		6,778,670		19,855		6,756,710		2,105
Mortgage loans held for sale	115,173		115,173		0		115,173		0
Private equity investments	19,389		19,389		15,502		0		3,887
Mutual funds and mutual funds held in rabbi trusts	32,348		32,348		32,348		0		0
Loans, net	36,881,048		36,931,256		0		0		36,931,256
GGL/SBA loans servicing asset	3,040		3,040		0		0		3,040
Derivative assets	140,016		140,016		0		140,016		0

Financial liabilities
Non-interest-bearing deposits	$	9,439,485	$	9,439,485	$	0	$	9,439,485	$	0
Non-time interest-bearing deposits	19,891,711		19,891,711		0		19,891,711		0
Time deposits	9,074,308		9,112,459		0		9,112,459		0
Total deposits	$	38,405,504	$	38,443,655	$	0	$	38,443,655	$	0
Federal funds purchased and securities sold under repurchase agreements	165,690		165,690		165,690		0		0
Trading liability for short positions	1,560		1,560		1,560		0		0
Other short-term borrowings	1,752,000		1,752,000		0		1,752,000		0
Long-term debt	2,153,897		2,185,717		0		2,185,717		0
Earnout liability	11,016		11,016		0		0		11,016
Derivative liabilities	37,071		37,071		0		34,732		2,339

Note 8 - Derivative Instruments and Hedging Activities

Synovus utilizes derivative instruments to manage its exposure to various types of interest rate risk, exposures related to liquidity and credit risk, and to facilitate customer transactions. The primary types of derivative instruments utilized by Synovus consist of interest rate swaps, interest rate lock commitments made to prospective mortgage loan customers, commitments to sell fixed-rate mortgage loans, and foreign currency exchange forwards. Interest rate lock commitments represent derivative instruments since it is intended that such loans will be sold. Synovus is party to master netting arrangements with its dealer counterparties; however, Synovus does not offset assets and liabilities under these arrangements for financial statement presentation purposes. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" to the consolidated financial statements of Synovus' 2019 Form 10-K for additional information regarding accounting policies for derivatives.

Hedging Derivatives

Cash flow hedge relationships mitigate exposure to the variability of future cash flows or other forecasted transactions. Synovus has entered into interest rate swap contracts to manage overall cash flow changes related to interest rate risk exposure on index-based variable rate commercial loans. The contracts effectively modify Synovus' exposure to interest rate risk by utilizing receive fixed/pay index-based variable rate interest rate swaps.

For cash flow hedges, the effective portion of the gain or loss related to the derivative instrument is initially reported as a component of other comprehensive income and subsequently reclassified into earnings when the forecasted transaction affects earnings or when the hedge is terminated and included in the same income statement line item as the earnings effect of the hedged item.

Synovus recorded an unrealized gain of $9.8 million, or $7.3 million, after-tax, in OCI, during the first quarter of 2020, related to terminated cash flow hedges, which is being recognized into earnings in conjunction with the effective terms of the original swaps through the third quarter of 2025. Synovus recognized pre-tax income of ~~$270 thousand~~$1.0 million and ~~$390 thousand,~~$1.4 million, respectively, during the three and ~~six~~nine months ended ~~June~~September 30, 2020 related to the amortization of terminated cash flow hedges.

3634

As of ~~June~~September 30, 2020, Synovus expects to reclassify approximately $3940 million of pre-tax gains from AOCI into interest income on cash flow hedges over the next twelve months. Included in this amount is approximately $5 million in pre-tax gains related to the terminated cash flow hedges. As of ~~June~~September 30, 2020, the maximum length of time over which Synovus is hedging its exposure to the variability in future cash flows is through the first quarter of 2024.

For derivative instruments that are not designated as hedging instruments, changes in the fair value of the derivatives are recognized in earnings immediately.

Counterparty Credit Risk and Collateral

Entering into derivative contracts potentially exposes Synovus to the risk of counterparties’ failure to fulfill their legal obligations, including, but not limited to, potential amounts due or payable under each derivative contract. Notional principal amounts are often used to express the volume of these transactions, but the amounts potentially subject to credit risk are much smaller. Synovus assesses the credit risk of its dealer counterparties by regularly monitoring publicly available credit rating information, evaluating other market indicators, and periodically reviewing detailed financials. Dealer collateral requirements are determined via risk-based policies and procedures and in accordance with existing agreements. Synovus seeks to minimize dealer credit risk by dealing with highly rated counterparties and by obtaining collateral for exposures above certain predetermined limits. Management closely monitors credit conditions within the customer swap portfolio, which management deems to be of higher risk than dealer counterparties. Collateral is secured at origination and credit 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 risk 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 ~~June~~September 30, 2020 and December 31, 2019, collateral totaling ~~$159.3~~$159.8 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 sheets and related disclosures. At ~~June~~September 30, 2020 and December 31, 2019, Synovus had a variation margin of ~~$198.5~~$187.0 million and $113.7 million respectively, each reducing the derivative liability.

3735

The following table reflects the notional amount and fair value of derivative instruments included on the consolidated balance sheets. Beginning on October 19, 2020, CME Group Inc. transitioned price alignment and discounting for swap futures from the daily EFFR to the SOFR. This change will not have a material impact on Synovus' financial statements.


		June 30, 2020										December 31, 2019											September 30, 2020					December 31, 2019
				Fair Value								Fair Value									Fair Value						Fair Value
(in thousands)	(in thousands)	Notional Amount		Derivative Assets ⁽¹⁾		Derivative Liabilities ⁽²⁾		Notional Amount		Derivative Assets ⁽¹⁾		Derivative Liabilities ⁽²⁾		(in thousands)	Notional Amount		Derivative Assets (1)		Derivative Liabilities (2)		Notional Amount		Derivative Assets (1)		Derivative Liabilities (2)
Derivatives in cash flow hedging relationships:	Derivatives in cash flow hedging relationships:													Derivatives in cash flow hedging relationships:
Interest rate contracts	Interest rate contracts	$	2,750,000	$	99,070	$	—	$	2,000,000	$	54	$	8,624	Interest rate contracts	$	2,750,000	$	90,116	$	0	$	2,000,000	$	54	$	8,624
Total derivatives designated as hedging instruments	Total derivatives designated as hedging instruments			$	99,070	$	—			$	54	$	8,624	Total derivatives designated as hedging instruments			$	90,116	$	0			$	54	$	8,624

Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:													Derivatives not designated as hedging instruments:
Interest rate contracts⁽³⁾	Interest rate contracts⁽³⁾	$	8,647,036	$	390,228	$	192,556	$	7,258,159	$	138,672	$	25,849	Interest rate contracts(3)	$	8,761,038	$	362,700	$	176,338	$	7,258,159	$	138,672	$	25,849
Mortgage derivatives - interest rate lock commitments	Mortgage derivatives - interest rate lock commitments	348,408		7,680		—		70,481		1,290		—		Mortgage derivatives - interest rate lock commitments	451,953		10,212		0		70,481		1,290		0
Mortgage derivatives - forward commitments to sell fixed-rate mortgage loans	Mortgage derivatives - forward commitments to sell fixed-rate mortgage loans	325,000		—		1,396		107,000		—		168		Mortgage derivatives - forward commitments to sell fixed-rate mortgage loans	492,500		0		1,793		107,000		0		168
Other contracts⁽⁴⁾	Other contracts⁽⁴⁾	164,430		—		424		145,764		—		91		Other contracts(4)	186,074		0		377		145,764		0		91
Visa derivative	Visa derivative	—		—		1,755		—		—		2,339		Visa derivative	—		0		1,460		—		0		2,339
Total derivatives not designated as hedging instruments	Total derivatives not designated as hedging instruments			$	397,908	$	196,131			$	139,962	$	28,447	Total derivatives not designated as hedging instruments			$	372,912	$	179,968			$	139,962	$	28,447

⁽¹⁾Derivative assets are recorded in other assets on the consolidated balance sheets.

⁽²⁾Derivative liabilities are recorded in other liabilities on the consolidated balance sheets.

⁽³⁾Includes interest rate contracts for customer swaps and offsetting positions, net of variation margin payments.

⁽⁴⁾Includes risk participation agreements sold. Additionally, the notional amount of risk participation agreements purchased was ~~$2.8~~$2.7 million and $3.0 million at ~~June~~September 30, 2020 and December 31, 2019, respectively.

Synovus also provides foreign currency exchange services, primarily forward contracts, with counterparties to allow commercial customers to mitigate exchange rate risk. Synovus covers its risk by entering into an offsetting foreign currency exchange forward contract. The notional amount of foreign currency exchange forwards was ~~$35.1~~$25.1 million and $32.9 million at ~~June~~September 30, 2020 and December 31, 2019, respectively. The fair value of foreign currency exchange forwards was negligible at ~~June~~September 30, 2020 and December 31, 2019 due to the very short duration of these contracts.

The following table presents the effect of hedging derivative instruments on the consolidated statements of income and the total amounts for the respective line item affected for the three and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019.


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	(in thousands)	2020		2019		2020		2019		(in thousands)	2020		2019		2020		2019
Total amounts presented in the consolidated statements of income in interest income on loans	Total amounts presented in the consolidated statements of income in interest income on loans	$	5,261	$	—	$	5,086	$	—	Total amounts presented in the consolidated statements of income in interest income on loans	$	8,509	$	0	$	13,595	$	0

Gain/loss on cash flow hedging relationships:⁽¹⁾	Gain/loss on cash flow hedging relationships:⁽¹⁾									Gain/loss on cash flow hedging relationships:(1)
Interest rate swaps:	Interest rate swaps:									Interest rate swaps:
Realized gains (losses) reclassified from AOCI, pre-tax, to interest income on loans	Realized gains (losses) reclassified from AOCI, pre-tax, to interest income on loans	270		—		390		—		Realized gains (losses) reclassified from AOCI, pre-tax, to interest income on loans	1,031		0		1,421		0
Pre-tax income recognized on cash flow hedges	Pre-tax income recognized on cash flow hedges	$	270	$	—	$	390	$	—	Pre-tax income recognized on cash flow hedges	$	1,031	$	0	$	1,421	$	0

⁽¹⁾See "Part I - Item 1. Financial Statements and Supplementary Data - Note 6 - Shareholders' Equity and Other Comprehensive Income (Loss) in this Report for additional information.

3836

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 and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019 is presented below.


			Gain (Loss) Recognized in Consolidated Statements of Income																Gain (Loss) Recognized in Consolidated Statements of Income
			Three Months Ended June 30,						Six Months Ended June 30,								Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands)	(in thousands)	Location in Consolidated Statements of Income	2020		2019		2020		2019		(in thousands)	Location in Consolidated Statements of Income	2020		2019		2020		2019
Derivatives not designated as hedging instruments:	Derivatives not designated as hedging instruments:										Derivatives not designated as hedging instruments:
Interest rate contracts⁽¹⁾	Interest rate contracts⁽¹⁾	Capital markets income	$	653	$	221	$	49	$	91	Interest rate contracts(1)	Capital markets income	$	176	$	549	$	225	$	640
Other contracts⁽²⁾	Other contracts⁽²⁾	Capital markets income	4		—		(333)		—		Other contracts(2)	Capital markets income	47		(144)		(286)		(144)
Mortgage derivatives - interest rate lock commitments	Mortgage derivatives - interest rate lock commitments	Mortgage banking income	(634)		255		6,390		948		Mortgage derivatives - interest rate lock commitments	Mortgage banking income	2,532		22		8,922		970
Mortgage derivatives - forward commitments to sell fixed-rate mortgage loans	Mortgage derivatives - forward commitments to sell fixed-rate mortgage loans	Mortgage banking income	3,701		(243)		(1,228)		(229)		Mortgage derivatives - forward commitments to sell fixed-rate mortgage loans	Mortgage banking income	(396)		642		(1,624)		413
Visa derivative											Visa derivative	Other non-interest expense	0		(2,500)		0		(2,500)
Total derivatives not designated as hedging instruments	Total derivatives not designated as hedging instruments		$	3,724	$	233	$	4,878	$	810	Total derivatives not designated as hedging instruments		$	2,359	$	(1,431)	$	7,237	$	(621)

⁽¹⁾Additionally, losses related to termination of customer swaps of $2.5 million were recorded in other non-interest expense during the first quarter of 2020.

⁽²⁾Includes risk participation agreements sold.

Note 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 and ~~six~~nine months ended ~~June~~September 30, 2020 and 2019.


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share data)	(in thousands, except per share data)	2020		2019		2020		2019		(in thousands, except per share data)	2020		2019		2020		2019
Basic Net Income Per Common Share:	Basic Net Income Per Common Share:									Basic Net Income Per Common Share:
Net income available to common shareholders	Net income available to common shareholders	$	84,901	$	153,034	$	115,131	$	270,070	Net income available to common shareholders	$	83,283	$	127,435	$	198,414	$	397,505
Weighted average common shares outstanding	Weighted average common shares outstanding	147,288		157,389		147,300		159,148		Weighted average common shares outstanding	147,314		152,238		147,304		156,819
Net income per common share, basic	Net income per common share, basic	$	0.58	$	0.97	$	0.78	$	1.70	Net income per common share, basic	$	0.57	$	0.84	$	1.35	$	2.53
Diluted Net Income Per Common Share:	Diluted Net Income Per Common Share:									Diluted Net Income Per Common Share:
Net income available to common shareholders	Net income available to common shareholders	$	84,901	$	153,034	$	115,131	$	270,070	Net income available to common shareholders	$	83,283	$	127,435	$	198,414	$	397,505
Weighted average common shares outstanding	Weighted average common shares outstanding	147,288		157,389		147,300		159,148		Weighted average common shares outstanding	147,314		152,238		147,304		156,819
Effect of dilutive outstanding equity-based awards, warrants, and earnout payments	Effect of dilutive outstanding equity-based awards, warrants, and earnout payments	445		1,688		767		1,760		Effect of dilutive outstanding equity-based awards, warrants, and earnout payments	662		1,805		733		1,776
Weighted average diluted common shares	Weighted average diluted common shares	147,733		159,077		148,067		160,908		Weighted average diluted common shares	147,976		154,043		148,037		158,595
Net income per common share, diluted	Net income per common share, diluted	$	0.57	$	0.96	$	0.78	$	1.68	Net income per common share, diluted	$	0.56	$	0.83	$	1.34	$	2.51

Basic net income per common share is computed by dividing net income available to common shareholders by the average common shares outstanding for the period. Diluted net income per common share reflects the dilution that could occur if securities or other contracts to issue common stock were exercised or converted. The dilutive effect of outstanding stock options, restricted share units, and warrants is reflected in diluted net income per common share, unless the impact is anti-dilutive, by application of the treasury stock method.

As of ~~June~~September 30, 2020 and 2019, there were ~~1.3 million~~758 thousand and 40 thousand, respectively, potentially dilutive shares related to stock options to purchase shares of common stock that were outstanding during 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 - Commitments and Contingencies

In the normal course of business, Synovus enters into commitments to extend credit such as loan commitments and letters of credit to meet the financing needs of its customers. Synovus uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet ~~instruments.~~instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed

expiration dates or other termination clauses and may require payment of a fee. Synovus also has commitments to fund certain low-income housing investments, solar energy, and CRA investments.

The contractual amount of these financial instruments represents Synovus' maximum credit risk should the counterparty draw upon the commitment, and should the counterparty subsequently fail to perform according to the terms of the contract. Since many of the commitments are expected to expire without being drawn upon, total commitment amounts do not necessarily represent future cash requirements. Additionally, certain commitments (primarily consumer) can generally be canceled by providing notice to the borrower.

The ACL associated with unfunded commitments and letters of credit is 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 ~~June~~September 30, 2020, the ACL for unfunded commitments was ~~$61.0~~$60.8 million, including the impact of CECL and COVID-19, compared to a reserve of $1.4 million at December 31, 2019. Additionally, an immaterial amount of unearned fees relating to letters of credit are recorded within other liabilities on the consolidated balance sheets. See "Part I-Item 1. Financial Statements and Supplementary Data - Note 1 - Basis of Presentation" in this Report for more information on Synovus' adoption of CECL.

Synovus invests in certain LIHTC partnerships which are engaged in the development and operation of affordable multi-family housing pursuant to Section 42 of the Code. Additionally, Synovus invests in certain solar energy tax credit partnerships pursuant to Section 48 of the Code. Synovus typically acts as a limited partner in these investments and does not 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 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 is not exposed to losses beyond Synovus’ investment. Synovus receives tax credits related to these investments which are subject to recapture by taxing authorities based on compliance provisions required to be met at the project level.

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)	(in thousands)	June 30, 2020		December 31, 2019		(in thousands)	September 30, 2020		December 31, 2019
Letters of credit*	Letters of credit*	$	175,465	$	202,614	Letters of credit*	$	177,000	$	202,614
Commitments to fund commercial and industrial loans	Commitments to fund commercial and industrial loans	7,887,720		7,018,152		Commitments to fund commercial and industrial loans	7,990,189		7,018,152
Commitments to fund commercial real estate, construction, and land development loans	Commitments to fund commercial real estate, construction, and land development loans	2,823,515		3,032,252		Commitments to fund commercial real estate, construction, and land development loans	2,891,857		3,032,252
Commitments under home equity lines of credit	Commitments under home equity lines of credit	1,584,619		1,501,452		Commitments under home equity lines of credit	1,588,844		1,501,452
Unused credit card lines	Unused credit card lines	971,419		877,929		Unused credit card lines	984,636		877,929
Other loan commitments	Other loan commitments	435,907		485,371		Other loan commitments	458,509		485,371
Total letters of credit and unfunded lending commitments	Total letters of credit and unfunded lending commitments	$	13,878,645	$	13,117,770	Total letters of credit and unfunded lending commitments	$	14,091,035	$	13,117,770


Investments in low income housing, solar energy tax credit and other CRA partnerships:	Investments in low income housing, solar energy tax credit and other CRA partnerships:					Investments in low income housing, solar energy tax credit and other CRA partnerships:
Carrying amount included in other assets	Carrying amount included in other assets	$	168,058	$	146,612	Carrying amount included in other assets	$	214,615	$	146,612
Amount of future funding commitments included in carrying amount	Amount of future funding commitments included in carrying amount	92,025		78,266		Amount of future funding commitments included in carrying amount	124,866		78,266
Permanent and short-term construction loans and letter of credit commitments	Permanent and short-term construction loans and letter of credit commitments	12,488		2,124		Permanent and short-term construction loans and letter of credit commitments	52,686		2,124
Funded portion of permanent and short-term loans and letters of credit	Funded portion of permanent and short-term loans and letters of credit	5,146		3,196		Funded portion of permanent and short-term loans and letters of credit	5,194		3,196

* Represent the contractual amount net of risk participations purchased of approximately $31 million and $33 million at ~~June~~September 30, 2020 and December 31, 2019, respectively.

Merchant Services

In accordance with credit and debit card association rules, Synovus provides merchant processing services for customers. Prior to the second quarter of 2020, these services were provided through a referral relationship which was replaced during the second quarter of 2020 with a new contractual arrangement under which certain sales and processing support are provided through an outside merchant services provider with Synovus owning the merchant contract relationship. In addition, Synovus sponsors various third-party MPS businesses that process credit and debit card transactions on behalf of merchants. In connection with these services, a liability may arise in the event of a billing dispute between the merchant and a cardholder that is ultimately resolved in the cardholder's favor. If the merchant defaults on its obligations, the cardholder, through its issuing bank, generally has until six months after the date of the transaction to present a chargeback to the MPS, which is primarily liable for any losses on covered transactions. However, if a sponsored MPS fails to meet its obligations, then Synovus, as the sponsor, could be held liable for the disputed amount. Synovus seeks to mitigate this risk through its contractual arrangements

with the MPS and the merchants by withholding future settlements, retaining cash reserve accounts and/or obtaining other security. For the three and ~~six~~nine months ended ~~June~~September 30, 2020, Synovus and the sponsored entities processed and settled ~~$16.40~~$20.23 billion and ~~$34.75~~$55.47 billion of

transactions, respectively. For the three and ~~six~~nine months ended ~~June~~September 30, 2019, the sponsored entities processed and settled ~~$18.88~~$19.13 billion and ~~$36.59~~$55.72 billion of transactions, respectively.

Synovus covered chargebacks related to a particular sponsored MPS during 2019 and 2018 where the MPS’s cash reserve account was unavailable to support the chargebacks. As of ~~June~~September 30, 2020, the remaining amount due to Synovus from the MPS is ~~$20.9~~$20.6 million, compared to $21.4 million at December 31, 2019. During the first quarter of 2020, Synovus recorded a $2.7 million reserve in other operating expenses associated with the chargebacks, reflecting the amount that Synovus does not expect to collect. The net balance of ~~$18.2~~$17.9 million at ~~June~~September 30, 2020 is included in other assets and classified in NPAs. While Synovus has contractual protections to mitigate against loss, repayment of the amounts owed to Synovus will depend in large part upon the continued financial viability and/or valuation of the MPS and the availability of any cash reserve accounts.

Legal Proceedings

Synovus and its subsidiaries are subject to various legal proceedings, claims and disputes 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, 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, 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.

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 ~~June~~September 30, 2020 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 0 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 makers. Prior to the fourth quarter of 2019, Synovus identified its overall banking operations as its only reportable segment. Synovus has 3 major reportable business segments: Community Banking, Wholesale Banking, and Financial Management Services (FMS),

with functional activities such as treasury, technology, operations, marketing, finance, enterprise risk, legal, human resources, corporate communications, executive management, among others, included in Treasury and Corporate Other.

Business segment results are determined based upon Synovus' management reporting system, which assigns balance sheet and income statement items to each of the business segments. Certain assets, liabilities, revenues, and expenses not allocated or attributable to a particular business segment are included in Treasury and Corporate Other. Synovus's third-party lending partnership consumer loans and held for sale loans as well as PPP C&I loans are included in Treasury and Corporate Other. The management accounting policies and processes utilized in compiling segment financial information are highly subjective and, unlike financial accounting, are not based on authoritative guidance similar to GAAP. As a result, reported segment results are not necessarily comparable with similar information reported by other financial institutions.

The Community Banking business segment serves customers using a relationship-based approach through its branch, ATM, commercial, and private wealth network in addition to mobile, Internet, and telephone banking. This segment primarily provides individual, small business, and corporate customers with an array of comprehensive banking products and services including commercial, home equity, and other consumer loans, credit and debit cards, and deposit accounts.

The Wholesale Banking business segment serves primarily larger corporate customers by providing commercial lending and deposit services through specialty teams including middle market, CRE, senior housing, national accounts, premium finance, structured lending, healthcare, and asset-based lending.

The FMS business segment serves its customers by providing mortgage and trust services and also specializing in professional portfolio management for fixed-income securities, investment banking, the execution of securities transactions as a broker/dealer, asset management, and financial planning services, as well as the provision of individual investment advice on equity and other securities.

