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 JuneSeptember 30, 2017
Commission file number 1-10312
 

financialappendix930a29.jpg
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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check One):
Large accelerated filerxAccelerated filer¨
    
Non-accelerated filer
¨ (Do not check if a smaller reporting company)
Smaller reporting company¨
    
  Emerging growth company¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to section 7(a)2(B) of the Securities Act.  ¨ 
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,November 2, 2017
Common Stock, $1.00 Par Value   121,501,638119,514,829


Table of Contents
 
    Page
Part I.
Financial Information 
  Index of Defined Terms
i
 Item 1.Financial Statements (Unaudited) 
  Consolidated Balance Sheets as of JuneSeptember 30, 2017 and December 31, 2016
1
  Consolidated Statements of Income for the SixNine and Three Months Ended JuneSeptember 30, 2017 and 2016
2
  Consolidated Statements of Comprehensive Income for the SixNine and Three Months Ended JuneSeptember 30, 2017 and 2016
3
  Consolidated Statements of Changes in Shareholders' Equity for the SixNine Months Ended JuneSeptember 30, 2017 and 2016
4
  Consolidated Statements of Cash Flows for the SixNine Months Ended JuneSeptember 30, 2017 and 2016
5
  Notes to Unaudited Interim Consolidated Financial Statements
7
 Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations
4342
 Item 3.
Quantitative and Qualitative Disclosures About Market Risk
7177
 Item 4.Controls and Procedures
7177
     
Part II.
Other Information 
 Item 1.Legal Proceedings
7278
 Item 1A.Risk Factors
7278
 Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
7278
 Item 3.Defaults Upon Senior Securities
7379
 Item 4.Mine Safety Disclosures
7379
 Item 5.Other Information
7379
 Item 6.Exhibits
7480
 Signatures
7581
     
     
     
     
     
     
     
     
     


SYNOVUS FINANCIAL CORP.
INDEX OF DEFINED TERMS
ALCO – Synovus' Asset Liability Management Committee
ASC – Accounting Standards Codification
ASU – Accounting Standards Update
ATM – Automatic teller machine
Basel III – A global regulatory framework developed by the Basel Committee on Banking Supervision
BOLI – Bank-Owned Life Insurance
BOV – Broker’s opinion of value
bp – Basis point (bps - basis points)
C&I – Commercial and industrial loans
CCC – Central clearing counterparty
CET1 – Common Equity Tier 1 Capital defined by Basel III capital rules
CME – Chicago Mercantile Exchange
CMO – Collateralized Mortgage Obligation
Cabela’s Transaction – The transaction completed on September 25, 2017 whereby Synovus Bank acquired certain assets and assumed certain liabilities of WFB and then immediately thereafter sold WFB’s credit card assets and certain related liabilities to Capital One Bank (USA), National Association, a bank subsidiary of Capital One Financial Corporation.  As a part of this transaction, Synovus Bank retained WFB’s $1.10 billion brokered time deposit portfolio and received a $75.0 million fee from Cabela’s and Capital One.  Throughout this Report, we refer to this transaction as the “Cabela’s Transaction” and the associated $75.0 million fee received from Cabela’s and Capital One as the “Cabela’s Transaction Fee”
Code – Internal Revenue Code of 1986, as amended
Company – Synovus Financial Corp. and its wholly-owned subsidiaries, except where the context requires otherwise
Covered Litigation – Certain Visa litigation for which Visa is indemnified by Visa USA members
CRE – Commercial real estate
DIF – Deposit Insurance Fund
Dodd-Frank Act – The Dodd-Frank Wall Street Reform and Consumer Protection Act
EVE – economic value of equity
Exchange Act – Securities Exchange Act of 1934, as amended
FASB – Financial Accounting Standards Board
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.research
Federal Reserve Board – The 7-member Board of Governors that oversees the Federal Reserve System, establishes monetary policy, and monitors the economic health of the country. Its members are appointed by the President, subject to Senate confirmation, and serve 14-year terms.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.structure
FFIEC – Federal Financial Institutions Examination Council
FHLB – Federal Home Loan Bank
FICO – Fair Isaac Corporation
GA DBF – Georgia Department of Banking and Finance

i
Table of Contents

GAAP – Generally Accepted Accounting Principles in the United States of America
GGL – government guaranteed loans
Global One – Entaire Global Companies, Inc., the parent company of Global One Financial, Inc., as acquired by Synovus on October 1, 2016. Throughout this Report, we refer to this acquisition as "Global One."

i
Table of Contents

Global One"
HELOC – Home equity line of credit
LIBOR – London Interbank Offered Rate
LTV – Loan-to-collateral value ratio
NAICS – North American Industry Classification System
nm – not meaningful
NPA – Non-performing assets
NPL – Non-performing loans
NSF – Non-sufficient funds
OCI – Other comprehensive income
OTC– Over-the-counter
ORE – Other real estate
OTTI – Other-than-temporary impairment
Parent Company – Synovus Financial Corp.
SBA – Small Business Administration
SCM – 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 and wholly-owned subsidiary of Synovus through which Synovus conducts its banking operations
Synovus' 2016 Form 10-K – Synovus' Annual Report on Form 10-K for the year ended December 31, 2016
Synovus Mortgage – Synovus Mortgage Corp., a wholly-owned subsidiary of Synovus Bank
Synovus Securities – Synovus Securities, Inc., a wholly-owned subsidiary of Synovus
Synovus Trust – Synovus Trust Company, N.A., a wholly-owned subsidiary of Synovus Bank
TDR – Troubled debt restructuring (as defined in ASC 310-40)
Treasury – United States Department of the Treasury
VIE – Variable interest entity, as defined in ASC 810-10
Visa – The Visa U.S.A., Inc. card association or its affiliates, collectively
Visa Class 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 Derivative – A derivative contract with the purchaser of Visa Class B shares which provides for settlements between the purchaser and Synovus based upon a change in the ratio for conversion of Visa Class B shares into Visa Class A shares
Warrant – A warrant issued to the Treasury by Synovus to purchase up to 2,215,820 shares of Synovus common stock at a per share exercise price of $65.52 expiring on December 19, 2018, as was issued by Synovus to Treasury in 2008 in connection with the Capital Purchase Program, promulgated under the Emergency Stabilization Act of 2008

WFB – World's Foremost Bank, a wholly-owned subsidiary of Cabela's Incorporated

ii
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, 2017 December 31, 2016September 30, 2017 December 31, 2016
ASSETS      
Cash and cash equivalents$377,213
 395,175
$386,459
 395,175
Interest bearing funds with Federal Reserve Bank468,148
 527,090
1,297,581
 527,090
Interest earning deposits with banks6,012
 18,720
6,047
 18,720
Federal funds sold and securities purchased under resale agreements46,847
 58,060
48,820
 58,060
Trading account assets, at fair value3,045
 9,314
12,329
 9,314
Mortgage loans held for sale, at fair value61,893
 51,545
54,072
 51,545
Other loans held for sale31,253
 —
Investment securities available for sale, at fair value3,827,058
 3,718,195
3,825,443
 3,718,195
Loans, net of deferred fees and costs24,430,512
 23,856,391
24,487,360
 23,856,391
Allowance for loan losses(248,095) (251,758)(249,683) (251,758)
Loans, net$24,182,417
 23,604,633
$24,237,677
 23,604,633
Premises and equipment, net416,364
 417,485
423,245
 417,485
Goodwill57,092
 59,678
57,315
 59,678
Other intangible assets11,843
 13,223
11,548
 13,223
Other real estate19,476
 22,308
10,551
 22,308
Deferred tax asset, net320,403
 395,356
272,052
 395,356
Other assets890,155
 813,220
967,731
 813,220
Total assets$30,687,966
 30,104,002
$31,642,123
 30,104,002
LIABILITIES AND SHAREHOLDERS' EQUITY      
Liabilities      
Deposits:      
Non-interest bearing deposits$7,363,476
 7,085,804
$7,302,682
 7,085,804
Interest bearing deposits, excluding brokered deposits16,387,032
 16,183,273
16,420,319
 16,183,273
Brokered deposits1,468,308
 1,378,983
2,463,227
 1,378,983
Total deposits25,218,816
 24,648,060
26,186,228
 24,648,060
Federal funds purchased and securities sold under repurchase agreements150,379
 159,699
141,539
 159,699
Long-term debt2,107,245
 2,160,881
1,882,607
 2,160,881
Other liabilities213,579
 207,438
434,671
 207,438
Total liabilities$27,690,019
 27,176,078
$28,645,045
 27,176,078
Shareholders' Equity      
Series C Preferred Stock – no par value. Authorized 100,000,000 shares; 5,200,000 shares issued and outstanding at June 30, 2017 and December 31, 2016$125,980
 125,980
Common stock - $1.00 par value. Authorized 342,857,143 shares; 142,498,906 issued at June 30, 2017 and 142,025,720 issued at December 31, 2016; 121,661,092 outstanding at June 30, 2017 and 122,266,106 outstanding at December 31, 2016142,499
 142,026
Series C Preferred Stock – no par value. Authorized 100,000,000 shares; 5,200,000 shares issued and outstanding at September 30, 2017 and December 31, 2016$125,980
 125,980
Common stock - $1.00 par value. Authorized 342,857,143 shares; 142,525,139 issued at September 30, 2017 and 142,025,720 issued at December 31, 2016; 119,566,625 outstanding at September 30, 2017 and 122,266,106 outstanding at December 31, 2016142,525
 142,026
Additional paid-in capital3,029,754
 3,028,405
3,033,682
 3,028,405
Treasury stock, at cost – 20,837,814 shares at June 30, 2017 and 19,759,614 shares at December 31, 2016(709,944) (664,595)
Treasury stock, at cost – 22,958,514 shares at September 30, 2017 and 19,759,614 shares at December 31, 2016(800,509) (664,595)
Accumulated other comprehensive loss(47,865) (55,659)(39,596) (55,659)
Retained earnings457,523
 351,767
534,996
 351,767
Total shareholders’ equity2,997,947
 2,927,924
2,997,078
 2,927,924
Total liabilities and shareholders' equity$30,687,966
 30,104,002
$31,642,123
 30,104,002
      
See accompanying notes to unaudited interim consolidated financial statements.

SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
Six Months Ended June 30, Three Months Ended June 30,Nine Months Ended September 30, Three Months Ended September 30,
(in thousands, except per share data)2017 2016 2017 20162017 2016 2017 2016
Interest income:              
Loans, including fees$511,319
 462,892
 $261,971
 232,974
$785,166
 700,340
 $273,847
 237,448
Investment securities available for sale40,099
 33,655
 20,266
 16,685
60,112
 49,926
 20,014
 16,269
Trading account assets49
 34
 21
 12
90
 46
 41
 13
Mortgage loans held for sale972
 1,238
 505
 650
1,478
 1,966
 506
 727
Federal Reserve Bank balances2,515
 2,019
 1,304
 1,020
4,084
 3,170
 1,569
 1,151
Other earning assets2,957
 1,878
 1,443
 1,052
4,633
 2,822
 1,675
 946
Total interest income557,911
 501,716
 285,510
 252,393
855,563
 758,270
 297,652
 256,554
Interest expense:              
Deposits35,075
 32,214
 18,118
 16,200
55,874
 48,072
 20,798
 15,858
Federal funds purchased and securities sold under repurchase agreements84
 96
 45
 51
125
 154
 42
 58
Long-term debt31,728
 29,763
 16,250
 14,693
45,967
 44,394
 14,240
 14,631
Total interest expense66,887
 62,073
 34,413
 30,944
101,966
 92,620
 35,080
 30,547
Net interest income491,024
 439,643
 251,097
 221,449
753,597
 665,650
 262,572
 226,007
Provision for loan losses18,934
 16,070
 10,260
 6,693
58,620
 21,741
 39,686
 5,671
Net interest income after provision for loan losses472,090
 423,573
 240,837
 214,756
694,977
 643,909
 222,886
 220,336
Non-interest income:              
Service charges on deposit accounts39,593
 39,950
 19,820
 20,240
59,848
 60,772
 20,255
 20,822
Fiduciary and asset management fees24,676
 22,854
 12,524
 11,580
37,290
 34,691
 12,615
 11,837
Brokerage revenue14,436
 13,821
 7,210
 7,338
21,947
 20,019
 7,511
 6,199
Mortgage banking income11,548
 11,425
 5,784
 5,941
17,151
 18,755
 5,603
 7,329
Bankcard fees16,438
 16,718
 8,253
 8,346
24,339
 24,988
 7,901
 8,269
Investment securities gains (losses), net7,667
 67
 (1) —
(Decrease) increase in fair value of private equity investments, net(3,166) (278) (1,352) 113
Cabela's Transaction Fee75,000
 —
 75,000
 —
Investment securities (losses) gains, net(289) 126
 (7,956) 59
Decrease in fair value of private equity investments, net(3,193) (527) (27) (249)
Other fee income11,033
 10,084
 6,164
 5,280
16,127
 15,255
 5,094
 5,171
Other non-interest income18,314
 16,392
 10,299
 9,048
27,754
 25,109
 9,439
 8,718
Total non-interest income140,539
 131,033
 68,701
 67,886
275,974
 199,188
 135,435
 68,155
Non-interest expense:              
Salaries and other personnel expense212,404
 198,419
 105,213
 97,061
322,079
 300,364
 109,675
 101,945
Net occupancy and equipment expense59,264
 53,360
 29,933
 26,783
89,837
 81,480
 30,573
 28,120
Third-party processing expense26,223
 22,814
 13,620
 11,698
39,882
 34,033
 13,659
 11,219
FDIC insurance and other regulatory fees13,645
 13,344
 6,875
 6,625
20,723
 20,100
 7,078
 6,756
Professional fees12,907
 13,307
 7,551
 6,938
20,048
 19,794
 7,141
 6,486
Advertising expense11,258
 9,761
 5,346
 7,351
14,868
 15,358
 3,610
 5,597
Foreclosed real estate expense, net3,582
 7,272
 1,448
 4,588
10,847
 9,998
 7,265
 2,725
Earnout liability adjustment1,707
 —
 1,707
 —
Earnout liability adjustments3,766
 —
 2,059
 —
Merger-related expense86
 —
 —
 —
110
 550
 23
 550
Loss on early extinguishment of debt, net—
 4,735
 —
 —
—
 4,735
 —
 —
Fair value adjustment to Visa derivative—
 720
 —
 360
—
 1,079
 —
 360
Restructuring charges, net6,524
 6,981
 13
 5,841
7,043
 8,225
 519
 1,243
Other operating expenses41,533
 46,131
 20,041
 21,366
65,577
 67,000
 24,044
 20,870
Total non-interest expense389,133
 376,844
 191,747
 188,611
594,780
 562,716
 205,646
 185,871
Income before income taxes223,496
 177,762
 117,791
 94,031
376,171
 280,381
 152,675
 102,620
Income tax expense75,635
 64,773
 41,788
 33,574
130,303
 102,148
 54,668
 37,375
Net income147,861
 112,989
 76,003
 60,457
245,868
 178,233
 98,007
 65,245
Dividends on preferred stock5,119
 5,119
 2,559
 2,559
7,678
 7,678
 2,559
 2,559
Net income available to common shareholders$142,742
 107,870
 $73,444
 57,898
$238,190
 170,555
 $95,448
 62,686
Net income per common share, basic$1.17
 0.85
 $0.60
 0.46
$1.96
 1.36
 $0.79
 0.51
Net income per common share, diluted1.16
 0.85
 0.60
 0.46
1.94
 1.36
 0.78
 0.51
Weighted average common shares outstanding, basic122,251
 126,164
 122,203
 125,100
121,796
 125,076
 120,900
 122,924
Weighted average common shares outstanding, diluted123,043
 126,778
 123,027
 125,699
122,628
 125,712
 121,814
 123,604
              
See accompanying notes to unaudited interim consolidated financial statements.

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

Six Months Ended June 30,Nine Months Ended September 30,
2017 20162017 2016
(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 income$223,496
 (75,635) 147,861
 177,762
 (64,773) 112,989
$376,171
 (130,303) 245,868
 280,381
 (102,148) 178,233
Net change related to cash flow hedges:                    
Reclassification adjustment for losses realized in net income130
 (50) 80
 337
 (130) 207
130
 (50) 80
 402
 (155) 247
Net unrealized gains on investment securities available for sale:                    
Reclassification adjustment for net gains realized in net income(7,667) 2,952
 (4,715) (67) 26
 (41)
Reclassification adjustment for net losses (gains) realized in net income289
 (111) 178
 (126) 49
 (77)
Net unrealized gains arising during the period20,250
 (7,797) 12,453
 66,215
 (25,493) 40,722
25,715
 (9,903) 15,812
 56,648
 (21,821) 34,827
Net unrealized gains12,583
 (4,845) 7,738
 66,148
 (25,467) 40,681
26,004
 (10,014) 15,990
 56,522
 (21,772) 34,750
Post-retirement unfunded health benefit:                    
Reclassification adjustment for gains realized in net income(40) 16
 (24)��(104) 40
 (64)(74) 29
 (45) (124) 48
 (76)
Actuarial gains arising during the period—
 —
—
—
 —
 —
 —
61
 (23)—
38
 102
 (39) 63
Net unrealized (realized) gains$(40) 16
 (24) (104) 40
 (64)$(13) 6
 (7) (22) 9
 (13)
Other comprehensive income$12,673
 (4,879) 7,794
 66,381
 (25,557) 40,824
$26,121
 (10,058) 16,063
 56,902
 (21,918) 34,984
Comprehensive income   $155,655
     153,813
   $261,931
     213,217
                    

Three Months Ended June 30,Three Months Ended September 30,
2017 20162017 2016
(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 income$117,791
 (41,788) 76,003
 94,031
 (33,574) 60,457
$152,675
 (54,668) 98,007
 102,620
 (37,375) 65,245
Net change related to cash flow hedges:                    
Reclassification adjustment for losses realized in net income65
 (25) 40
 64
 (25) 39
—
 —
 —
 65
 (25) 40
Net unrealized gains on investment securities available for sale:

         
Reclassification adjustment for net losses realized in net income1
 —
 1
 —
 —
 —
Net unrealized gains arising during the period11,150
 (4,293) 6,857
 19,044
 (7,332) 11,712
Net unrealized gains11,151
 (4,293) 6,858
 19,044
 (7,332) 11,712
Net unrealized gains (losses) on investment securities available for sale:

 

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

        
Reclassification adjustment for gains realized in net income(20) 8
 (12) (10) 4
 (6)(34) 13
 (21) (20) 8
 (12)
Actuarial gains arising during the period—
 —
—
—
 —
 —
 —
61
 (23)—
38
 102
 (39) 63
Net unrealized (realized) gains$(20) 8
 (12) (10) 4
 (6)$27
 (10) 17
 82
 (31) 51
Other comprehensive income$11,196
 (4,310) 6,886
 19,098
 (7,353) 11,745
Other comprehensive income (loss)$13,448
 (5,179) 8,269
 (9,479) 3,639
 (5,840)
Comprehensive income   $82,889
     72,202
   $106,276
     59,405
                    
See accompanying notes to unaudited interim consolidated financial statements.

SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(unaudited)
(in thousands, except per share data)Series C Preferred Stock 
Common
Stock
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Income (Loss)
 Retained Earnings TotalSeries C Preferred Stock 
Common
Stock
 
Additional
Paid-in
Capital
 
Treasury
Stock
 
Accumulated
Other
Comprehensive
Income (Loss)
 Retained Earnings Total
Balance at December 31, 2015$125,980
 140,592
 2,989,981
 (401,511) (29,819) 174,973
 3,000,196
$125,980
 140,592
 2,989,981
 (401,511) (29,819) 174,973
 3,000,196
Net income—
 —
 —
 —
 —
 112,989
 112,989
—
 —
 —
 —
 —
 178,233
 178,233
Other comprehensive income, net of income taxes—
 —
 —
 —
 40,824
 —
 40,824
—
 —
 —
 —
 34,984
 —
 34,984
Cash dividends declared on common stock -$0.24 per share—
 —
 —
 —
 —
 (30,015) (30,015)
Cash dividends declared on common stock -$0.36 per share—
 —
 —
 —
 —
 (44,737) (44,737)
Cash dividends paid on Series C Preferred Stock—
 —
 —
 —
 —
 (5,119) (5,119)—
 —
 —
 —
 —
 (7,678) (7,678)
Repurchases of common stock—
 —
 

 (171,547)��—
 —
 (171,547)—
 —
 (10,581) (252,503) —
 —
 (263,084)
Restricted share unit activity—
 298
 (4,814) —
 —
 (89) (4,605)—
 301
 (4,860) —
 —
 (89) (4,648)
Stock options exercised—
 118
 1,917
 —
 —
 —
 2,035
—
 173
 2,808
 —
 —
 —
 2,981
Share-based compensation net tax benefit—
 —
 52
 —
 —
 —
 52
—
 —
 199
 —
 —
 —
 199
Share-based compensation expense—
 —
 6,849
 —
 —
 —
 6,849
—
 —
 10,213
 —
 —
 —
 10,213
Balance at June 30, 2016$125,980
 141,008
 2,993,985
 (573,058) 11,005
 252,739
 2,951,659
Balance at September 30, 2016$125,980
 141,066
 2,987,760
 (654,014) 5,165
 300,702
 2,906,659
                          
Balance at December 31, 2016$125,980
 142,026
 3,028,405
 (664,595) (55,659) 351,767
 2,927,924
$125,980
 142,026
 3,028,405
 (664,595) (55,659) 351,767
 2,927,924
Net income—
 —
 —
 —
 —
 147,861
 147,861
—
 —
 —
 —
 —
 245,868
 245,868
Other comprehensive income, net of income taxes—
 —
 —
 —
 7,794
 —
 7,794
—
 —
 —
 —
 16,063
 —
 16,063
Cash dividends declared on common stock - $0.30 per share—
 —
 —
 —
 —
 (36,696) (36,696)
Cash dividends declared on common stock - $0.45 per share—
 —
 —
 —
 —
 (54,671) (54,671)
Cash dividends paid on Series C Preferred Stock—
 —
 —
 —
 —
 (5,119) (5,119)—
 —
 —
 —
 —
 (7,678) (7,678)
Repurchases of common stock—
 —
 —
 (45,349) —
 —
 (45,349)—
 —
 —
 (135,914) —
 —
 (135,914)
Restricted share unit activity—
 330
 (7,850) —
 —
 (290) (7,810)—
 335
 (8,007) —
 —
 (290) (7,962)
Stock options exercised—
 143
 2,361
 —
 —
 —
 2,504
—
 164
 2,708
 —
 —
 —
 2,872
Share-based compensation expense—
 —
 6,838
 —
 —
 —
 6,838
—
 —
 10,576
 —
 —
 —
 10,576
Balance at June 30, 2017$125,980
 $142,499
 3,029,754
 (709,944) (47,865) 457,523
 2,997,947
Balance at September 30, 2017$125,980
 $142,525
 3,033,682
 (800,509) (39,596) 534,996
 2,997,078
                          
See accompanying notes to unaudited interim consolidated financial statements.

SYNOVUS FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended June 30,Nine Months Ended September 30,
(in thousands)2017 20162017 2016
Operating Activities      
Net income$147,861
 112,989
$245,868
 178,233
Adjustments to reconcile net income to net cash provided by operating activities:      
Provision for loan losses18,934
 16,070
58,620
 21,741
Depreciation, amortization, and accretion, net29,334
 28,506
44,786
 43,615
Deferred income tax expense70,484
 61,283
114,205
 94,436
Decrease in trading account assets6,269
 4,096
(3,014) (2,212)
Originations of mortgage loans held for sale(325,094) (320,304)(490,202) (512,572)
Proceeds from sales of mortgage loans held for sale323,861
 299,186
500,786
 486,690
Gain on sales of mortgage loans held for sale, net(7,049) (6,946)(10,587) (10,828)
Increase in other assets(14,525) (33,152)(18,598) (38,577)
(Decrease) increase in other liabilities(9,667) 13,162
Investment securities gains, net(7,667) (67)
Increase in other liabilities17,718
 37,068
Investment securities losses (gains), net289
 (126)
Losses and write-downs on other real estate, net2,856
 6,089
9,869
 8,194
Decrease in fair value of private equity investments, net3,166
 278
3,193
 527
Losses and write-downs on other assets held for sale, net—
 7,902
1,872
 7,205
Loss on early extinguishment of debt, net—
 4,735
—
 4,735
Share-based compensation expense6,838
 6,849
10,576
 10,213
Net cash provided by operating activities$245,601
 200,676
$485,381
 328,342
   
Investing Activities      
Net decrease (increase) in interest earning deposits with banks12,708
 (7,154)12,673
 (988)
Net decrease (increase) in federal funds sold and securities purchased under resale agreements11,213
 (7,866)9,240
 (1,934)
Net decrease (increase) in interest bearing funds with Federal Reserve Bank58,942
 (74,519)
Net increase in interest bearing funds with Federal Reserve Bank(770,491) (155,889)
Proceeds from maturities and principal collections of investment securities available for sale313,902
 443,128
483,307
 711,882
Proceeds from sales of investment securities available for sale338,381
 243,609
812,293
 596,824
Purchases of investment securities available for sale(748,754) (623,046)(1,195,302) (1,233,236)
Proceeds from sales of loans10,747
 7,739
26,386
 8,433
Proceeds from sales of other real estate5,492
 16,282
8,359
 25,415
Net increase in loans(612,309) (660,778)(755,231) (879,200)
Purchases of bank-owned life insurance policies(75,000) —
(150,000) —
Net increase in premises and equipment(15,386) (16,769)(34,717) (24,491)
Proceeds from sales of other assets held for sale3,158
 296
3,158
 5,673
Net cash used in investing activities$(696,906) (679,078)$(1,550,325) (947,511)
   
Financing Activities      
Net increase in demand and savings deposits367,450
 595,342
335,438
 1,054,389
Net increase in certificates of deposit202,927
 87,466
Net increase (decrease) in certificates of deposit1,202,926
 (105,698)
Net (decrease) increase in federal funds purchased and securities sold under repurchase agreements(9,320) 70,154
(18,160) 18,000
Repayments on long-term debt(1,128,591) (1,455,067)(1,653,613) (1,730,106)
Proceeds from issuance of long-term debt1,075,000
 1,400,000
1,375,000
 1,700,000
Dividends paid to common shareholders(18,349) (30,015)(36,681) (44,737)
Dividends paid to preferred shareholders(5,119) (5,119)(7,678) (7,678)
Stock options exercised2,504
 2,035
2,872
 2,981
Repurchases of common stock(45,349) (171,547)(135,914) (263,084)
Restricted stock activity(7,810) (4,605)(7,962) (4,648)
Net cash provided by financing activities$433,343
 488,644
$1,056,228
 619,419
(Decrease) increase in cash and cash equivalents(17,962) 10,242
(8,716) 250
Cash and cash equivalents at beginning of period395,175
 367,092
395,175
 367,092
Cash and cash equivalents at end of period$377,213
 377,334
$386,459
 367,342
   

   
Supplemental Cash Flow Information      
Cash paid during the period for:      
Income tax payments, net$8,768
 5,849
$11,195
 6,828
Interest paid67,007
 64,424
101,632
 93,479
Non-cash Activities      
Premises and equipment transferred to other assets held for sale—
 18,677
1,063
 23,667
Other assets held for sale transferred to premises and equipment4,450
 —
4,450
 —
Loans foreclosed and transferred to other real estate5,516
 8,631
6,571
 15,017
Loans transferred to other loans held for sale at fair value10,584
 7,314
77,774
 10,482
Securities purchased during the period but settled after period-end193,286
 49,479
Dividends declared on common stock during the period but paid after period-end18,349
 —
17,990
 —
   
See accompanying notes to unaudited interim consolidated financial statements.

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 Financial Corp. is a financial services company based in Columbus, Georgia. Through its wholly-owned subsidiary, Synovus Bank, a Georgia state-chartered bank that is a member of the Federal Reserve System, the company provides commercial and retail banking in addition to a full suite of specialized products and services including private banking, treasury management, wealth management, premium finance and international banking.
Synovus Bank is positioned in some of the highest growth markets in the Southeast, with 248249 branches and 327328 ATMs in Georgia, Alabama, South Carolina, Florida, and Tennessee.
Basis of Presentation
The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the instructions to the SEC Form 10-Q and Article 10 of Regulation S-X; therefore, they do not include all information and footnotes necessary for a fair presentation of financial position, results of operations, comprehensive income, and cash flows in conformity with GAAP. All adjustments consisting of normally recurring accruals that, in the opinion of management, are necessary for a fair presentation of the consolidated financial position and results of operations for the periods covered by this Report have been included. The accompanying unaudited interim consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes appearing in Synovus' 2016 Form 10-K. There have been no significant changes to the accounting policies as disclosed in Synovus' 2016 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 fair value of investment securities, and the fair value of private equity investments, and contingent liabilities related to legal matters.investments.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and due from banks. At December 31, 2016, $533 thousand of the due from banks balance was restricted as to withdrawal. There were no cash and cash equivalents restricted as to withdrawal at JuneSeptember 30, 2017.
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 JuneSeptember 30, 2017 and December 31, 2016, interest bearing funds with the Federal Reserve Bank included $120.5$57.7 million and $130.0 million, respectively, on deposit to meet Federal Reserve Bank requirements. Interest earning deposits with banks include $5.9$6.0 million and $5.6 million at JuneSeptember 30, 2017 and December 31, 2016, respectively, which are pledged as collateral in connection with certain letters of credit. Federal funds sold include $43.3$45.8 million and $56.1 million at JuneSeptember 30, 2017 and December 31, 2016, respectively, which are pledged to collateralize certain derivative financial instruments. Federal funds sold and securities purchased under resale agreements, and federal funds purchased and securities sold under repurchase agreements, generally mature in one day.
Recently Adopted Accounting Standards Updates
During 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting. ASU 2016-09 simplifiessimplified various aspects of the accounting for employee share-based payment transactions for both public and nonpublic entities, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. This accounting standard update includesincluded a requirement to record all tax effects associated with share-based compensation through the income statement. Prior to 2017, tax benefits in excess of compensation cost (“windfalls”) and tax deficiencies (“shortfalls”) were recorded in equity. During the sixnine and three months ended JuneSeptember 30, 2017, Synovus recognized $4.5$4.7 million and $378$211 thousand, respectively, of income tax benefits from excess tax benefits that occurred during the sixnine months ended JuneSeptember 30, 2017 from the vesting of restricted share units and exercise of stock options. As of January 1, 2017, Synovus had no previously unrecognized excess tax benefits. Additionally, beginning January 1, 2017, Synovus modified the denominator in the diluted earnings per common share calculation under the treasury stock method to exclude future excess tax benefits as part of the assumed proceeds. Synovus elected to retain its existing accounting policy election to estimate award forfeitures.

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

Note 2 - Acquisitions
Cabela's Transaction
On September 25, 2017, Synovus' wholly owned subsidiary, Synovus Bank, completed the acquisition of certain assets and assumption of certain liabilities of WFB. Immediately following the closing of this transaction, Synovus Bank sold WFB’s credit card assets and related liabilities to Capital One Bank (USA), National Association, a bank subsidiary of Capital One Financial Corporation.
Synovus retained WFB’s $1.10 billion brokered time deposits portfolio, which had a weighted average remaining maturity of approximately 2.53 years and a weighted average rate of 1.83% as of September 25, 2017. The transaction was accounted for as an assumption of a liability (accounted for under the asset acquisition model). In accordance with ASC 820, Fair Value Measurements and Disclosures, the brokered time deposit portfolio was recorded at $1.10 billion, which was the amount of cash received for the deposits and represented the estimated fair value of the deposits at the transaction date. Additionally, Synovus received a $75.0 million transaction fee from Cabela’s and Capital One, which was recognized into earnings upon closing of the transaction, based on having achieved the recognition criteria outlined in SEC SAB Topic 13.A, Revenue Recognition.
Acquisition of Global One
On October 1, 2016, Synovus completed its acquisition of all of the outstanding stock of Global One. Prior to its acquisition, Global One was an Atlanta-based private specialty financial services company that lended primarily to commercial entities, with all loans fully collateralized by cash value life insurance policies and/or annuities issued by investment grade life insurance companies. Under the terms of the merger agreement, Synovus acquired Global One for an up-front payment of $30 million, consisting of the issuance of 821 thousand shares of Synovus common stock valued at $26.6 million and $3.4 million in cash, with additional payments to Global One's former shareholders over the next three to five years based on earnings from the Global One business as further discussed below.
The acquisition of Global One constituted a business combination. Accordingly, the assets acquired and liabilities assumed were recorded at their estimated fair values as shown in the following table. The determination of fair value required management to make estimates about discount rates, future expected earnings and cash flows, market conditions, future loan growth, and other future events that are highly subjective in nature and subject to change. These fair value estimates reflect measurement period adjustments to the amounts reported as of December 31, 2016, the most significant of which consist of a reduction in goodwill of $2.6$2.4 million and a decrease in the estimated fair value of contingent consideration of $1.8 million (the income statement impact of such adjustments was insignificant). These fair value estimates are considered preliminary and are subject to change for up to one year after the closing date of the acquisition as additional information becomes available.

