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

 
FORM 10-Q
 

Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934
For the quarterly period ended June 30, 20152016
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) 649-2311
Securities registered pursuant to Section 12(b) of the Act:
Title of each className of each exchange on which registered
Common Stock, $1.00 Par Value
Series B Participating Cumulative Preferred Stock Purchase Rights
Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series C
New York Stock Exchange
New York Stock Exchange
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: NONE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    YES x  NO ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).   YES x  NO ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filerxAccelerated filer¨
    
Non-accelerated filer
¨ (Do not check if a smaller reporting company)
Smaller reporting company¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES ¨    NO x
Indicate the number of shares outstanding of each of the issuer’s class of common stock, as of the latest practicable date.
Class   July 31, 20152016
Common Stock, $1.00 Par Value   131,993,103122,932,237


Table of Contents

Table of Contents
 
    Page
Part I.
Financial Information 
  Index of Defined Terms
i
 Item 1.Financial Statements (Unaudited) 
  Consolidated Balance Sheets as of June 30, 20152016 and December 31, 20142015
1
  Consolidated Statements of Income for the Six and Three Months Ended June 30, 20152016 and 20142015
2
  Consolidated Statements of Comprehensive Income for the Six and Three Months Ended June 30, 20152016 and 20142015
3
  Consolidated Statements of Changes in Shareholders' Equity for the Six Months Ended June 30, 20152016 and 20142015
4
  Consolidated Statements of Cash Flows for the Six Months Ended June 30, 20152016 and 20142015
5
  Notes to Unaudited Interim Consolidated Financial Statements
7
 Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
4443
 Item 3.
Quantitative and Qualitative Disclosures About Market Risk
71
 Item 4.Controls and Procedures
71
     
Part II.
Other Information 
 Item 1.Legal Proceedings
72
 Item 1A.Risk Factors
72
 Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
72
 Item 3.Defaults Upon Senior Securities
73
 Item 4.Mine Safety Disclosures
73
 Item 5.Other Information
73
 Item 6.Exhibits
74
 Signatures
7675
     
     
     
     
     
     
     
     
     


Table of Contents



SYNOVUS FINANCIAL CORP.
INDEX OF DEFINED TERMS
ALCO – Synovus' Asset Liability Management Committee
ASC – Accounting Standards Codification
ASR – acceleratedAccelerated share repurchase
ASU – Accounting Standards Update
Basel III – aA global regulatory framework developed by the Basel Committee on Banking Supervision
BOLI – Bank-Owned Life Insurance
BOV – broker’sBroker’s opinion of value
bp – basisBasis point (bps - basis points)
C&I – commercialCommercial and industrial loans
CB&T – Columbus Bank and Trust Company, a division of Synovus Bank. Synovus Bank is a wholly-owned subsidiary of Synovus Financial Corp.
CCC – centralCentral clearing counterparty
CET1 – Common Equity Tier 1 Capital defined by Basel III capital rules
CMO – Collateralized Mortgage Obligation
Code – Internal Revenue Code of 1986, as amended
Company – Synovus Financial Corp. and its wholly-owned subsidiaries, except where the context requires otherwise
Covered Litigation – Certain Visa litigation for which Visa is indemnified by Visa USA members
CRE – Commercial Real Estatereal estate
DIF – Deposit Insurance Fund
Dodd-Frank Act – The Dodd-Frank Wall Street Reform and Consumer Protection Act
EVE – economic value of equity
Exchange Act – Securities Exchange Act of 1934, as amended
FASB – Financial Accounting Standards Board
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
FHLB – Federal Home Loan Bank
FICO – Fair Isaac Corporation
GA DBF – Georgia Department of Banking and Finance
GAAP – Generally Accepted Accounting Principles in the United States of America
HELOC – homeHome equity line of credit
IASB – International Accounting Standards Board
IRC – Internal Revenue Code of 1986, as amended
LIBOR – London Interbank Offered Rate
LTV – loan-to-collateralLoan-to-collateral value ratio
NAICS – North American Industry Classification System

i
Table of Contents

nm – not meaningful
NPA – non-performingNon-performing assets
NPL – non-performingNon-performing loans
NSF – non-sufficientNon-sufficient funds
OCI – otherOther comprehensive income
ORE – otherOther real estate
OTTI – other-than-temporaryOther-than-temporary impairment
Parent Company – Synovus Financial Corp.
Rights Plan – Synovus' Shareholder Rights Plan dated April 26, 2010, as amended
SBA – Small Business Administration
SCM – state,State, county, and municipal
SEC – U.S. Securities and Exchange Commission
Securities Act – Securities Act of 1933, as amended
Series C Preferred Stock – Synovus' Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series C, $25 liquidation preference
Synovus – Synovus Financial Corp.
Synovus Bank – A Georgia state-chartered bank formerly known as Columbus Bank and Trust Company, and wholly-owned subsidiary of Synovus through which Synovus conducts its banking operations
Synovus' 20142015 Form 10-K – Synovus' Annual Report on Form 10-K for the year ended December 31, 20142015
Synovus Mortgage – Synovus Mortgage Corp., a wholly-owned subsidiary of Synovus Bank
Synovus Trust Company, N. A. – Synovus Trust Company, N.A., a wholly-owned subsidiary of Synovus Bank
TDR – troubledTroubled debt restructuring (as defined in ASC 310-40)
Treasury – United States Department of the Treasury
VIE – variableVariable interest entity, as defined in ASC 810-10
Visa – The Visa U.S.A., Inc. card association or its affiliates, collectively
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
Visa derivativeDerivative – A derivative contract with the purchaser of Visa Class B shares which provides for settlements between the purchaser and Synovus based upon a change in the ratio for conversion of Visa Class B shares into Visa Class A shares
Warrant – A warrant issued to the Treasury by Synovus to purchase up to 2,215,820 shares of Synovus common stock at a per share exercise price of $65.52 expiring on December 19, 2018, as was issued by Synovus to Treasury in 2008 in connection with the Capital Purchase Program, promulgated under the Emergency Stabilization Act of 2008


ii
Table of Contents



PART I. FINANCIAL INFORMATION
ITEM 1. - FINANCIAL STATEMENTS
SYNOVUS FINANCIAL CORP.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except share and per share data)June 30, 2015 December 31, 2014
June 30, 2016 December 31, 2015
ASSETS      
Cash and cash equivalents$360,832
 485,489
$377,334
 367,092
Interest bearing funds with Federal Reserve Bank1,289,205
 721,362
904,406
 829,887
Interest earning deposits with banks18,694
 11,810
24,541
 17,387
Federal funds sold and securities purchased under resale agreements72,487
 73,111
77,685
 69,819
Trading account assets, at fair value11,973
 13,863
1,001
 5,097
Mortgage loans held for sale, at fair value98,202
 63,328
87,824
 59,275
Investment securities available for sale, at fair value3,354,673
 3,041,406
3,580,359
 3,587,818
Loans, net of deferred fees and costs21,494,869
 21,097,699
23,060,908
 22,429,565
Allowance for loan losses(254,702) (261,317)(255,076) (252,496)
Loans, net$21,240,167
 20,836,382
$22,805,832
 22,177,069
Premises and equipment, net445,579
 455,235
424,967
 445,155
Goodwill24,431
 24,431
24,431
 24,431
Other real estate66,449
 85,472
33,289
 47,030
Deferred tax asset, net571,402
 622,464
425,160
 511,948
Other assets651,776
 616,878
692,862
 650,645
Total assets$28,205,870
 27,051,231
$29,459,691
 28,792,653
LIABILITIES AND SHAREHOLDERS' EQUITY      
Liabilities      
Deposits:      
Non-interest bearing deposits$6,421,815
 6,228,472
$6,934,443
 6,732,970
Interest bearing deposits, excluding brokered deposits14,775,216
 13,660,830
15,495,318
 15,434,171
Brokered deposits1,452,150
 1,642,398
1,496,161
 1,075,520
Total deposits22,649,181
 21,531,700
23,925,922
 23,242,661
Federal funds purchased and securities sold under repurchase agreements188,285
 126,916
247,179
 177,025
Long-term debt2,139,219
 2,140,319
2,135,892
 2,186,893
Other liabilities223,028
 211,026
199,039
 185,878
Total liabilities$25,199,713
 24,009,961
$26,508,032
 25,792,457
Shareholders' Equity      
Series C Preferred Stock – no par value. 5,200,000 shares outstanding at June 30, 2015 and December 31, 2014125,980
 125,980
Common stock - $1.00 par value. Authorized 342,857,143 shares; 140,425,254 issued at June 30, 2015 and 139,950,422 issued at December 31, 2014; 132,257,577 outstanding at June 30, 2015 and 136,122,843 outstanding at December 31, 2014140,425
 139,950
Series C Preferred Stock – no par value. Authorized 100,000,000 shares; 5,200,000 shares issued and outstanding at June 30, 2016 and December 31, 2015125,980
 125,980
Common stock - $1.00 par value. Authorized 342,857,143 shares; 141,007,636 issued at June 30, 2016 and 140,592,409 issued at December 31, 2015; 124,047,659 outstanding at June 30, 2016 and 129,547,032 outstanding at December 31, 2015141,008
 140,592
Additional paid-in capital2,981,434
 2,960,825
2,993,985
 2,989,981
Treasury stock, at cost – 8,167,677 shares at June 30, 2015 and 3,827,579 shares at December 31, 2014(311,859) (187,774)
Accumulated other comprehensive loss, net(22,323) (12,605)
Treasury stock, at cost – 16,959,977 shares at June 30, 2016 and 11,045,377 shares at December 31, 2015(573,058) (401,511)
Accumulated other comprehensive gain (loss)11,005
 (29,819)
Retained earnings92,500
 14,894
252,739
 174,973
Total shareholders’ equity3,006,157
 3,041,270
2,951,659
 3,000,196
Total liabilities and shareholders' equity$28,205,870
 27,051,231
$29,459,691
 28,792,653
   
See accompanying notes to unaudited interim consolidated financial statements.

1
Table of Contents

SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Six Months Ended June 30, Three Months Ended June 30,Six Months Ended June 30, Three Months Ended June 30,
(in thousands, except per share data)2015 2014 2015 20142016 2015 2016 2015
Interest income:              
Loans, including fees$432,026
 427,080
 $216,756
 215,737
$462,892
 432,026
 $232,974
 216,756
Investment securities available for sale28,117
 29,746
 14,175
 14,490
33,655
 28,117
 16,685
 14,175
Trading account assets224
 251
 117
 90
34
 224
 12
 117
Mortgage loans held for sale1,397
 1,018
 766
 616
1,238
 1,397
 650
 766
Federal Reserve Bank balances1,592
 998
 947
 472
2,019
 1,592
 1,020
 947
Other earning assets1,698
 1,502
 893
 808
1,878
 1,698
 1,052
 893
Total interest income465,054
 460,595
 233,654
 232,213
501,716
 465,054
 252,393
 233,654
Interest expense:              
Deposits31,631
 27,742
 16,813
 13,521
32,214
 31,631
 16,200
 16,813
Federal funds purchased and securities sold under repurchase agreements89
 151
 46
 75
96
 89
 51
 46
Long-term debt26,427
 27,136
 13,151
 13,566
29,763
 26,427
 14,693
 13,151
Total interest expense58,147
 55,029
 30,010
 27,162
62,073
 58,147
 30,944
 30,010
Net interest income406,907
 405,566
 203,644
 205,051
439,643
 406,907
 221,449
 203,644
Provision for loan losses11,034
 21,795
 6,636
 12,284
16,070
 11,034
 6,693
 6,636
Net interest income after provision for loan losses395,873
 383,771
 197,008
 192,767
423,573
 395,873
 214,756
 197,008
Non-interest income:              
Service charges on deposit accounts38,928
 38,451
 19,795
 19,238
39,950
 38,928
 20,240
 19,795
Fiduciary and asset management fees23,414
 22,329
 11,843
 11,296
22,854
 23,414
 11,580
 11,843
Brokerage revenue14,032
 12,920
 6,782
 6,707
13,821
 14,032
 7,338
 6,782
Mortgage banking income13,995
 8,794
 7,511
 5,283
11,425
 13,995
 5,941
 7,511
Bankcard fees16,576
 16,212
 8,499
 8,695
16,718
 16,576
 8,346
 8,499
Investment securities gains, net2,710
 1,331
 1,985
 —
67
 2,710
 —
 1,985
Other fee income9,851
 9,791
 4,605
 4,928
10,084
 9,851
 5,280
 4,605
Gain on sale of Memphis branches, net—
 5,789
 —
 —
Other non-interest income15,181
 17,952
 7,812
 7,241
16,114
 15,181
 9,161
 7,812
Total non-interest income134,687
 133,569
 68,832
 63,388
131,033
 134,687
 67,886
 68,832
Non-interest expense:              
Salaries and other personnel expense191,054
 185,985
 94,565
 92,540
198,419
 191,054
 97,061
 94,565
Net occupancy and equipment expense52,713
 52,480
 26,541
 26,425
53,360
 52,713
 26,783
 26,541
Third-party processing expense21,015
 19,560
 10,672
 9,464
22,814
 21,015
 11,698
 10,672
FDIC insurance and other regulatory fees13,725
 17,531
 6,767
 7,885
13,344
 13,725
 6,625
 6,767
Professional fees12,011
 15,901
 6,417
 8,224
13,307
 12,011
 6,938
 6,417
Advertising expense6,309
 8,757
 2,865
 6,281
9,761
 6,309
 7,351
 2,865
Foreclosed real estate expense, net13,847
 9,745
 4,351
 4,063
7,272
 13,847
 4,588
 4,351
Visa indemnification charges729
 752
 354
 356
Loss on early extinguishment of debt4,735
 —
 —
 —
Restructuring charges, net(102) 16,293
 5
 7,716
6,981
 (102) 5,841
 5
Other operating expenses45,412
 39,361
 25,269
 19,251
46,851
 46,141
 21,726
 25,623
Total non-interest expense356,713
 366,365
 177,806
 182,205
376,844
 356,713
 188,611
 177,806
Income before income taxes173,847
 150,975
 88,034
 73,950
177,762
 173,847
 94,031
 88,034
Income tax expense64,091
 55,686
 32,242
 27,078
64,773
 64,091
 33,574
 32,242
Net income109,756
 95,289
 55,792
 46,872
112,989
 109,756
 60,457
 55,792
Dividends on preferred stock5,119
 5,119
 2,559
 2,559
5,119
 5,119
 2,559
 2,559
Net income available to common shareholders$104,637
 90,170
 $53,233
 44,313
$107,870
 104,637
 $57,898
 53,233
Net income per common share, basic$0.78
 0.65
 $0.40
 0.32
$0.85
 0.78
 $0.46
 0.40
Net income per common share, diluted0.78
 0.65
 0.40
 0.32
0.85
 0.78
 0.46
 0.40
Weighted average common shares outstanding, basic133,935
 138,961
 132,947
 138,991
126,164
 133,935
 125,100
 132,947
Weighted average common shares outstanding, diluted134,678
 139,535
 133,625
 139,567
126,778
 134,678
 125,699
 133,625
              
See accompanying notes to unaudited interim consolidated financial statements.

2
Table of Contents

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


Six Months Ended June 30,Six Months Ended June 30,
2015 20142016 2015
(in thousands)Before-tax Amount Tax (Expense) Benefit Net of Tax Amount Before-tax Amount Tax (Expense) Benefit Net of Tax AmountBefore-tax Amount Tax (Expense) Benefit Net of Tax Amount Before-tax Amount Tax (Expense) Benefit Net of Tax Amount
Net income173,847
 (64,091) 109,756
 150,975
 (55,686) 95,289
177,762
 (64,773) 112,989
 173,847
 (64,091) 109,756
Net change related to cash flow hedges:                      
Reclassification adjustment for losses realized in net income224
 (87) 137
 224
 (87) 137
337
 (130) 207
 224
 (87) 137
Net unrealized (losses) gains on investment securities available for sale:           
Net unrealized gains (losses) on investment securities available for sale:

 

 

      
Reclassification adjustment for net gains realized in net income(2,710) 1,043
 (1,667) (1,331) 513
 (818)(67) 26
 (41) (2,710) 1,043
 (1,667)
Net unrealized (losses) gains arising during the period(13,467) 5,188
 (8,279) 45,640
 (17,572) 28,068
Net unrealized (losses) gains(16,177) 6,231
 (9,946) 44,309
 (17,059) 27,250
Net unrealized gains (losses) arising during the period66,215
 (25,493) 40,722
 (13,467) 5,188
 (8,279)
Net unrealized gains (losses)66,148
 (25,467) 40,681
 (16,177) 6,231
 (9,946)
Post-retirement unfunded health benefit:                      
Reclassification adjustment for gains realized in net income(84) 32
 (52) (144) 56
 (88)(104) 40
 (64) (84) 32
 (52)
Actuarial gains arising during the period236
 (93) 143
 395
 (152) 243
—
 —
 —
 236
 (93) 143
Net unrealized gains$152
 (61) 91
 251
 (96) 155
Other comprehensive (loss) income$(15,801) 6,083
 (9,718) 44,784
 (17,242) 27,542
Net unrealized (realized) gains$(104) 40
 (64) 152
 (61) 91
Other comprehensive income (loss)$66,381
 (25,557) 40,824
 (15,801) 6,083
 (9,718)
Comprehensive income    $100,038
     122,831
    $153,813
     100,038
                      
See accompanying notes to unaudited interim consolidated financial statements.


Three Months Ended June 30,Three Months Ended June 30,
2015 20142016 2015
(in thousands)Before-tax Amount Tax (Expense) Benefit Net of Tax Amount Before-tax Amount Tax (Expense) Benefit Net of Tax AmountBefore-tax Amount Tax (Expense) Benefit Net of Tax Amount Before-tax Amount Tax (Expense) Benefit Net of Tax Amount
Net income88,034
 (32,242) 55,792
 73,950
 (27,078) 46,872
94,031
 (33,574) 60,457
 88,034
 (32,242) 55,792
Net change related to cash flow hedges:                      
Reclassification adjustment for losses realized in net income112
 (44) 68
 112
 (44) 68
64
 (25) 39
 112
 (44) 68
Net unrealized (losses) gains on investment securities available for sale:           
Net unrealized gains (losses) on investment securities available for sale:           
Reclassification adjustment for net gains realized in net income(1,985) 764
 (1,221) —
 —
 —
—
 —
 —
 (1,985) 764
 (1,221)
Net unrealized (losses) gains arising during the period(28,678) 11,042
 (17,636) 26,797
 (10,317) 16,480
Net unrealized (losses) gains(30,663) 11,806
 (18,857) 26,797
 (10,317) 16,480
Net unrealized gains (losses) arising during the period19,044
 (7,332) 11,712
 (28,678) 11,042
 (17,636)
Net unrealized gains (losses)19,044
 (7,332) 11,712
 (30,663) 11,806
 (18,857)
Post-retirement unfunded health benefit:                      
Reclassification adjustment for gains realized in net income(42) 16
 (26) (72) 28
 (44)(10) 4
 (6) (42) 16
 (26)
Actuarial gains arising during the period236
 (93) 143
 395
 (152) 243
—
 —
 —
 236
 (93) 143
Net unrealized gains$194
 (77) 117
 323
 (124) 199
Other comprehensive (loss) income$(30,357) 11,685
 (18,672) 27,232
 (10,485) 16,747
Net unrealized (realized) gains$(10) 4
 (6) 194
 (77) 117
Other comprehensive income (loss)$19,098
 (7,353) 11,745
 (30,357) 11,685
 (18,672)
Comprehensive income    $37,120
     63,619
    $72,202
     37,120
                      
See accompanying notes to unaudited interim consolidated financial statements.

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Table of Contents

SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(unaudited)
(in thousands, except per share data)Series C Preferred Stock 
Common
Stock
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Income (Loss)
 Retained Earnings (Deficit) TotalSeries C Preferred Stock 
Common
Stock
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Income (Loss)
 Retained Earnings Total
Balance at December 31, 2013$125,862
 139,721
 2,976,348
 (114,176) (41,258) (137,512) 2,948,985
Net income—
 —
 —
 —
 —
 95,289
 95,289
Other comprehensive income, net of income taxes—
 —
 —
 —
 27,542
 —
 27,542
Cash dividends declared on common stock - $0.14 per share—
 —
 —
 —
 —
 (19,460) (19,460)
Cash dividends paid on Series C Preferred Stock—
 —
 (5,119) —
 —
 —
 (5,119)
Series C Preferred Stock-adjustment to issuance costs118
 —
 —
 —
 —
 —
 118
Restricted share unit activity—
 39
 (507) —
 —
 —
 (468)
Stock options exercised—
 75
 1,229
 —
 —
 —
 1,304
Share-based compensation net tax benefit—
 —
 162
 —
 —
 —
 162
Share-based compensation expense—
 —
 4,698
 —
 —
 —
 4,698
Balance at June 30, 2014$125,980
 139,835
 2,976,811
 (114,176) (13,716) (61,683) 3,053,051
             
Balance at
December 31, 2014		$125,980
 139,950
 2,960,825
 (187,774) (12,605) 14,894
 3,041,270
$125,980
 139,950
 2,960,825
 (187,774) (12,605) 14,894
 3,041,270
Net income—
 —
 —
 —
 —
 109,756
 109,756
—
 —
 —
 —
 —
 109,756
 109,756
Other comprehensive income, net of income taxes—
 —
 —
 —
 (9,718) —
 (9,718)
Cash dividends declared on common stock - $0.20 per share—
 —
 —
 —
 —
 (26,664) (26,664)
Other comprehensive loss, net of income taxes—
 —
 —
 —
 (9,718) —
 (9,718)
Cash dividends declared on common stock -$0.20 per share—
 —
 —
 —
 —
 (26,664) (26,664)
Cash dividends paid on Series C Preferred Stock—
 —
 —
 —
 —
 (5,119) (5,119)—
 —
 —
 —
 —
 (5,119) (5,119)
Repurchases and completion of ASR agreement to repurchase shares of common stock—
 —
 14,515
 (124,085) —
 —
 (109,570)—
 —
 14,515
 (124,085) —
 —
 (109,570)
Restricted share unit activity—
 278
 (4,314) —
 —
 (367) (4,403)—
 278
 (4,314) —
 —
 (367) (4,403)
Stock options exercised—
 197
 3,074
 —
 —
 —
 3,271
—
 197
 3,074
 —
 —
 —
 3,271
Share-based compensation net tax benefit—
 —
 1,063
 —
 —
 —
 1,063
—
 —
 1,063
 —
 —
 —
 1,063
Share-based compensation expense—
 —
 6,271
 —
 —
 —
 6,271
—
 —
 6,271
 —
 —
 —
 6,271
Balance at June 30, 2015$125,980
 140,425
 2,981,434
 (311,859) (22,323) 92,500
 3,006,157
$125,980
 140,425
 2,981,434
 (311,859) (22,323) 92,500
 3,006,157
                          
Balance at December 31, 2015$125,980
 140,592
 2,989,981
 (401,511) (29,819) 174,973
 3,000,196
Net income—
 —
 —
 —
 —
 112,989
 112,989
Other comprehensive income, net of income taxes—
 —
 —
 —
 40,824
 —
 40,824
Cash dividends declared on common stock - $0.24 per share—
 —
 —
 —
 —
 (30,015) (30,015)
Cash dividends paid on Series C Preferred Stock—
 —
 —
 —
 —
 (5,119) (5,119)
Repurchases of common stock—
 —
 —
 (171,547) —
 —
 (171,547)
Restricted share unit activity—
 298
 (4,814) —
 —
 (89) (4,605)
Stock options exercised—
 118
 1,917
 —
 —
 —
 2,035
Share-based compensation net tax benefit—
 —
 52
 —
 —
 —
 52
Share-based compensation expense—
 —
 6,849
 —
 —
 —
 6,849
Balance at June 30, 2016$125,980
 $141,008
 2,993,985
 (573,058) 11,005
 252,739
 2,951,659
             
See accompanying notes to unaudited interim consolidated financial statements.

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SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended June 30,Six Months Ended June 30,
(in thousands)2015 20142016 2015
Operating Activities      
Net income109,756
 95,289
112,989
 109,756
Adjustments to reconcile net income to net cash provided by operating activities:      
Provision for loan losses11,034
 21,795
16,070
 11,034
Depreciation, amortization, and accretion, net28,169
 26,342
28,506
 28,169
Deferred income tax expense58,302
 49,891
61,283
 58,302
Decrease (increase) in trading account assets1,891
 (14,205)
Decrease in trading account assets4,096
 1,891
Originations of mortgage loans held for sale(454,708) (347,327)(320,304) (454,708)
Proceeds from sales of mortgage loans held for sale426,430
 325,722
299,186
 426,430
Gain on sales of mortgage loans held for sale, net(8,988) (6,522)(6,946) (8,988)
Increase in other assets(38,776) (8,924)(32,874) (36,398)
(Decrease) increase in other liabilities(34,914) 1,955
Increase (decrease) in other liabilities13,162
 (34,914)
Investment securities gains, net(2,710) (1,331)(67) (2,710)
Losses and write-downs on other real estate, net11,066
 8,229
6,089
 11,066
Losses and write-downs on other assets held for sale, net7,902
 —
Loss on early extinguishment of debt4,735
 —
Share-based compensation expense6,271
 4,698
6,849
 6,271
Write-downs on other assets held for sale—
 7,508
Gain on sale of Memphis branches, net—
 (5,789)
Gain on sale of branch property—
 (3,116)
Net cash provided by operating activities$112,823
 154,215
$200,676
 115,201
Investing Activities      
Net cash used in dispositions—
 (90,571)
Net (increase) decrease in interest earning deposits with banks(6,884) 16,664
Net decrease in federal funds sold and securities purchased under resale agreements623
 1,422
Net increase in interest earning deposits with banks(7,154) (6,884)
Net (increase) decrease in federal funds sold and securities purchased under resale agreements(7,866) 623
Net increase in interest bearing funds with Federal Reserve Bank(567,843) (44,756)(74,519) (567,843)
Proceeds from maturities and principal collections of investment securities available for sale314,239
 245,108
443,128
 314,239
Proceeds from sales of investment securities available for sale82,156
 20,815
243,609
 82,156
Purchases of investment securities available for sale(686,074) (111,505)(623,046) (686,074)
Proceeds from sales of loans and principal repayments on other loans held for sale21,866
 37,300
7,739
 21,866
Proceeds from sales of other real estate19,348
 28,147
16,282
 19,348
Net increase in loans(445,124) (594,896)(660,778) (445,124)
Net increase in premises and equipment(8,805) (23,938)(16,769) (8,805)
Proceeds from sales of other assets held for sale351
 241
296
 351
Net cash used in investing activities$(1,276,147) (515,969)$(679,078) (1,276,147)
   
Financing Activities      
Net increase in demand and savings deposits1,039,670
 208,039
595,342
 1,039,670
Net increase in certificates of deposit77,813
 100,011
87,466
 77,813
Net increase (decrease) in federal funds purchased and securities sold under repurchase agreements61,369
 (20,292)
Principal repayments on long-term debt(425,078) (375,667)
Net increase in federal funds purchased and securities sold under repurchase agreements70,154
 61,369
Repayments on long-term debt(1,455,067) (425,078)
Proceeds from issuance of long-term debt425,000
 600,000
1,400,000
 425,000
Dividends paid to common shareholders(26,664) (19,460)(30,015) (26,664)
Dividends paid to preferred shareholders(5,119) (5,119)(5,119) (5,119)
Stock options exercised3,271
 1,304
2,035
 3,271
Repurchases of common stock(109,570) —
(171,547) (109,570)
Excess tax benefit from share-based compensation2,378
 201
Restricted stock activity(4,403) (468)(4,605) (4,403)
Net cash provided by financing activities$1,038,667
 488,549
$488,644
 1,036,289
(Decrease) increase in cash and cash equivalents(124,657) 126,795
Increase (decrease) in cash and cash equivalents10,242
 (124,657)
Cash and cash equivalents at beginning of period485,489
 469,630
367,092
 485,489
Cash and cash equivalents at end of period$360,832
 596,425
$377,334
 360,832
      
   

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Supplemental Cash Flow Information      
Cash paid during the period for:      
Income tax payments (refunds), net8,751
 4,530
Income tax payments, net5,849
 8,751
Interest paid55,747
 56,657
64,424
 55,747
Non-cash Activities      
Premises and equipment transferred to other assets held for sale939
 13,037
18,677
 939
Loans foreclosed and transferred to other real estate11,391
 25,280
8,631
 11,391
Loans transferred to other loans held for sale at fair value19,459
 31,605
7,314
 19,459
Securities purchased during the period but settled after period-end47,159
 —
—
 47,159
      
Dispositions:   
Fair value of non-cash assets sold—
 (100,982)
Fair value of liabilities sold—
 (191,553)
   
See accompanying notes to unaudited interim consolidated financial statements.

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Notes to Unaudited Interim Consolidated Financial Statements
Note 1 - Significant Accounting Policies
Business Operations
The accompanying unaudited interim consolidated financial statements of Synovus Financial Corp. include the accounts of the Parent Company and its consolidated subsidiaries. Synovus provides integratedFinancial Corp. is a financial services includingcompany based in Columbus, Georgia. Through its wholly-owned subsidiary, Synovus Bank, member FDIC, the company provides commercial and retail banking financialin addition to a full suite of specialized products and services including private banking, treasury management, insurancewealth management, and international banking. Synovus also provides mortgage services, to customersfinancial planning, and investment advisory services through locally-branded divisions of its wholly-owned subsidiary bank,subsidiaries, Synovus Mortgage, Synovus Trust, and Synovus Securities, as well as its GLOBALT and Creative Financial Group divisions. These specialized offerings, combined with traditional banking products and services, make Synovus Bank a great choice for retail and commercial customers.
Synovus Bank's 28 locally-branded bank divisions are positioned in offices locatedsome of the best markets in the Southeast, with 253 branches and 335 ATMs in Georgia, Alabama, South Carolina, Florida, and Tennessee.
In addition to our banking operations, we also provide various other financial services to our customers through direct and indirect wholly-owned non-bank subsidiaries, including: Synovus Securities, Inc., headquartered in Columbus, Georgia, which specializes in professional portfolio management for fixed-income securities, investment banking, the execution of securities transactions as a broker/dealer and the provision of individual investment advice on equity and other securities; Synovus Trust Company, N.A., headquartered in Columbus, Georgia, which provides trust, asset management and financial planning services; and Synovus Mortgage Corp., headquartered in Birmingham, Alabama, which offers mortgage services.
Basis of Presentation
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the instructions to the SEC Form 10-Q and Article 10 of Regulation S-X; therefore, they do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, comprehensive income, and cash flows in conformity with GAAP. All adjustments consisting of normally recurring accruals that, in the opinion of management, are necessary for a fair presentation of the consolidated financial position and results of operations for the periods covered by this Report have been included. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes appearing in Synovus' 20142015 Form 10-K. There have been no significant changes to the accounting policies as disclosed in Synovus' 20142015 Form 10-K.
In preparing the unaudited interim consolidated financial statements in accordance with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the respective consolidated balance sheets and the reported amounts of revenues and expenses for the periods presented. Actual results could differ significantly from those estimates.
Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses; the valuation of other real estate;losses, the fair value of investment securities;securities, the fair value of private equity investments;investments, and contingent liabilities related to legal matters; and the deferred tax assets valuation allowance.matters.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and due from banks. At June 30, 2015,2016, there were no amount of the due from banks balance wascash and cash equivalents restricted as to withdrawal. At December 31, 2014, $1252015, $100 thousand of the due from banks balance was restricted as to withdrawal.
Short-term Investments
Short-term investments consist of interest bearing funds with the Federal Reserve Bank, interest earning deposits with banks, and Federal funds sold and securities purchased under resale agreements. At June 30, 20152016 and December 31, 2014,2015, interest bearing funds with the Federal Reserve Bank included $123.1$132.5 millionand $89.7$117.3 million, respectively, on deposit to meet Federal Reserve Bank requirements. Interest earning deposits with banks include $6.6$5.5 million and $7.1$2.2 million at June 30, 20152016 and December 31, 2014,2015, respectively, which isare pledged as collateral in connection with certain letters of credit. Federal funds sold include $68.1$75.2 million and $67.5$65.9 million at June 30, 20152016 and December 31, 2014,2015, respectively, which are pledged to collateralize certain derivative financial instruments. Federal funds sold and securities purchased under resale agreements, and Federal funds purchased and securities sold under repurchase agreements, generally mature in one day.
Recently Adopted Accounting Standards Updates

During 2014,2015, the FASB issued ASU 2015-02, Amendments to the following ASUs, all ofConsolidation Analysis, which became effective January 1, 2015:

ASU 2014-01, Investments-Equity Method and Joint Ventures (Topic 323), Accounting for Investments in Qualified Affordable Housing Projects

In January 2014, the FASB issued amended guidance which permits Synovus to make an accounting policy election to account for its investments in qualified affordable housing projects using a proportional amortization method, if certain

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conditions are met, and to present the amortization as a component of income tax expense. The amended guidance would be applied retrospectively to all periods presented and is effective for fiscal years, and interim periods within those years, beginning after December 15, 2014. Regardless of the policy election, the amended guidance, where disclosed, enables the users of the financial statements to understand the nature of investments in qualified affordable housing projects and the effect of the measurement of the investments in qualified affordable housing projects and the related tax credits on Synovus’ financial position and results of operations.

Synovus adopted the amended guidance on January 1, 2015,2016. ASU 2015-02 was issued by the FASB to modify the analysis that companies must perform in order to determine whether a legal entity should be consolidated. ASU 2015-02 simplifies current consolidation rules by reducing the number of consolidation models; placing more emphasis on risk of loss when determining a controlling financial interest; reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a VIE; and did notchanging consolidation conclusions for public and private companies in several industries that typically make an accounting policy election to apply the proportional amortization method for its investments in qualified affordable housing projects because the impact to the consolidated financial statements was insignificant. Therefore, the adoptionuse of limited partnerships or VIEs. Adoption of ASU 2015-02 did not have an impact on Synovus’ consolidated financial statements. At June 30, 2015, the aggregate carrying value of Synovus' investments in LIHTC partnerships was $9.9 million. See Note 18 "Variable Interest Entities" to the consolidated financial statements of Synovus' 2014 Form 10-K for additional information regarding these investments.

Additionally, adoption of the following standards effective January 1, 2015 did not have a significant impact on Synovus’ consolidated financial statements.

ASU 2014-14, Classification of Certain Government-Guaranteed Mortgage Loans upon Foreclosure
ASU 2014-12, Accounting for Share-Based Payments when the Terms of an Award Provide that a Performance Target Could be Achieved after the Requisite Service Period
ASU 2014-11, Repurchase-to-Maturity Transactions, Repurchase Financings, and Disclosures
ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity
ASU 2014-04, Receivables-Troubled Debt Restructurings by Creditors (Subtopic 310-40), Reclassification of Residential Real Estate Collateralized Consumer Mortgage Loans upon Foreclosure
Reclassifications
Prior periods' consolidated financial statements are reclassified whenever necessary to conform to the current periods' presentation.
Subsequent Events
Synovus has evaluated for consideration, or disclosure, all transactions, events, and circumstances, subsequent to the date of the consolidated balance sheet and through the date the accompanying unaudited interim consolidated financial statements were issued, and has reflected, or disclosed, those items deemed appropriate within the unaudited interim consolidated financial statements.
Note 2 - Share Repurchase Program
On October 21, 2014, Synovus announcedDuring the third quarter of 2015, Synovus' Board of Directors authorized a $250$300 million share repurchase program which will expire on October 23, 2015.to be completed over the next 15 months. As of June 30, 2015,2016, Synovus had repurchased a total of $197.5$208.5 million or 7.47.1 million shares of common stock under the $300 million share repurchase program through a combination of shareprogram. Share repurchases under the accelerated share repurchase (ASR) agreement described belowprogram by quarter are as follows: second quarter of 2016 - $60.5 million (2.0 million shares), first quarter of 2016 - $110.9 million (3.9 million shares), and open market transactions.
During October 2014, Synovus entered into an ASR agreement to purchase $75.0fourth quarter of 2015 - $37.1 million of Synovus common stock under the share repurchase program. As of December 31, 2014, Synovus had repurchased 2.5(1.2 million shares of common stock under the ASR agreement. During January 2015, Synovus repurchased 392 thousand shares upon completion of the ASR agreement. Additionally, since October 2014 throughshares). At June 30, 2015, Synovus has repurchased $122.5 million, or 4.5 million shares, of common stock through open market transactions, including $109.4 million, or 3.9 million shares, of common stock repurchased during2016, the first half of 2015.
Note 3 - Sale of Branchesremaining authorization under this program was $91.5 million.
On January 17, 2014, Synovus completed the sale of certain loans, premises, deposits, and other assets and liabilities of the Memphis, Tennessee branches of Trust One Bank, a division of Synovus Bank.  The sale included $89.6 million in total loans and $191.3 million in total deposits.   Results for the six months ended June 30, 2014 reflect a pre-tax gain, net of associated costs, of $5.8 million relating to this transaction.  

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Note 43 - Investment Securities
The amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities available for sale at June 30, 20152016 and December 31, 20142015 are summarized below.
 June 30, 2015 June 30, 2016
(in thousands) Amortized Cost Gross Unrealized Gains Gross Unrealized Losses  Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses  Fair Value
U.S. Treasury securities $43,149
 383
 —
 43,532
 $73,741
 1,082
 —
 74,823
U.S. Government agency securities 24,505
 763
 —
 25,268
 13,006
 443
 —
 13,449
Securities issued by U.S. Government sponsored enterprises 126,947
 920
 —
 127,867
 50,063
 54
 —
 50,117
Mortgage-backed securities issued by U.S. Government agencies 176,856
 2,012
 (794) 178,074
 189,281
 3,583
 (81) 192,783
Mortgage-backed securities issued by U.S. Government sponsored enterprises 2,416,229
 12,780
 (18,280) 2,410,729
 2,544,204
 37,817
 (352) 2,581,669
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises 534,730
 4,487
 (1,949) 537,268
 625,458
 10,298
 (142) 635,614
State and municipal securities 4,566
 120
 (1) 4,685
 3,000
 47
 (1) 3,046
Equity securities 3,228
 4,375
 —
 7,603
 3,228
 5,503
 —
 8,731
Other investments 20,145
 —
 (498) 19,647
 20,210
 333
 (416) 20,127
Total investment securities available for sale $3,350,355
 25,840
 (21,522) 3,354,673
 $3,522,191
 59,160
 (992) 3,580,359
                
 December 31, 2014 December 31, 2015
(in thousands) 
Amortized Cost(1)
 Gross Unrealized Gains Gross Unrealized Losses Fair Value Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value
U.S. Treasury securities $42,636
 190
 —
 42,826
 $43,125
 232
 —
 43,357
U.S. Government agency securities 26,426
 898
 —
 27,324
 13,087
 536
 —
 13,623
Securities issued by U.S. Government sponsored enterprises 81,332
 710
 —
 82,042
 126,520
 389
 —
 126,909
Mortgage-backed securities issued by U.S. Government agencies 177,678
 2,578
 (440) 179,816
 209,785
 1,340
 (1,121) 210,004
Mortgage-backed securities issued by U.S. Government sponsored enterprises 2,250,897
 19,915
 (9,131) 2,261,681
 2,645,107
 7,874
 (22,562) 2,630,419
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises 414,562
 4,856
 (2,342) 417,076
 530,426
 2,396
 (3,225) 529,597
State and municipal securities 5,024
 183
 (1) 5,206
 4,343
 92
 (1) 4,434
Equity securities 3,228
 3,520
 

 6,748
 3,228
 6,444
 —
 9,672
Other investments 19,121
 7
 (441) 18,687
 20,177
 —
 (374) 19,803
Total investment securities available for sale $3,020,904
 32,857
 (12,355) 3,041,406
 $3,595,798
 19,303
 (27,283) 3,587,818
                
(1)
Amortized cost is adjusted for other-than-temporary impairment charges in 2014, which have been recognized in the consolidated statements of income and were considered inconsequential.
At June 30, 20152016 and December 31, 2014,2015, investment securities with a carrying value of $2.222.19 billion and $2.12$2.43 billion respectively, were pledged to secure certain deposits and securities sold under repurchase agreements as required by law and contractual agreements.
Synovus has reviewed investment securities that are in an unrealized loss position as of June 30, 20152016 and December 31, 20142015 for OTTI and does not consider any securities in an unrealized loss position to be other-than-temporarily impaired. If Synovus intended to sell a security in an unrealized loss position, the entire unrealized loss would be reflected in income. Synovus does not intend to sell investment securities in an unrealized loss position prior to the recovery of the unrealized loss, which may 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.