Synovus uses a centralized FTP methodology to attribute appropriate net interest income to the business segments. The intent of the FTP methodology is to transfer interest rate risk from the business segments by providing matched duration funding of assets and liabilities. The result is to centralize the financial impact, management, and reporting of interest rate risk in the Treasury and Corporate Other function where it can be centrally monitored and managed. Treasury and Corporate Other charges (credits) an internal cost of funds for assets held in (or pays for funding provided by) each business segment. The FTP rate is based on prevailing market interest rates for comparable duration assets (or liabilities).

The following tables present ~~certain~~certain financial information for each reportable business segment for the three and ~~six~~nine months ended ~~June~~September 30, 2020. During the three months ended September 30, 2020, Synovus recognized a $44.9 million non-cash goodwill impairment charge representing all of the goodwill allocated to the Consumer Mortgage reporting unit (which is included in the FMS reportable segment) driven by significant mortgage refinance activity at record-low mortgage rates and the FOMC's updated guidance in the third quarter of 2020 regarding inflation targeting and their expectations for interest rates to remain low for an extended period of time. To ~~provide~~provide comparable prior year information, Synovus has included proforma business segment financial information for the three and ~~six~~nine months ended ~~June~~September 30, 2019 utilizing various allocation methodologies based on balance sheet and income statement items assigned to each business segment. The application and development of management reporting methodologies is a dynamic process and is subject to periodic enhancements. As these enhancements are made, financial results presented by each reportable business segment may be periodically revised.


		Three Months Ended June 30, 2020																			Three Months Ended September 30, 2020
(in thousands)	(in thousands)	Community Banking		Wholesale Banking		Financial Management Services		Treasury and Corporate Other		Synovus Consolidated		(in thousands)	Community Banking		Wholesale Banking		Financial Management Services		Treasury and Corporate Other		Synovus Consolidated
Net interest income	Net interest income	$	220,638	$	145,016	$	18,832	$	(7,920)	$	376,566	Net interest income	$	220,426	$	139,080	$	20,986	$	(3,502)	$	376,990
Non-interest revenue	Non-interest revenue	25,982		5,654		52,972		88,876		173,484		Non-interest revenue	29,982		5,496		65,820		13,113		114,411
Non-interest expense	Non-interest expense	75,984		22,934		48,281		136,942		284,141		Non-interest expense	68,571		19,530		92,931		135,623		316,655
Pre-provision net revenue	Pre-provision net revenue	$	170,636	$	127,736	$	23,523	$	(55,986)	$	265,909	Pre-provision net revenue	$	181,837	$	125,046	$	(6,125)	$	(126,012)	$	174,746

Three Months Ended June 30, 2019 Proforma
(in thousands) Community Banking Wholesale Banking Financial Management Services Treasury and Corporate Other Synovus Consolidated
Net interest income $ 207,493 $ 128,857 $ 30,978 $ 29,934 $ 397,262
Non-interest revenue 34,050 7,937 38,628 9,192 89,807
Non-interest expense 73,910 14,709 37,508 137,999 264,126
Pre-provision net revenue $ 167,633 $ 122,085 $ 32,098 $ (98,873) $ 222,943


		Six Months Ended June 30, 2020																			Three Months Ended September 30, 2019 Proforma
(in thousands)	(in thousands)	Community Banking		Wholesale Banking		Financial Management Services		Treasury and Corporate Other		Synovus Consolidated		(in thousands)	Community Banking		Wholesale Banking		Financial Management Services		Treasury and Corporate Other		Synovus Consolidated
Net interest income	Net interest income	$	417,885	$	268,185	$	35,614	$	28,142	$	749,826	Net interest income	$	203,197	$	133,773	$	26,582	$	38,545	$	402,097
Non-interest revenue	Non-interest revenue	59,431		14,910		100,247		102,753		277,341		Non-interest revenue	35,145		7,092		40,966		5,557		88,760
Non-interest expense	Non-interest expense	151,288		41,136		91,570		276,427		560,421		Non-interest expense	76,414		25,413		40,413		134,070		276,310
Pre-provision net revenue	Pre-provision net revenue	$	326,028	$	241,959	$	44,291	$	(145,532)	$	466,746	Pre-provision net revenue	$	161,928	$	115,452	$	27,135	$	(89,968)	$	214,547


		Six Months Ended June 30, 2019 Proforma																			Nine Months Ended September 30, 2020
(in thousands)	(in thousands)	Community Banking		Wholesale Banking		Financial Management Services		Treasury and Corporate Other		Synovus Consolidated		(in thousands)	Community Banking		Wholesale Banking		Financial Management Services		Treasury and Corporate Other		Synovus Consolidated
Net interest income	Net interest income	$	422,253	$	254,468	$	59,843	$	57,874	$	794,438	Net interest income	$	638,311	$	407,265	$	56,600	$	24,640	$	1,126,816
Non-interest revenue	Non-interest revenue	66,826		14,695		70,907		16,757		169,185		Non-interest revenue	89,413		20,406		166,067		115,866		391,752
Non-interest expense	Non-interest expense	148,727		29,728		70,726		307,356		556,537		Non-interest expense	219,859		63,176		184,501		409,540		877,076
Pre-provision net revenue	Pre-provision net revenue	$	340,352	$	239,435	$	60,024	$	(232,725)	$	407,086	Pre-provision net revenue	$	507,865	$	364,495	$	38,166	$	(269,034)	$	641,492

June 30, 2020
(dollars in thousands) Community Banking Wholesale Banking Financial Management Services Treasury and Corporate Other Synovus Consolidated
Total loans net of deferred fees and costs $ 11,837,955 $ 18,718,503 $ 5,544,768 $ 3,813,071 $ 39,914,297
Total deposits $ 28,777,901 $ 9,737,901 $ 313,296 $ 5,365,482 $ 44,194,580
Total full-time equivalent employees 2,273 269 831 1,935 5,308
December 31, 2019
(dollars in thousands) Community Banking Wholesale Banking Financial Management Services Treasury and Corporate Other Synovus Consolidated
Total loans net of deferred fees and costs $ 12,170,914 $ 17,643,509 $ 5,285,455 $ 2,062,572 $ 37,162,450
Total deposits $ 25,610,777 $ 8,314,184 $ 284,716 $ 4,195,827 $ 38,405,504
Total full-time equivalent employees 2,301 213 839 1,911 5,264


	Nine Months Ended September 30, 2019 Proforma
(in thousands)	Community Banking		Wholesale Banking		Financial Management Services		Treasury and Corporate Other		Synovus Consolidated
Net interest income	$	625,450	$	388,241	$	86,425	$	96,419	$	1,196,535
Non-interest revenue	101,971		21,787		111,873		22,314		257,945
Non-interest expense	225,141		55,141		111,139		441,426		832,847
Pre-provision net revenue	$	502,280	$	354,887	$	87,159	$	(322,693)	$	621,633


	September 30, 2020
(dollars in thousands)	Community Banking		Wholesale Banking		Financial Management Services		Treasury and Corporate Other		Synovus Consolidated



Total loans net of deferred fees and costs	$	11,489,106	$	19,204,961	$	5,412,944	$	3,442,836	$	39,549,847


Total deposits	$	28,870,928	$	10,339,568	$	414,243	$	5,041,165	$	44,665,904
Total full-time equivalent employees	2,200		285		843		1,904		5,232

	December 31, 2019
(dollars in thousands)	Community Banking		Wholesale Banking		Financial Management Services		Treasury and Corporate Other		Synovus Consolidated
Total loans net of deferred fees and costs	$	12,170,914	$	17,643,509	$	5,285,455	$	2,062,572	$	37,162,450
Total deposits	$	25,610,777	$	8,314,184	$	284,716	$	4,195,827	$	38,405,504
Total full-time equivalent employees	2,301		213		839		1,911		5,264

Note 12 - Subsequent Events

Issuance of Subordinated Debt by Synovus Bank

On October 29, 2020, Synovus Bank issued $200.0 million aggregate principal amount of 4.000% Fixed-to-Fixed Rate Subordinated Bank Notes due October 29, 2030 (the "Maturity Date"). Subject to any redemption prior to the Maturity Date, the Notes will bear interest from and including the original issue date to, but excluding, October 29, 2025 (the ‘‘Reset Date’’), at a fixed rate of 4.000% per annum and from and including the Reset Date to, but excluding the Maturity Date, the Notes will

bear interest at a fixed rate that will be the Five-year U.S. Treasury Rate (as defined) as of the Reset Determination Date, plus 3.625% per annum. Interest on the Notes will be payable semi-annually in arrears on April 29 and October 29 of each year, commencing on April 29, 2021. Synovus Bank may redeem the Notes, in whole but not in part, (i) at any time within 90 days following a Regulatory Capital Treatment Event or Tax Event (in each case as defined) or Synovus Bank becoming required to be registered as an investment company pursuant to the Investment Company Act of 1940, as amended, or (ii) on the Reset Date, in each case at a redemption price equal to 100% of the principal amount of the Notes, plus accrued and unpaid interest, if any, to but excluding the redemption date. The Notes are not redeemable at the option or election of holders.

Voluntary Early Retirement Program

Synovus incurred approximately $14 million in one-time termination benefit restructuring charges in October 2020 associated with a voluntary early retirement program offered to employees as part of the Synovus Forward efficiency initiatives.

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 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;


(4)						the impact of recent, proposed, or potential changes in governmental policy, laws and regulations, including recently enacted laws, regulations and guidance related to government stimulus programs related to the COVID-19 pandemic, proposed and potential changes in the regulation and taxation of banks and financial institutions, or the interpretation or application thereof and the uncertainty of future implementation and enforcement of these regulations;


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


~~(5)~~(6)						the risks that if economic conditions worsen further or regulatory capital rules are modified, we may be required to undertake initiatives to improve our capital position;


~~(6)~~(7)						the risk that we may be required to make substantial expenditures to keep pace with regulatory initiatives and the rapid technological changes in the financial services market;


~~(7)~~						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;


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


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


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


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


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


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


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


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


~~(17)~~(16)						the risk that our enterprise risk management framework, our compliance program, or our corporate governance and supervisory oversight functions may not identify or address risks adequately, which may result in unexpected losses;


~~(18)~~(17)						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;


~~(19)~~(18)						risks related to the ability of our operational framework to identify and manage risks associated with our business such as credit risk, compliance risk, reputational risk, and operational risk, including third-party business partners, as well as our relationship with third-party vendors and other service providers;


(19)						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;


(20)						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;


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


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


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


(24)						risks related to regulatory approval to take certain actions, including any dividends on our common stock or 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 effects of any damages to our reputation resulting from developments related to any of the items identified above; and


(28)						other factors and other information contained in this Report and in other reports and filings that we make with the SEC under the Exchange Act, including, without limitation, those found in "Part II - Item 1A. Risk Factors" of this Report.

For a discussion of these and other risks that may cause actual results to differ from expectations, refer to “Part I-Item 1A. Risk Factors” and other information contained in Synovus' 2019 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 Company 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 financial planning, and investment advisory services through its wholly-owned subsidiaries, 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 293 branches~~with 292 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 and ~~six~~nine months ended ~~June~~September 30, 2020 and financial condition as of ~~June~~September 30, 2020 and December 31, 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’ 2019 Form 10-K.

Management's Discussion and Analysis of Financial Condition and Results of Operations consists of:

•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.

•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.

•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.

4645

DISCUSSION OF RESULTS OF OPERATIONS


Table 1 - Consolidated Financial Highlights	Table 1 - Consolidated Financial Highlights																	Table 1 - Consolidated Financial Highlights
		Three Months Ended June 30,														Six Months Ended June 30,														Three Months Ended September 30,					Nine Months Ended September 30,
(dollars in thousands, except per share data)	(dollars in thousands, except per share data)	2020			2019			Change		2020			2019			Change		(dollars in thousands, except per share data)	2020			2019			Change		2020			2019			Change
Net interest income	Net interest income	$	376,566		$	397,262		(5.2)	%	$	749,826		$	794,438		(5.6)	%	Net interest income	$	376,990		$	402,097		(6)	%	$	1,126,816		$	1,196,535		(6)	%
Provision for credit losses⁽¹⁾	Provision for credit losses⁽¹⁾	141,851			12,119			nm		300,573			35,688			742.2		Provision for credit losses(1)	43,383			27,562			57		343,956			63,250			444
Non-interest revenue	Non-interest revenue	173,484			89,807			93.2		277,341			169,185			63.9		Non-interest revenue	114,411			88,760			29		391,752			257,945			52
Adjusted non-interest revenue⁽²⁾	Adjusted non-interest revenue⁽²⁾	95,368			90,197			5.7		194,745			168,643			15.5		Adjusted non-interest revenue(2)	115,701			91,297			27		310,446			259,940			19
Total FTE revenues	Total FTE revenues	550,911			487,880			12.9		1,028,814			965,064			6.6		Total FTE revenues	492,357			491,676			—		1,521,171			1,456,736			4
Adjusted total revenues⁽²⁾	Adjusted total revenues⁽²⁾	472,795			488,270			(3.2)		946,218			964,522			(1.9)		Adjusted total revenues(2)	493,647			494,213			—		1,439,865			1,458,731			(1)
Non-interest expense	Non-interest expense	284,141			264,126			7.6		560,421			556,537			0.7		Non-interest expense	316,655			276,310			15		877,076			832,847			5
Adjusted non-interest expense⁽²⁾	Adjusted non-interest expense⁽²⁾	276,411			256,707			7.7		547,567			499,360			9.7		Adjusted non-interest expense(2)	268,742			258,474			4		816,310			757,834			8
Income before income taxes	Income before income taxes	124,058			210,824			(41.2)		166,173			371,398			(55.3)		Income before income taxes	131,363			186,985			(30)		297,536			558,383			(47)
Net income	Net income	93,192			156,184			(40.3)		131,712			276,370			(52.3)		Net income	91,574			135,726			(33)		223,286			412,096			(46)
Net income available to common shareholders	Net income available to common shareholders	84,901			153,034			(44.5)		115,131			270,070			(57.4)		Net income available to common shareholders	83,283			127,435			(35)		198,414			397,505			(50)
Net income per common share, basic	Net income per common share, basic	0.58			0.97			(40.7)		0.78			1.70			(53.9)		Net income per common share, basic	0.57			0.84			(32)		1.35			2.53			(47)
Net income per common share, diluted	Net income per common share, diluted	0.57			0.96			(40.3)		0.78			1.68			(53.7)		Net income per common share, diluted	0.56			0.83			(32)		1.34			2.51			(47)
Adjusted net income per common share, diluted⁽²⁾	Adjusted net income per common share, diluted⁽²⁾	0.23			1.00			(76.9)		0.44			1.98			(78.0)		Adjusted net income per common share, diluted(2)	0.89			0.97			(9)		1.32			2.96			(55)
Net interest margin⁽³⁾	Net interest margin⁽³⁾	3.13		%	3.69		%	(56)	bps	3.25		%	3.74		%	(49)	bps	Net interest margin(3)	3.10		%	3.69		%	(59)	bps	3.20		%	3.72		%	(52)	bps
Net charge-off ratio⁽³⁾	Net charge-off ratio⁽³⁾	0.24			0.13			11		0.23			0.16			7		Net charge-off ratio(3)	0.29			0.22			7		0.25			0.18			7
Return on average assets⁽³⁾	Return on average assets⁽³⁾	0.71			1.34			(63)		0.52			1.21			(69)		Return on average assets(3)	0.69			1.14			(45)		0.58			1.18			(60)
Adjusted return on average assets⁽²⁾⁽³⁾	Adjusted return on average assets⁽²⁾⁽³⁾	0.32			1.39			(107)		0.32			1.42			(110)		Adjusted return on average assets(2)(3)	1.05			1.33			(28)		0.57			1.39			(82)
Efficiency ratio-FTE	Efficiency ratio-FTE	51.58			54.14			(256)		54.47			57.67			(320)		Efficiency ratio-FTE	64.31			56.20			811		57.66			57.17			49
Adjusted tangible efficiency ratio⁽²⁾	Adjusted tangible efficiency ratio⁽²⁾	57.91			52.08			583		57.31			51.17			614		Adjusted tangible efficiency ratio(2)	53.91			51.71			220		56.14			51.36			478

⁽¹⁾Beginning January 1, 2020, provision calculation is based on current expected credit loss methodology. Prior to January 1, 2020, calculation was based on incurred loss methodology.

⁽²⁾See "Table 14 - Reconciliation of Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.

⁽³⁾Annualized


		June 30, 2020			March 31, 2020			Sequential Quarter Change			June 30, 2019			Year-Over-Year Change							September 30, 2020				June 30, 2020				Sequential Quarter Change				September 30, 2019			Year-Over-Year Change
(dollars in thousands)	(dollars in thousands)																																				June 30, 2020	Sequential Quarter Change	September 30, 2019	Year-Over-Year Change
Loans, net of deferred fees and costs	Loans, net of deferred fees and costs	$	39,914,297		$	38,258,024		$	1,656,273		$	36,138,561		$	3,775,736		Loans, net of deferred fees and costs	$	39,549,847			$	39,914,297			$	(364,450)			$	36,417,826			$	3,132,021
Total average loans	Total average loans	40,136,090			37,593,045			2,543,045			35,777,127			4,358,963			Total average loans	39,762,572				40,136,090				(373,518)				36,201,322				3,561,250
Total deposits	Total deposits	44,194,580			39,826,585			4,367,995			37,966,722			6,227,858			Total deposits	44,665,904				44,194,580				471,324				37,433,070				7,232,834
Core deposits (excludes brokered deposits)	Core deposits (excludes brokered deposits)	39,904,278			35,838,637			4,065,641			34,963,178			4,941,100			Core deposits (excludes brokered deposits)	40,756,645				39,904,278				852,367				34,237,575				6,519,070
Core transaction deposits (excludes brokered and public fund deposits)	Core transaction deposits (excludes brokered and public fund deposits)	29,425,251			24,790,621			4,634,630			23,268,923			6,156,328			Core transaction deposits (excludes brokered and public fund deposits)	30,988,237				29,425,251				1,562,986				23,794,467				7,193,770
Total average deposits	Total average deposits	43,096,475			38,687,207			4,409,268			37,899,662			5,196,813			Total average deposits	44,339,497				43,096,475				1,243,022				37,714,145				6,625,352
Non-performing assets ratio	Non-performing assets ratio	0.44		%	0.50		%	(6)		bps	0.39		%	5		bps	Non-performing assets ratio	0.49		%		0.44		%		5		bps		0.42		%		7		bps
Non-performing loans ratio	Non-performing loans ratio	0.37			0.41			(4)			0.34			3			Non-performing loans ratio	0.43				0.37				6				0.32				11
Past due loans over 90 days	Past due loans over 90 days	0.02			0.02			—			0.02			—			Past due loans over 90 days	0.02				0.02				—				0.04				(2)
CET1 capital	CET1 capital	$	3,827,229		$	3,744,415		$	82,814		$	3,899,532		$	(72,303)		CET1 capital	$	3,913,402			$	3,827,229			$	86,173			$	3,660,078			$	253,324
Tier 1 capital	Tier 1 capital	4,364,374			4,281,560			82,814			4,094,672			269,702			Tier 1 capital	4,450,547				4,364,374				86,173				4,196,628				253,919
Total risk-based capital	Total risk-based capital	5,459,568			5,289,039			170,529			4,913,043			546,525			Total risk-based capital	5,536,918				5,459,568				77,350				5,023,138				513,780
CET1 capital ratio	CET1 capital ratio	8.90		%	8.70		%	20		bps	9.61		%	(71)		bps	CET1 capital ratio	9.30		%		8.90		%		40		bps		8.96		%		34		bps
Tier 1 capital ratio	Tier 1 capital ratio	10.15			9.95			20			10.09			6			Tier 1 capital ratio	10.57				10.15				42				10.27				30
Total risk-based capital ratio	Total risk-based capital ratio	12.70			12.29			41			12.11			59			Total risk-based capital ratio	13.16				12.70				46				12.30				86
Total shareholders’ equity to total assets ratio	Total shareholders’ equity to total assets ratio	9.34			10.01			(67)			10.05			(71)			Total shareholders’ equity to total assets ratio	9.55				9.34				21				10.22				(67)
Tangible common equity ratio⁽¹⁾	Tangible common equity ratio⁽¹⁾	7.41			7.94			(53)			8.56			(115)			Tangible common equity ratio(1)	7.67				7.41				26				8.04				(37)
Return on average common equity⁽²⁾	Return on average common equity⁽²⁾	7.48			2.75			473			13.90			(642)			Return on average common equity(2)	7.28				7.48				(20)				11.36				(408)
Adjusted return on average common equity⁽¹⁾⁽²⁾	Adjusted return on average common equity⁽¹⁾⁽²⁾	3.00			2.79			21			14.43			nm			Adjusted return on average common equity(1)(2)	11.48				3.00				848				13.35				(187)
Adjusted return on average tangible common equity⁽¹⁾⁽²⁾	Adjusted return on average tangible common equity⁽¹⁾⁽²⁾	3.60			3.39			21			16.70			nm			Adjusted return on average tangible common equity(1)(2)	13.24				3.60				964				15.46				(222)

⁽¹⁾See "Table 14 - Reconciliation of Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.

⁽²⁾Quarter annualized

4746

~~COVID-19 Healthcare Crisis~~Economic Environment and ~~Economic Environment~~Recent Events

The ongoing COVID-19 healthcare crisis and public health response ~~to contain it~~ have triggered recessionary economic and financial market conditions during ~~a large portion~~the majority of the first ~~half~~nine months of 2020. During March 2020, in an effort to lessen the impact of COVID-19 on consumers and businesses, the Federal Reserve reduced the federal funds rate 1.5 percentage points to 0.00 to 0.25 percent and the U.S. government enacted the CARES Act, the largest economic stimulus package in the nation’s history.

~~Synovus' response~~Synovus responded to the COVID-19 pandemic ~~included~~by taking measures early, beginning in March 2020, to improve the health and safety of our customers, team members, ~~customers,~~ and communities including remote work capabilities and branch service enhancements; bonus payments to hourly team members required to work on-site; payment deferments on approximately $6 billion of our loan portfolio during the second quarter; and forgiveness of NSF and monthly service charges for ~~customers impacted. Additionally,~~impacted customers. Synovus participated in ~~delivering PPP loans to~~the Paycheck Protection Program (PPP) and delivered close to 19,000 ~~customers beginning on April 3, 2020 and funded~~loans totaling nearly $2.9 billion ~~in PPP loans~~ during the second ~~quarter~~quarter.. The average PPP loan was approximately $150 thousand, and the customers that received those loans ~~employ~~employed over 335 thousand individuals. Synovus has also participated in the Federal Reserve's Main Street Lending Program to support small and medium-sized businesses impacted by COVID-19. Additionally, although the vast majority of our customers were no longer in a payment deferment program at the end of the third quarter, we have continued to work with our borrowers who have been impacted by the pandemic.