Global One October 1, 2016 October 1, 2016
(in thousands) Fair Value Fair Value
Assets acquired:    
Cash and due from banks $9,554
 $9,554
Commercial and industrial loans(1)
 357,307
 357,307
Goodwill(2)
 32,661
 32,884
Other intangible assets 12,500
 12,500
Other assets 3,904
 3,681
Total assets acquired $415,926
 $415,926
  
Liabilities assumed:    
Notes payable(3)
 $358,560
 $358,560
Contingent consideration 12,234
 12,234
Deferred tax liability, net 3,229
 3,229
Other liabilities 11,903
 11,903
Total liabilities assumed $385,926
 $385,926
Consideration paid $30,000
 $30,000
    
Cash paid $3,408
 $3,408
Fair value of common stock issued 26,592
 26,592
    
(1) The unpaid principal balance of the loans was $356.7 million.  
(2) The goodwill is not expected to be deductible for tax purposes.
(3) The unpaid principal balance of the notes payable was $357.0 million.
Under the terms of the merger agreement, the purchase price includes additional annual payments ("Earnout Payments") to Global One's former shareholders over the next three to five years, with amounts based on a percentage of "Global One Earnings," as defined in the merger agreement. The Earnout Payments will consist of shares of Synovus common stock as well as a smaller cash consideration component.
Other intangible assets consist of existing borrower relationships (11 years useful life), trade name (10 years useful life), and distribution network (8 years useful life) with JuneSeptember 30, 2017 net carrying values of $10.1$9.8 million, $1.0 million,$990 thousand, and $544$525 thousand, respectively.
The following is a description of the methods used to determine the fair values of significant assets and liabilities:
Commercial and industrial loans: The fair value of loans was determined based on a discounted cash flow approach. The most significant assumptions used in the valuation of the loan portfolio consisted of the prepayment rate, the probability of extension at maturity, the interest rates on extended loans, and the discount rates. All loans are fully collateralized by cash value life insurance policies and/or annuities issued by investment grade insurance companies. Based on a history of no principal losses on the loan portfolio since inception as well as the collateral position, no losses were estimated in the event of default.
Notes payable: The notes payable were extinguished immediately after the closing of the acquisition. Accordingly, the fair value of notes payable was determined based on the amounts paid to extinguish such notes, inclusive of applicable prepayment penalties, which is consistent with the perspective of a market participant.
Contingent consideration: The fair value of the contingent consideration, which represents the fair value of the above referenced Earnout Payments, was determined based on option pricing methods and a Monte Carlo simulation. The most significant assumptions used in the valuation of the contingent consideration were the expected cash flows, volatility, and discount rates. FutureSubsequent changes in the fair value of the contingent consideration will beare recognized in earnings until the contingent consideration arrangement is settled.
Note 3 - Share Repurchase Program
Synovus' Board of Directors authorized an up to $200 million share repurchase program that will expire at the end of 2017. This program was announced on January 17, 2017. As of JuneSeptember 30, 2017, Synovus had repurchased under this program a total of $45.3$135.9 million, or 1.13.2 million shares, at an average price of $42.04$42.47 per share.

Note 4 - Investment Securities
The amortized cost, gross unrealized gains and losses, and estimated fair values of investment securities available for sale at JuneSeptember 30, 2017 and December 31, 2016 are summarized below.
 June 30, 2017 September 30, 2017
(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 $83,493
 —
 (360) 83,133
 $83,550
 —
 (369) 83,181
U.S. Government agency securities 12,088
 223
 —
 12,311
 10,772
 266
 —
 11,038
Mortgage-backed securities issued by U.S. Government agencies 132,710
 640
 (1,125) 132,225
 127,521
 715
 (852) 127,384
Mortgage-backed securities issued by U.S. Government sponsored enterprises 2,881,234
 6,169
 (30,998) 2,856,405
 2,663,959
 7,917
 (20,024) 2,651,852
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises 734,804
 84
 (12,468) 722,420
 943,583
 —
 (12,143) 931,440
State and municipal securities 290
 —
 —
 290
 180
 1
 —
 181
Corporate debt and other securities 20,279
 205
 (210) 20,274
 20,297
 286
 (216) 20,367
Total investment securities available for sale $3,864,898
 7,321
 (45,161) 3,827,058
 $3,849,862
 9,185
 (33,604) 3,825,443
                
 December 31, 2016 December 31, 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 $108,221
 225
 (644) 107,802
 $108,221
 225
 (644) 107,802
U.S. Government agency securities 12,727
 266
 —
 12,993
 12,727
 266
 —
 12,993
Mortgage-backed securities issued by U.S. Government agencies 174,440
 1,116
 (1,354) 174,202
 174,440
 1,116
 (1,354) 174,202
Mortgage-backed securities issued by U.S. Government sponsored enterprises 2,543,495
 5,416
 (42,571) 2,506,340
 2,543,495
 5,416
 (42,571) 2,506,340
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises 905,789
 1,214
 (16,561) 890,442
 905,789
 1,214
 (16,561) 890,442
State and municipal securities 2,780
 14
 —
 2,794
 2,780
 14
 —
 2,794
Equity securities 919
 2,863
 —
 3,782
 919
 2,863
 —
 3,782
Corporate debt and other securities 20,247
 —
 (407) 19,840
 20,247
 —
 (407) 19,840
Total investment securities available for sale $3,768,618
 11,114
 (61,537) 3,718,195
 $3,768,618
 11,114
 (61,537) 3,718,195
                
At JuneSeptember 30, 2017 and December 31, 2016, investment securities with a carrying value of $1.731.69 billion and $2.04 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 JuneSeptember 30, 2017 and December 31, 2016 for OTTI and does not consider any securities in an unrealized loss position to be other-than-temporarily impaired. If Synovus intended to sell a security in an unrealized loss position, the entire unrealized loss would be reflected in earnings. Synovus does not intend to sell investment securities in an unrealized loss position prior to the recovery of the unrealized loss, which may not be until maturity, and has the ability and intent to hold those securities for that period of time. Additionally, Synovus is not currently aware of any circumstances which will require it to sell any of the securities that are in an unrealized loss position prior to the respective securities' recovery of all such unrealized losses.
Declines 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 JuneSeptember 30, 2017, Synovus had 9275 investment securities in a loss position for less than twelve months and 313 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 JuneSeptember 30, 2017 and December 31, 2016 are presented below.
June 30, 2017September 30, 2017
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
U.S. Treasury securities$64,342
 360
 —
 —
 64,342
 360
$64,351
 369
 —
 —
 64,351
 369
Mortgage-backed securities issued by U.S. Government agencies95,492
 1,125
 —
 —
 95,492
 1,125
80,303
 552
 7,636
 300
 87,939
 852
Mortgage-backed securities issued by U.S. Government sponsored enterprises2,161,449
 30,998
 —
 —
 2,161,449
 30,998
1,696,906
 19,128
 48,596
 896
 1,745,502
 20,024
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises668,342
 11,678
 23,212
 790
 691,554
 12,468
569,191
 5,617
 240,355
 6,526
 809,546
 12,143
Corporate debt and other securities—
 —
 5,069
 210
 5,069
 210
—
 —
 5,081
 216
 5,081
 216
Total$2,989,625
 44,161
 28,281
 1,000
 3,017,906
 45,161
$2,410,751
 25,666
 301,668
 7,938
 2,712,419
 33,604
                      
December 31, 2016December 31, 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
U.S. Treasury securities$64,023
 644
 —
 —
 64,023
 644
$64,023
 644
 —
 —
 64,023
 644
Mortgage-backed securities issued by U.S. Government agencies128,121
 1,240
 3,626
 114
 131,747
 1,354
128,121
 1,240
 3,626
 114
 131,747
 1,354
Mortgage-backed securities issued by U.S. Government sponsored enterprises2,123,181
 42,571
 —
 —
 2,123,181
 42,571
2,123,181
 42,571
 —
 —
 2,123,181
 42,571
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises682,492
 15,653
 24,801
 908
 707,293
 16,561
682,492
 15,653
 24,801
 908
 707,293
 16,561
Corporate debt and other securities14,952
 48
 4,888
 359
 19,840
 407
14,952
 48
 4,888
 359
 19,840
 407
Total$3,012,769
 60,156
 33,315
 1,381
 3,046,084
 61,537
$3,012,769
 60,156
 33,315
 1,381
 3,046,084
 61,537
                      

The amortized cost and fair value by contractual maturity of investment securities available for sale at JuneSeptember 30, 2017 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, 2017Distribution of Maturities at September 30, 2017
(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$18,791
 64,702
 —
 —
 —
 83,493
$18,830
 64,720
 —
 —
 —
 83,550
U.S. Government agency securities1,000
 5,612
 5,476
 —
 —
 12,088
2,331
 6,437
 2,004
 —
 —
 10,772
Mortgage-backed securities issued by U.S. Government agencies—
 —
 34,868
 97,842
 —
 132,710
—
 —
 32,956
 94,565
 —
 127,521
Mortgage-backed securities issued by U.S. Government sponsored enterprises47
 2,262
 535,035
 2,343,890
 —
 2,881,234
44
 2,015
 446,255
 2,215,645
 —
 2,663,959
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 —
 22,173
 712,631
 —
 734,804
—
 —
 20,910
 922,673
 —
 943,583
State and municipal securities110
 180
 —
 —
 —
 290
180
 —
 —
 —
 —
 180
Corporate debt and other securities—
 —
 15,000
 2,000
 3,279
 20,279
—
 —
 15,000
 2,000
 3,297
 20,297
Total amortized cost$19,948
 72,756
 612,552
 3,156,363
 3,279
 3,864,898
$21,385
 73,172
 517,125
 3,234,883
 3,297
 3,849,862
                      
Fair Value                      
U.S. Treasury securities$18,791
 64,342
 —
 —
 —
 83,133
$18,830
 64,351
 —
 —
 —
 83,181
U.S. Government agency securities1,004
 5,682
 5,625
 —
 —
 12,311
2,385
 6,529
 2,124
 —
 —
 11,038
Mortgage-backed securities issued by U.S. Government agencies—
 —
 35,007
 97,218
 —
 132,225
—
 —
 33,073
 94,311
 —
 127,384
Mortgage-backed securities issued by U.S. Government sponsored enterprises48
 2,390
 529,968
 2,323,999
 —
 2,856,405
45
 2,127
 444,701
 2,204,979
 —
 2,651,852
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 —
 21,950
 700,470
 —
 722,420
—
 —
 20,666
 910,774
 —
 931,440
State and municipal securities110
 180
 —
 —
 —
 290
181
 —
 —
 —
 —
 181
Corporate debt and other securities—
 —
 15,205
 1,927
 3,142
 20,274
—
 —
 15,286
 1,919
 3,162
 20,367
Total fair value$19,953
 72,594
 607,755
 3,123,614
 3,142
 3,827,058
$21,441
 73,007
 515,850
 3,211,983
 3,162
 3,825,443
                      
Proceeds from sales, gross gains, and gross losses on sales of securities available for sale for the nine and three months ended JuneSeptember 30, 2017 and 2016 are presented below. 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, Nine Months Ended September 30, Three Months Ended September 30,
(in thousands) 2017 2016 2017 2016 2017 2016 2017 2016
Proceeds from sales of investment securities available for sale $338,381
 243,609
 $55,752
 —
 $812,293
 596,824
 $473,912
 353,215
Gross realized gains on sales 7,942
 954
 239
 —
 7,942
 2,590
 —
 1,635
Gross realized losses on sales (275) (887) (240) —
 (8,231) (2,464) (7,956) (1,576)
Investment securities gains, net $7,667
 67
 $(1) —
Investment securities (losses) gains, net $(289) 126
 $(7,956) 59
                

Note 5 - Restructuring Charges
For the sixnine and three months ended JuneSeptember 30, 2017 and 2016, total restructuring charges consist of the following components:
Six Months Ended June 30, Three Months Ended June 30,Nine Months Ended September 30, Three Months Ended September 30,
(in thousands)2017 2016 2017 20162017 2016 2017 2016
Severance charges$6,453
 —
 $—
 —
$6,428
 —
 $(24) —
Lease termination charges—
 31
 —
 (13)
Asset impairment charges—
 6,866
 —
 5,821
511
 8,120
 515
 1,240
Loss (gain) on sale of assets held for sale, net(4) 13
 (4) 13
Other charges75
 71
 17
 20
104
 105
 28
 3
Total restructuring charges, net$6,524
 6,981
 $13
 5,841
$7,043
 8,225
 $519
 1,243
              
DuringRestructuring charges of $7.0 million were recorded during the nine months ended September 30, 2017 consisting primarily of severance charges of $6.4 million recorded during the first quarter of 2017, Synovus recorded severance2017. Severance charges of $6.5 million includingincluded $6.2 million for termination benefits incurred in conjunction with a voluntary early retirement program offered during the first quarter of 2017. This program was part of Synovus' ongoing efficiency initiatives. The $6.2 million accrual was based on the benefits to be paid to employees who accepted the early retirement offer on or prior to the expiration of the program on March 30, 2017. The accrual balance for severance charges associated with the voluntary early retirement program was $1.2 million at September 30, 2017. For the three months ended JuneSeptember 30, 2017, Synovus recorded restructuring charges of $519 thousand due to additional asset impairment charges of $515 thousand on properties previously identified for disposition. During the nine months ended September 30, 2016, Synovus recorded restructuring charges of $5.8$8.2 million with $4.8 million of those charges related to Synovus' corporate real estate optimization activities and $1.0$3.3 million associated with branch closures. Restructuring charges associated with branch closures during the first quarter of 2016 totaled $1.1 million.
The following tables present aggregate activity within the accrual for restructuring charges for the sixnine and three months ended JuneSeptember 30, 2017 and 2016:
(in thousands)Severance Charges Lease Termination Charges TotalSeverance Charges Lease Termination Charges Total
Balance at December 31, 2016$81
 3,968
 4,049
$81
 3,968
 4,049
Accruals for voluntary and involuntary termination benefits6,453
 —
 6,453
6,428
 —
 6,428
Payments(2,803) (438) (3,241)(5,304) (540) (5,844)
Balance at June 30, 2017$3,731
 3,530
 7,261
Balance at September 30, 2017$1,205
 3,428
 4,633
          
Balance at April 1, 20176,315
 3,689
 10,004
Balance at July 1, 20173,731
 3,530
 7,261
Accruals for voluntary and involuntary termination benefits(24) —
 (24)
Payments(2,584) (159) (2,743)(2,502) (102) (2,604)
Balance at June 30, 2017$3,731
 3,530
 7,261
Balance at September 30, 2017$1,205
 3,428
 4,633
          
(in thousands)Severance Charges Lease Termination Charges TotalSeverance Charges Lease Termination Charges Total
Balance at December 31, 2015$1,930
 4,687
 6,617
$1,930
 4,687
 6,617
Accruals for lease terminations—
 31
 31
—
 6
 6
Payments(1,337) (343) (1,680)(1,702) (533) (2,235)
Balance at June 30, 2016$593
 4,375
 4,968
Balance at September 30, 2016$228
 4,160
 4,388
          
Balance at April 1, 20161,533
 4,545
 6,078
Balance at July 1, 2016593
 4,375
 4,968
Accruals for lease terminations—
 (13) (13)—
 (25) (25)
Payments(940) (157) (1,097)(365) (190) (555)
Balance at June 30, 2016$593
 4,375
 4,968
Balance at September 30, 2016$228
 4,160
 4,388
          
All other charges were paid in the quarters that they were incurred. No other restructuring charges resulted in payment accruals.

Note 6 - 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 JuneSeptember 30, 2017 and December 31, 2016.
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, 2017 September 30, 2017 
(in thousands)Current Accruing 30-89 Days Past Due Accruing 90 Days or Greater Past Due Total Accruing Past Due Non-accrual  Total Current Accruing 30-89 Days Past Due Accruing 90 Days or Greater Past Due Total Accruing Past Due Non-accrual  Total 
Investment properties$6,028,397
 3,482
 72
 3,554
 3,712
 6,035,663
 $5,919,393
 3,454
 186
 3,640
 2,063
 5,925,096
 
1-4 family properties818,327
 8,657
 101
 8,758
 8,535
 835,620
 784,520
 6,588
 796
 7,384
 2,712
 794,616
 
Land and development529,967
 1,964
 126
 2,090
 10,931
 542,988
 494,488
 5,732
 65
 5,797
 6,927
 507,212
 
Total commercial real estate7,376,691
 14,103
 299
 14,402
 23,178
 7,414,271
 7,198,401
 15,774
 1,047
 16,821
 11,702
 7,226,924
 
Commercial, financial and agricultural6,915,588
 14,670
 765
 15,435
 69,550
 7,000,573
 6,871,204
 30,010
 2,356
 32,366
 58,139
 6,961,709
 
Owner-occupied4,715,325
 9,291
 801
 10,092
 24,918
 4,750,335
 4,751,269
 9,586
 618
 10,204
 3,960
 4,765,433
 
Total commercial and industrial11,630,913
 23,961
 1,566
 25,527
 94,468
 11,750,908
 11,622,473
 39,596
 2,974
 42,570
 62,099
 11,727,142
 
Home equity lines1,533,528
 8,286
 705
 8,991
 20,648
 1,563,167
 1,505,556
 7,535
 160
 7,695
 15,638
 1,528,889
 
Consumer mortgages2,444,866
 7,141
 623
 7,764
 18,035
 2,470,665
 2,545,986
 5,225
 137
 5,362
 6,332
 2,557,680
 
Credit cards223,092
 1,550
 1,258
 2,808
 —
 225,900
 222,176
 2,312
 1,237
 3,549
 —
 225,725
 
Other consumer loans1,021,355
 7,197
 99
 7,296
 2,988
 1,031,639
 1,234,355
 8,726
 130
 8,856
 2,067
 1,245,278
 
Total consumer5,222,841
 24,174
 2,685
 26,859
 41,671
 5,291,371
 5,508,073
 23,798
 1,664
 25,462
 24,037
 5,557,572
 
Total loans$24,230,445
 62,238
 4,550
 66,788
 159,317
 24,456,550
(1 
) 
$24,328,947
 79,168
 5,685
 84,853
 97,838
 24,511,638
(1 
) 
    ��                 
December 31, 2016 December 31, 2016 
(in thousands)Current Accruing 30-89 Days Past Due Accruing 90 Days or Greater Past Due Total Accruing Past Due Non-accrual  Total Current Accruing 30-89 Days Past Due Accruing 90 Days or Greater Past Due Total Accruing Past Due Non-accrual  Total 
Investment properties$5,861,198
 2,795
 —
 2,795
 5,268
 5,869,261
 $5,861,198
 2,795
 —
 2,795
 5,268
 5,869,261
 
1-4 family properties873,231
 4,801
 161
 4,962
 9,114
 887,307
 873,231
 4,801
 161
 4,962
 9,114
 887,307
 
Land and development591,732
 1,441
 —
 1,441
 16,233
 609,406
 598,624
 1,441
 —
 1,441
 16,233
 616,298
 
Total commercial real estate7,326,161
 9,037
 161
 9,198
 30,615
 7,365,974
 7,333,053
 9,037
 161
 9,198
 30,615
 7,372,866
 
Commercial, financial and agricultural6,846,591
 9,542
 720
 10,262
 59,074
 6,915,927
 6,839,699
 9,542
 720
 10,262
 59,074
 6,909,035
 
Owner-occupied4,601,356
 17,913
 244
 18,157
 16,503
 4,636,016
 4,601,356
 17,913
 244
 18,157
 16,503
 4,636,016
 
Total commercial and industrial11,447,947
 27,455
 964
 28,419
 75,577
 11,551,943
 11,441,055
 27,455
 964
 28,419
 75,577
 11,545,051
 
Home equity lines1,585,228
 10,013
 473
 10,486
 21,551
 1,617,265
 1,585,228
 10,013
 473
 10,486
 21,551
 1,617,265
 
Consumer mortgages2,265,966
 7,876
 81
 7,957
 22,681
 2,296,604
 2,265,966
 7,876
 81
 7,957
 22,681
 2,296,604
 
Credit cards229,177
 1,819
 1,417
 3,236
 —
 232,413
 229,177
 1,819
 1,417
 3,236
 —
 232,413
 
Other consumer loans809,419
 5,771
 39
 5,810
 2,954
 818,183
 809,419
 5,771
 39
 5,810
 2,954
 818,183
 
Total consumer4,889,790
 25,479
 2,010
 27,489
 47,186
 4,964,465
 4,889,790
 25,479
 2,010
 27,489
 47,186
 4,964,465
 
Total loans$23,663,898
 61,971
 3,135
 65,106
 153,378
 23,882,382
(2 
) 
$23,663,898
 61,971
 3,135
 65,106
 153,378
 23,882,382
(2 
) 
                      
(1) Total before net deferred fees and costs of $26.0$24.3 million.
(2) Total before net deferred fees and costs of $26.0 million.







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

Loan Portfolio Credit Exposure by Risk GradeLoan Portfolio Credit Exposure by Risk Grade Loan Portfolio Credit Exposure by Risk Grade 
June 30, 2017 September 30, 2017 
(in thousands)Pass 
Special
Mention
 
Substandard(1)
 
Doubtful(2)
 Loss Total Pass 
Special
Mention
 
Substandard(1)
 
Doubtful(2)
 Loss Total 
Investment properties$5,952,286
 61,451
 21,926
 —
 —
 6,035,663
 $5,847,902
 60,423
 16,771
 —
 —
 5,925,096
 
1-4 family properties788,665
 24,169
 22,559
 227
 —
 835,620
 756,665
 20,286
 17,438
 227
 —
 794,616
 
Land and development477,974
 40,576
 21,227
 3,211
 —
 542,988
 451,141
 36,523
 16,419
 3,129
 —
 507,212
 
Total commercial real estate7,218,925
 126,196
 65,712
 3,438
 —
 7,414,271
 7,055,708
 117,232
 50,628
 3,356
 —
 7,226,924
 
Commercial, financial and agricultural6,710,038
 124,412
 160,354
 5,629
 140
(3) 
7,000,573
 6,704,805
 106,117
 149,456
 1,250
 81
(3) 
6,961,709
 
Owner-occupied4,590,414
 52,101
 106,410
 1,410
 —
 4,750,335
 4,632,930
 52,797
 79,633
 73
 —
 4,765,433
 
Total commercial and industrial11,300,452
 176,513
 266,764
 7,039
 140
 11,750,908
 11,337,735
 158,914
 229,089
 1,323
 81
 11,727,142
 
Home equity lines1,535,583
 —
 24,812
 373
 2,399
(3) 
1,563,167
 1,505,724
 —
 20,771
 355
 2,039
(3) 
1,528,889
 
Consumer mortgages2,450,658
 —
 19,528
 313
 166
(3) 
2,470,665
 2,547,272
 —
 10,125
 177
 106
(3) 
2,557,680
 
Credit cards224,643
 —
 445
 —
 812
(4) 
225,900
 224,488
 —
 523
 —
 714
(4) 
225,725
 
Other consumer loans1,028,493
 —
 2,808
 299
 39
(3) 
1,031,639
 1,242,211
 —
 2,754
 299
 14
(3) 
1,245,278
 
Total consumer5,239,377
 —
 47,593
 985
 3,416
 5,291,371
 5,519,695
 —
 34,173
 831
 2,873
 5,557,572
 
Total loans$23,758,754
 302,709
 380,069
 11,462
 3,556
 24,456,550
(5 
) 
$23,913,138
 276,146
 313,890
 5,510
 2,954
 24,511,638
(5 
) 
                      
December 31, 2016 December 31, 2016 
(in thousands)Pass 
Special
Mention
 
Substandard(1)
 
Doubtful(2)
 Loss Total Pass 
Special
Mention
 
Substandard(1)
 
Doubtful(2)
 Loss Total 
Investment properties$5,794,626
 43,336
 31,299
 —
 —
 5,869,261
 $5,794,626
 43,336
 31,299
 —
 —
 5,869,261
 
1-4 family properties826,311
 33,928
 26,790
 278
 —
 887,307
 826,311
 33,928
 26,790
 278
 —
 887,307
 
Land and development514,853
 60,205
 27,361
 6,987
 —
 609,406
 521,745
 60,205
 27,361
 6,987
 —
 616,298
 
Total commercial real estate7,135,790
 137,469
 85,450
 7,265
 —

7,365,974
 7,142,682
 137,469
 85,450
 7,265
 —

7,372,866
 
Commercial, financial and agricultural6,642,648
 126,268
 140,425
 6,445
 141
(3) 
6,915,927
 6,635,756
 126,268
 140,425
 6,445
 141
(3) 
6,909,035
 
Owner-occupied4,462,420
 60,856
 111,330
 1,410
 —

4,636,016
 4,462,420
 60,856
 111,330
 1,410
 —

4,636,016
 
Total commercial and industrial11,105,068
 187,124
 251,755
 7,855
 141

11,551,943
 11,098,176
 187,124
 251,755
 7,855
 141

11,545,051
 
Home equity lines1,589,199
 —
 22,774
 2,892
 2,400
(3) 
1,617,265
 1,589,199
 —
 22,774
 2,892
 2,400
(3) 
1,617,265
 
Consumer mortgages2,271,916
 —
 23,268
 1,283
 137
(3) 
2,296,604
 2,271,916
 —
 23,268
 1,283
 137
(3) 
2,296,604
 
Credit cards230,997
 —
 637
 —
 779
(4) 
232,413
 230,997
 —
 637
 —
 779
(4) 
232,413
 
Other consumer loans814,844
 —
 3,233
 42
 64
(3) 
818,183
 814,844
 —
 3,233
 42
 64
(3) 
818,183
 
Total consumer4,906,956
 —
 49,912
 4,217
 3,380
 4,964,465
 4,906,956
 —
 49,912
 4,217
 3,380
 4,964,465
 
Total loans$23,147,814
 324,593
 387,117
 19,337
 3,521
 23,882,382
(6 
) 
$23,147,814
 324,593
 387,117
 19,337
 3,521
 23,882,382
(6 
) 
                      
(1) Includes $235.8$224.5 million and $256.6 million of Substandard accruing loans at JuneSeptember 30, 2017 and December 31, 2016, 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 $26.0$24.3 million.
(6) Total before net deferred fees and costs of $26.0 million.

The following table details the changes in the allowance for loan losses by loan segment for the sixnine and three months ended JuneSeptember 30, 2017.
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, 2017As Of and For The Nine Months Ended September 30, 2017
(in thousands)Commercial Real Estate Commercial & Industrial Retail TotalCommercial Real Estate Commercial & Industrial Retail Total
Allowance for loan losses:              
Beginning balance$81,816
 125,778
 44,164
 251,758
$81,816
 125,778
 44,164
 251,758
Charge-offs(3,207) (19,535) (9,656) (32,398)(11,336) (41,390) (24,023) (76,749)
Recoveries3,648
 3,282
 2,871
 9,801
6,191
 5,181
 4,682
 16,054
Provision for loan losses(4,730) 13,912
 9,752
 18,934
1,289
 36,934
 20,397
 58,620
Ending balance(1)
$77,527
 123,437
 47,131
 248,095
$77,960
 126,503
 45,220
 249,683
Ending balance: individually evaluated for impairment4,386
 7,226
 1,038
 12,650
4,108
 7,360
 783
 12,251
Ending balance: collectively evaluated for impairment$73,141
 116,211
 46,093
 235,445
$73,852
 119,143
 44,437
 237,432
Loans:              
Ending balance: total loans(1)(2)
$7,414,271
 11,750,908
 5,291,371
 24,456,550
$7,226,924
 11,727,142
 5,557,572
 24,511,638
Ending balance: individually evaluated for impairment 73,638
 122,889
 31,688
 228,215
64,909
 109,434
 30,132
 204,475
Ending balance: collectively evaluated for impairment$7,340,633
 11,628,019
 5,259,683
 24,228,335
$7,162,015
 11,617,708
 5,527,440
 24,307,163
              
As of and For The Six Months Ended June 30, 2016As Of and For The Nine Months Ended September 30, 2016
(in thousands)Commercial Real Estate Commercial & Industrial Retail TotalCommercial Real Estate Commercial & Industrial Retail Total
Allowance for loan losses:              
Beginning balance$87,133
 122,989
 42,374
 252,496
$87,133
 122,989
 42,374
 252,496
Charge-offs(9,277) (10,661) (7,148) (27,086)(13,361) (17,098) (10,611) (41,070)
Recoveries6,690
 4,342
 2,564
 13,596
10,927
 6,122
 3,601
 20,650
Provision for loan losses(5,187) 12,963
 8,294
 16,070
(3,597) 18,875
 6,463
 21,741
Ending balance(1)
$79,359
 129,633
 46,084
 255,076
$81,102
 130,888
 41,827
 253,817
Ending balance: individually evaluated for impairment12,515
 14,221
 1,691
 28,427
11,066
 11,474
 1,724
 24,264
Ending balance: collectively evaluated for impairment$66,844
 115,412
 44,393
 226,649
$70,036
 119,414
 40,103
 229,553
Loans:              
Ending balance: total loans(1)(3)
$7,507,695
 10,955,430
 4,625,410
 23,088,535
$7,472,551 11,009,021
 4,807,511
 23,289,083
Ending balance: individually evaluated for impairment112,954
 119,805
 37,788
 270,547
102,837
 118,442
 37,820
 259,099
Ending balance: collectively evaluated for impairment$7,394,741
 10,835,625
 4,587,622
 22,817,988
$7,369,714
 10,890,579
 4,769,691
 23,029,984
              
(1) As of and for the sixnine months ended JuneSeptember 30, 2017 and 2016, there were no purchased credit-impaired loans and no allowance for loan losses for purchased credit-impaired loans.
(2) Total before net deferred fees and costs of $26.0$24.3 million.
(3) Total before net deferred fees and costs of $27.6$26.2 million.





Allowance for Loan Losses and Recorded Investment in Loans

Allowance for Loan Losses and Recorded Investment in Loans

Allowance for Loan Losses and Recorded Investment in Loans

As Of and For The Three Months Ended June 30, 2017As Of and For The Three Months Ended September 30, 2017
(in thousands)Commercial Real Estate Commercial & Industrial Consumer TotalCommercial Real Estate Commercial & Industrial Consumer Total
Allowance for loan losses:              
Beginning balance$78,314
 127,096
 48,104
 253,514
$77,527
 123,437
 47,131
 248,095
Charge-offs(1,299) (12,642) (5,722) (19,663)(8,129) (21,855) (14,367) (44,351)
Recoveries759
 1,458
 1,767
 3,984
2,543
 1,899
 1,811
 6,253
Provision for loan losses(247) 7,525
 2,982
 10,260
6,019
 23,022
 10,645
 39,686
Ending balance(1)
$77,527
 123,437
 47,131
 248,095
$77,960
 126,503
 45,220
 249,683
Ending balance: individually evaluated for impairment4,386
 7,226
 1,038
 12,650
4,108
 7,360
 783
 12,251
Ending balance: collectively evaluated for impairment$73,141
 116,211
 46,093
 235,445
$73,852
 119,143
 44,437
 237,432
Loans:              
Ending balance: total loans(1)(2)
$7,414,271
 11,750,908
 5,291,371
 24,456,550
$7,226,924
 11,727,142
 5,557,572
 24,511,638
Ending balance: individually evaluated for impairment 73,638
 122,889
 31,688
 228,215
64,909
 109,434
 30,132
 204,475
Ending balance: collectively evaluated for impairment$7,340,633
 11,628,019
 5,259,683
 24,228,335
$7,162,015
 11,617,708
 5,527,440
 24,307,163
              
As Of and For The Three Months Ended June 30, 2016As Of and For The Three Months Ended September 30, 2016
(in thousands)Commercial Real Estate Commercial & Industrial Consumer TotalCommercial Real Estate Commercial & Industrial Consumer Total
Allowance for loan losses:              
Beginning balance$84,557
 124,878
 45,081
 254,516
$79,359
 129,633
 46,084
 255,076
Charge-offs(7,455) (5,136) (3,180) (15,771)(4,084) (6,437) (3,463) (13,984)
Recoveries5,397
 3,078
 1,163
 9,638
4,237
 1,780
 1,037
 7,054
Provision for loan losses(3,140) 6,813
 3,020
 6,693
1,590
 5,912
 (1,831) 5,671
Ending balance(1)
$79,359
 129,633
 46,084
 255,076
$81,102
 130,888
 41,827
 253,817
Ending balance: individually evaluated for impairment12,515
 14,221
 1,691
 28,427
11,066
 11,474
 1,724
 24,264
Ending balance: collectively evaluated for impairment$66,844
 115,412
 44,393
 226,649
$70,036
 119,414
 40,103
 229,553
Loans:              
Ending balance: total loans(1)(3)
$7,507,695
 10,955,430
 4,625,410
 23,088,535
$7,472,551
 11,009,021
 4,807,511
 23,289,083
Ending balance: individually evaluated for impairment112,954
 119,805
 37,788
 270,547
102,837
 118,442
 37,820
 259,099
Ending balance: collectively evaluated for impairment$7,394,741
 10,835,625
 4,587,622
 22,817,988
$7,369,714
 10,890,579
 4,769,691
 23,029,984
              
(1) (1For)As of and for the three months ended JuneSeptember 30, 2017 and 2016, there were no purchased credit-impaired loans and no allowance for loan losses for purchased credit-impaired loans.
(2) Total before net deferred fees and costs of $26.0$24.3 million.
(3) Total before net deferred fees and costs of $27.6$26.2 million.