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Declines in the fair value of available for sale securities below their cost that are deemed to have OTTI are reflected in earnings as realized losses to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income. Currently, unrealized losses on debt securities are attributable to increases in interest rates on comparable securities from the date of purchase. Synovus regularly evaluates its investment securities portfolio to ensure that there are no conditions that would indicate that unrealized losses represent OTTI. These factors include the length of time

the security has been in a loss position, the extent that the fair value is below amortized cost, and the credit standing of the issuer. As of June 30, 2015,2016, Synovus had thirty-sevenfive investment securities in a loss position for less than twelve months and thirty-twoeight investment securities in a loss position for twelve months or longer.
Gross unrealized losses on investment securities and the fair value of the related securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at June 30, 20152016 and December 31, 2014,2015, are presented below.
June 30, 2015June 30, 2016
Less than 12 Months 12 Months or Longer TotalLess than 12 Months 12 Months or Longer Total
(in thousands)
Fair
Value
 
Gross Unrealized
Losses
 
Fair
Value
 
Gross Unrealized
Losses
 
Fair
Value
 
Gross Unrealized
Losses
Fair
Value
 
Gross Unrealized
Losses
 
Fair
Value
 
Gross Unrealized
Losses
 
Fair
Value
 
Gross Unrealized
Losses
Mortgage-backed securities issued by U.S. Government agencies30,996
 169
 19,805
 625
 50,801
 794
—
 —
 9,785
 81
 9,785
 81
Mortgage-backed securities issued by U.S. Government sponsored enterprises803,540
 4,383
 620,762
 13,897
 1,424,302
 18,280
170,365
 352
 —
 —
 170,365
 352
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises74,962
 176
 78,262
 1,773
 153,224
 1,949
—
 —
 27,827
 142
 27,827
 142
State and municipal securities—
 —
 47
 1
 47
 1
—
 —
 53
 1
 53
 1
Other investments14,900
 100
 4,747
 398
 19,647
 498
—
 —
 4,794
 416
 4,794
 416
Total$924,398
 4,828
 723,623
 16,694
 1,648,021
 21,522
$170,365
 352
 42,459
 640
 212,824
 992
                      
December 31, 2014December 31, 2015
Less than 12 Months 12 Months or Longer TotalLess than 12 Months 12 Months or Longer Total
(in thousands)
Fair
Value
 
Gross Unrealized
Losses
 
Fair
Value
 
Gross Unrealized
Losses
 
Fair
Value
 
Gross Unrealized
Losses
Fair
Value
 
Gross Unrealized
Losses
 
Fair
Value
 
Gross Unrealized
Losses
 
Fair
Value
 
Gross Unrealized
Losses
Mortgage-backed securities issued by U.S. Government agencies—
 —
 21,488
 440
 21,488
 440
122,626
 639
 18,435
 482
 141,061
 1,121
Mortgage-backed securities issued by U.S. Government sponsored enterprises251,134
 763
 798,282
 8,368
 1,049,416
 9,131
1,656,194
 12,874
 489,971
 9,688
 2,146,165
 22,562
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises20,338
 61
 119,172
 2,281
 139,510
 2,342
196,811
 963
 72,366
 2,262
 269,177
 3,225
State and municipal securities—
 —
 45
 1
 45
 1
—
 —
 50
 1
 50
 1
Other investments—
 —
 3,680
 441
 3,680
 441
14,985
 15
 4,818
 359
 19,803
 374
Total$271,472
 824
 942,667
 11,531
 1,214,139
 12,355
$1,990,616
 14,491
 585,640
 12,792
 2,576,256
 27,283
                      

10
Table of Contents

The amortized cost and fair value by contractual maturity of investment securities available for sale at June 30, 20152016 are shown below. The expected life of mortgage-backed securities or CMOs may differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties. For purposes of the maturity table, mortgage-backed securities and CMOs, which are not due at a single maturity date, have been classified based on the final contractual maturity date.
Distribution of Maturities at June 30, 2015Distribution of Maturities at June 30, 2016
(in thousands)
Within One
Year
 
1 to 5
Years
 
5 to 10
Years
 
More Than
10 Years
 
No Stated
Maturity
 Total
Within One
Year
 
1 to 5
Years
 
5 to 10
Years
 
More Than
10 Years
 
No Stated
Maturity
 Total
Amortized Cost                      
U.S. Treasury securities$18,286
 24,863
 —
 —
 —
 43,149
$18,758
 54,983
 —
 —
 —
 73,741
U.S. Government agency securities78
 12,000
 12,427
 —
 —
 24,505
—
 6,613
 6,393
 —
 —
 13,006
Securities issued by U.S. Government sponsored enterprises30,412
 96,535
 —
 —
 —
 126,947
50,063
 —
 —
 —
 —
 50,063
Mortgage-backed securities issued by U.S. Government agencies—
 —
 —
 176,856
 —
 176,856
—
 —
 16,261
 173,020
 —
 189,281
Mortgage-backed securities issued by U.S. Government sponsored enterprises28
 1,025
 1,939,029
 476,147
 —
 2,416,229
—
 454
 1,254,247
 1,289,503
 —
 2,544,204
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 —
 —
 534,730
 —
 534,730
—
 —
 —
 625,458
 —
 625,458
State and municipal securities1,020
 938
 —
 2,608
 —
 4,566
184
 350
 —
 2,466
 —
 3,000
Equity securities—
 —
 —
 —
 3,228
 3,228
—
 —
 —
 —
 3,228
 3,228
Other investments—
 —
 15,000
 2,000
 3,145
 20,145
—
 —
 15,000
 2,000
 3,210
 20,210
Total amortized cost$49,824
 135,361
 1,966,456
 1,192,341
 6,373
 3,350,355
$69,005
 62,400
 1,291,901
 2,092,447
 6,438
 3,522,191
           
Fair Value                      
U.S. Treasury securities$18,286
 25,246
 —
 —
 —
 43,532
$18,758
 56,065
 —
 —
 —
 74,823
U.S. Government agency securities78
 12,336
 12,854
 —
 —
 25,268
—
 6,800
 6,649
 —
 —
 13,449
Securities issued by U.S. Government sponsored enterprises30,582
 97,285
 —
 —
 —
 127,867
50,117
 —
 —
 —
 —
 50,117
Mortgage-backed securities issued by U.S. Government agencies—
 —
 —
 178,074
 —
 178,074
—
 —
 16,653
 176,130
 —
 192,783
Mortgage-backed securities issued by U.S. Government sponsored enterprises29
 1,077
 1,926,628
 482,995
 —
 2,410,729
—
 469
 1,269,397
 1,311,803
 —
 2,581,669
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 —
 —
 537,268
 —
 537,268
—
 —
 —
 635,614
 —
 635,614
State and municipal securities1,038
 945
 —
 2,702
 —
 4,685
184
 350
 —
 2,512
 —
 3,046
Equity securities—
 —
 —
 —
 7,603
 7,603
—
 —
 —
 —
 8,731
 8,731
Other investments—
 —
 14,900
 1,701
 3,046
 19,647
—
 —
 15,333
 1,625
 3,169
 20,127
Total fair value$50,013
 136,889
 1,954,382
 1,202,740
 10,649
 3,354,673
$69,059
 63,684
 1,308,032
 2,127,684
 11,900
 3,580,359
                      
Proceeds from sales, gross gains, and gross losses on sales of securities available for sale for the six and three months ended June 30, 20152016 and 20142015 are presented below. Other-than-temporary impairment charges of $88 thousand are included in gross realized losses for the six months ended June 30, 2014. The specific identification method is used to reclassify gains and losses out of other comprehensive income at the time of sale.
 Six Months Ended June 30, Three Months Ended June 30, Six Months Ended June 30, Three Months Ended June 30,
(in thousands) 2015 2014 2015 2014 2016 2015 2016 2015
Proceeds from sales of investment securities available for sale $82,156
 $20,815 $49,737
 —
 $243,609
 82,156
 $—
 49,737
Gross realized gains 2,710
 1,419
 1,985
 —
 954
 2,710
 —
 1,985
Gross realized losses —
 (88) —
 —
 (887) —
 —
 —
Investment securities gains, net $2,710
 1,331
 $1,985
 —
 $67
 2,710
 $—
 1,985
                

11
Table of Contents

Note 54 - Restructuring Charges
For the six and three months ended June 30, 20152016 and 2014,2015, total restructuring charges consist of the following components:
Six Months Ended June 30, Three Months Ended June 30,Six Months Ended June 30, Three Months Ended June 30,
(in thousands)2015 2014 2015 20142016 2015 2016 2015
Severance charges$—
 8,047
 $—
 —
Lease termination charges(4) —
 (4) —
$31
 (4) $(13) (4)
Asset impairment charges—
 7,358
 —
 7,358
6,866
 —
 5,821
 —
Gain on sale of assets held for sale, net(157) —
 —
 —
Loss (gain) on sale of assets held for sale, net13
 (157) 13
 —
Professional fees and other charges59
 888
 9
 358
71
 59
 20
 9
Total restructuring charges, net$(102) 16,293
 $5
 7,716
$6,981
 (102) $5,841
 5
              
For the three months ended June 30, 2016, Synovus recorded restructuring charges of $5.8 million with $4.8 million of these charges related to Synovus' continued corporate real estate optimization activities. Synovus continues to evaluate its branch network while deploying additional digital and on-line capabilities to increase convenience for customers while lowering transaction costs, and identified during the second quarter three branch closures to be completed by year-end, which will be in addition to the four branches closed earlier this year.   Restructuring charges associated with branch closures identified during 2016 totaled $1.0 million and $1.1 million during the second and first quarter of 2016, respectively. After these closures, the branch network will consist of 250 locations by year-end, which will represent a 22.6% reduction from year-end 2010.  
During the six months ended June 30, 2015, Synovus recorded net gains of $157 thousand on the sale of certain branch locations and recorded additional expense, net of $55 thousand associated withlocations.
The following tables present aggregate activity within the 2014 branch closings. Restructuringaccrual for restructuring charges for the six and three months ended June 30, 2014 related primarily to expense savings initiatives that were approved during 2014. The initiatives include the consolidation or closing of certain branch locations as well as workforce reductions. Severance charges for the six months ended June 30, 2014 consisted of estimated involuntary termination benefits for targeted staff reductions identified during 2014. These termination benefits were provided under an ongoing benefit arrangement as defined in ASC 712, Compensation-Nonretirement Postemployment Benefits; accordingly, the charges were recorded pursuant to the liability recognition criteria of ASC 712.   Asset impairment charges for the six2016 and three months ended June 30, 2014 were recorded following the decision to close 13 branches during 2014. Additionally, substantially all of the professional fees and other charges for the six and three months ended June 30, 2014 consist of professional fees incurred in connection with an organizational restructuring implemented during 2014.

12
Table of Contents

The following table presents aggregate activity associated with accruals that resulted from restructuring charges during the six and three months ended June 30, 2015 and 2014:2015:
Severance Charges Lease Termination Charges Total
(in thousands)     Severance Charges Lease Termination Charges Total
Balance at December 31, 2014$3,291
 5,539
 8,830
Balance at December 31, 2015$1,930
 4,687
 6,617
Accruals for efficiency initiatives—
 (4) (4)—
 31
 31
Payments(1,038) (411) (1,449)(1,337) (343) (1,680)
Balance at June 30, 20152,253
 5,124
 7,377
Balance at June 30, 2016$593
 4,375
 4,968
          
Balance at April 1, 20152,770
 5,318
 8,088
Balance at April 1, 20161,533
 4,545
 6,078
Accruals for efficiency initiatives—
 (4) (4)—
 (13) (13)
Payments(517) (190) (707)(940) (157) (1,097)
Balance at June 30, 2015$2,253
 5,124
 7,377
Balance at June 30, 2016$593
 4,375
 4,968
          
Severance Charges Lease Termination Charges Total
(in thousands)     Severance Charges Lease Termination Charges Total
Balance at December 31, 2013$1,572
 1,383
 2,955
Balance at December 31, 2014$3,291
 5,539
 8,830
Accruals for efficiency initiatives8,047
 —
 8,047
—
 (4) (4)
Payments(3,395) (1,305) (4,700)(1,038) (411) (1,449)
Balance at June 30, 20146,224
 78
 6,302
Balance at June 30, 2015$2,253
 5,124
 7,377
          
Balance at April 1, 20147,688
 94
 7,782
Balance at April 1, 20152,770
 5,318
 8,088
Accruals for efficiency initiatives—
 —
 —
—
 (4) (4)
Payments(1,464) (16) (1,480)(517) (190) (707)
Balance at June 30, 2014$6,224
 78
 6,302
Balance at June 30, 2015$2,253
 5,124
 7,377
          
All professional fees and other charges were paid in the yearsquarters that they were incurred. No other restructuring charges resulted in payment accruals.

13
Table of Contents

Note 65 - Loans and Allowance for Loan Losses
The following is a summary of current, accruing past due, and non-accrual loans by portfolio class as of June 30, 20152016 and December 31, 2014.2015.
Current, Accruing Past Due, and Non-accrual LoansCurrent, Accruing Past Due, and Non-accrual Loans Current, Accruing Past Due, and Non-accrual Loans 
June 30, 2015 June 30, 2016 
(in thousands)Current Accruing 30-89 Days Past Due Accruing 90 Days or Greater Past Due Total Accruing Past Due Non-accrual  Total Current Accruing 30-89 Days Past Due Accruing 90 Days or Greater Past Due Total Accruing Past Due Non-accrual  Total 
Investment properties$5,409,452
 1,092
 183
 1,275
 13,166
 5,423,893
 $5,901,061
 5,451
 —
 5,451
 14,149
 5,920,661
 
1-4 family properties1,075,754
 1,873
 389
 2,262
 19,390
 1,097,406
 1,106,507
 3,270
 134
 3,404
 17,869
 1,127,780
 
Land acquisition524,265
 6,099
 741
 6,840
 23,396
 554,501
 448,740
 2,698
 206
 2,904
 7,610
 459,254
 
Total commercial real estate7,009,471
 9,064
 1,313
 10,377
 55,952
 7,075,800
 7,456,308
 11,419
 340
 11,759
 39,628
 7,507,695
 
Commercial, financial and agricultural6,205,203
 9,691
 926
 10,617
 43,733
 6,259,553
 6,526,947
 10,025
 4,042
 14,067
 55,821
 6,596,835
 
Owner-occupied4,104,001
 6,759
 671
 7,430
 29,338
 4,140,769
 4,331,804
 9,673
 —
 9,673
 17,118
 4,358,595
 
Total commercial and industrial10,309,204
 16,450
 1,597
 18,047
 73,071
 10,400,322
 10,858,751
 19,698
 4,042
 23,740
 72,939
 10,955,430
 
Home equity lines1,659,927
 5,376
 546
 5,922
 17,802
 1,683,651
 1,633,322
 6,604
 271
 6,875
 16,912
 1,657,109
 
Consumer mortgages1,758,735
 10,160
 2
 10,162
 24,855
 1,793,752
 2,103,106
 7,113
 —
 7,113
 21,895
 2,132,114
 
Credit cards243,464
 1,893
 1,367
 3,260
 —
 246,724
 233,118
 1,610
 1,306
 2,916
 —
 236,034
 
Other retail318,691
 3,085
 7
 3,092
 1,958
 323,741
 
Other retail loans594,142
 3,308
 5
 3,313
 2,698
 600,153
 
Total retail3,980,817
 20,514
 1,922
 22,436
 44,615
 4,047,868
 4,563,688
 18,635
 1,582
 20,217
 41,505
 4,625,410
 
Total loans$21,299,492
 46,028
 4,832
 50,860
 173,638
 21,523,990
(1 
) 
$22,878,747
 49,752
 5,964
 55,716
 154,072
 23,088,535
(1 
) 
                      
December 31, 2014 December 31, 2015 
(in thousands)Current Accruing 30-89 Days Past Due Accruing 90 Days or Greater Past Due Total Accruing Past Due Non-accrual  Total Current Accruing 30-89 Days Past Due Accruing 90 Days or Greater Past Due Total Accruing Past Due Non-accrual  Total 
Investment properties$5,194,393
 1,851
 —
 1,851
 20,720
 5,216,964
 $5,726,307
 2,284
 —
 2,284
 23,040
 5,751,631
 
1-4 family properties1,105,186
 4,067
 432
 4,499
 24,197
 1,133,882
 1,105,914
 6,300
 103
 6,403
 16,839
 1,129,156
 
Land acquisition551,308
 363
 —
 363
 34,375
 586,046
 495,542
 639
 32
 671
 17,768
 513,981
 
Total commercial real estate6,850,887
 6,281
 432
 6,713
 79,292
 6,936,892
 7,327,763
 9,223
 135
 9,358
 57,647
 7,394,768
 
Commercial, financial and agricultural6,130,184
 9,979
 1,790
 11,769
 40,359
 6,182,312
 6,391,036
 12,222
 785
 13,007
 49,137
 6,453,180
 
Owner-occupied4,042,389
 6,404
 225
 6,629
 26,099
 4,075,117
 4,293,308
 5,254
 95
 5,349
 20,293
 4,318,950
 
Total commercial and industrial10,172,573
 16,383
 2,015
 18,398
 66,458
 10,257,429
 10,684,344
 17,476
 880
 18,356
 69,430
 10,772,130
 
Home equity lines1,659,869
 6,992
 703
 7,695
 16,434
 1,683,998
 1,667,552
 5,882
 —
 5,882
 16,480
 1,689,914
 
Consumer mortgages1,648,145
 12,626
 12
 12,638
 33,278
 1,694,061
 1,907,644
 8,657
 134
 8,791
 22,248
 1,938,683
 
Credit cards250,304
 1,971
 1,374
 3,345
 —
 253,649
 237,742
 1,663
 1,446
 3,109
 —
 240,851
 
Other retail297,703
 2,361
 101
 2,462
 2,295
 302,460
 
Other retail loans418,337
 2,390
 26
 2,416
 2,565
 423,318
 
Total retail3,856,021
 23,950
 2,190
 26,140
 52,007
 3,934,168
 4,231,275
 18,592
 1,606
 20,198
 41,293
 4,292,766
 
Total loans$20,879,481
 46,614
 4,637
 51,251
 197,757
 21,128,489
(2 
) 
$22,243,382
 45,291
 2,621
 47,912
 168,370
 22,459,664
(2 
) 
                      
(1)Total before net deferred fees and costs of $29.1$27.6 million.
(2)Total before net deferred fees and costs of $30.8$30.1 million.








14
Table of Contents

The credit quality of the loan portfolio is summarized no less frequently than quarterly using the standard asset classification system utilized by the federal banking agencies. These classifications are divided into three groups – Not Criticized (Pass), Special Mention, and Classified or Adverse rating (Substandard, Doubtful, and Loss) and are defined as follows:
Pass - loans which are well protected by the current net worth and paying capacity of the obligor (or guarantors, if any) or by the fair value, less cost to acquire and sell in a timely manner, of any underlying collateral.
Special Mention - loans which have potential weaknesses that deserve management's close attention. These loans are not adversely classified and do not expose an institution to sufficient risk to warrant an adverse classification.
Substandard - loans which are inadequately protected by the current net worth and paying capacity of the obligor or by the collateral pledged, if any. Loans with this classification are characterized by the distinct possibility that the institution will sustain some loss if the deficiencies are not corrected.
Doubtful - loans which have all the weaknesses inherent in loans classified as Substandard with the added characteristic that the weaknesses make collection or liquidation in full highly questionable and improbable on the basis of currently known facts, conditions, and values.
Loss - loans which are considered by management to be uncollectible and of such little value that their continuance on the institution's books as an asset, without establishment of a specific valuation allowance or charge-off, is not warranted.
In the following tables, retail loans are generally assigned a risk grade similar to the classifications described above; however, upon reaching 90 days and 120 days past due, they are generally downgraded to Substandard and Loss, respectively, in accordance with the FFIEC Uniform Retail Credit Classification and Account Management Policy. Additionally, in accordance with the Interagency Supervisory Guidance on Allowance for Loan and Lease Losses Estimation Practices for Loans and Lines of Credit Secured by Junior Liens on 1-4 Family Residential Properties, the risk grade classifications of retail loans (home equity lines and consumer mortgages) secured by junior liens on 1-4 family residential properties also consider available information on the payment status of the associated senior lien with other financial institutions.

15
Table of Contents

Loan Portfolio Credit Exposure by Risk GradeLoan Portfolio Credit Exposure by Risk Grade Loan Portfolio Credit Exposure by Risk Grade 
June 30, 2015 June 30, 2016 
(in thousands)Pass 
Special
Mention
 
Substandard(1)
 
Doubtful(2)
 Loss Total Pass 
Special
Mention
 
Substandard(1)
 
Doubtful(2)
 Loss Total 
Investment properties$5,184,993
 151,839
 87,061
 —
 —
 5,423,893
 $5,788,229
 86,101
 46,331
 —
 —
 5,920,661
 
1-4 family properties944,376
 65,752
 78,648
 8,630
 —
 1,097,406
 1,009,820
 51,938
 58,789
 7,233
 —
 1,127,780
 
Land acquisition458,762
 48,798
 46,491
 450
 —
 554,501
 387,082
 52,062
 19,784
 326
 —
 459,254
 
Total commercial real estate6,588,131
 266,389
 212,200
 9,080
 —
 7,075,800
 7,185,131
 190,101
 124,904
 7,559
 —
 7,507,695
 
Commercial, financial and agricultural5,959,330
 159,282
 129,704
 10,323
 914
(3) 
6,259,553
 6,317,597
 163,494
 105,107
 10,400
 237
(3) 
6,596,835
 
Owner-occupied3,904,444
 97,192
 138,347
 327
 459
(3) 
4,140,769
 4,160,662
 81,636
 114,409
 1,420
 468
(3) 
4,358,595
 
Total commercial and industrial9,863,774
 256,474
 268,051
 10,650
 1,373
 10,400,322
 10,478,259
 245,130
 219,516
 11,820
 705
 10,955,430
 
Home equity lines1,657,790
 —
 22,471
 1,762
 1,628
(3) 
1,683,651
 1,632,841
 —
 21,808
 1,201
 1,259
(3) 
1,657,109
 
Consumer mortgages1,759,349
 —
 32,685
 1,593
 125
(3) 
1,793,752
 2,102,767
 —
 27,808
 1,372
 167
(3) 
2,132,114
 
Credit cards245,357
 —
 427
 —
 940
(4) 
246,724
 234,728
 —
 533
 —
 773
(4) 
236,034
 
Other retail319,932
 —
 3,667
 56
 86
(3) 
323,741
 
Other retail loans595,455
 —
 4,620
 —
 78
(3) 
600,153
 
Total retail3,982,428
 —
 59,250
 3,411
 2,779
 4,047,868
 4,565,791
 —
 54,769
 2,573
 2,277
 4,625,410
 
Total loans$20,434,333
 522,863
 539,501
 23,141
 4,152
 21,523,990
(5 
) 
$22,229,181
 435,231
 399,189
 21,952
 2,982
 23,088,535
(5 
) 
                      
December 31, 2014 December 31, 2015 
(in thousands)Pass 
Special
Mention
 
Substandard(1)
 
Doubtful(2)
 Loss Total Pass 
Special
Mention
 
Substandard(1)
 
Doubtful(2)
 Loss Total 
Investment properties$4,946,609
 167,490
 102,865
 —
 —
 5,216,964
 $5,560,595
 114,705
 76,331
 —
 —
 5,751,631
 
1-4 family properties943,721
 86,072
 96,392
 7,697
 —
 1,133,882
 995,903
 64,325
 61,726
 7,202
 —
 1,129,156
 
Land acquisition462,313
 60,902
 62,101
 730
 —
 586,046
 436,835
 46,208
 30,574
 364
 —
 513,981
 
Total commercial real estate6,352,643
 314,464
 261,358
 8,427
 —

6,936,892
 6,993,333
 225,238
 168,631
 7,566
 —

7,394,768
 
Commercial, financial and agricultural5,905,589
 143,879
 123,225
 9,539
 80
(3) 
6,182,312
 6,184,179
 152,189
 100,658
 13,330
 2,824
(3) 
6,453,180
 
Owner-occupied3,817,653
 95,647
 161,045
 327
 445
(3) 
4,075,117
 4,118,631
 78,490
 121,272
 98
 459
(3) 
4,318,950
 
Total commercial and industrial9,723,242
 239,526
 284,270
 9,866
 525

10,257,429
 10,302,810
 230,679
 221,930
 13,428
 3,283

10,772,130
 
Home equity lines1,659,794
 —
 20,043
 2,009
 2,152
(3) 
1,683,998
 1,666,586
 —
 20,456
 1,206
 1,666
(3) 
1,689,914
 
Consumer mortgages1,653,491
 —
 37,656
 2,654
 260
(3) 
1,694,061
 1,910,649
 —
 26,041
 1,700
 293
(3) 
1,938,683
 
Credit cards252,275
 —
 495
 —
 879
(4) 
253,649
 239,405
 —
 480
 —
 966
(4) 
240,851
 
Other retail298,991
 —
 3,339
 32
 98
(3) 
302,460
 
Other retail loans418,929
 —
 4,315
 —
 74
(3) 
423,318
 
Total retail3,864,551
 —
 61,533
 4,695
 3,389
 3,934,168
 4,235,569
 —
 51,292
 2,906
 2,999
 4,292,766
 
Total loans$19,940,436
 553,990
 607,161
 22,988
 3,914
 21,128,489
(6 
) 
$21,531,712
 455,917
 441,853
 23,900
 6,282
 22,459,664
(6 
) 
                      
(1) Includes $146.3$270.1 million and $170.9$303.7 million of non-accrual Substandard accruing loans at June 30, 20152016 and December 31, 2014,2015, respectively.
(2) The loans within this risk grade are on non-accrual status. Commercial loans generally have an allowance for loan losses in accordance with ASC 310, and retail loans generally have an allowance for loan losses equal to 50% of the loan amount.
(3) The loans within this risk grade are on non-accrual status and have an allowance for loan losses equal to the full loan amount.
(4) Represent amounts that were 120 days past due. These credits are downgraded to the Loss category with an allowance for loan losses equal to the full loan amount and are generally charged off upon reaching 181 days past due in accordance with the FFIEC Uniform Retail Credit Classification and Account Management Policy.
(5)Total before net deferred fees and costs of $29.1$27.6 million.
(6)Total before net deferred fees and costs of $30.8$30.1 million.


16

Table of Contents

The following table details the changes in the allowance for loan losses by loan segment for the six and three months ended June 30, 20152016 and 2014.2015.
Allowance for Loan Losses and Recorded Investment in Loans

Allowance for Loan Losses and Recorded Investment in Loans

Allowance for Loan Losses and Recorded Investment in Loans

As Of and For The Six Months Ended June 30, 2015As of and For The Six Months Ended June 30, 2016
(in thousands)Commercial Real Estate Commercial & Industrial Retail Unallocated TotalCommercial Real Estate Commercial & Industrial Retail Total
Allowance for loan losses:                
Beginning balance$101,471
 118,110
 41,736
 —
 261,317
$87,133
 122,989
 42,374
 252,496
Charge-offs(10,397) (9,074) (11,757) —
 (31,228)(9,277) (10,661) (7,148) (27,086)
Recoveries6,481
 3,570
 3,528
 —
 13,579
6,690
 4,342
 2,564
 13,596
Provision for loan losses(6,864) 10,444
 7,454
 —
 11,034
(5,187) 12,963
 8,294
 16,070
Ending balance$90,691
 123,050
 $40,961
 $—
 $254,702
Ending balance(1)
$79,359
 129,633
 46,084
 255,076
Ending balance: individually evaluated for impairment17,197
 10,292
 1,092
 —
 28,581
12,515
 14,221
 1,691
 28,427
Ending balance: collectively evaluated for impairment$73,494
 112,758
 39,869
 —
 226,121
$66,844
 115,412
 44,393
 226,649
Loans:               

Ending balance: total loans(1)(2)
$7,075,800
 10,400,322
 4,047,868
 —
 21,523,990
$7,507,695
 10,955,430
 4,625,410
 23,088,535
Ending balance: individually evaluated for impairment 193,230
 112,491
 41,013
 —
 346,734
112,954
 119,805
 37,788
 270,547
Ending balance: collectively evaluated for impairment$6,882,570
 10,287,831
 4,006,855
 —
 21,177,256
$7,394,741
 10,835,625
 4,587,622
 22,817,988
                
As Of and For The Six Months Ended June 30, 2014As of and For The Six Months Ended June 30, 2015
(in thousands)Commercial Real Estate Commercial & Industrial Retail Unallocated TotalCommercial Real Estate Commercial & Industrial Retail Total
Allowance for loan losses:                
Beginning balance$127,012
 116,069
 41,479
 23,000
 307,560
$101,471
 118,110
 41,736
 261,317
Allowance for loan losses of sold loans(281) (398) (340)   (1,019)
Charge-offs(35,906) (15,590) (12,860) —
 (64,356)(10,397) (9,074) (11,757) (31,228)
Recoveries5,216
 4,308
 4,279
 —
 13,803
6,481
 3,570
 3,528
 13,579
Provision for loan losses8,353
 26,425
 10,017
 (23,000) 21,795
(6,864) 10,444
 7,454
 11,034
Ending balance$104,394
 130,814
 42,575
 —
 277,783
Ending balance(1)
$90,691
 123,050
 40,961
 254,702
Ending balance: individually evaluated for impairment21,470
 19,053
 961
 —
 41,484
17,197
 10,292
 1,092
 28,581
Ending balance: collectively evaluated for impairment$82,924
 111,761
 41,614
 —
 236,299
$73,494
 112,758
 39,869
 226,121
Loans:                
Ending balance: total loans(2)
$6,650,571
 10,065,212
 3,768,935
 —
 20,484,718
Ending balance: total loans(1)(3)
$7,071,595
 10,404,527
 4,047,868
 21,523,990
Ending balance: individually evaluated for impairment331,414
 202,899
 51,181
 —
 585,494
193,230
 112,491
 41,013
 346,734
Ending balance: collectively evaluated for impairment$6,319,157
 9,862,313
 3,717,754
 —
 19,899,224
$6,878,365
 10,292,036
 4,006,855
 21,177,256
                
(1)As of and for the six months ended June 30, 2016 and 2015, there were no purchased credit-impaired loans and no allowance for loan losses for purchased credit-impaired loans.
(2) Total before net deferred fees and costs of $27.6 million.
(3) Total before net deferred fees and costs of $29.1 million.

Allowance for Loan Losses and Recorded Investment in Loans

 As of and For The Three Months Ended June 30, 2016
(in thousands)Commercial Real Estate Commercial & Industrial Retail Total
Allowance for loan losses:       
Beginning balance$84,557
 124,878
 45,081
 254,516
Charge-offs(7,455) (5,136) (3,180) (15,771)
Recoveries5,397
 3,078
 1,163
 9,638
Provision for loan losses(3,140) 6,813
 3,020
 6,693
Ending balance(1)
$79,359
 129,633
 46,084
 255,076
Ending balance: individually evaluated for impairment12,515
 14,221
 1,691
 28,427
Ending balance: collectively evaluated for impairment$66,844
 115,412
 44,393
 226,649
Loans:       
Ending balance: total loans(1)(2)
$7,507,695
 10,955,430
 4,625,410
 23,088,535
Ending balance: individually evaluated for impairment    112,954
 119,805
 37,788
 270,547
Ending balance: collectively evaluated for impairment$7,394,741
 10,835,625
 4,587,622
 22,817,988
        
 As of and For The Three Months Ended June 30, 2015
(in thousands)Commercial Real Estate Commercial & Industrial Retail Total
Allowance for loan losses:       
Beginning balance$94,208
 117,806
 41,357
 253,371
Charge-offs(2,957) (3,802) (3,845) (10,604)
Recoveries2,540
 1,305
 1,454
 5,299
Provision for loan losses(3,100) 7,741
 1,995
 6,636
Ending balance(1)
$90,691
 123,050
 40,961
 254,702
Ending balance: individually evaluated for impairment17,197
 10,292
 1,092
 28,581
Ending balance: collectively evaluated for impairment$73,494
 112,758
 39,869
 226,121
Loans:       
Ending balance: total loans(1)(3)
7,071,595
 10,404,527
 4,047,868
 21,523,990
Ending balance: individually evaluated for impairment193,230
 112,491
 41,013
 346,734
Ending balance: collectively evaluated for impairment$6,878,365
 10,292,036
 4,006,855
 21,177,256
        
(1) As of and for the three months ended June 30, 2016 and 2015, there were no purchased credit-impaired loans and no allowance for loan losses for purchased credit-impaired loans.
(2)Total before net deferred fees and costs of $29.0$27.6 million.


17
Table of Contents

The following table details the changes in the allowance for loan losses by loan segment for the three months ended June 30, 2015 and 2014.
Allowance for Loan Losses and Recorded Investment in Loans

 As Of and For The Three Months Ended June 30, 2015
(in thousands)Commercial Real Estate Commercial & Industrial Retail Unallocated Total
Allowance for loan losses:         
Beginning balance$94,208
 117,806
 41,357
 —
 253,371
Charge-offs(2,957) (3,802) (3,845) —
 (10,604)
Recoveries2,540
 1,305
 1,454
 —
 5,299
Provision for loan losses(3,100) 7,741
 1,995
 —
 6,636
Ending balance$90,691
 123,050
 40,961
 —
 254,702
Ending balance: individually evaluated for impairment17,197
 10,292
 1,092
 —
 28,581
Ending balance: collectively evaluated for impairment$73,494
 112,758
 39,869
 —
 226,121
Loans:         
Ending balance: total loans(1)
$7,075,800
 10,400,322
 4,047,868
 —
 21,523,990
Ending balance: individually evaluated for impairment    193,230
 112,491
 41,013
 —
 346,734
Ending balance: collectively evaluated for impairment$6,882,570
 10,287,831
 4,006,855
 —
 21,177,256
          
 As Of and For The Three Months Ended June 30, 2014
(in thousands)Commercial Real Estate Commercial & Industrial Retail Unallocated Total
Allowance for loan losses:         
Beginning balance$126,955
 128,346
 45,570
 —
 300,871
Charge-offs(27,960) (7,554) (6,567) —
 (42,081)
Recoveries2,989
 2,355
 1,365
 —
 6,709
Provision for loan losses2,410
 7,667
 2,207
 —
 12,284
Ending balance$104,394
 $130,814
 $42,575
 $—
 $277,783
Ending balance: individually evaluated for impairment21,470
 19,053
 961
 —
 41,484
Ending balance: collectively evaluated for impairment$82,924
 111,761
 41,614
 —
 236,299
Loans:         
Ending balance: total loans(2)
$6,650,571
 10,065,212
 3,768,935
 —
 20,484,718
Ending balance: individually evaluated for impairment331,414
 202,899
 51,181
 —
 585,494
Ending balance: collectively evaluated for impairment$6,319,157
 9,862,313
 3,717,754
 —
 19,899,224
          
(1)(3) Total before net deferred fees and costs of $29.1 million.
(2)Total before net deferred fees and costs of $29.0 million.

During the first quarter of 2014, Synovus designated $23.0 million of allowance for loan losses that was included in the unallocated component of the allowance for loan losses at December 31, 2013 to the allowance for loan losses allocated to the respective loan segments. 