In September, six months after converting our branches to drive-thru and appointment-only, our retail branch network re-opened its lobbies to walk-in customers, implementing CDC safety guidelines and branch design enhancements, including plexiglass barriers, customer directional signage, mask requirements and social distancing protocols. Synovus' team members, many of whom worked remotely during the second and third quarters, re-entered the work place in a phased-in approach. This re-entry was carefully designed by team members themselves and carefully monitored through re-entry surveys and touchpoints. Synovus also provided additional benefits for team members directly impacted by the virus, including supplemental paid-time off and expanded medical benefits. In our communities, we have responded to the COVID-19 healthcare crisis and economic uncertainty with financial contributions to more than a dozen organizations for COVID-19 relief efforts, matching contributions for COVID-19 donations to the American Red Cross, and meal donations for first responders and health care workers.

In light of current economic uncertainty, Synovus has suspended its share repurchase activity beyond the $16.2 million completed during the first quarter and withdrawn 2020 guidance and long-term goals announced at the beginning of the year. Significant economic uncertainty remains, including the trajectory of the economic recovery which we expect will be impacted by any additional government stimulus plans.

Synovus is committed to addressing racial equality and social justice and has taken a number of actions during the third quarter to expand efforts to advance economic empowerment and racial equity, including establishing an internal advisory council to the CEO comprised of certain senior African American leaders, funding a $1.0 million contribution to the United Negro College Fund for the establishment of a scholarship for African American students in our footprint, providing foundational unconscious bias training to additional leaders across the footprint, and continuing to diversify an already strong and diverse Board of Directors with a new independent director. We continue to make progress toward the objectives of our CEO-sponsored inclusion and diversity initiative to improve minority representation within our team member population and female and minority representation in senior leadership, all while improving inclusiveness of all team members.

During the third quarter, we communicated new leadership expectations and leadership training development tools for our team members. We also launched a new leadership development program for our leaders. These new expectation and training tools are intended to help team members understand what leadership looks like at the Company, and to ensure alignment of the daily work experience with the Company’s culture and values.

Executive Summary

Net income available to common shareholders for the ~~second~~third quarter of 2020 was ~~$84.9~~$83.3 million, or ~~$0.57~~$0.56 per diluted common share, a decline of ~~44.5%~~35% and ~~40.3%~~32%, respectively, ~~compared~~compared to the ~~second~~third quarter of 2019 and adjusted net income per common share, diluted⁽¹⁾ was ~~$0.23,~~$0.89, down ~~76.9%~~9% compared to ~~$1.00~~$0.97 for the ~~second~~third quarter of 2019. Net income available to common shareholders for the first ~~six~~nine months of 2020 was ~~$115.1~~$198.4 million, or ~~$0.78~~$1.34 per diluted common share, a decline of ~~57.4%~~50% and ~~53.7%~~47%, respectively, compared to the first ~~six~~nine months of 2019 and adjusted net income per common share, diluted⁽¹⁾ was ~~$0.44,~~$1.32, down ~~78.0%~~55% compared to ~~$1.98~~$2.96 for the first ~~six~~nine months of 2019. The year-over-year decline in adjusted net income per common share for all periods was impacted by deterioration in the economic environment caused by the COVID-19 pandemic and driven by a significant increase in provision for credit losses following the adoption of CECL on January 1, 2020, ~~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.

in PAA (primarily comprised of declines of $27.0 million of loan accretion and $32.9 million of deposit premium amortization) associated with the FCB acquisition and declines in market interest rates, which were somewhat offset by higher average earning assets. Net interest margin was down 4952 bps over the comparable ~~six-month~~nine-month periods to ~~3.25%~~3.20%, due primarily to the decline in market interest rates in addition to declines in PAA. On a sequential quarter basis, net interest income was up ~~$3.3 million, or 0.9%,~~$424 thousand and net interest margin for the ~~second~~third quarter was ~~3.13%~~3.10%, which was down 243 bps compared to the ~~first~~second quarter of ~~2020.~~2020. The sequential quarter decline in net interest margin was primarily driven by the ~~full quarter~~ impact of ~~the March 2020 emergency rate cuts by the Federal Reserve, as well as excess liquidity.~~ ~~While~~bond repositioning and student loan sales executed in the second ~~half~~quarter of 2020, partially offset by further declines in deposit pricing and favorable deposit remixing trends. We continue to expect modest downward pressure on NIM as the ~~year~~repricing within our fixed-rate asset portfolios is ~~expected to be favorably impacted~~partially offset by ~~additional~~continued declines in overall deposit costs. Excluding the potential impacts from PPP ~~fee accretion~~ ~~as PPP loans are forgiven~~,forgiveness, we expect net interest income and net interest margin ~~are expected~~ to ~~experiencedownward pressure due to~~ ~~certain~~ ~~strategic~~ ~~balance sheet management activities which were completed late~~decrease modestly in the ~~second~~fourth quarter. of 2020 as compared to the third quarter of 2020.

Non-interest revenue for the ~~second~~third quarter of 2020 was ~~$173.5~~$114.4 million, up ~~$83.7~~$25.7 million, or ~~93.2%~~29%, and year-to-date was ~~$277.3~~$391.8 million, up ~~$108.2~~$133.8 million, or ~~63.9%~~52%, compared to the same periods in ~~2019 and included gains on sales of investment securities available for sale of $69.4 million and $78.1 million, respectively.~~2019. Adjusted non-interest revenue⁽¹⁾which excludes net investment securities gains/(losses) and gain on sale/fair value increase/(decrease) of private equity investments, for the ~~second~~third quarter of 2020 was ~~$95.4~~$115.7 million, up ~~$5.2~~$24.4 million, or ~~5.7%~~27%, from the third quarter of 2019, and on a year-to-date basis was ~~$194.7~~$310.4 million compared to ~~$168.6~~$259.9 million for the first ~~six~~nine months of 2019, up ~~$26.1~~$50.5 million, or ~~15.5%~~19%. The increase in adjusted non-interest revenue was due primarily to strong growth in mortgage banking income with record production driven by the current rate environment. AsIn the fourth quarter, we expect to see declines in mortgage ~~activity normalizes, Synovus believes a reduction of adjusted non-interest~~ revenue, inas compared to the third quarter ~~is likely before we see a return to consistent growth in fee revenue as the economy recovers.~~of 2020.

Non-interest expense for the ~~second~~third quarter of 2020 was ~~$284.1~~$316.7 million, up ~~$20.0~~$40.3 million, or ~~7.6%~~15%, compared to the third quarter of 2019 and adjusted non-interest expense⁽¹⁾of ~~$276.4~~$268.7 million was up~~$19.7~~ $10.3 million,, or ~~7.7%, compared to the second quarter of 2019.~~4%. On a year-to-date basis, non-interest expense was up ~~$3.9~~$44.2 million, or ~~0.7%~~5%, and adjusted non-interest expense⁽¹⁾ was up ~~$48.2~~$58.5 million, or ~~9.7%, compared~~8%. During the three months ended September 30, 2020, Synovus recognized a $44.9 million non-cash goodwill impairment charge representing the goodwill allocated to the ~~same period in 2019.~~Consumer Mortgage reporting unit. The increase in adjusted expense during the first nine months of 2020 was largely driven by mortgage production commissions, expense associated with ~~Synovus~~'Synovus' internal revenue growth and efficiency ~~initiative, "Synovus Forward",~~ ~~COVID-19~~initiatives, COVID-19 related expenses,, and investments in talent and technology. The efficiency ratio-FTE for the first ~~six~~nine months of 2020 was ~~54.47%~~57.66%, compared to ~~57.67%~~57.17% for the first ~~six~~nine months of 2019. The adjusted tangible efficiency ratio⁽¹⁾ for the first ~~six~~nine months of 2020 was ~~57.31%~~56.14%, up ~~614~~478 bps compared to the same period a year ago. ~~Synovus expect~~s Excluding up-front expenses ~~to decline in the second half of the year~~ ~~as mortgage production commissions decline~~associated with ~~normalized mortgage activity, COVID-19 related expenses decline, and~~ Synovus Forward initiatives, ~~are implemented~~.we expect adjusted non-interest expense in the fourth quarter to be in-line with adjusted non-interest expense in the third quarter of 2020.

At ~~June~~September 30, 2020, total loans, net of ~~$39.91~~deferred fees and costs of $39.55 billion, increased ~~$1.66~~$2.39 billion, or ~~4.3%, sequentially, and increased $2.75 billion, or 7.4%~~6%, from December 31, ~~2019. The~~2019 led by C&I growth ~~in total loans at June 30, 2020 included~~of $3.24 billion, including $2.71 billion in PPP loans net of unearned fees, ~~funded during the second quarter,~~and CRE growth of $472.1 million, partially offset ~~partially~~ by ~~the transfer of certain third-party lending partnership~~a $1.26 billion decline in consumer loans. The decline in consumer loans ~~to held for sale during~~is the ~~second quarter totaling $801.0 million.~~result of the strategic disposition of $1.28 billion in third-party single-service consumer and non-relationship consumer mortgage loans. We expect loans, ~~to be fairly flat over the second half of the year, as compared to balances at June 30, 2020,~~ excluding the impact of PPP ~~loan forgiveness.~~forgiveness, to be relatively flat in the fourth quarter, as compared to the third quarter of 2020.

The ACL at ~~June~~September 30, 2020 totaled ~~$649.7~~$664.6 million,, an increase of ~~$366.9~~$381.8 million from December 31, 2019,, reflecting a building of the ACL required under CECL primarily as a result of uncertainty and deterioration in the economic environment due to ~~the impact of~~ COVID-19. The ACL to loans coverage ratio was ~~1.63%~~1.68%, or ~~1.74%~~1.80%, excluding PPP loans, at ~~June~~September 30, 2020. Current credit metrics ~~remain stable~~deteriorated slightly with NPAs at 44 49 bps,, NPLs at 37 43 bps,, and total past due loans at 12 ~~bps~~.14 bps; however, we have not experienced widespread deterioration in the portfolio. Year-to-date, net charge-offs are 2325 bps compared to 1618 bps in the prior year. Synovus ~~does expect~~expects some pressure on credit metrics over the next few quarters, which aligns with the reserve builds ~~in the first half of the year~~to-date during 2020 under ~~the pro-cyclical nature of~~ CECL.

Total period-end deposits at ~~June~~September 30, 2020 increased ~~$4.37~~$6.26 billion, or ~~11.0%, compared to March 31, 2020, and increased $5.79 billion, or 15.1%~~16%, compared to December 31, ~~2019, led by growth in non-interest bearing demand deposits. The growth in non-interest-bearing demand~~2019. Core transaction deposits ~~occurred in conjunction with Synovus' PPP lending effort. Synovus also experienced broad-based growth across interest-bearing core transaction accounts~~increased $6.82 billion, or 28%, compared to ~~both March 31, 2020 and~~ December 31, 2019. The significant increase in deposit balances compared to December 31, 2019 is due largely to the current economic environment as well as government stimulus programs including deposits associated with PPP loans.

At ~~June~~September 30, 2020, Synovus' CET1 ratio was ~~8.90%~~9.30%, well in excess of regulatory requirements including the ~~capital~~capital conservation buffer of 2.5%. The ~~June~~September 30, 2020 CET1 ratio improved 2040 bps compared to ~~March 31,~~June 30, 2020 and ~~declined 5~~improved 35 bps compared to December 31, ~~2019. During~~2019 from a combination of earnings and balance sheet activities. These balance sheet activities included the ~~latter part~~settlement of ~~the~~our second quarter ~~of 2020, Synovus executed certain~~bond repositioning and our on-going efforts to manage non-relationship loan portfolios as we prioritize our balance sheet ~~management activities including repositioning the investment securities portfolio and transitioning certain third-party lending partnership loans to held~~ for ~~sale. These actions settled subsequent to quarter-end, at the margin, and are expected to provide further support to capital ratios in the third quarter of 2020.~~core, client relationships.

More detail on Synovus' financial results for the three and ~~six~~nine months ended ~~June~~September 30, 2020 may be found in subsequent sections of "Item 2. – Management's Discussion and Analysis of Financial Condition and Results of Operations" of this Report. See also "Item 1A. - Risk Factors" of this Report.

⁴⁸

(1) See "Table 14 - Reconciliation of Non-GAAP Financial Measures” in this Report for applicable reconciliation to the most comparable GAAP measure.

Changes in Financial Condition

During the ~~six~~nine months ended ~~June~~September 30, 2020, total assets increased ~~$5.92~~$4.84 billion from $48.20 billion at December 31, 2019 to ~~$54.12~~$53.04 billion. Loans increased ~~$2.75~~$2.39 billion, including $2.71 ~~billion~~billion in PPP loans net of unearned fees, and ~~loans~~loans held for sale increased ~~$785.8~~$630.0 million as Synovus ~~transitione~~dtransitioned certain third-party lending partnership consumer loans to held for sale. Investment securities available for sale increased ~~$418.8~~$787.9 million and cash and cash equivalents increased ~~$384.3~~$798.4 million. Additional increases in total assets at ~~June~~September 30, 2020, compared to December 31, 2019, included ~~a $1.29 billion receivable for securities available for sale sold during the quarter that will settle after quarter-end and~~increases in BOLI investments of $268.4 million driven by additional investments in BOLI policies and increases in other assets of ~~$262.4 million. Other assets increased $351.2~~$363.1 million ~~and included~~primarily from an increase in the fair value of derivative assets of ~~$357.0~~$323.0 million.

The growth in assets was primarily funded by increases of ~~$5.79~~$6.26 billion in deposits. Other short-term borrowings declined ~~$1.45~~$1.35 billion and long-term debt ~~increased $174.0~~decreased $525.5 million. ~~Additionally, total liabilities at June 30, 2020 included an accrued liability of $923.0 million for purchases of securities available for sale that will settle after quarter-end.~~ Other liabilities increased ~~$315.1~~$296.4 million and included an increase in the fair value of derivative liabilities ~~of $159.1~~of $142.9 million, ~~an increase in income taxes payable of $67.5 million, and~~ an increase in reserves on unfunded commitments of ~~$59.7~~$59.4 million, and an increase in income taxes payable of $38.4 million. Total shareholders' equity increased ~~$111.3~~$122.9 million during the ~~six~~nine months ended ~~June~~September 30, 2020, primarily due to net income of ~~$131.7~~$223.3 million, increases in unrealized gains of ~~$50.6~~$29.9 million in investment securities available for sale and ~~$86.8~~$79.4 million in cash flow hedges, offset partially by dividends declared on common stock of ~~$97.2~~$145.8 million and dividends declared on preferred stock of $24.9 million.

Synovus adopted CECL on January 1, 2020 with an increase to the ALL of $83.0 million and an increase to the reserve on unfunded commitments of $27.4 million with offsetting increases in loans of $62.2 million related to acquired PCI loans and net deferred tax assets of $12.5 million and a reduction to retained earnings of $35.7 million. The ACL at ~~June~~September 30, 2020 was ~~$649.7~~$664.6 million, an increase of ~~$366.9~~$381.8 million from December 31, 2019, reflecting significant economic stress due to the COVID-19 healthcare crisis.

The loan to deposit ratio was ~~90.3%~~88.6% at ~~June~~September 30, 2020, compared to 96.8% at December 31, 2019, and ~~95.2%~~97.3% at ~~June~~September 30, 2019.

Loans

The following table compares the composition of the loan portfolio at ~~June~~September 30, 2020, December 31, 2019, and ~~June~~September 30, 2019.


Table 2 - Loans by Portfolio Class	Table 2 - Loans by Portfolio Class																																	Table 2 - Loans by Portfolio Class
										June 30, 2020 vs. December 31, 2019 Change																				June 30, 2020 vs. June 30, 2019 % Change																												September 30, 2020 vs. December 31, 2019 Change																September 30, 2020 vs. September 30, 2019 Change
(dollars in thousands)	(dollars in thousands)	June 30, 2020						December 31, 2019																												June 30, 2019																		(dollars in thousands)										December 31, 2019											September 30, 2019	September 30, 2020 vs. September 30, 2019 Change
Commercial, financial and agricultural	Commercial, financial and agricultural	$	13,136,696	32.9	%	$	10,239,559	27.6	%			$	2,897,137			28.3	%			$	9,716,939			26.9	%			$	3,419,757			35.2	%	Commercial, financial and agricultural	$	13,120,038			33.2	%			$	10,239,559			27.6	%			$	2,880,479				28	%			$	9,846,830			27.0	%			$	3,273,208			33	%
Owner-occupied	Owner-occupied	6,801,580		17.0		6,529,811		17.6		271,769				4.2				6,511,805				18.0				289,775				4.4		Owner-occupied	6,894,113				17.4				6,529,811				17.6				364,302				6					6,571,485				18.1				322,628				5
Total commercial and industrial	Total commercial and industrial	19,938,276		49.9		16,769,370		45.2		3,168,906				18.9				16,228,744				44.9				3,709,532				22.9		Total commercial and industrial	20,014,151				50.6				16,769,370				45.2				3,244,781				19					16,418,315				45.1				3,595,836				22
Investment properties	Investment properties	9,447,200		23.7		9,004,327		24.2		442,873				4.9				8,914,992				24.7				532,208				6.0		Investment properties	9,662,447				24.4				9,004,327				24.2				658,120				7					8,843,545				24.3				818,902				9
1-4 family properties	1-4 family properties	696,808		1.7		780,015		2.1		(83,207)				(10.7)				804,426				2.2				(107,618)				(13.4)		1-4 family properties	655,038				1.7				780,015				2.1				(124,977)				(16)					805,756				2.2				(150,718)				(19)
Land and development	Land and development	683,527		1.7		709,442		1.9		(25,915)				(3.7)				647,828				1.8				35,699				5.5		Land and development	648,390				1.6				709,442				1.9				(61,052)				(9)					663,689				1.8				(15,299)				(2)
Total commercial real estate	Total commercial real estate	10,827,535		27.1		10,493,784		28.2		333,751				3.2				10,367,246				28.7				460,289				4.4		Total commercial real estate	10,965,875				27.7				10,493,784				28.2				472,091				4					10,312,990				28.3				652,885				6
Consumer mortgages	Consumer mortgages	5,811,376		14.6		5,546,368		14.9		265,008				4.8				5,407,762				15.0				403,614				7.5		Consumer mortgages	5,658,525				14.3				5,546,368				14.9				112,157				2					5,470,730				15.0				187,795				3
Home equity lines	Home equity lines	1,710,264		4.3		1,713,157		4.6		(2,893)				(0.2)				1,650,745				4.6				59,519				3.6		Home equity lines	1,615,207				4.1				1,713,157				4.6				(97,950)				(6)					1,675,092				4.6				(59,885)				(4)
Credit cards	Credit cards	250,448		0.6		268,841		0.7		(18,393)				(6.8)				258,283				0.7				(7,835)				(3.0)		Credit cards	264,829				0.7				268,841				0.7				(4,012)				(1)					267,874				0.8				(3,045)				(1)
Other consumer loans	Other consumer loans	1,474,583		3.7		2,396,294		6.5		(921,711)				(38.5)				2,249,337				6.2				(774,754)				(34.4)		Other consumer loans	1,130,237				2.9				2,396,294				6.5				(1,266,057)				(53)					2,295,486				6.3				(1,165,249)				(51)
Total consumer	Total consumer	9,246,671		23.2		9,924,660		26.7		(677,989)				(6.8)				9,566,127				26.5				(319,456)				(3.3)		Total consumer	8,668,798				22.0				9,924,660				26.7				(1,255,862)				(13)					9,709,182				26.7				(1,040,384)				(11)
Total loans	Total loans	40,012,482		100.2		37,187,814		100.1		2,824,668				7.6				36,162,117				100.1				3,850,365				10.6		Total loans	39,648,824				100.3				37,187,814				100.1				2,461,010				7					36,440,487				100.1				3,208,337				9
Deferred fees and costs, net	Deferred fees and costs, net	(98,185)		(0.2)		(25,364)		(0.1)		(72,821)				287.1				(23,556)				(0.1)				(74,629)				316.8		Deferred fees and costs, net	(98,977)				(0.3)				(25,364)				(0.1)				(73,613)				290					(22,661)				(0.1)				(76,316)				337
Total loans, net of deferred fees and costs	Total loans, net of deferred fees and costs	$	39,914,297	100.0	%	$	37,162,450	100.0	%	$	2,751,847			7.4	%			$	36,138,561			100.0	%			$	3,775,736			10.4	%	Total loans, net of deferred fees and costs	$	39,549,847			100.0	%			$	37,162,450			100.0	%			$	2,387,397			6		%			$	36,417,826			100.0	%			$	3,132,021			9	%

At ~~June~~September 30, 2020, total loans, net of deferred fees and costs of ~~$39.91~~$39.55 billion, increased ~~$2.75~~$2.39 billion, or ~~7.4%~~6%, from December 31, 2019 led by C&I growth of ~~$3.17~~$3.24 billion, including $2.71 billion in PPP loans net of unearned fees, and CRE growth of ~~$333.8~~$472.1 million, partially offset by a ~~$678.0 million~~$1.26 billion decline in consumer loans. The decline in consumer loans is the result of the strategic disposition of $1.28 billion in third-party single-service consumer and non-relationship consumer mortgage loans. Total loans at September 30, 2020 declined $364.5 million sequentially due to strategic dispositions of $531.8

million primarily in third-party single-service consumer loans and non-relationship consumer mortgage loans. Excluding the impact of asset dispositions and PPP loan payoffs, we had sequential quarter net loan growth of $170.3 million. We expect loans, ~~to be fairly flat over the second half of the year, as compared to balances at June 30, 2020,~~ excluding the impact of PPP ~~loan forgiveness.~~ forgiveness, to be relatively flat in the fourth quarter, as compared to the third quarter of 2020.C&I ~~loans~~loans remain the largest component of our loan portfolio, representing ~~49.9%~~50.6% of total loans, while CRE and consumer loans represent ~~27.1%~~27.7% and ~~23.2%~~22.0%, respectively. Our portfolio composition is established through a comprehensive concentration management policy which sets limits for C&I, CRE, and consumer loan levels as well as for sub-categories therein.