The tables below summarize impaired loans (including accruing TDRs) as of JuneSeptember 30, 2017 and December 31, 2016.
Impaired Loans (including accruing TDRs)
June 30, 2017 
Six Months Ended
June 30, 2017
 Three Months Ended June 30, 2017September 30, 2017 Nine Months Ended September 30, 2017 Three Months Ended September 30, 2017
(in thousands)Recorded Investment Unpaid Principal Balance Related Allowance Average Recorded Investment Interest Income Recognized Average Recorded Investment Interest Income 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$—
 —
 —
 246
 —
 —
 —
$—
 —
 —
 164
 —
 —
 —
1-4 family properties253
 2,582
 —
 380
 —
 257
 —
253
 2,582
 —
 374
 —
 253
 —
Land and development2,226
 5,539
 —
 2,193
 —
 2,246
 —
1,488
 3,172
 —
 2,084
 —
 1,911
 —
Total commercial real estate2,479
 8,121
 —
 2,819
 —
 2,503
 —
1,741
 5,754
 —
 2,622
 —
 2,164
 —
Commercial, financial and agricultural
26,913
 33,098
 —
 22,956
 —
 26,202
 —
20,696
 22,122
 —
 23,094
 —
 25,583
 —
Owner-occupied13,824
 20,250
 —
 10,383
 —
 11,910
 —
97
 744
 —
 8,875
 —
 7,164
 —
Total commercial and industrial40,737
 53,348
 —
 33,339
 —
 38,112
 —
20,793
 22,866
 —
 31,969
 —
 32,747
 —
Home equity lines1,064
 1,064
 —
 1,060
 —
 1,064
 —
1,072
 1,072
 —
 1,063
 —
 1,069
 —
Consumer mortgages744
 941
 —
 744
 —
 744
 —
—
 —
 —
 661
 —
 496
 —
Credit cards—
 —
 —
 —
 —
 —
 —
—
 —
 —
 —
 —
 —
 —
Other consumer loans—
 —
 —
 —
 —
 —
 —
—
 —
 —
 —
 —
 —
 —
Total consumer1,808
 2,005
 —
 1,804
 —
 1,808
 —
1,072
 1,072
 —
 1,724
 —
 1,565
 —
Total impaired loans with no
related allowance recorded
$45,024
 63,474
 —
 37,962
 —
 42,423

—
$23,606
 29,692
 —
 36,315
 —
 36,476

—
With allowance recorded                          
Investment properties$29,168
 29,168
 1,175
 29,575
 597
 29,264
 306
$28,651
 28,651
 1,116
 29,325
 903
 28,826
 306
1-4 family properties15,879
 15,893
 448
 16,995
 386
 16,133
 250
15,741
 15,741
 452
 16,552
 664
 15,665
 278
Land and development26,112
 26,168
 2,763
 27,381
 299
 26,366
 126
18,776
 18,832
 2,540
 24,825
 347
 18,544
 48
Total commercial real estate71,159
 71,229
 4,386
 73,951
 1,282
 71,763
 682
63,168
 63,224
 4,108
 70,702
 1,914
 63,035
 632
Commercial, financial and agricultural
46,569
 46,887
 5,524
 46,455
 787
 48,959
 436
51,819
 52,019
 5,730
 48,694
 1,175
 53,040
 388
Owner-occupied35,583
 35,594
 1,702
 42,814
 674
 38,318
 336
36,822
 36,855
 1,630
 41,627
 1,002
 37,004
 328
Total commercial and industrial82,152
 82,481
 7,226
 89,269
 1,461
 87,277
 772
88,641
 88,874
 7,360
 90,321
 2,177
 90,044
 716
Home equity lines7,135
 7,135
 171
 8,197
 465
 7,680
 229
5,995
 5,995
 119
 7,807
 265
 6,534
 82
Consumer mortgages18,762
 18,762
 598
 19,720
 183
 19,009
 92
18,336
 18,336
 382
 19,270
 687
 18,369
 222
Credit cards—
 —
 —
 —
 —
 —
 —
—
 —
 —
 —
 —
 —
 —
Other consumer loans3,983
 3,984
 269
 4,692
 132
 4,380
 59
4,729
 4,729
 282
 4,507
 191
 4,224
 59
Total consumer29,880
 29,881

1,038
 32,609
 780
 31,069
 380
29,060
 29,060

783
 31,584
 1,143
 29,127
 363
Total impaired loans with
allowance recorded
$183,191
 183,591
 12,650
 195,829
 3,523
 190,109
 1,834
$180,869
 181,158
 12,251
 192,607
 5,234
 182,206
 1,711
Total impaired loans                          
Investment properties$29,168
 29,168

1,175
 29,821
 597

29,264
 306
$28,651
 28,651

1,116
 29,489
 903

28,826
 306
1-4 family properties16,132
 18,475

448
 17,375
 386

16,390
 250
15,994
 18,323

452
 16,926
 664

15,918
 278
Land and development28,338
 31,707

2,763
 29,574
 299

28,612
 126
20,264
 22,004

2,540
 26,909
 347

20,455
 48
Total commercial real estate73,638
 79,350

4,386
 76,770
 1,282

74,266
 682
64,909
 68,978

4,108
 73,324
 1,914

65,199
 632
Commercial, financial and agricultural
73,482
 79,985

5,524
 69,411
 787

75,161
 436
72,515
 74,141

5,730
 71,788
 1,175

78,623
 388
Owner-occupied49,407
 55,844

1,702
 53,197
 674

50,228
 336
36,919
 37,599

1,630
 50,502
 1,002

44,168
 328
Total commercial and industrial122,889
 135,829

7,226
 122,608
 1,461

125,389
 772
109,434
 111,740

7,360
 122,290
 2,177

122,791
 716
Home equity lines8,199
 8,199

171
 9,257
 465

8,744
 229
7,067
 7,067

119
 8,870
 265

7,603
 82
Consumer mortgages19,506
 19,703

598
 20,464
 183

19,753
 92
18,336
 18,336

382
 19,931
 687

18,865
 222
Credit cards—
 —

—
 —
 —

—
 —
—
 —

—
 —
 —

—
 —
Other consumer loans3,983
 3,984

269
 4,692
 132

4,380
 59
4,729
 4,729

282
 4,507
 191

4,224
 59
Total consumer31,688
 31,886

1,038
 34,413
 780

32,877
 380
30,132
 30,132

783
 33,308
 1,143

30,692
 363
Total impaired loans$228,215
 247,065

12,650
 233,791
 3,523

232,532
 1,834
$204,475
 210,850

12,251
 228,922
 5,234

218,682
 1,711
                          

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

The average recorded investment in impaired loans was $290.3$281.2 million and $281.9$263.0 million, respectively, for the sixnine and three months ended JuneSeptember 30, 2016. Excluding accruing TDRs, there was no interest income recognized for the investment in impaired loans for the sixnine and three months ended JuneSeptember 30, 2016. Interest income recognized for accruing TDRs was $4.0$6.1 million and $2.0$2.1 million, respectively, for the sixnine and three months ended JuneSeptember 30, 2016. At JuneSeptember 30, 2017 and December 31, 2016, impaired loans of $60.8$37.6 million and $53.7 million, respectively, 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.

The following tables represent, by concession type, the post-modification balance for loans modified or renewed during the sixnine and three months ended JuneSeptember 30, 2017 and 2016 that were reported as accruing or non-accruing TDRs.
TDRs by Concession Type    
Six Months Ended June 30, 2017 Nine Months Ended September 30, 2017 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate Term Extensions and/or Other Concessions Total Number of Contracts Principal Forgiveness Below Market Interest Rate Term Extensions and/or Other Concessions Total 
Investment properties—
 $—
 —
 —
 —
 —
 $—
 —
 —
 —
 
1-4 family properties16
 —
 2,089
 513
 2,602
 21
 —
 2,090
 1,477
 3,567
 
Land acquisition1
 —
 —
 135
 135
 4
 —
 157
 895
 1,052
 
Total commercial real estate17
 —
 2,089
 648
 2,737
 25
 —
 2,247
 2,372
 4,619
 
Commercial, financial and agricultural28
 —
 5,760
 6,279
 12,039
 50
 —
 8,703
 12,145
 20,848
 
Owner-occupied1
 —
 —
 22
 22
 4
 —
 35
 1,705
 1,740
 
Total commercial and industrial29
 —
 5,760
 6,301
 12,061
 54
 —
 8,738
 13,850
 22,588
 
Home equity lines—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 
Consumer mortgages1
 —
 —
 9
 9
 8
 —
 248
 1,190
 1,438
 
Credit cards—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 
Other retail loans8
 —
 —
 570
 570
 25
 —
 682
 958
 1,640
 
Total retail9
 —
 —
 579
 579
 33
 —
 930
 2,148
 3,078
 
Total TDRs55
 $—
 7,849
 7,528
 15,377
(1 
) 
112
 $—
 11,915
 18,370
 30,285
(1 
) 
                  
Three Months Ended June 30, 2017 Three Months Ended September 30, 2017 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate 
Term Extensions
and/or Other Concessions
 Total Number of Contracts Principal Forgiveness Below Market Interest Rate 
Term Extensions
and/or Other Concessions
 Total 
Investment properties—
 $—
 —
 —
 —
 —
 $—
 —
 —
 —
 
1-4 family properties8
 —
 478
 196
 674
 5
 —
 —
 964
 964
 
Land and development1
 —
 —
 135
 135
 3
 —
 157
 760
 917
 
Total commercial real estate9
 —
 478
 331
 809
 8
 —
 157
 1,724
 1,881
 
Commercial, financial and agricultural10
 —
 1,895
 740
 2,635
 22
 —
 2,943
 5,866
 8,809
 
Owner-occupied1
 —
 —
 22
 22
 3
 —
 35
 1,683
 1,718
 
Total commercial and industrial11
 —
 1,895
 762
 2,657
 25
 —
 2,978
 7,549
 10,527
 
Home equity lines—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 
Consumer mortgages1
 —
 —
 9
 9
 7
 —
 248
 1,181
 1,429
 
Credit cards—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 
Other consumer loans5
 —
 —
 295
 295
 17
 —
 682
 388
 1,070
 
Total consumer6
 —
 —
 304
 304
 24
 —
 930
 1,569
 2,499
 
Total TDRs26
 $—
 2,373
 1,397
 3,770
(1 
) 
57
 $—
 4,065
 10,842
 14,907
(1 
) 
                  
(1) No net charge-offs were recorded during the sixnine and three months ended JuneSeptember 30, 2017 upon restructuring of these loans.




TDRs by Concession Type    
Six Months Ended June 30, 2016 Nine Months Ended September 30, 2016 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate Term Extensions and/or Other Concessions Total Number of Contracts Principal Forgiveness Below Market Interest Rate Term Extensions and/or Other Concessions Total 
Investment properties3
 $—
 1,826
 148
 1,974
 4
 $—
 1,826
 3,518
 5,344
 
1-4 family properties19
 —
 3,490
 1,164
 4,654
 23
 —
 3,703
 1,211
 4,914
 
Land acquisition11
 —
 —
 1,269
 1,269
 13
 —
 —
 1,766
 1,766
 
Total commercial real estate33
 —
 5,316
 2,581
 7,897
 40
 —
 5,529
 6,495
 12,024
 
Commercial, financial and agricultural45
 —
 13,948
 4,845
 18,793
 50
 —
 13,948
 5,232
 19,180
 
Owner-occupied6
 —
 2,667
 550
 3,217
 7
 —
 5,458
 550
 6,008
 
Total commercial and industrial51
 —
 16,615
 5,395
 22,010
 57
 —
 19,406
 5,782
 25,188
 
Home equity lines3
 —
 224
 —
 224
 5
 —
 224
 123
 347
 
Consumer mortgages6
 —
 354
 51
 405
 6
 —
 354
 51
 405
 
Credit cards—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 
Other retail loans17
 —
 324
 1,534
 1,858
 24
 —
 394
 1,828
 2,222
 
Total retail26
 —
 902
 1,585
 2,487
 35
 —
 972
 2,002
 2,974
 
Total TDRs110
 $—
 22,833
 9,561
 32,394
(2 
) 
132
 $—
 25,907
 14,279
 40,186
(2 
) 
                  
Three Months Ended June 30, 2016 Three Months Ended September 30, 2016 
(in thousands, except contract data)Number of Contracts Principal Forgiveness Below Market Interest Rate 
Term Extensions
and/or Other Concessions
 Total Number of Contracts Principal Forgiveness Below Market Interest Rate 
Term Extensions
and/or Other Concessions
 Total 
Investment properties1
 $—
 1,389
 —
 1,389
 1
 $—
 —
 3,370
 3,370
 
1-4 family properties12
 —
 3,095
 324
 3,419
 4
 —
 213
 47
 260
 
Land and development5
 —
 —
 734
 734
 2
 —
 —
 497
 497
 
Total commercial real estate18
 —
 4,484
 1,058
 5,542
 7
 —
 213
 3,914
 4,127
 
Commercial, financial and agricultural15
 —
 1,934
 1,458
 3,392
 5
 —
 —
 387
 387
 
Owner-occupied2
 —
 1,132
 102
 1,234
 1
 —
 2,791
 —
 2,791
 
Total commercial and industrial17
 —
 3,066
 1,560
 4,626
 6
 —
 2,791
 387
 3,178
 
Home equity lines1
 —
 28
 —
 28
 2
 —
 —
 123
 123
 
Consumer mortgages3
 —
 200
 51
 251
 —
 —
 —
 —
 —
 
Credit cards—
 —
 —
 —
 —
 —
 —
 —
 —
 —
 
Other consumer loans10
 —
 94
 1,449
 1,543
 7
 —
 70
 294
 364
 
Total consumer14
 —
 322
 1,500
 1,822
 9
 —
 70
 417
 487
 
Total TDRs49
 $—
 7,872
 4,118
 11,990
(2 
) 
22
 $—
 3,074
 4,718
 7,792
(2 
) 
                  
(2) No net charge-offs were recorded during the sixnine and three months ended JuneSeptember 30, 2016 upon restructuring of these loans.

For both the sixnine and three months ended JuneSeptember 30, 2017, there were threefour defaults with a recorded investment of $292$498 thousand and one default with a recorded investment of $206 thousand, respectively, on accruing TDRs restructured during the previous twelve months (defaults are defined as the earlier of the TDR being placed on non-accrual status or reaching 90 days past due with respect to principal and/or interest payments) compared to one default for both the six and three months ended June 30, 2016two defaults with a recorded investment of $92 thousand.$181 thousand and one default with a recorded investment of $89 thousand, respectively, for the nine and three months ended September 30, 2016.
If, at the time a loan was designated as a TDR, the loan was not already impaired, the measurement of impairment that resulted from the TDR designation closely approximates the reserve derived through specific loan measurement of impairment in accordance with ASC 310-10-35. Generally, the change in the allowance for loan losses resulting from such TDR designation is not significant. At JuneSeptember 30, 2017, the allowance for loan losses allocated to accruing TDRs totaling $167.4$166.9 million was $8.5 million compared to accruing TDRs of $195.8 million with an allocated allowance for loan losses of $9.8 million at December 31, 2016. Non-accrual, non-homogeneous loans (commercial-type impaired loans greater than $1 million)$1 million) that are designated as TDRs are individually measured for the amount of impairment, if any, both before and after the TDR designation.designation.

Note 7 - Other Comprehensive Income (Loss)
The following tables illustrate activity within the balances in accumulated other comprehensive income (loss) by component for the sixnine and three months ended JuneSeptember 30, 2017 and 2016.
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 at December 31, 2016$(12,217) (44,324) 882
 (55,659)$(12,217) (44,324) 882
 (55,659)
Other comprehensive income before reclassifications—
 12,453
 —
 12,453
—
 15,812
 38
 15,850
Amounts reclassified from accumulated other comprehensive income (loss)80
 (4,715) (24) (4,659)80
 178
 (45) 213
Net current period other comprehensive income80
 7,738
 (24) 7,794
80
 15,990
 (7) 16,063
Balance as of June 30, 2017$(12,137) (36,586) 858
 (47,865)
Balance as of September 30, 2017$(12,137) (28,334) 875
 (39,596)
              
Balance as of April 1, 2017$(12,177) (43,444) 870
 (54,751)
Balance as of July 1, 2017$(12,137) (36,586) 858
 (47,865)
Other comprehensive income before reclassifications—
 6,857
 —
 6,857
—
 3,359
 38
 3,397
Amounts reclassified from accumulated other comprehensive income (loss)40
 1
 (12) 29
—
 4,893
 (21) 4,872
Net current period other comprehensive income40
 6,858
 (12) 6,886
—
 8,252
 17
 8,269
Balance as of June 30, 2017$(12,137) (36,586) 858
 (47,865)
Balance as of September 30, 2017$(12,137) (28,334) 875
 (39,596)
              
Changes in Accumulated Other Comprehensive Income (Loss) by Component (Net of Income Taxes)
(in thousands)Net unrealized gains (losses) on cash flow hedges Net unrealized gains (losses) on investment securities available for sale Post-retirement unfunded health benefit 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 at December 31, 2015$(12,504) (18,222) 907
 (29,819)$(12,504) (18,222) 907
 (29,819)
Other comprehensive income before reclassifications—
 40,722
 —
 40,722
—
 34,827
 63
 34,890
Amounts reclassified from accumulated other comprehensive income (loss)207
 (41) (64) 102
247
 (77) (76) 94
Net current period other comprehensive income207
 40,681
 (64) 40,824
247
 34,750
 (13) 34,984
Balance as of June 30, 2016$(12,297) 22,459
 843
 11,005
Balance as of September 30, 2016$(12,257) 16,528
 894
 5,165
              
Balance as of April 1, 2016$(12,336) 10,747
 849
 (740)
Balance as of July 1, 2016$(12,297) 22,459
 843
 11,005
Other comprehensive income (loss) before reclassifications—
 11,712
 —
 11,712
—
 (5,895) 63
 (5,832)
Amounts reclassified from accumulated other comprehensive income (loss)39
 —
 (6) 33
40
 (36) (12) (8)
Net current period other comprehensive income (loss)39
 11,712
 (6) 11,745
40
 (5,931) 51
 (5,840)
Balance as of June 30, 2016$(12,297) 22,459
 843
 11,005
Balance as of September 30, 2016$(12,257) 16,528
 894
 5,165
              
In accordance with ASC 740-20-45-11(b), a deferred tax asset valuation allowance associated with unrealized gains and losses not recognized in income is charged directly to other comprehensive income (loss). During 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 JuneSeptember 30, 2017, 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 million and $13.3 million, respectively, related to the residual tax effects remaining in OCI due to a previously established deferred tax asset valuation allowance. Under the portfolio approach, these unrealized losses are realized at the time the entire portfolio is sold or disposed.
Reclassifications out of Accumulated Other Comprehensive Income (Loss)
Details About
Accumulated Other Comprehensive Income (Loss) Components
 
Amount Reclassified from
Accumulated Other
Comprehensive Income (Loss)
 
Affected Line Item
in the Statement Where
Net Income is Presented
 
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,  For the Nine Months Ended September 30, 
 2017 2016  2017 2016 
Net unrealized gains (losses) on cash flow hedges:          
Amortization of deferred losses $(130) (140) Interest expense $(130) (205) Interest expense
Amortization of deferred losses —
 (197) Loss on early extinguishment of debt, net —
 (197) Loss on early extinguishment of debt, net
 50
 130
 Income tax (expense) benefit 50
 155
 Income tax (expense) benefit
 $(80) (207) Reclassifications, net of income taxes $(80) (247) Reclassifications, net of income taxes
          
Net unrealized gains on investment securities available for sale:     
Realized gain on sale of securities $7,667
 67
 Investment securities gains, net
Net unrealized (losses) gains on investment securities available for sale:     
Realized (losses) gains on sale of securities $(289) 126
 Investment securities (losses) gains, net
 (2,952) (26) Income tax (expense) benefit 111
 (49) Income tax (expense) benefit
 $4,715
 41
 Reclassifications, net of income taxes $(178) 77
 Reclassifications, net of income taxes
Post-retirement unfunded health benefit:          
Amortization of actuarial gains $40
 104
 Salaries and other personnel expense $74
 124
 Salaries and other personnel expense
 (16) (40) Income tax (expense) benefit (29) (48) Income tax (expense) benefit
 $24
 64
 Reclassifications, net of income taxes $45
 76
 Reclassifications, net of income taxes
          
Reclassifications out of Accumulated Other Comprehensive Income (Loss)
Details About
Accumulated Other Comprehensive Income (Loss) Components
 
Amount Reclassified from
Accumulated Other
Comprehensive Income (Loss)
Affected Line Item
in the Statement Where
Net Income is Presented
 
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 Three Months Ended September 30, 
 2017 2016  2017 2016 
Net unrealized gains (losses) on cash flow hedges:          
Amortization of deferred losses $(65) (64)Interest expense $—
 (65)Interest expense
 25
 25
Income tax (expense) benefit —
 25
Income tax (expense) benefit
 $(40) (39)Reclassifications, net of income taxes $—
 (40)Reclassifications, net of income taxes
          
Net unrealized gains on investment securities available for sale:          
Realized net (loss)gain on sale of securities $(1) —
Investment securities gains, net $(7,956) 59
Investment securities (losses) gains, net
 —
 —
Income tax (expense) benefit 3,063
 (23)Income tax (expense) benefit
 $(1) —
Reclassifications, net of income taxes $(4,893) 36
Reclassifications, net of income taxes
Post-retirement unfunded health benefit:          
Amortization of actuarial gains $20
 10
Salaries and other personnel expense $34
 20
Salaries and other personnel expense
 (8) (4)Income tax (expense) benefit (13) (8)Income tax (expense) benefit
 $12
 6
Reclassifications, net of income taxes $21
 12
Reclassifications, net of income taxes
          

Note 8 - 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.
Level 3Unobservable inputs that are supported by little, if any, market activity for the asset or liability. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow models and similar techniques, and may also include the use of market prices of assets or liabilities that are not directly comparable to the subject asset or liability. These methods of valuation may result in a significant portion of the fair value being derived from unobservable assumptions that reflect Synovus' own estimates for assumptions that market participants would use in pricing the asset or liability. This category primarily includes collateral-dependent impaired loans, other real estate, certain equity investments, private equity investments, GGL/SBA loan servicing assets, and contingent consideration.

See "Part II - Item 8. Financial Statements and Supplementary Data - Note 16 - Fair Value Accounting" to the consolidated financial statements of Synovus' 2016 Form 10-K for a description of valuation methodologies for assets and liabilities measured at fair value on a recurring and non-recurring basis.

















Assets and Liabilities Measured at Fair Value on a Recurring Basis
The following table presents all financial instruments measured at fair value on a recurring basis as of JuneSeptember 30, 2017 and December 31, 2016, according to the valuation hierarchy included in ASC 820-10. For equity and debt securities, class was determined based on the nature and risks of the investments. TransfersSynovus did not have any transfers between levels during the sixnine and three months ended JuneSeptember 30, 2017 and year ended December 31, 2016 were inconsequential.2016.
June 30, 2017September 30, 2017
(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:              
U.S. Government agency securities—
 1,587
 —
 1,587
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 494
 —
 494
Collateralized mortgage obligations issued by
U.S. Government sponsored enterprises
—
 386
 —
 386
—
 10,484
 —
 10,484
State and municipal securities—
 1,072
 —
 1,072
—
 1,101
 —
 1,101
Other investments—
 250
 —
 250
Total trading securities$—
 3,045
 —
 3,045
$—
 12,329
 —
 12,329
Mortgage loans held for sale—
 61,893
 —
 61,893
—
 54,072
 —
 54,072
       
Investment securities available for sale:              
U.S. Treasury securities83,133
 —
 —
 83,133
83,181
 —
 —
 83,181
U.S. Government agency securities—
 12,311
 —
 12,311
—
 11,038
 —
 11,038
Mortgage-backed securities issued by U.S. Government agencies—
 132,225
 —
 132,225
—
 127,384
 —
 127,384
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 2,856,405
 —
 2,856,405
—
 2,651,852
 —
 2,651,852
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 722,420
 —
 722,420
—
 931,440
 —
 931,440
State and municipal securities—
 290
 —
 290
—
 181
 —
 181
Corporate debt and other securities(1)
3,142
 15,205
 1,927
 20,274
3,162
 15,287
 1,918
 20,367
Total investment securities available for sale$86,275
 3,738,856
 1,927
 3,827,058
$86,343
 3,737,182
 1,918
 3,825,443
Private equity investments

 —
 15,698
 15,698
—
 —
 15,671
 15,671
Mutual funds held in rabbi trusts12,867
 —
 —
 12,867
13,439
 —
 —
 13,439
GGL/SBA loans servicing asset—
 —
 4,297
 4,297
—
 —
 4,270
 4,270
Derivative assets:              
Interest rate contracts—
 15,332
 —
 15,332
—
 14,896
 —
 14,896
Mortgage derivatives(2)
—
 1,393
 —
 1,393
—
 974
 —
 974
Total derivative assets$—
 16,725
 —
 16,725
$—
 15,870
 —
 15,870
Liabilities              
Trading account liabilities—
 7,860
 —
 7,860
Earnout liability(3)
—
 —
 13,941
 13,941
—
 —
 16,000
 16,000
Derivative liabilities:              
Interest rate contracts—
 13,389
 —
 13,389
—
 12,369
 —
 12,369
Mortgage derivatives(2)
—
 32
 —
 32
Visa derivative—
 —
 5,053
 5,053
—
 —
 4,693
 4,693
Total derivative liabilities$—
 13,389
 5,053
 18,442
$—
 12,401
 4,693
 17,094
              

 December 31, 2016
(in thousands)Level 1 Level 2 Level 3 Total Assets and Liabilities at Fair Value
Assets       
Trading securities:       
Mortgage-backed securities issued by U.S. Government agencies—
 3,460
 —
 3,460
Collateralized mortgage obligations issued by U.S. Government sponsored enterprises—
 3,438
 —
 3,438
State and municipal securities—
 426
 —
 426
Other investments1,890
 100
 —
 1,990
Total trading securities$1,890
 7,424
 —
 9,314
Mortgage loans held for sale—
 51,545
 —
 51,545
        
Investment securities available for sale:       
     U.S. Treasury securities107,802
 —
 —
 107,802
U.S. Government agency securities—
 12,993
 —
 12,993
Mortgage-backed securities issued by U.S. Government agencies—
 174,202
 —
 174,202
Mortgage-backed securities issued by U.S. Government sponsored enterprises—
 2,506,340
 —
 2,506,340
Collateralized mortgage obligations issued by U.S. Government agencies or sponsored enterprises—
 890,442
 —
 890,442
State and municipal securities—
 2,794
 —
 2,794
Equity securities3,782
 —
 —
 3,782
 Corporate debt and other securities(1)    
3,092
 14,952
 1,796
 19,840
Total investment securities available for sale$114,676
 3,601,723
 1,796
 3,718,195
Private equity investments—
 —
 25,493
 25,493
Mutual funds held in rabbi trusts11,479
 —
 —
 11,479
Derivative assets:       
Interest rate contracts—
 17,157
 —
 17,157
Mortgage derivatives(2)
—
 3,466
 —
 3,466
Total derivative assets$—
 20,623
 —
 20,623
Liabilities       
Earnout liability(3) 
—
 —
 14,000
 14,000
Derivative liabilities:       
Interest rate contracts—
 17,531
 —
 17,531
Visa derivative—
 —
 5,768
 5,768
Total derivative liabilities$—
 17,531
 5,768
 23,299
        
(1) Based on an analysis of the nature and risks of these investments, Synovus has determined that presenting these investments as a single asset class is appropriate.
(2) Mortgage derivatives consist of customer interest rate lock commitments that relate to the potential origination of mortgage loans, which would be classified as held for sale and forward loan sales commitments with third-party investors.
(3) Earnout liability consists of contingent consideration obligation related to the Global One acquisition.

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 are recorded as a component of mortgage banking income in the Consolidated Statements of Income. An immaterial portion of these changes in fair value was attributable to changes in instrument-specific credit risk.
Changes in Fair Value Included in Net Income              
For the Six Months Ended June 30, For the Three Months Ended June 30,For the Nine Months Ended September 30, For the Three Months Ended September 30,
(in thousands)2017 2016 2017 20162017 2016 2017 2016
Mortgage loans held for sale$954
 1,850
 $(249) 878
$850
 1,762
 $(104) (87)
              

Mortgage Loans Held for Sale  
(in thousands)As of June 30, 2017 As of December 31, 2016As of September 30, 2017 As of December 31, 2016
Fair value$61,893
 51,545
$54,072
 51,545
Unpaid principal balance60,508
 51,114
52,791
 51,114
Fair value less aggregate unpaid principal balance$1,385
 431
$1,281
 431
      

Changes in Level 3 Fair Value Measurements and Quantitative Information about Level 3 Fair Value Measurements
As noted above, Synovus uses significant unobservable inputs 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 Sheets for the sixnine and three months ended JuneSeptember 30, 2017 and 2016 (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 sixnine and three months ended JuneSeptember 30, 2017 and 2016, Synovus did not have any transfers between levels in the fair value hierarchy.
  
Six Months Ended June 30, 2017Nine Months Ended September 30, 2017
(in thousands)Investment Securities Available for Sale Private Equity Investments Visa Derivative 
Earnout
Liability(1) 
 
GGL / SBA
Loans Servicing Asset(2)
Investment Securities Available for Sale Private Equity Investments Visa Derivative 
Earnout
Liability(1) 
 
GGL / SBA
Loans Servicing Asset(2)
Beginning balance, January 1,$1,796
 25,493
 (5,768) (14,000) —
$1,796
 25,493
 (5,768) (14,000) —
Total gains (losses) realized/unrealized:         
Total (losses) gains realized/unrealized:         
Included in earnings —
 (3,166) —
 (1,707) (694)—
 (3,193) —
 (3,766) (721)
Unrealized gains (losses) included in other comprehensive income131
 —
 —
 —
 —
122
 —
 —
 —
 —
Additions—
 —
 —
 —
 539
—
 —
 —
 —
 539
Sales and settlements—
 (6,629) 715
 —
 —
—
 (6,629) 1,075
 —
 —
Transfer from amortization method to fair value—
 —
 —
 —
 4,452
—
 —
 —
 —
 4,452
Measurement period adjustments related to Global One acquisition—
 —
 —
 1,766
 —
—
 —
 —
 1,766
 —
Ending balance, June 30,$1,927
 15,698
 (5,053) (13,941) 4,297
Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at June 30,$—
 (3,166) —
 (1,707) (694)
Ending balance, September 30,$1,918
 15,671
 (4,693) (16,000) 4,270
Total net (losses) gains for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets/liabilities still held at September 30,$—
 (3,193) —
 (3,766) (721)
                  
                  
Three Months Ended June 30, 2017Three Months Ended September 30, 2017
(in thousands)
Investment Securities Available
for Sale
  Private Equity Investments Visa Derivative 
Earnout
Liability(1) 
 
GGL / SBA
Loans Servicing Asset(2)
Investment Securities Available
for Sale
  Private Equity Investments Visa Derivative 
Earnout
Liability(1) 
 
GGL / SBA
Loans Servicing Asset(2)
Beginning balance, April 1,$1,851
 23,679
 (5,412) (11,421) 4,178
Total gains (losses) realized/unrealized:         
Beginning balance, July 1,$1,927
 15,698
 (5,053) (13,941) 4,297
Total (losses) gains realized/unrealized:         
Included in earnings —
 (1,352) —
 (1,707) (376)—
 (27) —
 (2,059) (27)
Unrealized gains (losses) included in other comprehensive income76
 —
 —
 —
 —
(9) —
 —
 —
 —
Additions—
 —
 —
 —
 495
—
 —
 —
 —
 —
Sales and settlements—
 (6,629) 359
 —
 —
—
 —
 360
 —
 —
Measurement period adjustments related to Global One acquisition—
 —
 —
 (813) —
—
 —
 —
 —
 —
Ending balance, June 30,$1,927
 15,698
 (5,053) (13,941) 4,297
Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at June 30,$—
 (1,352) —
 (1,707) (376)
Ending balance, September 30,$1,918
 15,671
 (4,693) (16,000) 4,270
Total net (losses) gains for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets/liabilities still held at September 30,$—
 (27) —
 (2,059) (27)
                  
(1) Earnout liability consists of contingent consideration obligation related to the Global One acquisition.  
(2) Effective January 1, 2017, Synovus elected the fair value option for determining the value of the GGL/SBA loans servicing asset. Synovus has retained servicing responsibilities on sold GGL/SBA loans and receives a servicing fee. The servicing asset is established at fair value at the time of the sale based on an analysis of future cash flows that incorporates estimates for discount rates, prepayment speeds, and delinquency rates. The servicing asset is measured at fair value on a quarterly basis with changes in fair value included with the associated servicing fee in other non-interest income. Prior to 2017, Synovus accounted for the GGL/SBA loans servicing asset using the amortization method.



  
Six Months Ended June 30, 2016Nine Months Ended September 30, 2016
(in thousands)Investment Securities Available for Sale Private Equity Investments Visa DerivativeInvestment Securities Available for Sale Private Equity Investments Visa Derivative
Beginning balance, January 1,$1,745
 27,148
 (1,415)$1,745
 27,148
 (1,415)
Total gains (losses) realized/unrealized:     
Total (losses) gains realized/unrealized:     
Included in earnings —
 (278) (720)—
 (527) (1,080)
Unrealized gains (losses) included in other comprehensive income(120) —
 —
28
 —
 —
Settlements—
 (4) 720
—
 (629) 1,080
Ending balance, June 30,$1,625
 26,866
 (1,415)
Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at June 30,$—
 (278) (720)
Ending balance, September 30,$1,773
 25,992
 (1,415)
Total net (losses) gains for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at September 30,$—
 (527) (1,080)
          
          
Three Months Ended June 30, 2016Three Months Ended September 30, 2016
(in thousands)
Investment Securities Available
for Sale
  Private Equity Investments Visa Derivative
Investment Securities Available
for Sale
  Private Equity Investments Visa Derivative
Beginning balance, April 1,$1,638
 26,757
 (1,415)
Total gains (losses) realized/unrealized:     
Beginning balance, July 1,$1,625
 26,866
 (1,415)
Total (losses) gains realized/unrealized:     
Included in earnings —
 113
 (360)—
 (249) (360)
Unrealized gains (losses) included in other comprehensive income(13) —
 —
148
 —
 —
Settlements—
 (4) 360
—
 (625) 360
Ending balance, June 30,$1,625
 26,866
 (1,415)
Total net gains (losses) for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at June 30,$—
 113
 (360)
Ending balance, September 30,$1,773
 25,992
 (1,415)
Total net (losses) gains for the period included in earnings attributable to the change in unrealized gains (losses) relating to assets still held at September 30,$—
 (249) (360)
          



The table below provides an overview of the valuation techniques and significant unobservable inputs used in those techniques to measure financial instruments that are classified within Level 3 of the valuation hierarchy and are measured at fair value on a recurring basis.
    JuneSeptember 30, 2017 December 31, 2016
  Valuation TechniqueSignificant Unobservable InputRange/Weighted Average Range/Weighted Average
Assets and liabilities
measured at fair value
on a recurring basis
      
       
Investment Securities Available for Sale - Other Investments:      
       
Trust preferred securities Discounted cash flow analysisCredit spread embedded in discount rate392398 bps 442 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 liquidity(1)
N/A 15%
       
GGL/SBA loans servicing asset Discounted cash flow analysisDiscount rate Prepayment speeds12.01%12.19% 6.75% N/A
       
Earnout liability Option pricing methods and Monte Carlo simulationGlobal One Earnout, as defined in merger agreement, for the five years ending October 1, 2021
$11.8 million -
$16.7 million
 
$9.3 million -
$14.2 million
       
Visa derivative liability Discounted cash flow analysisEstimated timing of resolution of covered litigation, future cumulative deposits to the litigation escrow for settlement of the covered litigation, and estimated future monthly fees payable to the derivative counterparty1-5 years 1-5 years
       
(1) Represents management's estimate of discount that market participants would require based on the instrument's lack of liquidity.