18
Table of Contents

The tables below summarize impaired loans (including accruing TDRs) as of June 30, 20152016 and December 31, 2014.2015.
Impaired Loans (including accruing TDRs)Impaired Loans (including accruing TDRs)          Impaired Loans (including accruing TDRs)
June 30, 2015 Six Months Ended June 30, 2015 Three Months Ended June 30, 2015June 30, 2016 Six Months Ended
June 30, 2016		 Three Months Ended
June 30, 2016
(in thousands)Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income RecognizedRecorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income Recognized
With no related allowance recorded                          
Investment properties$10,143
 12,858
 —
 14,279
 —
 13,595
 —
$4,249
 4,275
 —
 8,772
 —
 8,185
 —
1-4 family properties2,146
 7,754
 —
 2,685
 —
 2,482
 —
1,219
 5,243
 —
 1,417
 —
 1,329
 —
Land acquisition12,076
 51,816
 —
 18,550
 —
 16,285
 —
2,650
 7,109
 —
 4,431
 —
 2,857
 —
Total commercial real estate24,365
 72,428
 —
 35,514
 —
 32,362
 —
8,118
 16,627
 —
 14,620
 —
 12,371
 —
Commercial, financial and agricultural3,811
 6,981
 —
 5,344
 —
 4,694
 —
5,434
 7,585
 —
 5,738
 —
 5,761
 —
Owner-occupied17,655
 20,749
 —
 17,932
 —
 18,306
 —
8,023
 9,019
 —
 8,661
 —
 8,753
 —
Total commercial and industrial21,466
 27,730
 —
 23,276
 —
 23,000
 —
13,457
 16,604
 —
 14,399
 —
 14,514
 —
Home equity lines352
 384
 —
 59
 —
 117
 —
1,043
 1,043
 —
 1,039
 —
 1,043
 —
Consumer mortgages1,415
 2,694
 —
 1,065
 —
 1,135
 —
814
 2,065
 —
 814
 —
 814
 —
Credit cards—
 —
 —
 —
 —
 —
 —
—
 —
 —
 —
 —
 —
 —
Other retail—
 —
 —
 —
 —
 —
 —
Other retail loans—
 —
 —
 —
 —
 —
 —
Total retail1,767
 3,078
 —
 1,124
 —
 1,252
 —
1,857
 3,108
 —
 1,853
 —
 1,857
 —
Total impaired loans with no
related allowance recorded
$47,598
 103,236
 —
 59,914
 —
 56,614
 —
$23,432
 36,339
 —
 30,872
 —
 28,742

—
With allowance recorded                          
Investment properties73,222
 73,222
 7,633
 82,837
 1,247
 79,258
 616
$39,590
 39,593
 4,356
 49,244
 1,022
 40,474
 366
1-4 family properties59,985
 60,797
 6,312
 66,855
 807
 61,177
 451
50,946
 50,985
 7,466
 49,705
 461
 49,975
 344
Land acquisition35,658
 36,256
 3,252
 42,584
 548
 40,675
 265
14,300
 14,301
 693
 19,715
 223
 16,342
 95
Total commercial real estate168,865
 170,275
 17,197
 192,276
 2,602
 181,110
 1,332
104,836
 104,879
 12,515
 118,664
 1,706
 106,791
 805
Commercial, financial and agricultural39,277
 39,360
 8,068
 47,618
 637
 40,585
 268
53,621
 55,850
 12,634
 54,517
 517
 59,487
 328
Owner-occupied51,748
 51,745
 2,224
 60,375
 953
 56,879
 443
52,727
 52,948
 1,587
 50,379
 927
 51,355
 483
Total commercial and industrial91,025
 91,105
 10,292
 107,993
 1,590
 97,464
 712
106,348
 108,798
 14,221
 104,896
 1,444
 110,842
 811
Home equity lines8,921
 8,921
 185
 7,034
 123
 8,404
 64
9,019
 9,019
 134
 9,410
 512
 9,201
 250
Consumer mortgages25,105
 25,105
 833
 28,960
 661
 26,622
 316
20,939
 20,939
 1,179
 21,480
 224
 21,138
 109
Credit cards—
 —
 —
 —
 —
 —
 —
—
 —
 —
 —
 —
 —
 —
Other retail5,220
 5,220
 74
 5,287
 166
 5,323
 82
Other retail loans5,973
 5,975
 378
 4,935
 143
 5,190
 71
Total retail39,246
 39,246
 1,092
 41,281
 950
 40,349
 462
35,931
 35,933

1,691
 35,825
 879
 35,529
 430
Total impaired loans with
allowance recorded
$299,136
 300,626
 28,581
 341,550
 5,142
 318,923
 2,506
$247,115
 249,610
 28,427
 259,385
 4,029
 253,162
 2,046
Total impaired loans                          
Investment properties$83,365
 86,080
 7,633
 97,116
 1,247
 92,853
 616
$43,839
 43,868

4,356
 58,016
 1,022

48,659
 366
1-4 family properties62,131
 68,551
 6,312
 69,540
 807
 63,659
 451
52,165
 56,228

7,466
 51,122
 461

51,304
 344
Land acquisition47,734
 88,072
 3,252
 61,134
 548
 56,960
 265
16,950
 21,410

693
 24,146
 223

19,199
 95
Total commercial real estate193,230
 242,703
 17,197
 227,790
 2,602
 213,472
 1,332
112,954
 121,506

12,515
 133,284
 1,706

119,162
 805
Commercial, financial and agricultural43,088
 46,341
 8,068
 52,962
 637
 45,279
 268
59,055
 63,435

12,634
 60,255
 517

65,248
 328
Owner-occupied69,403
 72,494
 2,224
 78,307
 953
 75,185
 443
60,750
 61,967

1,587
 59,040
 927

60,108
 483
Total commercial and industrial112,491
 118,835
 10,292
 131,269
 1,590
 120,464
 712
119,805
 125,402

14,221
 119,295
 1,444

125,356
 811
Home equity lines9,273
 9,305
 185
 7,093
 123
 8,521
 64
10,062
 10,062

134
 10,449
 512

10,244
 250
Consumer mortgages26,520
 27,799
 833
 30,025
 661
 27,757
 316
21,753
 23,004

1,179
 22,294
 224

21,952
 109
Credit cards—
 —
 —
 —
 —
 —
 —
—
 ���

—
 —
 —

—
 —
Other retail5,220
 5,220
 74
 5,287
 166
 5,323
 82
Other retail loans5,973
 5,975

378
 4,935
 143

5,190
 71
Total retail41,013
 42,324
 1,092
 42,405
 950
 41,601
 462
37,788
 39,041

1,691
 37,678
 879

37,386
 430
Total impaired loans$346,734
 403,862
 28,581
 401,464
 5,142
 375,537
 2,506
$270,547
 285,949

28,427
 290,257
 4,029

281,904
 2,046
                          

19
Table of Contents

Impaired Loans (including accruing TDRs)
December 31, 2014 Year Ended December 31, 2014December 31, 2015 Year Ended December 31, 2015
(in thousands)Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income RecognizedRecorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized
With no related allowance recorded                  
Investment properties$15,368
 20,237
 —
 25,311
 —
$10,051
 12,946
 —
 11,625
 —
1-4 family properties2,981
 10,520
 —
 5,441
 —
1,507
 5,526
 —
 2,546
 —
Land acquisition21,504
 61,843
 —
 29,954
 —
8,551
 39,053
 —
 13,897
 —
Total commercial real estate39,853
 92,600
 —
 60,706
 —
20,109
 57,525
 —
 28,068
 —
Commercial, financial and agricultural7,391
 11,193
 —
 8,984
 —
4,393
 7,606
 —
 5,737
 —
Owner-occupied17,017
 19,612
 —
 19,548
 —
8,762
 11,210
 —
 14,657
 —
Total commercial and industrial24,408
 30,805
 —
 28,532
 —
13,155
 18,816
 —
 20,394
 —
Home equity lines—
 —
 —
 —
 —
1,030
 1,030
 —
 573
 —
Consumer mortgages995
 2,065
 —
 1,352
 —
814
 941
 —
 995
 —
Credit cards—
 —
 —
 —
 —
—
 —
 —
 —
 —
Other retail—
 —
 —
 —
 —
Other retail loans—
 —
 —
 —
 —
Total retail995
 2,065
 —
 1,352
 —
1,844
 1,971
 —
 1,568
 —
Total impaired loans with no
related allowance recorded
$65,256
 125,470
 —
 90,590
 —
$35,108
 78,312
 —
 50,030
 —
With allowance recorded                  
Investment properties$81,758
 83,963
 5,413
 129,289
 3,690
$62,305
 62,305
 10,070
 73,211
 2,131
1-4 family properties80,625
 81,357
 11,442
 94,773
 2,645
51,376
 51,376
 6,184
 61,690
 1,618
Land acquisition49,300
 49,483
 4,900
 89,195
 1,689
24,168
 24,738
 2,715
 34,793
 936
Total commercial real estate211,683
 214,803
 21,755
 313,257
 8,024
137,849
 138,419
 18,969
 169,694
 4,685
Commercial, financial and agricultural59,035
 59,041
 7,597
 91,221
 2,392
42,914
 44,374
 8,339
 43,740
 1,125
Owner-occupied62,583
 62,601
 2,854
 78,950
 2,610
49,530
 49,688
 2,138
 55,323
 1,814
Total commercial and industrial121,618
 121,642
 10,451
 170,171
 5,002
92,444
 94,062
 10,477
 99,063
 2,939
Home equity lines4,848
 4,848
 129
 3,604
 1,405
9,575
 9,575
 206
 8,318
 346
Consumer mortgages33,450
 33,450
 1,040
 39,427
 115
22,173
 23,297
 651
 26,044
 1,229
Credit cards—
 —
 —
 —
 —
—
 —
 —
 —
 —
Other retail5,293
 5,293
 101
 4,997
 315
Other retail loans4,651
 4,651
 132
 5,105
 323
Total retail43,591
 43,591
 1,270
 48,028
 1,835
36,399
 37,523
 989
 39,467
 1,898
Total impaired loans with
allowance recorded
$376,892
 380,036
 33,476
 531,456
 14,861
$266,692
 270,004
 30,435
 308,224
 9,522
Total impaired loans                  
Investment properties$97,126
 104,200
 5,413
 154,600
 3,690
$72,356
 75,251
 10,070
 84,836
 2,131
1-4 family properties83,606
 91,877
 11,442
 100,214
 2,645
52,883
 56,902
 6,184
 64,236
 1,618
Land acquisition70,804
 111,326
 4,900
 119,149
 1,689
32,719
 63,791
 2,715
 48,690
 936
Total commercial real estate251,536
 307,403
 21,755
 373,963
 8,024
157,958
 195,944
 18,969
 197,762
 4,685
Commercial, financial and agricultural66,426
 70,234
 7,597
 100,205
 2,392
47,307
 51,980
 8,339
 49,477
 1,125
Owner-occupied79,600
 82,213
 2,854
 98,498
 2,610
58,292
 60,898
 2,138
 69,980
 1,814
Total commercial and industrial146,026
 152,447
 10,451
 198,703
 5,002
105,599
 112,878
 10,477
 119,457
 2,939
Home equity lines4,848
 4,848
 129
 3,604
 1,405
10,605
 10,605
 206
 8,891
 346
Consumer mortgages34,445
 35,515
 1,040
 40,779
 115
22,987
 24,238
 651
 27,039
 1,229
Credit cards—
 —
 —
 —
 —
—
 —
 —
 —
 —
Other retail5,293
 5,293
 101
 4,997
 315
Other retail loans4,651
 4,651
 132
 5,105
 323
Total retail44,586
 45,656
 1,270
 49,380
 1,835
38,243
 39,494
 989
 41,035
 1,898
Total impaired loans$442,148
 505,506
 33,476
 622,046
 14,861
$301,800
 348,316
 30,435
 358,254
 9,522
                  

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Table of Contents

The average recorded investment in impaired loans was $720.4$401.5 million and $650.7$375.5 million for the six and three months ended June 30, 2014.2015. Excluding accruing TDRs, there was no interest income recognized for the investment in impaired loans for the six and three months ended June 30, 2014.2015. Interest income recognized for accruing TDRs was $8.0$5.1 million and $4.0$2.5 million for the six and three months ended June 30, 2014 .2015. At June 30, 20152016 and December 31, 2014, all2015, impaired loans other than $268.5of $65.4 million and $348.4$77.9 million, respectively, of accruing TDRs, were on non-accrual status.
Concessions provided in a TDR are primarily in the form of providing a below market interest rate given the borrower's credit risk, a period of time generally less than one year with a reduction of required principal and/or interest payments (e.g., interest only for a period of time), or an extension of the maturity of the loan generally for less than one year. Insignificant periods of reduction of principal and/or interest payments, or one-time deferrals of 3 months or less, are generally not considered to be financial concessions.

21
Table of Contents

The following tables represent, by concession type, the post-modification balance for loans modified or renewed during the six and three months ended June 30, 20152016 and 20142015 that were reported as accruing or non-accruing TDRs.
TDRs by Concession Type    
Six Months Ended June 30, 2015 Six Months Ended June 30, 2016 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate Term Extensions and/or Other Concessions Total Number of Contracts Principal Forgiveness Below Market Interest Rate Term Extensions and/or Other Concessions Total 
Investment properties4
 $—
 16,932
 3,815
 20,747
 3
 $—
 1,826
 148
 1,974
 
1-4 family properties21
 14,823
 3,358
 879
 19,060
 19
 —
 3,490
 1,164
 4,654
 
Land acquisition6
 —
 604
 819
 1,423
 11
 —
 —
 1,269
 1,269
 
Total commercial real estate31
 14,823
 20,894
 5,513
 41,230
 33
 —
 5,316
 2,581
 7,897
 
Commercial, financial and agricultural49
 —
 1,580
 3,844
 5,424
 45
 —
 13,948
 4,845
 18,793
 
Owner-occupied3
 —
 1,739
 416
 2,155
 6
 —
 2,667
 550
 3,217
 
Total commercial and industrial52
 —
 3,319
 4,260
 7,579
 51
 —
 16,615
 5,395
 22,010
 
Home equity lines48
 —
 2,517
 2,148
 4,665
 3
 —
 224
 —
 224
 
Consumer mortgages12
 —
 510
 786
 1,296
 6
 —
 354
 51
 405
 
Credit cards—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 
Other retail13
 —
 257
 495
 752
 
Other retail loans17
 —
 324
 1,534
 1,858
 
Total retail73
 —
 3,284
 3,429
 6,713
 26
 —
 902
 1,585
 2,487
 
Total TDRs156
 $14,823
 27,497
 13,202
 55,522
(1 
) 
110
 $—
 22,833
 9,561
 32,394
(1 
) 
                  
Three Months Ended June 30, 2015 Three Months Ended June 30, 2016 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate Term Extensions and/or Other Concessions Total Number of Contracts Principal Forgiveness Below Market Interest Rate 
Term Extensions
and/or Other Concessions
 Total 
Investment properties1
 $—
 —
 211
 211
 1
 $—
 1,389
 —
 1,389
 
1-4 family properties8
 —
 502
 729
 1,231
 12
 —
 3,095
 324
 3,419
 
Land acquisition3
 —
 349
 111
 460
 5
 —
 —
 734
 734
 
Total commercial real estate12
 —
 851
 1,051
 1,902
 18
 —
 4,484
 1,058
 5,542
 
Commercial, financial and agricultural24
 —
 565
 1,954
 2,519
 15
 —
 1,934
 1,458
 3,392
 
Owner-occupied1
 —
 —
 416
 416
 2
 —
 1,132
 102
 1,234
 
Total commercial and industrial25
 —
 565
 2,370
 2,935
 17
 —
 3,066
 1,560
 4,626
 
Home equity lines37
 —
 1,542
 2,013
 3,555
 1
 —
 28
 —
 28
 
Consumer mortgages1
 —
 265
 —
 265
 3
 —
 200
 51
 251
 
Credit cards—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 
Other retail7
 —
 —
 431
 431
 
Other retail loans10
 —
 94
 1,449
 1,543
 
Total retail45
 —
 1,807
 2,444
 4,251
 14
 —
 322
 1,500
 1,822
 
Total TDRs82
 $—
 3,223
 5,865
 9,088
(2 
) 
49
 $—
 7,872
 4,118
 11,990
(2 
) 
                  
(1)No net charge-offs were recorded during the six months ended June 30, 2016 upon restructuring of these loans.
(2) No net charge-offs were recorded during the three months ended June 30, 2016 upon restructuring of these loans.






TDRs by Concession Type  
 Six Months Ended June 30, 2015 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate Term Extensions and/or Other Concessions Total 
Investment properties4
 $—
 16,932
 3,815
 20,747
 
1-4 family properties21
 14,823
 3,358
 879
 19,060
 
Land acquisition6
 —
 604
 819
 1,423
 
Total commercial real estate31
 14,823
 20,894
 5,513
 41,230
 
Commercial, financial and agricultural49
 —
 1,580
 3,844
 5,424
 
Owner-occupied3
 —
 1,739
 416
 2,155
 
Total commercial and industrial52
 —
 3,319
 4,260
 7,579
 
Home equity lines48
 —
 2,517
 2,148
 4,665
 
Consumer mortgages12
 —
 510
 786
 1,296
 
Credit cards—
 —
 —
 —
 —
 
Other retail loans13
 —
 257
 495
 752
 
Total retail73
 —
 3,284
 3,429
 6,713
 
Total TDRs156
 $14,823
 27,497
 13,202
 55,522
(3 
) 
           
 Three Months Ended June 30, 2015 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate 
Term Extensions
and/or Other Concessions
 Total 
Investment properties1
 $—
 —
 211
 211
 
1-4 family properties8
 —
 502
 729
 1,231
 
Land acquisition3
 —
 349
 111
 460
 
Total commercial real estate12
 —
 851
 1,051
 1,902
 
Commercial, financial and agricultural24
 —
 565
 1,954
 2,519
 
Owner-occupied1
 —
 —
 416
 416
 
Total commercial and industrial25
 —
 565
 2,370
 2,935
 
Home equity lines37
 —
 1,542
 2,013
 3,555
 
Consumer mortgages1
 —
 265
 —
 265
 
Credit cards—
 —
 —
 —
 —
 
Other retail loans7
 —
 —
 431
 431
 
Total retail45
 —
 1,807
 2,444
 4,251
 
Total TDRs82
 $—
 3,223
 5,865
 9,088
(4 
) 
           
(3) Net charge-offs of $4.0 million were recorded during the six months ended June 30, 2015 upon restructuring of these loans.
(2)(4) No net charge-offs were recorded during the three months ended June 30, 2015 upon restructuring of these loans.




22
Table of Contents

TDRs by Concession Type  
 Six Months Ended June 30, 2014 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate Term Extensions and/or Other Concessions Total 
Investment properties10
 $—
 7,548
 1,699
 9,247
 
1-4 family properties29
 —
 1,511
 3,656
 5,167
 
Land acquisition12
 —
 4,517
 2,042
 6,559
 
Total commercial real estate51
 —
 13,576
 7,397
 20,973
 
Commercial, financial and agricultural40
 —
 4,541
 11,697
 16,238
 
Owner-occupied12
 —
 19,475
 14,262
 33,737
 
Total commercial and industrial52
 —
 24,016
 25,959
 49,975
 
Home equity lines6
 —
 729
 451
 1,180
 
Consumer mortgages8
 —
 1,753
 103
 1,856
 
Credit cards—
 —
 —
 —
 —
 
Other retail10
 —
 442
 235
 677
 
Total retail24
 —
 2,923
 789
 3,712
 
Total TDRs127
 $—
 40,515
 34,145
 74,660
(1 
) 
           
 Three Months Ended June 30, 2014 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate Term Extensions and/or Other Concessions Total 
Investment properties5
 $—
 405
 1,168
 1,573
 
1-4 family properties18
 —
 1,082
 1,542
 2,624
 
Land acquisition11
 —
 4,517
 1,508
 6,025
 
Total commercial real estate34
 —
 6,004
 4,218
 10,222
 
Commercial, financial and agricultural19
 —
 2,750
 7,415
 10,165
 
Owner-occupied5
 —
 16,987
 11,444
 28,431
 
Total commercial and industrial24
 —
 19,737
 18,859
 38,596
 
Home equity lines4
 —
 487
 405
 892
 
Consumer mortgages7
 —
 1,652
 103
 1,755
 
Credit cards—
 —
 —
 —
 —
 
Other retail6
 —
 442
 118
 560
 
Total retail17
 —
 2,581
 626
 3,207
 
Total TDRs75
 $—
 28,322
 23,703
 52,025
(2 
) 
           
(1) No net charge-offs were recorded duringFor both the six months ended June 30, 2014 upon restructuring of these loans.

(2) No net charge-offs were recorded during theand three months ended June 30, 2014 upon restructuring2016, there was one default with a recorded investment of these loans.


23
Table of Contents

The following table presents$92 thousand on accruing TDRs that defaulted inrestructured during the periods indicated and which were modified or renewed in a TDR within 12previous twelve months of the default date.
Troubled Debt Restructurings Entered Into That Subsequently Defaulted* During
 Six Months Ended June 30, 2015 Three Months Ended June 30, 2015
(in thousands, except contract data)
Number of
Contracts
 
Recorded
Investment
 
Number of
Contracts
 
Recorded
Investment
Investment properties—
 $—
 —
 $—
1-4 family properties—
 —
 —
 —
Land acquisition—
 —
 —
 —
Total commercial real estate—
 —
 —
 —
Commercial, financial and agricultural—
 —
 —
 —
Owner-occupied—
 —
 —
 —
Total commercial and industrial—
 —
 —
 —
Home equity lines1
 34
 —
 —
Consumer mortgages—
 —
 —
 —
Credit cards—
 —
 —
 —
Other retail1
 81
 —
 —
Total retail2
 115
 —
 —
Total TDRs2
 $115
 —
 $—
        
* Default is(defaults are defined as the earlier of the troubled debt restructuringTDR being placed on non-accrual status or reaching 90 days past due with respect to principal and/or interest payments.
Troubled Debt Restructurings Entered Into That Subsequently Defaulted* During
 Six Months Ended June 30, 2014 Three Months Ended June 30, 2014
(in thousands, except contract data)
Number of
Contracts
 
Recorded
Investment
 
Number of
Contracts
 
Recorded
Investment
Investment properties1
 $186
 —
 $—
1-4 family properties3
 1,018
 3
 1,018
Land acquisition1
 428
 1
 428
Total commercial real estate5
 1,632
 4
 1,446
Commercial, financial and agricultural2
 1,378
 1
 856
Owner-occupied—
 —
 —
 —
Total commercial and industrial2
 1,378
 1
 856
Home equity lines—
 —
 —
 —
Consumer mortgages1
 70
 1
 70
Credit cards—
 —
 —
 —
Other retail—
 —
 —
 —
Total retail1
 70
 1
 70
Total TDRs8
 $3,080
 6
 $2,372
        

* Default is defined aspayments) compared to two defaults with a recorded investment of $115 thousand and no defaults, respectively, for the earlier of the troubled debt restructuring being placed on non-accrual status or reaching 90 days past due with respect to principal and/or interest payments.six and three months ended June 30, 2015.
If, at the time a loan was designated as a TDR, the loan was not already impaired, the measurement of impairment that resulted from the TDR designation changes from a general pool-level reserve to a specific loan measurement of impairment in accordance with ASC 310-10-35. Generally, the change in the allowance for loan losses resulting from such TDR designation is not significant. At June 30, 2015,2016, the allowance for loan losses allocated to accruing TDRs totaling $268.5$205.2 million was $15.3$12.7 million compared to accruing TDRs of $348.4$223.9 million with an allocated allowance for loan losses of $21.0$12.6 million at December 31, 2014.2015. Non-accrual, non-homogeneous loans (commercial-type impaired loans greater than $1 million) that are designated as TDRs, are individually measured for the amount of impairment, if any, both before and after the TDR designation.

24
Table of Contents

Note 7 - Other Real Estate
The carrying value of ORE was $66.4 million and $85.5 million at June 30, 2015 and December 31, 2014, respectively. During the six months ended June 30, 2015 and 2014, $11.4 million and $25.3 million, respectively,of loans and other loans held for sale were foreclosed and transferred to other real estate at fair value less costs to sell. During the six months ended June 30, 2015 and 2014, Synovus recognized foreclosed real estate expense, net, of $13.8 million and $9.7 million, respectively. These expenses included write-downs for declines in fair value of ORE subsequent to the date of foreclosure and net realized losses resulting from sales transactions totaling $11.1 million and $8.2 million for the six months ended June 30, 2015 and 2014, respectively.
Note 8 - Goodwill
At June 30, 2015, the carrying value of goodwill was $24.4 million. Synovus assesses goodwill for impairment at the reporting unit level on an annual basis and between annual assessments if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Synovus performs its annual goodwill impairment testing as of June 30th of each year. At June 30, 2015, Synovus completed its annual goodwill impairment evaluation, and as a result of this evaluation, concluded that goodwill was not impaired.
For the goodwill impairment test, the fair value of the reporting unit was determined by using the income approach. The first step (Step 1) of impairment testing requires a comparison of the reporting unit's fair value to the carrying amount to identify potential impairment. The result of the Step 1 process indicated that goodwill of the reporting unit was not impaired, as the fair value of the reporting unit exceeded the respective carrying value; therefore, no further testing was required. The estimated fair value of the reporting unit was $125.7 million, which exceeded the carrying value of $83.7 million by $42.0 million, or 50%. The key assumptions that drove the fair value of this reporting unit under the income approach included projected revenue growth, projected EBITDA margin, long-term growth rate, and the discount rate.


25
Table of Contents

Note 96 - Other Comprehensive Income (Loss)
The following tables illustrate activity within the balances in accumulated other comprehensive income (loss) by component for the six and three months ended June 30, 20152016 and 2014.2015.
Changes in Accumulated Other Comprehensive Income (Loss) by Component (Net of Income Taxes)
(in thousands)Net unrealized gains (losses) on cash flow hedges Net unrealized gains (losses) on investment securities available for sale Post-retirement unfunded health benefit TotalNet unrealized gains (losses) on cash flow hedges Net unrealized gains (losses) on investment securities available for sale Post-retirement unfunded health benefit Total
Balance as of December 31, 2014$(12,824) (713) 932
 (12,605)
Balance at December 31, 2015$(12,504) (18,222) 907
 (29,819)
Other comprehensive income before reclassifications—
 (8,279) 143
 (8,136)—
 40,722
 —
 40,722
Amounts reclassified from accumulated other comprehensive income (loss)137
 (1,667) (52) (1,582)207
 (41) (64) 102
Net current period other comprehensive income (loss)137
 (9,946) 91
 (9,718)
Balance as of June 30, 2015$(12,687) (10,659) 1,023
 (22,323)
Net current period other comprehensive income207
 40,681
 (64) 40,824
Balance as of June 30, 2016$(12,297) 22,459
 843
 11,005
              
Balance as of April 1, 2015$(12,755) 8,198
 906
 (3,651)
Balance as of April 1, 2016$(12,336) 10,747
 849
 (740)
Other comprehensive income before reclassifications—
 (17,636) 143
 (17,493)—
 11,712
 —
 11,712
Amounts reclassified from accumulated other comprehensive income (loss)68
 (1,221) (26) (1,179)39
 —
 (6) 33
Net current period other comprehensive income (loss)68
 (18,857) 117
 (18,672)
Balance as of June 30, 2015$(12,687) (10,659) 1,023
 (22,323)
Net current period other comprehensive income39
 11,712
 (6) 11,745
Balance as of June 30, 2016$(12,297) 22,459
 843
 11,005
              

Changes in Accumulated Other Comprehensive Income (Loss) by Component (Net of Income Taxes)
(in thousands)Net unrealized gains (losses) on cash flow hedges Net unrealized gains (losses) on investment securities available for sale Post-retirement unfunded health benefit TotalNet unrealized gains (losses) on cash flow hedges Net unrealized gains (losses) on investment securities available for sale Post-retirement unfunded health benefit Total
Balance as of December 31, 2013$(13,099) (28,936) 777
 (41,258)
Balance at December 31, 2014$(12,824) (713) 932
 (12,605)
Other comprehensive income before reclassifications—
 28,068
 243
 28,311
—
 (8,279) 143
 (8,136)
Amounts reclassified from accumulated other comprehensive income (loss)137
 (818) (88) (769)137
 (1,667) (52) (1,582)
Net current period other comprehensive income137
 27,250
 155
 27,542
137
 (9,946) 91
 (9,718)
Balance at June 30, 2014$(12,962) (1,686) 932
 (13,716)
Balance as of June 30, 2015$(12,687) (10,659) 1,023
 (22,323)
              
Balance as of April 1, 2014$(13,030) (18,166) 733
 (30,463)
Other comprehensive income before reclassifications—
 16,480
 243
 16,723
Balance as of April 1, 2015$(12,755) 8,198
 906
 (3,651)
Other comprehensive income (loss) before reclassifications—
 (17,636) 143
 (17,493)
Amounts reclassified from accumulated other comprehensive income (loss)68
 —
 (44) 24
68
 (1,221) (26) (1,179)
Net current period other comprehensive income68
 16,480
 199
 16,747
Balance as of June 30, 2014$(12,962) (1,686) 932
 (13,716)
Net current period other comprehensive income (loss)68
 (18,857) 117
 (18,672)
Balance as of June 30, 2015$(12,687) (10,659) 1,023
 (22,323)
              



26
Table of Contents

In accordance with ASC 740-20-45-11(b), a deferred tax asset valuation allowance associated with unrealized gains and losses not recognized in income is charged directly to other comprehensive income (loss). During the years 2010 and 2011, Synovus recorded a deferred tax asset valuation allowance associated with unrealized gains and losses not recognized in income directly to other comprehensive income (loss) by applying the portfolio approach for allocation of the valuation allowance. Synovus has consistently applied the portfolio approach which treats derivative financial instruments, equity securities, and debt securities as a single portfolio. As of June 30, 2015,2016, the balance in net unrealized gains (losses) on cash flow hedges and net unrealized gains (losses) on investment securities available for sale includes unrealized losses of $12.1$12.1 million and $13.3$13.3 million,, respectively, related to the residual tax effects remaining in OCI due to a previously established deferred tax asset valuation allowance. Under the portfolio approach, these unrealized losses are realized at the time the entire portfolio is sold or disposed.

27
Table of Contents

The following table illustrates activity within the reclassifications out of accumulated other comprehensive income (loss), for the six and three months ended June 30, 2015 and 2014.
Reclassifications out of Accumulated Other Comprehensive Income (Loss)
 
Details About
Accumulated Other Comprehensive Income (Loss) Components
 
Amount Reclassified from
Accumulated Other
Comprehensive Income (Loss)
Affected Line Item
in the Statement Where
Net Income is Presented
  For the Six Months Ended June 30, 
  2015 2014 
Net unrealized gains (losses) on cash flow hedges:     
  Amortization of deferred losses $(224) (224)Interest expense
  87
 87
Income tax (expense) benefit
  $(137) (137)Reclassifications, net of income taxes
Net unrealized gains (losses) on investment securities available for sale:     
  Realized gain on sale of securities $2,710
 1,331
Investment securities gains, net
  (1,043) (513)Income tax (expense) benefit
  $1,667
 818
Reclassifications, net of income taxes
Post-retirement unfunded health benefit:     
  Amortization of actuarial gains $84
 144
Salaries and other personnel expense
  (32) (56)Income tax (expense) benefit
  $52
 88
Reclassifications, net of income taxes
      

















Reclassifications out of Accumulated Other Comprehensive Income (Loss)
Details About
Accumulated Other Comprehensive Income (Loss) Components
 
Amount Reclassified from
Accumulated Other
Comprehensive Income (Loss)
Affected Line Item
in the Statement Where
Net Income is Presented
 
Amount Reclassified from
Accumulated Other
Comprehensive Income (Loss)
Affected Line Item
in the Statement Where
Net Income is Presented
 For the Three Months Ended June 30,  For the Six Months Ended June 30, 
 2015 2014  2016 2015 
Net unrealized gains (losses) on cash flow hedges:          
Amortization of deferred losses $(112) (112)Interest expense $(140) (224)Interest expense
Amortization of deferred losses (197) —
Loss on early extinguishment of debt
 130
 87
Income tax (expense) benefit
 44
 44
Income tax (expense) benefit $(207) (137)Reclassifications, net of income taxes
 $(68) (68)Reclassifications, net of income taxes     
Net unrealized gains (losses) on investment securities available for sale:          
Realized gain on sale of securities $1,985
 —
Investment securities gains, net $67
 2,710
Investment securities gains, net
 (764) —
Income tax (expense) benefit (26) (1,043)Income tax (expense) benefit
 $1,221
 —
Reclassifications, net of income taxes $41
 1,667
Reclassifications, net of income taxes
Post-retirement unfunded health benefit:          
Amortization of actuarial gains $42
 72
Salaries and other personnel expense $104
 84
Salaries and other personnel expense
 (16) (28)Income tax (expense) benefit (40) (32)Income tax (expense) benefit
 $26
 44
Reclassifications, net of income taxes $64
 52
Reclassifications, net of income taxes
          

28
Reclassifications out of Accumulated Other Comprehensive Income (Loss)
Details About
Accumulated Other Comprehensive Income (Loss) Components
 
Amount Reclassified from
Accumulated Other
Comprehensive Income (Loss)
Affected Line Item
in the Statement Where
Net Income is Presented
  For the Three Months Ended June 30, 
  2016 2015 
Net unrealized gains (losses) on cash flow hedges:     
  Amortization of deferred losses $(64) (112)Interest expense
  25
 44
Income tax (expense) benefit
  $(39) (68)Reclassifications, net of income taxes
      
Net unrealized gains (losses) on investment securities available for sale:     
  Realized gain on sale of securities $—
 1,985
Investment securities gains, net
  —
 (764)Income tax (expense) benefit
  $—
 1,221
Reclassifications, net of income taxes
Post-retirement unfunded health benefit:     
  Amortization of actuarial gains $10
 42
Salaries and other personnel expense
  (4) (16)Income tax (expense) benefit
  $6
 26
Reclassifications, net of income taxes
      
Table of Contents

Note 107 - Fair Value Accounting
Synovus carries various assets and liabilities at fair value based on the fair value accounting guidance under ASC 820, Fair Value Measurements, and ASC 825, Financial Instruments. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an “exit price”) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.
Fair Value Hierarchy
Synovus determines the fair value of its financial instruments based on the fair value hierarchy established under ASC 820-10, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the financial instrument's fair value measurement in its entirety. There are three levels of inputs that may be used to measure fair value. The three levels of inputs of the valuation hierarchy are defined below:
Level 1Quoted prices (unadjusted) in active markets for identical assets and liabilities for the instrument or security to be valued. Level 1 assets include marketable equity securities, U.S. Treasury securities, and mutual funds.
Level 2Observable inputs other than Level 1 quoted prices, such as quoted prices for similar assets and liabilities in active markets, quoted prices in markets that are not active or model-based valuation techniques for which all significant assumptions are derived principally from or corroborated by observable market data. Level 2 assets and liabilities include debt securities with quoted prices that are traded less frequently than exchange-traded instruments and derivative contracts whose value is determined by using a pricing model with inputs that are observable in the market or can be derived principally from or corroborated by observable market data. U.S. Government sponsored agency securities, mortgage-backed securities issued by U.S. Government sponsored enterprises and agencies, obligations of states and municipalities, collateralized mortgage obligations issued by U.S. Government sponsored enterprises, and mortgage loans held-for-sale are generally included in this category. Certain private equity investments that invest in publicly traded companies are also considered Level 2 assets.
Level 3Unobservable inputs that are supported by little, if any, market activity for the asset or liability. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow models and similar techniques, and may also include the use of market prices of assets or liabilities that are not directly comparable to the subject asset or liability. These methods of valuation may result in a significant portion of the fair value being derived from unobservable assumptions that reflect Synovus' own estimates for assumptions that market participants would use in pricing the asset or liability. This category primarily includes collateral-dependent impaired loans, other real estate, certain equity investments, and private equity investments.
See Note 1614 "Fair Value Accounting" to the consolidated financial statements of Synovus' 20142015 Form 10-K for a description of valuation methodologies for assets and liabilities measured at fair value on a recurring and non-recurring basis.




29
Table of Contents

Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table presents all financial instruments measured at fair value on a recurring basis as of June 30, 20152016 and December 31, 2014,2015, according to the valuation hierarchy included in ASC 820-10. For equity and debt securities, class was determined based on the nature and risks of the investments. Transfers betweensbetween levels forduring the periodsix and three months ended June 30, 20152016 and year ended December 31, 20142015 were inconsequential.
June 30, 2015June 30, 2016
(in thousands)Level 1 Level 2 Level 3 Total Assets and Liabilities at Fair ValueLevel 1 Level 2 Level 3 Total Assets and Liabilities at Fair Value
Assets              
Trading securities:              
Mortgage-backed securities issued by U.S. Government agencies—
 1,011
 —
 1,011
—
 798
 —
 798
Collateralized mortgage obligations issued by
U.S. Government sponsored enterprises
—
 7,193
 —
 7,193
—
 11
 —
 11
Other U.S. Government agencies  177
   177
State and municipal securities—
 156
 —
 156
—
 15
 —
 15
All other mortgage-backed
securities
—
 2,416
 —
 2,416
Other investments—
 1,197
 —
 1,197
Total trading securities$—
 11,973
 —
 11,973
$—
 1,001
 —
 1,001
Mortgage loans held for sale—
 98,202
 —
 98,202
—
 87,824
 —
 87,824
Investment securities available for sale:              
U.S. Treasury securities43,532
 —
 —
 43,532
74,823
 —
 —
 74,823
U.S. Government agency securities—
 25,268
 —
 25,268
—
 13,449
 —
 13,449
Securities issued by U.S. Government sponsored enterprises—
 127,867
 —
 127,867
—
 50,117
 —
 50,117
Mortgage-backed securities issued by U.S. Government agencies—
 178,074
 —
 178,074
—
 192,783
 —
 192,783
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 2,410,729
 —
 2,410,729
—
 2,581,669
 —
 2,581,669
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 537,268
 —
 537,268
—
 635,614
 —
 635,614
State and municipal securities—
 4,685
 —
 4,685
—
 3,046
 —
 3,046
Equity securities7,603
 —
 —
 7,603
8,731
 —
 —
 8,731
Other investments(1)
3,047
 14,900
 1,700
 19,647
3,169
 15,333
 1,625
 20,127
Total investment securities available for sale$54,182
 3,298,791
 1,700
 3,354,673
$86,723
 3,492,011
 1,625
 3,580,359
Private equity investments—
 1,033
 26,959
 27,992
—
 658
 26,866
 27,524
Mutual funds held in rabbi trusts11,218
 —
 —
 11,218
11,141
 —
 —
 11,141
Derivative assets:              
Interest rate contracts—
 27,948
 —
 27,948
—
 36,804
 —
 36,804
Mortgage derivatives(2)
—
 2,691
 —
 2,691
—
 2,541
 —
 2,541
Total derivative assets$—
 30,639
 —
 30,639
$—
 39,345
 —
 39,345
Liabilities              
Trading account liabilities—
 1,546
 —
 1,546
—
 789
 —
 789
Derivative liabilities:              
Interest rate contracts—
 28,566
 —
 28,566
—
 37,221
 —
 37,221
Mortgage derivatives(2)
—
 1,467
 —
 1,467
Visa derivative—
 —
 1,415
 1,415
—
 —
 1,415
 1,415
Total derivative liabilities$—
 28,566
 1,415
 29,981
$—
 38,688
 1,415
 40,103
              

30
Table of Contents

December 31, 2014December 31, 2015
(in thousands)Level 1 Level 2 Level 3 Total Assets and Liabilities at Fair ValueLevel 1 Level 2 Level 3 Total Assets and Liabilities at Fair Value
Assets              
Trading securities:              
Mortgage-backed securities issued by U.S. Government agencies—
 145
 —
 145
—
 2,922
 —
 2,922
Collateralized mortgage obligations issued by U.S. Government sponsored enterprises—
 2,449
 —
 2,449
—
 1,078
 —
 1,078
State and municipal securities—
 1,976
 —
 1,976
—
 1,097
 —
 1,097
All other mortgage-backed securities—
 2,483
 —
 2,483
Other investments—
 6,810
 —
 6,810
Total trading securities$—
 13,863
 —
 13,863
$—
 5,097
 —
 5,097
Mortgage loans held for sale—
 63,328
 —
 63,328
—
 59,275
 —
 59,275
Investment securities available for sale:              
U.S. Treasury securities42,826
 —
 —
 42,826
43,357
 —
 —
 43,357
U.S. Government agency securities—
 27,324
 —
 27,324
—
 13,623
 —
 13,623
Securities issued by U.S. Government sponsored enterprises—
 82,042
 —
 82,042
—
 126,909
 —
 126,909
Mortgage-backed securities issued by U.S. Government agencies—
 179,816
 —
 179,816
—
 210,004
 —
 210,004
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 2,261,681
 —
 2,261,681
—
 2,630,419
 —
 2,630,419
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 417,076
 —
 417,076
—
 529,597
 —
 529,597
State and municipal securities—
 5,206
 —
 5,206
—
 4,434
 —
 4,434
Equity securities6,748
 —
 —
 6,748
9,672
 —
 —
 9,672
Other investments(1)
2,035
 15,007
 1,645
 18,687
3,073
 14,985
 1,745
 19,803
Total investment securities available for sale$51,609
 2,988,152
 1,645
 3,041,406
$56,102
 3,529,971
 1,745
 3,587,818
Private equity investments—
 995
 27,367
 28,362
—
 870
 27,148
 28,018
Mutual funds held in rabbi trusts11,252
 —
 —
 11,252
10,664
 —
 —
 10,664
Derivative assets:              
Interest rate contracts—
 30,904
 —
 30,904
—
 25,580
 —
 25,580
Mortgage derivatives(2)
—
 1,213
 —
 1,213
—
 1,559
 —
 1,559
Total derivative assets$—
 32,117
 —
 32,117
$—
 27,139
 —
 27,139
       
Liabilities              
Trading account liabilities—
 2,100
 —
 2,100
—
 1,032
 —
 1,032
Salary stock units1,206
 —
 —
 1,206
Derivative liabilities:              
Interest rate contracts—
 31,398
 —
 31,398
—
 26,030
 —
 26,030
Mortgage derivatives(2)
—
 753
 —
 753
Visa derivative—
 —
 1,401
 1,401
—
 —
 1,415
 1,415
Total derivative liabilities$—
 32,151
 1,401
 33,552
$—
 26,030
 1,415
 27,445
              
(1) Based on an analysis of the nature and risks of these investments, Synovus has determined that presenting these investments as a single asset class is appropriate.
(2) Mortgage derivatives consist of customer interest rate lock commitments that relate to the potential origination of mortgage loans, which would be classified as held for sale and forward loan sales commitments with third-party investors.


31
Table of Contents

Fair Value Option
The following table summarizes the difference between the fair value and the unpaid principal balance of mortgage loans held for sale measured at fair value and the changes in fair value of these loans. Mortgage loans held for sale are initially measured at fair value with subsequent changes in fair value recognized in earnings. Changes in fair value were recorded as a component of mortgage banking income in the consolidated statements of income. An immaterial portion of these changes in fair value was attributable to changes in instrument-specific credit risk.
Changes in Fair Value Included in Net Income              
For the Six Months Ended June 30, For the Three Months Ended June 30,For the Six Months Ended June 30, For the Three Months Ended June 30,
(in thousands)2015 2014 2015 20142016 2015 2016 2015
Mortgage loans held for sale(563) 1,782
 (973) 1,057
$1,850
 (563) $878
 (973)
              

Mortgage Loans Held for Sale  
(in thousands)As of June 30, 2015 As of December 31, 2014As of June 30, 2016 As of December 31, 2015
Fair value$98,202
 63,328
$87,824
 59,275
Unpaid principal balance96,925
 61,488
84,877
 58,177
Fair value less aggregate unpaid principal balance$1,277
 1,840
$2,947
 1,098
      

32
Table of Contents

Changes in Level 3 Fair Value Measurements and Quantitative Information about Level 3 Fair Value Measurements
As noted above, Synovus uses significant unobservable inputs (Level 3) in determining the fair value of assets and liabilities classified as Level 3 in the fair value hierarchy. The table below includes a roll-forward of the amounts on the consolidated balance sheet for the six and three months ended June 30, 20152016 and 20142015 (including the change in fair value), for financial instruments of a material nature that are classified by Synovus within Level 3 of the fair value hierarchy and are measured at fair value on a recurring basis. Transfers between fair value levels are recognized at the end of the reporting period in which the associated changes in inputs occur. During the firstsix and second quarters ofthree months ended June 30, 2016 and 2015, and 2014, Synovus did not have any transfers between levels in the fair value hierarchy.