U.S. Small Business Administration Paycheck Protection Program (PPP)

Synovus is participating in the Paycheck Protection Program (“PPP”), which is a loan program that originated from the CARES Act and was subsequently expanded by the Paycheck Protection Program and Health Care Enhancement Act (“PPPHCEA Act”) which was passed by Congress on April 23, 2020 and signed into law on April 24, 2020. PPP loans are forgivable, in whole or in part, if the proceeds are used for payroll and other permitted purposes in accordance with the requirements of the PPP. These loans carry a fixed rate of 1.00% and a term of two years, if not forgiven, in whole or in part. The loans are ~~guaranteed~~guaranteed by the SBA. The SBA pays the originating bank a processing fee ranging from 1% to 5%, based on the size of the loan. Synovus began accepting applications from qualified customers on April 3, 2020 and ~~has~~ provided nearly $2.9 billion in funding to close to 19,000 customers through the PPP ~~as of June 30, 2020.~~during the second quarter. The average PPP loan was approximately $150 thousand, and the customers that received those loans employ over 335 thousand individuals. In October 2020, the SBA announced a streamlined forgiveness process for certain PPP loans of $50,000 or less and approximately 7% of our PPP balances fall within this threshold.

Commercial Loans

Total commercial loans (which are comprised of C&I and CRE loans) at ~~June~~September 30, 2020 were ~~$30.77~~$30.98 billion, or ~~77.0%~~78.3%, of the total loan portfolio, compared to $27.26 billion, or 73.4%, at December 31, 2019 and ~~$26.60~~$26.73 billion, or ~~73.6%~~73.4%, at ~~June~~September 30, 2019.

At ~~June~~September 30, 2020, Synovus had5 6 commercial loan relationships with total commitments of $100 million or more (including amounts funded), with no single relationship exceeding $150 million in commitments.

Commercial and Industrial Loans

The C&I loan portfolio represents the largest category of Synovus' loan 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. As of ~~June~~September 30, 2020, ~~80.1% (93.0%~~80.7% (93.7% excluding PPP loans) of Synovus' C&I loans are secured by real

estate, business equipment, inventory, and other types of collateral compared to 92.6% as of December 31, 2019. C&I loans grew ~~$3.17~~$3.24 billion, or ~~18.9%~~19.3%, from December 31, 2019, driven primarily by ~~$2.71~~$2.71 billion in PPP loans net of unearned fees at ~~June~~September 30, 2020.

Table 3 - Commercial and Industrial Loans by Industry
June 30, 2020 December 31, 2019
(dollars in thousands) Amount
%⁽¹⁾
Amount
%⁽¹⁾
Health care and social assistance $ 3,567,225 17.9 % $ 3,083,355 18.4 %
Finance and insurance 1,487,083 7.5 1,263,521 7.5
Manufacturing 1,387,812 7.0 1,208,688 7.2
Retail trade 1,376,393 6.9 1,202,958 7.2
Accommodation and food services 1,315,174 6.6 921,515 5.5
Professional, scientific, and technical services 1,269,710 6.4 883,433 5.3
Wholesale trade 1,197,540 6.0 1,138,145 6.8
Other services 1,168,152 5.9 1,005,420 6.0
Real estate and rental and leasing 1,164,789 5.8 1,126,828 6.7
Construction 1,089,184 5.5 702,892 4.2
Transportation and warehousing 957,299 4.8 854,954 5.1
Arts, entertainment and recreation 825,993 4.1 771,846 4.6
Real estate other 669,717 3.4 615,441 3.7
Educational services 580,615 2.9 409,639 2.4
Public Administration 421,781 2.1 342,329 2.0
Administration, support, waste management, and remediation 406,743 2.0 302,711 1.8
Agriculture, forestry, fishing, and hunting 402,946 2.0 369,185 2.2
Information 372,992 1.9 314,740 1.9
Other Industries 277,128 1.3 251,770 1.5
Total commercial and industrial loans $ 19,938,276 100.0 % $ 16,769,370 100.0 %

^{Table 3 - Commercial and Industrial Loans by Industry
September 30, 2020 December 31, 2019
(dollars in thousands) Amount %(1) Amount %(1)
Health care and social assistance $ 3,679,193 18.4 % $ 3,083,355 18.4 %
Finance and insurance 1,531,747 7.7 1,263,521 7.5
Manufacturing 1,384,392 6.9 1,208,688 7.2
Retail trade 1,364,773 6.8 1,202,958 7.2
Accommodation and food services 1,310,059 6.5 921,515 5.5
Professional, scientific, and technical services 1,266,776 6.3 883,433 5.3
Wholesale trade 1,181,295 5.9 1,138,145 6.8
Other services 1,178,357 5.9 1,005,420 6.0
Real estate and rental and leasing 1,118,949 5.6 1,126,828 6.7
Construction 1,081,726 5.4 702,892 4.2
Transportation and warehousing 953,810 4.8 854,954 5.1
Arts, entertainment and recreation 854,972 4.3 771,846 4.6
Real estate other 686,309 3.4 615,441 3.7
Educational services 606,981 3.0 409,639 2.4
Public Administration 421,655 2.1 342,329 2.0
Administration, support, waste management, and remediation 404,894 2.0 302,711 1.8
Agriculture, forestry, fishing, and hunting 392,273 2.0 369,185 2.2
Information 377,391 1.9 314,740 1.9
Other Industries 218,599 1.1 251,770 1.5
Total commercial and industrial loans $ 20,014,151 100.0 % $ 16,769,370 100.0 %}

(1) Loan balance in each category expressed as a percentage of total C&I loans.

At ~~June~~September 30, 2020, ~~$13.14~~$13.12 billion of C&I loans, or ~~32.9%~~33.2% of the total loan portfolio ~~included~~(including PPP loans of $2.71 billion net of unearned ~~fees and~~fees), represented loans originated for the purpose of financing commercial, financial, and agricultural business activities. The primary source of repayment on these loans is revenue generated from products or services offered by the business or organization. The secondary source of repayment is the collateral, which consists primarily of equipment, inventory, accounts receivable, time deposits, cash surrender value of life insurance, and other business assets.

At ~~June~~September 30, 2020, ~~$6.80~~$6.89 billion of C&I loans, or ~~17.0%~~17.4% 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. Total CRE loans of ~~$10.83~~$10.97 billion increased $~~333.8~~472.1 million, or ~~3.2%~~4%, from December 31, 2019, driven primarily by growth in income-producing investment properties.

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 ~~June~~September 30, 2020 were ~~$9.45~~$9.66 billion, or ~~87.3%~~88.1%, of the CRE loan portfolio, and increased ~~$442.9~~$658.1 million, or ~~4.9%~~7%, from December 31, 2019 with most sub-categories experiencing growth other than shopping centers, which were ~~slightly down.~~down $86.6 million, or 5%, from December 31, 2019.

1-4 Family Properties Loans

1-4 family properties loans include construction loans to home builders 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. At ~~June~~September 30, 2020, 1-4 family properties loans totaled ~~$696.8~~$655.0 million, or ~~6.4%~~6.0% of the CRE loan portfolio, and decreased by ~~$83.2~~$125.0 million, or ~~10.7%~~16%, from December 31, 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). Land and development loans of ~~$683.5~~$648.4 million at ~~June~~September 30, 2020 decreased ~~slightly~~$61.1 million, or 9%, from $709.4 million at December 31, 2019.

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, student, and personal loans from third-party lending partnerships. The majority of Synovus' consumer loans are consumer mortgages and HELOCs secured by first and second liens on residential real estate primarily located in the markets served by Synovus.

Consumer loans at ~~June~~September 30, 2020 of ~~$9.25~~$8.67 billion decreased ~~$678.0 million,~~$1.26 billion, or ~~6.8%~~13%, compared to December 31, 2019 ~~primarily~~ due to the ~~transfer~~strategic disposition of certain third-party ~~lending partnership~~single-service consumer loans ~~to held for sale, partially offset by growth in~~and non-relationship consumer ~~mortgages~~.mortgage loans. Consumer mortgages grew ~~$265.0~~$112.2 million, or ~~4.8%~~2.0%, from December 31, 2019 due to record production primarily resulting from the low rate environment in addition to continued successful recruiting of ~~MLOs.~~MLOs somewhat offset by the strategic sale of $180.2 million in non-relationship consumer mortgage loans. HELOCs decreased ~~$2.9~~$98.0 million, or 6%, from December 31, 2019. Credit card loans of ~~$250.4~~$264.8 million at ~~June~~September 30, 2020 included ~~$53.0~~$56.6 million of commercial credit card loans, and decreased ~~$18.4~~$4.0 million from $268.8 million at December 31, 2019. Other consumer loans decreased ~~$921.7 million,~~$1.27 billion, or ~~38.5%~~53%, from December 31, 2019 primarily due to the ~~transfer~~strategic disposition of ~~$801.0 million of Synovus'~~certain third-party ~~lending partnership~~single-service consumer loans ~~to held-for-sale~~.totaling $1.10 billion. As of ~~June~~September 30, 2020, ~~these~~third-party lending partnerships had combined balances of ~~$1.13 billion,~~$714.3 million, or ~~2.8%~~1.8%, of the total loan portfolio, compared to $1.98 billion, or 5.3%, of the total loan portfolio, at December 31, 2019.

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. Consumer loans are generally assigned a risk 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 ALL. Revolving lines of credit are reviewed for a 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 ~~June~~September 30, 2020, weighted-average FICO scores within the residential real estate portfolio based on committed balances were ~~789~~790 for HELOCs and 778 for Consumer Mortgages.

Deposits

Deposits provide the most significant funding source for interest earning assets. The following table shows the 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	Table 4 - Composition of Period-end Deposits																							Table 4 - Composition of Period-end Deposits
(dollars in thousands)	(dollars in thousands)	June 30, 2020		%⁽¹⁾		March 31, 2020		%⁽¹⁾		December 31, 2019		%⁽¹⁾		June 30, 2019		%⁽¹⁾		(dollars in thousands)	September 30, 2020		%(1)		June 30, 2020		%(1)		December 31, 2019		%(1)		September 30, 2019		%(1)
Non-interest-bearing demand deposits⁽²⁾	Non-interest-bearing demand deposits⁽²⁾	$	11,830,675	26.8	%	$	8,968,756	22.5	%	$	8,661,220	22.6	%	$	8,577,612	22.6	%	Non-interest-bearing demand deposits(2)	$	12,129,777	27.2	%	$	11,830,675	26.8	%	$	8,661,220	22.6	%	$	8,970,218	24.0	%
Interest-bearing demand deposits⁽²⁾	Interest-bearing demand deposits⁽²⁾	5,057,234		11.4		4,617,368		11.6		4,769,505		12.4		4,847,242		12.8		Interest-bearing demand deposits(2)	5,291,135		11.8		5,057,234		11.4		4,769,505		12.4		4,714,817		12.6
Money market accounts⁽²⁾	Money market accounts⁽²⁾	11,457,223		26.0		10,255,014		25.8		9,827,357		25.6		8,952,875		23.6		Money market accounts(2)	12,441,340		27.8		11,457,223		26.0		9,827,357		25.6		9,212,140		24.6
Savings deposits⁽²⁾	Savings deposits⁽²⁾	1,080,119		2.4		949,483		2.4		909,500		2.4		891,194		2.3		Savings deposits(2)	1,125,985		2.5		1,080,119		2.4		909,500		2.4		897,292		2.4
Public funds	Public funds	5,347,351		12.1		5,261,383		13.2		4,622,318		12.0		4,351,304		11.5		Public funds	5,791,944		13.0		5,347,351		12.1		4,622,318		12.0		3,795,320		10.1
Time deposits⁽²⁾	Time deposits⁽²⁾	5,131,676		11.6		5,786,633		14.5		6,185,611		16.1		7,342,951		19.3		Time deposits(2)	3,976,464		8.9		5,131,676		11.6		6,185,611		16.1		6,647,788		17.8
Brokered deposits	Brokered deposits	4,290,302		9.7		3,987,948		10.0		3,429,993		8.9		3,003,544		7.9		Brokered deposits	3,909,259		8.8		4,290,302		9.7		3,429,993		8.9		3,195,495		8.5
Total deposits	Total deposits	$	44,194,580	100.0	%	$	39,826,585	100.0	%	$	38,405,504	100.0	%	$	37,966,722	100.0	%	Total deposits	$	44,665,904	100.0	%	$	44,194,580	100.0	%	$	38,405,504	100.0	%	$	37,433,070	100.0	%
Core deposits⁽³⁾	Core deposits⁽³⁾	$	39,904,278	90.3	%	$	35,838,637	90.0	%	$	34,975,511	91.1	%	$	34,963,178	92.1	%	Core deposits(3)	$	40,756,645	91.2	%	$	39,904,278	90.3	%	$	34,975,511	91.1	%	$	34,237,575	91.5	%
Core transaction deposits⁽⁴⁾	Core transaction deposits⁽⁴⁾	$	29,425,251	66.6	%	$	24,790,621	62.2	%	$	24,167,582	62.9	%	$	23,268,923	61.3	%	Core transaction deposits(4)	$	30,988,237	69.4	%	$	29,425,251	66.6	%	$	24,167,582	62.9	%	$	23,794,467	63.6	%

Time deposits greater than $100,000, including brokered and public funds	Time deposits greater than $100,000, including brokered and public funds	$	6,875,462	15.6	%	$	7,176,468	18.0	%	$	7,262,833	18.9	%	$	8,290,297	21.8	%	Time deposits greater than $100,000, including brokered and public funds	$	5,478,221	12.3	%	$	6,875,462	15.6	%	$	7,262,833	18.9	%	$	7,574,038	20.2	%
Brokered time deposits	Brokered time deposits	$	2,442,940	5.5	%	$	2,229,596	5.6	%	$	2,154,095	5.6	%	$	2,095,240	5.5	%	Brokered time deposits	$	1,996,133	4.5	%	$	2,442,940	5.5	%	$	2,154,095	5.6	%	$	2,098,643	5.6	%

⁽¹⁾Deposits balance in each category expressed as percentage of total deposits.

⁽²⁾Excluding any public funds or brokered deposits.

⁽³⁾Core deposits exclude brokered deposits.

⁽⁴⁾Core transaction deposits consist of non-interest-bearing demand deposits, interest-bearing demand deposits, money market accounts, and savings deposits excluding public funds and brokered deposits.

Total period-end deposits at September 30, 2020 increased $471.3 million, or 1%, compared to June 30, 2020, and increased ~~$4.37~~$6.26 billion, or ~~11.0%~~16%, compared to ~~March~~December 31, ~~2020,~~2019. Core transaction deposits increased $1.56 billion, or 5%, sequentially, and increased ~~$5.79~~$6.82 billion, or ~~15.1%~~28%, compared to December 31, 2019 ~~led by~~. The significant increase in deposit balances compared to December 31, 2019 is due largely to the current uncertain economic environment as well as government stimulus programs including deposits associated with PPP loans. The sequential quarter growth in ~~non-interest-bearing demand deposits. The~~lower cost core transaction accounts of $1.56 billion included growth in non-interest-bearing demand deposits occurred in conjunction with Synovus' PPP lending effort. Synovus also experienced broad-based growth across interest-bearing core transaction accounts compared to both March 31, 2020 and December 31, 2019. The quarterly growth in interest-bearing core transaction accounts included growth inof $299.1 million, money market accounts of ~~$1.20 billion,~~$984.1 million, NOW accounts of ~~$439.9~~$233.9 million, and savings balances of ~~$130.6~~$45.9 million, and more than offset ~~somewhat by~~strategic declines of $1.16 billion and $381.0 million in ~~higher cost~~ time deposits ~~of $655.0 million. Additionally, Synovus increased funding by $302.4 million in lower priced~~and brokered deposits, ~~at June 30, 2020, compared to March 31, 2020. Interest-bearing~~respectively. Total deposit ~~costs~~cost declined 4514 bps during the ~~second~~third quarter of 2020, compared to the ~~first~~second quarter of ~~2020.~~2020 due to pricing diligence and product remixing.

On an average basis, the increase in total deposits was ~~$4.41~~$1.24 billion, or ~~11.4%~~3%, compared to the ~~first~~second quarter of 2020.

Non-interest Revenue

Non-interest revenue for the ~~second~~third quarter of 2020 was ~~$173.5~~$114.4 million, up ~~$83.7~~$25.7 million, or ~~93.2%~~29%, and year-to-date was ~~$277.3~~$391.8 million, up ~~$108.2~~$133.8 million, or ~~63.9%~~52%, compared to the same periods in 2019 ~~and included gains on sales of investment securities available for sale of $69.4 million and $78.1 million, respectively.~~. Adjusted non-interest revenue, which excludes net investment securities ~~gains~~gains/(losses) and gain on sale/fair value increase/(decrease) of private equity investments, for the ~~second~~third quarter of 2020 was ~~$95.4~~$115.7 million, up ~~$5.2~~$24.4 million, or ~~5.7%~~27%, from the ~~second~~third quarter of 2019, and on a year-to-date basis was ~~$194.7~~$310.4 million compared to ~~$168.6~~$259.9 million for the first ~~six~~nine months of 2019, up ~~$26.1~~$50.5 million, or ~~15.5%~~19%. The increase in adjusted non-interest revenue was due primarily to strong growth in mortgage banking income with record production driven by the current rate environment.As In the fourth quarter, we expect to see declines in mortgage ~~activity normalizes, Synovus believes a reduction of adjusted non-interest~~ revenue, inas compared to the third quarter ~~is likely before we see a return to consistent growth in fee revenue as the economy recovers.~~of 2020. See "Table 14 - Reconciliation of Non-GAAP Financial Measures” in this Report for applicable reconciliation to GAAP measures.

The following table shows the principal components of non-interest revenue.


Table 5 - Non-interest revenue	Table 5 - Non-interest revenue													Table 5 - Non-interest revenue
		Three Months Ended June 30,										Six Months Ended June 30,											Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	(dollars in thousands)	2020		2019		% Change		2020		2019		% Change		(dollars in thousands)	2020		2019		% Change		2020		2019		% Change
Service charges on deposit accounts	Service charges on deposit accounts	$	15,567	$	21,994	(29.2)	%	$	36,255	$	42,853	(15.4)	%	Service charges on deposit accounts	$	17,813	$	22,952	(22)	%	$	54,069	$	65,805	(18)	%
Fiduciary and asset management fees	Fiduciary and asset management fees	14,950		14,478		3.3		30,124		28,057		7.4		Fiduciary and asset management fees	15,885		14,686		8		46,009		42,743		8
Card fees	Card fees	9,186		11,161		(17.7)		20,136		22,037		(8.6)		Card fees	10,823		12,297		(12)		30,959		34,334		(10)
Brokerage revenue	Brokerage revenue	9,984		10,052		(0.7)		22,383		19,431		15.2		Brokerage revenue	10,604		11,071		(4)		32,987		30,502		8
Mortgage banking income	Mortgage banking income	23,530		7,907		197.6		35,757		12,962		175.9		Mortgage banking income	31,229		10,351		202		66,987		23,313		187
Capital markets income	Capital markets income	6,050		8,916		(32.1)		17,294		14,161		22.1		Capital markets income	5,690		7,396		(23)		22,984		21,557		7
Income from bank-owned life insurance	Income from bank-owned life insurance	7,756		5,176		49.8		13,794		10,466		31.8		Income from bank-owned life insurance	7,778		5,139		51		21,572		15,605		38
Investment securities gains (losses), net		69,409		(1,845)		nm		78,144		(1,771)		nm
Gain on sale and increase/(decrease) in fair value of private equity investments		8,707		1,455		nm		4,452		2,313		nm
Investment securities (losses) gains, net														Investment securities (losses) gains, net	(1,550)		(3,731)		nm		76,594		(5,502)		nm
Gain on sale and increase in fair value of private equity investments														Gain on sale and increase in fair value of private equity investments	260		1,194		nm		4,712		3,507		nm
Other non-interest revenue	Other non-interest revenue	8,345		10,513		(20.6)		19,002		18,676		1.7		Other non-interest revenue	15,879		7,405		114		34,879		26,081		34
Total non-interest revenue	Total non-interest revenue	$	173,484	$	89,807	93.2	%	$	277,341	$	169,185	63.9	%	Total non-interest revenue	$	114,411	$	88,760	29	%	$	391,752	$	257,945	52	%

Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2020 compared to ~~June~~September 30, 2019

Service charges on deposit accounts for the three and ~~six~~nine months ended ~~June~~September 30, 2020 were down ~~$6.4~~$5.1 million, or ~~29.2%~~22%, and ~~$6.6~~$11.7 million, or ~~15.4%~~18%, respectively, due primarily to the impact of COVID-19, including fewer transactions ~~fee waivers,~~ and the impact of higher average balances due to stimulus funds. Service charges on deposit accounts consist of NSF fees, account analysis fees, and all other service charges. NSF fees were ~~down $5.1~~down $4.4 million, or ~~52.8%~~43%, and ~~$4.9~~$9.3 million, or ~~26.6%~~33%, for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively. Account analysis fees were ~~down $432~~up $168 thousand, or ~~5.9%~~2%, and ~~$451~~down $283 thousand, or ~~3.2%~~1%, for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively. 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 and ~~six~~nine months ended ~~June~~September 30, 2020, were down ~~$909~~$882 thousand, or ~~17.9%~~16%, and ~~$1.3~~$2.2 million, or ~~12.5%~~14%, respectively.

Fiduciary and asset management fees are derived from providing estate administration, personal trust, corporate trust, corporate bond, investment management, and financial planning services. Fiduciary and asset management fees increased ~~$472 thousand,~~$1.2 million, or ~~3.3%~~8%, and ~~$2.1~~$3.3 million, or ~~7.4%~~8%, for the three and ~~six~~nine months ended ~~June~~September 30, 2020, ~~respectively.~~respectively. The increases were driven by growth in total assets under management which increased by ~~4.7%~~8% year-over-year to ~~$16.56~~$17.54 billion.

Card fees for the three and ~~six~~nine months ended ~~June~~September 30, 2020 were down ~~$2.0~~$1.5 million,, or ~~17.7%~~12%, and ~~$1.9~~$3.4 million,, or ~~8.6%~~10%, respectively, due to lower transaction volume as a result of the impact of COVID-19. Card fees consist primarily of credit card interchange fees, debit card interchange fees, and merchant discounts. Card fees are reported net of certain associated expense items including customer loyalty program expenses and network expenses.

Brokerage revenue of ~~$10.0~~$10.6 million for the three months ended ~~June~~September 30, 2020 was ~~essentially flat,~~down $466 thousand, or 4%, and for the ~~six~~nine months ended ~~June~~September 30, 2020 was ~~$22.4~~$33.0 million, up ~~$3.0~~$2.5 million, or ~~15.2%~~8%. The year-over-year growth ~~for the first six months of 2020~~ was driven by growth in assets under management, increasing contributions from 2019 new hires, and higher transaction revenue from elevated market volatility. Brokerage revenue consists primarily of brokerage commissions as well as advisory fees earned from the management of customer assets. ~~Brokerage assets under management were $3.94 billion at June 30, 2020, an increase of 19.6% from $3.29 billion at June 30, 2019.~~

Mortgage banking income was significantly higher in the first ~~six~~nine months of 2020, with increases of ~~$15.6~~$20.9 million and ~~$22.8~~$43.7 million for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively. Mortgage banking income was driven by higher production and sales, including an increase in refinance volume, due primarily to a decline in long-term interest rates. Total secondary market mortgage loan production wa~~s $635.2~~was $653.9 million,, up ~~$418.3~~$371.3 million, and ~~$889.7 million,~~$1.54 billion, up ~~$545.6~~$916.9 million, for the three and ~~six~~nine months ended ~~June~~September 30, 2020, ~~respectively~~.respectively.