Assets Measured at Fair Value on a Non-recurring Basis
Certain assets are 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, 2017 December 31, 2016September 30, 2017 December 31, 2016
(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*
$—
 —
 11,773
 11,773
 —
 —
 21,742
 21,742
$—
 —
 3,114
 3,114
 —
 —
 21,742
 21,742
Other loans held for sale—
 —
 31,253
 31,253
 —
 —
 —
 —
Other real estate—

—

12,367

12,367
 —
 —
 19,305
 19,305
—

—

8,137

8,137
 —
 —
 19,305
 19,305
Other assets held for sale—
 —
 —
 —
 —
 —
 12,083
 12,083
—
 —
 4,033
 4,033
 —
 —
 12,083
 12,083
                              
* Collateral-dependent impaired loans that were written down to fair value during the period.

The following table presents fair value adjustments recognized in earnings for the nine and three months ended JuneSeptember 30, 2017 and 2016 for the assets measured at fair value on a non-recurring basis.
Six Months Ended June 30, Three Months Ended June 30,Nine Months Ended September 30, Three Months Ended September 30,
(in thousands)2017 2016 2017 20162017 2016 2017 2016
Impaired loans*
$5,808
 1,162
 $5,776
 —
$1,075
 1,329
 $83
 59
Other loans held for sale3,519
 —
 —
 —
25,051
 2,096
 25,051
 2,096
Other real estate518
 3,306
 280
 2,053
5,165
 2,405
 5,165
 968
Other assets held for sale238
 6,625
 —
 5,593
1,683
 7,532
 1,683
 907
              
* Collateral-dependent impaired loans that were written down to fair value during the period.

    

















The table below provides an overview of the valuation techniques and significant unobservable inputs used in those techniques to measure financial instruments that are classified within Level 3 of the valuation hierarchy and are measured at fair value on a non-recurring basis. The range of sensitivities that management utilized in its fair value calculations is deemed acceptable in the industry with respect to the identified financial instruments.
    JuneSeptember 30, 2017 December 31, 2016
  Valuation TechniqueSignificant Unobservable Input
Range
(Weighted Average)(1)
 
Range
(Weighted Average)(1)
Assets measured at fair
value on a non-recurring basis
      
       
Collateral dependent impaired loans Third-party appraised value of collateral less estimated selling costs
Discount to appraised value (2)
Estimated selling costs
0% - 60% (46%(43%)
0% - 10% (7%)
 
0%-52% (25%)
0%-10% (7%)
       
Other loans held for sale Third-party appraised value of collateral less estimated selling costs
Discount to appraised value (2)
Estimated selling costs
N/A
0% - 85% (48%)
0% - 10% (2%)
 N/A
       
Other real estate Third-party appraised value of real estate less estimated selling costs
Discount to appraised value (2)
Estimated selling costs
0% - 35% (8%86% (32%)
0% - 10% (7%)
 
0%-10% (5%)
0%-10% (7%)
       
Other assets held for sale Third-party appraised value less estimated selling costs or BOV
Discount to appraised value (2)
Estimated selling costs
N/A
15%-46% (22%)
0%-10% (7%)
 
0%-81% (47%)
0%-10% (7%)
       
(1) The range represents management's estimate of the high and low of the value that would be assigned to a particular input. For assets measured at fair value on a non-recurring basis, the weighted average is the measure of central tendencies; it is not the value that management is using for the asset or liability.
(2) Synovus also makes adjustments to the values of the assets listed above for reasons including age of the appraisal, information known by management about the property, such as occupancy rates, changes to the physical condition of the property, and other factors. 3Q17 included certain balance sheet restructuring actions which included discounts to fair value for planned accelerated dispositions of other loans held for sale, other real estate, and other assets held for sale.

Fair Value of Financial Instruments
The following table presents the carrying and fair values of financial instruments at JuneSeptember 30, 2017 and December 31, 2016. The fair values represent management’s estimates based on various methodologies and assumptions. For financial instruments that are not recorded at fair value on the balance sheet, such as loans held for investment, interest bearing deposits (including brokered deposits), and long-term debt, the fair value amounts should not be taken as an estimate of the amount that would be realized if all such financial instruments were to be settled immediately.
 










The carrying and estimated fair values of financial instruments, as well as the level within the fair value hierarchy, as of JuneSeptember 30, 2017 and December 31, 2016 are as follows:
June 30, 2017September 30, 2017

(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$377,213
 377,213
 377,213
 —
 —
$386,459
 386,459
 386,459
 —
 —
Interest bearing funds with Federal Reserve Bank468,148
 468,148
 468,148
 —
 —
1,297,581
 1,297,581
 1,297,581
 —
 —
Interest earning deposits with banks6,012
 6,012
 6,012
 —
 —
6,047
 6,047
 6,047
 —
 —
Federal funds sold and securities purchased under resale agreements46,847
 46,847
 46,847
 —
 —
48,820
 48,820
 48,820
 —
 —
Trading account assets3,045
 3,045
 —
 3,045
 —
12,329
 12,329
 —
 12,329
 —
Mortgage loans held for sale61,893
 61,893
 —
 61,893
 —
54,072
 54,072
 —
 54,072
 —
Other loans held for sale127
 127
 —
 127
 —
31,253
 31,253
 —
 —
 31,253
Investment securities available for sale3,827,058
 3,827,058
 86,275
 3,738,856
 1,927
3,825,443
 3,825,443
 86,343
 3,737,182
 1,918
Private equity investments15,698
 15,698
 —
 —
 15,698
15,671
 15,671
 —
 —
 15,671
Mutual funds held in rabbi trusts12,867
 12,867
 12,867
 —
 —
13,439
 13,439
 13,439
 —
 —
Loans, net of deferred fees and costs24,430,512
 24,191,120
 —
 —
 24,191,120
24,487,360
 24,193,343
 —
 —
 24,193,343
GGL/SBA loans servicing asset4,297
 4,297
 —
 —
 4,297
4,270
 4,270
 —
 —
 4,270
Derivative assets16,725
 16,725
 —
 16,725
 —
15,870
 15,870
 —
 15,870
 —
                  
Financial liabilities                  
Trading account liabilities7,860
 7,860
   7,860
  
Non-interest bearing deposits7,363,476
 7,363,476
 —
 7,363,476
 —
7,302,682
 7,302,682
 —
 7,302,682
 —
Interest bearing deposits17,855,340
 17,852,694
 —
 17,852,694
 —
18,883,546
 18,891,446
 —
 18,891,446
 —
Federal funds purchased, other short-term borrowings and other short-term liabilities150,379
 150,379
 150,379
 —
 —
141,539
 141,539
 141,539
 —
 —
Long-term debt2,107,245
 2,155,543
 —
 2,155,543
 —
1,882,607
 1,929,043
 —
 1,929,043
 —
Other liabilities13,941
 13,941
 —
 —
 13,941
16,000
 16,000
 —
 —
 16,000
Derivative liabilities18,442
 18,442
 —
 13,389
 5,053
17,094
 17,094
 —
 12,401
 4,693
                  
 December 31, 2016

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

Note 9 - 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 JuneSeptember 30, 2017 and December 31, 2016, Synovus had no outstanding interest rate swap contracts utilized to manage interest rate risk related to core banking activities.
Synovus is party to master netting arrangements with its dealer counterparties; however, Synovus does not offset assets and liabilities under these arrangements for financial statement presentation purposes.
Counterparty Credit Risk and Collateral
Entering into derivative contracts potentially exposes Synovus to the risk of counterparties’ failure to fulfill their legal obligations, including, but not limited to, potential amounts due or payable under each derivative contract. Notional principal amounts are often used to express the volume of these transactions, but the amounts potentially subject to credit risk are much smaller. Synovus assesses the credit risk of its dealer counterparties by regularly monitoring publicly available credit rating information, evaluating other market indicators, and periodically reviewing detailed financials. Dealer collateral requirements are determined via risk-based policies and procedures and in accordance with existing agreements. Synovus seeks to minimize dealer credit risk by dealing with highly rated counterparties and by obtaining collateral for exposures above certain predetermined limits. Management closely monitors credit conditions within the customer swap portfolio, which management deems to be of higher risk than dealer counterparties. Collateral is secured at origination and credit related fair value adjustments are recorded against the asset value of the derivative as deemed necessary based upon an analysis, which includes consideration of the current asset value of the swap, customer 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
As of JuneSeptember 30, 2017 and December 31, 2016, there were no cash flow hedges outstanding. The unamortized deferred net loss balance from previously terminated cash flow hedges at December 31, 2016 of $(130) thousand was recognized during the sixnine months ended JuneSeptember 30, 2017.
Fair Value Hedges
As of JuneSeptember 30, 2017 and December 31, 2016, there were no fair value hedges outstanding. The unamortized deferred gain balance on all previously terminated fair value hedges at December 31, 2016 of $873 thousand was recognized during the sixnine months ended JuneSeptember 30, 2017.
Customer Related Derivative Positions
Synovus enters into interest rate swap agreements to facilitate the risk management strategies of a small number of commercial banking customers. Synovus mitigates this risk by entering into equal and offsetting interest rate swap agreements with highly rated counterparties. The interest rate swap agreements are free-standing derivatives and are recorded at fair value on Synovus' Consolidated Balance Sheets. Fair value changes are recorded as a component of non-interest income. As of JuneSeptember 30, 2017, the notional amount of customer related interest rate derivative financial instruments, including both the customer position and the offsetting position, was $1.49$1.54 billion, an increase of $160.4$216.9 million compared to December 31, 2016.
Visa Derivative
In conjunction with the sale of Class B shares of common stock issued by Visa to Synovus as a Visa USA member, Synovus entered into a derivative contract with the purchaser, which provides for settlements between the parties based upon a change in the ratio for conversion of Visa Class B shares to Visa Class A shares. The conversion ratio changes when Visa deposits funds to a litigation escrow established by Visa to pay settlements for certain litigation, for which Visa is indemnified by Visa USA members. The litigation escrow is funded by proceeds from Visa’s conversion of Class B shares. The fair value of the derivative contract was $5.1$4.7 million and $5.8 million at JuneSeptember 30, 2017 and December 31, 2016, respectively. The fair value of the derivative contract is determined based on management's estimate of the timing and amount of the Covered Litigation settlement, and the resulting payments due to the counterparty under the terms of the contract. Management believes that the estimate of Synovus' exposure to the Visa indemnification and fees associated with the Visa derivative is adequate based on current information, including Visa's recent announcements and disclosures. However, future developments in the litigation could require potentially significant

changes to Synovus' estimate. See "Part II - Item 8. Financial Statements and Supplementary Data - Note 19 - Visa Shares and Related Agreements" of Synovus' 2016 Form 10-K for further information.
Mortgage Derivatives
Synovus originates first lien residential mortgage loans for sale into the secondary market. Mortgage loans are sold by Synovus for conversion to securities and the servicing of these loans is generally sold to a third-party servicing aggregator, or Synovus sells the mortgage loans as whole loans to investors either individually or in bulk on a servicing released basis.
Synovus enters into interest rate lock commitments for residential mortgage loans which commits it to lend funds to a potential borrower at a specific interest rate and within a specified period of time. Interest rate lock commitments that relate to the origination of mortgage loans that, if originated, will be held for sale, are considered derivative financial instruments under applicable accounting guidance. Outstanding interest rate lock commitments expose Synovus to the risk that the price of the mortgage loans underlying the commitments may decline due to increases in mortgage interest rates from inception of the rate lock to the funding of the loan.
At JuneSeptember 30, 2017 and December 31, 2016, Synovus had commitments to fund at a locked interest rate, primarily fixed-rate mortgage loans to customers in the amount of $87.8$64.3 million and $88.2 million, respectively. Fair value adjustments related to these commitments resulted in a loss of $(416)$595 thousand and a gain of $1.2$1.0 million for the sixnine months ended JuneSeptember 30, 2017 and 2016, respectively, which was recorded as a component of mortgage banking income in the Consolidated Statements of Income.
At JuneSeptember 30, 2017 and December 31, 2016, outstanding commitments to sell primarily fixed-rate mortgage loans amounted to $102.5$83.0 million and $126.5 million, respectively. Such commitments are entered into to reduce the exposure to market risk arising from potential changes in interest rates, which could affect the fair value of mortgage loans held for sale and outstanding rate lock commitments, which guarantee a certain interest rate if the loan is ultimately funded or granted by Synovus as a mortgage loan held for sale. The commitments to sell mortgage loans are at fixed prices and are scheduled to settle at specified dates that generally do not exceed 90 days. Fair value adjustments related to these outstanding commitments to sell mortgage loans resulted in a loss of $(1.7)$1.9 million and $(1.6) million$830.0 thousand for the sixnine months ended JuneSeptember 30, 2017 and 2016, respectively, which were recorded as a component of mortgage banking income in the Consolidated Statements of Income.

Collateral Requirements
Pursuant to the Dodd-Frank Act, certain derivative transactions have collateral requirements, both at the inception of the trade and as the value of each derivative position changes. As of JuneSeptember 30, 2017, collateral totaling $43.3$45.8 million of federal funds sold was pledged to the derivative counterparties to comply with collateral requirements. Effective January 3, 2017, the CME amended its rulebook to legally characterize variation margin cash payments for cleared OTC derivatives as settlement rather than as collateral. As a result, in 2017, Synovus began reducing the corresponding derivative asset and liability balances for CME-cleared OTC derivatives to reflect the settlement of those positions via the exchange of variation margin.
The impact of derivative instruments on the Consolidated Balance Sheets at JuneSeptember 30, 2017 and December 31, 2016 is presented below.

Fair Value of Derivative Assets Fair Value of Derivative LiabilitiesFair Value of Derivative Assets Fair Value of Derivative Liabilities

(in thousands)
Location on Consolidated Balance Sheets June 30, 2017 December 31, 2016 Location on Consolidated Balance Sheets June 30, 2017 December 31, 2016Location on Consolidated Balance Sheets September 30, 2017 December 31, 2016 Location on Consolidated Balance Sheets September 30, 2017 December 31, 2016
Derivatives not designated
as hedging instruments:
                
Interest rate contractsOther assets $15,332
 17,157
 Other liabilities 13,389
 17,531
Other assets $14,896
 17,157
 Other liabilities 12,369
 17,531
Mortgage derivativesOther assets 1,393
 3,466
 Other liabilities —
 —
Other assets 974
 3,466
 Other liabilities 32
 —
Visa derivative —
 —
 Other liabilities 5,053
 5,768
 —
 —
 Other liabilities 4,693
 5,768
Total derivatives not
designated as hedging
instruments
 $16,725
 20,623
 18,442
 23,299
 $15,870
 20,623
 17,094
 23,299
                
The pre-tax effect of fair value hedges on the Consolidated Statements of Income for the sixnine and three months ended JuneSeptember 30, 2017 and 2016 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, Nine Months Ended September 30,
Derivatives not designated as hedging instruments 2017 2016 2017 2016
Interest rate contracts(1)
 Other non-interest income $(1) 33
 Other non-interest income $(5) 39
Mortgage derivatives(2)
 Mortgage banking income (2,073) (485) Mortgage banking income (2,524) 189
Total $(2,074) (452) $(2,529) 228
        
          
 Gain (Loss) Recognized in Income Gain (Loss) Recognized in Income
(in thousands) Three Months Ended June 30, Three Months Ended September 30,
Derivatives not designated as hedging instruments Location of Gain (Loss) Recognized in Income 2017 2016 Location of Gain (Loss) Recognized in Income 2017 2016
Interest rate contracts(1)
 Other non-interest income $—
 27
 Other non-interest income $(4) 5
Mortgage derivatives(2)
 Mortgage banking income (289) (335) Mortgage banking income (451) 674
Total $(289) (308) $(455) 679
        
(1) Gain (loss) represents net fair value adjustments (including credit related adjustments) for customer swaps and offsetting positions.
(2) Gain (loss) represents net fair value adjustments recorded for interest rate lock commitments and commitments to sell mortgage loans to third-party investors.
During the sixnine months ended JuneSeptember 30, 2017 and 2016, Synovus reclassified $873 thousand and $950 thousand,$1.4 million, respectively, from hedge-related basis adjustment, a component of long-term debt, as a reduction to interest expense. During the sixnine months ended JuneSeptember 30, 2016, Synovus reclassified $1.3 million from hedge-related basis adjustment, as a reduction to loss on early extinguishment of debt, net. As of JuneSeptember 30, 2017, all deferred gains related to hedging relationships that had been previously terminated had been recognized into earnings.

Note 10 - 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 sixnine and three months ended JuneSeptember 30, 2017 and 2016.

Six Months Ended June 30, Three Months Ended June 30,Nine Months Ended September 30, Three Months Ended September 30,
(in thousands, except per share data)2017 2016 2017 20162017 2016 2017 2016
Basic Net Income Per Common Share:              
Net income available to common shareholders$142,742
 107,870
 $73,444
 57,898
$238,190
 170,555
 $95,448
 62,686
Weighted average common shares outstanding122,251
 126,164
 122,203
 125,100
121,796
 125,076
 120,900
 122,924
Net income per common share, basic$1.17
 0.85
 $0.60
 0.46
$1.96
 1.36
 $0.79
 0.51
Diluted Net Income Per Common Share:              
Net income available to common shareholders$142,742
 107,870
 $73,444
 57,898
$238,190
 170,555
 $95,448
 62,686
Weighted average common shares outstanding122,251
 126,164
 122,203
 125,100
121,796
 125,076
 120,900
 122,924
Potentially dilutive shares from outstanding equity-based awards792
 614
 824
 599
Potentially dilutive shares from outstanding equity-based awards and Earnout Payments832
 636
 914
 680
Weighted average diluted common shares123,043
 126,778
 123,027
 125,699
122,628
 125,712
 121,814
 123,604
Net income per common share, diluted$1.16
 0.85
 $0.60
 0.46
$1.94
 1.36
 $0.78
 0.51
              
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 JuneSeptember 30, 2017 and 2016, there were 2.2 million and 2.5 million, respectively, potentially dilutive shares related to the Warrant and stock options to purchase shares of common stock that were outstanding during 2017 and 2016, but were not included in the computation of diluted net income per common share because the effect would have been anti-dilutive.
Note 11 - Share-based Compensation
General Description of Share-based Plans
Synovus has a long-term incentive plan under which the Compensation Committee of the Board of Directors has the authority to grant share-based awards to Synovus employees. At JuneSeptember 30, 2017, Synovus had a total of 5.7 million shares of its authorized but unissued common stock reserved for future grants under the 2013 Omnibus Plan. The 2013 Omnibus Plan authorizes 8.6 million common share equivalents available for grant, where grants of options count as one share equivalent and grants of full value awards (e.g., restricted share units, market restricted share units, and performance share units) count as two share equivalents. Any restricted share units that are forfeited and options that expire unexercised will again become available for issuance under the Plan. The Plan permits grants of share-based compensation including stock options, restricted share units, market restricted share units, and performance share units. The grants generally include vesting periods ranging from three to five years and contractual terms of ten years. Stock options are granted at exercise prices which equal the fair value of a share of common stock on the grant-date. Market restricted share units and performance share units are granted at target and are compared annually to required market and performance metrics to determine final units vested and compensation expense. Synovus has historically issued new shares to satisfy share option exercises and share unit conversions. Dividend equivalents are paid on outstanding restricted share units, market restricted share units, and performance share units in the form of additional restricted share units that vest over the same vesting period or the vesting period left on the original restricted share unit grant.
Share-based Compensation Expense
Total share-based compensation expense was $6.8$10.6 million and $3.5$3.7 million for the sixnine and three months ended JuneSeptember 30, 2017, respectively, and $6.8$10.2 million and $3.5$3.4 million for the sixnine and three months ended JuneSeptember 30, 2016, respectively.
Stock Options
No stock option grants were made during the sixnine months ended JuneSeptember 30, 2017. At JuneSeptember 30, 2017, there were 826809 thousand outstanding stock options to purchase shares of common stock with a weighted average exercise price of $17.81$17.82 per share.

Restricted Share Units, Performance Share Units, and Market Restricted Share Units
During the sixnine months ended JuneSeptember 30, 2017, Synovus awarded 230235 thousand restricted share units that have a service-based vesting period of three years and awarded 73 thousand performance share units that vest upon service and performance conditions.

Synovus also granted 73 thousand market restricted share units during the sixnine months ended JuneSeptember 30, 2017. The weighted average grant-date fair value of the awarded restricted share units, performance share units and market restricted share units was $41.93$41.95 per share. Market restricted share units and performance share units are granted at target and are compared annually to required market and performance metrics. The performance share units vest upon meeting certain service and performance conditions. Return on average assets (ROAA) performance is evaluated each year over a three-year performance period, with share distribution determined at the end of the three years. The number of performance share units that will ultimately vest ranges from 0% to 150% of target based on Synovus' three-year weighted average ROAA (as defined). The market restricted share units have a three-year service-based vesting component as well as a total shareholder return multiplier. The number of market restricted share units that will ultimately vest ranges from 75% to 125% of target based on Synovus' total shareholder return. At JuneSeptember 30, 2017, including dividend equivalents granted, there were 983973 thousand restricted share units, performance share units and market restricted share units outstanding with a weighted average grant-date fair value of $32.82$32.91 per share.
Note 12 - 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. Additionally, certain commitments (primarily consumer) can generally be canceled by providing notice to the borrower.
The allowance for credit losses associated with unfunded commitments and letters of credit is a component of the unfunded commitments reserve recorded within other liabilities on the Consolidated Balance Sheets. Additionally, unearned fees relating to letters of credit are recorded within other liabilities on the Consolidated Balance Sheets. These amounts are not material to Synovus' Consolidated Balance Sheets.
Unfunded lending commitments and letters of credit at JuneSeptember 30, 2017 and December 31, 2016 are presented below.
(in thousands)June 30, 2017 December 31, 2016September 30, 2017 December 31, 2016
Letters of credit*$155,542
 150,948
$152,082
 150,948
Commitments to fund commercial real estate, construction, and land development loans1,427,947
 1,394,162
1,309,144
 1,394,162
Unused credit card lines1,152,324
 1,103,431
1,170,429
 1,103,431
Commitments under home equity lines of credit1,126,766
 1,096,052
1,133,569
 1,096,052
Commitments to fund commercial and industrial loans5,039,168
 4,792,834
5,164,553
 4,792,834
Other loan commitments308,386
 307,772
326,672
 307,772
Total unfunded lending commitments and letters of credit$9,210,133
 8,845,199
$9,256,449
 8,845,199
      
* Represent the contractual amount net of risk participations of approximately $61$63 million and $83 million at JuneSeptember 30, 2017 and December 31, 2016, respectively.
Note 13 - Legal Proceedings
Synovus and its subsidiaries are subject to various legal proceedings and claims that arise in the ordinary course of its business. Additionally, in the ordinary course of its business, Synovus and its subsidiaries are subject to regulatory examinations, information gathering requests, inquiries and investigations. Synovus, like many other financial institutions, has been the target of numerous legal actions and other proceedings asserting claims for damages and related relief for losses. These actions include claims and counterclaims asserted by individual borrowers related to their loans and allegations of violations of state and federal laws and regulations relating to banking practices, including putative class action matters. In addition to actual damages, if Synovus does

not prevail in asserted legal actions, credit-related litigation could result in additional write-downs or charge-offs of loans, which could adversely affect Synovus' results of operations during the period in which the write-down or charge-off were to occur.
Synovus carefully examines and considers each legal matter, and, in those situations where Synovus determines that a particular legal matter presents loss contingencies that are both probable and reasonably estimable, Synovus establishes an appropriate accrual. 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 JuneSeptember 30, 2017 are adequate. The actual costs of resolving legal claims may be higher or lower than the amounts accrued.
In addition, where Synovus determines that there is a reasonable possibility of a loss in respect of legal matters, Synovus considers whether it is able to estimate the total reasonably possible loss or range of loss. An event is “reasonably possible” if “the chance of the future event or events occurring is more than remote but less than likely.” An event is “remote” if “the chance of the event or 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 the aggregate range from our outstanding litigation is from zero to $12$10 million in excess of the amounts accrued, if any, related to those matters. This estimated aggregate range is based upon information currently available to Synovus, and the actual losses could prove to be lower or higher. As there are further developments in these legal matters, Synovus will reassess these matters, and the estimated range of reasonably possible losses may change as a result of this assessment. Based on Synovus' current knowledge and advice of counsel, management presently does not believe that the liabilities arising from these legal matters will have a material adverse effect on Synovus' consolidated financial condition, results of operations or cash flows. However, it is possible that the ultimate resolution of these legal matters could have a material adverse effect on Synovus' results of operations for any particular period.
Synovus intends to vigorously pursue all available defenses to these legal matters, but will also consider other alternatives, including settlement, in situations where there is an opportunity to resolve such legal matters on terms that Synovus considers to be favorable, including in light of the continued expense and distraction of defending such legal matters. Synovus maintains insurance coverage, which may be available to cover legal fees, or potential losses that might be incurred in connection with such legal matters. The above-noted estimated range of reasonably possible losses does not take into consideration insurance coverage which may or may not be available for the respective legal matters.
Note 14 - Agreement with World's Foremost Bank and Capital One BankSubsequent Events
On April 17, 2017, Synovus Bank entered into a definitive agreement to acquire certain card assets and assume certain liabilities of World's Foremost Bank (WFB), a wholly-owned subsidiary of Cabela's Incorporated.  Immediately following the closing of this transaction, Synovus will sell the credit card assets and related liabilities to Capital One Bank (USA), National Association, a subsidiary of Capital One Financial Corporation (Capital One), while retaining the brokered time deposits portfolio.  As of June 30, 2017 the WFB brokered deposits portfolio had a carrying value of approximately $1.1 billion.  Pursuant to the terms of the agreement, Synovus will receive $75 million in consideration from Cabela's and Capital One upon closing. Closing of the transaction is subject to customary regulatory approvals and the satisfaction of other closing conditions.
The transaction will be accounted for as an assumption of liabilities pursuant to the asset acquisition model and the earning of fees for services performed. The $75 million in consideration will be recorded as a transaction fee, to be recognized upon closing of the transaction as no continuing involvement or contingencies with respect to the sale of the credit card assets and related liabilities will exist. If the transaction between Synovus and Capital One referred to above does not occur immediately after the transaction between Synovus and WFB, then the transaction between Synovus and WFB will be rescinded, including

repaymentOn September 25, 2017, Synovus issued a notice of any cash amounts paid and returnredemption to redeem all of any assets and liabilities transferred, such that Cabela’s, WFB, Capital One andthe $300.0 million aggregate principal amount of its outstanding 7.875% senior notes due 2019 on November 9, 2017 at a “make whole” premium, plus accrued but unpaid interest on the 2019 notes to the redemption date.  The results for the three months ending December 31, 2017 will include a pre-tax loss of approximately $24 million related to early extinguishment of these notes. 

On November 1, 2017, Synovus completed a public offering of $300.0 million of 3.125% senior notes due 2022. Proceeds from this offering will be used, in part, to fund the same position as if the transaction had never occurred.
Additionally, the deposit liabilities acquired by Synovus will be recorded at fair value determined in accordance with the Brokered CD Curve Discount Methodology, as defined in the agreement.   In the event that the book valueredemption of the deposits is less than the fair value of the deposits, Capital One will provide a cash payment to Synovus to compensate Synovus for the difference; however, Synovus is not required to make any payment if the fair value of the deposits is less than the book value. At June 30, 2017 the deposit portfolio had a weighted average cost of funds of approximately 1.82%, maturities ranging from 2017 through 2023, and a weighted average maturity of approximately 2.79 years.
For additional information regarding this transaction, please refer to Synovus' Current Report on Form 8-K filed with the SEC on April 17, 2017.2019 notes. 

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 could negatively
affect our future profitability;
(3) the risk that our current and future information technology system enhancements and initiatives may not be successfully implemented, which could negatively impact our operations;
(4) the risk that our enterprise risk management framework may not identify or address risks adequately, which may result in unexpected losses;
(5) the risk 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;
(7) changes in the interest rate environment, including changes to the federal funds rate, and competition in our primary market area may result in increased funding costs or reduced earning assets yields, thus reducing margins and net interest income;
(8) our ability to attract and retain key employees;
(9) the risk that we may be required to make substantial expenditures to keep pace with the rapid technological changes in the financial services market;
(10) 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;
(11) risks related to a failure in or breachthe ability of our operational or security systems offramework to manage risks associated with our infrastructure, or those of ourbusiness such as credit risk and operational risk, including third-party vendors and other service providers, includingwhich could, among other things, result in a breach of security systems as a result of cyber-attacks,cyber-attack or similar act;

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

(12)(13) the impact of recent and proposed changes in governmental policy, laws and regulations, including proposed and recently enacted changes in the regulation of banks and financial institutions, or the interpretation or application thereof and the uncertainty of future implementation and enforcement of these regulations in light of the 2016 national election results;regulations;
(13)(14) the risk that we could realize losses if we determine to sell non-performing assets and the proceeds we receive are lower than the carrying value of such assets;
(14)(15) the risk that we may be exposed to potential losses in the event of fraud on cash accounts and/or theft;
(15)(16) the risk that we may not be able to identify suitable acquisition targets or strategic partners as part of our growth strategy and even if we are able to identify suitable acquisition targets,counterparties, we may not be able to complete such acquisitionstransactions on favorable terms, if at all, or successfully integrate acquired bank or nonbank acquisitionsoperations into our existing operations;
(16)(17)the risk that we may not be able to realize the anticipated benefits from our balance sheet restructuring actions;
(18) the impact on our financial results, reputation, and business if we are unable to comply with all applicable federal and state regulations or other supervisory actions or directives and any necessary capital initiatives;
(17)(19) the risks that if economic conditions worsen or regulatory capital rules are modified, or the results of mandated “stress testing” do not satisfy certain criteria, we may be required to undertake initiatives to improve our capital position;
(18)(20) changes in the cost and availability of funding due to changes in the deposit market and credit market;
(19)(21) restrictions or limitations on access to funds from historical and alternative sources of liquidity could adversely affect our overall liquidity, which could restrict our ability to make payments on our obligations and our ability to support asset growth and sustain our operations and the operations of Synovus Bank;
(20)(22) our ability to receive dividends from our subsidiaries could affect our liquidity, including our ability to pay dividends or take other capital actions;
(21)(23) risks related to regulatory approval to take certain actions, including any dividends on our common stock or Series C Preferred Stock, any repurchases of common stock or any other issuance or redemption of any other regulatory capital instruments, as well as any applications in respect of expansionary initiatives;
(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)(25) the risk that our current tax position, including the realization of our deferred tax assets in the future, could be subject to comprehensive tax reform;
(24)(26) the risk that we could have an “ownership change” under Section 382 of the Code, which could impair our ability to timely and fully utilize our net operating losses and built-in losses that may exist when such “ownership change” occurs;
(25)(27) the costs and effects of litigation, investigations, inquiries or similar matters, or adverse facts and developments related thereto;
(26)(28) risks related to the fluctuation in our stock price;
(27)(29) the effects of any damages to our reputation resulting from developments related to any of the items identified above; and
(28)(30) other factors and other information contained in this Report and in other reports and filings that we make with the SEC under the Exchange Act, including, without limitation, those found in "Risk Factors" of this Report.
For a discussion of these and other risks that may cause actual results to differ from expectations, refer to “Part I-Item 1A. Risk Factors” and other information contained in Synovus' 2016 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. Through its wholly-owned subsidiary, Synovus Bank, a Georgia state-chartered bank that is a member of the Federal Reserve System, the company provides commercial and retail banking in addition to a full suite of specialized products and services including private banking, treasury management, wealth management, premium finance and international banking. Synovus also provides mortgage services, financial planning, and investment advisory services through its wholly-owned subsidiaries, Synovus Mortgage, Synovus Trust, and Synovus Securities, as well as its GLOBALT and Creative Financial Group divisions.
Synovus Bank is positioned in some of the highest growth markets in the Southeast, with 248249 branches and 327328 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 sixnine and three months ended JuneSeptember 30, 2017 and financial condition as of JuneSeptember 30, 2017 and December 31, 2016. 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’ 2016 Form 10-K.
Management's Discussion and Analysis of Financial Condition and Results of Operations consists of:
Ÿ    Discussion of Results of Operations - Reviews Synovus' financial performance, as well as selected balance sheet items,
items from the statements of income, significant transactions, and certain key ratios that illustrate Synovus' performance.