Six Months Ended June 30,Six Months Ended June 30,
2015 20142016 2015
(in thousands)Investment Securities Available for Sale Private Equity Investments Visa Derivative Investment Securities Available for Sale Private Equity Investments Other Derivative Contracts, NetInvestment Securities Available for Sale Private Equity Investments Visa Derivative Investment Securities Available for Sale Private Equity Investments Visa Derivative
Beginning balance, January 1,1,645
 27,367
 (1,401) 2,350
 27,745
 (2,706)$1,745
 27,148
 (1,415) 1,645
 27,367
 (1,401)
Total gains (losses) realized/unrealized:                      
Included in earnings —
 (408) (729) (88) (369) (752)—
 (278) (720) —
 (408) (729)
Unrealized gains (losses) included in other comprehensive income55
 —
 —
 144
 —
 —
(120) —
 —
 55
 —
 —
Purchases—
 —
 —
 —
 —
 —
—
 —
 —
 —
 —
 —
Sales—
 —
 —
 —
 —
 —
—
 —
 —
 —
 —
 —
Issuances—
 —
 —
 —
 —
 —
—
 —
 —
 —
 —
 —
Settlements—
 —
 715
 (540) —
 1,020
—
 (4) 720
 —
 —
 715
Amortization of discount/premium—
 —
 —
 —
 —
 —
—
 —
 —
 —
 —
 —
Transfers in and/or out of Level 3—
 —
 —
 —
 —
 —
—
 —
 —
 —
 —
 —
Ending balance, June 30,1,700
 26,959
 (1,415) 1,866
 27,376
 (2,438)$1,625
 26,866
 (1,415) 1,700
 26,959
 (1,415)
The amount of total net gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at June 30,—
 (408) (729) (88) (369) (752)
Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at June 30,$—
 (278) (720) —
 (408) (729)
                      
                      
Three Months Ended June 30,Three Months Ended June 30,
2015 20142016 2015
(in thousands)Investment Securities Available for Sale  Private Equity Investments Visa Derivative Investment Securities Available for Sale  Private Equity Investments Visa DerivativeInvestment Securities Available for Sale  Private Equity Investments Visa Derivative Investment Securities Available for Sale  Private Equity Investments Visa Derivative
Beginning balance, April 1,$1,654
 27,081
 (1,425) 2,399
 27,495
 (2,525)$1,638
 26,757
 (1,415) 1,654
 27,081
 (1,425)
Total gains (losses) realized/unrealized:                      
Included in earnings —
 (122) (354) —
 (119) (356)—
 113
 (360) —
 (122) (354)
Unrealized gains (losses) included in other comprehensive income46
 —
 —
 7
 —
 —
(13) —
 —
 46
 —
 —
Purchases—
 —
 —
 —
 —
 —
Sales—
 —
 —
 —
 —
 —
Issuances—
 —
 —
 —
 —
 —
Settlements—
 —
 364
 (540) —
 443
—
 (4) 360
 —
 —
 364
Amortization of discount/premium—
 —
 —
 —
 —
 —
Transfers in and/or out of Level 3—
 —
 —
 —
 —
 —
Ending balance, June 30,$1,700
 26,959
 (1,415) 1,866
 27,376
 (2,438)$1,625
 26,866
 (1,415) 1,700
 26,959
 (1,415)
The amount of total net gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at June 30,$—
 (122) (354) —
 (119) (356)
Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at June 30,$—
 113
 (360) —
 (122) (354)
                      

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.
33
    June 30, 2016 December 31, 2015
  Valuation TechniqueSignificant Unobservable Input
Range
(Weighted Average)(1)
 
Range
(Weighted Average)(1)
Assets measured at fair
value on a recurring basis
      
       
Investment Securities Available for Sale - Other Investments:      
       
Trust preferred securities Discounted cash flow analysisCredit spread embedded in discount rate530 bps 477 bps
       
Private equity investments Individual analysis of each investee companyMultiple factors, including but not limited to, current operations, financial condition, cash flows, evaluation of business management and financial plans, and recently executed financing transactions related to the investee companiesN/A N/A
   
Discount for lack of marketability(2)
15% 15%
       
Visa derivative liability Internal valuationEstimated future cumulative deposits to the litigation escrow for settlement of the Covered Litigation, and estimated future monthly fees payable to the derivative counterpartyN/A N/A
       
Table(1) The range represents management's best estimate of Contentsthe high and low of the value that would be assigned to a particular input.
(2) Represents management's estimate of discount that market participants would require based on the instrument's lack of liquidity.

Assets Measured at Fair Value on a Non-recurring Basis
Certain assets are recorded at fair value on a non-recurring basis. These non-recurring fair value adjustments typically are a result of the application of lower of cost or fair value accounting or a write-down occurring during the period. For example, if the fair value of an asset in these categories falls below its cost basis, it is considered to be at fair value at the end of the period of the adjustment. The following table presents assets measured at fair value on a non-recurring basis as of the dates indicated for which there was a fair value adjustment during the period.


June 30, 2015 December 31, 2014June 30, 2016 December 31, 2015
(in thousands)Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 TotalLevel 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total
Impaired loans*
$—
 —
 6,702
 6,702
 —
 —
 28,588
 28,588
$—
 —
 3,680
 3,680
 —
 —
 11,264
 11,264
Other loans held for sale—
 —
 —
 —
 —
 —
 3,411
 3,411
—
 —
 —
 —
 —
 —
 425
 425
Other real estate—

—

38,201

38,201
 —
 —
 32,046
 32,046
—

—

13,082

13,082
 —
 —
 23,519
 23,519
Other assets held for sale$—
 —
 —
 —
 —
 —
 3,718
 3,718
$—
 —
 8,043
 8,043
 —
 —
 3,425
 3,425
                              

The following table presents fair value adjustments recognized in earnings for the six and three months ended June 30, 20152016 and 20142015 for the assets measured at fair value on a non-recurring basis.
Six Months Ended June 30, Three Months Ended June 30,Six Months Ended June 30, Three Months Ended June 30,
(in thousands)2015 2014 2015 20142016 2015 2016 2015
Impaired loans*
$1,792
 8,144
 $1,546
 5,542
$1,162
 1,792
 —
 1,546
Other loans held for sale—
 1,631
 —
 1,631
Other real estate8,962
 3,229
 4,714
 654
3,306
 8,962
 2,053
 4,714
Other assets held for sale—
 7,508
 —
 7,508
6,625
 —
 5,593
 —
              
* ImpairedCollateral-dependent impaired loans that are collateral-dependent.were written down to collateral value during the period.































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Quantitative Information about Level 3 Fair Value Measurements
The tablestable below provideprovides 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.hierarchy and are measured at fair value on a non-recurring basis. The range of sensitivities that management utilized in its fair value calculations is deemed acceptable in the industry with respect to the identified financial instruments. The tables below present both the total balance as of the dates indicated for assets measured at fair value on a recurring basis and the assets measured at fair value on a non-recurring basis for which there was a fair value adjustment during the period.
June 30, 2016December 31, 2015
(dollars in thousands)Level 3 Fair Value Valuation TechniqueSignificant Unobservable Input
Range
(Weighted Average)(1)
Range
(Weighted Average)(1)
Assets measured at fair
value on a recurringnon-recurring basis
      
       
Investment Securities Available for Sale:Collateral dependent impaired loans Third-party appraised value of collateral less estimated selling costs
Discount to appraised value (2)
Estimated selling costs
0% - 83% (32%)
0% - 10% (7%)
 
  Other Investments:
0%-100% (51%)
0%-10% (7%)
       
Trust preferred securitiesOther loans held for sale 1,700Third-party appraised value of collateral less estimated selling costs
Discount to appraised value (2)
Estimated selling costs
 Discounted cash flow analysisCredit spread embedded in discount rate465-565 bps (513 bps)
0%-11% (7%)
0%-10% (7%)
       
Other real estate Third-party appraised value of collateral less estimated selling costs
Discount for lack of marketabilityto appraised value (2)
Estimated selling costs
0% - 32% (13%)
0% - 10% (7%)
0%-20% (7%)
0%-10% (0%(7%)
       
Private equity investmentsOther assets held for sale 26,959Third-party appraised value of collateral less estimated selling costs or BOV
Discount to appraised value (2)
Estimated selling costs
0%-86% (65%) 0%-10% (7%) Individual analysis of each investee companyMultiple factors, including but not limited to, current operations, financial condition, cash flows, evaluation of business management and financial plans, and recently executed financing transactions related to the investee companiesN/A
Visa derivative liability1,415
Internal valuationEstimated future cumulative deposits to the litigation escrow for settlement of the Covered Litigation, and estimated future monthly fees payable to the derivative counterpartyN/A
0%-75% (42%)
0%-10% (7%)
       

June 30, 2015
(dollars in thousands) Level 3 Fair Value Valuation TechniqueSignificant Unobservable Input
Range
(Weighted Average)(1)
Assets measured at fair
value on a non-recurring basis
      
Collateral dependent impaired loans $6,702
 Third-party appraised value of collateral less estimated selling costs
Discount to appraised value (3)
Estimated selling costs
0% - 100% (29%)
0% - 10% (7%)
       
Other real estate 38,201
 Third-party appraised value of collateral less estimated selling costs
Discount to appraised value (3)
Estimated selling costs
0% - 42% (5%)
0% - 10% (7%)
       
(1) The range represents management's best estimate of the high and low of the value that would be assigned to a particular input. For assets measured at fair value on a non-recurring basis, the weighted average is the measure of central tendencies; it is not the value that management is using for the asset or liability.
(2)Represents management's estimate of discount that market participants would require based on the instrument's lack of liquidity.
(3) Synovus also makes adjustments to the values of the assets listed above for various reasons, including age of the appraisal, information known by management about the property, such as occupancy rates, changes to the physical conditions of the property, and other factors.

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Table of Contents

December 31, 2014
(dollars in thousands)Level 3 Fair ValueValuation TechniqueSignificant Unobservable Input
Range (Weighted Average)(1)
Assets measured at fair
value on a recurring basis
Investment Securities Available for Sale:
  Other Investments:
Trust preferred securities1,645
Discounted cash flow analysisCredit spread embedded in discount rate600-675 bps (639 bps)
Discount for lack of marketability(2)
0%-10% (0%)
Private equity investments27,367
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(2)
N/A
Visa derivative liability1,401
Internal valuationEstimated future cumulative deposits to the litigation escrow for settlement of the Covered Litigation, and estimated future monthly fees payable to the derivative counterpartyN/A
December 31, 2014
(dollars in thousands) Level 3 Fair Value Valuation TechniqueSignificant Unobservable Input
Range
(Weighted Average)(1)
Assets measured at fair
value on a non-recurring basis
      
Collateral dependent impaired loans $28,588
 Third-party appraised value of collateral less estimated selling costs
Discount to appraised value (2)
Estimated selling costs
0%-100% (46%)
0%-10% (7%)
       
Other loans held for sale 3,411
 Third-party appraised value of collateral less estimated selling costs
Discount to appraised value (2)
Estimated selling costs
0%-11% (7%)
0%-10% (7%)
       
Other real estate 32,046
 Third-party appraised value of collateral less estimated selling costs
Discount to appraised value (2)
Estimated selling costs
0%-61% (16%)
0%-10% (7%)
       
Other assets held for sale 3,718
 Third-party appraised value of collateral less estimated selling costs or BOV
Discount to appraised value (2)
Estimated selling costs
0%-100% (49%)
0%-10% (7%)
       
(1) The range represents management's best estimate of the high and low end of the value that would be assigned to a particular input. For assets measured at fair value on a non-recurring basis, the weighted average is the measure of central tendencies; it is not the value that management is using for the asset or liability.
(2) Represents management's estimate of discount that market participants would require based on the instrument's lack of liquidity.
(3) Synovus also makes adjustments to the values of the assets listed above for various reasons, including age of the appraisal, information known by management about the property, such as occupancy rates, changes to the physical conditions of the property, pending sales, and other factors.

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Table of Contents

Sensitivity Analysis of Level 3 Unobservable Inputs Measured on a Recurring Basis
Included in the fair value estimates of financial instruments carried at fair value on the consolidated balance sheet are those estimated in full or in part using valuation techniques based on assumptions that are not supported by observable market prices, rates, or other inputs. Unobservable inputs are assessed carefully, considering the current economic environment and market conditions. However, by their very nature, unobservable inputs imply a degree of uncertainty in their determination, because they are supported by little, if any, market activity for the related asset or liability.
Investment Securities Available for Sale
The significant unobservable inputs used in the fair value measurement of the corporate obligations in Level 3 assets are the credit spread embedded in the discount rate and the discount for lack of liquidity. Generally, a change in one or more assumptions, and the degree or sensitivity of the change used, can have a significant impact on fair value. With regard to the trust preferred securities in Level 3 assets, raising the credit spread, and raising the discount for lack of liquidity assumptions will result in a lower fair value measurement.
Private Equity Investments
In the absence of quoted market prices, inherent lack of liquidity, and the long-term nature of private equity investments, significant judgment is required to value these investments. The significant unobservable inputs used in the fair value measurement of private equity investments include current operations, financial condition, and cash flows, comparables and private sales, when available, and recently executed financing transactions related to investee companies. Significant increases or decreases in any of these inputs in isolation would result in a significantly lower or higher fair value measurement.
Visa Derivative Liability
The fair value of the Visa derivative contract is determined based on management's estimate of the timing and amount of the Covered Litigation settlement, and the resulting payments due to the counterparty under the terms of the contract. Significant changes in any of these inputs in isolation could result in a significantly higher (lower) valuation of the Visa derivative liability. Also, additional funding into the escrow generally results in a proportional increase in our derivative liability.
Fair Value of Financial Instruments
The following table presents the carrying and fair values of financial instruments at June 30, 20152016 and December 31, 2014.2015. The fair value represents management’s best estimates based on a range of methodologies and assumptions. For financial instruments that are not recorded at fair value on the balance sheet, such as loans, interest bearing deposits (including brokered deposits), and long-term debt, the fair value amounts should not be taken as an estimate of the amount that would be realized if all such financial instruments were to be settled immediately.















37
Table of Contents

The carrying and estimated fair values of financial instruments, as well as the level within the fair value hierarchy, as of June 30, 20152016 and December 31, 20142015 are as follows:
June 30, 2015June 30, 2016

(in thousands)
Carrying Value Fair Value Level 1 Level 2 Level 3Carrying Value Fair Value Level 1 Level 2 Level 3
Financial assets                  
Cash and cash equivalents$360,832
 360,832
 360,832
 —
 —
$377,334
 377,334
 377,334
 —
 —
Interest bearing funds with Federal Reserve Bank1,289,205
 1,289,205
 1,289,205
 —
 —
904,406
 904,406
 904,406
 —
 —
Interest earning deposits with banks18,694
 18,694
 18,694
 —
 —
24,541
 24,541
 24,541
 —
 —
Federal funds sold and securities purchased under resale agreements72,487
 72,487
 72,487
 —
 —
77,685
 77,685
 77,685
 —
 —
Trading account assets11,973
 11,973
 —
 11,973
 —
1,001
 1,001
 —
 1,001
 —
Mortgage loans held for sale98,202
 98,202
 —
 98,202
 —
87,824
 87,824
 —
 87,824
 —
Investment securities available for sale3,354,673
 3,354,673
 54,182
 3,298,791
 1,700
3,580,359
 3,580,359
 86,723
 3,492,011
 1,625
Private equity investments27,992
 27,992
 —
 1,033
 26,959
27,524
 27,524
 —
 658
 26,866
Mutual funds held in rabbi trusts11,218
 11,218
 11,218
 —
 —
11,141
 11,141
 11,141
 —
 —
Loans, net of deferred fees and costs21,494,869
 21,310,531
 —
 —
 21,310,531
23,060,908
 22,873,602
 —
 —
 22,873,602
Derivative assets30,639
 30,639
 —
 30,639
 —
39,345
 39,345
 —
 39,345
 —
Financial liabilities                  
Trading account liabilities1,546
 1,546
 —
 1,546
 —
789
 789
 —
 789
 —
Non-interest bearing deposits6,421,815
 6,421,815
 —
 6,421,815
 —
6,934,443
 6,934,443
 —
 6,934,443
 —
Interest bearing deposits16,227,366
 16,238,771
 —
 16,238,771
 —
16,991,479
 16,999,970
 —
 16,999,970
 —
Federal funds purchased and securities sold under repurchase agreements188,285
 188,285
 188,285
 —
 —
247,179
 247,179
 247,179
 —
 —
Long-term debt2,139,219
 2,200,777
 —
 2,200,777
 —
2,135,892
 2,203,518
 —
 2,203,518
 —
Derivative liabilities$29,981
 29,981
 —
 28,566
 1,415
$40,103
 40,103
 —
 38,688
 1,415
                  
December 31, 2014December 31, 2015

(in thousands)
Carrying Value Fair Value Level 1 Level 2 Level 3Carrying Value Fair Value Level 1 Level 2 Level 3
Financial assets                  
Cash and cash equivalents$485,489
 485,489
 485,489
 —
 —
$367,092
 367,092
 367,092
 —
 —
Interest bearing funds with Federal Reserve Bank721,362
 721,362
 721,362
 —
 —
829,887
 829,887
 829,887
 —
 —
Interest earning deposits with banks11,810
 11,810
 11,810
 —
 —
17,387
 17,387
 17,387
 —
 —
Federal funds sold and securities purchased under resale agreements73,111
 73,111
 73,111
 —
 —
69,819
 69,819
 69,819
 —
 —
Trading account assets13,863
 13,863
 —
 13,863
 —
5,097
 5,097
 
 5,097
 —
Mortgage loans held for sale63,328
 63,328
 —
 63,328
 —
59,275
 59,275
 
 59,275
 —
Other loans held for sale3,606
 3,606
 —
 —
 3,606
425
 425
 —
 —
 425
Investment securities available for sale3,041,406
 3,041,406
 51,609
 2,988,152
 1,645
3,587,818
 3,587,818
 56,102
 3,529,971
 1,745
Private equity investments28,362
 28,362
 —
 995
 27,367
28,018
 28,018
 —
 870
 27,148
Mutual funds held in rabbi trusts11,252
 11,252
 11,252
 —
 —
10,664
 10,664
 10,664
 —
 —
Loans, net of deferred fees and costs21,097,699
 20,872,939
 —
 —
 20,872,939
22,429,565
 22,192,903
 ���
 —
 22,192,903
Derivative assets32,117
 32,117
 —
 32,117
 —
27,139
 27,139
 —
 27,139
 —
         
Financial liabilities                  
Trading account liabilities2,100
 2,100
 —
 2,100
 —
1,032
 1,032
 —
 1,032
 —
Non-interest bearing deposits6,228,472
 6,228,472
 —
 6,228,472
 —
6,732,970
 6,732,970
 —
 6,732,970
 —
Interest bearing deposits15,303,228
 15,299,372
 —
 15,299,372
 —
16,509,691
 16,516,222
 —
 16,516,222
 —
Federal funds purchased and securities sold under repurchase agreements126,916
 126,916
 126,916
 —
 —
177,025
 177,025
 177,025
 —
 —
Salary stock units1,206
 1,206
 1,206
 —
 —
Long-term debt2,140,319
 2,191,279
 —
 2,191,279
 —
2,186,893
 2,244,376
 —
 2,244,376
 —
Derivative liabilities$33,553
 33,553
 —
 32,151
 1,401
$27,445
 27,445
 —
 26,030
 1,415
                  

38
Table of Contents

Note 118 - Derivative Instruments
As part of its overall interest rate risk management activities, Synovus utilizes derivative instruments to manage its exposure to various types of interest rate risk. These derivative instruments generally consist of interest rate swaps, interest rate lock commitments made to prospective mortgage loan customers, and commitments to sell fixed-rate mortgage loans. Interest rate lock commitments represent derivative instruments since it is intended that such loans will be sold.
Synovus may also utilize interest rate swaps to manage interest rate risks primarily arising from its core banking activities. These interest rate swap transactions generally involve the exchange of fixed and floating interest rate payment obligations without the exchange of underlying principal amounts. Swaps may be designated as either cash flow hedges or fair value hedges, as discussed below. As of June 30, 20152016 and December 31, 2014,2015, Synovus had no outstanding interest rate swap contracts utilized to manage interest rate risk.risk related to core banking activities.
Synovus is party to master netting arrangements with its dealer counterparties; however, Synovus does not offset assets and liabilities under these arrangements for financial statement presentation purposes.
Counterparty Credit Risk and Collateral
Entering into derivative contracts potentially exposes Synovus to the risk of counterparties’ failure to fulfill their legal obligations, including, but not limited to, potential amounts due or payable under each derivative contract. Notional principal amounts are often used to express the volume of these transactions, but the amounts potentially subject to credit risk are much smaller. Synovus assesses the credit risk of its dealer counterparties by regularly monitoring publicly available credit rating information, andevaluating other market indicators.indicators, and periodic detailed financial reviews. 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 credit rating, collateral value, and customer standing with regards to its swap contractual obligations and other related matters. Such asset values fluctuate based upon changes in interest rates regardless of changes in notional amounts and changes in customer specific risk.
Cash Flow Hedges
Synovus designates hedges of floating rate loans as cash flow hedges. These swaps hedge against the variability of cash flows from specified pools of floating rate prime based loans. Synovus calculates effectiveness of the hedging relationship quarterly using regression analysis. The effective portion of the gain or loss on the derivative instrument is reported as a component of other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transactions affect earnings. Ineffectiveness from cash flow hedges is recognized in the consolidated statements of income as a component of other non-interest income. As of June 30, 2015,2016, there were no cash flow hedges outstanding, and therefore, no cumulative ineffectiveness.
Synovus expects to reclassify from accumulated other comprehensive income (loss) $447 thousand of interest expense during the next twelve months as amortization of deferred losses is recorded.
outstanding. Synovus did not terminate any cash flow hedges during 20152016 or 2014.2015. The remaining unamortized deferred net loss balance of all previously terminated cash flow hedges at June 30, 20152016 and December 31, 20142015 was $(894)$(260) thousand and $(1.1) million,$(597) thousand, respectively. Synovus expects to reclassify from accumulated other comprehensive income (loss) $260 thousand to interest expense during the next twelve months as amortization of deferred losses from prior period cash flow hedge terminations is recognized. Additionally, Synovus recognized $197 thousand of the deferred loss balance to loss on early extinguishment of debt during the first quarter of 2016.
Fair Value Hedges
Synovus designates hedges of fixed rate liabilities as fair value hedges. These swaps hedge against the change in fair value of various fixed rate liabilities due to changes in the benchmark interest rate, LIBOR. Synovus calculates effectiveness of the fair value hedges quarterly using regression analysis. Ineffectiveness from fair value hedges is recognized in the consolidated statements of income as a component of other non-interest income. As of June 30, 2015,2016, there were no fair value hedges outstanding, and therefore, no cumulative ineffectiveness.
outstanding. Synovus did not terminate any fair value hedges during 20152016 or 2014.2015. The remaining unamortized deferred gain balance on all previously terminated fair value hedges at June 30, 20152016 and December 31, 20142015 was $6.1$1.7 million and $7.64.0 million, respectively. Synovus expects to reclassify from hedge-related basis adjustment, a component of long-term debt, $3.1$1.7 million of the deferred gain balance on previously terminated fair value hedges as a reduction to interest expense during the next twelve months as amortization of deferred gains is recorded. Additionally, Synovus recorded $1.3 million of the unamortized deferred gain balance to loss on early extinguishment of debt during the first quarter of 2016.

39
Table of Contents

Customer Related Derivative Positions
Synovus enters into interest rate swap agreements to facilitate the risk management strategies of a small number of commercial banking customers. Synovus mitigates this risk by entering into equal and offsetting interest rate swap agreements with highly rated third-party financial institutions. The interest rate swap agreements are free-standing derivatives and are recorded at fair value on Synovus' consolidated balance sheet. Fair value changes are recorded in non-interest income in Synovus' consolidated statements of income. As of June 30, 2015,2016, the notional amount of customer related interest rate derivative financial instruments, including both the customer position and the offsetting position, was $1.10$1.28 billion, an increase of $13.9$6.9 million compared to December 31, 2014.2015.
Visa Derivative
In conjunction with the sale of Class B shares of common stock issued by Visa to Synovus as a Visa USA member, Synovus entered into a derivative contract with the purchaser, which provides for settlements between the parties based upon a change in

the ratio for conversion of Visa Class B shares to Visa Class A shares. The conversion ratio changes when Visa deposits funds to a litigation escrow established by Visa to pay settlements for certain litigation, for which Visa is indemnified by Visa USA members. The litigation escrow is funded by proceeds from Visa’s conversion of Class B shares. The fair value of the derivative contract was $1.4 million at both June 30, 20152016 and December 31, 2014.2015. The fair value of the derivative contract is determined based on management's estimate of the timing and amount of the Covered Litigation settlement, and the resulting payments due to the counterparty under the terms of the contract.
Mortgage Derivatives
Synovus originates first lien residential mortgage loans for sale into the secondary market. Mortgage loans are sold by Synovus for conversion to securities and the servicing of these loans is generally sold to a third-party servicing aggregator, or Synovus sells the mortgage loans as whole loans to investors either individually or in bulk on a servicing released basis.
Synovus enters into interest rate lock commitments for residential mortgage loans which commits it to lend funds to a potential borrower at a specific interest rate and within a specified period of time. Interest rate lock commitments that relate to the origination of mortgage loans that, if originated, will be held for sale, are considered derivative financial instruments under applicable accounting guidance. Outstanding interest rate lock commitments expose Synovus to the risk that the price of the mortgage loans underlying the commitments may decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan.
At June 30, 20152016 and December 31, 2014,2015, Synovus had commitments to fund at a locked interest rate, primarily fixed-rate mortgage loans to customers in the amount of $108.5$108.9 million and $73.4$88.8 million, respectively. The fair value of these commitments resulted in a gain of $1.2 million and $266 thousand and $1.3 million for the six months ended June 30, 20152016 and 2014,2015, respectively, which was recorded as a component of mortgage banking income in the consolidated statements of income.
At June 30, 20152016 and December 31, 2014,2015, outstanding commitments to sell primarily fixed-rate mortgage loans amounted to $149.5$135.0 million and $113.0$95.0 million, respectively. Such commitments are entered into to reduce the exposure to market risk arising from potential changes in interest rates, which could affect the fair value of mortgage loans held for sale and outstanding rate lock commitments, which guarantee a certain interest rate if the loan is ultimately funded or granted by Synovus as a mortgage loan held for sale. The commitments to sell mortgage loans are at fixed prices and are scheduled to settle at specified dates that generally do not exceed 90 days. The fairFair value ofadjustments related to these outstanding commitments to sell mortgage loans resulted in a gainloss of $2.0$1.6 million and a lossgain of $(2.0)$2.0 million for the six months ended June 30, 20152016 and 2014,2015, respectively, which waswere recorded as a component of mortgage banking income in the consolidated statements of income.
Collateral Contingencies
Certain derivative instruments contain provisions thatcounterparties require Synovus to maintain an investment gradespecified minimum credit ratingratings from each of the major credit rating agencies. WhenShould Synovus’ credit rating fallsfall below investment grade, these provisions allowspecified ratings, the counterparties ofhave the derivative instrumentcontractual right to demand immediate and ongoing full collateralization on derivative instruments in net liability positions and, for certain counterparties, request immediate termination. As Synovus’ current rating is below investment grade,Certain of these agreements currently require Synovus is required to post collateral as required by each agreement, against thesespecific derivative positions. Additionally, as of June 10, 2013, the CCC became mandatory for certain trades as required under the Dodd-Frank Act. These derivative transactions also carry collateral requirements, both at the inception of the trade, and as the value of each derivative position changes. As trades are migrated to the CCC, dealer counterparty exposure will be reduced, and higher notional amounts of Synovus' derivative instruments will be housed at the CCC, a highly regulated and well-capitalized entity. As of June 30, 2015,2016, collateral totaling $68.1$75.2 million, consisting of Federal funds sold, was pledged to the derivative counterparties, including $8.2$22.9 million with the CCC, to comply with collateral requirements.

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The impact of derivative instruments on the consolidated balance sheets at June 30, 20152016 and December 31, 20142015 is presented below.
 Fair Value of Derivative Assets Fair Value of Derivative Liabilities

(in thousands)
Location on Consolidated Balance Sheet June 30, 2016 December 31, 2015 Location on Consolidated Balance Sheet June 30, 2016 December 31, 2015
Derivatives not designated
  as hedging instruments:
           
Interest rate contractsOther assets $36,804
 25,580
 Other liabilities 37,221
 26,030
Mortgage derivativesOther assets 2,541
 1,559
 Other liabilities 1,467
 —
Visa derivative  —
 —
 Other liabilities 1,415
 1,415
 Total derivatives not
  designated as hedging
  instruments    
  $39,345
 27,139
   40,103
 27,445
            
 Fair Value of Derivative Assets Fair Value of Derivative Liabilities

(in thousands)
Location on Consolidated Balance Sheet June 30, 2015 December 31, 2014 Location on Consolidated Balance Sheet June 30, 2015 December 31, 2014
Derivatives not designated
  as hedging instruments:
           
Interest rate contractsOther assets $27,948
 30,904
 Other liabilities $28,566
 31,398
Mortgage derivativesOther assets 2,691
 1,213
 Other liabilities —
 753
Visa derivative  —
 —
 Other liabilities 1,415
 1,401
 Total derivatives not
  designated as hedging
  instruments    
  $30,639
 32,117
   $29,981
 33,552
            
    
The pre-tax effect of fair value hedges on the consolidated statements of income for the six and three months ended June 30, 2015 and 20142016 is presented below.
Location of Gain (Loss) Recognized in Income Gain (Loss) Recognized in Income Location of Gain (Loss) Recognized in Income Gain (Loss) Recognized in Income
(in thousands) Six Months Ended June 30, Six Months Ended June 30,
Derivatives not designated as hedging instruments 2015 2014 2016 2015
Interest rate contracts(1)
Other non-interest income (124) 384
 Other non-interest income 33
 (124)
Mortgage derivatives(2)
Mortgage banking income 2,231
 (755) Mortgage banking income (485) 2,231
Total $2,107
 (371) $(452) 2,107
        
         
Location of Gain (Loss) Recognized in Income Gain (Loss) Recognized in Income Gain (Loss) Recognized in Income
(in thousands) Three Months Ended June 30, Three Months Ended June 30,
Derivatives not designated as hedging instruments 2015 2014 Location of Gain (Loss) Recognized in Income 2016 2015
Interest rate contracts(1)
Other non-interest income $55
 281
 Other non-interest income 27
 55
Mortgage derivatives(2)
Mortgage banking income 1,128
 (435) Mortgage banking income (335) 1,128
Total $1,183
 (154) $(308) 1,183
        
(1) Gain (loss) represents net fair value adjustments (including credit related adjustments) for customer swaps and offsetting positions.
(2) Gain (loss) represents net fair value adjustments recorded for interest rate lock commitments and commitments to sell mortgage loans to third-party investors.
During the six months ended June 30, 20152016 and 2014,2015, Synovus reclassified $950 thousand and $1.5 million, respectively, from hedge-related basis adjustment, a component of long-term debt, as a reduction to interest expense. Additionally, during the six months ended June 30, 2016, Synovus reclassified $1.3 million from hedge-related basis adjustment, as a reduction to loss on early extinguishment of debt. These deferred gains relate to hedging relationships that have been previously terminated and are reclassified into earnings over the remaining life of the hedged items.

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Note 129 - 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 six and three months ended June 30, 2015 and 2014.2016.

Six Months Ended June 30, Three Months Ended June 30,Six Months Ended June 30, Three Months Ended June 30,
(in thousands, except per share data)2015 2014 2015 20142016 2015 2016 2015
Basic Net Income Per Common Share:              
Net income available to common shareholders$104,637
 90,170
 $53,233
 44,313
$107,870
 104,637
 $57,898
 53,233
Weighted average common shares outstanding133,935
 138,961
 132,947
 138,991
126,164
 133,935
 125,100
 132,947
Net income per common share, basic$0.78
 0.65
 0.40
 0.32
$0.85
 0.78
 0.46
 0.40
       
Diluted Net Income Per Common Share:              
Net income available to common shareholders$104,637
 90,170
 53,233
 44,313
$107,870
 104,637
 $57,898
 53,233
Weighted average common shares outstanding133,935
 138,961
 132,947
 138,991
126,164
 133,935
 125,100
 132,947
Potentially dilutive shares from assumed exercise of
securities or other contracts to purchase common stock
743
 574
 678
 576
Potentially dilutive shares from outstanding equity-based awards614
 743
 599
 678
Weighted average diluted common shares134,678
 139,535
 133,625
 139,567
126,778
 134,678
 125,699
 133,625
Net income per common share, diluted$0.78
 0.65
 0.40
 0.32
$0.85
 0.78
 0.46
 0.40
              
Basic net income per common share is computed by dividing net income 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 options and restricted share units is reflected in diluted net income per common share, unless the impact is anti-dilutive, by application of the treasury stock method.
As of June 30, 20152016 and 2014,2015, there were 2.72.5 million and 3.52.7 million, respectively, potentially dilutive shares related to common stock options and Warrants to purchase shares of common stock that were outstanding during 20152016 and 2014,2015, but were not included in the computation of diluted net income per common share because the effect would have been anti-dilutive.

Note 1310 - Share-based Compensation
General Description of Share-based Plans
Synovus has a long-term incentive plan under which the Compensation Committee of the Board of Directors has the authority to grant share-based awards to Synovus employees. At June 30, 2015,2016, Synovus had a total of 7.06.2 million shares of its authorized but unissued common stock reserved for future grants under the 2013 Omnibus Plan. The 2013 Omnibus Plan authorizes 8.6 million common share equivalents available for grant, where grants of options count as one share equivalent and grants of full value awards (e.g., restricted share units, market restricted share units, and performance share units) count as two share equivalents. Any restricted share units that are forfeited and options that expire unexercised will again become available for issuance under the Plan. The Plan permits grants of share-based compensation including stock options, restricted share units, market restricted share units, and performance share units. The grants generally include vesting periods ranging from three to five years and contractual terms of ten years. Stock options are granted at exercise prices which equal the fair value of a share of common stock on the grant-date. Market restricted share units and performance share units are granted at target and are compared annually to required market and performance metrics to determine final units vested and compensation expense. Synovus has historically issued new shares to satisfy share option exercises and share unit conversions. Dividend equivalents are paid on outstanding restricted share units, market restricted share units, and performance share units in the form of additional restricted share units that vest over the same vesting period or the vesting period left on the original restricted share unit grant.
Share-based Compensation Expense
Share-based compensation costs associated with employee grants are recorded as a component of salaries and other personnel expense in the consolidated statements of income. Share-based compensation costs associated with grants made to non-employee directors of Synovus are recorded as a component of other operating expenses. Total share-based compensation expense was $6.8 million and $3.5 million for the six and three months ended June 30, 2016, respectively, and $6.3 million and $3.0 million for the six and three months ended June 30, 2015, respectively, and $4.7 million and $2.5 million for the six and three months ended June 30, 2014, respectively.
Stock Options
No stock option grants were made during the six months ended June 30, 2015.2016. At June 30, 2015,2016, there were 1.91.5 million outstanding options to purchase shares of common stock with a weighted average exercise price of $36.27.$34.10 per share.


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Restricted Share Units, Performance Share Units, and Market Restricted Share Units
During the six months ended June 30, 2015,2016, Synovus awarded 318342 thousand restricted share units that have a service-based vesting period of three years and awarded 8284 thousand performance share units that vest upon service and performance conditions. Synovus also granted 8284 thousand market restricted share units during the six months ended June 30, 2015.2016. The weighted average grant-date fair value of the awarded restricted share units, performance share units and market restricted share units was $28.05$26.22 per share. Market restricted share units and performance share units are granted at target and are compared annually to required market and performance metrics. The performance share units vest upon meeting certain service and performance conditions. Return on average assets (ROAA) performance is evaluated each year over a three-year performance period, with share distribution determined at the end of the three years. The number of performance share units that will ultimately vest ranges from 0% to 150% of target based on Synovus' three-year weighted average ROAA (as defined). The market restricted share units have a three-year service-based vesting component as well as a total shareholder return multiplier. The number of market restricted share units that will ultimately vest ranges from 75% to 125% of target based on Synovus' total shareholder return (TSR).return. At June 30, 2015,2016, including dividend equivalents granted, there were 1.1 million restricted share units, performance share units and market restricted share units outstanding with a weighted average grant-date fair value of $26.30 per share.
$24.91.Note 11 - Commitments and Contingencies
In the normal course of business, Synovus enters into commitments to extend credit such as loan commitments and letters of credit to meet the financing needs of its customers. Synovus uses the same credit policies in making commitments and conditional obligations as it does for on-balance sheet instruments. Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed expiration dates or other termination clauses and may require payment of a fee.
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.
The carrying amount of loan commitments and letters of credit closely approximates the fair value of such financial instruments. Carrying amounts include unamortized fee income and, in some instances, allowances for any estimated credit losses from these financial instruments. These amounts are not material to Synovus' consolidated balance sheets.

Unfunded lending commitments and letters of credit at June 30, 2016 and December 31, 2015 are presented below.
(in thousands)June 30, 2016 December 31, 2015
Letters of credit*$182,327
 166,936
Commitments to fund commercial real estate, construction, and land development loans1,696,990
 1,882,130
Unused credit card lines1,078,166
 1,055,181
Commitments under home equity lines of credit1,089,537
 1,051,386
Commitments to fund commercial and industrial loans4,169,140
 4,094,809
Other loan commitments417,431
 284,706
Total unfunded lending commitments and letters of credit$8,633,591
 8,535,148
    
* Represents the contractual amount net of risk participations of $62 million and $66 million at June 30, 2016 and December 31, 2015, respectively.

Note 1412 - 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 numerous legal actions and other proceedings asserting claims for damages and related relief for losses resulting from the recent financial crisis.losses. These actions include mortgage loan and other loan put-back claims, claims and counterclaims asserted by individual borrowers related to their loans and allegations of violations of state and federal laws and regulations relating to banking practices, including several purported 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 occurred. Synovus also from timewere to time faces disputes with customers and other counterparties, and in many cases, those disputes can pose both financial and reputational risk to Synovus.occur.
Synovus carefully examines and considers each legal matter, and, in those situations where Synovus determines that a particular legal matter presents loss contingencies that are both probable and reasonably estimable, Synovus establishes an appropriate accrual. An event is considered to be probable if the future event is likely to occur. While the final outcome of any legal proceeding is inherently uncertain, based on the information currently available, advice of counsel and available insurance coverage, management believes that the amounts accrued with respect to legal matters as of June 30, 20152016 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, including those legal matters described below, 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 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 that the aggregate range from our pending and threatened litigation, including, without limitation, the matters described below, is from zero to $15$12 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 higher. As there are further developments in these legal matters, Synovus will reassess these matters, and the estimated range of reasonably possible losses may change as a result of this assessment. Based on Synovus' current knowledge and advice of counsel, management presently does not believe that the liabilities arising from these legal matters will have a material adverse effect on Synovus' consolidated financial condition, results of operations or cash flows. However, it is possible that the ultimate resolution of these legal matters could have a material adverse effect on Synovus' results of operations for any particular period.
Synovus intends to vigorously pursue all available defenses to these legal matters, but will also consider other alternatives, including settlement, in situations where there is an opportunity to resolve such legal matters on terms that Synovus considers to be favorable, including in light of the continued expense, reputational risk and distraction of defending such legal matters. Synovus also maintains insurance coverage, which may (or may not) be available to cover legal fees, or potential losses that might be incurred in connection with the legal matters described below. 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.