Capital markets income primarily includes fee income from customer ~~derivative~~derivative transactions. Additionally, capital markets income includes fee income from capital raising investment banking transactions and foreign exchange as well as other miscellaneous income from capital market transactions. While capital markets income was ~~$2.9~~$1.7 million lower for the three months ended ~~June~~September 30, 2020, capital markets income for the first ~~six~~nine months of 2020 was up ~~$3.1~~$1.4 million, as commercial clients locked in lower rates on borrowings late in the first quarter.

Income from BOLI, which includes increases in the cash surrender value of policies and proceeds from insurance benefits, increased $2.6 million, or ~~49.8%~~51%, and $~~3.3~~6.0 million, or ~~31.8%~~38%, for the three and ~~six~~nine months ended ~~June~~September 30, 2020, ~~respectively,~~

respectively, due ~~primarily~~primarily to additional investments in BOLI policies during the first quarter of 2020. The first ~~six~~nine months of 2020 included income on proceeds from insurance benefits of ~~$706 thousand~~$1.3 million compared to $233 thousand in 2019.

Investment securities gains (losses), net, of ~~$69.4~~$(1.6) million and ~~$78.1~~$76.6 million for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively, reflected strategic repositioning of the portfolio primarily during the latter part of the second quarter of 2020. The transactions were primarily focused on agency mortgage-backed securities, but also included the disposition of Synovus' remaining $155.0 million in asset-backed securities.

Gain on sale and increase/(decrease) in fair value of private equity investments included realized gains during the second quarter of 2020 from the sale of positions in two publicly traded equity investments, offset partially by write-downs on two smaller remaining investments.

The main components of other non-interest revenue are fees for letters of credit and unused lines of credit, safe deposit box fees, access fees for ATM use, other service charges, income from insurance commissions, gains from sales of GGL/SBA loans, and other miscellaneous ~~items.~~items. Insurance commission revenue for the three and nine months ended September 30, 2020 was up $1.6 million and $1.7 million, respectively. The third quarter of 2020 included a $2.8 million favorable valuation adjustment for tax credit investments and a gain of $2.5 million from the sale of non-relationship mortgage loans. Additionally, the first quarter of 2020 included a sale-leaseback gain of $2.4 million associated with a bank office property while the second quarter of 2020 included ~~expense~~an unfavorable valuation adjustment of $1.6 million ~~related to investments in solar energy~~for tax credit ~~partnerships.~~investments.

Non-interest Expense

~~Non-intere~~stNon-interest expense for the ~~second~~third quarter of 2020 was ~~$284.1~~$316.7 million, up ~~$20.0~~$40.3 million, or ~~7.6%~~15%, compared to the ~~second~~third quarter of 2019 and adjusted non-interest expenseof ~~$276.4~~$268.7 million was up ~~$19.7~~$10.3 million, or ~~7.7%~~4%. On a year-to-date basis, non-interest expense was up ~~$3.9~~$44.2 million, or ~~0.7%~~5%, and adjusted non-interest expense was up ~~$48.2~~$58.5 million, or ~~9.7%~~8%. During the three months ended September 30, 2020, Synovus recognized a $44.9 million non-cash goodwill impairment charge representing the goodwill allocated to the Consumer Mortgage reporting unit. The increase in adjusted expense during the first nine months of 2020 was largely driven by mortgage production commissions, expense associated with Synovus' internal revenue growth and efficiency initiatives, COVID-19 related expenses, and investments in talent and technology. The efficiency ratio-FTE for the first ~~six~~nine months of 2020 was ~~54.47%~~57.66%, compared to ~~57.67%~~57.17% for the first ~~six~~nine months of 2019. The adjusted tangible efficiency ratio for the first ~~six~~nine months of 2020 was ~~57.31%~~56.14%, up ~~614~~478 bps compared to the same period a year ago. ~~Synovus expects~~Excluding expenses ~~to decline in the second half of the year as mortgage production commissions decline~~associated with ~~normalized mortgage activity, COVID-19 related expenses decline, and~~ Synovus Forward initiatives, ~~are implemented.~~we expect adjusted non-interest expense in the fourth quarter to be in-line with adjusted non-interest expense in the third quarter of 2020. See "Table 14 - Reconciliation of Non-GAAP Financial Measures” 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													Table 6 - Non-interest Expense
		Three Months Ended June 30,										Six Months Ended June 30,											Three Months Ended September 30,				Nine Months Ended September 30,
(dollars in thousands)	(dollars in thousands)	2020		2019		% Change		2020		2019		% Change		(dollars in thousands)	2020		2019		% Change		2020		2019		% Change
Salaries and other personnel expense	Salaries and other personnel expense	$	159,597	$	143,009	11.6	%	$	309,274	$	282,436	9.5	%	Salaries and other personnel expense	$	154,994	$	142,516	9	%	$	464,268	$	424,952	9	%
Net occupancy, equipment, and software expense	Net occupancy, equipment, and software expense	41,727		39,851		4.7		83,921		78,245		7.3		Net occupancy, equipment, and software expense	41,554		41,017		1		125,475		119,262		5
Third-party processing and other services	Third-party processing and other services	21,366		19,118		11.8		42,846		36,875		16.2		Third-party processing and other services	20,620		18,528		11		63,466		55,403		15
Professional fees	Professional fees	15,305		9,312		64.4		25,980		15,660		65.9		Professional fees	13,377		9,719		38		39,358		25,379		55
FDIC insurance and other regulatory fees	FDIC insurance and other regulatory fees	6,851		7,867		(12.9)		12,129		14,629		(17.1)		FDIC insurance and other regulatory fees	6,793		7,242		(6)		18,922		21,872		(14)
Amortization of intangibles														Amortization of intangibles	2,640		2,901		(9)		7,920		8,702		(9)
Goodwill impairment														Goodwill impairment	44,877		—		nm		44,877		—		nm
Earnout liability adjustments	Earnout liability adjustments	4,908		—		nm		4,908		—		nm		Earnout liability adjustments	—		10,457		nm		4,908		10,457		nm
Merger-related expense	Merger-related expense	—		7,401		nm		—		57,140		nm		Merger-related expense	—		353		nm		—		57,493		nm
Restructuring charges	Restructuring charges	2,822		18		nm		6,042		37		nm		Restructuring charges	2,882		(66)		nm		8,924		(29)		nm
Loss on early extinguishment of debt	Loss on early extinguishment of debt	—		—		nm		1,904		—		nm		Loss on early extinguishment of debt	154		4,592		nm		2,057		4,592		nm
Valuation adjustment to Visa derivative														Valuation adjustment to Visa derivative	—		2,500		nm		—		2,500		nm
Other operating expenses	Other operating expenses	31,565		37,550		(15.9)		73,417		71,515		2.7		Other operating expenses	28,764		36,551		(21)		96,901		102,264		(5)
Total non-interest expense	Total non-interest expense	$	284,141	$	264,126	7.6	%	$	560,421	$	556,537	0.7	%	Total non-interest expense	$	316,655	$	276,310	15	%	$	877,076	$	832,847	5	%

Three and ~~Six~~Nine Months Ended ~~June~~September 30, 2020 compared to ~~June~~September 30, 2019

Salaries and other personnel expense increased ~~$16.6~~$12.5 million, or ~~11.6%~~9%, and ~~$26.8~~$39.3 million, or ~~9.5%~~9%, for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively, due primarily to higher mortgage production-based commissions, COVID-19 related bonus payments to certain front-line employees, and investments in ~~talent~~.talent. Total headcount of 5,347 declined 81 from June 30, 2020 and 57 from September 30, 2019.

Net occupancy, equipment, and software expense increased ~~$1.9~~$537 thousand, or 1%, and $6.2 million, or ~~4.7%, and $5.7 million, or 7.3%~~5%, during the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively, primarily due to investments in technology as well as increases in net rent ~~expense~~. expense. Synovus expects net rent expense to decline during the ~~second half~~fourth quarter of 2020,, as compared to expense during the ~~six months ended June 30,~~third quarter of 2020,, as Synovus optimizes its physical space with branch and corporate real estate closures.

Third-party processing and other services includes all third-party core operating system and processing charges as well as third-party loan servicing charges. Third-party processing expense increased ~~$2.2~~$2.1 million, or ~~11.8%~~11%, and ~~$6.0~~$8.1 million, or ~~16.2%~~15%, for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively. The increase is primarily associated with loan growth from Synovus' consumer-based lending partnerships. ~~During~~However, during the second quarter of 2020, Synovus restructured certain of its third-party consumer-based lending partnership arrangements with a shift of new originations to held for ~~sale. Thus, Synovus expects~~sale and thereby reducing future third-party loan servicing ~~expense to decline in the second half of 2020, as compared to expense during the six months ended June 30, 2020.~~expense.

Professional fees increased ~~$6.0~~$3.7 million, or ~~64.4%~~38%, and ~~$10.3~~$14.0 million, or ~~65.9%~~55%, for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively,from increases in consulting fees related to Synovus' internal revenue growth and efficiency initiative, "Synovus Forward".

FDIC insurance and other regulatory fees were down ~~$1.0 million~~$449 thousand and ~~$2.5~~$3.0 million for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively, due primarily to strategic balance sheet management actions, aimed at ~~reducing~~reducing FDIC expense.

During the three months ended September 30, 2020, Synovus recognized a $44.9 million non-cash goodwill impairment charge representing the goodwill allocated to the Consumer Mortgage reporting unit resulting from a combination of factors including the extended duration of lower market valuations, high volumes in refinance activity that have reduced mortgage yields, and the clarity around longer term policy actions designed to keep interest rates low.

Earnout liability fair value adjustments associated with the Global One acquisition are the result of higher than projected earnings and higher earnings estimates over the remaining contractual earnout period, reflecting the continued success of the Global One enterprise. The earnout period ends on June 30, 2021.

In connection with the FCB acquisition, Synovus incurred merger-related expense totaling ~~$7.4 million~~$353 thousand and ~~$57.1~~$57.5 million for the three and ~~six~~nine months ended ~~June~~September 30, 2019, respectively, primarily related to employment compensation agreements, severance, and professional services. See "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 and ~~six~~nine months ended ~~June~~September 30, 2020, Synovus recorded ~~$2.8~~$2.9 million and ~~$6.0~~$8.9 million, respectively, in restructuring charges primarily related to branch closures and restructuring of corporate real estate as part of the Synovus Forward ~~initiative~~. initiative. Synovus Bank operated ~~293~~292 branches at ~~June~~September 30, 2020 and at November 2, 2020 Synovus Bank operated 288 branches, compared to 298 branches at December 31, 2019,, following the closing of ~~six~~12 branches ~~during the first half of 2020~~ and opening of ~~one~~two new ~~branch~~. ~~During July, Synovus opened an additional branch and expects to close seven~~ branches during ~~the remainder~~2020. See "Part I - Item 1. Financial Statements and Supplementary Data - Note 12 - Subsequent Events", regarding Synovus' voluntary early retirement program and associated one-time termination benefit restructuring charge of approximately $14 million recorded in October, 2020.

On February 25, 2020, Synovus terminated a ~~$250~~$250.0 million long-term FHLB obligation and incurred a $1.9 m~~illion~~million loss on early extinguishment of debt and on September 15, 2020, Synovus terminated a $500 million long-term FHLB obligation and incurred a $154 thousand loss on early extinguishment of debt.

Other operating expenses includes advertising, travel, insurance, network and communication, other taxes, subscriptions and dues, other loan and ORE expense, postage and freight, training, business development, supplies, donations, and other miscellaneous expenses. Other operating expenses were down ~~$6.0~~$7.8 million and ~~up $1.9~~$5.4 million, for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively. Advertising expense was down ~~$3.0~~$3.3 million and ~~$3.4~~$6.7 million for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively, and travel expense was down ~~$2.5~~$1.8 million and ~~$2.9~~$4.8 million for the three and ~~six~~nine months ended ~~June~~September 30, 2020, respectively. Other operating expenses for the ~~six~~nine months ended ~~June~~September 30, 2020 includes a $2.7 million valuation adjustment on a MPS receivable, ~~and~~ a $2.5 million charge from termination of customer ~~swaps.~~swaps, and a $1.0 million donation to the United Negro College Fund.

Income Tax Expense

Income tax expense was ~~$34.5~~$39.8 million for the ~~six~~three months ended ~~June~~September 30, 2020, representing an effective tax rate of ~~20.7%~~30.3%, compared to income tax expense of ~~$95.0~~$51.3 million forfor the ~~six~~three months ended ~~June~~September 30, 2019, representing an effective tax rate of ~~25.6%~~27.4%. The ~~decrease~~increase in the effective tax rate for the ~~six~~three months ended ~~June~~September 30, 2020, as compared to the three months ended September 30, 2019, is primarily related to a non-deductible goodwill impairment charge of $44.9 million recorded during the third quarter of 2020.

Income tax expense was $74.3 million for the nine months ended September 30, 2020, representing an effective tax rate of 25.0%, compared to income tax expense of $146.3 million for the nine months ended September 30, 2019, representing an effective tax rate of 26.2%. The effective tax rate for the ~~six~~nine months ended ~~June~~September 30, ~~2019, reflects~~2020 includes the impact of the non-deductible goodwill impairment charge recognized during the third quarter of 2020, partly offset by discrete tax benefits including a ~~one-time benefit of~~ $2.7 million benefit for carrying back net operating loss deductions to pre-TJCA tax periods, as allowed by the CARES Act, a $1.4 million benefit for a state tax rate change, and ~~$2.6~~$2.3 million in other net discrete benefit items, including discrete items related to prior periods. ~~Additionally, the~~The effective tax rate in the first ~~six~~nine months of 2019 was higher largely due to ~~non-deductible~~nondeductible merger-related expenses associated with the FCB acquisition.

~~The~~Synovus’ effective tax rate ~~is affected by~~considers many factors including, but not limited to, the level of pre-tax income, BOLI, tax-exempt interest, certain income tax credits, and nondeductible expenses. In addition, the effective tax rate is affected by items that may occur in any given period but are not consistent from period-to-period, such as tax benefits related to share-based compensation, jurisdiction statutory tax rate changes, valuation allowance changes, ~~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 deductions and certain state concessions, we do not expect the provisions of the CARES Act to have a significant impact on the Company’s current tax provision. With regard to the CARES Act payroll tax deferrals, Synovus estimates the payment of approximately $16.6 million of employer payroll taxes otherwise due in 2020 will be delayed, with 50% due by December 31, 2021 and the remaining 50% by December 31, 2022.

CREDIT QUALITY, CAPITAL RESOURCES AND LIQUIDITY

Credit Quality

~~Synov~~usSynovus continuously monitors the quality of its loan portfolio by industry, property type, geography, as well as credit quality metrics. ~~While~~Credit metrics deteriorated slightly during the third quarter of 2020 with slight increases in NPAs, NPLs, and past dues from June 30, 2020; however, these increases were primarily isolated to specific credits, and we ~~expect to experience stress~~have not experienced widespread deterioration in the portfolio.

During the three months ended September 30, 2020, loan downgrades to Special Mention and Substandard totaled $731.0 million and $137.5 million, respectively, primarily due to downgrades of $600.0 million in the hotel portfolio, ~~as we progress through~~one of the ~~current economic environment,~~ hardest hit industries. Synovus' hotel loan portfolio totaled $1.41 billion at September 30, 2020 compared to $1.36 billion at June 30, 2020.

Synovus does expect some pressure on credit metrics over the next few quarters, which aligns with the reserve builds ~~in the first half of the year~~to-date during 2020 under the pro-cyclical nature of CECL, the credit quality of the portfolio at June 30, 2020 was generally stable, due in part to Synovus' deferral relief program offered in response to the impact of COVID-19.

~~At June 30, 2020, 11.7% of Synovus' loan portfolio, or $4.~~67 ~~billion, is in sectors we expect to be most sensitive to the COVID-19 pandemic. Within this group, hotels represented the largest exposure at $1.3~~7 ~~billion, followed by shopping centers (excluding those with a grocery, pharmacy, or discount store anchor) at $1.07billion~~, ~~restaurants at$787 million, retail trade (excluding gas and staples) at $724 million, arts, entertainment, and recreation at $462 million, and oil-related industries at $265 million.~~ ~~While our entire loan portfolio is being continuously assessed, enhanced monitoring for these sectors~~ ~~is ongoing~~.CECL. We are continuously working with ~~these~~our customers to evaluate how the current economic conditions are impacting, and will continue to impact, their business operations.

The table below includes selected credit quality metrics.


Table 7 - Credit Quality Metrics	Table 7 - Credit Quality Metrics																	Table 7 - Credit Quality Metrics
(dollars in thousands)	(dollars in thousands)	June 30, 2020			December 31, 2019			June 30, 2019			(dollars in thousands)	September 30, 2020			December 31, 2019				September 30, 2019
Non-performing loans	Non-performing loans	$	147,437		$	101,636		$	124,083		Non-performing loans	$	168,837		$	101,636			$	115,915
ORE and other assets	ORE and other assets	30,242			35,810			15,479			ORE and other assets	23,280			35,810				35,400
Non-performing assets	Non-performing assets	$	177,679		$	137,446		$	139,562		Non-performing assets	$	192,117		$	137,446			$	151,315
Total loans	Total loans	$	39,914,297		$	37,162,450		$	36,138,561		Total loans	$	39,549,847		$	37,162,450			$	36,417,826
Non-performing loans as a % of total loans	Non-performing loans as a % of total loans	0.37		%	0.27		%	0.34		%	Non-performing loans as a % of total loans	0.43		%	0.27		%		0.32		%
Non-performing assets as a % of total loans, ORE, and specific other assets	Non-performing assets as a % of total loans, ORE, and specific other assets	0.44			0.37			0.39			Non-performing assets as a % of total loans, ORE, and specific other assets	0.49			0.37				0.42
Loans 90 days past due and still accruing	Loans 90 days past due and still accruing	$	8,391		$	15,943		$	5,851		Loans 90 days past due and still accruing	$	7,512		$	15,943			$	15,660
As a % of total loans	As a % of total loans	0.02		%	0.04		%	0.02		%	As a % of total loans	0.02		%	0.04		%		0.04		%
Total past due loans and still accruing	Total past due loans and still accruing	$	46,390		$	123,793		$	80,792		Total past due loans and still accruing	$	57,316		$	123,793			$	88,219
As a % of total loans	As a % of total loans	0.12		%	0.33		%	0.22		%	As a % of total loans	0.14		%	0.33		%		0.24		%
Net charge-offs, quarter	Net charge-offs, quarter	$	24,046		$	8,821		$	11,779		Net charge-offs, quarter	$	28,466		$	8,821			$	19,925
Net charge-offs/average loans, quarter	Net charge-offs/average loans, quarter	0.24		%	0.10		%	0.13		%	Net charge-offs/average loans, quarter	0.29		%	0.10		%		0.22		%
Net charge-offs, year-to-date	Net charge-offs, year-to-date	$	44,107		$	57,612		$	28,867		Net charge-offs, year-to-date	$	72,573		$	57,612			$	48,792
Net charge-offs/average loans, year-to-date	Net charge-offs/average loans, year-to-date	0.23		%	0.16		%	0.16		%	Net charge-offs/average loans, year-to-date	0.25		%	0.16		%		0.18		%
Provision for loan losses, quarter	Provision for loan losses, quarter	$	119,242		$	24,470		$	12,119		Provision for loan losses, quarter	$	43,618		$	24,470			$	27,562
Provision for unfunded commitments, quarter	Provision for unfunded commitments, quarter	22,609			*			*			Provision for unfunded commitments, quarter	(235)			*				*
Provision for credit losses, quarter	Provision for credit losses, quarter	$	141,851		$	24,470		$	12,119		Provision for credit losses, quarter	$	43,383		$	24,470			$	27,562
Provision for loan losses, year-to-date	Provision for loan losses, year-to-date	268,359			87,720			35,688			Provision for loan losses, year-to-date	311,977			87,720				63,250
Provision for unfunded commitments, year-to-date	Provision for unfunded commitments, year-to-date	32,214			*			*			Provision for unfunded commitments, year-to-date	31,979			*				*
Provision for credit losses, year-to-date	Provision for credit losses, year-to-date	300,573			87,720			35,688			Provision for credit losses, year-to-date	343,956			87,720				63,250
Allowance for loan losses	Allowance for loan losses	588,648			281,402			257,376			Allowance for loan losses	603,800			281,402				265,013
Reserve for unfunded commitments	Reserve for unfunded commitments	61,029			1,375			995			Reserve for unfunded commitments	60,794			1,375				1,496
Allowance for credit losses	Allowance for credit losses	$	649,677		$	282,777		$	258,371		Allowance for credit losses	$	664,594		$	282,777			$	266,509
ACL to loans coverage ratio	ACL to loans coverage ratio	1.63		%	0.76		%	0.71		%	ACL to loans coverage ratio	1.68		%	0.76		%		0.73		%
ALL to loans coverage ratio	ALL to loans coverage ratio	1.47			0.76			0.71			ALL to loans coverage ratio	1.53			0.76				0.73
ACL/NPLs	ACL/NPLs	440.65			278.23			208.22			ACL/NPLs	393.63			278.23				229.92
ALL/NPLs	ALL/NPLs	399.25			276.87			207.42			ALL/NPLs	357.62			276.87				228.63

* Prior to CECL implementation on January 1, 2020, the provision for unfunded commitments was reflected within other non-interest expense.

Non-performing Assets

Total NPAs as a percentage of total loans, ORE, and specific other assets were ~~0.44%~~0.49% at ~~June~~September 30, 2020 compared to 0.37% at December 31, 2019 and ~~0.39%~~0.42% at ~~June~~September 30, 2019. Total NPAs were ~~$177.7~~$192.1 million at ~~June~~September 30, 2020 compared to $137.4 million at December 31, 2019 and ~~$139.6~~$151.3 million at ~~June~~September 30, 2019. The increase in NPLs and NPAs compared to December 31, 2019 was mostly isolated to a few larger commercial relationships being designated as non-performing.