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

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

DISCUSSION OF RESULTS OF OPERATIONS
Consolidated Financial Highlights
Six Months Ended June 30, Three Months Ended June 30,Nine Months Ended September 30, Three Months Ended September 30,
(dollars in thousands, except per share data)2017 2016 Change 2017 2016 Change2017 2016 Change 2017 2016 Change
Net interest income$491,024
 439,643
 11.7 % $251,097
 221,449
 13.4 %$753,597
 665,650
 13.2 % $262,572
 226,007
 16.2 %
Provision for loan losses18,934
 16,070
 17.8 10,260
 6,693
 53.3
58,620
 21,741
 169.6 39,686
 5,671
 599.8
Non-interest income140,539
 131,033
 7.3 68,701
 67,886
 1.2
275,974
 199,188
 38.5 135,435
 68,155
 98.7
Adjusted non-interest income(1)
136,038
 131,244
 3.7 70,054
 67,773
 3.4
204,456
 199,589
 2.4 68,418
 68,345
 0.1
Total revenues(2)
623,896
 570,609
 9.3 319,799
 289,335
 10.5
1,030,750
 865,676
 19.1 406,246
 294,433
 38.0
Adjusted total revenues(1)
958,943
 866,203
 10.7 331,273
 294,682
 12.4
Non-interest expense389,133
 376,844
 3.3 191,747
 188,611
 1.7
594,780
 562,716
 5.7 205,646
 185,871
 10.6
Adjusted non-interest expense(1)
382,048
 361,587
 5.7 191,442
 182,410
 5.0
576,150
 545,495
 5.6 194,102
 183,907
 5.5
Income before income taxes223,496
 177,762
 25.7 117,791
 94,031
 25.3
376,171
 280,381
 34.2 152,675
 102,620
 48.8
Net income147,861
 112,989
 30.9 76,003
 60,457
 25.7
245,868
 178,233
 37.9 98,007
 65,245
 50.2
Net income available to common shareholders142,742
 107,870
 32.3 73,444
 57,898
 26.9
238,190
 170,555
 39.7 95,448
 62,686
 52.3
Net income per common share, basic1.17
 0.85
 36.6 0.60
 0.46
 29.9
1.96
 1.36
 43.4 0.79
 0.51
 54.8
Net income per common share, diluted1.16
 0.85
 36.3 0.60
 0.46
 29.6
1.94
 1.36
 43.2 0.78
 0.51
 54.5
Net interest margin3.46% 3.27% 19 bps
 3.51% 3.27
 24 bps
Net charge-off ratio (annualized)0.19
 0.12
 7 bps
 0.26
 0.11
 15 bp
Return on average assets0.98
 0.78
 20 bps
 1.00
 0.83
 17 bp
Efficiency ratio(3)
62.31
 65.97
 (366) bps
 59.90
 65.11
 (521) bp
Adjusted net income per common share, diluted(1)
1.82
 1.45
 25.9 0.65
 0.52
 24.7
Net interest margin(3)
3.52% 3.27% 25  bps 3.63% 3.27
 36  bps
Net charge-off ratio(3)
0.33
 0.12
 21  bps 0.62
 0.12
 50  bps
Adjusted net charge-off ratio(1)(3)
0.15
 0.12
 3  bps 0.06
 0.12
 (6) bps
Return on average assets(3)
1.07
 0.81
 26  bps 1.27
 0.88
 39  bps
Adjusted return on average assets(1)(3)
1.01
 0.87
 14  bps 1.05
 0.90
 15  bps
Efficiency ratio57.70
 65.00
 (730) bps 50.62
 63.13
 (1,251) bps
Adjusted efficiency ratio(1)
60.08
 62.98
 (290) bps 58.59
 62.41
 (382) bps
                      
(1) See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
(2) Consists of net interest income and non-interest income excluding net investment securities gains.(losses) gains, net.
(3) Non-interest expense as a percentage of the sum of net interest income (fully taxable equivalent basis) and non-interest income excluding net investment securities gains/losses.Annualized
June 30, 2017 March 31, 2017 Sequential Quarter Change June 30, 2016 Year-Over-Year ChangeSeptember 30, 2017 June 30, 2017 Sequential Quarter Change September 30, 2016 Year-Over-Year Change 
(dollars in thousands, except per share data) 
Loans, net of deferred fees and costs$24,430,512
 24,258,468
 172,044
 23,060,908
 1,369,604$24,487,360
 24,430,512
 56,848
 23,262,887
 1,224,473 
Total deposits25,218,816
 25,105,712
 113,104
 23,925,922
 1,292,89426,186,228
 25,218,816
 967,412
 24,192,003
 1,994,225 
Total average deposits24,991,708
 24,918,855
 72,853
 23,608,027
 1,383,68125,286,919
 24,991,708
 295,211
 24,030,291
 1,256,628 
Average core deposits(1)
23,612,149
 23,538,068
 74,081
 22,271,027
 1,341,12223,756,030
 23,612,149
 143,881
 22,620,552
 1,135,478 
Average core transaction deposits(1)
18,409,170
 18,147,856
 261,314
 16,849,367
 1,559,80318,603,161
 18,409,170
 193,991
 17,362,060
 1,241,101 
                   
Non-performing assets ratio0.73% 0.77
 (4) bps
 0.81
 (8) bps
0.57% 0.73
 (16) bps 0.77
 (20) bps 
Non-performing loans ratio0.65
 0.65
 —
 0.67
 (2) bps
0.40
 0.65
 (25) bps 0.64
 (24) bps 
Past due loans over 90 days0.02
 0.01
 1 bp
 0.03
 (1) bp
0.02
 0.02
 —
 0.02
 —
 
                   
Common equity Tier 1 capital (transitional)$2,749,304
 2,734,983
 14,321
 2,596,233
 153,071 
Tier 1 capital$2,734,983
 2,758,794
 (23,811) 2,627,572
 107,4112,849,580
 2,829,340
 20,240
 2,620,379
 229,201 
Common equity Tier 1 capital (transitional)2,829,340
 2,672,648
 156,692
 2,616,181
 213,159
Total risk-based capital3,340,155
 3,274,612
 65,543
 3,146,897
 193,2583,362,127
 3,340,155
 21,972
 3,139,465
 222,662 
Tier 1 capital ratio10.02%
 10.18
 (16) bps
 10.06
 (4) bps
Common equity Tier 1 capital ratio (transitional)10.37
 9.86
 51 bps
 10.01
 36 bps
Common equity Tier 1 capital ratio transitional(2)
10.06% 10.02
 4  bps 9.96
 10  bps 
Tier 1 capital ratio(2)
10.43
 10.37
 6  bps 10.05
 38  bps 
Total risk-based capital ratio12.24
 12.08
 16 bps
 12.05
 19 bps
12.30
 12.24
 6  bps 12.04
 26  bps 
Total shareholders’ equity to total assets ratio9.77
 9.66
 11 bps
 10.02
 (25) bps
9.47
 9.77
 (30) bps 9.78
 (31) bps 
Tangible common equity to tangible assets ratio(1)
9.15
 9.04
 11 bps
 9.52
 (37) bps
8.88
 9.15
 (27) bps 9.28
 (40) bps 
Return on average common equity
(3)
10.34
 9.97
 37 bps
 8.26
 208 bps
13.24
 10.34
 290  bps 8.89
 435  bps 
Return on average tangible common equity(1)
10.62
 10.26
 36 bps
 8.33
 229 bps
Adjusted return on average common equity(1)(3)
10.92
 10.49
 43  bps 9.08
 184  bps 
Adjusted return on average tangible common equity(1)(3)
11.19
 10.75
 44  bps 9.16
 203  bps 
                   
(1) See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
(2) June 30, 2017 ratios for CET1 transitional and Tier 1 capital were reported in error as 10.37% and 10.02%, respectively, on the June 30, 2017 Report.
(3) Annualized


Results for the SixNine and Three Months Ended JuneSeptember 30, 2017
Third quarter of 2017 results include the Cabela's Transaction Fee, partially offset by certain balance sheet restructuring actions which resulted in pre-tax charges totaling $44.5 million. The fourth quarter of 2017 results will include a pre-tax loss on early extinguishment of debt totaling approximately $24 million due to the previously announced redemption of our 7.875% senior notes due 2019 at a redemption premium on November 9, 2017.
For the sixnine months ended JuneSeptember 30, 2017, net income available to common shareholders was $142.7$238.2 million, or $1.16$1.94 per diluted common share, an increase of 32.3%39.7% and 36.3%43.2%, respectively, compared to the sixnine months ended JuneSeptember 30, 2016. For the three months ended JuneSeptember 30, 2017, net income available to common shareholders was $73.4$95.4 million, or $0.60$0.78 per diluted common share, an increase of 26.8%52.3% and 29.6%54.5%, respectively, compared to the three months ended JuneSeptember 30, 2016. For the six and three months ended JuneSeptember 30, 2017, results include anadjusted net income tax benefitper common share, diluted was $0.65, up 24.7% compared to $0.52 for the third quarter of $4.5 million and $378 thousand, respectively,2016. For the three months ended September 30, 2017, return on average assets was 1.27%, annualized, up 39 basis points from adoptionthe third quarter of a new accounting standard update effective January 1, 2017 which includes a requirement2016 (adjusted return on average assets was 1.05%, annualized, up 15 basis points from the third quarter of 2016). See "Non-GAAP Financial Measures" in this Report for the applicable reconciliation to record all tax effects associated with share-based compensation through the income statement.most comparable GAAP measure.
Total revenues of $623.9$1.0 billion for the nine months ended September 30, 2017 were up 19.1% compared to the nine months ended September 30, 2016. Adjusted total revenues, which excludes the Cabela's Transaction Fee, net investment securities (losses) gains, net, and decrease in fair value of private equity investments, net, of $958.9 million for the sixnine months ended JuneSeptember 30, 2017 arewere up 9.3%10.7% compared to the sixnine months ended JuneSeptember 30, 2016. Total revenues of $319.8$406.2 million for the three months ended JuneSeptember 30, 2017 arewere up 10.5% vs.38.0% compared to the three months ended September 30, 2016. Adjusted total revenues of $331.3 million for the three months ended September 30, 2017 were up 12.4% compared to the same time period in 2016 withdriven by net interest income and non-interest income excluding net investment securities gains growing 13.4% and 3.4%, respectively,growth of 16.2% from the prior year. Net interest income was $251.1$262.6 million for the three months ended JuneSeptember 30, 2017, up $29.6$36.6 million, or 13.4%16.2%, compared to the three months ended JuneSeptember 30, 2016. The net interest margin was 3.51%3.63% for the three months ended JuneSeptember 30, 2017, an increase of 912 basis points from the firstsecond quarter of 2017 and 2436 basis points from 3.27% for the secondthird quarter of 2016. The yield on earning assets was 3.99%4.11%, up 1112 basis points from the firstsecond quarter of 2017 and up 2640 basis points compared to the secondthird quarter of 2016, and the effective cost of funds was 0.48%, unchanged from second quarter of 2017 and up twofour basis points from both firstthird quarter 2017 and second quarter 2016 at 0.48%.of 2016. The yield on loans was 4.36%4.49%, an increase of 1113 basis points sequentially and 2135 basis points from the second quarter of 2016 and the yield on investment securities was 2.11%, an increase of 4 basis points sequentially and 22 basis points from the secondthird quarter of 2016. Earning asset yields also benefited from a reduction of the average balance of lower yielding funds held at the Federal Reserve. See "Non-GAAP Financial Measures" in this Report for the applicable reconciliation to the most comparable GAAP measure.
Non-interest income for the sixnine and three months ended JuneSeptember 30, 2017 was $140.5$276.0 million and $68.7$135.4 million, respectively, up $9.5$76.8 million, or 7.3%38.5%, and up $815 thousand,$67.3 million, or 1.2%98.7%, compared to the sixnine and three months ended JuneSeptember 30, 2016, respectively. Adjusted non-interest income, which excludes the Cabela's Transaction Fee, net investment securities (losses) gains, net, and decrease in fair value of private equity investments, net was up $4.8$4.9 million, or 3.7%2.4%, and up $2.3 million, or 3.4%,flat, for the sixnine and three months ended JuneSeptember 30, 2017, compared to the same periods a year ago.ago, respectively. See "Non-GAAP Financial Measures" in this Report for the applicable reconciliation to the most comparable GAAP measure.
Non-interest expense for the sixnine and three months ended JuneSeptember 30, 2017 was $389.1$594.8 million and $191.7$205.6 million, respectively, compared to $376.8$562.7 million and $188.6$185.9 million for the sixnine and three months ended JuneSeptember 30, 2016, respectively. Adjusted non-interest expense for the sixnine and three months ended JuneSeptember 30, 2017, which excludes the third quarter of 2017 balance sheet restructuring actions of impairments on ORE and other properties held for sale, restructuring charges, net, loss on early extinguishment of debt, net, litigation contingency/settlement expense, merger-related expense, fair value adjustment to Visa derivative, and amortization of intangibles, and certain earnout liability adjustments, increased $20.5$30.7 million, or 5.7%5.6%, and $9.0$10.2 million, or 5.0%5.5%, compared to the same periods in 2016, respectively. Synovus has generatedcontinues to generate positive operating leverage through the first half of 2017, with the year-over-year expense growth primarily driven by strategic investments in talent and technology, higher third-party processing expense relating to third-party lending partnerships servicing fees, the addition of Global One, and expenses associated with Synovus Bank's transition to a single bank operating environment and single brand. Strategic investments in talent and technology accounted for approximately $10$15 million and $5 million of the increase for the sixnine and three months ended JuneSeptember 30, 2017, respectively, compared to the same periods in 2016, as Synovus continues to add key talent and invest in technology to enhance the customer experience. Third-party processing expense relating to the servicing fees of third-party lending partnerships increased by $2.2$3.4 million and $1.2 million for the sixnine and three months ended JuneSeptember 30, 2017, respectively, compared to the same periods in 2016, and Global One operating expenses accounted for $1.8$3.0 million and $568 thousand$1.2 million of the increase compared to the sixnine and three months ended JuneSeptember 30, 2016, respectively. Expenses associated with Synovus Bank's transition to a single bank operating environment and single brand resulted in higher expenses of $2.9$4.0 million and $1.9$1.1 million compared to the sixnine and three months ended JuneSeptember 30, 2016, respectively. See "Non-GAAP Financial Measures" in this Report for the applicable reconciliation to the most comparable GAAP measure.

Credit quality metrics continuedDuring the third quarter of 2017, Synovus completed certain balance sheet restructuring actions which included $77.8 million in loans transferred to be favorable duringheld-for-sale (consisting primarily of NPLs) that resulted in charge-offs of $34.2 million and provision expense of $27.7 million. Additionally, foreclosed real estate expenses for the three months endedquarter included $7.1 million of charges related to discounts to fair value for completed or planned accelerated dispositions. Non-performing loans were $97.8 million at September 30, 2017, down $61.5 million from June 30, 2017.2017 and down $50.3 million from September 30, 2016. The non-performing loan ratio was 0.40% at September 30, 2017, as compared to 0.65% at June 30, 2017 and 0.64% at September 30, 2016. Total non-performing assets were $138.6 million at September 30, 2017, down $40.3 million from June 30, 2017 and down $40.5 million from September 30, 2016. The non-performing assets ratio declined 4 basis pointswas 0.57% at September 30, 2017, as compared to 0.73%, compared to 0.77% in the prior quarter, and was down 8 basis points from 0.81%0.77% a year ago. Net charge-offs for the sixnine months ended JuneSeptember 30, 2017 were $22.6$60.7 million, or 0.19%0.33% as a percentage of average loans annualized, compared to $13.5$20.4 million, or 0.12%, as a percentage of average loans annualized, for the sixnine months ended JuneSeptember 30, 2016. The $9.1 millionExcluding the third quarter of 2017 balance sheet restructuring actions, the adjusted net charge-off ratio for the nine months ended September 30, 2017 was 0.15%. Total delinquencies (consisting of loans 30 or 67.5% increase from 2016 is primarily the resultmore days past due and still accruing) were 0.35% of charge-offs on a legacy credit that was fully reservedtotal loans at September 30, 2017 as well as a reduction in recoveries. For the six months endedcompared to 0.27% at June 30, 2017 the provision for loan losses was $18.9 million, an increase of $2.9 million, or 17.8%, compared to the six months ended Juneand 0.27% at September 30, 2016 primarily due to a decline in recoveries.2016. The allowance for loan losses at JuneSeptember 30, 2017 was $248.1$249.7 million, or 1.02% of total loans, compared to $251.8 million, or 1.06% of total loans, at December 31, 2016 and $255.1$253.8 million, or 1.11%1.09% of total loans, at JuneSeptember 30, 2016. See "Non-GAAP Financial Measures" in this Report for the applicable reconciliation to the most comparable GAAP measure.
DuringRestructuring charges of $7.0 million were recorded during the nine months ended September 30, 2017 consisting primarily of severance charges of $6.4 million recorded during the first quarter of 2017 Synovus recorded restructuring charges of $6.5 million consistingassociated primarily ofwith termination benefits incurred in conjunction with a voluntary early retirement program offered during the quarter. This program was part of Synovus' ongoing efficiency initiatives. Additionally, during the three months ended September 30, 2017, Synovus recorded restructuring charges of $519 thousand due to additional asset impairment charges of $515 thousand on properties previously identified for disposition. During the first half ofnine months ended September 30, 2016, Synovus recorded restructuring charges of $7.0$8.2 million consisting primarily of asset impairment charges related to corporate real estate optimization activities and branch closures.

At JuneSeptember 30, 2017, total loans were $24.43$24.49 billion, an increase of $574.1$631.0 million, or 4.9%3.5% annualized, and $1.37$1.22 billion or 5.9%5.3%, compared to December 31, 2016 and JuneSeptember 30, 2016, respectively. Year-over-year loan growth was driven by a $795.5$750.1 million or 7.3%15.6% increase in consumer loans and a $718.1 million or 6.5% increase in C&I loans, and a $666.0 million or 14.4% increase in consumer loans, partially offset by a $93.4$245.6 million or 1.2%3.3% decline in CRE loans.
During the secondthird quarter of 2017, total average deposits increased $72.9$295.2 million, or 1.2%4.7% annualized, compared to the first quarter of 2017, and increased $1.38 billion, or 5.9%, compared to the second quarter of 2017, and increased $1.26 billion, or 5.2%, compared to the third quarter of 2016. Excluding the acquired WFB brokered time deposits, average deposits for the third quarter of 2017 increased $223.3 million, or 3.5% annualized, compared to the second quarter of 2017. Average core transaction deposits increased $261.3$194.0 million, or 5.8%4.2% annualized, compared to the prior quarter, and were up $1.56$1.24 billion, or 9.3%7.1%, compared to the secondthird quarter of 2016. The increase in average deposits for the three months ended JuneSeptember 30, 2017 compared to the three months ended JuneSeptember 30, 2016 was due to growth in average core transaction deposits, which represented 73.7%73.6% of average deposits for the secondthird quarter of 2017 compared to 71.4%72.3% a year ago. See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
During January 2016, Synovus repurchased $124.7 million of its subordinated notes that matured on June 15, 2017 in conjunction with Synovus' cash tender offer that commenced on December 23, 2015 and expired on January 22, 2016. Results for the sixnine months ended JuneSeptember 30, 2016 included a $4.7 million pre-tax loss relating to this tender offer.
On September 25, 2017, Synovus issued a notice of redemption to redeem all of the $300.0 million aggregate principal amount of its outstanding 7.875% senior notes due 2019 on November 9, 2017 at a “make whole” premium, plus accrued but unpaid interest on the 2019 notes to the redemption date.  The results for the three months ending December 31, 2017 will include a pre-tax loss of approximately $24 million related to early extinguishment of these notes.
During the sixnine months ended JuneSeptember 30, 2017, Synovus repurchased $45.3$135.9 million in common stock under the current share repurchase program, which authorizes repurchases of up to $200 million of the Company's common stock to be executed during 2017. Additionally, during the first quarter of 2017, Synovus increased the quarterly common stock dividend by 25% to $0.15 per share effective with the quarterly dividend declared during the first quarter of 2017. Total shareholders' equity was $3.00 billion at JuneSeptember 30, 2017, compared to $2.93 billion at December 31, 2016, and $2.95$2.91 billion at JuneSeptember 30, 2016. Return on average common equity was 10.34% at June13.24%, annualized, for the three months ended September 30, 2017, compared to 9.42% at December 31, 2016, and 8.26% at10.34%, annualized, for the three months ended June 30, 2017, and 8.89%, annualized, for the three months ended September 30, 2016. ReturnAdjusted return on average common equity was 10.92%, annualized, for the three months ended September 30, 2017, compared to 10.49%, annualized, for the three months ended June 30, 2017, and 9.08%, annualized, for the three months ended September 30, 2016. Adjusted return on average tangible common equity was 10.62% at June11.19%, annualized, for the three months ended September 30, 2017, compared to 9.65% at December 31, 2016,10.75%, annualized, for the three months ended June 30, 2017, and 8.33% at June9.16%, annualized, for the three months ended September 30, 2016. See "Non-GAAP Financial Measures" in this Report for the applicable reconciliation to the most comparable GAAP measure.

2017 Outlook
For 2017, excluding the impact from the Cabela's Transaction Fee and balance sheet restructuring actions recognized during the third quarter of 2017, management currently expects:
Average loan growth of 5% to 7%
Average total deposits growth of 5% to 7%
Net interest income growth of 12% to 14%
Adjusted non-interest income* growth of 2% to 4%
TotalAdjusted total non-interest expenseexpense* growth of 2% to 4%
Effective income tax rate of 34% to 35%
NetAdjusted net charge-off ratioratio* of 15 to 20 bps
* See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
Changes in Financial Condition
During the sixnine months ended JuneSeptember 30, 2017, total assets increased $584.0 million$1.54 billion from $30.10 billion at December 31, 2016 to $30.69$31.64 billion. The principal componentcomponents of this increase waswere an increase in loans, net of deferred fees and costs, of $574.1$631.0 million and an increase in interest bearing funds with the Federal Reserve of $770.5 million. Additionally, investment securities available for sale, at fair value, increased by $108.9$107.2 million, and Synovus increased its investment in BOLI policies by $75.0$150.0 million during the sixnine months ended JuneSeptember 30, 2017. An increase of $570.8 million$1.54 billion in deposits, which includes the $1.10 billion in brokered time deposits acquired from WFB in the Cabela's Transaction, provided the primary funding source for the growth in loans and investments.assets. Long-term debt declined by $278.3 million during the nine months ended September 30, 2017 with Synovus' payoff of $278.6 million of subordinated notes at their maturity date of June 15, 2017. Other liabilities, at September 30, 2017, included $193.3 million accrued for purchases of investment securities available for sale settled during October, 2017.

Loans
The following table compares the composition of the loan portfolio at JuneSeptember 30, 2017, December 31, 2016, and JuneSeptember 30, 2016.
(dollars in thousands)June 30, 2017 December 31, 2016 
June 30, 2017 vs. December 31, 2016 % Change(1)
 June 30, 2016 
June 30, 2017 vs. June 30, 2016
% Change
September 30, 2017 December 31, 2016 
September 30, 2017 vs.
December 31, 2016 % Change(1)
 September 30, 2016 
September 30, 2017 vs.
September 30, 2016
% Change
Investment properties$6,035,663
 5,869,261
 5.7 % 5,850,970
 3.2 %$5,925,096
 5,869,261
 1.3 % 5,898,631
 0.4 %
1-4 family properties835,620
 887,307
 (11.7) 967,334
 (13.6)794,616
 887,307
 (14.0) 921,688
 (13.8)
Land and development542,988
 609,406
 (22.0) 689,391
 (21.2)507,212
 616,297
 (23.7) 652,232
 (22.2)
Total commercial real estate7,414,271
 7,365,974
 1.3
 7,507,695
 (1.2)7,226,924
 7,372,865
 (2.6) 7,472,551
 (3.3)
Commercial, financial and agricultural7,000,573
 6,915,927
 2.5
 6,596,835
 6.1
6,961,709
 6,909,036
 1.0
 6,537,656
 6.5
Owner-occupied4,750,335
 4,636,016
 5.0
 4,358,595
 9.0
4,765,433
 4,636,016
 3.7
 4,471,365
 6.6
Total commercial and industrial11,750,908
 11,551,943
 3.5
 10,955,430
 7.3
11,727,142
 11,545,052
 2.1
 11,009,021
 6.5
Home equity lines1,563,167
 1,617,265
 (6.7) 1,657,109
 (5.7)1,528,889
 1,617,265
 (7.3) 1,638,844
 (6.7)
Consumer mortgages2,470,665
 2,296,604
 15.3
 2,132,114
 15.9
2,557,680
 2,296,604
 15.2
 2,243,154
 14.0
Credit cards225,900
 232,413
 (5.7) 236,034
 (4.3)225,725
 232,413
 (3.8) 232,309
 (2.8)
Other consumer loans1,031,639
 818,183
 52.6
 600,153
 71.9
1,245,278
 818,183
 69.8
 693,204
 79.6
Total consumer5,291,371
 4,964,465
 13.3
 4,625,410
 14.4
5,557,572
 4,964,465
 16.0
 4,807,511
 15.6
Total loans24,456,550
 23,882,382
 4.8
 23,088,535
 5.9
24,511,638
 23,882,382
 3.5
 23,289,083
 5.2
Deferred fees and costs, net(26,038) (25,991) 0.4
 (27,627) (5.8)(24,278) (25,991) (8.8) (26,196) (7.3)
Total loans, net of deferred fees and costs$24,430,512
 23,856,391
 4.9 % 23,060,908
 5.9 %$24,487,360
 23,856,391
 3.5 % 23,262,887
 5.3 %
                  
(1) Percentage changes are annualized


At JuneSeptember 30, 2017, total loans were $24.43$24.49 billion, an increase of $574.1$631.0 million, or 4.9%3.5% annualized, and $1.37$1.22 billion or 5.9%5.3%, compared to December 31, 2016 and JuneSeptember 30, 2016, respectively. Year-over-year loan growth was driven by a $795.5$718.1 million or 7.3%6.5% increase in C&I loans and a $666.0$750.1 million or 14.4%15.6% increase in consumer loans, partially offset by a $93.4$245.6 million or 1.2%3.3% decline in CRE loans.
Commercial Loans
Total commercial loans (which are comprised of C&I and CRE loans) at JuneSeptember 30, 2017 were $19.1718.95 billion, or 78.4%77.4% of the total loan portfolio, compared to $18.92 billion, or 79.2%79.3%, at December 31, 2016 and $18.46$18.48 billion, or 80.0%79.4%, at JuneSeptember 30, 2016.
At JuneSeptember 30, 2017 and December 31, 2016, Synovus had 2726 and 29 commercial loan relationships, respectively, with total commitments of $50 million or more (including amounts funded). The average funded balance of these relationships at both JuneSeptember 30, 2017 and December 31, 2016 was approximately $33 million and $34 million.million, respectively.
Commercial and Industrial Loans
The C&I loan portfolio represents the largest category of Synovus' total loan portfolio and is currently concentrated on small to middle market C&I lending dispersed throughout a diverse group of industries primarily in the Southeast and other selected areas in the United States, including health care and social assistance, manufacturing, retail trade, real-estate related industries, finance and insurance, professional, scientific, and technical services as well as wholesale trade, shown in theStates. The following table (aggregatedshows the composition of the C&I portfolio aggregated by NAICS code).code. The portfolio is relationship focused and, as a result, Synovus' lenders have in-depth knowledge of the borrowers, most of which have guaranty arrangements. C&I loans are originated through Synovus' local market banking divisions and the Corporate Banking Group to commercial customers primarily to finance capital expenditures, including real property, plant and equipment, or as a source of working capital. In accordance with Synovus' lending policy, each loan undergoes a detailed underwriting process which incorporates uniform underwriting standards and oversight in proportion to the size and complexity of the lending relationship. As of JuneSeptember 30, 2017, approximately 93% of Synovus' C&I loans are secured by real estate, business equipment, inventory, and other types of collateral. C&I loans of $11.75$11.73 billion, representing 48.1%47.9% of the total loan portfolio, grew $199.0$182.0 million, or 3.5%2.1% annualized, from December 31, 2016 and $795.5$718.1 million, or 7.3%6.5%, from JuneSeptember 30, 2016. The year-over-year growth in C&I loans reflects $356.7 million in loans added from the Global One acquisition on October 1, 2016.

Commercial and Industrial Loans by IndustryJune 30, 2017 December 31, 2016September 30, 2017 December 31, 2016
(dollars in thousands)Amount 
%(1)
 Amount 
%(1)
Amount 
%(1)
 Amount 
%(1)
Health care and social assistance$2,640,636
 22.5% $2,594,572
 22.5%$2,709,369
 23.1% $2,598,438
 22.5%
Manufacturing928,275
 7.9
 872,559
 7.5
932,355
 8.0
 872,559
 7.6
Retail trade870,760
 7.4
 905,083
 7.8
844,068
 7.2
 876,951
 7.6
Real estate and rental and leasing805,709
 6.9
 771,188
 6.7
817,497
 7.0
 764,296
 6.6
Other services785,735
 6.7
 816,846
 7.1
Finance and insurance722,162
 6.1
 764,811
 6.6
733,843
 6.3
 764,811
 6.6
Professional, scientific, and technical services711,833
 6.1
 681,529
 5.9
704,515
 6.0
 719,056
 6.2
Wholesale trade705,147
 6.0
 645,124
 5.6
719,717
 6.0
 645,124
 5.6
Real estate other587,531
 5.0
 517,426
 4.5
582,041
 5.0
 561,133
 4.9
Accommodation and food services537,025
 4.6
 530,232
 4.6
538,749
 4.6
 530,232
 4.6
Construction464,747
 3.9
 465,632
 4.0
455,816
 3.9
 465,632
 4.0
Transportation and warehousing423,253
 3.6
 397,357
 3.4
407,663
 3.5
 385,350
 3.3
Agriculture, forestry, fishing, and hunting373,340
 3.2
 387,589
 3.4
363,640
 3.1
 387,589
 3.4
Administration, support, waste management, and remediation272,302
 2.3
 287,391
 2.5
268,458
 2.3
 287,391
 2.5
Educational services239,964
 2.0
 222,516
 1.9
231,003
 2.0
 222,516
 1.9
Information222,223
 1.9
 240,437
 2.1
212,829
 1.8
 240,437
 2.1
Other services802,345
 6.8
 810,437
 7.0
Other industries443,656
 3.8
 458,060
 4.0
419,844
 3.5
 406,691
 3.5
Total commercial and industrial loans$11,750,908
 100.0% $11,551,943
 100.0%$11,727,142
 100.0% $11,545,052
 100.0%
              
(1) Loan balance in each category expressed as a percentage of total C&I loans.
At JuneSeptember 30, 2017, $7.00$6.96 billion of C&I loans, or 28.7%28.4% of the total loan portfolio, represented loans originated for the purpose of financing commercial, financial, and agricultural business activities. The primary source of repayment on these loans is revenue generated from products or services offered by the business or organization. The secondary source of repayment is the collateral, which consists primarily of equipment, inventory, accounts receivable, time deposits, cash surrender value of life insurance, and other business assets.

At JuneSeptember 30, 2017, $4.75$4.77 billion of C&I loans, or 19.4%19.5% 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. These loans are predominately secured by owner-occupied properties and other real estate, and to a lesser extent, other types of collateral.
Commercial Real Estate Loans
Total CRE loans consist of investment properties loans, 1-4 family properties loans, as well as land and development loans. These loans are subject to the same uniform lending policies referenced above. CRE loans of $7.41$7.23 billion, representing 30.3%29.5% of the total loan portfolio, increased $48.3decreased $145.9 million, or 1.3%2.6% annualized, from December 31, 2016 and decreased $93.4$245.6 million, or 1.2%3.3%, from JuneSeptember 30, 2016. The decline from a year ago was driven by strategic reductions in 1-4 family properties as well asand land and development loans and a $15.7 million reduction from sales and transfers to held for sale during the third quarter of 2017.  This decline was partially offset by growth in investment properties.
Investment Properties Loans
Investment properties loans consist of construction and mortgage loans for income producing properties and are primarily made to finance multi-family properties, hotels, office buildings, shopping centers, warehouses, and other investment property. Total investment properties loans as of JuneSeptember 30, 2017 were $6.045.93 billion, or 81.4%82.0% of the total CRE portfolio and 24.7%24.2% of the total loan portfolio, compared to $5.87 billion, or 79.7%79.6% of the total CRE portfolio and 24.6% of the total loan portfolio at December 31, 2016, an increase of $166.4$55.8 million, or 5.7%1.3% annualized. The net growth since year-end reflects an $84.0 million or 15.0% annualized driven by strong growth in hotel loans, a $68.2 million or 5.8% annualized growth rate in multi-family loans, partially offset by a $124.0 million or 17.2% annualized decline in the multi-family investment property category.shopping center portfolio. Synovus' investment properties portfolio is well diversified by property type, geography (primarily within Synovus' primary market areas of Georgia, Alabama, Tennessee, South Carolina, and Florida), and tenants. The investment properties loans are primarily secured by the property being financed by the loans; however, these loans may also be secured by real estate or other assets beyond the property being financed.
1-4 Family Properties Loans
1-4 family properties loans include construction loans to homebuilders and commercial mortgage loans to real estate investors and are almost always secured by the underlying property being financed by such loans. These properties are primarily located in the markets served by Synovus. Construction loans are generally interest-only loans and typically have maturities of three years or less, and commercial mortgage loans generally have maturities of three to five years, with amortization periods of up to fifteen

to twenty years. At JuneSeptember 30, 2017, 1-4 family properties loans totaled $835.6794.6 million, or 11.3%11.0% of the total CRE portfolio and 3.4%3.2% of the total loan portfolio, compared to $887.3 million, or 12.0% of the total CRE portfolio and 3.7% of the total loan portfolio at December 31, 2016.
Land and Development Loans
Land and development loans include commercial and residential development as well as land acquisition loans and are secured by land held for future development, typically in excess of one year. These loans have short-term maturities and are typically unamortized. Properties securing these loans are substantially within 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). Total land and development loans were $543.0$507.2 million at JuneSeptember 30, 2017, or 2.2%2.1% of the total loan portfolio, a decline of $66.4$109.1 million, or 22.0%23.7% annualized, from December 31, 2016. Synovus continues to strategically reduce its exposure to these types of loans.
Consumer Loans
The consumer loan portfolio consists of a wide variety of loan products offered through Synovus' banking network as well as third-party lending partnerships, including first and second residential mortgages, home equity lines, credit card loans, home improvement loans, student loans, and other consumer loans. The majority of Synovus' consumer loans are consumer mortgages and home equity lines secured by first and second liens on residential real estate primarily located in the markets served by Synovus.
Consumer loans at JuneSeptember 30, 2017 totaled $5.29$5.56 billion, representing 21.6%22.6% of the total loan portfolio compared to $4.96 billion, or 20.8%20.7% of the total loan portfolio at December 31, 2016, and $4.63$4.81 billion, or 20.0%20.6% of the total loan portfolio at JuneSeptember 30, 2016. Consumer loans increased $326.9$593.1 million, or 13.3%16.0% annualized, from December 31, 2016 and $666.0$750.1 million, or 14.4%15.6%, from JuneSeptember 30, 2016 as a result of the strategic initiative to diversify the composition of the loan portfolio.2016. Consumer mortgages grew $174.1$261.1 million or 15.3%15.2% annualized, from December 31, 2016, and $338.6$314.5 million, or 15.9%14.0%, from JuneSeptember 30, 2016 primarily due to continued recruiting of mortgage loan originators in strategic markets throughout the footprint as well as enhanced origination efforts, which also create additional cross-selling opportunities for other products. Credit card loans totaled $225.9$225.7 million at JuneSeptember 30, 2017, including $58.4$59.1 million of commercial credit card loans. The commercial credit card loans relate to Synovus' commercial customers who utilize corporate credit cards for various business activities. Other consumer loans increased $213.5$427.1 million, or 52.6%69.8% annualized, from December

31, 2016, and $431.5$552.1 million, or 71.9%79.6%, from JuneSeptember 30, 2016 due to two consumer-based lending partnerships. One lending partnership, which began near the end ofin the third quarter of 2015, is a program that provides merchants and contractors nationwide with the ability to offer term financing to their customers for major purchases and home improvement projects. The other lending partnership, which began in the second quarter of 2016, primarily provides qualified borrowers the ability to refinance student loan debt. As of JuneSeptember 30, 2017, these partnerships had combined balances of $699.5$915.2 million, or 2.9%3.7% of the total loan portfolio.
Consumer loans are subject to uniform lending policies and consist primarily of loans with strong borrower credit scores. Synovus makes consumer lending decisions based upon a number of key credit risk determinants including FICO scores as well as loan-to-value and debt-to-income ratios. Risk levels 1-6 (descending) are assigned to consumer loans based upon a risk score matrix. At least annually, the consumer loan portfolio data is sent to a consumer credit reporting agency for a refresh of customers' credit scores so that management can evaluate ongoing consistency or negative migration in the quality of the portfolio, which impacts the allowance for loan losses. The most recent credit score refresh was completed as of June 30, 2017. Revolving lines of credit are regularly reviewed for any material change in financial circumstances, and when appropriate, the line of credit may be suspended for further advances. FICO scores within the residential real estate portfolio have generally remained stable over the last several years.
At June 30, 2017, weighted-average FICO scores within the residential real estate portfolio were 761 for HELOCs and 770 for consumer mortgages. mortgages.Conservative debt-to-income ratios (average HELOC debt to income ratio of loans originated) were maintained in both the third quarter and second quarter of 2017 at 32.3% compared to 31.1% in the first quarter of 2017.. HELOC utilization rates (total amount outstanding as a percentage of total available lines) of 56.7%were 55.9% and 58.3% at JuneSeptember 30, 2017 and December 31, 2016, respectively, andrespectively. Additionally, we maintained loan-to-value ratios based upon prudent guidelines were maintained to ensure consistency with Synovus' overall risk philosophy. At JuneSeptember 30, 2017, 36% of home equity line balances were secured by a first lien, and 64% were secured by a second lien. Apart from credit card loans and unsecured loans, Synovus does not originate loans with LTV ratios greater than 100% at origination except for infrequent situations provided that certain underwriting requirements are met. Additionally, at origination, loan maturities are determined based on the borrower's ability to repay (cash flow or earning power 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.