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TelexFree Litigation
On October 22, 2014, several pending lawsuits were consolidated into a multi-district putative class action case captioned In re: TelexFree Securities Litigation, MDL Number 4:14-md2566-TSH, United States District Court District of Massachusetts. Synovus Financial Corp. and Synovus Bank were named as defendants with numerous other defendants in the purported class action lawsuit.   An Amended Complaint was filed on March 31, 2015 which consolidated and amended the claims previously asserted. The claims against Synovus Financial Corp. were dismissed by Plaintiffs on April 10, 2015 so now, as to Synovus-related entities, only claims against Synovus Bank remain pending.  TelexFree was a merchant customer of Base Commerce, LLC, “Base Commerce”, an independent sales organization/member service provider sponsored by Synovus Bank. The purported class action lawsuit generally alleges that TelexFree engaged in an improper multi-tier marketing scheme involving voice-over Internet protocol telephone services and that the various defendants, including Synovus Bank, provided financial services to TelexFree that allowed TelexFree to conduct its business operations. Synovus Bank filed a motion to dismiss the lawsuit on June 1, 2015.2015, which remains pending before the court.
Synovus Bank believes it has substantial defenses related to these purported claims and intends to vigorously defend the claims asserted. Synovus currently cannot reasonably estimate losses attributable to this matter.



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 commercial banking industry or economy generally, to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.
All statements other than statements of historical fact are forward-looking statements. You can identify these forward-looking statements through Synovus' use of words such as “believes,” “anticipates,” “expects,” “may,” “will,” “assumes,” “predicts,” “could,” “should,” “would,” “intends,” “targets,” “estimates,” “projects,” “plans,” “potential” and other similar words and expressions of the future or otherwise regarding the outlook for Synovus' future business and financial performance and/or the performance of the commercial banking industry and economy in general. Forward-looking statements are based on the current beliefs and expectations of Synovus' management and are subject to significant risks and uncertainties. Actual results may differ materially from those contemplated by such forward-looking statements. A number of factors could cause actual results to differ materially from those contemplated by the forward-looking statements in this document. Many of these factors are beyond Synovus' ability to control or predict. These factors include, but are not limited to:
(1) the risk that competition in the financial services industry may adversely affect our future earnings and growth;
(2) 
the risk that we may not realize the expected benefits from our efficiency and growth initiatives, which will negatively

affect our future profitability;
(3)the risk that our enterprise risk management framework may not identify or address risks adequately, which may result in unexpected losses;
(4)the risk that our allowance for loan losses may prove to be inadequate or may be negatively affected by credit risk exposures;
(5)the risk that any future economic downturn could have a material adverse effect on our capital, financial condition, results of operations and future growth;
(6)changes in the interest rate environment, including changes to the federal funds rate, and competition in our primary market area may result in increased funding costs or reduced earning assets yields, thus reducing margins and net interest income;
(7) the risk that we may be required to make substantial expenditures to keep pace with the rapid technological changes in the financial services market;
(4)the risk that our enterprise risk management framework may not identify or address risks adequately, which may result in unexpected losses;
(5)the risk that our allowance for loan losses may prove to be inadequate or may be negatively affected by credit risk exposures;
(6)the risk that any future economic downturn could have a material adverse effect on our capital, financial condition, results of operations and future growth;

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(7)
the risk that we could realize additional losses if our levels of non-performing assets increase and/or if we determine to
sell certain non-performing assets and the proceeds we receive are lower than the carrying value of such assets;
(8)changes in the interest rate environment and competition in our primary market area may result in increased funding costs or reduced earning assets yields, thus reducing margins and net interest income;
(9)
the risk that if we pursue acquisitions in the future as part of our growth strategy, we may not be able to complete such
acquisitions or successfully integrate bank or non-bank acquisitions into our existing operations;

(10) risks related to a failure in or breach of our operational or security systems of our infrastructure, or those of our third-party vendors and other service providers, including as a result of cyber attacks,cyber-attacks, which could disrupt our businesses, result in the disclosure or misuse of confidential or proprietary information, damage our reputation, increase our costs or cause losses;
(11)(9) 
risks related to our reliance on third parties to 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
of a third-party vendor;
(10)our ability to attract and retain key employees;
(11)the risk that we could realize losses if we determine to sell non-performing assets and the proceeds we receive are lower than the carrying value of such assets;

(12) the impact onrisk that we may not be able to identify suitable acquisition targets as part of our financial results, reputation,growth strategy and businesseven if we are unableable to comply with all applicable federal and state regulations,identify suitable acquisition targets, we may not be able to complete such acquisitions, successfully integrate bank or other supervisory actionsnonbank acquisitions into our existing operations, or directives and any necessary capital initiatives;realize the anticipated benefits or synergies from such acquisitions;
(13) the impact of the recent and proposed changes in governmental policy, laws and regulations, including proposed and recently enacted changes in the regulation of banks and financial institutions, or the interpretation or application thereof, including restrictions, increased capital requirements, limitations and/or penalties arising from banking, securities and insurance laws, enhanced regulations and examinations and restrictions on compensation;
(14) 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;
(15)the risks that if economic conditions worsen or regulatory capital rules are modified, or the results of mandated “stress
testing” do not satisfy certain criteria, we may be required to undertake initiatives to improve our capital position;
(15)(16) changes in the cost and availability of funding due to changes in the deposit market and credit market, or the way in which we are perceived in such markets, including a downgrade inmay adversely affect our credit ratings;
(16)the impact on our borrowing costs, capital costsresources, liquidity and our liquidity due to our status as a non-investment grade issuer;financial results;
(17) 
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;
(18) the risk that we may be unable to pay dividends on our common stock or Series C Preferred Stock or obtain any applicable regulatory approval to take certain capital actions, including any increases in dividends on our common stock, any repurchases of common stock or any other issuance or redemption of any other regulatory capital instruments;
(19) our ability to receive dividends from our subsidiaries could affect our liquidity, including our ability to pay dividends or take other capital actions;
(20) the risk that further downgrades of U.S. government securities by one or more of the credit ratings agencies could have a material effect on our operations, earnings, and financial condition;
(21)risks related to recent and proposed changes in the mortgage banking industry, including the risk that we may be required to repurchase mortgage loans sold to third parties and the impact of the “ability to pay” and “qualified mortgage” rules on our loan origination process and foreclosure proceedings;
(22)the risk that for our deferred tax assets, we may be required to increase the valuation allowance in future periods, or we
may not be able to realize all of the deferred tax assets in the future;
(21)(23) the risk that we could have an “ownership change” under Section 382 of the IRC,Code, which could impair our ability to timely and fully utilize our net operating losses and built-in losses that may exist when such “ownership change” occurs;
(22)(24) 
risks related to recent and proposed changes in the mortgage banking industry, including the risk that we may be required
to repurchase mortgage loans sold to third parties and the impact of the “ability to pay” and “qualified mortgage” rules on our loan origination process and foreclosure proceedings;
(23)
the costs and effects of litigation, investigations, inquiries or similar matters, or adverse facts and developments related
thereto;
(24)(25) risks related to the fluctuation in our stock price;
(25)(26) the effects of any damages to Synovus'our reputation resulting from developments related to any of the items identified above; and

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(26)(27) other factors and other information contained in this Report and in other reports and filings that we make with the SEC under the Exchange Act, including, without limitation, those found in “Part I-Item 1A."Part I - Item 1A.- Risk Factors”Factors" of Synovus' 20142015 Form 10-K.

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' 20142015 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 written or oral, 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. We provide integrated financial services includingThrough its wholly-owned subsidiary, Synovus Bank, member FDIC, the company provides commercial and retail banking financialin addition to a full suite of specialized products and services including private banking, treasury management, insurancewealth management, and international banking. Synovus also provides mortgage services, to our customersfinancial planning, and investment advisory services through its wholly-owned subsidiaries, Synovus Mortgage, Synovus Trust, and Synovus Securities, as well as its GLOBALT and Creative Financial Group divisions.
Synovus Bank's 28 locally-branded bankingbank divisions are positioned in some of our wholly-owned subsidiary bank, Synovus Bank,the best markets in the Southeast, with 253 branches and other offices335 ATMs in Georgia, Alabama, South Carolina, Florida, and Tennessee.
The following financial review summarizes the significant trends, changes in our business, transactions, and other matters affecting Synovus’ results of operations for the six and three months ended June 30, 2015 and 20142016 and financial condition as of June 30, 20152016 and December 31, 2014.2015. 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’ 20142015 Form 10-K.
Management's Discussion and Analysis of Financial Condition and Results of Operations consistconsists of:
Ÿ    Discussion of Results of Operations - Reviews Synovus' financial performance, as well as selected balance sheet items,
items from the statements of income, and certain key ratios that illustrate Synovus' performance.

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

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

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DISCUSSION OF RESULTS OF OPERATIONS
Consolidated Financial Highlights
Six Months Ended June 30, Three Months Ended June 30,Six Months Ended June 30, Three Months Ended June 30,
(dollars in thousands, except per share data)2015 2014 Change 2015 2014 Change2016 2015 Change 2016 2015 Change
Net interest income$406,907
 405,566
 0.3% $203,644
 205,051
 (0.7)%$439,643
 406,907
 8.0% $221,449
 203,644
 8.7%
Provision for loan losses11,034
 21,795
 (49.4) 6,636
 12,284
 (46.0)16,070
 11,034
 45.6 6,693
 6,636
 0.9
Non-interest income134,687
 133,569
 0.8 68,832
 63,388
 8.6
131,033
 134,687
 (2.7) 67,886
 68,832
 (1.4)
Adjusted non-interest income(1)
131,977
 126,449
 4.4 66,847
 63,388
 5.5
130,966
 131,977
 (0.8) 67,886
 66,847
 1.6
Non-interest expense356,713
 366,365
 (2.6) 177,806
 182,205
 (2.4)376,844
 356,713
 5.6 188,611
 177,806
 6.1
Adjusted non-interest expense(1)
334,238
 336,557
 (0.7) 166,872
 169,498
 (1.5)361,708
 351,686
 2.8 182,410
 173,047
 5.4
Income before income taxes173,847
 150,975
 15.1 88,034
 73,950
 19.0
177,762
 173,847
 2.3 94,031
 88,034
 6.8
Adjusted pre-tax, pre-credit costs income(1)
204,646
 195,458
 4.7 103,619
 98,941
 4.7
Net income109,756
 95,289
 15.2 55,792
 46,872
 19.0
112,989
 109,756
 2.9 60,457
 55,792
 8.4
Net income available to common shareholders104,637
 90,170
 16.0 53,233
 44,313
 20.1
107,870
 104,637
 3.1 57,898
 53,233
 8.8
Net income per common share, basic0.78
 0.65
 20.4 0.40
 0.32
 25.6
0.85
 0.78
 9.4 0.46
 0.40
 15.6
Net income per common share, diluted0.78
 0.65
 20.2 0.40
 0.32
 25.5
0.85
 0.78
 9.5 0.46
 0.40
 15.6
Net interest margin3.22% 3.40
 (18) bps
 3.15% 3.41
 (26) bps
3.27% 3.22
 5 bps
 3.27% 3.15
 12bps
Net charge-off ratio0.17
 0.50
 (33) bps
 0.10
 0.69
 (59) bps
Net charge-off ratio (annualized)0.12
 0.17
 (5) bps
 0.11
 0.10
 1bp
                      
June 30, 2015 March 31, 2015 Sequential Quarter Change June 30, 2014 Year-Over-Year ChangeJune 30, 2016 March 31, 2016 Sequential Quarter Change June 30, 2015 Year-Over-Year Change
(dollars in thousands, except per share data) 
Loans, net of deferred fees and costs$21,494,869
 21,106,213
 388,656
 $20,455,763
 1,039,106
$23,060,908
 22,758,203
 302,705
 $21,494,869
 1,566,039
Total deposits22,649,181
 22,107,849
 541,332
 20,993,467
 1,655,714
23,925,922
 23,449,928
 475,994
 22,649,181
 1,276,741
Total average deposits22,466,102
 21,615,049
 851,053
 20,863,706
 1,602,396
23,608,027
 23,210,263
 397,764
 22,466,102
 1,141,925
Average core deposits(1)
20,910,171
 20,020,227
 889,944
 19,462,539
 1,447,632
22,271,027
 22,115,024
 156,003
 20,910,171
 1,360,856
Average core deposits excluding average state, county, and municipal (SCM) deposits(1)
18,632,388
 17,796,034
 836,354
 17,193,687
 1,438,701
19,990,988
 19,674,275
 316,713
 18,632,388
 1,358,600
                  
Non-performing assets ratio1.11% 1.28
 (17) bps
 1.77% (66) bps
0.81% 0.95
 (14) bps
 1.11% (30) bps
Non-performing loans ratio0.81
 0.92
 (11) bps
 1.27
 (46) bps
0.67
 0.78
 (11) bps
 0.81
 (14) bps
Past due loans over 90 days0.02
 0.02
 —
 0.02
 —
0.03
 0.01
 2 bps
 0.02
 1 bp
                  
Tier 1 capital(2)
$2,615,827
 2,592,618
 23,209
 $2,500,491
 115,336
$2,627,572
 2,609,191
 18,381
 2,615,827
 11,745
Common equity Tier 1 capital (transitional)(2)
2,615,827
 2,592,618
 23,209
 N/A
 N/A
2,616,181
 2,609,191
 6,990 2,615,827
 354
Tier 1 common equity(1)(2)
N/A
 N/A
 N/A
 2,364,511
 N/A
Total risk-based capital(2)
2,971,518
 3,039,552
 (68,034) 2,958,274
 13,244
Tier 1 capital ratio(2)
10.73%
 10.80
 (7) bps
 11.01% (28) bps
Common equity Tier 1 capital ratio (transitional)(2)
10.73
 10.80
 (7) bps
 N/A
 N/A
Tier 1 common equity ratio(1)(2)
N/A
 N/A
 N/A
 10.42
 N/A
Total risk-based capital ratio(2)
12.18
 12.66
 (48) bps
 13.03
 (85) bps
Total risk-based capital3,146,897
 3,183,901
 (37,004) 2,971,518
 175,379
Tier 1 capital ratio10.06%
 10.04
 2 bps
 10.73% (67) bps
Common equity Tier 1 capital ratio (transitional)10.01
 10.04
 (3) bps
 10.73
 (72) bps
Total risk-based capital ratio12.05
 12.25
 (20) bps
 12.18
 (13) bps
Total shareholders’ equity to total assets ratio10.66
 10.97
 (31) bps
 11.47
 (81) bps
10.02
 10.12
 (10) bps
 10.66
 (64) bps
Tangible common equity to tangible assets ratio(1)
10.13
 10.43
 (30) bps
 10.91
 (78) bps
9.52
 9.62
 (10) bps
 10.13
 (61) bps
                  
(1)
See reconciliation of “Non-GAAP Financial Measures” in this Report.
(2)(1) 2015 regulatory capital determined under Basel III transitional capital rules. Prior periods were determined under Basel I capital rules.See reconciliation of “Non-GAAP Financial Measures” in this Report.

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Results for the Six and Three Months Ended June 30, 20152016
For the six months ended June 30, 2015,2016, net income available to common shareholders was $104.6$107.9 million, or $0.78$0.85 per diluted common share, compared to net income available to common shareholders of $90.2$104.6 million, or $0.65$0.78 per diluted common share, for the six months ended June 30, 2014.2015. For the three months ended June 30, 2015,2016, net income available to common shareholders was $53.2$57.9 million, or $0.40$0.46 per diluted common share, compared to net income available to common shareholders of $44.3$53.2 million, or $0.32$0.40 per diluted common share, for the three months ended June 30, 2014.
Results2015. Adjusted net income available to common shareholders for the sixthree months ended June 30, 2015 reflect continued broad-based improvement in credit quality as the NPL ratio declined to 0.81% at June 30, 2015 from 0.92% at March 31, 2015 and 1.27% a year ago. Additionally, other real estate balances declined $8.32016 was $61.6 million, or 11.2%, and $35.1 million, or 34.6%,$0.49 per diluted common share, compared to March 31, 2015, and June 30, 2014, respectively. Credit costs totaled $12.8 millionadjusted net income available to common shareholders for the three months ended June 30, 2015 of $56.0 million, or $0.42 per diluted common share (excluding the after-tax impact of loss on early extinguishment of debt, litigation contingency expenses, and restructuring charges). See reconciliation of "Non-GAAP Financial Measures" in this Report.
Credit quality metrics improved with the NPL ratio declining to 0.67% at June 30, 2016 from 0.78% at March 31, 2016 and 0.81% a year ago. ORE balances declined $13.7 million during the first half of 2016 to $33.3 million at June 30, 2016. Total non-performing assets were $187.4 million at June 30, 2016, down by $29.3 million, or 13.5%, from the previous quarter, and down $52.7 million, or 22.0%, from a year ago. The NPA ratio declined 14 basis points and was 0.81% at June 30, 2016 compared to $15.7 million for the three months ended0.95% at March 31, 2015,2016 and $16.9 million for the three months ended1.11% at June 30, 2014.2015. Net charge-offs for the three months ended June 30, 20152016 totaled $6.1 million, or 0.11% of average loans annualized, compared to net charge-offs of $7.4 million, or 0.13% of average loans annualized for the three months ended March 31, 2016 and net charge-offs of $5.3 million, or 0.10% of average loans annualized, down $7.0 million from $12.3 million in the first quarter of 2015 and down $30.1 million from $35.4 million infor the second quarter of 2014. Total non-performing assets were $240.1 million at June 30, 2015, down $30.0 million, or 11.1%, from the previous quarter, and down $123.0 million, or 33.9%, from a year ago.
Adjusted pre-tax, pre-credit costs income (which excludes provision for loan losses, other credit costs, restructuring charges, securities gains and losses, gain on the Memphis transaction, litigation contingency expense, and certain other items) was $204.6 million2015. Net charge-offs for the six months ended June 30, 2015 with $103.62016 totaled $13.5 million, reportedor 0.12% of average loans annualized, compared to net charge-offs of $17.6 million, or 0.17% of average loans annualized for the six months ended June 30, 2015. Synovus expects its net charge-off ratio to be between 10 and 20 basis points for the second half of 2016. Provision expense was $6.7 million compared to provision expense of $9.4 million in the prior quarter and $6.6 million during the second quarter a year ago. For the six months ended June 30, 2016, provision expense was $16.1 million compared to $11.0 million for the same period a year ago. The decrease in provision expense in the second quarter of 2016 compared to the first quarter of 2016 was primarily attributable to an increase in the volume of recoveries. Synovus does, however, expect the level of recoveries to subside in the second half of the year, which could cause provision expense to increase modestly compared to the first half of the year.
Total revenues were $289.3 million for the three months ended June 30, 20152016, up $8.1 million, or 2.9%, sequentially and $101.0up 7.0% vs. the same time period in 2015. Net interest income was $221.4 million reported for the three months ended June 30, 2016, up $3.3 million, or 1.5%, compared to the three months ended March 31, 2016 and up $17.8 million, or 8.7%, compared to the three months ended June 30, 2015. The sequentialnet interest margin was 3.27%, unchanged from the previous quarter increase of $2.6 million in adjusted pre-tax, pre-credit costs income was led by an increase in mortgage banking income of $1.0 million and included the benefit of one more calendar day as well as three more business days with increases in interest income of $381 thousand and service charges on deposit accounts of $661 thousand. Additionally, adjusted non-interest expenseup 12 basis points from 3.15% for the second quarter of 20152015. The yield on earning assets was $495 thousand lower than3.73% and the firsteffective cost of funds was 0.46% for the second quarter of 2015 driven by a seasonal decline in employment taxes. Compared2016, both unchanged from the previous quarter. The yield on loans was 4.15%, unchanged from the prior quarter. Synovus continues to expect that the six months ended June 30, 2014, adjusted pre-tax, pre-credit costs income grew $9.2 million, comprised of a $5.5 million increase in adjusted non-interest income led by growth in mortgage banking income, an increase in net interest income for the full year (in a flat rate environment as compared to 2015) will be 7.5% with the net interest margin possibly experiencing slight downward pressure during the third quarter of $1.32016.
Total non-interest income was $67.9 million with year-over-year average loan growth of $973.6for the three months ended June 30, 2016, up $4.7 million, or 4.8%7.5% compared to the three months ended March 31, 2016 and down 1.4% vs. the three months ended June 30, 2015. Adjusted non-interest income (excludes investment securities gains, net) was up 7.6% vs. the first quarter of 2016 and up 1.6% vs. the second quarter of 2015. Adjusted non-interest expense was $182.4 million for the three months ended June 30, 2016, up $3.1 million, or 1.7%, compared to the three months ended March 31, 2016 and up $9.4 million, or 5.4%, compared to the three months ended June 30, 2015. Advertising expense for the three months ended June 30, 2016 was up $4.9 million and $4.5 million compared to the first quarter of 2016 and the second quarter of 2015, respectively, as a decreaseresult of $2.3 million inSynovus increasing brand awareness activities. The adjusted non-interest expense.efficiency ratio improved to 61.54% for the second quarter of 2016 compared to 61.62% for the second quarter of 2015. Synovus remains focused on achieving its long-term goal of an adjusted efficiency ratio below 60%. See reconciliation of "Non-GAAP Financial Measures" in this Report.
The net interest margin declined thirteen basis pointsResults for the three months ended June 30, 2016 included $5.8 million in restructuring charges with $4.8 million of these charges related to 3.15% comparedSynovus' continued corporate real estate optimization activities. Synovus is also continuing to 3.28%evaluate its branch network while deploying additional digital and on-line capabilities to increase convenience for customers while lowering transaction costs, and during the three months ended June 30, 2016, identified three branch closures to be completed by year-end, which are in addition to the previous quarter and was twenty six basis points below the second quarter of 2014 net interest margin of 3.41%. The yield on earning assets was 3.61%, a decline of twelve basis points fromfour branches identified during the first quarter of 2015, and2016. After these closures, the effective costbranch network will consist of funds increased one basis point to 0.46%. The yield on loans declined five basis points and the increased balances at the Federal Reserve Bank contributed seven basis points of the linked quarter decline. Compared to the second quarter of 2014, the yield on earning assets declined twenty five basis points250 locations by year-end, which will represent a 22.6% reduction from 3.86% and the effective cost of funds increased one basis point from 0.45%.year-end 2010. 
At June 30, 2015,2016, total loans outstanding were $21.49$23.06 billion,, a sequential quarter increase of $388.7$302.7 million, or 7.4%5.3% annualized, and a year-over-year increase of $1.04$1.57 billion, or 5.1%7.3%. Growth for the quarter, was across allcompared to the previous quarter, consisted of retail loan categories with CRE loans growing $164.3growth of $261.0 million, or 9.5% annualized, retail loans increasing $127.1 million, or 13.0%24.1% annualized, and C&I loans growing by $97.0loan growth of $146.0 million, or 3.8% annualized.5.4% annualized, partially offset by a planned decline in CRE loans of $105.9 million, or 5.6% annualized, primarily due to the selective pull-back in construction lending. Total average loans, net grew $179.4$349.8 million, or 3.4%6.3% annualized, from the previous quarter and $915.5 million,$1.65 billion, or 4.5%7.8%, as compared to the second quarter of 2014.2015.

At June 30, 2015,2016, total deposits were $22.6523.93 billion, up $476.0 million, or 8.2% annualized, compared to the previous quarter and totalup $1.28 billion, or 5.6%, compared to June 30, 2015. Brokered deposits increased $291.6 million vs. the first quarter of 2016 and reflect the addition of a new bank deposit sweep product, being offered to our Synovus Securities customers, which added $307.7 million in new deposits as of June 30, 2016. Total average deposits for the three months ended June 30, 2016 were $22.47$23.61 billion, with total average deposits up $851.1$397.8 million, or 15.8%6.9% annualized, from the previous quarter. Average core deposits ended the quarter at $20.91and up $1.14 billion, up $889.9 million, or 17.8%5.1%, compared to the firstsecond quarter of 2015. Period-end core deposits excluding SCM deposits increased $233.8 million, or 4.7%, sequentially and $1.27 billion, or 6.7%, compared to the prior year. Average core deposits excluding average state, county, and municipal (SCM)SCM deposits grew $836.4increased $316.7 million, or 18.9%6.5% annualized, overfrom the firstprevious quarter of 2015 and $1.44and grew $1.36 billion, or 8.4%7.3%, over the second quarter of 2014.2015. See reconciliation of "Non-GAAP Financial Measures" in this Report.
During January 2016, Synovus repurchased $124.7 million of its subordinated notes maturing in 2017 in conjunction with Synovus' cash tender offer that commenced on December 23, 2015 and expired on January 22, 2016. Results for the six months ended June 30, 2016 included a $4.7 million pre-tax loss relating to the January tender offer.
Synovus continued to return capital to shareholdersexecute on the $300 million share repurchase program announced in October 2015, acquiring $60.5 million of common stock during the second quarter of 2015, acquiring an additional $50.32016 and $110.9 million of common stock following repurchases of $59.1 million during the first quarter of 2015. Since2016. From inception of the existing $300 million share repurchase program announced in October 20142015 through June 30, 2015,August 2, 2016, Synovus has repurchased $197.5$244.5 million of common stock.stock, reducing the total share count by 8.3 million. Management currently expects to complete the $300 million share repurchase program on or prior to year-end 2016, with timing of repurchases dependent on market conditions and other factors. Additionally, during the first half of 2015,six months ended June 30, 2016, Synovus declared common stock dividends totaling $0.20$0.24 per share, representing a 43%20% increase from the dividends declared during the first halfsame time period of 2014.2015. Total shareholders' equity was $3.012.95 billion at June 30, 2015,2016, compared to $3.043.00 billion at December 31, 2014,2015, and $3.05$3.00 billion at June 30, 2014.2015.

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Changes in Financial Condition
During the six months ended June 30, 2015,2016, total assets increased $1.15 billion$667.0 million from $27.05$28.79 billion at December 31, 20142015 to $28.2129.46 billion. The principal componentscomponent of this increase werewas an increase of $567.8 million in interest bearing funds with the Federal Reserve Bank, an increase of $397.2 million in loans, net of deferred fees and costs, and an increase in investment securities available for sale, at fair value of $313.3$631.3 million. An increase of $1.12 billion$683.3 million in deposits provided the funding source for the growth in loans, net of deferred fees and costs and increase in investment securities available for sale, at fair value and drove the increase in interest bearing funds at the Federal Reserve Bank.loans.

Loans
The following table compares the composition of the loan portfolio at June 30, 2015,2016, December 31, 2014,2015, and June 30, 2014.2015.
(dollars in thousands)June 30, 2015 December 31, 2014 
June 30, 2015 vs. December 31, 2014 % Change(1)
 June 30, 2014 
June 30, 2015 vs. June 30, 2014
% Change
June 30, 2016 December 31, 2015 
June 30, 2016 vs. December 31, 2015 % Change(1)
 June 30, 2015 
June 30, 2016 vs. June 31, 2015
% Change
Investment properties$5,423,893
 5,216,964
 8.0 % $4,890,580
 10.9 %$5,920,661
 5,751,631
 5.9 % $5,403,394
 9.6 %
1-4 family properties1,097,406
 1,133,882
 (6.5) 1,150,706
 (4.6)1,127,780
 1,129,156
 (0.2) 1,113,700
 1.3
Land acquisition554,501
 586,046
 (10.9) 609,285
 (9.0)459,254
 513,981
 (21.4) 554,501
 (17.2)
Total commercial real estate7,075,800
 6,936,892
 4.0
 6,650,571
 6.4
7,507,695
 7,394,768
 3.1
 7,071,595
 6.2
Commercial, financial and agricultural6,259,553
 6,182,312
 2.5
 6,059,794
 3.3
6,596,835
 6,453,180
 4.5
 6,243,259
 5.7
Owner-occupied4,140,769
 4,075,117
 3.2
 4,005,418
 3.4
4,358,595
 4,318,950
 1.8
 4,161,268
 4.7
Total commercial and industrial10,400,322
 10,257,429
 2.8
 10,065,212
 3.3
10,955,430
 10,772,130
 3.4
 10,404,527
 5.3
Home equity lines1,683,651
 1,683,998
 —
 1,664,520
 1.1
1,657,109
 1,689,914
 (3.9) 1,683,651
 (1.6)
Consumer mortgages1,793,752
 1,694,061
 11.9
 1,561,111
 14.9
2,132,114
 1,938,683
 20.1
 1,793,752
 18.9
Credit cards246,724
 253,649
 (5.5) 255,369
 (3.4)236,034
 240,851
 (4.0) 246,724
 (4.3)
Other retail323,741
 302,460
 14.2
 287,935
 12.4
Other retail loans600,153
 423,318
 84.0
 323,741
 85.4
Total retail4,047,868
 3,934,168
 5.8
 3,768,935
 7.4
4,625,410
 4,292,766
 15.6
 4,047,868
 14.3
Total loans21,523,990
 21,128,489
 3.8
 20,484,718
 5.1
23,088,535
 22,459,664
 5.6
 21,523,990
 7.3
Deferred fees and costs, net(29,121) (30,790) (10.9) (28,955) 0.6
(27,627) (30,099) (16.5) (29,121) (5.1)
Total loans, net of deferred fees and costs$21,494,869
 21,097,699
 3.8 % $20,455,763
 5.1 %$23,060,908
 22,429,565
 5.7 % $21,494,869
 7.3 %
                  
(1) Percentage changes are annualized
At June 30, 2015,2016, total loans were $21.4923.06 billion, an increase of $397.2$631.3 million, or 3.8%5.7% annualized, and $1.04$1.56 billion or 5.1%7.3%, compared to December 31, 20142015 and June 30, 2014, respectively, driven by growth in most categories across the loan portfolio.2015, respectively. Annual percentage loan growth for 20152016 is currently expected to be in the mid single-digits.

Commercial Loans
Total commercial loans (which are comprised of C&I and CRE loans) at June 30, 20152016 were $17.4818.46 billion, or 81.2%80.0% of the total loan portfolio, compared to $17.1918.17 billion, or 81.4%80.9%, at December 31, 20142015 and $16.72$17.48 billion, or 81.6%81.2%, at June 30, 2014.2015.
At June 30, 20152016 and December 31, 2014,2015, Synovus had 2728 and 2524 commercial loan relationships, respectively, with total commitments of $50 million or more (including amounts funded). The average funded balance of these relationships at both June 30, 20152016 and December 31, 20142015 was approximately $36 million.$32 million and $35 million, respectively.
Commercial and Industrial Loans
The C&I portfolio represents the largest category of Synovus' total loan portfolio and is currently concentrated on small to middle market commercial and industrial lending dispersed throughout a diverse group of industries in the Southeast, including health care and social assistance, manufacturing, retail trade, manufacturing, real-estate related industries, wholesale trade, and finance and insurance, and wholesale trade as shown in the following table (aggregated by NAICS code). Loans in the health care and social assistance industry have grown approximately $127 million, or 13.8% annualized, from December 31, 2014, as specialized lending units continue to build relationships in senior housing, medical office lending, and other health care related areas. The portfolio is relationship focused and, as a result, Synovus' lenders have in-depth knowledge of the borrowers, most of which have guaranty arrangements. C&I loans are primarily originated through Synovus' local market banking divisions and made to commercial customers primarily to finance capital expenditures, including real property, plant and equipment, or as a source of working capital. In accordance with Synovus' uniform lending policy, each loan undergoes a detailed underwriting process which incorporates uniform underwriting

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standards and oversight in proportion to the size and complexity of the lending relationship. Approximately91%As of June 30, 2016, approximately 93% of Synovus' C&I loans are secured by real estate, business equipment, inventory, and other types of collateral.
Total C&I loans at June 30, 2015 were $10.40 billion, or 48.3% of the total loan portfolio, compared to $10.26 billion, or 48.6% of the total loan portfolio, at December 31, 2014 and $10.07 billion, or 49.1% of the total loan portfolio at June 30, 2014. C&I loans grew $142.9$183.3 million, or 2.8%3.4% annualized, from December 31, 2014, driven primarily by increases2015 and $550.9 million, or 5.3%, from June 30, 2015. Annual percentage C&I loan growth is currently expected to be in specialty units such as senior housing, equipment finance, and medical office lending.the mid single-digits for the full year.

Commercial and Industrial Loans by IndustryJune 30, 2015 December 31, 2014June 30, 2016 December 31, 2015
(dollars in thousands)Amount 
%(1)
 Amount 
%(1)
Amount 
%(1)
 Amount 
%(1)
Health care and social assistance$1,984,245
 19.1% 1,856,795
 18.1%$2,366,349
 21.6% $2,242,852
 20.8%
Retail trade881,289
 8.1
 868,834
 8.0
Manufacturing866,462
 8.3
 878,492
 8.6
877,318
 8.0
 880,010
 8.1
Retail trade830,372
 8.0
 814,882
 8.0
Real estate and rental and leasing694,681
 6.7
 721,477
 7.0
742,238
 6.8
 685,310
 6.4
Finance and insurance726,490
 6.6
 736,492
 6.8
Wholesale trade671,896
 6.5
 627,736
 6.1
678,221
 6.2
 672,167
 6.2
Finance and insurance644,630
 6.2
 684,319
 6.7
Professional, scientific, and technical services574,218
 5.5
 588,862
 5.7
629,491
 5.8
 628,626
 5.8
Real estate other532,604
 5.1
 497,396
 4.8
520,601
 4.8
 506,328
 4.7
Accommodation and food services451,600
 4.3
 438,745
 4.3
485,603
 4.4
 490,626
 4.6
Construction423,135
 4.1
 432,521
 4.2
442,025
 4.0
 406,287
 3.8
Agriculture, forestry, fishing, and hunting390,248
 3.8
 366,041
 3.6
384,948
 3.5
 394,587
 3.7
Transportation and warehousing290,290
 2.8
 250,221
 2.4
336,251
 3.1
 336,048
 3.1
Information273,608
 2.6
 239,996
 2.3
242,089
 2.2
 234,893
 2.2
Administration, support, waste management, and remediation220,605
 2.1
 247,226
 2.4
234,595
 2.1
 211,227
 2.0
Educational services219,871
 2.1
 227,272
 2.2
199,018
 1.8
 210,656
 2.0
Other services866,376
 8.3
 860,105
 8.4
834,023
 7.6
 859,315
 8.0
Other industries465,481
 4.5
 525,343
 5.2
374,881
 3.4
 407,872
 3.8
Total commercial and industrial loans$10,400,322
 100.0% $10,257,429
 100.0%$10,955,430
 100.0% $10,772,130
 100.0%
              
(1) Loan balance in each category expressed as a percentage of total commercial and industrial loans. 
Synovus has actively invested in additional expertise, product offerings, and product quality to provide its C&I clients with increased and enhanced product offerings and customer service. Complementing this investment in C&I, management continues to focus on streamlining and enhancing Synovus' existing product lines, especially for traditional retail, small business, and professional services customers.
The Corporate Banking Group provides lending solutions to larger corporate clients and includes specialty units such as syndications, senior housing, and equipment finance. These units partner with Synovus' local bankers to build relationships across the five-state footprint, as well as the southeastern and southwestern United States. To date, loan syndications consist primarily of loans where Synovus is participating in the credit facility (versus being the lead bank). Senior housing loans are typically extended to borrowers in the assisted living, independent living, or memory care facilities sectors. The equipment finance group originates loans to small, middle, and large commercial banking customers, and the formation of this group has further strengthened the equipment financing line of business and signals Synovus' continued commitment to offer a broad range of expertise, products, and services to commercial customers. The Corporate Banking Group also originates direct loans to well-capitalized public companies and larger private companies that operate in the five-state footprint as well as other states in the Southeast.
At June 30, 2015, $6.262016, $6.60 billion of C&I loans, or 29.1%28.6% of the total loan portfolio, represented loans originated for the purpose of financing commercial, financial, and agricultural business activities. The primary source of repayment on these loans is revenue generated from products or services offered by the business or organization. The secondary source of repayment is the collateral, which consists primarily of equipment, inventory, accounts receivable, time deposits, and other business assets.
At June 30, 2015, $4.142016, $4.36 billion of C&I loans, or 19.2%18.9% of the total loan portfolio, represented loans originated for the purpose of financing owner-occupied properties. 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 on these loans is the real estate.collateral. These loans are predominately secured by owner-occupied properties and other real estate, and to a lesser extent, other types of collateral.

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Commercial Real Estate Loans
CRE loans consist of investment properties loans, 1-4 family properties loans, and land acquisition loans. CRE loans are primarily originated through Synovus' local market banking divisions. These loans are subject to the same uniform lending policies referenced above. Total CRE loans, which represent 32.9% of the total loan portfolio at June 30, 2015, were $7.08 billion compared to $6.94 billion, or 32.8% of the total loan portfolio, at December 31, 2014 and $6.65 billion, or 32.5% of the total loan portfolio, at June 30, 2014. CRE loans increased $138.9$112.9 million, or 4.0%3.1% annualized, from December 31, 20142015 and $425.2$436.1 million, or 6.4%6.2%, from June 30, 2014,2015, driven by growth in investment properties loans partially offset by planned reductions in land acquisition and 1-4 family properties loans. Synovus currently expects that CRE loans for the second half of the year will be flat to slightly down from June 30, 2016.
Investment Properties Loans
Total investment properties loans as of June 30, 20152016 were $5.425.92 billion, or 76.7%78.9% of the total CRE portfolio and 25.2%25.6% of the total loan portfolio, compared to $5.22$5.75 billion, or 75.2%77.8% of the total CRE portfolio, and 24.7%25.6% of the total loan portfolio at December 31, 2014,2015, an increase of $206.9$169.0 million, or 8.0%5.9% annualized, with draws on existing construction commitments being a significant contributor.driven by strong growth in the multi-family and office buildings categories. 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. Synovus' investment properties portfolio is well diversified with no concentration by property type, geography (other than the fact that most of these loans are in Synovus' primary market areas of Georgia, Alabama, Tennessee, South Carolina, and Florida), or tenants. The investment properties loans are primarily secured by the property being financed by the loans; however, these loans may also be secured by real estate or other assets beyond the property being financed.
1-4 Family Properties Loans
At June 30, 2015,2016, 1-4 family properties loans totaled $1.101.13 billion, or 15.5%15.0% of the total CRE portfolio and 5.1%4.9% of the total loan portfolio, compared to $1.13 billion, or 16.3%15.3% of the total CRE portfolio and 5.3%5.0% of the total loan portfolio at December 31, 2014.2015. 1-4 family properties loans include construction loans to homebuilders, commercial mortgage loans to real estate investors, and residential development loans to developers 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. Underwriting standards for these types of loans include stricter approval requirements as well as more stringent underwriting standards than current regulatory guidelines. Construction and residential development loans are generally interest-only loans and typically have maturities of three years or less, and 1-4 family rental propertiescommercial mortgage loans generally have maturities of three to five years, with amortization periods of up to fifteen to twenty years.
Land Acquisition Loans
Total land acquisition loans were $554.5459.3 million at June 30, 2015,2016, or 2.6%2.0% of the total loan portfolio, a decline of $31.5$54.7 million, or 10.9%21.4% annualized, from December 31, 2014.2015. Land acquisition loans are secured by land held for future development, typically in excess of one year. These loans have short-term maturities and are typically unamortized. Land securing these loans is substantially within the Synovus footprint, and loan terms generally include personal guarantees from the principals. Loans in this portfolio are underwritten based on the loan to value of the collateral and the capacity of the guarantor(s). Generally, the maximum loan-to-value at the time of origination or refinancing is aligned with regulatory requirements. Synovus has continuedcontinues to reduce its exposure to these types of loans.
Retail Loans
Retail loans at June 30, 20152016 totaled $4.054.63 billion, representing 18.8%20.0% of the total loan portfolio compared to $3.934.29 billion, or 18.6%19.1% of the total loan portfolio at December 31, 20142015, and $3.77$4.05 billion, or 18.4%18.8% of the total loan portfolio at June 30, 2014.2015. Retail loans increased $113.7$332.6 million, or 5.8%15.6% annualized, from December 31, 20142015 and $278.9$577.5 million, or 7.4%14.3%, from June 30, 2014,2015 due primarily as a resultto initiatives to grow this portion of significant growth in consumer mortgage loans of $99.7the loan portfolio. Consumer mortgages grew $193.4 million or 11.9%20.1% annualized, from December 31, 20142015, and $232.6$338.4 million, or 14.9%18.9%, from June 30, 2014.2015 primarily due to continued recruiting of mortgage loan originators in strategic markets throughout the footprint as well as enhanced origination efforts, which also create additional cross-selling opportunities for other products. Other retail loans increased $176.8 million, or 84.0% annualized, from December 31, 2015, and $276.4 million, or 85.4%, from June 30, 2015 primarily due to our two new lending partnerships. One lending partnership, which began near the end of the third quarter of 2015, is a point-of-sale program that provides merchants and contractors nationwide with the ability to offer term financing to their customers for major purchases and home improvement projects. The other lending partnership began in the second quarter of 2016 and primarily provides qualified borrowers the ability to refinance student loan debt. As of June 30, 2016, these partnerships had combined balances of $253.9 million, and management currently projects that these lending partnerships will not exceed 2-3% of the total loan portfolio in future periods.
The retail loan portfolio consists of a wide variety of loan products offered through Synovus' banking network, including first and second residential mortgages, home equity lines, credit card loans, automobile loans, and other retail loans. The majority of Synovus' retail loans are consumer mortgages and home equity lines secured by first and second liens on residential real estate primarily located in the markets served by Synovus in Georgia, Florida, South Carolina, Alabama, and Tennessee. Substantially all retailhome equity lines, consumer mortgage, and credit card loans are to in-market borrowers with no indirect lending products, which increases opportunities for cross-selling. Credit card loans totaled $246.7236.0 million at June 30, 2015,2016, including $60.3$59.4 million of commercial credit card loans. The commercial credit card loans relate to Synovus' commercial customers who utilize corporate credit cards for various business activities.
Retail loans are subject to uniform lending policies and consist primarily of loans with strong borrower credit scores (most recently measured as of June 30, 2015)2016). At June 30, 20152016 and December 31, 2014,2015, weighted-average FICO scores within the residential real estate portfolio were 775764 and 772,769, respectively, for HELOCs and 736766 and 735,759, respectively, for consumer mortgages .mortgages. Conservative debt-to-income ratios (average HELOC debt to income ratio of loans originated) were maintained in the second

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quarter of 20152016 at 31.6%30.7% compared to 31.3%31.6% in the firstsecond quarter of 2015. HELOC utilization rates (total amount outstanding as a percentage of total available lines) of 60.6%59.1% and 61.3%60.2% at June 30, 20152016 and December 31, 2014,2015, respectively, and loan-to-value ratios based upon prudent guidelines were maintained to ensure consistency with Synovus' overall risk philosophy. At June 30, 2015, 34%2016, 35% of home equity line balances were secured by a first lien, and 66%65% were secured by a second lien. Apart from credit card loans and unsecured loans, Synovus does not originate loans with LTV ratios greater than 100% at origination except for infrequent situations provided that certain underwriting requirements are met. Additionally, at origination, loan maturities are determined based on the borrower's ability to repay (cash flow or earning power of the borrower that represents the primary source of repayment) and the collateralization of the loan, including the economic life of the asset being pledged. Collateral securing these loans provides a secondary source of repayment in that the collateral may be liquidated. Synovus determines the need for collateral on a case-by-case basis. Factors considered include the purpose of the loan, current and prospective credit-worthiness of the customer, terms of the loan, and economic conditions.
Risk levels 1-6 (descending) are assigned to retail loans based upon a risk score matrix. At least annually, the retail loan portfolio data is sent to a consumer credit reporting agency for a refresh of customers' credit scores. The most recent credit score refresh was completed as of June 30, 2015.2016. Management reviews the refreshed scores to monitor the credit risk migration of the retail loan portfolio, which impacts the allowance for loan losses. Management also considers the results from the refreshed scores for possible changes in underwriting policies. Revolving lines of credit are regularly reviewed for any material change in financial circumstances, and when appropriate, the line of credit may be suspended. FICO scores within the retail residential real estate portfolio have generally remained stable over the last several years.