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~~2019~~ ~~primarily related to the designation of a large C&I relationship as non-performing in the first quarter of 2020.~~

Provision for Credit Losses and Allowance for Credit Losses

Provision for credit losses (which includes the provision for loan losses and unfunded commitments) of ~~$141.9 million and $300.6~~$43.4 million for the three ~~and six~~ months ended ~~June~~September 30, 2020 ~~respectively,~~included net charge-offs of $28.5 million and the impact of downgrades largely concentrated in the hotel portfolio, which were mostly offset by improvement in the economic forecast which included adjustments for the estimated impact of currently enacted government stimulus plans, as well as reserve releases from loan dispositions. Provision for credit losses of $344.0 million for the nine months ended September 30, 2020, resulted in the building of the ACL required under CECL primarily as a result of uncertainty and deterioration in the economic environment due to ~~COVID-19~~.the impact of COVID-19. The amount of provision for credit losses going forward will continue to fluctuate based on a number of factors including economic outlook, loan growth, loan mix, risk grade migration, as well as the timing and impact of any future government stimulus plans. The ACL at ~~June~~September 30, 2020 totaled ~~$649.7~~$664.6 million consisting of an ALL of ~~$588.6~~$603.8 million and reserve for unfunded commitments of ~~$61.0~~$60.8 million, resulting in an ACL to loans coverage ratio of ~~1.63%~~1.68% and an ACL to NPLs ratio of ~~441%~~394%. Excluding PPP loans, the ACL to loans coverage ratio was ~~1.74%~~1.80%.


Table 8 - Accruing TDRs by Risk Grade	Table 8 - Accruing TDRs by Risk Grade													Table 8 - Accruing TDRs by Risk Grade
		June 30, 2020						December 31, 2019								June 30, 2019					September 30, 2020				December 31, 2019		September 30, 2019
(dollars in thousands)	(dollars in thousands)	Amount		%		Amount		%		Amount		%		(dollars in thousands)	Amount		%		Amount		%		Amount		%
Pass	Pass	$	74,619	44.8	%	$	70,574	53.0	%	$	60,586	47.9	%	Pass	$	69,433	42.5	%	$	70,574	53.0	%	$	65,171	50.1	%
Special mention	Special mention	16,228		9.8		11,735		8.8		12,841		10.2		Special mention	13,303		8.1		11,735		8.8		14,053		10.8
Substandard accruing	Substandard accruing	75,614		45.4		50,836		38.2		52,942		41.9		Substandard accruing	80,775		49.4		50,836		38.2		50,795		39.1
Total accruing TDRs	Total accruing TDRs	$	166,461	100.0	%	$	133,145	100.0	%	$	126,369	100.0	%	Total accruing TDRs	$	163,511	100.0	%	$	133,145	100.0	%	$	130,019	100.0	%

Troubled Debt Restructurings

Accruing TDRs were ~~$166.5~~$163.5 million at ~~June~~September 30, 2020, compared to $133.1 million at December 31, 2019 and ~~$126.4~~$130.0 million at ~~June~~September 30, 2019. Accruing TDRs increased ~~$33.3~~$30.4 million from December 31, 2019 and ~~$40.1~~$33.5 million from ~~June~~September 30, 2019. The primary driver of the increase in accruing TDRs compared to December 31, 2019 is a result of a large relationship being designated as an accruing TDR in the first quarter of 2020 due to interest rate and term concessions. Non-accruing TDRs were ~~$8.5~~$4.6 million at ~~June~~September 30, 2020, compared to $17.1 million at December 31, 2019 and ~~$12.8~~$13.6 million at ~~June~~September 30, 2019.

Accruing TDRs are considered performing because they are performing in accordance with the restructured terms. At ~~June~~September 30, 2020, December 31, 2019, and ~~June~~September 30, 2019, approximately 99%, 99%, and ~~97%~~98%, respectively, of accruing TDRs were current. In addition, subsequent defaults on accruing TDRs (defaults defined as the earlier of the TDR being placed on non-accrual status or reaching 90 days past due with respect to principal and/or interest payments within twelve months of the TDR designation) have continued to remain at low levels.

Non-TDR Modifications due to COVID-19

Regulatory agencies ~~have~~ encouraged financial institutions to work prudently with borrowers who are or may be unable to meet their contractual payment obligations because of COVID-19. In the Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus (initially issued on March 22, 2020 and revised on April 7, 2020), for example, the regulatory agencies expressed their view of loan modification programs as positive actions that may mitigate adverse effects on borrowers due to COVID-19 and their unwillingness to criticize institutions for working with borrowers in a safe and sound manner. Moreover, the Interagency Statement provided that eligible loan modifications related to COVID-19 may be accounted for under section 4013 of the CARES Act or in accordance with ASC 310-40. Section 4013 of the CARES Act allows banks to elect to not consider loan modifications related to COVID-19 that are made between March 1, 2020 and the earlier of December 31, 2020, or 60 days after the National Emergency ends to borrowers that are current (i.e., less than 30 days past due as of December 31, 2019) as TDRs. The regulatory agencies further stated that performing loans granted payment deferrals due to COVID-19 are not considered past due or non-accrual. FASB confirmed the foregoing regulatory agencies' view, that such short-term modifications (e.g., six months) made on a good-faith basis in response to COVID-19 for borrowers who are current are not TDRs. Beginning in late March 2020, Synovus provided ~~relief progr~~rel~~ams~~ief programs consisting primarily of 90-day payment deferral relief to b~~orrowers~~borrowers negatively impacted by COVID-19 and has primarily accounted for these loan modifications in accordance with ASC ~~310-40.~~310-40~~Synovus approved payment deferral relief~~. During the third quarter, upon evaluation of ~~principal~~facts and ~~interest~~ ~~to borrowers due to~~circumstances, the ~~effects~~CARES Act was elected for certain loan modifications that met the criteria of ~~COVID-19~~ ~~on approximately $6 billion~~section 4013 of ~~our loan portfolio. Th~~ethe CARES Act. The deferred payments along with interest accrued during the deferral period are generally due and payable on the maturity date of the existing loan. Based on the terms of the deferral ~~relief~~relief program which did not provide for forgiveness of interest, Synovus has recognized interest income on loans during the deferral period. As of ~~June~~September 30, 2020, ~~$2.11 billion~~approximately 1% of the total loan portfolio was in a ~~90-day~~P&I deferral status, ~~including $3.2 million under a second 90-day~~down significantly from approximately 15% of our loan portfolio that had been granted P&I deferral period. Based on reviews of customer cash flows, client surveys, and conversations and interactions with customers, Synovus preliminarily estimates that approximately 3 to 5 percent of total loans will have a second deferral granted for a 90-day deferment. ~~As of August 4, 2020, $701.9 million~~through our relief programs as of the ~~total loan portfolio was in a 90-day deferral status, including $246.0 million under a second 90-day deferral period. The majority~~filing of ~~second 90-day payment deferral relief provided~~our first quarter 2020 10-Q.In addition to ~~borrowers, as of August 4, 2020, includes deferral of scheduled principal payments only, with no deferral of interest payments.~~our

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P&I deferment program, we have also provided borrowers who have been impacted during the current crisis with other modifications such as interest only relief or amortization extensions on approximately 2% of total loans.

Capital Resources

Synovus and Synovus Bank are required to comply with capital adequacy standards established by their primary federal regulator, the Federal Reserve. Synovus and Synovus Bank measure capital adequacy using the standardized approach to Basel III. At ~~June~~September 30, 2020, Synovus and Synovus Bank's capital levels 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	Table 9 - Capital Ratios							Table 9 - Capital Ratios
(dollars in thousands)	(dollars in thousands)	June 30, 2020			December 31, 2019			(dollars in thousands)	September 30, 2020			December 31, 2019
CET1 capital	CET1 capital							CET1 capital
Synovus Financial Corp.	Synovus Financial Corp.	$	3,827,229		$	3,743,459		Synovus Financial Corp.	$	3,913,402		$	3,743,459
Synovus Bank	Synovus Bank	4,633,418			4,640,501			Synovus Bank	4,674,063			4,640,501
Tier 1 risk-based capital	Tier 1 risk-based capital							Tier 1 risk-based capital
Synovus Financial Corp.	Synovus Financial Corp.	4,364,374			4,280,604			Synovus Financial Corp.	4,450,547			4,280,604
Synovus Bank	Synovus Bank	4,633,418			4,640,501			Synovus Bank	4,674,063			4,640,501
Total risk-based capital	Total risk-based capital							Total risk-based capital
Synovus Financial Corp.	Synovus Financial Corp.	5,459,568			5,123,381			Synovus Financial Corp.	5,536,918			5,123,381
Synovus Bank	Synovus Bank	5,168,612			4,923,279			Synovus Bank	5,201,409			4,923,279
CET1 capital ratio	CET1 capital ratio							CET1 capital ratio
Synovus Financial Corp.	Synovus Financial Corp.	8.90		%	8.95		%	Synovus Financial Corp.	9.30		%	8.95		%
Synovus Bank	Synovus Bank	10.76			11.10			Synovus Bank	11.08			11.10
Tier 1 risk-based capital ratio	Tier 1 risk-based capital ratio							Tier 1 risk-based capital ratio
Synovus Financial Corp.	Synovus Financial Corp.	10.15			10.23			Synovus Financial Corp.	10.57			10.23
Synovus Bank	Synovus Bank	10.76			11.10			Synovus Bank	11.08			11.10
Total risk-based capital to risk-weighted assets ratio	Total risk-based capital to risk-weighted assets ratio							Total risk-based capital to risk-weighted assets ratio
Synovus Financial Corp.	Synovus Financial Corp.	12.70			12.25			Synovus Financial Corp.	13.16			12.25
Synovus Bank	Synovus Bank	12.01			11.78			Synovus Bank	12.33			11.78
Leverage ratio	Leverage ratio							Leverage ratio
Synovus Financial Corp.	Synovus Financial Corp.	8.38			9.16			Synovus Financial Corp.	8.48			9.16
Synovus Bank	Synovus Bank	8.91			9.94			Synovus Bank	8.91			9.94
Tangible common equity ratio⁽¹⁾	Tangible common equity ratio⁽¹⁾							Tangible common equity ratio(1)
Synovus Financial Corp.	Synovus Financial Corp.	7.41			8.08			Synovus Financial Corp.	7.67			8.08

⁽¹⁾See "Table 14 - Reconciliation of Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.

At ~~June~~September 30, 2020, Synovus' CET1 ratio ~~was 8.90%~~increased to 9.30%, well in excess of regulatory requirements including the capital conservation buffer of ~~2.5%~~2.5%. The JuneSeptember 30, 2020 CET1 ratio improved 2040 bps compared to ~~March 31,~~June 30, 2020 and ~~was 5~~35 bps ~~below the~~compared to December 31, 2019 ~~ratio. During~~from a combination of earnings and balance sheet activities. These balance sheet activities included the ~~latter part~~settlement of ~~the~~our second quarter ~~of 2020, Synovus executed certain~~bond repositioning and our on-going efforts to manage non-relationship loan portfolios as we prioritize our balance sheet ~~management activities including repositioning the investment securities portfolio and transitioning certain third-party lending partnership loans to held~~ for ~~sale. These actions settled subsequent to quarter-end, at the margin,~~core, client relationships. We remain focused on supporting our overall capital position and are ~~expected~~targeting the higher end of our CET1 operating range of 9.0% to ~~provide further support to capital ratios~~9.5%, given the heightened uncertainty in the ~~third quarter of 2020.~~current economic environment. 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' 2019 Form 10-K. Management reviews the Company's capital position on an on-going basis and believes, based on internal capital analyses and earnings projections, that Synovus is well positioned to meet relevant regulatory capital standards.

As a result of the greater economic uncertainty associated with the current pandemic, Synovus suspended its share repurchase activity beyond the $16.2 million (450 thousand shares) of its common stock repurchased during the first quarter.

On ~~March 27,~~August 26, 2020, the federal banking regulators issued a final rule (following an interim final rule ~~updating CECL transition options, which~~issued on March 27, 2020) that allows electing banking organizations that adopt CECL during 2020 to ~~delay an estimate of~~mitigate the ~~effect~~estimated effects 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, 2020 and the ~~June~~September 30, 2020 regulatory capital ratios reflect Synovus' election of the five-year transition provision. For

additional information on Synovus' adoption of CECL, see "Part I - Item 1. Financial Statements and Supplementary Data - Note 1 - Basis of Presentation and Accounting Policies" in this Report.

Dividends

Synovus has historically paid a quarterly cash dividend to the holders of its common stock. Management and the Board of Directors closely monitor current and projected capital levels, liquidity (including dividends from subsidiaries), financial markets and other economic trends, as well as regulatory requirements regarding the payment of dividends. As Synovus navigates through the current recession and regulatory guidelines, the approach to common stock dividends will be continually evaluated based on an assessment of 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, which are restricted by various regulations administered by federal and state bank regulatory authorities.

Synovus declared common stock dividends of ~~$97.2~~$145.8 million, or ~~$0.66~~$0.99 per common share, for the ~~six~~nine months ended ~~June~~September 30, 2020, up from $~~94.5~~138.9 million, or ~~$0.60~~$0.90 per common share, for the ~~six~~nine months ended ~~June~~September 30, 2019, respectively. In addition, Synovus declared dividends on its preferred stock of ~~$16.6~~$24.9 million and ~~$6.3~~$14.6 million during the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, respectively.

Liquidity

Liquidity represents the extent to which Synovus has readily available sources of funding 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 as well as market risk.

In accordance with Synovus policies and regulatory guidance, ALCO evaluates contractual and anticipated cash flows under normal and stressed conditions to properly manage the Company’s liquidity profile. Synovus places an emphasis on maintaining numerous sources of current and contingent liquidity to meet its obligations to depositors, borrowers, and creditors on a timely basis. Liquidity is generated through various sources, including, but not limited to, maturities and repayments of loans by customers, maturities and sales of investment securities, and growth in 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 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 funding and liquidity. Synovus Bank also has the capacity to access funding through its membership in the FHLB 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 ~~June~~September 30, 2020, based on currently pledged collateral, Synovus Bank had access to incremental FHLB funding of $4.90$4.57 billion, subject to FHLB credit policies.

In addition to bank level liquidity management, Synovus must manage liquidity at the parent company level for various operating needs including the servicing of debt, the payment of dividends on our common stock and preferred stock, share repurchases, payment of general corporate expenses and potential capital infusions into subsidiaries. The primary source of liquidity for Synovus consists of dividends from Synovus Bank, which is governed by certain rules and regulations of the GA DBF and the Federal Reserve Bank. Synovus' ability to receive dividends from Synovus Bank in future periods will depend on a number of factors, including, without limitation, Synovus Bank's future profits, asset quality, liquidity, and overall condition. In addition, both the GA DBF and Federal Reserve Bank may require approval to pay dividends, based on certain regulatory statutes and limitations.

On February 12, 2020, Synovus Bank issued $400.0 million aggregate principal amount of 2.289% Fixed-to-Floating Rate Senior Bank Notes due 2023. From and including the original issue date to, but excluding, February 10, 2022, the Notes bear interest at a fixed rate of 2.289% per annum, payable semi-annually in arrears on each February 10 and August 10, beginning on August 10, 2020. Unless redeemed, from and including February 10, 2022 to but excluding the Maturity Date, the interest rate on the Notes is computed quarterly using an interest rate based on the SOFR with a daily index maturity plus a spread of 94.5 bps per annum, payable quarterly in arrears. Synovus Bank may redeem the Notes, at its option, on February 10, 2022 (which is the date that is one year prior to the Maturity Date) upon not less than 10 nor more than 60 days’ prior notice given to holders of the Notes. The redemption price for any redemption is 100% of the principal amount of the Notes, plus accrued 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 and on September 15, 2020, Synovus terminated a $500 million long-term FHLB obligation and incurred a $154 thousand loss on early extinguishment of debt.

Synovus presently believes that the sources of liquidity discussed above, including existing liquid funds on hand, are sufficient to meet its anticipated funding needs. However, if economic conditions were to significantly deteriorate, regulatory

capital requirements for Synovus or Synovus Bank were to increase as the result of regulatory directives or otherwise, or Synovus believes it is prudent to enhance current liquidity levels, then Synovus may seek additional liquidity from external sources. See "Part I- Item 1A. Risk Factors - the COVID-19 pandemic has resulted in significant market volatility and lower interest rates that could materially affect Synovus’ results of operations and access to capital" of this Report and "Part I – Item 1A. Risk Factors - Changes in the cost and availability of funding due to changes in the deposit market and credit market may adversely affect our capital resources, liquidity and financial results" of Synovus' 2019 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 ~~six~~nine months ended ~~June~~September 30, 2020 increased ~~$4.54~~$5.00 billion, or ~~9.8%~~11%, to ~~$50.78~~$51.57 billion as compared to ~~$46.24~~$46.57 billion for the first ~~six~~nine months of 2019. Average earning assets increased ~~$3.78~~$4.18 billion, or ~~8.8%~~10%, in the first ~~six~~nine months of 2020 compared to the same period in 2019 and represented ~~92.0%~~91.8% of average total assets at ~~June~~September 30, 2020, as compared to ~~92.8%~~92.7% at ~~June~~September 30, 2019. The increase in average earning assets primarily resulted from a ~~$3.14~~$3.17 billion, or 9%, increase in average loans, net, which included average PPP loans of ~~$1.11 billion (Synovus fund~~$1.64 bill~~ed nearly $2.9 billion of PPP loans during the second quarter of 2020)~~ion, as well as a ~~$513.5~~$578.3 million increase in average interest-bearing funds held at the Federal Reserve ~~Bank.~~Bank and a $287.4 million increase in loans held for sale.

Average interest-bearing liabilities increased ~~$2.35~~$2.19 billion, or ~~7.4%~~7%, to ~~$34.16~~$34.11 billion for the first ~~six~~nine months of 2020 compared to the same period in 2019. The increase in average interest-bearing liabilities resulted from a ~~$2.60~~$3.08 billion, or 28%, increase in average money market deposits (includes an increase of $863.7 million in other brokered deposits), a ~~$706.7~~$879.2 million increase in average interest-bearing demand deposits, and a $451.8 million increase in average long-term debt, including $400.0 million of senior notes issued in February ~~2020, and a $161.6 million increase in other short-term borrowings.~~2020. These increases were partially offset by a ~~$1.62~~$1.98 billion, or ~~15.5%~~19%, decrease in average time ~~deposits.~~deposits (includes an increase of $230.2 million in brokered time deposits) and a $316.6 million decrease in other short-term borrowings. Average non-interest-bearing demand deposits increased ~~$1.49~~$2.13 billion, or ~~16.2%~~23%, to ~~$10.67~~$11.37 billion for the first ~~six~~nine months of 2020 compared to the same period in 2019, due largely to liquidity associated with PPP lending.

Net interest income for the ~~six~~nine months ended ~~June~~September 30, 2020 was ~~$749.8 million,~~$1.13 billion, down ~~$44.6~~$69.7 million, or ~~5.6%~~6%, compared to the same period in 2019. The decrease in year-over-year net interest income was due to declines of ~~$36.2~~$62.5 million in PAA (primarily comprised of declines of ~~$13.5~~$27.0 million of loan accretion and ~~$21.9~~$32.9 million of deposit premium amortization) associated with the FCB acquisition and declines in market interest rates, which were somewhat offset by higher average earning ~~assets~~.assets. Net interest margin was down 4952 bps over the comparable ~~six-month~~nine-month periods to ~~3.25%~~3.20%, due primarily to the decline in market ~~intere~~stinterest rates in addition to declines in PAA. For the ~~six~~nine months ended ~~June~~September 30, 2020, the yield on earning assets was ~~4.03%~~3.88%, a decrease of 7791 bps compared to the ~~six~~nine months ended ~~June~~September 30, 2019,, while the effective cost of funds decreased 2839 bps to ~~0.78%~~0.68%. The yield on loans decreased 8396 bps to ~~4.34%~~4.20% while the yield on investment securities decreased 1436 bps to ~~2.91%~~2.72% over the ~~six~~nine months ended ~~June~~September 30, 2019.

On a sequential quarter basis, net interest income was up ~~$3.3 million, or 0.9%,~~$424 thousand and net interest margin for the ~~second~~third quarter was ~~3.13%~~3.10%, which was down 243 bps compared to the ~~first~~second quarter of ~~2020.~~2020. The sequential quarter decline in net interest margin was primarily driven by the ~~full quarter~~ impact of bond repositioning and student loan sales executed in the ~~March~~second quarter of 2020, ~~emergency rate cuts~~partially offset by ~~the Federal Reserve, as well as excess liquidity.~~further declines in deposit pricing and favorable deposit remixing trends. The ~~second~~third quarter included average PPP loan balances of $2.70 billion versus $2.21 billion in the second quarter and ~~$9.2~~$11.9 million in accretion of associated PPP processing ~~fees.~~fees versus $9.2 million in the second quarter. For the ~~second~~third quarter of 2020, the yield on earning assets decreased 5817 bps, while the effective cost of funds decreased 3414 bps compared to the ~~first~~second quarter of 2020.

~~While~~We continue to expect modest downward pressure on NIM as the ~~second half of~~repricing within our fixed-rate asset portfolios is partially offset by continued declines in overall deposit costs. Excluding the ~~year is expected to be favorably impacted by additional~~potential impacts from PPP ~~fee accretion as PPP loans are forgiven,~~forgiveness, we expect net interest income and net interest margin ~~are expected~~ to ~~experience downward pressure due to certain strategic balance sheet management activities which were completed late~~decrease modestly in the ~~second quarter.~~fourth quarter of 2020 as compared to the third quarter of 2020.