Higher-risk consumer loans as defined by the FDIC are consumer loans (excluding consumer loans defined as nontraditional mortgage loans) where, as of the origination date or, if the loan has been refinanced, as of the refinance date, the probability of default within two years is greater than 20%, as determined using a defined historical stress period. These loans are not a part of Synovus' consumer lending strategy, and Synovus does not currently offer specific higher-risk consumer loans, alt-A, no documentation or stated income residential real estate loan products. Synovus estimates that, as of JuneSeptember 30, 2017, it had $100.7$87.0 million of higher-risk consumer loans (1.9%(1.6% of the consumer portfolio and 0.4% of the total loan portfolio) compared to $108.8$105.3 million as of JuneSeptember 30, 2016. Included in these amounts as of both JuneSeptember 30, 2017 and 2016 are approximately $11 million and $12 million, respectively, of accruing TDRs.

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 Deposits
            
(dollars in thousands) June 30, 2017 
%(1)
 March 31, 2017 
%(1)
 December 31, 2016 
%(1)
 June 30, 2016 
%(1)
September 30, 2017 
%(1)
 June 30, 2017 
%(1)
 December 31, 2016 
%(1)
 September 30, 2016 
%(1)
Non-interest bearing demand deposits $7,298,845
 29.2% 7,174,146
 28.8 7,280,033
 29.5 6,930,336
 29.4$7,305,508
 28.9% 7,298,845
 29.2 7,280,033
 29.5 $7,042,908
 29.3
Interest bearing demand deposits 4,837,053
 19.4
 4,784,329
 19.2 4,488,135
 18.2 4,233,310
 17.94,868,372
 19.3
 4,837,053
 19.4 4,488,135
 18.2 4,274,117
 17.8
Money market accounts, excluding brokered deposits 7,427,562
 29.7
 7,424,627
 29.8 7,359,067
 29.8 7,082,759
 30.07,528,036
 29.8
 7,427,562
 29.7 7,359,067
 29.8 7,227,030
 30.1
Savings deposits 805,019
 3.2
 909,660
 3.7 908,725
 3.7 746,225
 3.2803,185
 3.2
 805,019
 3.2 908,725
 3.7 797,961
 3.3
Time deposits, excluding brokered deposits 3,243,670
 13.0
 3,245,306
 13.0 3,244,373
 13.2 3,278,396
 13.93,250,929
 12.9
 3,243,670
 13.0 3,244,373
 13.2 3,278,536
 13.6
Brokered deposits 1,379,559
 5.5
 1,380,787
 5.5 1,380,932
 5.6 1,337,001
 5.61,530,889
 6.1
 1,379,559
 5.5 1,380,932
 5.6 1,409,739
 5.9
Total average deposits 24,991,708
 100.0% 24,918,855
 100.0 24,661,265
 100.0 23,608,027
 100.0$25,286,919
 100.0
 24,991,708
 100.0 24,661,265
 100.0 $24,030,291
 100.0
Average core deposits(2)
 23,612,149
 94.5
 23,538,068
 94.5 23,280,334
 94.4 22,271,027
 94.323,756,030
 93.9
 23,612,149
 94.5 23,280,334
 94.4 22,620,552
 94.1
Average core transaction deposits (2)
 $18,409,170
 73.7% 18,147,856
 72.8 17,776,147
 72.1 16,849,367
 71.4$18,603,161
 73.6
 18,409,170
 73.7 17,776,147
 72.1 $17,362,060
 72.3
                     
(1) Deposits balance in each category expressed as percentage of total deposits.
(2) See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
During the secondthird quarter of 2017, total average deposits increased $72.9$295.2 million, or 1.2%4.7% annualized, compared to the first quarter of 2017, and increased $1.38 billion, or 5.9%, compared to the second quarter of 2017, and increased $1.26 billion, or 5.2%, compared to the third quarter of 2016. Excluding the acquired WFB brokered time deposits, average deposits for the third quarter of 2017 increased $223.3 million, or 3.5% annualized, compared to the second quarter of 2017. Average core transaction deposits increased $261.3$194.0 million, or 5.8%4.2% annualized, compared to the prior quarter, and were up $1.56$1.24 billion, or 9.3%7.1%, compared to the secondthird quarter of 2016. The increase in average deposits for the three months ended JuneSeptember 30, 2017 compared to the three months ended JuneSeptember 30, 2016 was due to growth in average core transaction deposits, which represented 73.7%73.6% of average deposits for the secondthird quarter of 2017 compared to 71.4%72.3% a year ago. See “Non-GAAP Financial Measures” in this Report for the applicable reconciliation to the most comparable GAAP measure.
Average non-interest bearing demand deposits as a percentage of total average deposits were 28.9% for the three months ended September 30, 2017, compared to 29.2% for the three months ended June 30, 2017 compared to 28.8%and 29.3% for the three months ended March 31, 2017, and 29.4% for the three months ended JuneSeptember 30, 2016.
Average time deposits of $100,000 and greater for the three months ended September 30, 2017, June 30, 2017, March 31, 2017, and JuneSeptember 30, 2016 were $3.05 billion, $2.86 billion, $2.79 billion, and $2.90$2.81 billion, respectively, and included average brokered time deposits of $983.4 million, $815.5 million, $761.2 million, and $885.6$775.1 million, respectively. These larger deposits represented 11.4%12.1%, 11.2%11.4%, and 12.3%11.7% of total average deposits for the three months ended September 30, 2017, June 30, 2017, March 31, 2017, and JuneSeptember 30, 2016, respectively, and included brokered time deposits which represented 3.3%3.9%, 3.1%3.3%, and 3.8%3.2% of total average deposits for the three months ended September 30, 2017, June 30, 2017, March 31, 2017, and JuneSeptember 30, 2016, respectively. GivenBrokered time deposits acquired from WFB in the growth in core transactionCabela's Transaction increased average brokered time deposits Synovus continues to decrease its reliance on higher cost time deposits.by $71.9 million for the three months ended September 30, 2017.
During May 2016, Synovus launched a bank deposit sweep product, which resulted in the addition of approximately $293 million in deposits from existing customers of Synovus Securities.   These customers previously had their cash balances invested in mutual funds with an unaffiliated institution. The total aggregate balance of these accounts was approximately $338.5$326.2 million as of JuneSeptember 30, 2017. 

During the secondthird quarter of 2017, total average brokered deposits represented 5.5%6.1% of Synovus' total average deposits compared to 5.5% and 5.6%5.9% of total average deposits the previous quarter and the secondthird quarter a year ago, respectively.

Non-interest Income
Non-interest income for the sixnine and three months ended JuneSeptember 30, 2017 was $140.5$276.0 million and $68.7$135.4 million, respectively, up $9.5$76.8 million, or 7.3%38.5%, and up $815 thousand,$67.3 million, or 1.2%98.7%, compared to the sixnine and three months ended JuneSeptember 30, 2016, respectively. Adjusted non-interest income, which excludes the Cabela's Transaction Fee, net investment securities (losses) gains, net, and decrease in fair value of private equity investments, net was up $4.8$4.9 million, or 3.7%2.4%, and up $2.3 million, or 3.4%,flat, for the sixnine and three months ended JuneSeptember 30, 2017, compared to the same periods a year ago.ago, respectively. See "Non-GAAP Financial Measures" in this Report for the applicable reconciliation to the most comparable GAAP measure.
The following table shows the principal components of non-interest income.
Non-interest Income

Six Months Ended June 30, Three Months Ended June 30,Nine Months Ended September 30, Three Months Ended September 30,
(in thousands)2017 2016 % Change 2017 2016 % Change2017 2016 % Change 2017 2016 % Change
Service charges on deposit accounts$39,593
 39,950
 (0.9)% $19,820
 20,240
 (2.1)%$59,848
 60,772
 (1.5)% $20,255
 20,822
 (2.7)%
Fiduciary and asset management fees24,676
 22,854
 8.0
 12,524
 11,580
 8.2
37,290
 34,691
 7.5
 12,615
 11,837
 6.6
Brokerage revenue14,436
 13,821
 4.4
 7,210
 7,338
 (1.7)21,947
 20,019
 9.6
 7,511
 6,199
 21.2
Mortgage banking income11,548
 11,425
 1.1
 5,784
 5,941
 (2.6)17,151
 18,755
 (8.6) 5,603
 7,329
 (23.6)
Bankcard fees16,438
 16,718
 (1.7) 8,253
 8,346
 (1.1)24,339
 24,988
 (2.6) 7,901
 8,269
 (4.5)
Investment securities gains (losses), net7,667
 67
 nm
 (1) —
 nm
Cabela's Transaction Fee75,000
 —
 nm
 75,000
 —
 nm
Investment securities (losses) gains, net(289) 126
 nm
 (7,956) 59
 nm
Decrease in fair value of private equity investments, net(3,166) (278) nm
 (1,352) 113
 nm
(3,193) (527) nm
 (27) (249) nm
Other fee income11,033
 10,084
 9.4
 6,164
 5,280
 16.7
16,127
 15,255
 5.7
 5,094
 5,171
 (1.5)
Other non-interest income18,314
 16,392
 11.7
 10,299
 9,048
 13.8
27,754
 25,109
 10.5
 9,439
 8,718
 8.3
Total non-interest income$140,539
 131,033
 7.3 % $68,701
 67,886
 1.2 %$275,974
 199,188
 38.5 % $135,435
 68,155
 98.7 %
                      
Principal Components of Non-interest Income
Service charges on deposit accounts for the sixnine and three months ended JuneSeptember 30, 2017 were down $357$924 thousand, or 0.9%1.5%, and down $420$567 thousand, or 2.1%2.7%, respectively, compared to the sixnine and three months ended JuneSeptember 30, 2016. Service charges on deposit accounts consist of NSF fees, account analysis fees, and all other service charges. NSF fees were $17.9$27.4 million and $8.9$9.4 million for the sixnine and three months ended JuneSeptember 30, 2017, respectively, down $411$647 thousand, or 2.2%2.3%, and $249$236 thousand, or 2.7%2.4%, compared to the sixnine and three months ended JuneSeptember 30, 2016, respectively. The decline in NSF fees from prior year is primarily due to lower Regulation E opt-in rates on new accounts as well as lower incident levels given higher average deposit balances. Account analysis fees were $12.3$18.6 million and $6.2$6.3 million for the sixnine and three months ended JuneSeptember 30, 2017, respectively, up $260$382 thousand, or 2.2%2.1%, and down $35up $122 thousand, or 0.6%2.0%, compared to the sixnine and three months ended JuneSeptember 30, 2016, respectively. All other service charges on deposit accounts, which consist primarily of monthly fees on retail demand deposit and saving accounts, for the sixnine and three months ended JuneSeptember 30, 2017 were $9.4$13.9 million and $4.7$4.5 million, down $207$659 thousand, or 2.2%4.5%, and $136$452 thousand, or 2.8%9.2%, compared to the same periods in 2016. The decline in all other service charges is largely due to a one-time impact during 2017 from account level conversions required for Synovus Bank's transition to a single bank operating environment.
Fiduciary and asset management fees are derived from providing estate administration, employee benefit plan administration, personal trust, corporate trust, corporate bond, investment management, and financial planning services. Fiduciary and asset management fees increased $1.8$2.6 million, or 8.0%7.5%, and $944$778 thousand, or 8.2%6.6%, for the sixnine and three months ended JuneSeptember 30, 2017, respectively, compared to the sixnine and three months ended JuneSeptember 30, 2016. The year-over-year increase is driven by growth in total assets under management, which ended the quarter aquat $12.43rter at $13.0 billion, an increase of 10.3% from June14.8% from September 30, 2016, from higher equity markets as well as increased banker productivity, as Synovus continues to benefit from new talent additions.
Brokerage revenue, which consists primarily of brokerage commissions, was $14.4$21.9 million and $7.2$7.5 million for the sixnine and three months ended JuneSeptember 30, 2017, respectively, up $615 thousand,$1.9 million, or 4.4%9.6%, and down $128 thousand,up $1.3 million, or 1.7%21.2%, compared to the sixnine and three months ended JuneSeptember 30, 2016, respectively. The increase for the first half of 2017 compared to the first half of 2016 is largely driven by growth in brokerage assets under management, which ended the quarter at $2.12$2.25 billion, an increase of 19.4%22.3% from JuneSeptember 30, 2016, as well as increased banker productivity, as Synovus continues to benefit from new talent additions.


Mortgage banking income was $11.5$17.2 million and $5.8$5.6 million for the sixnine and three months ended JuneSeptember 30, 2017, respectively, compared to $11.4$18.8 million and $5.9$7.3 million for the same periods in 2016. During the secondthird quarter of 2017, mortgage production

excluding portfolio loan production increased 7.2%decreased 1.9% sequentially and declined 7.2%14.3% from the same time period in 2016, reflecting a decline in refinancing volume. Total mortgage production for the first halfnine months of 2017 was $635.9$978.7 million. Mortgage production excluding portfolio loan production for the nine months ended September 30, 2017 was $491.3 million, (which includes $310.0 million of portfolio loans), down 0.8%5.2% from the first halfsame time period of 2016.
Bankcard fees totaled $16.4$24.3 million and $8.3$7.9 million for the sixnine and three months ended JuneSeptember 30, 2017, respectively, compared to $16.7$25.0 million and $8.3 million for the same periods in 2016. Bankcard fees consist primarily of credit card interchange fees and debit card interchange fees. Debit card interchange fees were $8.6$12.9 million, up $105$109 thousand, or 1.2%0.9%, and $4.4$4.3 million, up $70$4 thousand, or 1.6%0.1%, for the sixnine and three months ended JuneSeptember 30, 2017, respectively, compared to the same periods in 2016. Credit card interchange fees were $11.1$16.6 million, down $108$254 thousand, or 1.0%1.5%, and $5.6$5.5 million, down $100$147 thousand, or 1.7%2.6%, for the sixnine and three months ended JuneSeptember 30, 2017, respectively, compared to the same periods in 2016.
On September 25, 2017, Synovus Bank completed the Cabela's Transaction and received the Cabela's Transaction Fee.
Investment securities (losses) gains, net, of $7.7were ($289) thousand and ($8.0) million, for the sixnine and three months ended JuneSeptember 30, 2017, respectively. During the third quarter of 2017, as part of its balance sheet restructuring actions, Synovus repositioned the available for sale securities portfolio and recorded a net loss of ($8.0) million. The first quarter of 2017 included a $3.4 million gain on the sale of an equity position and a $4.3 million gain from the repositioning of the investment securities portfolio during the first quarter of 2017.portfolio.
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 was higher by $949$871 thousand, or 9.4%, and $884 thousand, or 16.7%5.7%, for the six and threenine months ended JuneSeptember 30, 2017, respectively, compared to the same periodsperiod in 2016 driven by higher customer swap dealer fees and syndication arranger fees.
The main components of other non-interest income are income from BOLI policies, insurance commissions, gains from sales of GGL/SBA loans, card sponsorship fees, and other miscellaneous items. The increase of $1.9$2.6 million, or 11.7%10.5%, and $1.3 million,$721 thousand, or 13.8%8.3%, during the sixnine and three months ended JuneSeptember 30, 2017, respectively, compared to the same periods in 2016, was due primarily to growth in BOLI revenues and gains on sales of GGL/SBA loans, and insurance revenues.loans. BOLI revenues grew $1.5$2.2 million and $863$726 thousand during the sixnine and three months ended JuneSeptember 30, 2017, respectively, driven by additional investments in BOLI policies. Gains from the sale of GGL/SBA loans were up $1.2$1.1 million compared to 2016 on a year-to-date basis and lower by $112 thousand for the secondthird quarter compared to the second quarter of 2016. Insurance revenues grew $480 thousand, or 25.5%, and $168 thousand, or 18.8%, during the six and three months ended June 30, 2017 compared to the same periods inthird quarter of 2016.
Non-interest Expense
Non-interest expense for the sixnine and three months ended JuneSeptember 30, 2017 was $389.1$594.8 million and $191.7$205.6 million, respectively, compared to $376.8$562.7 million and $188.6$185.9 million for the sixnine and three months ended JuneSeptember 30, 2016, respectively. Adjusted non-interest expense for the sixnine and three months ended JuneSeptember 30, 2017, which excludes the third quarter of 2017 balance sheet restructuring actions of impairments on ORE and other properties held for sale, restructuring charges, net, loss on early extinguishment of debt, net, litigation contingency/settlement expense, merger-related expense, fair value adjustment to Visa derivative, and amortization of intangibles, and certain earnout liability adjustments, increased $20.5$30.7 million, or 5.7%5.6%, and $9.0$10.2 million, or 5.0%5.5%, compared to the same periods in 2016, respectively. Synovus has generatedcontinues to generate positive operating leverage through the first half of 2017, with the year-over-year expense growth primarily driven by strategic investments in talent and technology, higher third-party processing expense relating to third-party lending partnerships servicing fees, the addition of Global One, and expenses associated with Synovus Bank's transition to a single bank operating environment and single brand. Strategic investments in talent and technology accounted for approximately $10$15 million and $5 million of the increase for the sixnine and three months ended JuneSeptember 30, 2017, respectively, compared to the same periods in 2016, as Synovus continues to add key talent and invest in technology to enhance the customer experience. Third-party processing expense relating to the servicing fees of third-party lending partnerships increased by $2.2$3.4 million and $1.2 million for the sixnine and three months ended JuneSeptember 30, 2017, respectively, compared to the same periods in 2016, and Global One operating expenses accounted for $1.8$3.0 million and $568 thousand$1.2 million of the increase compared to the sixnine and three months ended JuneSeptember 30, 2016, respectively. Expenses associated with Synovus Bank's transition to a single bank operating environment and single brand resulted in higher expenses of $2.9$4.0 million and $1.9$1.1 million compared to the sixnine and three months ended JuneSeptember 30, 2016, respectively. See "Non-GAAP Financial Measures" in this Report for the applicable reconciliation to the most comparable GAAP measure.


The following table summarizes the components of non-interest expense for the sixnine and three months ended JuneSeptember 30, 2017 and 2016.
Non-interest Expense

                      
Six Months Ended June 30, Three Months Ended June 30,Nine Months Ended September 30, Three Months Ended September 30,
(in thousands)2017 2016 % Change 2017 2016 % Change2017 2016 % Change 2017 2016 % Change
Salaries and other personnel expense$212,404
 198,419
 7.0 % $105,213
 97,061
 8.4 %$322,079
 300,364
 7.2 % $109,675
 101,945
 7.6 %
Net occupancy and equipment expense59,264
 53,360
 11.1
 29,933
 26,783
 11.8
89,837
 81,480
 10.3
 30,573
 28,120
 8.7
Third-party processing expense26,223
 22,814
 14.9
 13,620
 11,698
 16.4
39,882
 34,033
 17.2
 13,659
 11,219
 21.7
FDIC insurance and other regulatory fees13,645
 13,344
 2.3
 6,875
 6,625
 3.8
20,723
 20,100
 3.1
 7,078
 6,756
 4.8
Professional fees12,907
 13,307
 (3.0) 7,551
 6,938
 8.8
20,048
 19,794
 1.3
 7,141
 6,486
 10.1
Advertising expense11,258
 9,761
 15.3
 5,346
 7,351
 (27.3)14,868
 15,358
 (3.2) 3,610
 5,597
 (35.5)
Foreclosed real estate expense, net3,582
 7,272
 (50.7) 1,448
 4,588
 (68.4)10,847
 9,998
 8.5
 7,265
 2,725
 166.6
Earnout liability adjustment1,707
 —
 nm
 1,707
 —
 nm
3,766
 —
 nm
 2,059
 —
 nm
Merger-related expense86
 —
 nm
 —
 —
 —
110
 550
 (80.0) 23
 550
 (95.8)
Loss on early extinguishment of debt, net—
 4,735
 nm
 —
 —
 —
—
 4,735
 nm
 —
 —
 nm
Fair value adjustment to Visa derivative—
 720
 nm
 —
 360
 nm
—
 1,079
 nm
 —
 360
 nm
Restructuring charges, net6,524
 6,981
 (6.5) 13
 5,841
 nm
7,043
 8,225
 (14.4) 519
 1,243
 (58.2)
Other operating expenses41,533
 46,131
 (10.0) 20,041
 21,366
 (6.2)65,577
 67,000
 (2.1) 24,044
 20,870
 15.2
Total non-interest expense$389,133
 376,844
 3.3 % $191,747
 188,611
 1.7 %$594,780
 562,716
 5.7 % $205,646
 185,871
 10.6 %
                      
Salaries and other personnel expenses increased $14.0$21.7 million, or 7.0%7.2%, and $8.2$7.7 million, or 8.4%7.6%, for the sixnine and three months ended JuneSeptember 30, 2017, respectively, compared to the same periods in 2016, primarily due to annual merit increases, talent additions, higher self-insurance expense, and Global One.
Net occupancy and equipment expense was up $5.9$8.4 million, or 11.1%10.3%, and $3.2$2.5 million, or 11.8%8.7%, for the sixnine and three months ended JuneSeptember 30, 2017, respectively, compared to the same periods in 2016 as costs associated with growth in technology investments offset efficiencies gained in occupancy and related expenses. Synovus' branch network consists of 248249 locations at JuneSeptember 30, 2017 compared to 253250 branches a year ago.    
Third-party processing expense includes all third-party core operating system and processing charges as well as third-party servicing charges. Third-party processing expense increased $3.4$5.8 million, or 14.9%17.2%, and $1.9$2.4 million, or 16.421.7%, for the sixnine and three months ended JuneSeptember 30, 2017, respectively, compared to the same periods in 2016, driven by an increase of $2.2$3.4 million and $1.2 million for the six nine and three months ended JuneSeptember 30, 2017, respectively, compared to the same periods in 2016, from servicing chargesfees associated with loan growth from Synovus' two consumer-based lending partnerships.
FDIC insurance and other regulatory fees increased by $301$623 thousand, or 2.3%3.1%, and $250$322 thousand, or 3.8%4.8%, for the sixnine and three months ended JuneSeptember 30, 2017, compared to the same periods in 2016. On March 15, 2016, the FDIC approved a final rule to increase the DIF to the statutorily required minimum level of 1.35%. 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% and required that the ratio reach that level by September 30, 2020. Further, the Dodd-Frank Act also made banks with $10 billion or more in total assets responsible for the increase from 1.15% to 1.35%. Under a rule adopted by the FDIC in 2011, regular assessment rates for all banks would decline when the reserve ratio reached 1.15%, which occurred during the second quarter of 2016. Banks with total assets of less than $10 billion have substantially lower assessment rates under the 2011 rule. The final rule imposed on banks with at least $10 billion in assets a surcharge of 4.5 cents per $100 of their assessment base, after making certain adjustments. The FDIC expects the reserve ratio will likely reach 1.35% after approximately two years of payments of the surcharges. The final rule became effective on July 1, 2016 with surcharge assessments beginning July 1, 2016. Synovus' FDIC insurance cost remained relatively flat to prior levels following the surcharge assessment since regular assessment rates declined at the same time the surcharge assessment became effective.
Professional fees for the sixnine and three months ended JuneSeptember 30, 2017 were down $400up $254 thousand, or 3.0%1.3%, and $655 thousand, or 10.1%, respectively, compared to the same period in 2016, from declines in legal expenses. For the three months ended June 30, 2017, professional fees were higher by $613 thousand, or 8.8%, compared to the same periodperiods in 2016, driven by increases in consulting expense primarily related to Synovus Bank's transition to a single bank operating environment.

Advertising expense for the six months ended June 30, 2017 was up $1.5 million, compared to the same period in 2016 due primarily to a timing related increase as Synovus incurred expenses during the first quarter of 2017 associated with brand and targeted advertising efforts, including an ad that ran across Synovus' footprint during the Superbowl.
Foreclosed real estate expense declined $3.7 million, or 50.7%, and $3.1 million or, 68.4%, for the sixnine and three months ended JuneSeptember 30, 2017 respectively, comparedincluded the third quarter of 2017 balance sheet restructuring actions with $7.1 million recorded for discounts to the same periods in 2016 due to lower disposition-related costs.fair value for completed or planned ORE accelerated dispositions. ORE balances declined $13.8$17.9 million to $19.5$10.6 million at JuneSeptember 30, 2017 compared to prior year.

During the second quarter ofnine and three months ended September 30, 2017, Synovus recorded contingent consideration expense of $1.7$3.8 million, and $2.1 million, respectively, resulting from an updateupdates to the estimated fair value of the Global One earnout liability.   
Merger-related expense consists of professional fees relating to the October 1, 2016 acquisition of Global One. See "Note 2- Acquisition"Acquisitions" in this Report for more information on the October 1, 2016 acquisition of Global One.
During January 2016, Synovus repurchased $124.7 million of its subordinated notes that matured on June 15, 2017 in conjunction with Synovus' cash tender offer that commenced on December 23, 2015 and expired on January 22, 2016. Results for the sixnine months ended JuneSeptember 30, 2016 included a $4.7 million pre-tax loss relating to this tender offer.
On September 25, 2017, Synovus issued a notice of redemption to redeem all of the $300.0 million aggregate principal amount of its outstanding 7.875% senior notes due 2019 on November 9, 2017 at a “make whole” premium, plus accrued but unpaid interest on the 2019 notes to the redemption date.  The results for the three months ending December 31, 2017 will include a pre-tax loss of approximately $24 million related to early extinguishment of these notes.
    ForRestructuring charges of $7.0 million were recorded during the sixnine months ended JuneSeptember 30, 2017 Synovus recordedconsisting primarily of severance charges of $6.5$6.4 million includingrecorded during the first quarter of 2017. Severance charges included $6.2 million for termination benefits incurred in conjunction with a voluntary early retirement program offered during the first quarter.quarter of 2017. This program was part of Synovus' ongoing efficiency initiatives. For the three months ended JuneSeptember 30, 2017, Synovus recorded restructuring charges of $519 thousand due to additional asset impairment charges of $515 thousand on properties previously identified for disposition. During the nine months ended September 30, 2016, Synovus recorded restructuring charges of $5.8$8.2 million with $4.8 million of those charges related to Synovus' corporate real estate optimization activities and $1.0$3.3 million associated with branch closures. Restructuring charges associated with branch closures during the first quarter of 2016 totaled $1.1 million.
Other operating expenses for the six and three months ended JuneSeptember 30, 2017 included balance sheet restructuring charges of $1.2 million for asset impairment charges related to accelerated disposition of other properties held for sale while other operating expenses for the three months ended September 30, 2016 were reduced by $1.7 million in gains on sales of properties held for sale. Additionally, the three months ended September 30, 2016 included a $2.4 million gain related to the purchase of an additional interest in an existing NPL at a discount that was subsequently paid in full. Other operating expenses for the nine months ended September 30, 2017 included a $2.4 million gain from the settlement of a contingent receivable during the second quarter of 2017 while the sixnine months ended JuneSeptember 30, 2016 included litigation settlement expense of $2.7$2.5 million recognized primarily during the first quarter of 2016.
The efficiency ratio improved to below 60% at 59.90% in59% during the secondthird quarter of 2017, down from 65.11% a year ago.2017. The adjusted efficiency ratio was 59.56%58.59% in the secondthird quarter of 2107 compared to 63.00%62.41% in the secondthird quarter of 2016. The calculation of the adjusted efficiency ratio was revised during the first quarter of this year.  ORE expense and other credit costs had been excluded since the financial crisis due to the abnormal level of expenditure.  Given the more normalized level of expense that Synovus is now experiencing, these costs will be included in the calculation hereafter (excluding the third quarter of 2017 balance sheet restructuring actions) and previous quarters have been restated as well. The change in the calculation resulted in a higher adjusted efficiency ratio. See "Non-GAAP Financial Measures" in this Report for the applicable reconciliation to the most comparable GAAP measure.
Income Tax Expense
Income tax expense was $75.6$130.3 million and $41.8$54.7 million for the sixnine and three months ended JuneSeptember 30, 2017, respectively, representing an effective tax ratesrate of 33.8%34.6% and 35.5% during35.8% for the respective periods compared to income tax expense of $64.8$102.1 million and $33.6$37.4 million for the sixnine and three months ended JuneSeptember 30, 2016, respectively, representing an effective tax ratesrate of 36.4% and 35.7% during the respectivefor both periods.     
The effective tax rate is impacted by discrete items that may occur in any given period but are not consistent from period-to-period such as share-based compensation, valuation allowance changes, and changes to unrecognized tax benefits. The decrease forin the first half ofeffective tax rate in 2017 as compared to the same period in 2016 wasis primarily duerelated to the adoption of ASU 2016-09, as further described below. The effective tax rate for 2017 also reflects a $2.6 million reduction in the new accounting standard update for share-based compensationdeferred tax asset valuation allowance relating to certain tax credits.
As disclosed in Note 1, Synovus adopted ASU 2016-09 effective January 1, 2017, which includes a requirement to record all tax effects associated with share-based compensation through the income statement.  These tax effects, which are determined upon the vesting of restricted share units and the exercise of stock options, are treated as discrete items in the period in which they occur.  For the sixnine and three months ended JuneSeptember 30, 2017, the impact from the adoption of the new accounting standard updateASU 2016-09 was an income tax benefit of $4.5$4.7 million and $378$211 thousand, respectively. Synovus currently estimates that the benefit from this accounting standard update for the remainder of 2017 will be less than $1.0 million per quarter.