Higher-risk consumer loans as defined by the FDIC are consumer loans (excluding consumer loans defined as nontraditional mortgage loans) where, as of the origination date or, if the loan has been refinanced, as of the refinance date, the probability of default within two years is greater than 20%, as determined using a defined historical stress period. These loans are not a part of Synovus' retail lending strategy, and Synovus does not currently develop or offer specific higher-risk consumer loans, alt-A, no documentation or stated income retail residential real estate loan products. Synovus estimates that, as of June 30, 2015,2016, it had $123.7$108.8 million of higher-risk consumer loans (3.1%(2.4% of the retail portfolio and 0.6%0.5% of the total loan portfolio). compared to $123.7 million as of June 30, 2015. Included in this amount as of June 30, 2016 is approximately $14$12 million of accruing TDRs. Synovus makes retail lending decisions based upon a number of key credit risk determinants including FICO scores as well as bankruptcy predictor scores, loan-to-value, and debt-to-income ratios.
Other Real Estate
The carrying value of ORE was $66.4 million, $85.5 million, and $101.5 million at June 30, 2015, December 31, 2014, and June 30, 2014, respectively. As of June 30, 2015, the ORE carrying value reflects cumulative write-downs totaling approximately $72 million, or 52% of the related loans' unpaid principal balance. During the six months ended June 30, 2015 and 2014, $11.4 million and $25.3 million, respectively,of loans and other loans held for sale were foreclosed and transferred to other real estate at fair value less costs to sell. During the six months ended June 30, 2015 and 2014, Synovus recognized foreclosed real estate expense, net, of $13.8 million and $9.7 million, respectively. These expenses included write-downs for declines in fair value of ORE subsequent to the date of foreclosure and net realized losses resulting from sales transactions totaling $11.1 million and $8.2 million for the six months ended June 30, 2015 and 2014, respectively.
Synovus' objective is to dispose of ORE properties in a timely manner and to maximize net sale proceeds. Synovus has a centralized managed assets division with the specialized skill set to facilitate this objective. While there is not a defined timeline for their sale, ORE properties are actively marketed through unaffiliated third parties, including real estate brokers and real estate auctioneers. Sales are made on an opportunistic basis, as acceptable buyers and terms are identified. In addition, Synovus may also decide to sell ORE properties in bulk asset sales to unaffiliated third parties, in which case the typical period of marketing the property will likely not occur. In some cases, Synovus is approached by potential buyers of ORE properties or Synovus may contact independent third parties who we believe might have an interest in an ORE property.

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Deposits
Deposits provide the most significant funding source for interest earning assets. The following table shows the relative composition of average deposits for the time periods indicated.
Composition of Average DepositsComposition of Average Deposits  Composition of Average Deposits
Three Months EndedThree Months Ended 
(dollars in thousands)June 30, 2015 
%(1)
 March 31, 2015 
%(1)
 December 31, 2014 
%(1)
 September 30, 2014 
%(1)
 June 30, 2014 
%(1)
June 30, 2016 
%(1)
 March 31, 2016 
%(1)
 December 31, 2015 
%(1)
 June 30, 2015 
%(1)
 
Non-interest bearing demand deposits$6,436,167
 28.7% $6,108,558
 28.3% $6,110,047
 28.6% $5,824,592
 27.8% $5,765,287
 27.6%$6,930,336
 29.4% 6,812,223
 29.4 6,846,200
 29.5 6,436,167
 28.7 
Interest bearing demand deposits3,919,401
 17.4
 3,800,476
 17.6
 3,781,389
 17.7
 3,722,599
 17.8
 3,830,956
 18.4
4,233,310
 17.9
 4,198,738
 18.1 4,117,116
 17.7 3,919,401
 17.4 
Money market accounts, excluding brokered deposits6,466,610
 28.8
 6,210,704
 28.7
 6,009,897
 28.2
 6,044,138
 28.9
 6,033,522
 28.9
7,082,759
 30.0
 7,095,778
 30.6 7,062,517
 30.4 6,466,610
 28.8 
Savings deposits675,260
 3.0
 649,597
 3.0
 638,813
 3.0
 645,654
 3.1
 644,103
 3.1
746,225
 3.2
 722,172
 3.1 692,536
 3.0 675,260
 3.0 
Time deposits, excluding brokered deposits3,412,733
 15.2
 3,250,892
 15.0
 3,193,507
 15.0
 3,206,984
 15.3
 3,188,671
 15.3
3,278,396
 13.9
 3,286,113
 14.1 3,340,794
 14.3 3,412,733
 15.2 
Brokered deposits1,555,931
 6.9
 1,594,822
 7.4
 1,602,354
 7.5
 1,494,620
 7.1
 1,401,167
 6.7
1,337,001
 5.6
 1,095,239
 4.7 1,185,093
 5.1 1,555,931
 6.9 
Total average deposits$22,466,102
 100.0
 $21,615,049
 100.0
 $21,336,007
 100.0
 $20,938,587
 100.0
 $20,863,706
 100.0
$23,608,027
 100.0% 23,210,263
 100.0 23,244,256
 100.0 22,466,102
 100.0 
Average core deposits(2)
$20,910,171
 93.1
 20,020,227
 92.6
 $19,733,653
 92.5
 $19,443,967
 92.9
 $19,462,539
 93.3
22,271,027
 94.3
 22,115,024
 95.3 22,059,163
 94.9 20,910,171
 93.1 
Average core deposits excluding average SCM deposits(2)
$18,632,388
 82.9
 17,796,034
 82.3
 $17,548,896
 82.3
 $17,398,150
 83.1
 $17,193,687
 82.4
$19,990,988
 84.7% 19,674,275
 84.8 19,755,885
 85.0 18,632,388
 82.9 
                             
(1) Deposits balance in each category expressed as percentage of total deposits.
(2) See reconciliation of “Non-GAAP Financial Measures” in this Report.

During the second quarter of 2015,2016, total average deposits increased $851.1$397.8 million, or 15.8%6.9% annualized, compared to the first quarter of 2015,2016, and increased $1.60$1.14 billion, or 7.7%5.1%, compared to the second quarter of 2014.2015. Average core deposits were up $889.9$156.0 million, or 17.8%2.8% annualized, compared to the previous quarter, and up $1.45$1.36 billion, or 7.4%6.5%, compared to the second quarter a year ago. Average core deposits excluding average state, county, and municipal (SCM) deposits grew $836.4 million, or 18.9% annualized, over the prior quarter and $1.44 billion, or 8.4%, over the second quarter of 2014. The increase in average deposits for the three months ended June 30, 2016 compared to the three months ended June 30, 2015 was largely due to growth in money market accounts and non-interest bearing demand products.
Average core deposits excluding average SCM deposits for the three months ended June 30, 2016 increased $316.7 million, or 6.5% annualized, compared to the prior quarter and time deposit products.grew $1.36 billion, or 7.3%, over the second quarter of 2015. Period-end core deposits excluding SCM deposits as of June 30, 2016 increased $233.8 million, or 4.7% annualized, sequentially and $1.27 billion, or 6.7%, compared to June 30, 2015. Average non-interest bearing demand deposits as a percentage of total average deposits was 28.7%were 29.4% for the three months ended June 30, 2015,2016, compared to 28.3%29.4% for the three months ended March 31, 2015,2016, and 27.6%28.7% for the three months ended June 30, 2014.2015. We continue to expect that our deposit strategy will yield core deposit growth which will support loan growth. See reconciliation of “Non-GAAP Financial Measures” in this Report.
Average time deposits of $100,000 and greater for the three months ended June 30, 2015,2016, March 31, 2015,2016, and June 30, 20142015 were $3.43$2.90 billion, $3.34$2.79 billion, and $3.04$3.43 billion, respectively, and included average brokered time deposits of $1.37 billion, $1.41 billion,$885.6 million, $780.2 million, and $1.22$1.37 billion, respectively. These larger deposits represented 15.3%12.3%, 15.4%12.0%, and 14.6%15.3% of total average deposits for the three months ended June 30, 2015,2016, March 31, 2015,2016, and June 30, 2014,2015, respectively, and included brokered time deposits which represented 6.1%3.8%, 6.5%3.4%, and 5.8%6.1% of total average deposits for the three months ended June 30, 2015,2016, March 31, 2015,2016, and June 30, 2014,2015, respectively.
During May 2016, Synovus launched a new bank deposit sweep product, which resulted in the addition of approximately 20,000 deposit accounts from existing customers of Synovus Securities, Synovus’ wholly-owned subsidiary.   These customers

previously had their cash balances invested in mutual funds with an unaffiliated institution.  Synovus’ new product provides added benefits to our customers because it provides FDIC insurance coverage (up to the $250,000 FDIC insurance limit) while also providing a small increase in the rate earned on such deposits.   The total aggregate balance of these accounts was approximately $293 million when the product was launched in May 2016, and was $307.7 million as of June 30, 2016.  $139.3 million of the sequential quarter increase in average brokered deposits is due to balances from this product.  Synovus expects that these balances will remain stable, with gradual increases over time.
During the second quarter of 2015,2016, total average brokered deposits represented 6.9%5.6% of Synovus' total average deposits compared to 7.4%4.7% and 6.7%6.9% of total average deposits the previous quarter and the second quarter a year ago, respectively.
Non-interest Income
Non-interest income for the six and three months ended June 30, 20152016 was $134.7$131.0 million and $68.8$67.9 million, respectively, up $1.1down $3.7 million, or 0.8%2.7%, and up $5.4 million,down $946 thousand, or 8.6%1.4%, compared to the six and three months ended June 30, 2014,2015, respectively. Adjusted non-interest income, which excludes net investment securities gains and the prior year net gain of $5.8 million from the Memphis transaction, increased $5.5was down $1.0 million, or 4.4%0.8%, for the six months ended June 30, 2015,2016, compared to the same period a year ago, and increased $3.5up $1.0 million, or 5.5%1.6%, for the three months ended June 30, 2015,2016 compared to the same period a year ago. The increase over prior year was driven primarily by an increase in mortgage banking income as well as growth in service charges on deposit accounts, fiduciary and asset management fees, brokerage revenue, and gains on salessecond quarter of SBA loans.2015. See reconciliation of "Non-GAAP Financial Measures" in this Report.
The following table shows the principal components of non-interest income.
Non-interest Income

Six Months Ended June 30, Three Months Ended June 30,Six Months Ended June 30, Three Months Ended June 30,
(in thousands)2015 2014 2015 20142016 2015 % Change 2016 2015 % Change
Service charges on deposit accounts$38,928
 38,451
 $19,795
 19,238
$39,950
 38,928
 2.6 % $20,240
 19,795
 2.2 %
Fiduciary and asset management fees23,414
 22,329
 11,843
 11,296
22,854
 23,414
 (2.4) 11,580
 11,843
 (2.2)
Brokerage revenue14,032
 12,920
 6,782
 6,707
13,821
 14,032
 (1.5) 7,338
 6,782
 8.2
Mortgage banking income13,995
 8,794
 7,511
 5,283
11,425
 13,995
 (18.4) 5,941
 7,511
 (20.9)
Bankcard fees16,576
 16,212
 8,499
 8,695
16,718
 16,576
 0.9
 8,346
 8,499
 (1.8)
Investment securities gains, net2,710
 1,331
 1,985
 —
67
 2,710
 (97.5) —
 1,985
 nm
Other fee income9,851
 9,791
 4,605
 4,928
10,084
 9,851
 2.4
 5,280
 4,605
 14.7
Gain on sale of Memphis branches, net—
 5,789
 —
 —
Other non-interest income15,181
 17,952
 7,812
 7,241
16,114
 15,181
 6.1
 9,161
 7,812
 17.3
Total non-interest income$134,687
 133,569
 $68,832
 63,388
$131,033
 134,687
 (2.7)% $67,886
 68,832
 (1.4)%
                  
Principal Components of Non-interest Income
Service charges on deposit accounts for the six and three months ended June 30, 20152016 were up $477$1.0 million, or 2.6%, and up$445 thousand, or 1.2%, and up $557 thousand, or 2.9%2.2%, respectively, compared to the same time periods in 2014.2015. Service charges on deposit accounts consist of NSF fees, account analysis fees, and all other service charges. NSF fees were $17.9$18.3 million and $9.2 million for the six and three months ended June 30, 2015,2016, respectively, an increase of $1.2 million,$441 thousand, or 7.3%2.5%, and $896a slight decline of $18 thousand, or 10.8%0.2%, compared to the six and three months ended June 30, 2014, respectively,2015, respectively. The increase for the first half of 2016 compared to the first half of 2015 is primarily due primarily to an increase in overdraft service utilization rates and higher Regulation E opt-in rates (Regulation E limitsduring the abilityfirst quarter of a financial institution to assess an overdraft fee for paying automated teller machine and debit card transactions that overdraw a customer's account unless the customer affirmatively consents, or opts-in,2016 compared to the institution's paymentfirst quarter of overdrafts for these transactions).2015. Additionally, the first quarter included the benefit of one more business day compared to the same time period the prior year. Account analysis fees were $11.4$12.0 million and $5.6$6.2 million for the six and three months ended June 30, 2015,2016, respectively, down $593up $666 thousand, or 5.0%5.9%, and $370$589 thousand, or 6.2%10.5%, compared to the six and three months ended June 30, 2014,2015, respectively, primarilylargely due to higher earnings credit balances and a decline in the number of accounts on analysis.fee increases to align more closely with market rates. All other service charges on deposit accounts, which consist primarily of monthly fees on retail demand deposit and saving accounts, were $9.7 million for the six and three months ended June 30, 2015,2016 were $9.6 million and $4.9 million, respectively, down $149$85 thousand, or 1.5%0.9%, and $125 thousand, or 2.5%, compared to the same periodperiods in 2014, with more retail customers meeting requirements to qualify for fee waivers on checking products. All other service charges on deposit accounts for the three months ended June 30, 2015, were $5.0 million, up $30 thousand, or 0.6%, compared to the same period in 2014.respectively.
Fiduciary and asset management fees are derived from providing estate administration, employee benefit plan administration, personal trust, corporate trust, corporate bond, investment management, and financial planning services. Fiduciary and asset management fees were $23.4 million and $11.8 million for the six and three months ended June 30, 2015, respectively, an increase of $1.1 million,declined $560 thousand, or 4.9%2.4%, and $547$263 thousand, or 4.8%, respectively, compared to the same periods in 2014, due to new talent acquisition in strategic markets and an increase in assets-under-management of 4.3%.
Brokerage revenue, which consists primarily of brokerage commissions, was $14.0 million and $6.8 million for the six and three months ended June 30, 2015. Compared to the six and three months ended June 30, 2014, brokerage revenue was up $1.1 million, or 8.6%, and $75 thousand or 1.1%, respectively. The year-over-year increase was largely due to the unfavorable impact of severe winter weather on transactions during the first quarter of 2014. Additionally, the increase was driven by talent acquisition of commission-based financial consultants and brokers and a favorable increase in customer fee-based assets-under-management.
Mortgage banking income increased $5.2 million, or 59.1%, and increased $2.2 million, or 42.2%2.2%, for the six and three months ended June 30, 2015,2016, respectively, when compared to the same periods in 20152014, due primarily to. At June 30, 2016, the market value of assets under management was $11.27 billion, an increase in mortgage productionof 4.9% from June 30, 2015.

Brokerage revenue, which consists primarily of brokerage commissions, was driven by the rate environment, talent acquisitions, investments in key markets,$13.8 million and enhanced product offerings. Synovus currently expects mortgage banking income$7.3 million for the second half of 2015 to be similar to levels for the six and three months ended June 30, 2015.
Bankcard fees increased $364 thousand, or 2.2%, for the six months ended June 30, 2015, compared to the same period in 2014, and2016, respectively. Brokerage revenue for the three months ended June 30, 2015, bankcard fees declined by $1962016 increased $855 thousand, or 2.3%13.2%, compared to the first quarter of 2016 and increased $556 thousand, or 8.2%, compared to the three months ended June 30, 2014.2015.
Mortgage banking income was $11.4 million and $5.9 million for the six and three months ended June 30, 2016, respectively, compared to $14.0 and $7.5 million for the same periods in 2015, respectively. The decline in mortgage banking income was primarily due to a higher proportion of portfolio originations (vs. held for sale) as well as a decline in refinancing volume.
Bankcard fees totaled $16.7 million and $8.3 million for the six and three months ended June 30, 2016, respectively, compared to $16.6 million and $8.5 million for the same periods in 2015, respectively. Bankcard fees consist primarily of credit card interchange fees and debit card interchange fees. Debit card interchange fees were $8.2$8.5 million, up $73$305 thousand, or 0.9%3.7%, and $4.2$4.3 million, up $21$99 thousand, or 0.5%2.3%, for the six and three months ended June 30, 2015,2016, respectively, compared to the same periods in 2014.2015. Credit card interchange fees were

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$11.5 $11.2 million, up $535down $361 thousand, or 4.9%3.1%, and $6.0 million, up $188down $249 thousand, or 3.3%4.2%, for the six and three months ended June 30, 2015,2016, respectively, compared to the same periods in 2014.2015.
Other fee income includes fees for letters of credit and unused lines of credit, safe deposit box fees, access fees for automated teller machine use, customer swap dealer fees, and other service charges. Other fee income increased $60$233 thousand, or 0.6%2.4%, and $675 thousand, or 14.7%, for the six months ended June 30, 2015, compared to the same period in 2014. Other fee income declined $323 thousand, or 6.6%, for theand three months ended June 30, 2015,2016, respectively, compared to the three months ended June 30, 2014same periods in 2015, due primarily to a declinean increase in volume with increases in fees onfrom higher levels of unused lines of credit and lettershigher levels of credit.government guaranteed loan servicing fees.
The 2014 gain on sale of Memphis branches consists of a gain, net of associated costs, from the sale of certain loans, premises, deposits, and other assets and liabilities of the Memphis, Tennessee operations of Trust One Bank, a division of Synovus Bank on January 17, 2014. Please see "Note 3 - Sale of Branches" of this Report for further explanation of this transaction.
The main components of other non-interest income are income from company-owned life insurance policies, gains from sales of SBAgovernment guaranteed loans, insurance commissions, card sponsorship fees, and other miscellaneous items. Other non-interest income forThe increase of $933 thousand and $1.3 million during the six and three months ended June 30, 2016, respectively, compared to the same time periods in 2015, was $2.8included an increase of $254 thousand and $606 thousand, respectively, from net gains on private equity investments. Additionally, the second quarter of 2016 included a $669 thousand gain from a BOLI death benefit. Gains from sales of government guaranteed loans were $1.4 million lower thanand $716 thousand for the six and three months ended June 30, 2014 due2016, respectively, compared to a $3.1$2.8 million gain fromand $1.4 million for the sale of a branch property during the first quarter of 2014. Other non-interest income for thesix and three months ended June 30, 2015, increased $571 thousand, or 7.9%, compared torespectively. For the same period in 2014 largely due to an increasefull year, Synovus currently expects that these gains will approximate the $5.4 million in gains on sales of SBA loans of $501 thousand. Gains from sales of SBA loans totaled $2.8realized in 2015, which would represent approximately $4 million during the first half of 2015, up $1.6 million compared to the same period in 2014. Synovus has an increased focus on the SBA lending line of business and expects an increase in SBA gains for the full year 2015 compared to 2014.second half of 2016.
Non-interest Expense
Non-interest expense for the six and three months ended June 30, 2015 declined $9.72016 was $376.8 million or 2.6%, and $4.4$188.6 million, or 2.4%, respectively, compared to $356.7 million and $177.8 million for the same periods in 2014.six and three months ended June 30, 2015, respectively. Adjusted non-interest expense for the six and three months ended June 30, 2015,2016, which excludes restructuring charges, loss on early extinguishment of debt, litigation contingency expense, restructuring charges, credit costs, and Visa indemnification charges, declined $2.3increased $10.0 million, or 0.7%2.8%, and $2.6$9.4 million, or 1.5%5.4%, respectively, compared to the same periods in 2014.2015, respectively. Synovus expects adjusted non-interest expense for the year ending December 31, 2016 to be slightly up compared to 2015. See "Non-GAAP Financial Measures" in this Report for applicable reconciliation.

The following table summarizes the components of non-interest expense for the six and three months ended June 30, 20152016 and 2014.2015.
Non-interest Expense

                  
Six Months Ended June 30, Three Months Ended June 30,Six Months Ended June 30, Three Months Ended June 30,
(in thousands)2015 2014 2015 20142016 2015 % Change 2016 2015 % Change
Salaries and other personnel expense$191,054
 185,985
 $94,565
 92,540
$198,419
 191,054
 3.9 % $97,061
 94,565
 2.6 %
Net occupancy and equipment expense52,713
 52,480
 26,541
 26,425
53,360
 52,713
 1.2
 26,783
 26,541
 0.9
Third-party processing expense21,015
 19,560
 10,672
 9,464
22,814
 21,015
 8.6
 11,698
 10,672
 9.6
FDIC insurance and other regulatory fees13,725
 17,531
 6,767
 7,885
13,344
 13,725
 (2.8) 6,625
 6,767
 (2.1)
Professional fees12,011
 15,901
 6,417
 8,224
13,307
 12,011
 10.8
 6,938
 6,417
 8.1
Advertising expense6,309
 8,757
 2,865
 6,281
9,761
 6,309
 54.7
 7,351
 2,865
 156.6
Foreclosed real estate expense, net13,847
 9,745
 4,351
 4,063
7,272
 13,847
 (47.5) 4,588
 4,351
 5.4
Visa indemnification charges729
 752
 354
 356
Loss on early extinguishment of debt4,735
 —
 nm
 —
 —
 —
Restructuring charges, net(102) 16,293
 5
 7,716
6,981
 (102) nm
 5,841
 5
 nm
Other operating expenses45,412
 39,361
 25,269
 19,251
46,851
 46,141
 1.5
 21,726
 25,623
 (15.2)
Total non-interest expense$356,713
 366,365
 $177,806
 182,205
$376,844
 356,713
 5.6 % $188,611
 177,806
 6.1 %
                  
Salaries and other personnel expenses increased $5.1$7.4 million, or 2.7%3.9%, and $2.0$2.5 million, or 2.2%2.6%, for the six and three months ended June 30, 2015,2016, respectively, compared to the same periods in 20142015, primarily due to annual merit increases higher health insurance expense,and higher incentive compensation, and additional variable compensation associated with higher mortgage and brokerage revenue.compensation. These increases were somewhat offset by a decline in health insurance expense and the decrease in salaries and other personnel expense resulting from the decline of 197,62, or 4.3%1.4%, in total headcount at June 30, 20152016 vs. June 30, 2014.2015. The decline in headcount was driven by the eliminationvs. a year ago reflects Synovus' continued implementation of positions during 2014 in connection with branch closings, further refinement of our branch staffing model, and other efficiency initiatives.

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Net occupancy and equipment expense was up slightly by $233$647 thousand, or 1.2%, and $116$242 thousand, or 0.9%, for the six and three months ended June 30, 2015,2016, respectively, compared to the same periods in 2014.2015. During the first quarter of 2016, Synovus opened a branch prototype in Jacksonville, Florida which is designed to allow for faster service for routine transactions while providing an enhanced customer experience. This was the third new branch prototype opened since June of last year.  Synovus continues to invest in technology and rationalizeevaluate its branch network which has declinedwhile deploying additional digital and on-line capabilities to 258 branches atincrease convenience for customers while lowering transaction costs, and during the three months ended June 30, 20152016, identified three branch closures to be completed by year-end, which are in addition to the four branches identified during the first quarter of 2016. After these closures, the branch network will consist of 250 locations by year-end, which will represent a 22.6% reduction from 271 branches at June 30, 2014.year-end 2010. 
Third-party processing expense includes all third-party core operating system and processing charges. Third-party processing expense increased $1.5$1.8 million, or 7.4%8.6%, and $1.2$1.0 million, or 12.8%9.6%, for the six and three months ended June 30, 2015,2016, respectively, compared to the same periods in 20142015, driven by investments in technology.technology and increases in transaction volume.
FDIC insurance costs and other regulatory fees declined $3.8 million,$381 thousand, or 21.7%2.8%, and $1.1 million,$142 thousand, or 14.2%2.1%, for the six and three months ended June 30, 2015,2016, respectively, compared to the same periods in 20142015. On March 15, 2016 , primarily duethe FDIC approved a final rule to significant improvement in credit metrics includedincrease the DIF to the statutorily required minimum level of 1.35 percent. Congress, in the Dodd-Frank Act, increased the minimum for the DIF reserve ratio, the ratio of the amount in the fund to insured deposits, from 1.15 percent to 1.35 percent and required that the ratio reach that level by September 30, 2020. Further, the Dodd-Frank Act also made banks with $10 billion or more in total assets responsible for the increase from 1.15 percent to 1.35 percent. Under a rule adopted by the FDIC in 2011, regular assessment scorecardrates for all banks will decline when the reserve ratio reaches 1.15 percent, which the FDIC expects will occur during 2016. Banks with declinestotal assets of 33.9% and 39.5%less than $10 billion will have substantially lower assessment rates under the 2011 rule. The final rule will impose on banks with at least $10 billion in NPAs and accruing TDRs, respectively,assets a surcharge of 4.5 cents per $100 of their assessment base, after making certain adjustments. The FDIC expects the reserve ratio will likely reach 1.35 percent after approximately two years of payments of the surcharges. The final rule became effective on July 1, 2016. If the reserve ratio reaches 1.15 percent before that date, surcharges would begin July 1. If the reserve ratio has not reached 1.15 percent by that date, surcharges will begin the first quarter after the reserve ratio reaches 1.15 percent. Synovus expects its FDIC insurance cost to remain relatively flat to current levels for the remainder of the year since regular assessment rates will decline at June 30, 2015 compared to June 30, 2014.approximately the same time as the surcharge assessment becomes effective.
Professional fees declined $3.9for the six and three months ended June 30, 2016 were up $1.3 million, or 24.5%10.8%, and $1.8$521 thousand, or 8.1%, respectively, compared to the same periods in 2015, driven by increases in consulting expense.

Advertising expense for the second quarter was up $4.9 million and $4.5 million compared to the first quarter of 2016 and the second quarter of 2015, respectively, as a result of Synovus increasing brand awareness activities. Synovus expects that advertising expense for the second half of 2016 will approximate the first half of 2016.
Foreclosed real estate expense declined $6.6 million, or 22.0%47.5%, and was up slightly by $237 thousand, or 5.4%, for the six and three months ended June 30, 2015,2016, respectively, compared to the same periods in 2014.2015. The declinefirst half of 2015 expense reflects $10.0 million in professional fees was driven by a decreasefair value adjustments compared to $4.1 million in attorney fees.
Advertisingfair value adjustments during the first half of 2016 reflecting more stable ORE values. The increase in foreclosed real estate expense was $6.3 million and $2.9 million for the six and three months ended June 30, 2015, respectively,2016 compared to $8.8the same period a year ago was primarily due to disposition-related costs.
During January 2016, Synovus repurchased $124.7 million of its subordinated notes maturing in 2017 in conjunction with Synovus' cash tender offer that commenced on December 23, 2015 and $6.3 millionexpired on January 22, 2016. Results for the six andmonths ended June 30, 2016 included a $4.7 million pre-tax loss relating to the January tender offer.
    For the three months ended June 30, 2014, respectively. Advertising expense for the second half2016, Synovus recorded restructuring charges of 2015 is expected$5.8 million with $4.8 million of these charges related to Synovus' continued corporate real estate optimization activities. Synovus continues to evaluate its branch network while deploying additional digital and on-line capabilities to increase from the first half of 2015 based on increased levels of advertising spend related to our branding campaign as well as our product campaigns.
Foreclosed real estateconvenience for customers while lowering transaction costs, were up $4.1 million, or 42.1%, and up $288 thousand, or 7.1%, for the six and three months ended June 30, 2015, respectively, compared to the same periods in 2014. Foreclosed real estate costs during the remainder of 2015 are expected to be lower than the first half of 2015 levels. For further discussion of foreclosed real estate, see the section captioned “Other Real Estate” of this Report.
Other operating expenses include other credit related expenses which were lower in 2014 due to the following: $2.9 million recovery upon the termination of a letter of credit which was fully reserved during the first quarter of 2014 and $1.6 million recovery on property taxes paid from a loan pay-offidentified during the second quarter three branch consolidations to be completed by year-end, which will be in addition to the four branches closed earlier this year.   Restructuring charges associated with branch consolidations identified during 2016 totaled $1.0 million and $1.1 million during the second and first quarter of 2014. 2016, respectively.  
Other operating expenses for the six and three months ended June 30, 20152016 were reduced by a $2.4 million gain related to the purchase of an additional interest in an existing NPL at a discount that was subsequently paid in full. Other operating expenses also include $4.4 million inincluded litigation contingency expense.
Management currently expects that adjusted non-interest expense of $2.7 million for the year ending December 31, 2015 will be approximatelysix months ended June 30, 2016 that was recorded during the same as in 2014 ($675 million). See "Non-GAAP Financial Measures" in Synovus' 2014 Form 10-K for applicable reconciliation.
Income Tax Expense
Income tax expense was $64.1 millionfirst quarter of 2016 and $32.2$4.4 million for the six and three months ended June 30, 2015, respectively,2015.
The adjusted efficiency ratio improved to 61.54% for the second quarter of 2016 compared to $55.761.62% for the second quarter of 2015. Synovus remains focused on achieving its long-term goal of an adjusted efficiency ratio below 60%. See reconciliation of "Non-GAAP Financial Measures" in this Report.
Income Tax Expense
Income tax expense was $64.8 million and $27.1$33.6 million for the six and three months ended June 30, 2014, respectively. The2016, respectively, representing effective tax rates of 36.4% and 35.7% during the respective periods.For the full year 2016, Synovus expects an effective tax rate was 36.9% for the six months ended June 30, 2015 as well as the same period in 2014. Synovus calculated the provision for income taxes for the six and three months ended June 30, 2015 and June 30, 2014 by applying the estimated annual effective tax rate to year-to-date pre-tax income and adjusting for discrete items that occurred during the period. The actual effective income tax rate in future periods could be affected by items that are infrequent in nature, such as new legislation and changes in the deferred tax asset valuation allowance. Synovus currently expects an annual effective tax rate of approximately 36%-37% for the full year 2015.
At June 30, 2015, the net deferred tax asset was $571.4 million, compared to $622.5 million at December 31, 2014. The decrease in the net deferred tax asset is primarily driven by the continued generation of taxable income.

37% range.


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CREDIT QUALITY, CAPITAL RESOURCES AND LIQUIDITY
Credit Quality
Synovus continuously monitors the credit quality of its loan portfolio by industry, property type, geography, as well as credit quality metrics and maintains an allowance for loan losses that management believes is sufficient to absorb probable losses inherent in its loan portfolio. Credit quality continuedmetrics have remained favorable to improveimproving during the second quarterfirst six months of 2015 with non-performing assets declining by 11.1% sequentially to an ending non-performing assets ratio of 1.11%, past dues remaining at low levels, and the net charge-off ratio declining to 0.10%, down 13 basis points from the first quarter of 2015. The non-performing loans ratio has also continued to decline, ending the quarter at 0.81%.2016.
The table below includes selected credit quality metrics.
Credit Quality MetricsAs of and for the Three Months Ended,
(dollars in thousands)June 30, 2015 March 31, 2015 December 31, 2014 September 30, 2014 June 30, 2014 
Provision for loan losses$6,636
 $4,397
 8,193
 3,843
 12,284
 
Other credit costs6,175
 11,273
 8,213
 11,858
 4,635
 
Total credit costs$12,811
 $15,670
 16,406
 15,701
 16,919
 
Non-performing loans    173,638
 194,232
 197,757
 242,382
 259,547
 
Impaired loans held for sale(1)    
-
 1,082
 3,606
 338
 2,045
 
Other real estate66,449
 74,791
 85,472
 81,636
 101,533
 
 Non-performing assets    $240,087
 $270,105
 286,835
 324,356
 363,125
 
Non-performing loans as a % of total loans0.81% 0.92
 0.94
 1.18
 1.27
 
Non-performing assets as a % of total loans, other loans held for sale, and ORE1.11% 1.28
 1.35
 1.57
 1.77
 
NPL inflows$21,397
 26,059
 32,630
 32,988
 34,321
 
Loans 90 days past due and still accruing4,832
 5,025
 4,637
 4,067
 4,798
 
As a % of total loans0.02% 0.02
 0.02
 0.02
 0.02
 
Total past due loans and still accruing$50,860
 57,443
 51,251
 72,712
 60,428
 
As a % of total loans0.24% 0.27
 0.24
 0.35
 0.30
 
Net charge-offs$5,306
 12,343
 16,252
 12,250
 35,372
 
Net charge-offs/average loans0.10% 0.23
 0.31
 0.24
 0.69
 
Allowance for loan losses$254,702
 253,371
 261,317
 269,376
 277,783
 
Allowance for loan losses as a % of total loans1.18% 1.20
 1.24
 1.31
 1.36
 
           
(1) Represent only impaired loans that have been specifically identified to be sold. Impaired loans held for sale are carried at the lower of cost or fair value, less costs to sell, based primarily on estimated sales proceeds net of selling costs.
Total credit costs
Total credit costs (provision for loan losses plus other credit costs which consist primarily of foreclosed real estate expense, net,) for the quarters ended June 30, 2015 and June 30, 2014 were $12.8 million and $16.9 million, respectively, including provision for loan losses of $6.6 million and $12.3 million, respectively, and expenses related to foreclosed real estate of $4.4 million and $4.1 million, respectively. Total credit costs improved 18.2% on a sequential quarter basis and improved 24.3% from the second quarter of 2014.
Credit Quality Metrics 
(dollars in thousands)June 30, 2016 December 31, 2015 June 30, 2015
Non-performing loans    $154,072
 168,370
 173,638
Other real estate33,289
 47,030
 66,449
 Non-performing assets    $187,361
 215,400
 240,087
Non-performing loans as a % of total loans0.67% 0.75
 0.81
Non-performing assets as a % of total loans, other loans held for sale, and ORE0.81
 0.96
 1.11
Loans 90 days past due and still accruing$5,964
 2,621
 4,832
As a % of total loans0.03% 0.01
 0.02
Total past due loans and still accruing$55,716
 47,912
 50,860
As a % of total loans0.24% 0.21
 0.24
Net charge-offs - Quarter$6,133
 3,425
 5,306
Net charge-offs/average loans - Quarter0.11% 0.06
 0.10
Net charge-offs - Year$13,490
 27,831
 17,649
Net charge-offs/average loans - Year0.12% 0.13
 0.17
Provision for loan losses - Quarter$6,693
 5,021
 6,636
Provision for loan losses - Year16,070
 19,010
 11,034
Allowance for loan losses255,076
 252,496
 254,702
Allowance for loan losses as a % of total loans1.11% 1.13
 1.18
      









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Non-performing Assets
Total NPAs were $240.1 million at June 30, 2015, a $46.7 million, or 16.3%, decrease from December 31, 2014 and a $123.0 million, or 33.9%, decrease from $363.1$187.4 million at June 30, 2014.2016, a $28.0 million, or 13.0%, decrease from $215.4 million at December 31, 2015 and a $52.7 million, or 22.0%, decrease from $240.1 million at June 30, 2015. The year-over-year decline in non-performing assets was primarily driven by significant balance reductions in legacy non-performingthe continued resolution of problem assets a continued decline in NPL inflows, as well as assetincluding workouts and dispositions. Total non-performing assets as a percentage of total loans, other loans held for sale, and other real estate were 1.11%0.81% at June 30, 20152016 compared to 1.35%0.96% at December 31, 2014,2015, and 1.77%1.11% at June 30, 2014. Synovus currently expects that NPAs will continue to decline at a modest pace for the remainder of 2015.
NPL Inflows by Loan Type       
 Six Months Ended June 30, Three Months Ended June 30,
(in thousands)2015 2014 2015 2014
Investment properties$3,680
 5,126
 $3,385
 2,407
1-4 family properties2,974
 5,226
 2,057
 3,681
Land for future development370
 6,541
 194
 2,694
Total commercial real estate7,024
 16,893
 5,636

8,782
Commercial, financial and agricultural17,032
 19,677
 7,935
 12,946
Owner-occupied10,865
 12,187
 3,416
 3,493
Small business  —
   —
 Total commercial and industrial27,897
 31,864
 11,351
 16,439
Home equity lines5,469
 4,790
 1,491
 1,587
Consumer mortgages6,473
 14,789
 2,873
 6,739
Credit cards—
 —
 —
 —
Other retail loans593
 1,445
 46
 774
Total retail12,535
 21,024
 4,410
 9,100
Total NPL inflows$47,456
 69,781
 $21,397
 34,321
        
Past Due Loans
As a percentage of total loans outstanding, loans 90 days past due and still accruing interest continue to be at very low levels and were 0.02% at June 30, 2015, December 31, 2014, and June 30, 2014. These loans are in the process of collection, and management believes that sufficient collateral value securing these loans exists to cover contractual interest and principal payments.