6162

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/Rates	Table 10 - Average Balances and Yields/Rates	2020					2019								Table 10 - Average Balances and Yields/Rates	2020		2019
(dollars in thousands) (yields and rates annualized)	(dollars in thousands) (yields and rates annualized)	Second Quarter			First Quarter	Fourth Quarter	Third Quarter	Second Quarter	(dollars in thousands) (yields and rates annualized)	Third Quarter			Second Quarter	First Quarter		Fourth Quarter	Third Quarter
Interest Earning Assets:	Interest Earning Assets:								Interest Earning Assets:
Investment securities⁽¹⁾⁽²⁾	Investment securities⁽¹⁾⁽²⁾	$	6,618,533		6,680,047	6,696,768	6,831,036	6,955,386	Investment securities(1)(2)	$	7,227,400		6,618,533	6,680,047		6,696,768	6,831,036
Yield	Yield	2.72		%	3.09	3.12	3.14	3.03	Yield	2.39		%	2.72	3.09		3.12	3.14
Trading account assets⁽³⁾	Trading account assets⁽³⁾	$	6,173		6,306	7,986	5,519	4,853	Trading account assets(3)	$	5,391		6,173	6,306		7,986	5,519
Yield	Yield	2.19		%	2.70	2.69	4.01	1.83	Yield	1.69		%	2.19	2.70		2.69	4.01
Commercial loans⁽²⁾⁽⁴⁾	Commercial loans⁽²⁾⁽⁴⁾	$	30,236,919		27,607,343	26,698,202	26,567,719	26,353,701	Commercial loans(2)(4)	$	30,730,135		30,236,919	27,607,343		26,698,202	26,567,719
Yield	Yield	3.95		%	4.57	4.82	5.09	5.13	Yield	3.80		%	3.95	4.57		4.82	5.09
Consumer loans⁽⁴⁾	Consumer loans⁽⁴⁾	$	9,899,172		9,985,702	9,809,832	9,633,603	9,423,427	Consumer loans(4)	$	9,032,437		9,899,172	9,985,702		9,809,832	9,633,603
Yield	Yield	4.34		%	4.60	5.07	5.08	5.17	Yield	4.08		%	4.34	4.60		5.07	5.08
Allowance for loan losses	Allowance for loan losses	$	(498,545)		(368,033)	(269,052)	(258,024)	(259,284)	Allowance for loan losses	$	(591,098)		(498,545)	(368,033)		(269,052)	(258,024)
Loans, net⁽⁴⁾	Loans, net⁽⁴⁾	$	39,637,546		37,225,012	36,238,982	35,943,298	35,517,844	Loans, net(4)	$	39,171,474		39,637,546	37,225,012		36,238,982	35,943,298
Yield	Yield	4.08		%	4.62	4.93	5.13	5.17	Yield	3.92		%	4.08	4.62		4.93	5.13
Mortgage loans held for sale	Mortgage loans held for sale	$	221,157		86,415	117,909	99,556	70,497	Mortgage loans held for sale	$	244,952		221,157	86,415		117,909	99,556
Yield	Yield	3.09		%	3.67	3.77	3.93	4.27	Yield	2.92		%	3.09	3.67		3.77	3.93
Other loans held for sale	Other loans held for sale	$	19,246		—	—	475	272	Other loans held for sale	$	493,940		19,246	—		—	475
Yield	Yield	4.19		%	—	—	—	—	Yield	3.61		%	4.19	—		—	—
Other earning assets⁽⁵⁾	Other earning assets⁽⁵⁾	$	1,709,086		652,130	514,635	513,160	511,488	Other earning assets(5)	$	1,265,880		1,709,086	652,130		514,635	513,160
Yield	Yield	0.11		%	1.02	1.71	2.08	2.37	Yield	0.11		%	0.11	1.02		1.71	2.08
Federal Home Loan Bank and Federal Reserve Bank Stock⁽³⁾	Federal Home Loan Bank and Federal Reserve Bank Stock⁽³⁾	$	247,801		284,082	278,586	254,994	234,949	Federal Home Loan Bank and Federal Reserve Bank Stock(3)	$	200,923		247,801	284,082		278,586	254,994
Yield	Yield	3.60		%	3.38	2.85	3.85	3.29	Yield	2.73		%	3.60	3.38		2.85	3.85
Total interest earning assets	Total interest earning assets	$	48,459,542		44,933,992	43,854,866	43,648,038	43,295,289	Total interest earning assets	$	48,609,960		48,459,542	44,933,992		43,854,866	43,648,038
Yield	Yield	3.75		%	4.33	4.60	4.78	4.79	Yield	3.58		%	3.75	4.33		4.60	4.78
Interest-Bearing Liabilities:	Interest-Bearing Liabilities:								Interest-Bearing Liabilities:
Interest-bearing demand deposits	Interest-bearing demand deposits	$	7,260,940		6,445,986	6,381,282	6,138,810	6,335,953	Interest-bearing demand deposits	$	7,789,095		7,260,940	6,445,986		6,381,282	6,138,810
Rate	Rate	0.21		%	0.51	0.60	0.69	0.71	Rate	0.19		%	0.21	0.51		0.60	0.69
Money market accounts, excluding brokered deposits	Money market accounts, excluding brokered deposits	$	12,238,479		11,548,014	10,526,296	10,138,783	10,024,836	Money market accounts, excluding brokered deposits	$	13,272,972		12,238,479	11,548,014		10,526,296	10,138,783
Rate	Rate	0.46		%	1.00	1.13	1.26	1.23	Rate	0.36		%	0.46	1.00		1.13	1.26
Savings deposits	Savings deposits	$	1,036,024		926,822	915,640	900,366	904,183	Savings deposits	$	1,114,956		1,036,024	926,822		915,640	900,366
Rate	Rate	0.02		%	0.05	0.05	0.05	0.05	Rate	0.02		%	0.02	0.05		0.05	0.05
Time deposits under $100,000	Time deposits under $100,000	$	1,621,943		1,761,741	1,873,350	2,100,492	2,245,878	Time deposits under $100,000	$	1,379,923		1,621,943	1,761,741		1,873,350	2,100,492
Rate	Rate	1.43		%	1.64	1.27	1.39	1.39	Rate	1.03		%	1.43	1.64		1.27	1.39
Time deposits over $100,000	Time deposits over $100,000	$	4,772,555		5,051,705	5,198,266	5,957,691	6,331,665	Time deposits over $100,000	$	3,863,821		4,772,555	5,051,705		5,198,266	5,957,691
Rate	Rate	1.80		%	2.04	1.51	1.69	1.70	Rate	1.44		%	1.80	2.04		1.51	1.69
Other brokered deposits	Other brokered deposits	$	1,998,571		1,376,669	1,156,131	993,078	766,718	Other brokered deposits	$	1,912,114		1,998,571	1,376,669		1,156,131	993,078
Rate	Rate	0.25		%	1.42	1.84	2.47	2.46	Rate	0.23		%	0.25	1.42		1.84	2.47
Brokered time deposits	Brokered time deposits	$	2,244,429		2,166,496	2,121,069	2,119,149	1,985,589	Brokered time deposits	$	2,232,940		2,244,429	2,166,496		2,121,069	2,119,149
Rate	Rate	1.86		%	2.11	2.16	2.27	2.28	Rate	1.59		%	1.86	2.11		2.16	2.27
Total interest-bearing deposits	Total interest-bearing deposits	$	31,172,941		29,277,433	28,172,034	28,348,369	28,594,822	Total interest-bearing deposits	$	31,565,821		31,172,941	29,277,433		28,172,034	28,348,369
Rate	Rate	0.73		%	1.18	1.16	1.32	1.30	Rate	0.54		%	0.73	1.18		1.16	1.32
Federal funds purchased and securities sold under repurchase agreements	Federal funds purchased and securities sold under repurchase agreements	$	250,232		167,324	192,731	221,045	300,168	Federal funds purchased and securities sold under repurchase agreements	$	180,342		250,232	167,324		192,731	221,045
Rate	Rate	0.12		%	0.30	0.24	0.22	0.20	Rate	0.09		%	0.12	0.30		0.24	0.22
Other short-term borrowings	Other short-term borrowings	$	550,000		1,384,362	1,565,507	1,307,370	1,090,581	Other short-term borrowings	$	46,739		550,000	1,384,362		1,565,507	1,307,370
Rate	Rate	1.23		%	1.66	1.87	2.31	2.59	Rate	1.12		%	1.23	1.66		1.87	2.31
Long-term debt	Long-term debt	$	2,834,188		2,678,651	2,153,983	2,286,221	2,114,819	Long-term debt	$	2,234,665		2,834,188	2,678,651		2,153,983	2,286,221
Rate	Rate	2.36		%	2.78	3.07	3.32	3.53	Rate	2.71		%	2.36	2.78		3.07	3.32
Total interest-bearing liabilities	Total interest-bearing liabilities	$	34,807,361		33,507,770	32,084,255	32,163,005	32,100,390	Total interest-bearing liabilities	$	34,027,567		34,807,361	33,507,770		32,084,255	32,163,005
Rate	Rate	0.86		%	1.30	1.30	1.47	1.48	Rate	0.68		%	0.86	1.30		1.30	1.47
Non-interest-bearing demand deposits	Non-interest-bearing demand deposits	$	11,923,534		9,409,774	9,706,784	9,365,776	9,304,839	Non-interest-bearing demand deposits	$	12,773,676		11,923,534	9,409,774		9,706,784	9,365,776
Cost of funds	Cost of funds	0.65		%	1.04	1.02	1.16	1.15	Cost of funds	0.50		%	0.65	1.04		1.02	1.16
Effective cost of funds⁽⁶⁾	Effective cost of funds⁽⁶⁾	0.62		%	0.96	0.95	1.09	1.10	Effective cost of funds(6)	0.48		%	0.62	0.96		0.95	1.09
Net interest margin	Net interest margin	3.13		%	3.37	3.65	3.69	3.69	Net interest margin	3.10		%	3.13	3.37		3.65	3.69
Taxable equivalent adjustment⁽²⁾	Taxable equivalent adjustment⁽²⁾	$	861		786	769	819	811	Taxable equivalent adjustment(2)	$	956		861	786		769	819

⁽¹⁾Excludes net unrealized gains (losses).

⁽²⁾Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 21%, in adjusting interest on tax-exempt loans and investment securities to a taxable-equivalent basis.

⁽³⁾Included as a component of other assets on the consolidated balance sheets.

⁽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.

6263

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 ~~six~~nine months ended ~~June~~September 30, 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	Table 11 - Net Interest Income and Rate/Volume Analysis																																													Table 11 - Net Interest Income and Rate/Volume Analysis
		Six Months Ended June 30,																										2020 Compared to 2019														Nine Months Ended September 30,								2020 Compared to 2019
		Average Balances						Interest						Annualized Yield/Rate								Change due to									Increase (Decrease)		Average Balances						Interest						Annualized Yield/Rate			Change due to	Increase (Decrease)
(dollars in thousands)	(dollars in thousands)	2020		2019		2020		2019		2020		2019		Volume		Rate				Increase (Decrease)		(dollars in thousands)	2020			2019			2020			2019			2020			2019			Volume			Rate			Increase (Decrease)
Assets	Assets
Interest earning assets:	Interest earning assets:																			Interest earning assets:
Investment securities	Investment securities	$	6,649,290	$	6,746,950	$	96,593	$	102,789	2.91	%	3.05	%	$	(1,481)	$	(4,715)	$	(6,196)	Investment securities	$	6,843,400		$	6,775,287		$	139,791		$	156,554		2.72	%		3.08	%		$	1,571		$	(18,334)		$	(16,763)
Trading account assets	Trading account assets	6,240		3,459		76		29		2.45		1.67		23		24		47		Trading account assets	5,955			4,153			99			84			2.22			2.70			37			(22)			15
Taxable loans, net⁽¹⁾	Taxable loans, net⁽¹⁾	38,396,237		35,206,985		823,156		900,129		4.31		5.16		81,833		(158,806)		(76,973)		Taxable loans, net(1)	38,671,202			35,421,137			1,203,839			1,360,511			4.16			5.14			125,062			(281,734)			(156,672)
Tax-exempt loans, net⁽¹⁾⁽²⁾	Tax-exempt loans, net⁽¹⁾⁽²⁾	468,330		342,848		7,820		6,587		3.36		3.87		2,415		(1,182)		1,233		Tax-exempt loans, net(1)(2)	494,885			348,246			12,366			10,453			3.34			4.01			4,402			(2,489)			1,913
Allowance for loan losses	Allowance for loan losses	(433,289)		(256,067)																Allowance for loan losses	(486,276)			(256,727)
Loans, net	Loans, net	38,431,278		35,293,766		830,976		906,716		4.34		5.17		84,248		(159,988)		(75,740)		Loans, net	38,679,811			35,512,656			1,216,205			1,370,964			4.20			5.16			129,464			(284,223)			(154,759)
Mortgage loans held for sale	Mortgage loans held for sale	153,786		52,803		2,502		1,143		3.25		4.33		2,175		(816)		1,359		Mortgage loans held for sale	184,396			68,558			4,291			2,122			3.10			4.13			3,581			(1,412)			2,169
Other loans held for sale	Other loans held for sale	9,623		802		204		22		4.19		5.35		235		(53)		182		Other loans held for sale	172,241			692			4,756			22			3.63			4.11			5,279			(545)			4,734
Other earning assets⁽³⁾	Other earning assets⁽³⁾	1,180,608		595,018		2,133		7,233		0.36		2.42		7,018		(12,118)		(5,100)		Other earning assets(3)	1,209,239			567,433			2,477			9,964			0.27			2.32			11,099			(18,586)			(7,487)
Federal Home Loan Bank and Federal Reserve Bank stock	Federal Home Loan Bank and Federal Reserve Bank stock	265,942		223,244		4,629		4,479		3.48		4.01		851		(701)		150		Federal Home Loan Bank and Federal Reserve Bank stock	244,111			233,943			6,000			6,931			3.28			3.95			301			(1,232)			(931)
Total interest earning assets	Total interest earning assets	46,696,767		42,916,042		937,113		1,022,411		4.03		4.80		93,069		(178,367)		(85,298)		Total interest earning assets	47,339,153			43,162,722			1,373,619			1,546,641			3.88			4.79			151,332			(324,354)			(173,022)
Cash and due from banks	Cash and due from banks	536,180		517,958																Cash and due from banks	532,808			516,789
Premises and equipment, net	Premises and equipment, net	489,246		483,420																Premises and equipment, net	485,790			486,141
Other real estate	Other real estate	13,523		14,056																Other real estate	11,709			14,803
Cash surrender value of bank-owned life insurance	Cash surrender value of bank-owned life insurance	963,428		763,741																Cash surrender value of bank-owned life insurance	989,238			765,204
Other assets⁽⁴⁾	Other assets⁽⁴⁾	2,075,995		1,544,423																Other assets(4)	2,209,923			1,621,335
Total assets	Total assets	$	50,775,139	$	46,239,640															Total assets	$	51,568,621		$	46,566,994

Liabilities and Shareholders' Equity	Liabilities and Shareholders' Equity																					Liabilities and Shareholders' Equity
Interest-bearing liabilities:	Interest-bearing liabilities:																			Interest-bearing liabilities:
Interest-bearing demand deposits	Interest-bearing demand deposits	$	6,853,463	$	6,364,470	$	11,871	$	21,974	0.35	%	0.70	%	$	1,702	$	(11,805)	$	(10,103)	Interest-bearing demand deposits	$	7,167,617		$	6,288,424		$	15,561		$	32,611		0.29	%		0.69	%		$	4,541		$	(21,591)		$	(17,050)
Money market accounts	Money market accounts	13,580,867		10,985,791		48,832		71,264		0.72		1.31		16,905		(39,337)		(22,432)		Money market accounts	14,119,510			11,035,016			61,799			109,711			0.58			1.33			30,712			(78,624)			(47,912)
Savings deposits	Savings deposits	981,423		902,630		161		258		0.03		0.06		23		(120)		(97)		Savings deposits	1,026,259			901,867			204			371			0.03			0.05			46			(213)			(167)
Time deposits	Time deposits	8,809,434		10,430,033		81,612		86,887		1.86		1.68		(13,539)		8,264		(5,275)		Time deposits	8,361,942			10,344,873			108,106			131,773			1.73			1.70			(25,236)			1,569			(23,667)
Federal funds purchased and securities sold under repurchase agreements	Federal funds purchased and securities sold under repurchase agreements	208,778		266,807		201		281		0.19		0.21		(61)		(19)		(80)		Federal funds purchased and securities sold under repurchase agreements	199,230			251,385			242			404			0.16			0.21			(82)			(80)			(162)
Other short-term borrowings	Other short-term borrowings	967,181		805,602		7,509		10,476		1.54		2.59		2,081		(5,048)		(2,967)		Other short-term borrowings	658,128			974,696			7,643			18,195			1.53			2.46			(5,830)			(4,722)			(10,552)
Long-term debt	Long-term debt	2,756,419		2,049,726		35,454		35,392		2.52		3.43		12,054		(11,992)		62		Long-term debt	2,581,232			2,129,424			50,645			54,785			2.54			3.39			11,466			(15,606)			(4,140)
Total interest-bearing liabilities	Total interest-bearing liabilities	34,157,565		31,805,059		185,640		226,532		1.08		1.43		19,165		(60,057)		(40,892)		Total interest-bearing liabilities	34,113,918			31,925,685			244,200			347,850			0.94			1.44			15,617			(119,267)			(103,650)
Non-interest-bearing deposits	Non-interest-bearing deposits	10,666,654		9,180,584																Non-interest-bearing deposits	11,374,121			9,242,993
Other liabilities	Other liabilities	918,009		689,462																Other liabilities	1,028,401			691,357
Shareholders' equity	Shareholders' equity	5,032,911		4,564,535																Shareholders' equity	5,052,181			4,706,959
Total liabilities and equity	Total liabilities and equity	$	50,775,139	$	46,239,640															Total liabilities and equity	$	51,568,621		$	46,566,994
Interest rate spread:	Interest rate spread:									2.95	%	3.37	%							Interest rate spread:													2.94	%		3.35	%
Net interest income - FTE/margin⁽⁵⁾	Net interest income - FTE/margin⁽⁵⁾					$	751,473	$	795,879	3.25	%	3.74	%	$	73,904	$	(118,310)	$	(44,406)	Net interest income - FTE/margin(5)							$	1,129,419		$	1,198,791		3.20	%		3.72	%		$	135,715		$	(205,087)		$	(69,372)
Taxable equivalent adjustment	Taxable equivalent adjustment					1,647		1,441												Taxable equivalent adjustment							2,603			2,256
Net interest income, actual	Net interest income, actual					$	749,826	$	794,438											Net interest income, actual							$	1,126,816		$	1,196,535

⁽¹⁾Average loans are shown net of unearned income. NPLs are included. Interest income includes fees as follows: 2020 - ~~$24.4~~$42.8 million, 2019 - ~~$17.1~~$26.4 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 ~~$218.7~~$212.9 million and ~~$(36.5)~~$14.7 million for the ~~six~~nine months ended ~~June~~September 30, 2020 and 2019, respectively.

⁽⁵⁾The net interest margin is calculated by dividing annualized net interest income - FTE by average total interest earnings assets.

6364

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 which incorporates all of Synovus’ earning assets and liabilities. These simulations are used to determine a baseline net interest income projection and the sensitivity of the income profile based on changes in interest rates. These simulations incorporate assumptions and factors, including, but not limited to, changes in market rates, in the size or composition of the balance sheet, and in repricing characteristics as well as customer behaviors. This process is reviewed and updated on an on-going basis in a manner consistent with Synovus’ ALCO governance framework.

Synovus has modeled its baseline net interest income projection assuming a flat interest rate environment with the federal funds rate at the Federal Reserve’s current targeted range of 0% to 0.25% and the current prime rate of 3.25%. Synovus has modeled the impact of a gradual increase in market interest rates across the yield curve of 100 and 200 bps and a gradual decline of 25 bps to determine the sensitivity of net interest income for the next twelve months. The lesser decline of the downrate scenario presented was selected in light of the low absolute level of monetary policy rates and generally incorporates an assumption that rates are floored at the zero-lower-bound. Synovus' current rate risk position is considered ~~modestly~~ asset-sensitive and would be expected to benefit net interest income in a rising interest rate environment and reduce net interest income in a declining interest rate environment. The following table represents the estimated sensitivity of net interest income at ~~June~~September 30, 2020, with comparable information for December 31, 2019.


Table 12 - Twelve Month Net Interest Income Sensitivity	Table 12 - Twelve Month Net Interest Income Sensitivity						Table 12 - Twelve Month Net Interest Income Sensitivity
		Estimated % Change in Net Interest Income as Compared to Unchanged Rates (for the next twelve months)				Estimated % Change in Net Interest Income as Compared to Unchanged Rates (for the next twelve months)
								Estimated % Change in Net Interest Income as Compared to Unchanged Rates (for the next twelve months)
Change in Short-term Interest Rates (in bps)	Change in Short-term Interest Rates (in bps)	June 30, 2020	December 31, 2019	Change in Short-term Interest Rates (in bps)	September 30, 2020	December 31, 2019
+200	+200	1.9%	2.8%	+200	2.4%	2.8%
+100	+100	1.0%	2.0%	+100	1.0%	2.0%
Flat	Flat	—%	—%	Flat	—%	—%
-25	-25	0.2%	N/A	-25	(0.2)%	N/A

The net interest income simulation model is the primary tool utilized to evaluate potential interest rate risks over a shorter-term time horizon. Synovus also evaluates potential longer-term interest rate risk through modeling and evaluation of ~~EVE. Simulation modeling is utilized to measure~~ the ~~EVE 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~~of the ~~balance sheet. These simulations value only the current balance sheet and do not incorporate growth assumptions used in the net interest income simulation.~~Company's Economic Value of Equity (EVE). The EVE ismeasurement process estimates the net fair value of assets, liabilities, and off-balance sheet financial instruments ~~derived from the present value of future cash flows discounted at current market interest rates. From this baseline valuation, Synovus evaluates changes in the value of each of these items in~~under various interest rate ~~scenarios to determine the net impact on the EVE. Key assumptions utilized in the model, namely loan prepayments, investment security prepayments, deposit repricing betas,~~scenarios. Management uses EVE sensitivity analyses as an additional means of measuring interest rate risk and ~~non-maturity deposit duration have a significant impact on the results~~incorporates this form of ~~the EVE simulations.~~analysis within its governance and limits framework.

LIBOR

In July 2017, the Financial Conduct Authority, which regulates LIBOR, announced that it intends to stop persuading or compelling banks to submit rates for the calculation of LIBOR after 2021, confirming the continuation of LIBOR will not be guaranteed beyond that date. However, due to the COVID-19 pandemic, the FCA has since softened its stance on the 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~~ISDA recently recommended a spread adjustment methodology for ~~cash~~derivative products based on a historical ~~median over a five-year lookback period calculating the difference~~differences between LIBOR and SOFR. Organizations are currently working on industry-wide and company-specific transition plans as it relates to derivatives and cash markets exposed to LIBOR. As 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 transition to an alternative reference rate. Synovus has established a cross-functional LIBOR transition working group that is in the process of 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.

6465

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, fair value measurements and income taxes. In determining which accounting policies are critical in nature, Synovus has identified the policies that require significant judgment or involve complex estimates. It is management's practice to discuss critical accounting policies with the Board of Directors' Audit Committee, including the development, selection, implementation and disclosure of the critical accounting policies. The application of these policies has a significant impact on Synovus’ unaudited interim consolidated financial statements. Synovus’ financial results could differ significantly if different judgments or estimates are used in the application of these policies. All accounting policies described in "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" in Synovus' 2019 Form 10-K should be reviewed for a greater understanding of how we record and report our financial performance. Excluding the adoption of ASU 2016-13, Financial Instruments-Credit Losses (CECL) on January 1, 2020 as disclosed in "Part I - Item 1. Financial Statements and Supplementary Data - Note 1 - Basis of Presentation and Accounting Policies" in this Report, there have been no significant changes to the accounting policies, estimates and assumptions, or the judgments affecting the application of these estimates and assumptions from those disclosed in Synovus' 2019 Form 10-K.