CREDIT QUALITY, CAPITAL RESOURCES AND LIQUIDITY
Credit Quality
Synovus continuously monitors the quality of its loan portfolio by industry, property type, geography, as well as credit quality metrics and maintains an allowance for loan losses that management believes is sufficient to absorb probable losses inherent in its loan portfolio. Credit quality metrics have remained favorable during the first sixnine months of 2017. The decline in non-performing assets is driven by the activities described below.
During the three months ended September 30, 2017, Synovus completed certain balance sheet restructuring actions which included the transfer of $77.8 million in loans (consisting primarily of non-performing loans) to held-for-sale.  This action resulted in provision expense of $27.7 million and net charge-offs of $34.2 million due to the actual or planned sale of such loans in an accelerated timeline, which required discounts below fair value.  Additionally, the third quarter results also reflect ORE write-downs totaling $7.1 million consisting of discounts to fair value for completed or planned ORE accelerated dispositions.  
The table below includes selected credit quality metrics.
Credit Quality Metrics  
(dollars in thousands)June 30, 2017 December 31, 2016 June 30, 2016September 30, 2017 December 31, 2016 September 30, 2016
Non-performing loans $159,317
 153,378
 154,072
$97,838
 153,378
 148,155
Impaired loans held for sale(1)
127
 —
 —
30,197
 —
 2,473
Other real estate19,476
 22,308
 33,289
10,551
 22,308
 28,438
Non-performing assets $178,920
 175,686
 187,361
$138,586
 175,686
 179,066
Non-performing loans as a % of total loans0.65% 0.64
 0.67
0.40% 0.64
 0.64
Non-performing assets as a % of total loans, other loans held for sale, and ORE0.73
 0.74
 0.81
0.57
 0.74
 0.77
Loans 90 days past due and still accruing$4,550
 3,135
 5,964
$5,685
 3,135
 5,358
As a % of total loans0.02% 0.01
 0.03
0.02% 0.01
 0.02
Total past due loans and still accruing$66,788
 65,106
 55,716
$84,853
 65,106
 61,781
As a % of total loans0.27% 0.27
 0.24
0.35% 0.27
 0.27
Net charge-offs, quarter$15,679
 8,319
 6,133
$38,098
 8,319
 6,930
Net charge-offs/average loans, quarter0.26% 0.14
 0.11
0.62% 0.14
 0.12
Net charge-offs, year-to-date$22,597
 28,738
 13,490
$60,695
 28,738
 20,420
Net charge-offs/average loans, year-to-date0.19% 0.12
 0.12
0.33% 0.12
 0.12
Provision for loan losses, quarter$10,260
 6,259
 6,693
$39,686
 6,259
 5,671
Provision for loan losses, year-to-date18,934
 28,000
 16,070
58,620
 28,000
 21,741
Allowance for loan losses248,095
 251,758
 255,076
249,683
 251,758
 253,817
Allowance for loan losses as a % of total loans1.02% 1.06
 1.11
1.02% 1.06
 1.09
          
(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.
Non-performing Assets
Total NPAs were $178.9$138.6 million at JuneSeptember 30, 2017, a $3.2$37.1 million, or 1.8%21.1%, increasedecrease from $175.7 million at December 31, 2016 and a $8.4$40.5 million, or 4.5%22.6%, decrease from $187.4$179.1 million at JuneSeptember 30, 2016. The year-over-year decline in non-performing assets was driven by the continued resolution of problem assets including workoutsaccelerated dispositions and dispositions.transfers to held for sale in conjunction with the balance sheet restructuring actions described above. Total non-performing assets as a percentage of total loans, other loans held for sale, and other real estate were 0.73%0.57% at JuneSeptember 30, 2017 compared to 0.74% at December 31, 2016 and 0.81%0.77% at JuneSeptember 30, 2016.
Retail Trade Loan Portfolio
As of JuneSeptember 30, 2017, loans in the retail trade industry consisted of $870.8$844.1 million of C&I loans and $864.9$840.4 million of CRE (investment properties) loans. These portfolios are well-diversified geographically. Based on an analysis of these portfolios as of JuneSeptember 30, 2017, we believe that the majority of these loans do not have exposure to the retail sectors which are most adversely impacted by competition from online retail and big-box retail store closures. As of JuneSeptember 30, 2017, these portfolios had non-performing loans of $6.0$4.3 million, 0.03%0.01% of loans past due 90 days or more, and 0.16%0.13% of loans past due 30 days or more as a percentage of total retail trade loans outstanding.

Troubled Debt Restructurings
Accruing TDRs were $167.4$166.9 million at JuneSeptember 30, 2017, compared to $195.8 million at December 31, 2016 and $205.2$201.9 million at JuneSeptember 30, 2016. Accruing TDRs declined $28.4$28.9 million, or 14.5%14.7%, from December 31, 2016 and $37.8$35.0 million, or 18.4%17.3%, from a year ago primarily due to lowercontinued decline in TDR inflows, fewer TDRs havingneeding to retain the TDR designation upon subsequent renewal, refinance, or modification, and pay-offs.

At JuneSeptember 30, 2017, the allowance for loan losses allocated to these accruing TDRs was $8.5 million compared to $9.8 million at December 31, 2016 and $12.7$11.8 million at JuneSeptember 30, 2016. Accruing TDRs are considered performing because they are performing in accordance with the restructured terms. At JuneSeptember 30, 2017 and December 31, 2016, 98%94% and 99%, respectively, of accruing TDRs were current. In addition, subsequent defaults on accruing TDRs (defaults defined as the earlier of the TDR being placed on non-accrual status or reaching 90 days past due with respect to principal and/or interest payments within twelve months of the TDR designation) have remained low,negligible, and consisted of threefour defaults with a recorded investment of $292$498 thousand for the sixnine months ended JuneSeptember 30, 2017 compared to one defaulttwo defaults with a recorded investment of $92$181 thousand for the sixnine months ended JuneSeptember 30, 2016.
Accruing TDRs by Risk GradeJune 30, 2017 December 31, 2016 June 30, 2016September 30, 2017 December 31, 2016 September 30, 2016
(dollars in thousands)Amount % Amount % Amount %Amount % Amount % Amount %
Pass$69,943
 41.8% 81,615
 41.7 64,314
 31.3$65,018
 39.0% 81,615
 41.7 66,887
 33.1
Special Mention20,550
 12.3
 29,250
 14.9 33,744
 16.517,759
 10.6
 29,250
 14.9 37,259
 18.6
Substandard accruing76,902
 45.9
 84,911
 43.4 107,107
 52.284,141
 50.4
 84,911
 43.4 97,750
 48.4
Total accruing TDRs$167,395
 100.0% 195,776
 100.0 205,165
 100.0$166,918
 100.0% 195,776
 100.0 201,896
 100.0
                

Accruing TDRs Aging by Portfolio Class
June 30, 2017September 30, 2017
(in thousands)Current 30-89 Days Past Due 90+ Days Past Due Total Current 30-89 Days Past Due 90+ Days Past Due Total 
Investment properties$27,991
 —
 —
 27,991
 $27,715
 —
 —
 27,715
 
1-4 family properties15,483
 397
 —
 15,880
 15,695
 46
 —
 15,741
 
Land and development22,908
 —
 —
 22,908
 15,344
 229
 —
 15,573
 
Total commercial real estate66,382
 397
 —
 66,779
 58,754
 275
 —
 59,029
 
Commercial, financial and agricultural36,248
 1,517
 —
 37,765
 36,094
 7,166
 58
 43,318
 
Owner-occupied34,480
 —
 —
 34,480
 34,085
 1,683
 —
 35,768
 
Total commercial and industrial70,728
 1,517
 —
 72,245
 70,179
 8,849
 58
 79,086
 
Home equity lines6,571
 344
 —
 6,915
 5,988
 7
 —
 5,995
 
Consumer mortgages17,193
 538
 —
 17,731
 17,038
 1,298
 —
 18,336
 
Credit cards—
 —
 —
 —
 —
 —
 —
 —
 
Other consumer loans3,669
 56
 —
 3,725
 4,469
 3
 —
 4,472
 
Total consumer27,433
 938
 —
 28,371
 27,495
 1,308
 —
 28,803
 
Total accruing TDRs$164,543
 2,852
 —
 167,395
 $156,428
 10,432
 58
 166,918
 
                
December 31, 2016December 31, 2016
(in thousands)Current 30-89 Days Past Due 90+ Days Past Due Total Current 30-89 Days Past Due 90+ Days Past Due Total 
Investment properties$30,182
 133
 —
 30,315
 $30,182
 133
 —
 30,315
 
1-4 family properties22,694
 —
 —
 22,694
 22,694
 —
 —
 22,694
 
Land and development26,015
 10
 —
 26,025
 26,015
 10
 —
 26,025
 
Total commercial real estate78,891
 143
 —
 79,034
 78,891
 143
 —
 79,034
 
Commercial, financial and agricultural31,443
 798
 —
 32,241
 31,443
 798
 —
 32,241
 
Owner-occupied52,333
 —
 —
 52,333
 52,333
 —
 —
 52,333
 
Total commercial and industrial83,776
 798
 —
 84,574
 83,776
 798
 —
 84,574
 
Home equity lines7,526
 412
 —
 7,938
 7,526
 412
 —
 7,938
 
Consumer mortgages18,518
 572
 —
 19,090
 18,518
 572
 —
 19,090
 
Credit cards—
 —
 —
 —
 —
 —
 —
 —
 
Other consumer loans5,013
 127
 —
 5,140
 5,013
 127
 —
 5,140
 
Total consumer31,057
 1,111
 —
 32,168
 31,057
 1,111
 —
 32,168
 
Total accruing TDRs$193,724
 2,052
 —
 195,776
 $193,724
 2,052
 —
 195,776
 
                
Non-accruing TDRs were $10.1$9.0 million at JuneSeptember 30, 2017 compared to $11.4 million at December 31, 2016. Non-accruing TDRs generally may be returned to accrual status if there has been a period of performance, consisting usually of at least a six month sustained period of repayment performance in accordance with the terms of the agreement.
Potential Problem Loans
Potential problem loans are defined by management as being certain performing loans with a well-defined weakness where there is known information about possible credit problems of borrowers which causes management to have concerns about the ability of such borrowers to comply with the present repayment terms of such loans. Potential problem commercial loans consist of commercial Substandard accruing loans but exclude loans 90 days past due and still accruing interest and accruing TDRs classified as Substandard since these loans are disclosed separately. Potential problem commercial loans were $149.2$125.4 million at JuneSeptember 30, 2017 compared to $162.0 million and $144.1$172.5 million at December 31, 2016 and JuneSeptember 30, 2016, respectively. Synovus cannot predict whether these potential problem loans ultimately will become non-performing loans or result in losses.
Net Charge-offs
Net charge-offs for the sixnine months ended JuneSeptember 30, 2017 were $22.6$60.7 million, or 0.19%0.33% as a percentage of average loans annualized, compared to $13.5$20.4 million, or 0.12%, as a percentage of average loans annualized for the sixnine months ended JuneSeptember 30, 2016. The $9.1$40.3 million or 67.5% increase from 2016 is primarily due to $34.2 million in net charge-offs recorded during the resultthird quarter of charge-offs on a legacy credit that was fully reserved as well as a reduction2017 in recoveries.conjunction with the aforementioned transfers to held for sale completed during the quarter.

Provision for Loan Losses and Allowance for Loan Losses
For the sixnine months ended JuneSeptember 30, 2017, the provision for loan losses was $18.9$58.6 million, an increase of $2.9$36.9 million, or 17.8%169.6%, compared to the sixnine months ended JuneSeptember 30, 2016primarily due to a decline$27.7 million incurred in recoveries.connection with the aforementioned transfers to held for sale completed during the third quarter.
The allowance for loan losses at JuneSeptember 30, 2017 was $248.1$249.7 million, or 1.02% of total loans, compared to $251.8 million, or 1.06% of total loans, at December 31, 2016 and $255.1$253.8 million, or 1.11%1.09% of total loans, at JuneSeptember 30, 2016.  
Capital Resources
Synovus and Synovus Bank are required to comply with capital adequacy standards established by their primary federal regulator, the Federal Reserve. Synovus has always placed great emphasis on maintaining a solid capital base and continues to satisfy applicable regulatory capital requirements.
At JuneSeptember 30, 2017, 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, 2017 December 31, 2016September 30, 2017 December 31, 2016
Tier 1 capital   
Common equity Tier 1 capital (transitional)   
Synovus Financial Corp.$2,734,983
 2,685,880$2,749,304
 2,654,287
Synovus Bank3,098,126
 3,187,5833,164,640
 3,187,583
Common equity Tier 1 capital (transitional)   
Tier 1 capital   
Synovus Financial Corp.2,829,340
 2,654,2872,849,580
 2,685,880
Synovus Bank3,098,126
 3,187,5833,164,640
 3,187,583
Total risk-based capital      
Synovus Financial Corp.3,340,155
 3,201,268
3,362,127
 3,201,268
Synovus Bank3,348,941
 3,441,563
3,417,187
 3,441,563
Tier 1 capital ratio   
Common equity Tier 1 capital ratio (transitional)   
Synovus Financial Corp.10.02% 10.07
10.06% 9.96
Synovus Bank11.37
 11.97
11.59
 11.97
Common equity Tier 1 ratio (transitional)   
Tier 1 capital ratio   
Synovus Financial Corp.10.37
 9.96
10.43
 10.07
Synovus Bank11.37
 11.97
11.59
 11.97
Total risk-based capital to risk-weighted assets ratio      
Synovus Financial Corp.12.24
 12.01
12.30
 12.01
Synovus Bank12.29
 12.93
12.52
 12.93
Leverage ratio      
Synovus Financial Corp.9.30
 8.99
9.34
 8.99
Synovus Bank10.20
 10.68
10.40
 10.68
Tangible common equity to tangible assets ratio (1)
      
Synovus Financial Corp.9.15
 9.09
8.88
 9.09
      
(1) See " Non-GAAP Financial Measures" in this Report for the applicable reconciliation to the most comparable GAAP measure.
The Basel III capital rules became effective January 1, 2015, for Synovus and Synovus Bank, subject to a transition period for several aspects, including the capital conservation buffer and certain regulatory capital adjustments and deductions, as described below. Under the Basel III capital rules, the minimum capital requirements for Synovus and Synovus Bank include a common equity Tier 1 (CET1) ratio of 4.5%; Tier 1 capital ratio of 6%; total capital ratio of 8%; and leverage ratio of 4%. When fully phased-in on January 1, 2019, the Basel III capital rules include a capital conservation buffer of 2.5% that is added on top of each of the minimum risk-based capital ratios. The implementation of the capital conservation buffer began on January 1, 2016 at the 0.625% level and will be phased-in over a three-year period (increasing by that amount on each subsequent January 1, until it reaches 2.5% on January 1, 2019). As a financial holding company, Synovus and its subsidiary bank, Synovus Bank, are required to maintain capital levels required for a well-capitalized institution as defined by federal banking regulations. Under the Basel III capital rules, Synovus and Synovus Bank are well-capitalized if each has a CET1 ratio of 6.5% or greater, a Tier 1 risk-based capital ratio of 8% or greater, a total risk-based capital ratio of 10% or greater, a leverage ratio of 5% or greater, and are not subject to any written agreement, order, capital directive, or prompt corrective action directive from a federal and/or state banking regulatory

agency to meet and maintain a specific capital level for any capital measure.
During the sixnine months ended JuneSeptember 30, 2017, Synovus repurchased $45.3$135.9 million in common stock under the current share repurchase program which was authorized during the fourth quarter of 2016 by Synovus' Board of Directors. The current share repurchase program authorized share repurchases of up to $200 million of the Company's common stock to be executed during 2017. As of JuneSeptember 30, 2017 and August 4,November 2, 2017, the remaining authorization under this program was $154.7$64.1 million and $141.3$56.6 million, respectively.
As of JuneSeptember 30, 2017, total disallowed deferred tax assets were $142.0$112.7 million or 0.52%0.41% of risk-weighted assets compared to $218.3 million or 0.82% of risk-weighted assets at December 31, 2016. Disallowed deferred tax assets for CET1 were $113.6$90.2 million at JuneSeptember 30, 2017 compared to $131.0 million at December 31, 2016, due to a three-year phase-in of the total disallowed deferred tax asset for the CET1 capital measure. Basel III revised the deferred tax asset limitation criteria effective January 1, 2015 and now includes the component of deferred tax assets arising from temporary timing differences in regulatory capital up to certain levels of CET1. Thus, the disallowed portion of deferred tax assets is comprised of net operating loss carryforwards and tax credit carryforwards. Synovus' deferred tax asset is projected to continue to decline, thus creating additional regulatory capital in future periods. See "Part II - Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations - Income Taxes" in Synovus' 2016 Form 10-K for more information on Synovus' net deferred tax asset.

Synovus' CET1 ratio was 10.02%10.06% at JuneSeptember 30, 2017 under Basel III transitional provisions and the estimated fully phased-in CET1 ratio, as of JuneSeptember 30, 2017, was 9.82%9.88%, both of which are well in excess of regulatory requirements. See "Non-GAAP Financial Measures" in this Report for the applicable reconciliation to the most comparable GAAP measure.
Management currently believes, based on internal capital analysis and earnings projections, that Synovus' capital position is adequate to meet current and future regulatory minimum capital requirements. Synovus' 2017 DFAST results show that capital ratios remain above regulatory minimums throughout the forecast period in the severely adverse scenario. Synovus expects to announce its 2018 capital plan in January of 2018.
Dividends
Synovus has historically paid a quarterly cash dividend to the holders of its common stock. Management and the Board of Directors closely monitor current and projected capital levels, liquidity (including dividends from subsidiaries), financial markets and other economic trends, as well as regulatory requirements regarding the payment of dividends. During the first quarter of 2017, Synovus increased the quarterly common stock dividend by 25% to $0.15 per share effective with the quarterly dividend declared during the first quarter of 2017.
Synovus' ability to pay dividends on its capital stock, consisting of 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 the first quarter of 2017, Synovus Bank paid upstream cash dividends of $100.0 million to Synovus and during the second quarter ofnine months ended September 30, 2017, Synovus Bank made upstream cash distributions to Synovus totaling $200.0$350.0 million including cash dividends of $65.2$215.2 million. Additionally, during the second quarter ofnine months ended September 30, 2017, Synovus Securities made upstream cash distributions to Synovus of $10.0 million. For the year ended December 31, 2016, Synovus Bank paid upstream cash dividends to Synovus totaling $325.0 million with $180.0$260.0 million paid during the first sixnine months of 2016.
    Synovus declared dividends of $0.30$0.45 and $0.24$0.36 per common share for the sixnine months ended JuneSeptember 30, 2017 and 2016, respectively, and paid dividends of $0.15 and $0.24 during the six months ended June 30, 2017 and 2016.respectively. In addition to dividends paid on its common stock, Synovus paid dividends of $5.1$7.7 million on its Series C Preferred Stock during both the sixnine months ended JuneSeptember 30, 2017 and 2016.
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. On September 25, 2017, Synovus Bank completed the Cabela's Transaction and thereby retained WFB’s $1.10 billion brokered time deposit portfolio with a weighted average remaining maturity of approximately 2.53 years and a weighted average rate of 1.83 percent.
Synovus Bank has the capacity to access funding through its membership in the FHLB System. At JuneSeptember 30, 2017, based on currently pledged collateral, Synovus Bank had access to incremental funding of $480$667 million, subject to FHLB credit policies, through utilization of FHLB advances.
In addition to bank level liquidity management, Synovus must manage liquidity at the parent company level for various operating needs including the servicing of debt, the payment of dividends on our common stock and preferred stock, share repurchases, payment of general corporate expenses and potential capital infusions into subsidiaries. The primary source of liquidity for Synovus consists of dividends from Synovus Bank, which is governed by certain rules and regulations of the GA DBF and the Federal Reserve Bank. During the first quarter of 2017, Synovus Bank paid upstream cash dividends of $100.0 million to Synovus

and during the second quarter ofnine months ended September 30, 2017, Synovus Bank made upstream cash distributions to Synovus totaling $200.0$350.0 million including cash dividends of $65.2$215.2 million. Additionally, during the second quarter ofnine months ended September 30, 2017, Synovus Securities made upstream cash distributions to Synovus of $10.0 million. For the year ended December 31, 2016, Synovus Bank paid upstream cash dividends to Synovus totaling $325.0 million with $180.0$260.0 million paid during the first sixnine months of 2016.
Synovus' ability to receive dividends from Synovus Bank in future periods will depend on a number of factors, including, without limitation, Synovus Bank's future profits, asset quality, liquidity and overall condition. In addition, GA DBF rules and related statutes contain limitations on payments of dividends by Synovus Bank without the approval of the GA DBF. During the second quarter, Synovus' parent companySynovus paid off the remaining balance of $278.6 million of its subordinated notes at their maturity date of June 15, 2017. On September 25, 2017, Synovus issued a notice of redemption to redeem all of the $300.0 million aggregate principal amount of its outstanding 7.875% senior notes due 2019 on November 9, 2017 at a “make whole” premium, plus accrued but unpaid interest on the 2019 notes to the redemption date.  The results for the three months ending December 31, 2017 will include a pre-tax loss of approximately $24 million related to early extinguishment of these notes. On November 1, 2017, Synovus completed a public offering of $300.0 million of 3.125% senior notes due 2022. Proceeds from this offering will be used, in part, to fund the redemption of the 2019 notes. 
Synovus presently believes that the sources of liquidity discussed above, including existing liquid funds on hand, are sufficient to meet its anticipated funding needs. However, if economic conditions were to significantly deteriorate, regulatory capital requirements for Synovus or Synovus Bank increase as the result of regulatory directives or otherwise, or Synovus believes it is prudent to enhance current liquidity levels, then Synovus may seek additional liquidity from external sources. See "Part I – Item 1A. Risk Factors - Changes in the cost and availability of funding due to changes in the deposit market and credit market may adversely affect our capital resources, liquidity and financial results." of Synovus' 2016 Form 10-K.
Earning Assets and Sources of Funds
Average total assets for the sixnine months ended JuneSeptember 30, 2017 increased $1.45$1.35 billion, or 5.0%4.6%, to $30.54$30.58 billion as compared to $29.09$29.24 billion for the first sixnine months of 2016. Average earning assets increased $1.53$1.43 billion, or 5.7%5.2%, in the first sixnine months of 2017 compared to the same period in 2016 and represented 93.7%93.8% of average total assets at JuneSeptember 30, 2017, as compared to 93.1%93.2% at JuneSeptember 30, 2016. The increase in average earning assets resulted from a $1.44$1.41 billion increase in average loans, net, and a $310.1$284.6 million increase in average taxable investment securities. These increases were partially offset by a $259.1$309.4 million decrease in average interest bearing funds held at the Federal Reserve Bank. Average interest bearing liabilities increased $1.07 billion,$981.4 million, or 5.6%5.1%, to $20.13$20.14 billion for the first sixnine months of 2017 compared to the same period in 2016. The increase in average interest bearing liabilities was driven by a $594.8$594.7 million increase in average interest bearing demand deposits and a $545.3$434.1 million increase in average money market deposit accounts. Average non-interest bearing demand deposits increased $365.6$331.1 million, or 5.3%4.8%, to $7.24$7.26 billion for the first sixnine months of 2017 compared to the same period in 2016.
Net interest income for the sixnine months ended JuneSeptember 30, 2017 was $491.0$753.6 million, an increase of $51.4$87.9 million, or 11.7%13.2%, compared to $439.6$665.7 million for the sixnine months ended JuneSeptember 30, 2016.

The net interest margin was 3.46%3.52% for the sixnine months ended JuneSeptember 30, 2017, an increase of 1925 basis points from 3.27% for the sixnine months ended JuneSeptember 30, 2016. The yield on earning assets was 3.93%3.99%, up 2027 basis points compared to the first sixnine months of 2016 and the effective cost of funds increased 12 basis pointpoints to 0.47%. The yield on loans was 4.31%4.37%, an increase of 1623 basis points from the sixnine months ended JuneSeptember 30, 2016 and the yield on investment securities was 2.09%2.10%, an increase of 1822 basis points from the sixnine months ended JuneSeptember 30, 2016. Earning asset yields also benefited from a reduction of the average balance of lower yielding funds held at the Federal Reserve.
On a sequential quarter basis, net interest income increased by $11.2$11.5 million and the net interest margin increased by 912 basis points.points to 3.63%. The increase in net interest income was driven by a $236.9$75.5 million increase in average earning assets with a $319.6$149.7 million increase in average loans, net. This increase in loans was partially offset by a $80.6$58.3 million decrease in lower yielding funds held at the Federal Reserve.average taxable investment securities. The increase in net interest income for the quarter was also driven by margin expansion. Additionally, the rate increases in December, March, and June favorably impacted net interest income and the net interest margin for the six months ended June 30, 2017 compared to the six months ended June 30, 2016 and the three months ended June 30, 2017 compared to the three months ended March 31, 2017 and the three months ended June 30, 2016. The yield on earning assets was 3.99%4.11%, up 2612 basis points from the second quarter of 2016.2017. This increase was driven by a 13 basis point increase in loan yields. The effective cost of funds was 0.48% for the secondthird quarter 2017, up 2 basis pointsunchanged from the second quarter of 2016.2017.

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 Yields2017 20162017 2016
(dollars in thousands) (yields and rates annualized)Second Quarter First Quarter Fourth Quarter Third Quarter Second Quarter Third Quarter Second Quarter First Quarter Fourth Quarter Third Quarter
Interest Earning Assets:                   
Taxable investment securities (1)
$3,844,688
 3,841,556
 3,643,510
 3,544,933
 3,529,030
 $3,786,436
 3,844,688
 3,841,556
 3,643,510
 3,544,933
Yield2.11% 2.06% 1.92
 1.83
 1.89
 2.11% 2.11% 2.06% 1.92
 1.83
Tax-exempt investment securities(1)(3)
$340
 2,730
 2,824
 2,943
 3,491
 $259
 340
 2,730
 2,824
 2,943
Yield (taxable equivalent) (3)
6.87% 5.81
 5.82
 5.96
 6.08
 7.86% 6.87
 5.81
 5.82
 5.96
Trading account assets$3,667
 6,443
 6,799
 5,493
 3,803
 $7,823
 3,667
 6,443
 6,799
 5,493
Yield2.28% 1.72
 2.63
 0.93
 1.27
 2.09% 2.28
 1.72
 2.63
 0.93
Commercial loans(2)(3)
$19,137,733
 19,043,384
 18,812,659
 18,419,484
 18,433,638
 $19,059,936
 19,137,733
 19,043,384
 18,812,659
 18,419,484
Yield4.27% 4.16
 4.05
 4.03
 4.04
 4.41% 4.27
 4.16
 4.05
 4.03
Consumer loans(2)
$5,215,258
 4,992,683
 4,911,149
 4,720,082
 4,497,147
 $5,440,765
 5,215,258
 4,992,683
 4,911,149
 4,720,082
Yield4.49% 4.40
 4.27
 4.30
 4.32
 4.55% 4.49
 4.40
 4.27
 4.30
Allowance for loan losses$(251,219) (253,927) (253,713) (255,675) (251,101) $(249,248) (251,219) (253,927) (253,713) (255,675)
Loans, net (2)
$24,101,772
 23,782,140
 23,470,095
 22,883,891
 22,679,684
 $24,251,453
 24,101,772
 23,782,140
 23,470,095
 22,883,891
Yield4.36% 4.25
 4.14
 4.14
 4.15
 4.49% 4.36
 4.25
 4.14
 4.14
Mortgage loans held for sale$52,224
 46,554
 77,652
 87,524
 72,477
 $52,177
 52,224
 46,554
 77,652
 87,524
Yield3.87% 4.01
 3.51
 3.32
 3.59
 3.88% 3.87
 4.01
 3.51
 3.32
Federal funds sold, due from Federal Reserve Bank, and other short-term investments$561,503
 654,322
 982,355
 998,565
 907,614
 $543,556
 561,503
 654,322
 982,355
 998,565
Yield1.00% 0.77
 0.49
 0.48
 0.47
 1.23% 1.00
 0.77
 0.49
 0.48
Federal Home Loan Bank and Federal Reserve Bank Stock(4)
$177,323
 170,844
 121,079
 70,570
 77,571
 $175,263
 177,323
 170,844
 121,079
 70,570
Yield2.99% 3.42
 3.75
 4.99
 5.15
 3.50% 2.99% 3.42
 3.75
 4.99
Total interest earning assets$28,741,517
 28,504,589
 28,304,314
 27,593,919
 27,273,670
 $28,816,967
 28,741,517
 28,504,589
 28,304,314
 27,593,919
Yield3.99% 3.88
 3.73
 3.71
 3.73
 4.11% 3.99
 3.88
 3.73
 3.71
Interest Bearing Liabilities:                   
Interest bearing demand deposits$4,837,053
 4,784,329
 4,488,135
 4,274,117
 4,233,310
 $4,868,372
 4,837,053
 4,784,329
 4,488,135
 4,274,117
Rate0.23% 0.19
 0.16
 0.16
 0.18
 0.27% 0.23
 0.19
 0.16
 0.16
Money Market accounts, excluding brokered deposits$7,427,562
 $7,424,627
 7,359,067
 7,227,030
 7,082,759
 $7,528,036
 7,427,562
 $7,424,627
 7,359,067
 7,227,030
Rate0.32% 0.31
 0.29
 0.29
 0.31
 0.34% 0.32
 0.31
 0.29
 0.29
Savings deposits$805,019
 909,660
 908,725
 797,961
 746,225
 $803,184
 805,019
 909,660
 908,725
 797,961
Rate0.04% 0.11
 0.12
 0.07
 0.06
 0.03% 0.04
 0.11
 0.12
 0.07
Time deposits under $100,000$1,202,746
 1,215,593
 1,229,809
 1,248,294
 1,262,280
 $1,183,582
 1,202,746
 1,215,593
 1,229,809
 1,248,294
Rate0.67% 0.64
 0.64
 0.64
 0.64
 0.68% 0.67
 0.64
 0.64
 0.64
Time deposits over $100,000$2,040,924
 2,029,713
 2,014,564
 2,030,242
 2,016,116
 $2,067,347
 2,040,924
 2,029,713
 2,014,564
 2,030,242
Rate0.94% 0.92
 0.90
 0.88
 0.89
 0.97% 0.94% 0.92
 0.90
 0.88
Non-maturing brokered deposits$564,043
 619,627
 638,779
 634,596
 451,398
 $547,466
 564,043
 619,627
 638,779
 634,596
Rate0.54% 0.41
 0.31
 0.29
 0.39
 0.73% 0.54
 0.41
 0.31
 0.29
Brokered time deposits$815,515
 761,159
 742,153
 775,143
 885,603
 $983,423
 815,515
 761,159
 742,153
 775,143
Rate0.94% 0.92
 0.90
 0.88
 0.85
 1.16% 0.94
 0.92
 0.90
 0.88
Total interest bearing deposits$17,692,862
 17,744,708
 17,381,232
 16,987,383
 16,677,691
 $17,981,410
 17,692,862
 17,744,708
 17,381,232
 16,987,383
Rate0.41% 0.39
 0.37
 0.37
 0.39
 0.46% 0.41
 0.39
 0.37
 0.37
Federal funds purchased and securities sold under repurchase agreements$183,400
 176,854
 219,429
 247,378
 221,276
 $191,585
 183,400
 176,854
 219,429
 247,378
Rate0.10% 0.09
 0.08
 0.09
 0.09
 0.08% 0.10
 0.09
 0.08
 0.09
Long-term debt$2,270,452
 2,184,072
 2,190,716
 2,114,193
 2,279,043
 $1,985,175
 2,270,452
 2,184,072
 2,190,716
 2,114,193
Rate2.83% 2.83
 2.65
 2.71
 2.55
 2.81% 2.83
 2.83
 2.65
 2.71
Total interest bearing liabilities$20,146,714
 20,105,634
 19,791,377
 19,348,954
 19,178,010
 $20,158,170
 20,146,714
 20,105,634
 19,791,377
 19,348,954

Rate0.68% 0.65
 0.62
 0.63
 0.65% 0.69% 0.68
 0.65
 0.62
 0.63
Non-interest bearing demand deposits$7,298,845
 7,174,146
 7,280,033
 $7,042,908
 6,930,336
 $7,305,508
 7,298,845
 7,174,146
 7,280,033
 $7,042,908
Effective cost of funds0.48% 0.46
 0.44
 0.44
 0.46% 0.48% 0.48
 0.46
 0.44
 0.44
Net interest margin3.51% 3.42
 3.29
 3.27
 3.27% 3.63% 3.51
 3.42
 3.29
 3.27
Taxable equivalent adjustment (3)
$298
 309
 322
 $330
 329
 $283
 298
 309
 322
 $330
                   
(1) Excludes net unrealized gains (losses).
(2) Average loans are shown net of deferred fees and costs. Non-performing loans are included.
(3) Reflects taxable-equivalent adjustments, using the statutory federal income tax rate of 35%, 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.