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Troubled Debt Restructurings
Accruing TDRs were $205.2 million at June 30, 2016, compared to $223.9 million at December 31, 2015 and $268.5 million at June 30, 2015, compared to $348.4 million at December 31, 2014 and $444.1 million at June 30, 2014.2015. Accruing TDRs declined $79.9$18.7 million, or 22.9%8.4%, from December 31, 20142015 and $175.6$63.4 million, or 39.5%23.6%, from a year ago primarily due to lower TDR inflows, as well as fewer TDRs having to retain the TDR designation upon subsequent renewal, refinance, or modification. At June 30, 2015, the allowance for loan losses allocated to these accruing TDRs was $15.3 million compared to $21.0 million at December 31, 2014modification, and $24.3 million at June 30, 2014. Accruing TDRs are considered performing because they are performing in accordance with the restructured terms. At both June 30, 2015 and December 31, 2014, approximately 99% of accruing TDRs were current. In addition, subsequent defaults on accruing TDRs (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 declined significantly to two defaults with a recorded investment of $115 thousand for the six months ended June 30, 2015 compared to eight defaults with a recorded investment of $3.1 million for the six months ended June 30, 2014.
At June 30, 2015, 41.7%, or $111.9 million, of accruing TDRs were graded as Pass (32.4%) or Special Mention (9.3%) loans. At June 30, 2015, troubled debt restructurings (accruing and non-accruing) were $323.3 million, a decrease of $99.7 million, or 23.6%, compared to December 31, 2014.
Accruing TDRs by Risk GradeJune 30, 2015 December 31, 2014
(dollars in thousands)Amount % Amount %
Pass$86,968
 32.4% $86,354
 24.8%
Special Mention24,980
 9.3
 65,446
 18.8
Substandard accruing156,594
 58.3
 196,627
 56.4
  Total accruing TDRs$268,542
 100.0% $348,427
 100.0%
        

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Accruing TDRs Aging and Allowance for Loan Losses by Portfolio Class
 June 30, 2015
(in thousands)Current 30-89 Days Past Due 90+ Days Past Due Total Allowance for Loan Losses
Investment properties$97,733
 259
 —
 97,992
 7,584
1-4 family properties25,717
 —
 —
 25,717
 2,273
Land acquisition29,464
 —
 —
 29,464
 1,390
Total commercial real estate152,914
 259
 —
 153,173
 11,247
Commercial, financial and agricultural26,865
 113
 —
 26,978
 964
Owner-occupied50,090
 —
 —
 50,090
 2,097
Total commercial and industrial76,955
 113
 —
 77,068
 3,061
Home equity lines8,712
 209
 —
 8,921
 185
Consumer mortgages23,371
 789
 —
 24,160
 711
Credit cards—
 —
 —
 —
 —
Other retail loans5,121
 99
 —
 5,220
 74
Total retail37,204
 1,097
 —
 38,301
 970
Total accruing TDRs$267,073
 1,469
 —
 268,542
 15,278
          
 December 31, 2014
(in thousands)Current 30-89 Days Past Due 90+ Days Past Due Total Allowance for Loan Losses
Investment properties$109,436
 —
 —
 109,436
 5,294
1-4 family properties39,655
 —
 —
 39,655
 6,838
Land acquisition43,696
 —
 —
 43,696
 2,815
Total commercial real estate192,787
 —
 —
 192,787
 14,947
Commercial, financial and agricultural46,995
 197
 —
 47,192
 2,373
Owner-occupied66,463
 548
 —
 67,011
 2,854
Total commercial and industrial113,458
 745
 —
 114,203
 5,227
Home equity lines4,657
 191
 —
 4,848
 129
Consumer mortgages28,714
 2,164
 418
 31,296
 592
Credit cards—
 —
 —
 —
 —
Other retail loans5,095
 180
 18
 5,293
 101
Total retail38,466
 2,535
 436
 41,437
 822
Total accruing TDRs$344,711
 3,280
 436
 348,427
 20,996
          












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Non-accruing TDRs may generally be returned to accrual status if there has been a period of performance, consisting usually of at least a six month sustained period of repayment performance in accordance with the terms of the agreement.pay-offs. Consistent with regulatory guidance, a TDR will generally no longer be reported as a TDR after a period of performance which is generally a minimum of six months and after the loan has been reported as a TDR at a year-end reporting date, and if at the time of the modification, the interest rate was at market, considering the credit risk associated with the borrower. Non-accruing
At June 30, 2016, the allowance for loan losses allocated to these accruing TDRs were $54.8was $12.7 million compared to $12.6 million at December 31, 2015 and $15.3 million at June 30, 2015. Accruing TDRs are considered performing because they are performing in accordance with the restructured terms. At both June 30, 2016 and December 31, 2015, 99% of accruing TDRs were current. In addition, subsequent defaults on accruing TDRs (defaults defined as the earlier of the TDR being placed on non-accrual status or reaching 90 days past due with respect to principal and/or interest payments within twelve months of the TDR designation) have remained low, and consisted of only one default with a recorded investment of $92 thousand for the six months ended June 30, 2016 and two defaults with a recorded investment of $115 thousand for the six months ended June 30, 2015.

Accruing TDRs by Risk GradeJune 30, 2016 December 31, 2015 June 30, 2015
(dollars in thousands)Amount % Amount % Amount %
Pass$64,314
 31.3% 75,015
 33.5 86,968
 32.4
Special Mention33,744
 16.5
 40,365
 18.0 24,980
 9.3
Substandard accruing107,107
 52.2
 108,493
 48.5 156,594
 58.3
  Total accruing TDRs$205,165
 100.0% 223,873
 100.0 268,542
 100.0
            
Accruing TDRs Aging by Portfolio Class
 June 30, 2016
(in thousands)Current 30-89 Days Past Due 90+ Days Past Due Total 
Investment properties$33,430
 —
 —
 33,430
 
1-4 family properties42,100
 —
 —
 42,100
 
Land acquisition14,133
 —
 —
 14,133
 
Total commercial real estate89,663
 —
 —
 89,663
 
Commercial, financial and agricultural28,814
 399
 —
 29,213
 
Owner-occupied51,299
 —
 —
 51,299
 
Total commercial and industrial80,113
 399
 —
 80,512
 
Home equity lines8,770
 249
 —
 9,019
 
Consumer mortgages19,107
 891
 —
 19,998
 
Credit cards—
 —
 —
 —
 
Other retail loans5,862
 111
 —
 5,973
 
Total retail33,739
 1,251
 —
 34,990
 
Total accruing TDRs$203,515
 1,650
 —
 205,165
 
         
 December 31, 2015
(in thousands)Current 30-89 Days Past Due 90+ Days Past Due Total 
Investment properties$50,913
 —
 —
 50,913
 
1-4 family properties43,931
 —
 —
 43,931
 
Land acquisition19,929
 380
 —
 20,309
 
Total commercial real estate114,773
 380
 —
 115,153
 
Commercial, financial and agricultural24,934
 592
 208
 25,734
 
Owner-occupied47,141
 387
 —
 47,528
 
Total commercial and industrial72,075
 979
 208
 73,262
 
Home equity lines9,575
 —
 —
 9,575
 
Consumer mortgages20,520
 712
 —
 21,232
 
Credit cards—
 —
 —
 —
 
Other retail loans4,459
 192
 —
 4,651
 
Total retail34,554
 904
 —
 35,458
 
Total accruing TDRs$221,402
 2,263
 208
 223,873
 
         
Non-accruing TDRs were $17.6 million at June 30, 2016 compared to $74.6$47.4 million at December 31, 2014,2015, a decrease of $19.8$29.8 million, or 26.5%, primarily due62.9%. Non-accruing TDRs may generally be returned to principal reductions.
Non-accruing TDRs by Type   
(in thousands)June 30, 2015 December 31, 2014
Investment properties$9,681
 $15,922
1-4 family properties4,077
 7,523
Land acquisition17,219
 24,037
  Total commercial real estate30,977
 47,482
Commercial, financial and agricultural6,565
 7,478
Owner-occupied11,347
 14,427
 Total commercial and industrial17,912
 21,905
Home equity lines908
 893
Consumer mortgages4,861
 4,256
Credit cards—
 —
Other retail loans144
 66
Total retail5,913
 5,215
Total non-accruing TDRs$54,802
 $74,602
    
accrual status if there has been a period of performance, consisting usually of at least a six month sustained period of repayment performance in accordance with the terms of the agreement.
Potential Problem Loans
Potential problem loans are defined by management as being certain performing loans with a well-defined weakness where there is known information about possible credit problems of borrowers which causes management to have concerns about the ability of such borrowers to comply with the present repayment terms of such loans. Potential problem commercial loans consist

of commercial Substandard accruing loans but exclude loans 90 days past due and still accruing interest and accruing TDRs classified as Substandard. Synovus had $216.5 million of potentialSubstandard since these loans are disclosed separately. Potential problem commercial loans were $144.1 million at June 30, 20152016 compared to $222.5$181.0 million and $229.6$216.5 million at December 31, 20142015 and June 30, 2014,2015, respectively. Synovus cannot predict at this time whether these potential problem loans ultimately will become non-performing loans or result in losses.















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Net Charge-offs
Net charge-offs for the six months ended June 30, 20152016 were $17.613.5 million, or 0.17%0.12% as a percentage of average loans annualized, a decrease of $32.9$4.2 million, or 65.1%23.6%, compared to $50.6$17.6 million, or 0.50%0.17%, as a percentage of average loans annualized for the six months ended June 30, 2014.2015. The decline in net charge-offs was driven by a decline in NPL inflows,fewer dispositions of distressed loans and lower impairment charge-offs on existing collateral dependent impaired loans, and lower charges on the resolution and disposition of distressed loans. The net charge-off ratio for 2015the second half of 2016 is expected to be belowin the previously guided range of 3010 to 4020 basis points due to the continued significant credit improvements.
The following tables show net charge-offs by loan type for the six and three months ended June 30, 2015 and 2014.
Net Charge-offs (Recoveries) by Loan Type       
 Six Months Ended June 30, Three Months Ended June 30,
(in thousands)2015 2014 2015 2014
Investment properties$165
 $8,894
 $1,717
 $5,222
1-4 family properties2,951
 1,692
 (905) 1,063
Land for future development800
 20,104
 (395) 18,686
Total commercial real estate3,916
 30,690
 417

24,971
Commercial, financial and agricultural3,129
 6,645
 436

4,118
Owner-occupied2,375
 4,637
 2,061

1,081
 Total commercial and industrial5,504
 11,282
 2,497

5,199
Home equity lines1,305
 3,247
 573

1,940
Consumer mortgages4,438
 1,969
 769

1,194
Credit cards1,915
 2,522
 811

1,436
Other retail loans571
 843
 238

632
Total retail8,229
 8,581
 2,391

5,202
Total net charge-offs$17,649
 $50,553
 $5,305

$35,372
range.
Provision for Loan Losses and Allowance for Loan Losses
For the six months ended June 30, 2015,2016, the provision for loan losses was $11.0$16.1 million, a decreasean increase of $10.8$5.0 million, or 49.4%45.6%, compared to the six months ended June 30, 2014.2015. The decreaseincrease in the provision for loan losses was primarily a result of continued improvement in credit quality trends, including:
Reduced netattributable to the impact from updates to the allowance for loan charge-offs by $32.9 million, or 65.1%, from $50.6 million for the six months ended June 30, 2014 to $17.6 million for the six months ended June 30, 2015;
Reduced NPL inflows by $22.3 million, or 32.0%, from $69.8 million for the six months ended June 30, 2014 to $47.5 million for the six months ended June 30, 2015;
Reduced loans rated Special Mention by $213.7 million, or 29.0%, from $736.5 million at June 30, 2014 to $522.9 million at June 30, 2015;
Reduced loans rated Substandard accruing by $90.5 million, or 18.7%, from $483.7 million at June 30, 2014 to $393.2 million at June 30, 2015; and
Pass rated loans as a percentage of total loans were 94.9% at June 30, 2015 compared to 92.8% at June 30, 2014.losses factors.
The allowance for loan losses atJune 30, 20152016 was $255.1 million, or 1.11% of total loans, compared to was$252.5 million, or 1.13% of total loans, at December 31, 2015 and $254.7 million, or 1.18% of total loans, compared to $261.3 million or 1.24% of total loans at December 31, 2014 and $277.8 million or 1.36% of total loans at June 30, 2014. The decrease in the allowance for loan losses is primarily due to continued improvement in credit quality trends, which includes lower NPL levels as well as reduced NPL inflows and net charge-offs, improved risk grade migration trends, and stable collateral values.  2015.
Capital Resources
Synovus is required to comply with the capital adequacy standards established by the Federal Reserve Board and our subsidiary bank, Synovus Bank, must comply with similar capital adequacy standards established by the FDIC. Synovus has always placed great emphasis on maintaining a solid capital base and continues to satisfy applicable regulatory capital requirements.
At June 30, 2016, Synovus' and Synovus Bank's capital levels each exceeded well-capitalized requirements currently in effect. The following table presents certain ratios used to measure Synovus and Synovus Bank's capitalization.
Capital Ratios   
(dollars in thousands)    June 30, 2016 December 31, 2015
Tier 1 capital   
Synovus Financial Corp.$2,627,572
 2,660,016
Synovus Bank3,145,265
 3,136,132
Common equity Tier 1 capital (transitional)   
Synovus Financial Corp.2,616,181
 2,660,016
Synovus Bank3,145,265
 3,136,132
Total risk-based capital   
Synovus Financial Corp.3,146,897
 3,255,758
Synovus Bank$3,402,134
 3,390,764
Tier 1 capital ratio   
Synovus Financial Corp.10.06% 10.37
Synovus Bank12.06
 12.25
Common equity Tier 1 ratio (transitional)   
Synovus Financial Corp.10.01
 10.37
Synovus Bank12.06
 12.25
Total risk-based capital to risk-weighted assets ratio   
Synovus Financial Corp.12.05
 12.70
Synovus Bank13.04
 13.25
Leverage ratio   
Synovus Financial Corp.9.10
 9.43
Synovus Bank10.92
 11.15
Tangible common equity to tangible assets ratio (1)
   
Synovus Financial Corp.9.52
 9.90
    
(1) See reconciliation of “Non-GAAP Financial Measures” in this Report.

The Basel III capital rules, implemented in the U.S. with certain changes mandated by the Dodd-Frank Act, strengthen the definition of regulatory capital, increase risk-based capital requirements, and make selected changes to the calculation of risk-weighted assets. The rules became effective January 1, 2015 for Synovus and Synovus Bank, subject to a transition period for

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several aspects, including the capital conservation buffer and certain regulatory capital adjustments and deductions, as described below. Under the Basel III capital rules, the minimum capital requirements for Synovus and Synovus Bank include a common equity Tier 1 (CET1) ratio of 4.5%; Tier 1 capital ratio of 6%; total capital ratio of 8%; and leverage ratio of 4%. When fully phased-in on January 1, 2019, the Basel III capital rules include a capital conservation buffer of 2.5% that is added on top of each of the minimum risk-based capital ratios. The implementation of the capital conservation buffer will beginbegan on January 1, 2016 at the 0.625% level and will be phased-in over a three-year period (increasing by that amount on each subsequent January 1, until it reaches 2.5% on January 1, 2019). As a financial holding company, Synovus and its subsidiary bank, Synovus Bank, are required to maintain capital levels required for a well-capitalized institution as defined by federal banking regulations. Under the Basel III capital rules, Synovus and Synovus Bank are well-capitalized if each has a CET1 ratio of 6.5% or greater, a Tier 1 risk-based capital ratio of 8% or greater, a total risk-based capital ratio of 10% or greater, a leverage ratio of 5% or greater, and are not subject to any written agreement, order, capital directive, or prompt corrective action directive from a federal and/or state banking regulatory agency to meet and maintain a specific capital level for any capital measure.
At June 30,During the third quarter of 2015, Synovus' and Synovus Bank's capital levels each exceeded well-capitalized requirements currently in effect. The following table presents certain ratios used to measure Synovus and Synovus Bank's capitalization.
Capital Ratios   
(dollars in thousands)    June 30, 2015 December 31, 2014
    
Capital rules in effect:Basel III Basel I
    
Tier 1 capital   
Synovus Financial Corp.$2,615,827
 2,543,625
Synovus Bank3,040,311
 2,988,189
Common equity Tier 1 capital (transitional)   
Synovus Financial Corp.2,615,827
 N/A
Synovus Bank3,040,311
 N/A
Tier 1 common equity(1)
   
Synovus Financial Corp.N/A
 2,407,645
Total risk-based capital   
Synovus Financial Corp.2,971,518
 2,987,406
Synovus Bank$3,296,578
 3,251,836
Tier 1 capital ratio   
Synovus Financial Corp.10.73% 10.86
Synovus Bank12.49
 12.76
Common equity Tier 1 ratio (transitional)   
Synovus Financial Corp.10.73
 N/A
Synovus Bank12.49
 N/A
Tier 1 common equity ratio(1)
   
Synovus Financial Corp.N/A
 10.28
Total risk-based capital to risk-weighted assets ratio   
Synovus Financial Corp.12.18
 12.75
Synovus Bank13.54
 13.89
Leverage ratio   
Synovus Financial Corp.9.48
 9.67
Synovus Bank11.04
 11.39
Tangible common equity to tangible assets ratio (1)
   
Synovus Financial Corp.10.13
 10.69
    
(1) See reconciliation of “Non-GAAP Financial Measures” in this Report.
Capital ratios at June 30, 2015 were impacted by common stock repurchases of $50.3 million during the second quarter and $59.1 million during the first quarter pursuant to Synovus'completed its $250 million share repurchase program which was announced on October 21, 2014 and which expiresexpired on October 23, 2015. As of June 30, 2015,Under this program, Synovus had repurchased a total of $197.5 million, or 7.49.1 million shares of common stock under the share repurchase program through a combination of share repurchases under thean accelerated share repurchase (ASR) agreement described below and open market transactions. Synovus entered intoAdditionally, during the ASR agreement during October 2014third quarter of 2015, Synovus' Board of Directors authorized a $300 million share repurchase program to purchase $75.0 millionbe completed over the next 15 months. During the fourth quarter of Synovus common stock2015, under the $300 million share repurchase program. As of December

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31, 2014,program, Synovus had repurchased 2.5$37.1 million, or 1.2 million shares, of common stock under the ASR agreement. During January 2015, Synovus repurchased 392 thousand shares upon completion of the ASR agreement. Additionally, since October 2014 through June 30, 2015, Synovus has repurchased $122.5 million, or 4.5 million shares, of common stock through open market transactions including $109.4 million, or 3.9 million shares, of common stock repurchasedand during the first half of 2015.
Additionally, 2015 capital ratios are impacted by changes required2016 Synovus repurchased $171.5 million, or 5.9 million shares. At June 30, 2016, the remaining authorization under Basel III capital rules, which, for Synovus, increased risk-weighted assets by approximately $420this program was $91.5 million whenand as of August 2, 2016, the capital rules went into effect at March 31, 2015 with higher risk-weights assignedremaining authorization under this program was $55.5 million. Management currently expects to certain categories including unfunded lines of credit, non-performing loans, and various other categories. Synovus and Synovus Bank elected to make a permanent election to exclude accumulated other comprehensive income (loss) from regulatory capital, and therefore will retaincomplete the same accumulated other comprehensive income (loss) treatment as under the regulatory capital rules in effect$300 million share repurchase program on or prior to year-end 2016, with timing of repurchases dependent on market conditions and other factors.
On December 7, 2015, Synovus issued in a public offering $250 million aggregate principal amount of subordinated notes due in 2025, for aggregate proceeds of $246.6 million, net of debt issuance costs. Also during the fourth quarter of 2015, Synovus repurchased $46.7 million of its 2017 subordinated notes in privately negotiated transactions which resulted in a pre-tax loss of $1.5 million. Additionally, during January 1, 2015.2016, Synovus repurchased $124.7 million of the 2017 subordinated notes in conjunction with Synovus' cash tender offer that commenced on December 23, 2015 and expired on January 22, 2016. Results for the six months ended June 30, 2016 included a $4.7 million pre-tax loss relating to the January tender offer.
As of June 30, 2015,2016, total disallowed deferred tax assets were $384.0$281.8 million or 1.57%1.08% of risk-weighted assets compared to $412.9$341.1 million or 1.72%1.33% of risk-weighted assets at March 31, 2015, and compared to $492.2 million or 2.10% of risk weighted assets at December 31, 2014.2015. Disallowed deferred tax assets for the new Basel III ratio, CET1, were $258.2$169.1 million at June 30, 2015, compared to $287.22016 and $215.5 million at MarchDecember 31, 2015, due to a three-year phase-in of the total disallowed deferred tax asset for the CET1 capital measure. Basel III revised the deferred tax asset limitation criteria effective January 1, 2015 and now includes the component of deferred tax assets arising from temporary timing differences in regulatory capital up to certain levels of CET1. Thus, the disallowed portion of deferred tax assets, under Basel III, is comprised of net operating loss carryforwards and tax credit carryforwards. Under Basel I, there were limitations on the inclusion of deferred tax assets for regulatory capital based on Tier 1 capital levels and projected future earnings. The treatment of deferred tax assets under Basel III had an initial favorable impact on Synovus' regulatory capital ratios. Synovus' deferred tax asset shouldis projected to continue to decrease over time,decline, thus creating additional regulatory capital in future periods.
Synovus' CET1 ratio was 10.73%10.01% at June 30, 20152016 under Basel III transitional provisions and the estimated fully phased-in CET1 ratio, as of June 30, 20152016, was approximately 10.09%9.49%, both of which are well in excess of the regulatory requirements prescribed by Basel III. See reconciliation of "Non-GAAP Financial Measures" in this Report.
Management currently believes, based on internal capital analyses and earnings projections, that Synovus and Synovus Bank'sSynovus' capital position is adequate to meet current and future regulatory minimum capital requirements.
Dividends
Synovus has historically paid a quarterly cash dividend to the holders of its common stock. Management and the Board of Directors closely monitorsmonitor current and projected capital levels, liquidity (including dividends from subsidiaries), financial markets and other economic trends, as well as regulatory requirements regarding the payment of dividends. During October 2014,the fourth quarter of 2015, Synovus increased the quarterly common stock dividend (which wasby 20% to $0.12 per share effective with the quarterly dividend paid on January 2, 2015) from $0.07 to $0.10 per share. 4, 2016.
Synovus' ability to pay dividends on its capital stock, including the common stock and the Series C Preferred Stock, is primarily dependent upon dividends and distributions that it receives from its bank and non-banking subsidiaries, which are restricted by various regulations administered by federal and state bank regulatory authorities, as further discussed below in the section titled "Liquidity." During 2014, Synovus Bank paid upstream dividends of $182.0 million to Synovus. During the six months ended June 30, 2015,2016, Synovus Bank paid upstream cash dividends of $150.0$180.0 million to Synovus.Synovus and during the year ended December 31, 2015, Synovus Bank made upstream cash distributions to Synovus totaling $225.0 million including cash dividends of $199.9 million.
    Synovus declared dividends of $0.20$0.24 per common share for the six months ended June 30, 20152016 and $0.14$0.20 for the six months ended June 30, 2014.2015. In addition to dividends paid on its common stock, Synovus paid dividends of $5.1 million on its Series C Preferred Stock during both the six months ended June 30, 20152016 and June 30, 2014.2015.
Liquidity
Liquidity represents the extent to which Synovus has readily available sources of funding needed to meet the needs of depositors, borrowers and creditors, to support asset growth, and to otherwise sustain operations of Synovus and its subsidiaries, at a reasonable cost, on a timely basis, and without adverse consequences. ALCO monitors Synovus' economic, competitive, and regulatory environment and is responsible for measuring, monitoring, and reporting on liquidity and funding risk, interest rate risk, and market risk and has the authority to establish policies relative to these risks. ALCO, operating under liquidity and funding policies approved by the Board of Directors, actively analyzes contractual and anticipated cash flows in order to properly manage Synovus’ liquidity position.
Contractual and anticipated cash flows are analyzed under normal and stressed conditions to determine forward looking liquidity needs and sources. Synovus analyzes liquidity needs under various scenarios of market conditions and operating performance. This analysis includes stress testing and measures expected sources and uses of funds under each scenario. Emphasis is placed on maintaining numerous sources of current and potential liquidity to allow Synovus to meet its obligations to depositors, borrowers, and creditors on a timely basis.
Liquidity is generated primarily through maturities and repayments of loans by customers, maturities and sales of investment securities, deposit growth, and access to sources of funds other than deposits. Management continuously monitors and maintains appropriate levels of liquidity so as to provide adequate funding sources to manage customer deposit withdrawals, loan requests, and funding maturities. Liquidity is also enhanced by the acquisition of new deposits. Each of the banking divisions monitors deposit flows and evaluates local market conditions in an effort to retain and grow deposits.

Synovus Bank also generates liquidity through the national deposit markets through the issuance of brokered certificates of deposit and money market accounts. Synovus Bank accesses these funds from a broad geographic base to diversify its sources of funding and liquidity. Synovus Bank has the capacity to access funding through its membership in the FHLB System. At June 30, 2015,2016, based on currently pledged collateral, Synovus Bank had access to incremental funding of $870 million, subject to available collateral and FHLB credit policies, through utilization of FHLB advances.
In addition to bank level liquidity management, Synovus must manage liquidity at the Parent Company for various operating needs including potential capital infusions into subsidiaries, the servicing of debt, the payment of dividends on our common stock and preferred stock, share repurchases and payment of general corporate expenses. 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 FDIC. During 2014,2015, Synovus Bank paidmade upstream cash distributions to the Parent Company totaling $225.0 million including cash dividends totaling $182.0 million to Synovus Financial Corp.of $199.9 million. During the six months ended June 30, 2015,2016, Synovus Bank paid upstream cash dividends of $150.0totaling $180.0 million to Synovus.the Parent Company. Synovus' ability to receive dividends from Synovus Bank in future periods will depend on a number of factors, including, without limitation, Synovus Bank's future profits, asset quality, liquidity and overall condition. In addition, GA DBF rules and related statutes contain additional restrictionslimitations on payments of dividends by Synovus Bank. In particular, the Georgia Financial Institutions Code contains restrictions on the ability of a Georgia bank to pay dividends other than from retained earningsBank without the approval of the GA DBF. As
On December 7, 2015, Synovus issued in a resultpublic offering $250 million aggregate principal amount of this restriction,subordinated debt due in 2025, for aggregate proceeds of $246.6 million, net of debt issuance costs. Also during the fourth quarter of 2015, Synovus Bank is currently requiredrepurchased $46.7 million of its subordinated notes maturing in 2017 in privately negotiated transactions which resulted in a pre-tax loss of $1.5 million. Additionally, during January 2016, Synovus repurchased $124.7 million of its subordinated notes maturing in 2017 in conjunction with Synovus' cash tender offer that commenced on December 23, 2015 and expired on January 22, 2016. Results for the six months ended June 30, 2016 included a $4.7 million pre-tax loss relating to seek approval from the GA DBF to pay dividends to Synovus.January tender offer.
Synovus presently believes that the sources of liquidity discussed above, including existing liquid funds on hand, are sufficient to meet its anticipated funding needs through the near future.needs. However, if economic conditions were to significantly deteriorate, regulatory capital requirements for Synovus or Synovus Bank increase as the result of regulatory directives or otherwise, or Synovus believes it is prudent to enhance current liquidity levels, then Synovus may seek additional liquidity from external sources. See "Part I – Item 1A. Risk Factors - Changes in the cost and availability of funding due to changes in the deposit market and credit market, or the way in which we are perceived in such markets, may adversely affect our capital resources, liquidity and financial results." " ofSynovus' 20142015 Form 10-K.
Earning Assets and Sources of Funds
Average total assets for the six months ended June 30, 20152016 increased $1.33$1.39 billion, or 5.0%, to $27.70$29.09 billion as compared to $26.37$27.70 billion for the first six months of 2014.2015. Average earning assets increased $1.45$1.54 billion, or 6.0%, in the first six months of 20152016 compared to the same period in 20142015 and represented 92.2%93.1% of average total assets at June 30, 2015,2016, as compared to 91.4%92.2% at June 30, 2014.2015. The increase in average earning assets resulted from a $1.01$1.57 billion increase in average loans, net, and a $469.1$450.6 million increase in federalaverage taxable investment securities. These increases were partially offset by a $468.5 million decrease in interest bearing funds sold, due fromheld at the Federal Reserve Bank, and other short-term investments.Bank. Average non-interestinterest bearing demand depositsliabilities increased $621.4$871.3 million, or 11.0%4.8%, to $6.27$19.06 billion for the first six months of 20152016 compared to the same period in 2014. Average interest bearing liabilities increased $699.2 million, or 4.0%, to $18.19 billion for the first six months of 2015 compared to the same period in 2014.2015. The increase in interest bearing liabilities was driven by a $284.0$750.0 million increase in money market deposit accounts (excluding brokered deposits), and a $268.9$355.8 million increase in interest bearing demand deposits. These increases were partially offset by a $359.1 million decrease in brokered timedeposits. Average non-interest bearing demand deposits and a $62.3increased $598.0 million, increaseor 9.5%, to $6.87 billion for the first six months of 2016 compared to the same period in long-term debt.2015.
Net interest income for the six months ended June 30, 20152016 was $406.9$439.6 million, an increase of $1.3$32.7 million, or 0.33%8.0%, compared to $405.6$406.9 million for the six months ended June 30, 2014.2015.
The net interest margin for the six months ended June 30, 20152016 was 3.22%3.27%, down 18 bpsup 5 basis points from 3.40%3.22% for the six months ended June 30, 2014.2015. Earning asset yields decreasedincreased by 18 bps6 basis points compared to the six months ended June 30, 2014 while2015 and the effective cost of funds was flat. The primary factor negatively impacting earning asset yields was a 16 bp decline in loan yields.increased one basis point.
On a sequential quarter basis, net interest income increased by $381 thousand and$3.3 million while the net interest margin decreased by 13 bps to 3.15%.was unchanged. The increase in net interest income for the second quarter was due to one additional calendar day in the quarter and an $833.4a $367.4 million increase in average earning assets. Yieldsassets driven by a $349.8 million increase in average loans, net. The yield on earning assets decreased by 12 bps whilewas 3.73% and the effective cost of funds increased by 1 bp. The primary factors negatively impacting earning asset yields were a 5 bp decline in loan yields and an increase inwas 0.46% for the average balance of lower yielding funds held atsecond quarter 2016, both unchanged from the Federal Reserve Bank. The effective cost of funds was negatively impacted by an 8 bp increase in the cost of time deposits over $100 thousand, a 7 bp increase in the cost of time deposits under $100 thousand, and a 3 bp increase in money market deposits (excluding brokered deposits).previous quarter.
Current expectations are for theThe net interest margin to be flat to slightly downcould experience slight downward pressure in the second halfthird quarter of 2015 from2016. Current expectations for the second quarter level, as modest loan yield pressure is offset by liquidity deployment.full year 2016 are for an estimated increase in net interest income of 7.5% assuming no change in short-term interest rates.

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Quarterly yields earned on average interest-earning assets and rates paid on average interest-bearing liabilities for the five most recent quarters are presented below.
Average Balances, Interest, and Yields2015 20142016 2015 
(dollars in thousands) (yields and rates annualized)Second Quarter First Quarter Fourth Quarter Third Quarter Second Quarter Second Quarter First Quarter Fourth Quarter Third Quarter Second Quarter 
Interest Earning Assets:                    
Taxable investment securities (1)
$3,165,513
 2,998,597
 3,027,769
 3,035,940
 3,091,537
 $3,529,030
 3,537,131
 3,481,184
 3,380,543
 3,165,513
 
Yield1.79% 1.85
 1.85
 1.84
 1.87
 1.89% 1.91
 1.85
 1.76
 1.79
 
Tax-exempt investment securities(1)(3)
$4,595
 4,967
 5,030
 5,168
 5,781
 $3,491
 4,091
 4,352
 4,509
 4,595
 
Yield (taxable equivalent) (3)
6.15% 6.21
 6.19
 6.21
 6.23
 6.08% 6.37
 6.16
 6.21
 6.15
 
Trading account assets$12,564
 14,188
 12,879
 16,818
 16,011
 $3,803
 5,216
 8,067
 7,278
 12,564
 
Yield3.72% 3.02
 3.08
 2.52
 2.25
 1.27% 1.65
 2.24
 1.84
 3.72
 
Commercial loans(2)(3)
$17,297,130
 17,176,641
 16,956,294
 16,603,287
 16,673,930
 $18,433,638
 18,253,169
 17,884,661
 17,522,735
 17,297,130
 
Yield4.01% 4.06
 4.09
 4.17
 4.19
 4.04% 4.03
 3.97
 3.99
 4.01
 
Consumer loans(2)
$3,986,151
 3,929,188
 3,895,397
 3,814,160
 3,695,010
 $4,497,147
 4,334,817
 4,233,061
 4,105,639
 3,986,151
 
Yield4.37% 4.45
 4.42
 4.44
 4.51
 4.32% 4.37
 4.27
 4.31
 4.37
 
Allowance for loan losses$(254,177) (257,167) (268,659) (274,698) (293,320) $(251,101) (258,097) (252,049) (256,102) (254,177) 
Loans, net (2)
$21,029,104
 20,848,662
 20,583,032
 20,142,749
 20,075,620
 $22,679,684
 22,329,889
 21,865,673
 21,372,272
 21,029,104
 
Yield4.14% 4.19
 4.22
 4.29
 4.32
 4.15% 4.15
 4.08
 4.10
 4.14
 
Mortgage loans held for sale$90,419
 64,507
 60,892
 70,766
 59,678
 $72,477
 63,339
 50,668
 69,438
 90,419
 
Yield3.39% 3.92
 3.84
 3.96
 4.13
 3.59% 3.72
 3.84
 3.82
 3.39
 
Federal funds sold, due from Federal Reserve Bank, and other short-term investments$1,590,114
 1,123,250
 898,871
 974,363
 843,018
 $907,614
 885,938
 1,081,604
 1,380,686
 1,590,114
 
Yield0.24% 0.24
 0.23
 0.23
 0.23
 0.47% 0.47
 0.27
 0.24
 0.24
 
Federal Home Loan Bank and Federal Reserve Bank Stock(4)
$76,091
 80,813
 75,547
 78,131
 76,172
 77,571
 80,679
 66,790
 71,852
 76,091
 
Yield4.57% 3.90
 4.53
 3.57
 4.15
 5.15% 3.82
 5.08
 4.71
 4.57
 
Total interest earning assets$25,968,400
 25,134,984
 24,664,020
 24,323,935
 24,167,817
 $27,273,670
 26,906,283
 26,558,338
 26,286,578
 25,968,400
 
Yield3.61% 3.73
 3.78
 3.81
 3.86
 3.73% 3.73
 3.63
 3.60
 3.61
 
Interest Bearing Liabilities:                    
Interest bearing demand deposits$3,919,401
 3,800,476
 3,781,389
 $3,722,599
 3,830,956
 $4,233,310
 4,198,738
 4,117,116
 3,955,803
 3,919,401
 
Rate0.18% 0.19
 0.19
 0.19
 0.19
 0.18% 0.17
 0.17
 0.18
 0.18
 
Money Market accounts$6,466,610
 6,210,704
 6,009,897
 6,044,138
 6,033,523
 $7,082,759
 7,095,778
 7,062,517
 6,893,563
 6,466,610
 
Rate0.35% 0.32
 0.29
 0.29
 0.31
 0.31% 0.32
 0.35
 0.36
 0.35
 
Savings deposits$675,260
 649,597
 638,813
 645,654
 644,103
 $746,225
 722,172
 692,536
 685,813
 675,260
 
Rate0.06% 0.05
 0.07
 0.07
 0.09
 0.06% 0.07
 0.06
 0.06
 0.06
 
Time deposits under $100,000$1,351,299
 1,324,513
 1,315,905
 1,335,848
 1,364,322
 $1,262,280
 1,279,811
 1,307,601
 1,338,994
 1,351,299
 
Rate0.68% 0.61
 0.57
 0.56
 0.57
 0.64% 0.65
 0.65
 0.66
 0.68
 
Time deposits over $100,000$2,061,434
 1,926,380
 1,877,602
 1,871,136
 1,824,349
 $2,016,116
 2,006,302
 2,033,193
 2,086,851
 2,061,434
 
Rate0.88% 0.80
 0.76
 0.75
 0.74
 0.89% 0.89
 0.88
 0.88
 0.88
 
Brokered money market accounts$185,909
 181,754
 191,103
 174,538
 184,233
 
Non-maturing brokered deposits$451,398
 315,006
 297,925
 221,817
 185,909
 
Rate0.31% 0.30
 0.28
 0.27
 0.27
 0.39% 0.48
 0.31
 0.31
 0.31
 
Brokered time deposits$1,370,022
 1,413,068
 1,411,252
 1,320,082
 1,216,934
 $885,603
 780,233
 887,168
 1,135,346
 1,370,022
 
Rate0.67% 0.63
 0.58
 0.52
 0.51
 0.85% 0.83
 0.76
 0.71
 0.67
 
Total interest bearing deposits$16,029,935
 15,506,492
 15,225,961
 15,113,995
 15,098,420
 $16,677,691
 16,398,040
 16,398,056
 16,318,187
 16,029,935
 
Rate0.42% 0.39
 0.36
 0.35
 0.36
 0.39% 0.39
 0.40
 0.42
 0.42
 
Federal funds purchased and other short-term liabilities$232,531
 222,658
 186,993
 171,429
 219,490
 
Federal funds purchased and securities sold under repurchase agreements$221,276
 $177,921
 158,810
 207,894
 232,531
 
Rate0.08% 0.08
 0.07
 0.08
 0.13
 0.09% 0.10
 0.08
 0.09
 0.08
 
Long-term debt$2,173,595
 2,207,215
 2,084,636
 2,142,705
 2,099,578
 $2,279,043
 2,361,973
 2,007,924
 2,072,455
 2,172,765
 
Rate2.39% 2.41
 2.55
 2.54
 2.58
 2.55% 2.55
 2.63
 2.51
 2.39
 
Total interest bearing liabilities$18,436,061
 17,936,365
 17,497,590
 17,428,129
 17,417,488
 $19,178,010
 18,937,934
 18,564,790
 18,598,536
 18,435,231
 
Rate0.65% 0.63
 0.62
 0.62
 0.62
 
Non-interest bearing demand deposits$6,436,167
 6,108,558
 6,110,047
 5,824,592
 5,765,287
 
Effective cost of funds0.46% 0.45
 0.44
 0.44
 0.45
 

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Rate0.65% 0.66
 0.65
 0.65
 0.65
 
Non-interest bearing demand deposits$6,930,336
 6,812,223
 6,846,200
 6,541,832
 6,436,167
 
Effective cost of funds0.46% 0.46
 0.45
 0.46
 0.46
 
Net interest margin3.15% 3.28
 3.34
 3.37
 3.41
 3.27% 3.27
 3.18
 3.14
 3.15
 
Taxable equivalent adjustment (3)
$330
 349
 372
 408
 443
 $329
 305
 311
 315
 330
 
                    
(1) Excludes net unrealized gains and (losses).
(2) Average loans are shown net of deferred fees and costs. Non-performing loans are included.
(3) Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 35%, in adjusting interest on tax-exempt loans and investment securities to a taxable-equivalent basis.
(4)Included as a component of Other Assets on the balance sheet.