Goodwill

G~~oodwill~~Goodwill assessments are highly sensitive to economic projections and the related assumptions and estimates used by management. Synovus includes goodwill impairment analysis and reporting unit valuations as part of its critical accounting policy for fair value measurements. For additional information, see "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" in Synovus' 2019 Form 10-K and "Part I - Item 1. Financial Statements and Supplementary Data - Note 5 - Goodwill and Other Intangible Assets" in this Report.

Non-GAAP Financial Measures

The measures entitled adjusted non-interest 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; return on average tangible common equity, adjusted return on average tangible common equity; and tangible common equity ratio 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 revenue; total non-interest expense; total revenues; efficiency ratio-FTE; net income per common share, diluted; return on average assets; return on average common equity; and the ratio of total shareholders' equity to total 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 revenue are measures used by management to evaluate non-interest revenue exclusive of net investment securities gains (losses) and gains on sale 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. Return on average tangible common equity and adjusted return on average tangible common equity are measures used by management to compare Synovus' performance with other financial institutions because it calculates the return available to common shareholders without the impact of intangible assets and their related amortization, thereby allowing management to evaluate the performance of the business consistently. The tangible common equity ratio is used by management 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 Six Months Ended
(in thousands) June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
Adjusted non-interest revenue
Total non-interest revenue $ 173,484 $ 89,807 $ 277,341 $ 169,185
Subtract/add: Investment securities (gains) losses, net (69,409) 1,845 (78,144) 1,771
Subtract: Gain on sale and increase in fair value of private equity investments, net (8,707) (1,455) (4,452) (2,313)
Adjusted non-interest revenue $ 95,368 $ 90,197 $ 194,745 $ 168,643
Adjusted non-interest expense
Total non-interest expense $ 284,141 $ 264,126 $ 560,421 $ 556,537
Subtract: Earnout liability adjustments (4,908) — (4,908) —
Subtract: Merger-related expense — (7,401) — (57,140)
Subtract: Restructuring charges, net (2,822) (18) (6,042) (37)
Subtract: Loss on early extinguishment of debt, net — — (1,904) —
Adjusted non-interest expense $ 276,411 $ 256,707 $ 547,567 $ 499,360

Three Months Ended Six Months Ended
(in thousands, except per share data) June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
Adjusted total revenues and adjusted tangible efficiency ratio
Adjusted non-interest expense $ 276,411 $ 256,707 $ 547,567 $ 499,360
Subtract: Amortization of intangibles (2,640) (2,410) (5,280) (5,802)
Adjusted tangible non-interest expense $ 273,771 $ 254,297 $ 542,287 $ 493,558
Net interest income $ 376,566 $ 397,262 $ 749,826 $ 794,438
Add: Tax equivalent adjustment 861 811 1,647 1,441
Add: Total non-interest revenue 173,484 89,807 277,341 169,185
Total FTE revenues $ 550,911 $ 487,880 $ 1,028,814 $ 965,064
Subtract/add: Investment securities (gains) losses, net (69,409) 1,845 (78,144) 1,771
Subtract: Gain on sale and increase in fair value of private equity investments, net (8,707) (1,455) (4,452) (2,313)
Adjusted total revenues $ 472,795 $ 488,270 $ 946,218 $ 964,522
Efficiency ratio-FTE 51.58 % 54.14 % 54.47 % 57.67 %
Adjusted tangible efficiency ratio 57.91 52.08 57.31 51.17
Adjusted net income per common share, diluted
Net income available to common shareholders $ 84,901 $ 153,034 $ 115,131 $ 270,070
Add: Earnout liability adjustments 4,908 — 4,908 —
Add: Merger-related expense — 7,401 — 57,140
Add: Restructuring charges, net 2,822 18 6,042 37
Add: Loss on early extinguishment of debt, net — — 1,904 —
Subtract/add: Investment securities (gains) losses, net (69,409) 1,845 (78,144) 1,771
Subtract: Gain on sale and increase in fair value of private equity investments, net (8,707) (1,455) (4,452) (2,313)
Add/subtract: Tax effect of adjustments 19,500 (1,951) 19,335 (7,659)
Adjusted net income available to common shareholders $ 34,015 $ 158,892 $ 64,724 $ 319,046
Weighted average common shares outstanding, diluted 147,733 159,077 148,067 160,908
Adjusted net income per common share, diluted $ 0.23 $ 1.00 $ 0.44 $ 1.98

Table 14 - Reconciliation of Non-GAAP Financial Measures, continued
Three Months Ended Six Months Ended
(dollars in thousands) June 30, 2020 June 30, 2019 June 30, 2020 June 30, 2019
Adjusted return on average assets (annualized)
Net income $ 93,192 $ 156,184 $ 131,712 $ 276,370
Add: Earnout liability adjustments 4,908 — 4,908 —
Add: Merger-related expense — 7,401 — 57,140
Add: Restructuring charges, net 2,822 18 6,042 37
Add: Loss on early extinguishment of debt, net — — 1,904 —
Subtract/add: Investment securities (gains) losses, net (69,409) 1,845 (78,144) 1,771
Subtract: Gain on sale and increase in fair value of private equity investments, net (8,707) (1,455) (4,452) (2,313)
Add/subtract: Tax effect of adjustments 19,500 (1,951) 19,335 (7,659)
Adjusted net income $ 42,306 $ 162,042 $ 81,305 $ 325,346
Net income annualized 374,816 626,452 264,871 557,321
Adjusted net income annualized 170,154 649,949 163,503 656,084
Total average assets 52,853,685 46,679,769 50,775,139 46,239,640
Return on average assets (annualized) 0.71 % 1.34 % 0.52 % 1.21 %
Adjusted return on average assets (annualized) 0.32 1.39 0.32 1.42


Table 14 - Reconciliation of Non-GAAP Financial Measures
	Three Months Ended				Nine Months Ended
(in thousands)	September 30, 2020		September 30, 2019		September 30, 2020		September 30, 2019
Adjusted non-interest revenue
Total non-interest revenue	$	114,411	$	88,760	$	391,752	$	257,945
Add/subtract: Investment securities losses (gains), net	1,550		3,731		(76,594)		5,502
Subtract: Gain on sale and increase in fair value of private equity investments, net	(260)		(1,194)		(4,712)		(3,507)
Adjusted non-interest revenue	$	115,701	$	91,297	$	310,446	$	259,940

Adjusted non-interest expense
Total non-interest expense	$	316,655	$	276,310	$	877,076	$	832,847
Subtract: Earnout liability adjustments	—		(10,457)		(4,908)		(10,457)
Subtract: Goodwill impairment	(44,877)		—		(44,877)		—
Subtract: Merger-related expense	—		(353)		—		(57,493)
Subtract/add: Restructuring charges, net	(2,882)		66		(8,924)		29
Subtract: Valuation adjustment to Visa derivative	—		(2,500)		—		(2,500)
Subtract: Loss on early extinguishment of debt, net	(154)		(4,592)		(2,057)		(4,592)
Adjusted non-interest expense	$	268,742	$	258,474	$	816,310	$	757,834

Table 14 - Reconciliation of Non-GAAP Financial Measures, continued
Three Months Ended
(dollars in thousands) June 30, 2020 March 31, 2020 June 30, 2019
Adjusted return on average common equity, return on average tangible common equity, and adjusted return on average tangible common equity (annualized)
Net income available to common shareholders $ 84,901 $ 30,230 $ 153,034
Add: Earnout liability adjustments 4,908 — —
Add: Merger-related expense — — 7,401
Add: Restructuring charges, net 2,822 3,220 18
Add: Loss on early extinguishment of debt, net — 1,904 —
Subtract/add: Investment securities (gains) losses, net (69,409) (8,734) 1,845
Subtract/add: (Increase) decrease in fair value of private equity investments (8,707) 4,255 (1,455)
Add/subtract: Tax effect of adjustments 19,500 (167) (1,951)
Net income available to common shareholders $ 34,015 $ 30,708 $ 158,892
Adjusted net income available to common shareholders' annualized $ 136,808 $ 123,507 $ 637,314
Add: Amortization of intangibles 7,868 7,868 7,250
Adjusted net income available to common shareholders excluding amortization of intangibles annualized $ 144,676 $ 131,375 $ 644,564
Net income available to common shareholders annualized $ 341,470 $ 121,584 $ 613,818
Add: Amortization of intangibles 7,868 7,868 7,250
Net income available to common shareholders excluding amortization of intangibles $ 349,338 $ 129,452 $ 621,068
Total average shareholders' equity less preferred stock $ 4,567,254 $ 4,424,278 $ 4,416,705
Subtract: Goodwill (497,267) (497,267) (487,601)
Subtract: Other intangible assets, net (51,667) (54,514) (69,853)
Total average tangible shareholders' equity less preferred stock $ 4,018,320 $ 3,872,497 $ 3,859,251
Return on average common equity (annualized) 7.48 % 2.75 % 13.90 %
Adjusted return on average common equity (annualized) 3.00 2.79 14.43
Return on average tangible common equity (annualized) 8.69 3.34 16.09
Adjusted return on average tangible common equity (annualized) 3.60 3.39 16.70

(dollars in thousands) June 30, 2020 March 31, 2020 June 30, 2019
Tangible common equity ratio
Total assets $ 54,121,989 $ 50,619,585 $ 47,318,203
Subtract: Goodwill (497,267) (497,267) (492,390)
Subtract: Other intangible assets, net (50,392) (53,032) (61,473)
Tangible assets $ 53,574,330 $ 50,069,286 $ 46,764,340
Total shareholders' equity $ 5,052,968 $ 5,065,205 $ 4,753,816
Subtract: Goodwill (497,267) (497,267) (492,390)
Subtract: Other intangible assets, net (50,392) (53,032) (61,473)
Subtract: Preferred Stock, no par value (537,145) (537,145) (195,140)
Tangible common equity $ 3,968,164 $ 3,977,761 $ 4,004,813
Total shareholders' equity to total assets ratio 9.34 % 10.01 % 10.05 %
Tangible common equity ratio 7.41 7.94 8.56



	Three Months Ended						Nine Months Ended
(in thousands, except per share data)	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Adjusted total revenues and adjusted tangible efficiency ratio
Adjusted non-interest expense	$	268,742		$	258,474		$	816,310		$	757,834
Subtract: Amortization of intangibles	(2,640)			(2,901)			(7,920)			(8,702)
Adjusted tangible non-interest expense	$	266,102		$	255,573		$	808,390		$	749,132

Net interest income	$	376,990		$	402,097		$	1,126,816		$	1,196,535
Add: Tax equivalent adjustment	956			819			2,603			2,256
Add: Total non-interest revenue	114,411			88,760			391,752			257,945
Total FTE revenues	$	492,357		$	491,676		$	1,521,171		$	1,456,736
Add/subtract: Investment securities losses (gains), net	1,550			3,731			(76,594)			5,502
Subtract: Gain on sale and increase in fair value of private equity investments, net	(260)			(1,194)			(4,712)			(3,507)
Adjusted total revenues	$	493,647		$	494,213		$	1,439,865		$	1,458,731
Efficiency ratio-FTE	64.31		%	56.20		%	57.66		%	57.17		%
Adjusted tangible efficiency ratio	53.91			51.71			56.14			51.36

Adjusted net income per common share, diluted
Net income available to common shareholders	$	83,283		$	127,435		$	198,414		$	397,505
Add: Income tax expense, net related to State Tax Reform	—			4,402			—			4,402
Add: Earnout liability adjustments	—			10,457			4,908			10,457
Add: Goodwill impairment	44,877			—			44,877			—
Add: Merger-related expense	—			353			—			57,493
Add/subtract: Restructuring charges, net	2,882			(66)			8,924			(29)
Add: Valuation adjustment to Visa derivative	—			2,500			—			2,500
Add: Loss on early extinguishment of debt, net	154			4,592			2,057			4,592
Add/subtract: Investment securities losses (gains), net	1,550			3,731			(76,594)			5,502
Subtract: Gain on sale and increase in fair value of private equity investments, net	(260)			(1,194)			(4,712)			(3,507)
Subtract/add: Tax effect of adjustments	(1,122)			(2,478)			18,214			(10,137)
Adjusted net income available to common shareholders	$	131,364		$	149,732		$	196,088		$	468,778
Weighted average common shares outstanding, diluted	147,976			154,043			148,037			158,595
Adjusted net income per common share, diluted	$	0.89		$	0.97		$	1.32		$	2.96



Table 14 - Reconciliation of Non-GAAP Financial Measures, continued
	Three Months Ended						Nine Months Ended
(dollars in thousands)	September 30, 2020			September 30, 2019			September 30, 2020			September 30, 2019
Adjusted return on average assets (annualized)
Net income	$	91,574		$	135,726		$	223,286		$	412,096
Add: Income tax expense, net related to State Tax Reform	—			4,402			—			4,402
Add: Earnout liability adjustments	—			10,457			4,908			10,457
Add: Goodwill impairment	44,877			—			44,877			—
Add: Merger-related expense	—			353			—			57,493
Add/subtract: Restructuring charges, net	2,882			(66)			8,924			(29)
Subtract: Valuation adjustment to Visa derivative	—			2,500			—			2,500
Add: Loss on early extinguishment of debt, net	154			4,592			2,057			4,592
Add/subtract: Investment securities losses (gains), net	1,550			3,731			(76,594)			5,502
Subtract: Gain on sale and increase in fair value of private equity investments, net	(260)			(1,194)			(4,712)			(3,507)
Subtract/add: Tax effect of adjustments	(1,122)			(2,478)			18,214			(10,137)
Adjusted net income	$	139,655		$	158,023		$	220,960		$	483,369
Net income annualized	364,305			538,478			298,258			550,971
Adjusted net income annualized	555,584			626,939			295,151			646,263
Total average assets	53,138,334			47,211,026			51,568,621			46,566,994
Return on average assets (annualized)	0.69		%	1.14		%	0.58		%	1.18		%
Adjusted return on average assets (annualized)	1.05			1.33			0.57			1.39


Table 14 - Reconciliation of Non-GAAP Financial Measures, continued
	Three Months Ended
(dollars in thousands)	September 30, 2020			June 30, 2020			September 30, 2019
Adjusted return on average common equity, return on average tangible common equity, and adjusted return on average tangible common equity (annualized)
Net income available to common shareholders	$	83,283		$	84,901		$	127,435
Add: Income tax expense, net related to State Tax Reform	—			—			4,402
Add: Earnout liability adjustments	—			4,908			10,457
Add: Goodwill impairment	44,877			—			—
Add: Merger-related expense	—			—			353
Add/subtract: Restructuring charges, net	2,882			2,822			(66)
Add: Valuation adjustment to Visa derivative	—			—			2,500
Add: Loss on early extinguishment of debt, net	154			—			4,592
Add/subtract: Investment securities losses (gains), net	1,550			(69,409)			3,731
Subtract: Gain on sale and increase in fair value of private equity investments	(260)			(8,707)			(1,194)
Subtract/add: Tax effect of adjustments	(1,122)			19,500			(2,478)
Net income available to common shareholders	$	131,364		$	34,015		$	149,732

Adjusted net income available to common shareholders' annualized	$	522,600		$	136,808		$	594,045
Add: Amortization of intangibles	7,782			7,868			8,632
Adjusted net income available to common shareholders excluding amortization of intangibles annualized	$	530,382		$	144,676		$	602,677

Net income available to common shareholders annualized	$	331,322		$	341,470		$	505,585
Add: Amortization of intangibles	7,782			7,868			8,632
Net income available to common shareholders excluding amortization of intangibles	$	339,104		$	349,338		$	514,217

Total average shareholders' equity less preferred stock	$	4,553,159		$	4,567,254		$	4,450,301
Subtract: Goodwill	(497,267)			(497,267)			(492,320)
Subtract: Other intangible assets, net	(49,075)			(51,667)			(60,278)
Total average tangible shareholders' equity less preferred stock	$	4,006,817		$	4,018,320		$	3,897,703
Return on average common equity (annualized)	7.28		%	7.48		%	11.36		%
Adjusted return on average common equity (annualized)	11.48			3.00			13.35
Return on average tangible common equity (annualized)	8.46			8.69			13.19
Adjusted return on average tangible common equity (annualized)	13.24			3.60			15.46




(dollars in thousands)	September 30, 2020			June 30, 2020			September 30, 2019
Tangible common equity ratio
Total assets	$	53,040,538		$	54,121,989		$	47,661,182
Subtract: Goodwill	(452,390)			(497,267)			(487,865)
Subtract: Other intangible assets, net	(47,752)			(50,392)			(58,572)
Tangible assets	$	52,540,396		$	53,574,330		$	47,114,745
Total shareholders' equity	$	5,064,542		$	5,052,968		$	4,868,838
Subtract: Goodwill	(452,390)			(497,267)			(487,865)
Subtract: Other intangible assets, net	(47,752)			(50,392)			(58,572)
Subtract: Preferred Stock, no par value	(537,145)			(537,145)			(536,550)
Tangible common equity	$	4,027,255		$	3,968,164		$	3,785,851
Total shareholders' equity to total assets ratio	9.55		%	9.34		%	10.22		%
Tangible common equity ratio	7.67			7.41			8.04

ITEM 3. – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information presented in the Market Risk Analysis section of the Management's Discussion and Analysis of Financial Condition and Results of Operations is incorporated herein by reference.

ITEM 4. – CONTROLS AND PROCEDURES

In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by Synovus' management, with the participation of Synovus' Chief Executive Officer and Chief Financial Officer, of the effectiveness of Synovus' disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. Based on that evaluation, Synovus' Chief Executive Officer and Chief Financial Officer have concluded that, as of ~~June~~September 30, 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 ~~June~~September 30, 2020 that have materially affected, or are reasonably likely to materially affect, Synovus' internal control over financial reporting.

6971

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, 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 "Part I - Item 1. Financial Statements and Supplementary Data - Note 10 - Commitments and Contingencies" of this Report, which Note is incorporated herein by this reference.

ITEM 1A. – RISK FACTORS

In addition to the other information set forth in this Report, you should carefully consider the factors discussed in "Part I - Item IA - Risk Factors” of Synovus' 2019 Form 10-K and "Item 1A. - Risk Factors" of Synovus' Form 10-Q for the period ended March 31, 2020 ("1Q 2020 Form 10-Q"), which could materially affect its business, financial position, results of operations, cash flows, or future results. Please be aware that these risks may change over time and other risks may prove to be important in the future. In addition, these risks may be heightened by the disruption and uncertainty resulting from COVID-19. New risks may emerge at any time, and we cannot predict such risks or estimate the extent to which they may affect our business, financial condition or results of operations, or the trading price of our securities.

There are no material changes during the period covered by this Report to the risk factors previously disclosed in Synovus' 2019 Form 10-K and 1Q 2020 Form 10-Q.

ITEM 2. – UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS

(a) None.

(b) None.

The Company announced on January 24, 2020 that its Board of Directors authorized share repurchases in 2020 at a level that would be consistent with Synovus retaining a 9% CET1 ratio target. As a result of the greater economic uncertainty associated with the current pandemic, Synovus suspended its share repurchase activity beyond the $16.2 million (450 thousand shares) of its common stock repurchased during the first quarter.

ITEM 3. – DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. – MINE SAFETY DISCLOSURES

None.

ITEM 5. – OTHER INFORMATION

None.

7072

ITEM 6. – EXHIBITS



Exhibit Number						Description

3.1						Restated Articles of Incorporation of Synovus, incorporated by reference to Exhibit 3.1 of Synovus’ Current Report on Form 8-K dated April 22, 2020, as filed with the SEC on April 24, 2020.

3.2						Restated Bylaws of Synovus, incorporated by reference to Exhibit 3.2 of Synovus' Current Report on Form 8-K dated April 22, 2020, as filed with the SEC on April 24, 2020.

4.1						4.000% Fixed-to-Fixed Rate Subordinated Bank Note due 2030, incorporated by reference to Exhibit 4.1 of Synovus' Current Report on Form 8-K dated October 29, 2020, as filed with the SEC on October 29, 2020.

31.1						Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

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

32						Certification of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101						Interactive Data File

104						Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

7173

SIGNATURES

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

SYNOVUS FINANCIAL CORP.

~~August~~November 6, 2020

By:

/s/ Andrew J. Gregory, Jr.

Date

Andrew J. Gregory, Jr.

Executive Vice President and Chief Financial Officer

(Duly Authorized Officer and Principal Financial Officer)

7274


Loan Portfolio by Risk Grade
	December 31, 2019
(in thousands)	Pass		Special Mention		Substandard⁽¹⁾		Doubtful⁽²⁾		Loss⁽³⁾			Total
Commercial, financial and agricultural	$	9,927,059	$	128,506	$	182,831	$	1,163	$	—		$	10,239,559
Owner-occupied	6,386,055		58,330		85,426		—		—			6,529,811
Total commercial and industrial	16,313,114		186,836		268,257		1,163		—			16,769,370
Investment properties	8,930,360		16,490		57,477		—		—			9,004,327
1-4 family properties	766,529		3,249		10,237		—		—			780,015
Land and development	681,003		18,643		9,796		—		—			709,442
Total commercial real estate	10,377,892		38,382		77,510		—		—			10,493,784
Consumer mortgages	5,527,746		—		18,376		97		149			5,546,368
Home equity lines	1,697,086		—		14,806		21		1,244			1,713,157
Credit cards	266,146		—		818		—		1,877		⁽⁴⁾	268,841
Other consumer loans	2,390,199		—		6,095		—		—			2,396,294
Total consumer	9,881,177		—		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


Table 14 - Reconciliation of Non-GAAP Financial Measures
	Three Months Ended						Six Months Ended
(in thousands)	June 30, 2020		June 30, 2019		June 30, 2020		June 30, 2019
Adjusted non-interest revenue
Total non-interest revenue	$	173,484	$	89,807	$	277,341	$	169,185
Subtract/add: Investment securities (gains) losses, net	(69,409)		1,845		(78,144)		1,771
Subtract: Gain on sale and increase in fair value of private equity investments, net	(8,707)		(1,455)		(4,452)		(2,313)
Adjusted non-interest revenue	$	95,368	$	90,197	$	194,745	$	168,643

Adjusted non-interest expense
Total non-interest expense	$	284,141	$	264,126	$	560,421	$	556,537
Subtract: Earnout liability adjustments	(4,908)		—		(4,908)		—
Subtract: Merger-related expense	—		(7,401)		—		(57,140)
Subtract: Restructuring charges, net	(2,822)		(18)		(6,042)		(37)
Subtract: Loss on early extinguishment of debt, net	—		—		(1,904)		—
Adjusted non-interest expense	$	276,411	$	256,707	$	547,567	$	499,360