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 sixnine months ended JuneSeptember 30, 2017 and 2016, 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, 2017 Compared to 2016Nine Months Ended September 30, 2017 Compared to 2016
Average Balances Interest Annualized Yield/Rate Change due to Increase (Decrease)Average Balances Interest Annualized Yield/Rate Change due to Increase (Decrease)
(dollars in thousands)2017 2016 2017 2016 2017 2016 Volume Rate 2017 2016 2017 2016 2017 2016 Volume Rate 
Assets                                  
Interest earning assets:                                  
Taxable investment securities$3,843,131
 3,533,080
 $40,069
 33,579
 2.09% 1.90
 $2,921
 3,569
 $6,490
$3,824,025
 3,537,060
 $60,079
 49,820
 2.09% 1.88
 $4,035
 6,224
 $10,259
Tax-exempt investment securities(2)
1,528
 3,791
 45
 118
 5.95
 6.23
 (70) (3) (73)1,101
 3,506
 51
 162
 6.13
 6.16
 (111) —
 (111)
Total investment securities3,844,659
 3,536,871
 40,114
 33,697
 2.09
 1.91
 2,851
 3,566
 6,417
3,825,126
 3,540,566
 60,130
 49,982
 2.10
 1.88
 3,924
 6,224
 10,148
Trading account assets5,047
 4,510
 49
 34
 1.93
 1.49
 4
 11
 15
5,983
 4,840
 90
 46
 1.99
 1.28
 11
 33
 44
Taxable loans, net(1)
24,122,851
 22,686,162
 510,222
 461,792
 4.27
 4.09
 29,139
 19,291
 48,430
24,227,567
 22,812,346
 783,546
 698,657
 4.32
 4.09
 43,293
 41,596
 84,889
Tax-exempt loans, net(1)(2)
72,553
 73,223
 1,688
 1,692
 4.69
 4.65
 (15) 11
 (4)70,721
 74,691
 2,492
 2,591
 4.71
 4.63
 (138) 39
 (99)
Allowance for loan losses(252,565) (254,599)              (251,448) (254,960)              
Loans, net23,942,839
 22,504,786
 511,910
 463,484
 4.31
 4.15
 29,124
 19,302
 48,426
24,046,840
 22,632,077
 786,038
 701,248
 4.37
 4.14
 43,155
 41,635
 84,790
Mortgage loans held for sale49,405
 67,908
 972
 1,238
 3.93
 3.65
 (335) 69
 (266)50,339
 74,494
 1,478
 1,966
 3.91
 3.52
 (636) 148
 (488)
Federal funds sold, due from Federal Reserve Bank, and other short-term investments607,656
 896,777
 2,684
 2,129
 0.88
 0.48
 (688) 1,243
 555
586,055
 930,954
 4,396
 3,343
 0.99
 0.48
 (1,212) 2,265
 1,053
Federal Home Loan Bank and Federal Reserve Bank stock174,101
 79,125
 2,788
 1,768
 3.20
 4.47
 2,105
 (1,085) 1,020
174,493
 76,252
 4,321
 2,649
 3.30
 4.63
 3,402
 (1,730) 1,672
Total interest earning assets$28,623,707
 27,089,977
 $558,517
 502,350
 3.93% 3.73
 $33,061
 23,106
 $56,167
$28,688,836
 27,259,183
 $856,453
 759,234
 3.99% 3.72
 $48,644
 48,575
 $97,219
Cash and due from banks396,305
 405,564
              391,829
 400,222
              
Premises and equipment, net414,810
 441,197
              416,835
 434,889
              
Other real estate21,723
 41,586
              20,246
 39,282
              
Other assets(3)
1,080,397
 1,111,448
              1,066,863
 1,103,504
              
Total assets$30,536,942
 29,089,772
              $30,584,609
 29,237,080
              
                                  
Liabilities and Shareholders' EquityLiabilities and Shareholders' Equity                Liabilities and Shareholders' Equity                
Interest-bearing liabilities:                                  
Interest-bearing demand deposits$4,810,836
 4,216,024
 $5,001
 3,673
 0.21% 0.18% $531
 797
 $1,328
$4,830,226
 4,235,529
 $8,366
 5,420
 0.23% 0.17% $756
 2,190
 $2,946
Money market accounts8,017,785
 7,472,471
 12,857
 11,852
 0.32
 0.32
 865
 140
 1,005
8,037,235
 7,603,136
 20,268
 17,620
 0.34
 0.31
 1,007
 1,641
 2,648
Savings deposits857,050
 734,199
 329
 232
 0.08
 0.06
 37
 60
 97
838,898
 755,608
 394
 366
 0.06
 0.06
 37
 (9) 28
Time deposits4,032,971
 4,115,172
 16,887
 16,457
 0.84
 0.80
 (326) 756
 430
4,100,836
 4,094,525
 26,846
 24,666
 0.88
 0.80
 37
 2,143
 2,180
Federal funds purchased and securities sold under repurchase agreements180,145
 199,599
 84
 96
 0.09
 0.09
 (9) (3) (12)184,000
 215,641
 125
 154
 0.09
 0.09
 (21) (8) (29)
Long-term debt2,227,501
 2,320,508
 31,728
 29,763
 2.83
 2.57
 (1,185) 3,150
 1,965
2,145,838
 2,251,235
 45,967
 44,394
 2.82
 2.59
 (2,073) 3,646
 1,573
Total interest-bearing liabilities$20,126,288
 19,057,973
 $66,886
 62,073
 0.67
 0.65
 $(87) 4,900
 $4,813
$20,137,033
 19,155,674
 $101,966
 92,620
 0.68
 0.64
 $(257) 9,603
 $9,346
Non-interest bearing deposits7,236,840
 6,871,279
              7,259,981
 6,928,906
              
Other liabilities214,381
 203,923
              219,388
 203,989
              
Shareholders' equity2,959,433
 2,956,597
              2,968,207
 2,948,511
              
Total liabilities and equity$30,536,942
 29,089,772
              $30,584,609
 29,237,080
              
Interest rate spread:        3.26
 3.08
              3.31
 3.08
      
Net interest income - FTE/margin(4)
    491,631
 440,277
 3.46% 3.27
 $33,148
 18,206
 $51,354
    754,487
 666,614
 3.52% 3.27
 $48,901
 38,972
 $87,873
Taxable equivalent adjustment    607
 634
              890
 964
          
Net interest income, actual    $491,024
 439,643
              $753,597
 665,650
          
                                  
(1) Average loans are shown net of unearned income. Non-performing loans are included. Interest income includes fees as follows: 2017 - $15.7$23.4 million, 2016 - $15.6$23.4 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 $(41.2)$(34.7) million and $28.7$35.7 million for the sixnine months ended JuneSeptember 30, 2017 and
2016, respectively.
(4) The net interest margin is calculated by dividing annualized net interest income - FTE by average total interest earnings assets.

Market Risk Analysis
Interest rate risk is the primary market risk to which Synovus is potentially exposed. Synovus measures its sensitivity to changes in market interest rates through the use of a simulation model. Synovus uses this simulation model to determine a baseline net interest income forecast and the sensitivity of this forecast to changes in interest rates. These simulations include all of Synovus’ earning assets and liabilities. Forecasted balance sheet changes, primarily reflecting loan and deposit growth forecasts, are included in the periods modeled. Anticipated deposit mix changes in each interest rate scenario are also included in the periods modeled.
Synovus has modeled its baseline net interest income forecast assuming a flat interest rate environment with the federal funds rate at the Federal Reserve’s current targeted range of 1.00% to 1.25% and the current prime rate of 4.25%. 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 JuneSeptember 30, 2017, with comparable information for December 31, 2016.
   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, 2017 December 31, 2016
 +200 4.5% 4.6%
 +100 2.8% 2.2%
 Flat —% —%
 -25 -1.3% -2.3%
      
   Estimated % Change in Net Interest Income as Compared to Unchanged Rates (for the next twelve months)
 
 Change in Short-term Interest Rates (in basis points) September 30, 2017 December 31, 2016
 +200 4.9% 4.6%
 +100 2.9% 2.2%
 Flat —% —%
 -25 -1.5% -2.3%
      
Several factors could serve to diminish or eliminate this asset sensitivity in a rising rate environment. These factors include a higher than projected level of deposit customer migration to higher cost deposits, such as certificates of deposit, which would increase total interest expense and serve to reduce the realized level of asset sensitivity. Another factor which could impact the realized interest rate sensitivity is the repricing behavior of interest bearing non-maturity deposits. Assumptions for repricing are expressed as a beta relative to the change in the prime rate. For instance, a 50% beta would correspond to a deposit rate that would increase 0.5% for every 1% increase in the prime rate. Projected betas for interest bearing non-maturity deposit repricing are a key component of determining the Company's interest rate risk positioning. Projected betas are based on historical analysis, current product features, and deposit mix. These projected betas reflect an assumption that realized betas will increase as short-term rates increase. Should realized betas be higher than projections, the expected benefit from higher interest rates would be diminished. The following table presents an example of the potential impact of an increase in repricing betas on Synovus' realized interest rate sensitivity position.
 As of June 30, 2017 As of September 30, 2017
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 4.5% 2.8% 4.9% 3.1%
+100 2.8% 1.9% 2.9% 2.1%
  
The net interest income simulation model is the primary tool utilized to evaluate potential interest rate risks over a shorter term time horizon. Synovus also evaluates potential longer term interest rate risk through modeling and evaluation of EVE. Simulation modeling is utilized to measure the 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 EVE model indicates that, compared with a valuation assuming stable rates, EVE is projected to increase by 1.4%2.6% and decrease by 0.9%1.2%, assuming an immediate and sustained increase in interest rates of 100 and 200 basis points, respectively. Assuming an immediate 25 basis point decline in rates, EVE is projected to decrease by 2.7%3.2%. These metrics reflect a slight moderation in long term asset sensitivity as compared to December 31, 2016. This moderation is primarily due to an increase in the duration of the investment portfolio and a slight increase in loan duration, and a decrease in wholesale funding duration.

 Estimated Change in EVE Estimated Change in EVE
Immediate Change in Interest Rates (in basis points) June 30, 2017 December 31, 2016 September 30, 2017 December 31, 2016
+200 -0.9% 2.8% 1.2% 2.8%
+100 1.4% 3.2% 2.6% 3.2%
-25 -2.7% -3.3% -3.2% -3.3%
  
ADDITIONAL DISCLOSURES
Recently Issued Accounting Standards
Several accounting standards will be effective in fiscal year 2018 or later. Synovus is currently evaluating the requirements of these new ASUs to determine the impact on the consolidated financial statements:
ASU 2017-12, Derivatives and Hedging: Targeted Improvements to Accounting for Hedging Activities
ASU 2017-08, Receivables-Nonrefundable Fees and Other Costs: Premium Amortization on Purchased Callable Debt Securities
ASU 2017-05, Other Income-Gains and Losses from the Derecognition of Nonfinancial Assets, Clarifying the Scope of Asset Derecognition Guidance and Accounting for Partial Sales of Nonfinancial Assets
ASU 2017-04, Intangibles-Goodwill and Other, Simplifying the Test for Goodwill Impairment
ASU 2017-01, Business Combinations-Clarifying the Definition of a Business
ASU 2016-18, Statement of Cash Flows-Restricted Cash
ASU 2016-15, Statement of Cash Flows-Classification of Certain Cash Receipts and Cash Payments
ASU 2016-13, Financial Instruments-Credit Losses (CECL)
ASU 2016-02, Leases
ASU 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities
ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and subsequent related Updates
The ASUs with the most significant impact on Synovus are ASU 2016-13, Financial Instruments-Credit Losses (CECL), effective in 2020, followed by the ASU 2014-09, Revenue from Contracts with Customers, effective in 2018, and ASU 2016-02, Leases, effective in 2019.

ASU 2016-13, Financial Instruments-Credit Losses (CECL). In June 2016, the FASB issued new accounting guidance related to credit losses. The new guidance replaces the existing incurred loss impairment guidance with a single expected credit loss methodology. The new guidance will require management’s estimate of credit losses over the full remaining expected life of loans and other financial instruments. For Synovus, the standard will apply to loans, unfunded loan commitments, and debt securities available for sale. The standard is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years.  Early adoption is permitted on January 1, 2019.  Upon adoption, Synovus expects to record a cumulative effect adjustment to retained earnings as of the beginning of the reporting period of adoption.  
Synovus has begun itsSynovus' implementation efforts, which are led by a cross-functional steering committee. The earlycommittee, are in process. To date, the focus of the committee has been on assessing the data, calculations, and disclosures required by the standard as well as working through the committee develops a project plan to address these requirements and provide for the implementation of the new standard. Management expects that the allowance for loan losses will be higher under the new standard; however, management is still in the process of determining the magnitude of the increase and the impact on its financial statements and regulatory capital ratios. Additionally, the extent of the increase on the allowance for loan losses will depend upon the composition of the loan portfolio upon adoption of the standard, as well as economic conditions and forecasts at that time.

ASU 2014-09, Revenue from Contracts with Customers (Topic 606) and subsequent related Updates. In May 2014, the FASB issued new accounting guidance for recognizing revenue from contracts with customers, which is effective on January 1, 2018. ASU 2014-09 establishesand subsequent related updates establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The standard is intended to increase comparability across industries. The core principle of the revenue model is that a company will recognize revenue when it transfers control of goods or services to customers at an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services.
Synovus has completed the initial scoping exercise and determined that approximately 80% of non-interest income revenue streams are within the scope of ASU 2014-09. Non-interest income streams that are out of The scope of the new standard include mortgageguidance explicitly excludes net interest income securities gains (losses), BOLI, gains on sales of GGL/SBA loans, and certainas well as many other smaller components within non-interest income. Management has also substantially completed its evaluation of service charges on deposit accounts (whichrevenues from financial assets.

represent approximately 30% of non-interest income) and has determined that changes inSynovus will adopt the new revenue recognition for those contracts (considered day-to-day contracts) are not expected to result in a material impact to Synovus upon adoption. Synovus is currently reviewing contracts related to card fees, investment management and trust fees, and insurance commissions and fees. While Synovus has not yet identified any material changesguidance in the timingfirst quarter of revenue recognition, the review is ongoing, and management continues to evaluate the presentation of certain contract costs (whether presented gross or offset against non-interest revenue) for certain arrangements such as card interchange fees.
Extensive new disclosures will be required, including disaggregation of total revenue, information about performance obligations, information about key judgments and estimates and policy decisions regarding revenue recognition. Synovus expects to use2018 using the modified retrospective method with a cumulative-effect adjustment to opening retained earnings. Synovus has substantially completed its assessment of adoption.revenue

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

ASU 2016-02, Leases. In February 2016, the FASB issued its new standard on lease accounting. ASU 2016-02 introduces a lessee model that brings most leases on the balance sheet. Under the new standard, all lessees will recognize a right-of-use asset and a lease liability for all leases, including operating leases, with a lease term greater than 12 months. From a lessor perspective, the accounting model is largely unchanged. For Synovus, the impact of this ASU will predominately relate to its accounting and reporting of leases as a lessee. The new ASU will be effective for Synovus beginning January 1, 2019. A modified retrospective approach is required at adoption which requires all prior periods presented in the financial statements to be restated with a cumulative effect adjustment to retained earnings as of the beginning of the earliest period presented. The standard also requires additional disclosures regarding leasing arrangements.
Synovus is currently evaluating the potential financial statement impact from the implementation of this standard by reviewing its existing lease contracts and other contracts that may include embedded leases. Synovus currently expects to recognize lease liabilities and corresponding right-of-use assets (at their present value) related to substantially all of the $282 million of future minimum lease commitments as disclosed in Note 8 of Synovus' 2016 Form 10-K. However, the population of contracts requiring balance sheet recognition and their initial measurement continues to be under evaluation.
See "Note 1 - Significant Accounting Policies" in this Report for a discussion of recently adopted accounting standards updates.
Critical Accounting Policies
The accounting and financial reporting policies of Synovus are in accordance with GAAP and conform to the accounting and reporting guidelines prescribed by bank regulatory authorities. Synovus has identified certain of its accounting policies as “critical accounting policies,” consisting of those related to the allowance for loan losses and determination of the fair value of financial instruments. In determining which accounting policies are critical in nature, Synovus has identified the policies that require significant judgment or involve complex estimates. It is management's practice to discuss critical accounting policies with the Board of Directors' Audit Committee, including the development, selection, implementation and disclosure of the critical accounting policies. The application of these policies has a significant impact on Synovus’ unaudited interim consolidated financial statements. Synovus’ financial results could differ significantly if different judgments or estimates are used in the application of these policies. All accounting policies described in "Part II - Item 8. Financial Statements and Supplementary Data - Note 1 - Summary of Significant Accounting Policies" in Synovus' 2016 Form 10-K should be reviewed for a greater understanding of how we record and report our financial performance. During the sixnine months ended JuneSeptember 30, 2017, 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' 2016 Form 10-K.

Non-GAAP Financial Measures
The measures entitled adjusted non-interest income; adjusted non-interest expense; adjusted total revenues; adjusted efficiency ratio; adjusted net income per common share, diluted; adjusted return on average assets; adjusted net charge-off ratio; adjusted return on average common equity; adjusted return on average tangible common equity; average total deposit growth excluding WFB deposits; average core deposits; average core transaction deposits; return on average tangible common equity; tangible common equity to tangible assets ratio; and common equity Tier 1 (CET1) ratio (fully phased-in); are not measures recognized under GAAP and therefore are considered non-GAAP financial measures. The most comparable GAAP measures to these measures are total non-interest income; total non-interest expense; total revenues; efficiency ratio; total deposits;net income per common share, diluted; return on average assets; net charge-off ratio; return on average common equity; average deposit growth; total average deposits; the ratio of total shareholders' equity to total assets; and the CET1 ratio; respectively.
Management believes that these non-GAAP financial measures provide meaningful additional information about Synovus to assist management and investors in evaluating Synovus’ operating results, financial strength, the performance of its business, and the strength of its capital position. However, these non-GAAP financial measures have inherent limitations as analytical tools and should not be considered in isolation or as a substitute for analyses of operating results or capital position as reported under GAAP. The non-GAAP financial measures should be considered as additional views of the way our financial measures are affected by significant items and other factors, and since they are not required to be uniformly applied, they may not be comparable to other similarly titled measures at other companies. Adjusted total revenues and adjusted non-interest income is a measureare measures used by management to evaluate total revenue and non-interest income exclusive of net investment securities gains/losses, and changes in fair value of private equity investments, net.net, and the Cabela's Transaction Fee. 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, adjusted return on average assets, and adjusted return on average common equity are measurements used by management to evaluate operating results exclusive of items that are not indicative of ongoing operations and impact period-to-period comparisons. Average total deposit growth excluding WFB deposits, average core deposits, and average core transaction deposits are measures used by management to evaluate organic growth of deposits and the quality of deposits as a funding source. Adjusted net charge-off ratio is a measure used by management to evaluate charge-offs exclusive of charge-offs on loans transferred to held-for-sale. The adjusted return on average tangible common equity is a measure used by management to compare Synovus' performance with other financial institutions because it calculates the return available to common shareholders without the impact of intangible assets and their related amortization, thereby allowing management to evaluate the performance of the business consistently. The tangible common equity to tangible assets 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. The computations of these measures are set forth in the tables below.    

Reconciliation of Non-GAAP Financial Measures

Six Months Ended Three Months Ended Year EndedNine Months Ended Three Months Ended Year Ended
(in thousands, except per share data)June 30, 2017 June 30, 2016 June 30, 2017 June 30, 2016 December 31, 2016September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016 December 31, 2016
Adjusted non-interest income                  
Total non-interest income$140,539
 131,033
 68,701
 67,886
 273,194
$275,974
 199,188
 135,435
 68,155
 273,194
Subtract/add: Investment securities gains (losses), net(7,667) (67) 1
 —
 (6,011)
Add/Subtract: Decrease (increase) in fair value of private equity investments, net3,166
 278
 1,352
 (113) 1,026
Subtract: Cabela's Transaction Fee(75,000) —
 (75,000) —
 —
Add/subtract: Investment securities (losses) gains, net289
 (126) 7,956
 (59) (6,011)
Add: Decrease in fair value of private equity investments, net3,193
 527
 27
 249
 1,026
Adjusted non-interest income$136,038
 131,244
 70,054
 67,773
 268,209
$204,456
 199,589
 68,418
 68,345
 268,209
                  
Adjusted non-interest expense                  
Total non-interest expense$389,133
 376,844
 191,747
 188,611
  $594,780
 562,716
 205,646
 185,871
  
Subtract: Discounts to fair value for completed or planned ORE accelerated dispositions(7,082) —
 (7,082) —
  
Subtract: Asset impairment charges related to accelerated disposition of corporate real estate and other properties(1,168) —
 (1,168) —
  
Subtract: Earnout liability adjustments(2,059) —
 (2,059) —
  
Subtract: Restructuring charges, net(6,524) (6,981) (13) (5,841)  (7,043) (8,225) (519) (1,243)  
Subtract: Fair value adjustment to Visa derivative—
 (720) —
 (360)  —
 (1,079) —
 (360)  
Subtract: Litigation settlement expenses—
 (2,700) —
 —
  
Subtract: Litigation contingency/settlement expenses(401) (2,511) (401) 189
  
Subtract: Loss on early extinguishment of debt, net—
 (4,735) —
 —
  —
 (4,735) —
 —
  
Subtract: Amortization of intangibles(475) (121) (292) —
  (767) (121) (292) —
  
Subtract: Merger-related expense(86) —
 —
 —
  (110) (550) (23) (550)  
Adjusted non-interest expense$382,048
 361,587
 191,442
 182,410
  $576,150
 545,495
 194,102
 183,907
  
                  

Reconciliation of Non-GAAP Financial Measures, continued

Six Months EndedThree Months EndedNine Months Ended Three Months Ended
(in thousands, except per share data)June 30, 2017 June 30, 2016June 30, 2017 June 30, 2016September 30, 2017 September 30, 2016 September 30, 2017 September 30, 2016
Adjusted efficiency ratio             
Adjusted non-interest expense$382,048
 361,587
191,442
 182,410
$576,150
 545,495
 194,102
 183,907
Net interest income491,024
 439,643
251,097
 221,449
753,597
 665,650
 262,572
 226,007
Add: Tax equivalent adjustment607
 634
298
 329
890
 964
 283
 330
Add: Total non-interest income140,539
 131,033
68,701
 67,886
275,974
 199,188
 135,435
 68,155
Subtract/add: Investment securities gains (losses), net(7,667) (67)1
 —
Add/Subtract: Investment securities (losses) gains, net289
 (126) 7,956
 (59)
Total FTE revenues624,503
 571,243
320,097
 289,664
1,030,750
 865,676
 406,246
 294,433
Subtract/add: (Decrease) increase in fair value of private equity investments, net3,166
 278
1,352
 (113)
Total adjusted revenues$627,669
 $571,521
321,449
 289,551
Subtract: Cabela's Transaction Fee(75,000) —
 (75,000) —
Add: Decrease in fair value of private equity investments, net3,193
 527
 27
 249
Adjusted total revenues$958,943
 866,203
 331,273
 294,682
Efficiency ratio62.31% 65.97%59.90
 65.11
57.70% 65.00
 50.62
 63.13
Adjusted efficiency ratio60.87
 63.27
59.56
 63.00
60.08
 62.98
 58.59
 62.41
             
Adjusted net income per common share, diluted       
Net income available to common shareholders$238,190
 170,555
 95,448
 62,686
Add:Earnout liability adjustments2,059
 —
 2,059
 —
Add: Merger-related expense110
 550
 23
 550
Add: Fair value adjustment to VISA derivative—
 1,079
 —
 360
Add/subtract: Litigation contingency/recovery401
 2,511
 401
 (189)
Add: Restructuring charges7,043
 8,225
 519
 1,243
Add: Amortization of intangibles767
 121
 292
 —
Add: Loss on early extinguishment of debt, net—
 4,735
 —
 —
Add: Provision expense on loans transferred to held-for-sale27,710
 —
 27,710
 —
Add: Discounts to fair value for completed or planned ORE accelerated dispositions7,082
 —
 7,082
 —
Add: Asset impairment charges related to accelerated disposition of corporate real estate and other properties1,168
 —
 1,168
 —
Add/subtract: Investment securities (losses) gains, net289
 (126) 7,956
 (59)
Add: Decrease in fair value of private equity investments, net3,193
 527
 27
 249
Subtract: Cabela's Transaction Fee(75,000) —
 (75,000) —
Add/subtract: Tax effect of adjustments10,078
 (6,520) 11,034
 (797)
Adjusted net income$223,090
 181,657
 78,719
 64,043
Weighted average common shares outstanding122,628
 125,712
 121,814
 123,604
Adjusted net income per common share, diluted$1.82
 1.45
 0.65
 0.52
       


Reconciliation of Non-GAAP Financial Measures, continued

 
(dollars in thousands)June 30, 2017 March 31, 2017 December 31, 2016 June 30, 2016 
Average core deposits and average core transaction deposits        
Average total deposits$24,991,708
24,918,855
24,918,855
 24,661,265
 23,608,027
 
Subtract: Average brokered deposits(1,379,559) (1,380,787) (1,380,931) (1,337,000) 
     Average core deposits23,612,149

23,538,068
 23,280,334
 22,271,027
 
Subtract: Average total SCM deposits(2,051,646) (2,238,324) (2,356,567) (2,280,039) 
Subtract: Average time deposits excluding SCM deposits(3,151,333) (3,151,888) (3,147,620) (3,141,621) 
Average core transaction deposits$18,409,170

18,147,856
 17,776,147

16,849,367
 
         
Return on average tangible common equity        
Total average shareholders' equity$2,975,049
 2,943,643
 2,912,687
 2,946,697
 
Subtract: Average Series C Preferred Stock(125,980) (125,980) (125,980) (125,980) 
Average common equity2,849,069

2,817,663
 2,786,707

2,820,717
 
Subtract: Average goodwill(57,017) (59,649) (55,144) (24,431) 
Subtract: Average other intangible assets, net(11,966) (13,177) (233) (250) 
Average tangible common equity2,780,086

2,744,837
 2,731,330

2,796,036
 
Net income available to common shareholders annualized294,583
 281,043
 262,526
 232,866
 
Add: Amortization of intangibles, annualized and after-tax737
 469
 1,003
 1
 
Adjusted net income available to common shareholders annualized$295,320

281,512
 263,529

232,867
 
Return on average common equity10.34% 9.97
 9.42

8.26
 
     Return on average tangible common equity10.62% 10.26
 9.65

8.33
 
Tangible common equity to tangible assets ratio        
Total assets$30,687,966
 30,679,589
 30,104,002
 29,459,691
 
Subtract: Goodwill(57,092) (57,010) (59,678) (24,431) 
Subtract: Other intangible assets, net(11,843) (12,137) (13,223) (228) 
Tangible assets$30,619,031

30,610,442
 30,031,101
 29,435,032
 
Total shareholders' equity$2,997,947
 2,962,127
 2,927,924
 2,951,659
 
Subtract: Goodwill(57,092) (57,010) (59,678) (24,431) 
Subtract: Other intangible assets, net(11,843) (12,137) (13,223) (228) 
Subtract: Series C Preferred Stock, no par value(125,980) (125,980) (125,980) (125,980) 
Tangible common equity$2,803,032

2,767,000
 2,729,043
 2,801,020
 
Total shareholders' equity to total assets ratio9.77%

9.66
 9.73
 10.02
 
     Tangible common equity to tangible assets ratio9.15


9.04
 9.09
 9.52
 
Common equity Tier 1 (CET1) ratio (fully phased-in)        
Common equity Tier 1 (CET1)$2,734,983
       
Subtract: Adjustment related to capital components(31,623)       
CET1 (fully phased-in)2,703,360




     
Total risk-weighted assets27,282,003
       
Total risk-weighted assets (fully phased-in)27,528,587
       
Common equity Tier 1 (CET1) ratio10.02




     
     Common equity Tier 1 (CET1) ratio (fully phased-in)9.82




     
         
Reconciliation of Non-GAAP Financial Measures, continued

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

252,907
 322,462
 264,960
 
Total average assets$30,584,607
 29,237,109
 30,678,388
 29,528,435
 
Adjusted return on average assets (annualized)1.01% 0.87
 1.05
 0.90
 
         
Adjusted net charge-off ratio (annualized)        
Net charge-offs$60,695
   38,099
   
Charge-offs on loans transferred to held-for-sale during 3Q17(34,235)   (34,235)   
Net-charges-offs excluding charge-offs on loans transferred to held-for-sale$26,460
   3,864
   
Net charge-offs excluding charge-offs on loans transferred to held-for-sale annualized35,377
   15,330
   
Average loan balances$24,297,002
   24,499,923
   
Net charge-off ratio, as reported (annualized)0.33%   0.62
   
Adjusted net charge-off ratio, excluding 3Q17 transfers to held-for-sale (annualized)0.15%   0.06
   
         
Outlook 2017 (Yr)
Adjusted net charge-off ratio excluding balance sheet restructuring actions
Net charge-off ratio29-34 b.p.s
Subtract: Net charge-off ratio related to loans transferred to held-for-sale14 b.p.s
Net charge-off ratio, excluding transfers to held-for-sale15-20 b.p.s





Reconciliation of Non-GAAP Financial Measures, continuedThree Months Ended
(dollars in thousands)September 30, 2017 June 30, 2017 December 31, 2016 September 30, 2016 
Adjusted return on average common equity (annualized)        
Net income available to common shareholders$95,448
 73,444
 65,990
 62,686
 
Add:Earnout liability adjustments2,059
 —
 —
 —
 
Add: Merger-related expense23
 —
 1,086
 550
 
Add: Fair value adjustment to VISA derivative—
 —
 4,716
 360
 
Add/subtract: Litigation contingency/recovery401
 —
 —
 (189) 
Add: Restructuring charges519
 13
 42
 1,243
 
Add: Amortization of intangibles292
 292
 400
 —
 
Add: Provision expense on loans transferred to held-for-sale27,710
 —
 —
 —
 
Add: Discounts to fair value for completed or planned ORE accelerated dispositions7,082
 —
 —
 —
 
Add: Asset impairment charges related to accelerated disposition of corporate real estate and other properties1,168
 —
 —
 —
 
Add/subtract: Investment securities (losses) gains, net7,956
 1
 (5,885) (59) 
Add: Decrease in fair value of private equity investments, net27
 1,352
 499
 249
 
Subtract: Cabela's Transaction Fee(75,000) —
 —
 —
 
Add/subtract: Tax effect of adjustments11,034
 (613) (318) (797) 
Adjusted net income$78,719
 74,489
 66,530
 64,043
 
Net income annualized$312,309
 298,775
 264,674
 254,780
 
         
Total average shareholders' equity less preferred stock$2,859,491
 2,849,069
 2,786,707
 2,806,533
 
Subtract: Goodwill(57,167) (57,018) (55,144) (24,431) 
Subtract: Other intangible assets, net(11,648) (11,965) (233) (226) 
Total average tangible shareholders' equity less preferred stock$2,790,676
 2,780,086
 2,731,330
 2,781,876
 
Adjusted return on average common equity (annualized)10.92% 10.49
 9.50
 9.08
 
Adjusted return on average tangible common equity (annualized)11.19% 10.75
 9.69
 9.16
 
         
Sequential quarter growth in total average deposits excluding acquired WFB deposits        
3Q17 sequential quarter total average deposits growth, as reported$295,210
       
Subtract: Average balance WFB acquired deposits(71,920)       
3Q17 sequential quarter total average deposits growth, as adjusted$223,290
       
3Q17 sequential quarter growth, excluding WFB acquired deposits$223,290
       
2Q17 total average deposits$24,991,708
       
Sequential quarter percent change, as reported, annualized4.7%       
Sequential quarter percent change, as adjusted, annualized3.5%       
         


Reconciliation of Non-GAAP Financial Measures, continued

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

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

18,409,170

17,776,147

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

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

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

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


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


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


    
         
         



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


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




ITEM 3. – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information presented in the Market Risk Analysis section of the Management's Discussion and Analysis of Financial Condition and Results of Operations is incorporated herein by reference.
ITEM 4. – CONTROLS AND PROCEDURES
In connection with the preparation of this Quarterly Report on Form 10-Q, an evaluation was carried out by Synovus' management, with the participation of Synovus' Chief Executive Officer and Chief Financial Officer, of the effectiveness of Synovus' disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and that such information is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures. Based on that evaluation, Synovus' Chief Executive Officer and Chief Financial Officer have concluded that, as of JuneSeptember 30, 2017, 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 JuneSeptember 30, 2017 that have materially affected, or are reasonably likely to materially affect, Synovus' internal control over financial reporting.


PART II. – OTHER INFORMATION
ITEM 1. – LEGAL PROCEEDINGS
Synovus and its subsidiaries are subject to various legal proceedings, claims and disputes that arise in the ordinary course of its business. Additionally, in the ordinary course of its business, Synovus and its subsidiaries are subject to regulatory examinations, information gathering requests, inquiries and investigations. Synovus, like many other financial institutions, has been the target of legal actions and other proceedings asserting claims for damages and related relief for losses. These actions include mortgage loan and other loan put-back claims, claims and counterclaims asserted by individual borrowers related to their loans and allegations of violations of state and federal laws and regulations relating to banking practices, including putative class action matters. In addition to actual damages, if Synovus does not prevail in such asserted legal actions, credit-related litigation could result in additional write-downs or charge-offs of assets, which could adversely affect Synovus' results of operations during the period in which the write-down or charge-off were to occur.
Based on Synovus' current knowledge and advice of counsel, management presently does not believe that the liabilities arising from these legal matters will have a material adverse effect 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 "Note 13 - Legal 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 "Part I - Item IA - Risk Factors” of Synovus’ 2016 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’ 2016 10-K.
ITEM 2. – UNREGISTERED SALES OF SECURITIES AND USE OF PROCEEDS
(a) None.
(b) None.
(c) Issuer Purchases of Equity Securities:
Synovus' Board of Directors authorized a $200 million share repurchase program that will expire at the end of 2017. This program was announced on January 17, 2017. The table below sets forth information regarding repurchases of our common stock during the secondthird quarter of 2017.
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 2017 —
 $—
 —
 $184,856,772
May 2017 65,000
 41.86
 65,000
 182,136,106
June 2017 653,200
 42.04
 653,200
 154,673,133
Total 718,200
 $42.03
 718,200
 
         
Share Repurchases Total Number of Shares Repurchased 
Average Price Paid per Share(1)
 
Total Number
of Shares Repurchased as
Part of
Publicly Announced
Plans or Programs
 
Maximum Approximate
Dollar Value
of Shares
that May Yet Be
Purchased Under the
Plans or Programs
     
July 2017 175,900
 $43.84
 175,900
 $146,962,549
August 2017 960,000
 42.67
 960,000
 105,996,984
September 2017 984,800
 42.49
 984,800
 64,149,735
Total 2,120,700
 $42.69
 2,120,700
 
         
(1) The average price paid per share is calculated on a trade date basis for all open market transactions and excludes commissions and other transaction expenses.

The foregoing repurchases during the secondthird quarter of 2017 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.

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.
10.1
Amendment No. 1 to Third Amended and Restated Synovus Deferred Compensation Plan.
10.2
Framework Agreement, dated April 17, 2017, by and among Cabela's Incorporated, World's Foremost Bank, Synovus Bank, Capital One Bank (USA), National Association and, solely for purposes of the recitals thereto and Section 5.18, Section 8.2 and Article IX thereof, Capital One, National Association, incorporated by reference to Exhibit 2.1 to Synovus' Current Report on Form 8-K dated April 17, 2017, as filed with the SEC on April 17, 2017.*
10.3
Asset and Deposit Purchase Agreement, dated as of April 17, 2017, by and among Cabela's Incorporated, World's Foremost Bank and Synovus Bank, incorporated by reference to Exhibit 2.2 to Synovus' Current Report on Form 8-K dated April 17, 2017, as filed with the SEC on April 17, 2017.
10.4
Asset Purchase Agreement, dated as of April 17, 2017, by and between Capital One Bank (USA), National Association and Synovus Bank, incorporated by reference to Exhibit 2.3 to Synovus' Current Report on Form 8-K dated April 17, 207, as filed with the SEC on April 17, 2017.
  
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.
   
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
* Schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K under the Securities Act of 1933, as amended. A copy of any omitted schedule will be furnished supplementally to the Securities and Exchange Commission upon request.
   

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 4,November 7, 2017By: /s/ Kevin S. Blair
Date  Kevin S. Blair
   Executive Vice President and Chief Financial Officer
   (Duly Authorized Officer and Principal Financial Officer)


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