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Net Interest Income and Rate/Volume Analysis
The following tables set forth the major components of net interest income and the related annualized yields and rates for the six months ended June 30, 20152016 and 2014,2015, as well as the variances between the periods caused by changes in interest rates versus changes in volume.
Net Interest Income and Rate/Volume Analysis
 Six Months Ended June 30, 2016 Compared to 2015
 Average Balances Interest Annualized Yield/Rate Change due to Increase (Decrease)
(dollars in thousands)2016 2015 2016 2015 2016 2015 Volume Rate 
Assets                 
Interest earning assets:                 
Taxable investment securities$3,533,080
 3,082,516
 $33,579
 28,021
 1.90% 1.82
 $4,089
 1,469
 $5,558
Tax-exempt investment securities(2)
3,791
 4,780
 118
 148
 6.23
 6.18
 (30) —
 (30)
Total investment securities3,536,871
 3,087,296
 33,697
 28,169
 1.91
 1.82
 4,059
 1,469
 5,528
Trading account assets4,510
 13,372
 34
 224
 1.49
 3.35
 (148) (42) (190)
Taxable loans, net(1)
22,686,162
 21,118,864
 461,792
 430,861
 4.09
 4.11
 31,963
 (1,032) 30,931
Tax-exempt loans, net(1)(2)
73,223
 76,182
 1,692
 1,791
 4.65
 4.74
 (70) (29) (99)
Allowance for loan losses(254,599) (255,664)              
Loans, net22,504,786
 20,939,382
 463,484
 432,652
 4.15
 4.17
 31,893
 (1,061) 30,832
Mortgage loans held for sale67,908
 77,535
 1,238
 1,397
 3.65
 3.60
 (173) 14
 (159)
Federal funds sold, due from Federal Reserve Bank, and other short-term investments896,777
 1,357,972
 2,129
 1,632
 0.48
 0.24
 (529) 1,024
 495
Federal Home Loan Bank and Federal Reserve Bank stock79,125
 78,439
 1,768
 1,658
 4.47
 4.23
 14
 96
 110
Total interest earning assets$27,089,977
 25,553,996
 $502,350
 465,732
 3.73% 3.67
 $35,116
 1,500
 $36,616
Cash and due from banks405,564
 429,450
              
Premises and equipment, net441,197
 452,352
              
Other real estate41,586
 79,102
              
Other assets(3)
1,111,448
 1,189,794
              
Total assets$29,089,772
 27,704,694
              
                  
Liabilities and Shareholders' Equity                
Interest-bearing liabilities:                 
Interest-bearing demand deposits$4,216,024
 3,860,267
 $3,673
 3,547
 0.18% 0.19% $337
 (211) $126
Money market accounts7,472,471
 6,523,208
 11,852
 10,818
 0.32
 0.33
 1,562
 (528) 1,034
Savings deposits734,199
 662,499
 232
 183
 0.06
 0.06
 21
 28
 49
Time deposits4,115,172
 4,723,685
 16,457
 17,083
 0.80
 0.73
 (2,215) 1,589
 (626)
Federal funds purchased and securities sold under repurchase agreements199,599
 227,622
 96
 89
 0.09
 0.08
 (11) 18
 7
Long-term debt2,320,508
 2,190,312
 29,763
 26,427
 2.57
 2.41
 1,575
 1,761
 3,336
Total interest-bearing liabilities$19,057,973
 18,187,593
 $62,073
 58,147
 0.65
 0.64
 $1,269
 2,657
 $3,926
Non-interest bearing deposits6,871,279
 6,273,267
              
Other liabilities203,923
 216,632
              
Shareholders' equity2,956,597
 3,027,202
              
Total liabilities and equity$29,089,772
 27,704,694
              
Interest rate spread        

 

      
Net interest income - FTE/margin(4)
    440,277
 407,585
 3.27% 3.22
 $33,847
 (1,157) $32,690
Taxable equivalent adjustment    634
 678
          
Net interest income, actual    $439,643
 406,907
          
                  
Net Interest Income and Rate/Volume Analysis
 Six Months Ended June 30, 2015 Compared to 2014
 Average Balances Interest Annualized Yield/Rate Change due to Increase (Decrease)
(dollars in thousands)2015 2014 2015 2014 2015 2014 Volume Rate 
Assets                 
Interest earning assets:                 
Taxable investment securities$3,082,516
 3,136,359
 $28,021
 29,622
 1.82% 1.89
 $(505) (1,096) $(1,601)
Tax-exempt investment securities(2)
4,780
 6,099
 148
 190
 6.18
 6.23
 (41) (1) (42)
Total investment securities3,087,296
 3,142,458
 28,169
 29,812
 1.82
 1.90
 (546) (1,097) (1,643)
Trading account assets13,372
 18,166
 224
 251
 3.35
 2.76
 (65) 38
 (27)
Taxable loans, net(1)
21,118,864
 20,125,993
 430,861
 425,559
 4.11
 4.26
 20,974
 (15,672) 5,302
Tax-exempt loans, net(1)(2)
76,182
 99,245
 1,791
 2,377
 4.74
 4.83
 (552) (34) (586)
Allowance for loan losses(255,664) (300,161)              
Loans, net20,939,382
 19,925,077
 432,652
 427,936
 4.17
 4.33
 20,422
 (15,706) 4,716
Mortgage loans held for sale77,535
 49,247
 1,397
 1,018
 3.60
 4.13
 579
 (201) 378
Federal funds sold, due from Federal Reserve Bank, and other short-term investments1,357,972
 888,904
 1,632
 1,022
 0.24
 0.23
 512
 98
 610
Federal Home Loan Bank and Federal Reserve Bank stock78,439
 79,361
 1,658
 1,454
 4.23
 3.66
 (17) 221
 204
Total interest earning assets$25,553,996
 24,103,213
 $465,732
 461,493
 3.67% 3.85
 $20,885
 (16,647) $4,238
Cash and due from banks429,450
 406,196
              
Premises and equipment, net452,352
 468,723
              
Other real estate79,102
 112,128
              
Other assets(3)
1,189,794
 1,283,490
              
Total assets$27,704,694
 26,373,750
              
                  
Liabilities and Shareholders' Equity                
Interest-bearing liabilities:                 
Interest-bearing demand deposits$3,860,267
 3,854,641
 $3,547
 3,576
 0.19% 0.19
 $5
 (34) $(29)
Money market accounts6,523,208
 6,251,211
 10,818
 9,687
 0.33
 0.31
 418
 713
 1,131
Savings deposits662,499
 630,607
 183
 298
 0.06
 0.10
 16
 (131) (115)
Time deposits4,723,685
 4,406,587
 17,083
 14,182
 0.73
 0.65
 1,022
 1,878
 2,900
Federal funds purchased and securities sold under repurchase agreements227,622
 217,271
 89
 151
 0.08
 0.14
 7
 (69) (62)
Long-term debt2,190,312
 2,128,049
 26,427
 27,135
 2.41
 2.55
 787
 (1,495) (708)
Total interest-bearing liabilities$18,187,593
 17,488,366
 $58,147
 55,029
 0.64
 0.63
 $2,255
 862
 $3,117
Non-interest bearing deposits6,273,267
 5,651,819
              
Other liabilities216,632
 235,472
              
Shareholders' equity3,027,202
 2,998,093
              
Total liabilities and equity$27,704,694
 26,373,750
              
Net interest income/margin    407,585
 406,464
 3.22% 3.40
 $18,630
 (17,509) $1,121
Taxable equivalent adjustment    678
 898
          
Net interest income, actual    $406,907
 405,566
          
                  
(1) Average loans are shown net of unearned income. Non-performing loans are included. Interest income includes fees as follows: 20152016 - $15.2$15.6 million, 20142015 - $13.9$15.2 million.
(2) Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 35% in adjusting interest on tax-exempt loans and investment securities to a taxable-
equivalent basis.
(3) Includes average net unrealized gains (losses) on investment securities available for sale of $26.6$28.7 million and ($1.7)$26.6 million for the six months ended June 30, 20152016 and
2014,2015, respectively.

66(4) The net interest margin is calculated by dividing annualized net interest income - FTE by average total interest earnings assets.
Table of Contents


Market Risk Analysis
Interest rate risk is the primary market risk to which Synovus is potentially exposed. Synovus measures its sensitivity to changes in market interest rates through the use of a simulation model. Synovus uses this simulation model to determine a baseline net interest income forecast and the sensitivity of this forecast to changes in interest rates. These simulations include all of Synovus’ earning assets and liabilities. Forecasted balance sheet changes, primarily reflecting loan and deposit growth forecasts, are included in the periods modeled. Anticipated deposit mix changes in each interest rate scenario are also included in the periods modeled.
Synovus has modeled its baseline net interest income forecast assuming a flat interest rate environment with the federal funds rate at the Federal Reserve’s current targeted range of 0%0.25% to 0.25%0.50% and the current prime rate of 3.25%3.50%. Due to the targeted federal funds rate being at or near 0% at this time, only rising rate scenarios have been modeled. Synovus has modeled the impact of a gradual increase in short-term rates of 100 and 200 basis points and a decline of 25 basis points to determine the sensitivity of net interest income for the next twelve months. Synovus continues to maintain a modestly asset sensitive position which would be expected to benefit net interest income in a rising interest rate environment and reduce net interest income in a declining interest rate environment. The following table represents the estimated sensitivity of net interest income to these changes in short term interest rates at June 30, 2015,2016, with comparable information for December 31, 2014.2015.
   Estimated % Change in Net Interest Income as Compared to Unchanged Rates (for the next twelve months)
 
 Change in Short-term Interest Rates (in basis points) June 30, 2015 December 31, 2014
 +200 6.2% 6.7%
 +100 4.2% 4.3%
 Flat —% —%
      
   Estimated % Change in Net Interest Income as Compared to Unchanged Rates (for the next twelve months)
 
 Change in Short-term Interest Rates (in basis points) June 30, 2016 December 31, 2015
 +200 5.8% 6.4%
 +100 3.5% 3.8%
 Flat —% —%
 -25 -1.9% -2.6%
      
Several factors could serve to diminish or eliminate this asset sensitivity.sensitivity in a rising rate environment. These factors include a higher than projected level of deposit customer migration to higher cost deposits, such as certificates of deposit, which would increase total interest expense and serve to reduce the realized level of asset sensitivity. Another factor which could impact the realized interest rate sensitivity is the repricing behavior of interest bearing non-maturity deposits. Assumptions for repricing are expressed as a beta relative to the change in the prime rate. For instance, a 50% beta would correspond to a deposit rate that would increase 0.5% for every 1% increase in the prime rate. Projected betas for interest bearing non-maturity deposit repricing are a key component of determining the Company's interest rate risk positioning. Should realized betas be higher than projected betas, the expected benefit from higher interest rates would be diminished. The following table presents an example of the potential impact of an increase in repricing betas on Synovus' realized interest rate sensitivity position.
 As of June 30, 2015 As of June 30, 2016
Change in Short-term Interest Rates (in basis points) Base Scenario 15% Increase in Average Repricing Beta Base Scenario 15% Increase in Average Repricing Beta
+200 6.2% 4.7% 5.8% 3.7%
+100 4.2% 3.4% 3.5% 2.4%
  
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 economic
value of equity (EVE). Simulation modeling is utilized to measure the economic value of equity and its sensitivity to immediate
changes in interest rates. These simulations value only the current balance sheet and do not incorporate growth assumptions used in the net interest income simulation. The economic value of equity is the net fair value of assets, liabilities, and off-balance sheet financial instruments derived from the present value of future cash flows discounted at current market interest rates. From this baseline valuation, Synovus evaluates changes in the value of each of these items in various interest rate scenarios to determine the net impact on the economic value of equity. Key assumptions utilized in the model, namely loan prepayments, investment security prepayments, deposit repricing betas, and non-maturity deposit duration have a significant impact on the results of the EVE simulations. As illustrated in the table below, the economic value of equity model indicates that, compared with a valuation assuming stable rates, EVE is projected to increase by 4.6%5.9% and 6.8%6.9%, assuming an immediate and sustained increase in interest rates of 100 and 200 basis points, respectively. Assuming an immediate 25 basis point decline in rates, EVE is projected to decrease by 3.9%

 Estimated Change in EVE Estimated Change in EVE
Immediate Change in Interest Rates (in basis points) June 30, 2015 December 31, 2014 June 30, 2016 December 31, 2015
+200 6.8% 6.7% 6.9% 3.2%
+100 4.6% 4.4% 5.9% 3.4%
-25 -3.9% -3.5%
  


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ADDITIONAL DISCLOSURES
Recently Issued Accounting Standards
The following ASUs will be implemented effective January 1, 20162017 or later:

ASU 2016-13, Financial Instruments--Credit Losses.On June 16, 2016, the FASB issued the new credit impairment standard, ASU 2016-13, Financial Instruments-Credit Losses. ASU 2016-13 represents a shift in focus from an incurred loss model to one that recognizes losses expected to occur over the life of an asset. Under the new guidance, an entity recognizes as an allowance its estimate of expected credit losses for financial assets not recorded at fair value based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance in ASU 2016-13 applies to all industries, and will impact Synovus' accounting for loans, loan commitments, and debt securities.

ASU 2016-13 will be required to be implemented through a cumulative effect adjustment to retained earnings as of the beginning of the first reporting period in which the amendments are effective. This ASU is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. Once effective, the new guidance will significantly change the accounting for credit impairment. Management is currently evaluating the requirements of this new accounting standard to determine the impact on its consolidated financial statements.

ASU 2016-09, Compensation—Stock Compensation: Improvements to Employee Share-Based Payment Accounting.In March 2016, the FASB issued ASU 2016-09, which simplifies several aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. The new guidance includes a requirement to record all of the tax effects related to share-based payments at settlement (or expiration) through the income statement. Currently, tax benefits in excess of compensation cost (“windfalls”) and tax deficiencies (“shortfalls”) are recorded in equity. For Synovus, this ASU will be effective for annual reporting periods beginning after December 15, 2016. Based on management’s initial assessment of the potential impact of the standard on Synovus, management expects that the ASU could create some quarterly income tax expense volatility, but the amount would not be significant.

ASU 2016-02, Leases.In February 2016, the FASB issued ASU 2016-02, its new standard on lease accounting. ASU 2016-02 introduces a lessee model that brings most leases on the balance sheet. Under the new standard, all lessees will recognize a right-of-use asset and a lease liability for all leases, including operating leases, with a lease term greater than 12 months. From a lessor perspective, the accounting model is largely unchanged, though the new standard does include certain targeted improvements to align, where necessary, lessor accounting with the lessee accounting model and the revenue recognition guidance in ASC Topic 606 (those related to evaluating when profit can be recognized). For Synovus, the impact of this ASU will primarily relate to its accounting and reporting of leases as a lessee. The new ASU will be effective for Synovus beginning January 1, 2019 (prior periods will be restated so prior years are comparable). Early adoption is permitted. Management currently estimates that the financial statement impact from the implementation of the new lease accounting standard will not be significant.

ASU 2016-01, Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. In January 2016, the FASB issued ASU 2016-01, which amends the guidance on the classification and measurement of financial instruments. Although the ASU retains many current requirements, it significantly revises an entity’s accounting related to the classification and measurement of investments in equity securities and the presentation of certain fair value changes for financial liabilities measured at fair value. The ASU also amends certain disclosure requirements associated with the fair value of financial instruments. ASU 2016-01 requires an entity to: (i) measure equity investments at fair value through net income, with certain exceptions; (ii) present in OCI the changes in instrument-specific credit risk for financial liabilities measured using the fair value option; (iii) present financial assets and financial liabilities by measurement category and form of financial asset; (iv) calculate the fair value of financial instruments for disclosure purposes based on an exit price and; (v) assess a valuation allowance on deferred tax assets related to unrealized losses of AFS debt securities in combination with other deferred tax assets. The ASU provides an election to subsequently measure certain nonmarketable equity investments at cost less any impairment and adjusted for certain observable price changes. The ASU also requires a qualitative impairment assessment of such equity investments and

amends certain fair value disclosure requirements. Because companies must recognize changes in the measurement of equity investments in net income, income volatility will potentially increase, but changes in credit risk will not affect earnings when the fair value option is elected. The new standard will be effective for Synovus for fiscal years beginning after December 15, 2017. Management is currently evaluating the impact of the ASU on Synovus’ consolidated financial statements.

ASU 2014-09, Revenue from Contracts with Customers. ASU 2014-09 establishes a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The standard is intended to increase comparability across industries and jurisdictions. The core principle of the revenue model is that a company will recognize revenue when it transfers control of goods or services to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services.
On April 29, 2015, the FASB issued a proposal to delay the effective date of ASU 2014-09, Revenue from Contracts with Customers, for public and non-public companies.companies. The proposed new effective date will be annual reporting periods beginning after December 15, 2017, and the interim periods within that year, for public business entities. As such, for Synovus, the ASU will be effective on January 1, 2018, for both its interim and annual reporting periods. This proposal represents a one-year deferral from the original effective date.
The proposed new effective date guidance will allow early adoption for all entities (i.e., both public business entities and other entities) as of the original effective date for public business entities, which was annual reporting periods beginning after December 15, 2016, and the interim periods within that year.
The FASB has already issued one proposal to amend certain aspects of the standard related to licenses of intellectual property and identifying performance obligations. The FASB plans to issue a second proposal covering the new practical expedients to ease transition and other clarifications, in the near term, with a 45-day comment period.
Management is currently evaluating the impact of this ASU on Synovus’ consolidated financial statements. The standard is expected to potentially impact ORE sales, interchange revenue, credit card loyalty programs, uncollectible credit card interest and fees, asset managers’ performancemanagement fees, treasury management services revenue, and miscellaneous fees; however, the overall financial statement impact for Synovus is not expected to be material.significant. Extensive new disclosures will be required, including disaggregation of total revenue, information about performance obligations, changes in contract asset and liability account balances between periods, and information about key judgments and estimates and policy decisions regarding revenue recognition.
ASU 2015-02, Amendments to the Consolidation Analysis. ASU 2015-02 was issued by the FASB to modify the analysis that companies must perform to determine whether a legal entity should be consolidated. ASU 2015-02 simplifies current consolidation rules by reducing the number of consolidation models; placing more emphasis on risk of loss when determining a controlling financial interest; reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity (VIE); and changing consolidation conclusions for public and private companies in several industries that typically make use of limited partnerships or VIEs. Although the ASU is expected to result in the deconsolidation of many entities, companies will need to reevaluate all their previous consolidation conclusions. ASU 2015-02 will be effective for annual reporting periods beginning after December 15, 2015. Early adoption is permitted. Management is currently evaluating the impact of the accounting update on Synovus’ consolidated financial statements.
ASU 2015-03, Simplifying the Presentation of Debt Issuance Costs. On April 7, 2015, the FASB issued a new ASU that intends to simplify the presentation of debt issuance costs. The new standard will more closely align the presentation of debt issuance costs under U.S. GAAP with the presentation under comparable IFRS standards.
Under current accounting standards, debt issuance costs are reported on the balance sheet as assets and amortized as interest expense. The new ASU requires that debt issuance costs be presented on the balance sheet as a direct deduction from the carrying amount of the related debt liability, which is similar to the presentation of debt discounts or premiums. The costs will continue to be amortized to interest expense using the effective interest method. The cost of issuing debt will no longer be recorded as a separate asset, except when incurred before receipt of the funding from the associated debt liability. The ASU requires retrospective application to all prior periods presented in the financial statements. The ASU is effective for public business entities for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Adoption of ASU 2015-03 will not have a material impact on Synovus’ consolidated financial statements.
See Note 1 of the notes to the unaudited interim consolidated financial statements for a discussion of recently adopted accounting standards updates.
Critical Accounting Policies
The accounting and financial reporting policies of Synovus are in accordance with U.S. 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 deferred tax assets valuation allowance, other real estate, and determining the fair value of financial instruments. 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 Note 1 - Summary of Significant Accounting Policies in Synovus' 20142015 Form 10-K should be reviewed for a greater understanding of how we record and report our financial performance. During the threesix months ended June 30, 2015,2016, there have been no significant changes to Synovus’ critical accounting policies, estimates and assumptions, or the judgments affecting the application of these estimates and assumptions from those disclosed in Synovus' 20142015 Form 10-K.
Non-GAAP Financial Measures
The measures entitled adjusted pre-tax, pre-credit costs income,non-interest income; adjusted non-interest expense; adjusted net income per common share, diluted; adjusted non-interest expense,efficiency ratio; average core deposits,deposits; average core deposits excluding average SCMstate, county, and municipal deposits; core deposits the tangibleexcluding state, county, and municipal deposits; Tangible Common Equity ratio; and common equity to tangible assets ratio, Tier 1 common equity and the Tier 1 common equity(CET1) ratio (fully phased-in) are not measures recognized under U.S. GAAP and therefore are considered non-GAAP financial measures. The most comparable GAAP measures to these measures are income before income taxes, total non-interest income,income; total non-interest expense,expense; net income per common share, diluted; efficiency ratio; total deposits,deposits; and the ratio of total shareholders’ equity to total assets, Tier 1 capital, and the ratio of Tier 1 capital to risk-weighted assets, respectively.
Management uses these non-GAAP financial measures to assess the performance of Synovus’ core business and the strength of its capital position. Synovus believes that these non-GAAP financial measures provide meaningful additional information about Synovus to assist management, investors, and bank regulators in evaluating Synovus’ operating results, financial strength and capitalization and to permit investors to assess the performance of Synovus on the same basis as that used by management. 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. Adjusted non-interest income is a measure used by management to evaluate non-interest income exclusive

of net investment securities gains. Adjusted non-interest expense and the adjusted 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 is a measure used by management to evaluate operating results exclusive of items that are not indicative of ongoing operations and impact period-to-period comparisons. Average core deposits, average core deposits excluding average state, county, and municipal deposits, and core deposits excluding state, county, and municipal deposits are measures used by management to evaluate organic growth of deposits and the quality of deposits as a funding source. The Tangible Common Equity ratio and common equity Tier 1 (CET1) ratio (fully phased-in) are used by management and bank regulators to assess the strength of our capital position. These non-GAAP financial measures should not be considered as a substitute for operating results determined in accordance with GAAP and may not be comparable to other similarly titled measures atof other companies. Adjusted pre-tax, pre-credit costs income is a measure used by management to evaluate core operating results exclusive of credit costs as well as certain revenues and expenses such as investment securities gains, net and restructuring charges. Adjusted non-interest income is a measure used by management to evaluate non-interest income exclusive of net investment securities gains and other non-recurring income items. Adjusted non-interest expense is a measure used by management to gauge the success of expense management initiatives focused on reducing recurring controllable operating costs. Average core deposits and average core deposits excluding average SCM deposits are measures used by management to evaluate organic growth of deposits and the quality of deposits as a funding source. The tangible common equity to tangible assets ratio,Tier 1 common equity, and the Tier 1 common equity ratio are used by management and investment analysts to assess the strength of Synovus’ capital position. The computations of these measures are set forth in the tables below.

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Reconciliation of Non-GAAP Financial Measures

Six Months Ended Three Months EndedSix Months Ended Three Months Ended
(in thousands)June 30, 2015 June 30, 2014 June 30, 2015 June 30, 2014June 30, 2016 June 30, 2015 June 30, 2016 June 30, 2015
Adjusted Pre-tax, Pre-credit Costs Income       
Income before income taxes$173,847
 150,975
 $88,034
 73,950
Add: Provision for loan losses11,034
 21,795
 6,636
 12,284
Add: Other credit costs (1)
17,448
 12,763
 6,175
 4,635
Add: Restructuring charges(102) 16,293
 5
 7,716
Add: Litigation contingency expense(2)
4,400
 —
 4,400
 —
Add: Visa indemnification charges729
 752
 354
 356
Less: Investment securities gains, net(2,710) (1,331) (1,985) —
Less: Gain on sale of Memphis branches, net—
 (5,789) —
 —
Adjusted pre-tax, pre-credit costs income$204,646
 195,458
 $103,619
 98,941
       
Adjusted Non-interest Income              
Total non-interest income$134,687
 133,569
 $68,832
 63,388
$131,033
 134,687
 67,886
 68,832
Less: Investment securities gains, net(2,710) (1,331) (1,985) —
(67) (2,710) —
 (1,985)
Less: Gain on sale of Memphis branches, net—
 (5,789) —
 —
Adjusted non-interest income$131,977
 126,449
 $66,847
 63,388
$130,966
 131,977
 67,886
 66,847
       
Adjusted Non-interest Expense              
Total non-interest expense$356,713
 366,365
 $177,806
 182,205
$376,844
 356,713
 188,611
 177,806
Less: Other credit costs(1)
(17,448) (12,763) (6,175) (4,635)
Less: Restructuring charges102
 (16,293) (5) (7,716)(6,981) 102
 (5,841) (5)
Less: Visa indemnification charges(729) (752) (354) (356)(720) (729) (360) (354)
Less: Litigation contingency expense(2)
(4,400) —
 (4,400) —
Less: Litigation contingency expense(2,700) (4,400) —
 (4,400)
Less: Loss on early extinguishment of debt(4,735) —
 —
 —
Adjusted non-interest expense$334,238
 336,557
 $166,872
 169,498
$361,708
 351,686
 182,410
 173,047
              


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Reconciliation of Non-GAAP Financial Measures, continued

 
(dollars in thousands)June 30, 2015 March 31, 2015 December 31, 2014 September 30, 2014 June 30, 2014
Average Core Deposits and Average Core Deposits Excluding Average SCM Deposits         
Average total deposits$22,466,102
 21,615,049
 21,336,007
 20,938,587
 20,863,706
Less: Average brokered deposits(1,555,931) (1,594,822) (1,602,354) (1,494,620) (1,401,167)
     Average core deposits$20,910,171
 20,020,227
 19,733,653
 19,443,967
 19,462,539
Less: Average SCM deposits(2,277,783) (2,224,193) (2,184,757) (2,045,817) (2,268,852)
Average core deposits excluding average SCM deposits$18,632,388
 17,796,034
 17,548,896
 17,398,150
 17,193,687
          
Tangible Common Equity to Tangible Assets Ratio         
Total assets$28,205,870
 27,633,784
 27,051,231
 26,519,110
 26,627,290
Less: Goodwill(24,431) (24,431) (24,431) (24,431) (24,431)
Less: Other intangible assets, net(863) (1,061) (1,265) (1,471) (1,678)
Tangible assets$28,180,576
 27,608,292
 27,025,535
 26,493,208
 26,601,181
Total shareholders' equity3,006,157
 3,030,635
 3,041,270
 3,076,545
 3,053,051
Less: Goodwill(24,431) (24,431) (24,431) (24,431) (24,431)
Less: Other intangible assets, net(863) (1,061) (1,265) (1,471) (1,678)
Less: Series C Preferred Stock, no par value(125,980) (125,980) (125,980) (125,980) (125,980)
Tangible common equity2,854,883
 2,879,163
 2,889,594
 2,924,663
 2,900,962
Total shareholders' equity to total assets ratio10.66% 10.97
 11.24
 11.60
 11.47
     Tangible common equity to tangible assets ratio10.13% 10.43
 10.69
 11.04
 10.91
          
Tier 1 Common Equity and Tier 1 Common Equity Ratio         
Total shareholders' equity    $3,041,270
   3,053,051
Less: Accumulated other comprehensive loss, net    12,605
   13,716
Less: Goodwill    (24,431)   (24,431)
Less: Other intangible assets, net    (1,265)   (1,678)
Less: Disallowed deferred tax assets    (492,199)   (547,786)
Other items    7,645
   7,619
Tier 1 capital    $2,543,625
   2,500,491
Less: Qualifying trust preferred securities    (10,000)   (10,000)
Less: Series C Preferred Stock, no par value    (125,980)   (125,980)
Tier 1 common equity    $2,407,645
   2,364,511
Total risk-weighted assets    $23,431,450
   22,702,108
Tier 1 capital ratio    10.86%   11.01
Tier 1 common equity ratio    10.28%   10.42
          
  Three Months Ended
(in thousands) June 30, 2016 June 30, 2015
Adjusted Net Income Per Common Share, Diluted    
Net income available to common shareholders 57,898
 53,233
Add: Litigation contingency expense —
 4,400
Add: Restructuring charges 5,841
 5
Subtract: Tax effect of adjustments (2,138) (1,612)
Adjusted net income available to common shareholders 61,601
 $56,026
Weighted average common shares outstanding - diluted 125,699
 133,625
     Adjusted net income per common share, diluted 0.49
 0.42
     
Adjusted Efficiency Ratio    
Adjusted non-interest expense 182,410
 173,047
Subtract: Other credit costs (4,143) (6,175)
Adjusted non-interest expense excluding credit costs 178,267
 166,872
Net interest income 221,449
 203,644
Add: Tax equivalent adjustment 329
 330
Total non-interest income 67,886
 68,832
Subtract: Investment securities gains, net —
 (1,985)
Total revenues 289,664
 270,821
      Adjusted efficiency ratio 61.54% 61.62%
     
(1) Other credit costs consist primarily of foreclosed real estate expense, net.
(2) Amounts for other periods presented herein are not reported separately as amounts are not material.

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Reconciliation of Non-GAAP Financial Measures, continued

Three Months Ended 
(dollars in thousands)June 30, 2016 March 31, 2016 December 31, 2015 June 30, 2015 
Average Core Deposits and Average Core Deposits Excluding Average State, County, and Municipal Deposits        
Average total deposits$23,608,027
 23,210,263
 23,244,256
 22,466,102
 
Less: Average brokered deposits(1,337,000) (1,095,239) (1,185,093) (1,555,931) 
     Average core deposits22,271,027
 22,115,024
 22,059,163
 20,910,171
 
Less: Average SCM deposits(2,280,039) (2,440,749) (2,303,278) (2,277,783) 
Average core deposits excluding average SCM deposits$19,990,988
 19,674,275
 19,755,885
 18,632,388
 
Core Deposits and Core Deposits Excluding State, County, and Municipal Deposits        
Total deposits$23,925,922
 23,449,928
   22,649,181
 
Less: Brokered deposits(1,496,161) (1,204,517)   (1,452,151) 
     Core deposits22,429,761
 22,245,411
   21,197,030
 
Less: State, county, and municipal deposits(2,294,898) (2,344,361)   (2,330,061) 
Core deposits excluding state, county, and municipal deposits$20,134,863
 19,901,050
   18,866,969
 
Tangible Common Equity Ratio        
Total assets$29,459,691
 29,171,257
 28,792,653
 28,205,870
 
Less: Goodwill(24,431) (24,431) (24,431) (24,431) 
Less: Other intangible assets, net(228) (277) (471) (863) 
Tangible assets$29,435,032
 29,146,549
 28,767,751
 28,180,576
 
Total shareholders' equity$2,951,659
 2,953,268
 3,000,196
 3,006,157
 
Less: Goodwill(24,431) (24,431) (24,431) (24,431) 
Less: Other intangible assets, net(228) (277) (471) (863) 
Less: Series C Preferred Stock, no par value(125,980) (125,980) (125,980) (125,980) 
Tangible common equity$2,801,020
 2,802,580
 2,849,314
 2,854,883
 
Total shareholders' equity to total assets ratio10.02% 10.12
 10.42
 10.66
 
     Tangible common equity ratio9.52% 9.62
 9.90
 10.13
 
Common Equity Tier 1 (CET1) Ratio (fully phased-in)        
Common equity Tier 1 (CET1)$2,616,181
       
Adjustment related to capital components(114,588)       
CET1 (fully phased-in)$2,501,593
       
Total risk-weighted assets (fully phased-in)$26,373,430
       
Common equity Tier 1 (CET1) ratio (fully phased-in)9.49%       
         




ITEM 3. – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information presented in the Market Risk Analysis section of the Management's Discussion and Analysis of Financial Condition and Results of Operations is incorporated herein by reference.
ITEM 4. – CONTROLS AND PROCEDURES
In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by Synovus' management, with the participation of Synovus' Chief Executive Officer and Chief Financial Officer, of the effectiveness of Synovus' disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. Based on that evaluation, Synovus' Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2015,2016, Synovus' disclosure controls and procedures were effective.
There have been no material changes in Synovus' internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the quarter ended June 30, 20152016 that has materially affected, or is reasonably likely to materially affect, Synovus' internal controls over financial reporting.


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PART II. – OTHER INFORMATION
ITEM 1. – LEGAL PROCEEDINGS
Synovus and its subsidiaries are subject to various legal proceedings, claims and disputes that arise in the ordinary course of its business. Additionally, in the ordinary course of business, Synovus and its subsidiaries are subject to regulatory examinations, information gathering requests, inquiries and investigations. Synovus, like many other financial institutions, has been the target of numerous legal actions and other proceedings asserting claims for damages and related relief for losses resulting from the recent financial crisis.losses. These actions include mortgage loan and other loan put-back claims, claims and counterclaims asserted by individual borrowers related to their loans and allegations of violations of state and federal laws and regulations relating to banking practices, including several purported 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 occurred. Synovus also from timewere to time faces disputes with customers and other counterparties, and in many cases, those disputes can pose both financial and reputational risk to Synovus.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 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 and financial condition for any particular period. For additional information, see "Part I - Item 1. Financial Statements - Note 1412 - Legal Proceedings"Proceedings" 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 “Risk Factors” in Part I-Item 1A of Synovus’ 20142015 Form 10-K which could materially affect its business, financial position, results of operations, cash flows, or future results. Please be aware that these risks may change over time and other risks may prove to be important in the future. New risks may emerge at any time, and we cannot predict such risks or estimate the extent to which they may affect our business, financial condition or results of operations, or the trading price of our securities.
There were no material changes during the period covered by this Report to the risk factors previously disclosed in Synovus’ 20142015 10-K.
ITEM 2. – UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS
(a) None.
(b) None.
(c) Issuer Purchases of Equity Securities:
On October 21, 2014, Synovus announcedDuring the third quarter of 2015, Synovus' Board of Directors authorized a $250$300 million share repurchase program which will expire on October 23, 2015.to be completed over the next 15 months. The table below sets forth information regarding repurchases of our common stock during the second quarter of 2015.2016.
Share Repurchases Total Number of Shares Repurchased 
Average Price Paid per Share(1)
 
Total Number
of Shares Repurchased as
Part of
Publicly Announced
Plans or Programs
 
Maximum Approximate
Dollar Value
of Shares
that May Yet Be
Purchased Under the
Plans or Programs
 
    
April 2015 744,600
 $27.86
 744,600
 $82,127,559
 
May 2015 609,400
 28.17
 609,400
 64,960,137
 
June 2015 414,500
 29.98
 414,500
 52,532,110
 
Total 1,768,500
 $28.47
 1,768,500
 $52,532,110
 
Share Repurchases Total Number of Shares Repurchased 
Average Price Paid per Share(1)
 
Total Number
of Shares Repurchased as
Part of
Publicly Announced
Plans or Programs
 
Maximum Approximate
Dollar Value
of Shares
that May Yet Be
Purchased Under the
Plans or Programs
     
April 2016 411,100
 $28.96
 411,100
 $140,125,932
May 2016 676,500
 30.61
 676,500
 119,416,015
June 2016 928,400
 30.06
 928,400
 91,509,436
Total 2,016,000
 $30.02
 2,016,000
 $91,509,436
         
(1) The average price paid per share is calculated on a trade date basis for all open market transactions and excludes commissions and other transaction expenses.

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TableThe foregoing repurchases during the second quarter of Contents2016 totaled $60.5 million, or 2.0 million shares, of common stock and were purchased through a combination of open market transactions and privately negotiated transactions, including under plans complying with Rule 10b5-1 under the Exchange Act.




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

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ITEM 6. – EXHIBITS  
   
Exhibit
Number
 Description
  
3.1
 Amended and Restated Articles of Incorporation of Synovus, as amended, incorporated by reference to Exhibit 3.1 of Synovus’ Quarterly Report on Form 10-Q for the quarter ended June 30, 2010, as filed with the SEC on August 9, 2010.
  
3.2
 Articles of Amendment to the Amended and Restated Articles of Incorporation of Synovus with respect to the Series C Preferred Stock, incorporated by reference to Exhibit 3.1 to Synovus' Current Report on Form 8-K dated July 25, 2013, as filed with the SEC on July 25, 2013.
   
3.3
 Articles of Amendment to the Amended and Restated Articles of Incorporation of Synovus, incorporated by reference to Exhibit 3.1 to Synovus' Current Report on Form 8-K dated April 29, 2014, as filed with the SEC on April 29, 2014.
   
3.4
 Articles of Amendment to the Amended and Restated Articles of Incorporation of Synovus, incorporated by reference to Exhibit 3.1 to Synovus' Current Report on Form 8-K dated May 19, 2014, as filed with the SEC on May 19, 2014.
   
3.5
 Bylaws, as amended, of Synovus, incorporated by reference to Exhibit 3.1 of Synovus' Current Report on Form 8-K dated November 8, 2010, as filed with the SEC on November 9, 2010.
  
4.1
 Specimen stock certificate for Fixed Rate Cumulative Perpetual Stock, Series A, incorporated by reference to Exhibit 4.2 of Synovus' Current Report on Form 8-K dated December 17, 2008, as filed with the SEC on December 22, 2008.
4.2
Specimen stock certificate for Fixed-to-Floating Rate Non-Cumulative Perpetual Preferred Stock, Series C, incorporated by reference to Exhibit 4.1 of Synovus' Current Report in Form 8-K dated July 2, 2013, as filed with the SEC on July 25, 2013.
4.3
Warrant for purchase of up to 15,510,737 shares of Synovus common stock, incorporated by reference o Exhibit 4.1 of Synovus' Current Report on Form 8-K dated December 17, 2008, as filed with the SEC on December 22, 2008.
4.4
Shareholder Rights Plan,Amendment No. 3 dated as of April 26, 2010, between Synovus Financial Corp. and Mellon Investor Services LLC, as Rights Agent, which includes the Form of Articles of Amendment to the Articles of Incorporation of Synovus Financial Corp. (Series B Participating Cumulative Preferred Stock) as Exhibit A, the Summary of Terms of the Rights Agreement as Exhibit B and the Form of Right Certificate as Exhibit C, incorporated by reference to Exhibit 4.1 of Synovus' Current Report on Form 8-K dated April 26, 2010, as filed with the SEC on April 26, 2010.
4.5
Amendment No. 1, dated as of September 6, 201120, 2016 to Shareholder Rights Plan between Synovus Financial Corp. and American Stock Transfer & Trust Company, LLC, incorporated by reference to Exhibit 4.1 of Synovus' Current Report on Form 8-K dated September 6, 2011, as filed with the SEC on September 6, 2011.
4.6
Amendment No. 2, dated April 24, 2013, to Shareholder Rights Plan dated as of April 26, 2010 (as amended) by and between Synovus Financial Corp. and American Stock Transfer and Trust Company, LLC, incorporated by reference to Exhibit 4.1 of Synovus' Current Report on Form 8-K dated April 24, 2013,20, 2016, as filed with the SEC on April 24, 2013.
4.7
Summary of Plan Adjustments, effective as of May 16, 2014, to Shareholder Rights Plan between Synovus Financial Corp. and American Stock Transfer & Trust Company, LLC, incorporated by reference to Exhibit 99.2 of Synovus' Current Report on Form 8-K dated may 19, 2014, as filed with the SWEC on May 19, 2014.
4.8
Indenture, dated as of June 20, 2005, between Synovus Financial Corp. and The Bank of New York Trust Company, N.A., as trustee, incorporated by reference to Exhibit 4.1 of Synovus' Registration Statement on Form S-4 (No. 333-126767) filed with the SEC on July 21, 2005.
4.9
Senior Notes Indenture, dated as of February 13, 2012, between Synovus Financial Corp. and The Bank of New York Melton Trust Company, N.A., as trustee, incorporated by reference to Exhibit 4.1 of Synovus' Current Report on Form 8-K dated February 8, 2012, as filed with the SEC on February 13, 2012.
4.10
Specimen Physical Stock Certificate of Synovus, incorporated by reference to Exhibit 4.1 to Synovus' Current Report on Form 8-K dated May 19, 2014, as filed with the SEC on May 19, 2014.2016.
   
12.1
 Ratio of Earnings to Fixed Charges.
   
31.1
 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
   

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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
   

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

 
 SYNOVUS FINANCIAL CORP.
   
August 5, 20153, 2016By: /s/ Thomas J. Prescott
Date  Thomas J. Prescott
   Executive Vice President and Chief Financial Officer
   (Duly Authorized Officer and Principal Financial Officer)


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